Carlson Capital and predecessor advisory affiliates have managed funds under the name “Carlson Capital, L.P.” since 1993, and have been registered with the SEC as an investment adviser since 2001 and with the Commodity Futures Trading Commission as a commodity pool operator and commodity trading advisor since 1998. CCA is a wholly-owned subsidiary and affiliate of Carlson Capital and is SEC-registered in reliance on Carlson Capital’s registration. CCA manages collateralized loan obligation special purpose vehicles (the “CLOs”), the names of which are set forth in Item 10 (Other Financial Industry Activities and Affiliations) below. Notwithstanding that it is a separate legal entity, CCA is subject to Carlson Capital’s unified compliance program. Clint D. Carlson and his immediate family members are the principal owners of Carlson, and certain employees also have ownership interests in Carlson Capital and certain affiliated vehicles. Carlson’s total regulatory assets under management were approximately $16 billion as of December 31, 2018. All assets are managed on a discretionary basis. Carlson’s principal office is located in Dallas, TX, with other offices located in New York, NY, Greenwich, CT, and Houston, TX. Carlson Capital UK LLP (“Carlson UK”), an affiliate of Carlson, maintains an office in London, United Kingdom. Carlson UK and a predecessor advisory affiliate have been authorized and regulated as investment advisers with the United Kingdom Financial Conduct Authority (“FCA”), previously known as the Financial Services Authority, since 2001. Carlson UK acts as a sub-adviser to Carlson Capital, its only client. Please see Item 10 (Other Financial Industry Activities and Affiliations) below. Carlson Capital currently provides discretionary investment advisory services to privately-offered pooled investment vehicles, to managed accounts generally comprised of privately-offered pooled investment vehicles (“Managed Accounts”), and CCA provides discretionary investment advisory services to the CLOs (collectively, “Clients”). Carlson Capital also may offer co-investment opportunities as described, in more detail, below under Item 10 (Other Financial Industry Activities and Affiliations – Certain Conflicts of Interest). The Funds Carlson Capital currently manages each of the Black Diamond Funds® (collectively, the “Funds”), the names of which are set forth in Item 10 (Other Financial Industry Activities and Affiliations) below. The Funds are generally organized in master-feeder structures in which the master fund of each Fund group is a Cayman Islands exempted company, and the feeder funds include a U.S.-domiciled fund organized as a Delaware limited partnership and an offshore fund organized as a Cayman Islands exempted company. Most of the Fund groups also include an intermediate fund between the offshore feeder fund and the master fund. Carlson Capital GP, L.P. (“CCGP”), an affiliate of Carlson, is the general partner of the U.S.-domiciled feeder funds. CCGP has delegated to Carlson Capital the investment advisory authority of the U.S.-domiciled feeder funds. Black Diamond Relative Value Cayman, L.P. (“Relative Value Cayman”) is a Cayman Islands exempted limited partnership. Relative Value Cayman does not utilize a master-feeder structure and is instead managed pari passu with the Relative Value Master Fund (as defined below). CCGP is the general partner of Relative Value Cayman and has delegated to Carlson Capital the investment advisory authority of this Fund. As described more fully below, Carlson Capital employs multiple strategies across the Funds, including equity relative value, equity long/short, credit, event-driven, rates and volatility, overlay, strategic, and other strategies. A brief description of each of the foregoing strategies can be found in Item 8 (Methods of Analysis, Investment Strategies and Risk of Loss) below. Carlson Capital’s core strategies combine quantitative analysis of historical and theoretical relationships between securities and related instruments with a fundamental analysis of the macroeconomic environment and industry factors and company fundamentals. Carlson Capital continually monitors global financial markets in an effort to uncover structural inefficiencies and investor biases toward certain types of risk. Once an opportunity has been identified, Carlson Capital seeks to identify the reason that the inefficiency exists and the potential catalyst that will correct it. An appropriate hedge is then typically created in an effort to minimize risk. The master funds advised by Carlson Capital and their respective investment objectives and strategies are as follows: Double Black Diamond Offshore Ltd., a Cayman Islands exempted company (the “Double Black Diamond Master Fund”), is a diversified, multi-strategy fund. The Double Black Diamond Master Fund has a bias towards non-directional, relative value investment strategies that seek to identify, isolate, and exploit mispricings among related securities within industry sectors. However, the Double Black Diamond Master Fund expects certain strategies to take some directional market risk. The Double Black Diamond Master Fund employs three core strategies: equity relative value, credit, and event-driven. Carlson Capital’s investment teams, organized by industry sector, employ deep fundamental analysis to develop investment theses. Carlson Capital seeks to allocate capital opportunistically within and across strategies in an effort to position the Double Black Diamond Master Fund advantageously during various market environments, using moderate leverage to enhance an attractive risk-reward and low equity beta profile and maintain broad diversification. Black Diamond Offshore Ltd., a Cayman Islands exempted company (the “Black Diamond Master Fund”), is a diversified, multi-strategy fund. The Black Diamond Master Fund’s philosophy, objective, and strategy allocation is similar to that of the Double Black Diamond Master Fund, but the Black Diamond Master Fund has in the past and may continue to place a greater emphasis on one or more strategies outside of the three core strategies and may have greater directionality. Carlson Capital’s investment teams, organized by industry sector, employ deep fundamental analysis to develop investment theses. Carlson Capital seeks to allocate capital opportunistically within and across strategies in an effort to position the Black Diamond Master Fund advantageously during various market environments, using moderate leverage to enhance an attractive risk-reward and low equity beta profile and maintain broad diversification. Black Diamond Relative Value Offshore Ltd., a Cayman Islands exempted company (the “Relative Value Master Fund”), is a single-strategy equity relative value fund. Equity relative value seeks to identify equity securities and related instruments that are mispriced relative to other securities, groups of securities, or the overall market. Positions are set up in a hedged construct in an effort to isolate the discrepancy in value and minimize the market risk. Investments may represent a short-term or long-term fundamental view on the relative performance of a specific security, relative to other similar securities or the overall market. Equity relative value seeks to exploit the long market bias of many investors. Many investors typically think in terms of buying securities that will appreciate, not in terms of capturing the difference in the performance of two or more securities. Black Diamond Arbitrage Offshore Ltd., a Cayman Islands exempted limited company (the “Arbitrage Master Fund”), is a single-strategy event-driven fund. Event-driven strategies center on investing in securities of companies facing a major corporate event. The Event- Driven team primarily focuses on companies involved in mergers or acquisitions, but may also seek investment opportunities driven by companies experiencing restructurings, bankruptcies, spin-offs, or significant litigation. This strategy is research intensive and requires continual review of announced and anticipated events. The goal is to uncover securities with a favorable risk-reward ratio based on the probability that the desired event will occur. An appropriate hedge is then typically developed in an effort to minimize exposure to market risk and attempt to ensure that, if events unfold as anticipated, the investment will generate the expected returns. Black Diamond Thematic Offshore Ltd., a Cayman Islands exempted company (the “Thematic Master Fund”), is a single-strategy thematic equity long/short fund. The Thematic Master Fund pursues a top-down, thematic equity long/short strategy with overall low net exposure in an effort to maximize absolute returns while limiting exposure and correlation to the equity markets. These themes may include, among other things, broad macroeconomic trends and specific industry trends or opportunities created by dislocations in various markets or securities. Through original fundamental research, the Thematic Master Fund seeks to identify companies that will either benefit or be hurt by such trends and establishes long or short positions in the securities of those companies. These long and short themes are then combined in an overall portfolio in an effort to limit the impact of the market. This research is conducted by a dedicated thematic strategy team who collaborates with the equity, credit, and event-driven teams at Carlson Capital and has access to the broad resources across Carlson. Black Diamond Mortgage Opportunity Offshore II Ltd., a Cayman Islands exempted company (the “Mortgage Opportunity II Master Fund”), is a single-strategy fund dedicated to investing in the residential mortgage-backed securities market. The Mortgage Opportunity II Master Fund invests in a variety of both agency and non-agency mortgage-backed securities and related instruments and derivatives that Carlson Capital believes will offer attractive risk- adjusted returns. The only investors in the Mortgage Opportunity II Master Fund are the Black Diamond Master Fund and the Double Black Diamond Master Fund. The CLOs CCA manages CLOs that are each a Cayman Islands exempted company that seeks to leverage Carlson Capital’s existing credit team and credit research process. The CLOs employ a long-only strategy investing in the broadly syndicated loan market. The focus is on investing in syndicated loans of companies that CCA believes generate solid, predictable, low volatility free cash flows and that have the potential for accelerated deleveraging. The CLO strategy seeks a positive risk adjusted return and focuses on capital preservation. In its capacity as collateral manager to the CLOs, CCA controls the management of the collateral supporting certain debt obligations issued by the CLOs. CCA performs numerous administrative and advisory functions with respect to the collateral, including selecting the portfolio of collateral and instructing the trustee with respect to any acquisition, disposition, or reinvestment of proceeds of the collateral. CCA’s ability to invest a CLO’s assets is constrained by the portfolio quality criteria and asset and income coverage tests described in the indenture pursuant to which the CLO’s securities are issued. In CCA’s purchase and sale of assets for a CLO’s portfolio, CCA is required to comply with the restrictions and parameters set forth in the indenture governing the CLO. The Managed Accounts

Carlson Capital also provides discretionary investment advisory services to separately Managed Accounts pursuant to specific investment guidelines and restrictions as set forth in the investment advisory agreement with the relevant Managed Account.
There can be no assurance that the investment objectives of any Client will be achieved.
Carlson’s management of each Client, and the terms of any investment in such Client, are
governed exclusively by the terms of that Client’s governing documents (“Governing
Documents”), including, without limitation, its offering memorandum (if any), limited
partnership agreement (if any), memorandum and articles of association (if any), investment
advisory or similar agreement (if any), and/or indenture (if any). On occasion, Fund investors
may request restrictions applicable to investing in certain securities and Carlson Capital may
agree to apply those restrictions to a Fund. Such restrictions may have an adverse impact on
a Fund’s performance. All discussions in this Brochure of the Clients, their investments, the
strategies Carlson pursues in managing the Clients’ portfolio, the fees and expenses borne by
the Clients, and all other terms of each, are qualified in their entirety by reference to the
Governing Documents.
Please see Item 8 (Methods of Analysis, Investment Strategies and Risk of Loss) and Item 10 (Other Financial Industry Activities and Affiliations) below. please register to get more info

Management Fees The Funds: Generally, Carlson Capital is paid asset-based fees (“Management Fee”) at an annual rate of between 0.75% to 2.0% of the net asset value of each limited partner’s capital account and each investor’s series of shares, as applicable. If the limited partnership interests or shares of a feeder fund are issued in more than one series, each series may have a different Management Fee applicable to it. Management Fees charged to the U.S.-domiciled feeder funds are generally calculated and payable in advance as of the first business day of each calendar quarter. In the event an investor is admitted to a U.S.-domiciled feeder fund subsequent to the first day of a quarter or withdraws from a U.S.- domiciled feeder fund prior to last day of a quarter, the Management Fee paid to Carlson Capital with respect to such investor will be prorated to reflect the number of months in the calendar quarter during which such investor was a limited partner in the feeder fund. Management Fees charged to the offshore feeder funds are generally calculated and payable in arrears as of the end of each month before accrual of any Performance Allocation (as described below). The Management Fee charged to a Fund is generally not negotiable. Carlson Capital may, however, waive or reduce the Management Fees charged to certain investors, and has waived Management Fees for investors in the Funds that are affiliated with Carlson and its affiliates, including, without limitation, their respective partners, employees and similar persons. Carlson Capital may pay and has paid all or part of the Management Fees to third parties for services rendered in connection with the placement of interests and/or shares in the feeder funds or for other services. The CLOs: CCA receives a senior management fee ranging from 0.10% to 0.15% from each CLO, calculated and paid quarterly in arrears. CCA also accrues a subordinated management fee ranging from 0.05% to 0.30% from each CLO, calculated and paid quarterly in arrears. Senior management fees and subordinated management fees are generally not negotiable. CCA may waive (in whole or in part) and has waived, or reimbursed to the extent received, senior management fees and subordinated management fees for Carlson’s partners, employees, and affiliates as well as for Funds that have invested in the CLOs. The Managed Accounts: The amount and terms of payment of any management fees payable by the owners of the Managed Accounts to Carlson Capital vary and are established in the Governing Documents of the Managed Accounts. Depending on the structure, size of investment and other factors, Managed Accounts may and in certain instances do offer more favorable fee terms than an investment in other Clients. Performance Allocations and Fees The Funds: CCGP generally receives a special allocation of profits or a “Performance Allocation,” each year with respect to each of the Funds. The amount of the Performance Allocation varies between Funds and if the limited partnership interests or shares of a feeder fund are issued in more than one series, each series may have a different Performance Allocation applicable to it. Depending on the series, the amount of the Performance Allocation is equal to a percentage that ranges from 20% to 30% of each limited partner’s or shareholder’s share of the net profits (including realized and unrealized gains) of each feeder fund, if any (after taking into account expenses of the feeder fund, including any Management Fees). In certain instances, the Performance Allocations are subject to achievement of a “hurdle” rate, which may be based on the absolute outperformance of an index. In addition, Performance Allocations may be subject to being reduced by the amount of any Management Fees paid. The Performance Allocations are generally calculated and applied on an annual basis and are accrued on a monthly basis based on the net profits (or losses) of each Fund. Although the Performance Allocation is accrued on a monthly basis, it is not credited to CCGP until the occurrence of a crystallization event, which is generally the end of each calendar year, the withdrawal or redemption of a limited partner or shareholder from a feeder fund, a transfer of an investment in a feeder fund that results in a change of a majority in interest of the beneficial ownership of the investment (unless the transferor and transferee have the same investment adviser exercising investment discretion over the transfer on behalf of both the transferor and transferee) and/or the conversion of an investment in a feeder fund to another series that results in a change in the manner in or rate at which the Performance Allocation is made or to another feeder fund in a different Fund group. The Performance Allocation is applied at the onshore feeder fund level or offshore intermediate fund level and received by CCGP. CCGP also receives a Performance Allocation from Relative Value Cayman. CCGP serves as the general partner to the onshore feeder funds, as a special shareholder of each offshore intermediate fund, and as general partner of Relative Value Cayman. In the case of onshore feeder funds and Relative Value Cayman, the Performance Allocation is calculated and applied separately for each memorandum account established by the fund for each capital contribution by a limited partner. In the case of offshore feeder funds, the Performance Allocation is calculated and applied separately for each sub-series of shares created by the fund for each subscription by a shareholder. The Performance Allocation is calculated in accordance with each Fund’s Governing Documents and is subject to a high-water mark or loss carry-forward, which generally requires that prior un-recouped net losses be made up before the Performance Allocation is credited. As noted above, certain Performance Allocation calculations include a “hurdle” rate, which may be based on the absolute outperformance of an index and, therefore, result in a Performance Allocation being made even if a particular memorandum account or series has not achieved absolute gains. In the case of a partial withdrawal, partial redemption, partial transfer of an investment in a feeder fund that results in a change of a majority in interest of the beneficial ownership of the transferred investment (unless the transferor and transferee have the same investment adviser exercising investment discretion over the transfer on behalf of both the transferor and transferee) or partial conversion of an investment in a feeder fund to another feeder fund in a different Fund group, the amount of net losses that must be recouped will generally be reduced in proportion to the amount withdrawn, redeemed, transferred or converted, as applicable. The Performance Allocation is generally not negotiable. Carlson Capital may, however, in its sole discretion, waive or reduce the Performance Allocation made with respect to any limited partner or shareholder in the feeder funds, and has waived the Performance Allocation for partners, employees and similar persons of Carlson and its affiliates. Carlson Capital may pay and has paid all or part of the Performance Allocation to third parties for services rendered in connection with the placement of interests and/or shares in the feeder funds or for other services. The CLOs: CCA is entitled to a 20% incentive management fee from each CLO. No incentive management fee is accrued until each CLO has achieved a “hurdle” rate with respect to the subordinated notes issued by the CLO (referred to as an “incentive management fee threshold”). The incentive management fee threshold varies from an internal rate of return of 10% to 12%. Incentive management fees are generally not negotiable; however, CCA may waive (in whole or in part) and has waived, or reimbursed to the extent received, incentive management fees for partners, employees and affiliates of Carlson, including Funds that have invested in the CLOs.

