Item 5 – Fees and Compensation
The fees for MRJ Capital's portfolio management services are: (a) a quarterly investment
management fee based on assets under management at the start of each quarter; plus (b)
an annual incentive fee for all clients qualifying under the provisions of Rule 205-3 of the
Investment Advisers Act of 1940.
The annualized quarterly investment management fee is:
1.00% of the first $5 million
0.875% (7/8%) of the next $10 million
0.75% (3/4%) of the next $10 million
0.625% (5/8%) of the amounts above $25 million
MRJ Capital also typically charges a performance fee when the total return on a portfolio
exceeds 20% annually. The performance fee is 5% of the client’s portfolio return above
20%. For example, a 25% total return in a given year would result in a performance fee of
0.25% (¼%).
The incentive fee is based on the annual appreciation, gross of investment management
fees, in the account and is an amount equal to 5% of the amount by which the market value
of an advisory account as of December 31 of any year exceeds 120% of the market value of
the account as of January 1 of that year. The incentive fee shall be adjusted for any
amounts added to or withdrawn from the account during the year and will comply with the
provisions of Rule 205-3 of the Investment Advisors Act of 1940. An incentive-based fee
will not be offered to clients who do not meet the minimum criteria of Rule 205-3. In
measuring clients' assets for the calculation of performance-based fees, MRJ Capital shall
include realized and unrealized capital gains and losses.
Fees are payable quarterly. Accounts that become clients of MRJ Capital after the start of
the quarter are not charged any investment management fee for the first, partial quarter.
Furthermore, until a new account becomes relatively fully invested (in the judgment of MRJ
Capital), cash and cash equivalents will be excluded when calculating fees. Accounts that
cease to be clients after the start of a quarter do not receive a pro rata return of the
investment management fee that they have been charged for the quarter.
MRJ Capital will request that clients provide MRJ Capital with the authority to debit its fee
directly from the managed account(s). Clients may arrange with MRJ Capital to otherwise
remit fees subject to MRJ Capital’s discretion to accept such manner of fee payment.
Fees are not negotiable, except in unusual cases.
MRJ Capital’s fees are exclusive of brokerage commissions, transaction fees, and other
related costs and expenses which shall be incurred by the client. Clients may incur certain
charges imposed by custodians, brokers, 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 as
well as any money market fund fees used for cash holdings in client accounts charge
internal fund expenses. Such charges, fees and commissions are exclusive of and in
addition to MRJ Capital’s fee, and MRJ Capital shall not receive any portion of these
commissions, fees, and costs.
Item 12 further describes the factors that MRJ Capital considers in selecting or
recommending broker-dealers for client transactions and determining the reasonableness
of their compensation (e.g., commissions).