GlendonCapitalManagementL.P.(“GCM”,“Glendon”,orthe“Firm”)isalimitedpartnership organizedunderthelawsofthestateofDelawareandisregisteredwiththeU.S. Securities andExchange Commission (“SEC”) as an investment adviser. GCM is owned by Matthew Barrett,HollyKim,EitanMelamed,Brian Berman,MichaelKeegan,ChrisSayerandGlendon Employee Company M, LP; all of GCM’s individual owners are active in managing the businessofGCM.GCMcommencedoperationsasofApril26,2013.


GCMcommencedoperationsonApril26,2013andismanagedbyMatthewBarrett,Brian Berman,HollyKim,EitanMelamed(the“FoundingPartners”),MichaelKeegan,who joined inMay1,2016,andChrisSayer,whobecameapartnerinJanuary1,2018(collectively the“Partners”). PriortoformingGCM,certainofthePartnerswere theexecutiveteamof BarclaysAssetManagementGroup(“BAMG”),asubsidiaryofBarclays BankPLC(“Barclays”).
From2007–2014,theFoundingPartnersandotherBAMG investmentprofessionals who currently work at Glendon (collectively, the “Glendon InvestmentTeam”)managedan accountforBarclays(the“BarclaysAccount”).


GCMisfocusedoninvestingindistressedsituations.Clients(asdefinedintheimmediately followingparagraph)mayinvest inandholdavarietyofinstruments,includingbankloans, publicandprivatecorporate bonds,municipalandsovereigndebt,asset‐backedsecurities, equity securities received in connectionwithdebtrestructuringsorotherwise (including, occasionally,throughinitialpublicofferings),andinvestmentsinprivateequity.Clients may alsoholdavarietyofderivativeinstrumentsorshortpositionsforinvestmentand hedging purposes.GCMprovidesadvisoryservicesasdescribedintheinvestmentprogram of each Client’sGoverningDocuments(definedbelow)orassetforthintheadvisorycontractwith such Client. Please refer to Item 8 for a more detailed description of our investment strategies andthetypesofinvestmentinstrumentsheldbyourClients.


GCMactsastheinvestmentmanagertoGlendonOpportunitiesFund,L.P.,anditsassociated feederfunds(“G1”),andtocertainseparatelymanagedaccountsofinstitutionalinvestors.
In the future, GCM may provide discretionary or non‐discretionary investment advisory services to other investment funds (each, a “Fund”, and collectively, the “Funds”) and separate account clients (each, a “Separate Account” and collectively, the “Separate Accounts”andtogetherwiththeFunds,the“Clients”).Suchinvestmentfundsandvehicles mayusemaster‐feederstructures,parallelfunds,orotherstructures.Totheextentthatsuch structuresareemployed,referencestoaparticularfundwillmeancollectivelytheassociated master fund, feeder funds and/or any parallel funds. GCM tailors its advisory services as described in the investment program of each Fund client’s private placement memorandumand organizationaldocuments(collectively,“GoverningDocuments”)orthe advisorycontractwitheachSeparateAccountclient,asapplicable.Investorsandprospective investorsareurgedtoconsultsuch GoverningDocumentsformorecompleteinformation about the investment objectives and investmentrestrictionswithrespecttoaparticular investmentprogram. Inmanagingassets foraparticularfundClient,GCMmayenterinto “side letters” or other arrangements with certaininvestorsofaFundgrantingsuch investorscertainspecificrights,benefitsorprivilegesthatarenotmadeavailabletoother investors.
GCMalsoprovidesinvestmentadvicetoAltairGlobalCreditOpportunitiesFund(A),LLCona sub‐advisorybasisandmaysub‐adviseotherthird‐partyinvestmentfundsinthefuture.
Glendondoesnotparticipateinanywrapfeeprograms.


As of December 31, 2018, GCM managed regulatory assets of $1,921,258,582 on a discretionary basis (approximately$1.5 billion AUM).Of this amount, approximately $1.4 billion was attributabletoG1,includingundrawncapital commitments,andapproximately $507.5millionwasattributabletootherGCMclientaccounts.
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PotentialClientsandinvestorsininvestmentfundsshouldreviewtheadvisorycontract or the applicable Governing Documents for an investment fund in conjunction with this brochureformorecompleteinformationaboutthefeesandcompensationpayabletoGCM.
GCMdoesnotcurrentlyhaveafeeschedule. FeespayabletoGCMunderitsseparateaccount arrangementsaregenerallysubjecttonegotiation.FeespayabletoGCMwithrespecttoits investmentfundsmaybewaivedormodifiedbyGCMinitssolediscretionwithrespectto certaininvestors,asmorefullydisclosedintheapplicableFund’sGoverningDocuments.


The specific manner by which GCM will charge fees will be established in the respective Client’swrittenagreementwithGCM.Ourfeeswillgenerallyconsistofamanagementfee whichwillbebilledonaquarterlybasispayableinadvance,andeitheraperformancebased feebilledonanannualbasisoranincentivefeeallocation. Accounts initiated or terminated during a calendar quarter will bechargedaproratedfee. Uponterminationofanyaccount, anyprepaid,unearnedfeeswillbepromptlyrefunded,andanyearned,unpaidfeeswillbe dueandpayable.


Ourfeesareexclusiveofbrokeragecommissions,transactionfeesandotherrelatedcostsand expenses,whichshallbeincurredbytheClient.Clientswillincurcertainchargesimposed by custodians, brokers,fundadministrators, and other third parties such as fees charged bymanagers,custodialfees,deferredsalescharges,odd‐lotdifferentials,transfertaxes,wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securitiestransactions.Suchcharges,feesandcommissionsareexclusiveofandinaddition toGCM’sfees,andGCMshallnotreceiveanyportionofthesecommissions,feesandcharges.
Additionally, GCM will, depending on the terms of the written agreement with its Client, charge for investment related attorneys’ fees, for other investment related advisory fees, including the use of “expert network” consultants, other due diligence related expenses, includingGCMstafftravelthatisinvestment‐related.Thesefeeswillbechargedregardless ofwhetheraninvestmentismadeandwillbeproratedonafairandequitablebasiswhere morethanoneGCMClientinvests. Item12furtherdescribesthefactorsthatGCMconsiders in selecting broker‐dealers forclient transactions and determining the reasonableness of theircompensation(i.e.,commission).
Inadditiontothefeesandexpensesdescribedabove,Clientsandprospectiveinvestorswill besubjecttoadditionalexpensesassociatedwithmanaging,operatingorservicingaclient accountorinvestmentfund.PotentialClientsandprospectiveinvestorsshouldconsultthe relevant advisory contract or applicable Governing Documents for a more complete discussionofthefees,expensesandothercompensationarrangementstowhichsuchClients andinvestorswillormaybesubject.
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GCMchargesperformance‐basedfeestoG1andtheSeparateAccounts;performancefeesare subject to individualized negotiation with each such Client. GCM will structure any performance or incentive fee arrangement to comply with Section 205(a)(1) of the AdvisersActandRule205‐3thereunder. Performancebasedfeearrangementsmaycreate anincentiveforGCMtorecommendinvestmentsthatmayberiskierormorespeculativethan those that would be recommended under a different fee arrangement. Such fee arrangements also createanincentivetofavoraccountsthatpayhigherperformancefees overotheraccountsthatpaylowerornoperformancefeesintheallocationofinvestment opportunities.GCMhasadoptedpoliciesandproceduresdesignedto ensurethatallClients aretreatedfairlyandequitably,andtopreventthispotentialconflictfrominfluencingthe allocationofinvestmentopportunitiesamongClients.


Theamountofanincentivefeeorallocation,ifany,variesamongstourClients.Inaddition, incentive fees or allocations will be paid by Clients at different times such as annually or upondistributionsexceedingvariousthresholds.Anygivenfeearrangementmaybemore orlessadvantageousdependingonperformanceandtimingofdistributions.
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As indicated above, GCM provides portfolio management servicesto G1 and the Separate Accounts. It may in the future provide portfolio management services to other private investment funds, and other separately managed account clients including accounts for institutions such as banking organizations, foreign investment companies, educational endowments, corporate pension and profit‐sharing plans, Taft‐Hartley plans, charitable institutions, foundations, endowments, municipalities, trust programs, sovereign funds, foreignfunds,andotherU.S.andinternationalinstitutions.GCMwillalsoofferitsservicesto registered investment companies, high net worth individuals, and family offices. The minimumseparatelymanagedaccountsizethatGCMwillmanageistypically$100,000,000.
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ThestaffofGCMintegratesexperiencedprofessionalsinallofthedisciplinesthatarecritical to successful analysis of distressed debt, including accounting, law, bankruptcy, capital markets and fundamental securities analysis. They combine extensive experience in distressedbankdebt,defaultedsecuritiesandbankruptcysituationswithprovenexpertise in valuing companies and assets, negotiation and restructuring. However, investing in distresseddebtandspecialsituationinvolvesrisksthataremorefullyilluminatedinItem8.B below. There can be no assurance that a Client’s investment return objectives will be achievedorthatsubstantiallossofaClient’sinvestmentprincipalwillbeavoided.Clients shouldbepreparedtobearthelossofalloftheirinvestmentprincipalmanagedbyGCM.

A. MethodsofAnalysisandInvestmentStrategies

GCM'sinvestmentstrategy istoseektoexecutecreditandequityinvestmentsinmarkets experiencing distress and dislocation as well as adjacencies to those markets. This strategy seeks to exploit the cyclicality of credit markets and the assets financed by traditionalcreditinvestors.Investmentindebtandequitysecuritiesinvolvesriskoflossthat investorsinaFundorSeparateAccountClientsmustbepreparedtobear.


Thisbrochuredescribesourinvestmentprocess,whichissubjecttofurtherrefinementand developmentbyGCManditsInvestmentTeam. Thissummaryshouldnotbeinterpretedto limitinanywayGCM’sinvestmentstrategiesoractivities. GCMmayofferadvisoryservices, provide advice withrespectto any investment strategy(whether or not describedinthis brochure),andmakeanyinvestments(includingthosenotdescribedinthisbrochure)that GCM considers appropriate subject to each Client’s stated investment objectives and guidelines.


The foundational tenets of Glendon’s investment philosophy, applied across industries, marketsandcycles,arebuiltuponGlendon’sbeliefsthat:

 The cyclical nature of distressed markets is best exploited by matching investable capitaltothedistressedopportunityset:raisingsmallersizedfundsfor off‐cycle marketsandlargerinvestablefundsforscalabledistressedmarkets.


 Extendedperiodsoflowvolatilitycanleadtothecreationofcreditexcessesand asset inflation,whichbringabouttheconditionsforhighmarketvolatility.Stresses and/or exogenousshockscantriggertherecognitionandreversaloftheseexcesses, creatingscalabledistressedmarketopportunities.
 The prices and yields of credit instruments can overreact to stresses and exogenous shocksacrossvariousindustries,marketsandregions,creatingattractive investment opportunities in credit and the assets financed by traditional credit investors.
 When properly analyzed and underwritten, these investment opportunities can generate equity like returns, often while providing the greater downside protections ofcreditinstruments.
 Shocksandstressesinmarketsareepisodicandglobalinnature.TheGlendon team seekstoactivelymigrateitseffortsandresourcestowherethesedislocations occur.
Glendonbelievesthatdistressedinvestmentopportunityorpricingdislocationsstemfrom marketdisruptions,includingtheeffectsofeconomiccycles,regulatorychanges,litigation, andotherexogenousshocks.Astheseeventsoccur,Glendonbelievesthepro‐cyclicalnature of traditional credit investors (highly leveraged financial institutions and securitization structureswithheightenedriskaversion,andfixedincomefundssubjecttocapitaloutflows) cancausecreditpricestooverreacttovolatility,creatinginvestmentopportunities.These typesofdistressedopportunitiesGlendonpursuescanoccurabruptly,acrossdifferent regions,industries,assetclassesandtypesofinstruments.Tocapitalizeonthese opportunities,Glendonhaspositioneditselfasaresponsiveandanalyticalinvestorwitha flexibleinvestmentmandatedescribedbelow.Glendonbelievesthatthesecharacteristics areessentialtoitsinvestmentstrategybecausespecificsourcesand/ortimingof exogenousshocksaregenerallynotforeseeable,anddeepvaluespresentedbypocketsof dislocationmaydevelopandclose,quickly.Glendonbelievesthataflexibleapproachis likelytoyieldawiderangeofattractiverisk‐adjustedinvestmentsforcreditopportunities andspecialsituationsforitsClients.