The Managed Accounts: The amount and terms of payment of any performance fees or allocations payable to Carlson Capital by the owners of the Managed Accounts vary and are established in the Governing Documents of the Managed Accounts. Depending on the structure, size of investment and other factors, Managed Accounts may and in certain instances do offer more favorable fee terms than an investment in other Clients. Withdrawal Fees Substantial withdrawal fees may apply to limited partners and/or shareholders in the feeder funds who withdraw or redeem, as applicable, all or a portion of their limited partnership interests and/or shares from a feeder fund prior to the expiration of any applicable lock-up period. Managed Accounts may also be required to pay withdrawal, early termination or other similar fees under certain circumstances and as established in the Governing Documents of the Managed Accounts. Expenses The types of expenses borne by a Client are set forth in the Governing Documents of such Client. Additional information on expenses of each Fund or CLO are also available to investors upon written request and, in the case of the Funds, in the Funds’ annual audit. If any of the expenses below are incurred jointly for more than one Client, such expenses will be allocated among the Clients in proportion to their respective net asset values, in proportion to the size of the investment made by each in the activity or entity to which the expense relates, or in such other manner as Carlson determines to be equitable. Although Carlson Capital will typically be entitled to the reimbursement of Fund organizational expenses, Carlson may elect to pay such expenses without reimbursement in certain circumstances. Carlson and/or its affiliates pay all of their respective ordinary office overhead expenses, including, but not limited to, overhead expenses such as rent, supplies, stationery, office furniture and fixtures, employee insurance, payroll taxes and the compensation of its personnel. Each Client pays or reimburses Carlson and its affiliates for all other costs and expenses associated with such Client’s operations as set forth in the Governing Documents of each Client. Notwithstanding the foregoing, in certain circumstances, Carlson has agreed to reimburse a Client for a portion of certain operating expenses of the Client. The Funds and the CLOs: In general, expenses borne by a Client that is a Fund or CLO may include, without limitation:
• organizational and initial offering costs including, but not limited to, legal, accounting, printing, marketing, and comparable expenses;
• expenses related to investment transactions and positions for the Client’s account, including brokerage commissions and custody charges, interest and commitment fees on loans and debit balances and other borrowing costs, borrowing charges on securities sold short, bank service fees, costs of any outside appraisers, pricing services, accountants, attorneys or other experts or consultants engaged by the Client, Carlson, or any of their affiliates, reasonable investment- related travel expenses, and expenses in connection with proposed transactions (including transactions that fail to close);
• legal fees and costs (including settlement costs) arising in connection with any litigation or regulatory investigation instituted against, any regulatory examination or other review of, or any request for information from the Client, Carlson, or any of their affiliates in connection with the affairs of the Client or its affiliates;
• costs of research and data services and corporate access, costs of hardware, software, and other technical and telecommunications services and equipment used in the investment and risk management as well as the trade and transaction reporting process;
• insurance costs;
• costs of communication with investors;
• costs of preparing and filing regulatory or registration filings of the Client, Carlson, or any of their affiliates relating to their respective activities relating to the Client or its affiliates (including, without limitation, as applicable, Form PF, Form CPO-PQR, Form CTA-PR, the EU Directive on Alternative Investment Fund Managers and any other filing or registration with, or license obtained from, any U.S. federal, state or local, non-U.S. or multi-national governmental, regulatory, self-regulatory or other authority necessary for, or incidental to, permitting Carlson or any of its affiliates to provide investment advisory or other services to the Client or its affiliates);
• fees, expenses and other costs of legal counsel and other service providers to the Client, Carlson, or any of their affiliates in connection with advice relating to the legal, regulatory, tax, and compliance affairs and other fees, expenses, and costs incurred by the Client, Carlson, or any of their affiliates in connection with the offering of interests or shares in the Client to prospective or current investors in various jurisdictions (as applicable) through local distributors or otherwise and the operations of the Client or its affiliates (including but not limited to the preparation of any private placement memorandum, partnership agreement or memorandum and articles of association (as applicable), subscription agreement, investment advisory agreement, agreements with custodians, brokers and other counterparties, and service providers to the Client and its affiliates, and side letter arrangements);
• directors’ registration fees of the Client and its affiliates (as applicable);
• third-party fees of anti-money laundering officers (as applicable), compliance, and counterparty management services of the Client and its affiliates;
• legal, accounting, auditing, and tax services and fees, including costs of the audit of the Client’s and its affiliates annual financial statements and the preparation of their respective tax returns;
• fees and expenses of the Client’s administrator, depositary institution services, and directors (as applicable);
• expenses of the tax matters partner and partnership representative of the Client and its affiliates (as applicable);
• taxes or similar amounts imposed on the Client or any of its investors as a result of its or their earnings, investments, or withdrawals (which amounts will be assessed, where applicable to particular investors, directly against such investors’ investments in the Client);
• clearing and settlement charges, any other expenses related to the purchase, sale, transmittal, settlement, or holding of investments (directly or indirectly through derivative instruments);
• other ordinary operating and out-of-pocket expenses of the Client and its affiliates; and
• where applicable, a proportionate share of the operating expenses of the Fund group for any Fund structured as a master-feeder. Certain offshore feeder Funds may from time to time offer one or more series of shares for investment that are denominated in a currency other than U.S. dollars. These are referred to as “Non-USD Currency Series.” The direct costs and expenses associated with converting the subscription funds received in respect of a Non-USD Currency Series into U.S. dollars (“Currency Conversions”) and the direct expenses, profits, and losses associated with entering into currency hedges to reduce the effect of fluctuations in currency exchange rates between the currency of a Non-USD Currency Series and U.S. dollars (“Currency Hedges”) will be allocated solely to such series. However, Funds that offer Non-USD Currency Series expect to incur costs and expenses indirectly associated with Currency Conversions and Currency Hedges, which may be borne by the Fund as a whole. The CLOs: The CLOs also pay for any fees necessary to register any collateral obligation, as well as all costs, fees and expenses incurred related to the rating of the CLO securities or obtaining ratings or credit estimates, communications with rating agencies, and the listing of the CLO securities on an exchange. Also, the CLOs must pay the trustee and collateral administrator fees and reimburse the trustee and the collateral administrator for all reasonable out-of-pocket expenses properly incurred by the CLOs’ trustee and collateral administrator in the performance of their respective duties. The Managed Accounts: The types of expenses borne by the owners of the Managed Accounts vary, but generally include a sub-set of the types of expenses borne by the Funds, and are established in the Governing Documents of the Managed Accounts. Level of Trading Activity Carlson may engage in a high level of trading activity on behalf of one or more Clients. As a result, higher commissions may be paid by such Clients in comparison to other Clients or third party investment funds. Administration Fees Each Fund and CLO pays administrator fees and reimburses its administrator for all reasonable out- of-pocket expenses properly incurred by the Fund’s administrator in the performance of its duties. Sub-Adviser Fees and Expenses A portion of the assets of certain Funds may be, and has been, managed directly by, or invested in investment funds managed or sponsored by, other investment advisers selected by Carlson Capital, to the extent Carlson Capital considers the investment strategies offered by such advisers appropriate and consistent with the Fund’s investment objectives. To the extent a portion of the assets of a Fund (generally not to exceed a specified percentage of the net assets of a Fund) is managed directly by, or invested in investment funds managed or sponsored by, one or more third-party investment advisers, unless provided otherwise in the applicable Governing Documents, such Fund will pay fees and bear expenses associated with the investment advisory services of the sub-advisers managing assets for the Fund and the sub-funds in which it invests, in addition to the fees paid to Carlson Capital and its affiliates and the expenses of such Fund, resulting in a layering of fees and expenses. While the exact fees charged by each sub-adviser may differ, such fees will generally consist of one or both of the following: (i) a fixed fee that is a percentage of the net assets of the Fund managed by the sub-adviser and/or (ii) a performance fee equal to a percentage of the total appreciation, if any, in the net asset value of the assets of the Fund managed by the sub-adviser. The fees and expenses payable by the Funds may be higher than those of other investment funds, particularly those that do not use any sub- advisers. Performance fees payable to the sub-advisers may create an incentive to make investments that are more speculative than would be the case in the absence of such performance fees. Co-Investments As noted under Item 4 (Advisory Business), Carlson Capital may offer co-investment opportunities as described in more detail below under Item 10 (Other Financial Industry Activities and Affiliations – Certain Conflicts of Interest). If any co-investor participates in a co-investment alongside a Client (indirectly through a co-investment vehicle established by Carlson Capital or directly in the relevant investment), it is expected that such co-investor will bear its pro rata share of fees, costs, and expenses related to its co-investment. To the extent that a co-investor does not agree to or does not otherwise bear fees, costs, and expenses related to co-investments which are not ultimately consummated, such fees, costs, and expenses are generally born by Carlson Capital, or, if consistent with the Governing Documents of any Client participating in such co-investment, by the Client on whose behalf Carlson evaluated and pursued such investment. In addition, in the event that the co-investor participates in a co-investment through an investment vehicle or vehicles managed or advised by Carlson Capital, it is expected it will generally bear its pro rata share of organizational costs and expenses of such vehicles. Carlson Capital may (or may not) in its discretion: (i) charge Management Fees, Performance Allocation or other similar fees to a co-investor and (ii) collect customary fees in connection with actual or contemplated investments that are the subject of such co-investment arrangements. Please see Item 10 (Other Financial Industry Activities and Affiliations) and Item 12 (Brokerage Practices) below. please register to get more info

As described in Item 5 (Fees and Compensation) above, Carlson or an affiliate generally receives performance-based allocations or fees with respect to each Client. Although each Client pays performance-based allocations or fees, Clients pay Carlson varying levels of management fees and/or performance-based allocations or fees. Also, Carlson has different levels of proprietary interest in the Clients. As a result of these and potentially other factors, Carlson may therefore have an incentive to favor one Client over another. In order to alleviate potential conflicts of interest for Carlson and its affiliates that arise out of the varying fee arrangements and allocations, the allocation of investment opportunities among the Clients are made in accordance with Carlson’s allocation policies and procedures as more fully described in Item 12 (Brokerage Practices – Order Aggregation and Allocation) and Item 10 (Other Financial Industry Activities and Affiliations) below. Performance-based compensation arrangements may create an incentive for Carlson to recommend investments that are riskier or more speculative than would be recommended under a different compensation arrangement. The performance-based allocations or fees generally are calculated on a basis that includes unrealized gains as well as realized gains. please register to get more info

As noted in Item 4 (Advisory Business) above, Carlson provides investment advice to the Funds, the Managed Accounts, and the CLOs. In general, interests in the Funds that are domiciled in the U.S. are only available to be purchased by “accredited investors” as defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and “qualified purchasers” as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), or “knowledgeable employees,” as defined in Rule 3c-5 under the Investment Company Act. In general, interests in the Funds that are domiciled outside of the U.S. are only available to be purchased by persons that are either: (i) not a “U.S. Person” (as defined under Rule 902(k) promulgated under the Securities Act; or (ii) a “U.S. Person” that is an “accredited investor” and a “qualified purchaser” or “knowledgeable employee.” The Managed Accounts generally are owned by pooled investment vehicles and large institutional investors, and ownership of a Managed Account is similarly limited to investors who are both “accredited investors” and “qualified purchasers.” Interests in the CLOs are generally only available to be purchased by “accredited investors,” “qualified purchasers” and “qualified institutional buyers” as defined in Rule 144A of the Securities Act. Additional details on investor eligibility requirements are set forth in each Client’s Governing Documents. Generally, limited partners and shareholders in the feeder funds must invest a minimum dollar amount, generally ranging from $1,000,000 to $5,000,000, although such minimum amount may be and has been waived under certain circumstances at the sole discretion of Carlson. A higher minimum investment requirement may be and has been imposed on certain series of interests or shares in some feeder funds that may offer and has resulted in more favorable fee terms than other series of interests or shares offered, which in certain cases depends on the performance of the Fund. Minimum investment amounts for Managed Accounts and CLOs are negotiable. Please see Item 4 (Advisory Business) above. please register to get more info

