Item 5 ‐ Fees and Compensation
Description
The fees for NAM's services are calculated based upon the value of investments in a client's account.
NAM’s current standard fee schedule is 1.00% on all assets. NAM charges a minimum fee of
$50,000 that may be waived at NAM’s discretion. Fees may be negotiable under certain
circumstances at the discretion of NAM management. A historic standard fee schedule may be used
for certain existing client accounts, and such fees may be lower than the fees charged by NAM’s
current fee schedule.
For wrap fee programs, the client may pay a single fee or a fee plus transaction fee (referred
to as a “wrap fee”) to the wrap sponsor. The fee charged by the wrap fee sponsor is typically
based upon a percentage of the market value of the account. For those wrap programs where
the client pays a fee plus transaction fee, the transaction fee is based on the number of shares
traded typically subject to a minimum transaction fee. The total wrap fee covers portions of
or all services rendered by both the wrap sponsor and NAM. Generally, fees covered by the
total wrap fee paid are for: 1) selection of NAM as investment adviser; 2) NAM’s fee to
manage the client’s portfolio; 3) periodic evaluation and comparison of account performance;
and 4) custodial services. The fee does not cover broker‐dealer commissions for execution of
trades with broker‐dealers other than the wrap sponsor. See Other Fees for further
discussion regarding broker‐dealer commissions for wrap fee programs.
Fee Billing
Fees are generally billed by NAM on a quarterly basis, following the end of the calendar quarter for
which services are provided. Clients may choose to pay such invoices from the assets of the account
managed by NAM or from another source. For accounts initiated or terminated during a calendar
quarter, the fee will be calculated on a pro‐rata basis. NAM may also adjust the fee for contributions
or withdrawals it deems significant to the account. In certain circumstances, a client may be billed
prior to services being rendered, in which case the investment management agreement provides
that the fees will be adjusted on a pro‐rata basis and payable to NAM at the date of the contribution
or refunded by NAM at the date of the withdrawal.
Wrap program fees are generally determined and billed by the wrap sponsor. Further, certain wrap
sponsors may provide for clients to pre‐pay NAM’s fees in advance. For those sponsors that pre‐pay
NAM’s fee, the fees are generally paid by the sponsor at the beginning of the quarter and are for that
quarter. Any refund due to a client for termination of NAM’s services before the end of the quarter
is deducted from the next quarterly fee due to NAM from the wrap sponsor. The amount of any such
refund is determined by the wrap sponsor. The wrap sponsor is responsible for crediting any fees
due to its clients.
NAM uses pricing information provided by FT‐Interactive Data (NAM’s “Primary Pricing
Source”) for purposes of valuing client portfolios for investment performance calculation
purposes. Unless otherwise directed by the client, NAM uses pricing information provided
by the client’s custodian for fee billing purposes. In the rare instance where the
custodian’s pricing service and the Primary Pricing Source are unable to obtain a price,
where a security has halted trading, or where the portfolio manager strongly believes a
security is not being priced fairly, NAM (under the direction of the portfolio manager) will
determine a fair value for that security, based on the firm’s knowledge of the security,
current market conditions and any other considerations deemed appropriate. No single
factor or approach will be implemented by NAM in every case of determining a fair value
for a security, as each individual case is unique in nature. NAM’s objective in determining
a fair value price will be to determine a price NAM believes it could reasonably receive
upon a current sale.
The contract for management services between a client and NAM may generally be terminated at
any time upon 30 days advance written notice from one party to the other. Upon termination of
any account, any earned, unpaid fees will be due and payable and any prepaid, unearned fees will
be promptly refunded through the effective date of the termination.
Other Fees
There are other fees or expenses associated with client accounts beyond fees paid to NAM for
providing investment management services. NAM’s fees do not include brokerage commissions,
transaction fees, and other related expenses paid to brokers which will be incurred by the client.
NAM does not accept custody of client assets and therefore requires its clients to separately engage
custodians. Clients may incur certain other charges imposed by such custodians. Mutual funds and
exchange traded funds also charge other fees and expenses, which are disclosed in a fund’s
prospectus. Such charges, fees and commissions are exclusive of and in addition to NAM’s fee, and
NAM shall not receive any portion of these commissions, fees and costs. For more information
about brokerage, see Item 12 below.
Further, when evaluating a wrap fee program, a client should recognize that brokerage
commissions for the execution of transactions in the client’s account are not negotiated by
NAM. Trades are generally expected to be executed only with the wrap sponsor’s broker‐
dealer with which the client has entered into the wrap fee program. Accordingly, the client
may wish to satisfy himself or herself that such broker‐dealer can provide adequate price and
execution of most or all transactions. In the event, NAM utilizes a different broker‐dealer than
the wrap sponsor as NAM deems it is in the best interest of the wrap clients to trade the
account with a different broker‐dealer, the client may incur commission costs in addition to
the wrap fee.