ITEM 5. FEES AND COMPENSATION
Asset-Based Compensation
The asset-based compensation applicable to each client account varies and is described in more detail in the Fund’s
offering memorandum or client’s investment management agreement. The Adviser is paid an asset-based investment
management fee in an amount up to 1.75% per annum of the net assets of the particular client account. The
management fees for the Funds are charged quarterly in advance, based on the value of the assets as of the first
business day of each quarter and the management fee for other client accounts is charged as set forth in the
applicable investment management agreement.
If an investor invests in a Fund or a client invests during a quarter or month, as applicable, or makes an additional
subscription during a quarter or month, as applicable, the management fee will be charged as of the effective date of
the subscription or the date of the additional contribution based on the value of the assets as of the applicable date
and will be prorated for the number of months or days, as applicable, remaining in the quarter or month, respectively.
To the extent there is a withdrawal during a quarter or month, as applicable, the unearned portion of any asset-based
fee paid in advance will be refunded and paid along with the redemption proceeds. The Adviser determines the
amount of the relevant refund on a pro rata basis, based on the portion of the relevant period during which it provided
services.
The management fee may be waived or reduced for an investor in a Fund that is a member, employee or affiliate of
the Adviser, Roystone Capital Advisors LLC (the “General Partner”), relatives of such persons, and for certain large or
strategic investors.
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Performance-Based Compensation
The performance-based compensation applicable to each client account varies and is described in more detail in the
Fund’s offering memorandum or client’s investment management agreement. The Adviser (or an affiliate of the
Adviser) is entitled to be paid annual performance-based compensation, which is compensation based on a share of
net capital appreciation of the assets of a client account. This performance-based compensation paid to the Adviser
(or an affiliate of the Adviser) is up to 20%, and is subject to a loss carryforward.
The performance based compensation may be waived or reduced for an investor in a Fund that is a member,
employee or affiliate of the Adviser, the General Partner, relatives of such persons, and for certain large or strategic
investors.
The management fee and any performance-based compensation with respect to a Fund is calculated by a Fund’s
administrator and deducted by the Fund’s administrator pursuant to instructions from the Adviser. With respect to
other client accounts, the Adviser sends an invoice to the client (or the client’s third party administrator) for the
amount of the applicable management fee and performance-based compensation (if any).
In addition to paying the management fee and performance-based compensation, as more fully described in the
offering documents of the Funds or the investment management agreement for a client, client accounts may also be
subject to other expenses such as legal, audit, tax, administration and accounting expenses and other professional
expenses, research fees and expenses, investment expenses, interest on margin accounts and other indebtedness;
borrowing charges on securities sold short; custodial fees; and bank service fees. The applicable expenses for a client
are set forth in the client’s governing documents, as applicable and all of the above listed expenses may not be paid
by all of the Adviser’s clients.
Client assets may be invested in ETFs or other registered investment companies. In these cases, the client will bear its
pro rata share of the investment management fee and other fees of such fund, which are in addition to the
management fee paid to the Adviser. The Adviser manages a master-feeder structure and accordingly, the feeder
funds in such structure each bear their pro rata share of the expenses of the master fund. In addition, clients will incur
brokerage and other transaction costs. Please refer to Item 12 of this Brochure for a discussion of the Adviser’s