InvestmentTypes

GCM expects its investment strategy will be executed primarily through the following categoriesofdistress/dislocation:1

 StressedandDistressedCompanySecurities. Glendon’sprimarystrategy is to purchase the instruments – bonds, loans, unsecured claims, preferred stock and equity – in the secondary market issued by companies that are undergoing financial stress, including companies involved in insolvency proceedings.
Deteriorationina company’s financial condition can result from a downturn in general economic conditions or a decline in its industry conditions or company performance, often exacerbatedbyahighlyleveragedcapitalstructureandliquidity pressures.Glendonmayalsoenterintocreditdefaultswaps,shortsalesofsecurities andother structuredinvestmentsaspartofitsoverallinvestmentstrategy.Glendon valuesa company in the context of its market distress—whether going concern or liquidation—and,throughitsanalysis,estimatesarecoveryvalueforthedifferent claims in the company’s capital structure. The Glendon Investment Team is experiencedinvaluingandinvestingindistressedcompaniesacrossmanydifferent sectors,includingindustrials,consumergoods,retail,chemicals,metalsandmining, energy, transportation, mediaand telecommunications, auto suppliers, building materials,realestateandinfrastructure.TheFirmalsohasexperienceinvestingin opportunities across regions, generally focusing on jurisdictions with strong 1 TheopportunitiesGlendonpursuesdependonavarietyoffactors,includingprevailingmarketconditionsand investmentavailability.Thereisnoassurancethatanyparticularinvestmentwillbesuccessful. creditors’ rights protections and an established rule of law. In these situations, Glendon may be the lead investor and ultimately gain control of an entity or participate with other creditors in a restructuring process. Typically, distressed investmentopportunitiesoccurepisodicallyacrossthesedifferentcategoriesand,as such, the composition of GCM’s portfolio will likely depend in large part on the particular industries, asset classes or regions experiencing cyclical downturns or impactedbyexogenousshock.


 Post‐Reorganization Securities.Thesesecuritiesareissuedtocreditorsof companiesthathavecompletedareorganizationinsatisfactionofacreditor’sclaims andmayincludebothfixedincomeandequitysecurities.Glendonmayreceivethese securities in connection with a claim it held in a company’s bankruptcy, or it may purchasethesesecuritiesonasecondarybasisafteracompany’sreorganizationfrom traditional credit investors as well as non‐traditional investors receiving these securities in exchange for prior claims. The markets for these securities are often characterized by limited liquidity, wider bid/asked spreads, an absence of major broker‐dealers, limited research, and issuance from companies in out‐of‐favor industries.Glendonbelievesthatthelimitedmarketparticipationoftraditionalbuy‐ side investors in these securities results in volatile price swings, and the limited publishedresearchcanresultinoverlookedinherentvalueofthecompany,including taxattributessuchasnetoperatinglosscarry‐forwardsthatmayhavebeenpreserved aspartofthecompany’sreorganization.


 Downgraded Securities (“Fallen Angels”). An important component of Glendon’sinvestment strategy is investments in fixed‐income securities that have been downgradedbycreditagencies.Ratingsdecisions(inparticular,adowngrade to belowinvestment‐graderatings) cancreateheavyselling,asinvestment‐grade funds mayhavelimitsforinvestinginlower‐ratedsecurities,andregulatedentities mayface punitive capital charges in holding these instruments. Due to the large sizeofthe investment‐grade fixed‐income market, Glendon is often able to readily scale its sourcingofdowngradedsecuritiesgiventherelativelackofbuyinginterest inthese securities. Glendon typically performs a recovery analysis that takes into considerationthestressthetargetcompanyisundergoingandtheprocessandperiod of time over which those stresses may be resolved. Broadly, three outcomes are weighed in Glendon’s analysis to determine an entry point: (i) if the stress is transitory, the instrument may regain its rating; (ii) if the stress is ongoing, the instrumentmayberelegatedtoadifferent,morespeculative,assetclass,suchashigh yield; or (iii) if the stress is profound, the instrument may be restructured in a workoutorinsolvencyproceeding.Generally,thecatalystfortheinvestmentisthe eventualreturnoftraditionalinvestorstothemarketfortheinstrument.TheFirm hasaparticularfocusonthesecuritiesoffinancialinstitutionswithcapitaladequacy concerns, including hybrid securities of banks and insurance companies. Glendon believes its experience in the valuation of credit instruments held by financial institutionsisvitalinassessingoutcomesinthisparticularsector.
 Tax‐Exempt and Sovereign Bonds. Glendon believes that the volatility of theU.S. tax‐exemptbondmarketishighlycorrelatedtothepro‐cyclicalfundflows for the retailfundsthatdominatethemarket.InGlendon’sexperience,fundflows are very reactive to news reports regarding the financial health of the municipalities and commonwealthsoftheUnitedStates,giventheprospectoflow recovery rates for unsecuredbonds issued by municipalities that have undergone Chapter9 reorganizations.Retailoutflowshaveattimesledtoindiscriminateselling.
Glendon focusesonthosetax‐exemptbondswhere(i)itbelievesthatthelikelihood of insolvency is low, (ii) and/or the bond is protected by an enforceable security interest or other features that may limit downside or (iii) the bond’s credit is unrelatedtothe underlyingcreditworthinessofanymunicipality.


 Asset‐backed securities. The Firm periodically participates in the securitization markets,withparticipationscoincidingwithcreditcycleturnsforthe assets financed by these instruments. Asset‐backed securitizations in which Glendon has invested include securitizations involving aircraft, residential mortgages, commercial mortgages and student loans, among others. Glendon generallyfocusesonthemore seniorinstrumentsinsecuritizationsasdeterminedby securitizationdocumentation andcash‐flowor“waterfall”analysis.Inaddition,the Firmfocusesonthose instrumentsthathavebeendowngradedbelowinvestment‐ gradeand,asaresult,maycarrypunitivecapitalchargestothefinancialinstitutions thatmayholdthem, which mayincentivizethese institutions to sell at pricesthat Glendonbelievesare undervalued.


 SpecialSituations. Glendonalsofocuseson“specialsituation”investments, which includeinvestmentsinassetplatforms,liquidationsofcompaniesorfinancial institutions, rescue or debtor‐in‐possession financing and securities or claims, includinglitigationtrusts,wheretheenforcementofcreditors’rightsoralitigation outcome is determinative. Glendon also seeks to invest in equities (including, occasionally,throughinitialpublicofferings)andothersecurities of non‐distressed and non‐stressed companies by utilizing Glendon’s knowledge of andexperiences with companiesthatarereorganizing orthecreditmarketsin general.Glendonmay alsoinvestinequitiesandothersecuritiesnotimplicatedinthe dislocationofcredit markets if, in its judgment, these investments are important for portfolio constructionpurposes.
B. RiskofLoss TheinvestmentstrategiesemployedbyGCMonbehalfofourClientsinvolvesignificantrisks.
Prospectiveinvestorsinourinvestmentfundsshouldcarefullyreviewtherisksdescribedin therelevantGoverningDocumentsfortherelevantinvestmentfundandshouldevaluatethe merits and risks of an investmentin the context of their overall investment and financial circumstances.The risk factors below are not intended to be exhaustive and should be considered carefully by prospective investors together with the full text of the applicable GoverningDocuments.
Account values will fluctuate based upon a multitude of factors, including the financial condition,resultsofoperationsandprospectsoftheissuersoftheunderlyingsecuritiesor loanpositions,governmentalintervention,marketconditions,andlocal,regional,national andglobaleconomicconditions.Therefore,Clientsshouldbepreparedtolosealloraportion oftheirprincipalinvestedwithGCMiftheinvestmentstrategiesarenotsuccessful.Among therisksthatinvestinginsecuritiesinvolvesare:

General Economic and Market Conditions. The success of GCM’s investment activities couldbeaffectedbygeneraleconomicandmarketconditions,intheU.S.,Europeandtherest oftheworld,aswellasbychangesinapplicablelaws(includinglawsrelatingtotaxationof GCM’sinvestments),tradebarriers,currencyexchangecontrols,rateofinflation,currency depreciation, asset reinvestment, resource self‐sufficiency, energy or commodity market volatility and national and international political and socioeconomic circumstances in respect of the countries in which Glendon may invest (including wars, terrorist acts or securityoperations).ThesefactorsmayadverselyaffectGlendon’sabilitytosourceattractive investment opportunities, the pricing of such investment opportunities, the value of investmentsheldandtheabilitytoexitormonetizeitsinvestments,whichcouldimpairthe profitability or result in losses. In addition, general fluctuations in the market prices of securitiesandinterestratesmayaffecttheinvestmentopportunitiesandthevalueofthe investments.Accountsmayholdinvestmentsthatcanbeadverselyaffectedbythelevelof volatilityinthefinancialmarkets;thelargerthepositions,thegreaterthepotentialforloss.


Highly Competitive Market for Investment Opportunities. The activity of identifying, completing and realizing on attractive distressed and other similar investments that fall within Glendon’s investment objective is highly competitive, involves a high degree of uncertainty and will be subject to market conditions. Glendon expects to encounter competitionfromotherentitieshavingsimilarinvestmentobjectives.Potentialcompetitors includeotherinvestmentpartnershipsandcorporations,businessdevelopmentcompanies, strategic industry acquirers, financial institutions (such as mortgage banks and pension funds), hedge funds and investment funds affiliated with other financial sponsors or institutionalinvestors,privateequityanddebtinvestors,andcreditvehicles.Further,over thepastseveralyears,anever‐increasingnumberofprivateequityanddistresseddebtfunds havebeenformed(andmanysuchexistingfundshavegrowninsize).Additionalfundswith similarinvestmentobjectivesmaybeformedinthefuturebyotherunrelatedparties.Asa resultofthedislocationsinthecreditmarketoverthelastseveralyears,otherfirmsand institutionsareseekingtocapitalizeontheperceivedopportunitieswithvehicles,fundsand otherproducts.SuchsponsorsareexpectedtocompetewithGlendonforinvestments.Some ofthesecompetitorsmayhavegreaterfinancialresourcesandmorepersonnelthanGlendon.
Itispossiblethatcompetitionforappropriateinvestmentopportunitieswillincrease,thus reducingthenumberofopportunitiesavailabletoGlendonandadverselyaffectingtheterms uponwhichinvestmentscanbemade.TherecanbenoassurancethatGlendonwillbeable to identify or consummate investments satisfying its investment criteria or that if such investmentsaremade,thatsuchinvestmentswillberealizeduponatfavorablevaluationsor thattheobjectivesofGlendonwillbeachieved.
PotentialLackofDiversification. Glendonisnotunderanyotherobligationtodiversify the investments, whether by reference to the amount invested, type of securities, the industriesorgeographicalareasinwhichissuersandportfoliocompaniesoperate.Subject torestrictions,Glendonmayallocatecapitalamonginvestmentsasitdeterminesinitssole discretion,subjecttothegoalofmaximizingthereturns,andClientswillhavenoassurances withrespecttothediversificationorgeographicconcentrationoftheinvestmentprogram.
ThislackofdiversificationwillexposeClientstolossesdisproportionatetomarketdeclines ingeneraliftherearedisproportionatelygreateradversepricemovementsintheparticular investments, and a Client’s investment portfolio may be subject tomore rapid changes in valuethanwouldbethecaseiftheClientwererequiredtomaintainawidediversification amongcompanies,industriesandtypesofsecurities.TotheextentaClientholdsinvestments concentrated in a particular issuer, portfolio company, security, asset class or geographic region, the Client will be more susceptible than a more widely diversified investment partnership to the negative consequences of a single corporate, economic, political or regulatoryevent.


