FS Multi-Alternative Income Fund NCSR Certified annual shareholder report (management investment company)



UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C. 20549

	FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENTINVESTMENT COMPANIES Investment Company Act filenumber: 811-23338

FS Multi-Alternative Income Fund (Exact name of registrant as specifiedin charter)

201 Rouse Boulevard Philadelphia, Pennsylvania (Address of principalexecutive offices)		19112 (Zip code)

MichaelC. Forman FS Multi-AlternativeIncome Fund 201Rouse Boulevard Philadelphia,Pennsylvania 19112 (Name and address of agentfor service)

Registrant’s telephone number, including area code:(215) 495-1150 Date of fiscal year end:October 31 Date of reporting period: October31, 2019

Item 1.Reports to Stockholders.

The annual report (the “Annual Report”) of FS Multi-Alternative Income Fund (the “Fund”) for the fiscal year ended October 31, 2019 transmitted to shareholders pursuant to Rule 30e-1 promulgated under the Investment Company Act of 1940, as amended (the “1940 Act”), isas follows:

FS Multi-Alternative
Income Fund

Electronic Reports Disclosure — Beginning on January 1, 2021, as permitted by regulations adopted by theSecurities and Exchange Commission (“SEC”), paper copies of FS Multi-Alternative Income Fund’s (the “Fund”) shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary (such as a broker-dealer or bank). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. Shareholders who hold accounts directly may elect to receive shareholder reports and other communications from the Fund electronically by calling 877-628-8575 or emailing service@fsinvestments.com to make such arrangements. For shareholders who hold accounts through an investment advisor, bank or broker-dealer, please contact that financial intermediary directly for information on how to receive shareholder reports and other communications electronically.

You may elect to receive all future reports in paper free of charge. Shareholders who hold accounts directly may inform the Fund that you wish to continue receiving paper copies of your shareholder reports by calling 877-628-8575 or emailing service@fsinvestments.com. For shareholders who hold accounts through an investment advisor, bank or broker-dealer, please contact that financial intermediary directly to inform them that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds in the fund complex if you hold accounts directly or to all funds held in your account if you invest through your financial intermediary.

Annual report
2019

FS Multi-Alternative Income Fund

PORTFOLIO REVIEW

The following tables summarize the portfolio composition, industry classification and top 10 holdings of our investment portfolio as of October 31,2019 (unaudited):


Portfolio composition (by fair value)			Industry classification (by fair value)
Real Estate Funds	31	%	Real Estate	31	%
Senior Secured Loans—First Lien	19	%	USD CLO	6	%
Senior Secured Loans—Second Lien	3	%	EUR CLO	5	%
Senior Secured Bonds	12	%	Telecommunications	5	%
Unsecured Bonds	21	%	Retail	5	%
CLO/Structured Credit	12	%	Oil & Gas	4	%
Emerging Markets Debt	1	%	Computers	3	%
Common Equity	0	%	Chemicals	3	%
Short-Term Investments	1	%	Software	3	%
	100	%	Media Entertainment	2	%
Top 10 Holdings (by fair value)			Healthcare-Services	2	%
Clarion Lion Properties Fund	9	%	Municipal	2	%
Blackstone Property Partners, LP	9	%	Miscellaneous Manufacturer	2	%
Brookfield Premier Real Estate Partners	5	%	Pharmaceuticals	2	%
CBRE U.S. Core Partners, LP	5	%	Aerospace/Defense	2	%
RREEF Core Plus Industrial Fund	3	%	Short-Term Investments	1	%
Altice Europe N.V.	2	%	Other	22	%
Frontier Communications Corp.	2	%		100	%
Jubilee CDO BV	1	%
Sequa Mezzanine Holdings LLC	1	%
APX Group Inc	1	%

FS Multi-Alternative Income Fund

OFFICERS AND BOARD OF TRUSTEES

Officers

MICHAEL C. FORMAN
Chairman, Chief Executive Officer& President

EDWARD T. GALLIVAN, JR.
Chief Financial Officer& Treasurer

STEPHEN S. SYPHERD
General Counsel& Secretary

JAMES F. VOLK
ChiefCompliance Officer

Boardof Trustees

MICHAEL C. FORMAN
Chairman, Chief Executive Officer& President

DAVID J. ADELMAN
Vice-Chairman
President & Chief Executive Officer,
CampusApartments, Inc.

HOLLY E. FLANAGAN
Trustee
Managing Director,Gabriel Investments

BRIAN R. FORD
Trustee
Retired Partner, Ernst &Young LLP

DANIEL J. HILFERTY, III
Trustee
Chief Executive Officer, IndependenceHealth Group

TABLE OF CONTENTS

FS Multi-Alternative Income Fund

Annual Report for the Year Ended October31, 2019


		Page
Report of Independent Registered Public Accounting Firm		1
Consolidated Schedule of Investments		2
Consolidated Statement of Assets and Liabilities		12
Consolidated Statement of Operations		14
Consolidated Statements of Changes in Net Assets		15
Consolidated Statement of Cash Flows		16
Consolidated Financial Highlights		17
Notes to Consolidated Financial Statements		22
Supplemental Information (Unaudited)		46

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of FS Multi-AlternativeIncome Fund

Opinion on the Financial Statements

We have audited the accompanyingconsolidatedstatement of assets and liabilities of FS Multi-Alternative Income Fund (the “Fund”), including theconsolidatedschedule of investments, as of October 31, 2019, and the relatedconsolidatedstatements of operations and cash flows for the year then ended, theconsolidatedstatements of changes in net assets and theconsolidatedfinancial highlights for the year then ended and the period from September 27, 2018 (commencement of operations) through October 31, 2018 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, theconsolidatedfinancial position of the Fund at October 31, 2019, theconsolidatedresults of its operations and its cash flows for the year then ended and theconsolidatedchanges in its net assets and itsconsolidatedfinancial highlights for the year then ended and the period from September 27, 2018 (commencement of operations) through October 31, 2018, in conformity with U.S. generally acceptedaccounting principles.

Basis for Opinion

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

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express nosuch opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2019, by correspondence with the custodians and others or by other appropriate auditing procedures where replies from others were not received. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis forour opinion.

We have served as auditor of one or more FS Investments investment companiessince 2013.

Philadelphia, Pennsylvania
December23, 2019

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Number of Shares	Cost		Fair Value^(c)
Real Estate Funds—35.1%
Blackstone Property Partners, LP		Real Estate	2,872		$4,000		$4,086
Brookfield Premier Real Estate Partners		Real Estate	1,616		2,104		2,179
CBRE U.S. Core Partners, LP		Real Estate	1,484,863		2,116		2,156
Clarion Lion Properties Fund		Real Estate	2,705		4,080		4,173
RREEF Core Plus Industrial Fund		Real Estate	10,253		1,310		1,358
Total Real Estate Funds					13,610		13,952


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
Senior Secured Loans—First Lien—22.0%
Accuride Corp., L+525, 1.0% Floor, 11/17/2023	(d)	Auto Parts & Equipment		$326		308		272
Advantage Sales & Marketing, Inc., L+325, 1.0% Floor, 7/23/2021	(d)	Advertising		440		420		412
Advantage Sales & Marketing, Inc., L+325, 1.0% Floor, 7/23/2021	(d) (e)	Advertising		84		77		79
Advisor Group, Inc., L+500, 7/31/2026	(d) (e)	Diversified Financial Services		105		104		100
AHP Health Partners, Inc., L+450, 1.0% Floor, 6/30/2025	(d) (e)	Healthcare-Services		148		149		148
AI Ladder (Luxembourg) Subco S.a r.l, L+450, 7/9/2025	(d)	Securities & Trusts		7		7		7
Aleris International, Inc., L+475, 2/27/2023	(d)	Mining		5		5		5
Algoma Steel, Inc., L+850, 1.5% Floor, 12/1/2025	(d) (e)	Iron/Steel		65		65		59
Almonde, Inc., L+350, 1.0% Floor, 6/13/2024	(d)	Software		20		20		19
American Tire Distributors Holdings, Inc., L+750, 1.0% Floor, 9/2/2024	(d)	Distribution/Wholesale		14		13		12
APX Group, Inc., L+500, 4/1/2024	(d)	Electronics		422		418		416
BCP Raptor II, LLC, L+475, 11/3/2025	(d)	Pipelines		206		205		181
BCP Raptor, LLC, L+425, 1.0% Floor, 6/24/2024	(d)	Pipelines		312		306		277
Belk, Inc., L+675, 7/31/2025	(d)	Retail		613		545		515
Brand Energy & Infrastructure Services, Inc., L+425, 1.0% Floor, 6/21/2024	(d)	Engineering & Construction		27		27		27
California Resources Corp., L+475, 1.0% Floor, 12/31/2022	(d) (e) (f)	Oil & Gas		259		255		224
Cengage Learning, Inc., L+425, 1.0% Floor, 6/7/2023	(d) (e)	Media Entertainment		50		48		46
Champ Acquisition Corp., L+550, 12/19/2025	(d) (f)	Apparel		106		104		107
CommerceHub, Inc., L+350, 5/21/2025	(d)	Software		10		10		10
Cortes NP Acquisition Corp., L+400, 1.0% Floor, 11/30/2023	(d)	Machinery-Construction & Mining		17		16		16
CSM Bakery Solutions LLC, L+400, 1.0% Floor,7/3/2020	(d)	Food		92		90		87
Dex Media, Inc., L+900, 1.0% Floor, 12/29/2023	(d) (e)	Software		249		245		256
Diamond Resorts Corp., L+375, 1.0% Floor, 9/2/2023	(d)	Lodging		208		204		201
DynCorp International, Inc., L+600, 1.0% Floor,8/18/2025	(d) (e)	Computers	��	70		68		69
Electronics for Imaging, Inc., L+500, 7/23/2026	(d)	Computers		67		63		62
Employbridge LLC, L+450, 1.0% Floor, 4/18/2025	(d)	Commercial Services		188		190		188
Endo Luxembourg Finance Co. I S.a r.l., L+425, 0.8% Floor, 4/29/2024	(d) (e)	Pharmaceuticals		142		130		131

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
Flexential Intermediate Corp., L+350, 8/1/2024	(d)	Computers		$379		$359		$321
Foresight Energy, LLC, L+575, 1.0% Floor, 3/28/2022	(d)	Metals and Mining		287		289		151
J.C. Penney Corp., Inc., L+425, 1.0% Floor, 6/23/2023	(d)	Retail		215		197		190
Jo-Ann Stores, Inc., L+500, 1.0% Floor, 10/20/2023	(d)	Retail		181		181		139
Jo-Ann Stores, Inc., L+500, 1.0% Floor, 10/20/2023	(d) (e)	Retail		38		36		29
Matador Bidco S.a.r.l., L+475, 10/15/2026	(d)	Securities & Trusts		54		53		54
Monitronics International, Inc., L+650, 3/29/2024	(d) (f)	Computers		386		372		344
Nomad Buyer, Inc., L+500, 8/1/2025	(d)	Software		408		398		403
PAE Holding Corp., L+550, 10/20/2022	(d) (f)	Commercial Services		183		184		184
Paradigm Midstream, L+525, 9/5/2024	(d)	Pipelines		383		378		365
Patterson Medical Holdings, Inc., L+475, 1.0% Floor,8/29/2022	(d) (e)	Pharmaceuticals		129		125		117
PetSmart, Inc., L+400, 1.0% Floor, 3/11/2022	(d) (e) (f)	Retail		53		52		52
PG&E Opco, L+347.5, 4/27/2020	(d) (e) (f)	Electric		15		14		13
Polar US Borrower, LLC, L+475, 10/15/2025	(d)	Chemicals		69		68		65
Post Holdings, Inc., L+500, 10/21/2024	(d) (e) (f)	Food		45		44		45
Quorum Health Corp., L+675, 1.0% Floor, 4/29/2022	(d) (e)	Healthcare-Services		33		32		32
Rent-A-Center, Inc., L+450, 6.5% Floor, 8/5/2026	(d) (e)	Commercial Services		70		69		70
RP Crown Parent, LLC, L+275, 1.0% Floor, 10/12/2023	(d)	Software		141		140		141
Sage BorrowCo, LLC, L+475, 6/20/2026	(d)	Food		72		72		73
Seadrill Partners Finco LLC, L+600, 1.0% Floor,2/21/2021	(d) (e)	Oil & Gas		173		157		89
Sequa Mezzanine Holdings L.L.C., L+500, 1.0% Floor,11/28/2021	(d) (f)	Aerospace/Defense		424		421		419
SGS Cayman, L.P., L+537.5, 1.0% Floor, 4/23/2021	(d)	Commercial Services		83		80		81
Smart & Final Stores LLC, L+675, 6/20/2025	(d)	Food		420		379		384
Sutherland Global Services, Inc., L+537.5, 1.0% Floor,4/23/2021	(d)	Computers		355		345		350
The Talbots, Inc., L+700, 1.0% Floor, 11/28/2022	(d) (f)	Retail		223		217		218
Tibco Software, Inc., L+400, 6/30/2026	(d) (e)	Software		25		25		25
TopGolf International, Inc., L+550, 2/9/2026	(d) (e)	Leisure		104		103		105
UTEX Industries Inc., L+400, 1.0% Floor, 5/21/2021	(d) (e) (f)	Miscellaneous Manufacturer		233		227		181
Verifone Systems, Inc., L+400, 8/20/2025	(d) (e) (f)	Computers		25		23		23
W3 Topco LLC, L+600, 1.0% Floor, 8/16/2025	(d)	Internet		103		92		98
WireCo WorldGroup, Inc., L+500, 1.0% Floor, 9/30/2023	(d)	Metal Fabricate/Hardware		48		49		47
Total Senior Secured Loans—First Lien						9,273		8,734

Senior Secured Loans—Second Lien—3.7%
Access CIG, LLC, L+775, 2/27/2026	(d)	Computers		179		179		178
Comet Acquisition, Inc., L+750, 10/26/2026	(d)	Healthcare-Services		44		43		43
Electronics for Imaging, Inc., L+900, 7/23/2027	(d)	Computers		17		16		15
Emerald Performance Materials, LLC, L+775, 1.0% Floor,8/1/2022	(d)	Chemicals		63		63		63
EXC Holdings III Corp., L+750, 1.0% Floor, 12/1/2025	(d)	Miscellaneous Manufacturer		395		389		389
Flexential Intermediate Corp., L+725, 1.0% Floor, 8/1/2025	(d)	Computers		155		150		112
Jo-Ann Stores, Inc., L+925, 1.0% Floor, 5/21/2024	(d) (e)	Retail		154		148		56
NEP/NCP Holdco, Inc., L+700, 10/19/2026	(d)	Media Entertainment		9		8		9

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
NeuStar, Inc., L+800, 1.0% Floor, 8/8/2025	(d) (e)	Computers		$20		$19		$19
Sequa Mezzanine Holdings LLC, L+900, 1.0% Floor,4/28/2022	(d)	Aerospace/Defense		203		201		198
SMG Holdings, Inc., L+700, 1/23/2026	(d)	Entertainment		99		100		100
UTEX Industries Inc., L+725, 1.0% Floor, 5/20/2022	(d) (e)	Miscellaneous Manufacturer		170		169		94
Vectra Co., L+725, 3/8/2026	(d)	Miscellaneous Manufacturer		102		102		98
WireCo WorldGroup, Inc., L+900, 1.0% Floor,9/30/2024	(d)	Metal Fabricate/Hardware		104		105		100
Total Senior Secured Loans—Second Lien						1,692		1,474

Senior Secured Bonds—14.2%
Altice France SA, 8.1%, 2/1/2027	(e) (g) (h)	Telecommunications		235		239		261
Altice France SA, 5.5%, 1/15/2028	(e) (h)	Telecommunications		400		400		408
APX Group, Inc., 8.8%, 12/1/2020	(e) (i) (j)	Electronics		80		80		79
BCD Acquisition, Inc., 9.6%, 9/15/2023	(e) (g) (h)	Auto Manufacturers		105		109		108
Cornerstone Building Brands, Inc., 8.0%, 4/15/2026	(e) (h) (i) (j)	Building Materials		212		203		209
CSI Compressco LP/CSI Compressco Finance, Inc.,7.5%, 4/1/2025	(e) (g) (h)	Oil & Gas Services		450		456		439
Dell International LLC/EMC Corp., 4.9%, 10/1/2026	(e) (g) (h)	Computers		19		20		21
Dell International LLC/EMC Corp., 8.1%, 7/15/2036	(e) (g) (h)	Computers		47		58		60
Denbury Resources, Inc., 7.8%, 2/15/2024	(e) (g) (h)	Oil & Gas		40		33		30
Denbury Resources, Inc., 9.3%, 3/31/2022	(e) (g) (h)	Oil & Gas		157		158		130
Digicel International Finance Ltd./Digicel Holdings Bermuda Ltd., 8.8%, 5/25/2024	(e) (g) (h)	Telecommunications		200		200		191
Eagle Intermediate Global Holding BV / Ruyi US Finance LLC, 7.5%, 5/1/2025	(e) (h) (i) (j)	Textiles		436		433		382
Enterprise Development Authority, 12.0%, 7/15/2024	(e) (h) (i) (j)	Entertainment		5		5		6
Frontier Communications Corp., 8.5%, 4/1/2026	(g) (h)	Telecommunications		179		168		180
Frontier Communications Corp., 8.0%, 4/1/2027	(e) (g) (h)	Telecommunications		74		74		78
Hudbay Minerals, Inc., 7.6%, 1/15/2025	(e) (g) (h)	Mining		197		199		202
Intelsat Jackson Holdings SA, 5.5%, 8/1/2023	(e) (i) (j)	Telecommunications		218		205		205
JW Aluminum Continuous Cast Co., 10.3%, 6/1/2026	(e) (g) (h)	Mining		25		25		26
L Brands, Inc., 6.9%, 11/1/2035	(e) (g)	Retail		169		146		144
L Brands, Inc., 6.8%, 7/1/2036	(e) (g)	Retail		136		115		114
LABL Escrow Issuer LLC, 6.8%, 7/15/2026	(h)	Packaging & Containers		115		115		119
Northern Oil and Gas, Inc., 8.5%, 5/15/2023 (8.5% Cash + 1.0% PIK, if leverage test not satisfied)	(e) (g)	Oil & Gas		108		110		112
Pacific Drilling SA, 8.4%, 10/1/2023	(e) (g) (h)	Oil & Gas		58		51		47
Par Pharmaceutical, Inc., 7.5%, 4/1/2027	(g) (h)	Pharmaceuticals		72		67		69
Punch Taverns Finance, 5.3%, 3/30/2024	(e)	Retail		£31		42		42
Quorum Health Corp., 11.6%, 4/15/2023	(e)	Healthcare-Services		$20		20		17
Refinitiv US Holdings, Inc., 6.3%, 5/15/2026	(e) (g) (h)	Commercial Services		76		82		83
RegionalCare Hospital Partners Holdings, Inc. / LifePoint Health, Inc., 9.8%, 12/1/2026	(e) (h) (i) (j)	Healthcare-Services		188		187		207
Solocal Group, 8.0%, 3/15/2022 (3 mo. EURIBOR + 7.0%)	(e) (k)	Internet		€181		204		190
SRS Distribution, Inc., 8.3%, 7/1/2026	(e) (h) (i) (j)	Retail		$313		300		314
Summer BC Holdco B Sarl, 5.8%, 10/31/2026	(e) (h)	Advertising		€100		111		112
Team Health Holdings, Inc., 6.4%, 2/1/2025	(e) (h) (i) (j)	Commercial Services		$182		159		118
Teekay Corp., 9.3%, 11/15/2022	(e) (g) (h)	Transportation		160		160		166

