Gladstone Alternative Income Fund 424B3Prospectus supplement

In addition, our repurchase of Shares may be a taxable event to shareholders, potentially including even shareholders who do not tender any Shares in such repurchase. Furthermore, our use of cash to repurchase Shares could adversely affect our ability to satisfy the distribution requirements for treatment as a RIC. We could also recognize income or gain in connection with its sale or other disposal of portfolio securities to fund Share repurchases. Any such income would be taken into account in determining whether such distribution requirements are satisfied and would need to be distributed to shareholders (in taxable distributions) in order to eliminate a Fund-level tax. See “

Tax Matters

” below.

Because the Shares do not trade on a national securities exchange and we will only offer to repurchase a limited percent of Shares each quarter, your ability to liquidate your investment may be

substantially

limited

.

We are designed for long-term investors and not as a trading vehicle. An investment in the Shares, unlike an investment in a traditional listed

closed-end

fund, should be considered illiquid. The Shares are appropriate only for investors who are seeking an investment in less liquid portfolio investments within an illiquid fund. We are not a suitable investment for investors who need access to the money they invest. Unlike

open-end

funds (commonly known as mutual funds), which generally permit redemptions on a daily basis, we will only offer to repurchase a limited percent of Shares each quarter. Unlike many

closed-end

funds, the Shares are not listed for trading on any national securities exchange and we do not currently intend to list the Shares for trading on any national securities exchange, nor we do not expect any secondary market to develop for the Shares in the foreseeable future. The NAV of the Shares may be volatile and, if we were to use leverage in the future, this volatility will increase.

Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, or the operations of businesses in which we invest, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business.

As the use of technology has become more prevalent in the course of business, the Adviser and our service providers have become more susceptible to operational and information security risks. Although the Adviser has implemented, and will continue to implement, security measures, its technology platform may be vulnerable to intrusion, computer viruses, ransomware attacks, phishing schemes, or similar disruptive problems caused by cyber incidents. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of the Adviser’s information resources or those of our service providers or portfolio companies. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to the Adviser’s information systems or those of our service providers or portfolio companies for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, costs to repair system damage, increased cybersecurity protection and insurance costs, litigation and damage to the Adviser’s business relationships or those of our service providers or portfolio companies. Other ways in which the business operations of the Adviser or those of our service providers or portfolio companies may be impacted include interference with the ability to value our portfolio, the unauthorized release of personal identifiable information or confidential information, and violations of applicable privacy, recordkeeping and other laws.

As the Adviser’s and our service providers’ or portfolio companies’ reliance on technology has increased, so have the risks posed to information systems. The Adviser has implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as its

 

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increased awareness of the nature and extent of a risk of a cyber incident, do not guarantee that a cyber incident will not occur and/or that our financial results, the value of our portfolio or confidential information will not be negatively impacted by such an incident. Furthermore, the Adviser cannot control the cyber security systems of our service providers or portfolio companies. In addition, any such incident, disruption or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt the Adviser’s operations, and damage our and its reputations, resulting in a loss of confidence in our services and its services, which could adversely affect our business.

We are subject to risks associated with artificial intelligence and machine learning technology.

Recent technological advances in artificial intelligence and machine learning technology pose risks to us and our portfolio companies. We and our portfolio companies could be exposed to the risks of artificial intelligence and machine learning technology if third-party service providers or any counterparties, whether or not known to us, also use artificial intelligence and machine learning technology in their business activities. We and our portfolio companies may not be in a position to control the use of artificial intelligence and machine learning technology in third-party products or services.

Use of artificial intelligence and machine learning technology could include the input of confidential information in contravention of applicable policies, contractual or other obligations or restrictions, resulting in such confidential information becoming partly accessible by other third-party artificial intelligence and machine learning technology applications and users.

Independent of its context of use, artificial intelligence and machine learning technology is generally highly reliant on the collection and analysis of large amounts of data, and it is not possible or practicable to incorporate all relevant data into the model that artificial intelligence and machine learning technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error—potentially materially so—and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of artificial intelligence and machine learning technology. To the extent that we or our portfolio companies are exposed to the risks of artificial intelligence and machine learning technology use, any such inaccuracies or errors could have adverse impacts on our Company or our investments.

Artificial intelligence and machine learning technology and its applications, including in the private investment and financial sectors, continue to develop rapidly, and it is impossible to predict the future risks that may arise from such developments.

We are subject to risks related to corporate social responsibility.

Our business (including that of our portfolio companies) may face public scrutiny related to environmental, social and governance (“ESG”) activities, which are increasingly considered to contribute to the long-term sustainability of a company’s performance. A variety of organizations measure the performance of companies on ESG topics, and the results of these assessments are widely publicized. Adverse incidents with respect to ESG activities could impact the value of our brand, our relationship with future portfolio companies, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations.

Additionally, new regulatory initiatives related to ESG that are applicable to us and our portfolio companies could adversely affect our business. The SEC has adopted rules that, among other matters, establish a framework for reporting of climate-related risks and other ESG-related rules have been proposed and these or similar rules may be adopted in the future. Compliance with these rules may be onerous and expensive. Further, compliance with any new laws, regulations or disclosure obligations increases our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we or our portfolio companies conduct our businesses and adversely affect our profitability.

 

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We are dependent on information systems and systems failures could significantly disrupt our business.

Our business is dependent on services provided by the Adviser and other service providers including pricing, administrative, accounting, tax, legal, custody, transfer agency, and other services. Any failure or interruption of the systems of those parties could cause delays or other problems in our activities. We are also subject to the possibility of loss caused by inadequate procedures and controls, human error and system failures by a service provider; each of which may negatively our performance. For example, trading delays or errors could prevent us from benefiting from potential investment gains or avoiding losses. In addition, a service provider may be unable to provide a NAV for our Shares on a timely basis. Similar types of risks also are present for issuers of securities in which we invest, which could result in material adverse consequences for such issuers, and may cause our investment in such securities to lose value. In addition, the financial, accounting, data processing, backup or other operating systems and facilities of our service providers may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond the control of our service providers and adversely affect our business. There could be:

 

•

sudden electrical or telecommunications outages;

 

•

natural disasters such as earthquakes, tornadoes and hurricanes;

 

•

disease pandemics;

 

•

events arising from local or larger scale political or social matters, including terrorist acts; and

 

•

cyber-attacks.

These events, in turn, could have a material adverse effect on our operating results and negatively affect the NAV of our Shares and our ability to pay dividends to our shareholders.

We are dependent upon the key management personnel of the Adviser, particularly David Gladstone, John Sateri, Terry Lee Brubaker and Laura Gladstone, and on the continued operations of the Adviser for our future success.

We have no employees. Our executive officers and the employees of the Adviser will not spend all of their time managing our activities and our investment portfolio. We are particularly dependent upon David Gladstone, John Sateri, Terry Lee Brubaker and Laura Gladstone for their experience, skills and networks. Our executive officers and the employees of the Adviser will allocate some, and in some cases a material portion, of their time to businesses and activities that are not related to our business. We have no separate facilities and are completely reliant on the Adviser, which has significant discretion as to the implementation and execution of our business strategies and risk management practices. We are subject to the risk of discontinuation of the Adviser’s operations or termination of the Advisory Agreement and the risk that, upon such event, no suitable replacement will be found. We believe that our success depends to a significant extent upon the Adviser and that discontinuation of its operations or the loss of its key management personnel could have a material adverse effect on our ability to achieve our investment objective.

Our success will depend on the Adviser’s ability to attract and retain qualified personnel in a competitive environment.

The Adviser experiences competition in attracting and retaining qualified personnel, particularly investment professionals and senior executives, and we may be unable to maintain or grow our business if the Adviser cannot attract and retain such personnel. The Adviser’s ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including its ability to offer competitive wages, benefits and professional growth opportunities. The Adviser competes with investment funds (such as

 

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private equity funds and private credit funds) and traditional financial services companies for qualified personnel, many of which have greater resources than us. Searches for qualified personnel may divert management’s time from the operation of our business. Strain on the existing personnel resources of the Adviser, in the event that it is unable to attract experienced investment professionals and senior executives, could have a material adverse effect on our business.

The Adviser can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

The Adviser has the right to resign under the Advisory Agreement at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If the Adviser resigns, we may not be able to find a new investment adviser with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our business as well as our ability to pay distributions are likely to be adversely affected and the NAV of our Shares may decline. Even if we are able to retain comparable management, the integration of such management and their lack of familiarity with our investment objective and strategies may result in additional costs and time delays that may adversely affect our business.

The Adviser’s liability is limited under the Advisory Agreement, and we are required to indemnify the Adviser against certain liabilities, which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account.

The Adviser has not assumed any responsibility to us other than to render the services described in the Advisory Agreement. Pursuant to the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser will not be liable to us for their acts under the Advisory Agreement, absent willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement. We have agreed to indemnify, defend and protect the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser with respect to all damages, liabilities, costs and expenses arising out of or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Advisory Agreement or otherwise as an investment adviser for us, and not arising out of willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement. These protections may lead the Adviser to act in a riskier manner when acting on our behalf than it would when acting for its own account.

There are significant potential conflicts of interest, including with the Adviser, which could impact our investment returns.

Our executive officers and Trustees, and the officers and directors of the Adviser, serve or may serve as officers, directors, or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our shareholders’ best interests. Moreover, the Adviser may establish or sponsor other investment vehicles which from time to time may have potentially overlapping investment objectives with ours and accordingly may invest in, whether principally or secondarily, asset classes we target. While the Adviser generally has broad authority to make investments on behalf of the investment vehicles that it advises, the Adviser has adopted investment allocation procedures to address these potential conflicts. Nevertheless, the management of the Adviser may face conflicts in the allocation of investment opportunities to other entities it manages. As a result, it is possible that we may not be given the opportunity to participate in certain investments made by other funds managed by the Adviser.

 

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Our incentive fee may induce the Adviser to make certain investments, including speculative investments.

The advisory fees payable pursuant to the Advisory Agreement may cause the Adviser to invest in high-risk investments or take other risks. In addition to its management fee, the Adviser is entitled under the Advisory Agreement to receive incentive compensation based in part upon our achievement of specified levels of income. In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on net income may lead the Adviser to place undue emphasis on the maximization of net income at the expense of other criteria, such as preservation of capital, maintaining sufficient liquidity, or management of credit risk or market risk, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our investment portfolio.

We may be obligated to pay the Adviser incentive compensation even if we incur a loss.

The Advisory Agreement entitles the Adviser to incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our investment income for that quarter (before deducting incentive compensation, net operating losses, distribution and shareholder servicing fees and certain other items) above a threshold return for that quarter. When calculating our incentive compensation, our

pre-incentive

fee net investment income excludes realized and unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss on our statement of operations for that quarter. Thus, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

We may be required to pay the Adviser incentive compensation on income accrued, but not yet received in cash.

That part of the incentive fee payable by us that relates to our net investment income is computed and paid on income that may include interest that has been accrued but not yet received in cash, such as debt instruments with PIK interest or OID. If a portfolio company defaults on a loan, it is possible that such accrued interest previously used in the calculation of the incentive fee will become uncollectible. Consequently, we may make incentive fee payments on income accruals that we may not collect in the future and with respect to which we do not have a clawback right against the Adviser.

The valuation process for certain of our portfolio holdings creates a conflict of interest.

A substantial portion of our portfolio investments is expected to be in the form of securities for which market quotations are not readily available. Securities that do not have a readily available current market value are valued by the Adviser as our “valuation designee” under the oversight of the Board of Trustees. The Adviser has adopted policies and procedures for valuing securities and other assets in circumstances where market quotes are not readily available. In the event that market quotes are not readily available, and the security or asset cannot be valued pursuant to one of the valuation methods, the value of the security or asset will be determined in good faith by the Adviser. The participation of the Adviser’s investment professionals in our valuation process, and Mr. Gladstone’s pecuniary interest in the Adviser may result in a conflict of interest.

There is a risk that you may not receive distributions or that distributions may not grow over time.

We intend to distribute at least 90.0% of our investment company taxable income to our shareholders by paying monthly distributions. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or

year-to-year

increases in cash distributions. Furthermore, we expect to retain some or all net realized long-term capital gains by first offsetting them with realized capital losses, and secondly through a deemed distribution to supplement our equity capital and support the growth of our portfolio, although our Board may determine in certain cases to distribute these gains to our shareholders. We cannot assure you that we will achieve investment results or maintain a tax status that will allow or re

qui

re any specified level of cash distributions.

 

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Investing in the Shares may involve an above average degree of risk.

The investments we intend to make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies may be highly speculative, and therefore, an investment in the Shares may not be suitable for someone with lower risk tolerance.

Distributions to our shareholders may include a return of capital.

We intend to pay monthly distributions based on then-current estimates of taxable income for each fiscal year, which may differ, and in the past have differed, from actual results. Because our distributions are based on estimates of taxable income that may differ from actual results, future distributions payable to our stockholders may also include a return of capital. Moreover, to the extent that we distribute amounts that exceed our current and accumulated earnings and profits, these distributions constitute a return of capital to the extent of the common shareholder’s adjusted tax basis in its Shares. A return of capital represents a return of a shareholder’s original investment in Shares and should not be confused with a distribution from earnings and profits. Although return of capital distributions may not be taxable, such distributions may increase an investor’s tax liability for capital gains upon the sale of its Shares by reducing the investor’s tax basis in its Shares. Such returns of capital reduce our asset base and also adversely impact our ability to raise debt capital as a result of the leverage restrictions under the 1940 Act, which could have material adverse impact on our ability to make new investments.

Public health threats may adversely impact the businesses in which we invest and affect our business, operating results and financial condition.

Public health threats, such as pandemics, may disrupt the operations of the businesses in which we invest. Such threats can create economic and political uncertainties and can contribute to global economic instability. In the event of a future public health threat, our portfolio companies may face limitations on their business activities for an unknown period of time, including shutdowns that may be requested or mandated by governmental authorities, or that they may experience disruptions in their supply chains or decreased consumer demand. Certain of our portfolio companies may experience increases in health and safety expenses, payroll costs and other operating expenses in response to public health threats. These adverse economic impacts may decrease the value of the collateral securing our loans in such portfolio companies, as well as the value of our equity investments. In addition, these adverse impacts could cause certain of our portfolio companies to have difficulty meeting their debt service requirements, which in turn could lead to an increase in defaults, and/or could diminish the ability of certain of our portfolio companies to engage in liquidity events. These negative impacts on our portfolio companies and their performance may reduce the interest income we receive and/or increase realized and unrealized losses related to our investments, which may, in turn, adversely impact our business, financial condition or results of operations.

We are subject to restrictions that may discourage a change of control.

The Declaration of Trust includes provisions that could limit the ability of other entities or persons to acquire control of us or to convert us to

open-end

status. The Trustees are elected for indefinite terms and do not stand for reelection on a regular basis, although they may stand for reelection in connection with the election of another Trustee. A Trustee may be removed from office without cause only by a vote of

two-thirds

of the remaining Trustees or by a vote of the holders of at least

two-thirds

of Shares. These voting thresholds are not required under Delaware or federal law. The anti-takeover provisions in the Declaration of Trust promote stability in our governance and limit the risk that we will be subject to changes in control, operational changes or other changes that may not be in the best interests of shareholders. However, these anti-takeover provisions may also inhibit certain changes of control that could benefit shareholders, such as by leading to improvements in our operations, by leading to increased returns of capital to shareholders or through other means. The Declaration of Trust, including the anti-takeover provisions contained therein, was considered and ratified by the Board. See “

Anti-Takeover and Other Provisions in the Declaration of Trust

.”

 

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MANAGEMENT OF THE FUND

Trustees and Officers

Pursuant to the Declaration of Trust and our

By-laws

(the

“By-laws”),

the Board oversees the management of our business and affairs. The Board appoints officers who are responsible for our

day-to-day

operations and who execute policies authorized by the Board. The Board consists of eight Trustees, two of whom are considered to be “interested persons” (as defined in the 1940 Act) of us. We refer to the Trustee who are such “interested persons” as “Interested Trustees” and the Trustee who are not “interested persons” as “Independent Trustees. The Trustees are subject to removal or replacement in accordance with Delaware law and the Declaration of Trust. The SAI provides additional information about the Trustees.

Investment Adviser

Our investment adviser is Gladstone Management Corporation, an investment adviser registered with the SEC and located at 1521 Westbranch Drive, Suite 100, McLean, Virginia 22102. The Adviser was founded in 2002 and had approximately $4.15 billion in total assets under management as of June 30, 2024. The Adviser is a dividend-oriented, diversified alternative and private markets fund manager offering yield opportunities to institutional and retail investors. $8.1 billion has been deployed by funds managed by the Adviser since inception. Subject to the supervision of the Board, the Adviser is responsible for managing our investment activities and our business affairs. In addition to serving as our investment adviser, the Adviser provides management and advisory services to Gladstone Capital, a business development company, Gladstone Investment, a business development company, Gladstone Commercial Corporation (“Gladstone Commercial”), a REIT, and Gladstone Land Corporation (“Gladstone Land”), a REIT.

Advisory Fees

Pursuant to our Advisory Agreement, we will pay the Adviser certain fees as compensation for its services, consisting of a management fee and an incentive fee, each as described below.

The management fee is calculated at an annual rate of 1.25%, payable monthly in arrears, accrued daily based upon our average daily net assets. “Net assets” means the total value of all our assets, less an amount equal to all of our accrued debts, liabilities and obligations and before taking into account any management or incentive fees payable or contractually due but not payable during the period. These calculations will be appropriately prorated for any period of less than a month. Because we are newly organized, no fees were paid to the Adviser pursuant to the Advisory Agreement in any prior fiscal year.

The incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% of our net assets at the end of the immediately preceding calendar quarter (the “Hurdle Rate”), subject to a “catch-up” feature. The incentive fee is payable quarterly to the Adviser and is computed as follows:

 

•

No incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the Hurdle Rate;

 

•

100.0% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the Hurdle Rate but is less than 2.0588% of our net assets in any calendar quarter; and

 

•

15.0% of the amount of our pre-incentive fee net investment income, if any, that exceeds 2.0588% of our net assets in any calendar quarter.

 

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For this

purpose, “pre-incentive

fee net investment income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, consulting fees that we receive from portfolio companies) accrued by us during the calendar quarter, minus our operating expenses for the quarter (including the management fee (less any rebate of other fees received by the Adviser), expenses payable under the Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred shares, but excluding the incentive fee and any distribution and/or shareholder servicing fees).

Pre-incentive

fee net investment income includes, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and

zero-coupon

securities), accrued income that we have not yet received in cash.

Pre-incentive fee

net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

The following is a graphical representation of the calculation of the incentive fee:

Pre-Incentive Fee Net Investment Income

(expressed as a percentage of the Fund’s net assets)

 

Percentage of pre-incentive fee net investment income allocated to the incentive fee

Example: Incentive Fee for Each Calendar Quarter

Scenario 1

Assumptions

Investment income (including interest, dividends, fees, etc.) = 1.50%

Hurdle rate

(1)

 = 1.75%

Base management fee

(2)

= 0.3125%

Other expenses (legal, accounting, custodian, transfer agent, etc.)

