Filed pursuant to Rule 424(b)(3)
File No. 333-275489
PROSPECTUS SUPPLEMENT
(to Prospectus dated July 22, 2024)
Octagon XAI CLO Income Fund
This supplement amends certain information in the Prospectus, dated July 22, 2024, of Octagon XAI CLO Income Fund (the “Fund”). Unless otherwise indicated, all other information included in the Prospectus, or any previous supplements thereto, that is not inconsistent with the information set forth in this supplement, remains unchanged. Capitalized terms not otherwise defined in this supplement have the same meaning as in the Prospectus.
Summary of Fund Expenses
The following table contains information about the costs and expenses that Shareholders can expect to bear directly or indirectly. The purpose of the table and the example below is to help Shareholders understand the fees and expenses that they can expect to bear directly or indirectly.
Shareholder Transaction Expenses | Class A | Class I | ||||||
| Maximum Initial Sales Charge (Load) Imposed on Purchases (as a percentage of offering price)(1) | 2.00 | % | None | |||||
| Early Withdrawal Charge(2) | 1.00 | % | 1.00 | % | ||||
| Dividend Reinvestment Fees | None | None | ||||||
| Annual Expenses (As a Percentage of Net Assets Attributable to Common Shares) | Class A | Class I | ||||||
| Management fees(3) | 1.50 | % | 1.50 | % | ||||
| Distribution and/or Servicing Fees(4) | 0.85 | % | None | |||||
| Interest payment on borrowed Funds | None | None | ||||||
| Other expenses(5)(6) | 0.68 | % | 0.68 | % | ||||
| Total Annual Fund Operating Expenses | 3.03 | % | 2.18 | % | ||||
| Distribution Fee Reimbursement(7) | (0.50 | %) | None | |||||
| Expense Limitation(8) | ─ | ─ | ||||||
| Total annual expenses (After Expense Reimbursements)(7)(8) | 2.53 | % | 2.18 | % | ||||
| (1) | Paralel Distributors, LLC is the principal underwriter and distributor of Class A Shares and Class I Shares and serves in that capacity on a best efforts basis, subject to various conditions. The Fund may be offered through Selling Agents that have entered into selling agreements with the Distributor. Selling Agents typically receive the sales load with respect to Class A Shares purchased by their clients. The Distributor does not retain any portion of the sales load. Class A Shares are sold subject to a maximum sales load of up to 2.00% of the offering price. However, purchases of Class A Shares in excess of $500,000 may be eligible for a sales load discount. See “Purchase of Shares.” While neither the Fund nor the Distributor impose an initial sales charge on Class I Shares, if you buy Class I Shares through certain Selling Agents, they may directly charge you transaction or other fees in such amount as they may determine. Please consult your Selling Agent for additional information. Investors should consult with their Selling Agent about the sales load and any additional fees or charges their Selling Agent might impose on each class of Shares. |
| (2) | The Fund imposes early withdrawal charges of up to 1.00% on Shares accepted for repurchase that have been held by an investor for less than one year. Payment of the early withdrawal charge is made by netting the charge against the repurchase proceeds. The early withdrawal charge is retained by the Fund for the benefit of remaining Shareholders. If a Shareholder has made multiple purchases and tenders a portion of its Shares, the early withdrawal charge is calculated on a first-in/first-out basis. See “Periodic Repurchase Offers” below for additional information about Share repurchases. |
| (3) | The Fund pays the Adviser an annual management fee, payable monthly in arrears, in an amount equal to 1.50% of the Fund’s average daily Managed Assets. The Adviser will pay to the Sub-Adviser a sub-advisory fee out of the management fee received by the Adviser. |
| (4) | The Fund may charge a distribution and/or shareholder servicing fee totaling up to 0.85% per year on Class A Shares. |
| (5) | “Other expenses” are estimated based on Fund Managed Assets of $125 million and anticipated expenses for the first year of the Fund’s operations. “Other Expenses” include professional fees and other expenses, including, without limitation, SEC filing fees, printing fees, administration fees, transfer agency fees, custody fees, fees charged by PINE, trustee fees, insurance costs and financing costs. |
| (6) | The Adviser and the Sub-Adviser have agreed to (i) pay all organizational expenses of the Fund and (ii) pay or reimburse offering expenses of the Fund incurred through the date of effectiveness of this registration statement. Such amounts are not subject to recoupment by the Adviser and the Sub-Adviser. |
