|
The date of this Disclosure Statement is January 1st, 2010. This
Disclosure Statement is delivered in accordance with the Investment Advisers
Act of 1940. The information disclosed within has not been approved or
verified by the Securities and Exchange Commission. This Disclosure Statement
provides information about Tricord Investment Advisors, Inc., hereafter known
as “Tricord”,
and the nature of their financial planning and investment supervisory
services. Tricord is required to provide each client and prospective client
with this Disclosure Statement prior to entering into any written or oral
investment advisory contract. Clients may, however, upon request, terminate
the contract without charge within five business days after signing. Clients
will also be provided with copies of this Disclosure Statement whenever
requested. I. Advisory Services and Fees-
Tricord provides the following services: (a) Approximately 90% of billings
result from providing investment supervisory services. This service is
provided by billing a percentage fee based on assets under management. (b)
Approximately 10% of billings result from consultations to provide advice on
matters not involving securities. The latter service is the financial planning
service provided by Tricord, and it is provided by billing on an hourly or
fee basis. The investment supervisory service provided by Tricord involves
the selection, acquisition, and disposition of investment products
appropriate for the investment objectives of the client. The service includes
discretionary authorization from the client to give instructions with respect
to purchases and sales. However, Tricord is not authorized to take possession
of client funds or investments at any time. The fee for this service is based
on the size and the investment objectives of the account. Tricord also offers an investment supervisory service called the
Buy-Write strategy which seeks to provide consistent income derived from
selling put or call options that are written against a stock or LEAPS (Long
Term Equity Anticipation Security) positions.
This service includes discretionary authorization from the client to
give instructions with respect to purchases or sales The fee is calculated and
payable daily or monthly in advance and is based on the following rate
schedule: On the first $500,000 of assets under management: 1.50% per year In addition to the advisory fee listed above, there may be fees
per account charged by the custodian. Any fees will be billed as incurred
along with any transaction costs associated with the purchase and sale of
securities in the account, and any charges or expenses resulting from
maintenance of the account. Any fees billed to Tricord will be charged as a
pass through reimbursable expense. These fees are subject to change as
dictated by the custodian. Mutual funds and exchange traded funds (ETF’s) have operating
expenses which include a fee paid to an investment manager or management
team. Clients using mutual funds or ETF’s incur such fees, although these
fees are internal to the operation of the investments and are not separately
billed to the client. Termination of this service may be accomplished, for any reason,
by either party giving written notice to the other. Notice given by the
client is effective upon receipt by the firm. Notice given by the firm is
effective thirty days after receipt by the client. In the event of
termination, the regular management fee is refunded pro-rata from the date of
termination to the date to which service has been prepaid. The firm’s sole compensation for the investment supervisory
service is from the fees charged to clients. No commissions or other
compensations, direct or indirect, are received from the investment product
suppliers or other parties used in connection with this service. Tricord may furnish investment analysis and advice through
consultations on an hourly basis, which would be billed at the rate of $135
per hour. Clients may also receive consultation regarding financial topics
not involving investments. This financial planning service is provided on an
hourly basis, with the appropriate charges being the following: Financial
Analysis and Consultation: $135 per hour; Administrative Services (such as
typing, collating, or computer assistance): $25 per hour. Tricord may also
offer financial planning services on a fixed fee basis. The fee for
this service depends on the complexity of the client’s situation and
typically ranges from $1,000 to $3,000. Financial planning services, which are independent of any asset
management services, evaluate specific areas to develop financial strategies
tailored to fit the needs of the client. These areas may include the client’s assets and liabilities, cash-flow,
insurance coverage, retirement planning, education planning, estate planning,
and investment planning. These areas and other relevant factors are discussed
with the client to develop an assessment of the client’s current and long-term financial needs.
Major emphasis is placed on identifying goals, assessing progress toward
reaching those goals, and developing measures for achieving those objectives.
