Item 5. Fees and Compensation
Endurant Capital’s compensation is negotiable and varies, but typically it charges an annual fee
of 0.75% to 1.5% of assets under management, which amount is payable monthly in arrears, on
the last day of each month, based on the net market value of the client’s account on that date.
Endurant Capital also typically is allocated from each investor a performance allocation equal to
10% to 30% of net profits (including both realized and unrealized gains and losses) otherwise
allocable to such limited partner. Performance allocations are assessed in arrears on an annual
basis and are only applied to the portion of profits that exceed the cumulative losses previously
incurred by or allocated to investors. Endurant Capital complies with Rule 205-3 under the
Investment Advisers Act of 1940 and California Code of Regulations section 260.234, to the extent
applicable. Performance allocations may create an incentive for Endurant Capital to make more
risky and speculative investments than it would otherwise make.
The Fund and Sub-Advised Accounts may invest in money market funds, for short term safety
and liquidity, and exchange traded funds and if it does it also pays, indirectly, investment advisory
fees to the managers of those funds. Endurant Capital believes that its fees are competitive with
fees charged by other investment advisers for comparable services. Comparable services may be
available, however, from other sources for lower fees.
The disclosures in this Item 5 and Item 12 allow a plan that is subject to the Employee Retirement
Income Security Act of 1974 and that invests in the Fund to use the “alternative reporting option”
to report Endurant Capital’s compensation as “eligible indirect compensation” on the Schedule
C of the plan’s Form 5500 Annual Return/Report of Employee Benefit Plan.
The relationship between Endurant Capital and the Fund is terminable on expiration of the Fund’s
term, dissolution of the Fund or on Endurant Capital’s withdrawal as general partner or
investment adviser of the Fund. An investor may withdraw from the Fund, on specified prior
written notice, on the last day of any calendar quarter that occurs on or after the day preceding
the first anniversary of such limited partner’s admission to the Fund (subject to Endurant Capital’s
right to suspend withdrawals in certain unusual circumstances). If an investor withdraws funds
before that date, the Fund generally will charge a withdrawal fee of 3% of the amount withdrawn.
In all cases, investors bear expenses, the pro rata portion of the management fee and the
performance allocation through the date of termination or withdrawal. The Fund does not
refund any management fee previously paid to an investor that withdraws from the Fund. The
Fund is responsible for its own costs and expenses, including trading costs and expenses (such as
brokerage commissions and charges, expenses related to short sales, custodial fees and clearing
and settlement charges), Fund organizational expenses and fees, ongoing operating, legal,
accounting, and bookkeeping fees and expenses, and the fees and expenses charged by Morgan
Stanley Fund Services, the Fund’s administrator, for its accounting, bookkeeping and other
services. Endurant Capital bears its own operating, general, administrative, and overhead costs
and expenses, other than the expenses described above. Securities brokerage firms and futures
commission merchants that execute clients’ securities and commodities trades, however, may
pay all or part of these costs and expenses, as discussed in Item 12 below.
The relationship between Endurant Capital and the Sub-Advised Accounts are subject to terms
of an account’s Sub-Advisory agreement but both parties to the agreement can terminate the
agreement in its sole discretion upon at least 3 days’ prior written notice to the other party.