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
Tenet Healthcare Corp., 6.3%, 2/1/2027	(e) (g) (h)	Healthcare-Services		$66		$68		$70
Tenet Healthcare Corp., 5.1%, 11/1/2027	(e) (g) (h)	Healthcare-Services		116		116		121
TPro Acquisition Corp., 11.0%, 10/15/2024	(h)	Retail		88		83		85
TransDigm, Inc., 6.4%, 6/15/2026	(e) (g)	Aerospace/Defense		29		29		30
Transocean Guardian Ltd., 5.9%, 1/15/2024	(e) (g) (h)	Oil & Gas		14		15		14
Transocean Phoenix 2 Ltd., 7.8%, 10/15/2024	(e) (g) (h)	Oil & Gas Services		8		8		8
Unique Pub Finance Co. Plc, 5.7%, 6/30/2027	(e)	Real Estate		£8		11		11
Urban One, Inc., 7.4%, 4/15/2022	(e) (g) (h)	Media Entertainment		$114		110		111
Vantage Drilling International, 9.3%, 11/15/2023	(e) (g) (h)	Oil & Gas		329		329		314
Total Senior Secured Bonds						5,703		5,633

Unsecured Bonds—23.5%
AHP Health Partners, Inc., 9.8%, 7/15/2026	(e) (g) (h)	Healthcare-Services		183		190		198
Ally Financial, Inc., 3.8%, 11/18/2019	(e) (g)	Diversified Financial Services		40		40		40
Altice Luxembourg SA, 8.0%, 5/15/2027	(e)	Media Entertainment		€200		224		245
APX Group, Inc., 7.6%, 9/1/2023	(e) (i) (j)	Electronics		$105		100		93
Aruba Investments, Inc., 8.8%, 2/15/2023	(e) (g) (h)	Chemicals		152		153		153
Avantor, Inc., 9.0%, 10/1/2025	(e) (g) (h)	Healthcare-Products		37		40		41
Bausch Health Americas, Inc., 8.5%, 1/31/2027	(e) (g) (h)	Pharmaceuticals		87		91		98
Bausch Health Companies, Inc., 7.0%, 1/15/2028	(e) (g) (h)	Pharmaceuticals		109		114		118
Bausch Health Companies, Inc., 7.3%, 5/30/2029	(e) (f) (g) (h)	Pharmaceuticals		51		56		56
CCO Holdings LLC/CCO Holdings Capital Corp., 5.4%, 6/1/2029	(e) (g) (h)	Media Entertainment		128		134		137
CDK Global, Inc., 4.9%, 6/1/2027	(e) (g)	Software		26		26		28
Central Garden & Pet Co., 5.1%, 2/1/2028	(e) (g)	Household Products/Wares		64		62		66
Cleveland-Cliffs, Inc., 5.9%, 6/1/2027	(e) (g) (h)	Iron/Steel		74		71		71
Constellation Merger Sub, Inc., 8.5%, 9/15/2025	(e) (h) (i) (j)	Leisure Time		310		300		222
Coty, Inc., 6.5%, 4/15/2026	(e) (g) (h)	Cosmetics/Personal Care		33		34		34
Diamond Resorts International, Inc., 10.8%, 9/1/2024	(e) (h) (i) (j)	Lodging		71		71		74
Endeavor Energy Resources LP/EER Finance, Inc., 5.5%, 1/30/2026	(e) (g) (h)	Oil & Gas		77		79		80
Forestar Group, Inc., 8.0%, 4/15/2024	(e) (g) (h)	Home Builders		29		29		31
Freeport-McMoRan, Inc., 5.5%, 3/15/2043	(e) (g)	Mining		74		67		69
Frontier Communications Corp., 10.5%, 9/15/2022	(e) (g)	Telecommunications		278		154		131
Frontier North, Inc., 6.7%, 2/15/2028	(e) (g)	Telecommunications		550		505		517
Genesys Telecommunications Laboratories, Inc./Greeneden Lux 3 Sarl/Greeneden US Holdings, 10.0%, 11/30/2024	(e)(h) (i) (j)	Software		454		491		492
Genworth Holdings, Inc., 7.2%, 2/15/2021	(e) (g)	Insurance		37		38		38
Genworth Holdings, Inc., 7.6%, 9/24/2021	(e) (g)	Insurance		25		26		26
Genworth Holdings, Inc., 4.9%, 8/15/2023	(e) (g)	Insurance		28		26		27
Genworth Holdings, Inc., 4.8%, 2/15/2024	(e)	Insurance		12		11		11
GTCR AP Finance, Inc., 8.0%, 5/15/2027	(e) (g) (h)	Insurance		30		30		31
HCA Healthcare, Inc., 6.3%, 2/15/2021	(e) (g)	Healthcare-Services		18		19		19
HCA, Inc., 7.5%, 2/15/2022	(e) (g)	Healthcare-Services		39		43		43
Hexion, Inc., 7.9%, 7/15/2027	(e) (g) (h)	Chemicals		423		415		409
HLF Financing Sarl LLC/Herbalife International, Inc., 7.3%, 8/15/2026	(e) (g) (h)	Pharmaceuticals		81		83		85

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
HUB International Ltd., 7.0%, 5/1/2026	(e) (h) (i) (j)	Insurance		$9		$9		$9
KGA Escrow LLC, 7.5%, 8/15/2023	(e) (h) (i) (j)	Retail		162		167		173
Liberty Interactive LLC, 8.5%, 7/15/2029	(e) (g)	Media Entertainment		25		25		26
Liberty Interactive LLC, 4.0%, 11/15/2029	(e) (g)	Media Entertainment		643		451		452
Lloyds Banking Group PLC, 7.5% 9/27/2025 (fixed, converts to FRN on 9/27/2025)	(e) (g) (l)	Commercial Banks		218		206		240
Macy’s Retail Holdings, Inc., 5.1%, 1/15/2042	(e) (g)	Retail		182		148		169
Macy’s Retail Holdings, Inc., 4.3%, 2/15/2043	(e) (g)	Retail		48		38		40
Marriott Ownership Resorts, Inc., 4.8%, 1/15/2028	(e) (g) (h)	Lodging		30		30		31
Methanex Corp., 5.3%, 12/15/2029	(e) (g)	Chemicals		269		269		275
MGM Growth Properties Operating Partnership LP / MGP Finance Co-Issuer, Inc., 5.8%, 2/1/2027	(e) (g) (h)	Real Estate Investment Trusts		40		45		45
MGM Growth Properties Operating Partnership LP / MGP Finance Co-Issuer, Inc., 4.5%, 1/15/2028	(e) (g)	Real Estate Investment Trusts		2		2		2
MGM Resorts International, 7.8%, 3/15/2022	(e) (g)	Lodging		36		40		40
Michaels Stores, Inc., 8.0%, 7/15/2027	(e) (g) (h)	Retail		47		46		47
Natural Resource Partners LP/NRP Finance Corp., 9.1% 6/30/2025	(e) (g) (h)	Coal		166		165		156
Navient Corp., 5.6%, 8/1/2033	(e) (g)	Diversified Financial Services		178		144		157
Netflix, Inc., 4.6%, 5/15/2029	(e)	Internet		€100		120		122
Netflix, Inc., 3.9%, 11/15/2029	(e)	Internet		100		112		114
Nine Energy Service, Inc., 8.8%, 11/1/2023	(e) (g) (h)	Oil & Gas Services		$49		49		37
NOVA Chemicals Corp., 5.3%, 6/1/2027	(e) (g) (h)	Chemicals		153		151		158
Pacific Gas & Electric Co., 3.3%, 12/1/2027	(e) (g) (m) (n)	Electric		100		99		94
Pacific Gas & Electric Co., 6.1%, 3/1/2034	(e) (g) (m) (n)	Electric		23		21		23
Parsley Energy LLC/Parsley Finance Corp., 5.6%, 10/15/2027	(e) (g) (h)	Oil & Gas		127		121		132
Post Holdings, Inc., 5.6%, 1/15/2028	(e) (g) (h)	Food		20		21		21
Post Holdings, Inc., 5.5%, 12/15/2029	(e) (f) (g) (h)	Food		55		57		58
Puerto Rico Commonwealth Aqueduct & Sewer Auth.,6.2%, 7/1/2038	(e) (g)	Municipal		5		4		5
Puerto Rico Electric Power Authority, 0.0%, 7/1/2018	(e) (g)(n)(o)	Municipal		5		3		3
Puerto Rico Electric Power Authority, 0.0%, 7/1/2020	(e) (g)(n)(o)	Municipal		15		11		10
Puerto Rico Electric Power Authority, 10.0%, 1/1/2021	(e) (m) (n)	Municipal		8		8		7
Puerto Rico Electric Power Authority, 10.0%, 7/1/2021	(e) (m) (n)	Municipal		8		8		7
Puerto Rico Electric Power Authority, 10.0%, 1/1/2022	(e) (m) (n)	Municipal		2		2		2
Puerto Rico Electric Power Authority, 10.0%, 7/1/2022	(e) (m) (n)	Municipal		2		2		2
Puerto Rico Electric Power Authority, 5.3%, 7/1/2022	(e) (m) (n)	Municipal		10		6		8
Puerto Rico Electric Power Authority, 5.3%, 7/1/2027	(e) (m) (n)	Municipal		145		91		111
Puerto Rico Electric Power Authority, 5.0%, 7/1/2028	(e) (g) (m) (n)	Municipal		5		4		4
Puerto Rico Electric Power Authority, 5.3%, 7/1/2028	(e) (m) (n)	Municipal		5		3		4
Puerto Rico Electric Power Authority, 5.0%, 7/1/2029	(e) (m) (n)	Municipal		130		81		98
Puerto Rico Electric Power Authority, 2.1%, 7/1/2031 (3 mo. USD LIBOR * 0.7 + 0.7%)	(e) (k) (m) (n)	Municipal		15		11		10
Puerto Rico Electric Power Authority, 6.8%, 7/1/2036	(e) (g) (m) (n)	Municipal		15		12		12
Puerto Rico Electric Power Authority, 5.3%, 7/1/2040	(e) (g) (m) (n)	Municipal		15		12		11
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 7/1/2046	(e) (g) (o)	Municipal		1,122		235		293

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
Puerto Rico Sales Tax Financing Corp. Sales Tax Rev., 0.0%, 7/1/2051	(e) (g)(n)(o)	Municipal		$1,122		$172		$219
Quicken Loans, Inc., 5.3%, 1/15/2028	(e) (g) (h)	Diversified Financial Services		71		70		73
SemGroup Corp./Rose Rock Finance Corp., 5.6%, 11/15/2023	(e) (g)	Pipelines		117		113		120
Senior Housing Properties Trust, 4.8%, 2/15/2028	(e) (g)	Real Estate Investment Trusts		35		32		36
SES SA, 5.3%, 4/4/2043	(e) (g) (h)	Telecommunications		17		15		18
Shelf Drill Holdings Ltd., 8.3%, 2/15/2025	(e) (g) (h)	Oil & Gas		180		160		152
Sirius XM Radio, Inc., 5.0%, 8/1/2027	(e) (g) (h)	Media Entertainment		53		55		56
Sirius XM Radio, Inc., 5.5%, 7/1/2029	(e) (g) (h)	Media Entertainment		24		26		26
Southern California Edison Co., 6.3% 2/1/2022 (fixed, converts to FRN on 2/1/2022)	(e) (g) (l)	Electric		40		40		39
Sprint Corp., 7.9%, 9/15/2023	(e) (g)	Telecommunications		94		102		104
Sprint Corp., 7.1%, 6/15/2024	(e) (g)	Telecommunications		4		4		4
SRC Energy, Inc., 6.3%, 12/1/2025	(e) (f) (g)	Oil & Gas		151		145		142
Starfruit Finco BV / Starfruit US Holdco LLC, 8.0%, 10/1/2026	(e) (h) (i) (j)	Chemicals		199		193		199
SunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp., 7.5%, 6/15/2025	(e) (g) (h)	Coal		76		76		65
Surgery Center Holdings, Inc., 6.8%, 7/1/2025	(e) (g) (h)	Healthcare-Services		29		26		27
Surgery Center Holdings, Inc., 10.0%, 4/15/2027	(e) (g) (h)	Healthcare-Services		14		14		14
Teekay Shuttle Tankers LLC, 7.1%, 8/15/2022	(e)	Transportation		200		193		202
Teva Pharmaceutical Finance Netherlands III BV, 3.2%, 10/1/2026	(e) (g)	Pharmaceuticals		85		66		64
TransDigm, Inc., 5.5%, 11/15/2027	(e) (f) (h)	Aerospace/Defense		50		50		50
Uber Technologies, Inc., 7.5%, 9/15/2027	(e) (g) (h)	Internet		27		27		27
Valaris Plc, 7.8%, 2/1/2026	(e)	Oil & Gas		29		28		15
Verscend Escrow Corp., 9.8%, 8/15/2026	(e) (g) (h)	Commercial Services		91		92		97
Vertiv Group Corp., 9.3%, 10/15/2024	(e) (h) (i) (j)	Machinery-Construction & Mining		450		459		426
Vistra Operations Co. LLC, 5.6%, 2/15/2027	(e) (g) (h)	Electric		29		30		31
Vistra Operations Co. LLC, 5.0%, 7/31/2027	(e) (g) (h)	Electric		48		49		50
Vodafone Group PLC, 7.0%, 4/4/2029 (fixed, converts to FRN on 4/4/2029)	(e) (g)	Telecommunications		97		97		112
WPX Energy, Inc., 5.3%, 9/15/2024	(e) (g)	Oil & Gas		69		69		70
WPX Energy, Inc., 5.8%, 6/1/2026	(e) (g)	Oil & Gas		12		12		12
WPX Energy, Inc., 5.3%, 10/15/2027	(e) (g)	Oil & Gas		14		14		14
Total Unsecured Bonds						9,180		9,355

Collateralized Loan Obligation (CLO) / Structured Credit—14.1%
Accunia European CLO I B.V., 2.7%, 7/15/2030 (3 mo. EURIBOR + 2.7%)	(e) (h) (p)	EUR CLO		€250		284		279
Accunia European CLO III DAC, 3.1%, 1/20/2031 (3 mo. EURIBOR + 3.1%)	(e) (p)	EUR CLO		100		108		109
Ares XXXVII CLO Ltd., 4.7%, 10/15/2030 (3 mo. USD LIBOR + 2.7%)	(e) (h) (p)	USD CLO		$250		247		234
Ares XXXVR CLO Ltd., 5.0%, 7/15/2030 (3 mo. USD LIBOR + 3.0%)	(e) (h) (p)	USD CLO		250		250		237

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Amortized Cost		Fair Value^(c)
Babson CLO Ltd. 2018-4 AAD, 4.9%, 10/15/2030 (3 mo. USD LIBOR + 2.9%)	(e) (h) (p)	USD CLO		$250		$250		$235
Bain Capital Credit CLO 2016-2 Ltd., 6.1%, 1/15/2029 (3 mo. USD LIBOR + 4.1%)	(e) (h) (k)	USD CLO		250		245		247
Black Diamond CLO 2014-1 Ltd., 7.3%, 10/17/2026 (3 mo. USD LIBOR + 5.3%)	(e) (g) (k)	USD CLO		250		249		246
BlackRock European CLO VII DAC, 2.3%, 10/15/2031 (3 mo. EURIBOR + 2.3%)	(e) (h) (p)	EUR CLO		€250		285		279
BlueMountain CLO 2015-4 Ltd., 4.9%, 4/20/2030 (3 mo. USD LIBOR + 3.0%)	(e) (g) (h) (p)	USD CLO		$250		242		226
Carlyle Global Market Strategies Euro CLO 2014-2 Ltd., 3.3%, 11/17/2031 (3 mo. EURIBOR + 3.3%)	(e) (p)	EUR CLO		€100		115		112
CFIP CLO 2014-1 Ltd., 6.1%, 7/13/2029 (3 mo. USD LIBOR + 4.1%)	(e) (h) (k)	USD CLO		$250		245		247
Dryden 36 Senior Loan Fund, 5.7%, 4/15/2029 (3 mo. USD LIBOR + 3.7%)	(e) (g) (h) (p)	USD CLO		250		250		245
Erna Srl, 2.3%, 7/25/2031 (3 mo. EURIBOR + 2.3%)	(e) (k)	EUR CLO		€197		220		219
Harvest CLO XX DAC, 3.4%, 10/20/2031 (3 mo. EURIBOR + 3.4%)	(e) (p)	EUR CLO		100		115		111
Jubilee CLO 2017-XVIII B.V., 3.1%, 1/15/2030 (3 mo. EURIBOR + 3.1%)	(e) (p)	EUR CLO		100		114		110
Jubilee CLO 2018-21 ACI, 2.5%, 1/15/2032 (3 mo. EURIBOR + 2.5%)	(e) (h) (p)	EUR CLO		250		285		280
Jubilee CLO 2018-21 AD, 3.6%, 1/15/2032 (3 mo. EURIBOR + 3.6%)	(e) (h) (p)	EUR CLO		250		285		275
Man GLG US CLO 2018-2 Ltd., 5.5%, 10/15/2028 (3 mo. USD LIBOR + 3.5%)	(e) (h) (p)	USD CLO		$250		249		240
Marlay Park CLO DAC, 1.6%, 10/15/2030 (3 mo. EURIBOR + 1.6%)	(e) (p)	EUR CLO		€100		109		108
Octagon Loan Funding Ltd., 5.0%, 11/18/2031 (3 mo. USD LIBOR + 2.9%)	(e) (h) (p)	USD CLO		$250		250		235
Preferred Term Securities XXI Ltd./Preferred Term Securities XXI, Inc., 2.5%, 3/22/2038 (3 mo. USD LIBOR + 0.4%)	(e) (h) (k)	USD CDO		205		166		171
Preferred Term Securities XXVI Ltd./Preferred Term Securities XXVI, Inc., 2.5%, 9/22/2037 (3 mo. USD LIBOR + 0.4%)	(e) (h) (k)	USD CDO		93		75		78
Rockford Tower Europe CLO 2018-1 DAC, 2.5%, 12/20/2031 (3 mo. EURIBOR + 2.5%)	(e) (h) (p)	EUR CLO		€250		284		279
Tikehau CLO IV B.V., 3.3%, 10/15/2031 (3 mo. EURIBOR + 3.3%)	(e) (p)	EUR CLO		100		116		111
Toro European CLO 3 DAC, 3.3%, 4/15/2030 (3 mo. EURIBOR + 3.3%)	(e) (k)	EUR CLO		100		116		112
Trimaran Cavu 2019-1 Ltd., 6.1%, 7/20/2032 (3 mo. USD LIBOR + 4.2%)	(e) (g) (h) (p)	USD CLO		$250		250		239
Trinitas CLO VII Ltd., 5.4%, 1/25/2031 (3 mo. USD LIBOR + 3.5%)	(e) (h) (p)	USD CLO		250		228		228
Tymon Park CLO DAC, 6.8%, 1/21/2029 (3 mo. EURIBOR + 6.8%)	(e) (k)	EUR CLO		€100		113		102
Total Collateralized Loan Obligation / Structured Credit						5,745		5,594

