SEC Info - Aberdeen Global Short Duration Income Fund, Inc., et al.

As filed with the Securities and Exchange Commission on July 21, 2014

Securities Act File No. 333-161670

Investment Company Act File No. 811-22327

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-2

Registration Statement Under the Securities Act of 1933

Pre-effective Amendment No. 4

o	Post-effective Amendment No.
x	Registration Statement Under the Investment Company Act of 1940

Amendment No. 4

Aberdeen Global Short Duration Income Fund, Inc.

(Exact Name of Registrant as Specified in Charter)

1735 Market Street, 32nd Floor

Philadelphia, PA 19103
(Address of Principal Executive Offices)

(800) 522-5465

(Registrant’s Telephone Number, including Area Code)

Lucia Sitar

Aberdeen Asset Management Inc.

1735 Market Street, 32nd Floor

Philadelphia, PA 19103

(Name and Address of Agent for Service)

Copies of information to:

Rose F. DiMartino, Esq.

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York, 10019

(212) 728-8000

Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Registration Statement.

If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a distribution reinvestment plan, check the following box. o

It is proposed that this filing will become effective (check appropriate box):

o when declared effective pursuant to section 8(c).

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

Title of Securities Being Registered	Amount Being Registered(1)	Proposed Maximum Offering Price Per Unit		Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee(2)(3)
Common Stock, $0.001 par value per share	40,000	$	25.00	$	1,000,000	$	136.40

(1) Includes the underwriters’ over-allotment option.

(2) Estimated pursuant to Rule 457 solely for the purpose of determining the registration fee.

(3) This amount was previously wired to the Securities and Exchange Commission’s account at US Bank in St. Louis, Missouri in payment of the required registration fee due in connection with initial filing of and amendments to this Registration Statement.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.

PROSPECTUS

Shares

Aberdeen Global Short Duration
Income Fund, Inc.

Common Shares
$25.00 per Share

The Fund. Aberdeen Global Short Duration Income Fund, Inc. (the "Fund") is a non-diversified, closed-end management investment company.

Investment Objectives. The Fund's primary investment objective is to provide current income. As a secondary objective, the Fund will seek capital appreciation. There can be no assurance that the Fund's investment objectives will be achieved.

Investment Strategy. The Fund will seek to achieve its investment objectives by investing primarily in a geographically diverse portfolio of below investment grade floating rate loans and floating and fixed rate high yield debt securities. Under normal circumstances, the Fund seeks to maintain an average duration of three years or less. The Fund will invest in loans and other debt securities of issuers located in the United States and in non-U.S. countries.

Listing. It is anticipated that the Fund's shares of common stock ("Common Shares") will be approved for listing on the New York Stock Exchange ("NYSE"), subject to notice of issuance, under the symbol "[ ]."

No Prior History. The Fund's shares have no history of public trading. Shares of closed-end investment companies frequently trade at a discount from their net asset value. This risk may be greater for investors expecting to sell their shares in a relatively short period of time after completion of the public offering.

Investment in the Common Shares involves substantial risks arising from, among other strategies, the Fund's ability to invest in loans and other debt securities that are rated below investment grade or unrated but determined by the Fund's investment advisers to be of comparable credit quality, the Fund's exposure to foreign securities denominated in U.S. dollars or foreign currencies, and the Fund's anticipated use of leverage. Below investment grade loans and debt securities are regarded as having predominantly speculative characteristics with respect to the borrower's or issuer's capacity to pay interest and to repay principal and are commonly referred to as "high yield" or "junk." The Fund's potential exposure to foreign securities, particularly securities of issuers in emerging markets, involves special risks, including currency risk. Because of the risks associated with investing in high yield loans, and other high yield securities and foreign issuers, and using leverage, an investment in the Fund may be considered speculative. Before buying any of the Fund's Common Shares, you should read the discussion of the risks of investing in the Fund in the "Risks" section beginning on page [__] of this prospectus.

Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share		Total(3)
Public offering price	$	25.00	$
Sales load(1)	$	1.125	$
Estimated offering costs	$	.05	$
Proceeds, after expenses, to the Fund(2)	$	23.825	$

Leverage. The Fund currently intends to use leverage to seek to achieve its investment objectives. Under the Investment Company Act of 1940, as amended (the "1940 Act"), the Fund may use leverage through borrowings in an aggregate amount of up to 33¹/₃% of the Fund's Managed Assets immediately after such borrowings. "Managed Assets" of the Fund shall mean total assets of the Fund, including any form of investment leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other similar preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund's investment objectives and policies, and/or (iv) any other means. For purposes of calculating "Managed Assets," the liquidation preference of any preferred shares outstanding is not considered a liability. After the Fund has fully invested the net proceeds of this offering, the Fund currently intends to borrow money from certain financial institutions ("Borrowings") in an initial aggregate amount of approximately [30]% (as determined immediately after such Borrowings) of the value of its Managed Assets. Although the Fund currently does not intend to do so, the Fund also may use leverage through the issuance of preferred shares in an aggregate amount of up to 50% of the Fund's Managed Assets immediately after such issuance. In addition to Borrowings and the issuance of preferred shares, the Fund may enter into certain investment management strategies, such as reverse repurchase agreements or derivatives transactions to achieve investment leverage (such investments and transactions collectively, "effective leverage"). The Fund considers effective leverage to result from any investment strategy which is used to increase gross investment exposure in excess of the Fund's net asset value. Effective leverage does not include exposure obtained for hedging purposes, from securities lending, or to manage the Fund's interest rate exposure. The Fund will not enter into any leverage transaction if, immediately after such transaction, the Fund's total leverage including any Borrowings and preferred shares and effective leverage incurred, exceeds 50% of the Fund's Managed Assets. See "Effects of Leverage," "Risks—Leverage Risk" and "Description of Shares."

Investment Manager, Investment Advisers and Sub-Adviser. Aberdeen Asset Management Inc. ("AAMI" or the "Investment Manager") will be the Fund's investment manager. Aberdeen Asset Managers Limited ("AAML") and Aberdeen Asset Management Asia Limited ("AAMAL" and together with AAML, the "Investment Advisers") will be the Fund's investment advisers. Aberdeen Asset Management Limited ("AAM Aus" or the "Sub-Adviser") will be the Fund's investment sub-adviser. Collectively, AAMI, AAML, AAMAL and AAM Aus are referred to herein as the "Advisers" and the Advisers and their affiliates are referred to herein as "Aberdeen." See "Management of the Fund" in this prospectus and in the Fund's Statement of Additional Information (the "SAI"). The Investment Manager has retained TS Capital, LLC and its affiliates, TSC Distributors, LLC and TSC Fund Services, LLC to provide the Fund with certain distribution, marketing and shareholder services.

You should read this prospectus, which contains important information about the Fund, before deciding whether to invest in the Common Shares, and retain it for future reference. This prospectus sets forth concisely the information about the Fund that a prospective investor ought to know before investing. A statement of additional information dated , 2014 (the "SAI"), as it may be supplemented, containing additional information about the Fund, has been filed with the SEC and is incorporated by reference in its entirety into this prospectus. You may request a free copy of the SAI, the table of contents of which is on page [__] of this prospectus, annual and semi- annual reports to shareholders when available, and other information about the Fund, and make shareholder inquiries by calling ; by writing to the Fund at 1735 Market Street, 32nd Floor, Philadelphia, PA 19103; or from the Fund's website once such website is active ( ). The SAI and additional information regarding the Fund has been filed with the SEC and is available upon written or oral request and without charge. Information about the Fund can be reviewed and copied at the SEC's public reference room in Washington, D.C. Call 1-202-551-8090 for information on the operation of the public reference room. This information also is available on SEC's website at http://www.sec.gov and copies may be obtained upon payment of a duplicating fee by writing to the SEC's Public Reference Section, 100 F Street, N.E., Washington, D.C., 20549-0102. You may also email requests for these documents to publicinfo@sec.gov. All website addresses herein are inactive textual references, and the information from websites is not incorporated into this prospectus.

The Fund's Common Shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.

TABLE OF CONTENTS

Prospectus Summary					1
Summary of Fund Expenses					34
The Fund					36
Use of Proceeds					36
The Fund's Investments					36
Leverage					50
Risks					54
Management of the Fund					70
Net Asset Value					73
Dividends and Distributions					74
Dividend Reinvestment and Cash Purchase Plan					75
Description of Shares					77
Certain Provisions of the Maryland General Corporation Law and the Charter and Bylaws					79
Structure of the Fund; Common Share Repurchases and Conversion to Open-End Fund					81
U.S. Federal Tax Matters					83
Underwriting					87
Structuring and Shareholder Servicing Agent					89
Legal Opinions					89
Legal Proceedings					89
Independent Registered Public Accounting Firm					89
Table of Contents for the Statement of Additional Information					90

You should rely only on the information contained in or incorporated by reference into this prospectus. The Fund has not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither the Fund nor the underwriters is making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date of this prospectus. The Fund's business, financial condition and prospects may have changed since then.

PROSPECTUS SUMMARY

The following information is only a summary. This summary does not contain all of the information that you should consider before investing in the Fund's Common Shares. You should review the more detailed information contained elsewhere in this prospectus and in the Statement of Additional Information (the "SAI"). In particular, you should carefully read the risks of investing in the Fund's Common Shares, as discussed under "Risks."

The Fund
Aberdeen Global Short Duration Income Fund, Inc. (the "Fund") is a non-diversified, closed-end management investment company. See "The Fund."

The Offering
The Fund is offering shares of common stock ("Common Shares") at $25.00 per share through a group of underwriters (the "Underwriters") led by [ ] and [ ]. You must purchase at least 100 Common Shares in this offering. The Fund has given the Underwriters an option to purchase up to an additional [ ] Common Shares. [Aberdeen Asset Management Inc., the Fund's investment manager ("AAMI" or the "Investment Manager"), has agreed to pay: (i) all organizational expenses; and (ii) all offering costs of the Fund (other than sales load) that exceed .20% (or $.05 per Common Share) of the Fund's aggregate offering price.]

Listing
It is anticipated that the Common Shares will be approved for listing on the New York Stock Exchange ("NYSE"), subject to notice of issuance, under the symbol "[ ]."

Investment Objectives and Policies
The Fund's primary investment objective is to provide current income. As a secondary objective, the Fund will seek capital appreciation. There can be no assurance that the Fund's investment objectives will be achieved.

The Fund will seek to achieve its investment objectives by investing primarily in a geographically diverse portfolio of below investment grade floating rate loans and floating and fixed rate high yield debt securities. The Fund will invest in loans and other debt securities of issuers located in the United States and in non-U.S. countries.

Under normal circumstances, the Fund seeks to maintain an average duration of three years or less (including the effect of leverage but after the effect of derivatives used to shorten duration). Under certain market conditions, such as in periods of significant volatility in interest rates and spreads, the Fund's average duration may be longer than three years. The Fund may invest in individual loans or debt securities with durations in excess of three years.

acceptances. Floating rate investments are debt obligations of companies or other entities, the interest rates of which float or vary periodically based upon a benchmark indicator of prevailing interest rates. The Fund's floating rate investments may include instruments that have interest rates that change based on multiples of changes in specified interest rates or interest rates that change inversely to changes in specified interest rates.