Possibly High Portfolio Turnover. Glendon’s investment strategy may require frequent tradingandahighportfolioturnover.ThemorefrequentlyGlendontrades,thehigherthe commission and transaction costs and certain other expenses involved in Glendon’s operations. These costs will be borne by the investor regardless of the profitability of Glendon’s investment and trading activities. In addition, a high portfolio turnover may increasetherecognitionofshort‐term,ratherthanlong‐term,capitalgains.


IlliquidInvestments.Glendonmaymakeinvestmentsthatarethinlytraded,investments forwhichnomarketexistsorinvestmentsthatarerestrictedastotheirtransferabilityunder applicable securities laws or documents governing particular transactions. For example, Glendon may invest in post‐reorganization securities which are often characterized by limitedliquidity,widerbid/askspreadsandtheabsenceofmarketmakers.Somesecurities orinstrumentsthatwereliquidatthetimetheywereacquiredmay,foravarietyofreasons whichmaynotbeinGlendon’scontrol,laterbecomeilliquid.Thismayhavetheeffectof limitingtheavailabilityofthesesecuritiesorinstrumentsforpurchasebyGlendonandmay alsolimittheabilityofGlendontosellsuchinvestmentsattheirfairmarketvalueinresponse tochangesintheeconomyorthefinancialmarkets.Duetosecuritiesregulationsgoverning certain publicly traded equity securities, Glendon’s ability to sell securities could also be diminishedwithrespecttoequityholdingsthatrepresentasignificantportionoftheissuer’s or portfolio company’s securities (particularly if Glendon has designated one or more directorsoftheissuerorportfoliocompany).
MarketDislocation.SuccessfulimplementationofaClient’sinvestmentstrategydepends, inpart,oncontinueddisruptionandvolatilityinthecreditmarkets.However,aprolonged disruption may prevent a Client from advantageously realizing on or disposing of its investments. The continued economic instability could adversely affect the financial resourcesofcorporateborrowersinwhichtheClientinvestsandresultintheinabilityof suchborrowerstomakeprincipalandinterestpaymentson,orrefinance,outstandingdebt whendue.Intheeventofsuchdefaults,theClientmaysufferapartialortotallossofcapital invested in such companies, which would, in turn, have an adverse effect on the Client’s returns.SuchmarketplaceeventsalsomayrestricttheabilityoftheClienttosellorliquidate investmentsatfavorable timesor forfavorable prices(althoughsuch marketplaceevents maynotforecloseaClient’sabilitytoholdsuchinvestmentsuntilmaturity).Inparticular,the Client’s investment strategy relies in part on the stabilization or improvement of the conditions in the global financial markets generally and credit and energy markets specifically. Absent such a recovery or in the event of a further market deterioration, the valueoftheClient’sinvestmentsmaynotappreciateasprojectedormaysufferaloss.


Expedited Transactions. Investmentanalyses and decisionsby Glendon willoften be undertakenonanexpeditedbasisinorderfortheClienttotakeadvantageofinvestment opportunities. In such cases, the information available to Glendon at the time of the investment decision may be limited, and Glendon may not have access to the detailed informationnecessaryforafullevaluationoftheinvestmentopportunity.Inaddition,the financial information available to Glendon may not be accurate or provided based upon acceptedaccountingmethods.Inaddition,Glendonwillrelyuponindependentconsultants inconnectionwithitsevaluationofproposedinvestments.Therecanbenoassurancethat theseconsultantswillaccuratelyevaluatesuchinvestments. Furthermore, Glendon’s due diligence in any expedited transactions may not reveal all of a potential investment’s liabilitiesandmaynotrevealotherweaknessesintheparticulardebtorequitysecuritiesor theissuer’sbusiness.TherecanbenoassurancethatGlendon’sduediligenceprocesseswill uncoverallrelevantfactsthatwouldbematerialtoaninvestmentdecision.Asaresult,there is a risk that unanticipated events or developments may occur in these expected transactions,whichcouldadverselyaffectClients’investment.


Follow‐onInvestments.TheClientmayhavetheopportunitytoincreaseitsinvestmentin orprovideadditionalfundingtoaparticularissuerorportfoliocompanyinwhichtheClient is already invested. There can be no assurance that the Client will seek such follow‐on investmentsorthatitwillhavesufficientcapitaltodoso.AnydecisionbytheClientnotto makefollow‐oninvestmentsoritsinabilitytomakesuchinvestmentsmayhaveasubstantial negativeimpactontheissuerorportfoliocompanyinneedofsuchaninvestmentandmay diminish the Client’s ability to influence the issuer’s or portfolio company’s future development.Theforegoingisamplifiedbyrestrictionsonfollow‐oninvestmentsthatthe Client is permitted to make. Furthermore, no assurance can be made that any follow‐on investmentmadebytheClientwillbeprofitabletotheClient.


Non‐U.S.Investments.Glendonispermittedtomakeinvestmentsinthesecuritiesofforeign issuers and portfolio companies. Certain foreign investments involve risks and special considerationsnottypicallyassociatedwithU.S.investments.Suchrisksinclude:theriskof nationalization or expropriation of assets or confiscatory taxation; social, economic and political uncertainty, including war and revolution; dependence on exports and the correspondingimportanceofinternationaltrade;pricefluctuations,marketvolatility,less liquidity and smaller capitalization of securities markets; currency exchange rate fluctuations;ratesofinflation;controlson,andchangesincontrolson,foreigninvestment andlimitationsonrepatriationofinvestedcapitalandonGlendon’sabilitytoexchangelocal currenciesforU.S.dollars;U.S.andforeignwithholdingtaxes;governmentalinvolvementin andcontrolovertheeconomies;governmentaldecisionstodiscontinuesupportofeconomic reform programs generally and impose centrally planned economies; less extensive regulationofthesecuritiesmarkets;longersettlementperiodsforsecuritiestransactions; lessdevelopedcorporatelawsregardingfiduciarydutiesandtheprotectionofinvestors;and certainconsiderationsregardingthemaintenanceofGlendon’sportfoliosecuritiesandcash with foreign sub‐custodians and securities depositories. In addition, Glendon may invest fromtimetotimeininvestmentslocatedinmemberstatesoftheEuropeanUnion.Inlightof the continued and ongoing uncertainty in European debt markets unique political risks associated with concerns surrounding its members exiting the European Union or abandoning theregion’scommoncurrency,suchinvestmentsmaybesubjecttoheightened risksorrisks notassociatedwiththeforegoing.


Theremaybelesspubliclyavailableinformationaboutcertainforeigncompaniesthanwould bethecaseforcomparablecompaniesintheUnitedStates,andcertainforeigncompanies may not be subject to accounting, auditing and financial reporting standards and requirementscomparableto,orasuniformas,thoseofU.S.companies,whichmayresultin the unavailability of material information about issuers and portfolio companies. Certain countriesrequiregovernmentalapprovalpriortoinvestmentsbyforeignpersons,orlimit theamountofinvestmentbyforeignpersonsinaparticularcompany,orlimitinvestmentby foreignpersonstoaspecificclassofsecuritiesofacompanythatmayhavelessadvantageous terms than the classes available for purchase by nationals. Some countries require governmentalapprovalfortherepatriationofinvestmentincome,capitalortheproceedsof salesofsecuritiesbyforeigninvestors.Glendon’sinvestmentscouldbeadverselyaffectedby delaysin,orarefusaltogrant,anyrequiredgovernmentalapprovalforrepatriationofcapital orearnings,aswellasbytheapplicationofrestrictionsoninvestments.Inaddition,because Glendon’sinvestmentsinothercountrieswilllikelybedenominatedinthecurrenciesofsuch countries,achangeinthevalueofthesecurrenciesagainsttheU.S.dollarmaywellresultin a corresponding change in the U.S. dollar value of Glendon’s assets denominated in those currencies.Glendonisundernoobligationtoemployhedgingtechniquestominimizethe currencyrisks.


The judicial systems of jurisdictions outside of the United States vary in terms of speed, commercial sophistication, impartiality, consistency of results and adherence to judicial precedent.Asaresult,Glendonmayhavedifficultyinforeclosingorsuccessfullypursuing claims in the courts of certain non‐U.S. jurisdictions, as compared to the United States.
Further,totheextentthatGlendonoraportfolioinvestmentmayobtainajudgmentbutis requiredtoseekitsenforcementinanon‐U.S.court,therecanbenoassurancethatsuchcourt willenforcesuchjudgment.ThelawsofcertaincountriesoutsideoftheUnitedStateslack the sophistication and consistency found in the United States with respect to foreclosure, bankruptcy, insolvency, liquidation, corporate reorganization and creditors’ rights. For example, issuers and portfolio companies located in non‐U.S. jurisdictions may be involved in restructurings, bankruptcyproceedingsand/orreorganizationsthatarenot subjecttolawsandregulations thataresimilartotheU.S.BankruptcyCodeandtherights of creditors afforded in U.S. jurisdictions.Totheextentsuchnon‐U.S.lawsandregulations donotprovideGlendonwith equivalent rights and privileges necessary to promote and protectitsinterestinanysuch proceeding,Glendon’sinvestmentsmaybeadverselyaffected.
WhileGlendonintends,where deemedappropriate,tomanageclientaccountsinamanner thatwillminimizeexposureto theforegoingrisks(althoughGlendonmaynotalwayshedge currencyrisks),therecanbeno assurancethatadversedevelopmentswithrespecttosuch riskswillnotadverselyaffectthe assetsofclientaccountsthatareheldincertaincountries.
LeveragedInvestmentsGlendon’sinvestmentsareexpectedtoincludecompanieswhose capital structures may have significant leverage. Such investments are inherently more sensitivetodeclinesinrevenuesand/orincreasesincostsorinterestrates. Theleveraged capitalstructureofsuchinvestmentswillincreasetheexposureoftheportfolioinvestments to adverse economic factors such as downturns in the economy or deterioration in the conditionoftheportfolioinvestmentoritsindustry. Additionally,thesecuritiesacquiredby Glendonmaybethemostjuniorinwhatwilltypicallybeacomplexcapitalstructure,and thussubjecttothegreatestriskofloss.


LeverageinClientsAccountsGlendonmayutilizeleverageinitsClients’accountsinthe formofdirectborrowings. Additionally,Glendonmayutilizecertainderivativesinstruments which contain inherent leverage, including, but not limited to, swaps and options. While leverage presents opportunities for increasing Glendon’s total return, it may potentially increase losses as well. Accordingly, any event that adversely affects the value of an investmentbyGlendonwouldbemagnifiedtotheextentleverageisused. Thecumulative effectoftheuseofleveragebyGlendoninamarketthatmovesadverselytoinvestments couldresultinalosstotheinvestorthatwouldbegreaterthanhadleveragenotbeenused, includingthelossoftheentireinvestmentandalsolossexceedingtheoriginalamountofa particular investment.There are also financing costs associated with leverage, and each leveragedinvestmentwillinvolveinterestraterisktotheextentthatfinancingchargesfor suchinvestmentsarebasedonapredeterminedinterestrate.


