5. FEES AND COMPENSATION
The specific manner in which fees are charged by ZCA is established in a Client’s written
agreement with ZCA. ZCA’s fees are negotiable and billed on a quarterly basis, in arrears. Fees
are generally billed and debited from the Client’s account held at custodian. In some instances,
Clients receive a fee invoice and remit payment to ZCA via check or wire. The fee invoice shall
set forth the amount of the fees, the value of the account assets on which the fees are based and
how the fees were calculated. The custodian also must send to the Client a statement, at least
quarterly, indicating all amounts disbursed from the account, including fees paid directly to ZCA
from the Account. We urge you to compare the account statement you receive from your qualified
custodian with the statements we provide to you.
ZCA charges an asset-based fee for its continuous discretionary and non-discretionary advisory
services. Fees are based upon a percentage of the market value of all assets in the portfolio on the
last trading day of each calendar quarter. This fee ranges from 0.20% to 1.00%, depending on the
complexity and nature of the advisory services to be rendered. For purposes of calculating asset-
based fees, Client assets are valued based on the value ascribed to the assets by the Client’s
custodian. However, shares of or interests in mutual funds, hedge funds, private equity funds and
similar pooled investment vehicles will be based on prices provided by the fund itself. In addition,
ZCA may, in good faith, value certain other assets at fair market value, pursuant to its written
valuation procedures.
ZCA’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, third party investments and other third parties such as fees charged by
managers, sub-advisers, 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. Mutual funds exchange traded funds, hedge funds, private equity funds and other
pooled investment vehicles also charge internal management fees, which are disclosed in a fund’s
prospectus or other offering materials. Certain of our privately offered funds, available only to
“Qualified” investors (as defined by the Securities and Exchange Commission) charge a
performance fee, which is a fee charged in addition to our management fee if the fund reaches a
level of performance stated in the fund’s offering documents. Item 12 further describes the factors
that ZCA considers in selecting or recommending broker-dealers for Client transactions and
determining the reasonableness of their compensation (e.g., commissions).
Similarly, ZCA may invest (or recommend the investment of) Client assets with sub-advisers or
third-party money managers through separate or other accounts. In addition to ZCA’s management
fees, these assets will be subject to custodian fees (transactional or asset based) as well as the
advisory or similar fees charged by these sub-advisers; ZCA does not reduce its management fees
to offset the effect of such fees, unless required by applicable law. Such charges, fees and
commissions charged by sub-advisers or third-party money managers are exclusive of and in
addition to ZCA’s fee, and ZCA shall not receive any portion of these commissions, fees, and costs.
Cash management
As part of the investment process, ZCA will routinely maintain and actively manage a percentage
of each client’s portfolio in cash or cash equivalents. Such cash is generally used to meet short
term client cash needs or may be maintained to pay for additional investments in securities as
needed. Clients will pay management fees on cash assets even though they may earn little to no
interest and cash and cash equivalent assets generally do not appreciate in value.