The Fund will typically invest, as a percentage of its Managed Assets (as defined below):

• a minimum of 65% in floating rate investments;

• a maximum of 25% in second lien, mezzanine or other subordinated loans;

• a maximum of 25% in unsecured floating rate debt securities;

• a maximum of 10% in any single borrower (in the case of loans) or single issuer (in the case of other debt securities); and

• [a maximum of 40% in any single sector.]

"Managed Assets" of the Fund shall mean total assets of the Fund, including any form of investment leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other similar preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund's investment objectives and policies, and/or (iv) any other means. For purposes of calculating "Managed Assets," the liquidation preference of any preferred shares outstanding is not considered a liability.

The Fund may purchase loans by assignment from a participant in the original syndicate of lenders or from subsequent assignees of such interests, or can buy a participation in a loan. The Fund may also purchase participations in the original syndicate making loans. Loan participations typically represent indirect participations in a loan to a corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates. When purchasing loan participations, the Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk associated with an interposed bank or other financial intermediary. The Fund will acquire participations only if the lender interpositioned between the Fund and the borrower is determined by the Advisers (as defined below) to be creditworthy.

Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc. ("S&P"), or Fitch Ratings Ltd. ("Fitch"), below "Baa3" by Moody's Investors Service, Inc. ("Moody's") or comparably rated by another nationally recognized statistical rating organizations ("NRSRO") or, if unrated, determined by the Advisers to be of comparable credit quality. Below investment grade instruments are considered speculative with respect to the borrower's or issuer's capacity to pay interest and repay principal. Distressed instruments are issues rated "CCC+" or lower by S&P or Fitch, "Caa1" or lower by Moody's, or comparably rated by another NRSRO or, if unrated, determined by the Advisers to be of comparable credit quality. The Fund may not invest more than 20% of its Managed Assets in debt instruments that are rated "CCC" or below by S&P or Fitch, or "Caa" by Moody's, or comparably rated by another NRSRO or, if unrated, determined by the Advisers to be of comparable credit quality. In the event that a debt instrument receives different ratings from different NRSROs, the Fund will treat the instrument as being rated in the highest rating category received from an NRSRO (such instruments are commonly referred to as "split-rated instruments").

The Fund will rely on the judgment, analysis and experience of the Advisers in evaluating the creditworthiness of a borrower. In this evaluation, the Advisers will take into consideration, among other things, the borrower's financial resources, its sensitivity to economic conditions and trends, its operating history, the quality of the borrower's management and regulatory matters.

The Fund will invest in loans and other debt securities of issuers located in the United States and in non-U.S. countries. It is anticipated that the Fund will invest between 20%-40% of its Managed Assets in loans and other debt securities of U.S. issuers, between 20%-40% of its Managed Assets in loans and other debt securities of other developed market issuers, and between 20%-40% of its Managed Assets in loans and other debt securities of emerging market issuers. An emerging market country is any country determined by the Advisers to have an emerging market economy, considering factors such as the country's credit rating, its political and economic stability and the development of its financial and capital markets. Emerging market countries can include every nation in the world except the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe. A developed market country is any country, other than the United States, that is not determined by the Advisers to have an emerging market economy. The Fund's investments may be denominated in U.S. dollars or in foreign currencies. Under normal conditions, the Fund will invest in loans and other securities of issuers from at least three different countries.

While the Fund expects to have exposure to foreign currencies in which its holdings are denominated, generally under normal market conditions, the Fund will have exposure to the U.S. dollar in an

amount equal to at least 90% of net assets, either through U.S. dollar-denominated holdings or through hedging holdings denominated in foreign currencies back to U.S. dollars.

The Fund may invest in securities of any type of issuer, including U.S. and non-U.S. corporations and other non-governmental or business entities, operating in any industries or sectors; the U.S. Government, its agencies or instrumentalities and government sponsored entities; states, territories and possessions of the United States, and their political subdivisions, agencies or instrumentalities; foreign governmental issuers, their agencies or instrumentalities and sponsored entities; international agencies and supranational entities; and special purpose vehicles created for the purpose of issuing structured, collateralized or asset-backed securities.

The Fund may purchase and retain in its portfolio loans where the borrowers have experienced, or may be perceived to be likely to experience, credit problems, including default, involvement in or recent emergence from bankruptcy reorganization proceedings or other forms of debt restructuring. At times, in connection with the restructuring of a loan either outside of bankruptcy court or in the context of bankruptcy court proceedings, the Fund may determine or be required to accept equity securities or warrants in exchange for all or a portion of a loan.

There is no limit on the amount of the Fund's Managed Assets that may be invested in securities that, at the time of investment, are illiquid (determined using the Securities and Exchange Commission's ("SEC") standard applicable to investment companies, i.e., securities that cannot be disposed of within seven days in the ordinary course of business at approximately the value at which the Fund has valued the securities).

The Fund may invest without limit in 144A securities, Regulation S securities, and/or securities that are unregistered (but are eligible for purchase and sale by certain qualified institutional buyers) or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale ("restricted securities").

AAMI will be responsible for determining the Fund's overall investment strategy and overseeing its implementation. AAMI will also manage the Fund's investments and make investment decisions on behalf of the Fund. AAMI may delegate management responsibility for a portion of the Fund's portfolio to Aberdeen Asset Managers Limited ("AAML") and Aberdeen Asset Management Asia Limited ("AAMAL" and together with AAML, the "Investment Advisers"), the Fund's investment advisers, and AAML and AAMAL will manage such portion, if any, allocated to them by AAMI. Aberdeen Asset Management Limited ("AAM Aus" or the "Sub-Adviser"), the Fund's investment sub-adviser, makes recommendations to the Investment Manager as to the overall structure of the Fund's portfolio, including asset allocation advice

and general advice on investment strategy relating to the Fund's overall investment objectives and the selection of and the placement of orders with brokers and dealers to execute portfolio transactions on behalf of the Fund. Each of the Investment Manager, the Investment Advisers and the Sub-Adviser (collectively, the "Advisers") is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act").

The Fund's allocation among the various types of loans and other debt securities will depend on market conditions and the market outlook of the Advisers. In managing the Fund, the Advisers intend to utilize various risk management techniques, including credit quality analysis.

The Advisers will select securities for the Fund's portfolio employing proprietary investment strategies. The Advisers will regularly monitor and make allocation decisions among issuers of various regions, countries and credit qualities in order to achieve the Fund's investment objectives. The Advisers will have daily responsibility for the management of the portfolio and for the implementation of the investment process.

Percentage minimums or maximums described in this prospectus are as of the time of investment by the Fund and may not be met or be exceeded on a going-forward basis as a result of credit rating downgrades or market value fluctuations of the Fund's portfolio securities or receipt by the Fund of securities as a result of holding certain investments. The Fund will not be required to sell securities solely as a result of such downgrades or market value fluctuations.

The Fund's investment restrictions listed in the SAI as "fundamental" may not be changed without approval by holders of a majority of the outstanding voting securities of the Fund, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), which includes Common Shares and preferred shares, if any, voting together as a single class, and the holders of the outstanding preferred shares voting as a single class. The remainder of the Fund's investment policies and restrictions, including its investment strategies and investment objectives, are considered non-fundamental and may be changed by the Board of Directors of the Fund (the "Board of Directors" or the "Board") without shareholder approval. See "The Fund's Investments" and "Risks" in this prospectus and "Investment Objectives and Policies" in the SAI.

Investment Manager, Investment Advisers and Sub-Adviser

The Fund's investment manager will be Aberdeen Asset Management Inc., the Fund's investment advisers will be Aberdeen Asset Managers Limited and Aberdeen Asset Management Asia Limited, and the Fund's investment sub-adviser will be Aberdeen Asset Management Limited. The Investment Manager is a Delaware corporation located at 1735 Market Street, 32nd Floor, Philadelphia, Pennsylvania 19103. AAML is a United Kingdom limited company

located at Bow Bells House, 1 Bread Street, London, England EC4M9HH. AAMAL is a Singapore corporation located at 21 Church Street, #01-01 Capital Square Two, Singapore 049480. AAM Aus is an Australian corporation located at Level 6, 201 Kent Street, Sydney, NSW 2000, Australia.

AAMI will be responsible for determining the Fund's overall investment strategy and overseeing its implementation. AAMI will also manage the Fund's investments and make investment decisions on behalf of the Fund. AAMI may delegate management responsibility for a portion of the Fund's portfolio to AAML and AAMAL, and AAML and AAMAL will manage such portion, if any, allocated to it by AAMI. AAM Aus makes recommendations to the Investment Manager as to the overall structure of the Fund's portfolio, including asset allocation advice and general advice on investment strategy relating to the Fund's overall investment objectives and the selection of and the placement of orders with brokers and dealers to execute portfolio transactions on behalf of the Fund. Each of the Advisers is a registered investment adviser under the Advisers Act.

Each of the Advisers is a wholly-owned subsidiary of Aberdeen PLC, which is the parent company of an asset management group managing approximately $[____] billion in assets as of June 30, 2014 for a range of pension funds, financial institutions, investment trusts, unit trusts, offshore funds, charities and private clients. The registered offices of Aberdeen PLC are located at 10 Queen's Terrace, Aberdeen, Scotland AB 10 1 YG. Aberdeen PLC was formed in 1983 and was first listed on the London Stock Exchange in 1991. In rendering investment advisory services, the Advisers have access to the resources of their investment adviser affiliates (collectively, "Aberdeen").

The Fund will pay the Investment Manager a fee at the annual rate of [1.00%] of the Fund's average weekly Managed Assets, computed based upon Managed Assets determined at the end of each week and payable at the end of each calendar month. During periods in which the Fund is utilizing leverage, the advisory fee will be higher than if the Fund did not utilize a leveraged capital structure because the fee is calculated as a percentage of the Managed Assets, which includes assets obtained through leverage.

[The Investment Manager pays the fees to each Investment Adviser at the annual rate of [ ]% of the portion of Fund's Managed Assets allocated to the Investment Adviser by the Investment Manager. These fees are computed weekly and payable monthly.]

[The Investment Manager pays the fees of the Sub-Adviser. The Sub-Adviser receives an annual total fee of $[ ], payable in monthly increments.]

The Investment Manager has contractually agreed to limit Total Annual Expenses of the Fund to [1.00%] on an annual basis for three

years. This limit excludes certain expenses, including interest expenses and other costs from borrowing, costs associated with changes in applicable tax rates, taxes, brokerage commissions, and other expenditures which are capitalized in accordance with generally accepted accounting principles, and other non-routine expenses not incurred in the ordinary course of the Fund's business. See "Summary of Fund Expenses."

Investment Philosophy and Process
The Advisers employ a disciplined approach to risk management through a portfolio that is geographically diverse. The Advisers' investment process is governed by their strict adherence to the process outlined below:

• Think globally, invest globally; apply a global perspective to credit risk analysis, and sourcing investment opportunities.

• Employ a "business economics" approach to credit research focusing our research efforts on underlying securities.

• A stop-loss discipline that emphasizes the continuous monitoring of credit fundamentals and price. The Advisers seek to capture the upside return and limit downside risk.

• Seek opportunities at a security level that is not benchmark driven. The Advisers tend to avoid over-diversification, invest with conviction, and remain nimble with positions.

