Item 5 Fees and Compensation
A. ACM’s fees for services provided to APDF and APDF Cayman include a
management fee (the “Management Fee”), which is a fixed, asset-based fee, and
incentive compensation (“Incentive Compensation”), which is a performance-
based allocation (in the case of APDF) or a performance-based fee (in the case of
APDF Cayman). ACM’s fees for services provided to Aetna 1099 Fund include a
management fee (the “Investment Management Fee”), which is a fixed, asset-
based fee.
The Management Fee is generally between 1% and 1.5% per annum of the net
asset value of each investor's investment in APDF or APDF Cayman, as
applicable, calculated and payable monthly in arrears. The Incentive
Compensation for APDF and APDF Cayman is generally allocable or payable
annually. The Incentive Compensation for APDF and APDF Cayman is generally
between 5% and 10% of the net realized and unrealized capital appreciation
attributable to each investor's investment. The Incentive Compensation for APDF
and APDF Cayman is subject to a cumulative “high water mark,” requiring the
recovery of an investor's prior losses before such allocation or fee is made or paid.
The Investment Management Fee is 1.0% per annum of the net asset value of the
Aetna 1099 Fund, calculated and payable monthly in arrears.
ACM may waive, reduce or calculate differently the APDF and APDF Cayman
Management Fee and Incentive Compensation with respect to certain investors
(including, without limitation, to ACM itself and any of its affiliates, in their
capacities as investors).
Because APDF, APDF Cayman and Aetna 1099 Fund invest in underlying hedge
funds that typically have their own management, incentive, and other fees,
investors will be indirectly subject to fees and expenses of such underlying hedge
funds as well as the fees and expenses of APDF, APDF Cayman or Aetna 1099
Fund, as applicable.
No fees are paid by the Affiliated Client with respect to services provided by
ACM.
B. ACM deducts fees from the assets of APDF, APDF Cayman and Aetna 1099
Fund on a monthly basis. For APDF and Aetna 1099 Fund, investors’ capital
accounts are debited their pro rata portion of the amount of the fees owed. For
APDF Cayman, both the management and incentive fees are debited from the
value of APDF Cayman, resulting in a pro rata diminution in the value of each
investor’s shares. With respect to the Affiliated Client, ACM neither deducts fees
nor bills the client for its services.
C. Each of APDF, APDF Cayman and Aetna 1099 Fund generally pays all of the
expenses incurred in its operation, including, but not limited to: (i) fees for
ACM Brochure March 2017.docx
Form ADV: Part 2A Page 6
administrative, custodial, legal, audit and tax services; and (ii) the cost of
insurance, background checks, litigation and other extraordinary matters. Each of
APDF, APDF Cayman and Aetna 1099 Fund also pays the management fees and
incentive compensation owed to managers of underlying hedge funds in its
portfolio, as well as investment-related expenses incurred in cash management.
All of the above-described fees and expenses result in the diminution of the net
asset value of APDF, APDF Cayman and Aetna 1099 Fund, and, therefore, cause
pro rata reductions in the value of investors’ interests in these entities on a
monthly basis.
ACM may use placement agents to assist in the placement of interests in APDF,
APDF Cayman or Aetna 1099 Fund. The placement agents would generally be
entitled to placement fees, the amount of which may depend on the size of an
investment. The placement fees are paid by ACM and are not an expense paid by
APDF, APDF Cayman, Aetna 1099 Fund or their respective investors.
To date, no brokerage commissions have been incurred by APDF, APDF Cayman
or Aetna 1099 Fund because the nature of their investment activities do not
require the payment of brokerage commissions.
D. Fees are paid in arrears; no mechanism for a refund is required.
E. Neither ACM nor any of its supervised persons accepts compensation for the sale
of securities or other investment products.