(3)

= 0.2%

Pre-incentive fee net investment income (investment income – (base management fee + other expenses)) = 0.9875%

Pre-incentive fee net investment income does not exceed the Hurdle rate; therefore there is no incentive fee payable.

Scenario 2

Assumptions

Investment income (including interest, dividends, fees, etc.) = 2.50%

Hurdle rate

(1)

 = 1.75%

Base management fee

(2)

= 0.3125%

 

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Other expenses (legal, accounting, custodian, transfer agent, etc.)

(3)

= 0.2%

Pre-incentive fee net investment income (investment income – (base management fee + other expenses)) = 1.9875%

 

Incentive fee		= 100% × pre-incentive fee net investment income (subject to “catch-up”) (4)
		= 100% × (1.9875% – 1.75%)
		= 0.2375%

Pre-incentive fee net investment income exceeds the Hurdle Rate, but does not fully satisfy the “catch-up” provision, therefore the subordinated incentive fee on income is 0.2375%.

Scenario 3

Assumptions

Investment income (including interest, dividends, fees, etc.) = 3.50%

Hurdle Rate

(1)

 = 1.75%

Base management fee

(2)

= 0.3125%

Other expenses (legal, accounting, custodian, transfer agent, etc.)

(3)

= 0.2%

Pre-incentive fee net investment income (investment income – (base management fee + other expenses)) = 2.9875%

Catch up = 100% × pre-incentive fee net investment income (subject to “catch-up”)

(4)

Incentive fee = 100% × “catch-up” + (15.0% × (pre-incentive fee net investment income – 2.0588%))

 

Catch up =		2.0588% – 1.75%
=		0.3088%

 

Incentive fee		=(100% × 0.3088%) + (15.0% × (2.9875% – 2.0588%))
		= 0.3088% + (15% × 0.9287%)
		= 0.3088% + 0.139305% = 0.448105%

 

(1)	Represents 7.0% annualized Hurdle Rate.

(2)	Represents 1.25% annualized base management fee on average total assets.

(3)	Excludes organization and offering expenses.

(4)	The “catch-up” provision is intended to provide our Adviser with an incentive fee of 15.0% on all pre-incentive fee net investment income when our net investment income exceeds 2.0588% in any calendar quarter.

*	The returns shown are for illustrative purposes only. There is no guarantee that positive returns will be realized and actual returns may vary from those shown in the examples above.

All investment professionals of the Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services under the Advisory Agreement, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by the Adviser. We will bear all other costs and expenses of our operations and transactions, including (without limitation) those relating to: organization and offering; calculating our net asset value (including the cost and expenses of any independent valuation firm); expenses incurred by the Adviser payable to third parties, including agents, consultants or other advisors (such as independent valuation firms, accountants and legal counsel), in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies; interest payable on debt, if any, incurred to finance our investments; any direct expenses of issue, sale, underwriting, distribution, redemption or repurchase of our

 

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securities; investment advisory and management fees; administration fees, if any, payable under the Administration Agreement between us and the Administrator; fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments; transfer agent and custodial fees; federal and state registration fees; federal, state and local taxes; Independent Trustees’ fees and expenses; costs of preparing and filing prospectuses, statements of additional information, reports or other documents required by the SEC; costs of any reports, proxy statements or other notices to securityholders, including printing costs; our allocable portion of the fidelity bond, trustees and officers/errors and omissions liability insurance, and any other insurance premiums; direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and all other expenses incurred by us or the Administrator in connection with administering our business, including payments under the Administration Agreement between us and the Administrator based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief compliance officer, chief financial officer, controller, general counsel, chief valuation officer and other non-investment advisory personnel and their respective staffs. Transfer agent expenses, expenses of preparation, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular Share class will be allocated to such class.

A discussion regarding the considerations of the Board for approving the Advisory Agreement will be included in our annual report to shareholders for the fiscal period ending March 31, 2025.

New Advisory Agreement

We and our initial shareholder have approved a new investment advisory agreement between us and the Adviser (the “New Advisory Agreement”). The New Advisory Agreement is the result of an anticipated change in control of the Adviser. From inception, the Adviser has been 100% indirectly owned and controlled by David Gladstone. David Gladstone owns 100% of the voting and economic interests of The Gladstone Companies, Ltd., which in turn owns 100% of the voting and economic interests of The Gladstone Companies, Inc. (“TGC”), which in turn owned 100% of the voting and economic interests of the Adviser. On January 24, 2024, the Adviser entered into a voting trust agreement (the “Voting Trust Agreement”), among David Gladstone, Lorna Gladstone, Laura Gladstone, Kent Gladstone and Jessica Martin, each as a trustee and collectively, as the board of trustees of the voting trust (the “Voting Trust Board”), the Adviser and certain stockholders of the Adviser, pursuant to which David Gladstone deposited all of his indirect interests in the Adviser, which represented 100% of the voting and economic interests thereof, with the voting trust.

Pursuant to the Voting Trust Agreement, prior to its Effective Date (as defined below) David Gladstone has, in his sole discretion, the full, exclusive and unqualified right and power to vote in person or by proxy all of the shares of common stock of the Adviser deposited with the voting trust at all meetings of the stockholders of the Adviser in respect of any and all matters on which the stockholders of the Adviser are entitled to vote under the Adviser’s certificate of incorporation or applicable law, to give consents in lieu of voting such shares of common stock of the Adviser at a meeting of the stockholders of the Adviser in respect of any and all matters on which stockholders of the Adviser are entitled to vote under its certificate of incorporation or applicable law, to enter into voting agreements, waive notice of any meeting stockholders of the Adviser in respect of such shares of common stock of the Adviser and to grant proxies with respect to all such shares of common stock of the Adviser with respect to any lawful corporate action (collectively, the “Voting Powers”).

Commencing on the Effective Date, the Voting Trust Board shall have the full, exclusive and unqualified right and power to exercise the Voting Powers. Each member of the Voting Trust Board shall hold 20% of the voting power of the Voting Trust Board as of the Effective Date. The “Effective Date” shall occur on the earliest of (i) the death of David Gladstone, (ii) David Gladstone’s election (in his sole discretion) and (iii) January 24, 2025. The members of senior management of the Adviser prior to the entry into the Voting Trust Agreement continue to manage the

day-to-day

aspects of the Adviser.

 

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There are no changes to the terms of the Advisory Agreement currently in effect (the “Original Advisory Agreement”) in the New Advisory Agreement, including the fee structure and services to be provided, other than the date and term of the New Advisory Agreement as compared to the Original Advisory Agreement. In addition to there being no changes to the fee structure, no other fees or expenses currently paid by us will change as a result of entry into the New Advisory Agreement. There will be no changes to our principal investment objective, investment strategies, fundamental investment restrictions or principal risks as a result of entry into the Voting Trust Agreement or New Advisory Agreement.

Expense Support and Conditional Reimbursement Agreement

We and the Adviser have entered into the Expense Support and Conditional Reimbursement Agreement under which the Adviser has agreed contractually for a

one-year

period to reimburse our initial organizational and offering costs, as well as the operating expenses of each Class commencing with the first quarter following the date of this prospectus, to the extent that aggregate distributions made to our shareholders of a Class during the applicable quarter exceed Available Operating Funds (as defined below). Additionally, during the term of the Expense Support and Conditional Reimbursement Agreement, the Adviser may reimburse our or any Class’s operating expenses to the extent that it otherwise deems appropriate in order to ensure that we or such Class bear an appropriate level of expenses (each such payment, an “Expense Payment”). “Available Operating Funds” means the sum of (i) our net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses); (ii) our net capital gains (including the excess of net long-term capital gains over net short-term capital losses); and (iii) dividends and other distributions paid to or otherwise earned by us on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

In consideration of the Adviser’s agreement to reimburse our operating expenses, we have agreed to repay the Adviser in the amount of any of our expenses reimbursed, subject to the limitation that a reimbursement (an “Adviser Reimbursement”) will be made only if and to the extent that (i) it is payable not more than three years from the date on which the applicable Expense Payment was made by the Adviser; (ii) the Adviser Reimbursement does not cause Other Fund Operating Expenses (as defined below) attributable to Shares of such Class (on an annualized basis and net of any reimbursements received by us with respect to such Class during such fiscal year) during the applicable quarter to exceed the percentage of average net assets attributable to Shares of such Class represented by Other Fund Operating Expenses (on an annualized basis) during the fiscal quarter in which the applicable Expense Payment from the Adviser was made; (iii) the Adviser Reimbursement does not cause the Fund to breach any other expense cap in place at the time of such Adviser Reimbursement; and (iv) the distributions per share declared by us for the applicable Class at the time of the applicable Expense Payment are less than the effective rate of distributions per share for such Class of Shares at the time the Adviser Reimbursement would be paid. The Expense Support and Conditional Reimbursement Agreement will remain in effect at least one year from the date of this prospectus, unless and until the Board approves its modification or termination. The Expense Support and Conditional Reimbursement Agreement may be terminated only by the Board on notice to the Adviser.

Other Fund Operating Expenses is defined as our total Operating Expenses (as defined below), excluding the management and incentive fees payable to the Adviser, any offering expenses, financing fees and costs, interest expense, distribution fees, shareholder servicing fees and extraordinary expenses. “Operating Expenses” means all operating costs and expenses we incur, as determined in accordance with generally accepted accounting principles for investment companies.

Administrative Services

We entered into the Administration Agreement with the Administrator. Pursuant to Administration Agreement, the Administrator performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation, including providing us with office facilities, equipment, clerical,

 

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bookkeeping and record keeping services at such facilities and such other services as the Administrator, subject to review by our Board of Trustees, from time to time determines to be necessary or useful to perform its obligations under the Administration Agreement.

We reimburse the Administrator pursuant to the Administration Agreement for our allocable portion of the Administrator’s expenses incurred while performing services to us, which are primarily rent and the cost of the Administrator’s employees, including our chief compliance officer, chief financial officer, controller, general counsel, chief valuation officer, and other non-investment advisory personnel and their respective staffs. Our allocable portion of the Administrator’s expenses is generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter that the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator.

ALPS Fund Services, Inc. and certain of its affiliates provide sub-administrative, fund accounting and other services to us for a monthly administration fee based on the greater of an annual minimum fee or an asset-based fee, which scales downward based upon average daily net assets.

Portfolio Managers

The Adviser takes a team approach to portfolio management; however, the following persons, whom we refer to collectively as the Portfolio Managers, are primarily responsible for the

day-to-day

management of our portfolio: David Gladstone, John Sateri, Terry Lee Brubaker and Laura Gladstone. In addition, the Portfolio Managers have access to the other investment professionals at the Adviser to assist in sourcing and evaluating of our investments.

Biographical information for the Portfolio Managers is set forth below.

 

Name		Since		Recent Professional Experience
David Gladstone		Inception		Founder, Chief Executive Officer and Chairman of the Board of Gladstone Investment since its inception in 2005, of Gladstone Capital since its inception in 2001, of Gladstone Commercial since its inception in 2003 and of Gladstone Land since its inception in 1997. Founder, Chief Executive Officer and Chairman of the Board of the Adviser. Since 2010, Mr. Gladstone also serves on the board of managers of the Distributor. Chief Executive Officer, President, Chief Investment Officer and Director of Gladstone Acquisition from January 2021 until October 2022.
John Sateri		Inception		Managing Director of the Adviser since 2007. Investment Committee member of the Adviser for Gladstone Land, Gladstone Investment, Gladstone Capital and Gladstone Commercial since 2021.
Terry Lee Brubaker		Inception		Chief Operating Officer of Gladstone Land, Gladstone Investment, Gladstone Capital and Gladstone Commercial since 2007, 2005, 2004 and 2003, respectively. Vice Chairman, Chief Operating Officer and a director of our Adviser since 2006.
Laura Gladstone		Inception		Managing Director, Private Finance, of the Adviser since 2001.

As discussed above, the Portfolio Managers are all officers or directors, or both, of the Adviser, and Messrs. Gladstone and Brubaker are managers of the Administrator. The Adviser and the Administrator provide

 

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investment advisory and administration services, respectively, to the other pooled investment vehicles that are managed by the Adviser. As such, our Portfolio Managers also are primarily responsible

for the day-to-day management of

the portfolios of certain other pooled investment vehicles. As of this prospectus, Messrs. Gladstone, Brubaker and David Dullum (the president of Gladstone Investment and an executive managing director of the Adviser) are primarily responsible for the

day-to-day

management of the portfolio of Gladstone Investment, a business development company; Messrs. Gladstone, Brubaker and Robert Marcotte (the president of Gladstone Capital and an executive managing director of the Adviser) are primarily responsible for the

day-to-day

management of the portfolio of Gladstone Capital, a business development company; Messrs. Gladstone, Brubaker and Arthur Cooper (the president of Gladstone Commercial and an executive managing director of the Adviser) are primarily responsible

for the day-to-day management of

Gladstone Commercial, a REIT; and Messrs. Gladstone and Brubaker are primarily responsible for

the day-to-day management

of Gladstone Land, a REIT.

The SAI provides additional information about the portfolio managers’ compensation, other accounts managed by the portfolio managers, and ownership of Shares by the portfolio managers.

Control Persons and Principal Holders of Securities

Shareholders beneficially owning more than 25% of outstanding Shares may be in control and may be able to affect the outcome of certain matters presented for a shareholder vote. TGC provided our initial capital by investing $100,000 in Class I Shares and thus will own 100% of outstanding Shares until we commence selling Shares to the public. For so long as TGC has a greater than 25% interest in our Shares, it may be deemed to be a “control person” of us for purposes of the 1940 Act. However, it is anticipated that TGC will no longer be a control person when we commence operations and Shares are sold to the public.

Additional Information

The Trustees are generally responsible for overseeing our management. The Trustees authorize us to enter into service agreements with the Adviser, the Administrator, the Distributor, and other service providers in order to provide, and in some cases authorize service providers to procure through other parties, necessary or desirable services on our behalf. Shareholders are not intended to be third-party beneficiaries of such service agreements.

Neither this prospectus, the SAI, any contracts filed as exhibits to the registration statement of which this prospectus forms a part, nor any other communications or disclosure documents from us or on our behalf creates a contract between a shareholder and us, our service providers, and/or the Trustees or our officers, other than pursuant to any rights under federal or state law. The Trustees may amend this prospectus, the SAI, and any other contracts to which we are a party, and interpret the investment objective, policies, restrictions and contractual provisions applicable to us without shareholder input or approval, except in circumstances in which shareholder approval is specifically required by law (such as changes to fundamental investment policies) or where a shareholder approval requirement is specifically disclosed in our prospectus or SAI.

 

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PLAN OF DISTRIBUTION

Gladstone Securities LLC, the Distributor, is the principal underwriter and distributor of the Shares pursuant to a distribution agreement (the “Distribution Agreement”) by and between us and the Distributor. The Distributor, which is 100% indirectly owned and controlled by David Gladstone and an affiliate of the Adviser, is located at 1521 Westbranch Drive, Suite 100, McLean, Virginia 22102, is a broker-dealer registered with the SEC and is a member of FINRA. The Distributor acts as the distributor of Shares on a best-efforts basis pursuant to the terms of the Distribution Agreement. The Distributor is not obligated to sell any specific amount of Shares.

Shares will be continuously offered through the Distributor and/or certain financial intermediaries that have agreements with the Distributor. The Shares will be offered at NAV per share calculated each regular business day, plus any applicable sales load. Please see “

Net Asset Value

” below.

We and the Distributor will have the sole right to accept orders to purchase Shares and reserve the right to reject any order in whole or in part.

No market currently exists for the Shares. We will not list the Shares for trading on any securities exchange. There is currently no secondary market for the Shares and we do not anticipate that a secondary market will develop for the Shares. Neither the Adviser nor the Distributor intends to make a market in the Shares.

Pursuant to the Distribution Agreement, we have agreed to indemnify the Distributor and certain of the Distributor’s affiliates against certain liabilities, including certain liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”). To the extent consistent with applicable law, the Distributor has agreed to indemnify us, our officers and each Trustee against certain liabilities under the Securities Act and in connection with the services rendered to us.

Share Classes

We have received exemptive relief from the SEC that permits us to issue multiple classes of Shares and to, among other things, impose asset-based distribution fees and early-withdrawal fees. As a condition of the exemptive relief, have undertaken to comply with the terms of Rule 18f-3. We have adopted a Multi-Class Plan pursuant to Rule 18f-3 under the 1940 Act. Under the Multi-Class Plan, Shares of each class represent an equal pro rata interest in us and, generally, have identical voting, dividend, liquidation, and other rights, preferences, powers, restrictions, limitations, qualifications and terms and conditions, except that: (a) each class has a different designation; (b) each class may have different purchase minimums and eligible investors; (c) each class of Shares bears any class-specific fees and expenses; and (d) each class shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, and shall have exclusive voting rights on any matter submitted to shareholders that relates solely to that class.

We are currently offering Class A Shares, Class C Shares, Class I Shares and Class U Shares and may offer additional classes of Shares in the future. Each share class represents an investment in the same portfolio of investments, but each class has its own expense structure and arrangements for shareholder services or distribution, which allows you to choose the class that best fits your situation and eligibility requirements.

 

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Class  I Shares . Class I Shares will be sold at the prevailing NAV per Class I Share and are not subject to any upfront sales charge. Class I Shares are not subject to a distribution fee, shareholder servicing fees, or contingent deferred sales charge. Class I Shares may only be available through certain financial intermediaries. Because the Class I Shares are sold at the prevailing NAV per Class I Share without an upfront sales charge, the entire amount of your purchase is available for investment immediately. However, for all accounts, Class I Shares require a minimum investment of $250,000.

 

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•

Class  A Shares . Class A Shares will be sold at the prevailing NAV per Class A Share plus a 5.75% sales load, which includes up to 5.00% of the price per Share for sales commissions and up to 0.75% of the price per Share for dealer manager fees. The full amount of the sales charges may be reallowed to brokers or dealers participating in the offering. You may be able to buy Class A Shares without a sales charge (i.e., “load-waived”) when you are: (i) reinvesting dividends or distributions; (ii) a current or former Trustee; (iii) an employee (including the employee’s spouse, domestic partner, children, grandchildren, parents, grandparents, siblings or any dependent of the employee, as defined in Section 152 of the Code) of the Adviser or its affiliates or of a broker-dealer authorized to sell the Shares; (iv) purchasing shares through the Adviser; (v) purchasing Shares through a financial services firm that has a special arrangement with us; or (vi) participating in an investment advisory or agency commission program under which you pay a fee to an investment adviser or other firm for portfolio management or brokerage services. Class A Shares require a minimum investment of $5,000 and are subject to a quarterly shareholder servicing fee at an annual rate of up to 0.25% of our average daily net assets attributable to Class A Shares.

 

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Class  C Shares. Class C Shares will be sold at the prevailing NAV per Class C Share and are not subject to any upfront sales charge. Class C Shares redeemed during the first 365 days after purchase may be subject to a contingent deferred sales charge of 1.00% of the original purchase price. Class C Shares require a minimum investment of $5,000 and are subject to a quarterly shareholder servicing fee at an annual rate of up to 0.25% of our average daily net assets attributable to Class C Shares and a distribution fee which will accrue at an annual rate of up to 0.75% of our average daily net assets attributable to Class C Shares.