• The Advisers are long-term investors and seek to minimize portfolio turnover.

The Advisers' investment style is a flexible approach toward the global loan and global high yield market that takes advantage of global opportunities and will move up and down the capital structure with an overall emphasis on bottom-up security selection and fundamental credit research.

The goal of the Advisers in managing the Fund's portfolio is to add value through rigorous fundamental research and to identify what the Advisers believe to be quality securities while attempting to manage risk through a controlled and disciplined process. The Advisers believe that:

• pricing inefficiencies are inherent in global credit markets due to the lack of information among investors in different markets, the different behavior exhibited by investors in different markets, and the wide variety of counterparties trading and providing pricing on individual securities;

• major price inefficiencies occur between loans and bonds within industries and within credit quality classes and particularly between loans and bonds issued by the same company but denominated in different currencies;

• a detailed and thorough fundamental company-by-company approach to analysis provides the best way to identify these opportunities;

• a strong buy-and-sell discipline is key in exploiting these opportunities;

• a team approach is essential to leverage global resources and collective expertise; and

• active risk management is crucial.

The Advisers have access to the research platform of Aberdeen. Aberdeen has an integrated global credit research platform with major offices in New York, Philadelphia, London, Singapore, and Sydney. Aberdeen has a global team of dedicated specialist industry credit analysts and portfolio managers. Aberdeen's portfolio management team oversees the process and evaluates relative value across securities, industries, markets, credit quality grades, and currencies relative to the Fund's objectives and risk tolerances.

The Advisers follow a team approach both locally and globally so as to leverage resources and collective expertise and knowledge. Regional portfolio managers lead the teams with analysts providing detailed issuer and industry analysis and financial forecasting along with relative value recommendations. These regional teams work closely with other regional teams across geographies to identify what the Advisers believe to be quality securities by finding information discrepancies and valuation differences. In locating what the Advisers believe to be quality securities, the Advisers focus on the following:

• issue selection

• industry and sector allocation

• global asset allocation

• currency

• duration and term structure

• risk analysis

For further information on the Advisers' investment philosophy and process, see "Investment Philosophy and Process."

Derivatives
The Fund may purchase and sell derivative instruments as a portfolio management or hedging technique to manage the effective interest rate and currency exposure of the Fund, manage the average duration of the Fund's portfolio, protect against possible adverse changes in the market value of securities held in or to be purchased for the Fund's portfolio, protect the value of the Fund's portfolio, facilitate the sale of certain securities for investment purposes, or as a substitute for purchasing or selling particular securities. Transactions in derivative instruments may include purchasing and selling forward contracts and non-deliverable forwards, purchasing and selling exchange-listed and over-the-counter put and call options on currencies, securities, equity, fixed income, currency and interest rate indices and other financial instruments, purchasing and selling futures contracts on securities, indices and other financial instruments

and options thereon, purchasing and selling structured notes, and entering into interest rate swaps, total return swaps and credit default swaps ("CDS") (including credit default swaps on underlying loans ("LCDS") and credit indices ("CDX")). Generally, the Fund's exposure to derivative instruments for investment (i.e., non-hedging) purposes, as measured by the market value of such instruments, will not exceed [25]% of the Fund's Managed Assets. In calculating the [25]% limitation, the Fund may net derivatives with opposite exposure to the same underlying instrument. The Fund has an overall limit on derivatives and leverage, as detailed in "Leverage" below. To the extent that the Fund invests in derivatives that provide exposure to an underlying asset that would itself meet any of the Fund's investment policies, the market value of the derivatives would be included in calculating the percentage of investment. See "Risks—Derivatives Risk."

Leverage
The Fund currently intends to use leverage to seek to achieve its investment objectives. Under the 1940 Act, the Fund may use leverage through borrowings and/or issuance of debt securities in an aggregate amount of up to 33¹/₃% of the Fund's Managed Assets immediately after such borrowings. After the Fund has fully invested the net proceeds of this offering, the Fund currently intends to borrow money from certain financial institutions ("Borrowings") in an initial aggregate amount of approximately [30]% (as determined immediately after such Borrowings) of the value of its Managed Assets. Although the Fund currently does not intend to do so, the Fund may use leverage through the issuance of preferred shares in an aggregate amount of up to 50% of the Fund's Managed Assets immediately after such issuance. In addition to Borrowings and the issuance of preferred shares, the Fund may enter into certain investment management strategies, such as reverse repurchase agreements or derivatives transactions to achieve leverage (such investments and transactions collectively, "effective leverage").

The Fund considers effective leverage to result from any investment strategy which is used to increase gross investment exposure in excess of the Fund's net asset value ("NAV"). Effective leverage does not include exposure obtained for hedging purposes, from securities lending, or to manage the Fund's interest rate exposure. The Fund will not enter into any leverage transaction if, immediately after such transaction, the Fund's total leverage including any Borrowings and preferred shares and effective leverage incurred exceeds 50% of the Fund's Managed Assets. It is possible that after entering into a leveraging transaction, the assets of the Fund decline due to market conditions such that this 50% limit will be exceeded. In that case, the leverage risk to holders of Common Shares ("Common Shareholders") will increase. The Fund does not currently anticipate issuing any preferred shares and/or debt securities other than Borrowings.

There is no assurance that the Fund will utilize leverage or, if leverage is utilized, that it will be successful in enhancing the level of

the Fund's cash distributions or total return. Leverage is a speculative technique and there are special risks and costs associated with leverage. The cost associated with any use of leverage will be borne by the Common Shareholders. The Board of Directors will determine whether the Fund should utilize leverage, the terms of such leverage and the timing of its offering or arrangement. Through the use of leverage, the Fund will seek to obtain a higher return for the Common Shareholders than if the Fund did not use leverage. The use of leverage is a speculative technique and investors should note that there are special risks and costs associated with the leveraging of the Common Shares. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed. When leverage is used, the net asset value and market price of the Common Shares and the yield to Common Shareholders will be more volatile. In addition, because the fees received by the Investment Manager are based on the Managed Assets of the Fund (including the liquidation preference of preferred shares, the principal amount of outstanding Borrowings and the proceeds of any reverse repurchase agreements), the Investment Manager has a financial incentive for the Fund to use certain forms of leverage (e.g., Borrowings, preferred shares and reverse repurchase agreements), which may create a conflict of interest between the Investment Manager, on the one hand, and the Common Shareholders, on the other hand. See "Leverage—Leverage Risk."

In order to seek to reduce interest rate risk if the Fund engages in leverage through Borrowings, the Fund may enter into interest rate swap or cap transactions as to all or a portion of Fund leverage. The use of interest rate swaps and caps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an interest rate swap, the Fund would agree to pay to the other party to the interest rate swap (which is known as the "counterparty") a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment that is intended to approximate the Fund's variable rate payment obligation on leverage. See "Leverage—Interest Rate Transactions."

So long as the Fund is able to realize a higher net return on its investment portfolio than the then-current cost of any leverage together with other related expenses, the effect of the leverage will be to cause Common Shareholders to realize higher current net investment income than if the Fund were not so leveraged. On the other hand, to the extent that the then-current cost of any leverage, together with other related expenses, approaches the net return on the Fund's investment portfolio, the benefit of leverage to Common Shareholders will be reduced, and if the then-current cost of any leverage were to exceed the net return on the Fund's portfolio, the Fund's leveraged capital structure would result in a lower rate of return to Common Shareholders than if the Fund were not so leveraged. The use by the Fund of leverage through reverse repurchase agreements involves additional risks, including the risk that the market

value of the securities that the Fund is obligated to repurchase may decline below the repurchase price, the risk that the Fund will be required to sell securities at inopportune times or prices in order to repay leverage and the risk that the counterparty may be unable to return the securities to the Fund. See "Leverage—Leverage Risk."

Dividends and Distributions
Commencing with the Fund's first dividend, the Fund intends to make distributions at a level rate as determined by the Board. The rate may be changed at any time by the Board of Directors.

The Fund intends to distribute to Common Shareholders regular monthly distributions of all or a portion of its net investment income at a level rate based on the Fund's projected performance, which rate is a fixed amount that may be adjusted from time to time. In addition, the Fund intends to distribute its net realized capital gains, if any, at least annually.

The Advisers were granted exemptive relief from the SEC to permit certain closed-end funds for which they act as investment advisers or sub-advisers to make periodic distributions of long-term capital gains more frequently than annually, subject to certain conditions. In connection with such exemptive relief, the Fund's Board of Directors may, in the future, adopt a managed distribution policy, which would allow the Fund to pay distributions, a component of which may include long-term capital gains, of approximately the same amount or percentage to Common Shareholders each month. See "Dividends and Distributions."

The Fund expects to declare its initial monthly dividend within approximately [30-60] days and pay its initial monthly dividend within approximately [60-90] days after the completion of this offering, depending on market conditions.

At times, to maintain a stable level of distributions, the Fund may pay out less than all of its net investment income or pay out accumulated undistributed income, or return capital, in addition to current net investment income. Any distribution that is treated as a tax return of capital generally will reduce a shareholder's basis in his or her shares, which may increase the capital gain or reduce the capital loss realized upon the sale of such shares. Any amounts received in excess of a shareholder's basis are generally treated as capital gain, assuming the shares are held as capital assets. See "Dividends and Distributions."

Dividend Reinvestment and Cash Purchase Plan

Shareholders may elect to have their distributions automatically reinvested in Fund shares which will be either issued by the Fund or purchased on the open market, depending on the market price per share plus any brokerage commissions, relative to the Fund's NAV per share.

Distribution Support
The Investment Manager has retained TS Capital, LLC, TSC Distributors, LLC and TSC Fund Services, LLC to provide the Fund with certain distribution, marketing and shareholder services.

Administrator
The Fund has retained Aberdeen Asset Management Inc. (in such capacity, the "Administrator") to serve as administrator. The address of the Administrator is 1735 Market Street, 32nd Floor, Philadelphia, Pennsylvania 19103. The Fund will pay the Administrator a fee at an annual rate equal to % of the Fund's average weekly Managed Assets up to $ , % between $ and $ , and % in excess of $ . See "Management of the Fund—Administrator."

Sub-Administrator
State Street Bank and Trust Company ("State Street"), One Heritage Drive, North Quincy, Massachusetts 02171, will serve as the sub- administrator and fund accountant for the Fund.

Custodian
State Street will serve as the Fund's custodian. See "Management of the Fund—Custodian."

Transfer Agent
Computershare Trust Company, N.A., P.O. Box 43078, Providence, Rhode Island 02940, will serve as the Fund's transfer agent and dividend paying agent. See "Management of the Fund—Transfer Agent."

Closed-End Structure
Closed-end funds differ from open-end management investment companies (commonly referred to as mutual funds) in that closed-end funds generally list their shares for trading on a securities exchange and do not redeem their shares at the option of the shareholder. By comparison, mutual funds issue securities redeemable at NAV at the option of the shareholder and typically engage in a continuous offering of their shares. Mutual funds are subject to continuous asset in-flows and out-flows, whereas closed-end funds can generally stay more fully invested in securities consistent with the closed-end fund's investment objective(s) and policies. In addition, in comparison to open-end funds, closed-end funds have greater flexibility in their ability to make certain types of investments, including investments in illiquid securities.

