Business Context and Reporting Period
This Form 8-K, dated July 30, 2026, reports on XAI Floating Rate & Alternative Income Trust (NYSE: XFLT). The filing details the termination of the previous investment sub-advisory agreement with Octagon Credit Investors, LLC, effective July 30, 2026, and the simultaneous entry into an Interim Investment Sub-Advisory Agreement with Rockford Tower Asset Management, L.L.C. (the "King Street Sub-Adviser"), a subsidiary of King Street Capital Management, L.P.
A special meeting of shareholders to approve a permanent New Sub-Advisory Agreement was adjourned to August 6, 2026, to continue soliciting proxies.
Key Financial Metrics and Fee Structure
The filing does not provide specific revenue, profit, cash flow, or balance sheet metrics for the Trust. However, it outlines the following fee structures under the new interim agreement:
- Investment Advisory Fee: The Trust pays XA Investments, LLC an annual fee of 1.70% of average daily Managed Assets.
- Sub-Advisory Fee: The King Street Sub-Adviser receives 52% of the advisory fee payable to the Adviser.
- Expense Reimbursement Cap: Reimbursable expenses for the Sub-Adviser are capped at 0.07% per annum of average daily net assets.
- Sub-Adviser Assets: As of December 31, 2025, King Street and affiliates managed $30.0 billion in assets, including $12 billion in CLOs.
Material Changes
The primary material change is the change in sub-adviser from Octagon Credit Investors, LLC to Rockford Tower Asset Management, L.L.C. (King Street). Key operational changes include:
- Portfolio Management: Mr. Young Choi became the lead portfolio manager, and Mr. Terry Ing became a portfolio manager.
- Agreement Terms: The interim agreement is substantially similar to the previous one regarding investment objectives and policies.
- Duration: The interim agreement terminates on the earlier of the 150th day following effectiveness or upon shareholder approval of the permanent agreement.
Outlook, Risks, and Contingencies
Outlook and Management Commentary: The Trust's investment objective and principal policies remain unchanged. The interim arrangement is designed to ensure continuity while the permanent agreement is ratified by shareholders.
Risks and Contingencies:
- Termination Rights: The interim agreement can be terminated by the Trust, Adviser, or Sub-Adviser with 60 days' written notice without penalty.
- Expense Limitations: Reimbursement of expenses is subject to caps and may be deferred for up to three years if current operating expense limitations are in effect.
- Shareholder Approval: The permanent sub-advisory agreement is contingent upon shareholder approval at the adjourned special meeting.
Investor Verification Checklist
- Verify the outcome of the shareholder special meeting adjourned to August 6, 2026, regarding the permanent New Sub-Advisory Agreement.
- Confirm the exact start date of the interim agreement to calculate the 150-day termination window.
- Review the full text of Exhibits 10.1 and 10.2 for specific definitions of "Managed Assets" and reimbursable expense categories.
- Monitor future filings for any changes to the 1.70% advisory fee or the 52% sub-advisory split in the permanent agreement.