 

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Class  U Shares. Class U Shares will be sold at the prevailing NAV per Class U Share and are not subject to any upfront sales charge. Class U Shares are not subject to a shareholder servicing fee or contingent deferred sales charge. Class U shares are subject to a distribution fee which will accrue at an annual rate of up to 0.75% of our average daily net assets attributable to Class U Shares. Class U Shares may only be available through certain financial intermediaries. Because the Class U Shares are sold at the prevailing NAV per Class U Share without an upfront sales charge, the entire amount of your purchase is available for investment immediately. However, for all accounts, Class U Shares require a minimum investment of $5,000. While Class U Shares do not impose a front-end sales charge, if you purchase Class U Shares through certain financial firms, they may directly charge you transaction or other fees in such amount as they may determine. Please consult your financial firm for additional information .

We reserve the right to waive the initial investment minimum for any class of Shares. There is no minimum subsequent investment amount for any class of Shares.

Shareholder Servicing Fee

We will adopt a “Shareholder Services Plan” with respect to the Class A Shares and Class C Shares under which we may compensate financial industry professionals for providing ongoing services in respect of clients with whom they have distributed Shares. Such services may include electronic processing of client orders, electronic fund transfers between clients and us, account reconciliations with our transfer agent, facilitation of electronic delivery to clients of fund documentation, monitoring client accounts for

back-up

withholding and any other special tax reporting obligations, maintenance of books and records with respect to the foregoing, and such other information and liaison services as we or the Adviser may reasonably request.

Under the Shareholder Services Plan, we, with respect to Class A Shares and Class C Shares, may incur expenses on an annual basis equal up to 0.25% of average net assets attributable to Class A Shares and Class C Shares, respectively.

 

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Distribution Plans

We have adopted a “Distribution Plan” for the Class C Shares and Class U Shares. The Distribution Plan will operate in a manner consistent with Rule

12b-1

under the 1940 Act, which regulates the manner in which an

open-end

investment company may directly or indirectly bear the expenses of distributing its shares. Although we are not an

open-end

investment company, we have undertaken to comply with the terms of Rule

12b-1

as a condition of the exemptive order discussed above. The Distribution Plan permits us to compensate the Distributor for providing or procuring through financial firms, distribution, administrative, recordkeeping, shareholder and/or related services with respect to the Class C Shares or Class U Shares. Most or all of the distribution fees are paid to financial firms through which shareholders may purchase or hold such Shares. Because these fees are paid out of the Class C Shares’ assets or Class U Shares’ assets, respectively, on an ongoing basis, over time they will increase the cost of an investment in Class C Shares and Class U Shares, respectively, and may cost you more than other types of sales charge.

Under the Distribution Plan, we will pay the Distributor a distribution fee at an annual rate of up to 0.75% of the average net assets attributable to Class C Shares and Class U Shares.

Purchasing Shares

Eligible investors may purchase Shares through their broker-dealer or other financial firm. Shares may be offered through certain financial firms that charge their customers transaction or other fees with respect to their customers’ investments in the Shares. Your broker-dealer or other financial firm may establish different minimum investment requirements than we do and may also independently charge you transaction or other fees and additional amounts (which may vary) in return for its services, which will reduce your return. Shares you purchase through your broker-dealer or other financial firm will normally be held in your account with that firm. If you purchase Shares through a broker-dealer or other financial firm, instructions for buying, selling, exchanging or transferring Shares must be submitted by your financial firm or broker-dealer on your behalf.

GLADSTONE ALTERNATIVE INCOME FUND

Common Shares

Class I Shares

Class A Shares

Class C Shares

Class U Shares

Statement of Additional Information

Gladstone Alternative Income Fund is a newly organized Delaware statutory trust that is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). We are a non-diversified, closed-end management investment company that is operated as an “interval fund.”

This Statement of Additional Information (this “Statement of Additional Information”) is not a prospectus and is authorized for distribution to prospective investors only if preceded or accompanied by the prospectus. This Statement of Additional Information should be read in conjunction with the prospectus dated November 6, 2024, a copy of which may be obtained upon request and without charge by writing to us at Westbranch Drive, Suite 100, McLean, Virginia 22102, or by calling toll-free 1-833-588-5345 or by accessing our website at www.gladstoneintervalfund.com. The information on the website is not incorporated by reference into this Statement of Additional Information and investors should not consider it a part of this Statement of Additional Information. The prospectus, and other information about us, is also available on the U.S. Securities and Exchange Commission’s (the “SEC”) website at http://www.sec.gov. The address of the SEC’s website is provided solely for the information of prospective investors and is not intended to be an active link.

Capitalized terms used but not defined in this Statement of Additional Information have the meanings ascribed to them in the prospectus.

TABLE OF CONTENTS

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THE FUND

We are a newly organized, a non-diversified, closed-end management investment company that continuously offers our Shares and are operated as an “interval fund.” We were formed on May 29, 2024 as a Delaware statutory trust. We currently offer Class A Shares, Class C Shares, Class I Shares and Class U Shares and may offer additional classes of Shares in the future. We have received exemptive relief from the SEC that permits us to issue multiple classes of Shares and to, among other things, impose asset-based distribution fees and early-withdrawal fees.

INVESTMENT OBJECTIVE, POLICIES, AND RISKS

This section provides further information on certain types of investments and investment techniques that we may use and some of the risks associated with such investments and techniques. The composition of our portfolio and the investments and techniques that we use in seeking our investment objective and employing our investment strategies will vary over time. We may use the investments and techniques described below at all times, at some times, or not at all.

144A Securities. We also may invest in illiquid securities that are governed by Rule 144A under the Securities Act of 1933 (“144A Securities”). These securities may be resold under certain circumstances to other institutional buyers. Specifically, 144A Securities may be resold to a qualified institutional buyer (“QIB”) without registration and without regard to whether the seller originally purchased the security for investment. Investing in 144A Securities may decrease the liquidity of our portfolio to the extent that QIBs become, for a time, uninterested in purchasing these securities. Because of the resale restrictions in 144A Securities, there is a greater risk that they will become illiquid than securities issued in offerings registered with the SEC.

Asset-Backed Securities. We may invest in asset-backed securities (unrelated to commercial real estate loans). Asset-backed securities are securities whose principal and interest payments are collateralized by pools of assets such as auto loans, credit card receivables, leases, installment contracts, and personal property. In addition to prepayment and extension risks, these securities present credit risks that are not inherent in mortgage-related securities because asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable to mortgage assets. Credit card receivables generally are unsecured and the debtors on such receivables are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Automobile receivables generally are secured, but by automobiles rather than residential real property. Most issuers of automobile receivables permit the loan servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest senior to that of the holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile receivables may not have a proper security interest in the underlying automobiles. Therefore, if the issuer of an asset-backed security defaults on its payment obligations, there is the possibility that, in some cases, we will be unable to possess and sell the underlying collateral and that our recoveries on repossessed collateral may not be available to support payments on these securities.

Bank Obligations. Bank obligations in which we may invest include certificates of deposit, bankers’ acceptances and fixed time deposits. Bankers’ acceptances are credit instruments evidencing the obligation of a bank to pay a draft that has been drawn on it by a customer. These instruments reflect the obligation of both the bank and the drawer to pay the face amount of the instrument upon maturity. Certificates of deposit are negotiable certificates evidencing the indebtedness of a commercial bank to repay funds deposited with it for a definite period of time (usually from 14 days to one year) at a stated or variable interest rate. Variable rate certificates of deposit provide that the interest rate will fluctuate on designated dates based on changes in a designated base rate (such as the composite rate for certificates of deposit established by the Federal Reserve Bank of New York). Time deposits are bank deposits for fixed periods of time. Fixed time deposits may be

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withdrawn on demand by the investor but may be subject to early withdrawal penalties which may vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits.

Bridge Loans. Bridge loans are short-term loan arrangements (typically 12 to 18 months) usually made by a borrower in anticipation of receipt of intermediate-term or long-term permanent financing. Most bridge loans are structured as floating-rate debt with “step-up” provisions under which the interest rate on the bridge loan rises (or “steps up”) the longer the loan remains outstanding. In addition, bridge loans commonly contain a conversion feature that allows the bridge loan investor to convert its interest to senior exchange notes if the loan has not been prepaid in full on or before its maturity date. Bridge loans may be subordinate to other debt and may be secured or undersecured.

Cash Management Practices. We receive cash as a result of investments in the Shares in this offering, from the sale of our investments, and from any income or dividends generated by our portfolio investments and may handle that cash in different ways. We may maintain a cash balance pending investments in other securities, payment of dividends or repurchase consideration, or in other circumstances where our portfolio management team believes additional liquidity is necessary or advisable. To the extent that we maintain a cash balance, that portion of our portfolio will not be exposed to the potential returns (positive or negative) of the market in which we typically invest. We may invest our cash balance in short-term investments, such as repurchase agreements. These cash management practices are ancillary to, and not part of, our principal investment strategies. As such, we do not intend to invest substantially in this manner under normal circumstances.

CFTC Regulation. The CFTC has adopted regulations that subject registered investment companies and their investment advisers to regulation by the CFTC if the registered investment company invests more than a prescribed level of its liquidation value in futures, options on futures or commodities, swaps, or other financial instruments regulated under the Commodity Exchange Act (“CEA”) and the rules thereunder (“commodity interests”), or if a fund markets itself as providing investment exposure to such instruments. The Adviser has filed a claim of exclusion from the definition of the term “commodity pool operator” with respect to us and therefore, the Adviser is not subject to registration or regulation as a pool operator under the CEA. To remain eligible for this exclusion, we must comply with certain limitations, including limits on our ability to use any commodity interests and limits on the manner in which we hold out our use of such commodity interests. These limitations may restrict our ability to pursue our investment objective and strategies, increase the costs of implementing its strategies, result in higher expenses for us, and/or adversely affect our total return.

Collateralized Loan Obligations and Other Collateralized Obligations. A collateralized loan obligation (“CLO”) is a type of structured product that issues securities collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, second lien loans, and subordinate corporate loans. The underlying loans may be rated below investment grade by a rating agency. A CLO is not merely a conduit to a portfolio of loans; it is a pooled investment vehicle that may be actively managed by the collateral manager. Therefore, an investment in a CLO can be viewed as investing in (or through) another investment adviser and is subject to the layering of fees associated with such an investment.

The cash flows from a CLO are divided into two or more classes called “tranches,” each having a different risk-reward structure in terms of the right (or priority) to receive interest payments from the CLO. The risks of an investment in a CLO depend largely on the type of the collateral held in the CLO portfolio and the tranche of securities in which we invest. Generally, the risks of investing in a CLO can be summarized as a combination of economic risks of the underlying loans combined with the risks associated with the CLO structure governing the priority of payments. In addition to the general risks associated with fixed income securities and structured products discussed elsewhere in this Statement of Additional Information and in the prospectus, CLOs carry additional risks including but not limited to the following:

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Other structured products in which we may invest include collateralized debt obligations (“CDOs”), collateralized bond obligations (“CBOs”), collateralized fund obligations (“CFOs”) and collateralized mortgage obligations (“CMOs”). A CDO is a security backed by pools of corporate or sovereign bonds, bank loans to corporations, or a combination of bonds and loans, many of which may be unsecured. A CBO is an obligation of a trust or other special purpose vehicle backed by a pool of fixed income securities, which are often a diversified pool of securities that are high risk and below investment grade. These securities are collateralized by many different types of fixed income securities, including high yield debt, trust preferred securities, and emerging market debt, which are subject to varying degrees of credit and counterparty risk. A CFO is a security that is collateralized by private equity or hedge fund assets. A CMO is a security that is collateralized by whole loan mortgages or mortgage pass-through securities. CMOs, CDOs, CFOs and CBOs are structured similarly to CLOs and carry additional risks that include, but are not limited to, the risks of investing in CLOs described above and the risks associated with the pool of underlying securities.

Contingent Capital Securities. Contingent capital securities (sometimes referred to as “CoCos”), are debt or preferred securities with loss absorption characteristics built into the terms of the security, for example, an automatic write-down of principal or a mandatory conversion into common stock of the issuer under certain circumstances, such as the issuer’s capital ratio falling below a certain level. Banks and other financial companies are large issuers of CoCos. In one version of a CoCo, the security has loss absorption characteristics whereby the liquidation value of the security may be adjusted downward to below the original par value (even to zero) under certain circumstances. This may occur, for instance, in the event that business losses have eroded capital to a substantial extent. The write down of the par value would occur automatically and would not entitle the holders to seek bankruptcy of the company. In addition, an automatic write-down could result in a reduced income rate if the dividend or interest payment is based on the security’s par value. Such securities may, but are not required to, provide for circumstances under which the liquidation value may be adjusted back up to par, such as an improvement in capitalization and/or earnings. Another version of a CoCo provides for mandatory

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conversion of the security into common stock of the issuer under certain circumstances. The mandatory conversion might relate, for instance, to maintenance of a capital minimum, whereby falling below the minimum would trigger automatic conversion. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero, and conversion would deepen the subordination of the investor, hence worsening our standing in a bankruptcy. In addition, some such instruments also provide for an automatic write-down if the price of the common stock is below the conversion price on the conversion date. An automatic write-down or conversion event is typically triggered by a reduction in the capital level of the issuer, but may also be triggered by regulatory actions (e.g., a change in capital requirements) or by other factors. Because trigger events are not consistently defined among contingent convertible securities, this risk is greater for contingent convertible securities that are issued by banks with capital ratios close to the level specified in the trigger event.

In addition, coupon payments on contingent convertible securities are discretionary and may be cancelled by the issuer at any point, for any reason, and for any length of time. The discretionary cancellation of payments is not an event of default and there are no remedies to require re-instatement of coupon payments or payment of any past missed payments. Coupon payments may also be subject to approval by the issuer’s regulator and may be suspended in the event there are insufficient distributable reserves. Due to uncertainty surrounding coupon payments, contingent convertible securities may be volatile and their price may decline rapidly in the event that coupon payments are suspended. Contingent convertible securities typically are structurally subordinated to traditional convertible bonds in the issuer’s capital structure. In certain scenarios, investors in contingent convertible securities may suffer a loss of capital ahead of equity holders or when equity holders do not.

Convertible Securities. Convertible securities are preferred stock or debt obligations that may be converted into or exchanged for shares of common stock (or cash or other securities) of the same or a different issuer at a stated price or exchange ratio. Convertible securities generally rank senior to common stock in a corporation’s capital structure but usually are subordinated to comparable non-convertible securities. A convertible security entitles the holder to receive a dividend or interest that generally is paid or accrued on the underlying security until the convertible security matures or is redeemed, converted, or exchanged. While convertible securities generally do not participate directly in any dividend increases or decreases of the underlying securities, market prices of convertible securities may be affected by such dividend changes or other changes in the underlying securities. In addition, if the market price of the common stock underlying a convertible security approaches or exceeds the conversion price of the convertible security, the convertible security tends to reflect the market price of the underlying common stock. Alternatively, a convertible security may lose much or all of its value if the value of the underlying common stock falls below the conversion price of the security.

Convertible securities have both equity and fixed income risk characteristics. A significant portion of convertible securities have below investment grade credit ratings and are subject to increased credit and liquidity risks. A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument. If a convertible security held by us is called for redemption, we will be required to convert it into the underlying common stock, sell it to a third party, or permit the issuer to redeem the security. Any of these actions could have an adverse effect on our ability to achieve its investment objective, which, in turn, could result in losses to us.

Synthetic convertible securities are derivative instruments comprising two or more securities whose combined investment characteristics resemble a convertible security. A typical convertible security combines fixed income securities or preferred stock with an equity component, such as a warrant, which offers the potential to own the underlying equity security. The value of a synthetic convertible security may respond differently to market fluctuations than the value of a traditional convertible security in response to the same market fluctuations.

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Credit-Linked Notes. We may invest in Credit-Linked Notes (“CLNs”). CLNs are privately negotiated obligations whose returns are linked to the returns of one or more designated securities or other instruments that are referred to as “reference securities.” A CLN is generally issued by one party, typically a trust or a special purpose vehicle, with investment exposure or risk that is linked to a second party. The CLN’s price or coupon is linked to the performance of the reference security of the second party.

To the extent we invest in CLN, we have the right to receive periodic interest payments from the CLN issuer at an agreed upon interest rate and, if there has been no default or other applicable declines in credit quality, a return of principal at the maturity date. The cash flows are dependent on specified credit-related events. Should the second party default or declare bankruptcy, the CLN holder will generally receive an amount equivalent to the recovery rate. We would also be exposed to the credit risk of the CLN issuer up to the full CLN purchase price, and CLNs are often not secured by the reference securities or other collateral. CLNs are also subject to the credit risk of the reference securities. If a reference security defaults or suffers certain other applicable declines in credit quality, we may, instead of receiving repayment of principal, receive the security that has defaulted.

As with most derivative investments, valuation of a CLN may be difficult due to the complexity of the security. The market for CLNs may suddenly become illiquid. The other parties to the transactions may be the only investors with sufficient understanding of the CLN to be interested in bidding for it. Changes in liquidity may result in significant, rapid, and unpredictable changes in CLN prices. In certain cases, a CLN’s market price may not be available or the market may not be active.

Debtor-in-Possession (“DIP”) Loans. We may invest in or extend loans to companies that have filed for protection under Chapter 11 of the United States Bankruptcy Code. These DIP loans are most often working-capital facilities put into place at the outset of a Chapter 11 case to provide the debtor with both immediate cash and the ongoing working capital that will be required during the reorganization process. While such loans are generally viewed as less risky than many other types of loans as a result of their seniority in the debtor’s capital structure, their underlying collateral and because their terms will have been approved by a federal bankruptcy court order, the debtor’s reorganization efforts may fail and the proceeds of the ensuing liquidation of the DIP lender’s collateral might be insufficient to repay the DIP loan.

Defaulted Bonds and Distressed Debt. Defaulted bonds are subject to greater risk of loss of income and principal than higher rated securities and are considered speculative. In the event of a default, we may incur additional expenses to seek recovery. The repayment of defaulted bonds is subject to significant uncertainties, and, in some cases, there may be no recovery of repayment. Further, defaulted bonds might be repaid only after lengthy workout or bankruptcy proceedings, during which the issuer might not make any interest or other payments. Workout or bankruptcy proceedings typically result in only partial recovery of cash payments or an exchange of the defaulted bond for other securities of the issuer or its affiliates. Often, the securities received are illiquid or speculative. Investments in securities following a workout or bankruptcy proceeding typically entail a higher degree of risk than investments in securities that have not recently undergone a reorganization or restructuring. Moreover, these securities can be subject to heavy selling or downward pricing pressure after the completion of a workout or bankruptcy proceeding. If our evaluation of the anticipated outcome of an investment should prove inaccurate, we could experience a loss. Such securities obtained in exchange may include, but are not limited to, equity securities, warrants, rights, participation interests in sales of assets, and contingent interest obligations.

