What Every XFLT Shareholder Needs to Know for XFLT's Proxy Contest

XAI Floating Rate & Alternative Income Trust (XFLT) (the “Fund”), responded to misleading claims regarding the approval of a new investment sub-advisory agreement among the Fund, XAI and Rockford Tower Asset Management, L.L.C. (the “King Street Sub-Adviser”), a wholly owned subsidiary of King Street Capital Management, L.P. (“King Street”) at the upcoming Special Meeting of Shareholders on July 30, 2026.

Octagon claims the approval of King Street as Sub-Adviser will increase the fees paid to XA Investments. There will be NO increase in fees paid by shareholders. The Fund’s management fees and expenses will not increase, and shareholders will not pay any higher fees because of this change. In fact, under the proposed agreement with the King Street Sub-Adviser, if the Fund recovers the abysmal -54% NAV erosion suffered under the terminated sub-adviser's mismanagement, XA Investments will stand to earn less in fees than it would under the current arrangement.

Octagon claims it has a “better path forward” because it offered to take over your Fund as investment adviser and reduce the Fund’s advisory fee. This proposal is not on the ballot. A vote against the King Street Sub-Advisory Agreement does not make the terminated sub-adviser the Fund’s adviser. The terminated sub-adviser’s proposal was an attempt to take over as adviser of XFLT— a role it has not performed for any registered fund. Octagon would be getting a promotion and a pay raise under this “better path.” Rewarding an underperforming manager with expanded responsibilities and higher fees would have been imprudent and contrary to the Board's fiduciary duty to act in shareholders' best interests.

Octagon implies that XA Investments and the Board are not aligned with shareholders. The leadership team at XA Investments and the Fund Board all have material ownership of XFLT and are aligned with XFLT shareholders. Collectively, XA Investments' management and the Fund Board own approximately 272,859 shares of XFLT. The terminated sub-adviser is not aligned with shareholders, and Octagon senior leaders own far fewer shares of XFLT, including CEO and former XFLT Portfolio Manager Gretchen Lam. Like every other shareholder, the leadership team at XA Investments shared in the value destruction that has occurred under Octagon’s watch.

Octagon’s claims its management of XFLT by a “proven management team” led to performance that was “admirable.” The results tell a different story. The underperformance is far from “admirable.” As of March 31, 2026, XFLT underperformed its benchmark by -19.09% over the past one-year period, underperformed over the three-year, five-year and since-inception periods, and NAV per share declined approximately -54%, which implies $406.7 million of current-share-equivalent NAV erosion. The results are why the Board acted. The Board had a fiduciary responsibility to protect shareholders from the terminated sub-adviser’s persistent underperformance at XFLT and commenced a search process to identify a qualified sub-adviser that could improve future shareholder outcomes. Recent developments affirm that the Board was right to be concerned. In 2026 alone, Octagon’s own CLO portfolio has suffered seven CLO defaults in 2026 alone.