Methods of Analysis Carlson’s investment strategies are driven by various methods of analysis, including but not limited to, fundamental proprietary research, traditional security analysis, quantitative analysis, broker and research provider research and analyses, as well as the industry knowledge and expertise of Carlson’s portfolio management teams. Many investment strategies utilized by Carlson ordinarily attempt to reduce risk by hedging long positions with short positions and/or derivatives. For example, a purely long stock portfolio would be subject to the investment risks of its broad stock market exposure. Carlson Capital believes that hedged investment strategies can significantly reduce market risk. As described in the Governing Documents of Clients, as applicable, and as described in Item 4 (Advisory Business) above, Carlson Capital does not attempt to maintain a market neutral portfolio for all Clients and at times Carlson Capital may cause a Client to take directional positions that may be affected by the condition of the market. In addition, Carlson may elect not to hedge certain positions and there can be no assurances that hedged strategies will be profitable in either up or down markets. Various market conditions may be materially less favorable to certain strategies than to others. Investment Strategies The Funds and Managed Accounts. The principal investment strategies used by Carlson Capital in managing the Funds and Managed Accounts are summarized below. One or more of these strategies may be allocated to the respective Funds and Managed Accounts in accordance with the relevant Client’s applicable investment guidelines. Investing in securities involves risk of loss that investors in a Client should be prepared to bear. Equity Relative Value Strategies Equity Relative Value strategies seek to identify equity securities and related instruments that are mispriced relative to other securities, groups of securities, or the overall market. Positions are set up in a hedged construct in an effort to isolate the discrepancy in value and minimize the market risk. Investments may represent a short-term or long-term fundamental view on the relative performance of a specific security, relative to other similar securities or the overall market. Equity Relative Value strategies seek to exploit the long market bias of many investors. Many investors typically think in terms of buying securities that will appreciate, not in terms of capturing the difference in the performance between two or more securities. Equity Long/Short Strategies Equity Long/Short strategies generally seek to profit from current, short-term, and medium- term situations where the anticipated price movement of an individual equity security is not highly correlated to, or as easily hedged by, other securities within the same sector. These investment strategies, which typically emerge when investor expectations fail to adjust efficiently to aspects of fundamental change and often complex events affecting a company, may include catalysts, fundamental developments, and/or defined timeframes for value realization. Carlson seeks to balance the investments in the overall portfolio among individual strategies in order to minimize exposures to the market, various “macro” themes, or significant sector rotations. Event-Driven Strategies Event-driven strategies center on investing in securities of companies facing a major corporate event. The Event-Driven team primarily focuses on companies involved in mergers or acquisitions, but may also seek investment opportunities driven by companies experiencing restructurings, bankruptcies, spin-offs, or significant litigation. The strategy is research- intensive and requires continual review of announced and anticipated events. The goal is to uncover securities with a favorable risk-reward ratio based on the probability that the desired event will occur. An appropriate hedge is then typically developed in an effort to minimize exposure to market risk and attempt to ensure that, if events unfold as anticipated, the investment will generate the expected returns. Credit Strategies Credit strategies seek to profit by identifying attractive risk/reward opportunities between individual securities and across asset classes. The strategy covers sovereign and corporate credit, residential mortgage-backed securities, CLOs, and emerging market securities. Types of trades may include directional, distressed and mispriced opportunities, capital structure arbitrage, and relative value. Each trade and sub-strategy is evaluated based upon its fit within the overall desired credit portfolio construct. Rates and Volatility Rates strategies are generally designed to profit by expressing views on economic conditions, policy, and financial markets. Rates strategies primarily include interest rate positions, including but not limited to, directional, curve, relative value, and basis trades. The portfolio may employ various instrument types, including but not limited to, government bonds, interest rate futures, basis swaps, cross currency swaps, bond futures, forward rate agreements, interest rate swaps, swaptions, interest rate caps and floors, and other interest rate options. Additionally, the strategy may have exposure to non-interest rate positions for hedging or other purposes. Volatility strategies generally seek to profit from relative value volatility pairs, dispersion trades, and the principle of mean reversion of volatility. Positions are generally set up in a vega neutral construct with the view to profit from expected increases in market volatility. The portfolio is primarily composed of equity derivatives positions, including but not limited to, volatility swaps, variance swaps, listed equity options, and the Chicago Board Options Exchange Volatility Index products. Overlay Strategies Overlay strategies primarily include portfolio overlay hedges, initial public and secondary offering positions, and other opportunistic trades. Strategic Investments Carlson may make strategic investments on behalf of certain Clients, typically in smaller public and private companies in industries where Carlson has deep research expertise and industry knowledge. Past examples have included investments in the banking, energy, and insurance markets. Carlson generally maintains maximum flexibility in its trading and investment strategy in order to take advantage of what Carlson considers to be buying or selling opportunities for the Clients. There is, therefore, generally no limitation on the type of securities or financial instruments in which Carlson Capital invests on behalf of the Funds or Managed Accounts, on the origin or nature of the issue of securities or financial instruments held by the Funds or Managed Accounts, or on the currency denomination of such securities or financial instruments. Additionally, Carlson has invested and may invest on behalf of certain Clients in restricted or illiquid securities that are not readily marketable. Notwithstanding the foregoing, Carlson may agree to limit the investments by a Managed Account to certain securities and instruments or agree not to invest in certain securities or instruments on behalf of a Managed Account or other Client. The CLOs. As noted above, regarding the CLOs, CCA employs a long-only strategy investing in the broadly syndicated loan market. The focus is on investing in syndicated loans of companies that CCA believes generate solid, predictable, low volatility free cash flows and that have the potential for accelerated deleveraging. The CLO strategy seeks a positive risk-adjusted return and focuses on capital preservation. Leverage Borrowing, or leverage, generally is used to enhance returns. The amount of leverage used will vary with the number and quality of investment opportunities available to Clients and with the perceived risk level of each Client’s portfolio and otherwise as described in the Governing Documents of such Client. Risk Management Carlson’s overarching risk management philosophy regarding all Clients is the preservation of capital. It depends on the particular Client, but generally, as to the Funds and the Managed Accounts, Carlson attempts to minimize potential concentration risks associated with any single portfolio manager, any single investment strategy, position, or theme, and unintended residual market exposures, as applicable in accordance with the Governing Documents. Carlson Capital generally diversifies its multi-strategy Funds in terms of both the number and sizing of portfolio managers, investment strategies, and positions, and employs portfolio hedging strategies to mitigate potential downside risk associated with unintended residual market exposures. Carlson distinguishes risk measurement from risk management. Risk measurement often relies on aggregated quantitative data, while risk management is based upon more qualitative investment judgment around both risk and return, including risks that may be less quantifiable. Client portfolios are generally highly diversified yet very granular and are supported by systems and processes that emphasize internal transparency around decision making, improving the repeatability of investment processes, and institutionalizing investment judgment. With respect to specific investments, Carlson’s risk management philosophy is based upon a rigorous approach to trade construction. Individual positions are generally constructed on a bottom-up, fundamental basis. Carlson attempts to isolate the risks it is willing to bear, while hedging out other risks where Carlson believes it is appropriate to do so. Carlson’s systems offer significant internal transparency in terms of any individual portfolio manager’s positions, transactions, and identified risk exposures. Carlson believes its systems provide a robust, efficient, and effective tool for its professionals to monitor guidelines, exposures, and risks.
The investment objectives and methods summarized above represent Carlson’s current
intentions. Depending on conditions and trends in financial markets and the economy in
general, Carlson may pursue other objectives, employ other investment techniques or
purchase any type of security or instrument that it considers appropriate and in the best
interests of the Clients, whether or not described in this Item. Certain Risk Factors Investing in the Clients involves risk of loss as described in more detail below and is suitable only for investors prepared to bear such risk. The risk factors below are not intended to be exhaustive. Prospective investors should carefully review the risks described in the offering memorandum or investment advisory agreement and related documents, as applicable, for the relevant Client, and should evaluate the merits and risks of an investment in the context of their overall financial circumstances. Although certain of the strategies employed by Carlson Capital are intended to be market neutral, Clients may nonetheless be affected by the overall condition of financial markets. The following is a description of certain significant risks involved in Carlson’s investment strategies. Not all of these risks will be equally relevant to a Client at any given time. Not every Client will invest in every instrument described below (either generally or at any given time), and the CLOs invest per the highly restrictive terms of the applicable indenture and other Governing Documents. In certain circumstances, the descriptions below refer to the possibility that a Client “may” invest in particular type of instrument. Prospective investors should review the Governing Documents of a particular Client for more specific descriptions of the types of instruments in which such Client is authorized to (and does) invest. General Risks: An investment in the Clients involves a high degree of risk and is suitable only for investors who can bear the economic risk of the loss of their investment, who have limited need for liquidity in their investment, and who either are sophisticated investors in connection with financial and business matters or are represented by such a person. Prospective investors should carefully review the risks involved in investing in the Clients, and should evaluate the merits and risks of such an investment in the context of their overall financial circumstances. The risk factors set out below do not purport to be exhaustive and potential investors should review the Governing Documents of each Client carefully in their entirety and consult with their professional advisers before making an application for an investment in the Clients. Past Performance Not Indicative There can be no assurance that Clients will achieve their investment objectives. The past investment performance of the Clients may not be indicative of the future results of an investment. No assurance can be made that profits will be achieved or that substantial losses will not be incurred. Potential Loss of Investment There is a risk that an investment in the Clients will be lost entirely or in part. The Clients are not a complete investment program and should represent only a small portion of an investor’s portfolio management strategy. Each prospective investor must have enough knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in a risky investment like the Clients, whose performance may be highly volatile. No guarantee or representation is made that the investment strategy of a Client will be successful, that the targeted return or risk will be achieved or maintained, or that the various investment strategies utilized or investments made through a Client will have low correlation with each other or with the markets generally. Investment and Trading Risks in General All securities investments risk loss of capital. Although Carlson Capital employs certain strategies that are intended to be market neutral, this does not mean that the Clients will not be affected by the condition of financial markets. There can be no assurance that hedged strategies will be successful in up or down markets. The Clients’ investment program should be evaluated on the basis that there can be no assurance that Carlson’s assessments of the short-term or long-term prospects of investments will prove accurate. If Carlson’s evaluation of the anticipated outcome of an investment should prove incorrect, the Clients may experience substantial losses as a result of a decline in the market value of securities or other assets in which the Clients hold a long position or an increase in the value of securities or other assets in which the Clients hold a short position. International securities and commodities markets may not move in correlation with each other or in directions anticipated by Carlson, so that hedging and arbitrage activities may not be successful. Substantial competition from other market participants may render it difficult or impossible for the Clients to achieve intended results or promptly to effect transactions in volatile markets. The risk management techniques that may be utilized by Carlson may not protect Clients from significant investment losses. Limited Liquidity There is no public market for subscription interests in the Funds, and it is not anticipated that there will be any active secondary market for trading in such interests. The interests in the Funds are not registered so as to permit a public offering under the securities laws of any jurisdiction. The interests in the Funds will not be transferable to any other person without the prior written consent of Carlson Capital or CCGP, as applicable. Accordingly, investors in the Funds may be able to dispose of their interests only by means of withdrawals at the time, and subject to the prior notice and other conditions and restrictions, described in the offering memoranda of the Funds. Consequently, these interests in the Funds may be illiquid investments. The risk of any decline in the net asset value of the interests during the period from the date of notice of withdrawal until the effective date of the withdrawal will be borne by the investor requesting a withdrawal. Carlson Capital or CCGP, as applicable, may postpone the determination of a Fund’s net asset value, and/or the right of an investor to withdraw from the Fund (in full or in part), and/or the payment of withdrawal proceeds (in full or in part) in certain circumstances as set forth in the Fund’s Governing Documents. Hedging Clients may utilize financial instruments such as forward contracts, options, futures, and swaps for hedging purposes or as part of its trading strategies. Hedging against a decline in the value of a portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if the values of such positions decline, but seeks to establish other positions designed to gain from those same developments, with the goal of moderating the decline in the value of the portfolio positions. Hedging transactions may also limit the opportunity for gain if the value of the portfolio position should increase. The success of the Client’s hedging transactions is subject to the movements in the direction of securities prices and currency and interest rates. The degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio position being hedged may vary. A Client may not seek to, or be able to, establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Such imperfect correlation may prevent the Client from achieving the intended hedge or expose the Client to risk of loss. Event-Driven Strategies Prices of securities of companies involved in merger or other extraordinary transactions may be volatile, and market movements may be difficult to predict. The profit that the Clients may make if a proposed transaction is consummated may be small in relation to the amount that the Clients may lose if the transaction is not completed. The success of an arbitrage opportunity may depend on such variables as shareholder approval of a merger, the outcome of litigation seeking to enjoin a transaction, approval of regulatory or tax authorities, or the absence of material adverse change to the business or financial condition of the companies involved in the transaction. A delay or failure to complete a transaction may result in losses to the Clients. Financing and Leverage The investment strategies utilized by a Client often include the use of borrowing funds and otherwise obtaining leverage exposures to finance instruments. Use of leverage for investment purposes entails significant risks. Use of leverage tends to magnify the gains or losses from investment activities and volatility, since the value of investments purchased using leverage may increase or decrease whereas the liabilities for such leverage generally remain fixed. Use of leverage also causes a Client to incur interest and other expenses. If securities pledged to brokers or other financial institutions to secure a margin account decline in value, the Client may be subject to a “margin call,” pursuant to which it must either deposit additional funds with the broker, or suffer mandatory liquidation of the pledged securities to compensate for the decline in value. The prime brokers and dealers that provide financing to the Clients will determine the margin, haircut, and collateral valuation policies that will apply to the Clients from time to time. Changes by prime brokers and dealers in margin, haircut, financing, and valuation policies may result in margin calls, loss of financing, and forced liquidations of positions at disadvantageous prices. There can be no assurance that the Clients will be able to maintain any financing, and at times, especially during distressed market conditions, brokers and dealers have substantially reduced the availability of credit. If a Client is unable to obtain financing on terms acceptable to Carlson, the Client may be forced to liquidate portfolio investments on a schedule that Carlson would not otherwise follow and incur significant losses. Equity Securities Clients generally may invest in long and/or short positions in equity securities. Equity securities fluctuate in value, often based on factors unrelated to the value of the issuer of the securities. The market price of equity securities may be affected by general economic and market conditions, such as a broad decline in stock market prices or in the prices of issuers in a particular market, geographic or industry sector, or by conditions affecting specific issuers, such as changes in earnings forecasts. Short Sales Clients generally engage in short sales, which involve a sale of a security that the seller does not own in the hope of purchasing the same security (or a security exchangeable therefor) at a later date at a lower price, can result in profits when the prices of the securities sold short decline, and losses, which are theoretically unlimited, when such prices increase. The risk is heightened when the Client engages in short sales relating to highly volatile issuers. Credit Investments Clients generally may invest in bonds, loans, and other credit and credit-related instruments and derivatives. Credit securities generally fluctuate in value based upon broader market factors, such as changes in interest rates, and also based on developments affecting the perceived creditworthiness and ability of the borrower to repay the principal and interest owed with respect to the underlying indebtedness. Options Clients may invest in, or write, options. The purchaser of a put or call option runs the risk of losing the entire investment in a relatively short period of time if an option expires unexercised. The uncovered writer of a call option is subject to a risk of loss should the price of the underlying security increase, and the uncovered writer of a put option is subject to a risk of loss should the price of the underlying security decrease. Convertible Instruments Clients may invest in convertible instruments. A convertible instrument is a bond, debenture, note, preferred stock, or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or a different issuer within a particular period of time at a specified price or formula. Convertible debt instruments have characteristics of both credit and equity investments. The Clients may invest in convertible instruments that have varying conversion values. If a convertible instrument held by a Client is called for redemption, the Client will be required to permit the issuer to redeem the instrument, or convert it into the underlying stock, and will hold the stock to the extent Carlson determines that such equity investment is consistent with the investment objective of such Client. Distressed Investments Clients may invest in securities and obligations of bankrupt entities or entities experiencing financial difficulties that involve a substantial degree of risk. A Client may lose a substantial portion or all of its investment in such an entity or may be required to accept cash or securities with a value less than such Client’s investment. It may be difficult to obtain information as to the true financial condition of entities experiencing significant financial or business difficulties. Investments in distressed companies also may be adversely affected by state and federal laws relating to fraudulent conveyances, voidable preferences, lender liability, and the bankruptcy courts’ discretionary power to disallow, subordinate, or disenfranchise particular claims. The market prices of instruments issued by distressed companies may be subject to abrupt and erratic market movements and above average price volatility, and the spread between the bid and ask prices of such instruments may be greater than normally expected. It may take a number of years for the market prices of such securities to reflect their intrinsic values. Some of such securities in a Client’s portfolio may not be widely traded, and such positions may be substantial in relation to the market for such securities. Funding a plan of reorganization involves additional risks, including risks associated with equity ownership in the reorganized entity. Investments in distressed securities made in connection with an attempt to influence a restructuring proposal or plan of reorganization in a bankruptcy case may involve substantial litigation. Debt Investments Clients generally may invest in debt securities or debt instruments. These types of investments are subject to the risk of an issuer’s ability to meet principal and interest payments on the obligation (credit risk), and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer, and general market liquidity (market risk). With bonds and other credit securities, a rise in interest rates typically causes a fall in values, while a fall in interest rates typically causes a rise in values. The risk of debt securities varies significantly depending upon factors such as the issuer and maturity. For example, the issuer of a security or the counterparty to a contract may default or otherwise become unable to honor a financial obligation. Debt investments in some companies may be riskier than investments in the stocks of others. Loans Clients generally may invest in loans. Loans include fixed and floating rate loans arranged through private negotiations between one or more financial institutions and a borrower. Although loans are traded among certain financial institutions, some of the loans that the Clients may invest in will be considered illiquid. Loan Participations Clients generally may invest in loan participations. Investment in loan participations involves certain risks in addition to those associated with direct loans. A loan participant has no contractual relationship with the borrower of the underlying loan. As a result, the participant is generally dependent upon the lender to enforce its rights and obligations under the loan agreement in the event of a default, and may not have the right to object to amendments or modifications of the terms of such loan agreement. A participant in a syndicated loan generally does not have the voting rights, which are retained by the lender. In addition, a loan participant is subject to the credit risk of the lender as well as the borrower, since a loan participant is dependent upon the lender to pay its percentage of payments of principal and interest received on the underlying loan. A Client will acquire participations only if the seller of the participation is determined by Carlson to be creditworthy. Bridge Financings From time to time, a Client may lend to public or private companies, including companies in which the Client or another account managed by Carlson or one of its affiliates has an existing investment, on a short-term, unsecured basis or otherwise invest on an interim basis in such companies in anticipation of a future issuance of equity or long-term debt securities or other refinancing or syndication. Such bridge loans would typically be convertible into a more permanent, long-term security. However, for reasons not always in the Client’s control, such long-term securities issuance or other refinancing or syndication may not occur and such bridge loans and interim investments may remain outstanding. In such event, the interest rate on such loans or the terms of such interim investments may not adequately reflect the risk associated with the position taken by the Client, and the Client may have difficulty in exiting the investment. Conversion of the Client’s bridge financing into more permanent, long-term securities carries the risk that, even if the expected issuance or other refinancing or syndication occurs, an adequate market may not develop. In addition, the Client may be required to adhere to certain contractual obligations, such as lock-up agreements, which may prohibit the Client from selling such securities in certain circumstances. Fraud Of paramount concern in lending is the possibility of material misrepresentation or omission on the part of the borrower. Such inaccuracy or incompleteness may adversely affect the valuation of the collateral underlying the loans or may adversely affect the ability of the Client to perfect or effectuate a lien on the collateral securing the loan. The Client will rely upon the accuracy and completeness of representations made by the borrowers to the extent reasonable, but cannot guarantee such accuracy or completeness. Under certain circumstances, payments to the Client may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance or a preferential payment. Prepayment Risk The frequency at which prepayments (including voluntary prepayments by the obligors and liquidations due to default and foreclosures) occur on loans and other debt underlying certain of the Client’s investments will be affected by a variety of factors including, but not limited to, the prevailing level of interest rates as well as economic, demographic, tax, social, legal, and other factors. In general, “premium” financial instruments (i.e., financial instruments whose market values exceed their principal or par amounts) are adversely affected by faster-than- anticipated prepayments, and “discount” financial instruments (i.e., financial instruments whose principal or par amounts exceed their market values) are adversely affected by slower than anticipated prepayments. Since the Client’s investments may include discount financial instruments when interest rates are high, and may include premium financial instruments when interest rates are low, such investments may be adversely affected by prepayments in any interest rate environment.

