Item 5 – Fees and Compensation
Mutual Fund: As the investment adviser to the Mutual Fund, Longboard is entitled to receive a
unitary management fee for the services and facilities it provides to the Mutual Fund at the
annual rate of 1.99% of the Mutual Fund’s average daily net assets. Out of the unitary
management fee, Longboard pays substantially all expenses of the Mutual Fund, including the
cost of the transfer agency, custody, fund administration, audit, legal, and other services except
for interest expenses, distribution fees or expenses, brokerage expenses, taxes and extraordinary
expenses not incurred in the ordinary course of the business of the Mutual Fund. Longboard’s
unitary management fee is designed to pay substantially all the expenses of the Mutual Fund and
to compensate Longboard for providing services to the Mutual Fund. Acquired fund fees,
expenses related to investments in short positions, interest expenses, and dividends, if any, will
be borne by the Mutual Fund and its shareholders and will not be included in the unitary
management fee.
Longboard’s annual fee shall be calculated and paid monthly by the Mutual Fund’s Administrator,
Ultimus Fund Solutions. Approval is required by both Longboard and Ultimus prior to payment
being sent.
Clients also have the opportunity to purchase the Mutual Fund directly through the Transfer
Agency at Ultimus or through other broker dealers. If Longboard’s Mutual Fund is purchased
directly or through a broker-dealer or other financial intermediary, and assets in the fund increase
from that purchase, Longboard will receive income from the Mutual Fund for advisory fees which
are calculated using the Mutual Fund’s assets under management.
For a complete description of the fees and expenses associated with an investment in the Mutual
Fund(s), please refer to the Prospectus.
For more information on Longboard’s brokerage practices, please see Item 12 below.
Managed Accounts:
Advisory Fees
Longboard Wealth Management provides discretionary and non-discretionary investment
management services for a fee based on assets under management. The Firm charges a tiered
annual advisory fee according to the following schedule:
Assets Under Management Annual Fee
$0 – $3,000,000 0.90%
$3,000,001 – $6,000,000 0.80%
$6,000,001 – $10,000,000 0.60%
Over $10,000,000 0.50%
The advisory fee is billed quarterly in advance based on the market value of assets under
management on the last business day of the preceding calendar quarter. Fees are typically
deducted directly from client accounts with client authorization.
Minimum Fee
The Firm maintains a $15,000 minimum annual advisory fee. Accounts that do not generate at
least the $15,000 annually under the asset-based fee schedule will be charged the minimum fee.
This minimum fee may be waived at the Firm’s discretion.
Complex Situations
For certain clients with complex financial circumstances, including multi-entity structures,
alternative investments, or significant advisory demands, the Firm may charge a flat annual
advisory fee starting at $25,000.
Proprietary Fund Investments
Client assets invested in the Longboard Mutual Fund will be included in assets under
management for purposes of calculating advisory fees. Longboard serves as the investment
adviser to the Longboard Mutual Fund and receives management fees and other expenses at the
fund level for providing advisory services to the Fund. Accordingly, Longboard may receive
compensation:
• through the advisory fee charged on client assets, and
• through management fees received from the Mutual Fund.
Clients may also incur brokerage commissions, custodial fees, transaction costs, and expenses
of third-party investment products for assets invested outside the Mutual Fund.
Certain clients may have a portion of their assets invested in the Longboard Mutual Fund, for
which Longboard Asset Management serves as the investment adviser. In such cases,
Longboard receives compensation in two ways: (i) the advisory fee charged to the client for
investment management services, and (ii) the management fees and expenses paid by the
Mutual Fund to Longboard as the fund’s adviser.
As a result, assets invested in the Longboard Mutual Fund are subject to both the advisory fee
charged by Longboard and the management fees and expenses of the Mutual Fund. This results
in higher total compensation to Longboard than if the client’s assets were invested in other
investments that do not pay such management fees to the Firm.
This arrangement creates a conflict of interest because Longboard has a financial incentive to
recommend or allocate client assets to the Mutual Fund rather than to other investment options
that do not provide additional compensation to the Firm. Clients should review the Mutual Fund’s
prospectus for a description of the fees and expenses charged by the Fund.