We may hold securities of issuers that are, or are about to be, involved in reorganizations, financial restructurings, or bankruptcy (also known as “distressed debt”). Defaulted bonds and distressed debt securities are speculative and involve substantial risks in addition to the risks of investing in junk bonds. To the extent that we hold distressed debt, we will be subject to the risk that it may lose a portion or all of our investment in the distressed debt and may incur higher expenses trying to protect its interests in distressed debt. The prices of distressed bonds are likely to be more sensitive to adverse economic changes or individual issuer developments

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than the prices of higher rated securities. During an economic downturn or substantial period of rising interest rates, distressed security issuers may experience financial stress that would adversely affect their ability to service their principal and interest payment obligations, to meet their projected business goals, or to obtain additional financing. We may invest in additional securities of a defaulted issuer to retain a controlling stake in any bankruptcy proceeding or workout. Any distressed securities or any securities received in exchange for such securities may be subject to restrictions on resale. In any reorganization or liquidation proceeding, we may lose our entire investment or may be required to accept cash or securities with a value less than our original investment. Moreover, it is unlikely that a liquid market will exist for us to sell our holdings in distressed debt securities.

Demand Features. Many variable rate securities carry demand features that permit the holder to demand repayment of the principal amount of the underlying securities plus accrued interest, if any, upon a specified number of days’ notice to the issuer or its agent. A demand feature may be exercisable at any time or at specified intervals. Variable rate securities with demand features are treated as having a maturity equal to the time remaining before the holder can next demand payment of principal. The issuer of a demand feature instrument may have a corresponding right to prepay the outstanding principal of the instrument plus accrued interest, if any, upon notice comparable to that required for the holder to demand payment.

Derivatives. We may invest in derivative securities for bona fide hedging purposes. Subject to applicable provisions of the 1940 Act and applicable regulations promulgated by the Commodity Futures Trading Commission (“CFTC”), we may enter into hedging transactions, which may expose us to risks associated with such transactions. Such hedging may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions and amounts due under any credit facility from changes in currency exchange rates and market interest rates. Use of these hedging instruments may include counterparty credit risk. Hedging against a decline in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions and amounts due under our credit facilities or prevent losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also limit the opportunity for gain if the values of the underlying portfolio positions should increase. Moreover, it may not be possible to hedge against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.

The success of any hedging transactions will depend on our ability to correctly predict movements in currencies and interest rates. Therefore, while we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rate or interest rates may result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary. Moreover, for a variety of reasons, we may not seek to (or be able to) establish a perfect correlation between such hedging instruments and the portfolio holdings or credit facilities being hedged. Any such imperfect correlation may prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of factors not related to currency fluctuations.

ETFs. Exchange Traded Funds (“ETFs”) are investment companies whose shares are listed on a securities exchange and trade like a stock throughout the day. Certain ETFs use a “passive” investment strategy and will not attempt to take defensive positions in volatile or declining markets. Other ETFs are actively managed (i.e., they do not seek to replicate the performance of a particular index). Investments in ETFs are subject to a variety of risks, including risks of a direct investment in the underlying securities that the ETF holds. For example, the general level of stock prices may decline, thereby adversely affecting the value of the underlying common stock investments of the ETF and, consequently, the value of the ETF. Moreover, the market

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value of the ETF may differ from the value of its portfolio holdings because the market for ETF shares and the market for underlying securities are not always identical. Also, ETFs that track particular indices typically will be unable to match the performance of the index exactly due to the ETF’s operating expenses and transaction costs, among other things. Similar to investments in other investment companies, our shareholders must bear not only their proportionate share of our fees and expenses, but they also must bear indirectly the fees and expenses of the ETF.

Fixed Income Securities with Buy-Back Features. Fixed income securities with buy-back features enable us to recover principal upon tendering the securities to the issuer or a third party. Letters of credit issued by domestic or foreign banks often support these buy-back features. In evaluating a foreign bank’s credit, the Adviser considers whether adequate public information about the bank is available and whether the bank may be subject to unfavorable political or economic developments, currency controls or other governmental restrictions that could adversely affect the bank’s ability to honor its commitment under the letter of credit. Buy-back features include standby commitments, put bonds and demand features.

Foreign Currencies. A portion of our investments may be denominated in currencies other than the U.S. dollar. Changes in the rates of exchange between the U.S. dollar and other currencies will have an effect, which could be adverse, on our performance, amounts available for withdrawal and the value of securities distributed by us. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. Additionally, a particular foreign country may impose exchange controls, devalue its currency or take other measures relating to its currency which could adversely affect us. Finally, we could incur costs in connection with conversions between various currencies.

Foreign Securities. We may make investments in foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in U.S. companies. These risks include changes in foreign exchange rates, exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

Guaranteed Investment Contracts. We may invest in guaranteed investment contracts (“GIC”). A GIC is a general obligation of an insurance company. A GIC is generally structured as a deferred annuity under which the purchaser agrees to pay a given amount of money to an insurer (either in a lump sum or in installments) and the insurer promises to pay interest at a guaranteed rate (either fixed or variable) for the life of the contract. Some GICs provide that the insurer may periodically pay discretionary excess interest over and above the guaranteed rate. At the GIC’s maturity, the purchaser generally is given the option of receiving payment or an annuity. Certain GICs may have features that permit redemption by the issuer at a discount from par value. Generally, GICs are not assignable or transferable without the permission of the issuer. As a result, the acquisition of GICs is subject to the limitations applicable to our acquisition of illiquid and restricted securities. The holder of a GIC is dependent on the creditworthiness of the issuer as to whether the issuer is able to meet its obligations.

Inflation-Indexed Securities. Inflation-indexed securities are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Many other issuers pay out the CPI accruals as part of a semiannual coupon.

Inflation-indexed securities issued by the U.S. Treasury (“TIPS”) have maturities of five, ten, or thirty years, although it is possible that securities with other maturities will be issued in the future. TIPS pay interest on a semiannual basis, equal to a fixed percentage of the inflation-adjusted principal amount. For example, if we purchased an inflation-indexed bond with a par value of $1,000 and a 3% real rate of return coupon (payable

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1.5% semiannually), and inflation over the first six months was 1%, the mid-year par value of the bond would be $1,010 and the first semiannual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole year’s inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second semiannual interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value of the inflation-indexed bonds will be adjusted downward, and, consequently, the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. At maturity, TIPS are redeemed at the greater of their inflation- adjusted principal and the par amount at original issue. If an inflation-indexed bond does not provide a guarantee of principal at maturity, the adjusted principal amount of the bond repaid at maturity may be less than the original principal amount. Other types of inflation-indexed bonds may be adjusted in response to changes in the rate of inflation by different mechanisms (such as by changes in the rates of interest paid on their principal amounts).

The values of inflation-indexed bonds are expected to change in response to changes in real interest rates, which are tied to the relationship between nominal interest rates and the rate of inflation. For example, if inflation were to rise at a faster rate than nominal interest rates, real interest rates would likely decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than inflation, real interest rates would likely rise, leading to a decrease in value of inflation-indexed bonds.

While these securities, if held to maturity, are expected to be protected to some extent from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If nominal interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates or an expansion of non-inflationary economic activity), investors in these securities may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.

The periodic inflation adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index for Urban Consumers (“CPI-U”), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of price changes in the cost of living, made up of components such as housing, food, transportation, and energy. Inflation-indexed bonds issued by a foreign government generally are adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States. Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

Initial Public Offerings (“IPOs”). IPOs are new issues of equity and fixed income securities. IPOs have many of the same risks as small company stocks and bonds. IPOs do not have trading history, and information about the company may be available only for recent periods. Our purchase of shares or bonds issued in IPOs also exposes us to the risks inherent in those sectors of the market where these new issuers operate. The market for IPO issuers has been volatile and share and bond prices of newly priced companies have fluctuated in significant amounts over short periods of time. We may be limited in the quantity of IPO and secondary offering shares and bonds that we may buy at the offering price, or we may be unable to buy any shares or bonds of an IPO or secondary offering at the offering price. Our investment return earned during a period of substantial investment in IPOs may not be sustained during other periods when we make more limited, or no, investments in IPOs. As our increases, the impact of IPOs on our performance generally would decrease; conversely, as our size decreases, the impact of IPOs on our performance generally would increase.

Investments in Other Investment Companies. Subject to the limitations prescribed by the 1940 Act and our investment objective, policies, and restrictions, we may invest in other investment companies, including, but not limited to, money market funds, exchange-traded funds, closed-end funds, and other pooled vehicles. These limitations prohibit us from acquiring more than 3% of the voting shares of any one other investment company, and

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generally prohibit us from investing more than 5% of our total assets in the securities of any one other investment company or more than 10% of our total assets in securities of other investment companies in the aggregate. The percentage limitations above apply to investments in any investment company. However, pursuant to certain SEC rules, these percentage limitations do not apply to our investments in certain registered money market funds. Our investments in another investment company will be subject to the risks of the purchased investment company’s portfolio securities. Our shareholders must bear not only their proportionate share of our fees and expenses, but they also must bear indirectly the fees and expenses of the other investment company.

Put Bonds. A put bond (also referred to as a tender option or third-party bond) is a bond created by coupling an intermediate or long-term fixed rate bond with an agreement giving the holder the option of tendering the bond to receive its par value. As consideration for providing this tender option, the sponsor of the bond (usually a bank, broker-dealer or other financial intermediary) receives periodic fees that equal the difference between the bond’s fixed coupon rate and the rate (determined by a remarketing or similar agent) that would cause the bond, coupled with the tender option, to trade at par. By paying the tender offer fees, we in effect hold a demand obligation that bears interest at the prevailing short-term rate. Any investments in tender option bonds by us will be accounted for subject to Financial Accounting Standards Board Statement No. 140 and amendments thereto.

In selecting put bonds for us, the Adviser would take into consideration the creditworthiness of the issuers of the underlying bonds and the creditworthiness of the providers of the tender option features. A sponsor may withdraw the tender option feature if the issuer of the underlying bond defaults on interest or principal payments, the bond’s rating is downgraded or, in the case of a municipal bond, the bond loses its tax-exempt status.

REITs. REITs are pooled investment vehicles that invest primarily in either real estate or real estate-related loans. REITs generally derive their income from rents on the underlying properties or interest on the underlying loans, and the value of a REIT is affected by changes in the value of the properties owned by the REIT or securing mortgage loans held by the REIT or changes in interest rates affecting the underlying loans owned by the REIT. The affairs of REITs are managed by the REIT’s sponsor or management and, as such, the performance of the REIT is dependent on the management skills of the REIT’s sponsor or management. REITs are subject to heavy cash flow dependency, default by borrowers, self-liquidation, and the qualification of the REITs under applicable regulatory requirements for favorable income tax treatment. REITs also are subject to risks generally associated with investments in real estate including possible declines in the value of real estate, general and local economic conditions, environmental problems, changes in interest rates, decreases in market rates for rents, increases in competition, property taxes, capital expenditures or operating expenses, and other economic, political, or regulatory occurrences affecting the real estate industry. To the extent that assets underlying a REIT are concentrated geographically, by property type, or in certain other respects, these risks may be heightened. We will indirectly bear our proportionate share of any expenses, including management fees, paid by a REIT in which it invests.

Repurchase Agreements. A repurchase agreement is a transaction by which we acquire a security (or basket of securities) and simultaneously commits to resell that security to the seller (typically, a bank or securities dealer) at an agreed upon date on an agreed upon price, which represents our cost plus interest. The resale price reflects the purchase price plus an agreed upon market rate of interest that is unrelated to the coupon rate or date of maturity of the purchased security. We require at all times that the repurchase agreement be collateralized by cash or by securities of the U.S. Government, its agencies, its instrumentalities, or U.S. Government sponsored enterprises having a value equal to, or in excess of, the value of the repurchase agreement (including accrued interest).

Repurchase agreements are considered a form of lending under the 1940 Act. A repurchase agreement with more than seven days to maturity is considered an illiquid security.

The use of repurchase agreements involves certain risks. For example, if the seller of the agreement defaults on its obligation to repurchase the underlying securities at a time when the value of these securities has declined, we may incur a loss upon disposition of them. In addition, if the seller should be involved in

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bankruptcy or insolvency proceedings, we may incur delay and costs in selling the underlying security or may suffer a loss of principal and interest if we are treated as an unsecured creditor and required to return the underlying collateral to the seller’s estate. Even though the repurchase agreements may have maturities of seven days or less, they may lack liquidity, especially if the issuer encounters financial difficulties. To reduce credit risk and counterparty risk, we intend to limit repurchase agreements to transactions with dealers and financial institutions believed by the Adviser to present minimal credit risks. The Adviser will monitor the creditworthiness of the repurchase agreement sellers on an ongoing basis.

Reverse Repurchase Agreements. In a reverse repurchase agreement, we would sell a security to a securities dealer or bank for cash and also agree to repurchase the same security at an agreed upon price on an agreed upon date. Reverse repurchase agreements expose us to credit risk (that is, the risk that the counterparty will fail to resell the security to us). Engaging in reverse repurchase agreements also may involve the use of leverage, in that we may reinvest the cash we receive in additional securities. We will attempt to minimize this risk by managing its duration.

Revolving Credit Facility Loans. For some loans, such as revolving credit facility loans (“revolvers”), an investor may be obligated under the loan agreement to, among other things, make additional loans in certain circumstances. We generally will place assets in reserve for these contingent obligations by segregating or otherwise designating a sufficient amount of permissible liquid assets. Delayed draw term loans are similar to revolvers, except that, once drawn upon by the borrower during the commitment period, they remain permanently drawn and become term loans. A prefunded letter of credit term loan is a facility created by the borrower in conjunction with an agent, with the loan backed by letters of credit. Each participant in a letter of credit term loan fully funds its commitment amount to the agent for the facility.

Short-Term Taxable Securities. We may invest in bonds, the interest on which is subject to federal income tax, and we may be exempt from its state’s (if applicable) income tax.

Standby Commitments. We may acquire standby commitments from broker-dealers, banks or other financial intermediaries to enhance the liquidity of portfolio securities. A standby commitment entitles us to same day settlement at amortized cost plus accrued interest, if any, at the time of exercise. The amount payable by the issuer of the standby commitment during the time that the commitment is exercisable generally approximates the market value of the securities underlying the commitment. Standby commitments are subject to the risk that the issuer of a commitment may not be in a position to pay for the securities at the time that the commitment is exercised.

Ordinarily, we will not transfer a standby commitment to a third party, although we may sell securities subject to a standby commitment at any time. We may purchase standby commitments separate from or in conjunction with the purchase of the securities subject to the commitments. In the latter case, we may pay a higher price for the securities acquired in consideration for the commitment.

Unsecured Loans. We may make unsecured loans to portfolio companies, meaning that such loans will not benefit from any security interest over the assets of such companies. Liens on such portfolio companies’ assets, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured obligations after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

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U.S. Government Securities. We may invest in debt securities issued or guaranteed by agencies, instrumentalities and sponsored enterprises of the U.S. Government. U.S. Government securities are obligations of the U.S. Government and its agencies and instrumentalities, including Treasury bills, notes, bonds, and certificates of indebtedness that are issued or guaranteed as to principal or interest by the U.S. Treasury or U.S. Government sponsored enterprises. The U.S. Government is under no legal obligation, in general, to purchase the obligations of or provide financial support to its agencies, instrumentalities, or sponsored enterprises. No assurance can be given that the U.S. Government will purchase the obligations of or provide financial support to U.S. Government agencies, instrumentalities, or sponsored enterprises in the future, and the U.S. Government may be unable or unwilling to pay debts when due.

U.S. Government debt securities generally involve lower levels of credit risk than other types of debt securities of similar maturities, although, as a result, the yields available from U.S. Government debt securities are generally lower than the yields available from such other securities. Like other debt securities, the values of U.S. Government securities change as interest rates fluctuate. Fluctuations in the value of portfolio securities will not affect interest income on existing portfolio securities but will be reflected in our NAV.

We may purchase new issues of municipal bonds, which generally are offered on a when-issued basis, with delivery and payment normally taking place approximately one month after the purchase date. However, the payment obligation and the interest rate to be received by us are each fixed on the purchase date.

Warrants and Rights. Warrants and rights are types of securities that give a holder a right to purchase shares of common stock. Warrants are options to buy from the issuer a stated number of shares of common stock at a specified price, usually higher than the market price at the time of issuance, until a stated expiration date. Rights represent a privilege offered to holders of record of issued securities to subscribe (usually on a pro rata basis) for additional securities of the same class, of a different class or of a different issuer, usually at a price below the initial offering price of the common stock and before the common stock is offered to the general public. The holders of warrants and rights have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer. Warrants and rights may be transferable. The value of a warrant or right may not necessarily change with the value of the underlying securities. The risk of investing in a warrant or a right is that the warrant or the right may expire before the market value of the common stock exceeds the price specified by the warrant or the right. If not exercised before their stated expiration date, warrants and rights cease to have value and may result in a total loss of the money invested. Investments in warrants and rights are considered speculative.

When-Issued or Forward Transactions. When-issued or forward transactions involve a commitment by us to purchase securities, with settlement to take place in the future. When-issued purchases and forward transactions are negotiated directly with the other party, and such commitments are not traded on exchanges. The value of fixed income securities to be delivered in the future will fluctuate as interest rates vary. Securities purchased or sold on a when-issued or forward commitment basis involve a risk of loss if the value of the security to be purchased declines before the settlement date or if the value of the security to be sold increases before the settlement date. At the time we make the commitment to purchase a security on a when-issued basis, it will record the transaction and reflect the liability for the purchase and the value of the security in determining its NAV. We also generally are required to identify on our books cash and liquid assets in an amount sufficient to meet the purchase price unless our obligations are otherwise covered. We generally will purchase securities on a when-issued basis or purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, we may dispose of or negotiate a commitment after entering into it. We also may sell securities we have committed to purchase before the commitment’s settlement date.

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INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions. We are subject to the following fundamental investment restrictions that cannot be changed without the approval of the holders of a majority of our outstanding common Shares¹ and, if issued, preferred shares voting together as a single class, and of the holders of a majority of the outstanding preferred shares voting as a separate class.

In addition, we have adopted the following fundamental policies with respect to repurchase offers that cannot be changed without the approval of the holders of a majority of our outstanding common Shares and, if issued, preferred shares voting together as a single class, and of the holders of a majority of the outstanding preferred shares voting as a separate class:

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Interpretations and guidance provided by the SEC staff may be taken into account to determine if a certain practice or the purchase of securities or other instruments is permitted by the 1940 Act, the rules or regulations thereunder or applicable orders of the SEC. As a result, the foregoing fundamental investment policies may be interpreted differently over time as the statute, rules, regulations or orders (or, if applicable, interpretations) that relate to the meaning and effect of these policies change, and no vote of shareholders, as applicable, will be required or sought.