DebtSecurities.ItislikelythatasignificantportionofGlendon’sinvestmentsforitsClients willconsistofdebtsecurities.Debtsecuritiesaresubjecttotheriskofanissuer’sorportfolio company’sabilitytomeetprincipalandinterestpaymentsontheobligation(creditrisk),and mayalsobesubjecttopricevolatilityduetosuchfactorsasinterestratesensitivity,market perceptionofthecreditworthinessoftheissuerorportfoliocompanyandgeneralmarket liquidity(marketrisk).Withbondsandotherfixedincomesecurities,ariseininterestrates typicallycausesafallinvalues,whileafallininterestratestypicallycausesariseinvalues.
Theriskofdebtsecuritiesvariessignificantlydependinguponfactorssuchastheissuerand maturity.Forexample,theissuerofasecurityorthecounterpartytoacontractmaydefault or otherwise become unable to honor a financial obligation. The debt securities of some companiesmayberiskierthanthestocksofothers.
EquitySecurities. ItislikelythatGlendonwillinvestinequityandequity‐linkedsecurities foritsClients.Thevalueofthesesecuritiesgenerallywillvarywiththeperformanceofthe issuerorportfoliocompanyandmovementsintheequitymarkets.Asaresult,aninvestor maysufferlossesifitinvestsinequitysecuritiesofissuersandportfoliocompanieswhose performancedivergesfromGCM’sexpectations.Aninvestoralsomaybeexposedtorisks thatissuersorportfoliocompanieswillnotfulfillcontractualobligationssuchas,inthecase ofwarrants,deliveringcommonstockuponexercise.
PubliclyTradedSecurities. ItislikelythatGCMwillinvestinpubliclytradedsecuritiesfor itsClients. Publiclytradedsecuritiesmaybesensitivetomovementsinthestockmarketand trendsintheoveralleconomy. Moreover,theabilityofthesecompaniestorefinancedebt securitiesmay depend on their ability to sell new securities in the public high yield debt marketorotherwise.Inaddition,byinvestinginpubliclytradedsecuritiesorassets,GCM willbesubjecttofederalandstatesecuritieslaws,whichmay,amongotherthings,restrict orprohibitGCM’sabilitytosellaninvestment.


Bank Loans and Participations. It is likely that GCM will invest in bank loans and participationsforitsClients. Theseobligationsaresubjecttouniquerisks,including:(i)the possibleinvalidationoftheloanasafraudulentconveyanceunderrelevant creditors’rights laws;(ii)so‐calledlender‐liabilityclaimsbytheissueroftheobligations;(iii) environmental liabilities that may arise with respect to collateral securing the obligations; and (iv) limitations on GCM’s ability to directly enforce its rights with respect to participations.
The loans invested in by Glendon may include term loans and revolving loans, may pay interestatafixedorfloatingrateandmaybeseniororsubordinated.


Successfulclaimsbythirdpartiesarisingfromtheseandotherrisks,absentbadfaith,willbe borne by investors. Bank loans are frequently traded on the basis of standardized documentation,whichisusedinordertofacilitatetradingandmarketliquidity.Therecanbe noassurance,however,thatfuturelevelsofsupplyanddemandinbankloantradingwill provideanadequatedegreeofliquidity,thatthecurrentlevelofliquiditywillcontinueor thatthesamedocumentationwillbeusedinthefuture.Thesettlementoftradinginbank loansoftenrequirestheinvolvementofthirdparties,suchasadministrativeorsyndication agents, and there presently is no central clearinghouse or authority that monitors or facilitatesthetradingorsettlementofallbankloantrades.Often,settlementmaybedelayed duetotheactionsofathirdpartyorcounterparty,andadversepricemovementsmayoccur inthetimebetweentradeandsettlement,whichcouldresultinadverseconsequencesfor investors.


ItislikelythatGlendonmayacquireinterestsinbankloanseitherdirectly(bywayofsaleor assignment)orindirectly(bywayofparticipation).Thepurchaserofanassignmenttypically succeeds to all the rights and obligations of the assigning institution and becomes a contractingpartyunderthecreditagreementwithrespecttothedebtobligation;however, itsrightscanbemorerestrictedthanthoseoftheassigninginstitution.Inaddition,ifGlendon acquiresloanspursuanttoanassignment,itispossiblethatGlendon’sclaimsmaybesubject to attack (i.e., equitable subordination or disallowance) on account of the conduct of the transferee. Participation interests in a portion of a debt obligation typically result in a contractualrelationshiponlywiththeinstitutionparticipatingouttheinterestandnotwith theborrower.Inpurchasingparticipations,Glendonmayhavenorighttoenforcecompliance bytheborrowerwiththetermsoftheloanagreement,noranyrightsofset‐offagainstthe borrower, and Glendon may not directly benefit from the collateral supporting the debt obligationinwhichithaspurchasedtheparticipation.Asaresult,Glendonmayassumethe creditriskofboththeborrowerandtheinstitutionsellingtheparticipationtoGlendonclient accounts.Incertaincircumstances,investingintheformofaparticipationmaybethemost advantageousoronlyrouteforGlendontomakeorholdanyinvestment,includinginlightof limitationsrelatingtolocallawsorthewillingnessofadministrativeagentsorborrowersto allowGlendontobecomeadirectlender.Glendonmayinvestinbankloansthatare,ormay become, below investment grade. In terms of liquidity with respect to such investments, therecanbenoassurancethatlevelsofsupplyanddemandinbankloantradingwillprovide anadequatedegreeofliquidityforGlendon’sinvestmentstherein.Inaddition,Glendonmay make investments in stressed or distressed bank loans, which are often less liquid than performingbankloans.


HighYieldandPreferredSecurities.ItislikelythatGCMwillinvestin“highyield”bonds andpreferredsecuritiesthatareratedinthelowerratingcategoriesbythevariouscredit ratingagenciesorcomparablenon‐ratedsecurities. Securitiesinthelower‐ratedcategories and comparable non‐rated securities are subject to greater risk of loss of principal and interest than higher‐rated securities and are generally considered to be predominantly speculativewithrespecttotheissuer’scapacitytopayinterestandrepayprincipal. Theyare alsogenerallyconsideredtobesubjecttogreaterriskthansecuritieswithhigherratingsin the case of deterioration of general economic conditions. Because investors generally perceivethattherearegreaterrisksassociatedwiththelower‐ratedandcomparablenon‐ ratedsecurities,theyieldsandpricesofsuchsecuritiesmaybemorevolatilethanthosefor higher‐ratedandcomparablenon‐ratedsecurities.Themarketforhighyieldsecuritieshas experiencedperiodsofvolatilityandreducedliquidity.Highyieldsecuritiesmayormaynot be subordinated to certain other outstanding securities and obligations of the issuer or portfoliocompany,whichmaybesecuredbyallorsubstantiallyalloftheissuer’sorportfolio company’sassets.Highyieldsecuritiesmayalsonotbeprotectedbyfinancialcovenantsor limitationsonadditionalindebtedness.Themarketvaluesofcertainofthesedebtsecurities may reflect individual corporate developments. General economic recession or a major decline in the demand for products and services in the industry in which the issuer or portfoliocompanyoperateswouldlikelyhaveamaterialadverseimpactonthevalueofsuch securitiesorcouldadverselyaffecttheabilityoftheissuersorportfoliocompaniesofsuch securitiestorepayprincipalandpayinterestthereonandincreasetheincidenceofdefault ofsuchsecurities.Inaddition,adversepublicityandinvestorperceptions,whetherornot basedonfundamentalanalysis,mayalsodecreasethevalueandliquidityofthesehighyield debtsecurities.


DistressedSecurities.GCMmaypurchaseforitsmanagedaccounts,directlyorindirectly, securitiesandotherobligationsofcompaniesthatareexperiencingsignificantfinancialor businessdistress,includingcompaniesinvolvedinbankruptcyorotherreorganizationand liquidationproceedings.Althoughsuchpurchasesmayresultinsignificantreturns,they involveasubstantialdegreeofriskandmaynotshowanyreturnforaconsiderableperiod oftime.Infact,manyofthesesecuritiesandinvestmentsordinarilyremainunpaidunless anduntilthecompanyreorganizesand/oremergesfrombankruptcyproceedings,andasa resultmayhavetobeheldforanextendedperiodoftime. Awidevarietyofconsiderations, including,forexample,thepossibilityoflitigationbetweentheparticipantsina reorganization or liquidation proceeding or a requirement to obtain mandatory or discretionaryconsentsfromvariousgovernmentalauthoritiesorothersmayaffectthevalue of these securities and investments.The uncertainties inherent in evaluating such investmentsmaybeincreasedbylegalandpracticalconsiderationswhichlimittheaccessto reliableandtimelyinformationconcerningmaterialdevelopmentsaffectingacompany,or which cause lengthy delays in the completion of the liquidation or reorganization proceedings. Thelevelofanalyticalsophistication,bothfinancialandlegal,necessaryfor successfulinvestmentincompaniesexperiencingsignificantbusinessandfinancialdistress isunusuallyhigh. ThereisnoassurancethatGCMwillcorrectlyevaluatethenatureand magnitude of the various factorsthat could affect the prospects for a successful reorganizationorsimilaraction.Inanyreorganizationorliquidationproceedingrelatingto anissuerorportfoliocompanyorinvestment,aClientmayloseitsentireinvestment,maybe requiredtoacceptcashorsecuritieswithavaluelessthantheClient’soriginalinvestment and/ormayberequiredtoacceptpaymentoveranextendedperiodoftime(including, potentially,ataninterestratelowerthantheinterestrateontheoriginalinstrument).In addition, undercertaincircumstances,paymentstoaClientandtherelateddistributionsby theClient toitsinvestorsmaybereclaimedifanysuchpaymentordistributionislater determinedto have been a fraudulent conveyance, preferential payment, or similar transaction under applicablebankruptcyandinsolvencylaws.Asmorefullydiscussed below,inabankruptcy or other proceeding, the Client as a creditor may be unable to enforce its rights in any collateralormayhaveitssecurityinterestinanycollateral challengedordisallowed,anditsclaimsmaybesubordinatedtotheclaimsofother creditors.


The market for distressed securities is expected to be less liquid than the market for securitiesofcompaniesthatarenotdistressed.Asubstantiallengthoftimemayberequired to liquidate investments in securities that become distressed. Under adverse market or economicconditionsorintheeventofadversechangesinthefinancialconditionoftheissuer orportfoliocompany,aClientmayfinditmoredifficulttosellsuchsecuritieswhenGlendon believesitadvisabletodosoormayonlybeabletosellsuchsecuritiesataloss.AClientmay also find it more difficult to determine the fair market value of distressed securities for purposesofcomputingitsnetassetvalue.Insomecases,theClientmaybeprohibitedby contractfromsellingitsinvestmentsforaperiodoftime.


Defaulted Securities. GCM may invest forits managedaccounts in the securities of,and tradeclaims against,companiesinvolvedinbankruptcy proceedings,reorganizations and financialrestructuringsandmayhaveamoreactiveparticipationintheaffairsoftheissuer thanisgenerallyassumedbyaninvestor. ThismaysubjectGCMtolitigationrisksorprevent GCMfromdisposingofsecurities. Inabankruptcyorotherproceeding,GCMmaybeunable to enforce its rights in any collateral or may have its security interest in any collateral challenged, disallowed or subordinated to the claims of other creditors.While GCM will attempttoavoidtakingthetypesofactionsthatwouldleadtoequitablesubordination(as discussedbelow)orcreditorliability,therecanbenoassurancethatsuchclaimswillnotbe asserted or that GCM will be able to successfully defend against them. Because other investorsmay purchase the securities of these companies for the purpose of exercising control or management,GCMmaybeatadisadvantagetotheextentthatGCM’sinterests differfrom theinterestsoftheseotherinvestors.
Municipal and Sovereign Securities. GCM may trade in government, municipal and sovereigndebtobligations.Inadditiontotheriskspreviouslydescribedinthissection,there areparticularrisksrelatingtotheinvestmentandtradingofthesedebtobligations.These markets may be volatile, and the value of GCM’s investments can change significantly in responsetotax,legislativeandpoliticalchangesandthefinancialconditionoftheissuersof securities,someofwhichmaybeorlaterbecomedistressed.Politicalconditions,especially amunicipality’sorsovereignentity’swillingnesstomeetthetermsofitsdebtobligations, andtheabilityofamunicipalorforeignsovereignissuer,especiallyadistressedmunicipality or emerging market country, to make timely payments on its debt obligations are of considerable significance. Municipal and sovereign issuers of debt, especially distressed municipalitiesoremergingmarketcountries,orthemunicipalorsovereignauthoritiesthat controltherepaymentofsuchdebtmaybeunableorunwillingtorepayprincipalorpay interest when due. If issuers of such obligations are unable to raise taxes, increase other revenues,cutspending,reduceliabilities,and/orreceivestate,federalorotherassistance,a Clientmayexperiencelossesorimpairmentsonthoseobligations.


