Fees and Account Administration

Cutler Capital believes money managers should be compensated based on their performance. Fees and costs for qualified clients* consist of:

Minimum Management Fee: At the end of each quarter, a minimum management fee equal to the greater of $750 or 1/8% of the account's end-of-quarter net asset value is due. On an annual basis, the fee equals $3,000 or 1/2% of the account’s average end-of-quarter net asset value for the annual reporting period, whichever is greater.

Incentive Performance Fee: At the end of each calendar year, an incentive performance fee is calculated as follows: 11% of the increase in an account's net market value at the end of the calendar year, with adjustments for deposits, withdrawals and trading costs paid during the year (see Chart 4.). The increase in net asset value used to calculate the fee includes realized and unrealized gains or losses, and interest and dividend income. If net asset value decreases for the year, or the amount of the minimum management fee exceeds the incentive fee, Cutler Capital will earn no incentive fee.

PLEASE NOTE: Clients pay either the minimum management fee or the incentive performance fee, not both, for any calendar year. For example, at the end of each calendar year, if the annualized minimum management fees exceed the calculated incentive fee amount, only the minimum management fee is paid (for the final quarter) and no incentive performance fee will be earned. If the incentive performance fee exceeds the annualized minimum management fee, the incentive fee will be owed, minus the minimum management fees already paid during the year.

View Chart 4: Examples of Cutler Capital Management’s fee structure

Trading costs: Our clients pay commissions and trading costs directly from the assets (cash accounts) within the client accounts held by the custodian. Trading costs are passed along at net cost - there is no markup by Cutler Capital. Trading costs are deducted before the performance and the incentive performance fee are calculated.

*To be eligible for the fee structure outlined above, a client must be a "qualified client," as defined in Rule 205-3 of the Investment Advisers Act of 1940. A "qualified client" is an individual or company that immediately after entering into an investment contract has at least $1,000,000 under management with the firm, or be an individual or company with a net worth (or a joint net worth if the investor's spouse is included) exceeding $1,500,000 immediately before entering into the management contract. "Net worth" for these purposes means the fair market value of total assets, including investments, homes, home furnishings and automobiles, minus total liabilities. For individuals not meeting the definition of a "Qualified Client" we generally negotiate a fixed fee schedule, based on assets under management.

Account Administration
Assets for individually managed accounts are held in a separate custodial account in each client’s name at a major brokerage firm. Currently we use Smith Barney, a subsidiary of Citigroup, for custodial services. We are authorized to buy and sell securities in the client’s custodial account, and cannot transfer or withdraw funds or securities, except for the payment of agreed upon investment management fees.