The 1940 Act, including the rules and regulations thereunder, generally prohibits us from borrowing (other than certain temporary borrowings) unless immediately after the borrowing we have satisfied the asset coverage test with respect to senior securities representing indebtedness prescribed by the 1940 Act; that is, the value of our total assets less all liabilities and indebtedness not represented by senior securities (for these purposes, “total net assets”) is at least 300% of the senior securities representing indebtedness (effectively limiting the use of leverage through senior securities representing indebtedness to 33¹⁄₃% of our total net assets, including assets attributable to such leverage). Certain investments which may give rise to a form of leverage (including the use of reverse repurchase agreements, dollar rolls, bank loans, commercial paper or other credit facilities and other derivative transactions, loans of portfolio securities and when-issued, delayed delivery and forward commitment transactions) are subject to Rule 18f-4 under the 1940 Act. Rule 18f-4 imposes limits on the amount of derivatives and other transactions a fund can enter into and requires funds whose use of derivatives is more than a limited specified exposure to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.

Under the 1940 Act, we may not issue senior securities representing stock unless immediately after such issuance the value of our total net assets is at least 200% of the liquidation value of our outstanding senior securities representing stock, plus the aggregate amount of any senior securities representing indebtedness (effectively limiting the use of leverage through senior securities to 50% of our total net assets).

In addition, we are not permitted to declare any cash dividend or other distribution on Shares unless, at the time of such declaration, the asset coverage tests described above are satisfied after giving effect to such dividend or distribution.

Non-Fundamental Investment Restriction. We are not subject to any additional non-fundamental investment restriction which may be changed by the Board of Trustees without shareholder approval.

Compliance with any policy or limitation of ours that is expressed as a percentage of assets is determined at the time of purchase of portfolio securities. The policy will not be violated if these limitations are exceeded because of changes in the market value or investment rating of our assets or if a borrower distributes equity securities incident to the purchase or ownership of a portfolio investment or in connection with a reorganization of a borrower. We interpret our policies with respect to borrowing and lending to permit such activities as may be lawful for us, to the full extent permitted by the 1940 Act or by exemption from the provisions therefrom pursuant to an exemptive order of the SEC.

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INVESTMENT ADVISORY AND OTHER SERVICES, FEES AND EXPENSES

Advisory Agreement

We have entered into the Advisory Agreement with the Adviser. The Adviser is an investment adviser registered with the SEC located at 1521 Westbranch Drive, Suite 100, McLean, VA 22101.

Under the terms of the Advisory Agreement, the Adviser (i) determines the composition of our portfolio, the nature and timing of the changes therein and the manner of implementing such changes; (ii) identifies, evaluates and negotiates the structure of the investments we make; (iii) closes and monitors our investments; (iv) determines the securities and other assets that we will purchase, retain, or sell; (v) performs due diligence on prospective portfolio companies; and (vi) provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our funds. Pursuant to our Advisory Agreement, we pay the Adviser certain fees as compensation for its services, consisting of a management fee and an incentive fee, each as described below.

The management fee is calculated at an annual rate of 1.25%, payable monthly in arrears, accrued daily based upon our average daily net assets. “Net assets” means the total value of all our assets, less an amount equal to all of our accrued debts, liabilities and obligations and before taking into account any management or incentive fees payable or contractually due but not payable during the period. This calculation will be appropriately prorated for any period of less than one month. Because we are newly organized, no fees were paid to the Adviser pursuant to the Advisory Agreement in any prior fiscal year.

The incentive fee rewards the Adviser if our quarterly net investment income (before giving effect to any incentive fee) exceeds 1.75% of our net assets at the end of the immediately preceding calendar quarter (the “Hurdle Rate”), subject to a “catch-up” feature. The incentive fee with respect to our pre-incentive fee net investment income is payable quarterly to the Adviser and is computed as follows:

For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, consulting fees that we receive from portfolio companies) accrued by us during the calendar quarter, minus our operating expenses for the quarter (including the management fee (less any rebate of other fees received by the Adviser), expenses payable under the Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred shares, but excluding the incentive fee and any distribution and/or shareholder servicing fees). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero-coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

The Advisory Agreement was initially approved by the Trustees, including all of the Independent Trustees, on October 1, 2024 at a meeting called for such purpose. A discussion regarding the basis for the Board

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of Trustees’ initial approval of the Advisory Agreement will be available in our initial report to shareholders. The Advisory Agreement will remain in full force and effect, unless sooner terminated by us, for an initial two-year period and shall continue thereafter on an annual basis provided that such continuance is specifically approved at least annually (i) by the vote of a majority of our outstanding voting securities or by the Board of Trustees; and (ii) by the vote, cast in person at a meeting called for such purpose, of a majority of the Independent Trustees. It can also be terminated at any time, without payment of any penalty by a vote of a majority of our outstanding voting securities or by a vote of a majority of the entire Board of Trustees on 60 days’ written notice to the Adviser, or by the Adviser on 60 days’ written notice to us. Additionally, the Advisory Agreement will terminate automatically in the event of its assignment. The Advisory Agreement may not be materially amended without a vote of a majority of our outstanding voting securities.

The Advisory Agreement provides that the Adviser and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Administrator will not be liable to us for their acts under the Advisory Agreement, absent willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Advisory Agreement.

All investment professionals of the Adviser and their respective staffs, when and to the extent engaged in providing investment advisory and management services under the Advisory Agreement, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by the Adviser. We will bear all other costs and expenses of our operations and transactions, including (without limitation) those relating to: organization and offering; calculating our net asset value (including the cost and expenses of any independent valuation firm); expenses incurred by the Adviser payable to third parties, including agents, consultants or other advisors (such as independent valuation firms, accountants and legal counsel), in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies; interest payable on debt, if any, incurred to finance our investments; any direct expenses of issue, sale, underwriting, distribution, redemption or repurchase of our securities; investment advisory and management fees; administration fees, if any, payable under the Administration Agreement between us and the Administrator; fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments; transfer agent and custodial fees; federal and state registration fees; federal, state and local taxes; Independent Trustees’ fees and expenses; costs of preparing and filing prospectuses, statements of additional information, reports or other documents required by the SEC; costs of any reports, proxy statements or other notices to shareholders, including printing costs; our allocable portion of the fidelity bond, trustees and officers/errors and omissions liability insurance, and any other insurance premiums; direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs; and all other expenses incurred by us or the Administrator in connection with administering our business, including payments under the Administration Agreement between us and the Administrator based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief compliance officer, chief financial officer, controller, general counsel, chief valuation officer and other non-investment advisory personnel and their respective staffs. Transfer agent expenses, expenses of preparation, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular Share class will be allocated to such class.

New Advisory Agreement

We and our initial shareholder have approved a new investment advisory agreement between us and the Adviser (the “New Advisory Agreement”). The New Advisory Agreement is the result of an anticipated change in control of the Adviser. From inception, the Adviser has been 100% indirectly owned and controlled by David Gladstone. David Gladstone owns 100% of the voting and economic interests of The Gladstone Companies, Ltd., which in turn owns 100% of the voting and economic interests of The Gladstone Companies,

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Inc. (“TGC”), which in turn owned 100% of the voting and economic interests of the Adviser. On January 24, 2024, the Adviser entered into a voting trust agreement (the “Voting Trust Agreement”), among David Gladstone, Lorna Gladstone, Laura Gladstone, Kent Gladstone and Jessica Martin, each as a trustee and collectively, as the board of trustees of the voting trust (the “Voting Trust Board”), the Adviser and certain stockholders of the Adviser, pursuant to which David Gladstone deposited all of his indirect interests in the Adviser, which represented 100% of the voting and economic interests thereof, with the voting trust.

Pursuant to the Voting Trust Agreement, prior to its Effective Date (as defined below) David Gladstone has, in his sole discretion, the full, exclusive and unqualified right and power to vote in person or by proxy all of the shares of common stock of the Adviser deposited with the voting trust at all meetings of the stockholders of the Adviser in respect of any and all matters on which the stockholders of the Adviser are entitled to vote under the Adviser’s certificate of incorporation or applicable law, to give consents in lieu of voting such shares of common stock of the Adviser at a meeting of the stockholders of the Adviser in respect of any and all matters on which stockholders of the Adviser are entitled to vote under its certificate of incorporation or applicable law, to enter into voting agreements, waive notice of any meeting stockholders of the Adviser in respect of such shares of common stock of the Adviser and to grant proxies with respect to all such shares of common stock of the Adviser with respect to any lawful corporate action (collectively, the “Voting Powers”).

Commencing on the Effective Date, the Voting Trust Board shall have the full, exclusive and unqualified right and power to exercise the Voting Powers. Each member of the Voting Trust Board shall hold 20% of the voting power of the Voting Trust Board as of the Effective Date. The “Effective Date” shall occur on the earliest of (i) the death of David Gladstone, (ii) David Gladstone’s election (in his sole discretion) and (iii) January 24, 2025. The members of senior management of the Adviser prior to the entry into the Voting Trust Agreement continue to manage the day-to-day aspects of the Adviser.

There are no changes to the terms of the Advisory Agreement currently in effect (the “Original Advisory Agreement”) in the New Advisory Agreement, including the fee structure and services to be provided, other than the date and term of the New Advisory Agreement as compared to the Original Advisory Agreement. In addition to there being no changes to the fee structure, no other fees or expenses currently paid by us will change as a result of entry into the New Advisory Agreement. There will be no changes to our principal investment objective, investment strategies, fundamental investment restrictions or principal risks as a result of entry into the Voting Trust Agreement or New Advisory Agreement.

Expense Support and Conditional Reimbursement Agreement

We and the Adviser have entered into the Expense Support and Conditional Reimbursement Agreement under which the Adviser has agreed contractually for a one-year period to reimburse our initial organizational and offering costs, as well as the operating expenses of each Class commencing with the first quarter following the date of this prospectus, to the extent that aggregate distributions made to our shareholders of a Class during the applicable quarter exceed Available Operating Funds (as defined below). Additionally, during the term of the Expense Support and Conditional Reimbursement Agreement, the Adviser may reimburse our or any Class’s operating expenses to the extent that it otherwise deems appropriate in order to ensure that we or such Class bear an appropriate level of expenses (each such payment, an “Expense Payment”). “Available Operating Funds” means the sum of (i) our net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses); (ii) our net capital gains (including the excess of net long-term capital gains over net short-term capital losses); and (iii) dividends and other distributions paid to or otherwise earned by us on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

In consideration of the Adviser’s agreement to reimburse our operating expenses, we have agreed to repay the Adviser in the amount of any of our expenses reimbursed, subject to the limitation that a

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reimbursement (an “Adviser Reimbursement”) will be made only if and to the extent that (i) it is payable not more than three years from the date on which the applicable Expense Payment was made by the Adviser; (ii) the Adviser Reimbursement does not cause Other Fund Operating Expenses (as defined below) attributable to Shares of such Class (on an annualized basis and net of any reimbursements received by us with respect to such Class during such fiscal year) during the applicable quarter to exceed the percentage of average net assets attributable to Shares of such Class represented by Other Fund Operating Expenses (on an annualized basis) during the fiscal quarter in which the applicable Expense Payment from the Adviser was made; (iii) the Adviser Reimbursement does not cause the Fund to breach any other expense cap in place at the time of such Adviser Reimbursement; and (iv) the distributions per share declared by us for the applicable Class at the time of the applicable Expense Payment are less than the effective rate of distributions per share for such Class of Shares at the time the Adviser Reimbursement would be paid. The Expense Support and Conditional Reimbursement Agreement will remain in effect at least one year from the date of this prospectus, unless and until the Board approves its modification or termination. The Expense Support and Conditional Reimbursement Agreement may be terminated only by the Board on notice to the Adviser.

Other Fund Operating Expenses is defined as our total Operating Expenses (as defined below), excluding the management and incentive fees payable to the Adviser, any offering expenses, financing fees and costs, interest expense, distribution fees, shareholder servicing fees and extraordinary expenses. “Operating Expenses” means all operating costs and expenses we incur, as determined in accordance with generally accepted accounting principles for investment companies.

Administration Agreement

We entered into the Administration Agreement with the Administrator. Pursuant to Administration Agreement, the Administrator performs (or oversees, or arranges for, the performance of) the administrative services necessary for our operation, including providing us with office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as the Administrator, subject to review by our Board of Trustees, from time to time determines to be necessary or useful to perform its obligations under the Administration Agreement.

We reimburse the Administrator pursuant to the Administration Agreement for our allocable portion of the Administrator’s expenses incurred while performing services to us, which are primarily the cost of the Administrator’s employees, including our chief compliance officer, chief financial officer, controller, general counsel, chief valuation officer, and other non-investment advisory personnel and their respective staffs. Our allocable portion of the Administrator’s expenses is generally derived by multiplying the Administrator’s total expenses by the approximate percentage of time during the current quarter that the Administrator’s employees performed services for us in relation to their time spent performing services for all companies serviced by the Administrator.

The Administration Agreement provides that the Administrator and its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Administrator will not be liable to us for their acts under the Administration Agreement, absent willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations under the Administration Agreement.

Distributor

The Distributor, an affiliate of our Adviser located at 1521 Westbranch Drive, Suite 100, McLean, VA 22101, serves as our principal underwriter. The Distributor is a broker-dealer registered with the SEC and is a member of FINRA. Under our Distribution Agreement, the Distributor is obligated to use its best efforts to find purchasers for the Shares. See “Plan of Distribution”.

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The Distribution Agreement will remain in full force and effect, unless sooner terminated by us, for an initial two-year period and shall continue thereafter on an annual basis, provided that each such continuance is specifically approved: (i) by the vote of a majority of the Independent Trustees; and (ii) by the vote of a majority of the entire Board cast in person at a meeting called for that purpose.

In addition, the Distributor is expected to provided other services, such as investment banking and due diligence services, to certain of our portfolio companies, for which Gladstone Securities receives a fee.

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MANAGEMENT OF THE FUND

The Board of Trustees supervises our management, activities and affairs and has approved contracts with various organizations to provide, among other services, the day-to-day management required by us and our shareholders.

Board Leadership Structure

Since our inception, Mr. Gladstone has served as chairman of our Board and our chief executive officer. The Board believes that our chief executive officer is best situated to serve as chairman because he is the trustee most familiar with our business and industry, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. In addition, Paul W. Adelgren, one of our Independent Trustees serves as the Lead Independent Trustee. The Lead Independent Trustee has the responsibility of presiding at all executive sessions of our Independent Trustee, consulting with the chairman and chief executive officer on Board and committee meeting agendas, acting as a liaison between management and the independent trustees and facilitating teamwork and communication between the independent trustees and management.

The Board believes the combined role of chairman and chief executive officer, together with having a Lead Independent Trustee, is in the best interest of shareholders because it provides the appropriate balance between strategic development and independent oversight of risk management. In coming to this conclusion, the Board considered the importance of having an interested chairperson that is familiar with our day-to-day management activities, our portfolio companies and the operations of the Adviser. The Board concluded that the combined role enhances, among other things, the Board’s understanding of our investment portfolio, business, finances and risk management efforts. In addition, the Board believes that Mr. Gladstone’s employment by the Adviser better allows for the efficient mobilization of the Adviser’s resources at the Board’s behest and on its behalf.

Each Trustee was appointed to serve on the Board of Trustees because of his or her experience, qualifications, attributes and/or skills as set forth in the subsection “Qualifications of Trustees” below. Based on a review of the Board of Trustees and its function, the Trustees have determined that the leadership structure of the Board of Trustees is appropriate and that the Board of Trustees’ role in the risk oversight, as discussed below, allows the Board of Trustees to effectively administer its oversight function.

The Board of Trustees has an Audit Committee, the Compensation Committee, Ethics, Nominating and Corporate Governance Committee and the Valuation Committee. The responsibilities of each committee and its members are described below in the subsection “Committees”.

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Trustees and Officers

The following tables present certain information regarding the Board of Trustees and our officers. The address of each Trustee and officer as it relates to our business is 1521 Westbranch Drive, Suite 100, McLean, Virginia 22102. Each Trustee and officer serves for an indefinite term (i.e., until his or her death, resignation, retirement, or removal).

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⁽¹⁾ The Fund Complex includes Gladstone Capital and Gladstone Investment, each a business development company advised by the Adviser.

⁽²⁾ Mr. Gladstone and Ms. Novara are interested persons of Gladstone Alternative Income Fund, within the meaning of Section 2(a)(19) of the 1940 Act, due to their positions as officers of us and of the Adviser and their employment by the Adviser.

Officers

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Qualifications of Trustees

The following is a brief discussion of the experience, qualifications, attributes and/or skills that led to the Board of Trustees’ conclusion that each individual identified below is qualified to serve as a Trustee.

When considering whether our trustees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Trustees to satisfy its oversight responsibilities effectively in light of our operational and organizational structure, the Ethics, Nominating and Corporate Governance Committee and the Board of Trustees focused primarily on the information discussed in each of the individual backgrounds set forth above and on the following particular attributes:

•  Mr. Adelgren was selected to serve as an Independent Trustee due to his strength and experience in ethics, which also led to his appointment as chairman of our Ethics, Nominating and Corporate Governance Committee.

•  Ms. English was selected to serve as an Independent Trustee due to her greater than twenty years of senior management experience at various corporations and non-profit organizations.

•  Mr. Gladstone was selected to serve as a Trustee due to the fact that he is our founder and has greater than 30 years of experience in the industry.

•  Ms. Gorka was selected to serve as an Independent Trustee due to her managerial expertise, strategic analyses and security background.

•  Ms. Novara was selected to serve as a Trustee due to the fact that she has in-depth knowledge of the Adviser and the Administrator. Ms. Novara also adds to the Board’s diversity of views.

•  Mr. Outland was selected to serve as an Independent Trustee due to his more than 20 years of experience in the real estate and mortgage industry.

•  Mr. Parker was selected to serve as an Independent Trustee due to his expertise and experience in the field of corporate taxation. Mr. Parker’s knowledge of corporate tax was instrumental in his appointment to the chairmanship of our Audit Committee.

•  Mr. Wilkinson was selected to serve as an Independent Trustee due to his over 40-year career in the venture capital industry where he has helped to start or expand dozens of rapidly growing companies in a variety of industries. Mr. Wilkinson brings a unique perspective to the Board from his experience in overseeing the successful growth and evolution of numerous businesses and understanding the challenges of leading both private and public companies through changing economic conditions.

Committees

The standing committees of the Board of Trustees are the Audit Committee, the Compensation Committee, Ethics, Nominating and Corporate Governance Committee and the Valuation Committee. The table below provides information about each committee’s composition, functions, and responsibilities.

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Committee Meetings

We are newly organized and our first fiscal year has not yet been completed.

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Board Oversight of Risk Management

The Board of Trustees, in its entirety, plays an active role in overseeing management of our risks. The Board of Trustees regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. Each of the following committees of the Board plays a distinct role with respect to overseeing management of our risks:

While each of the above committees is responsible for evaluating certain risks and overseeing the management of such risks, the committees each report to our Board on a regular basis to apprise our Board regarding the status of remediation efforts of known risks and of any new risks that may have arisen since the previous report.