Asset‐BackedSecurities.GCMmayinvestdirectlyorindirectlyinasset‐backedsecurities, whicharestructuredsecuritiescollateralizedorbackedbyanotherassetorassets,suchas residential or commercial mortgages, home equity loans, auto loans, installment sale contracts, credit card and other consumer receivables, commercial loans, small business loans,corporateloans,aviationandotherleases,leasefinancings,investment‐gradeorhigh yield debt, or, in some cases, other collateralized or asset‐backed securities (collectively, “Asset‐Backed Securities”). Asset‐Backed Securities may include instruments such as collateralized mortgage obligations (residential mortgage‐backed, commercial mortgage‐ backed),collateralizedbondobligations,collateralizeddebtobligations,andcollateralized loan obligations, and may include synthetic structures that are backed by derivative instrumentsinsteadofbytherelevantloans,bonds,orotherassetsthemselves.Othertypes of Asset‐Backed Securities, including interest‐only and principal‐only securities, may participateinonlycertaintypesofincomestreamsgeneratedbytheunderlyingassets.


Asset‐BackedSecuritiesareoftenextremelycomplex,andtheirvaluesandreturnsmaybe subjecttosignificantfluctuationsasaresultofrelativelysmallchangesininterestrates;the rates of prepayments, defaults, or late payments with respect to the relevant underlying assets;orotherfactors.ThevalueofanAsset‐BackedSecurityishighlydependentuponthe performanceofitsunderlyingassetsandupontheexpectedqualityoftheunderlyingassets.
Substantial leverage may be inherent in the structure of some Asset‐Backed Securities.
Consequently,Asset‐BackedSecuritiesmaypresentagreaterdegreeofriskthanothertypes offixedincomesecuritiesandmaybemorevolatile,lessliquid,andmoredifficulttoprice accuratelythanlesscomplexsecurities.GCMmayenterintohedgingtransactionsincertain circumstances to protect against interest rate movements, prepayment risk, defaults, or other factors, but there can be no assurance that such hedging transactions, if any are undertaken,wouldfullyprotecttheinvestoragainstsuchrisks.
Asset‐BackedSecuritiesaretypicallyseparatedintotranchesrepresentingdifferentdegrees of credit quality, with lower‐rated tranches being subordinate to senior tranches. Even thoughanassetsupportstheunderlyingloan(inasecuredinvestment),fullrecoveryofthe loan in the event of default may not be possible due to litigation costs or delays, legal uncertainties,limitedmarketabilityorreducedvaluationsoftheasset,andothersimilaror dissimilar factors. Accordingly, any defaults may materially adversely affect any long positions GCM holds in Asset‐Backed Securities. In addition, the quality of GCM’s investmentsincertainAsset‐BackedSecuritiesissubjecttotheaccuracyandcompleteness ofrepresentationsmadebytheunderlyingobligors.Accordingly,GCMissubjecttotherisk that originators of certain Asset‐Backed Securities fail to adequately verify such representations, whether because of defects in the verification systems used by such originatorsorotherwise.


BankruptcyandOtherProceedings. AClientmayinvestinthesecuritiesofcompaniesthat subsequently become involved in bankruptcy and other similar proceedings. When a companyseeksreliefundertheU.S.BankruptcyCode(orhasapetitionfiledagainstit),an automatic stay prevents all entities, including creditors, from foreclosing or taking other actionstoenforceclaims,perfectliensorreachcollateralsecuringsuchclaims.Creditorswho haveclaimsagainstthecompanypriortothedateofthebankruptcyfilingmustpetitionthe courttopermitthemtotakeanyactiontoprotectorenforcetheirclaimsortheirrightsin anycollateral.Suchcreditorsmaybeprohibitedfromdoingsoifthecourtconcludesthatthe valueofthepropertyinwhichthecreditorhasaninterestwillbe“adequatelyprotected” during the proceedings. If the bankruptcy court’s assessment of adequate protection is inaccurate, a creditor’s collateral may be wasted without the creditor being afforded the opportunitytopreserveit.Thus,evenifaClientholdsasecuredclaim,itmaybeprevented fromcollectingtheliquidationvalueofthecollateralsecuringitsdebt,unlessrelieffromthe automaticstayisgrantedbythecourt.Ifrelieffromstayisnotgranted,theClientmaynot realize a distribution on account of its secured claim until a plan of reorganization or liquidationforthedebtorisconfirmed.Bankruptcyproceedingscaninvolvesubstantiallegal, professionalandadministrativecoststothecompanyandtheClient,andduringtheprocess the investee company’s competitive position may erode, key management personnel may depart andthe company may not be able to invest adequately. The debt of companies in financialreorganizationwill,inmostcases,notpaycurrentinterest,maynotaccrueinterest duringreorganizationandmaybeadverselyaffectedbyanerosionoftheissuer’sorportfolio company’s fundamentalvalue.Such investmentscan result inatotalloss ofprincipal.
Bankruptcyproceedingsareinherentlylitigious,timeconsuming,highlycomplexanddriven extensively by facts and circumstances, which can result in challenges in predicting outcomes.Theequitablepowerofbankruptcyjudgesalsocanresultinuncertaintyastothe ultimateresolutionofclaims.
Security interests held by creditors are closely scrutinized and frequently challenged in bankruptcy proceedings and may be invalidated for a variety of reasons. For example, security interests may be set aside because, as a technical matter, they have not been grantedorperfectedproperlyundertheUniformCommercialCodeorotherapplicablelaw.If asecurity interestisinvalidated,thesecuredcreditorlosesthevalueofthecollateraland, becauseloss ofthesecuredstatuscausestheclaimtobetreatedasanunsecuredclaim,the holderofsuch claimwillbemorelikelytoexperienceasignificantlossofitsinvestment.
Therecanbeno assurance that the security interests securing the Client’s claims will not be challenged vigorously and found defective in some respect, or that the Client will beableto prevail againstanysuchchallenge.
Moreover,debtmaybedisallowed orsubordinatedtotheclaims ofothercreditorsifthe creditorisfoundtohaveengagedincertaininequitableconductresultinginharmtoother partieswithrespecttotheaffairsofacompanyfilingforprotectionfromcreditorsunderthe U.S.BankruptcyCode.Inaddition,creditors’claimsmayberecharacterizedandtreatedas equity if they are deemedtobecontributionstocapital,orifacreditorattemptstocontrol theoutcomeofthe business affairs of a company prior to its filing under the Bankruptcy Code.Ifacreditoris foundtohaveinterferedwiththecompany’saffairstothedetriment of other creditors orshareholders,thecreditormaybeheldliablefordamagestoinjured parties. While a Client willattempttoavoidtakingthetypesofactionthatwouldleadto equitablesubordinationor creditorliability,therecanbenoassurancethatsuchclaimswill notbeasserted.Inaddition, ifaClientorGCMservesonanofficialunsecuredcreditors’ committee of a company, the client or GCM will bedeemedafiduciaryforallgeneral unsecured creditors, and the securities of such company held by the Clientmay become restrictedsecurities,whicharenotfreelytradable.


While the challenges to liens and debt described above normally occur in a bankruptcy proceeding, the conditions or conduct that would lead to an attack in a bankruptcy proceedingcouldincertaincircumstancesresultinactionsbroughtbyothercreditorsofthe debtor, shareholders of the debtor or even the debtor itself in other state or U.S. federal proceedings, including pursuant to state fraudulent transfer laws. As is the case in a bankruptcyproceeding,therecanbenoassurancethatsuchclaimswillnotbeassertedor thataClientwillbeablesuccessfullytodefendagainstthem.TotheextentthattheClient assumes an active role in any legal proceeding involving the debtor, the Client may be preventedfromdisposingofsecuritiesissuedbysuchdebtorduetotheClient’spossession ofmaterial,non‐publicinformationconcerningsuchdebtor.


Incertainprotectivesituations,companiesinwhichaClienthasinvestedortowhichaClient has extended or invested in loans may file forchapter11bankruptcy protection andseek related financing. These debtor‐in‐possession or “DIP” loans are most often revolving working‐capitalortermloanfacilitiesputintoplaceattheoutsetofaChapter11caseto providethedebtorwithbothimmediatecashandtheongoingworkingcapitalthatwillbe requiredduringthereorganizationprocess.Whilesuchloansaregenerallylessriskythan manyothertypesofloansasaresultoftheirseniorityinthedebtor’scapitalstructureand because their terms have been approved by a U.S. federal bankruptcy court order, it is possiblethatthedebtor’sreorganizationeffortsmayfailandtheproceedsoftheensuing liquidationoftheDIPlender’scollateralmightbeinsufficienttorepayinfulltheDIPloan.
Furthermore,GCMfromtimetotimeappointspersonneltoserveoncreditors' committees(officialor unofficial), equityholders'committees orothergroupsto ensure preservationor enhancementofaClient'spositionasacreditororequityholderin bankruptcyorinsolvency proceedings or otherwise be engaged in financial restructuring activities in a variety of capacities. SuchactivitiesmayresultinGCMreceiving confidentialinformationthatmay,as a result of applicable securities laws or the internal policies of GCM, limit or otherwise constrain GCM’s flexibility in purchasing or selling securities or other obligations with respecttootherClient’sportfolios.Inaneffort toavoidsuchrestrictionsorlimitations,GCM may elect not to receive confidential information, which may be relevantto a Client's portfolio,thatothermarket participantsareeligibletoreceiveorhavereceived.


Inaddition,companieslocatedinnon‐U.S.jurisdictionsmaybeinvolvedinrestructurings, bankruptcyproceedingsand/orreorganizationsthatarenotsubjecttolawsandregulations that are similar to the U.S. Bankruptcy Code and the rights of creditors afforded in U.S.
jurisdictions.Totheextentsuchnon‐U.S.lawsandregulationsdonotprovideaClientwith equivalentrightsandprivilegesnecessarytopromoteandprotectitsinterestinanysuch proceeding,theClient’sinvestmentsinanysuchcompaniesmaybeadverselyaffected.For example,bankruptcylawandprocessinanon‐U.S.jurisdictionmaydiffersubstantiallyfrom thatintheUnitedStates,resultingingreateruncertaintyastotherightsofcreditors,the enforceability of such rights, reorganization timing and the classification, seniority and treatmentofclaims.Incertaindevelopingcountries,althoughbankruptcylawshavebeen enacted,theprocessforreorganizationremainshighlyuncertain.


Lender Liability Considerations and Equitable Subordination. A number of judicial decisionsintheUnitedStateshaveupheldtherightofborrowerstosuelendinginstitutions on the basis of various evolving legal theories (collectively termed “Lender Liability”).
Generally, Lender Liability is founded upon the premise that an institutional lender has violatedaduty(whetherimpliedorcontractual)ofgoodfaithandfairdealingowedtothe borrowerorhasassumedadegreeofcontrolovertheborrowerresultinginthecreationof a fiduciary duty owed to the borrower or its other creditors. A Client may be subject to potentialallegationsofLenderLiability.Inaddition,courtshaveinsomecasesappliedthe doctrineofequitablesubordinationtosubordinatetheclaimofalendinginstitutionagainst aborrowertoclaimsofothercreditorsoftheborrowerwhenthelendinginstitutionisfound to have engaged in unfair, inequitable or fraudulent conduct and other creditors of the borrower are harmed by such conduct. It is possible that Lender Liability or equitable subordination claims affecting the Client’s investments could arise without direct involvementoftheClientiftheClientisnottheagentorleadarrangerfortheinvestments.


