ITEM 5 - FEES AND COMPENSATION
Investment Management Services
F500 Advisory charges advisory fees for investment management services based on a percentage of
assets under management, per the following schedule:
Managed Assets Maximum Annual Fee*
$0 - $1,000,000 2.00% of assets
(minimum $600 per quarter)
$1,000,000 - $1,500,000 1.50% of assets
$1,500,000 - $3,000,000 1.30% of assets
$3,000,000 + 1.00% of assets
*Older accounts may be under historically different fee schedules; all fees are negotiable. F500
Advisory’s branch offices and investment advisory representatives have discretion to negotiate the
client’s fee within the above range.
F500 Advisory has certain clients (family members, employees, and close acquaintances) who receive
advisory services without paying fees or brokerage commissions. F500 Advisory has several non-fee
paying clients who, under a special historical arrangement, have engaged F500 Advisory’s services and
only pay compensation through brokerage commissions to our related broker-dealer. F500 Advisory
does not receive brokerage commissions.
F500 Advisory may charge a flat-fee or a performance-based fee for clients under a special arrangement.
All other clients have assets under management through a fee-based arrangement.
F500 Advisory imposes a minimum quarterly fee of $600, irrespective of account size, although this may
be reduced or the minimum waived under certain circumstances. If the regular quarterly management
fee calculated based on assets under management is less than our minimum advisory fee, we will charge
the client our minimum fee.
F500 Advisory Services, Inc. Brochure 8 Revised June 15, 2016
Billing Method
F500 Advisory’s investment management fees are payable quarterly in arrears based on the account
market value as of the last business day of the quarter.
The initial fee for a new account will be pro-rated for the number of days in the calendar quarter that
the account is under F500 Advisory’s management. At our discretion, F500 Advisory may elect to waive
fees for cash balances and/or waive first quarter fees for new money deposited into client accounts.
Generally F500 Advisory, with client authorization, will instruct the custodian to automatically withdraw
our advisory fee from the client’s account. Clients may request to pay the advisory fee by check rather
than having the fee deducted from their account. All clients will receive brokerage statements from the
custodian no less frequently than quarterly. The custodian statement will show the deduction of the
advisory fee for those clients who authorize the advisory fees to be withdrawn directly from their
custodian account.
F500 Advisory will send an invoice to all clients who choose not to have advisory fees withdrawn directly
from their custodian account. The invoice is payable upon receipt and will include the fee calculation
and amount due.
Termination
Either party may terminate the advisory agreement at any time by providing written notice to the other
party. The client may terminate the agreement at any time by writing F500 Advisory at our office.
Upon notice of termination, F500 Advisory will calculate the final fees due for services provided through
the date of termination based on the account’s market value as of the date of written notification of
termination and pro-rated for the number of days in the calendar quarter that the assets were under
management. Any advisory fees that we have earned for the services provided will be due upon
termination.
CD Plus Service
Fees for the CD Plus Service are negotiable. The maximum fee charged is:
1.00% annual fee based on assets under management, plus
15% performance-based incentive allocation
Performance-based fee structures are only available to clients meeting the financial requirements of
Rule 205-3 of the Investment Advisers Act of 1940, including persons whose individual net worth (or
joint net worth with their spouse) exceeds $2,000,000 and persons who invest at least $1,000,000 with
F500 Advisory (“Qualified Clients”).
The assets under management fee is charged quarterly in arrears as described under Investment
Management Services – Billing Method above. The incentive allocation is charged on the last day of
each calendar quarter, equal to 15% of the appreciation in each client’s account during the quarter. The
F500 Advisory Services, Inc. Brochure 9 Revised June 15, 2016
incentive allocation is payable only if, and to the extent that, the net capital appreciation of the client’s
account for the quarter exceeds any net capital depreciation in the account (reduced pro rata for any
partial withdrawals ) for that investment. F500 Advisory may receive incentive allocations with regard to
unrealized appreciation as well as realized gains in the client’s account.
CD Plus clients may terminate this service in the same manner as described under Investment
Management Services – Termination, above.
Proprietary Private Funds
F500 Advisory receives a management fee for our services to private funds, as follows:
Perennial Protection Fund, LLC
The management fee charged to each member will depend on the class of interests the member holds
in the fund. The fund currently consists of four separate classes of interests: Class A, Class B, Class C, and
Class D. Class A interests were available only to investors who invested in the fund prior to November 1,
2011. The fund is no longer offering Class A interests. Class B interests are available only to investors
who purchase interests directly from the fund. Class C and Class D interests are available to investors
...