Continuing services include, but are not limited to, reviewing and updating
the client’s written plan on a
periodic basis to update the analysis and to determine if additional or
alternative strategies need to be employed by the client. Tricord’s
investment supervisory fees and financial planning fees are negotiable. 3. Types of Investments- Tricord offers advice
regarding exchange-listed equity securities, securities traded
over-the-counter, corporate debt securities, separately managed accounts,
mutual funds, and 4. Methods of Analysis, Sources of Information, and Investment
Strategies - 1. Sources
of Information: Mr. McDonald obtains information and data from various sources,
such as Morningstar, Compound Stock Earnings, Vector Vest, PowerOptions, as
well as annual reports and prospectuses. C. Strategies: Mr. McDonald employs a strategy of
tactical asset allocation, sector rotation and market timing, utilizing
primarily Exchange Traded Funds, individual stock holdings, options, and
closed-end bond funds. He may also utilize inverse funds as market
conditions dictate. 5. Education and Business Standards -
Persons associated with Mr. McDonald must have adequate credentials in the form
of appropriate college degree, professional designation, or a minimum of two
years of work experience in their respective fields. 6. Education and Business Background –Tricord’s investment policies are determined by Lawrence
J. McDonald, Jr., who has been the President of Tricord since its
inception. Mr. McDonald has a BAET degree from Southern Technical
Institute, and has served as an investment advisor to clients since
1995. He has also completed several courses required for the Certified
Financial Planner designation. Mr. McDonald was associated with USAllianz Securities, Inc. as an investment adviser
representative and registered representative from January 2001 through July
2005. Prior to his association with USAlliance,
he worked with Fortis Investors, Inc. in the same capacity from March 1999
through December 2000. 7. Other Business Activities-Mr.
McDonald is the owner of L-J Financial Associates, Inc.(LJFA),
8. Other Financial Industry Activities or Affiliations-None 9. Participation or Interest in Client Transactions - From
time to time officers and employees of Tricord may invest in the same
securities as are employed in its investment management service. Due to the
size of these investments in relation to the size of the securities, it is
not anticipated that such investment activities will have a material impact
on the value of securities purchased or sold. 10. Conditions for Managing Accounts - A
minimum size of $50,000 applies to managed accounts.
This amount is negotiable at the discretion of Tricord. 11. Review of Accounts - Clients who have
contracted for ongoing financial planning services receive annual reviews, if
they so desire. However, if circumstances dictate, the client’s situation
will be reviewed as often as required. Regarding reports that are provided,
financial planning clients receive a written financial plan analysis. Updated
analysis reports are provided as dictated by the individual client’s
situation. Investment management clients’ accounts are reviewed monthly to
determine if each investment continues to be appropriate and if there are any
changes in the client’s circumstances which would alter the choice of
investments. As a part of the overall investment management program, there is
a continuing evaluation of the investments used in client accounts.
Investment management clients receive quarterly reports. Periodic reviews of
the goals and circumstances of investment management clients are conducted as
often as necessary. Clients are encouraged to have such reviews on at least
an annual basis. 12. Investment or Brokerage Discretion - In
its investment supervisory service, Tricord has the authority, without
specific client consent, to buy and sell securities and to determine what
amount of securities to buy and sell. Client accounts are established
either at FolioFn, Curian
Capital, Interactive Brokers, or TD Ameritrade. The FolioFn
platform allows for customized individual equity sector basket holdings
employed primarily in sector rotation and dynamic asset allocation
strategies, and are traded in two daily window trades. Curian Capital
provides individual stock holdings through accounts separately managed by
institutional money managers. TD Ameritrade is used in order to have
access to a platform that will accommodate certain qualified retirement
plans. Interactive Brokers is used for strategies that involve option. All
platforms are utilized to minimize the transaction costs to the client.
13. Additional Compensation-No
agreements have been made for additional compensation related to Tricord’s advisory services outside those already
mentioned in preceding paragraphs 14. Balance Sheet - A balance sheet is not
provided, as Tricord does not have custody of client funds or securities and
does not require prepayment of more than $500 in fees per client and six or
more months in advance. |