DISCLOSURE  STATEMENT
Tricord Investment Advisors, Inc.
P.O. Box 3085
Kennesaw, GA  30156
404-890-5588

 

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
Portion $500,001 - $1,000,000 under management: 1.00% per year
Portion $1,000,001 - $5,000,000 under management: .75% per year
Portion over $5,000,001 under management: To be negotiated

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.
  
2. Types of Clients- Tricord provides their services to individuals, pension and profit sharing plans, trusts, estates, corporations, non-incorporated businesses, and not-for-profit organizations.

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 U.S. government securities.

4. Methods of Analysis, Sources of Information, and Investment Strategies -
A.   Analysis: Mr. McDonald utilizes both technical and fundamental analysis.

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.
D.   Separately managed accounts may be employed for those clients who have a buy and hold strategy.  Depending on the needs of the client and the performance of the particular investment, he may utilize both a long term purchase strategy (securities held at least a year) or a short term purchase strategy (securities held less than a year).  He does not utilize short sales, margin transactions, or naked option writing strategies.

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 BackgroundTricord’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), Kennesaw, GA. LJFA is a life and health insurance, and employee benefits firm.

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.