Shares of closed-end funds listed for trading on a securities exchange frequently trade at a discount from NAV. The market price of such shares may be affected by NAV, dividend or distribution levels and their stability (which in turn will be affected by levels of dividend or interest payments by the fund's portfolio holdings, the timing and success of the fund's investment strategies, regulations affecting the timing and character of fund distributions, fund expenses and other factors), supply of and demand for the shares, trading volume of the shares, general market, interest rate and economic conditions and other factors beyond the control of a closed-end fund. The foregoing factors, among others, may result in the market price of the Common Shares being greater than, less than or equal to NAV.

The Board of Directors has reviewed the structure of the Fund in light of its investment objectives and policies and believes that the closed-end fund structure is appropriate. As described in this prospectus, however, the Board of Directors may review periodically the trading range and activity of the Common Shares with respect to its NAV, and the Board of Directors may take certain actions to seek to reduce or eliminate any such discount to NAV. Such actions may

include open market repurchases or tender offers for the Common Shares or the possible conversion of the Fund to an open-end fund. There can be no assurance that the Board of Directors will decide to undertake any of these actions or that, if undertaken, such actions would result in the Common Shares trading at a price equal to or close to NAV per Common Share. Investors should assume that it is highly unlikely that the Board of Directors would vote to convert the Fund to an open-end management investment company. See "Structure of the Fund; Common Share Repurchases and Conversion to Open-End Fund."

U.S. Federal Tax Matters
Distributions with respect to the Common Shares will constitute dividends to the extent of the Fund's current and accumulated earnings and profits, as calculated for U.S. federal income tax purposes. Such dividends generally will be taxable as ordinary income to Common Shareholders. Distributions of net capital gain that are reported by the Fund as capital gain dividends will be treated as long-term capital gains in the hands of Common Shareholders receiving such distributions. Distributions in excess of the Fund's current and accumulated earnings and profits would first be a tax-free return of capital to the extent of a Common Shareholder's adjusted tax basis in its Common Shares. After such adjusted tax basis is reduced to zero, the distribution would constitute capital gain (assuming the Common Shares are held as capital assets). In addition, a significant portion of the distributions generally will not constitute "qualified dividend income" for U.S. federal income tax purposes and thus will not be eligible for the lower tax rates on qualified dividend income. See "U.S. Federal Tax Matters."

Special Risk Considerations
An investment in the Fund involves special risk considerations. You should consider carefully the risks summarized below, which are described in more detail under "Risks" being on page [ ] of this prospectus.

No Operating History. The Fund is a non-diversified, closed-end management investment company with no operating history. It is designed for long-term investing and not as a vehicle for trading.

Investment and Market Risk. An investment in Common Shares is subject to investment risk, including the possible loss of the entire principal amount that you invest. Your investment in Common Shares provides indirect exposure to the securities owned by the Fund. The value of these securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. The ability of borrowers of loans and issuers of debt securities and other securities in which the Fund invests to service their obligations could be materially and adversely affected if an economic downturn continues into a prolonged recession. The value of the securities in which the Fund invests will affect the value of the Common Shares. Your Common Shares at any point in time may be worth less than your original investment, even after taking into account the reinvestment of Fund dividends and distributions.

Management Risk. The Fund is subject to management risk because it is an actively managed portfolio. The Advisers will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these will produce the desired results.

Also, in seeking to achieve the Fund's primary objective of current income, the Advisers will focus principally on an instrument's income-generating capacity when selecting portfolio investments. In seeking to generate income, the Fund may invest in securities with a greater potential risk of loss (or which are perceived to have a greater potential risk of loss) than higher quality securities with lower yields. In addition, if higher income opportunities become less available in established markets and issuers, the Fund may invest a higher portion of its assets in less mature issuers and less developed markets in seeking to achieve greater income. The Fund intends to regularly evaluate the level of dividends it pays as market conditions change and could reduce the level of dividends in an attempt to mitigate principal risk.

Bank Loan Risk. The Fund will invest in bank loans made by banks and other financial institutions to corporate customers, which may include senior floating rate loans and second lien, mezzanine and other subordinated floating rate loans which may be secured or unsecured. The Fund's investments in bank loans are subject to credit risk, and even secured bank loans may not be adequately collateralized. The interest rates of bank loans reset frequently. Bank loans are generally subject to legal or contractual restrictions on resale. As a result, there may not be a recognized, liquid public market for bank loan interests. Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. The borrower may be in financial distress or may default or have a right to borrow additional cash from the owners of direct debt. Direct debt instruments may involve a risk of insolvency of the lending bank or intermediary. In addition, there may be fewer legal protections for owners of direct debt than conventional debt securities. If the Fund acquires a participation interest in a loan, the Fund may not be able to control the exercise of any remedies that the lender would have under the loan. In addition, the Fund normally will have to rely on the participating lender to demand and receive payments in respect of the loans, and to pay those amounts on to the Fund; the Fund will be subject to the risk that the lender may be unwilling or unable to do so. In such a case, the Fund would not likely have any rights against the borrower directly. For additional risks relating to various types of bank loans, see "Risks—Senior Loans Risk," "—Second Lien and Other Subordinated Loans Risk," "—Bridge Loans Risk," and "—Delayed Funding Loans and Revolving Credit Facilities Risk."

Senior Loans Risk. Senior loans hold senior positions in the capital structure of a business entity. Senior loans are typically secured with

specific collateral and have a claim on the assets and/or stock of the borrower that is senior to that held by other secured creditors, unsecured creditors, subordinated debt holders and stockholders of the borrower. The senior loans in which the Fund will invest will usually be rated below investment grade or may also be unrated. As a result, the risks associated with senior loans are similar to the risks of below investment grade instruments, although senior loans are senior and generally secured in contrast to other below investment grade instruments, which are often subordinated or unsecured. Nevertheless, if a borrower under a senior loan defaults, becomes insolvent or goes into bankruptcy, the Fund may recover only a fraction of what is owed on the senior loan or nothing at all. Senior loans are subject to a number of risks described elsewhere in this prospectus, including credit risk, below investment grade instruments risk and liquidity risk. See "Risks—Credit and Below Investment Grade Instruments Risk" and "—Illiquid Securities Risk."

Although the senior loans in which the Fund will invest will typically be secured by collateral, there can be no assurance that such collateral could be readily liquidated or that the liquidation of such collateral would satisfy the borrower's obligation in the event of non-payment of scheduled interest or principal. In the event of the bankruptcy or insolvency of a borrower, the Fund could experience delays or limitations with respect to its ability to realize the benefits of the collateral securing a senior loan. In the event of a decline in the value of the already pledged collateral, if the terms of a senior loan do not require the borrower to pledge additional collateral, the Fund will be exposed to the risk that the value of the collateral will not at all times equal or exceed the amount of the Borrower's obligations under the senior loan. To the extent that a senior loan is collateralized by stock in the borrower or its subsidiaries, such stock may lose some or all of its value in the event of the bankruptcy or insolvency of the Borrower. Those senior loans that are under-collateralized involve a greater risk of loss.

Senior loans are generally not registered with the SEC or state securities commissions, and are generally not listed on any securities exchange. In addition, the amount of public information available on senior loans is generally less extensive than that available for other types of assets. Therefore, the Fund will be particularly dependent on the analytical abilities of the Advisers. In general, the secondary trading market for senior loans is not fully-developed. This is particularly true in markets outside of the United States and Western Europe. No active trading market may exist for certain senior loans, which may make it difficult to value them. Illiquidity and adverse market conditions may mean that the Fund may not be able to sell certain senior loans quickly or at a fair price. To the extent that a secondary market does exist for certain senior loans, the market for them may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

Some senior loans are subject to the risk that a court, pursuant to fraudulent conveyance or other similar laws, could subordinate the senior loans to presently existing or future indebtedness of the borrower or take other action detrimental to the holders of senior loans including, in certain circumstances, invalidating such senior loans or causing interest previously paid to be refunded to the borrower. If interest were required to be refunded, it could negatively affect the Fund's performance.

If legislation or regulations in the United States and foreign countries require financial institutions to increase their capital requirements this may cause financial institutions to dispose of senior loans that are considered highly levered transactions. Such sales could result in prices that, in the opinion of the Advisers, do not represent fair value. If the Fund attempts to sell a senior loan at a time when a financial institution is engaging in such a sale, the price the Fund could get for the senior loan may be adversely affected.

The Fund may purchase loans by assignment from a participant in the original syndicate of lenders or from subsequent assignees of such interests, or can buy a participation in a loan. When purchasing loan participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement against the borrower, and the Fund may not directly benefit from the collateral supporting the debt obligation in which it has purchased the participation. As a result, the Fund will be exposed to the credit risk of both the borrower and the institution selling the participation. Further, in purchasing participations in lending syndicates, the Fund may not be able to conduct the due diligence on the borrower or the quality of the senior loan with respect to which it is buying a participation that the Fund would otherwise conduct if it were investing directly in the senior loan, which may result in the Fund being exposed to greater credit or fraud risk with respect to the borrower or the senior loan than the Fund expected when initially purchasing the participation.

Second Lien and Other Subordinated Loans Risk. Secured loans that are second lien or further subordinated or unsecured loans generally are subject to similar risks as those associated with investments in senior loans, except that such loans are lower in priority of payment to senior loans and/or not secured by collateral. As a result, they are subject to the additional risk that the cash flow of the borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the borrower. These loans generally have greater price volatility than senior loans and may be less liquid.

Mezzanine Loan Risk. Mezzanine loans are subject to the same risks associated with investment in senior loans. However, mezzanine loans may rank lower in right of payment than any outstanding senior loans, or may be unsecured (i.e., not backed by a security interest in any specific collateral), and are subject to the additional risk that the

cash flow of the borrower and available assets may be insufficient to meet scheduled payments after giving effect to any higher ranking obligations of the borrower. Mezzanine loans are expected to have greater price volatility and exposure to losses upon default than senior loans and may be less liquid.

Bridge Loans Risk. Bridge loans or bridge facilities are short-term loan arrangements (e.g., 12 to 18 months) typically made by a borrower in anticipation 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 the longer the loan remains outstanding. In addition, bridge loans commonly contain a conversion feature that allows the bridge loan investor to convert its loan interest into senior exchange notes if the loan has not been prepaid in full on or prior to its maturity date. Bridge loans may be subordinate to other debt and may be secured or unsecured. Like any loan, bridge loans involve credit risk. Bridge loans are generally made with the expectation that the borrower will be able to obtain permanent financing in the near future. Any delay in obtaining permanent financing subjects the bridge loan investor to increased risk. A borrower's use of bridge loans also involves the risk that the borrower may be unable to locate permanent financing to replace the bridge loan, which may impair the borrower's perceived creditworthiness. From time to time, the Fund may make a commitment to participate in a bridge loan facility, obligating itself to participate in the facility if it funds. In return for this commitment, the Fund receives a fee.