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)		Cost		Fair Value^(c)
Emerging Markets Debt—0.7%
Mexican Bonos, 6.5%, 6/9/2022	(e)	Sovereign		$1,200		$61		$62
Petroleos Mexicanos, 4.9%, 1/24/2022	(e) (f)	Oil & Gas		70		73		73
Petroleos Mexicanos, 6.8%, 1/23/2030	(e) (g) (h)	Oil & Gas		64		64		69
Petroleos Mexicanos, 7.7%, 1/23/2050	(e) (g) (h)	Oil & Gas		46		48		50
Russian Federal Bond - OFZ, 8.0%, 10/7/2026	(e)	Sovereign		₽1,025		18		18
Total Emerging Markets Debt						264		272

Portfolio Company^(a)

Footnotes

Industry

Number of Shares

Cost^(b)

Fair
Value^(c)

Common Equity—0.2%

Hexion Holdings Corp., Class B

(e) (n)

Chemicals

2,691

Hexion Holdings Corp., Warrants

(e) (n)

Chemicals

2,976

Total Common Equity


Portfolio Company^(a)	Footnotes	Yield	Number of Shares	Cost^(b)		Fair Value^(c)
Short-Term Investments—1.4%
State Street Institutional Treasury Plus Money Market Fund - Premier Class	(q)	1.74 %	564,649		565		565
Total Short-Term Investments					565		565
TOTAL INVESTMENTS—114.9%					$46,109		45,639
LIABILITIES IN EXCESS OF OTHER ASSETS—(14.9)%	(r)						(5,912	)
NET ASSETS—100.0%							$39,727

Investments Sold Short—(0.2)%


Portfolio Company^(a)	Footnotes	Industry	Principal Amount^(b)			Proceeds			Fair Value^(c)
U.S. Treasury Sold Short—(0.2)%								��
U.S. Treasury Bond, 2.3%, 8/15/2049	(e) (g) (n)	Sovereign		$(85	)		$(88	)		$(86	)
Total Investments Sold Short							$(88	)		$(86	)

Forward Foreign Currency Exchange Contracts


Counterparty	Contract Settlement Date	Currency to be Received	Value	Currency to be Delivered	Value	Unrealized Appreciation		Unrealized Depreciation
Bank of America, N.A.	12/18/2019	USD	17	EUR	15		$—		$—
JPMorgan Chase Bank, N.A.	11/29/2019	USD	33	MXN	640		—		—
JPMorgan Chase Bank, N.A.	11/29/2019	USD	28	MXN	540		—		—
JPMorgan Chase Bank, N.A.	12/18/2019	EUR	1	USD	1		—		—
JPMorgan Chase Bank, N.A.	12/18/2019	EUR	156	USD	174		—		5
JPMorgan Chase Bank, N.A.	12/18/2019	EUR	511	USD	572		—		10
JPMorgan Chase Bank, N.A.	12/18/2019	USD	9	EUR	8		—		—
JPMorgan Chase Bank, N.A.	12/18/2019	USD	50	EUR	45		1		—
JPMorgan Chase Bank, N.A.	12/18/2019	USD	361	EUR	323		9		—
JPMorgan Chase Bank, N.A.	12/18/2019	USD	37	EUR	33		1		—
State Street Bank and Trust Company	12/18/2019	USD	49	GBP	38		—		—
State Street Bank and Trust Company	12/18/2019	USD	101	EUR	90		—		—
State Street Bank and Trust Company	12/18/2019	USD	49	EUR	44		—		1

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)


Counterparty	Contract Settlement Date	Currency to be Received	Value	Currency to be Delivered	Value	Unrealized Appreciation		Unrealized Depreciation
State Street Bank and Trust Company	12/18/2019	EUR	45	USD	50		$1		$—
State Street Bank and Trust Company	12/18/2019	EUR	115	USD	129		2		—
State Street Bank and Trust Company	12/18/2019	EUR	35	USD	39		1		—
State Street Bank and Trust Company	12/18/2019	EUR	21	USD	23		—		—
State Street Bank and Trust Company	12/18/2019	EUR	6	USD	7		—		—
State Street Bank and Trust Company	12/18/2019	EUR	141	USD	158		—		3
State Street Bank and Trust Company	12/18/2019	USD	254	EUR	227		5		—
State Street Bank and Trust Company	12/18/2019	USD	120	EUR	107		3		—
State Street Bank and Trust Company	12/18/2019	USD	17	GBP	13		—		—
State Street Bank and Trust Company	12/18/2019	USD	393	EUR	351		13		—
State Street Bank and Trust Company	12/18/2019	USD	131	EUR	117		2		—
State Street Bank and Trust Company	12/18/2019	USD	20	EUR	18		—		—
State Street Bank and Trust Company	12/18/2019	USD	22	EUR	20		—		—
Total Forward Foreign Currency Exchange Contracts							$38		$19

Futures Contracts


Description	Number of Contracts	Position	Expiration Date	Notional Amount	Unrealized Appreciation		Unrealized Depreciation
Interest Rate Futures
U.S 10-Year Treasury Note	10	Short	12/19/2019	1,309		$6		—
U.S 2-Year Treasury Note	9	Long	12/31/2019	1,938		3		—
Total Interest Rate Futures						$9		—

Cross-Currency Swaps

Counterparty

Fund Pays

Fund Receives

Notional
Amount of
Currency
Delivered

Notional
Amount of
Currency
Received

Expiration Date

Periodic
Payment
Frequency

Fair
Value^(c)

Unrealized Appreciation

Unrealized Depreciation

JPMorgan Chase Bank, N.A.

3 Month
EURIBOR
plus a spread of
(0.1435%)

3 Month
USD
LIBOR

EUR 900

USD1,024

12/3/2023

Quarterly

$21

—

JPMorgan Chase Bank, N.A.

3 Month
EURIBOR
plus a spread of
(0.10375%)

3 Month
USD
LIBOR

EUR 1,094

USD1,231

3/29/2021

Quarterly

—

JPMorgan Chase Bank, N.A.

3 Month
EURIBOR
plus a spread of
(0.176%)

3 Month
USD
LIBOR

EUR 518

USD583

7/12/2021

Quarterly

—

Total Cross-Currency Swaps

$42

—

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Schedule of Investments (continued)
As of October 31, 2019
(in thousands, except share amounts)

Interest Rate Swaps

Counterparty

Fund
Pays

Fund Receives

Notional
Amount

Expiration
Date

Periodic
Payment
Frequency

Fair
Value^(c)

Unrealized
Appreciation

Unrealized
Depreciation

Goldman Sachs & Co. LLC

3 Month
LIBOR

1.26%

USD 175

4/8/2022

Semi-annually

—

Goldman Sachs & Co. LLC

1.52%

3 Month LIBOR

USD 8

11/8/2026

Semi-annually

—

Goldman Sachs & Co. LLC

1.65%

3 Month LIBOR

USD 32

3/17/2030

Semi-annually

—

Goldman Sachs & Co. LLC

1.62%

3 Month LIBOR

USD 63

4/8/2050

Semi-annually

—

Total Interest Rate Swaps

—

(a)Security may be an obligation of one or more entities affiliated with thenamed company.

(b)Denominated in U.S. dollars unlessotherwise noted.

(c)Fair value is determined by the board of trustees of FS Multi-Alternative Income Fund (the “Fund”). See Notes 2 and 8 for information on the Fund’s policy regarding valuation of investments, fair value hierarchy levels and other significantaccounting policies.

(d)Certain variable rate securities in the Fund’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of October 31, 2019, the one-month, three-month and six-month London Interbank Offered Rate (“LIBOR” or “L”) was 1.78%, 1.90% and 1.92%, respectively, and the three-month Euro Interbank Offered Rate (“EURIBOR” or “E”)was (0.39)%.

(e)Security held in Fund’s wholly-owned subsidiary, FS Multi AlternativeCredit LLC.

(f)Position or portion thereof unsettled as of October31, 2019.

(g)Security or portion thereof is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage International, Ltd. (”BNP”). Securities may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) promulgated under the Securities Exchange Act of 1934, as amended, subject to terms and conditions governing the prime brokerage facility with BNP. As of October 31, 2019, there were no securities rehypothecatedby BNP.

(h)Exempt from registration under Rule 144A of the Securities Act of 1933, as amended. Such securities may be deemed liquid by the investment adviser and may be resold, normally to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $13,570, which represents approximately 34.2% of net assets as of October31, 2019.

(i)Security or portion thereof is pledged as collateral supporting the amounts outstanding under the revolving credit facility withSociété Générale.

(j)Security held in Fund’s wholly-owned subsidiary, FS Multi PrivateCredit LLC.

(k)Variable rate security. The stated interest rate represents the rate in effect at October31, 2019.

(l)The security has a perpetual maturity; the date displayed is the nextcall date.

(m)Security isin default.

(n)Security isnon-income producing.

(o)Issued with a zero coupon. Income is recognized through the accretionof discount.

(p)Variable or floating rate security for which the interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as ofperiod end.

(q)Rate represents the seven-day yield as of October31, 2019.

(r)Includes the effect of forward foreign currency exchange contracts, futures contracts, swap contracts and investmentssold short.

CDO—CollateralizedDebt Obligation

EUR—Euro

EURIBOR—Euro InterbankOffered Rate

FRN—FloatingRate Note

GBP—BritishPound Sterling

LIBOR—London InterbankOffered Rate

PIK—PaymentIn Kind

USD—U.S. Dollar

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Statement of Assets and Liabilities
(in thousands, except share and per share amounts)


	October 31, 2019
Assets
Investments, at fair value (amortized cost—$46,109)		$45,639
Foreign currency (cost—$30)		30
Collateral held at broker⁽¹⁾		47
Receivable for investments sold		510
Reimbursement due from adviser⁽²⁾		289
Interest receivable		337
Unrealized appreciation on forward foreign currency exchange contracts		38
Unrealized appreciation on swap contracts		45
Receivable for variation margin on futures contracts		9
Swap income receivable		8
Prepaid expenses and other assets		134
Total assets		$47,086

Liabilities
Financing arrangements payable		$ 5,293
Investments sold short, at fair value (proceeds $88)		86
Unrealized depreciation on forward foreign currency exchange contracts		19
Due to custodian		97
Payable for investments purchased		1,568
Accounting and administrative fees payable		40
Interest expense payable		35
Professional fees payable		186
Trustees’ fees payable		8
Shareholder service fee – Class A		10
Shareholder service and distribution fees – Class L		0
Distribution fee – Class M		0
Shareholder service and distribution fees – Class T		0
Other accrued expenses and liabilities		17
Total liabilities		$ 7,359
Net assets		$39,727

Commitments and contingencies ($788)⁽³⁾

Composition of net assets
Common shares, $0.001 par value, unlimited shares authorized		$ 3
Capital in excess of par value		39,328
Accumulated earnings (deficit)		396
Net assets		$39,727

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Statement of Assets and Liabilities (continued)
(in thousands, except share and per share amounts)


			October 31, 2019
Class A Shares
Net Assets			$10,750
Shares Outstanding			848,659
Net Asset Value Per Share (net assets ÷ shares outstanding)			$12.67
Maximum Offering Price Per Share ($12.67 ÷ 94.25% of net asset value per share)			$13.44

Class I Shares
Net Assets			$28,917
Shares Outstanding			2,282,761
Net Asset Value Per Share (net assets ÷ shares outstanding)			$12.67

Class L Shares
Net Assets			$20
Shares Outstanding			1,600
Net Asset Value Per Share (net assets ÷ shares outstanding)			$12.66
Maximum Offering Price Per Share ($12.66 ÷ 96.50% of net asset value per share)			$13.12

Class M Shares
Net Assets			$20
Shares Outstanding			1,600
Net Asset Value Per Share (net assets ÷ shares outstanding)			$12.67

Class T Shares
Net Assets			$20
Shares Outstanding			1,600
Net Asset Value Per Share (net assets ÷ shares outstanding)			$12.66
Maximum Offering Price Per Share ($12.66 ÷ 96.50% of net asset value per share)			$13.12

(1)Represents cash on depositat broker.

(2)See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviserand affiliates.

(3)See Note 11 for a discussion of the Fund’s commitmentsand contingencies.

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Statement of Operations
(in thousands)


	Year Ended October 31, 2019
Investment income
Interest income		$2,153
Dividend income		262
Fee income		71
Total investment income		2,486

Operating expenses
Management fees		643
Administrative services expenses		13
Accounting and administrative fees		238
Interest expense		123
Professional fees		365
Trustees’ fees		11
Shareholder service fee – Class A		10
Shareholder service and distribution fees – Class L		0
Distribution fee – Class M		0
Shareholder service and distribution fees – Class T		0
Other general and administrative expenses		121
Total operating expenses		1,524
Less: Expense reimbursement⁽¹⁾		(748	)
Less: Management fee waiver⁽¹⁾		(643	)
Net operating expenses		133
Net investment income		2,353

Realized and unrealized gain/loss
Net realized gain (loss) on investments		(119	)
Net realized gain (loss) on forward foreign currency exchange contracts		77
Net realized gain (loss) on swap contracts		(22	)
Net realized gain (loss) on investments sold short		(42	)
Net realized gain (loss) on futures contracts		(83	)
Net realized gain (loss) on foreign currency		4
Net change in unrealized appreciation (depreciation) on investments		(325	)
Net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts		(39	)
Net change in unrealized appreciation (depreciation) on swap contracts		46
Net change in unrealized appreciation (depreciation) on investments sold short		2
Net change in unrealized appreciation (depreciation) on futures contracts		12
Net change in unrealized gain (loss) on foreign currency		(10	)
Total net realized gain (loss) and unrealized appreciation (depreciation)		(499	)
Net increase (decrease) in net assets resulting from operations		$1,854

(1)See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates and a discussion of the waiver by FS Multi-Alternative Advisor, LLC, the Fund’s investment adviser, of management fees and certain reimbursements to which it wasotherwise entitled.

See notes to consolidated financial statements.


	Year Ended October 31, 2019			Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
Operations
Net investment income		$ 2,353			$ 8
Net realized gain (loss)		(185	)		(21	)
Net change in unrealized appreciation (depreciation) on investments		(325	)		(145	)
Net change in unrealized appreciation (depreciation) on forward foreign currency exchange contracts		(39	)		58
Net change in unrealized appreciation (depreciation) on swap contracts		46			(1	)
Net change in unrealized appreciation (depreciation) on investments sold short		2			—
Net change in unrealized appreciation (depreciation) on futures contracts		12			(3	)
Net change in unrealized gain (loss) on foreign currency		(10	)		10
Net increase (decrease) in net assets resulting from operations		1,854			(94	)

Shareholder distributions⁽¹⁾
Distributions to shareholders
Class A		(142	)		—
Class I		(1,233	)		—
Class L		(1	)		—
Class M		(1	)		—
Class T		(1	)		—
Net decrease in net assets resulting from distributions to shareholders		(1,378	)		—

Capital share transactions⁽²⁾
Net increase in net assets resulting from capital share transactions		7,845			31,400
Total increase in net assets		8,321			31,306
Net assets at beginning of period		31,406			100
Net assets at end of period		$39,727			$31,406

(1)See Note 5 for a discussion of the sources of distributions paid bythe Fund.

(2)See Note 3 for a discussion of the Fund’s commonshare transactions.

FS Multi-Alternative Income Fund

Consolidated Statements of Changes in Net Assets
(in thousands)

See notes to consolidated financial statements.


	Year Ended October 31, 2019
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations		$1,854
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments⁽¹⁾		(43,138	)
Investments in money market fund, net		11,144
Proceeds from sales and repayments of investments		25,813
Proceeds from investments sold short		33
Net realized (gain) loss on investments		119
Net realized (gain) loss on investments sold short		42
Net change in unrealized (appreciation) depreciation on investments		325
Net change in unrealized (appreciation) depreciation on forward foreign currency exchange contracts		39
Net change in unrealized (appreciation) depreciation on investments sold short		(2	)
Net change in unrealized (appreciation) depreciation on swap contracts		(46	)
Net change in unrealized (appreciation) depreciation on futures contracts		(12	)
Accretion of discount/amortization of premium, net		(141	)
(Increase) decrease in collateral held at broker		2
(Increase) decrease in receivable for investments sold		(285	)
(Increase) decrease in reimbursement due from adviser⁽²⁾		(249	)
(Increase) decrease in interest receivable		(130	)
(Increase) decrease in swap income receivable		(8	)
(Increase) decrease in prepaid expenses and other assets		(134	)
Increase (decrease) in due to custodian		97
Increase (decrease) in payable for investments purchased		(7,573	)
Increase (decrease) in management fees payable		(54	)
Increase (decrease) in administrative services expenses payable		(1	)
Increase (decrease) in accounting and administrative fees payable		37
Increase (decrease) in interest expense payable		35
Increase (decrease) in professional fees payable		149
Increase (decrease) in trustees’ fees payable		7
Increase (decrease) in shareholder service fee – Class A		10
Increase (decrease) in shareholder service and distribution fees – Class L		0
Increase (decrease) in distribution fee – Class M		0
Increase (decrease) in shareholder service and distribution fees – Class T		0
Increase (decrease) in other accrued expenses and liabilities		13
Net cash provided by (used in) operating activities		(12,054	)

Cash flows from financing activities
Issuance of common shares		7,840
Shareholder distributions paid		(1,373	)
Borrowings under financing arrangements⁽³⁾		10,134
Repayments under financing arrangements⁽³⁾		(4,841	)
Net cash provided by (used in) financing activities		11,760
Total increase (decrease) in cash		(294	)
Cash and foreign currency at beginning of year		324
Cash and foreign currency at end of year		$30

Supplemental disclosure
Reinvestment of shareholder distributions		$5

(1)Purchases of investments includes $261 of dividend income related to the Fund’s real estate investments.

