Canyon Capital Advisors LLC

Fees and Compensation
Clients are typically charged an asset based fee and/or an incentive based fee (commonly referred to as a
performance allocation or fee). The asset based fees are normally charged at an annual rate of between 1%
and 2% of the value of the Client’s net assets under management and are generally payable monthly or
quarterly in arrears depending on the investment advisory agreement. The fee will be based on the account
value on the last business day of the preceding calendar month or quarter, as applicable. The first payment,
if based on less than a full period, will be pro-rated to cover the period from the date the account is opened
through the end of that calendar year, quarter or month, as applicable. The performance allocation or fee
generally equals 20% per annum of the net profit in a Client’s account, typically subject to a loss
carryforward adjustment and a “high water mark”, and is generally payable in arrears at the end of each
calendar year but may be payable more frequently if provided for in the investment advisory agreement.
Upon termination of the investment advisory services, any unpaid portion of fees will be determined and
due on a pro rata basis. In certain circumstances the performance allocation or fee may be measured over
a multi-year period and/or subject to hurdle.
Performance based allocations or fees are charged in accordance with the requirements of Rule 205-3 under
the Investment Advisers Act of 1940, and Canyon will not accept clients who do not satisfy the eligibility
criteria of applicable law. Because Canyon is compensated based in part on capital appreciation, there may
be an incentive for Canyon to make investments that are riskier or more speculative than would be the case
in the absence of such a compensation framework. In addition, Canyon will receive performance based
compensation on unrealized appreciation as well as realized gains with respect to certain Clients.
Prepayment of fees is generally not required. In certain circumstances, fees may be individually negotiated
by Fund investors and/or managed accounts. Negotiated fees may be higher or lower than those discussed
above. Similar services may be available from other investment advisers at a lower cost.
Clients will also bear direct and indirect costs, fees and expenses incurred by or on behalf of such Clients

including, among others, (i) all costs, fees and expenses of the Client directly related to the investigation,
purchase, sale, preservation or retention of investments by the Client (including all fees and commissions
of brokers and custodians, research expenses, quotation services, travel costs, all fees and expenses relating
to the registration and qualification for sale of such investments and all transfer taxes); (ii) all federal, state
and local taxes and filing fees payable by the Client; (iii) all fees and disbursements of the independent
attorneys, accountants and consultants retained by the Client, or on behalf of the Client; (iv) all filing and
recording fees; and (v) all interest expense of the Client. To the extent such expenses are incurred for the
benefit of the multiple Clients, Canyon will make a good faith allocation of such expenses among its Clients.
In the event a Client invests in a transaction which includes break-up, standby, commitment, consent,
waiver or similar fees, the Adviser generally will retain such fees and reduce the management fee or
reimbursable expenses next payable by a like amount.
In order to take advantage of diversification and new investment strategies and concepts, Canyon, from
time to time, may place a portion of a Fund’s investable assets in accounts managed by or co-managed with
other investment advisors (including affiliated and non-affiliated investment advisers), in which case such
Fund may be subject to additional fees payable to such other investment advisor as well as its proportionate
share of costs and expenses. Canyon also may place a portion of a Fund’s investable assets in other Canyon
Funds, in which case such Fund shall not be subject to any additional management or incentive fees but
will bear its proportionate share of costs and expenses. The amounts which may be invested into other
managed accounts or in Canyon affiliated investment funds are not expected to be significant.
Investors should refer to each Fund’s Offering Memorandum and other relevant documents for
additional/supplemental information regarding a Fund as well as the fees and expenses associated with such
Fund.

Performance-Based Fees and Side-by-Side Management
As noted above, Canyon earns a performance allocation or fee. At this time, all Canyon Clients are charged
a performance allocation or fee. However, because the actual performance allocation or fee charged to a
specific Client may vary, there may be an incentive for Canyon to make investments that are riskier or more
speculative than would be the case in the absence of such a compensation framework or to favor those
Clients with higher performance allocations or fees over Clients with lower performance allocations or fees.
Canyon seeks to mitigate this risk by, among other things, seeking to allocate investments in a fair and
equitable manner over time among its Clients. For more information on Canyon’s allocation procedure,
please see Brokerage Practices – Allocation of Investment Opportunities. In addition, Canyon will receive
performance based compensation on unrealized appreciation as well as realized gains with respect to certain
Clients.