Delayed Funding Loans and Revolving Credit Facilities Risk. Delayed funding loans and revolving credit facilities are borrowings in which the Fund agrees to make loans up to a maximum amount upon demand by the borrowing issuer for a specified term. A revolving credit facility differs from a delayed funding loan in that as the borrowing issuer repays the loan, an amount equal to the repayment is again made available to the borrowing issuer under the facility. The borrowing issuer may at any time borrow and repay amounts so long as, in the aggregate, at any given time the amount borrowed does not exceed the maximum amount established by the loan agreement. Delayed funding loans and revolving credit facilities usually provide for floating or variable rates of interest. There are a number of risks associated with an investment in delayed funding loans and revolving credit facilities including credit, interest rate and liquidity risk and the risks of being a lender. There may be circumstances under which the borrowing issuer's credit risk may be deteriorating and yet the Fund may be obligated to make loans to the borrowing issuer as the borrowing issuer's credit continues to deteriorate, including at a time when the borrowing issuer's financial condition makes it unlikely that such amounts will be repaid. Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer, and only limited opportunities may exist to resell such instruments. As a result, a fund may be unable to sell such

investments at an opportune time or may have to resell them at less than fair market value. These risks could cause the Fund to lose money on its investment, which in turn could affect the Fund's returns. The Fund may treat delayed funding loans and revolving credit facilities for which there is no readily available market as illiquid.

Credit and Below Investment Grade Instruments Risk. Credit risk is the risk that one or more loans or other debt securities in the Fund's portfolio will decline in price, or the borrower of a loan or issuer of a security in the Fund's portfolio will fail to pay interest or principal when due. While a senior position in the capital structure of a borrower or issuer may provide some protection with respect to the Fund's investments in senior loans, losses may still occur because the market value of senior loans is affected by the creditworthiness of borrowers or issuers and by general economic and specific industry conditions and the Fund's other investments will often be subordinate to other debt in the issuer's capital structure.

The Fund may invest substantially all of its assets in loans and other debt securities that are rated below investment grade. Below investment grade instruments are debt obligations rated below "Baa3" by Moody's, below "BBB-" by S&P or Fitch, comparably rated by another NRSRO or, if unrated, determined by the Advisers to be of comparable credit quality. Below investment grade instruments are commonly referred to as "high yield" or "junk" and are considered speculative with respect to the borrower's or issuer's capacity to pay interest and repay principal and are susceptible to default or decline in market value due to adverse economic and business developments.

Below investment grade instruments may be particularly susceptible to economic downturns. It is likely that a prolonged or deepening economic recession could adversely affect the ability of the issuers of such instruments to repay principal and pay interest thereon, increase the incidence of default for such instruments and severely disrupt the market value of such instruments.

Below investment grade instruments, though higher yielding, are characterized by higher risk. They may be subject to certain risks with respect to the issuing entity and to greater market fluctuations than certain lower yielding, higher rated instruments. The retail secondary market for below investment grade instruments may be less liquid than that for higher rated instruments. Adverse conditions could make it difficult at times for the Fund to sell certain instruments or could result in lower prices than those used in calculating the Fund's net asset value. Because of the substantial risks associated with investments in below investment grade instruments, investors could lose money on their investment in Common Shares of the Fund, both in the short-term and the long-term.

Credit Rating Agency Risk. Credit ratings are determined by credit rating agencies such as S&P, Moody's and Fitch. Any shortcomings

or inefficiencies in credit rating agencies' processes for determining credit ratings may adversely affect the credit ratings of securities held by the Fund and, as a result, may adversely affect those securities' perceived or actual credit risk.

Non-U.S. Securities Risk. The Fund intends to invest a substantial portion of its assets in securities, including loans, of non-U.S. issuers, including issuers in emerging markets and frontier markets. Investing in securities of non-U.S. issuers, which are generally denominated in non-U.S. currencies, may involve certain risks not typically associated with investing in securities of U.S. issuers. These risks include that: (i) there may be less publicly available information about non-U.S. issuers or markets due to less rigorous disclosure or accounting standards or regulatory practices; (ii) non-U.S. markets may be smaller, less liquid and more volatile than the U.S. market; (iii) potential adverse effects of fluctuations in currency exchange rates or controls on the value of the Fund's investments; (iv) the economies of non-U.S. countries may grow at slower rates than expected or may experience a downturn or recession; (v) the impact of economic, political, social or diplomatic events; (vi) certain non-U.S. countries may impose restrictions on the ability of non-U.S. issuers to make payments of principal and interest to investors located in the United States due to blockage of non-U.S. currency exchanges or otherwise; and (vii) withholding and other non-U.S. taxes may decrease the Fund's return. These risks may be more pronounced to the extent that the Fund invests a significant amount of its assets in companies located in one region or in emerging markets.

Emerging Markets Risk. The Fund's investments in emerging markets may be considered speculative. Heightened risks of investing in emerging markets debt include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible repatriation of investment income and capital. Furthermore, foreign investors may be required to register the proceeds of sales and future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Fund. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Frontier Markets Risk. The Fund may invest in securities of issuers from frontier markets countries. Frontier markets countries are a subset of emerging markets countries. Frontier debt markets tend to be more volatile and be exposed to investment risk including liquidity risk and political risks, and adverse economic circumstances are more likely to arise in such markets. Registration and settlement

arrangements in these markets may be less developed than in more mature markets so the operational risks of investing are higher.

Custody/sub-custody risk. To the extent that the Fund invests in debt securities in markets where custodial and/or settlement systems are not fully developed, there may be very limited regulatory oversight of certain foreign banks or securities depositories that hold foreign securities and foreign currency. The laws of certain countries may limit the ability to recover such assets if a foreign bank or depository or their agents goes bankrupt and the assets of the Fund may be exposed to risk in circumstances where the custodian/sub-custodian or Advisers will have no liability.

Tax Risk Related to Foreign Investments. Because the Fund will invest a substantial portion of its assets outside of the U.S., additional investment risks include: the possible imposition of foreign withholding taxes on certain amounts of the Fund's income, which may reduce the net return on non-U.S. investments as compared to income received from a U.S. issuer; possible confiscatory taxation; and other foreign governmental laws or restrictions which might affect adversely payments due on securities held by the Fund. In particular, the Fund will be subject to foreign withholding or other foreign taxes with respect to dividend and interest income (and possibly, in some cases, capital gains) on certain foreign securities, thereby reducing the amount available for distribution to shareholders. The United States has entered into tax treaties with many foreign countries which may entitle a Fund to a reduced rate of such taxes or exemption from taxes on such income. Even in such a case, the ability for the Fund to avoid such foreign withholding taxes or reclaim withheld taxes may be impeded by onerous operational processes, regulatory challenges or other unforeseen difficulties in certain jurisdictions. There is no guarantee that the Fund will be able to realize such a reclaim benefit, even though it may be legally entitled to it. It is impossible to determine the effective rate of foreign tax for a Fund in advance since the amount of the assets to be invested within various countries is not known.

Settlement Risk. Settlement procedures in certain foreign markets, particularly with respect to bank loans, differ significantly and may be less established from those in the United States. Foreign settlement procedures and trade regulations also may involve certain risks (such as delays in payment for or delivery of securities) not typically generated by the settlement of U.S. loans and other debt securities. Communications between the United States and emerging market countries may be unreliable, increasing the risk of delayed settlements. If the Fund cannot settle or there is a delay in settling a purchase of a loan or other security, the Fund may miss attractive investment opportunities and certain assets may be uninvested with no return earned thereon for some period. If the Fund cannot settle or there is a delay in settling a sale of a loan or security, the Fund may lose money if the value of the security then declines or, if there is a

contract to sell the security to another party, the Fund could be liable to that party for any losses incurred. Furthermore, many markets in which the Fund will invest in loans will not operate with the concept of delayed compensation, or a pricing adjustment payable by the parties to a secondary loan trade that settles after an established time intended to assure that neither party derives an economic advantage from the delay (established in the U.S. as T+7 and T+20 for par/near par trades and distressed trades, respectively). Where there is no delayed compensation, one party will typically bear the risk of the other's delaying settlement for economic gain.

Valuation Risk. Unlike publicly traded common stock which trades on national exchanges, there is no central place or exchange for loans or debt securities trading. Loans and other debt securities generally trade on an "over-the-counter" market which may be anywhere in the world where buyer and seller can settle on a price. Due to the lack of centralized information and trading, the valuation of loans and other debt securities may carry more risk than that of common stock. This risk is heightened in emerging markets and other markets where loans are more thinly traded. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency and inconsistency of valuation models and processes may lead to inaccurate asset pricing. In addition, other market participants may value securities differently than the Fund. As a result, the Fund may be subject to the risk that when a loan or other debt security is sold in the market, the amount received by the Fund is less than the value of such loan or other debt security carried on the Fund's books.

Distressed Instruments Risk. Distressed instruments frequently do not produce income while they are outstanding. The Fund may be required to incur certain extraordinary expenses in order to protect and recover its investment. Therefore, to the extent the Fund seeks capital appreciation through investment in distressed instruments, its ability to achieve current income may be diminished. The Fund also will be subject to significant uncertainty as to when and in what manner and for what value the obligations evidenced by the distressed instruments will eventually be satisfied (e.g., through a liquidation of the obligor's assets, an exchange offer or plan of reorganization involving the distressed instruments or a payment of some amount in satisfaction of the obligation). In addition, even if an exchange offer is made or a plan of reorganization is adopted with respect to distressed instruments held by the Fund, there can be no assurance that the securities or other assets the Fund receives in connection with such exchange offer or plan of reorganization will not have a lower value or income potential than may have been anticipated when the investment was made. Moreover, any securities the Fund receives upon completion of an exchange offer or plan of reorganization may be restricted as to resale. As a result of the Fund's participation in negotiations with respect to any exchange offer or plan of reorganization with respect to a borrower or issuer of distressed

instruments, the Fund may be restricted from disposing of such securities.

Illiquid Securities Risk. There is no limit on the amount of the Fund's Managed Assets that may be invested in securities that, at the time of investment, are illiquid. Illiquid investments are assets which may not be sold or disposed of in the ordinary course of business within seven days at approximately the price at which the Fund has valued the investment on its books and may include such securities as those not registered under U.S. securities laws or securities that cannot be sold in public transactions. When there is no willing buyer and investments cannot be readily sold at the desired time or price, the Fund may have to accept a lower price or may not be able to sell the instrument at all. An inability to sell a portfolio position can adversely affect the Fund's value or prevent the Fund from being able to take advantage of other investment opportunities. Illiquid investments are also more difficult to value, and the Advisers' judgment may play a greater role in the valuation process.

Private Placements and Other Restricted Securities Risk. Private placement and other restricted securities include securities that have been privately placed and are not registered under the Securities Act of 1933 ("1933 Act"), such as unregistered securities eligible for resale without registration pursuant to Rule 144A and privately placed securities of U.S. and non-U.S. issuers offered outside of the U.S. without registration with the SEC pursuant to Regulation S. Private placements may offer attractive opportunities for investment not otherwise available on the open market. Private placements securities typically may be sold only to qualified institutional buyers (or, in the case of the initial sale of certain securities, such as those issued in collateralized debt obligations or collateralized loan obligations, to accredited investors (as defined in Rule 501(a) under the 1933 Act)), or in a privately negotiated transaction or to a limited number of purchasers, or in limited quantities after they have been held for a specified period of time and other conditions are met pursuant to an exemption from registration. Rule 144A securities and Regulation S securities may be freely traded among certain qualified institutional investors, such as the Fund, but their resale in the U.S. is permitted only in limited circumstances.