(2)See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviserand affiliates.

(3)See Note 9 for a discussion of the Fund’s financing arrangements. During the year ended October 31, 2019, borrowings under the financing arrangements included $88 ofcapitalized interest.

FS Multi-Alternative Income Fund

Consolidated Statement of Cash Flows
(in thousands)

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

ConsolidatedFinancial Highlights—Class A Shares
(in thousands, except share and per share amounts)


	Year Ended October 31, 2019			Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:⁽¹⁾
Net asset value, beginning of period		$12.46			$12.50
Results of operations
Net investment income⁽²⁾		0.78			(0.00	)
Net realized gain (loss) and unrealized appreciation (depreciation) on investments		(0.10	)		(0.04	)
Net increase (decrease) in net assets resulting from operations		0.68			(0.04	)

Shareholder Distributions:⁽³⁾
Distributions from net investment income		(0.47	)		—
Net increase (decrease) in net assets resulting from shareholder distributions		(0.47	)		—
Net asset value, end of period		$12.67			$12.46
Shares outstanding, end of period		848,659			1,600
Total return⁽⁴⁾		5.52	%		(0.32	)%⁽⁵⁾

Ratio/Supplemental Data:
Net assets, end of period		$10,750			$ 20
Ratio of net investment income (loss) to average net assets⁽⁶⁾⁽⁷⁾		6.12	%		(0.03	)%
Ratio of total expenses to average net assets⁽⁶⁾		4.69	%		3.68	%
Ratio of expense reimbursement/waiver to average net assets⁽⁶⁾		(3.95	)%		(1.35	)%
Ratio of net expenses to average net assets⁽⁶⁾		0.74	%		2.33	%
Portfolio turnover rate		69	%		2	%⁽⁵⁾
Total amount of senior securities outstanding exclusive of treasury securities		$5,293			—
Asset coverage ratio per unit⁽⁸⁾		8.51			—

(1)Per share data may be rounded in order to compute the ending net asset valueper share.

(2)The per share data was derived by using the average number of common shares outstanding during theapplicable period.

(3)The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class A common share during theapplicable period.

(4)The total return is historical and is calculated by determining the percentage change in net asset value, assuming the reinvestment of all distributions in additional common shares of the same class of the Fund at such class’ net asset value per share in accordance with the Fund’s distribution reinvestment plan. The total return does not consider the effect of any selling commissions or charges that may be incurred in connection with the sale of the Fund’s common shares. The historical calculation of total return in the table should not be considered a representation of the Fund’s future total return, which may be greater or less than the total return shown in the table due to a number of factors, including, among others, the Fund’s ability or inability to make investments that meet its investment criteria, the interest rates payable on the debt securities the Fund acquires, the level of the Fund’s expenses, the amount of the expense limitation, if any, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Fund encounters competition in its markets and general economic conditions. As a result of these and other factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Fundduring the applicable period on a per class basis and do not represent an actual returnto shareholders.

(5)Information presented isnot annualized.

(6)Average daily net assets is used for this calculation. Data for periods of less than one year is annualized. Ratios do not reflect the Fund’s proportionate share of income and expenses from private realestate funds.

(7)If the adviser had not waived or reimbursed certain expenses, the ratio of net investment income (loss) to average net assets would have been 2.17% and (1.38)% for the year ended October 31, 2019 and for the period from September 27, 2018 (Commencement of Operations) through October 31, 2018, respectively. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates and a discussion of the waiver by the Fund’s investment adviser of management fees and certain reimbursements to which it wasotherwise entitled.

(8)Asset coverage per unit is the ratio of the carrying value of the Fund’s total consolidated assets available to cover senior securities, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securitiesrepresenting indebtedness.

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Financial Highlights—Class I Shares
(in thousands, except share and per share amounts)


	Year Ended October 31, 2019			Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:⁽¹⁾
Net asset value, beginning of period		$ 12.46			$ 12.50
Results of operations
Net investment income⁽²⁾		0.86			0.00
Net realized gain (loss) and unrealized appreciation (depreciation) on investments		(0.15	)		(0.04	)
Net increase (decrease) in net assets resulting from operations		0.71			(0.04	)

Shareholder distributions:⁽³⁾
Distributions from net investment income		(0.50	)		—
Net decrease in net assets resulting from shareholder distributions		(0.50	)		—
Net asset value, end of period		$ 12.67			$ 12.46
Shares outstanding, end of period		2,282,761			2,513,600
Total return⁽⁴⁾		5.78	%		(0.32	)%⁽⁵⁾

Ratio/Supplemental Data:
Net assets, end of period		$28,917			$31,326
Ratio of net investment income to average net assets⁽⁶⁾⁽⁷⁾		6.83	%		0.22	%
Ratio of total operating expenses to average net assets⁽⁶⁾		4.34	%		3.43	%
Ratio of expense reimbursement/waiver to average net assets⁽⁶⁾		(4.00	)%		(1.35	)%
Ratio of net operating expenses to average net assets⁽⁶⁾		0.34	%		2.08	%
Portfolio turnover rate		69	%		2	%⁽⁵⁾
Total amount of senior securities outstanding exclusive of treasury securities		$ 5,293			—
Asset coverage ratio per unit⁽⁸⁾		8.51			—

(1)Per share data may be rounded in order to compute the ending net asset valueper share.

(2)The per share data was derived by using the average number of common shares outstanding during theapplicable period.

(3)The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class I common share during theapplicable period.

(4)The total return is historical and is calculated by determining the percentage change in net asset value, assuming the reinvestment of all distributions in additional common shares of the same class of the Fund at such class’ net asset value per share in accordance with the Fund’s distribution reinvestment plan. The total return does not consider the effect of any selling commissions or charges that may be incurred in connection with the sale of the Fund’s common shares. The historical calculation of total return in the table should not be considered a representation of the Fund’s future total return, which may be greater or less than the total return shown in the table due to a number of factors, including, among others, the Fund’s ability or inability to make investments that meet its investment criteria, the interest rates payable on the debt securities the Fund acquires, the level of the Fund’s expenses, the amount of the expense limitation, if any, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Fund encounters competition in its markets and general economic conditions. As a result of these and other factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on theFund during the applicable period on a per class basis and do not represent an actual returnto shareholders.

(5)Information presented isnot annualized.

(7)If the adviser had not waived or reimbursed certain expenses, the ratio of net investment income (loss) to average net assets would have been 2.83% and (1.13)% for the year ended October 31, 2019 and for the period from September 27, 2018 (Commencement of Operations) through October 31, 2018, respectively. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates and a discussion of the waiver by the Fund’s investment adviser of management fees and certain reimbursements to which it wasotherwise entitled.

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Financial Highlights—Class L Shares
(in thousands, except share and per share amounts)


	Year Ended October 31, 2019			Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:⁽¹⁾
Net asset value, beginning of period		$12.46			$12.50
Results of operations
Net investment income⁽²⁾		0.80			(0.00	)
Net realized gain (loss) and unrealized appreciation (depreciation) on investments		(0.16	)		(0.04	)
Net increase (decrease) in net assets resulting from operations		0.64			(0.04	)

Shareholder distributions⁽³⁾
Distributions from net investment income		(0.44	)		—
Net decrease in net assets resulting from shareholder distributions		(0.44	)		—
Net asset value, end of period		$12.66			$12.46
Shares outstanding, end of period		1,600			1,600
Total return⁽⁴⁾		5.17	%		(0.32	)%⁽⁵⁾

Ratio/Supplemental Data:
Net assets, end of period		$ 20			$ 20
Ratio of net investment income (loss) to average net assets⁽⁶⁾⁽⁷⁾		6.32	%		(0.28	)%
Ratio of total expenses to average net assets⁽⁶⁾		4.84	%		3.93	%
Ratio of expense reimbursement/waiver to average net assets⁽⁶⁾		(4.00	)%		(1.35	)%
Ratio of net expenses to average net assets⁽⁶⁾		0.84	%		2.58	%
Portfolio turnover rate		69	%		2	%⁽⁵⁾
Total amount of senior securities outstanding exclusive of treasury securities		$5,293			—
Asset coverage ratio per unit⁽⁸⁾		8.51			—

(1)Per share data may be rounded in order to compute the ending net asset valueper share.

(2)The per share data was derived by using the average number of common shares outstanding during theapplicable period.

(3)The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class L common share during theapplicable period.

(4)The total return is historical and is calculated by determining the percentage change in net asset value, assuming the reinvestment of all distributions in additional common shares of the same class of the Fund at such class’ net asset value per share in accordance with the Fund’s distribution reinvestment plan. The total return does not consider the effect of any selling commissions or charges that may be incurred in connection with the sale of the Fund’s common shares. The historical calculation of total return in the table should not be considered a representation of the Fund’s future total return, which may be greater or less than the total return shown in the table due to a number of factors, including, among others, the Fund’s ability or inability to make investments that meet its investment criteria, the interest rates payable on the debt securities the Fund acquires, the level of the Fund’s expenses, the amount of the expense limitation, if any, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Fund encounters competition in its markets and general economic conditions. As a result of these and other factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on theFund during the applicable period on a per class basis and do not represent an actual returnto shareholders.

(5)Information presented isnot annualized.

(7)If the adviser had not waived or reimbursed certain expenses, the ratio of net investment income (loss) to average net assets would have been 2.32% and (1.63)% for the year ended October 31, 2019 and for the period from September 27, 2018 (Commencement of Operations) through October 31, 2018, respectively. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates and a discussion of the waiver by the Fund’s investment adviser of management fees and certain reimbursements to which it wasotherwise entitled.

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Financial Highlights—Class M Shares
(in thousands, except share and per share amounts)


	Year Ended October 31, 2019			Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:⁽¹⁾
Net asset value, beginning of period		$12.46			$12.50
Results of operations
Net investment income⁽²⁾		0.83			(0.00	)
Net realized gain (loss) and unrealized appreciation (depreciation) on investments		(0.15	)		(0.04	)
Net increase (decrease) in net assets resulting from operations		0.68			(0.04	)

Shareholder distributions⁽³⁾
Distributions from net investment income		(0.47	)		—
Net decrease in net assets resulting from shareholder distributions		(0.47	)		—
Net asset value, end of period		$12.67			$12.46
Shares outstanding, end of period		1,600			1,600
Total return⁽⁴⁾		5.52	%		(0.32	)%⁽⁵⁾

Ratio/Supplemental Data:
Net assets, end of period		$ 20			$ 20
Ratio of net investment income (loss) to average net assets⁽⁶⁾⁽⁷⁾		6.56	%		(0.03	)%
Ratio of total expenses to average net assets⁽⁶⁾		4.59	%		3.68	%
Ratio of expense reimbursement/waiver to average net assets⁽⁶⁾		(4.00	)%		(1.35	)%
Ratio of net expenses to average net assets⁽⁶⁾		0.59	%		2.33	%
Portfolio turnover rate		69	%		2	%⁽⁵⁾
Total amount of senior securities outstanding exclusive of treasury securities		$5,293			—
Asset coverage ratio per unit⁽⁸⁾		8.51			—

(1)Per share data may be rounded in order to compute the ending net asset valueper share.

(2)The per share data was derived by using the average number of common shares outstanding during theapplicable period.

(3)The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class M common share during theapplicable period.

(4)The total return is historical and is calculated by determining the percentage change in net asset value, assuming the reinvestment of all distributions in additional common shares of the same class of the Fund at such class’ net asset value per share in accordance with the Fund’s distribution reinvestment plan. The total return does not consider the effect of any selling commissions or charges that may be incurred in connection with the sale of the Fund’s common shares. The historical calculation of total return in the table should not be considered a representation of the Fund’s future total return, which may be greater or less than the total return shown in the table due to a number of factors, including, among others, the Fund’s ability or inability to make investments that meet its investment criteria, the interest rates payable on the debt securities the Fund acquires, the level of the Fund’s expenses, the amount of the expense limitation, if any, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Fund encounters competition in its markets and general economic conditions. As a result of these and other factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on theFund during the applicable period on a per class basis and do not represent an actual returnto shareholders.

(5)Information presented isnot annualized.

(7)If the adviser had not waived or reimbursed certain expenses, the ratio of net investment income (loss) to average net assets would have been 2.56% and (1.38)% for the year ended October 31, 2019 and for the period from September 27, 2018 (Commencement of Operations) through October 31, 2018, respectively. See Note 4 for a discussion of reimbursements payable to the Fund by its investment adviser and affiliates and a discussion of the waiver by the Fund’s investment adviser of management fees and certain reimbursements to which it wasotherwise entitled.

See notes to consolidated financial statements.

FS Multi-Alternative Income Fund

Consolidated Financial Highlights—Class T Shares
(in thousands, except share and per share amounts)


	Year Ended October 31, 2019			Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
Per Share Data:⁽¹⁾
Net asset value, beginning of period		$12.46			$12.50
Results of operations
Net investment income⁽²⁾		0.80			(0.00	)
Net realized gain (loss) and unrealized appreciation (depreciation) on investments		(0.16	)		(0.04	)
Net increase (decrease) in net assets resulting from operations		0.64			(0.04	)

Shareholder distributions⁽³⁾
Distributions from net investment income		(0.44	)		—
Net decrease in net assets resulting from shareholder distributions		(0.44	)		—
Net asset value, end of period		$12.66			$12.46
Shares outstanding, end of period		1,600			1,600
Total return⁽⁴⁾		5.17	%		(0.32	)%⁽⁵⁾

Ratio/Supplemental Data:
Net assets, end of period		$ 20			$ 20
Ratio of net investment income (loss) to average net assets⁽⁶⁾⁽⁷⁾		6.32	%		(0.28	)%
Ratio of total expenses to average net assets⁽⁶⁾		4.84	%		3.93	%
Ratio of expense reimbursement/waiver to average net assets⁽⁶⁾		(4.00	)%		(1.35	)%
Ratio of net expenses to average net assets⁽⁶⁾		0.84	%		2.58	%
Portfolio turnover rate		69	%		2	%⁽⁵⁾
Total amount of senior securities outstanding exclusive of treasury securities		$5,293			—
Asset coverage ratio per unit⁽⁸⁾		8.51			—

(1)Per share data may be rounded in order to compute the ending net asset valueper share.

(2)The per share data was derived by using the average number of common shares outstanding during theapplicable period.

(3)The per share data for net decrease in net assets resulting from shareholder distributions reflects the actual amount of distributions declared per Class T common share during theapplicable period.

(4)The total return is historical and is calculated by determining the percentage change in net asset value, assuming the reinvestment of all distributions in additional common shares of the same class of the Fund at such class’ net asset value per share in accordance with the Fund’s distribution reinvestment plan. The total return does not consider the effect of any selling commissions or charges that may be incurred in connection with the sale of the Fund’s common shares. The historical calculation of total return in the table should not be considered a representation of the Fund’s future total return, which may be greater or less than the total return shown in the table due to a number of factors, including, among others, the Fund’s ability or inability to make investments that meet its investment criteria, the interest rates payable on the debt securities the Fund acquires, the level of the Fund’s expenses, the amount of the expense limitation, if any, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Fund encounters competition in its markets and general economic conditions. As a result of these and other factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on theFund during the applicable period on a per class basis and do not represent an actual returnto shareholders.

(5)Information presented isnot annualized.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements
(in thousands, except share and per share amounts)

Note 1. Principal Business and Organization

FS Multi-Alternative Income Fund (the “Fund”) was formed as a Delaware statutory trust under the Delaware Statutory Trust Act on April 9, 2018 and commenced investment operations on September 27, 2018. Prior to commencing investment operations, the Fund had no operations except for matters relating to its organization and registration as a non-diversified, closed-end managementinvestment company.

The Fund is a continuously offered, non-diversified, closed-end management investment company that operates as an interval fund pursuant to Rule 23c-3 under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund offers five classes of shares of beneficial interest—Class A Shares, Class I Shares, Class L Shares, Class M Shares and Class T Shares (as defined below), which are substantially the same except that each class of shares has different sales charges and expenses. The Fund has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company (“RIC”), as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As of October 31, 2019, the Fund had three wholly-owned subsidiaries, FS Multi Private Credit LLC, FS Multi Alternative Credit LLC and FS Multi Real Estate LLC, through which it may hold interests in certain portfolio companies. The consolidated financial statements include both the Fund’s accounts and the accounts of its wholly-owned subsidiaries as of October 31, 2019. All intercompany transactions have been eliminatedin consolidation.

The Fund’s investment objective is to provide attractive total returns, consisting primarily of current income. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of alternativeincome strategies.

The investment adviser to the Fund, FS Multi-Alternative Advisor, LLC (“FS Multi-Alternative Advisor”), oversees the management of the Fund’s activities and is responsible for developing investment guidelines with the Sub-Advisers (as defined below) and overseeing investment decisions for the Fund’s portfolio by using a multi-manager,multi-strategy approach.

The Fund currently focuses on three strategies to achieve its investment objective: Real Estate, Private Credit and Multi-Sector Credit. The portfolio primarily consists of a range of secured and unsecured debt obligations, structured credit, asset backed securities and real estate-related investments comprised primarily of private and public institutional real estate equity anddebt funds.

FS Multi-Alternative Advisor has engaged as investment sub-advisers to the Fund: GoldenTree Asset Management Credit Advisor LLC (the “GoldenTree Sub-Adviser”), a wholly-owned subsidiary of GoldenTree Asset Management LP (“GoldenTree”), with respect to a broad range of multi-sector credit investments, KKR Credit Advisors (US) LLC (“KKR Credit”) with respect to private middle-market debt and equity investments and StepStone Group Real Estate LP (“StepStone”) with respect to real estate-related assets (collectively,the “Sub-Advisers”).

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying consolidated financial statements of the Fund have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The Fund is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Accounting Standards Codification Topic 946,Financial Services—InvestmentCompanies. The Fund has evaluated the impact of subsequent events through the date the consolidated financial statementswere issued.

Use of Estimates: The preparation of the Fund’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Many of the amounts have been rounded and all amounts are in thousands, except share and pershare amounts.