| (7) | The Adviser and the Sub-Adviser have entered into an amended and restated letter agreement (the “Distribution Fee Reimbursement Agreement”) with the Fund through the eighteen-month anniversary of the later of the date of this Prospectus or the Trust’s commencement of operations (the “Limitation Period”). Under the Distribution Fee Reimbursement Agreement, the Adviser and the Sub-Adviser have agreed to reimburse the Fund for a portion of distribution and/or shareholder servicing fees paid and/or accrued during the Limitation Period in an amount equal to 0.50% of the Fund’s average daily net assets. During the Limitation Period, the Distribution Fee Reimbursement Agreement may be terminated or modified only with the written consent of the Board of Trustees. The Adviser and the Sub-Adviser may, at their discretion, agree to extend the Limitation Period for additional period(s) of one year on an annual basis. For a period not to exceed three years from the date on which fees are waived, the Adviser and the Sub-Adviser may recoup amounts reimbursed, provided that, after giving effect to such recoupment, the Fund’s expense ratio (excluding Excluded Expenses, as defined below) is not greater than (i) the Fund’s expense ratio (excluding Excluded Expenses) at the time the fees were waived or (ii) any expense limitation in effect at the time of such recoupment. Under the Distribution Fee Reimbursement Agreement, “Excluded Expenses” are management fees, distribution and/or servicing fees, taxes, leverage interest, brokerage commissions, dividend and interest expenses on short sales, acquired fund fees and expenses (as determined in accordance with SEC Form N-2), expenses incurred in connection with any merger or reorganization, and extraordinary expenses, such as litigation expenses. |
| (8) | The Adviser and the Sub-Adviser have entered into a letter agreement (the “Operating Expense Limitation Agreement”) with the Fund through March 31, 2026. Pursuant to the Operating Expense Limitation Agreement, the Adviser and the Sub-Adviser have agreed to waive a portion of their management fee and sub-advisory fee, as applicable, or reimburse the Fund for certain operating expenses so that the expenses of the Fund, exclusive of certain excluded expenses, do not exceed 0.68% of the Fund’s Managed Assets through March 31, 2026. Such amounts waived or reimbursed to the Fund by the Adviser and the Sub-Adviser are subject to recoupment for up to three years following the date of such waiver or reimbursement, to the extent that such recoupment does not cause the Fund’s operating expenses to exceed (i) the expense limitation in effect at the time the expense was paid or absorbed, and (ii) the expense limitation in effect at the time of such recoupment. The following expenses are excluded under the Operating Expense Limitation Agreement: (i) investment advisory fees, (ii) investor support and secondary market services fees, (iii) taxes, (iv) expenses incurred directly or indirectly by the Fund as a result of an investment in a permitted investment (including, without limitation, acquired fund fees and expenses), (v) expenses associated with the acquisition or disposition of portfolio investments (including, without limitation, brokerage commissions and other trading or transaction expenses), (vi) leverage expenses (including, without limitation, costs associated with the issuance or incurrence of leverage, commitment fees, interest expense or dividends on preferred shares), (vii) distribution and/or shareholder servicing (12b-1) fees, (viii) dividends on short sales, if any, (ix) securities lending costs, if any, (x) expenses of holding, and soliciting proxies for, meetings of shareholders of the Fund (except to the extent relating to routine items such as the election of trustees), (xi) expenses of a reorganization, restructuring, redomiciling or merger of the Fund or the acquisition of all or substantially all of the assets of another fund, or (xii) any extraordinary expenses not incurred in the ordinary course of the Fund’s business (including, without limitation, expenses related to litigation, derivative actions, demands related to litigation, regulatory or other government investigations and proceeding). |
Class A Shares Example
The following example illustrates the expenses that you would pay on a $1,000 investment in Class A Shares, assuming (1) total annual expenses of 2.53% of net assets attributable to Class A Shares during Year 1 and 3.03% of net assets attributable to Class A Shares thereafter, (2) a 5% annual return and (3) that all dividends and distributions are reinvested at net asset value per Share.