Private placements typically are subject to restrictions on resale as a matter of contract or under federal securities laws. Because there may be relatively few potential purchasers for such securities, especially under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer, the Fund could find it more difficult to sell such securities when it may be advisable to do so or it may be able to sell such securities only at prices lower than if such securities were more widely held. At times, it also may be more difficult to determine the fair value of such securities for purposes of computing the Fund's net asset value due to the absence of a trading market.

Private placements and restricted securities may be considered illiquid securities, which could have the effect of increasing the level of the Fund's illiquidity. Additionally, a restricted security that was liquid at the time of purchase may subsequently become illiquid.

Some loans and other debt securities are not readily marketable and may be subject to restrictions on resale. Loans and other debt securities may not be listed on any national securities exchange and no active trading market may exist for certain of the loans and other debt securities in which the Fund will invest. Where a secondary market exists, the market for some loans and other debt securities may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

Currency Risk. The value of securities, including loans, denominated or quoted in foreign currencies may be adversely affected by fluctuations in the relative currency exchange rates and by exchange control regulations. The Fund's investment performance may be negatively affected by a devaluation of a currency in which the Fund's investments are denominated or quoted. Further, the Fund's investment performance may be significantly affected, either positively or negatively, by currency exchange rates because the U.S. dollar value of securities denominated or quoted in another currency will increase or decrease in response to changes in the value of such currency in relation to the U.S. dollar. While the Fund intends to hedge most of its non-U.S. dollar-denominated securities into U.S. dollars, hedging may not alleviate all currency risks. See "Risks—Derivatives Risk."

Leverage Risk. The Fund initially intends to utilize leverage in an aggregate amount up to [30]% of the Fund's Managed Assets. The Fund will not, however, be required to reduce leverage to the extent the above percentage limitation is exceeded as a result of a decline in the value of the Fund's assets or to increase leverage resulting in an increase in the value of the Fund's assets. In the future the Fund may elect to utilize leverage in an amount up to 33¹/₃% of the Fund's Managed Assets. Pursuant to the provisions of the 1940 Act, the Fund may borrow an amount up to 33¹/₃% of its assets less all liabilities other than borrowing or may issue preferred shares in an amount up to 50% of its assets (including the proceeds from leverage). The Fund may leverage its assets through borrowings, issuance of debt or preferred shares, and/or the use of reverse repurchase agreements. The Fund may also leverage its assets through the use of derivatives and other investment techniques. The Fund may use leverage for investment purposes, to finance the repurchase of its Common Shares and/or to meet cash requirements. Although the use of leverage by the Fund may create an opportunity for increased return for the Common Shares, it also results in additional risks and can magnify the effect of any losses. If the income and gains earned on the securities and investments purchased with leverage proceeds are greater than the cost of the leverage, the Common Shares' return will be greater than

if leverage had not been used. Conversely, if the income and gains from the securities and investments purchased with such proceeds do not cover the cost of leverage, the return to the Common Shares will be less than if leverage had not been used. Reverse repurchase agreements are also subject to the risks that the market value of the securities sold by the Fund may decline below the price of the securities the Fund is obligated to repurchase, and that the securities may not be returned to the Fund. There is no assurance that a leveraging strategy will be successful. Leverage involves risks and special considerations for Common Shareholders including:

• the likelihood of greater volatility of NAV and market price of the Common Shares than a comparable portfolio without leverage;

• the risk that fluctuations in interest rates on borrowings and short-term debt or in the dividend rates on any preferred shares that the Fund may pay will reduce the return to the Common Shareholders or will result in fluctuations in the dividends paid on the Common Shares;

• the effect of leverage in a declining market, which is likely to cause a greater decline in the NAV of the Common Shares than if the Fund were not leveraged, which may result in a greater decline in the market price of the Common Shares; and

• when the Fund uses leverage, the investment advisory fee payable to the Investment Manager will be higher than if the Fund did not use leverage.

The Fund may continue to use leverage if the benefits to the Fund's shareholders of maintaining the leveraged position are believed to outweigh any current reduced return.

Debt Securities Risk. In addition to the risks described elsewhere in this section with respect to valuations and liquidity, debt securities, including high yield securities, are also subject to certain risks, including:

• Issuer Risk. The value of debt securities may decline for a number of reasons which directly relate to the issuer, such as management performance, leverage, and reduced demand for the issuer's goods and services.

• Interest Rate Risk. Interest rate risk is the risk that fixed income securities will decline in value because of changes in market interest rates. When market interest rates rise, the market value of such securities generally will fall. During periods of rising interest rates, the average life of certain types of securities may be extended because of slower than expected prepayments. This may lock in a below-market yield, increase the security's duration and reduce the value of the security. Investments in fixed rate debt securities with long-term maturities may experience significant price declines if long-term interest rates increase. There may be a greater risk of rising interest rates due to the current period of

historically low rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. In periods of market volatility, the market values of fixed income securities may be more sensitive to changes in interest rates. Typically, the impact of changes in interest rates on the market value of an instrument will be more pronounced for fixed rate instruments, such as most corporate bonds, than it will for senior loans or other floating rate instruments.

• Prepayment Risk. During periods of declining interest rates, borrowers or issuers may exercise their option to prepay principal earlier than scheduled. For fixed rate securities, such payments often occur during periods of declining interest rates, forcing the Fund to reinvest in lower yielding securities, resulting in a possible decline in the Fund's income and distributions to shareholders. This is known as call or prepayment risk. Debt securities frequently have call features that allow the issuer to repurchase the security prior to its stated maturity at a specified price (typically greater than par) only if certain prescribed conditions are met ("call protection"). An issuer may redeem an obligation if, for example, the issuer can refinance the debt at a lower cost due to declining interest rates or an improvement in the credit standing of the issuer. Senior loans and other loans typically do not have call protection.

• Reinvestment Risk. Reinvestment risk is the risk that income from the Fund's portfolio will decline if the Fund invests the proceeds from matured, traded or called bonds at market interest rates that are below the Fund portfolio's current earnings rate. A decline in income could affect the Common Shares' market price or the overall return of the Fund.

Derivatives Risk. The Fund's use of derivatives has risks, including: the imperfect correlation between the value of such instruments and the underlying assets of the Fund, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying assets in the Fund's portfolio; the loss of principal; the possible default of the other party to the transaction; new government regulation and illiquidity of the derivative investments. Furthermore, the ability to successfully use derivatives depends on the ability of the Advisers to predict pertinent market movements, which cannot be assured. Thus, the use of derivatives to generate income for hedging, currency and interest rate management or other purposes may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation the Fund can realize on an investment or may cause the Fund to hold a security that it might otherwise sell. The use of certain derivatives will provide the Fund with a form of leverage. In addition, there may be situations in which the Advisers elect not to use derivatives which result in losses greater than if they had been used. Amounts paid by the Fund as premiums

and cash or other assets held in margin accounts with respect to the Fund's use of derivatives are not otherwise available to the Fund for investment purposes.

The Fund may manage some of its derivative positions, if any, by segregating an amount of cash, cash equivalents or liquid securities on the Fund's records in an amount equal to the notional value of those positions. The Fund may also offset derivative positions against one another or against other assets to manage effective market exposure resulting from derivatives in its portfolio. To the extent that the Fund does not segregate liquid assets or otherwise cover its obligations under any such transactions (e.g., through offsetting positions), certain types of these transactions will be treated as senior securities representing indebtedness ("borrowings") for purposes of the limitations on borrowing under the 1940 Act; and therefore, the Fund may not enter into any such transactions if the Fund's borrowings would thereby exceed 33¹/₃% of its Managed Assets.

The use of derivative instruments is subject to applicable regulations of the SEC, the derivatives exchanges and clearing organizations upon which they are traded or cleared, the Commodity Futures Trading Commission ("CFTC"), various self-regulatory organizations and state regulatory authorities and, to the extent applicable, foreign regulations and regulatory bodies. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and regulation proposed or promulgated thereunder require many derivatives to be cleared through a central counterparty and traded on an exchange, expand entity registration requirements, and impose margin, reporting and recordkeeping requirements on market participants entering into derivative transactions. New regulations may potentially limit or completely restrict the ability of the Fund to use derivative instruments as a part of its investment strategy, increase the costs of using these instruments or make them less effective. In addition, the Fund's ability to use derivative instruments may be limited by tax considerations.

Credit Default Swaps Risk. The Fund may invest in credit default swap ("CDS") transactions for hedging or investment purposes. The "buyer" in a credit default contract is obligated to pay the "seller" a periodic stream of payments over the term of the contract, provided that no event of default on an underlying reference obligation has occurred. If an event of default occurs, the seller must pay the buyer the full notional value, or "par value," of the reference obligation through either physical settlement or cash settlement. The Fund may be either the buyer or seller in a CDS transaction. If the Fund is a buyer and no event of default occurs, the Fund will have made a series of periodic payments and recover nothing of monetary value. However, if an event of default occurs, the Fund (if the buyer) will receive the full notional value of the reference obligation either through a cash payment in exchange for the asset or a cash payment in addition to owning the reference assets. As a seller, the Fund

receives a fixed rate of income throughout the term of the contract, which typically is between six months and five years, provided that there is no event of default. The Fund currently intends to segregate assets on the Fund's records in the form of cash, cash equivalents or liquid securities in an amount equal to the net amount accrued by the Fund of the excess, if any, of its obligations over its entitlements under a CDS, which may be equal to the notional value of the CDS, particularly when the Fund is the seller of the CDS. As a seller in a CDS transaction, the Fund will be incurring a form of leverage. CDS transactions involve greater risks than if the Fund had invested in the reference obligation directly.

Regulatory Risk—Regulation as a Commodity Pool. The Investment Manager expects to claim an exclusion from the definition of the term "commodity pool operator" with respect to the Fund pursuant to Regulation 4.5 promulgated by the CFTC under the Commodity Exchange Act (the "CEA"). The Advisers will be limited in their ability to use futures or options on futures or engage in swaps transactions on behalf of the Fund as a result of the Investment Manager claiming the exclusion. For the Investment Manager to qualify for the exclusion under Regulation 4.5, the aggregate initial margin and premiums required to establish the Fund's positions in regulated derivative instruments (other than positions entered into for bona fide hedging purposes) may not exceed five percent of the Fund's liquidation value or, alternatively, the net notional value of the Fund's aggregate investments in such regulated derivative instruments (other than positions entered into for bona fide hedging purposes) may not exceed 100% of the Fund's liquidation value. In the event the Investment Manager fails to qualify for the exclusion and is required to register as a "commodity pool operator" with respect to the Fund, it will become subject to additional disclosure, recordkeeping and reporting requirements with respect to the Fund, which may increase the Fund's expenses.

Lender Liability Risk. A number of U.S. judicial decisions have upheld judgments obtained by borrowers against lending institutions on the basis of various evolving legal theories, collectively termed "lender liability." Generally, lender liability is founded on the premise that a lender has violated a duty (whether implied or contractual) of good faith, commercial reasonableness and fair dealing, or a similar duty owed to the borrower or has assumed an excessive degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. Because of the nature of its investments, the Fund may be subject to allegations of lender liability.

other creditors, (c) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (d) uses its influence as a stockholder to dominate or control a borrower to the detriment of other creditors of such borrower, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors, a remedy called "equitable subordination."