Codes of Ethics

In accordance with Rule 17j-1 of the 1940 Act, each of us, the Adviser and the Distributor has adopted a code of ethics and business conduct applicable to all of the officers, trustees, directors and personnel of such companies that complies with the guidelines set forth in Item 406 of Regulation S-K of the Securities Act and Rule 17j-1 of the 1940 Act. As required by the 1940 Act, this code establishes procedures for personal investments, restricts certain transactions by such personnel and requires the reporting of certain transactions and holdings by such personnel. This code of ethics and business conduct is publicly filed as an exhibit to our registration statement on the EDGAR database at www.sec.gov and is available on our website at www.gladstoneintervalfund.com. Appendix A to the code of ethics and business conduct is our insider trading policy. We intend to provide any required disclosure of any amendments to or waivers of the provisions of this code by posting information regarding any such amendment or waiver to our website or in a Current Report on Form 8-K.

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Compensation

The following table sets forth the compensation accrued by us for the Independent Trustees and the total compensation paid by all funds in the fund complex to the Independent Trustees. We currently do not offer any pension, profit-sharing or retirement plan to Trustees.

Fund Ownership

The following table sets forth the dollar range of equity securities in us that the Trustees beneficially owned as of the date of this SAI. There are no other registered investment companies within the family of investment companies (i.e., no other registered investment company shares the Adviser).

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Other Accounts Managed

The table below includes details regarding the number of other registered investment companies, other pooled investment vehicles and other accounts managed by the portfolio managers, total assets under management for each type of account and total assets in each type of account with performance-based advisory fees as of June 30, 2024.

Holdings of Portfolio Managers

As of October 15, 2024 Mr. Gladstone beneficially owns $100,000 of the Class I Shares due to being the sole indirect owner of TGC.

Compensation of Portfolio Managers

The Portfolio Managers receive compensation from the Adviser in the form of a base salary plus bonuses. Each Portfolio Manager’s base salary is determined by a review of salary surveys for persons with comparable experience who are serving in comparable capacities in the industry. Each Portfolio Manager’s base salary is set and reviewed yearly. Like all employees of the Adviser, a Portfolio Manager’s bonuses are tied to the post-tax performance of the Adviser and the entities that it advises. A Portfolio Manager’s bonuses increases or decreases when the Adviser’s income increases or decreases. The Adviser’s income, in turn, is directly tied to the management and incentive fees earned in managing its investment funds, including us. Pursuant to the Advisory Agreement, the Adviser receives a management fee and an incentive fee based on net investment income in excess of the hurdle rates as set out in the Advisory Agreement.

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Conflicts of Interest

Our executive officers and trustees, and the officers and directors of the Adviser, serve or may serve as officers, directors, or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our shareholders’ best interests. For example, Mr. Gladstone, our chairman and chief executive officer, is the chairman of the board and chief executive officer of the Adviser, the Administrator, the Distributor, and each of the publicly traded business development companies and real estate investment trusts managed by the Adviser. In addition, Mr. Sateri, our president, is also Managing Director of the Adviser. Mr. Malesardi, our chief financial officer, is also chief financial officer of the Adviser. While portfolio managers and the officers and other employees of the Adviser devote as much time to the management of us as appropriate to enable the Adviser to perform its duties in accordance with the Advisory Agreement, the portfolio managers and other of the Adviser’s officers may have conflicts in allocating their time and services among us, on the one hand, and other investment vehicles managed by the Adviser, on the other hand. These activities could be viewed as creating a conflict of interest insofar as the time and effort of the portfolio managers and the officers and employees of the Adviser will not be devoted exclusively to our business but will instead be allocated between our business and the management of these other investment vehicles. Moreover, the Adviser may establish or sponsor other investment vehicles which from time to time may have potentially overlapping investment objectives with ours and accordingly may invest in, whether principally or secondarily, asset classes we target. While the Adviser generally has broad authority to make investments on behalf of the investment vehicles that it advises, the Adviser has adopted investment allocation procedures to address these potential conflicts and intends to direct investment opportunities to us or the other funds that are managed by the Adviser with the investment strategy that most closely fits the investment opportunity. Nevertheless, the management of the Adviser may face conflicts in the allocation of investment opportunities to other entities it manages. As a result, it is possible that we may not be given the opportunity to participate in certain investments made by other funds managed by the Adviser.

In certain circumstances, we may make investments in a portfolio company in which one of our affiliates has or will have an investment, subject to satisfaction of any regulatory restrictions and, where required, the prior approval of our Board of Trustees. As of October 1, 2024, the Board has approved the following types of transactions:

Certain of our officers, who are also officers of the Adviser, may from time to time serve as directors of certain of our portfolio companies. If an officer serves in such capacity for one of our portfolio companies, such

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officer will owe fiduciary duties to stockholders of the portfolio company, which duties may from time to time conflict with the interests of our shareholders.

In the course of our investing activities, we will pay management and incentive fees to the Adviser and will reimburse the Administrator for certain expenses it incurs. As a result, investors in the Shares will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through our investors themselves making direct investments. As a result of this arrangement, there may be times when the management team of the Adviser has interests that differ from those of our shareholders, giving rise to a conflict.

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BROKERAGE ALLOCATION AND OTHER PRACTICES

Since we expect to generally acquire and dispose of our investments in privately negotiated transactions, we expect to infrequently use securities brokers or dealers in the normal course of our business. Subject to policies established by the Board of Trustees, the Adviser will be primarily responsible for ensuring the execution of transactions involving publicly traded securities and the review of brokerage commissions in respect thereof, if any. In the event that the Adviser ensures the execution of such transactions, we do not expect the Adviser to execute transactions through any particular broker or dealer, but we would expect the Adviser to seek to obtain the best net results for us, taking into account such factors as price (including any applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the broker dealer and the broker dealer’s risk and skill in positioning blocks of securities. While we expect that the Adviser generally will seek reasonably competitive trade execution costs, we will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, the Adviser may select a broker dealer based partly upon brokerage or market research services provided to us, the Adviser and any of its other clients, if any. In return for such services, we may pay a higher commission than other broker dealers would charge if the Adviser determines in good faith that such commission is reasonable in relation to the value of the brokerage and research services provided by such broker dealer viewed in terms either of the particular transaction or the Adviser’s overall responsibilities with respect to all of the Adviser’s clients.

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TAX MATTERS

The following discussion of U.S. federal income tax consequences of investment in Shares is based on the Code, U.S. Treasury regulations, and other applicable authority, as of the date of this Statement of Additional Information. These authorities are subject to change by legislative or administrative action, possibly with retroactive effect. The following discussion is only a summary of some of the important U.S. federal income tax considerations generally applicable to investments in Shares. This summary does not purport to be a complete description of the U.S. federal income tax considerations applicable to an investment in Shares. There may be other tax considerations applicable to particular shareholders. For example, except as otherwise specifically noted herein, we have not described tax consequences that we have assumed to be generally known by investors or certain tax considerations that may be relevant to certain types of holders subject to special treatment under the U.S. federal income tax laws, including shareholders subject to the U.S. federal alternative minimum tax, insurance companies, tax-exempt organizations, pension plans and trusts, regulated investment companies, real estate investment trusts, dealers in securities, shareholders holding Shares through tax-advantaged accounts (such as 401(k) plans or individual retirement accounts), financial institutions, shareholders holding Shares as part of a hedge, straddle, or conversion transaction, shareholders that are treated as partnerships for U.S. federal income tax purposes, U.S. shareholders (as defined below) whose functional currency is not the U.S. dollar, entities that are not organized under the laws of the United States or a political subdivision thereof, and persons who are neither citizens nor residents of the United States. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. This summary assumes that investors hold Shares as capital assets (within the meaning of the Code). Shareholders should consult their own tax advisors regarding their particular situation and the possible application of federal, state, local, non-U.S. or other tax laws, and any proposed tax law changes.

A “U.S. shareholder” is a beneficial owner of Shares that is for U.S. federal income tax purposes:

A “non-U.S. shareholder” is a beneficial owner of Shares that is not a U.S. shareholder or an entity that is treated as a partnership for U.S. federal income tax purposes.

An investment in our Shares is complex, and certain aspects of the U.S. tax treatment of such investment are not certain. Tax matters are very complicated and the tax consequences to a shareholder of an investment in our Shares will depend on the facts of such shareholder’s particular situation. Shareholders are strongly encouraged to consult their own tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership and disposition of our Shares, as well as the effect of state, local and foreign tax laws and the effect of any possible changes in tax laws.

Taxation of the Fund

We intend to elect to be treated and to qualify as a regulated investment company (a “RIC”) under Subchapter M of the Code. As a RIC, we generally will not be required to pay corporate-level federal income taxes on our net investment income or capital gains that we timely distribute (or are deemed to distribute, except

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with respect to certain retained capital gains as discussed below) to our Shareholders as dividends. Instead, dividends that we distribute (or are deemed to timely distribute) generally will be taxable to Shareholders, and any net operating losses, foreign tax credits and most other tax attributes generally will not pass through to Shareholders. We will be subject to U.S. federal corporate-level income tax on any undistributed income and/or gains. Our qualification and taxation as a RIC depends upon our ability to satisfy on a continuing basis, through actual, annual operating results, distribution, income and asset, and other requirements imposed under the Code. However, no assurance can be given that we will be able to meet the complex and varied tests required to qualify as a RIC or to avoid corporate level tax. In addition, because the relevant laws may change, compliance with one or more of the RIC requirements may be impossible or impracticable.

In order to qualify for the special tax treatment accorded to regulated investment companies and their shareholders, we must, among other things: (a) derive at least 90% of our gross income for each taxable year from (i) dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to our business of investing in such stock, securities, or currencies and (ii) net income derived from interests in “qualified publicly traded partnerships” (as defined below) (collectively, the “90% Income Test”); (b) diversify our holdings so that, at the end of each quarter of our taxable year, (i) at least 50% of the value of our total assets consists of cash and cash items, U.S. government securities, securities of other regulated investment companies, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of our total assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of our total assets is invested, including through corporations in which we owns a 20% or more voting stock interest, (x) in the securities (other than those of the U.S. government or other regulated investment companies) of any one issuer or of two or more issuers that we control and that are engaged in the same, similar, or related trades or businesses, or (y) in the securities of one or more qualified publicly traded partnerships (as defined below) (collectively, the “Diversification Tests”); and (c) distribute with respect to each taxable year at least 90% of the sum of our investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid—generally, taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses) and any net tax-exempt interest income for such year (the “Annual Distribution Requirement”). Our qualification and taxation as a RIC depend upon our ability to satisfy on a continuing basis, through actual, annual operating results, such distribution, income and asset, and other requirements imposed under the Code, no assurance can be given that we will be able to meet the complex and varied tests required to qualify as a RIC or to avoid corporate level tax. In addition, because the relevant laws may change, compliance with one or more of the RIC requirements may be impossible or impracticable.

We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our ordinary income for each calendar year, (2) 98.2% of our capital gain net income for each one-year period ending on October 31 of such year (or November 30 or December 31 of that year if we are permitted to elect and so elects), and (3) any income realized, but not distributed, in preceding years (to the extent that U.S. federal income tax was not imposed on such amounts) less certain over-distributions in the prior year (collectively, the “Excise Tax Requirement”). For purposes of the Excise Tax Requirement, a RIC’s ordinary gains and losses from the sale, exchange, or other taxable disposition of property that would otherwise be taken into account after October 31 (or November 30 of that year if the RIC makes the election described above) generally are treated as arising on January 1 of the following calendar year; in the case of a RIC with a December 31 year end that makes the election described above, no such gains or losses will be so treated. Also, for these purposes, we will be treated as having distributed any amount on which we are subject to corporate income tax for the taxable year ending within the calendar year. We intend generally to make distributions sufficient to avoid imposition of the 4% excise tax, although there can be no assurance that we will be able to or will do so.

We intend to distribute to our shareholders, at least annually, all or substantially all of our investment company taxable income (computed without regard to the dividends-paid deduction), our net tax-exempt income

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(if any) and our net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards). Any taxable income including any net capital gain retained by us will be subject to tax at the fund level at regular corporate rates. In the case of net capital gain, we are permitted to designate the retained amount as undistributed capital gain in a timely notice to our shareholders who would then, in turn, (i) be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their share of such undistributed amount, and (ii) be entitled to credit their proportionate shares of the tax paid by us on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds on a properly filed U.S. tax return to the extent the credit exceeds such liabilities. If we make this designation, for U.S. federal income tax purposes, the tax basis of Shares owned by a shareholder will be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder’s gross income under clause (i) of the preceding sentence and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence. We are not required to, and there can be no assurance that we will, make this designation if we retain all or a portion of our net capital gain in a taxable year.

In connection with any future borrowings, we may be prevented by loan covenants from declaring and paying dividends in certain circumstances. Even if we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements, under the 1940 Act, we are generally not permitted to make distributions to our shareholders while our debt obligations and senior securities are outstanding unless certain “asset coverage” tests or other financial covenants are met. Limits on our payment of dividends may prevent us from meeting the Annual Distribution Requirement, and may, therefore, jeopardize our qualification for taxation as a RIC, or subject us to the 4% excise tax on undistributed income.

We may be required to recognize taxable income for U.S. federal income tax purposes in circumstances in which we do not receive a corresponding payment in cash. Because such amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our shareholders in order to satisfy the Annual Distribution Requirement and the Excise Tax Requirement, even though We will not have received any corresponding cash amount. In order to enable us to make distributions to shareholders that will be sufficient to enable us to satisfy the Annual Distribution Requirement and the Excise Tax Requirement we may need to liquidate or sell some of our assets at times or at prices that are not advantageous, raise additional equity or debt capital, take out loans, forego new investment opportunities or otherwise take actions that are disadvantageous to our business (or be unable to take actions that are advantageous to our business).

In general, for purposes of the 90% gross income requirement described in paragraph (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership that would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a “qualified publicly traded partnership” (a partnership (x) the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof and (y) that derives less than 90% of our income from the qualifying income described in paragraph (a)(i) above) will be treated as qualifying income. In general, such entities will be treated as partnerships for U.S. federal income tax purposes because they meet the passive income requirement under Code section 7704(c)(2). In addition, although in general the passive loss rules of the Code do not apply to regulated investment companies, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership.

For purposes of the diversification test in (b) above, the term “outstanding voting securities of such issuer” will include the equity securities of a qualified publicly traded partnership. Also, for purposes of the diversification test in (b) above, the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the Internal Revenue Service (“IRS”) with respect to issuer identification for a particular type of investment may adversely affect our ability to meet the diversification test in (b) above.

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If we fail to satisfy the 90% Income Test for any taxable year or the Diversification Tests for any quarter of the taxable year, we may still continue to be taxed as a RIC for the relevant taxable year if we are eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. Additionally, relief is provided for certain de minimis failures of the diversification requirements where we correct the failure within a specified period. If the applicable relief provisions are not available or cannot be met, all of our income would be subject to corporate-level income tax as described below. We cannot provide assurance that we would qualify for any such relief should we fail the 90% Income Test or the Diversification Tests.

If we were to fail to meet the RIC requirements for more than two consecutive years and then seek to requalify as a RIC, we would be required to pay corporate-level tax on the unrealized appreciation recognized during the succeeding five-year period unless we make a special election to recognize gain to the extent of any unrealized appreciation in our assets at the time of requalification.

If we are unable to qualify for treatment as a RIC, and relief is not available as discussed above, we would be subject to tax on all of our taxable income at the regular corporate U.S. federal income tax rate (and we also would be subject to any applicable state and local taxes). We would not be able to deduct distributions to shareholders and would not be required to make distributions for U.S. federal income tax purposes. Distributions generally would be taxable to our shareholders as ordinary dividend income to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate U.S. shareholders would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the shareholder’s adjusted tax basis in its Shares, and any remaining distributions would be treated as capital gains.

Capital losses in excess of capital gains (“net capital losses”) are not permitted to be deducted against our net investment income. Instead, potentially subject to certain limitations, we may carry net capital losses from any taxable year forward to subsequent taxable years to offset capital gains, if any, realized during such subsequent taxable years. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether we retain or distribute such gains. We may carry net capital losses forward to one or more subsequent taxable years without expiration. We must apply such carryforwards first against gains of the same character.

In determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income and its earnings and profits, a RIC generally may elect to treat part or all of any post-October capital loss (defined as any net capital loss attributable to the portion, if any, of the taxable year after October 31 or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to such portion of the taxable year) or late-year ordinary loss (generally, the sum of its (i) net ordinary loss from the sale, exchange or other taxable disposition of property, attributable to the portion, if any, of the taxable year after October 31, and its (ii) other net ordinary loss attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding taxable year.

Fund Distributions

We intend to declare income dividends daily and distribute them to common shareholders monthly. Unless a shareholder elects otherwise, all distributions will be automatically reinvested in additional Shares pursuant to our dividend reinvestment plan. A shareholder whose distributions are reinvested in Shares under the dividend reinvestment plan will be treated for U.S. federal income tax purposes as having received an amount in distribution equal to the fair market value of the Shares issued to the shareholder, which amount will also be equal to the net asset value of such Shares. For U.S. federal income tax purposes, all distributions are generally taxable in the manner described below, whether a shareholder takes them in cash or they are reinvested pursuant to the dividend reinvestment plan in additional Shares.

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For U.S. federal income tax purposes, distributions of investment income are generally taxable as ordinary income. Taxes on distributions of capital gains are determined by how long we owned (or are deemed to have owned) the investments that generated the gains, rather than how long a shareholder has owned his or her Shares. In general, we will recognize long-term capital gain or loss on investments we have owned (or are deemed to have owned) for more than one year, and short-term capital gain or loss on investments we have owned (or are deemed to have owned) for one year or less. Tax rules can alter our holding period in investments and thereby affect the tax treatment of gain or loss in respect of such investments. Distributions of our net capital gains (which are generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly reported by us as “capital gain dividends” will be taxable to a U.S. Shareholder as long-term capital gains that are currently taxable at a maximum rate of 20% in the case of Shareholders taxed at individual rates, regardless of the U.S. Shareholder’s holding period for his, her or its Shares and regardless of whether paid in cash or reinvested in additional Shares.

Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to shareholders as ordinary income. Distributions of investment income reported by us as derived from “qualified dividend income” will be taxed in the hands of individuals at the rates applicable to net capital gain, provided holding period and other requirements are met at both the shareholder and fund levels. We do not expect a significant portion of distributions to be derived from qualified dividend income.

In general, dividends of net investment income received by our corporate shareholders will qualify for the dividends-received deduction generally available to corporations only to the extent of the amount of eligible dividends received by us from domestic corporations for the taxable year if certain holding period and other requirements are met at both the shareholder and fund levels. We do not expect a significant portion of distributions to be eligible for the dividends-received deduction.

Any distribution of income that is attributable to dividend income received by us on securities we temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by us, will not constitute qualified dividend income to non-corporate shareholders and will not be eligible for the dividends-received deduction for corporate shareholders.

If, in and with respect to any taxable year, we make a distribution in excess of our current and accumulated “earnings and profits,” the excess distribution will be treated as a return of capital to the extent of a shareholder’s tax basis in his or her Shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder’s basis in his or her Shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of such Shares. If we issue one or more series of preferred shares, where one or more such distributions occur in and with respect to any taxable year, the available earnings and profits will be allocated first to the distributions made to the holders of such preferred shares, and only thereafter to distributions made to holders of Shares. In such case, the holders of preferred shares will receive a disproportionate share of the distributions, if any, treated as dividends, and the holders of the Shares will receive a disproportionate share of the distributions, if any, treated as a return of capital.

