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XAI Octagon Floating Rate & Alternative Income Trust (XFLT)

As of

Closing price

Closing NAV

Premium/discount

Current distribution rate1

Fund overview

The Trust invests in a dynamically managed portfolio of floating-rate credit instruments and other structured credit investments within the private markets. Under normal market conditions, the Trust will invest at least 80% of managed assets in senior secured loans, CLO debt and CLO equity.

Objective

Seeks attractive total return with an emphasis on income generation across multiple stages of the credit cycle. There can be no assurance that the Trust will achieve its investment objective, and you could lose some or all of your investment.

Snapshot (as of )

Closing price
Closing NAV
Premium/discount
Current distribution rate1
Tax reporting 1099 tax form
CUSIP
Ticker
NAV ticker
Shares outstanding
Total common assets
Total managed assets
Leverage Ratio

Inception Date

Inception Price

$10.00

Inception NAV

$9.78

Distribution Frequency

Monthly

Footnotes are listed at the bottom of the page.

Management

Octagon

Octagon has a 25+ years track record managing institutional client credit portfolios. A leading institutional credit investor with of assets under management (as of ), Octagon serves as the investment sub-adviser for XFLT and is responsible for portfolio management.

About Octagon

As Collateralized Loan Obligation (CLO) investors, Octagon evaluates how a given CLO’s portfolio, structure and manager might affect the risk and value of a given CLO investment. Such judgments rely heavily on Octagon’s experience and skill in synthesizing information into an investment thesis that can withstand the scrutiny of its investment committee. Octagon’s dual role as both a manager and investor in CLOs adds depth of perspective that few firms can match.

Team

The Octagon team—a cohesive, experienced, team of 40 investment specialists—is led by the Octagon investment committee, whose members have worked together for 21 years (on average) across multiple credit cycles.

Portfolio Management

The Octagon portfolio management team dynamically manages the Trust’s portfolio based on its evolving credit market outlook, and continues to search for promising opportunities in the credit markets. The Octagon team meets regularly to monitor portfolios using its robust review process while striving to manage risk via its proprietary internal credit rating and portfolio weighting system.

  • Seeks to optimize relative value
  • Focuses on improving credits to enhance alpha generation
  • Seeks attractive risk-adjusted returns

The Trust’s investment portfolio is comprised largely of floating-rate credit instruments and other structured credit investments, which XAI and Octagon expect to perform well in a rising interest rate environment. The Trust’s assets are managed opportunistically primarily within private below investment grade credit markets* including:

  • Senior secured floating-rate loans;
  • Structured credit (CLO debt and CLO equity);
  • Opportunistic credit (long/short Credit investments and stressed credits).

*The Trust currently intends to invest primarily in below investment grade credit instruments but may invest without limitation in investment grade credit instruments. Credit instruments are considered below investment grade quality if rated below Baa3- by Moody’s or below BBB- by S&P or Fitch or, if unrated, judged to be below investment grade quality by Octagon.

At the heart of Octagon’s disciplined investment philosophy is a deep understanding of fundamental credit analysis, enhanced by a process focused on optimizing returns against target risk profiles. Octagon’s investment philosophy combines relative value focus and active portfolio management. Over Octagon’s 25+ year history, it has developed a repeatable and scalable credit selection and investment process.

Octagon’s investment process involves four key steps:

  1. Ongoing assessment of investment opportunities;
  2. Research, analysis and written recommendations with defined investment theses;
  3. Investment committee approval before any credit is considered for investment;
  4. Continual, collaborative monitoring that enhances decision making and risk management.
Octagon Proprietary Evaluations Octagon Proprietary Evaluations

Octagon’s proprietary evaluations of credit, liquidity and collateral quality are a determinant in position size and target weighting. Octagon’s risk management process includes formal portfolio reviews and real-time portfolio monitoring.

Andrew D. Gordon

Andrew D. Gordon

Executive Chair

Mr. Gordon co-founded Octagon in 1994 and subsequently managed numerous Octagon funds before assuming his current position. He has over 30 years of experience in the below-investment grade leveraged loan and high yield bond asset classes, in both sell-side and buy-side capacities.