NatureofMezzanineDebtSecurities.Mezzaninedebtsecuritiesgenerallywillhaveratings or implied or imputed ratings below investment grade. They will be obligations of corporations, partnerships orother entities thatare generallyunsecuredandtypicallyare subordinated to other obligations of the obligor.Insomeinstances,themezzaninedebtis secured by equity interests held by an intermediate or parent holding company, and the mezzanine debt therefore is structurally subordinated to claims of creditors against the obligor’soperatingsubsidiaries.Mezzaninedebtstructuresgenerally have greater credit and liquidityriskthanistypicallyassociatedwithinvestmentgradecorporateobligations.
Accordingly,therisksassociatedwithmezzaninedebtsecuritiesincludeagreaterpossibility that adverse changes in the financial condition of the obligor or in general economic conditions(includingasustainedperiodofrisinginterestratesoraneconomicdownturn) may adversely affect the obligor’s ability to pay principal and interest on its debt. Many obligors on mezzanine debt securities are highly leveraged, and specific developments affecting such obligors, including reduced cash flow from operations or the inability to refinance debt at maturity, may also adversely affect such obligors’ ability to meet debt serviceobligations.Mezzaninedebtsecuritiesareoftenissuedinconnectionwithleveraged acquisitions or recapitalizations, in which the issuers or portfolio companies incur a substantially higher amount of indebtedness than the level at which they had previously operated.Defaultratesformezzaninedebtsecuritieshavehistoricallybeenhigherthanhas beenthecaseforinvestmentgradesecurities.


NatureofInvestmentinSeniorLoans.AClient’sinvestmentsmayincludefirstliensenior secureddebtandsecondlienseniorsecureddebt,whichinvolvesahigherdegreeofriskofa lossofcapital.


The factors affecting an issuer’s or a portfolio company’s first and second lien leveraged loans,anditsoverallcapitalstructure,arecomplex.Somefirstlienloansmaynotnecessarily havepriorityoverallothersecuredorunsecureddebtofanissueroraportfoliocompany.For example, some first lien loans may permit other secured obligations (such as overdrafts, swaps or otherderivativesmadeavailablebymembersofthesyndicatetothecompany), or involvefirst liens only on specified assets of an issuer or a portfolio company (e.g., excluding real estate). Issuers or portfolio companies of first lien loans may have two tranches of first lien debt outstanding, each with first liens on separate collateral.
Furthermore,theliensreferredtohereingenerallyonlycoverU.S.assets,andnon‐U.S.assets arenotincluded(otherthan, forexample,whereaborrowerpledgesaportionofthestock offirst‐tiernon‐U.S. subsidiaries).IntheeventofChapter11filingbyanissuerorportfolio company, the U.S. BankruptcyCodeauthorizestheissuerorportfoliocompanytousea creditor’scollateraland toobtainadditionalcreditbygrantofapriorlienonitsproperty, senior even to liens that werefirstinprioritypriortothefiling,aslongastheissueror portfoliocompanyprovides whatthepresidingbankruptcyjudgeconsiderstobe“adequate protection,”whichmaybut neednotalwaysconsistofthegrantofreplacementoradditional liensorthemakingofcash payments to the affected secured creditor. The imposition of priorliensonaClient’s collateralwouldadverselyaffectthepriorityoftheliensandclaims heldbytheClientand couldadverselyaffecttheClient’srecoveryonitsleveragedloans.


Anysecureddebtissecuredonlytotheextentofitslienandonlytotheextentofunderlying assetsorincrementalproceedsonalreadysecuredassets.Moreover,underlyingassetsare subjecttocredit,liquidity,andinterestraterisk.Althoughtheamountandcharacteristicsof the underlying assets selected as collateral may allow the Client to withstand certain assumeddeficienciesinpaymentsoccasionedbytheborrower’sdefault,ifanydeficiencies exceedsuchassumedlevelsorifunderlyingassetsaresolditispossiblethattheproceedsof suchsaleordispositionwillnotbesufficienttosatisfytheamountofprincipalandinterest owingtotheClientinrespectofitsinvestment.
Further,loansmaybecomenon‐performingforavarietyofreasons.Uponabankruptcyfiling byanissueroraportfoliocompanyofdebt,theU.S.BankruptcyCodeimposesanautomatic stay on payments of its pre‐petition debt. Non‐performing debt obligations may require substantial workout negotiations, restructuring or bankruptcy filings that may entail a substantialreductionintheinterestrate,deferralofpaymentsand/orasubstantialwrite‐ downoftheprincipalofaloanorconversionofsomeorallofthedebttoequity.Ifanissuer oraportfoliocompanyweretofileforChapter11reorganization,theU.S.BankruptcyCode authorizestheissuerorportfoliocompanytorestructurethetermsofrepaymentofaclass ofdebteveniftheclassfailstoaccepttherestructuringaslongastherestructuredtermsare “fairandequitable”totheclassandcertainotherconditionsaremet.Seniorsecuredcredit facilitiesaregenerallysyndicatedtoanumberofdifferentfinancialmarketparticipants.The documentationgoverningsuchfacilitiestypicallyrequireseitheramajorityconsentor,in certaincases,unanimousapprovalforcertainactionsinrespectofthecredit,suchaswaivers, amendments,ortheexerciseofremedies.Asaresultofthesevotingregimes,theClientmay nothavetheabilitytocontrolanydecisioninrespectofanyamendment,waiver,exerciseof remedies,restructuringorreorganizationofdebtsowedtotheClient.Seniorsecuredloans arealsosubjecttootherrisks,including(i)thepossibleinvalidationof a debt or lien as a “fraudulentconveyance”,(ii)therecoveryasa“preference”ofliens perfectedorpayments made on account of a debt in the 90 days before a bankruptcy filing, (iii) equitable subordination claims by other creditors, (iv) “lender liability” claims by the issueror portfoliocompanyoftheobligationsand(v)environmentalorotherliabilitiesthat mayarise withrespecttocollateralsecuringtheobligations.Decisionsinbankruptcycases haveheld that a secondary loan market assignee can be denied a recovery from the debtor in a bankruptcyifapriorholderoftheloanseither(a)receivedanddidnotreturnapreference or fraudulent conveyance or (b) engaged in conduct that would qualify for equitable subordination.


AClient’sinvestmentsmaybesubjecttoearlyredemptionfeatures,refinancingoptions,pre‐ paymentoptionsorsimilarprovisionsthat,ineachcase,couldresultintheissuerorportfolio companyrepayingtheprincipalonanobligationheldbytheClientearlierthanexpected.As a consequence, the Client’s ability to achieve its investment objective may be adversely affected.


Junior,UnsecuredSecurities.AClient’sstrategymayentailacquiringsecuritiesthatare juniororunsecuredinstruments.Whilethisapproachcanfacilitateobtainingcontroland then adding value through active management, it also means that certain of the Client’s investments may be unsecured. If the issuer or portfolio company in question becomes financiallydistressedorinsolventanddoesnotsuccessfullyreorganize,theClientwillhave no assurance (compared to those distressed securities investors that acquire only fully collateralizedpositions)thatitwillrecoveranyoftheprincipalthatithasinvested.While suchjuniororunsecuredinvestmentsmaybenefitfromthesameorsimilarfinancialand other covenants as those enjoyed by the indebtedness ranking more senior to such investmentsandmaybenefitfromcross‐defaultprovisionsandsecurityovertheissuer’sor portfolio company’s assets, some or all of such terms may not be part of particular investments. Moreover, the ability of the Client to influence an issuer’s or a portfolio company’saffairs,especiallyduringperiodsoffinancialdistressorfollowinginsolvency,is likely to be substantially less than that of senior creditors. For example, under typical subordinationterms,seniorcreditorsareabletoblocktheaccelerationofthejuniordebtor theexercisebyjuniordebtholdersofotherrightstheymayhaveascreditors.Accordingly, theClientmaynotbeabletotakestepstoprotectitsinvestmentsinatimelymannerorat all, and there can be no assurance that the rate of return objectives of the Client or any particularinvestmentwillbeachieved.Inaddition,thedebtsecuritiesinwhichtheClientwill invest may not be protected by financial covenants or limitations upon additional indebtedness,mayhavelimitedliquidityandarenotexpectedtoberatedbyacreditrating agency.


Convertible Securities. Convertible securities are bonds, debentures, notes, preferred stocksorothersecuritiesthatmaybeconvertedintoorexchangedforaspecifiedamountof commonstockofthesameordifferentissuerorportfoliocompanywithinaparticularperiod oftimeataspecifiedpriceorformula.Aconvertiblesecurityentitlesitsholdertoreceive interestthatisgenerallypaidoraccruedondebtoradividendthatispaidoraccruedon preferred stock, in each case, until the convertible security matures or is redeemed, converted or exchanged. Convertible securities have unique investment characteristics in that they generally (i) have higher yields than common stocks, but lower yields than comparablenonconvertiblesecurities,(ii)arelesssubjecttofluctuationinvaluethanthe underlying common stock due to their fixed‐income characteristics and (iii) provide the potential for capital appreciation if the market price of the underlying common stock increases.


Thevalueofaconvertiblesecurityisafunctionofits“investmentvalue”(determinedbyits yieldincomparisonwiththeyieldsofothersecuritiesofcomparablematurityandquality thatdonothaveaconversionprivilege)andits“conversionvalue”(thesecurity’sworth,at marketvalue,ifconvertedintotheunderlyingcommonstock).Theinvestmentvalueofa convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standingoftheissuerorportfoliocompanyandotherfactorsmayalsohaveaneffectonthe convertible security’s investment value. The conversion value of a convertible security is determinedbythemarketpriceoftheunderlyingcommonstock.Iftheconversionvalueis low relative to the investment value, the price of the convertible security is governed principallybyitsinvestmentvalue.Totheextentthemarketpriceoftheunderlyingcommon stockapproachesorexceedstheconversionprice,thepriceoftheconvertiblesecuritywill beincreasinglyinfluencedbyitsconversionvalue.Aconvertiblesecuritygenerallywillsell atapremiumoveritsconversionvaluebytheextenttowhichinvestorsplacevalueonthe right to acquire the underlying common stock while holding a fixed income security.
Generally, the amount of the premium decreases as the convertible security approaches maturity.
Aconvertiblesecuritymaybesubjecttoredemptionattheoptionoftheissuerorportfolio company at a price established in the convertible security’s governing instrument. If a convertiblesecurityheldbytheClientiscalledforredemption,theClientwillberequiredto permittheissuerorportfoliocompanytoredeemthesecurity,convertitintotheunderlying commonstockorsellittoathirdparty.Anyoftheseactionscouldhaveanadverseeffecton theClient’sabilitytoachieveitsinvestmentobjective.
Abilityto AcquireLoans on AdvantageousTerms; Competition and Supply. A Client mayinvestinloans.TheClient’ssuccessinthisareawilldepend,inpart,ontheClient’sability toacquireloansonadvantageousterms.Inacquiringloans,theClientwillcompetewitha broadspectrumoflenders,someofwhichmaybewillingtoprovidecapitalonbetterterms (fromaborrower’sstandpoint)thantheClient.Increasedcompetitionfor,oradiminutionin theavailablesupplyof,qualifyingloansmayresultinloweryieldsonsuchloans,whichcould reducereturnstoLimitedPartners.


Prepayment. The Client may purchase loans for which the underlying obligors are not subjecttoanyrepaymentpenalties,evenifanobligordeterminestoprepaytheobligation early during the term of the debt investment. If the debt investments that the Client is investedinareprepaidwithoutanyprepaymentpenalties,theClient’sabilitytoachieveits investmentobjectivemaybeaffected.