A distribution by us will be treated as paid on December 31 of any calendar year if it is declared by us in October, November or December with a record date in such a month and paid by us during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received.

As required by federal law, detailed federal tax information with respect to each calendar year will be furnished to shareholders early in the succeeding year.

Dividends and distributions on Shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed our realized income and gains, even though such dividends and distributions may economically represent a return of a particular shareholder’s investment. Such distributions are

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likely to occur in respect of Shares purchased at a time when our net asset value reflects unrealized gains or income or gains that are realized but not yet distributed. Such realized income and gains may be required to be distributed even when our net asset value also reflects unrealized losses.

Distributions out of our current and accumulated earnings and profits will not be eligible for the 20% pass-through deduction under Section 199A of the Code, although qualified REIT dividends earned by us may qualify for the 20% pass-through deduction under Section 199A deduction.

The Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts and estates to the extent their income exceeds certain threshold amounts. For these purposes, “net investment income” generally includes gross income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts earned from trades or businesses), reduced by certain deductions allocable to such income. Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in us.

We will not be considered to be a “publicly offered” RIC if we do not have at least 500 shareholders at all times during a taxable year and our Shares are not treated as continuously offered pursuant to a public offering or our Shares are not regularly traded on an established securities market. It is possible that we will not be treated as a “publicly offered” RIC for one or more of our taxable years. Very generally, pursuant to Treasury Department regulations, expenses of a RIC that is not “publicly offered,” except those specific to our status as a RIC or separate entity (e.g., registration fees or transfer agency fees), are subject to special “pass-through” rules. These expenses (which include direct and certain indirect advisory fees) are treated as additional dividends to certain Fund shareholders (generally including other regulated investment companies that are not “publicly offered,” individuals and entities that compute their taxable income in the same manner as an individual), and, other than in the case of a shareholder that is a RIC that is not “publicly offered,” are not deductible by those shareholders under current law.

Sales, Exchanges or Redemptions of Shares

The sale, exchange or repurchase of our Shares may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition of our Shares treated as a sale or exchange for U.S. federal income tax purposes will be treated as long-term capital gain or loss if the Shares have been held for more than 12 months. Otherwise, such gain or loss on the taxable disposition of our Shares will be treated as short-term capital gain or loss. However, any loss realized upon a taxable disposition of Shares held for six months or less will be treated as long-term, rather than short-term, to the extent of any long-term capital gain distributions received (or deemed received) by the shareholder with respect to the Shares. All or a portion of any loss realized upon a taxable disposition of our Shares will be disallowed under the Code’s “wash sale” rule if other substantially identical Shares are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased Shares will be adjusted to reflect the disallowed loss.

A repurchase by us of a shareholder’s Shares pursuant to a repurchase offer (as described in the Prospectus) generally will be treated as a sale or exchange of the Shares by a shareholder provided that either (i) the shareholder tenders, and we repurchase, all of such shareholder’s Shares, thereby reducing the shareholder’s percentage ownership of us, whether directly or by attribution under Section 318 of the Code, to 0%, (ii) the shareholder meets numerical safe harbors under the Code with respect to percentage voting interest and reduction in ownership of us following completion of the repurchase offer, or (iii) the repurchase offer otherwise results in a “meaningful reduction” of the shareholder’s ownership percentage interest in us, which determination depends on a particular shareholder’s facts and circumstances.

If a tendering shareholder’s proportionate ownership of us (determined after applying the ownership attribution rules under Section 318 of the Code) is not reduced to the extent required under the tests described above, such shareholder will be deemed to receive a distribution from us under Section 301 of the Code with

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respect to the Shares held (or deemed held under Section 318 of the Code) by the shareholder after the repurchase offer (a “Section 301 distribution”). The amount of this distribution will equal the price paid by us to such shareholder for the Shares sold, and will be taxable as a dividend, i.e., as ordinary income, to the extent of our current or accumulated earnings and profits allocable to such distribution, with the excess treated as a return of capital reducing the shareholder’s tax basis in the Shares held after the repurchase offer, and thereafter as capital gain. Any Shares held by a shareholder after a repurchase offer will be subject to basis adjustments in accordance with the provisions of the Code.

Provided that no tendering shareholder is treated as receiving a Section 301 distribution as a result of selling Shares pursuant to a particular repurchase offer, shareholders who do not sell Shares pursuant to that repurchase offer will not realize constructive distributions on their Shares as a result of other shareholders selling Shares in the repurchase offer. In the event that any tendering shareholder is deemed to receive a Section 301 distribution, it is possible that shareholders whose proportionate ownership of the us increases as a result of that repurchase offer, including shareholders who do not tender any Shares, will be deemed to receive a constructive distribution under Section 305(c) of the Code in an amount equal to the increase in their percentage ownership of us as a result of the repurchase offer. Such constructive distribution will be treated as a dividend to the extent of current or accumulated earnings and profits allocable to it.

Use of our cash to repurchase Shares may adversely affect our ability to satisfy the distribution requirements for treatment as a RIC described above. We may also recognize income in connection with the sale of portfolio securities to fund share purchases, in which case we would take any such income into account in determining whether such distribution requirements have been satisfied.

The foregoing discussion does not address the tax treatment of tendering shareholders who do not hold their Shares as a capital asset. Such shareholders should consult their own tax advisors on the specific tax consequences to them of participating or not participating in the repurchase offer.

Issuer Deductibility of Interest

A portion of the interest paid or accrued on certain high yield discount obligations owned by us may not be deductible, and interest paid on debt obligations, if any, that are considered for tax purposes to be payable in the equity of the issuer or a related party will not be deductible to the issuer. This may affect the cash flow of the issuer. If a portion of the interest paid or accrued on certain high yield discount obligations is not deductible, that portion will be treated as a dividend paid by the issuer for purposes of the corporate dividends received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by us may be eligible for the dividends-received deduction to the extent attributable to the deemed dividend portion of such accrued interest.

Original Issue Discount, Payment-in-Kind Securities, Market Discount, Preferred Securities and Commodity-Linked Notes

Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by us in the secondary market may be treated as having “market discount.” Very generally, market discount is the excess of the stated redemption price of a debt obligation (or in the case of an obligation issued with OID, its “revised issue price”) over the purchase price of such obligation. Subject to the discussion below regarding Section 451 of the Code, (i) generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt obligation having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the “accrued market discount” on such debt obligation, (ii) alternatively, we may elect to accrue market discount currently, in which case we will be required to include the accrued market discount on such debt obligation in our income (as ordinary income) and thus distribute it over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation, and (iii) the rate at which the market discount

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accrues, and thus is included in our income, will depend upon which of the permitted accrual methods we elect. We reserve the right to revoke such an election at any time pursuant to applicable IRS procedures. Notwithstanding the foregoing, effective for taxable years beginning after 2017, Section 451 of the Code generally requires any accrual method taxpayer to take into account items of gross income no later than the time at which such items are taken into account as revenue in the taxpayer’s financial statements. However, the Treasury Department has issued final regulations providing that Section 451 does not apply to accrued market discount. In the case of higher-risk securities, the amount of market discount may be unclear. See “Higher-Risk Securities.”

From time to time, a substantial portion of our investments in loans and other debt obligations could be treated as having OID and/or market discount, which, in some cases could be significant. To generate sufficient cash to make the requisite distributions, we may be required to sell securities in our portfolio (including when it is not advantageous to do so) that we otherwise would have continued to hold.

A portion of the OID accrued on certain high yield discount obligations may not be deductible to the issuer and will instead be treated as a dividend paid by the issuer for purposes of the dividends-received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by us may be eligible for the dividends-received deduction to the extent attributable to the deemed dividend portion of such OID.

Some debt obligations with a fixed maturity date of one year or less from the date of issuance may be treated as having OID or, in certain cases, “acquisition discount” (very generally, the excess of the stated redemption price over the purchase price). We will be required to include the OID or acquisition discount in income (as ordinary income) and thus distribute it over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. The rate at which OID or acquisition discount accrues, and thus is included in our income, will depend upon which of the permitted accrual methods we elect.

Some preferred securities may include provisions that permit the issuer, at its discretion, to defer the payment of distributions for a stated period without any adverse consequences to the issuer. If we own a preferred security that is deferring the payment of its distributions, we may be required to report income for U.S. federal income tax purposes to the extent of any such deferred distributions even though we have not yet actually received the cash distribution.

In addition, PIK obligations will, and commodity-linked notes may, give rise to income which is required to be distributed and is taxable even though we receive no interest payment in cash on the security during the year.

If we hold the foregoing kinds of obligations, or other obligations subject to special rules under the Code, we may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest we actually received. Such distributions may be made from our cash assets or by disposition of portfolio securities, if necessary (including when it is not advantageous to do so). We may realize gains or losses from such dispositions. In the event we realize net capital gains from such transactions, our shareholders may receive a larger capital gain distribution than they might otherwise receive in the absence of such transactions.

Higher-Risk Securities

We may invest in debt obligations that are in the lowest rating categories or are unrated, including debt obligations of issuers not currently paying interest or who are in default. Investments in debt obligations that are at risk of or in default present special tax issues for us. Tax rules are not entirely clear about issues such as whether or to what extent we should recognize market discount on such a debt obligation, when we may cease to

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accrue interest, OID or market discount, when and to what extent we may take deductions for bad debts or worthless securities and how we should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by us when, as and if we invest in such securities, in order to seek to ensure that we distribute sufficient income to preserve our status as a RIC and does not become subject to federal income or excise tax.

Securities Purchased at a Premium

Very generally, where we purchase a bond or other debt security at a price that exceeds the redemption price at maturity (i.e., a premium), the premium is amortizable over the remaining term of such security. In the case of a taxable bond, if we make an election applicable to all such bonds we purchase, which election is irrevocable without consent of the IRS, we reduce the current taxable income from the bond by the amortized premium and reduces our tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January 4, 2013, we are permitted to deduct any remaining premium allocable to a prior period. In the case of a tax-exempt bond, tax rules require us to reduce our tax basis by the amount of amortized premium.

Certain Investments in REITs

Any investment by us in equity securities of REITs may result in our receipt of cash in excess of the REIT’s earnings; if we distribute these amounts, these distributions could constitute a return of capital to our shareholders for U.S. federal income tax purposes. Investments in REIT equity securities also may require us to accrue and to distribute income not yet received. To generate sufficient cash to make the requisite distributions, we may be required to sell securities in our portfolio (including when it is not advantageous to do so) that we otherwise would have continued to hold. Dividends received by us from a REIT generally will not constitute qualified dividend income.

Distributions by us to our shareholders that we properly report as “section 199A dividends,” as defined and subject to certain conditions described below, are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders are permitted a federal income tax deduction equal to 20% of qualified REIT dividends received by them, subject to certain limitations. Very generally, a “section 199A dividend” is any dividend or portion thereof that is attributable to certain dividends received by a RIC from REITs, to the extent such dividends are properly reported as such by the RIC in a written notice to its shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially similar or related property. We are permitted to report such part of its dividends as section 199A dividends as are eligible, but is not required to do so.

Foreign Currency Transactions

Our transactions in foreign currencies, foreign currency-denominated debt obligations and certain foreign currency options, futures contracts and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. Any such net gains could require a larger dividend toward the end of the calendar year. Any such net losses will generally reduce and potentially require the recharacterization of prior ordinary income distributions and may accelerate Fund distributions to shareholders and increase the distributions taxed to shareholders as ordinary income. Any net ordinary losses so created cannot be carried forward by us to offset income or gains earned in subsequent taxable years.

Options, Futures, and Forward Contracts, Swap Agreements, and other Derivatives

In general, option premiums received by us are not immediately included in our income. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or we transfer

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or otherwise terminate the option (e.g., through a closing transaction). If a call option written by us is exercised and we sell or deliver the underlying stock, we generally will recognize capital gain or loss equal to (a) the sum of the strike price and the option premium received by us minus (b) our basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by us pursuant to the exercise of a put option written by us, we will generally subtract the premium received for purposes of computing its cost basis in the stock purchased. Gain or loss arising in respect of a termination of our obligation under an option other than through the exercise of the option will be short-term capital gain or loss depending on whether the premium income received by us is greater or less than the amount paid by us (if any) in terminating the transaction. Thus, for example, if an option written by us expires unexercised, we generally will recognize short-term capital gain equal to the premium received.

Our options activities may include transactions constituting straddles for U.S. federal income tax purposes, that is, that trigger the U.S. federal income tax straddle rules contained primarily in Section 1092 of the Code. Such straddles include, for example, positions in a particular security, or an index of securities, and one or more options that offset the former position, including options that are “covered” by our long position in the subject security. Very generally, where applicable, Section 1092 requires (i) that losses be deferred on positions deemed to be offsetting positions with respect to “substantially similar or related property” to the extent of unrealized gain in the latter, and (ii) that the holding period of such a straddle position that has not already been held for the long-term holding period be terminated and begin anew once the position is no longer part of a straddle. Options on single stocks that are not “deep in the money” may constitute qualified covered calls, which generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are “in the money” although not “deep in the money” will be suspended during the period that such calls are outstanding. Thus, the straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as short-term capital gains, and distributions that would otherwise constitute “qualified dividend income” or qualify for the dividends-received deduction to fail to satisfy the holding period requirements and therefore to be taxed as ordinary income or to fail to qualify for the dividends received deduction, as the case may be.

The tax treatment of certain positions entered into by us, including regulated futures contracts, certain foreign currency positions and certain listed non-equity options, will be governed by section 1256 of the Code (“section 1256 contracts”). Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses (“60/40”), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, section 1256 contracts held by us at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are “marked to market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.

Derivatives, Hedging, and Other Transactions

In addition to the special rules described above in respect of futures and options transactions, our transactions in other derivatives instruments (e.g., forward contracts and swap agreements), as well as any of its hedging, short sale, securities loan or similar transactions may be subject to one or more special tax rules (e.g., notional principal contract, straddle, constructive sale, wash sale and short sale rules). These rules may affect whether gains and losses recognized by us are treated as ordinary or capital, accelerate the recognition of income or gains to us, defer losses to us, and cause adjustments in the holding periods of our securities, thereby affecting, among other things, whether capital gains and losses are treated as short-term or long-term. These rules could, therefore, affect the amount, timing and/or character of distributions to shareholders.

Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether we have made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid the Fund-level tax.

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Book-Tax Differences

Certain of our investments in derivative instruments and foreign currency-denominated instruments, and any of our transactions in foreign currencies and hedging activities, are likely to produce a difference between its book income and the sum of its taxable income and net tax-exempt income (if any). If such a difference arises, and our book income is less than the sum of its taxable income and net tax-exempt income (if any), we could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to avoid an entity-level tax. In the alternative, if our book income exceeds the sum of its taxable income (including realized capital gains) and net tax-exempt income, the distribution (if any) of such excess generally will be treated as (i) a dividend to the extent of our remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter, as a return of capital to the extent of the recipient’s basis in its Shares, and (iii) thereafter as gain from the sale or exchange of a capital asset.

Foreign (non-U.S.) Taxation

Investment income received from sources within foreign countries, or capital gains earned by investing in securities of foreign issuers, may be subject to foreign income taxes withheld at the source. In this regard, withholding tax rates in countries with which the United States does not have a tax treaty can be as high as 35% or more. The United States has entered into tax treaties with many foreign countries that may entitle us to a reduced rate of tax or exemption from tax on this related income and gains. The effective rate of foreign tax cannot be determined at this time since the amount of our assets to be invested within various countries is not now known. We do not anticipate being eligible for the special election that allows a RIC to treat foreign income taxes paid by such RIC as paid by its shareholders.

Tax-Exempt Shareholders

Income of a RIC that would be UBTI if earned directly by a tax-exempt entity will not generally be attributed as UBTI to a tax-exempt shareholder of the RIC. A tax-exempt shareholder could realize UBTI by virtue of its investment in us if Shares constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b). A tax-exempt shareholder may also recognize UBTI if we recognize “excess inclusion income” derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs as described above, if the amount of such income recognized by us exceeds our investment company taxable income (after taking into account deductions for dividends paid by us).

Non-U.S. Shareholders

The following discussion only applies to certain non-U.S. shareholders. Whether an investment in the Shares is appropriate for a non-U.S. shareholder will depend upon that person’s particular circumstances. An investment in the Shares by a non-U.S. shareholder may have adverse tax consequences. Non-U.S. shareholders should consult their tax advisers before investing in the Shares. The following discussion does not apply to non-U.S. shareholders that are engaged in a U.S. trade or business or hold their Shares in connection with a U.S. trade or business.

Distributions of our “investment company taxable income” to non-U.S. shareholders (including interest income and realized net short-term capital gains in excess of realized long-term capital losses, which generally would be free of withholding if paid to Non-U.S. shareholders directly) will be subject to withholding of federal tax at a 30% rate (or lower rate provided by an applicable treaty) to the extent of our current and accumulated earnings and profits unless an applicable exception applies. Actual or deemed distributions of our net capital gain to a non-U.S. shareholder, and gains recognized by a non-U.S. shareholder upon the sale of our Shares, will not be subject to withholding of U.S. federal income tax and generally will not be subject to U.S. federal income tax unless the non-U.S. shareholder is an individual, has been present in the United States for 183 days or more during the taxable year, and certain other conditions are satisfied. No assurance can be provided as to whether

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any of our distributions will be reported as eligible for this exemption. (Special certification requirements apply to a non-U.S. shareholder that is a foreign partnership or a foreign trust, and such entities are urged to consult their tax advisers.)

In general, no U.S. source withholding taxes will be imposed on dividends paid by RICs to non-U.S. shareholders to the extent the dividends are designated as “interest-related dividends” or “short-term capital gain dividends.” Under this exemption, interest-related dividends and short-term capital gain dividends generally represent distributions of interest or short-term capital gain that would not have been subject to U.S. withholding tax at the source if they had been received directly by a non-U.S. shareholder, and that satisfy certain other requirements. We expect that a portion of our dividends will qualify as interest-related dividends, although we cannot assure you the exact proportion that will so qualify.

If we distribute our net capital gain in the form of deemed rather than actual distributions (which we may do in the future), a non-U.S. shareholder will be entitled to a U.S. federal income tax credit or tax refund equal to the non-U.S. shareholder’s allocable share of the tax we pay on the capital gain deemed to have been distributed. In order to obtain the refund, the non-U.S. shareholder must obtain a U.S. taxpayer identification number (if one has not been previously obtained) and file a U.S. federal income tax return even if the non-U.S. shareholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return.

We have the ability to declare a large portion of a dividend in Shares. As long as a portion of such dividend is paid in cash and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, our non-U.S. shareholders will be taxed on 100% of the fair market value of the dividend on the date the dividend is received in the same manner as a cash dividend (including the application of withholding tax rules described above), even if most of the dividend is paid in Shares. In such a circumstance, we may be required to withhold all or substantially all of the cash we would otherwise distribute to a non-U.S. shareholder.

Non-U.S. shareholders should contact their intermediaries regarding the application of withholding rules to their accounts.

