ITEM 5: FEES AND COMPENSATION
I. Managed Accounts
As compensation for IndexIQ’s management of client accounts (each, an “Account”), clients
generally pay IndexIQ a Management Fee (defined below) and/or a fixed fee. IndexIQ’s fees
generally will be deducted directly from the client’s custodial accounts. Clients should be aware
of their responsibility to verify the accuracy of the fee calculation submitted to the custodian by
IndexIQ, as the custodian will not verify whether the fee has been properly calculated. Where
IndexIQ’s fees are not deducted directly from the client’s custodial account, IndexIQ’s fees will
be invoiced.
Generally, fees are negotiated on a case-by-case basis with the client and are determined based
upon many factors, including the amount of work involved, the assets placed under management
and the attention needed to manage the Account. Actual fees may be higher or lower than the range
provided below based on individual client negotiations.
Generally, a management fee (the “Management Fee”) for most managed accounts in non-
Sponsored Programs typically do not exceed 45 basis points based on the amount of assets under
management and is generally negotiable for larger accounts. The Management Fee typically will
be charged monthly or quarterly, as of the last day of each month or calendar quarter, based on the
average assets under management for the period, before reduction for the Management Fee as of
such date. The Management Fee shall be appropriately pro-rated for any termination of the
Account Agreement as of a date other than a calendar quarter-end.
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In certain cases, IndexIQ will agree with a client to a fixed fee to be paid on a monthly or quarterly
basis. The rate of a fixed fee will depend on, among other things, the size of the Account, whether
the client has other assets managed by IndexIQ, and the other terms agreed upon by the client and
IndexIQ. The fee typically will be charged monthly or quarterly, as of the last day of each calendar
month or quarter, based on the average assets under management for the month or quarter, before
reduction for the Management Fee as of such date. The Management Fee shall be appropriately
pro-rated for any termination of the Account Agreement as of a date other than a calendar month-
end or quarter-end.
Where IndexIQ is responsible for pricing a client’s portfolio for fee billing, IndexIQ will generally
use pricing information provided by an independent pricing service. Based on our investment style
and the types of securities in which we generally invest on behalf of our clients, the independent
pricing service is typically able to provide pricing information for securities included within our
clients’ portfolios. In the event an independent pricing service is unable to obtain a price, IndexIQ
will determine a fair value for that security.
II. Sponsored Programs
Wrap Accounts
The SMA Wrap programs described in Item 4 generally provide for an all-inclusive fee that covers
advisory fees, trade execution, reports of activity, custodial services, and the recommendation and
monitoring of investment managers. For IndexIQ’s services as investment manager in the SMA
Wrap programs, IndexIQ receives a portion of the total managed account program fee paid to the
sponsor by the client.
UMA / Model Portfolios
IndexIQ’s compensation for the provision of UMA or Model Portfolios for certain Sponsored
Programs typically do not exceed 45 basis points, generally based on a formula that reflects in part
the amount of assets in accounts managed using the Model Portfolio. The amount of assets in
accounts managed using the Model Portfolio and the value of those assets is determined by the
program sponsor. Fees typically are calculated and paid on a monthly or quarterly basis, in advance
or in arrears, as specified in the relevant program agreement.
Other Sponsored Programs
IndexIQ also participates in Sponsored Programs pursuant to which it enters into advisory
agreements directly with the client of a program sponsor. In these programs, IndexIQ typically is
directed to execute all trades with the program sponsor, consistent with its duty to seek best
execution. IndexIQ expects that in such programs a substantial percentage, if not all, of the client's
transactions will be executed with the program sponsor, as the client generally does not pay
commissions separate from the program fee paid to the sponsor.
While IndexIQ’s compensation in Sponsored Programs may be lower than IndexIQ’s standard
managed account fee schedule for the same strategy, the overall cost of a Wrap or other sponsored
program arrangement may be higher than the client otherwise would experience by paying
IndexIQ’s standard fees and negotiating transactions with a broker or dealer that are payable on a
per transaction basis.
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The management fee for managed accounts in Sponsored Programs typically do not exceed 45
basis points based on the amount of assets invested in the strategy. The amount of assets invested
in the strategy and the value of those assets is determined by the program sponsor. Fees typically
are paid on a monthly or quarterly basis, in advance, valued as of the last business day of each month
or calendar quarter.
III. Registered Funds
For its services to Registered Funds, IndexIQ receives an advisory or subadvisory fee generally
ranging from 0.09% to 0.75% of average daily net assets, payable in arrears on a monthly basis;
however, IndexIQ has entered into fee waivers and/or expense limits that reduce these fees for
certain Registered Funds. The value of a Registered Fund’s assets is determined in accordance
with valuation procedures adopted by IndexIQ and the Registered Fund’s Board. Additional
information regarding fees and the valuation of a Registered Fund’s assets is set forth in the
applicable Registered Fund’s Prospectus.
IV. General Fee Information
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