Item 5 – Fees and Compensation
A. Fee Schedule
The fees and compensation payable to Delta Accumulation may vary among its Clients. Lower
fees for comparable services may be available from other sources. Delta Accumulation
generally charges the following fees:
1. Management Fee:
Delta Accumulation receives an asset-based management fee in exchange for investment
advisory services. The management fee is generally between 0% and 1.0% and is typically
paid monthly in arrears (the “Management Fee”).
2. Performance-Based Fees:
With respect to the Separately Managed Accounts, Clients may or may not pay performance-
based compensation, depending on the terms of their Agreement with Delta Accumulation.
This fee structure is only available to Clients who meet the definition of a “Qualified Client”
under Rule 205-3 of the Investors Advisers Act of 1940. To be a Qualified Client, a Client must
either: (1) demonstrate a net worth of at least $2,200,000 excluding their primary residence;
or (2) have at least $1,100,000 under management with Delta Accumulation.
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The terms and conditions of the performance-based fee will be agreed upon with the Client
prior to entering into an Agreement. Generally, the performance-based fee will be calculated
quarterly on the last business day of the quarter. The performance-based fee will generally
be an amount between fifteen percent (15%) to thirty percent (30%) of the net new profit in
each Client account (the “Performance-Based Fee”), subject to a “high water mark” provision
under which the Firm receives a Performance-Based Fee from a Client only to the extent net
income allocated to the Client account exceeds any net losses previously allocated to it since
the last date a Performance-Based Fee was assessed (or the original date of contribution if no
Performance-Based Fee has previously been assessed).
Clients who elect to terminate their Agreement with Delta Accumulation prior to the
conclusion of a Performance-Based Fee measurement period will generally be charged a
Performance-Based Fee based on the performance of the account for the measurement
period prior to the termination date and prorated from the date on which the Performance-
Based Fee was last assessed by Delta Accumulation.
With respect to the Funds, the Firm generally receives a Performance-Based Fee equal to a
percentage of the net income allocated to each Investor for the year. This Performance-Based
Fee is also subject to a “high water mark” procedure such that the Performance-Based Fee is
taken only to the extent net income allocated to that Investor exceeds any cumulative losses
that were allocated to that Investor for earlier periods and that have not been recovered. This
Performance-Based Fee is generally 20% and is typically made at the end of each calendar
year.
Delta Accumulation may enter into customized Management Fee and Performance-Based Fee
(the “Fees”) pricing structures with Clients on a case-by-case basis. The Firm, in its sole
discretion, may reduce, or otherwise modify or waive the Fees with respect to any Client.
B. Payment of Fees
With respect to the Separately Managed Accounts, the Management Fee will be calculated by
Delta Accumulation and will be charged monthly in arrears. If the Client makes additional
capital contributions to the account or withdraws asset from the account, the Fees will be
prorated accordingly for the month. Performance-Based Fees are determined as of the last
business day of the calendar quarter and if an account closed prior to the conclusion of a
Performance-Based Fee measurement period, the fee will generally be based on the
performance of the account for the measurement period prior to the termination date and
prorated from the date on which the Performance-Based Fee was last assessed by Delta
Accumulation.
Separately Managed Account Clients have their Fees automatically deducted from their
custodial account. The Client will provide written authorization to their custodian, permitting
the Fee to be withdrawn directly from their custodial account. Generally, an invoice will be
sent to the Client account’s custodian at the same time a copy is sent to the Client. The invoice
will include the formula used to calculate the Fees, the value of the assets under management
on which the Fees are based, and the time period covered by the Fees. A Client’s custodian will
send statements no less than quarterly showing all disbursements in the custodial account,
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including any Fees withdrawn.
With respect to the Funds, Management Fees, Performance-Based Fees, and third-party fees
(discussed below) are deducted from Client assets. Management Fees, which are paid in
arrears, are withdrawn at the end of the month. Performance-Based Fees are generally
allocated as of the last business day of the calendar year and as of any date on which an
Investor makes a withdrawal, redemption or receives a distribution from such Investor’s
capital account or shares, as applicable.
C. Third-Party Fees
Clients shall pay brokerage commissions, transaction fees, and other related costs and
expenses that are directly related to the investment of the Client’s assets. Such charges, fees
and commissions are exclusive of and in addition to Delta Accumulation’s Fees, and Delta
Accumulation shall not receive any portion of these commissions, fees, and costs.
Please see Item 12 of this Brochure for details regarding brokerage arrangements.
D. Prepayment of Fees
Delta Accumulation does not require prepayment of Fees.
E. Outside Compensation for the Sale of Securities
Neither Delta Accumulation nor its supervised persons accepts compensation for the sale of
securities or other investment products outside of its association with Delta Accumulation.
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