Swaps and Derivatives Clients have and are expected to continue to invest and trade in swaps and other “synthetic” or derivative instruments, including contracts for differences, over-the-counter (“OTC”) options, non-deliverable forward contracts, and other customized financial instruments issued by banks, brokerage firms, or other financial institutions, both for hedging purposes and as an alternative to direct investments in the underlying financial instruments. A swap is an agreement between a Client and a financial intermediary whereby cash payments periodically are exchanged between the parties based upon changes in the price of underlying financial instrument(s) (such as an equity security, a fixed-income security, an index of securities, a currency, or another asset or group of assets with a readily determinable value). For example, an interest rate swap involves one party agreeing to make periodic fixed payments to the other party in return for the other party agreeing to make periodic payments to the first party that vary with a variable interest rate indicator. The risks associated with derivative transactions are potentially greater than those associated with the direct purchase or sale of the underlying financial instrument(s) because of the additional complexity and potential for leverage. Investing and trading in swaps and other derivative instruments may subject and has subjected Clients to additional costs associated with derivatives investing. To the extent the relevant swap or other derivative is not executed through a clearing agency, derivatives clearing organization or other centralized clearing platform, such swaps and other derivatives are subject to the risk of non-performance by the swap counterparty, and may create credit risk (the risk that a counterparty on a derivative transaction will not fulfill its contractual obligations), as well as legal, operational, reputational, and other risks beyond those associated with the direct purchase or sale of the underlying financial instrument(s) to which their values are related. While recent regulatory changes have expanded the types of swaps and other derivatives cleared through a derivatives clearing organization or other centralized clearing platform, many swaps and other forms of derivative instruments are not currently guaranteed by an exchange or clearing house or regulated by any U.S. or foreign governmental authority. In such circumstances, it is often not possible to dispose of or close out a swap or other derivative position without the consent of the counterparty, and a Client may not be able to enter into an offsetting contract in order to be able to cover its risk. Additional regulatory changes in the U.S. and other jurisdictions may significantly impact the trading of swaps and other derivatives in the future. Interest Rate Swaps Clients may invest in interest rate swaps. An interest rate swap is a bilateral agreement that requires each party to make periodic payments to the other party, the amounts of which are determined on the basis of a stated fixed or floating rate of interest, a specified notional principal amount, and the actual number of days during the period divided by the actual number of days in the year. Typically, one party agrees to make payments in an amount equal to a fixed rate of interest multiplied by the notional principal amount, while the other party agrees to make payments in an amount equal to a particular floating interest rate multiplied by the notional amount. The payment obligations of the parties might also be based on two different floating rates.

A party to an interest rate swap may be required to deposit margin or collateral with the counterparty in order to secure its obligations. The required margin or collateral may only be a fraction of the notional value of the swap, resulting in a high degree of leverage. Interest rate swaps may extend over significant periods of time and generally require payments to be made on a periodic (e.g., semi-annual) basis. Such transactions are entered into by each party acting as principal and typically may not be transferred or terminated without counterparty consent. As a result, interest rate swaps have limited liquidity. By entering into a swap, a party assumes the risk of adverse interest rate or exchange rate fluctuations, which could result in the party being obligated to make payments to its counterparty over a significant period of time. Interest Rate Caps and Floors Clients may invest in interest rate caps and floors. Similar to interest rate swaps, interest rate caps and floors are bilateral agreements in which the two parties agree to pay or receive payments on a notional principal amount. The purchaser of an interest rate cap receives payments from the seller to the extent that the cap’s underlying rate or other variable is greater than a specified strike rate. Conversely, the purchaser of an interest rate floor receives payments from the seller to the extent that the floor’s underlying rate or other variable is less than a specified strike rate. Interest rate caps and floors are subject to risks associated with the implied and realized volatility of interest rates and, in some cases, risks associated with implied and realized correlations, as well as risks similar to those described above with respect to interest rate swaps.

Volatility Swaps Clients may enter into volatility swaps. In a volatility swap, the counterparties agree to make payments in connection with changes in the volatility (i.e., the magnitude of change over a specified period of time) of an underlying reference instrument, such as a currency, rate, index, security, or other financial instrument. For example, a Client may enter into a volatility swap in order to take the position that the reference instrument’s volatility will increase over a particular period of time. If the reference instrument’s volatility does increase over the specified time, the Client will receive payment from its counterparty based upon the amount by which the reference instrument’s realized volatility level exceeds a volatility level agreed upon by the parties. If, however, the reference instrument’s volatility does not increase over the specified time, the Client will make a payment to the counterparty based upon the amount by which the reference instrument’s realized volatility level falls below the volatility level agreed upon by the parties.

Variance Swaps Clients may use variance swaps, a form of volatility swaps. A variance swap is an agreement by two parties to exchange cash flows based on the measured variance of a specified underlying asset. One party agrees to exchange a “fixed rate” or strike price payment for the “floating rate” or realized price variance on the underlying asset with respect to the notional amount. At inception, the strike price chosen is generally fixed at a level such that the fair value of the swap is zero. As a result, no money changes hands at the initiation of the contract. At the expiration date, the amount paid by one party to the other is the difference between the realized price variance of the underlying asset and the strike price multiplied by the notional amount. A receiver of the realized price variance would receive a payment when the realized price variance of the underlying asset is greater than the strike price and would make a payment when that variance is less than the strike price. A payer of the realized price variance would make a payment when the realized price variance of the underlying asset is greater than the strike price and would receive a payment when that variance is less than the strike price. Options on Swaps Clients may buy and sell options on swaps (“swaptions”). An option on swap is a contract that gives the purchaser of the contract the right (but not the obligation) to enter into a new swap agreement, or to shorten, extend, cancel, or otherwise modify an existing swap agreement, at a designated time in the future on specified terms. In return, the purchaser pays a premium to the seller of the contract. Options on swaps are generally subject to the same risks involved in a Client’s use of options. The purchaser of the contract is subject to the risk of losing the premium that it has paid should it decide to let the option expire unexercised. The seller of the contract receives the premium and bears the risk of unfavorable changes on the underlying swap. Depending on the terms of the particular option agreement, a Client will generally incur a greater degree of risk when it writes (i.e., sells) an option on a swap than it will incur when it purchases an option on a swap. Spread Trading and Arbitrage A part of Carlson’s investment operations may involve spread positions between two or more securities or derivatives positions, or a combination of the foregoing. Carlson’s trading operations also may involve arbitraging between two securities, between the security and security options markets, between derivatives and securities and/or options, between two derivatives, and/or any combination of the above. To the extent the price relationships between such positions remain constant, no gain or loss on the positions will occur. These offsetting positions entail substantial risk that the price differential could change unfavorably, thereby causing a loss to the position. Illiquid Investments Certain securities and other assets acquired by certain Clients have not been and may not be readily marketable at acquisition or have become or may become illiquid (e.g., due to the relevant issuer becoming distressed). Certain Clients have invested or may invest in “restricted” or non-publicly traded securities, securities traded on non-U.S. exchanges, securities that are acquired directly from companies in private placements that are not registered under U.S. securities laws, or securities traded off established exchanges on an OTC basis. A Client may not be readily able to dispose of such non-publicly traded or less-liquid securities, and in some cases, may be prohibited from disposing of such securities for a specified period of time. An exchange or regulatory authority may suspend trading in a particular security or contract, order immediate liquidation and settlement of a particular contract, or order that trading in a particular contract be conducted for liquidation only. Currency forward contracts and other derivative instruments not traded on regulated exchanges may be entered into with banks, brokerage firms, and other counterparties, may not be assigned without the consent of the counterparty, and may result in losses in the event of a default or bankruptcy of the counterparty. Effect of Regulatory Requirements The ability of a Client to transact in financial instruments it holds may be impacted by regulatory requirements, which may also require that certain holdings be publicly disclosed. The Clients (separately or together) may own more than a certain percentage of a class of securities of an issuer, as a result of which one or more of the Clients could be limited in transacting in such securities (or corresponding swaps and other derivative instruments) for a period of time. One or more of the Clients and/or Carlson or its affiliates may receive non- public information regarding an issuer, which would restrict the Clients’ ability to trade in the securities of the issuer (or corresponding swaps and other derivative instruments). These and other regulatory requirements may cause the Clients to be unable to transact in securities of an issuer (or corresponding swaps and other derivative instruments) when doing so would otherwise be in their best interests. For example, such a “lock-up” period may require the Clients to hold a security or other financial instrument when its value is declining, resulting in losses. Futures Clients may trade futures. Futures prices can be highly volatile. Because of the low margin deposits normally required in futures trading, an extremely high degree of leverage is typical of a futures trading account. As a result, a relatively small price movement in a futures contract held by a Client may result in substantial losses to the Client. The prices of futures contracts and options used for hedging purposes may not correlate with price movements of the underlying securities being hedged. Although the Clients generally seek to only purchase or sell commodity futures contracts if there is an active market for each such contract, no assurance can be given that a liquid market will exist for the contracts at any particular time. Futures exchanges and boards of trade may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit. Futures contract prices could move to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses. Futures exchanges may impose position accountability limits (the “Position Accountability Limits”) with respect to certain futures contracts traded on each particular futures exchange. Position Accountability Limits are triggers that would bring the Clients’ position(s) to the attention of the exchange. Through the application of Position Accountability Limits, exchanges can prohibit an investor from holding a position of more than a specific number of futures contracts. Under the rules of a futures exchange, if the Clients (separately or together) hold a certain number of futures contracts approaching the Position Accountability Limits, the Clients may be required by the futures exchange to limit or decrease their holdings of such futures contracts pursuant to the futures exchange’s Position Accountability Limits. If the Clients are required to either limit or decrease their holdings of such futures contracts, or if an exchange lowers its Position Accountability Limits, the Clients’ returns may be adversely impacted. As noted, such limitations may arise due to aggregation of the Clients’ holdings. Non-U.S. Investments Clients generally invest in both U.S. and non-U.S. securities denominated in non-U.S. currencies and/or traded outside of the United States. Such investments require consideration of certain risks typically not associated with investing in U.S. securities or property. Such risks include, among other things, trade balances and imbalances and related economic policies, unfavorable currency exchange rate fluctuations, imposition of exchange control regulation by the United States or non-U.S. governments, U.S. and non-U.S. withholding taxes, limitations on the removal of funds or other assets, policies of governments with respect to possible nationalization of their industries, and economic or political instability in non-U.S. nations. There may be less publicly available information about certain non-U.S. issuers than would be the case for comparable issuers in the United States, and certain non-U.S. issuers may not be subject to accounting, auditing, and financial reporting standards and requirements comparable to, or as uniform as, those of U.S. issuers. Securities markets outside the United States, while growing in volume, have for the most part substantially less volume than U.S. markets, and many securities traded on these non-U.S. markets are less liquid and their prices more volatile than securities of comparable U.S. companies. Settlement of trades in some non-U.S. markets is much slower and more subject to failure than in U.S. markets, which may result in delays that cause one or more Clients to miss attractive investment opportunities. There also may be less extensive regulation of the securities markets in particular countries other than in the United States. Additional costs may be incurred in connection with non-U.S. investment activities. Non- U.S. brokerage commissions generally are higher than in the United States. Expenses also may be incurred on currency exchanges when a Client changes investments from one country to another. Increased custodian costs as well as administrative difficulties (such as the applicability of non-U.S. laws to non-U.S. custodians in various circumstances, including bankruptcy, ability to recover lost assets, expropriation, nationalization, and record access) may be associated with the maintenance of assets in non-U.S. jurisdictions. Exchange Rate Risks Clients generally invest in financial instruments denominated in currencies other than the U.S. dollar and in other financial instruments, the price of which is determined by reference to currencies other than the U.S. dollar. While the Clients intend to hedge against certain fluctuations in exchange rates between the U.S. dollar and the currencies in which the Clients’ investments are denominated or by which the price of such investments are determined, the Clients expect to take some directional exchange rate risk. To the extent a Client does not fully hedge against fluctuations in exchange rates between the U.S. dollar and the currencies in which the Clients’ investments are denominated or by which the price of such investments are determined, the value of their assets will fluctuate with the exchange rates between the relevant currencies. An increase in the value of the U.S. dollar compared to the other currencies in which a Client makes its investments will reduce the effect of increases and magnify the effect of decreases in the prices of such Client’s financial instruments in their local markets. Conversely, a decrease in the value of the U.S. dollar will have the opposite effect of magnifying the effect of increases and reducing the effect of decreases in the prices of a Client’s financial instruments denominated in other currencies. Further, it is possible that a currency hedge will fail to protect a Client fully from fluctuations in currency exchange rates. Currencies of emerging market countries may be less liquid than currencies of developed countries, which may adversely affect a Client’s ability to enter or exit an investment when it desires to do so. Currency Hedges If a Client (for example, an offshore feeder Fund) offers a series of shares for investment that is denominated in a currency other than U.S. dollars (a “Non-USD Currency Series”), Carlson Capital expects to seek to enter into currency hedges to reduce the effect of fluctuations in currency exchange rates between the currency of the Non-USD Currency Series and U.S. dollars (“Currency Hedges”) as it deems appropriate. Currency Hedges aim to reduce, not eliminate, currency risk. The Non-USD Currency Series will not be completely hedged, and there can be no assurance that any such Currency Hedges will be effective. A Client will incur costs (which could be significant at times) when effecting Currency Hedges. Any direct costs associated with Currency Hedges entered into in respect of a particular Non-USD Currency Series will be allocated to such Non-USD Currency Series and will, therefore, impact the net asset value of the shares of such Non-USD Currency Series, which will likely negatively impact the return of the Non-USD Currency Series. Additionally, there is expected to be indirect costs associated with Currency Hedges that could impact the net asset value per share of all series. For example, certain instruments used in Currency Hedges may require the maintenance of margin with the counterparty to the Currency Hedge, which would increase financing costs to a Client if the Client’s borrowings increase due to the margin requirements. Carlson Capital is not obligated to enter into Currency Hedges in respect of any Non-USD Currency Series. There may be circumstances in which Carlson Capital determines not to conduct any Currency Hedges in respect of a Non-USD Currency Series in whole or in part for a certain period of time, including, without limitation, when Carlson Capital determines, in its sole and absolute discretion, without notice to investors of such Non-USD Currency Series (or any other investor), that Currency Hedges are not practicable or possible or may materially and adversely affect the Client or any of its investors. As a result, the currency exposure of investors of a particular Non-USD Currency Series could go fully or partially unhedged for that period of time. Carlson Capital’s determination not to adjust any Currency Hedges entered into in respect of a particular Non-USD Currency Series to take into account the exposure of such Non-USD Currency Series to exchange rate fluctuations or investment results could result in that Non-USD Currency Series being under hedged (i.e., not fully protected from exchange rate fluctuations, which could leave the Non-USD Currency Series exposed to exchange rate fluctuations on the portion of the net asset value of such series in excess of the hedged amount) or over hedged (i.e., having Currency Hedges that reference an amount of the currency in excess of the net asset value of such Non-USD Currency Series, which could result in a Non-USD Currency Series being overexposed to gains and losses associated with Currency Hedges as compared to the net asset value of such Non-USD Currency Series). Increased volatility in exchange rate fluctuations or the return of the underlying portfolio assets of the Client would likely magnify the extent of the Non-USD Currency Series being under hedged or over hedged. Currencies Clients generally trade currencies for hedging purposes. Currency markets are highly volatile, and currency trading is highly leveraged. Governments from time to time intervene, directly and by regulation, in the currency markets, with the specific intention of influencing the exchange rates. Currency markets are also, in general, highly interest rate sensitive, and may also be affected by trade, fiscal, monetary, and exchange control programs and policies of governments, and national and international political and economic events and policies. The Clients may invest in currencies of emerging market countries, which may be less liquid than currencies of developed countries. Forward Currency Contracts Clients may invest in forward currency contracts with banks, financial institutions, or dealers acting as principal. Forward currency contracts may not be liquid in all circumstances, so that in volatile markets, to the extent a Client wishes to do so, it may not be able to close out a position by taking another position equal and opposite to such position on a timely basis or without incurring a sizeable loss. Closing transactions with respect to forward currency contracts usually are effected with the currency trader who is a party to the original forward contract and generally require the consent of such trader. There can be no assurance that the Clients will be able to close out their respective obligations. There are no limitations on daily price moves in forward contracts. Banks and other financial institutions with whom Clients may maintain accounts may require margin deposits with respect to such trading. Banks are not required to continue to make markets in forward contracts. There have been periods during which certain banks have refused to quote prices for such forward contracts or have quoted prices with an unusually wide spread between the price at which the bank is prepared to buy and that at which it is prepared to sell. Trading of forward contracts through banks is not regulated by any U.S. governmental agency. The Clients will be subject to the risk of bank failure and the inability of, or refusal by, a bank to perform with respect to such contracts. Investments in Secured Loans The assets of the portfolio of the Clients may include secured debt, which involves various degrees of risk of a loss of capital. The factors affecting an issuer’s secured leveraged loans, and its overall capital structure, are complex. Some secured loans may not necessarily have priority over all other debt of an issuer. For example, some secured loans may permit other secured obligations (such as overdrafts, swaps, or other derivatives made available by members of the syndicate to the company), or involve secured loans only on specified assets of an issuer (e.g., excluding real estate). Issuers of secured loans may have two tranches of secured debt outstanding, each with secured debt on separate collateral. Furthermore, the liens referred to herein generally only cover domestic assets and non-U.S. assets are not included (other than, for example, where a borrower pledges a portion of the stock of first-tier non-U.S. subsidiaries). In the event of Chapter 11 filing by an issuer, the U.S. Bankruptcy Reform Act of 1978, as amended, authorizes the issuer to use a creditor’s collateral and to obtain additional credit by grant of a priority lien on its property, senior even to liens that were first in priority prior to the filing, as long as the issuer provides what the presiding bankruptcy judge considers to be “adequate protection” which may but need not always consist of the grant of replacement or additional liens or the making of cash payments to the affected secured creditor. The imposition of priority liens on the Clients’ collateral would adversely affect the priority of the liens and claims held by the Clients and could adversely affect the Clients’ recovery on the affected loans. Any secured debt is secured only to the extent of its lien and only to the extent of underlying assets or incremental proceeds on already secured assets. Moreover, underlying assets are subject to credit, liquidity, and interest rate risk. ABS and MBS Clients may invest in asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”). The investment characteristics of ABS and MBS differ from traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and that the principal may be prepaid at any time because the underlying loans or other assets generally may be prepaid at any time. The frequency at which prepayments (including voluntary prepayments by the obligors and liquidations due to default and foreclosures) occur on loans underlying MBS and ABS will be affected by a variety of factors, including the prevailing level of interest rates as well as the availability of mortgage credit, the relative economic vitality of the area in which the related properties are located, the servicing of the mortgage loans, possible changes in tax laws, other opportunities for investment, homeowner mobility and other economic, social, geographic, demographic, and legal factors. In general, any factors that increase the attractiveness of selling a mortgaged property or refinancing a mortgage loan, enhance a borrower’s ability to sell or refinance, or increase the likelihood of default under a mortgage loan would be expected to cause the rate of prepayment in respect of a pool of mortgage loans to accelerate. Particular investments may experience outright losses, as in the case of an interest only security in an environment of faster actual or anticipated prepayments. Also, particular investments may underperform relative to hedges that a portfolio manager may have constructed for these investments, resulting in a loss. In contrast, any factors having an opposite effect would be expected to cause the rate of prepayment of a pool of mortgage loans to slow. At any one time, a portfolio of MBS may be backed by residential mortgage loans with disproportionately large aggregate principal amounts secured by properties in only a few states or regions. As a result, the residential mortgage loans may be more susceptible to geographic risks relating to such areas, such as adverse economic conditions, adverse events affecting industries located in such areas, and natural hazards affecting such areas, than would be the case for a pool of mortgage loans having more diverse property locations. Mortgage loans on commercial properties underlying MBS often are structured so that a substantial portion of the loan principal is not amortized over the loan term but is payable at maturity and repayment of the loan principal thus often depends upon the future availability of real estate financing from the existing or an alternative lender and/or upon the current value and salability of the real estate. Therefore, the unavailability of real estate financing may lead to default. Most commercial mortgage loans underlying MBS are effectively nonrecourse obligations of the borrower, meaning that there is no recourse against the borrower’s assets other than the collateral. If borrowers are not able or willing to refinance or dispose of encumbered property to pay the principal and interest owed on such mortgage loans, payments on the subordinated classes of the related MBS are likely to be adversely affected. The ultimate extent of the loss, if any, to the subordinated classes of MBS may only be determined after a negotiated discounted settlement, restructuring or sale of the mortgage note, or the foreclosure (or deed in lieu of foreclosure) of the mortgage encumbering the property and subsequent liquidation of the property. Especially in the case of a mortgage-backed security related to commercial mortgage loans, the rate of principal payments on the loans in the related pool will also be affected by the nature and extent of any restrictions on prepayments that are set forth in the mortgage loans, and the extent to which such provisions may be enforced. Such restrictions may include a prohibition on prepayments for specified periods of time and/or requirements that principal prepayments be accompanied by the payment of prepayment penalties or be subject to yield maintenance premiums. The rate of prepayment on a pool of mortgage loans is likely to be affected by prevailing market interest rates for mortgage loans of a comparable type, term and risk level. When the prevailing market interest rate is below a mortgage coupon, a borrower generally has an increased incentive to refinance its mortgage loan. Even in the case of adjustable rate mortgage loans, as prevailing market interest rates decline, and without regard to whether the mortgage rates on such loans decline in a manner consistent therewith, the related borrowers may have an increased incentive to refinance for purposes of either: (i) converting to a fixed rate loan and thereby “locking in” such rate or (ii) taking advantage of a different index, margin, or rate cap or floor on another adjustable rate mortgage loan. Therefore, as prevailing market interest rates decline, prepayment speeds would be expected to accelerate. In the case of a mortgage-backed security related to multifamily or commercial loans, prevailing market interest rates, the outlook for market interest rates and economic conditions generally may cause some borrowers to sell their properties in order to realize their equity therein, to meet cash flow needs or to make other investments. In addition, some borrowers may be motivated by U.S. federal and state tax laws (which are subject to change) to sell their properties prior to the exhaustion of tax depreciation benefits. ABS which represent an interest in a pool of assets such as credit card receivables, automobile loans, or home equity loans, have yield and maturity characteristics corresponding to their underlying assets. The risk of each ABS depends both on the underlying assets and the legal structure of such security. (For example, credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws.) Through the use of trusts and special purpose corporations, various types of assets, primarily automobile and credit card receivables, are securitized in pass-through structures. Through collateralized debt obligations, the Clients may invest in these and other types of ABS that may be developed in the future. ABS present certain risks that are not presented by MBS. Primarily, these securities do not have the benefit of the same security interest in the related collateral. There is a possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Further, unlike traditional debt securities, which may pay a fixed rate of interest until maturity when the entire principal amount comes due, payments on certain ABS include both interest and a partial payment of principal. This partial payment of principal may be comprised of a scheduled principal payment as well as an unscheduled payment from the voluntary prepayment, refinancing, or foreclosure of the underlying loans. As a result of please register to get more info

