Item 5: Fees and Compensation
A. Fee Schedule
I. PRIVATE FUNDS
Pursuant to its investment management agreement with each Private Fund, NBAIM receives an
annual management fee (“Management Fee”), the rate of which is based on an investor’s net
investment amount. Net investment amount is generally calculated based on an investor's
contributions, withdrawals and distributions and is not based on capital appreciation or
depreciation in an account. This rate is then applied to the net asset value of each account.
Management Fees may be negotiable under certain circumstances, including for affiliates of
NBAIM. NBAIM or its affiliate acting as general partner or managing member of a Private Fund,
in its discretion, may waive or reduce the Management Fees applicable to all or any of the
investors in each Private Fund or agree with an investor to waive or alter the Management Fee as
to that investor.
NBAIM or its affiliate also receives annual performance-based fees or allocations (“Performance
Fee”) based on the net capital appreciation (i.e., capital appreciation less capital depreciation) of
each investor’s account for certain Private Funds. The Performance Fee is payable only if, and to
the extent that, the net capital appreciation of the investor’s account exceeds any net capital
depreciation accumulated in prior years (as adjusted for withdrawals of capital). NBAIM or its
affiliate acting as general partner or managing member of a Private Fund, in its discretion, may
waive or reduce the Performance Fees applicable to all or any of the investors in each Private
Fund or agree with an investor to waive or alter the Performance Fee as to that investor.
Lower fees for comparable services may be available from other sources. The expenses of a
Private Fund, including the Management Fee and Performance Fee, may constitute a higher
percentage of average net assets than would be found in other investment vehicles not managed
by NBAIM.
Investors should refer to each Private Fund’s Offering Documents for additional or
supplementary information regarding the Private Funds as well as the fees paid by each Private
Fund.
II. SEPARATE ACCOUNTS
Separate Accounts pay a management fee which is generally based on a percentage of the market
value of assets held in the account. Some Separate Accounts also pay a fee based on the
performance of the account. Fees are negotiable and set forth in the investment management
agreement with the client. All U.S. Separate Account clients of NBAIM are Qualified Purchasers
and those charged a performance fee must be eligible to enter into a performance fee
arrangement under the Advisers Act (“Qualified Clients”).
Fees may vary depending on a variety of factors including, but not limited to, the identity of the
portfolio manager or group managing the account, account size and investment objectives.
III. NON-DISCRETIONARY ACCOUNTS
With respect to its Non-Discretionary Accounts, NBAIM receives either a fixed fee or a fee based
on a percentage of the market value of assets held in the account.
B. Payment Method
Calculation and Payment of Fees:
Private Funds— The Management Fee are generally charged to each Private Fund
quarterly. Performance Fees are generally charged at the end of each Private Fund’s
fiscal year or upon withdrawal by an investor from a Private Fund.
NBAIM deducts the Management Fee and Performance Fee directly from each investor’s
account. Investors should refer to the applicable Offering Documents for additional or
supplementary information regarding payment of fees.
Separate Accounts— Management fees are generally charged quarterly at the
beginning of each calendar quarter, based on the market value of the client’s account on
the last business day of the previous calendar quarter. Performance fees, if any, are
generally charged on an annual basis.
Payment of fees for Separate Accounts is generally made upon invoice.
Non-Discretionary Accounts— The payment of fees associated with Non-Discretionary
Accounts vary, but in general are consistent with the basic method described above for
Separate Accounts.
Valuation of Assets—The market value of assets in Client Accounts are primarily based on net
asset value as reported by each Portfolio Manager for the Portfolio Funds and Third Party
Separate Accounts. In general, Portfolio Managers use a third-party administrator to calculate
the official monthly net asset value. NBAIM, alongside the Private Funds’ administrators and
Separate Accounts’ custodians (if engaged by Separate Account clients), review these monthly
calculations.
With respect to its direct trading accounts, the market values of the assets are generally
obtained from various third-party quotation services.
In addition, where significant issues regarding valuation arise that cannot be addressed by the
methods described above, NBAIM will consult with a central valuation committee of the Firm
to evaluate the issues and seek prompt resolution thereof.
C. Other Fees and Expenses
In addition to the management and performance fees paid to NBAIM or its affiliates, clients pay
other fees associated with their accounts and investments. Such fees may include the
following:
Custodial Fees— Private Funds and Separate Account clients may elect to have account assets
held in the custody of a bank, trust company or other entity selected by the Private Fund or the
client (as applicable). The Private Fund or the client will bear any custodial fees associated
with such account. To the extent that cash is held in such accounts and fees are charged by the
provider of such service, the fees so incurred by the Private Fund or the client will be in
addition to the fee payable to NBAIM for the account. See Item 15.
Additional Fees Related to Investments in Portfolio Funds and Third-Party Separate
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