Gretchen M. Lam, CFA

Gretchen M. Lam, CFA

Chief Executive Officer

Ms. Lam is a member of Octagon’s Investment Committee and serves as the firm’s Chief Executive Officer. Prior to assuming the Chief Executive Officer position in 2024, Ms. Lam served as a Senior Portfolio Manager across various CLOs, separately managed accounts and commingled funds. She also oversaw the Firm’s Structured Credit (CLO debt & equity) investment strategies. Ms. Lam is a member of the Firm’s ESG Committee.

Ms. Lam joined Octagon in 1999; prior to becoming a Portfolio Manager in 2013, she oversaw Octagon’s investments in the software, business services, finance & insurance, paper & packaging, gaming & lodging, homebuilding and real estate industries. She was also responsible for the Structured Credit exposure held in Octagon’s CLO vehicles.

Ms. Lam attended Babson College where she graduated Summa Cum Laude with a B.S. in Investments. She received her CFA Charter in 2006.

Michael B. Nechamkin

Michael B. Nechamkin

Chief Investment Officer, Senior Portfolio Manager

Mr. Nechamkin is a member of Octagon's Investment Committee and serves as a Portfolio Manager across CLOs, Separately Managed Accounts and Commingled Funds. Prior to joining Octagon as Portfolio Manager in 1999, Mr. Nechamkin was a Vice President in the High Yield Research Group at Bankers Trust. Prior to that, he served as a Convertible Securities Analyst at Mabon Securities and a Financial Consultant at Merrill Lynch. He earned a Bachelor and a Master of Talmudic Law, and holds an M.B.A. from the University of Baltimore.

Lauren Law, CFA

Lauren Law, CFA

Senior Portfolio Manager

Ms. Law is a member of Octagon's Investment Committee and serves as a Portfolio Manager across CLOs, Separately Managed Accounts and Commingled Funds. Ms. Law joined Octagon in 2004. In addition, she helps oversee the Firm's Structured Credit (CLO debt and equity) investment strategies. Prior to becoming a Portfolio Manager, Ms. Law was an Investment Team Principal whose coverage areas included healthcare, industrials, financials, business services, and the Firm's CLO debt and equity investments. She holds a Bachelor of Science from Babson College, where she graduated Magna Cum Laude. She received her CFA Charter in 2009.

Sean Gleason

Sean Gleason

Portfolio Manager

Mr. Gleason is a member of Octagon's Investment Committee and serves as a Portfolio Manager across CLOs and a Separately Managed Account. Mr. Gleason is also a member of the Firm's ESG (environmental, social, and corporate governance) Committee. Mr. Gleason joined Octagon in 2010. Prior to becoming a Portfolio Manager, Mr. Gleason was an Investment Team Principal whose coverage areas included the healthcare, retail, gaming, lodging, consumer products, building products and leisure industries. He holds a Bachelor of Science from Babson College, where he graduated Cum Laude.

Performance

Total returns (as of )

1M 3M 6M YTD 1Y 3Y Since Inception
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“Price” is based on the closing prices of XFLT on the NYSE at the end of trading on the last trading day of each period. “Benchmark” is the Morningstar LSTA Leveraged Loan 100 Index, which is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be higher or lower than the data shown. Returns assume reinvestment of distributions, and NAV returns are net of fund expenses. See “Risks” at the bottom of this page.

Portfolio composition

Asset allocation (% as of )

Asset Allocations are measured as a percentage of the Trusts's total investments as of . Allocations are not GAAP adjusted and may vary and are subject to change without notice. The total may not equal 100% due to rounding.

Trust shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with the Trust, please see the "Risks" section of the Trust's Prospectus here.

Fund characteristics (% as of )

Number of Holdings
Average bond price as a percentage of par %
Effective maturity years

Fund Characteristics are as of 8/31/19, may vary and are subject to change without notice.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with the Trust, please see the "Risks" section of the Trust's Prospectus here.

Top Ten Portfolio Holdings (as of )

Holding % Portfolio
Holding % Portfolio

Holdings are measured as a percentage of the funds Total Investments as of . Holdings are not GAAP adjusted and may vary and are subject to change without notice.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with the Trust, please see the "Risks" section of the Trust's Prospectus here.

Maturity breakdown (as of )

Maturities are as of , may vary and are subject to change without notice.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be higher or lower than the data shown.

An investment in this fund presents a number of risks and is not suitable for all investors. Investors should carefully review and consider potential risks before investing. For more detailed information on the specific risks associated with the Trust, please see the "Risks" section of the Trust's Prospectus here.

