Item 5 – Fees and Compensation
The following paragraphs detail the fee structure and compensation methodology for services provided by the
Advisor. Each Client engaging the Advisor for services described herein shall be required to enter into one or more
written agreements with the Advisor.
A. Fees for Advisory Services
Investment Management Services
Investment advisory fees are paid quarterly, in arrears of each calendar quarter pursuant to the terms of the investment
management agreement. Investment advisory fees are based on the market value of assets under management at the
end of the calendar quarter. Investment advisory fees range from 0.40% to 2.00% annually based on several factors,
including: the scope and complexity of the services to be provided; the level of assets to be managed; and the overall
relationship with the Advisor. Relationships with multiple objectives, specific reporting requirements, portfolio restrictions
and other complexities may be charged a higher fee.
Rail-Splitter Capital Management LLC
588 Lincoln Avenue, Suite 200, Winnetka, IL 60093
Phone: (773) 294-6099
https://www.rail-splitter.com
The investment advisory fee in the first quarter of service is prorated from the inception date of the account[s] to the end
of the first quarter. Fees may be negotiable at the sole discretion of the Advisor. The Client’s fees will take into
consideration the aggregate assets under management with the Advisor. All securities held in accounts managed by
RSCM will be independently valued by the Custodian. The Advisor will conduct periodic reviews of the Custodian’s
valuation to ensure accurate billing.
The Advisor’s fee includes securities transaction costs, and other securities transaction service fees described in Item
5.C below. However, the Advisor shall not receive any portion of these commissions, fees, and costs.
Use of Independent Managers – As noted in Item 4, the Advisor may implement all or a portion of a Client’s investment
portfolio utilizing one or more Independent Managers. To eliminate any conflict of interest, the Advisor does not earn
any compensation from an Independent Manager. The Advisor will only earn its investment advisory fee as described
above. The Advisor will allocate a portion of the advisory fee collected to the Independent Manager pursuant to the
terms of the executed agreement between the Advisor and the Independent Manager. The total blended fee, including
the Advisor’s fee and the Independent Manager’s fee, will not exceed 3.00% annually.
B. Fee Billing
Investment Management Services
Investment advisory fees are calculated by the Advisor or its delegate and deducted from the Client’s account[s] at the
Custodian. The Advisor shall send an invoice to the Custodian indicating the amount of the fees to be deducted from
the Client’s account[s] at the respective quarter end date. The amount due is calculated by applying the quarterly rate
(annual rate divided by 4) to the total assets under management with RSCM at the end of each quarter. Clients will be
provided with a statement, at least quarterly, from the Custodian reflecting deduction of the investment advisory fee.
Clients are urged to also review and compare the statement provided by the Advisor to the brokerage statement from
the Custodian, as the Custodian does not perform a verification of fees. Clients provide written authorization permitting
advisory fees to be deducted by RSCM to be paid directly from their account[s] held by the Custodian as part of the
investment advisory agreement and separate account forms provided by the Custodian.
Use of Independent Managers – For Client accounts implemented through an Independent Manager, the Client’s overall
fees will include The Advisor’s investment advisory fee (as noted above) plus investment management fees and/or
platform fees charged by the Independent Manager. The Independent Manager will assume the responsibility for
calculating the Client’s fees and deducting all fees from the Client’s account[s].
C. Other Fees and Expenses
Clients may incur certain fees or charges imposed by third parties in connection with investments made on behalf of
the Client’s account[s]. The Advisor includes Covered Costs as part of its investment advisory fee through the
Advisor’s Wrap Fee Program. Securities transaction fees for Client-directed trades may be charged back to the Client.
The Client will also be responsible for certain costs through the custodian including trade-away fees, margin interest,
cashiering fees (ie. Electronic funds and wire transfer fees), custody fees for non-publicly traded securities, and
administrative fees (ie. Transfer taxes, odd-lot differentials, certificate delivery fees, reorganization fees). Please see
Item 4.D. above as well as Appendix 1 – Wrap Fee Program Brochure.
D. Advance Payment of Fees and Termination
Investment Management Services
RSCM is compensated for its investment management services at the end of the quarter after services are rendered.
Either party may terminate the investment advisory agreement, at any time, by providing advance written notice to the
other party. The Client may also terminate the investment advisory agreement within five (5) business days of signing
the Advisor’s agreement at no cost to the Client. After the five-day period, the Client will incur charges for bona fide
advisory services rendered to the point of termination and such fees will be due and payable by the Client. The Client’s
investment advisory agreement with the Advisor is non-transferable without the Client’s prior consent.
Use of Independent Managers – In the event that the Advisor has determined that an Independent Manager is no longer
...