1 Year | 3 Years | 5 Years | 10 Years | |||||||||||
| $45* | $ | 107 | $ | 172 | $ | 344 | ||||||||
| * | This amount does not reflect the imposition of the early withdrawal charge of 1.00%. If an investor were to redeem Shares that have been held for less than one year and the Fund were to impose the early withdrawal charge, the costs for year one would be $55. |
The Example should not be considered a representation of future expenses or returns. Actual expenses may be higher or lower than those assumed. Moreover, the Fund’s actual rate of return may be higher or lower than the hypothetical 5% return shown in the example.
Class I Shares Example
The following example illustrates the expenses that you would pay on a $1,000 investment in Class I Shares, assuming (1) total annual expenses of 2.18% of net assets attributable to Class I Shares, (2) a 5% annual return and (3) that all dividends and distributions are reinvested at net asset value per Share. Actual expenses may be greater or less than those assumed.
| 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||
| $22* | $ | 68* | $ | 117* | $ | 251* | ||||||||
| * | This amount does not reflect the imposition of the early withdrawal charge of 1.00%. If an investor were to redeem Shares that have been held for less than one year and the Fund were to impose the early withdrawal charge, the costs for year one would be $32. |
The Example should not be considered a representation of future expenses or returns. Actual expenses may be higher or lower than those assumed. Moreover, the Fund’s actual rate of return may be higher or lower than the hypothetical 5% return shown in the example.
Management of the Fund
The following paragraphs are hereby added under the heading “Management of the Fund—Expenses.”
Operating Expense Limitation. The Fund, the Adviser and the Sub-Advisor have entered into a letter agreement, which is effective as of November 4, 2024 (the “Operating Expense Limitation Agreement”), pursuant to which the Adviser and the Sub-Adviser have agreed to waive a portion of their advisory or sub-advisory fees, as applicable, or reimburse the Fund for certain operating expenses so that the annual operating expenses of the Fund (exclusive of any Excluded Expenses (as defined below) do not exceed 0.68% of the Fund’s Managed Assets (the “Operating Expense Limitation”). For purposes of the Operating Expense Limitation Agreement, “Excluded Expenses” are (i) investment advisory fees, (ii) investor support and secondary market services fees, (iii) taxes, (iv) expenses incurred directly or indirectly by the Fund as a result of an investment in a permitted investment (including, without limitation, acquired fund fees and expenses), (v) expenses associated with the acquisition or disposition of portfolio investments (including, without limitation, brokerage commissions and other trading or transaction expenses), (vi) leverage expenses (including, without limitation, costs associated with the issuance or incurrence of leverage, commitment fees, interest expense or dividends on preferred shares), (vii) distribution and/or shareholder servicing (12b-1) fees, (viii) dividends on short sales, if any, (ix) securities lending costs, if any, (x) expenses of holding, and soliciting proxies for, meetings of shareholders of the Fund (except to the extent relating to routine items such as the election of trustees), (xi) expenses of a reorganization, restructuring, redomiciling or merger of the Fund or the acquisition of all or substantially all of the assets of another fund, or (xii) any extraordinary expenses not incurred in the ordinary course of the Fund’s business (including, without limitation, expenses related to litigation, derivative actions, demands related to litigation, regulatory or other government investigations and proceeding).
The Operating Expense Limitation Agreement provides that the Adviser and the Sub-Adviser may recoup amounts reimbursed pursuant to the Agreement for a period not to exceed three years following the date of such waiver or reimbursement, to the extent such recoupment does not cause the Fund’s operating expenses to exceed (a) the Operating Expense Limitation in effect at the time the expense was paid or absorbed, and (b) the Operating Expense Limitation in effect at the time of such recoupment. Any recoupment shall be allocated between the Adviser and the Sub-Adviser in the same proportion as the allocation of waived fees and/or reimbursed expenses being recouped. The Operating Expense Limitation Agreement shall remain in effect according to its terms until March 31, 2026, unless sooner terminated with the written consent of the Board of Trustees of the Fund. The agreement will terminate automatically upon the termination of the Advisory Agreement or the Sub-Advisory Agreement unless a new Advisory Agreement with the Adviser (or an affiliate of the Adviser) or a new Sub-Advisory Agreement with the Sub-Adviser (or an affiliate of the Sub-Adviser), as applicable, to replace the terminated agreement becomes effective upon such termination.
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Prospectus Supplement dated November 13, 2024
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