In September 2010, Carlson Capital voluntarily agreed to settle an SEC matter relating to Rule 105 of Regulation M under the Securities Exchange Act of 1934 without admitting or denying the SEC’s findings. Rule 105 generally prohibits purchasing an equity security in a registered secondary offering if the purchaser sold short the same security during a restricted period (generally defined as five business days before the pricing of the offering). Rule 105’s prohibition applies irrespective of any intent to violate the rule. The settlement involved four secondary offerings that Funds and other accounts managed by Carlson Capital participated in between May and November 2008. Pursuant to the requirements in Finland to disclose net short positions in Finnish issuers, Carlson UK sent a public notification of a net short position in the issued share capital of a Finland-listed company on January 31, 2014. Thereafter, Carlson UK closed/covered the entire net short position in the issued share capital of the company on February 7, 2014. Inadvertently, and due to an administrative oversight in the calendaring of the reporting to the Finnish Financial Supervisory Advisory Authority (“FIN-FSA”), on February 8, 2014, Carlson UK failed to report that it had in fact closed out its entire net short position in the company the prior trading day. As a result of this failure to notify FIN-FSA, Carlson UK received an administrative penalty in the amount of €30,000 and settled the matter in February 2016. In order to guard against future irregularities in reporting, Carlson’s Compliance Department instituted a process whereby two employees are responsible for verifying all the foreign reporting manually in addition to monitoring the automated reports. Additional details regarding the events described above can be found in Carlson’s Form ADV Part I, which can be accessed through the Securities and Exchange Commission (the “SEC”) website at http://www.sec.gov. please register to get more info

Carlson Capital is registered as a commodity pool operator and commodity trading advisor, and CCGP is registered as a commodity pool operator with the Commodity Futures Trading Commission (“CFTC”). Both Carlson Capital and CCGP are members of the National Futures Association (“NFA”), but have claimed certain exemptions with respect to activities on behalf of certain of the Funds. Pursuant to CFTC regulations and NFA rules, certain employees of Carlson Capital and its affiliates are registered with the NFA as associated persons and principals. CCGP is the general partner of the U.S.-domiciled feeder funds and, in accordance with SEC guidance, is considered a registered investment adviser under Carlson’s registration. CCGP has delegated to Carlson Capital the investment advisory authority for such Funds. Carlson Capital relies in part upon investment advice received from Carlson UK, a United Kingdom limited liability partnership. As described in Item 4 (Advisory Business) above, Carlson UK is an affiliate of Carlson and an FCA-authorized and regulated investment adviser. Carlson UK is not registered with the SEC as an investment adviser because it meets the requirements to be treated as a “participating affiliate” of Carlson Capital, which is its only client. Carlson UK personnel who provide advisory services to Carlson Capital are subject to Carlson Capital’s Advisers Act compliance policies and procedures and code of ethics as well as its own policies and procedures. No Carlson Capital Client incurs any additional management or performance fees or allocations as a result of Carlson UK’s services. The relationship between Carlson Capital and Carlson UK is evidenced in a Participating Affiliate Agreement dated March 29, 2018. CCA is: (i) the collateral manager of the CLOs, (ii) a wholly-owned subsidiary of Carlson Capital, and (iii) a relying adviser of Carlson Capital, which acts as the filing adviser. The Funds may under certain circumstances invest a portion of their assets in one or more of the other Funds or CLOs to the extent that Carlson Capital considers the investment appropriate and consistent with the investment objectives of the investing Fund. Any management or performance fees or allocations charged by Carlson Capital or an affiliate on assets invested in a Fund or CLO by another Fund will be waived or reimbursed to the extent received. The following is a list of the Funds:

Black Diamond Partners, L.P. Black Diamond Ltd. Black Diamond Intermediate Ltd. Black Diamond Offshore Ltd. Double Black Diamond, L.P. Double Black Diamond Ltd. Double Black Diamond Intermediate Ltd. Double Black Diamond Offshore Ltd. Black Diamond Relative Value Partners, L.P. Black Diamond Relative Value Ltd. Black Diamond Relative Value Intermediate Ltd. Black Diamond Relative Value Offshore Ltd. Black Diamond Relative Value Cayman, L.P. Black Diamond Arbitrage Partners, L.P. Black Diamond Arbitrage Ltd. Black Diamond Arbitrage Intermediate Ltd. Black Diamond Arbitrage Offshore Ltd. Black Diamond Thematic, L.P. Black Diamond Thematic Ltd. Black Diamond Thematic Intermediate Ltd. Black Diamond Thematic Offshore Ltd. Black Diamond Mortgage Opportunity Offshore II Ltd.

The following is a list of the CLOs:

Cathedral Lake CLO 2013, Ltd. Cathedral Lake II, Ltd. Cathedral Lake III, Ltd. Cathedral Lake IV, Ltd. Cathedral Lake V, Ltd. Certain Other Affiliations Parallel Resource Partners, LLC (“Parallel”), a Delaware limited liability company, is owned in part by related persons of Carlson and is an SEC-registered investment adviser. Parallel provides investment advisory services, pursuant to the investment guidelines as set forth in the applicable offering memoranda, to certain private investment vehicles (the “ERR Funds”). The ERR Funds are privately- offered, private equity funds formed by Parallel to make control investments in distress-driven opportunities in the North American upstream oil and gas sector. As of June 2015, the investment period of the ERR Funds was ended by agreement of the limited partners and the ERR Funds can make no further investments. Parallel is owned 50% by Bluescape Energy Partners, LLC and 50% by Carlson Energy Partners I, LLC (“CEP I”). Bluescape, a Delaware limited liability company, was formed in November 2010 to participate in the management of Parallel. CEP I was formed as a Delaware limited liability company in January 2011 to participate in the management of Parallel. CEP I is owned 50% in the aggregate by two employees of CEP I (Ron Hulme and John Howie) and 50% by affiliates of Carlson. Clint Carlson serves on the Board of Managers of Parallel (as it continues to manage three existing portfolio companies through the ERR Funds) and may, from time to time, be given access to confidential information relating to companies in which the ERR Funds or the Clients invest. Employees of Carlson and its affiliates may serve as officers, advisors, directors or in comparable management functions for portfolio companies in which the ERR Funds or the Clients invest, or provide other services to portfolio companies, and may receive compensation in connection therewith. Employees of Carlson and its affiliates may also from time to time serve on the board of directors or a creditors committee of a portfolio company, or be given access for other reasons to confidential information relating to companies in which the ERR Funds or the Clients invest. As a result, the Clients managed by Carlson may, under certain circumstances, be prohibited for a period of time from engaging in trading in certain issuers when doing so would otherwise be in their best interests. Carlson has policies and procedures in place to prevent the misuse of material non-public information as further discussed in Item 11 (Material, Non-Public Information). Certain Conflicts of Interest The non-exhaustive information contained below describes certain potential material conflicts of interest relating to Carlson’s advisory business and relationships to related persons described above that may impact a Client. Carlson attempts to address or mitigate these conflicts through its policies and procedures and, as it determines appropriate, use of the Conflicts Committee as described below. Each prospective investor in a Client must have enough knowledge and experience in financial and business matters to be capable of evaluating the potential material conflicts of interest that may arise in connection with the operation of such Client. No list of potential conflicts of interest can be expected to be full and complete. Each prospective investor should review the relevant Governing Documents in their entirety and discuss any proposed investment with his, her, or its investment, tax, accounting, legal, and other advisers prior to making any such investment. Other Clients and Services Carlson and its affiliates act, and may in the future act, in one or more capacities, including without limitation, as general partner, manager, director, administrator, trustee, custodian, investment adviser in relation to, or be otherwise involved in, the Clients or other funds and accounts that have similar or overlapping investment objectives. It is therefore possible and expected that any of them may, in the ordinary course of their business, have potential conflicts of interests with the Clients as further described below. Management of Multiple Clients In providing services to a Client, Carlson may give advice and recommend securities, and has given or recommended securities, which advice or securities may be identical to, or differ from, advice given to, or securities recommended or bought for, other Clients, even though their investment objectives may be the same or similar. Such other Clients may be and have been subject to different fees and expenses, and Carlson or its affiliates may own and have owned interests in some of such other Clients, which creates conflicts of interest in that Carlson may be incented to favor a higher fee paying Client over a lower fee paying Client or an account in which Carlson or its affiliates hold a greater ownership interest. Such conflicts of interest may result in Carlson allocating investments to certain Clients even if such investment opportunities are otherwise appropriate for other Clients. To mitigate these conflicts, Carlson has adopted allocation policies and procedures as described immediately below. Additionally, Carlson may cause and has caused accounts managed by it, including but not limited to the Clients in which Carlson or an affiliate may own an interest, to enter into transactions with each other. Please see Item 11 (Participation in Client Transactions). The performance of the Clients has varied, and any other accounts managed in the future by Carlson are expected to vary. Allocation of Investment Opportunities and Aggregation of Trade Orders In the ordinary course of its activities, Carlson buys or sells for one Client the same securities as those traded by another Client. Carlson has the sole authority to determine how investment and trading opportunities are allocated among the Clients, even though, as described above, it faces potential conflicts of interest in making such allocations. Please see Item 12 (Brokerage Practices – Order Aggregation and Allocation) for additional information regarding Carlson’s procedures concerning the allocation of investment opportunities and how potential conflicts are addressed. Also, Carlson may aggregate and has aggregated orders of the Clients. Such aggregation of orders, however, may not always benefit one or more particular Clients with regard to the price or quantity executed. Additionally, situations may arise in which the activities of Carlson or one or more of the Clients may disadvantage one or more of the other Clients, such as the inability of the market fully to absorb orders for the purchase or sale of particular financial instruments placed by Carlson for all the Clients at prices and in quantities that would be obtainable if the same were being placed only for one Client. At other times, a Client may seek to sell and has sold investments that are also held by another Client at different times. For example, a Client in liquidation or wind-down, or with a different strategy or withdrawal terms, may seek to sell an investment before another Client seeks to sell such investment, which may adversely affect the market value of the investment that is still held by the latter Client. Additionally, to the extent Clients buy or sell investments at different times, one Client’s activity may adversely affect the execution prices obtained by another Client. Please see Item 12 (Brokerage Practices – Order Aggregation and Allocation) for additional information as to our practices concerning the aggregation of investment opportunities and how potential conflicts are addressed. Carlson attempts to address or mitigate these conflicts through its policies and procedures and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Investments in other Investment Vehicles A portion of the assets of certain Clients may and has been managed directly by, or invested in investment funds managed or sponsored by, other investment advisers selected by Carlson, to the extent Carlson considers the investment strategies offered by such advisers appropriate and consistent with the Clients’ investment objectives. Where appropriate, a portion of the assets of certain Clients may also be, and has been, invested in other investment vehicles managed by Carlson, its affiliates, a portfolio company in which the Clients may have an investment, or affiliates of such a portfolio company. Such investments may include initial capital or follow-on investments in private funds or other commingled investment vehicles, “co-investment,” “overflow,” or “side car” vehicles, collateralized debt obligations, collateralized loan obligations, or other structured or special investment vehicles. For example, Carlson may cause a Client to make an investment in another Carlson-managed investment vehicle (including a CLO) in order to permit such investment vehicle to launch or achieve sufficient scale. The portion of the assets of the Clients allocated to investment advisers that are not controlled by or under common control with Carlson generally will not exceed 10% of the net assets of the Clients at the time of the allocation. Carlson will waive any fees payable or reimburse, to the extent received, any fees paid by any investment vehicle in which the Clients invest to Carlson or an affiliate controlled by or under common control with Carlson, to the extent that such fee is attributable to the investment by Clients in such vehicle. Carlson and its affiliates will be entitled to retain any fees paid by any such investment vehicle that are not attributable to the investment by Clients in the vehicle. Even with such fee waiver, such investments nevertheless present a conflict of interest to the extent that Carlson benefits if the investment by a Client contributes to making the investment vehicle more viable, marketable or profitable. Carlson attempts to address or mitigate these conflicts through its policies and procedures, including its Code of Ethics, and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Investments in and Loans to Portfolio Companies A portion of the assets of a Client may be invested in portfolio companies that are majority- owned or wholly-owned by the Client or one or more other Clients (each, a “Portfolio Company”). Such investments may be in the form of equity or debt investments and may include loans made by a Client to a Portfolio Company (see below). There is generally no limitation on the types of investments that a Client may make in a Portfolio Company. Certain Clients have provided (and may, from time to time, provide) loans or other extensions of credit (each, a “Portfolio Company Loan”) to one or more Portfolio Companies in which the Clients or another Client have an existing investment. A Portfolio Company Loan may be of any duration, may be made on a secured or unsecured basis, and may have a floating or fixed interest rate or other economic terms. It is generally expected that a Portfolio Company Loan will only be made by a Client if the Client holds another interest in the relevant Portfolio Company (or another entity in a group of entities), though that may not always be the case. The terms of a Portfolio Company Loan will generally take into account the actual or potential benefit to a Client and any other Clients that have another investment in the Portfolio Company. This may result in the Portfolio Company Loan having more favorable terms for the Portfolio Company than terms which would be provided by a lender in an arm’s length transaction. For example, the interest rate or repayment schedule on a Portfolio Company Loan may not (when viewed in isolation) adequately entirely reflect the risk associated with the Portfolio Company Loan. In certain cases, a Portfolio Company Loan has been (and may, from time to time, be) made to a Portfolio Company in which a Client or one or more other Clients have a controlling position (either alone or collectively) and a Client, one or more other Clients, Carlson or its affiliates have obtained certain rights associated with a non-passive investment (“Control Rights”). Even if a Portfolio Company has provided Control Rights that would not necessarily be provided to a third-party lender, such Portfolio Company Loan may involve a high degree of economic risk and is likely to be highly illiquid. In addition, if a Client or one or more other Clients has a controlling interest in a Portfolio Company, some jurisdictions hold that a controlling owner owes certain fiduciary duties to the minority owner. This may increase the risk of legal claims against a Client in the event that the terms of a Portfolio Company Loan were determined to be unfavorable to minority owners. Carlson attempts to address or mitigate these conflicts through its policies and procedures, including its Code of Ethics, and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Performance Allocation and Management Fee As noted above, the Performance Allocation payable to Carlson and its affiliates may create an incentive to make investments that are riskier or more speculative than would be the case in the absence of such an arrangement. Additionally, since the valuation of Client assets impacts the Performance Allocation (and Management Fees) payable to Carlson and its affiliates and may impact compensation of certain employees, Carlson may also have an incentive to inflate the valuation of certain Client assets. These incentives may be particularly acute when the Performance Allocation is payable only upon exceeding a “hurdle” rate, benchmark, and/or high-water mark or loss carry-forward, and the performance of Client accounts is below any such hurdle, benchmark, and/or high-water mark or loss carry-forward. Since the Performance Allocation is calculated on a basis that includes unrealized appreciation of assets, it generally will be greater than if such Performance Allocation were based solely on realized gains. Certain Clients have held and may hold securities for which a market quotation is not readily available. Such securities have been and may be valued, including as a basis for determining the amounts payable to Carlson and its affiliates, in part based on information provided by Carlson. With respect to certain Clients, the terms of the Performance Allocation and the Management Fee may be set without negotiation with any third party. Carlson attempts to address or mitigate these conflicts through its policies and procedures, including its Code of Ethics and its valuation policy and procedures, and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Co-Investment Opportunities From time to time, Carlson, in its sole and absolute discretion, offers certain parties, who may or may not be an investor in a Client, opportunities to co-invest in certain investments alongside a Client, without notice to, or the consent of, investors in the Client. Carlson will allocate co-investment opportunities among co-investors in any manner it so determines, taking into account those factors that it deems relevant under the circumstances, including, but not limited to: (i) whether a prospective co-investor has expressed an interest in participating in co-investment opportunities (including, for example, by election in such co- investor’s side letter or investment advisory agreement, if applicable); (ii) the character or nature of the co-investment opportunity (e.g., its size, structure, geographic location, relevant industry, tax characteristics, risk and return characteristics, and any contemplated minimum commitment threshold); (iii) the level of demand for participation in such co-investment opportunity; (iv) the ability of a prospective co-investor to analyze or consummate a potential co-investment opportunity on an expedited basis; (v) whether a prospective co-investor has previously declined to participate in a co-investment opportunity (and the number of times such prospective investor has previously declined); (vi) whether or not the prospective co- investor is willing to pay performance compensation and management fees in respect of the co-investment; (vii) the size of a prospective co-investor’s investment in a Client or in past or current co-investment opportunities; (viii) whether Carlson is required to offer such co- investment opportunity to such prospective co-investor (e.g., pursuant to such co-investor’s side letter, investment advisory agreement or the Governing Documents of the applicable Client) or other fiduciary considerations; (ix) the strategic value of a prospective co-investor to the co-investment opportunity; and (x) legal, regulatory, and tax considerations. The relevance of each of these factors will vary depending on the co-investment opportunity with no single factor consistently outweighing the others. Notwithstanding the foregoing, Carlson may in the future update or develop additional policies and procedures to address the allocation of co-investment opportunities without notice to, or the consent of, investors in any Client. Such policies and procedures may differ from Carlson’s current practice. Carlson attempts to address or mitigate these conflicts through its policies and procedures, and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Other Activities Carlson and its affiliates may engage in other activities, and will determine how much time and attention they will devote to the affairs of the Clients. Certain employees or other representatives of Carlson may and do serve as members of the board of directors or creditors committee of a portfolio company, or be given access for other reasons to confidential information relating to companies in which the Clients invest. As a result, the Clients may, under certain circumstances, be prohibited for a period of time from engaging in transactions with respect to the debt or securities of such a portfolio company. Such activities may also limit the amount of time that such representatives of Carlson may devote to Carlson and its Clients. Certain employees of Carlson also may and do from time to time receive compensation directly from a portfolio company for such service. Receipt of such compensation and/or service on a board creates a conflict of interest between a board member’s personal interests, the interests of the Clients, and the interests of the portfolio company and its other shareholders. While Carlson has compliance policies and procedures designed to monitor conflicts of interests relating to the outside activities of employees of Carlson, such as serving as a member of the board of directors of a portfolio company, such policies and procedures may not be effective. Other activities by Carlson and its affiliates on behalf of a Client may adversely affect one or more other Clients. Carlson and its affiliates and certain Clients may have economic interests in or other relationships with issuers (including securitization vehicles) or special purpose vehicles in whose obligations or securities another Client may invest or in which such other Client may have an economic interest. A Client may make investments in an issuer’s securities that may rank pari passu, senior or junior to an investment by another Client in such issuer’s securities, and Clients may have different rights, preferences or privileges with respect to an issuer. In such cases, Carlson or its affiliates may be required by its fiduciary obligations on behalf of a Client to take actions that are not in the best interests of another Client. Carlson or its affiliates manage multiple Clients that pursue similar strategies. To the extent that Carlson Capital manages a Fund and a Managed Account pursuant to a similar strategy, the Managed Account has access to detailed information about their accounts, including current portfolio holdings, which Carlson does not customarily make available to investors in Funds. Such Managed Accounts (or their investors) are generally able to take action, including more timely action, with respect to their accounts that investors in a Fund with similar or parallel strategies cannot take. For example, certain Managed Accounts have the ability to terminate their accounts immediately and may choose to liquidate their positions without regard to the effect such liquidation would have on other Clients, which may trade pursuant to a substantially similar strategy or otherwise have overlapping positions with such account. Carlson and its affiliates and their employees may, but are not required to, invest in certain Clients at any time and from time to time. As a result of Carlson’s position as the investment manager of a Client, such affiliated investors possess information relating to a Client which they would not otherwise possess, and none of Carlson, its affiliates or any employee of the foregoing will have any obligation to disclose such information to any investor in such Client. Such information includes, but is not limited to, knowledge about the performance or prospective performance of investments made by the Client or withdrawals or redemptions, as applicable, made or proposed to be made by one or more investors in the Client or a related Fund (including withdrawals or redemptions by affiliated investors). An affiliated investor in a Client will generally not be charged fees or allocations payable or allocable to Carlson or an affiliate but generally will be subject to the same rights and obligations, including withdrawal rights, as those of unaffiliated investors in such Client. Therefore, to the extent permitted by applicable law, an affiliated investor may, in its sole discretion, withdraw all or a substantial amount of its investment in a Client without notice to, or the consent of, the other investors in such Client, which may result in liquidations of the Client’s investments to fund such withdrawals prior to the most opportune time to effect such liquidations from a pricing standpoint. Such withdrawals may have a material adverse effect on the Client’s investment portfolio and its performance. A director of the offshore Funds is affiliated with a company (the “Placement Agent”) with which Carlson Capital has a placement agreement to provide placement services for certain of the offshore Funds (collectively, the “Placement Funds”). In connection with the placement agreement, such director is incentivized to maximize the amount of capital the Placement Agent raises for the Placement Funds and to encourage investors to maintain their investment in the Placement Funds. As a consequence, such director’s activities in affiliation with the Placement Agent may, at times, conflict with his fiduciary duties as a director of certain of the offshore Funds, which obligate him to act at all times in the best interests of these Funds. The director has indicated that he is aware of his fiduciary obligations and the potential conflict and does not believe that any such conflict interferes with his ability to exercise independent judgment on behalf of the Placement Funds. The Placement Agent is paid a percentage by Carlson Capital of the management fee and performance allocation otherwise due to Carlson Capital or CCGP under the Governing Documents between the Placement Funds and Carlson Capital. Additionally, in order to market to certain qualified investors in Switzerland in accordance with applicable law, certain offshore Funds have entered into a representative agreement with the Placement Agent and a paying agency agreement with a Swiss bank, of which the director was a former minority owner and member of the executive committee. Carlson attempts to address or mitigate these conflicts through its policies and procedures, including its policies and procedures regarding outside business activities and its Code of Ethics, and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Different Investors Investors in a Client or in Clients that are part of the same Fund group may have conflicting investment, tax, or other interests with respect to their investment. The conflicting interests of individual investors may relate to or arise from, among other things, the nature of investments made by a Client, the structuring or the acquisition of such investments, or the timing of disposition of investments. In selecting and making investments, Carlson generally considers the investment and other objectives of the Client and its direct and indirect investors as a whole, and not the investment or other objectives of any particular investor or group of investors individually; provided that, Carlson may agree to take into consideration certain principles of investment adopted by certain investors with respect to certain Clients. In addition, on occasion, investors may request restrictions applicable to investing in certain securities and Carlson may agree to apply those restrictions to a Client. Such restrictions may have an adverse impact on a Client’s performance.