The legal risks associated with loans of borrowers outside of the United States may be heightened, particularly in emerging markets or markets where loan trading may not be as developed.

Inflation/Deflation Risk. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Common Shares and distributions can decline. In addition, during any periods of rising inflation, the dividend rates or borrowing costs associated with the Fund's leverage would likely increase, which would tend to further reduce returns to Common Shareholders. Deflation risk is the risk that prices throughout the economy decline over time—the opposite of inflation. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of the Fund's portfolio.

Sector Risk. To the extent that the Fund has a significant portion of its assets invested in securities of companies conducting business in a broadly related group of industries within an economic sector, the Fund may be more vulnerable to unfavorable developments in that economic sector.

Investments in Equity Securities or Warrants Incidental to Investments in Loans and Other Debt Instruments. From time to time the Fund also may invest in or hold common stock and other equity securities or warrants incidental to the purchase or ownership of a loan or other debt instrument or in connection with a reorganization of a borrower or issuer. Investments in equity securities incidental to investments in loans or debt instruments entail certain risks in addition to those associated with investments in loans or other debt instruments. Because equity is merely the residual value of an issuer after all claims and other interests, it is inherently more risky than the bonds or loans of the same borrower or issuer. The value of the equity securities may be affected more rapidly, and to a greater extent, by company specific developments and general market conditions. These risks may increase fluctuations in the Fund's NAV. The Fund frequently may possess material non-public information about a borrower or issuer as a result of its ownership of a loan or other debt instrument of a borrower or issuer. Because of prohibitions on trading in securities while in possession of material non-public information, the Fund might be unable to enter into a transaction in a security of the borrower or issuer when it would otherwise be advantageous to do so.

Convertible Bonds Risk. The Fund may invest in convertible bonds, which include bonds, debentures, notes and other securities that entitle the holder to acquire common stock or other equity securities of the same or a different issuer. Convertible bonds generally offer lower interest or dividend yields than non-convertible bonds of similar quality. As with all debt securities, the market values of convertible bonds tend to decline as interest rates increase and, conversely, to increase as interest rates decline. Convertible bonds also tend to reflect the market price of the underlying stock in varying degrees, depending on the relationship of such market price to the conversion price in the terms of the convertible bond. Convertible bonds rank senior to common stock in an issuer's capital structure and consequently entail less risk than the issuer's common stock.

Payment-in-Kind Loan Risk. The Fund may invest in payment-in- kind loans ("PIK Loans"). PIK Loans generally represent a significantly higher credit risk than coupon loans. PIK Loans have unreliable valuations because their continuing accruals require judgments about the collectability of the deferred payments and the value of any collateral. PIK Loan accruals may create uncertainty about the source of distributions to shareholders (that is, cash distributions might come from offering proceeds or our capital rather than income).

U.S. Government Securities Risk. U.S. government securities generally do not involve the credit risks associated with investments in other types of debt securities, although, as a result, the yields available from U.S. government securities are generally lower than the yields available from other fixed income securities. Like other debt securities, however, 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 the Fund's NAV. Since the magnitude of these fluctuations will generally be greater at times when the Fund's average maturity is longer, under certain market conditions the Fund may, for temporary defensive purposes, accept lower current income from short-term investments rather than investing in higher yielding long-term securities.

Non-U.S. Government Debt Securities Risk. The ability of a government issuer, especially in an emerging market country, to make timely and complete payments on its debt obligations will be strongly influenced by the government issuer's balance of payments, including export performance, its access to international credits and investments, fluctuations of interest rates and the extent of its foreign reserves. A country whose exports are concentrated in a few commodities or whose economy depends on certain strategic imports could be vulnerable to fluctuations in international prices of these commodities or imports. To the extent that a country receives payment for its exports in currencies other than U.S. dollars, its ability to make debt payments denominated in U.S. dollars could be

adversely affected. If a government issuer cannot generate sufficient earnings from foreign trade to service its external debt, it may need to depend on continuing loans and aid from foreign governments, commercial banks, and multinational organizations. There are no bankruptcy proceedings similar to those in the United States by which defaulted government debt may be collected. Additional factors that may influence a government issuer's ability or willingness to service debt include, but are not limited to, a country's cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole and the issuer's policy towards the International Monetary Fund, the International Bank for Reconstruction and Development and other international agencies to which a government debtor may be subject.

Credit Crisis Liquidity and Volatility Risk. The credit markets have in the past experienced extreme volatility and market disruption. Instability in the credit markets may make it more difficult for a number of issuers of debt securities to obtain financing or refinancing for their investment or lending activities or operations. In particular, when conditions in the credit markets are volatile, issuers of debt securities may be subject to increased cost for debt, tightening underwriting standards and reduced liquidity for loans they make, securities they purchase and securities they issue.

Because of conditions in the credit markets, issuers of debt securities may be subject to increased costs associated with incurring debt, tightening underwriting standards and reduced liquidity for the loans they make. The general economic conditions may materially and adversely impact the broader financial and credit markets and reduce the availability of debt and equity capital for the market as a whole. The reduced willingness of some lenders to extend credit, in general, may make it more difficult for issuers of debt instruments, including senior loans and other loans, to finance their operations. These developments may adversely affect the broader economy, which in turn may adversely affect the ability of the issuers of securities owned by the Fund to make payments of principal and interest when due, and lead to lower credit ratings and increased defaults. Such developments could, in turn, reduce the value of securities owned by the Fund and adversely affect the Fund's NAV.

Non-Diversified Status. As a non-diversified investment company under the 1940 Act, the Fund is not limited in the proportion of its assets that may be invested in securities of a single issuer, and accordingly, the Fund may invest a greater portion of its assets in a more limited number of issuers than a diversified fund. Because the Fund, as a non-diversified investment company, may invest in a smaller number of individual issuers than a diversified investment company, an investment in the Fund may, under certain circumstances, present greater risk to an investor than an investment in a diversified company because changes in the financial condition

or market assessment of a single issuer may cause greater fluctuations in the Fund's NAV. Notwithstanding the foregoing, the Fund intends to conduct its operations so as to meet the diversification requirements for regulated investment companies for purposes of the Internal Revenue Code of 1986, as amended (the "Code"). See "U.S. Federal Income Tax Matters." For purposes of determining the Fund's non-diversified status under the 1940 Act and its diversified status under the Code, the Fund generally will treat the corporate borrower in loans it holds as the "issuer" of indebtedness. In the case of loan participations where a bank or other lending institution serves as a financial intermediary between the Fund and the corporate borrower, if the participation does not shift to the Fund the direct debtor-creditor relationship with the corporate borrower, SEC interpretations require the Fund to treat both the lending bank or other lending institution and the corporate borrower as "issuers." Treating a financial intermediary as an issuer of indebtedness with respect to participations may restrict the Fund's ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.

Market Discount from Net Asset Value Risk. Shares of closed-end investment companies frequently trade at a discount from their NAV. This characteristic is a risk separate and distinct from the risk that the Fund's NAV per Common Share could decrease as a result of its investment activities and may be greater for investors expecting to sell their Common Shares in a relatively short period of time following completion of this offering. The NAV per Common Share will be reduced immediately following this offering as a result of the payment of certain offering costs. Although the value of the Fund's net assets is generally considered by market participants in determining whether to purchase or sell Common Shares, whether investors will realize gains or losses upon the sale of the Common Shares will depend entirely upon whether the market price of the Common Shares at the time of sale is above or below the investor's purchase price for the Common Shares. Because the market price of the Common Shares will be determined by factors such as NAV, dividend and distribution levels and their stability (which will in turn be affected by levels of dividend and interest payments by the Fund's portfolio holdings, the timing and success of the Fund's investment strategies, regulations affecting the timing and character of Fund distributions, Fund expenses and other factors), supply of and demand for the Common Shares, trading volume of the Common Shares, general market, interest rate and economic conditions and other factors that may be beyond the control of the Fund, the Fund cannot predict whether the Common Shares will trade at, below or above NAV or at, below or above the initial public offering price.

Portfolio Turnover Risk. The Fund's annual portfolio turnover rate may vary greatly from year to year. Although the Fund cannot accurately predict its annual portfolio turnover rate, it is not expected

to exceed 100% under normal circumstances. However, portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for the Fund. High portfolio turnover may result in the realization of net short-term capital gains by the Fund which, when distributed to Common Shareholders, will be taxable as ordinary income when distributed to the Fund's Common Shareholders. In addition, a higher portfolio turnover rate results in correspondingly greater transactional expenses that are borne by the Fund. See "The Fund's Investments—Investment Practices—Portfolio Turnover" and "U.S. Federal Tax Matters."

Geopolitical Risk. Through its investments in foreign debt instruments, the Fund may be subject to the risk of one country's foreign policy unduly influencing or upsetting domestic political and social stability in another country or region. The results of such risk could have significant adverse effects on the U.S. economy, the stock market and world economies and markets generally. This risk could also adversely affect Fund service providers and/or the Fund's operations as well as interest rates, secondary trading, credit risk, inflation and other factors relating to the Fund's Common Shares. The Fund cannot predict the effects or likelihood of such events in the future on the U.S. and world economies, the value of the Common Shares or the NAV of the Fund.

Certain Affiliations. Until the underwriting syndicate is broken in connection with the initial public offering of the Common Shares, the Fund will be precluded from effecting principal transactions with brokers who are members of the syndicate.

Anti-Takeover Provisions. The Fund's charter and Bylaws contain provisions that may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of the stockholders. Such provisions may discourage outside parties from seeking control of the Fund or seeking to change the composition of the Board, which could result in stockholders not having the opportunity to realize a price greater than the current market price for their shares at some time in the future. See "Risk Factors—Anti-Takeover Provisions."

Secondary Market for the Fund's Common Shares. The issuance of Common Shares through the Fund's dividend reinvestment plan may have an adverse effect on the secondary market for the Fund's Common Shares. The increase in the number of outstanding Common Shares resulting from issuances pursuant to the Fund's dividend reinvestment plan and the discount to the market price at which such Common Shares may be issued, may put downward pressure on the market price for the Common Shares. Common Shares will not be issued pursuant to the dividend reinvestment plan at any time when Common Shares are trading at a lower price than the Fund's NAV per Common Share. When the Fund's Common Shares are trading at a premium, the Fund may also issue Common Shares that may be sold through private transactions effected on the NYSE or through broker-

SUMMARY OF FUND EXPENSES

The purpose of the following table and the example is to help you understand all fees and expenses that you, as a Common Shareholder, would bear directly or indirectly. The expenses shown in the table for "Other Expenses" and "Total Annual Expenses" are based on estimated amounts for the Fund's first full year of operations and assume that the Fund issues approximately 10,000,000 Common Shares. If the Fund issues fewer Common Shares, all other things being equal, these expenses would increase as a percentage of net assets attributable to Common Shares. The Fund's actual expenses may vary from the estimated expenses shown in the table. The table also assumes the use of leverage in an amount equal to [30]% of Managed Assets (after the leverage is incurred), and shows Fund expenses as a percentage of net assets attributable to Common Shares.