In order for a non-U.S. shareholder to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from backup withholding, a non-U.S. shareholder must comply with special certification and filing requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, W-8BEN-E or substitute form). Non-U.S. shareholders should consult their tax advisors in this regard.

Special rules (including withholding and reporting requirements) apply to non-U.S. partnerships and those holding our Shares through non-U.S. partnerships. Additional considerations may apply to non-U.S. trusts and estates. Investors holding our Shares through non-U.S. entities should consult their tax advisers about their particular situation.

A non-U.S. shareholder may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax referred to above.

A beneficial holder of Shares who is a non-U.S. person may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal tax on income referred to above.

Backup Withholding

We are generally required to withhold and remit to the U.S. Treasury a percentage of taxable distributions and redemption proceeds paid to any individual shareholder who fails to properly furnish us with a

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correct taxpayer identification number, who has under-reported dividend or interest income, or who fails to certify to us that he or she is not subject to such withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability provided the appropriate information is furnished to the IRS.

Tax Shelter Reporting Regulations

Under U.S. Treasury regulations, if a shareholder recognizes a loss of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder in any single taxable year, the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all regulated investment companies. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer’s treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.

Other Reporting and Withholding Requirements

Sections 1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, “FATCA”) generally require us to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental agreement (an “IGA”) between the United States and a foreign government. If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, we may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share redemptions or capital gain dividends we pay. If a payment by us is subject to FATCA withholding, we are required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., interest-related dividends). In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not financial institutions unless the foreign entity certifies that it does not have a greater than 10% U.S. owner or provides the withholding agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a non-U.S. shareholder and the status of the intermediaries through which they hold their Shares, non-U.S. shareholders could be subject to this 30% withholding tax with respect to distributions on their Shares and proceeds from the sale of their Shares. Under certain circumstances, a non-U.S. shareholder might be eligible for refunds or credits of such taxes.

Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of us could be required to report annually their “financial interest” in our foreign “financial accounts,” if any, on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Shareholders should consult a tax advisor, and persons investing in us through an intermediary should contact their intermediary, regarding the applicability to them of this reporting requirement.

Each prospective investor is urged to consult its tax adviser regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investor’s own situation, including investments through an intermediary.

Shares Purchased Through Tax-Qualified Plans

Special tax rules apply to investments through defined contribution plans and other tax-qualified plans. Shareholders should consult their tax advisers to determine the suitability of Shares as an investment through such plans and the precise effect of an investment on their particular tax situation.

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PROXY VOTING POLICY AND PROXY VOTING RECORD

We have delegated our proxy voting responsibility to the Adviser. The proxy voting policies and procedures of the Adviser are set out below. The guidelines are reviewed periodically by the Adviser and our trustee who are not “interested persons,” and, accordingly, are subject to change.

Introduction

As an investment adviser registered under the Advisers Act, the Adviser has a fiduciary duty to act solely in our best interests. As part of this duty, the Adviser recognizes that it must vote our securities in a timely manner free of conflicts of interest and in our best interests.

The Adviser’s policies and procedures for voting proxies for its investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers Act.

Proxy Policies

The Adviser votes proxies relating to our portfolio securities in what it perceives to be the best interest of our shareholders. The Adviser reviews on a case-by-case basis each proposal submitted to a stockholder vote to determine its effect on the portfolio securities we hold. In most cases the Adviser will vote in favor of proposals that the Adviser believes are likely to increase the value of the portfolio securities we hold.

Although the Adviser will generally vote against proposals that may have a negative effect on our portfolio securities, the Adviser may vote for such a proposal if there exist compelling long-term reasons to do so.

Our proxy voting decisions are made by our Adviser’s portfolio managers. To ensure that the Adviser’s vote is not the product of a conflict of interest, the Adviser requires that (1) anyone involved in the decision-making process disclose to our Adviser’s investment committee any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding a proxy vote; and (2) employees involved in the decision-making process or vote administration are prohibited from revealing how the Adviser intends to vote on a proposal in order to reduce any attempted influence from interested parties. Where conflicts of interest may be present, the Adviser will disclose such conflicts to us, including our Independent Trustees, and may request guidance from us on how to vote such proxies.

We are required to file our proxy voting record for the most recent 12-month period ended June 30 on Form N-PX with the SEC. Form N-PX is required to be filed by August 31 of each year and when filed will be available without charge and by request by calling us (collect) at (703) 287-5800 or on the SEC’s website at www.sec.gov.

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CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

Shareholders beneficially owning more than 25% of outstanding Shares may be in control and may be able to affect the outcome of certain matters presented for a shareholder vote. TGC provided our initial capital by investing $100,000 in Class I Shares and thus will own 100% of outstanding Shares until we commence selling Shares to the public. For so long as TGC has a greater than 25% interest in our Shares, it may be deemed to be a “control person” of us for purposes of the 1940 Act. However, it is anticipated that TGC will no longer be a control person when we commence operations and Shares are sold to the public. The following table sets forth, as of October 15, 2024, the beneficial ownership of (i) each trustee, (ii) each of the named executive officers, (iii) our executive officers and trustees as a group and (iv) each shareholder known to management to beneficially own more than 5% of the outstanding Shares.

Beneficial Ownership of Voting Securities

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PricewaterhouseCoopers LLP is our independent registered public accounting firm and must be approved at least annually by the Board of Trustees to continue in such capacity. PricewaterhouseCoopers LLP performs audit services, tax and other audit related services for us, including the examination of financial statements included in our annual reports to shareholders.

LEGAL COUNSEL

We have engaged Kirkland & Ellis LLP to serve as our legal counsel. In addition, the legality of Shares offered by the prospectus will be passed upon for us by Richards, Layton & Finger, P.A.

ADDITIONAL INFORMATION

A registration statement on Form N-2, including amendments thereto, relating to the Shares offered hereby, has been filed by us with the SEC. The prospectus and this Statement of Additional Information do not contain all of the information set forth in the registration statement, including any exhibits and schedules thereto. For further information with respect to us and the Shares offered hereby, reference is made to the registration statement. A copy of the registration statement may be reviewed on the EDGAR database on the SEC’s website at http://www.sec.gov. Prospective investors can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov).

FINANCIAL STATEMENTS

Appendix A to this SAI provides financial information regarding us. Our financial statements have been audited by PricewaterhouseCoopers LLP.

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APPENDIX A

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Gladstone Alternative Income Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities of Gladstone Alternative Income Fund (the “Fund”) as of September 30, 2024 and the related statement of operations for the period from May 29, 2024 (Organization Date) through September 30, 2024, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2024 and the results of its operations for the period from May 29, 2024 (Organization Date) through September 30, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

We have served as the auditor of the fund since 2024.

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Gladstone Alternative Income Fund

STATEMENT OF ASSETS AND LIABILITIES

September 30, 2024

See accompanying notes which are an integral part of the financial statements.

⁽¹⁾ See Note 3, Investment Advisory and Other Agreements, for detail on potential reimbursement to the Adviser under the terms of the Expense Support and Conditional Reimbursement Agreement.

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Gladstone Alternative Income Fund

STATEMENT OF OPERATIONS

Period from May 29, 2024 (Organization Date) to September 30, 2024

See accompanying notes which are an integral part of the financial statements.

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Gladstone Alternative Income Fund

NOTES TO FINANCIAL STATEMENTS

September 30, 2024

Note 1 — Organization and Registration

The Gladstone Alternative Income Fund (the “Fund”) is a non-diversified, closed-end management investment company that is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for federal income tax purposes the Fund intends to elect to be treated, and intends to qualify annually thereafter, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with its tax year ending December 31, 2024. The Fund will engage in a continuous offering of its common shares of beneficial interests (“Shares”) and will be operated as an “interval fund” that will make quarterly offers to repurchase between 5% and 25% of its outstanding Shares at net asset value (“NAV”) per Share, reduced by any applicable repurchase fee. The Fund will initially offer Class I Shares, Class A Shares, Class C Shares and Class U Shares and may offer additional classes of Shares in the Future. Subject to applicable law and approval of our Board of Trustees (the “Board” or “Board of Trustees,” and each of the trustees on the Board, a “Trustee”), for each quarterly repurchase offer, we currently expect to offer to repurchase 5% of the outstanding Shares at NAV, which is the minimum amount permitted.

The Fund will be externally managed by Gladstone Management Corporation (the “Adviser”).

The Fund’s primary investment objective is to (i) achieve and grow current income by investing primarily in debt securities of established businesses or real estate holding intermediaries that the Fund believes will provide stable earnings and cash flow to pay expenses, make principal and interest payments on its outstanding indebtedness and make distributions to shareholders that grow over time; and (ii) provide the Fund’s shareholders with long-term capital appreciation in the value of its assets by investing in equity securities of established businesses, including in connection with the Fund’s debt investments, that the Fund believes can grow over time to permit the Fund to sell its equity investments for capital gains.

The Fund will pursue its investment objective primarily by investing in directly originated loans to lower and middle market private businesses in the United States, broadly syndicated loans and commercial real estate loans. The Fund may also make equity investments, including in connection with its directly originated loans. The Fund will seek to avoid investing in high-risk, pre-revenue, early-stage enterprises. The Fund expects that most, if not all, of the debt securities it acquires will not be rated by a rating agency. Investors should assume that these loans would be rated below what is considered “investment grade” quality. Investments rated below investment grade are often referred to as high yield securities or junk bonds and may be considered higher risk as compared to investment grade debt instruments.

The Fund was organized as a statutory trust on May 29, 2024 under the laws of the State of Delaware. The Fund had no operations from that date to September 30, 2024 other than those relating to organizational matters and the registration of its Shares under applicable securities laws. The Gladstone Companies, Inc., which is the parent company of the Adviser, purchased 10,000 Class I Shares at an aggregate purchase price of $100,000 on September 26, 2024. The Fund is authorized to issue an unlimited number of Shares. The Fund intends to offer Shares through Gladstone Securities, LLC (the “Distributor”), an affiliate of the Adviser, on a best-efforts basis. The Distributor is not

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obligated to sell any specific amount of Shares, nor have arrangements been made to place shareholders’ funds in escrow, trust or similar arrangement. The initial NAV is $10.00 for each share class. The maximum sales load is 5.75% of the amount invested for Class A Shares. Class C Shares, Class I Shares and Class U Shares are not subject to an up-front sales charge. Class C Shares redeemed during the first 365 days after purchase may be subject to a contingent deferred sales charge equal to 1.00% of the invested amount. The minimum initial investment by a shareholder for Class I Shares, Class A Shares, Class C Shares and Class U Shares are $250,000, $5,000, $5,000 and $5,000, respectively, per account. The Fund reserves the right to waive the minimum initial investment requirement for any investor. There is no minimum subsequent investment amount for any class of Shares.

Note 2 — Significant Accounting Policies

Basis of Presentation

The Fund prepares its financial statements and the accompanying notes in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and they conform to Regulation S-X of the Securities and Exchange Commission. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 946 “Financial Services – Investment Companies”. Management believes it has made all necessary adjustments so that its financial statements are presented fairly and that all such adjustments are of a normal recurring nature.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions related to the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the period. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all short-term, highly-liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. We place our cash with financial institutions, and at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit. We seek to mitigate this concentration of credit risk by depositing funds with major financial institutions.

Organizational and Offering Costs

Organization costs consist of costs incurred to establish the Fund and enable it legally to do business. Examples of these costs are fees paid to the Board of Trustees, legal fees, and audit fees relating to the seed audit. All costs incurred by the Fund in connection with its organization and offering that are paid by the Adviser will be subject to reimbursement as described in Note 3. Organizational costs are charged to expenses as incurred. Offering costs incurred by the Fund are treated as deferred charges

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until operations commence and thereafter will be amortized over a 12-month period using the straight-line method. Examples of these costs are registration fees, legal fees, and fees relating to the initial registration statement.

Federal Income Taxes

For federal income tax purposes, the Fund intends to elect to be treated, and intends to qualify annually thereafter, as a RIC under Subchapter M of the Code.

As a RIC, the Fund generally will not be subject to corporate-level income taxes on any ordinary income or capital gains that the Fund distributes as dividends to its stockholders.

To qualify and maintain its qualification as a RIC, the Fund must, among other requirements, meet specified source-of-income and asset diversification requirements and distribute dividends to stockholders each taxable year of an amount generally at least equal to 90% of the Fund’s net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses determined without regard to any deduction for dividends paid. To the extent that the Fund has net taxable income prior to its qualification as RIC, the Fund will be subject to an entity-level U.S. federal income tax on such taxable income.

If the Fund fails to distribute by the end of any calendar year an amount at least equal to the sum of (1) 98% of its ordinary income for the calendar year, (2) 98.2% of its capital gain net income (both long-term and short-term for the one-year period ending on October 31 of that calendar year and (3) any income realized, but not distributed, in the preceding year (to the extent that income tax was not imposed on such amounts) less certain over-distributions in prior years (together, the “Excise Tax Distribution Requirements”), the Fund will be liable for a 4% nondeductible excise tax on the portion of the undistributed amounts of such income that are less than the amounts required to be distributed based on the Excise Tax Distribution Requirements. For this purpose, however, any ordinary income or capital gain net income retained by the Fund that is subject to corporate income tax for the tax year ending in that calendar year will be considered to have been distributed by year end (or earlier if estimated taxes are paid).

Indemnification

The Fund indemnifies its officers, trustees, investment adviser, administrator and distributor for certain liabilities that may arise from the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

Note 3 — Investment Advisory and Other Agreements

Investment Advisory Agreement

Pursuant to an investment advisory agreement (the “Advisory Agreement”) by and between the Fund and the Adviser, the Adviser will be entitled to receive a fee consisting of two components — a base management fee and an incentive fee.

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The base management fee will be payable monthly in arrears and is calculated at an annual rate of 1.25% accrued daily based upon the Fund’s average daily net assets during such period.

The incentive fee will be calculated and payable quarterly in arrears in an amount to 15% based upon the Fund’s “pre-incentive fee net investment income” for the immediately preceding calendar quarter. The Fund’s pre-incentive fee net investment income, expressed as a rate of return on the Fund’s net assets as of the end of the immediately preceding quarter, will be compared to a hurdle rate of 1.75% per quarter (7.00% annualized), subject to a “catch-up” feature which allows the Adviser to recover foregone incentive fees that were previously limited by the hurdle rate. For these purposes, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, and consulting fees that the Fund receives from portfolio companies) accrued by the Fund during the calendar quarter, minus the Fund’s operating expenses for the quarter (including the base management fee (less any rebate of other fees received by the Adviser), expenses payable under the administration agreement between the Fund and the administrator and any interest expenses and dividends paid on any issued and outstanding preferred shares, but excluding the incentive fee and any distributions and/or shareholder servicing fees). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero-coupon securities), accrued income that the Fund has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Expense Support and Conditional Reimbursement Agreement

The Adviser and the Fund have entered into the Expense Support and Conditional Reimbursement Agreement (the “Reimbursement Agreement”) under which the Adviser has agreed contractually for a one-year period to reimburse initial organizational and offering costs, as well as operating expenses, commencing with the quarter ending December 31, 2024 to the extent that aggregate distributions made to shareholders of a class of Shares during the applicable quarter exceed Available Operating Funds. “Available Operating Funds” means the sum of (i) the Fund’s net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses); (ii) the Fund’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses); and (iii) dividends and other distributions paid to or otherwise earned by the Fund on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

In consideration of the Adviser’s agreement to reimburse the Fund’s operating expenses, the Fund has agreed to repay the Adviser in the amount of any of the Fund’s expenses reimbursed, subject to the limitation that a reimbursement (an “Adviser Reimbursement”) will be made only if and to the extent that (i) it is payable not more than three years from the date on which the applicable Expense Payment was made by the Adviser; (ii) the Adviser Reimbursement does not cause Other Fund Operating Expenses (as defined in the Reimbursement Agreement) attributable to such Shares of such Class (on an annualized basis and net of any reimbursements received by the Adviser during such fiscal year) during the applicable quarter to exceed the percentage of average net assets attributable to shares of such Class represented by Other Fund Operating Expenses (on an annualized basis) during the fiscal quarter in which the applicable Expense Payment from the Adviser was made; (iii) the Adviser Reimbursement does not cause the Fund to breach any other expense cap in place at the time of such

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Adviser Reimbursement; and (iv) the distributions per share declared by the Fund at the time of the applicable Expense Payment are less than the effective rate of distributions per share for such Class of Shares at the time the Adviser Reimbursement would be paid. “Other Fund Operating Expenses” is defined as the Fund’s total Operating Expenses (as defined below), excluding the management and incentive fees payable to the Adviser, any offering expenses, financing fees and costs, interest expense, distribution fees, shareholder servicing fees and extraordinary expenses. “Operating Expenses” means all operating costs and expenses the Fund incurs, as determined in accordance with generally accepted accounting principles for investment companies.

The Reimbursement Agreement will remain in effect for at least one year unless earlier terminated by the Fund’s Board of Trustees upon written notice to the Adviser. The Reimbursement Agreement may be renewed by the mutual agreement of the Adviser and the Fund for successive terms. As of September 30, 2024 the maximum available recoupment by the Adviser is $383,539. The Fund has assessed the likelihood that a recoupment will be paid by the Fund in accordance with the provisions of ASC 450, Contingencies. Based on this assessment, it has been determined that the recoupment is both not probable and not estimable as of September 30, 2024, and as such, an accrual has not been made on the statement of assets and liabilities.

Administrative and Other Service Providers

Gladstone Administration, LLC (“Administrator”) will provide certain administrative services to the Fund pursuant to an administration agreement (the “Administration Agreement”), by and between the Fund and the Administrator. The Fund will reimburse the Administrator pursuant to the Administration Agreement for the Fund’s allocable portion of the Administrator’s expenses incurred while performing services to the Fund.

ALPS Fund Services, Inc. (“ALPS”) and certain of its affiliates provide sub-administrative, fund accounting and other services to the Fund for a monthly administration fee based on the greater of an annual minimum fee or an asset-based fee, which scales downward based upon average daily net assets.

UMB Bank, n.a. (“Custodian”), serves as the Fund’s custodian.

The Distributor will act as an agent for the Fund and the distributor of its Shares. Under the distribution agreement between the Fund and the Distributor, the Distributor may receive up to 5.75% of the investment amount of the Fund’s Class A Shares as an upfront sales charge. No upfront sales charge will be payable on the other Classes of the Fund’s Shares under the Distribution Agreement.

In addition, under a distribution and servicing plan that the Fund has adopted, the Class C Shares and Class U Shares will pay to the Distributor a distribution fee that will accrue at an annual rate equal to 0.75% of the average daily net assets attributable to Class C Shares and Class U Shares, respectively, and is payable on a quarterly basis. Under the plan, the Class A Shares and Class C Shares may charge the Distributor a servicing fee that will accrue at an annual rate equal to 0.25% of the average daily net assets attributable to the Class A Shares and Class C Shares, respectively.

SS&C GIDS, Inc. serves as the Transfer Agent to the Fund and is responsible for maintaining all shareholder records of the Fund.

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Note 4 — Subsequent Events

The Fund is required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Statement of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Fund is required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.

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