Distributions & IR

Common share distributions

Payable Date Record Date Ex-Date Declaration Date Amount Distribution Type
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Distributions data is unavailable at this time.

Preferred Shares

6.50% Series 2026 Term Preferred Shares
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Discuss with your financial planner today

Share this investment opportunity with your financial planner to find out how it can fit in your portfolio.

Buy through your brokerage

Shares of the Fund are available through certain brokerage accounts. Visit your brokerage today to see how you can get started.

Carefully consider the investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Fund’s prospectus and supplements thereto, which may be obtained by visiting the Fund’s Website or by calling 888-903-3358. Read the prospectus carefully before investing. Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Past performance is no guarantee of future results.

The information on this web site is intended for U.S. residents only. The information provided does not constitute a solicitation of an offer to buy, or an offer to sell securities in any jurisdiction to any person to whom it is not lawful to make such an offer. Consult with your financial advisor, accountant, or attorney prior to making any investment decision. No information in this website constitutes such advice. Securities offered through Foreside Fund Services, LLC.

Foreside Fund Services, LLC is not affiliated with XA Investments LLC.

Listing NYSE trading symbol "XFLTPRA"
CUSIP 98400T205
Closing Price (as of )
Coupon 6.50% per annum
Number of Shares 1,596,000
Par Value $25.00 per share
Original Issue Date March 29, 2021
Maturity Date March 31, 2026
Original Redemption The Shares may be redeemed in whole or in part at any time or from time to time at Issuer’s option on or after March 31, 2023 upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the Liquidation Preference of the Shares to be redeemed plus accrued and unpaid dividend payments otherwise payable thereon for the then-current monthly dividend period accrued to the date fixed for redemption.
Dividend Payment Date The Series 2026 Term Preferred Shares pay dividends every January 31, April 30, July 31 and October 31, commencing on July 31, 2021. If a dividend payment date falls on a day that is not a business day, then the dividend payment will be made on the next succeeding business day.
XFLTPRA Prospectus Prospectus Supplement
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Analyst Coverage

B. Riley Financial, Inc.

Matt Howlett
917-538-4762
mhowlett@brileyfin.com

Ladenburg

Mickey Schleien
305-572-4131
mschleien@ladenburg.com

Frequently Asked Questions

What is XAI Octagon Floating Rate & Alternative Income Trust (XFLT)?

XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) is a diversified, closed-end management investment company. The Trust seeks attractive total return with an emphasis on income generation across multiple stages of the credit cycle. The Trust invests in a dynamically managed portfolio of floating-rate credit instruments and other structured credit investments within the private markets. Under normal market conditions, the Trust will invest at least 80% of managed assets in floating rate credit instruments, including senior secured loans, CLO debt and CLO equity. The Trust’s common shares are listed on the New York Stock Exchange (“NYSE”) under the symbol “XFLT”. The Trust’s preferred shares are listed on the NYSE under the symbol “XFLT-PA”.

Who is XA Investments (XAI)?

XAI is a Chicago-based firm founded by XMS Capital Partners in April 2016. XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. XAI provides individual investors with access to institutional-caliber alternative managers. XAI partners with established asset managers with proven capabilities in alternative credit, private debt and select hedge fund strategies. For more information, please visit www.xainvestments.com or click here to read the firm brochure.

Who is XMS Capital Partners (XMS)?

XMS Capital Partners, LLC, established in 2006, is a global, independent, financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.

Where can I find information about the Trust’s share price and net asset value (NAV)?

The Trust’s full share price and NAV history can be found on the XFLT webpage under “Pricing & fees.”

Does the Trust pay distributions?

The Trust intends to pay substantially all of its net investment income, if any, to common shareholders through monthly distributions, and any net realized long-term capital gains at least annually. There is no assurance the Trust will continue to make regular monthly distributions or that it will do so at a particular rate. Distributions may be paid by the Trust from any permitted source and, from time to time, all or a portion of a distribution may be a return of capital.

Does the Trust have a dividend reinvestment plan (DRIP)?

Yes. Distributions with respect to Common Shares registered in the name of a broker-dealer or other nominee (that is, in “street name”) will be reinvested in additional Common Shares under the dividend reinvestment plan (DRIP), unless the broker or nominee does not participate in the DRIP or the Common Shareholder elects to receive distributions in cash. Investors who own Common Shares registered in street name should consult their broker-dealers for details regarding reinvestment. All distributions to investors who do not participate in the DRIP will be paid by check mailed directly to the record holder by DST Systems, Inc., as dividend disbursing agent. A participant in the DRIP who wishes to opt out of the DRIP and elect to receive distributions in cash should contact DST Systems, Inc. in writing at the address specified below or by calling the telephone number specified below.