Side Letters Carlson and its affiliates, without prior approval of or notice to any Client or investor in any Client, have entered into and may enter into additional side letters or other agreements with certain investors in Clients that have the effect of establishing rights under, or altering or supplementing, the terms of, any such investor’s investment in a Client or require the Client, Carlson, or their affiliate to take or refrain from taking certain actions. Rights affected include or relate to fees, reporting and transparency and liquidity and could pertain to any other matter related to the Client, Carlson, or their affiliates. Such side letters or other agreements do and may establish terms that are more favorable to an investor than those available to others, and, absent a contractual obligation, neither the Client, Carlson, nor any of their affiliates are under any obligation to offer such rights or benefits to any other investor. Existing and future side letters or other agreements that Carlson Capital has entered into or may enter into with a limited number of investors who are not otherwise affiliated Carlson Capital, and who have generally been invested with Carlson Capital for over ten (10) years or have generally invested a very large amount with Carlson Capital, generally provide one or more of the following terms: (i) a waiver or reduction of withdrawal/redemption fees (if any) and/or the right to withdraw/redeem interests/shares or exchange interests/shares for a different existing series of interests/shares that offer better liquidity upon the occurrence of a violation of certain laws or other extraordinary events; (ii) notification of certain events (such as the occurrence of certain litigation, regulatory or criminal proceedings, departure of certain principals of Carlson Capital, changes of certain service providers, or material changes to an investment strategy, certain policies of Carlson Capital or the Client’s Governing Documents); (iii) additional representations (such as acknowledgements of an investor’s regulatory status, or compliance with certain laws); (iv) preferential access to certain information about the Client’s investments (such as performance estimates, data required for an investor’s regulatory reporting, reports provided to a third-party risk aggregator, or due diligence reviews); and/or (v) other provisions that generally have no material impact on any other investors in the Client. Disclosure of Additional Information From time to time, investors and prospective investors in a Client may and do contact Carlson or its affiliates with questions concerning the Client or their investment in it. In addition, certain investors may and do periodically contact Carlson or its affiliates with due diligence or similar questions, or meet with Carlson or its affiliates as part of a periodic due diligence or similar review process. Depending upon the nature and timing of such questions, Carlson’s or its affiliates’ responses may and sometimes do result in the possession of information by certain investors that is not then possessed by other investors and which may not ultimately be received by investors who do not conduct similar reviews or seek similar information, and may provide the recipient greater insights into the activities of a Client than is included in standard reports distributed to investors. Service Providers Discounts and Related Conflicts Certain advisors, vendors or other service providers to the Clients may and in certain instances do also provide goods or services to, or have business, personal, financial, or other relationships with, Carlson, its affiliates and their employees. Such advisors, vendors and service providers may include accountants, administrators, lenders, bankers, brokers, attorneys, consultants, and investment or commercial banking firms (“Service Providers”). Such Service Providers may be and have been investors in one or more Clients, sources of investment opportunities to Clients, co-investors with Clients or commercial counterparties of Clients. Additionally, Carlson, its affiliates and their employees may have family members or relatives that are employees of, investors in, consultants to, or otherwise have business relationships with, a Service Provider or an affiliate thereof, including relationships where such family members or relatives receive financial benefits from the Service Provider or an affiliate thereof. Service Providers may be asked to support and have supported charitable causes which Carlson, its affiliates and their employees also support or with which they are otherwise affiliated. These relationships may influence Carlson or its affiliates in deciding whether to select or recommend such a Service Provider to perform services for a Client. Notwithstanding the foregoing, Carlson will only select a Service Provider to perform services for a Client to the extent Carlson or an affiliate thereof has determined that doing so is appropriate for the Client given all surrounding facts and circumstances and is consistent with Carlson’s responsibilities under applicable law, provided, however, Carlson may not necessarily seek out the lowest-cost option when engaging such Service Providers as other factors or considerations may prevail over cost. In certain circumstances, Service Providers or their affiliates may charge different rates or have different arrangements for services provided to Carlson or its affiliates as compared to services provided to a Client. In certain circumstances, such different arrangements may result in Carlson or its affiliates paying more favorable rates, or being subject to more favorable arrangements, than those to which the Clients are subject. Carlson has no obligation to obtain similar benefits (e.g., rate reductions or discounts) for the Clients. Carlson attempts to address or mitigate these conflicts through its policies and procedures, and, as Carlson determines appropriate, use of the Conflicts Committee as described below. Conflicts Committee Carlson has established a Conflicts Committee which meets at least on a quarterly basis to, among other things, consider issues that raise potential or actual conflicts of interest. Membership of the Conflicts Committee is determined as set forth in the committee charter and includes Carlson’s Chief Legal Officer and Chief Compliance Officer. Specifically, the Conflicts Committee is responsible for: (i) considering and resolving conflict matters that the Chief Legal Officer, the Chief Compliance Officer, or others raise to the Conflicts Committee; (ii) reviewing certain actual and potential conflicts of interest that may arise as a result of Carlson’s business as an investment adviser; (iii) making determinations regarding Carlson’s response to identified conflicts, including whether a conflict should be escalated to a Fund’s Board of Directors or another independent reviewing body; and (iv) reviewing disclosure of certain actual or potential conflicts of interest to Clients and underlying investors in the Clients, as appropriate. The Conflicts Committee seeks to resolve conflicts in the best interests of Clients in keeping with Carlson’s fiduciary duties. please register to get more info

TRADING
Code of Ethics Carlson has adopted a Code of Ethics (the “Code”) and Compliance Manual that contains policies and procedures reasonably designed to, among other things, alleviate possible conflicts of interest, prevent the misuse of material non-public information, ensure the propriety of its employees’ personal trading activity, and instill a culture of compliance with the U.S. federal securities law and the highest standards of business conduct. Each employee has access to the Code and the Compliance Manual, is provided with initial and on- going training on the policies and procedures contained in the Code and the Compliance Manual, and required upon commencement of employment, and at least annually thereafter, to sign a written acknowledgement of receipt, understanding, and agreement to abide by the Code and the Compliance Manual. Employees are also provided with any updates or amendments to the Code and the Compliance Manual on an on-going basis. The Code is available to all current or prospective investors upon request to the Compliance Department or Investor Relations Department at 2100 McKinney Avenue, Suite 1800, Dallas, TX 75201 or via compliance@carlsoncapital.com or investorrelations@carlsoncapital.com. Material, Non-Public Information From time to time, Carlson or its affiliates may come into possession of material non-public information. This may occur, for example, where an affiliated person is a director or officer of a company or an employee becomes otherwise aware of material non-public information. In the event that Carlson or its affiliates are in possession of material non-public information, Carlson will place the issuer or security on its restricted list and will be unable to use such information for the benefit of any of the Clients. Carlson’s possession of such information may, therefore, cause the Clients to be prohibited from trading the securities of the issuer until such time as the information is made public. In an effort to monitor and alleviate any potential or actual conflicts of interests, the Code requires employees to disclose to the Compliance Department all “family” and “close personal relationships” with employees of broker-dealers, investment banks, investment managers (including hedge funds, private equity or venture capital firms), or similar financial institutions, or officers or directors of publicly held companies. For this purpose, “family” includes all immediate family members and extended family members and “close personal relationships” includes relationships with whom the employee interacts with on a regular basis and whose relationship extends beyond professional interactions. Carlson may invest on behalf of the Clients in issuers of securities for which affiliated persons of Carlson may be members of the governing boards or hold other positions and for which such persons may receive compensation directly from such issuers. Receipt of such compensation and/or service on a board creates a conflict of interest between a board member’s personal interests, the interests of the Clients and investors of Carlson and the interest of the issuer and its other shareholders. Carlson has established procedures intended to address the possible conflicts of interest that board membership may present, including requiring authorization from Carlson’s Chief Compliance Officer prior to an employee serving as a board member. Personal Trading Carlson and its affiliates may recommend or effect transactions on behalf of the Clients in securities that their employees may buy or sell for their personal investment accounts. Carlson has implemented personal trading policies and procedures, described briefly below, as part of its Code which are aimed at ensuring that employee transactions do not create a potential or actual conflict of interest. Carlson’s personal trading policies and procedures require pre-approval of all transactions in most securities (with the exception of “Exempt Transactions,” “Broad-Based Products,” and “Exempt Transaction Products,” as described below) by employees for their, or members of their households’, personal investment accounts, including initial public offerings and private placements, in an effort to detect and prevent conflicts of interest and ensure that all personal transactions by employees are consistent with Carlson’s fiduciary duty to the Clients and in keeping with all applicable laws. Generally, employees may only execute 20 personal investment transactions (in aggregate across all accounts held by the employee or members of his or her household) per calendar quarter, not including Exempt Transactions. “Exempt Transactions” include money market funds, open-end mutual funds (certain closed-end funds are subject to pre-clearance), bank and brokerage CDs, unit investment trusts, direct investment plans, direct obligations of the U.S. government (e.g., Treasuries), municipal bonds, commodities (other than index-like products, ETFs and ETNs), and currencies (including spot currency transactions, cryptocurrencies, and digital currencies (other than initial coin offerings)). “Broad-Based Products” include broad-based index-like products and/or broad-based ETFs and ETNs (with 50 or more underliers as identified by NASDAQ), and “Exempt Transaction Products” include ETFs and ETNs whose underliers are comprised solely of Exempt Transactions. Other than for the Exempt Transactions, Broad-Based Products, Exempt Transaction Products, and certain other exemptions granted by Carlson’s Compliance Department, on a case by case basis, Carlson’s personal trading policies and procedures prohibit employee trading in sectors in which the employee manages a portfolio for Carlson. Execution traders must limit their personal trading to Exempt Transactions, Broad-Based Products, and Exempt Transaction Products. Employees are further prohibited from trading single-name securities in which Carlson has an existing order at the time of Compliance Department review and trading single-name securities until seven calendar days after Carlson has traded the position on behalf of any Client. Carlson’s personal trading policies and procedures prohibit trading of all options and derivatives in personal investment accounts and include a required 90-calendar day holding period for any employee securities holdings other than Exempt Transactions, Broad-Based Products, and Exempt Transaction Products unless an investment has decreased in value by 10% within the 90-calendar day minimum holding period, in which case requests to exit the position in full will ordinarily be granted. All employees must report initial and annual securities holdings and accounts in accordance with Carlson’s personal trading policies and procedures. Employees must certify on at least a quarterly basis all personal transactions involving non-exempt securities (as defined under Rule 204a-1). Transactions by employees are monitored in order to ascertain any pattern of conduct that may evidence actual or potential conflicts with the principles and objectives of the Code or other inappropriate behavior. Outside Activities Employees must obtain approval from Carlson’s Compliance Department prior to participation in outside business activities, including serving on boards of companies or creditors’ committees. Participation in Client Transactions Carlson and its affiliates and their respective principals and employees own significant investments in many of the Clients. Carlson does not generally invest directly on its own behalf in investments outside of the Clients. To the extent the consent of a Fund or CLO is required under Section 206(3) of the Advisers Act with respect to any proposed transaction to be entered by the Fund or CLO, Carlson shall obtain the consent of the Fund or CLO for such proposed transaction by obtaining the consent of a committee of the Directors of the Fund (which with respect to a U.S.-domiciled feeder fund shall be the Directors of the master fund) or CLO who are independent from, and unaffiliated with, Carlson and its affiliates or such other independent representative of the Fund or CLO as appointed by such Directors with the consent of Carlson or in any other manner that complies with the Advisers Act. Carlson may engage and has engaged in transactions between two or more Clients (a “cross transaction”), when consistent with the investment objectives and policies of each Client involved, including accounts in which Carlson and its affiliates and their principals and employees are investors or in which such persons may have a financial interest due to performance-based compensation payable to Carlson or an affiliate by such Client. When doing so, Carlson will generally seek to execute the transaction at the current market price of the security using current sales data (generally the closing price on a principal exchange), or a mid-market price, in each case, as determined by Carlson. Carlson does not charge any commission or other fee in connection with a cross transaction, although there will be, and has been, fees charged by third parties, such as the executing broker, to the Clients when cross transactions are executed through the market. No brokerage commission, fee (except for any third party customary transfer fees), or other remuneration shall be paid in connection with any direct cross transactions between Clients that are not executed through the market. All cross transactions require prior Compliance Department approval. A cross transaction form is completed and submitted to the Compliance Department for each proposed cross transaction which provides the reasons why the transaction is suitable for each Client and the relevant price support. In addition, the Compliance Department receives alerts that are designed to identify potential cross transactions to further confirm such transactions are being properly approved, documented, and supported. Please see Item 10 (Other Financial Industry Activities and Affiliations – Certain Conflicts of Interest) for more information regarding these potential conflicts of interest. please register to get more info