Cash and Cash Equivalents: The Fund considers all highly liquid investments with original maturities of three months or less to be cash equivalents.The Fund invests its cash in an institutional money market fund, which is stated at fair value and is considered Level 2 in the fair value hierarchy.The Fund’s uninvested cash is maintained with a high credit qualityfinancial institution.

Valuation of Portfolio Investments: The Fund determines the net asset value (“NAV”) of its common shares on each day that the New York Stock Exchange (“NYSE”) is open for business as of the close of the regular trading session. Each Class A share of beneficial interest (“Class A Share”), Class L share of beneficial interest (“Class L Share”) and Class T share ofbeneficial interest

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

(“Class T Share”)is offered at NAV plus the applicable sales load, while each Class I share of beneficial interest (“Class I Share”) and Class M share of beneficial interest (“Class M Share”)is offered at NAV. The Fund calculates NAV per share on a class-specific basis. The NAV of a class of shares depends on the number of shares of the applicable class outstanding at the time the NAV is determined. As such, the NAV of each class of shares may vary if the Fund sells different amounts of shares per class, among other things. The Fund’s assets and liabilities are valued in accordance with the principles setforth below.

FS Multi-Alternative Advisor values the Fund’s assets in good faith pursuant to the Fund’s valuation policy and consistently applied valuation process, which was developed by the audit committee of the Fund’s board of trustees (the “Board”) and approved by the Board. Portfolio securities and other assets for which market quotes are readily available are valued at market value. In circumstances where market quotes are not readily available, the Board has adopted methods for determining the fair value of such securities and other assets, and has delegated the responsibility for applying the valuation methods to FS Multi-Alternative Advisor. On a quarterly basis, the Board reviews the valuation determinations made with respect to the Fund’s investments during the preceding quarter and evaluates whether such determinations were made in a manner consistent with the Fund’svaluation process.

Accounting Standards Codification Topic 820,Fair Value Measurementsand Disclosures(“ASC Topic 820”) defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop itsown assumptions.

The Fund expects that its portfolio willprimarily consistofarangeofsecuredandunsecureddebtobligations (whichmaybesyndicatedordirectlyoriginated),structuredcredit,assetbackedsecuritiesandrealestate-relatedinvestmentsthatarecomprised primarilyofprivateandpublicinstitutionalrealestateequityanddebtfunds.

For purposes of calculating NAV, the Fund uses the followingvaluation methods:

•The market value of each security listedortradedonarecognizedsecuritiesexchangeorautomatedquotationsystem(“Exchange-TradedSecurity”)isthelastreported salepriceattherelevantvaluationdateonthecompositetapeorontheprincipalexchangeonwhichsuchsecurityistraded.

•If no sale is reported for an Exchange-Traded Security onthevaluation dateorifasecurityis tradedonaprivatelynegotiatedOTCsecondarymarketforinstitutionalinvestorsforwhichindicativedealerquotesareavailable(“OTCSecurity”),theFundvaluessuchinvestmentsusingquotationsobtained fromanapprovedindependentthird-partypricingservice,whichprovidesprevailingbidandaskpricesthatarescreenedforvaliditybytheservice fromdealersonthevaluationdate.Ifaquotedpriceobtained fromsuchservice isdeemedbyFSMulti-AlternativeAdvisortobeunreliable(andtherefore,notreadilyavailable),FSMulti-AlternativeAdvisormayrecommendthattheinvestmentbefairvaluedbysomeothermeans,including,butnotlimitedto,avaluationprovidedbyanapproved independentthird-partyvaluationfirm.Forinvestmentsforwhichan approvedindependentthird-partypricingservice isunabletoobtain quotedprices,theFundwillobtainbidandaskpricesdirectlyfromdealerswhomakeamarketinsuchsecurities.Inallsuchcases,investmentsarevaluedatthemid-point oftheprevailingbidandaskpricesobtained fromsuchsourcesunlessthereisacompellingreasontousesomeothervaluewithinthebid-askrangeandthe justification isdocumented andretainedbyFSMulti-AlternativeAdvisor.

•To the extent that the Fund holds investments for which no active secondary market exists and, therefore, no bid and ask prices can be readily obtained, the Fund will value such investments at fair value as determined in good faith by FS Multi-Alternative Advisor, under supervision of the Board, in accordance with the Fund’s valuation policy and pursuant to authority delegated by the Board. In making such determination, it is expected that FS Multi-Alternative Advisor, under supervision of the Board, may rely upon valuations obtained from an approved independent third-partyvaluationfirm,

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

except for private real estate funds, which are valued at estimated NAV.Withrespecttotheseinvestmentsforwhichmarketquotationsarenotreadilyavailable(excludingprivaterealestatefunds),theFund willundertakeamulti-step fairvaluation processeachquarter,asdescribedbelow:

•Weekly and as of each quarter end, FSMulti-AlternativeAdvisor will review and document preliminary valuations for each investment, which valuations maybeobtained from an approved independentthird-partyvaluation service,if applicable;

•Quarterly, FS Multi-Alternative Advisor will provide the audit committee of the Board with preliminary valuations foreach investment;

•The preliminary valuations will then be presented to and discussed with the audit committee ofthe Board;

•The audit committee of the Board will review the preliminary valuations and FS Multi-Alternative Advisor, together with any approved independent third-party valuation service, if applicable, will respond to and supplement the preliminary valuations to reflect any comments provided by the audit committee ofthe Board;

•Following its review, the audit committee of the Board will approve the fair valuation of the Fund’s investments and will recommend that the Board similarly approve the fair valuation of the Fund’sinvestments; and

•The Board will discuss the valuation of the Fund’s investments and will determine the fair value of each such investment in the portfolio in good faith based on various statistical and other factors, including the input and recommendation of FS Multi-Alternative Advisor, the audit committee of the Board and any approved independent third-party valuation service,if applicable.

•With respect to the Fund’s investment in private realestate funds:

•StepStone makes investmentrecommendationsto FSMulti-AlternativeAdvisor withrespectto private real estate funds, based on StepStone’s research and analysis, includingduediligence on the underlying private real estate funds’investmentsmanagers.

•Private real estate funds generally calculate and report NAV per share as of eachcalendar quarter-end.In accordance with ASC Topic 820, the Fund has elected to apply thepracticalexpedient to value its investments in private real estate funds using the NAV per share ofeachprivate real estate fund as reported by each fund’s investment manager. In situationswherethe timing of a private real estate fund’s NAV reporting does not align to the Fund’sreportingperiods, the Fund will estimate such fund’s NAV per share based on changes inproprietaryindices, expected returns based on historicalperformance,and/or other acceptablemethods as approved by the Board and in accordance with ASCTopic 820.

•StepStone has designed ongoing due diligence processes with respect tomonitoringandvaluation of the underlying investments of the private real estate funds, which assistFSMulti-AlternativeAdvisor in assessing the reliability of the NAV per share reported bytheprivate real estate funds eachquarter.StepStone communicates to the Fund any changesinthe value of underlying investments since the calculation date of the most recentreportedNAV and whether there are significant changes in the composition of theunderlyinginvestments for each private real estate fund after each reporting period of the privaterealestate fund. The Fund utilizes thisinformationand considers all relevant factors todeterminethat the estimated NAV per share used as a practical expedientisappropriate.

Determination of fair value involves subjective judgments and estimates. Accordingly, these notes to the Fund’s consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on the Fund’s consolidated financial statements. In making its determination of fair value, FS Multi-Alternative Advisor, under supervision of the Board, may use any approved independent third-party pricing or valuation services; provided that FS Multi-Alternative Advisor, under supervision of the Board, shall not be required to determine fair value in accordance with the valuation provided by any single source, and FS Multi-Alternative Advisor, under supervision of the Board, shall retain the discretion to use any relevant data, including informationobtained by

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

FS Multi-Alternative Advisor, any investment sub-adviser or from any approved independent third-party valuation or pricing service, that FS Multi-Alternative Advisor, under supervision of the Board, deems to be reliable in determining fair value underthe circumstances.

Below is a description of factors that FS Multi-Alternative Advisor, any approved independent third-party valuation service and the Board may consider when determining the fair value of theFund’s investments.

Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing yields for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, these factors may be incorporated into valuation models to arrive at fair value. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of the collateral securing itsdebt investments.

For convertible debt securities, fair value will generally approximate the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model maybe used.

The Fund’s equity interests in companies for which no active secondary market exists and, therefore, no bid and ask prices can be readily obtained, will be valued at fair value. FS Multi-Alternative Advisor, under supervision of the Board, in its determination of fair value, may consider various factors, including, but not limited to, multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a company or the Fund’s actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or non-recurring costs related to an acquisition, recapitalization, restructuring or otherrelated items.

FSMulti-AlternativeAdvisor,anyapproved independent thirdpartyvaluation service andtheBoardmayalsoconsider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the companies, the acquisition price of such investment or industry practices in determining fair value. FS Multi-Alternative Advisor, any approved independent third party valuation service and the Board may also consider the size and scope of a company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the size of the company relative to comparable firms, as well as such other factors as FS Multi-Alternative Advisor, under supervision of the Board, and any approved independent third-party valuation service, if applicable, may consider relevant in assessingfair value.

When the Fund receives warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Such warrants or other equity securities will subsequently be valued at fair value. Publicly traded securities that carry certain restrictions on sale will typically be valued at a discount from the public market values of the securities,where applicable.

If events materially affecting the price of foreign portfolio securities occur between the time when their price was last determined on such foreign securities exchange or market and the time when the Fund’s NAV was last calculated (for example, movements in certain U.S. securities indices which demonstrate strong correlation to movements in certain foreign securities markets), such securities may be valued at their fair value as determined in good faith in accordance with procedures established by the Board. For purposes of calculating NAV, all assets and liabilities initially expressed in foreign currencieswillbeconvertedintoU.S.dollarsatprevailingexchangeratesasmaybedetermined ingoodfaithbyFSMulti-AlternativeAdvisor,undersupervisionoftheBoard,inconsultationwithanyapproved independentthirdpartyvaluation service,ifapplicable.

Forward foreign currency exchange contracts typically will be valued at their quoted daily prices obtained from an independent third party. Futures contracts traded on exchanges typically will be valued daily at their last sale price. Swaps(other than centrally cleared)typically will be valued at their prices obtained from an independent third partyand are based on the present value of fixed and projected floating rate cash flows over the term of the swap contract. Future cash flows on swaps are discounted to their present value using swap rates provided by electronic data services or by brokers/dealers. Centrally cleared swaps are valued atthe daily

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

settlement price provided by the central clearing counterparty. The aggregate settlement values and notional amounts of the forward foreign currency exchange contracts, futures contracts and swaps will not be recorded in the consolidated statement of assetsand liabilities. Fluctuations in the value of the forward foreign currency exchange contracts, futures contracts and swaps will be recorded in the consolidated statement of assets and liabilities as an asset (liability) and in the consolidated statement of operations as unrealized appreciation (depreciation) until the contracts are closed, when they will be recorded as net realizedgain (loss).

The Board is solely responsible for the valuation of the Fund’s portfolio investments at fair valueasdetermined in good faithpursuantto the Fund’s valuation policy and consistently appliedvaluationprocess. The Board has delegatedday-to-dayresponsibility for implementing the Fund’s valuation policytoFSMulti-AlternativeAdvisor, and hasauthorizedFSMulti-AlternativeAdvisorto utilize independentthird-partyvaluation and pricing services that have beenapprovedby the Board. The audit committee of the Board is responsible for overseeing FSMulti-AlternativeAdvisor’simplementationof the Fund’svaluationprocess.

Revenue Recognition:Security transactions are accounted for on their trade date. The Fund records interest income on an accrual basis to the extent that it expects to collect such amounts. The Fund records dividend income and distributions on the ex-date. The Fund does not accrue as a receivable interest on loans or dividends on securities if it has reason to doubt its ability to collect such income. The Fund’s policy is to place investments on non-accrual status when there is reasonable doubt the interest income will be collected. The Fund considers many factors relevant to an investment when placing it on or removing it from non-accrual status, including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Fund will receive any previously accrued interest, then the previously recognized interest income will be written-off. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on theFund’s judgment.

Loan origination fees, original issue discount,market discountand market premiumare capitalized and such amounts are amortized as interest income,using the effective interest method,over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees,original issue discountand market discountare recorded as interest income. The Fund records prepayment premiums on loans and securities as fee income when it receivessuch amounts.

Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign Currency: Gains or losses on the sale of investments are calculated by using the specific identification method. The Fund measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gains or losses, when gains or losses are realized. Net change in unrealized gains or losses on foreign currency reflects the change in the value of receivables or accruals during the reporting period due to the impact of foreigncurrency fluctuations.

Organization and Offering Costs: Organization costs include, among other things, the cost of formation as a Delaware statutory trust, including the cost of legal services and other fees pertaining to the Fund’s organization. Offering costs will primarily includethird-party expensesincurred in marketing the Fund’s common shares. Franklin Square Holdings, L.P. (which does business as FS Investments), the Fund’s sponsor and an affiliate of FS Multi-Alternative Advisor, has agreed to assumeany organization and offering costs incurred by it or its affliates and will not seek reimbursement of such costs (seeNote 4).

Income Taxes: The Fund has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. Tomaintain the Fund’s qualification as a RIC, the Fund must, among other things, meet certain source-of-income and asset diversification requirements and distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income,” which is generally the Fund’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. As a RIC, the Fund will not have to pay corporate-level U.S. federal income taxes on any income that it distributes to its shareholders. The Fund intends to make distributions in an amount sufficient to maintain its RIC status each year and to avoid any U.S. federal income taxes on income so distributed. The Fund will also be subject to nondeductible U.S. federal excise taxes if it does not distribute at least 98% of net ordinary income, 98.2% of capital gain net income, if any, and any recognized and undistributed income from prior years for which it paid no U.S. federalincome taxes.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

Uncertainty in Income Taxes:The Fund evaluates its tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in the consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Fund recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense on its consolidated statement of operations. During the year ended October 31, 2019, the Fund did not incur any interestor penalties.

The Fund has analyzed the tax positions taken on U.S. federal and state income tax returns for all open tax years, and has concluded that no provision for income tax for uncertain tax positions is required in the Fund’s consolidated financial statements. The Fund’s U.S. federal and state income and U.S. federal excise tax returns for tax years for which the applicable statutes of limitations have not yet expired are subject to examination by the Internal Revenue Service and state departmentsof revenue.

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from, foreign currencies (foreign currency exchange rate risk). A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Forward foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currencies in which some of the investments and borrowings held by the Fund are denominated and in some cases, are used to obtain exposure to a particular market. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery offoreign currency.

FuturesContracts:TheFundentersintofuturescontracts asaneconomichedgeagainsteitherspecifictransactionsorportfolioinstrumentsortoobtainexposureto,orhedgeexposureawayfrom,changesininterestrates(interestraterisk).Afuturescontract isanagreementbetweentheFundandacounterpartytobuyorsellaspecificquantity ofanunderlyinginstrumentataspecifiedpriceandonaspecifieddate.Futurescontracts,whenusedbytheFund, helptomanagetheoverallexposuretorisinginterestrates.

InterestRateSwaps:TheFundentersintointerestrateswapstohelphedgeagainstinterestrateriskexposureandtomaintain theFund’sabilitytogenerateincomeatprevailingmarketrates.Aninterestrateswapcontract isanexchangeofinterestratesbetweencounterparties.ThevalueofthefixedratebondsthattheFundholdsmaydecreaseifinterestratesrise.Tohelphedgeagainstthisriskandtomaintain itsabilitytogenerateincomeatprevailingmarketrates,theFund entersintointerestrateswapagreements.InterestrateswapagreementsinvolvetheexchangebytheFundwithanotherpartyfortheirrespectivecommitmenttopayorreceiveinterestonthenotional amountofprincipal.

Cross-currency Swaps: The Fund enters into cross-currency swaps to gain or mitigate exposure on foreign currency exchange rate risk. Cross-currency swaps are contracts in which interest cash flows are exchanged between two parties based on the notional amounts of two different currencies. Cross-currency swaps, when used by the Fund, help to manage the overall exposure to the currencies in which some of the investments and borrowings held by the Fund are denominated. Cross-currency swaps involve an agreement to exchange notional amounts at a later date at either the same exchange rate, a specified rate or the then-currentspot rate.

Distributions: Distributions to the Fund’s shareholders will be recorded as of the record date. Subject to the discretion of the Board and applicable legal restrictions, the Fund currently intends to authorize, declare and pay ordinary cash distributions on a quarterly basis. Subject to the Board’s discretion and applicable legal restrictions, the Fund from time to time may also pay special interim distributions in the form of cash or shares. At least annually, the Fund intends to authorize and declare special cash distributions of net long-term capital gains,if any.

Recent Accounting Pronouncements: In August 2018, the Financial AccountingStandardsBoard(“FASB”) issued AccountingStandardsUpdate 2018-13,Fair ValueMeasurement(Topic 820)—DisclosuresFramework—Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13 which introduces new fair value disclosure requirements and eliminates and modifies certainexistingfair value disclosurerequirements.ASU 2018-13 is effective for fiscal years, and interim periods withinthosefiscal years, beginning after December 15, 2019. The Fund is currently evaluating the impact ofASU2018-13 on itsconsolidatedfinancialstatements.

FS Multi-Alternative Income Fund

Notes toConsolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (continued)

In March 2017, FASB issued Accounting Standards Update 2017-08,Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20),Premium Amortization on Purchased Callable Debt Securities, or ASU 2017-08. ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Fund is currently evaluating the impact of ASU 2017-08 on its consolidatedfinancial statements.

Note 3. Share Transactions

Below is a summary of transactions with respect to the Fund’s common shares during the year ended October 31, 2019 and the period from September 27, 2018 (Commencement of Operations) through October31, 2018:


	For the Year Ended October 31, 2019						Period from September 27, 2018 (Commencement of Operations) through October 31, 2018
	Shares			Amount			Shares		Amount
Class A Shares
Proceeds from Issuance of Shares		533,333			$ 6,800			1,600		$ 20
Transfers In		313,726			4,000			—		—
Proceeds		847,059			$10,800			1,600		$ 20
Class I Shares
Proceeds from Issuance of Shares		82,481			1,040			2,505,600		$31,320
Reinvestment of Distributions		406			5			—		—
Total Gross Proceeds		82,887			1,045			2,505,600		31,320
Transfers Out		(313,726	)		(4,000	)		—		—
NetProceeds		(230,839	)		$ (2,955	)		2,505,600		$31,320
Class L Shares
Proceeds from Issuance of Shares		—			$ —			1,600		$ 20
Class M Shares
Proceeds from Issuance of Shares		—			$ —			1,600		$ 20
Class T Shares
Proceeds from Issuance of Shares		—			$ —			1,600		$ 20
Proceeds to the Fund		616,220			$ 7,845			2,512,000		$31,400

Share Repurchase Program

The Fund operates as an interval fund under Rule 23c-3 of the 1940 Act and, as such,provides a limited degree of liquidity to shareholders. As an interval fund, the Fund has adopted a fundamental policy to offer to repurchase at regular intervals a specified percentage of its outstanding shares at the NAV of theapplicable class.

