ITEM 5 – FEES AND COMPENSATION
Fees In General
As a general matter, fees charged by the Archstone Funds include a base percentage of assets under
management, and solely with respect to the Private Funds, may also include an incentive allocation/fee
structured in a manner to comport with Rule 205-3 of the Investment Advisers Act of 1940, as amended (the
“Advisers Act”).
Private Fund Fees
The management fees of the Private Funds are generally paid quarterly in advance, and are prorated for
contributions made during the quarter. With respect to the Private Funds, any unearned portion of the prepaid
quarterly Management Fee for any fiscal quarter that is less than three months will be refunded to the applicable
Fund.
Specifically, Archstone is paid a quarterly asset-based management fee, in advance, generally between 1.0-1.5%
annually, as more fully described in the Private Fund’s relevant offering and/or operational documents.
Archstone may also receive a performance-based quarterly preferred profit participation or annual incentive
allocation/fee with respect to certain of the classes/series offered by certain of the Private Funds, generally 5%
of investment performance that may be subject to a loss carry forward/high water mark, as described in the
relevant offering and/or operational documents. Such management and incentive allocation/fees are calculated
after application of the underlying manager fees and expenses. Investors and prospective investors should refer
to the offering documents for the applicable Private Fund for a detailed description of its respective fee
schedule.
It should be noted that the management fee applicable to Archstone Partners, L.P. is charged solely to investors
admitted to this Partnership on or after January 1, 2010. These investors are charged a management fee in lieu
of the preferred profit participation described below.
Investors that were admitted to Archstone Partners, L.P. before January 1, 2010 are charged a quarterly
preferred profit participation with respect to their current interests or any additional interests they acquire in the
Partnership. Archstone Management Company, LLC is allocated the preferred profit participation at the end of
each quarter, based on a percentage of the relevant capital account balances as of the last day of such calendar
quarter. Such amount will be payable out of the investor’s cumulative net profits, if any, at the end of a fiscal
period in a tax year. To the extent that an investor in the Partnership has insufficient net profit to pay the
preferred profit participation, then such unpaid amount will be deferred to a suspense account and will be
payable in later fiscal periods when the Partnership has sufficient net profits. If an investor completely
withdraws from the Partnership when there is a balance in the suspense account, that investor’s suspense
account is forfeited and that amount is paid to Archstone Management Company, LLC.
With respect to terminating the investment advisory relationship, withdrawals/redemptions from the Archstone
Funds are subject to significant conditions and restrictions, which are set forth in the relevant Archstone Fund’s
governing documents. Such conditions, restrictions, and limitations may include, without limitation:
o The condition that withdrawal/redemption requests be properly submitted in accordance with the
relevant Archstone Fund documents and in a timely manner;
o The condition that any “lock-up period” applicable to the interests/shares has expired;
o The condition that withdrawals/redemptions, the calculation of net asset value, or the ability of
investors to withdraw/redeem have not been suspended (in whole or in part) by Archstone;
o The condition that payment of withdrawal/redemption proceeds may be deferred, if the relevant
Archstone Fund is unable to liquidate its investments in Portfolio Funds in a timely manner;
o Restrictions on the timing of withdrawal/redemption payments;
o Limitations on the amount paid to a withdrawing/redeeming investor due to \underlying Portfolio Fund
hold backs or reserves for certain expenses, Archstone Fund liabilities, and contingencies, among other
things; and
o Limitations on the method of withdrawal/redemption payments (i.e., in cash or in kind).
In connection with the wind down and the compulsory withdrawal/redemptions of investors in the Archstone
Funds commencing on June 30, 2017, there were no withdrawal/redemption fees assessed. Further, while
Archstone may waive or modify withdrawal/redemption terms for any investor in the Archstone Funds, all such
investors that have been compulsory withdrawn/redeemed remain subject to the same liquidity terms and return
of capital timeline.
Private Fund Expenses
The Archstone Funds will bear their own expenses including, but not limited to, taxes, organizational, offering
and investment-related expenses, administrative expenses, legal expenses, accounting expenses, audit and tax
preparation expenses, insurance, corporate licensing, custodial fees and other direct expenses associated with the
operation of the Archstone Funds.
Subject to the expense reimbursement provisions for each Private Fund, the below-referenced reimbursable
expenses borne by the Private Funds include, but are not limited to: (i) salaries and compensation of employees
of the Archstone Funds or Archstone and its affiliates (other than Alfred J. Shuman) (which includes employee
bonuses and incentives as appropriate, employee insurance, payroll taxes and recruiting related expenses); (ii)
expenses incurred by Archstone or the Private Fund in connection with the investments made by the Private
Fund, including, research expenses relating to the selection and on-going due diligence of prospective and
current money managers and the underlying investments made by the Portfolio Funds (i.e., background research
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