All correspondence concerning the DRIP should be directed to the DRIP Agent, DST Systems, Inc., 430 W. 7th Street, Kansas City, Missouri 64105-1594.

For more information on the DRIP program, please refer to our annual report.

What is the distribution payment process and will my dividend post in my investment account on the same day every month?

On the distribution payment date, the Trust funds the distribution to shareholders who do not participate in the Trust’s dividend reinvestment plan (see “Does the Trust have a dividend reinvestment plan (DRIP)” for more information). Such cash distributions are made via check mailed directly to the record holder by DST Systems, Inc. (“DST”), as the Trust’s distribution disbursing agent. The record holder, often a Common Shareholder’s broker-dealer or other nominee (“street name” holder), will allocate the cash distributions to its shareholder accounts, or process reinvestment transactions, per its client instructions. Processing times at various record holders may vary depending on each firm’s internal processes. Depending on your firm’s processes, the Trust’s distribution may or may not be posted in your account on the same day every month. Delays processing distributions may occur at your record holder/brokerage firm that are outside of the Trust’s control.

How do I know if I am a registered stockholder?

A registered stockholder is one who holds shares directly with the Trust. If shares were purchased through a broker, the shares may be registered in the name of the broker (held in “street name”) instead of being registered in the name of the beneficial owner. Individual stockholders whose shares are held in street name should contact their broker for more information on their participation in the DRIP.

Are distributions taxable to shareholders?

Distributions are generally taxable for stockholders as ordinary income and/or capital gain. The Trust will send each of its U.S. registered stockholders an annual Form 1099 after the calendar year end. Form 1099 details the amounts includible in a U.S. stockholder's taxable income for the year and the source(s) of such income.

How can I receive email alerts from XAI?

To sign up for email alerts regarding our monthly CEF newsletter, press releases, SEC filings, white papers and webinars, please fill out the form at the bottom of the webpage or contact info@xainvestments.com.

Pricing & fees

Share price and NAV history ()

Pricing history

Date
Share Price
NAV
Premium / Discount
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Premium / Discount Information ()

Share Price (as of )

DATE CLOSING PRICE($)
High
Low

NAV (as of )

DATE CLOSING NAV($)
High
Low
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Premium / Discount (as of )

DATE PREMIUM/DISCOUNT
High
Low

IPO information

Date 9/27/2017
Price $10.00
NAV $9.78
NAV ticker XFLTX
CUSIP 98400T106
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ANNUAL EXPENSES (as of ) AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON SHARESb AS A PERCENTAGE OF MANAGED ASSETS
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Expenses shown in the table are based on actual expenses of the Trust for the three months ended December 31, 2023, and the Trust’s average managed assets and average net assets for the three months ended December 31, 2023. Common shareholders bear the expenses of the Trust, including the management fee, which is calculated on the basis of the Trust’s managed assets, including proceeds from leverage, and the cost of leverage, as shown in the column “As a Percentage of Net Assets Attributable to Common Shares” above. As of December 31, 2023, the Trust had outstanding leverage equal to 39.60% of the Trust’s managed assets. See the Trust’s Annual Report for full information on expenses.

aRepresents both interest expense on borrowed funds and preferred dividends.

bCommon shareholders will pay the expenses set forth in this column.

Risks

An investment in the Trust is subject to investment risk, including the possible loss of your entire investment. There can be no assurance that the Trust’s objectives will be achieved. The Trust is a diversified, closed-end management investment company. Shares of closed-end management investment companies frequently trade at a discount from their net asset value, which is a risk separate and distinct from the risk that the fund's net asset value could decrease as a result of its investment activities. The Trust intends to invest primarily in below investment grade instruments, which are commonly referred to as “high yield” securities or “junk” bonds. Investments in below investment grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal when due and such issuers are not perceived as strong financially as those with higher credit ratings. The Trust intends to invest a significant portion of its assets in CLO debt and subordinated notes, which often involve risks that are different from or more acute than risks associated with other types of credit instruments. Investors should see the "Risks" section in the Trust’s most recent Prospectus or Annual Report on Form N-CSR for a detailed discussion of factors investors should consider carefully before deciding to invest in the Trust’s Shares.

