Item 5 - Fees and Compensation
General Fee Information
Clients enter into one of two fee arrangements. Clients may pay management fees
to Wallace Hart separately from the brokerage expenses of the account.
Accordingly, client accounts pay a management fee, plus the cost of transactions in the
account. The brokerage expenses may take the form of asset-based pricing, meaning
that the broker/dealer charges the account a flat-rate percentage to cover all brokerage
expenses, or these expenses may be assessed on a per-trade basis. Please see Item 12
- Brokerage Practices for additional information.
The fees noted above are separate and distinct from the internal fees and expenses
charged by mutual funds, ETFs (exchange traded funds) or other investment pools to
their shareholders (generally including a management fee and fund expenses, as
described in each fund’s prospectus or offering materials). The client should review all
fees charged by funds, brokers, Wallace Hart and others to fully understand the total
amount of fees paid by the client for investment and financial-related services.
Financial Planning Fees
If Wallace Hart provides stand-alone financial planning services to clients, these fees will
be negotiated at the time of the engagement for such services and are normally based
on the scope of the engagement.
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Portfolio Management Fees
The annual fee schedule for all accounts for which Raymond James & Associates, Inc.,
member New York Stock Exchange/SIPC (“Raymond James”) serves as custodian,
based on a percentage of assets under management, is as follows:
Portfolio Asset Value Annual Fee Rate
$0 - $999,999 1.75%
$1,000,000-$2,999,999 1.50%
$3,000,000-$4,999,999 1.35%
$5,000,000-$9,999,999 1.25%
$10,000,000+ 1.00%
The annual fee schedule for all accounts for which either Fidelity Institutional Wealth
Services (“Fidelity Investments”) or TIAA (“TIAA”) serves as custodian, which generally
includes 403(b), 457 and 401(a) accounts and other employer-sponsored accounts, based
on a percentage of assets under management, is as follows:
Portfolio Asset Value Annual Fee Rate
$0 - $999,999 1.00%
$1,000,000-$2,999,999 0.85%
$3,000,000-$4,999,999 0.75%
$5,000,000-$9,999,999 0.65%
$10,000,000+ Negotiable
Wallace Hart may, at its discretion, make exceptions to the foregoing or negotiate special
fee arrangements where Wallace Hart deems it appropriate under the circumstances.
Portfolio management fees are generally payable quarterly, in advance. Partial periods
will be prorated based on the portfolio asset value at the beginning of the period. If
management begins after the start of a quarter, fees will be prorated accordingly. Fees
are normally debited directly from client account(s), unless other arrangements are made.
Either Wallace Hart or the client may terminate their Investment Management Agreement
at any time, subject to any written notice requirements in the agreement. In the event
of termination, any paid but unearned fees will be promptly refunded to the client based
on the number of days that the account was managed, and any fees due to Wallace Hart
from the client will be invoiced or deducted from the client’s account prior to termination.
Fees for Pooled Investment Vehicle Advisory Services
The Offshore Fund generally pays to Wallace Hart an annualized management fee of up
to two percent (2%) of the net asset value of each investor’s capital accounts, and with
1792 ALYSHEBA WAY, SUITE 390 // LEXINGTON, KY 40509
MAIN: 859.300.3030 // TOLL FREE: 844.253.5455 // FAX: 859.300.3025
wallacehart.com
respect to certain of the Onshore Fund’s investors, the Onshore Fund generally pays to
Wallace Hart an annualized management fee of up to two percent (2%) of the net asset
value of such investors’ capital accounts, each as set forth below, and as further described
in the each Fund’s offering documents (collectively, the “Management Fee”).
The Management Fee is paid quarterly in advance and is deducted from the applicable
Fund. Generally, the Funds pay the Management Fee on capital committed by certain of
the Funds’ investors and called by the General Partner to make investments (“Called
Capital”) for the term of the Funds. The Management fee is generally subject to waiver
or reduction by the General Partner in its sole discretion, including in connection with
investments made by Wallace Hart and any related persons. In the event of termination
of either Fund Agreement, the Management Fee will be prorated as applicable. Any paid
but unearned fees will be promptly refunded to the applicable Fund, and any fees due to
Wallace Hart from the applicable Fund will be invoiced or deducted from such Fund prior
to termination.
The Funds are responsible for their organizational expenses, including the fees, costs,
and expenses of and incidental to the formation, qualifications to do business, and fund
raising of the Funds and the General Partner. In addition, the Funds are responsible for
their ordinary operating expenses, including, without limitation, the Management Fee, as
applicable; fees of the Funds’ independent auditors and administrator and custodial fees;
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