Common Shareholder Transaction Expenses				Percentage of Offering Price
Sales Load (as a percentage of offering price)				4.50%
Offering Expenses Borne by the Fund (as a percentage of offering price)(1)(2)				.20%
Dividend Reinvestment and Cash Purchase Plan Fees(3)				None
Annual Expenses (borne by Common Shareholder)				Percentage of Net Assets Attributable to Common Shares (Assumes Leverage is Used)(4)
Management Fee				[1.00]%
Interest Expense(5)				%
Other Expenses(6)				%
Total Annual Expenses(7)				%

(1) [The Investment Manager has agreed to pay (i) all of the Fund's organizational expenses, and (ii) the Fund's offering costs (other than sales load), to the extent that offering costs are in excess of $.05 per Common Share. Assuming an offering of 10,000,000 Common Shares, the total offering costs are estimated to be $[ ] of which $[ ] would be borne by the Fund and of which $[ ] would be paid by the Investment Manager.]

(2) For a description of the sales load, structuring fees and other compensation paid to the underwriters, see "Underwriting."

(3) You will be charged a service charge and a brokerage commission if you direct the DRIP administrator to sell your Common Shares held in a dividend reinvestment account. See "Dividend Reinvestment and Cash Purchase Plan."

(4) For the purposes of this table we have assumed that the Fund has utilized leverage equal to [30]% of Managed Assets and the Fund pays an interest rate on borrowed money equal to [____]% per annum. All costs and expenses related to any form of leverage used by the Fund will be borne entirely by the Common Shareholders.

The table presented below estimates what the Fund's annual expenses would be, stated as percentages of the Fund's net assets attributable to Common Shares, assuming the Fund is the same size as in the table above and does not use any leverage.

Annual Expenses				Percentage of Net Assets Attributable to Common Shares (Assumes No Leverage is Used)
Management Fee				[1.00]%
Other Expenses(6)				%
Total Annual Expenses(7)				%

(5) Represents estimated interest costs at a rate of [__]% per annum associated with the Fund's bank borrowings in one or more credit facilities (including prime brokerage facilities). The Fund's actual interest costs associated with leverage may differ from the estimates above.

(6) The "Other Expenses" are based on estimated amounts for the current fiscal year. Expenses attributable to the Fund's investments in other investment companies, including closed-end funds and exchange-traded funds (often referred to as "ETFs"), if any, are currently estimated not to exceed .01% of Managed Assets. See "Investment Objectives and Policies—Other Investment Companies" in the SAI.

(7) [The Investment Manager has contractually agreed to limit Total Annual Expenses of the Fund to [1.00%] on an annual basis for three years. This limit excludes certain expenses, including Interest Expenses and other costs from borrowing, costs associated with changes in applicable tax rates, taxes, brokerage commissions, and other expenditures which are capitalized in accordance with generally accepted accounting principles, and other non-routine expenses not incurred in the ordinary course of the Fund's business.]

Example

The following example illustrates the hypothetical expenses that you would pay on a $1,000 investment in Common Shares, (including a sales load of $45 and estimated offering expenses of $[__]), assuming (i) the Fund issues 10,000,000 Common Shares in this offering, (ii) total annual expenses of [____]% of net assets attributable to the Common Shares in years one through ten, (iii) a 5% annual return and (iv) reinvestment of all dividends and distributions at net asset value:

1 Year

3 Years

5 Years

10 Years

The example above should not be considered a representation of future expenses or annual rate of return. Actual expenses, leverage amount or annual rate of return may be higher or lower than those assumed for purposes of the example. The example assumes that the estimated "Other Expenses" set forth in the Annual Expenses table are accurate, and that all dividends and distributions are reinvested at net asset value. Moreover, the Fund's actual rate of return may be greater or less than the hypothetical 5% return shown in the example.

THE FUND

The Fund is a non-diversified, closed-end management investment company registered under the 1940 Act. The Fund was organized on August 28, 2009, as a Maryland corporation pursuant to Articles of Incorporation, as amended (the "Charter"). The Fund has no operating history. The Fund's principal office is located at 1735 Market Street, 32nd Floor, Philadelphia, PA 19103, and its telephone number is 1-800-522-5465. Investment in the Fund involves certain risks and special considerations, including risks associated with the Fund's use of leverage. See "Risks."

USE OF PROCEEDS

The net proceeds of the offering of Common Shares will be approximately $ ($ if the Underwriters exercise the option to purchase additional Common Shares in full) after payment of the estimated offering costs. [The Investment Manager has agreed to pay: (i) all organizational expenses; and (ii) all offering costs of the Fund (other than sales load) that exceed .20% (or $.05 per Common Share) of the Fund's aggregate offering price.] The Fund will invest the net proceeds of the offering in accordance with the Fund's investment objectives and policies as stated below. The Fund expects it will be able to invest substantially all of the net proceeds in securities that meet the Fund's investment objectives and policies [within six months after the completion of the offering]. This investment period is necessary due to the nature of the Fund's investments, certain of which have limited availability. Pending such investment, it is anticipated that the proceeds will be invested primarily in floating rate loans, other debt securities of predominantly U.S. issuers, and certain derivatives as a proxy for the U.S. loan market. Investments may also include high-quality, short-term debt securities. Investors should expect that before the Fund has fully invested the proceeds of the offering in accordance with its investment objectives and policies, the Fund's NAV may earn interest income at a more modest rate than if the Fund were fully invested in accordance with its investment objectives and policies. In addition, the Fund's income may not exceed the Fund's expenses during this period.

THE FUND'S INVESTMENTS

Investment Objectives and Policies

The Fund's primary investment objective is to provide current income. As a secondary objective, the Fund will seek capital appreciation. There can be no assurance that the Fund's investment objectives will be achieved.

The Fund's investment restrictions listed in the SAI as "fundamental" may not be changed without approval by holders of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act, which includes Common Shares and preferred shares, if any, voting together as a single class, and the holders of the outstanding preferred shares voting as a single class. The remainder of the Fund's investment policies, including its investment strategies and objectives, are considered non-fundamental and may be changed by the Board of Directors without shareholder approval. As defined in the 1940 Act, when used with respect to particular shares of the Fund, a "majority of the outstanding voting securities" means: (i) 67% or more of the shares present at a meeting, if the holders of more than 50% of the shares are present or represented by proxy; or (ii) more than 50% of the shares, whichever is less.

Under normal circumstances, the Fund seeks to maintain an average duration of three years or less (including the effect of leverage but after the effect of derivatives). The Fund may use futures and other derivatives to shorten the average duration of the Fund. Under certain market conditions, such as in periods of significant volatility in interest rates and spreads, the Fund's average duration may be longer than three years. The Fund may invest in individual loans or debt securities with durations in excess of three years.

The floating rate loans in which the Fund may invest include senior floating rate loans and second lien, mezzanine and other subordinated loans which may be secured or unsecured (including bridge loans, delayed funding loans and revolving credit facilities). The floating and fixed rate high yield debt securities in which the Fund may invest include bonds, debentures, notes, commercial paper and other similar types of debt instruments, convertible bonds, payment-in-kind securities (including payment-in-kind loans), zero-coupon bonds, bank certificates of deposit, fixed time deposits and bankers' acceptances. Floating rate investments are debt obligations of companies or other entities, the interest rates of which float or vary periodically based upon a benchmark indicator of prevailing interest rates. The Fund's floating rate investments may include instruments that have interest rates that change based on multiples of changes in specified interest rates or interest rates that change inversely to changes in specified interest rates.

The Fund will typically invest, as a percentage of its Managed Assets:

• a minimum of 65% in floating rate investments;

• a maximum of 25% in second lien, mezzanine or other subordinated loans;

• a maximum of 25% in unsecured floating rate debt securities;

• a maximum of 10% in any single borrower (in the case of loans) or single issuer (in the case of other debt securities); and

• [a maximum of 40% in any single sector.]

The Fund will invest primarily in loans and other debt securities that are below investment grade quality at the time of purchase (commonly referred to as "high yield" or "junk"). Below investment grade instruments are issues rated below "BBB-" by S&P or Fitch, below "Baa3" by Moody's or comparably rated by another NRSRO or, if unrated, determined by the Advisers to be of comparable credit quality. Below investment grade instruments are considered speculative with respect to the borrower's or issuer's capacity to pay interest and repay principal. Distressed instruments are issues rated "CCC+" or lower by S&P or Fitch, "Caa1" or lower by Moody's, or comparably rated by another NRSRO or, if unrated, determined by the Advisers to be of comparable credit quality. The Fund may not invest more than 20% of its Managed Assets in debt instruments that are rated "CCC" or below by S&P or Fitch, or "Caa" by Moody's, or comparably rated by another NRSRO or, if unrated, determined by the Advisers to be of comparable credit quality. In the event that a debt instrument receives different ratings from different NRSROs, the Fund will treat the instrument as being rated in the highest rating category received from an NRSRO (such instruments are commonly referred to as "split-rated instruments").

emerging market economy, considering factors such as the country's credit rating, its political and economic stability and the development of its financial and capital markets. Emerging market countries can include every nation in the world except the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe. A developed market country is any country, other than the United States, that is not determined by the Advisers to have an emerging market economy. The Fund's investments may be denominated in U.S. dollars or in foreign currencies. Under normal conditions, the Fund will invest in loans and other securities of issuers from at least three different countries.

While the Fund expects to have exposure to foreign currencies in which its holdings are denominated, generally under normal market conditions the Fund will have exposure to the U.S. dollar in an amount equal to at least 90% of net assets, either through U.S. dollar-denominated holdings or through hedging holdings denominated in foreign currencies back to U.S. dollars.

The Fund may invest without limit in 144A securities, Regulation S securities, and/or restricted securities.

AAMI will be responsible for determining the Fund's overall investment strategy and overseeing its implementation. AAMI will also manage the Fund's investments and make investment decisions on behalf of the Fund. AAMI may delegate management responsibility for a portion of the Fund's portfolio to AAML and AAMAL, and AAML and AAMAL will manage such portion, if any, allocated to them by AAMI. AAM Aus makes recommendations to the Investment Manager as to the overall structure of the Fund's portfolio, including asset allocation advice and general advice on investment strategy relating to the Fund's overall investment objectives and the selection of and the placement of orders with brokers and dealers to execute portfolio transactions on behalf of the Fund. Each of the Advisers is a registered investment adviser under the Advisers Act.

holding certain investments. The Fund will not be required to sell securities solely as a result of such downgrades or market value fluctuations.

The Fund's investment restrictions listed in the SAI as "fundamental" may not be changed without approval by holders of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act, which includes Common Shares and preferred shares, if any, voting together as a single class, and the holders of the outstanding preferred shares voting as a single class. The remainder of the Fund's investment policies and restrictions, including its investment strategies and investment objectives, are considered non-fundamental and may be changed by the Board of Directors without shareholder approval. See "The Fund's Investments" and "Risks" in this prospectus and "Investment Objectives and Policies" in the SAI.

Investment Philosophy and Process

The Advisers employ a disciplined approach to risk management through a portfolio that is geographically diverse. The Advisers investment process is governed by their strict adherence to the process outlined below: