Fees and Compensation (Item 5)
This section of the brochure describes how we are compensated for the services we offer.
Compensation Methodology and Rates
Assets Under Management
Clients are charged for our asset management services based on a percentage of the assets
being managed. The following fee schedule is our standard fee schedule for investment
advisory services. Your specific annual fee arrangement will be described in the written
Investment Advisory Agreement entered into between KRS and you. Investment advisory fees
charged by us are negotiable at our sole discretion. All clients do not pay the same fee. A lower
fee for a comparable service may be available from other sources.
Assets Under Management Annual Rates
All amounts 0.02% ‐ 0.50%
Depending on the record keeper, the annual fee for our services may be billed monthly or
quarterly, in arrears. Similarly, the account value used to determine the fee received depends
on the record keeper and may be based on the account value at month end or quarter end, or
some other equitable basis. If the management agreement does not span the entire monthly
billing period, the fee will be prorated based on the number of days the account is open during
the billing period. Your account custodian will send client statements at least quarterly,
showing all disbursements for the account including the amount of the advisory fee, if
deducted directly from the account. It is the shared responsibility of KRS and you to verify the
accuracy of the fee calculation as the account custodian will not determine whether the fee has
been properly calculated. See Brokerage Practices (Item 12) in this brochure for more
information about your account custodian(s).
You may terminate the Investment Advisory Agreement without fee or penalty by providing
written notice to KRS within five (5) business days from your execution of the agreement.
Thereafter, either party may terminate the Investment Advisory Agreement by providing
written notice to the other party. If an engagement does not span a full monthly billing period,
any unearned fees collected in advance of services being performed will be returned to you on
a pro rata basis.
Fixed Fees
You may enter into an Investment Advisory Agreement where the fee for services is determined
through negotiations and agreement between you and KRS. Fixed fees are not necessarily
based upon the value of assets managed or time expended providing services. Fixed fees are
normally agreed to for one year, then renegotiated and agreed to for future periods. If you are
paying a fixed fee you may pay a fee higher or lower than one based upon the value of assets
managed. In the event a fixed fee engagement is terminated, unearned fees will be returned to
you on a pro rata basis.
Valuation of Publicly Traded Securities
Publicly traded securities in your account(s) managed by us are held at the custodian that is
chosen by you. We use the securities valuation provided by the independent qualified
custodian for reporting and billing purposes. Publicly traded securities are usually valued as of
the end of business on the last trading day of the calendar month.
How Clients Pay Advisory Fees
Fees are generally deducted directly from your account. You must provide your qualified
account custodian with written authorization to have fees deducted from your account and
paid to KRS.
If agreed upon by both client and KRS, fees can be billed directly to the client instead of being
deducted from account balances.
Other Types of Fees and Expenses
In addition to the investment advisory fees you pay to us, you will pay transaction fees
(commissions) to your custodian or broker‐dealer for executing securities transactions and
charges for special services elected by you or KRS. These fees may include:
periodic distribution fees
electronic fund and wire transfer fees
certificate delivery fees
reorganization fees
account transfer fees (outbound)
returned check fees
international security transfer fees
overnight mail and check fees
Rule 144 transfer fees
transfer agent fees
This list is not meant to be all inclusive. Any fee on a special service incurred by the client will be
fully disclosed. Please refer to Item 12 of this document for an explanation of our brokerage
practices.
Investment Company Fees
Investment company funds (e.g., mutual funds or ETFs) that are held by you will bear their own
internal transaction and execution costs, as well as directly compensate their investment
managers along with internal administrative services. Some funds pay 12b‐1 fees, distribution
fees, and/or shareholder service fees to broker‐dealers that offer investment company funds to
their clients. These fees affect the net asset value of the fund shares and are indirectly borne by
fund shareholders such as you.
Some fund companies have imposed a redemption fee. A redemption fee is another type of fee
that some funds charge their shareholders when shares are sold or redeemed within a short
period of time from the purchase of the fund shares. Although a redemption fee is deducted
from redemption proceeds just like a deferred sales load, it is not considered to be a sales load.
Unlike a sales load, which is generally used to compensate brokers, a redemption fee is typically
used to defray fund costs associated with a shareholder’s redemption and is paid directly to the
fund, not to a broker. The SEC generally limits redemption fees to 2%. In most cases, the funds
will use the "first‐in, first‐out" (FIFO) method to determine the holding period. Under this
method, the date of the redemption will be compared with the earliest purchase date of shares
held in the account. While it is not the general practice of KRS to sell client’s securities in a
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