Once each quarter, the Fund will offer to repurchase at NAV no less than 5% and no more than 25% of the outstanding shares of the Fund, unless such offer is suspended or postponed in accordance with regulatory requirements (as discussed below). The offer to purchase shares is a fundamental policy that may not be changed without the vote of the holders of a majority of the Fund’s outstanding voting securities (as defined in the 1940 Act). Shareholders will be notified in writing of each quarterly repurchase offer and the date the repurchase offer ends (“Repurchase Request Deadline”). Shares will be repurchased at the respective NAV per share determined as of the close of regular trading on the NYSE no later than the 14^th day after the Repurchase Request Deadline, or the next business day if the 14^th day is not abusiness day.

The Board, or a committee thereof, in its sole discretion, will determine the number of shares for each share class that the Fund will offer to repurchase (“Repurchase Offer Amount”) for a given Repurchase Request Deadline. The Repurchase Offer Amount, however, will be no less than 5% and no more than 25% of the total number of shares outstanding on the RepurchaseRequest Deadline.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 3. Share Transactions (continued)

If shareholders tender for repurchase more than the Repurchase Offer Amount for a given repurchase offer, the Fund may, but is not required to, repurchase an additional amount of shares not to exceed 2% of the outstanding shares of the Fund on the Repurchase Request Deadline. If the Fund determines not to repurchase more than the Repurchase Offer Amount, or if shareholders tender shares in an amount exceeding the Repurchase Offer Amount plus 2% of the outstanding shares on the Repurchase Request Deadline, the Fund will repurchase the shares on a pro rata basis. However, the Fund may accept all shares tendered for repurchase by shareholders who own less than one hundred shares and who tender all of their shares, before prorating other amounts tendered. In addition, the Fund will accept the total number of shares tendered in connection with required minimum distributions from an individual retirement account or other qualifiedretirement plan.

The Fund may suspend or postpone a repurchase offer only: (a) if making or effecting the repurchase offer would cause the Fund to lose its status as a RIC under the Code; (b) for any period during which the NYSE or any market on which the securities owned by the Fund are principally traded is closed, other than customary weekend and holiday closings, or during which trading in such market is restricted; (c) for any period during which an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable, or during which it is not reasonably practicable for the Fund fairly to determine the value of its net assets; or (d) for such other periods as the U.S. Securities and Exchange Commission (“SEC”) may by order permit for the protection of shareholders ofthe Fund.

During the year ended October 31, 2019, the Fund did not conduct any repurchase offers in connection with its share repurchase program. On December 13, 2019, the Fund commenced its first repurchase offer for 5% ofoutstanding shares.

Distribution Plan

The Fund, with respect to its Class L, Class M and Class T Shares, is authorized under a distribution plan to pay to the Fund’s distributor a distribution fee for certain activities relating to the distribution of shares to investors and maintenance of shareholder accounts. These activities include marketing and other activities to support the distribution of the Class L, Class M and Class T Shares. The plan operates in a manner consistent with Rule 12b-1 under the 1940 Act, which regulates the manner in which an open-end investment company may directly or indirectly bear the expenses of distributing its shares. Although the Fund is not an open-end investment company, it has undertaken to comply with the terms of Rule 12b-1 as a condition of an exemptive order under the 1940 Act which permits it to have asset-based distribution fees. Under the distribution plan, the Fund will pay a distribution fee at an annual rate of 0.25% of average daily net assets attributable to the applicable share classes for remittance to financial intermediaries, as compensation for distribution and/or maintenance of shareholder accounts performed by such financial intermediaries for beneficial shareholders of the Fund.For the year ended October 31, 2019, Class L, Class M and Class T Shares incurred distribution fees of $0, $0, and$0, respectively.

Shareholder Service Expenses

The Fund has adopted a shareholder services plan with respect to its Class A, Class L and Class T Shares under which the Fund may compensate financial industry professionals or firms for providing ongoing services in respect of clients with whom they have distributed shares of the Fund. Such services may include (i) electronic processing of client orders, (ii) electronic fund transfers between clients and the Fund, (iii) account reconciliations with the Fund’s transfer agent, (iv) facilitation of electronic delivery to clients of Fund documentation, (v) monitoring client accounts for back-up withholding and any other special tax reporting obligations, (vi) maintenance of books and records with respect to the foregoing, (vii) responding to customer inquiries of a general nature regarding the Fund; (viii) responding to customer inquiries and requests regarding Statements of Additional Information, shareholder reports, notices, proxies and proxy statements, and other Fund documents; (ix) assisting customers in changing account options, account designations and account addresses, and (x) such other information and liaison services as the Fund or FS Multi-Alternative Advisor may reasonably request. Under the shareholder services plan, the Fund, with respect to Class A, Class L and Class T Shares, may incur expenses on an annual basis up to 0.25% of its average daily net assets attributable to Class A, Class L and Class T Shares, respectively.For the year ended October 31, 2019, Class A, Class L and Class T Shares incurred shareholder service fees of $10, $0, and$0, respectively.

FS Multi-Alternative Income Fund

Notes toConsolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions

Compensation of the Investment Adviser, the Sub-Advisers and their Affiliates

Pursuant to the amended and restated investment advisory agreement (the “Investment Advisory Agreement”), dated as of July 26, 2019, by and between the Fund and FS Multi-Alternative Advisor, FS Multi-Alternative Advisor is entitled to a management fee in consideration of the advisory services provided by FS Multi-Alternative Advisor to the Fund. FS Multi-Alternative Advisor is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and is an affiliate of the Fund. The management fee is calculated and payable quarterly in arrears at the annual rate of 1.60% of the Fund’s average daily gross assets during such period (the “Management Fee”). The Management Fee for any partial quarter will be appropriately prorated. Pursuant to a letter agreement (the “Letter Agreement”) dated as of December 24, 2018, between FS Multi-Alternative Advisor and the Fund, FS Multi-Alternative Advisor agreed, forthe fiscal quarter ended January 31, 2019, to waive the Management Fee to which it was entitled under the Investment Advisory Agreement so that the fee received equaled 0.00% of the Fund’s average daily gross assets during the fiscal quarter. By subsequent letter agreements, FS Multi-Alternative Advisor extended the terms of the Letter Agreement through the fiscal quarters ended April 30, 2019, July 31, 2019,October 31, 2019 and January31, 2020.

The Fund’s investment sub-advisory agreements with each Sub-Adviser (the “Investment Sub-Advisory Agreements”) provide that each Sub-Adviser receives a portfolio management fee with respect to the assets that it manages, which is generally paid by FS Multi-Alternative Advisor out of the Management Fee. FS Multi-Alternative Advisor has paid, and currently intends to pay, each Sub-Adviser the portfolio management fees to which they are entitled pursuant to the Investment Sub-AdvisoryAgreements during any period in which FS Multi-Alternative Advisor is waiving the Management Fee pursuant to theLetter Agreement.

Pursuant to an amended and restated administration agreement (the “Administration Agreement”), dated as of July 26, 2019, by and between the Fund and FS Multi-Alternative Advisor, the Fund reimburses FS Multi-Alternative Advisor and the Sub-Advisers, as applicable, for their respective actual costs incurred in providing administrative services to the Fund, including the allocable portion of the compensation and related expenses of certain personnel of FS Investments and the Sub-Advisers providing administrative services to the Fund on behalf of FS Multi-Alternative Advisor, subject to the limitations set forth in the Administration Agreement and the Expense Limitation Agreement (as defined below). Such services include general ledger accounting, fund accounting, legal services, investor relations and other administrative services. FS Multi-Alternative Advisor also performs, or oversees the performance of, the Fund’s corporate operations and required administrative services, which includes being responsible for the financial records that the Fund is required to maintain and preparing reports to the Fund’s shareholders and reports filed with the SEC. In addition, FS Multi-Alternative Advisor assists the Fund in calculating its NAV, overseeing the preparation and filing of its tax returns and the printing and dissemination of reports to the Fund’s shareholders, and generally overseeing the payment of the Fund’s expenses and the performance of administrative and professional services rendered to the Fund by others. FS Multi-Alternative Advisor is required to allocate the cost of such services to the Fund based on factors such as assets, revenues, time allocations and/orother methods.

The Fund’s Board reviews the methodology employed in determining how the expenses are allocated to the Fund and the proposed allocation of the administrative expenses among the Fund and certain affiliates of FS Multi-Alternative Advisor. The Board then assesses the reasonableness of such reimbursements for expenses allocated to the Fund based on the breadth, depth and quality of such services as compared to the estimated cost to the Fund of obtaining similar services from third-party service providers known to be available. In addition, the Board considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Fund’s Board, among other things, compares the total amount paid to FS Multi-Alternative Advisor for such services as a percentage of the Fund’s net assets to the same ratios reported by other comparable investment companies. The Fund will not reimburse FS Multi-Alternative Advisor for any services for which it receives a separate fee or for any administrative expenses allocated to a controlling person of FSMulti-Alternative Advisor.

Reimbursements of administrative expenses to FS Multi-Alternative Advisor are subject to the Expense Limitation (defined below), and the Sub-Advisers may defer certain amounts owed to them for administrative expenses during periods in which FS Multi-Alternative Advisor is waiving expenses or making payments pursuant to the Expense Limitation Agreement. Reimbursement of administrative expenses by the Fund is ultimately subject to the limitations contained in the ExpenseLimitation Agreement.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (continued)

FSMulti-AlternativeAdvisormaybereimbursedfortheadministrativeservices performedbyitonbehalfoftheFund.Inaddition,theSub-AdvisersmaybereimbursedforcertainoperatingandadministrationexpensesthattheyincuronbehalfoftheFund(“Sub-Adviser Expenses”),subjecttocertainlimitations.Totheextentsuchexpensesare“ordinaryoperatingexpenses,”suchamounts areincludedin,andarenotinaddition to,theFund’sExpenseLimitation(definedbelow).Under the Administration Agreement, thereimbursementof administrativeexpensesissubjecttocertainlimitations, includingthat(1)suchcostsarereasonablyallocatedbyFSMulti-AlternativeAdvisortotheFundonthebasisofassets,revenues,timeallocationsand/or othermethods;(2)suchreimbursementshallbesubjecttoanyexpenselimitation oftheFundineffectatthetimeatwhichsuchreimbursementisotherwisepayable;and(3)FSMulti-AlternativeAdvisorshallnotbeentitledtoreimbursementforanyexpensesrelatingtothesalariesanddirectexpensesof administrativepersonnelpaidbyFSMulti-AlternativeAdvisor(andtheFundshallhavenoobligationtopayanysuchexpenses)totheextentthatcertainthird-partyexpensesincurredbytheFund,whetherdirectlyorindirectlybyFSMulti-AlternativeAdvisorortheSub-Advisers,inconnectionwithadministering theFund’sbusinessexceed0.25% oftheaveragenetassetsattributabletoeachclassofshares.

Pursuant to the Letter Agreement, FS Multi-Alternative Advisor also agreed, for the fiscal quarter ended January 31, 2019, to assume all of the Fund’s “ordinary operating expenses” (or to cause its affiliates to assume such expenses). By subsequent letter agreements, FS Multi-Alternative Advisor extended the terms of the Letter Agreement through the fiscal quarters ended April 30, 2019, July 31, 2019,October 31, 2019 and January31, 2020.

FS Investments, the Fund’s sponsor and an affiliate of FS Multi-Alternative Advisor, has agreed to assume the Fund’s organization and offering costs and will not seek reimbursement ofsuch costs.

The following table describes the fees and expenses accrued under the Investment Advisory Agreement and the Administration Agreement during the year ended October31, 2019:


Related Party	Source Agreement	Description	NetAmount
FS Multi-Alternative Advisor	Investment Advisory Agreement	Management Fee⁽¹⁾	—
FS Multi-Alternative Advisor	Administration Agreement	Administrative Services Expenses⁽²⁾	—

(1)FS Multi-Alternative Advisor agreed for the fiscal quarters ended January 31, 2019, April 30, 2019, July 31, 2019 and October 31, 2019, to waive the entire amount of the management fee to which it was entitled under the Investment Advisory Agreement so that the fee received equaled 0.00% of the Fund’s average daily gross assets. The management fee amount shown in the table above is net of the management fee waiver of $643. During the year ended October 31, 2019, no management fees were paid to FS Multi-Alternative Advisor. As of October 31, 2019, no management fees were payable to FSMulti-Alternative Advisor.

(2)During the year ended October 31, 2019,FS Multi-Alternative Advisor agreed to assume all of the Fund’s ordinary operating expenses (or to cause its affiliates to assumesuch expenses).

Capital Contributions by FS Investments

In May2018,pursuanttoaprivateplacement,MichaelC.Forman,aprincipalofFSMulti-AlternativeAdvisor,contributed$100topurchaseapproximately8,000 ClassIcommonsharesat$12.50pershare.

In September 2018, pursuant to private placements, FS Investments, the Fund’s sponsor and an affiliate of FS Multi-Alternative Advisor, purchased $31,320 of Class I Shares and $20 of each of Class A Shares, Class L Shares, Class M Shares and Class T Shares. In March 2019, April 2019 and June 2019, pursuant to private placements, FS Investments (or its affiliates) purchased $800 ofClass I Shares, $40 of Class I Shares and $6,800 of Class A Shares, respectively.In September 2019 and November 2019, an affiliate of FS Investments purchased $200 and $615, respectively, of Class I Shares in the Fund’s public offering.As ofOctober 31, 2019, individuals and entities affiliated with FS Multi-Alternative Advisor held3,136,220 Shares valued at approximately$39,727 based on the respective NAV per Share on such date. As a result, FS Investments and its affiliates may own a significant percentage of the Fund’s outstanding Shares for the foreseeable future. This ownership will fluctuate asotherinvestors subscribe for Shares in the Fund’s continuous public offering and any other offerings the Fund may determine to conduct in the future, and as the Fund repurchases Shares pursuant to its quarterly repurchase offers. Depending on the size of this ownership at any given point in time, it is expected that FS Investments will, for the foreseeable future, either control the Fund or be in a position to exercise a significant influence on the outcome of any matter put to a voteof shareholders.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 4. Related Party Transactions (continued)

Expense Limitation Agreement

Pursuant to the amended and restated expense limitation agreement (the “Expense Limitation Agreement”), dated as of July 26, 2019, by and between FS Multi-Alternative Advisor and the Fund, FS Multi-Alternative Advisor agreed to pay or waive, on a quarterly basis, the “ordinary operating expenses” (as defined below) of the Fund to the extent that such expenses exceed 0.25% per annum of the Fund’s average daily net assets attributable to the applicable class of shares (the “Expense Limitation”). The Expense Limitation may be adjusted for other classes of shares to account for class-specific expenses. In consideration of FS Multi-Alternative Advisor’s agreement to limit the Fund’s expenses, the Fund has agreed to repay FS Multi-Alternative Advisor in the amount of any Fund expenses paid or waived, subject to the limitations that: (1) the reimbursement for expenses will be made only if payable not more than three years following the time such payment or waiver was made; and (2) the reimbursement may not be made if it would cause the Fund’s then-current expense limitation, if any, and the expense limitation that was in effect at the time when FS Multi-Alternative Advisor reimbursed or waived the ordinary operating expenses that are the subject of the repayment, to be exceeded. The Expense Limitation Agreement will continue indefinitely until terminated by the Board on written notice to FS Multi-Alternative Advisor. The Expense Limitation Agreement may not be terminated by FS Multi-Alternative Advisor. For the purposes of the Expense Limitation Agreement, “ordinary operating expenses” for a class of Shares consist of all ordinary expenses of the Fund attributable to such class, including administration fees, transfer agent fees, fees paid to the Fund’s trustees, legal expenses relating to the Fund’s registration statements (and any amendments or supplements thereto) and other filings with the SEC, administrative services expenses, and related costs associated with legal, regulatory compliance and investor relations, but excluding the following: (a) investment advisory fees, (b) portfolio transaction and other investment-related costs (including brokerage commissions, dealer and underwriter spreads, commitment fees on leverage facilities, prime broker fees and expenses, and dividend expenses related to short sales), (c) interest expense and other financing costs, (d) taxes, (e) distribution or shareholder servicing fees and (f) extraordinary expenses, as described in the Expense Limitation Agreement.Asdescribedabove,totheextentthatanySub-AdviserExpensesare“ordinaryoperatingexpenses,”suchamounts areincludedin,andarenotinaddition to,theExpenseLimitation.

Pursuant to the Letter Agreement, FS Multi-Alternative Advisor agreed for the fiscal quarters ending January 31, 2019, April 30, 2019, July 31, 2019 and October 31, 2019 to, among other things, assume all of the Fund’s “ordinary operating expenses” (as defined above) (or to cause its affiliates to assumesuch expenses).

The specific amount of expenses waivable and/or payable by FS Multi-Alternative Advisor pursuant to the Expense Limitation Agreement, if any, is determined at the end of each fiscal quarter. The conditional obligation of the Fund to reimburse FS Multi-Alternative Advisor pursuant to the terms of the Expense Limitation Agreement shall survive the termination of such agreement forany reason.

During the year ended October 31, 2019, the Fund accrued $748 of expense reimbursements that FS Investments has agreedto pay.

Note 5. Distributions

During the year ended October 31, 2019, the Fund declared and paid gross distributions in the amount of $0.5031875 (as adjusted for the applicable share class expenses) per share in the total amount of $1,378. The timing and amount of any future distributions to shareholders are subject to applicable legal restrictions and the sole discretion ofthe Board.

Shareholders automatically participate in thedistribution reinvestment plan (“DRP”), unless and until an election is made to withdraw from theDRP on behalf of such participating shareholder. Under the DRP, the Fund’s cash distributions to shareholders are reinvested in full and fractional shares of the same class of shares of the Fund. To the extent that shareholders reinvest their cash distributions, the Fund will use the proceeds to purchase additional common shares of the Fund. As such, a portion of the cash distributions paid by the Fund may be reinvested in additional common shares ofthe Fund.

