Item 5 FEES AND COMPENSATION
ADVISORY FEES
FundX charges an annual investment management fee based upon assets under
management ("AUM") in a client's account. AUM includes all client assets over which
FundX has investment discretion as described in Item 16, below. The management fee
schedule:
1.00% on assets up to $2,000,000
0.80% on assets from $2,000,001 to $5,000,000
0.70% on assets from $5,000,001 to $10,000,000
0.60% on assets from $10,000,001 to $20,000,000
0.50% on assets above $20,000,000
Assets in the Account are included in the fee assessment unless specifically identified in
writing for exclusion. The management fee is billed quarterly, in advance, and
prorated for accounts established or terminated at times other than the start of the
quarter.
The management fee is computed on the first day of each quarter of management by
determining the market value of the assets in the client’s portfolio using the following
guidelines: (a) for marketable securities: the current market price provided by
custodian; (b) for securities for which there exists no active market (such as real estate,
gas and oil, or other illiquid securities), by using such information as FundX in good faith
deems relevant to determine the value, or in the absence of such information, at cost;
and (c) cash or equivalents, at dollar value.
Clients typically authorize FundX to deduct quarterly investment advisory fee directly
from their custodial account. This authorization must be granted under the client’s
signed custodial account application. It is the client’s responsibility to verify the
accuracy of the fee calculation, as the custodian will not determine whether the fee is
properly calculated.
Clients may make additions to and withdrawals from the client’s custodial account at
any time. If assets are withdrawn from an account after the inception of a billing
period, the fee payable with respect to such assets will not be adjusted or prorated
based on the number of days remaining in the billing period. Clients may withdraw
account assets on notice to FundX, subject to the usual and customary securities
settlement procedures.
FUNDX UPGRADER FUNDS FEES
For investment management fee purposes, client holdings of shares of any of the
Upgrader Funds are treated differently than shares of other securities. No management
fee is charged to clients on that portion, if any, of their assets that are held in FundX-
managed accounts invested in any of the Upgrader Funds. However, because FundX’s
management fee is charged in advance each quarter, managed assets that are migrated
into the Upgrader Funds may have already paid a FundX management fee, which will
not be refunded to the client.
FundX Direct Portfolios Program FEES
FundX does not charge a separate management fee for the FundX Direct Portfolios
Program. Clients do not pay brokerage commissions or any other fees to Schwab as part
of the Program. Schwab does receive other revenues in connection with the Program,
as described in Schwab’s Program Disclosure Brochure. FundX does not pay SPT fees for
its services in the Program so long as the Firm maintains $100 million in client assets in
accounts at Schwab that are not enrolled in the Program. The Firm currently meets this
condition.
GENERAL FEE DISCLOSURE
We believe our investment management fees are competitive with the fees charged by
other investment advisors in the San Francisco Bay area for comparable services.
However, comparable services may be available from other sources for lower fees than
those charged by FundX.
FundX’s fees are exclusive of and in addition to applicable brokerage commissions,
custodial charges and asset-specific fees such as those charged by mutual funds or ETFs
for management and administration.
FundX does not provide clients advice as to the tax deductibility of its advisory fees.
Clients are directed to consult a tax professional to determine the potential tax
deductibility of the payment of advisory fees.
CUSTODIAN AND BROKERAGE FEES
Clients incur certain charges imposed by their custodians and other third parties such as
custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire
transfer and electronic fund fees, and other fees and taxes on brokerage accounts and
securities transactions. Additionally, clients will incur charges by the executing broker-
dealer in the form of brokerage commissions and transaction fees on the investment
transactions entered into for their account(s). All of these charges, fees and
commissions are in addition to Advisor’s investment management fee.
MUTUAL FUND FEES
Mutual funds, including exchange traded funds (ETFs), incur management fees and
operating expenses, which vary from fund to fund. In addition to the advisory fee
charged by FundX, clients indirectly pay for the expenses and advisory fees charged by
the funds and ETFs in which their assets are invested.
Clients are provided a copy of a fund prospectus for each fund in which they invest by
their custodian or by the fund sponsor rather than by FundX. As required by law, a
prospectus represents the fund’s complete disclosure of its management and fee
structure. In addition, a fund’s prospectus can be obtained directly from the fund.
BOND FEES
Clients whose assets are invested in bonds purchased directly from an underwriter may
pay a sales credit or sales concession to the underwriter on the trade (in lieu of a sales
commission) ranging from 0% - 2% of the par value of the bond.