Selection of Brokers-Dealers Carlson has complete discretion in selecting brokerage relationships and negotiating commissions. Carlson’s objective in selecting a broker-dealer is to seek the best overall terms available under the prevailing circumstances and to ensure that best execution standards are met. Carlson evaluates each of its brokerage relationships utilizing a variety of factors, including but not limited to, access to securities offered for sale by the broker, the ability of the broker to achieve prompt and reliable executions at favorable prices, the operational efficiency with which transactions are effected, the financial strength, integrity, and stability of the broker, the quality, comprehensiveness, and frequency of available research and related services considered to be of value provided or paid for by the broker, any special expertise or capabilities of the broker, and the competitiveness of commission rates in comparison with other brokers satisfying Carlson’s other selection criteria. Carlson is not required to weigh any of these factors equally. Subject to seeking best execution, Carlson Capital may direct and has directed brokerage transactions to brokers that have referred investors to Carlson and the Funds. Directing brokerage to broker- dealers in recognition of past or future referrals creates an incentive to effect more brokerage transactions with brokers who refer investors than might otherwise occur if referrals did not occur. Please see Item 14 (Client Referrals and Other Compensation). Carlson and its affiliates may have other business arrangements with brokerage firms used to execute transactions for the Clients. Brokerage firms and their affiliates may be investors in the Funds, and may provide financing or other services to Carlson or other accounts managed by Carlson. Carlson’s Code contains a “Gifts and Entertainment Policy” that requires employees to disclose all gifts and entertainment (except entertainment of de minimis value of $50 or less) provided by brokerage firms that conduct or seek to conduct business with Carlson and places restrictions on the value and types of gifts and entertainment employees may receive without prior Compliance Department approval. Carlson strictly prohibits the consideration of factors such as the receipt of gifts and entertainment when selecting brokers to execute transactions for the Clients. Carlson’s determination to use certain brokers for the Clients who trade similar strategies or otherwise have overlapping positions may be and have been influenced by the fact that certain Clients may only have counterparty relationships in place with certain brokers, which can subject such Clients to the financing, margin, and other terms in place with such brokers. Research and Other Soft Dollar Benefits Carlson is permitted to cause a higher commission to be paid to a broker-dealer that provides or pays for research, brokerage and other related services than might be charged by another broker-dealer for effecting the same transaction, provided that Carlson determines in good faith that the amount of commissions charged is reasonable in relation to the value of the brokerage and research, or investment management-related services and equipment, provided by such broker-dealer. Specifically, Carlson Capital utilizes and may continue to utilize client commission arrangements or client commission sharing arrangements to obtain research and related services that fall within Section 28(e) of the Exchange Act. Under these arrangements, Carlson Capital requests that a broker-dealer allocate a portion of total commissions paid to a pool of “credits” maintained by the broker-dealer that can be used to obtain research and related services. After accumulating a number of credits within the pool, Carlson Capital then directs that those credits be used to pay appropriate parties in return for eligible research and related services. Carlson Capital receives a benefit from these arrangements because it does not otherwise have to produce or pay for such research, other products or services to the extent it is responsible for such payments. Additionally, Carlson Capital has an incentive to select or recommend a broker-dealer based on Carlson Capital’s interest in receiving the research or other products or services, rather than on the Clients’ interests in receiving the most favorable execution based on other factors such as lower commissions. Research, brokerage, and related services provided by brokers to Carlson Capital during its past fiscal year, included and continue to include, but are not limited to, exchange and market data, information and analyses concerning specific securities, companies or sectors, market, financial or economic studies and forecasts, statistics, and pricing services, discussions with research personnel, legal research and analysis and databases, software and other news, technical and telecommunications services, and equipment utilized in the investment management and execution process. Carlson Capital does not receive any services from brokers that are outside the safe harbor for the use of brokerage commissions or “soft dollars” for “research and execution services” under Section 28(e) of the Exchange Act. To the extent a broker-dealer provides Carlson Capital with products or services that are used both for purposes permitted under the safe harbor of Section 28(e) as well as purposes that are not permitted under Section 28(e) (“mixed-use items”), Carlson Capital allocates payment for the product or service between “soft dollars” and “hard dollars,” which are payable by Carlson Capital or, in the event the product or service constitutes a Client operating expense, the Client. This allocation determination itself poses a conflict of interest for Carlson Capital because of the inherent incentive to minimize expenses payable by Carlson Capital to the extent Carlson Capital is responsible for such expenses. In allocating costs for a particular mixed-use item, Carlson Capital will make a good faith, fact-based analysis of how its employees use the product or service. Relevant factors might include, for example, the amount of time the product or service is used for eligible purposes versus non-eligible purposes, the relative utility (measured by objective metrics) to Carlson Capital of the eligible versus non-eligible uses, and the extent to which the product is redundant in light of other products employed by Carlson Capital for the same purpose; provided that Carlson Capital may consider any other factors it deems appropriate under the circumstances, with or without consideration of the foregoing. Research and brokerage products or services provided by brokers may be used in servicing any or all of the Clients, and such research and brokerage products or services may not necessarily be used by Carlson in connection with the Clients that paid commissions to the broker providing such products or services. Carlson may not allocate soft dollar benefits to the Clients proportionately to the soft dollar credits that each Client generates. During the past fiscal year, Carlson Capital selected and reviewed brokers in accordance with its best execution policy and assessed and allocated costs for any “mixed use” products according to their use and reviewed its soft dollar arrangements in light of its soft dollar policies and procedures. Additionally, the allocation of brokerage commissions paid to each broker in return for research is reviewed by Carlson’s Best Execution/Soft Dollar Committee. Total commissions as well as “per share commissions” paid to each broker are also monitored by the Best Execution/Soft Dollar Committee. In contrast to using Client commissions, Carlson UK utilizes a research payment account to obtain certain research and related services in compliance with FCA rules. Under this arrangement, Funds and Managed Accounts are allocated a research charge that is deposited into the research payment account pursuant to an annual research budget agreed to between Carlson Capital and Carlson UK based on the assessed value of research, which is reviewed periodically, in order for Carlson UK to procure third party research to provide investment advisory services to Carlson Capital for the benefit of its Clients. The research charge paid by the Clients is generally determined by their pro rata allocation of the research budget, based on the anticipated amount of research consumed by investment teams associated with the applicable investment strategies employed by the Clients over time. The research charge allocated to the Clients is reviewed and adjusted periodically and is expected to vary from year to year based on a number of factors, which may include, without limitation, changes in the annual research budget and the anticipated level of research usage and strategy exposures relevant to the Clients. Certain Managed Accounts have to approve any changes to the research charge paid by such Managed Accounts. Order Aggregation and Allocation Carlson buys and sells investment securities conforming to the specific objectives and constraints of each Client, and determines the appropriate size and amount of each security to be held. Carlson has established aggregation and allocation procedures for portfolio investment opportunities that are appropriate for more than one Client and transactions in which more than one Client participates. The aggregation and allocation procedures are designed to ensure that each Client is treated fairly and that transactions are allocated in a manner that is fair and equitable over time to each Client, taking into account all relevant facts and circumstances. Carlson may and generally does aggregate and place orders for more than one Client simultaneously. The proposed allocation of any order placed on behalf of more than one Client is ordinarily determined prior to placing the order. If all such orders are not filled at the same price, then Carlson generally causes each account to pay or receive the average of the prices at which the orders were filled for all accounts. If all orders placed cannot be fully executed under prevailing market conditions, then the securities traded may be allocated among the Clients in a fair and equitable manner, taking into account the size of the order placed for each Client account and any other relevant factors. Such aggregation of orders may not always benefit one or more particular Clients with regard to the price or quantity executed. Please see Item 10 (Other Financial Industry Activities and Affiliations – Certain Conflicts of Interest) for more information regarding potential conflicts in connection with aggregation. In general, if orders for an investment cannot be completely filled, the orders are allocated either pro rata among the Clients participating in an aggregated transaction, or on a basis other than pro rata if such other method of allocation is reasonable and does not result in an improper disadvantage or advantage to one participating Client as compared to another Client over time, taking into account all relevant criteria as described in further detail below. Carlson Capital generally determines which investment strategies are appropriate for each Client (which may be one strategy for single-strategy Clients). In accordance with Carlson Capital’s procedures, orders are generally assigned to an investment strategy and ordinarily allocated to each Client participating in that strategy based on the percentage of the strategy allocated to each such Client. Each Client’s investment strategy allocation may be based on criteria as they relate to each specific Client, including: (i) investment policies, guidelines, or restrictions; (ii) tax considerations; (iii) liquidity constraints; (iii) risk tolerances; (iv) regulatory restrictions; (v) available credit lines and counterparty arrangements; (vi) hedging activity; and (vii) other relevant factors. Not all factors may be relevant or weighted equally in connection with every investment opportunity. Under certain circumstances, orders may be allocated using a different methodology than described above. In any case, Carlson seeks to make such allocations in a fair and equitable manner over time, consistent with Carlson’s fiduciary obligations to its Clients and when applicable, in accordance with the Governing Documents and investment guidelines of such Clients. The Governing Documents of the CLOs generally place significant restrictions on the ability to buy and sell investment opportunities for the CLOs that impact allocation of investments among the CLOs and other Clients as described below. Additionally, Carlson allocates investment opportunities among the Clients in a manner that it believes is consistent with any applicable laws, rules or regulations of which Carlson is aware that may restrict the ability of a Client or Fund investors to participate in a particular investment (e.g., investments in newly issues securities (“New Issues”) subject to the Financial Industry Regulatory Authority Rules 5130 and 5131 (the “FINRA New Issue Rules”)). Carlson reserves the right to vary its policy with respect to the allocation of New Issues as it deems appropriate in light of, among other things, existing interpretations of, and amendments to, the FINRA New Issue Rules and practical considerations, including administrative burdens and principles of fairness and equity. In certain circumstances, this may result in investors not being allocated profit and loss earned on investments in New Issues even when such investors may be permitted to receive such allocations under the FINRA New Issue Rules. In some cases, certain Clients may receive priority or overweighted allocations of investment opportunities. In contrast to the Funds and Managed Accounts, the Governing Documents of the CLOs generally place significant restrictions on CCA’s ability to buy and sell assets for the CLOs, including but not limited to, those pertaining to permitted instrument types, credit ratings, coupon levels, maturities, interest rates, collateral quality, concentration limits, and diversity requirements (as applicable, the “CLO Portfolio Tests”). This may result in, and has resulted in, the allocation of loan investments to the CLOs that are otherwise appropriate for other Clients, or the sale of loan investments that are also held by other Clients at different times without regard to the effect that such sales would have on the other Clients at different times. Accordingly, CCA may be unable to buy or sell assets or to take other actions which it might, in its judgment, consider in the best interest of the CLOs. CCA will allocate each order to the appropriate CLOs based upon investment objectives, guidelines, mandates, and other relevant factors, including but not limited to, available cash balances, the investment period and cycle of each CLO, and the CLO Portfolio Tests applicable to each CLO. Although each CLO and other Client has individual and separate investment objectives, guidelines, and mandates, certain Clients may also invest in loans and other instruments in which one or more of the CLOs may simultaneously be invested or seek an investment. To determine appropriate allocation of such investments among the CLOs and other Clients, Carlson will analyze the prospective loans or other instruments in connection with the respective investment objectives, guidelines, and mandates of the CLOs and other Clients. In certain instances, the characteristics of a transaction and the other factors listed above may, at the discretion and reasonable judgment of Carlson, require that the entire order be directed to only one or a limited sub-set of CLOs or other Clients even when additional CLOs or other Clients may be permitted to receive such allocations. Trade Errors On occasion, Carlson experiences errors with respect to trades it makes on behalf of its Clients. Carlson is directly or indirectly required by the terms of the Clients’ Governing Documents to reimburse certain losses suffered by a Client as a result of a trade error in accordance with the requirements set forth therein. With respect to the Funds and CLOs, Carlson will reimburse certain losses as a result of a trade error due to Carlson’s willful misconduct or gross negligence, but the Funds and CLOs have been and will generally be responsible for any losses resulting from other trade errors. Regarding Managed Accounts, the standard of care is negotiated on an account-by-account basis and set forth in the applicable investment advisory agreement. Carlson will generally determine whether a trade error occurred with respect to a Client in its sole discretion and notice of a trade error will generally not be provided to any Clients, although certain Managed Accounts are entitled to notice pursuant to their Governing Documents. The Chief Compliance Officer of Carlson ensures that Carlson maintains appropriate documentation regarding all trade errors, including the resolution and reimbursement decisions. Carlson Capital also will not directly or indirectly use soft dollars to correct trade errors. Carlson has a conflict of interest in determining whether a trade error has occurred, as well as whether the costs of such trade error should be for the account of the Client or Carlson. please register to get more info

All Client accounts are regularly reviewed by Carlson investment personnel. The principal portfolio managers who make investment decisions on behalf of each of the strategies used by each Client supervise the management of the strategies and investments for which they are responsible and review their respective accounts on an on-going basis. Carlson’s Risk Committee and Investment Committee oversee specific aspects of the investment process including capital allocation, target leverage, and certain hedging decisions. Carlson Capital provides monthly reports to its investors that contain information about the Funds, including, as applicable, current performance results, assets under management and varying levels of portfolio transparency. Investors in the Funds also receive a monthly capital statement from each Fund’s administrator that sets forth the investor’s capital account balance or net asset value. Investors in the Funds receive audited financial statements on an annual basis. Carlson provides reports to Managed Accounts and CLOs as specified in the applicable Governing Documents. please register to get more info

Carlson Capital has entered, and may in the future enter, into agreements pursuant to which it compensates third parties for referrals of investors in the Funds. For example, Carlson Capital may engage a third party to act as a placement agent for one or more Funds or to act as a solicitor to refer clients to Carlson Capital. In addition, Carlson Capital may permit a “feeder fund” sponsored by a third party to invest in a Fund or group of Funds as part of a wealth management platform maintained by such sponsor or an affiliate thereof that acts as the broker-dealer for such platform. In such circumstances, the third party placement agent may receive a portion of the fees paid by such Funds to Carlson Capital attributable to capital committed by investors that invest directly in a Fund or the amounts invested by such third party “feeder fund.” Certain third party placement agents may in turn pay all or part of such fees to their clients who are investors in the Fund (directly or indirectly through a third party “feeder fund”) pursuant to fee arrangements between such placement agents and their clients. Investors solicited by such third parties will not be subject to any type of an increased fee from the Funds in connection with such solicitation. In certain circumstances, Carlson or its personnel may attend events sponsored by a third party at which Carlson or its personnel are introduced to prospective investors or clients. Carlson generally does not pay to attend such capital introduction events and generally does not pay the sponsors of such events for any investments received from prospective Fund investors or clients that Carlson is introduced to at such an event. However, attendance at such events may create the appearance that Carlson causes a Client to use the brokerage or other services of the event sponsors (or their affiliates) in order to be invited. An unaffiliated placement agent, an unaffiliated solicitor of clients, the sponsor of a third party “feeder fund” or the sponsor of a capital introduction event (or an affiliate of one of the foregoing) may act as a broker for one or more Clients or may otherwise be engaged by Carlson to provide services to one or more Clients. Carlson may direct and has directed brokerage transactions to brokers that have referred prospective investors to Carlson and the Funds, as described in Item 12 (Brokerage Practices) above. Carlson will only enter into an agreement with a placement agent, cash solicitor, or other person that is directly or indirectly referring prospective clients or Fund investors to Carlson if such agreement (and the transactions contemplated thereby) complies with the Advisers Act and any other applicable law. Please see Item 10 (Other Financial Industry Activities and Affiliations) and Item 12 (Brokerage Practices) above. please register to get more info

Rule 206(4)-2 under the Advisers Act (the “Custody Rule”) sets forth requirements regarding registered investment advisers who have “custody” of client assets (i.e., the authority to hold, directly or indirectly, client funds or securities). While Carlson does not physically hold the securities or other assets of the Funds (excluding certain types of securities that do not need to be maintained by a qualified custodian under the Custody Rule), Carlson is deemed to have custody of the Funds’ assets because Carlson (or its affiliate CCGP that serves as general partner of the U.S.-domiciled feeder funds) has the authority to obtain such assets by deducting advisory fees and otherwise withdrawing assets from each Fund’s account. Carlson satisfies its Custody Rule obligations regarding each Fund using the “audit exception,” which requires that each Fund: (i) be subject to audit at least annually, conducted in accordance with U.S. Generally Accepted Auditing Standards by an independent public accountant that is registered with, and subject to regular inspection by, the Public Company Accounting Oversight Board; and (ii) distribute its audited financial statements prepared in accordance with U.S. Generally Accepted Auditing Principles to all investors within 120 days of the end of each Fund’s fiscal year. Carlson expects to distribute audited financial statements prepared in accordance with U.S. Generally Accepted Auditing Principles to all investors within 90 days of the end of each Fund’s fiscal year. Carlson does not have custody with respect to the CLOs or the Managed Accounts since it does not have or accept the authority to hold, directly or indirectly, funds or securities held by a CLO or Managed Account or have the authority to obtain possession of them. please register to get more info

Carlson has complete discretionary authority to manage the Clients pursuant to the investment advisory agreements and/or other Governing Documents with the Clients and endeavors to manage the Clients in a manner consistent with the investment objectives and restrictions of each Client. For more information, please see Item 4 (Advisory Business) above. please register to get more info

Carlson has adopted policies and procedures (the “Proxy Policy”) regarding the voting of proxies designed to ensure that it votes proxies on behalf of the Clients over which it exercises voting discretion in the best interests of its Clients. Carlson Capital has retained ISS Governance Services (“ISS”) who will generally vote all proxies, including votes resulting in share blocking on behalf of Carlson based on ISS’ recommended vote for the Funds and certain Managed Accounts. ISS has been granted “Implied Consent” (as defined in the ISS Vote Authorization Registration Agreement) by Carlson Capital. Through Implied Consent, ISS will generally vote all proxies on behalf of Carlson based on ISS’ recommended vote with the exception of votes involving a proxy in which ISS’ various clients’ interests vary (i.e., instances which ISS deems a “specific client qualification” vote) or where a proxy is required for a special meeting. In these two instances, ISS will follow the procedures detailed in its ISS Vote Authorization Registration Agreement with Carlson. Carlson may nevertheless over-ride any voting decision by ISS or choose to abstain from voting if it determines, at its discretion, that the vote is not in the best interests of the Clients, Carlson, or any investment strategy. Both Carlson and ISS will maintain copies of proxy statements and records of votes cast by Carlson or ISS, as applicable. Where possible, Carlson may rely on the SEC’s electronic EDGAR system for proxy statements received regarding Client securities. Carlson shall maintain the records described above (other than proxy statements filed on EDGAR or records maintained by ISS) in Carlson’s office for two years. After two years, such records shall be retained for an additional three years but may be moved to an easily accessible place. When exercising its voting authority over securities, Carlson considers all relevant information, evaluates other issues that may have an impact on the value of the security, and votes with a view toward maximizing overall value. Carlson reviews each proposal submitted for a vote on a case-by- case basis to determine whether it is in the best interest of the Client. As a result, depending on a given Client’s particular circumstances, Carlson may vote securities in one Client differently than it votes those of another Client, or may vote differently on various proposals, even though the securities or proposals are similar or identical. In some instances, Carlson may determine that it is in the Client’s best interest to abstain from voting or not to vote at all. Prior to exercising its voting authority, Carlson reviews and considers potential material conflicts of interest. If a material conflict is determined to exist, Carlson takes steps to ensure that its voting decision is based on the best interests of the Client and is not a product of the conflict. Carlson may, at its discretion, seek guidance from Carlson’s outside legal counsel or other advisors. Investors in the Funds may not direct voting in a particular proxy solicitation. Carlson will deliver to each Client, upon written request, a copy of the Proxy Policy or information on how it voted proxies for the applicable Client. please register to get more info

There is no current financial condition that is reasonably likely to impair Carlson’s ability to meet its contractual commitments to any Client.
Item 19 REQUIREMENTS FOR STATE-REGISTERED ADVISERS
Not applicable. please register to get more info