FS Multi-Alternative Income Fund

Notes toConsolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 5. Distributions (continued)

The following table reflects the sources of distributions on a tax basis that the Fund paid on its common shares during the year ended October31, 2019:


	Year Ended October 31, 2019
Source of Distribution	Distribution Amount		Percentage
Net investment income⁽¹⁾		$1,378		100%
Short-term capital gains proceeds from the sale of assets		—		—
Return of capital		—		—
Total		$1,378		100%

(1)The Fund’s net investment income on a tax basis for the year ended October 31, 2019 and for the period from September 27, 2018 (Commencement of Operations) to October 31, 2018 was $2,182 and $56, respectively. The determination of the tax attributes of the Fund’s distributions is made annually as of the end of the calendar year based upon the Fund’s taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of the Fund’s distributions for a full year. The actual tax characteristics of distributions to shareholders are reported to shareholders annually onForm 1099-DIV.

The Fund may make certain adjustments to the classification of net assets as a result of permanent book-to-tax differences. During the year ended October 31, 2019, the Fund increased accumulated earnings (deficit) by $14 and decreased capital in excess of par value by $14. This reclassification, resulting from nondeductible excise taxes, has no impact on the net assets ofthe Fund.

As of October 31, 2019, the components of accumulated earnings (loss) on a tax basis wereas follows:


Distributable ordinary income	$860
Accumulated capital losses⁽¹⁾	(290	)
Net unrealized appreciation (depreciation)	(174	)
Total	$396

(1)Net capital losses may be carried forward indefinitely, and their character is retained as short-term or long-term. As of October 31, 2019, the Fund had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $245 and$45, respectively.

The aggregate cost of the Fund’s investments for U.S. federal income tax purposes totaled $45,861 as of October 31, 2019. Aggregate net unrealized appreciation (depreciation) on investments on a tax basis was $(174), which was comprised of gross unrealized appreciation of $997 and gross unrealized depreciation of $1,171, as of October31, 2019.

Note 6. Financial Instruments

The Fund trades in financial instruments with off-balance sheet risk in the normal course of its investing activities. These financial instruments may include forward foreign currency exchange contracts, futures contracts, swap contracts and written options, among others, and involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Fund has in particular classes of financial instruments and do not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactionsare considered.

The Fund is subject to foreign currency exchange rate risk and interest rate risk in the normal course of pursuing its investment objectives. The Fund enters into forward foreign currency exchange contracts and cross-currency swaps to gain or reduce exposure to foreign currencies and futures contracts and/or interest rate swaps to gain or reduce exposure to fluctuations ininterest rates.

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. These contracts help to manage the overall exposure to the currencies in which some of the investments and borrowings held by the Fund are denominated and in some cases, are used to obtain exposure to aparticular market.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

Each forward foreign currency exchange contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the consolidated statement of assets and liabilities. When a contract is closed, a realized gain or loss is recorded in the consolidated statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts are settled with the counterpartyin cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts contains the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that counterparties are unable to fulfill their obligations under the contracts. The Fund mitigates its counterparty risk by entering into forward foreign currency exchange contracts only with a diverse group of prequalified counterparties, monitoring their financial strength, entering into master netting arrangements with its counterparties, and requiring its counterparties to transfer collateral as security fortheir performance.

Cross-currency swaps are contracts in which cash flows are exchanged between two parties based on the notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the inception of the trade. Cross-currency swaps involve an agreement to exchange notional amounts at a later date at either the same exchange rate, a specified rate or the then-current spot rate. Periodic payments are made between the parties based on benchmark rates plus a spread, if applicable, in thetwo currencies.

Each cross-currency swap is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the statement of assets and liabilities. When a swap is closed, a realized gain or loss is recorded in the statement of operations equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of cross-currency swaps contains the risk that the value of a cross-currency swap changes unfavorably due to movements in the value of thereferenced foreign currencies, as well as the risk that the counterparty to the swap will default on its contractualdelivery obligations.

A futures contract is an agreement between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. The Fund invests in futures contracts to hedge the Fund’s existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions; as a cash management tool; to hedge interest rate risks associated with the Fund’s investments; to facilitate investments in portfolio securities; and to reduce cost In addition, the Fund takes long or short positions in futures to seek to stabilize overall portfolio volatility and to hedge overallmarket risk.

Upon entering into a futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Cash deposited as initial margin receivable is shown as collateral held at the broker in the consolidated statement of assets and liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as receivable (or payable) for variation margin on open futures in the consolidated statement of assets and liabilities. When the contract is closed, a realized gain or loss is recorded in the consolidated statement of operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. Risks of entering into futures contracts include interest rate risk and the possibility of an illiquid secondary market for these instruments. When investing in futures, there is reduced counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guaranteesagainst default.

An interest rate swap contract is an exchange of interest rates between counterparties. An interest rate swap generally involves one party making payments based on a fixed interest rate in return for payments from a counterparty based on a variable or floating interest rate. The Fund may enter into either side of such a swap contract. Interest rate swaps are used to adjust the Fund’s sensitivity to interest rates or to hedge against changes ininterest rates.

Each interest rate swap is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the consolidated statement of assets and liabilities. When a swap is closed, a realized gain or loss is recorded in the consolidated statement of operations equal to the difference between the value at the time it was opened and the valueat the

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

time it was closed. The use of interest rate swaps contains the risk that the value of an interest rate swap changes unfavorably due to movements in interest rates, as well as the risk that the counterparty to the swap will default on its contractual delivery obligations. Counterparty risk is mitigated for cleared swaps by trading these instruments through acentral counterparty.

The Fund is subject to credit risk in the normal course of pursuing its investment objectives. The Fund may enter into credit default swap contracts to manage its credit risk, to gain exposure to a credit in which it may otherwise invest or to enhance its returns. The Fund may also purchase and write call and put options in an effort to manage risk and/or generate gains fromoptions premiums.

The fair value of open derivative instruments (which are not considered to be hedging instruments for accounting disclosure purposes) by risk exposure as of October 31, 2019 wasas follows:


	Fair Value
	Asset Derivative			Liability Derivative
Foreign Currency Risk
Forward foreign currency exchange contracts		$38	⁽¹⁾		$19	⁽²⁾
Cross-currency swaps		$42	⁽³⁾		—
Interest Rate Risk
Interest rate swaps		$ 3	⁽³⁾		—
Interest rate futures		$ 9	⁽⁴⁾		—

The Fund’s derivative assets and liabilities at fair value by risk, presented in the table above, are reported on a gross basis on the Fund’s consolidated statement of assets and liabilities, and locatedas follows:

(1)Unrealized appreciation on forward foreign currencyexchange contracts.

(2)Unrealized depreciation on forward foreign currencyexchange contracts.

(3)Unrealized appreciation onswap contracts.

(4)Receivable for variation margin onfutures contracts.

The following tables present the Fund’s derivative assets and liabilities by counterparty, net of amounts available for offset under a master netting agreement and net of the related collateral received by the Fund for assets or pledged by the Fund for liabilities as of October31, 2019:


Counterparty	DerivativeAssets Subject toMaster NettingAgreement	Derivatives Available for Offset	Non-cash Collateral Received⁽¹⁾	Cash Collateral Received⁽¹⁾	NetAmount ofDerivativeAssets⁽²⁾
Goldman Sachs & Co. LLC	$ 3	—	—	—	$ 3
JPMorgan Chase Bank, N.A.	$53	$15	—	—	$38
State Street Bank and Trust Company	$27	$ 4	—	—	$23


Counterparty	Derivative Liabilities Subject to Master Netting Agreement	Derivatives Available for Offset	Non-cash Collateral Pledged⁽¹⁾	Cash Collateral Pledged⁽¹⁾	Net Amount of Derivative Liabilities⁽³⁾
JPMorgan Chase Bank, N.A	$15	$15	—	—	—
State Street Bank and Trust Company	$ 4	$ 4	—	—	—

(1)Insomeinstances,theactualamount ofthecollateralreceivedand/orpledgedmaybemorethantheamountshownduetoovercollateralization.

(2)Netamount of derivativeassetsrepresentsthenetamount duefromthecounterpartytotheFund.

(3)Netamountofderivativeliabilitiesrepresentsthenetamount duefromtheFundtothecounterparty.

The effect of derivative instruments (which are not considered to be hedging instruments for accounting disclosure purposes) on the Fund’s statement of operations by risk exposure for the year ended October 31, 2019 wasas follows:


	Realized Gain (Loss) on Derivatives Recognized in Income			Net Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income
Foreign Currency Risk
Forward foreign currency exchange contracts	$	77	⁽¹⁾	$	(39	)⁽²⁾
Cross-currency swaps	$	(33	)⁽³⁾	$	42	⁽⁴⁾
Interest Rate Risk
Interest rate swaps	$	11	⁽³⁾	$	4	⁽⁴⁾
Interest rate futures	$	(83	)⁽⁵⁾	$	12	⁽⁶⁾

The Fund’s derivative instruments at fair value by risk, presented in the table above, are reported on the Fund’s consolidated statement of operations and locatedas follows:

(1)Net realized gain (loss) on forward foreign currencyexchange contracts.

(2)Net change in unrealized appreciation (depreciation) on forward foreign currencyexchange contracts.

(3)Net realized gain (loss) onswap contracts.

(4)Net change in unrealized appreciation (depreciation) onswap contracts.

(5)Net realized gain (loss) onfutures contracts.

(6)Net change in unrealized appreciation (depreciation) onfutures contracts.

The average notional amounts of forward foreign currency exchange contracts,longfutures contracts,short futures contracts,cross-currency swaps and interest rate swaps outstanding during the year ended October 31, 2019, which are indicative of the volumes of these derivative types, were $3,991, $216, $880, $2,520 and$721, respectively.

Note 7. Investment Portfolio

The following table summarizes the composition of the Fund’s investment portfolio at cost and fair value as ofOctober31, 2019:


	Amortized Cost(Proceeds)⁽¹⁾			Fair Value			Percentage of Portfolio
Real Estate Funds		$13,610			$13,952			31%
Senior Secured Loans—First Lien		9,273			8,734			19%
Senior Secured Loans—Second Lien		1,692			1,474			3%
Senior Secured Bonds		5,703			5,633			12%
Unsecured Bonds		9,180			9,355			21%
CLO / Structured Credit		5,745			5,594			12%
Emerging Markets Debt		264			272			1%
Common Equity		77			60			0%
Short-Term Investments		565			565			1%
Total		$46,109			$45,639			100%
Investments Sold Short		$ (88	)		$ (86	)

(1)Amortizedcostrepresentstheoriginalcostadjustedfortheamortizationofpremiumsand/or accretionofdiscounts,asapplicable,oninvestments.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 7. Investment Portfolio (continued)

The following is the strategy and liquidity terms of the investments that are measured at estimated NAV per share as a practical expedient. As of October 31, 2019, there were unfunded commitmentsof $2,700.


Real Estate Funds	Investment Strategy	Fair Value	Redemption Notice Period for Quarterly Redemptions	Redemption Restrictions Terms
Blackstone Property Partners	Open-end core-plus fund that acquires large, high quality, substantially stabilized assets targeting industrial, multifamily, office, and retail assets focusing on gateway cities in the U.S. and Canada.	$4,086	No later than 90 calendar days prior to the last day of the calendar quarter	New investors have their capital locked up through two years and a quarter after the date the limited partner’s units were issued.
Brookfield Premier Real Estate Partners	Open-end core-plus fund that acquires a high-quality, diverse portfolio offering stable and predictable cash flows, targeting Class A office, multifamily, industrial and retail assets across the U.S. but predominantly situated in supply-constrained markets with the potential for long-term value appreciation.	2,179	No later than 90 calendar days prior to the last day of the calendar quarter	New investors have their capital locked up through two years and a quarter after the date the limited partner’s units were issued. No partial redemption request will be permitted if the aggregate NAV of the units to be redeemed would be less than$100 million.
CBRE U.S. Core Partners, LP	Open-end commercial real estate investment vehicle with a focused, well-defined investment objective to construct a high-quality income-producing portfolio diversified by product type and location. The portfolio is expected to provide a stable income-driven rate of return over the long term with the potential for growth of income and asset appreciation. Theinvestment approach is to enhance returns by actively managing the portfolio through cycles, including tactical adjustments of property type weightings, geographic concentrations and portfolio leverage, within a robust risk management framework.	2,156	No later than 60 calendar days prior to the last day of the calendar quarter	No partial redemption request will be permitted if the aggregate NAV of the units to be redeemed would be less than $1 million.
Clarion Lion Properties Fund	Open-end core real estate fund with interests in a diversified portfolio of primarily institutional quality real estate assets and related investments located throughout the U.S. to provide a strong income return with potential for long-term capital appreciation.	4,173	No later than 90 calendar days prior to the last day of the calendar quarter	None.
RREEF Core Plus Industrial Fund	Open-end commingled fund seeking to invest in a geographically-diversified portfolio of industrial real estate across the US. Thefund consists predominantly of large-bay, single tenant, bulk distribution warehouses that provide stable cash flows and predictability, as well as a smaller exposure to smaller-bay, multi-tenant fulfillment properties and ground-up developments that provide value-add optionality and upside.	1,358	No later than 2 months prior to the last day of the fiscal quarter	New investors have their capital locked up through two years and two months after the date the limited partner’s units were issued. If thefundis unable to fully satisfy all redemption requests, partial redemptions may be made on a pro-rata basis in proportion to the total number of units held by each Limited Partner that has formally submitted a redemption request, regardless of when the requests were received.
		$13,952

In general, under the 1940 Act, the Fund would be presumed to “control” a portfolio company if it owned more than 25% of its voting securities or had the power to exercise control over the management or policies of such portfolio company, and would be an “affiliated person” of a portfolio company if it owned 5% or more of itsvoting securities.

As of October 31, 2019, the Fund did not “control” any of its portfolio companies and was not an “affiliated person” of any of its portfolio companies, each as defined in the1940 Act.

The Fund’s investment portfolio may contain loans and other unfunded arrangements that are in the form of lines of credit or revolving credit facilities, or other investments, which require the Fund to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements.The Fund maintains sufficient cash on hand, available borrowings and liquid securities to fund any unfunded commitments should theneed arise.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of October31, 2019:


Industry classification	Fair Value		Percentage of Portfolio
Real Estate		$13,963		31%
USD CLO		2,859		6%
EUR CLO		2,486		5%
Retail		2,327		5%
Telecommunications		2,209		5%
Oil & Gas		1,769		4%
Computers		1,574		3%
Chemicals		1,382		3%
Software		1,374		3%
Media Entertainment		1,108		2%
Healthcare-Services		939		2%
Municipal		806		2%
Miscellaneous Manufacturer		762		2%
Pharmaceuticals		738		2%
Aerospace/Defense		697		2%
Short-Term Investments		565		1%
Other		10,081		22%
Total		$45,639		100%

Purchases and sales of securities during the year ended October 31, 2019, other than short-term securities and U.S. government obligations, were $43,138and$25,813, respectively.

Note 8. Fair Value of Financial Instruments

Under existing accounting guidance, fair value is defined as the price that the Fund would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Fund. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Fund classifies the inputs used to measure these fair values into the following hierarchy as defined by currentaccounting guidance:

Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assetsor liabilities.

Level 2: Inputs that are quoted prices for similar assets or liabilities inactive markets.

Level 3: Inputs that are unobservable for an assetor liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fairvalue measurement.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 7. Investment Portfolio (continued)

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 8. Fair Value of Financial Instruments (continued)

As of October 31, 2019, the Fund’s investments and derivatives were categorized as follows in the fairvalue hierarchy:


Asset Description	Level 1		Level 2			Level 3		Total
Senior Secured Loans—First Lien		$—		$8,734			—		$8,734
Senior Secured Loans—Second Lien		—		1,474			—		1,474
Senior Secured Bonds		—		5,633			—		5,633
Unsecured Bonds		—		9,355			—		9,355
CLO / Structured Credit		—		5,594			—		5,594
Emerging Markets Debt		—		272			—		272
Common Equity		27		33			—		60
Short-Term Investments		—		565			—		565
Subtotal		27		31,660			—		31,687
Real Estate Funds		—		—			—		13,952
Total Investments		27		31,660			—		45,639
Forward Foreign Currency Exchange Contracts		—		38			—		38
Futures Contracts		9		—			—		9
Interest Rate Swaps		—		3			—		3
Cross-Currency Swaps		—		42			—		42
Total Assets		$9		$ 83			—		$ 92

Liability Description	Level 1		Level 2			Level 3		Total
Forward Foreign Currency Exchange Contracts		—		$ (19	)		—		$ (19	)
U.S. Treasury Sold Short		—		(86	)		—		(86	)
Total Liabilities		—		$ (105	)		—		$ (105	)

The Fund’s investments consist primarily of debt securities that are traded on a private over-the-counter market for institutional investors. Except as described below, the Fund values its investments daily by using the mid-point of the prevailing bid and ask prices from dealers, which are provided by an independent third-party pricing service approved by the Board and screened for validity by such service. Investments and futures that are traded on an active public market are valued daily at their closing price.Forwardforeign currencyexchangecontracts and swapsarevaluedattheir quoted dailypricesobtainedfrom anindependentthirdparty.Debtinvestmentswherepricesfromdealers arenotavailablearevaluedusingbrokerquotes.Debt investments for which broker quotes are not available would be valued by an independent third-party valuation firm approved by the Board, which determines the fair value of such investments by considering, among other factors, the borrower’s ability to adequately service its debt, prevailing interest rates for like investments, expected cash flows, call features, anticipated prepayments and other relevant terms of the investments.In accordance with ASC 820, private real estate funds are measured at estimated NAV as a practical expedient and are not included in the fairvalue hierarchy.

The Fund periodically benchmarks the bid and ask prices it receives from the independent third-party pricing service and/or dealers, as applicable, against the actual prices at which it purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Fund’s management in purchasing and selling these investments in other investment funds managed by the sponsor, the Fund believes that these prices are reliable indicators of fair value. The Fund may also use other methods, including the use of an independent third-party valuation service approved by the Board, to determine fair value for securities for which it cannot obtain prevailing bid and ask prices through independent third-party pricing services or independent dealers, or where the Board otherwise determines that the use of such other methods is appropriate. The Fund will periodically benchmark the valuations provided by the independent third-party valuation service against the actual prices at which the Fund purchases and sells its investments. The Fund’s audit committee and Board reviewed the valuation determinations made with respect to these investments and determined that they were made in a manner consistent with the Fund’svaluation policy.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 9. Financing Arrangements

The following table presents summary information with respect to the Fund’s financing arrangements as of October31, 2019:

Arrangement

Type of Arrangement

Rate

Amount
Outstanding

Amount
Available

Maturity Date

BNP Facility

Revolving Prime Brokerage

L+1.00%

$3,993

$ 2,340

⁽¹⁾

April 27, 2020⁽²⁾

Société Générale Facility

Revolving Prime Brokerage

L+2.15% to L+2.25%⁽³⁾

1,300

8,700

June 17, 2022

Total

$5,293

$11,040

(1)The amount available under the BNP Facility is calculated based on the value of the pledged collateral, rather than BNP Paribas’ commitment. As explained below, the Fund may borrow amounts in excess of BNP Paribas’ commitment, at the discretion of BNP Paribas, to the extent the pledged collateral provides sufficient coverage foradditional borrowings.