Capital Structure Arbitrage. In certain circumstances, the execution of a distressed investingstrategyinvolvestheabilityofGlendontoidentifyandexploittherelationships betweenmovementsindifferentsecuritiesandinstrumentswithinanissuer’s,aportfolio company’s or a borrower’s capital structure (e.g., senior bank debt, second liens, debt securitiesandotherobligations,convertibleandnon‐convertibleseniorandsubordinated debt, preferred equity and common stock). please register to get more info

Asaregisteredinvestmentadviser,GCMisrequiredtodiscloseallmaterialfactsregarding any legal or disciplinary events that would be material to your evaluation of us or the integrity of our management. GCM has no information applicable to this report in this regard.
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GCM is affiliated with and under common control with Glendon Capital Associates, LLC (“GCA”) which is the general partner (the “General Partner”) in G1. GCM serves as the investmentadvisertoG1.GCAalsoservesasgeneralpartnerofthe feederfunds,anditis anticipated that GCM will form additional affiliates to act as general partner for its investment fund Clients that are formed as limited partnerships. GCAhas claimed an exemption from registration with the CFTC with respecttoitsstatusasacommoditypool operatorpursuanttoCFTCrule4.13(a)(3).


GCM is also affiliated with and under common control with Glendon Services L.P.
(“GSLP”), aresearchconsultantlocatedinNewYork,N.Y.thatisexemptfromregistration.
GSLPprovidesresearchservicesandsupportto GCManddoesnothaveitsownClients.
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A. CodeofEthicsandPersonalTrading.

The personal transactions and investment activities of employees of investment advisory firmsarethesubjectofvariousfederalsecuritieslaws,rulesandregulations.GCMrequires pre‐clearance with respect to personal trading by access persons and all ofGCM’saccess personsmustprovidetheChiefComplianceOfficerwithalistoftheirpersonalaccountsand aninitialholdingsreportwithin10daysofbecominganaccessperson.In addition, GCM’s access persons must provide annual holdings reports andquarterlytransactionreportsin accordance with SEC Rule 204A‐1. Access persons must conductallpersonalsecurities transactions in a manner that avoids a conflict betweentheirpersonalinterestsandthose ofGCManditsClients. GCM’sCodeofEthicsprohibitsaccesspersonsfrompersonalaccount dealings in any investment in which a Client holds a position or is actively under considerationasaninvestmentforaClientofGCM’s.
GCM has adopted a Code of Ethics for all supervised persons in the firm describing its high standard of business conduct and fiduciary duty to its Clients. The Code of Ethics includes provisions relating to the confidentiality of client information, a prohibition on insider trading, a prohibition of rumor mongering, restrictions on the acceptance of significant gifts and the reporting of certain gifts and business entertainment items, and personalsecuritiestradingprocedures,amongotherthings.Allsupervisedpersonsat GCM must acknowledge the terms of the Code of Ethics at the commencement of their employmentwithGCM,annuallyandwhenevertheCodeofEthicsisamended.GCM’s Clients or prospective clients may request a copy of the firm's Code of Ethics by contacting Michael Keegan, Chief Compliance Officer at (310) 907‐0533 or by e‐mail at [email protected].


GCManditspersonneldonotpurchaseanysecuritiesfortheirownaccountsfrom,orsellany securitiesfortheirownaccountsto,Funds.However,fromtimetotime,subjecttoapplicable Clientinvestmentguidelinesandrestrictions,GCMmaydirectoneClienttosellsecuritiesto another Client through an internal cross transaction. These “cross transactions” also may occurwithmanagedaccounts. Crosstradesmaybeexecutedasan“internalcross”where oneClientmaybookthetransactionatapricedeterminedinaccordancewithGCM’spolicies andprocedures. NofeeswillbechargedtoClientsinconnectionwiththecompletionofa crosstrade.


Crosstransactionsandprincipaltransactionsmaygiverisetoconflictsofinterestbetween Clients. Forexample,oneinvestmentfundcouldbeadvantagedtothedetrimentofanother fundClientintheeventthatthesecuritiesbeingexchangedarenotpricedinamannerthat reflectstheirfairvalue.Totheextentthatanysuchcrosstransactionmaybeviewedasa principaltransactionduetotheownershipinterestintheinvestmentfundsbyGCMandits personnel,GCMwillcomplywiththerequirementsofSection206(3)oftheAdvisersActand thegoverningdocumentsoftherelevantfundClient.

B. PotentialConflictsofInterest.Pleasenotethefollowingsectionprimarilyrelatesto
butis notexclusivetoconflictsinvestorsshouldbeawareofpriortoinvestingwithGCM. Investorsshouldbeawarethat,potentialandactualconflictsofinterestmayoccurbetween Clients,ontheonehand,andGCManditsaffiliates,ontheother.Thefollowingdiscussion describes certain potential conflicts of interest that should be carefully evaluated before makinganinvestmentwithGCM.
Dedication of Glendon Personnel Time to the Glendon Clients. The investment professionals and other employees of GCM and its affiliates will be permitted to spend a portion of their business time on activities other than a specific Clientor its portfolio investments.Asaresult,suchpersonsmayspendlesstimeontheactivitiesofaClientthan mayberequiredundercertaincircumstances.Theseactivitiescouldbeviewedascreatinga conflictofinterestinthatthetimeandeffortofGCManditsofficersandemployeeswillnot be devoted exclusively to the business of a Client, but will be allocated between the businessesofallGCMClients.
InvestmentsInvolvingOtherGlendonFunds.Glendon,initssolediscretion,maydecide nottoproceedwithaninvestmentornottopursue aninvestmentopportunityforaClient,or mayotherwiseberestrictedindoingso,because ofaconflictofinterest.
Allocation of Investments. If GCM determines, in its sole discretion, that a particular investmentopportunitywouldbesuitableforinvestmentbymorethanoneofitsClients, thensuchClientsmayco‐investinsuchinvestmentalongsideeachother,providedthateach Client’sinvestmentthereinisonsubstantiallythesametermsandconditionsapplicableto theinvestmentmadebysuch otherClient(s). Inthecase ofanysuchco‐investment,such investmentopportunitywillbeallocatedbetween(oramong)theClientsbasedon(a)net assetvalueofeachsuchClientasofthedateofdetermination(asdeterminedbyGCMinits solediscretion),(b)asdescribedintheGoverningDocumentsofeachsuchClientor(c)on suchotherequitablebasisasdeterminedbyGCMinitssolediscretion,ingoodfaithtobefair andreasonable,takingintoconsiderationsuchfactorsasmaybedeemedrelevantincluding, butnotlimitedto,(i)thesourcingoftheinvestmentopportunity,(ii)theinvestmentstrategy, guidelines or restrictions, (iii) the risk profile or the need to re‐size risk in the Clients’ portfolios(includingthepotentialfortheproposedinvestmenttocreateanindustry,sector, issuer,portfoliocompany,geographicorcurrencyimbalanceintherelevantportfolio),(iv) the operating currency and hedging strategies (if applicable), (v) the target return and investmentholdperiod,(vi)theexistingportfoliocompositionanddiversification,(vii)any applicable transfer, assignment or minimum hold restrictions relating to the investment opportunity, (viii) the amount of capital available for investment, (ix) the liquidity then availableoranticipatedfutureavailableliquidity,(x)theproximityoftheClientstotheend of their investment period or term, (xi) any tax, regulatory or contractual restrictions or consequences,(xii)themanagementofanyactualorpotentialconflictsofinterest,and(xiii) themagnitudeoftheinvestmentandanyoutsizedordeminimisallocation. Inthecaseof anysuchco‐investment,GCMwillgenerallyseektodisposeofeachClient’sinterestsinsuch co‐investmentatasimilartimeandonsimilarterms,subjecttotheconsiderationsreferenced above.


Expenses related to consummated investments, including fees and expenses of outside counsel, accountants and consultants, research firms, financial analysts and travel, will generallybeallocatedbyinvestedcapitalamongtheClientsparticipatinginsuchinvestment.
Expensesandfeesgeneratedinthecourseofevaluatingandmakinginvestmentsthatarenot consummated,suchasout‐of‐pocketfeesassociatedwithduediligence,attorneys’feesand thefeesofotherprofessionals,willbeallocatedamongtheClientsbasedgenerallyonthe expected participation in such investment (although, as discussed further below, co‐ investors may in certain circumstances not bear any broken deal expenses). If any transactionorotherfeesarepaidbyaportfoliocompanyinwhichtheClientsareinvested, thenonlysuchportionofthefeethatisallocabletotheClientbasedoncapitalcommittedto suchportfoliocompanywillbeincludedintheManagementFeeoffset.Insurancepremiums aregenerallyallocatedamongtheClientsbasedoncommitments.
Co‐Investments.AClientmayinvestalongsidestrategic,financialorotherthirdpartyco‐ investors, and may offer one or more co‐investment opportunities to one or more of its investorsinthesolediscretionofGCM;however,GCMshallhavenoobligationtoofferany suchco‐investmentopportunitiestosuchinvestors.Incertaincircumstances,co‐investors may acquire an interest in an investment after the Client has made such investment. Co‐ investmentopportunitiesmaybeofferedonano‐management‐fee,no‐carrybasis.Incertain circumstances, GCM or its affiliates may invest capital in co‐investment vehicles in connectionwithsuchco‐investmentopportunities. Suchinvestmentswillinvolveadditional risksthatmaynotbepresentininvestmentsthatdonotinvolveaco‐investor,includingthe possibilitythataco‐investormayatanytimehaveeconomicorbusinessinterestsorgoals thatarenotconsistentwiththoseoftheClient,maybeinapositiontotakeactioncontrary totheClient’sinvestmentobjectivesormaydefaultonitsobligations.TheClientmaynotbe abletomitigatetheseriskscontractuallyand,inaddition,undercertaincircumstancesmay beliableforactionsofitsco‐investors.


Feesandexpensesincurredinrespectofanyinvestment(andanytransactionorotherfee incomeearnedinrespectofanyinvestment)willybeallocatedamongtheClientand any co‐ investorsgenerallyon the basis of capital committed by each to the relevant investment; howeverGCMmaystructureanyco‐investmentopportunitysuchthattheco‐investorsdo notbearanyexpensesinconnectionwithunconsummatedinvestments.Insuchcases,the Clientshallbearallsuchbrokendealexpenses(andinsuchcaseshallbeentitledtoanysuch break‐upfeesorothersimilarfees).Anytransactionorotherfeeincomeearnedinrespectof theco‐investorsmayberetainedbyGCM.


Material,Non‐PublicInformation.GCMorcertainofitsaffiliatesmaycomeintopossession ofmaterialnon‐publicinformationwithrespecttoanissueroraportfoliocompany.Should thisoccur,GCMwouldberestrictedfrombuying,originatingorsellingsecurities,derivatives or loans of the issuer or portfolio company on behalf of a Client until such time as the informationbecamepublicorwasnolongerdeemedmaterialtoprecludetheClientfrom participating in an investment. Disclosure of such information to GCM’s personnel responsiblefortheaffairsoftheClientwillbeonaneed‐to‐knowbasisonly,andtheClient maynotbefreetoactuponanysuchinformation.Therefore,theClientmaynothaveaccess tomaterialnon‐publicinformationinthepossessionofGCMthatmightberelevanttoan investmentdecisiontobemadebytheClient,andtheClientmayinitiateatransactionorsell aninvestmentthat,ifsuchinformationhadbeenknowntoit,maynothavebeenundertaken.
Duetotheserestrictions,theClientmaynotbeabletoinitiateatransactionthatitotherwise mighthaveinitiatedandmaynotbeabletosellaninvestmentthatitotherwisemighthave sold.Inaddition,GCM,inanefforttoavoidbuyingorsellingrestrictionsonbehalfofanyof its Clients, may choose to forego an opportunity to receive (or elect not to receive) informationthatothermarketparticipantsorcounterparties,includingthosewiththesame positions in the issuer or portfolio company as a Client, are eligible to receive or have received,evenifpossessionofsuchinformationwouldbeadvantageoustosuchClient.
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GCM is responsible for the placement of its accounts transactions and the negotiation of prices and commissions, if any, with respect to such transactions. Fixed income and unlistedequitysecuritiesaregenerallypurchasedfromaprimarymarketmakeractingas principal on a net basis without a stated commission but at prices generally reflecting a dealer spread. Listed equity securities are normally purchased through brokers in transactions executed on securities exchanges involving negotiated commissions. Both fixed income and equity securities are also purchased in underwritten offerings at fixed pricesthatincludediscountstounderwritersand/orconcessionstodealers.
Inselectingbrokers‐dealersandexecutingtransactionsfor itsaccounts,GCMseeksto obtain thebestcombinationofpriceandexecutionontransactionseffectedforitsaccounts. For GCM,gettingthebestnetpriceisanimportantbutnotdecidingfactorinselectingabroker ordealertoexecuteanaccount’stransaction.Otherconsiderations include the nature of the security beingtraded, the size andtype ofthe transaction,thedesired timing of the trade,andthe reputation of the broker‐dealer for confidentiality, theperceived financial and operational soundness of the broker‐dealer and the researchservicesand products furnishedbythebroker‐dealer.GCMdoesnotconsiderwhetheritmayreceiveclientreferrals inselectingorrecommendingbroker‐dealers.