Distributions: The Trust intends to pay substantially all of its distributions from net investment capital. However, the Trust may pay any distributions from any permitted source and, from time to time, all or a portion of a distribution maybe a return of capital and capital gains. Distributions are not guaranteed in frequency or amount.

The Trust uses leverage to seek to enhance total return and income. The Trust may use leverage through (i) the issuance of senior securities representing indebtedness, including through borrowing from financial institutions or issuance of debt securities, including notes or commercial paper (collectively, “Indebtedness”), (ii) the issuance of preferred shares (“Preferred Shares”) and/or (iii) reverse repurchase agreements, securities lending, short sales or derivatives, such as swaps, futures or forward contracts, that have the effect of leverage (“portfolio leverage”). The Trust will not utilize leverage, either through Indebtedness, Preferred Shares or portfolio leverage, in an aggregate amount in excess of 40% of the Trust’s Managed Assets (including the proceeds of leverage).

Shares of closed‐end management investment companies frequently trade at a discount from their net asset value, which is a risk separate and distinct from the risk that the Trust’s net asset value could decrease as a result of its investment activities.

The Trust may engage in certain derivatives transactions that have economic characteristics similar to leverage. The use of derivatives may increase overall risk by magnifying the effect of both gains and losses leading to large changes in value and potentially large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss.

The Trust has entered into a revolving credit facility and any borrowings through the credit facility are secured by eligible securities held in the Trust’s portfolio of investments. The Trust has also issued Series 2026 Term Preferred Shares, which are senior securities that constitute shares of beneficial interest of the Trust. The 2026 Preferred Shares rank senior to the Trust’s Common Shares in priority of payment of dividends and as to the distribution of assets upon dissolution, liquidation or winding up of the Trust’s affairs; equal in priority with all other future series of Preferred Shares the Trust may issue as to priority of payment of dividends and as to distributions of assets upon dissolution, liquidation or the winding-up of the Trust’s affairs; and subordinate in right of payment to amounts owed under the Trust’s existing credit facility, and to the holder of any future senior indebtedness, which may be issued without the vote or consent of Preferred Shareholders.

The use of leverage is a speculative technique that involves special risks. The Trust currently anticipates utilizing leverage to seek to enhance total return and income. There can be no assurance that the Advisor’s and the Sub-Adviser’s expectations will be realized or that a leveraging strategy will be successful in any particular time period. Use of leverage creates an opportunity for increased income and capital appreciation but, at the same time, creates special risks. Leverage is a speculative technique that exposes the Trust to greater risk and increased costs than if it were not implemented. The more leverage that is utilized by the Trust, the more exposed the Trust will be to the risks of leverage. The use of leverage by the Trust causes the net asset value of the common shares to fluctuate significantly in response to changes in interest rates and other economic indicators. As a result, the net asset value, market price and dividend rate of the common shares is likely to be more volatile than those of a fund that is not exposed to leverage. Leverage increases operating costs, which may reduce total return. The Trust pays interest on its borrowings, which may reduce the Trust’s return. Increases in interest rates that the Trust must pay on its borrowings will increase the cost of leverage and may reduce the return to common shareholders. The risk of increases in interest rates may be greater in the current market environment because interest rates are near historically low levels. During the time in which the Trust is utilizing leverage, the amount of the investment advisory fee paid by the Trust will be higher than if the Trust did not utilize leverage because the fees paid will be calculated based on the Trust’s Managed Assets, including proceeds of leverage. Common shareholders bear the portion of the management fee attributable to assets purchased with the proceeds of leverage, which means that common shareholders effectively bear the entire management fee.

Fund shares are not guaranteed or endorsed by any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation. Shares of closed-end funds are subject to investment risks, including the possible loss of principal invested. Performance data quoted represents past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the data shown.

Footnotes

1The current distribution rate is calculated as the most recently distribution annualized and divided by the closing price on the date set forth above. Distributions are intended to be paid from net investment income; however, distributions may be funded from any source including return of capital.

2To assist the Trust with the goal of more stable monthly distributions, the Trust may distribute more or less than the amount of the net investment income earned in a particular period. There is no assurance the Trust will pay regular monthly distributions or that it will do so at a particular rate. Distributions may be paid by the Trust from any permitted source and, from time to time, all or a portion of a distribution may be a return of capital.

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