Bracebridge Capital, LLC (“Bracebridge” or the “Investment Manager”) is an investment adviser organized as a Delaware limited liability company. Nancy Zimmerman and Gabriel Sunshine founded the business in 1994 (under a former adviser entity that was replaced by Bracebridge in 1996) as a manager of absolute return investment funds. Nancy Zimmerman and Gabriel Sunshine control Bracebridge Capital II, L.P. and SVZ, L.P., the principal owners of Bracebridge, and have ultimate authority to manage all affairs of Bracebridge.

Bracebridge provides investment advisory services to pooled investment vehicles that are exempt from registration under the Investment Company Act of 1940, as amended (the “1940 Act”), and whose securities are not registered under the Securities Act of 1933, as amended (the “Securities Act”) (each, a “Fund” and collectively, the “Funds”). As the investment adviser of the Funds, Bracebridge’s services consist of identifying opportunities for acquisition and disposition of investments of the Funds. Investment advice is provided directly to the Funds, subject to the discretion and control of the general partner or the board of directors of the applicable Fund, and not individually to the limited partners or shareholders of the Funds. Bracebridge manages each Fund consistent with the stated investment strategy of such Fund as described in such Fund’s offering documents. Bracebridge provides services to the Funds in accordance with the investment management agreements with the Funds and/or governing documents of the applicable Fund. Bracebridge does not provide specifically tailored investment advice to investors and investors may not impose restrictions on investing in certain securities or types of securities. Investment restrictions for the Funds, if any, are generally established in the offering documents of the applicable Fund.

As of December 31, 2018, Bracebridge’s regulatory assets under management were approximately $26,590,502,636, all of which are managed on a discretionary basis. please register to get more info

Compensation and Fee Schedules
As the investment manager and/or general partner to the Funds, Bracebridge typically charges a management fee (“Management Fee”) and a performance fee or allocation (“Incentive Fees”), as described in the relevant governing documents and/or investment management agreements of the Funds. The fees and other compensation payable to Bracebridge by a Fund may vary from fund to fund, as well as among investors in the same Fund, and in certain circumstances, the fees payable to Bracebridge may be negotiated and set forth in subscription documentation in respect of a particular Fund investor and/or waived in whole or in part. Bracebridge generally intends to waive the Management Fee and Incentive Fee for investments by Bracebridge, employees of Bracebridge, the principals, or their related persons, including estate planning vehicles of such persons and certain other persons or entities associated with such persons. All investors should review the governing documents of the relevant Fund in conjunction with this brochure for complete information on the fees and compensation payable with respect to that particular Fund. All clients of Bracebridge are “qualified purchasers” as defined in Section 2(a)(51) of the 1940 Act and therefore specific fee information is not disclosed in this brochure.
Deduction of Fees; Timing of Payments; Termination
Bracebridge is authorized under the governing documents and investment management agreements of the Funds to charge and deduct Management Fees and Incentive Fees from the assets of the Funds for its services. Generally, the Funds pay Management Fees in advance. If the investment management agreement is terminated (or an investor withdraws all or a portion of its investment) before the end of the billing period, Bracebridge refunds a pro rata portion of the pre-paid Management Fee to the Funds’ (or the investor’s) accounts. The Incentive Fees will be deducted and paid as of the close of each fiscal quarter or fiscal year (and as of each other date on which Bracebridge determines it is appropriate or necessary to make a determination of the Incentive Fee with respect to an investor, i.e., a date on which an investor withdraws all or a portion of its investment).
Other Expenses
In addition to the fees disclosed above, an investor also bears its allocable share of a Fund’s investment expenses (e.g., expenses which, in Bracebridge’s determination, are related to investments or prospective investments (whether or not consummated) of the Fund, including without limitation, brokerage commissions; interest expense; expenses related to clearing transactions and other transaction costs, transfer taxes and stamp duty; expenses related to sourcing or structuring investments, investment due diligence or to the ongoing maintenance of investments; translation expenses; travel expenses incurred in connection with investments or prospective investments of the Fund, including, without limitation, to attend board meetings of special purpose vehicles managed by the Investment Manager, and expenses related to investments in other pooled investment vehicles, including, without limitation, asset-based and/or performance-based fees payable to the managers of such pooled investment vehicles), legal expenses (including, but not limited to, expenses associated with compliance with applicable laws and regulations, any and all filings made by the Fund, and expenses related to investments or prospective investments of a Fund), auditing and tax preparation expenses, tax reporting and compliance expenses, domiciliation fees, expenses relating to the offer and sale of a Fund’s interests, fees and expenses of an administrator and/or relating to administration of a Fund, fees and expenses of other service providers including but not limited to custodian fees, director’s fees, fees and expenses of third-party valuation, pricing and appraisal services and extraordinary expenses. From time to time, brokerage, investment banking and other investment firms may present Bracebridge with potential investment opportunities for which, if consummated, a Fund may pay a commission, consulting or similar "finder's fee." A Fund will be responsible, or will reimburse Bracebridge, for the Fund’s reasonable portion, as determined by Bracebridge in its sole discretion, or any costs and expenses (including but not limited to periodic insurance premiums) incurred by Bracebridge in connection with one or more insurance policies pursuant to which the Fund is a beneficiary including but not limited to directors and officers liability, errors and omissions liability and other risk insurance. Any expenses of a Fund that are paid for by Bracebridge will be reimbursed by the Fund. Please refer to Item 12 below for additional information regarding Bracebridge’s brokerage practices. Bracebridge and its supervised persons do not accept compensation or commissions for the sale of securities or other investment products. please register to get more info

As disclosed above under Item 5 “Fees and Compensation,” Bracebridge generally receives an Incentive Fee that is based on performance of the Funds. Incentive Fee arrangements may create an incentive for Bracebridge to make investments that are riskier or more speculative than would be the case if such arrangements were not in effect. In addition, because the Incentive Fee is calculated on a basis which includes, without limitation, unrealized appreciation of a Fund’s assets, such Incentive Fee may be greater than if such compensation were based solely on realized gains. please register to get more info

Bracebridge currently provides investment advisory services solely to the Funds. Investment advice is provided directly to the Funds, subject to the discretion and control of the general partner or the board of directors of the applicable Fund and not individually to the investors in the Funds. Bracebridge may in the future provide advisory services to other funds and separately managed accounts for high net worth individuals, trusts, estates, charitable organizations, pension plans, foundations, endowments, sovereign wealth funds, corporations, limited partnerships, limited liability companies and similar entities. Interests in the Funds are offered pursuant to applicable exemptions from registration under the 1940 Act and the Securities Act. Investors in the Funds may include high net worth individuals, trusts, estates, charitable organizations, pension plans, foundations, endowments, sovereign wealth funds, corporations, limited partnerships, limited liability companies and similar entities. Bracebridge also allows certain qualified employees to invest in the Funds. Some (but not all) of the Funds impose a minimum initial investment requirement of up to $5,000,000, which may be waived at the discretion of the respective board of directors or general partner (subject to the requirements of applicable law). Bracebridge may impose higher initial investment requirements for funds established for, and/or at the request of, a particular investor. please register to get more info

Methods of Analysis and Investment Strategies
The investment objective of most of the Funds managed by Bracebridge is to achieve absolute returns primarily by seeking investment opportunities arising from inefficiencies in financial markets throughout the world. Bracebridge may employ a variety of strategies in pursuit of the Funds’ objectives. There is no assurance that this investment objective will be achieved, and investment results may vary substantially on a monthly, quarterly and annual basis. Investing in securities involves a risk of loss that investors should be prepared to bear.

The Funds invest and trade primarily in fixed income securities throughout the world and in the derivatives relating to those securities, but the Funds also seek opportunities in other financial and currency markets. The Funds use options, futures, forward contracts, swaps and other derivatives, and equities in its investment program. The Funds may invest in securities and derivatives directly or through other pooled investment vehicles, including other Funds managed by Bracebridge or its affiliates. The Funds generally seek to engage in hedging transactions against macroeconomic risks, including those related to interest rates, foreign exchange and credit. However, the decision as to when and to what extent the Funds will engage in hedging transactions will depend upon a number of factors. Accordingly, there can be no assurance that the Funds will engage in hedging transactions at any given time or from time to time, or that such transactions, if available, will be effective. Unless otherwise noted, all references herein to the portfolios, investments, investment transactions, investment program, brokerage practices and similar matters, including associated risks, of the Funds should be understood to include both direct and indirect investments and/or other transactions, including, without limitation, investments and/or transactions held or taken directly by the Funds, by a master fund into which certain of the Funds invest (each, a “Master Fund” and collectively, the “Master Funds”) or by any other pooled vehicle in which a Fund directly or indirectly invests. Many inefficiencies in the financial markets can be attributed to the investment approaches of, or constraints on, diverse market participants. For example, some market participants have institutional or regulatory constraints that force them to use what Bracebridge views as economically suboptimal hedges to protect portfolios of bonds, mortgages and other interest rate sensitive positions. Other market participants use derivatives as a leveraged means to make a purely directional investment involving the underlying instrument. This provides an opportunity to capitalize on market anomalies. Bracebridge’s strategy is based on identifying such anomalies within or across global financial markets and their derivative products. Inefficiencies in emerging bond markets may also provide opportunities and may represent a substantial portion of the Funds’ investments.

In addition, Bracebridge manages a smaller fund that seeks to invest and trade primarily in distressed assets. From time to time, certain Funds managed by Bracebridge may pursue specialized investment strategies on behalf of one or more classes of interests. Further information about each of these Funds, their classes of interests, and their applicable strategies is provided in the offering documents of the applicable Fund.
Investment Risks
Investment and Trading Risks in General. All investments made by a Fund risk the loss of capital. The Investment Manager utilizes such investment techniques as margin transactions, short sales, option transactions and forward and futures contracts, which practices can, in certain circumstances, maximize the adverse impact to which the Funds may be subject. No guarantee or representation is made that the Funds' programs will be successful, and investment results may vary substantially over time. The Funds have been given very broad investment parameters and maintain flexible investment programs. Therefore, the Funds may make investments in the future that may be subject to risks in addition to those described herein. Additional risks associated with an investment in a Fund are disclosed in the offering documents of that Fund. Hedging Transactions. The Funds engage in transactions intended to hedge certain of their portfolio positions against overall exposure to certain risks including, but not limited to, exposure to interest rate, equity and exchange rate movements. The decision as to when and to what extent a Fund will engage in hedging transactions will depend upon a number of factors, including, but not limited to, prevailing market conditions, the composition of such Fund’s portfolio and the availability of suitable transactions. Accordingly, there can be no assurance that a Fund will engage in hedging transactions at any given time or from time to time. Additionally, there is significant judgment in determining which risks to hedge, how to effectively hedge such risks and how much to hedge such risks. Failure to effectively hedge significant risks in a Fund’s portfolio could have a significant adverse impact on the Fund. Leveraged Trading. The Funds employ a leveraged trading strategy. Accordingly, the Funds trade securities on margin, sell securities short and/or borrow, pledge, mortgage, lend or hypothecate securities, cash or other assets. Such practices may increase the volatility of a Fund’s returns. Trading securities on margin may result in interest charges to a Fund and, depending on the amount of trading activity, such charges could be substantial. Similarly, the low margin deposits normally required in options, futures and forward trading permit a high degree of leverage; accordingly, a relatively small price movement in an option, futures or forward contract may result in immediate and substantial losses to the investor. Other types of derivatives also may entail a high degree of leverage. Irrespective of the risk control objectives of the Investment Manager, such a degree of leverage necessarily entails a high degree of risk. A Fund’s use of leverage may magnify many of the risks discussed herein. Any use of short-term margin borrowings would result in certain additional risks to the Funds. For example, when the securities pledged to brokers to secure a Fund’s margin accounts decline in value, a Fund will be subject to a margin call, pursuant to which a Fund must either deposit additional funds or securities with the broker, or suffer mandatory liquidation of the pledged securities to compensate for the decline in value. In the event of a sudden drop in the value of a Fund’s assets, it might not be able to generate sufficient funds quickly enough to satisfy its margin requirements. Arbitrage Trading. As part of the Funds’ investment strategy, they engage in a significant amount of arbitrage trading. In such trading, a Fund generally attempts to take advantage of price differences of identical or similar securities or financial instruments on different markets or in different forms. Arbitrage transactions involve the risk that transactions will fail to be executed as intended or agreed upon, the risk that the other party to a transaction will fail to pay or otherwise perform as agreed, and credit risk (i.e., that the other party does not post collateral, etc., as required). Arbitrage investing also involves the risk that the value of a Fund’s long positions potentially decrease while its corresponding short positions increase over the same period. Often arbitrage opportunities disappear rapidly once the opportunity becomes well-known and many investors act on it. Arbitrage trading can also involve greater transaction costs because of the need to simultaneously buy and sell many different securities. There is no assurance that an arbitrage transaction will perform in the manner expected by the Investment Manager and the exposure of a Fund to a movement in the market or other factors could be significantly increased. Illiquid Investments. Many of the Funds’ investments are not regulated or traded on exchanges, and may not be readily marketable or be only thinly traded. In addition, a Fund may invest in private placements of securities that are not registered under applicable securities laws, have little or no trading market, or contain restrictions or outright prohibitions on transfer. A Fund may not be able to readily dispose of such investments, and, in some cases, may be contractually prohibited from disposing of such securities for a specified period. These limitations on liquidity of a Fund’s investments could prevent a successful sale thereof, result in delay of any sale, reduce the amount of proceeds that might otherwise be realized, result in the designation of certain investments as special situation investments (which would reduce the value of Fund interests available to be redeemed), or result in distribution of securities in-kind upon liquidation of a Fund. When market conditions change, investments may become illiquid. For example, the credit markets experienced a significant lack of liquidity at the end of 2008 and the beginning of 2009, and investments that were historically quite liquid became much less liquid, or illiquid. There have also been periods during which certain participants in the forward or other markets have refused to quote prices for certain financial instruments or assets or have quoted prices with an unusually wide spread between the price at which they were prepared to buy and that at which they were prepared to sell. There can be no assurance that a market will be liquid. It is also possible that illiquidity in a market could cause prices to decline, which may have the result of forcing a Fund to sell assets to satisfy requirements under its borrowing arrangements or to meet margin calls, which could, in turn, create further downward price pressure. If there is a substantial decline in the market value of a Fund’s portfolio of investments, investments may need to be liquidated quickly, and perhaps not at a value that Bracebridge believes reflects the true value of such investments. Risks of Derivatives: The Funds invest in derivatives, which are financial contracts whose value depends on, or is derived from, the value of an underlying financial instrument, asset, reference rate or index. A Fund uses derivatives both as part of a strategy designed to reduce exposure to other risks, such as interest rate, credit or currency risk and also when Bracebridge believes derivatives are inefficiently priced in relation to other investments and a Fund can take advantage of such inefficiencies. A Fund also may use derivatives for leverage, which increases opportunities for gain but also involves greater risk of loss due to leveraging risk. The Funds’ use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as limited liquidity, investment and trading risks, high volatility, documentation, counterparty and leverage risk. The Funds are generally required to post collateral with their derivatives counterparties based upon a number of factors, which may include the notional amounts and the value of the derivatives. The inputs used by the administrator, Bracebridge, and counterparties, for the valuation of derivatives are often unobservable and/or subjective, and therefore derivatives have increased valuation risk and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. These uncertainties in the valuation of derivatives may result in different valuations derived by the administrator or Bracebridge as compared to the derivative counterparty which may result in disagreements over the collateral amounts which a Fund or counterparty should post to each other. Failure by the counterparty to post collateral to a Fund for any reason (including the counterparty’s insolvency) may result in a Fund being under collateralized with respect to one or many derivative transactions. Failure by a Fund to post collateral to the counterparty for any reason may result in the counterparty terminating the relevant derivative transactions or some or all derivatives with that counterparty at prices disadvantageous to the Fund. Certain derivatives transactions used by the Funds, including certain interest rate swaps and certain credit default index swaps, are required to be cleared. In a cleared derivatives transaction, a Fund’s counterparty to the transaction is a central derivatives clearing organization, or clearing house, rather than a bank or broker. Since the Funds are not members of a clearinghouse, and only members of a clearinghouse can participate directly in the clearinghouse, the Funds enter into cleared derivatives transactions through clearing members that are futures commission merchants and members of the clearinghouses. A Fund makes and receives payments owed under cleared derivatives transactions (including margin payments) through their accounts at clearing members. A Fund’s clearing members guarantee the Fund’s performance of its obligations to the clearinghouse. In contrast to bilateral derivatives transactions, in some cases following a period of advance notice to a Fund, clearing members can generally require termination of existing cleared derivatives transactions at any time and increase the amount of margin required to be provided by the Fund to the clearing member for any cleared derivatives transaction above the amount of margin required by the clearinghouse. Clearinghouses also have broad rights to increase margin requirements for existing transactions and to terminate transactions. Any such termination or increase could interfere with the ability of a Fund to pursue its investment strategy. Also, a Fund is subject to execution risk if it enters into a derivatives transaction that is required to be cleared (or which Bracebridge expects to be cleared), and no clearing member is willing to clear the transaction on the Fund’s behalf. In that case, the transaction might have to be terminated, and the Fund could lose some or all of the benefit of any increase in the value of the transaction after the time of the trade. Increased clearing for derivatives transactions may reduce the Funds’ exposure to individual counterparty credit risk but central clearing requirements may give rise to other forms of risk. Clearinghouses in turn rely heavily on financial resources and liquidity provided by major financial institutions as clearing members and/or financial service providers. In addition, the concentration of credit and liquidity risk in clearinghouses may give rise to systemic risks in the event of a shock or default affecting a clearinghouse or one of its members that could adversely affect market prices and liquidity of the Fund’s investments. Some types of cleared derivatives are required to be executed on an exchange or on a swap execution facility. A swap execution facility is a trading platform where multiple market participants can execute derivatives by accepting bids and offers made by multiple other participants in the platform. While this execution requirement is designed to increase transparency and liquidity in the cleared derivatives market, trading on a swap execution facility can create additional costs and risks for a Fund. For example, swap execution facilities typically charge fees, and if a Fund executes derivatives on a swap execution facility through a broker intermediary, the intermediary may impose fees as well. Also, a Fund may be obligated to indemnify a swap execution facility, or a broker intermediary who executes cleared derivatives on a swap execution facility on a Fund’s behalf, against any losses or costs that may be incurred as a result of a Fund’s transactions on the swap execution facility. If a Fund wishes to execute a package of transactions that includes a swap that is required to be executed on a swap execution facility as well as other transactions (for example, a transaction that includes both a security and an interest rate swap that hedges interest rate exposure with respect to such security), it is possible a Fund could not execute all components of the package on the swap execution facility. In that case, a Fund would need to trade certain components of the package on the swap execution facility and other components of the package in another manner, which could subject a Fund to the risk that certain of the components of the package would be executed successfully and others would not, or that the components would be executed at different times, leaving a Fund with an unhedged position for a period of time.

The U.S. government and the European Union are implementing requirements for uncleared derivatives. Such requirements could increase the amount of margin required to be provided by a Fund in connection with its uncleared derivatives transactions and, therefore, make uncleared derivatives more expensive. Among other things, such requirements could further restrict a Fund’s ability to engage in, or increase the cost to a Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to a Fund or otherwise limiting liquidity. The implementation of the clearing requirement has generally increased the costs of derivatives transactions, for instance a Fund has to pay fees to its clearing members and is typically required to post more margin for cleared derivatives than funds have historically posted for bilateral derivatives. The costs of derivatives transactions are expected to increase further as clearing members raise their fees as to cover the costs of additional capital requirements and other regulatory changes applicable to the clearing members, and when rules imposing mandatory minimum margin requirements on bilateral swaps become effective. These rules and regulations are new and evolving, so their potential impact on the Fund and the financial system are not yet known. While the new rules and regulations and central clearing of some derivatives transactions are designed to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could cause them to suffer liquidity, solvency or other challenges simultaneously), there is no assurance that they will achieve that result, and in the meantime, as noted above, central clearing and related requirements expose Funds to new kinds of costs and risks. In addition, the Funds’ use of certain derivatives may increase or accelerate the amount of taxes payable by shareholders. An investment in a derivative instrument could result in a Fund losing more than the principal or notional principal amount invested in such instrument. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that a Fund will engage in these transactions to reduce exposure to other risks when that would be beneficial. Counterparty Risk. A Fund faces the risk that the other parties to transactions entered into by a Fund fail to perform as agreed. In addition, some of the markets in which a Fund may effect transactions are “over-the-counter” or “interdealer” markets and as a result, trading relationships are maintained with counterparties that include domestic and foreign broker-dealers and financial institutions. Such counterparty trading relationships entail counterparty risks that are different from those found in “exchange-based” markets. This exposes a Fund to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing a Fund to suffer a loss. Such “counterparty risk” is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where a Fund may have concentrated its transactions with a single or small group of counterparties. Counterparties in foreign countries with limited, if any, rights for creditors face increased risks, including the risk of being taken over by the government or becoming bankrupt. A Fund is not restricted from concentrating any or all of its transactions with one counterparty and so these counterparty relationships could result in a concentration of credit risk. A Fund could also be exposed to credit risk if counterparties fail to fulfill their obligations or the value of any collateral becomes inadequate. Trading agreements with certain counterparties permit those counterparties to terminate transactions with a Fund if certain events occur with respect to a Fund. If such a termination occurs, a Fund may not be able to realize the full value of these investments. Conversely, changing or unpredictable market conditions may lead to greater volatility in the credit ratings and credit standing of dealer counterparties. There can be no assurance that a counterparty will meet its obligations, especially during unusually adverse market conditions. If the counterparty defaults, a Fund will have contractual remedies, but a Fund may not be able to enforce its contractual rights. In the event of an insolvency of a dealer, the dealer counterparty may have insufficient assets to meet all of its obligations. In such an event, a Fund may not have a right to recover any securities held by the dealer counterparty, but would rather have only a general unsecured claim against the dealer counterparty. The ability to transact business with any one or number of counterparties and the absence of a regulated market to facilitate settlement may increase the potential for losses by a Fund. Counterparty risk with respect to over-the-counter derivatives may be affected by regulations affecting the derivatives market. Some derivatives, such as certain interest rate swaps and certain credit default index swaps, are required to be cleared, and a party to a cleared derivatives transaction is subject to the credit risk of the clearinghouse and the clearing member through which it holds its cleared position, rather than the credit risk of its original counterparty to the derivative transaction. Clearing members are required to segregate all funds received from customers with respect to cleared derivatives transactions from the clearing member’s proprietary assets. However, all funds and other property received by a clearing member from its customers are generally held by the clearing member on a commingled basis in an omnibus account and the clearing member may invest such funds in certain instruments permitted under applicable CFTC regulations. The assets of a Fund might not be fully protected in the event of a Fund’s clearing member’s bankruptcy, as a Fund would be limited to recovering only a pro rata share of all available funds segregated on behalf of the clearing member’s customers for a relevant account class. Loans of Portfolio Securities. The Funds may lend their portfolio securities. By doing so, a Fund attempts to increase income through the receipt of collateral on the loans. In the event of the bankruptcy of the other party to a securities loan or other default, a Fund could experience delays in recovering the loaned securities. To the extent that the value of the securities a Fund lent has increased, a Fund could experience a loss if such securities are not recovered. Prime Broker Risk. Prime brokers have custody of a substantial portion of a Fund’s securities, cash, distributions and rights accruing to a Fund’s securities accounts. SEC rules require U.S. prime brokers to maintain physical possession and control solely of fully paid securities and excess margin securities held in a Fund’s account and to establish certain reserves for the benefit of customers. For assets other than fully paid securities and excess margin securities, subject to the establishment of reserves, a prime broker generally has the ability to loan, pledge, and rehypothecate the securities in a Fund’s account, as is typical market practice, and may have insufficient assets to meet all of its obligations to customers in the event of the insolvency of the prime broker or a similar event which restricts a Fund’s ability to seek return of the securities in a Fund’s account. In such an event, a Fund would typically not have the right to receive delivery of particular securities credited to its account by the prime broker, but would rather have only a claim to participate pro rata with other customers of the prime broker in the customer property held by the broker. If the prime broker does not have a sufficient amount of any particular security to satisfy all customers’ claims to that security, the Fund could receive different assets from those transferred by a Fund to the prime broker. Also, even if the prime broker does have sufficient assets to meet all customer claims, there could be a delay before a Fund receives assets to satisfy its claims. Furthermore, until the Fund knows what securities it will receive, the Fund will have limited ability to manage the portfolio effectively. The prime broker also may hold a Fund’s securities through third parties such as clearing corporations, other brokers or banks. As a result, a Fund may be subject to credit risk with respect to such third parties as well as with respect to the prime brokers. In addition, certain of the Fund’s assets may be held by entities other than its prime brokers. For example, a Fund may provide certain of its assets as collateral to counterparties in connection with “over-the-counter” derivatives contracts such as swaps, forwards and certain options, and is likely to be an unsecured creditor of any such counterparty in the event of its insolvency. Documentation Risk. Transactions relating to many types of financial instruments, including but not limited to many over-the-counter derivative instruments, structured notes and bonds, are subject to documentation risk. Documentation risk includes the risk that the parties may interpret contractual terms differently when a Fund (or other party to the contract) seeks to enforce its contractual rights. If that occurs, the cost and unpredictability of the legal proceedings required for a Fund to enforce its contractual rights may lead a Fund to decide not to pursue its claims against the counterparty.

Forward Trading. Forward contracts and options thereon, unlike futures contracts, are not traded on exchanges and are not standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual basis. Forward and “cash” trading is substantially unregulated; there is no limitation on daily price movements and speculative position limits are not applicable. The principals who deal in the forward markets are not required to continue to make markets in the currencies or commodities they trade, and these markets can experience periods of illiquidity, sometimes of significant duration (see “Illiquid Investments” above).

Swap Agreements. A swap transaction is an individually negotiated agreement between two parties to exchange cash flows measured by different interest rates, exchange rates, or prices, with payments calculated by reference to a principal amount or quantity, and may involve interest rates, currencies, securities, commodities, and other items. Certain swap transactions are required to be cleared. Risks associated with cleared swaps are set forth above in “Risks of Derivatives”. Swap transactions that are not subject to clearing present certain risks similar to those described in “Risks of Derivatives” above. In addition: (i) there generally are no limitations on daily price moves in uncleared swap transactions; (ii) speculative position limits are not applicable to uncleared swap transactions, although the counterparties may limit the size or duration of positions available as a consequence of credit considerations; (iii) participants in the swap markets are not required to make continuous markets in swaps contracts; and (iv) the uncleared swap markets are “principals” markets in which performance with respect to an uncleared swap contract is the responsibility only of the counterparty and not of any exchange or clearing corporation. As a result, a Fund will be subject to the risk of the inability or refusal to perform with respect to such contracts on the part of the counterparties trading with it, as well as risks relating to the creditworthiness of the swap counterparty, market risk, credit risk, liquidity risk and operations risk. Swap agreements can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structure, swap agreements may increase or decrease the exposure of a Fund to long-term or short-term interest rates, non-U.S. currency values, mortgage securities, corporate borrowing rates, or other factors such as security prices, baskets of equity securities, or inflation rates. Swap agreements can take many different forms and are known by a variety of names. A Fund is not precluded from any particular form of swap agreement if such investment is consistent with the investment objective and policies of the Fund. The success of a Fund’s use of swap agreements will depend on the Investment Manager’s ability to correctly predict whether certain types of investments are likely to produce greater returns than other investments. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. Like other types of derivative instruments, swaps may entail a substantial degree of leverage and involve substantial risk (see “Risks of Derivatives” above). Credit Default Swaps. Investments in credit default swaps and in indices of credit default swaps, plus their related tranches and options, are used to synthetically take credit exposure to a specified reference entity or entities. The primary risks thus embedded in credit default swaps are similar to those taken in buying or selling a bond issued by the underlying reference entity or entities including, in the case of attempting to cover a short position upon the occurrence of a credit event, the risk of a “short squeeze,” and including, without limitation, uncertainty in documentation risk, such as a disagreement as to whether a “credit event” has occurred. However, because most credit default swaps are over-the- counter derivatives, a Fund will have exposure to the performance and credit of the counterparty as well. While Bracebridge seeks to have collateral arrangements that protect changes in mark-to-market exposure and generally only transacts with highly rated institutions, there is no guarantee that a counterparty will perform its contractual obligations. This risk is particularly severe when a Fund is long a default swap where an event of default by a reference entity followed by a subsequent counterparty default could leave the Fund with sizable credit exposure to the reference entity. Options. Purchasing put and call options, as well as writing such options, are highly specialized activities and entail risks. Although an option buyer’s risk is limited to the amount of the original investment for the purchase of the option, an investment in an option may be subject to greater fluctuation than an investment in the underlying securities. In theory, an uncovered call writer’s loss is potentially unlimited, but in practice the loss is limited by the term of the call. The risk for a writer of a put option is that the price of the underlying securities may fall below the exercise price. The ability to trade in or exercise options may be restricted in the event that trading in the underlying securities becomes restricted. The Funds may engage in spreads or other combination options transactions involving the purchase and sale of related options and futures contracts. “Spread” trading, as it involves offsetting “relative value” positions, may be executed on a highly leveraged basis and is subject to the risk of sudden illiquidity in the markets, which may make it difficult or impossible, for example, to close out one “leg” of the spread. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size, and strike price, the terms of over-the-counter options (options not traded on exchanges) are generally established through negotiation with the other party to the option contract. While this type of arrangement allows a Fund greater flexibility to tailor an option to its needs, over-the-counter options generally involve greater credit risk than exchange-traded options that are guaranteed by the clearing organization of the exchanges where they are traded. Swaptions. An option on a swap agreement, also called a “swaption,” is an over-the-counter option that gives the buyer the right, but not the obligation, to enter into a swap on a specified future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive a specified return based on a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay a specified return based on a specified asset, reference rate, or index. Swaptions also include options that allow one of the counterparties to terminate or extend an existing swap. Depending on the terms of the particular option agreement, a Fund will generally incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. Swaptions are generally subject to the risks of both options and swaps (see “Options” and “Swap Agreements” above). Fixed Income Securities. Fixed income securities are subject to the risk of the issuer’s inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). A Fund could lose money if the issuer or guarantor of a fixed income security is unable or unwilling, or is perceived by market participants as unable or unwilling, to make timely principal and/or interest payments, or to otherwise honor its obligations. The downgrade of the credit of a security held by the Fund may also decrease its value. Additionally, the market for certain investments may become illiquid under adverse market or economic conditions independent of any specific adverse changes in the conditions of a particular issuer. Low dealer inventories of corporate bonds reduce the ability of financial institutions to provide liquidity through their intermediary services, and reduced dealer inventories particularly during periods of economic uncertainty could lead to decreased liquidity and increased volatility in the fixed income markets and adversely affect the Funds. Asset-Backed Securities. Asset-backed securities represent interests in “pools” of assets such as mortgages, consumer loans or receivables held in trust and often involve risks that are different from risks associated with other types of fixed income securities. The amount of market risk associated with asset- backed securities depends on many factors, including, without limitation, the deal structure (i.e., determination as to the amount of underlying assets or other support needed to produce the cash flows necessary to service interest and make principal payments), the quality of the underlying assets, the level of credit support, if any, provided for the securities, and the credit quality of the credit-support provider, if any. Asset-backed securities involve risk of loss of principal if obligors of the underlying obligations default in payment of the obligations and the defaulted obligations exceed the credit support. Such risks may be magnified due to the pervasive and overlapping nature of borrowers in the asset-backed market. A major economic recession could disrupt severely the market for such securities and may have an adverse impact on the value of such securities. In addition, any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default for such securities. In the event of a default, the trustee in an asset-backed securities transaction may be delegated responsibility for certain actions regarding the trust and the underlying borrowers and there is no assurance that the trustee will take actions that an investor in an asset-backed securities transaction deems to be in its interest. Additional risks to collateral that may arise in connection with investments in asset-backed securities are risks associated with fraud committed by borrowers, lenders, agents or any other parties involved in asset-backed transactions, as well as losses caused by defaults on payment and other obligations, including, without limitation, the failure by underlying borrowers to maintain the collateral as specified in the prospectus for the security. Finally, a Fund may have exposure to any unexpected increase in loss severities, a measure of the face value of the loss on a loan after a foreclosure is completed. Residential Mortgage Loans. The Fund may invest in residential mortgage-backed securities (“RMBS”) and, through these holdings, may be exposed to residential mortgage loans, particularly “private-label” residential loans. Residential mortgage loans are secured by single-family residential property and are subject to risks of delinquency and foreclosure and risks of loss. The ability of a borrower to repay a loan secured by a residential property is dependent upon various factors, including the income or assets of the borrower. The Funds may hold or invest in RMBS backed by non-prime or sub-prime residential mortgage loans (which are subject to higher delinquency, foreclosure and loss rates than prime residential mortgage loans) and private-label mortgage loans (which have characteristics of commercial loans and do not conform to criteria set by U.S. Government entities (e.g., Ginnie Mae, Fannie Mae or Freddie Mac)) which could result in higher losses to the Fund. Non-prime and sub-prime residential mortgage loans are made to borrowers who have poor or limited credit histories and, as a result, do not qualify for traditional mortgage products. In addition, these loans may have been extended pursuant to varying underwriting guidelines, to no underwriting guidelines at all or to fraudulent origination practices. Because of their poor or non-existent credit history, non-prime and sub-prime borrowers have materially higher rates of delinquency, foreclosure and loss, all else being equal, compared to prime credit quality borrowers. Investments in non-prime and sub-prime RMBS backed by non-prime or sub-prime residential mortgage loans and investments in derivatives that reference non- prime or sub-prime RMBS, all else being equal, have higher risk than investments in RMBS backed by prime residential mortgage loans. Commercial Mortgage Loans. The Funds may invest in commercial mortgage-backed securities (“CMBS”) and, through these holdings, may be exposed to commercial mortgage loans. Commercial mortgage loans are generally secured by multi-family, retail, office, hotel or other commercial property and are subject to risks of delinquency and foreclosure, and risks of loss that are more concentrated and idiosyncratic than similar risks associated with residential mortgage loans that are secured by single- family residential property. In addition, the Fund may invest in commercial mortgage loans that have been extended pursuant to varying underwriting guidelines, to no underwriting guidelines at all or to origination practices later determined to be fraudulent. The ability of a borrower to repay a loan secured by an income-producing property is dependent primarily upon the successful operation of such property. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things: tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expense or limit rents that may be charged, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, changes in governmental rules, regulations and fiscal policies, including environmental legislation, acts of God, terrorism, social unrest and civil disturbances. In the event that the operation of a commercial property for its original purpose becomes unprofitable, such commercial property may not readily be converted to an alternative use and would generally require substantial capital expenditures. The liquidation value of any such commercial property may be substantially less, relative to the amount outstanding on the related commercial mortgage loan, than would be the case if such commercial property were readily adaptable to other uses. CMBS is also generally subject to the risks on modification of the terms of the original loan. Collateral Performance in Structured Products. In transactions such as collateralized debt obligations, the value of the securities is tied or indexed to the value of, and/or cash flows generated by, an underlying pool of assets, receivables, or derivatives. For example, the Funds may make investments in asset-backed securities that are collateralized by receivables, including equipment leases, residential leases or other loans or financial assets. Such investments are subject to risks of prepayment, delinquency and default similar to those present in mortgage loans and other asset-backed securities. There can be no guarantee that the performance of the underlying assets will meet the performance expectation of the issuer of the security or a Fund and this may lead to a diminution in value of the security. Also, due to the synthetic nature of some of the cash flows from these securities, there may be increased volatility in the performance of the assets owned by a Fund and a potential disconnect between the value of the underlying collateral or reference obligations and the value that is realizable from time to time on the security. The performance of the collateral, especially when the bonds are backed by future receivables, may also be strongly tied to the performance of the collateral servicer or manager, as applicable, so the value of an asset-backed security is subject to risks associated with the negligence or defalcation of its servicer or manager and a deterioration in the operations of the servicer or manager may lead to a degradation in the value of the collateral. In some circumstances, the mishandling of related documentation also may affect the rights of security holders in and to the underlying collateral (e.g. when holders of receivables underlying an asset-backed security may not have a proper security interest or even when security interests are present, the ability of an issuer of certain types of asset-backed securities to enforce those interests may be more limited than that of an issuer of mortgage-backed securities). Further, the insolvency of entities that generate receivables or that utilize the assets may result in a decline in the value of the underlying assets as well as costs and delays. The Funds may invest in securities indexed to the value of cash flows generated by receivables on consumer loans, including automobile loans, student loans and credit cards. Investments in securities collateralized by consumer loans are subject to the risk that loans are made to borrowers of varying creditworthiness. The Funds may invest in securities indexed to consumer loans that have been extended pursuant to varying underwriting guidelines, to no underwriting guidelines at all, or to origination practices later determined to be fraudulent. Consumer loans may be backed by collateral (as in automobile loans) or they may be unsecured, exposing the Funds to default risk as an unsecured creditor of individual consumer borrowers. Governmental regulators and agencies may further regulate the consumer credit industry in ways that make it more difficult for servicers and managers of such loans to collect payments on such loans, resulting in reduced collections. Such laws and regulations may, among other things, regulate interest rates and other charges, require certain disclosures, regulate the use of consumer credit information and regulate debt collection practices. Violation of certain provisions of these laws and regulations may limit a servicer or manager’s ability to collect all or part of the principal of, or interest on, such loans, entitle the borrowers to refunds of amounts previously paid by them, or subject the servicer or manager to damages and sanctions. Changes to bankruptcy or debtor relief laws may also impede collection efforts or alter timing and amount of collections. If an obligor sought protection under bankruptcy or debtor relief laws, a court could reduce or discharge completely the obligor’s obligations to repay amounts due on its loan. Risks specific to different categories of consumer loans may affect the Funds’ return on such investments. In the case of credit card loans, for example, various and unpredictable social, economic and geographic factors may affect the payment patterns and rates of default by borrowers, including consumer confidence and attitudes toward debt, rates of inflation and unemployment and prevailing interest rates. Rates of prepayment and default on student loans will also vary based on a number of factors, and will also be affected by contractual terms present in such loans, including the extension of grace periods, deferment periods and, under some circumstances, forbearance periods. The Funds also expect to invest in securities collateralized by non-typical cash flows such as tariffs, government transaction receivables, other revenues related to services provided to governmental entities or litigation claims. These securities’ cash flows may be predicated on an explicit or implicit guarantee from a sovereign that these payments will continue to be made. Investments in such securities are subject to the risk that the relevant sovereign entity could cease to direct payments (for example, if the government modified or terminated the stream of receivables), as well as credit risk and default risk. Securities may be collateralized by legal claims, including, without limitation, claims subject to pending litigation and instruments representing judicial orders of payment. There may be substantial uncertainty regarding whether payments due under a legal claim will be made or whether payments will be made within the timeframe or in the amounts established or expected. If a judicial system becomes overburdened or more lenient to defendants, there may be delays in litigation proceedings, and the value of legal claims in that judicial system may be adversely affected. Payment of judgments depends on the ability and willingness of the adverse party to pay its debts. Other Pooled Investment Vehicles. Investments in other pooled investment vehicles may be managed by investment managers unrelated to Bracebridge. The Funds may bear fees in connection with such investments, which may include asset-based and/or performance-based compensation payable to the managers of such other pooled investment vehicles and which would be in addition to the Incentive Fee and Management Fee payable to Bracebridge. Bracebridge will have no right or power to participate in the management or control of the business of such other pooled investment vehicles, and thus must depend solely upon the ability of their respective investment managers with respect to the Funds’ investments. The Funds generally will not have the opportunity to evaluate the specific investments made by the other pooled investment vehicles. Moreover, the Funds will not have an active role in the day-to- day management of the investments and/or derivatives of the other pooled investment vehicles. As a result, the returns of such other pooled investment vehicles will depend largely on the performance of these unrelated investment managers and could be substantially adversely affected by the unfavorable performance of such investment managers. Interest Rate Risk. The value of the Funds’ investments in fixed income securities (including bonds, notes and asset-backed securities) will typically change as interest rates fluctuate. To the extent a Fund invests in corporate bonds, notes, mortgage-related or other asset-backed securities, or other securities that are callable, such securities may be prepaid. Because prepayments generally increase when interest rates fall, a Fund is subject to the risk that cash flows from securities will have to be reinvested at lower rates. Likewise, since prepayments decrease when interest rates rise, these securities have maturities that tend to be longer when that is least desirable. A Fund also may invest to a material extent in debt securities paying no interest, such as zero coupon, principal-only and interest-only securities and, to the extent it makes such investments, a Fund will be exposed to additional interest rate risk. Some asset-backed securities also may include specific early amortization or payout events that may result in additional interest rate risk. Because of the different long and short positions in fixed income securities and related derivatives that the Funds engage in from time to time, the Funds’ portfolio is not intended to be highly correlated with changes in interest rates. For example, depending on the fixed income and derivative positions in the Funds’ portfolio at any given time, a decline in prevailing interest rates may result in an increase, a decline or no change in the value of the Funds’ portfolio. However, the decision as to when and to what extent the Funds will engage in hedging transactions with respect to interest rate risk will depend upon a number of factors. Accordingly, there can be no assurance that the Funds will engage in hedging transactions at any given time or from time to time, or that such transactions, if available, will be effective. Currency Risk. A portion of the Funds’ assets may be invested in debt and equity securities denominated in various non-U.S. currencies and in other financial instruments, the price of which is determined with reference to such currencies. A Fund will, however, value its investments and other assets in U.S. dollars. To the extent unhedged, the value of a Fund’s net assets will fluctuate with U.S. dollar exchange rates as well as with price changes of the Fund’s investments in various local markets and currencies. Forward currency contracts and options and other strategies may be utilized by a Fund to hedge against currency fluctuations. However, the decision as to when and to what extent a Fund will engage in hedging transactions will depend upon a number of factors, including prevailing market conditions, the composition of such Fund’s portfolio and the availability of suitable transactions. Accordingly, there can be no assurance that a Fund will engage in hedging transactions at any given time or from time to time, or that such transactions, if available, will be effective. European-Related Risks. The Funds may invest in securities that are denominated and traded in the euro, the official currency of the eurozone. The 2008 global economic crisis caused many European countries to experience serious fiscal difficulties, including public budget deficits, recession, sovereign default, restructuring of government debt, credit rating downgrades and an overall weakening of the banking and financial sectors. In addition, some European economies may depend on others for assistance, and the inability of such economies to achieve the reforms or objectives upon which that assistance is conditioned may result in a deeper and/or longer global financial downturn. These events in the eurozone have at times called into question the long-term viability of the euro as a shared currency among the eurozone nations. Moreover, the strict fiscal and monetary controls of the European Economic and Monetary Union as well as any new requirements it may impose on member countries may significantly impact such countries and limit them from implementing their own economic policies to some degree. As the result of economic, political, regulatory or other actions that may be taken, a Fund’s euro-denominated investments may become difficult to value, a Fund’s ability to operate its strategy in connection with euro-denominated securities may be significantly impaired and the value of a Fund’s euro-denominated investments may decline significantly and unpredictably. In March 2017, the Prime Minister of the United Kingdom (“UK”) provided formal notification to the European Council, invoking Article 50 of the Treaty on European Union (“TEU”), which contains a procedure for withdrawal. It is necessary to monitor the UK’s negotiations with the EU, the terms of withdrawal, transitional arrangements and the terms of future trade and other arrangements with the EU. The consequences of the UK’s notice to withdraw from the EU are uncertain, but may have a material adverse effect on the UK, European and global economies and currency and financial markets, the values of a Fund’s investments and ability to execute its investment strategy. Significant uncertainty remains in the market regarding the consequences, and the range and potential implications of possible political, regulatory, economic and market outcomes are difficult to predict. Short Sales. The Funds engage in “short sales,” which are sales of securities a Fund borrows but does not actually own, usually made with the anticipation that the prices of the securities will decrease and a Fund will be able to make a profit by purchasing the securities later at the lower prices. The Investment Manager may engage in short sales as part of hedging transactions or when it believes securities are overvalued. A Fund will incur a loss on a short sale if the price of the security increases prior to the time the Investment Manager purchases the security to replace the borrowed security. A short sale presents greater risk than purchasing a security outright since there is no ceiling on the possible cost of replacing the borrowed security, whereas the risk of loss on a “long” position is limited to the purchase price of the security. Closing out a short position may cause the security to rise further in value creating a greater loss. In addition, the ability to continue borrowing the security is not guaranteed. If the short seller loses the ability to continue borrowing the security, a “buy-in” may occur, forcing the short seller to purchase the security at an inopportune moment. Pricing Limits on Futures Contracts. Trading in futures positions may be restricted from time to time because certain commodity exchanges limit fluctuations in certain futures contract prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Under such daily limits, during a single trading day no trades may be executed at prices beyond the daily limits. Once the price of a contract for a particular future has increased or decreased by an amount equal to the daily limit, positions in that contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. These limits could prevent a Fund from promptly liquidating unfavorable positions and subject a Fund to substantial losses. Volatile Instruments. The prices of commodities contracts and all derivative instruments, including futures and options prices, can be highly volatile, which in turn can increase the volatility of an investment in a Fund. Price movements of forward, futures and other derivative contracts in which a Fund’s assets may be invested are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. In addition, governments from time to time intervene, directly and by regulation, in certain markets, particularly those in currencies, futures and options. Such intervention often is intended directly to influence prices and may, together with other factors, cause all of such markets to move rapidly in the same direction because of, among other things, interest rate fluctuations. A Fund also is subject to the risk of the failure of any of the exchanges on which its positions trade or of their clearinghouses. Event-Linked Bonds or Other Insurance-Related Securities. A portion of the Funds’ assets may be invested in “event-linked bonds” or other insurance-related securities. Event-linked bonds, which are sometimes referred to as “catastrophe bonds,” are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific “trigger” event, for example, a hurricane or earthquake. These securities may be issued by insurance companies, reinsurers, special purpose corporations, government agencies or other U.S. or non-U.S. entities. Other insurance-related investments may include, without limitation, equity in reinsurance companies, sidecars, quota share notes, retrocession notes, event-linked swaps and industry loss warranties. Insurance-related securities typically are below investment-grade or “high yield.” If a trigger event occurs in the geographic region and time period specified in an event-linked bond or other insurance-related security, a Fund may lose a portion or all of its principal invested in the bond. Event-linked bonds often provide for an extension of maturity that is mandatory or optional at the discretion of the issuer, in order to process and audit loss claims in those cases where a trigger event has, or possibly has, occurred. An extension of maturity may increase volatility. In addition to the specified trigger events, insurance-related securities also expose a Fund to certain unanticipated risks including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations, and adverse tax consequences. Since there is no way to predict with accuracy whether a triggering event will occur, insurance-related securities carry a high degree of risk. Pharmaceutical Product-Related Investments. Investments in securities or other instruments linked to products produced by pharmaceutical companies, including investments that participate in royalty streams, are subject to many particular risks. For example, pharmaceutical products (“Royalty Products”) are subject to extensive regulation by United States local, state and federal regulatory authorities and by comparable foreign regulatory bodies. Regulatory clearance of a product is limited to those disease states and conditions for which the product is useful, as demonstrated through clinical studies and determined by the appropriate regulatory authorities, and a product in which substantial research and development has been invested may be unable to obtain the approval required by relevant regulatory bodies. Furthermore, clearance of a Royalty Product for marketing for a specific indication may entail ongoing requirements or post-marketing studies and clearance may be later withdrawn. In addition, Royalty Products are subject to competition from alternative products or procedures that are now available or may in the future be developed or become available, any of which may cause a Royalty Product to become more expensive than its competitors or obsolete, thereby decreasing the value of or rendering worthless the expected revenue stream on that Royalty Product. Sales of the Royalty Products and the ability of the licensees responsible for the development, production, marketing and sale of the Products (the “Licensees”) to maintain their competitive positions are partly dependent on the success of the Licensees’ respective marketing efforts. These efforts often rely, in part, on the strength and reputation of a Royalty Product’s brand name and underlying trademarks, trade names and related intellectual property. A Licensee’s activities both in marketing the Royalty Products and in protecting its intellectual property are outside the control of a Fund. In addition, although the Royalty Products are based upon patents and/or patent applications with exclusive rights, a regulatory authority may authorize marketing by a third party for a generic substitute for a Royalty Product, in which case the Royalty Product would become subject to competition from such generic substitute. Governmental and other pressures to reduce pharmaceutical costs could result in physicians or pharmacies increasingly using generic substitutes for the Royalty Products. The manufacturers, developers or marketers of the Royalty Products could also become subject to product liability claims. A successful product liability claim could adversely affect the amount of royalties payable to a Fund. It is unlikely that there will ever be a formal public market to facilitate the exchange, barter or transfer of the Royalty Products held by a Fund. New Types of Securities and Other Investments. The Funds may invest in new or relatively new types of financial instruments and other investments that involve new asset classes, structures, documentation, forms of risk transfer, and markets or exchanges. As such, there is a limited significant trading history of these investments, and there can be no assurance that a liquid market in these instruments will develop. Lack of a liquid market may impose the risk of higher transaction costs and the possibility that a Fund may be forced to liquidate positions when it would not be advantageous to do so or not be able to liquidate such positions. In addition, there are higher risks associated with new types of securities arising from potential regulatory, legal or tax developments or from lack of clarity or agreement as to the construction of written documentation, in each case, the determination of which may not yet be settled by courts or legal regulatory proceedings or processes and any such determination may be a please register to get more info

Item 9 is not applicable to Bracebridge, as Bracebridge does not have any reportable material legal or disciplinary events. please register to get more info

Related Broker-Dealers
Neither Bracebridge nor any of its management persons is registered or has an application pending to register as a broker-dealer or a registered representative.
Related Futures Commission Merchant/Commodity Pool Operator/Commodity Trading Advisor
Bracebridge is a commodity pool operator and a commodity trading adviser registered with the Commodities Futures Trading Commission. The following management persons are associated persons of Bracebridge: Nancy Zimmerman, Gabriel Sunshine, John Spinney, and Steven Quintero. please register to get more info

TRANSACTIONS AND PERSONAL TRADING
Code of Ethics
Bracebridge has adopted a Code of Ethics (the “Code”) that states that employees and certain other persons covered by the Code (as used in this Item 11, “employees”) may not engage in any investment transaction under circumstances in which the employee benefits from or interferes with or otherwise disadvantages the purchase or sale of investments on behalf of a Fund. The policies and procedures set forth in the Code recognize that as an investment adviser, Bracebridge is a fiduciary to the Funds and has a duty to place the interests of the Funds before the interests of Bracebridge and its employees unless otherwise disclosed. This duty generally includes an obligation to address and mitigate conflicts of interest. The Code requires all employees to comply with applicable U.S. federal securities laws at all times. The Code outlines written policies regarding personal trading in brokerage or securities accounts in which an employee, or certain members of such employee’s immediate family, has any direct or indirect beneficial ownership. Generally, employees are required to seek advance clearance of any proposed purchase or sale of a security, with the exception of certain securities or security types such as mutual funds and certain exchange-traded funds, so that such personal trade requests are reviewed for conflicts. While employees may hold investments that are the same as, or in a different class or type than, investments held by a Fund, employees may not use information concerning the investments or investment intentions of Bracebridge on behalf of a Fund, or their ability to influence such investment intentions, in a manner detrimental to the interests of any client. The Code prohibits employees from engaging in certain short-term trading and purchases of securities in underwritten public offerings. In addition, the Code requires employees to disclose applicable personal securities holdings upon employment and annually thereafter, and report personal securities transactions at least quarterly. Bracebridge, its affiliates and their respective members, partners, officers, employees or related persons (and any such person’s investment vehicles, estate planning vehicles, donor advised funds and charitable foundations) (collectively, “Manager Related Persons”) have significant capital invested in the Funds. This provides alignment of financial interests with the interests of Fund investors, but may present conflicts of interest in that Manager Related Persons have a larger interest in certain Funds than others. In addition, investments in the Funds by such persons may also present conflicts of interest since such persons are generally permitted to make redemptions without being subject to any minimum lock-up period, anniversary redemption dates, notice periods or other restrictions on redemptions. Bracebridge’s compliance department has responsibility for the day-to-day administration of the Code. Employees are required to immediately report any violation of the Code to the Chief Compliance Officer (the “CCO”) or another member of the compliance department. This summary of the Code is qualified in its entirety by the Code of Ethics of Bracebridge, which is available to any investor or potential investor upon request.
Conflicts of Interest
The material reportable conflicts of interest encountered by a Fund include those discussed below, although the discussion below does not necessarily describe all of the conflicts that may be faced by a Fund. Other conflicts may be disclosed throughout this brochure and in the offering documents of each Fund and these materials should be read in their entirety. Bracebridge has adopted policies and procedures to address and mitigate conflicts of interest, including those described below. Bracebridge and/or its Manager Related Persons may give advice and recommend securities to, or buy securities for, clients and others, which advice or securities may differ from advice given to, or securities recommended or bought for, a Fund, whether their investment objectives are substantially the same or different. In addition, Bracebridge and/or its Manager Related Persons may engage in transactions or make investments for their own accounts which differ from or are identical to the transactions engaged in or investments made by Bracebridge for a Fund (and such transactions or investments may be made through one or more pooled vehicles, including, without limitation, those established for the benefit of Manager Related Persons). There may also be circumstances in which a related Fund makes investments that may be potentially suitable for one or more other Funds but in which the other Funds for any number of reasons does not invest. Investments by Manager Related Persons in Funds or pooled vehicles that pursue similar or different investment strategies from a particular Fund may also present conflicts of interest, including with respect to allocating management time or other functions relating to such Fund and other clients or investment activities.

Other conflicts may arise, for example, when one or more clients of Bracebridge, including, without limitation, any related Funds, (i) invest in different parts of the same issuer’s capital structure, whereby one or more Bracebridge clients own senior debt obligations of such issuer and other such clients own junior debt or equity of the same issuer, (ii) own public securities and other clients own private securities of the same issuer, or (iii) invest in different tranches of the same structured investment. In such cases, Bracebridge will carefully consider and resolve any conflicts of interest consistent with its fiduciary duties in its best judgment.

Bracebridge strives to allocate investment opportunities among clients in a fair and equitable manner over time. When clients of Bracebridge participate in the same manner in the same investment opportunity, such opportunity will be allocated at Bracebridge’s sole discretion, taking into account such factors as the relative amounts of capital available (considering both cash and available borrowings) for new investments, the relative net asset values of each such client, the existing kinds and levels of investments in such client in light of such client's investment strategy, a client's limitations on participation in special situation investments, such client's leverage and risk appetite, the investment programs and portfolio positions of such clients, whether or not an allocation of such opportunity will result in such client holding odd lots or a de minimis amount, and applicable tax and regulatory considerations. It is expected that multiple clients of Bracebridge and its affiliates, including a Master Fund, will invest in many of the same assets. When the purchase and sale of securities is considered to be in the best interests of multiple Funds, the securities to be purchased or sold may be aggregated in order to obtain superior execution and/or lower brokerage expenses. Execution prices for identical securities purchased or sold on behalf of multiple accounts in any one business day may be averaged. In such events, allocation of prices, as well as expenses incurred in the transaction, shall be made in a manner Bracebridge considers to be equally as favorable to a Fund as to any other Fund. Despite similar investment strategies among certain Funds, the Funds might have different performance results as a result of the manner in which investments are allocated. The officers, members and employees of Bracebridge may trade in securities for their own accounts, subject to restrictions and reporting requirements as may be required by law or otherwise determined from time to time by Bracebridge. These restrictions and reporting requirements generally do not apply to certain asset classes and investments not commonly invested in by the Funds. See Item 12 “Aggregation of Orders” below for more information regarding Bracebridge’s policy on aggregating orders. Bracebridge may engage in cross trades with respect to the Funds to the extent permitted in the Funds’ organizational documents. Certain of the Funds are part of a master-feeder structure and, accordingly, Bracebridge advises certain feeder funds to invest in certain Master Funds from time to time. The use of a master-feeder structure may create a conflict of interest in that different tax considerations for different Funds within a single master-feeder structure may cause a Master Fund to structure or dispose of an investment in a manner that may have disparate tax effects across the feeder funds within such structure, which may be more advantageous to one or more, but not all, such feeder funds.

Bracebridge has certain responsibilities in connection with valuation of securities. A conflict may arise with respect to valuing certain securities given that the Management Fee and Incentive Fee earned by Bracebridge are determined based on the value of such securities.

The Funds’ organizational documents do not prohibit Bracebridge or its employees, members and/or principals or any other partner from buying or selling securities or commodity interests for their own account. The records of any such trades by Bracebridge, its employees, members and/or principals will not be open to inspection by the Funds’ investors. Bracebridge maintains compliance policies and procedures, including personal trading policies, which are designed to reduce potential conflicts of interest (see “Code of Ethics” above). please register to get more info

Broker/Dealer Selection Process
Bracebridge’s objective is to act in the best interests of the Funds in its selection of brokers/dealers to effect transactions for the Funds. In making such selections, Bracebridge seeks to obtain the best execution for each such transaction. In any specific transaction, Bracebridge assesses best overall execution for the Funds in light of all relevant prevailing circumstances. Bracebridge considers the following factors (to which, in any given transaction, more or less weight may be given) in selecting broker/dealers: the creditworthiness and financial stability of the particular broker/dealer, the expertise and skill with respect to the specific securities traded for the relevant Fund’s account, the ability to execute and clear trades in an orderly and satisfactory manner, the adequacy of trading infrastructure, technology and capital, and the trading terms, among other factors. Best price (including commissions), or lowest possible transaction cost, is a significant consideration, however, “best execution” does not require Bracebridge to obtain the lowest possible price for any particular transaction, for any group of transactions, for any particular Fund or all Funds in the aggregate. Bracebridge’s Trade Oversight Committee meets periodically (typically quarterly) to review the quality and cost of execution being provided by Bracebridge’s broker/dealers.
Research and Other Soft Dollar Benefits
Section 28(e) of the Exchange Act is a “safe harbor” that permits an investment adviser to use commissions or “soft dollars” to obtain certain research and brokerage services in connection with the investment decision-making process. Bracebridge does not permit any soft dollar arrangements at this time, but retains the right to do so in the future.

Bracebridge from time to time participates in certain “capital introduction” programs organized or sponsored by certain prime brokers or counterparties to the Funds or affiliates of such prime brokers or counterparties, which programs may include prime brokers, counterparties or their affiliates introducing Bracebridge to potential investors with which the prime brokers, counterparties or its affiliate have a pre- existing relationship. None of Bracebridge or the Funds compensate prime brokers, counterparties or their affiliates for organizing such programs or making such introductions or for any investments ultimately made by such prospective investors. Such programs and introductions could be construed as an influence on Bracebridge’s broker/dealer selection in connection with brokerage financing and other activities of the Funds.
Directed Brokerage

Bracebridge does not have client directed brokerage arrangements.

Aggregation of Orders

Where an investment is appropriate for multiple Funds, Bracebridge may group all such Funds together and submit one aggregated order for all of the participating Funds. Bracebridge will generally be required to designate the amount of investments to be purchased or sold for each Fund participating in any aggregated order either prior to the execution of the order or promptly thereafter. Such allocation will be based upon the parameters described in Item 11 “Conflicts of Interest” above and upon factors that include, without limitation, the available capital of each Fund and whether allocation to a Fund will result in the Fund holding odd lots or a de minimus amount of an investment. If an aggregated order is not completely filled, it will typically be allocated on a pro rata basis to all Funds participating in the order promptly following execution subject to the parameters described in Item 11 “Conflicts of Interest” above.

Where an aggregated order is executed at more than one price over the course of a day, the executed transactions will be allocated so that each Fund receives the average unit price over the course of the day and bears its pro rata share of the aggregate transaction costs, to the extent reasonably practicable and subject to the parameters described in Item 11 “Conflicts of Interest” above. Where it is not practicable, Bracebridge shall endeavor to ensure that the Funds are treated in a fair and equitable manner. To the extent that any of those orders remains unfilled following such allocation, the unfilled amount will be combined with subsequent orders in that investment, if any, for allocation of subsequent transactions. To the extent that a trade allocation is not made pre-trade, Bracebridge’s policy is that such allocation must be made promptly after trade execution and in all cases by the end of the trading day. If circumstances exist that make it impossible or impractical to allocate a trade before the end of the relevant trading day, the relevant trader should so inform the compliance department. See Item 11 “Conflicts of Interest” above for more information regarding conflicts of interest related to aggregating orders. please register to get more info

Oversight and Monitoring
Bracebridge provides continuous advisory services for the Funds. The portfolio investments of each Fund are primarily reviewed by a team of investment professionals, which currently includes the principals of Bracebridge.
Reporting
Bracebridge provides written reports to investors in the Funds in accordance with the applicable Fund’s organizational and offering documents and as may be agreed with particular investors. Bracebridge has engaged an independent public accounting firm to audit the financial statements of the Funds within 120 days of the end of each fiscal year (or such shorter period as may be set forth in a Fund’s governing documents) or as soon as reasonably practicable thereafter. please register to get more info

Bracebridge does not compensate any person for client referrals. Bracebridge may enter into placement agent agreements in the future. Any placement agent fees in connection with any such agreement would generally be paid by Bracebridge. please register to get more info

Item 15 is not applicable to Bracebridge, as the Funds’ “qualified custodian” is not required to send account statements directly to Bracebridge’s clients under the custody rule. please register to get more info

Bracebridge provides investment advice directly to the Funds pursuant to a written investment management agreement with each Fund, subject to the discretion and control of the general partner or the board of directors of the applicable Fund, and not directly to the investors in the Funds. Powers of attorney and any restrictions on Bracebridge’s authority are set forth in the organizational documents and subscription documents of the Funds. please register to get more info

Bracebridge makes all decisions relating to the voting of proxies and exercise of consent rights (collectively, “Votes” or similar construction, as appropriate) on behalf of the Funds. Bracebridge will Vote in accordance with Bracebridge’s Proxy Policy. Bracebridge will endeavor to identify and resolve any conflicts between its own interest or the interest of its employees, on the one hand, and the interests of the Fund for which Bracebridge exercises voting discretion, on the other hand. Bracebridge will also endeavor to identify and resolve any conflicts of interest between different Funds for which Bracebridge exercises voting discretion. Where actual, potential or apparent conflicts are identified regarding any material individual voting matter, Bracebridge may, at the option of the CCO, submit the matter to an independent third party for resolution. This summary of Bracebridge’s voting policies and procedures is qualified in its entirety by the Proxy Policy of Bracebridge that is available to investors upon request. Any requests for information about how Bracebridge has voted with respect to securities held by the respective Fund should be directed to the CCO or another member of the compliance department. please register to get more info

Item 18.A is not applicable to Bracebridge, as it does not require or solicit prepayment of fees six months or more in advance. In response to Item 18.B, there is no financial condition that Bracebridge believes is reasonably likely to impair its ability to meet its contractual commitments to the Funds. Item 18.C is not applicable to Bracebridge, as it has not been subject to a bankruptcy petition during the past ten years.
ITEM 19. REQUIREMENTS FOR STATE-REGISTERED ADVISERS
Item 19 is not applicable to Bracebridge as it is not registered with any state securities authority. please register to get more info