Company: PRIF-PJ
Filing Date: 2025-08-28
Form Type: N-CSR
Source: 0001554625-25-000057
Chunk: 3

Company: Priority Income Fund, Inc.
Filing Date: 2025-08-28
Form: N-CSR
Chunk 3
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 performing in line with the broader markets, declining along with other risk assets on the back of tariff headline induced selling in March and April, then subsequently performing better as fears around tariff impacts eased. CLO equity experienced pressure from elevated prevailing interest rates increasing court restructurings for stressed credits and driving tighter spread repricing activity for performing loans.

Looking ahead to the remainder of 2025 and into 2026, we expect macroeconomic uncertainty and market volatility to continue, driven by tariff related headlines, changes in inflation and the employment landscape, and the potential for Federal Reserve rate cuts throughout the year. Senior secured loan market default and out of court restructuring rates increased and remained elevated over the last 12 months, rising above 4.50% in late 2024 and settling at 4.46% at 06/30/2025. [4] We expect this trend to

#### 2025 ANNUAL REPORTPRIORITY INCOME FUND, INC.5
continue, depending on the path of global tariffs, federal interest rates and other macroeconomics forces moving forward. Federal Reserve rate cuts would benefit floating rate borrowers from an interest coverage perspective as well, all else equal. We expect Priority to continue seeking opportunities in both CLO equity and debt in 2025.

#### Dividend Policy
To qualify for U.S federal income tax treatment as a regulated investment company, the Company is required to pay out distributions as determined in accordance with federal income tax regulations. In certain periods, we expect the income distributable pursuant to these regulations, which we refer to as distributable income, to be higher or lower than our reportable accounting income. In addition to net investment income, our dividend policy considers in part our estimate of our distributable income, which includes: (1) interest income from our underlying CLO debt and equity investments, (2) recognition of certain mark-to-market gains or losses to the extent that the fair market value of our CLO investments is determined to deviate from its adjusted tax basis, and (3) acceleration of unamortized fees and expenses following the refinancing or reset of a CLO’s liabilities. As a result, distributable income may differ from accounting income, as expressed by net investment income. Our distributions may exceed our earnings, and portions of the distributions that we make may therefore be a return of the money that you originally invested and represent a return of capital to you for tax purposes.

We would like to express our gratitude to both our new and long-term shareholders for their