Item 5: Fees and Compensation
5) A Fee Schedule
We offer two methods for calculating our fee for our standard service (“Management Fee”) –
an Assets Based Method and a Gains Based/Minimum Fee Method. Our fees for our standard
service are not negotiable.
Assets Based Method of Compensation
Our Assets Based Fee Rate is 0.25% (one-quarter of one percent) of the account value per
calendar quarter (which is roughly equivalent to an annual fee of 1.0%). The Assets Based
Fee Rate is applied to the account value on the last day of the quarter to calculate the Assets
Based Management Fee. If there are any deposits or withdrawals during a quarter, the fee is
adjusted so the client is only billed for the time that we managed actual client assets.
Gains Based/Minimum Fee Method of Compensation
The basic idea of the Gains Based/Minimum Fee Method is to charge a fee equal to 10% of
the investment gain due to the investments in the account during the period since the last
billed gains fee, subject to a minimum fee of 0.125% (one-eighth of one percent) of the account
value per calendar quarter in quarters when the amount of the gains fee would be less than
the amount of the minimum fee. If there are any deposits or withdrawals during a quarter, the
fee is adjusted so the client is only billed for the time that we managed actual client assets. In
addition, any Minimum Fees charged would be included as credits in calculating any future
gains fees.
Billing Method Change
For clients who qualify for both billing methods, per section “Client’s Eligibility For Gains Based
Management Fee Method” in the Investment Management Agreement, the client may
choose to change the billing method starting on the next calendar quarter by executing the
then-current Investment Management Agreement and making the appropriate billing method
selection.
5.B Frequency of Billing and Payment Options
We send the client a bill for the management fee after each calendar quarter. We may choose
to not send a bill if the management fee is less than a threshold amount of our choosing, and
may instead defer billing until a future quarter. The client will have the option to pay the
management fee either: (a) by direct payment to us; or (b) by authorizing us to deduct the
management fee from its corresponding account(s); or (c) by instructing us to deduct the
management fee for one or more of the client's retirement accounts from the Client's non-
retirement account(s) under our management. The client can indicate whether the instructions
are for that calendar quarter only or whether they are also "Standing Instructions" to do the
same in all future quarters. The client has the opportunity to update its instructions any time in
the future, and we send the client a form to update management fee deduction instructions
each time we send a bill even if the client has "Standing Instructions.”
If we have not received the client’s direct payment within thirty (30) days after we mail the
client's bill for the management fee, then we may deduct the management fee from the client’s
corresponding account(s) without separate authorization from the client. Any management
fees that are deducted from the client's account are treated as a client withdrawal when
calculating future management fees.
5.C Other Fees
Parker Investment’s fees are exclusive of any, to the extent relevant, fees paid to independent
third parties for services including, but not limited to custodial fees, brokerage commissions,
transaction fees, bank service fees, wire transfer and electronic fund transfer fees, short-term
redemption fees, margin borrowing, and other fees and taxes on brokerage accounts and
securities transactions. Clients may invest in mutual funds as part of Parker Investment’s
investment strategy. Investments in mutual funds and ETFs, however, generally include an
embedded investment management fee paid to the investment adviser of the mutual fund. As
such, client portfolios with investments in those types of securities will be subject to more than
one layer of management fees.
Also, we sometimes choose to buy a different class of a mutual fund which currently has a
$30 buy and a $30 sell fee charged by the broker-dealer if: (a) that class of the mutual fund
has a lower internal fund expense ratio than the class which has no buy or sell fees; and (b)
the anticipated savings, based on our expectation of how long we will hold that fund, from the
lower internal fund expense ratio will be greater than the combined buy and sell fee.
5.D Fees Paid In Advance
There are no fees paid in advance.
5.E Other Forms of Compensation
We do not receive any form of compensation from the buying or selling of securities nor
commissions.