GCMdoesnotattempttoputaspecificdollarvalueontheservicesrenderedortoallocatethe relative costs or benefits of those services among accounts, believing that theresearch receivedis,intheaggregate,ofassistancetoGCMinfulfillingitsoveralldutytoitsClients.
However,eachandeveryresearchservicemaynotbeusedtoserviceeachandeveryaccount managedbyGCMandGCMmayuseresearchservicestoserviceaccountsthat did not pay commissions to the broker‐dealers providing such research services.Moreover, GCMmay benefitfromthoseservicesasitmaynothavetopayfor suchresearchservicesoutof itsownresources.


Certain Client accountsgenerallytrade in the same securitiesas other Client accountson an aggregated basis when consistent with GCM's obligation of best execution. In such circumstances, all participating Client accounts will share commission costs equally and receive securities at a total average price. GCM will retain records of the trade order (specifyingeachparticipatingaccount)anditsallocation,whichwillbecompletedpriorto the entry of the aggregated order. Completed orders will be allocated as specified inthe initial trade order. Partially filled orders will be allocated on a pro rata basis. Any exceptionswillbeexplainedontheorder.


Wegenerallyaggregatethepurchaseandsaleofsecuritiesforvariousaccountsthathavea similarinvestmentstrategy.Indoingso,weseektofairlyallocateinvestmentopportunities in situations when the opportunity to buy or sell a security or financial instrument or pursue a trading strategy is limited.GCM has adopted procedures that are designed to provideafairallocationofaggregatedpurchasesorsalesofsuch investmentsamong our Clients. The procedures are designed to produce fairness over time but maynotproduce mathematicalprecisionintheallocationofindividualtransactions.
ThefactorsGCMconsidersinallocatingatradeinclude,butarenotlimitedto(i)whetherthe investment will fit within the investment guidelines of the account; (ii) the size of the account; (iii) the liquidity of the investment and other liquidity considerations, including redemption/withdrawalrequestsreceivedbysuchaccounts;(iii)thediversificationofthe account; (iv)geographical,sector,industry andasset class concentrations intheaccount; (v) risk characteristics of the relevant investment and the Client’s risk appetite; (vi) whethertheinvestmentcanbehedged(inconnectionwithClientaccountswith guidelines that call for hedging); and (vii) the maturity of the investment and theproximity of an accounttotheendofitsspecifiedterm,ifany(i.e.,whethertheaccountisin“wind down” or“rampup”mode).


Inallocatingthesale ofaninvestmentthatisheldinoneormoreaccounts, GCMhasthe discretiontosellforonlyoneaccountormultipleaccountsbasedonthefactorsdiscussed above and also where sales are required to realize liquidity (i) for a redemption in an account; (ii) to reallocate funds to a different investment strategy; or (iii) to purchase investmentsthatGCMdeterminesareappropriateforoneaccountbutnotothers.


GCMmayreceiveresearchorotherproductsorservicesotherthanexecutionfromabroker‐ dealer in connection with client securities transactions. This is known as a “soft dollar” relationship.GCMwillgenerallylimittheuseof“softdollars”toobtainresearch,including thirdpartyresearch,withinthemeaningofSection28(e)oftheSecuritiesExchangeActof 1934 (“Section 28(e)”). Research services within Section 28(e) may include, but are not limitedto,researchreportsandconsultants’adviceonportfoliostrategy.


WhenGCMusesClientcommissionstoobtainSection28(e)eligibleresearch,GCM’sChief ComplianceOfficerandtraderwillconferperiodicallytoreviewandevaluateitssoftdollar practices and to determine in good faith whether, with respect to any research or other productsorservicesreceivedfromabroker‐dealer,thecommissionsusedtoobtainthose productsandserviceswerereasonableinrelationtothevalueofthebrokerage,researchor otherproductsorservicesprovidedbythebroker‐dealer.Thisdeterminationmaybeviewed intermsofeitheraspecifictransactionorGCM’soverallresponsibilitiestoitsClients.


Theuseofclientcommissionstoobtainresearchandbrokerageproductsandservicesraises potentialconflictsofinterest,sinceGCMwillnothavetopayfortheproductsandservices itself.Although, in generalresearch purchased with“soft dollars”would be re‐charged to clientsifpermittedundertheapplicablewrittenagreement.Thismaycreateanincentivefor GCMtoselectabroker‐dealerbasedonitsinterestinreceivingthoseproductsandservices.
GCMdoesnotseektoallocatesoftdollarbenefitstoclientaccountsproportionatelytothe softdollarcreditstheaccountsgenerate.
Given the nature of the investment strategies, trade errors are not likely to, but may occasionally,occurwithrespecttotradesexecutedonbehalfofaClient.Tradeerrorscan result from a variety of situations, including, for example, when the wrong security is purchasedorsold,thecorrectsecurityispurchasedorsoldbutforthewrongaccount,orthe wrong quantity is purchased or sold. Trade errors frequently result in losses but may occasionally result in gains. It is policy of GCM that its clients will not incur any losses resulting from errors made by GCM. If a trade error occurs, we will make a good faith determinationregardingthecauseoftheerror.However,inmakingsuchadetermination, wewillhaveaconflictofinterestinlightoftheforegoing.
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GCM engages in ongoing monitoring of each Client’s account and investment portfolio.
MembersofGCM’sinvestmentteamandotherrelevantpersonnelwillmeetatleastquarterly to review each Client account and as needed from time to time. Substantively, account reviews will include performance of the account, adherence of the account to its investment mandates, potential transactions fortheaccountandanyotherconsideration thatmaybe pertinent.


There is informal monitoring of accounts with the positionsand trades of all accounts reviewedperiodicallybythePartners,relevantanalysts,andtheChiefComplianceOfficer.
Investorsinourinvestmentfundswilltypicallyreceiveannualandquarterlyreportsfrom the investment fund pursuant to the terms of such fund’s Governing Documents or as otherwiseagreedwithsuchinvestors.


SeparateAccountclientswillreceivereportsasagreeduponintherelevantadvisorycontract withsuchclient.
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GCM will enter into arrangements with, and compensate, solicitors for client referral activities. Thesesolicitationarrangementswillbefullydisclosedtoaffectedclientsandwill complywiththerequirementsofRule206(4)‐3undertheInvestmentAdvisersActof1940, whereapplicable.
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GCMhasanobligationtosafeguardClientassetsandprotectthemfromlossordestruction.
Rule206(4)‐2undertheAdvisersAct(the“CustodyRule”)imposesspecificconditionsupon registered investment advisers who have actual or deemed custody of Client assets. The CustodyRulecontainsadefinitionoftheterm“custody”whichincludes“holding,directlyor indirectly,Clientfundsorsecuritiesorhavinganyauthoritytoobtainpossessionofthem.” The definition also includes three non‐exclusive examples of custody, including when an investment adviser acts as general partner of a limited partnership. Accordingly, GCM is deemedtohavecustodyofthe assetsofany fundforwhichGCMor anaffiliateservesas general partner. GCM adheres to the applicable requirements of the Custody Rule with respecttoeachfundforwhichitoranaffiliateservesasgeneralpartner. Allfundsecurities areheldwithatleastonequalifiedcustodian.Inaddition,GCMarrangesforthedeliveryto investorsineachofthefundsofacopyoftheauditedfinancialstatementsfortheirfund, prepared in accordance with U.S. generally accepted accounting principles, on an annual basis,andwithintherequiredtimeframessetforthintheCustodyRule. Theseauditsare conducted by an accounting firm of national recognition that is a member of the Public Company Accounting Oversight Board. In addition, fund investors receive unaudited quarterlyaccountstatementsfromtheirfund’sadministratorandastatementoftheircapital account/shareholdingsasofthefiscalyear‐end.Fundinvestorsshouldcarefullyreview theirquarterlyaccountstatements,theirannualstatementsandtheirfund’sauditedfinancial statements.
SeparateAccountclientsselecttheirowncustodiantomaintaincustodyoftheirfundsand securities.Asdiscretionaryinvestmentadviser,GCMhastradingdiscretionoverthefunds andsecuritiesmaintainedinaSeparateAccountclient’scustodialaccount,butGCMdoesnot holdsuchfundsorsecuritiesorhaveauthoritytoobtainpossessionofthem.However,tothe extentGCMisdeemedtohavecustodyofaSeparateAccountclient’sfundsorsecurities,GCM willtakestepstomeetitsobligationsundertheCustodyRule.SeparateAccountclientsshould carefully review their quarterly account statements from the custodian and compare any statementsreceivedfromGCMwiththeaccountstatementsfromthecustodian.
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GCMexpectsthatitwillusuallyreceivediscretionaryauthorityfromitsClientatthe outset of an advisory relationship to select the identity and amount of securities to be bought orsold.Inallcases,however,suchdiscretionistobeexercisedinamanner consistentwith thestatedinvestmentobjectivesfortheparticularClientaccount.


Whenselectingsecuritiesanddeterminingamounts,GCMobservestheinvestmentpolicies, limitations and restrictions of the Clients for which it advises.


InvestmentguidelinesandrestrictionsmustbeprovidedtoGCMinwriting.
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Rule206(4)‐6,“ProxyVotingbyInvestmentAdvisers”requiresallinvestmentadviserswho exercisevotingauthorityoverClientproxiesto:(1)adoptpoliciesandproceduresforvoting proxies in the best interest of the Client; (2) describe the procedures to Clients; and (3) informClientshowtheymayobtaininformationabouthowtheadviserhasactuallyvoted theirproxies.


The procedures by which GCM will vote securities held by Separate Accounts will be addressedinthewritten agreementsbetweentheClientsandGCM.ForSeparateAccounts, GCMgenerallyleavesall voting securities matters up to the Client.Clients shouldarrange withtheircustodianto receiveproxystatementsandsimilarmaterialsdirectly.GCMorthe general partner of each Fund will generally vote proxies for the Fund’s investments in accordancewithGCM’spoliciesandproceduresforvotingproxiesdescribedbelow.
GCM recognizes that how it votes proxies for its Clients’ investments forms a part of its overallfiduciarydutytoitsClientsandforthisreasonGCMhaspoliciesandproceduresthat itbelievesarereasonablydesignedtoensurethatproxiesarevotedinthebestinterestsof theClientsandtorecognizeandresolveanymaterialconflictsofinterestthatmayarisein thecourseofsuchvoting. GCMengagesanindependentthirdpartyserviceprovidertomake recommendationsregardingthevotingofproxies,including,toensurethatproxiesarevoted in the best interests of GCM’sClients and to recognize and resolve any material conflicts of interest that may arisein the course of such voting; however,GCM retains discretion with respecttoproxyvoting.
IfyouwouldlikeadditionalinformationregardinghowGCMhasvotedonspecificproxies, or a copy of itsproxy voting policies and procedures, please contact Michael Keegan, ChiefComplianceOfficerat(310)907‐0533orbye‐[email protected].
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GCM has no financialcommitmentthat is reasonablylikelyto impairits abilityto meet contractual and fiduciary commitments to Clients, and has never been the subject of a bankruptcyproceeding.
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