Types of Clients
Clients and Fund investors include individuals, trusts, pension plans, corporations, and public and private
entities. Fund investors must meet the investor qualifications associated with each Fund (which generally
require Fund investors to be “accredited investors” and “qualified purchasers”, as such terms are defined in
the federal securities laws).
Canyon will generally manage investment advisory accounts with a minimum size of $50,000,000 and will
further require that no withdrawal be permitted if to do so reduces the account to less than $25,000,000,
unless the account is being terminated. However, Canyon may, in its discretion, based upon its total client
relationship and other circumstances, accept or continue to advise smaller accounts from time to time.

Methods of Analysis, Investment Strategies and Risk of Loss
Canyon seeks opportunities on behalf of its Clients to realize value overlooked by others. Canyon is a
“global value-oriented” alternative asset manager that employs a variety of credit strategies across a broad
spectrum of asset classes. Canyon emphasizes bottom-up fundamental credit analysis, leveraging its long
history of accumulated experience and knowledge to conduct balance sheet analysis and due diligence. It
believes that the dynamic nature of the global capital markets and the continuous evolution of corporate
and securitized balance sheets results in inefficiencies in financial asset prices (or gaps between market
value and “intrinsic” value). Given the legal and financial background and extensive investment experience
of Canyon, as well as the significant strengths that Canyon possesses in the areas of corporate finance and
special situations research, and real estate investing, Canyon believes it is advantageously positioned to
provide investors with an opportunity to capitalize on these perceived market inefficiencies in this area of
investing.
Canyon looks across the corporate capital structure, investing opportunistically across senior secured
leveraged loans, high yield bonds, convertibles, equities, credit derivatives and securitization notes.
Additionally, Canyon looks beyond the traditional corporate markets to the structured finance space, where
it invests in mortgage securities/derivatives, aircraft lease securitizations, collateralized debt
obligations/collateralized loan obligations, distressed structured municipal bonds and other areas. Positions
in other asset classes, such as foreign currencies and commodities, may be employed to a lesser extent as
appropriate. Allocations across these asset classes will shift over time in response to evolving value
propositions and risk/reward profiles.
Prior to implementation, investment ideas for Clients are discussed among Messrs. Friedman and Julis and
Canyon’s senior portfolio managers. Such discussions generally focus on, among other factors, the merits
of the investment on a stand-alone basis, risks embedded in and those theses implied by the investment,
how the investment fits in with the rest of the portfolio, hedging considerations, sizing goals and/or price
targets. All investment ideas ultimately must be approved by Messrs. Friedman and Julis.
“Value-Oriented” and “Event-Driven” Investing
Canyon’s strategy is to combine “value-oriented” and “event-driven” investing. Canyon believes in
employing a “bottom up” approach and focuses on rigorous research of business, credit and legal issues in
order to determine values, analyzes corporate events and special situations, identifies securities which can
be purchased at a price it believes represents a discount to intrinsic value, and identifies catalysts which can
unlock value.
“Value-oriented” investing is an investment strategy characterized by research directed at identifying gaps
between the market valuations of financial instruments and the intrinsic values of the underlying assets or
enterprises. These gaps are frequently created by business, financial or legal uncertainties that depress
market valuations of financial instruments, or discrete events that affect the valuation of a company or pool
of assets. In such situations, Canyon performs extensive research to develop an opinion about the true
nature and extent of the risks presented by those uncertainties. If Canyon determines that a discount is
sufficiently large and unwarranted, it may take a long position in such security. Conversely, when Canyon
believes that the market value of a security is significantly above its intrinsic value because investors are
underestimating the risks associated with the security or for other reasons, it may establish a short position
in that security.
“Event-driven” investing complements Canyon’s value approach by identifying near- and intermediate-
term catalysts that may affect investors’ perceptions of securities. By understanding the likelihood of value-
creation catalysts, Canyon positions itself to better gauge the holding period and internal rates of return of
its investments. Generally, Canyon attempts to purchase a security at a discount from its intrinsic value in
event-driven situations where: (i) diminution of value is limited by either the security’s ranking in the capital
structure or the underlying hard asset or going concern value; (ii) there is potential for significant capital

appreciation or ongoing current income; and (iii) there is an identifiable catalyst that can result in price
appreciation.
Investment Process
Canyon’s approach to “value-oriented” investing integrates the core analyses it generally performs for
investments. The foundation for investing in a company’s securities or instruments or structured finance
vehicles is based on a discounted cash flow or an abnormal earnings valuation, with a particular emphasis
on the timing of the cash flows and the risks associated with various components of that cash flow stream.
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