(2)As described below, the BNP Facility generally is terminable upon 179 days’ notice by either party. As of October 31, 2019, neither the Fund nor BNP Paribas had provided notice of its intent to terminatethe facility.

(3)Prior to March 17, 2020, the spread over LIBOR is determined based on satisfaction of certain minimum asset liquidity requirements, thereafter, the spread over LIBORis 2.25%.

BNP Facility

On October 9, 2018, the Fund’s wholly owned subsidiary, FS Multi Alternative Credit LLC (“Alternative Credit”), entered into a committed facility arrangement (the “BNP Facility”) with BNP Paribas Prime Brokerage International, Ltd. (together with its affiliates “BNP Paribas”). The BNP Facility provides for borrowings on a committed basis up to a maximum amount equal to the average outstanding balance over the past ten business days or, if fewer, the number of business days since closing. The Fund may also borrow additional amounts on an uncommitted basis, at the discretion of BNP Paribas, to the extent the pledged collateral provides sufficient coverage for such additional borrowings. Borrowings are available in U.S. Dollars (“USD”), Canadian Dollars (“CAD”), Euro (“EUR”), British Pounds (“GBP”), Swiss Francs (“CHF”), Australian Dollars (“AUD”), Japanese Yen (“JPY”), Swedish Krona (“SEK”), and Danish Krone (“DKK”). Borrowings under the BNP Facility accrue interest at a rate equal to the London Interbank Offered Rate (“LIBOR”) for a one-month interest period plus 1.00% per annum on USD borrowings, the Canadian Dollar Offered Rate (“CDOR”) for a one-month interest period plus 1.00% per annum on CAD borrowings, the British Pound Sterling London Interbank Offered Rate (“GBP LIBOR”) for a one-month interest period plus 1.00% per annum on GBP borrowings, the Swiss Franc London Interbank Offered Rate (“CHF LIBOR”) for a one-month interest period plus 1.00% per annum on CHF borrowings, the Bank Bill Swap Reference Rate (“BBSW”) for a one-month interest period plus 1.00% per annum on AUD borrowings, the Japanese Yen London Interbank Offered Rate (“JPY LIBOR”) for a one-month interest period plus 1.00% per annum on JPY borrowings, the Stockholm Interbank Offered Rate (“STIBOR”) for a one-month interest period plus 1.00% per annum on SEK borrowings, or the Copenhagen Interbank Offered Rate (“CIBOR”) for a one-month interest period plus 1.00% per annum on DKK borrowings. Interest is payable monthly in arrearsor may be capitalized on the principal balance as additional cash borrowing. Alternative Credit may terminate the facility upon 179 days’ notice. Absent a default or facility termination event (or the ratings decline described in the following sentence), BNP Paribas is required to provide Alternative Credit with 179 days’ notice prior to terminating or materially amending the BNP Facility. BNP Paribas has a cancellation right if BNP Paribas’ long-term credit rating declines three or more notches below its highest rating by any of Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services or Fitch IBCA, Inc. during the term of the BNP Facility. Upon any such termination, BNP Paribas is required to pay Alternative Credit a fee equal to 1.00% of the maximum amount of financing available on thetermination date.

In connection with the BNP Facility, Alternative Credit has made certain representations and warranties and is required to comply with various covenants and reporting requirements customary for facilities of this type. The BNP Facility agreements contain the following events of default and termination events, among others: (a) the occurrence of a default or similar condition under certain third-party contracts of the Fund or Alternative Credit; (b) any change in BNP Paribas’ interpretation of applicable law that, in the reasonable opinion of counsel to BNP Paribas, has the effect of impeding or prohibiting the BNP Facility; (c) certain events of insolvency or bankruptcy by the Fund or Alternative Credit; (d) specified material reductions in the Fund or Alternative Credit’s NAV; (e) any change in the Fund’s fundamental or material investment policies; and (f) the termination of the Investment Advisory Agreement or if FS Multi-Alternative Advisor otherwise ceases to act as the Fund’s investment adviser and is not immediately replaced by an affiliate or other investment adviser acceptable toBNP Paribas.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 9. Financing Arrangements (continued)

The carrying amount outstanding under the BNP Facility approximates its fair value. For the year ended October 31, 2019, the total interest expense for the BNP Facilitywas $98.

For the year ended October 31, 2019, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the BNP Facility wereas follows:


Cash paid for interest expense⁽¹⁾	—
Average borrowings	$3,262
Effective interest rate on borrowingsat October 31, 2019	2.63	%
Weighted average interest rate	3.30	%

(1)Interest under the BNP Facility is payable monthlyin arrearsor may be capitalized on the principal balance as additionalcash borrowing.

Under the terms of the BNP Facility, BNP Paribas has the ability to borrow a portion of the pledged collateral (collectively, the “rehypothecated securities”), subject to certain limits, in exchange for paying to Alternative Credit a fee equal to 70% of the difference between the fair market rate (as determined by BNP Paribas) and the overnight Fed Funds rate. Alternative Credit may, in its sole discretion for any valid business reason, designate any security within the pledged collateral as ineligible to be a rehypothecated security, provided there remain securities eligible to be rehypothecated within the segregated custody account in an amount equal to the outstanding borrowings owed by Alternative Credit to BNP Paribas. The Fund may recall any rehypothecated security at any time and BNP Paribas must return such security or an equivalent security within a commercially reasonable period. In the event BNP Paribas does not return the security, the Fund will have the right to, among other things, apply and set off an amount equal to 100% of the then-current fair market value of such rehypothecated securities against any outstanding borrowings owed to BNP Paribas under the facility. Rehypothecated securities are marked-to-market daily and if the value of all rehypothecated securities exceeds 100% of the outstanding borrowings owed by Alternative Credit under the BNP Facility, BNP Paribas may either reduce the amount of rehypothecated securities to eliminate such excess or deposit into the segregated custody account an amount of cash equal to such excess. Alternative Credit will continue to receive interest and the scheduled repayment of principal balances on rehypothecated securities. For the year ended October 31, 2019, Alternative Credit did not receive any fees from BNP Paribas for securities that had been rehypothecated pursuant to the BNP Facility. As of October 31, 2019, there were no securities rehypothecated byBNP Paribas.

Société Générale Facility

On June 17, 2019, the Fund’s wholly owned subsidiary, FS Multi Private Credit LLC (“Private Credit”), entered into a revolving credit facility (the “Société Générale Facility”), pursuant to a Credit Agreement with Société Générale as agent and lender. The Société Générale Facility provides for borrowings on a committed basis in an aggregate principal amount up to $10,000, which amount may be increased from time to time upon mutual agreement by Société Générale, Private Credit and the Fund. Advances outstanding under the Société Générale Facility bear interest at a rate equal to three-month LIBOR plus a spread of either (i) prior to March 27, 2020, if certain minimum asset liquidity requirements are satisfied, 2.15% or (ii) otherwise, 2.25%. Private Credit also pays a commitment fee on the average daily undrawn amount equal to either (i) so long as at least 80% or more of the facility amount is utilized, 0.25% per annum or (ii) if less than 80% of the facility amount is utilized, 0.75% per annum. Interest and fees under the Société Générale Facility are payable quarterly in arrears or may be capitalized on the principal balance as additional cash borrowing. Any amounts borrowed under the Société Générale Facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on June17, 2022.

In connection with the Société Générale Facility, Private Credit has made certain customary representations and warranties and is required to comply with various customary covenants, reporting requirements and other requirements. The Société Générale Facility contains events of default customary for similar financing transactions, including: (i) the failure to make principal, interest or other payments when due after the applicable grace period; (ii) the insolvency or bankruptcy of Private Credit or the Fund; (iii) a change of control of Private Credit; and (iv) a change of management of the Fund. In addition, Private Credit is required to maintain a minimum advance rate and a minimum loan to value ratio. The Fund is required to maintain a minimum asset coverage ratio of at least 300%, and the Fund’sNAV may not decline below certain percentage thresholds on a monthly or annual basis. Upon the occurrence and during the continuation of an event of default, Société Générale may declare the outstanding advances and all other obligations under the Société Générale Facility immediately dueand payable.

FS Multi-Alternative Income Fund

Notes toConsolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 9. Financing Arrangements(continued)

Private Credit’s obligations to Société Générale under the Société Générale Facility are secured by a first-priority security interest in substantially all of the assets of Private Credit, including its portfolio of assets. In connection with the Société Générale Facility, the Fund entered into a Guarantee, pursuant to which the Fund agreed to guaranty Private Credit’s obligations under the SociétéGénérale Facility.

The Fund incurred costsin the amount of $40,in connection with obtaining the Société Générale Facility, which the Fund has recordedin other assets, on its consolidated balance sheet and amortizes to interest expense over the life ofthe facility.

The carrying amount outstanding under the Société Générale Facility approximates its fair value. For the year ended October 31, 2019, the total interest expense for the Société Générale Facility was $25.

For the year ended October 31, 2019, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Société Générale Facility wereas follows:


Cash paid for interest expense⁽¹⁾	—
Average borrowings	$1,287
Effective interest rate on borrowingsat October 31, 2019	4.21	%
Weighted average interest rate⁽²⁾	5.21	%

(1)Interest under the Société Générale Facility is payable quarterly in arrears or may be capitalized on the principal balance as additionalcash borrowing.

(2)The weighted average interest rate presentedis annualized.

Note 10. Concentration of Risk

Investing in the Fund involves risks, including, but not limited to, those set forth below. The risks described below are not, and are not intended to be, a complete enumeration or explanation of the risks involved in an investment in the Fund. For a more complete discussion of the risks of investing in the Fund, see the section entitled “Types of Investments and Related Risks” in the Fund’s prospectus and the Fund’s other filings withthe SEC.

Credit Risk: The Fund’s debt investments are subject to the risk of non-payment of scheduled interest or principal by the borrowers with respect to such investments. Such non-payment would likely result in a reduction of income to the Fund and a reduction in the value of the debt investmentsexperiencing non-payment.

Although the Fund may invest in investments that FS Multi-Alternative Advisor and the Sub-Advisers believe are secured by specific collateral, the value of which may exceed the principal amount of the investments at the time of initial investment, there can be no assurance that the liquidation of any such collateral would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal payments with respect to such investment, or that such collateral could be readily liquidated. In addition, in the event of bankruptcy of a borrower, the Fund could experience delays or limitations with respect to its ability to realize the benefits of the collateral securing an investment. Under certain circumstances, collateral securing an investment may be released without the consent of the Fund. Moreover, the Fund’s investments in secured debt may be unperfected for a variety of reasons, including the failure to make required filings by lenders, trustees or other responsible parties and, as a result, the Fund may not have priority over other creditors as anticipated. The Fund’s right to payment and its security interest, if any, may be subordinated to the payment rights and security interests of more senior creditors. Certain of these investments may have an interest-only payment schedule, with the principal amount remaining outstanding and at risk until the maturity of the investment. In this case, a portfolio company’s ability to repay the principal of an investment may be dependent upon a liquidity event or the long-term success of the company, the occurrence of whichis uncertain.

Companies in which the Fund invests could deteriorate as a result of, among other factors, an adverse development in their business, a change in the competitive environment or an economic downturn. As a result, companies that the Fund expected to be stable may operate, or expect to operate, at a loss or have significant variations in operating results, may require substantial additional capital to support their operations or maintain their competitive position, or may otherwise have a weak financial condition or be experiencingfinancial distress.

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 10. Concentration of Risk (continued)

Non-U.S. Securities Risk:Investments in certain securities and other instruments of non-U.S. issuers or borrowers (“non-U.S. securities”), involve factors not typically associated with investing in the United States or other developed countries, including, but not limited to, risks relating to: (i) differences between U.S. and non-U.S. securities markets, including potential price volatility in and relative illiquidity of some non-U.S. securities markets; the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements; and less government supervision and regulation; (ii) other differences in law and regulation, including fewer investor protections, less stringent fiduciary duties, less developed bankruptcy laws and difficulty in enforcing contractual obligations; (iii) certain economic and political risks, including potential economic, political or social instability; exchange control regulations; restrictions on foreign investment and repatriation of capital, possibly requiring government approval; expropriationor confiscatory taxation; other government restrictions by the United States or other governments; higher rates of inflation; higher transaction costs; and reliance on a more limited number of commodity inputs, service providers and/or distribution mechanisms; and (iv) the possible imposition of local taxes on income and gains recognized with respect to securities and assets. Certain non-U.S. markets may rely heavily on particular industries or non-U.S. capital and are more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, organizations, entities and/or individuals, changes in international trading patterns, trade barriers and other protectionist or retaliatory measures. International trade barriers or economic sanctions against non-U.S. countries, organizations, entities and/or individuals may adversely affect the Fund’s non-U.S. holdings or exposures. Certain non-U.S. investments may become less liquid in response to social, political or market developments or adverse investor perceptions, or become illiquid after purchase by the Fund, particularly during periods of market turmoil. Certain non U.S. investments may become illiquid when, for instance, there are few, if any, interested buyers and sellers or when dealers are unwilling to make a market for certain securities. When the Fund holds illiquid investments, its portfolio may be harder to value, especially in changing markets. The risks of investments in emerging markets, including the risks described above, are usually greater than the risks involved in investing in more developed markets. Because non-U.S. securities may trade on days when the Fund’s common shares are not priced, NAV may change at times when common shares cannotbe sold.

Foreign Currency Risk: Investments made by the Fund, and the income received by the Fund with respect to such investments, may be denominated in various non-U.S. currencies. However, the books of the Fund are maintained in U.S. dollars. Accordingly, changes in currency values may adversely affect the U.S. dollar value of portfolio investments, interest and other revenue streams received by the Fund, gains and losses realized on the sale of portfolio investments and the amount of distributions, if any, made by the Fund. In addition, the Fund may incur substantial costs in converting investment proceeds from one currency to another. The Fund may enter into derivative transactions designed to reduce such currency risks. Furthermore, the portfolio companies in which the Fund invests may be subject to risks relating to changes in currency values. If a portfolio company suffers adverse consequences as a result of such changes, the Fund may also be adversely affected asa result.

REITand RealEstateRisk:InvestingincompaniesthatinvestinrealestateexposestheFundtotherisksofowningrealestatedirectly,aswellastorisksthatrelatespecificallytothewayinwhichrealestatecompaniesareorganizedandoperated.Realestateishighlysensitivetogeneralandlocaleconomicconditions anddevelopments, andcharacterizedbyintensecompetition andperiodicoverbuilding.Realestatecompaniesmaylackdiversificationduetoownershipofalimitednumberofpropertiesandconcentrationinaparticulargeographicregionorproperty type.Realestateinvestmenttrusts(“REITs”)arefinancialvehiclesthatpoolinvestorcapitaltopurchaseorfinancerealestate.EquityREITsinvestprimarilyindirectownershiporleaseofrealproperty, andtheyderivemostoftheirincomefromrents.EquityREITscanalsorealizecapitalgainsbyselling properties thathaveappreciatedinvalue.InvestinginequityREITsandotherrealestateinvestmentvehicles,suchasETFs,indexfunds,closed-endfunds,mutualfundsandunregisteredinvestmentfunds(togetherwithREITs, “RealEstateInvestmentVehicles”),involvescertainuniquerisksinaddition tothoserisksassociatedwithinvestingintherealestateindustryingeneral.

RealEstateInvestmentVehiclesaretypicallysmallormediummarketcapitalizationcompanies,andtheyaresubjecttomanagementfeesandotherexpenses.WhentheFundinvestsinRealEstateInvestmentVehicles,itwillbearitsproportionateshareofthecostsoftheRealEstateInvestmentVehicles’operations.RealEstateInvestmentVehiclesaredependentuponmanagementskill,maynotbediversified,andaresubjecttoheavycashflowdependencyandself-liquidation.RealEstateInvestmentVehiclesalsoaresubjecttothepossibilityoffailingtoqualifyfortax-freepass-throughofincome.Also,becauseRealEstateInvestmentVehiclestypicallyareinvestedinalimitednumberofprojectsorinaparticularmarketsegment,these

FS Multi-Alternative Income Fund

Notes to Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 10. Concentration of Risk (continued)

entitiesaremoresusceptibletoadversedevelopmentsaffectingasingle projectormarketsegmentthanmorebroadlydiversifiedinvestments.Intheeventofadefaultbyaborrower orlessee,aREITmayexperiencedelaysinenforcingitsrightsasamortgageeorlessorandmayincursubstantialcostsassociatedwithprotectingitsinvestments.

Collateralized Loan Obligation (“CLO”) Securities Risk:The Fund will invest in CLO securities issued by CLOs that principally invest in senior loans (typically, 80% or more of their assets), diversified by industry and borrower. It is also possible that the underlying obligations of CLOs in which the Fund invests will include (i) subordinated loans, (ii) debt tranches of other CLOs, and (iii) equity securities incidental to investments in senior loans. Holders of such securities are subject to a number of risks, including the credit, liquidity, counterparty and other market and assetspecific risks.

CLO securities are typically privately offered and sold and may be thinly traded or have a limited trading market. As a result, investments in CLO securities may be characterized by the Fund as illiquid securities. In addition to the general risks associated with debt securities discussed above, CLOs carry additional risks, including: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; and (iii) the possibility that the investments in CLOs are subordinate to other classes or tranches of the CLOs. The market value of CLO securities may be affected by, among other things, changes in the market value of the underlying assets held by the CLO, changes in the distributions on the underlying assets, defaults and recoveries on the underlying assets, capital gains and losses on the underlying assets, prepayments on underlying assets and the availability, prices and interest rate of underlying assets. Furthermore, the leveraged nature of each subordinated class may magnify the adverse impact on such class of changes in the value of the assets, changes in the distributions on the assets, defaults and recoveries on the assets, capital gains and losses on the assets, prepayment on assets and availability, price and interest rates of assets. Finally, CLO securities are limited recourse and may not be paid in full and may be subject to up to100% loss.

Derivatives Risk:The Fund may use derivative instruments including, in particular, swaps (including, total return swaps), syntheticCLOs, reverse repurchase agreements and other similar transactions, in seeking to achieve its investment objective or for other reasons, such as cash management, financing activities or to hedge its positions. Accordingly, these derivatives may be used in limited instances as a form of leverage or to seek to enhance returns, including speculation on changes in credit spreads, interest rates or other characteristics of the market, individual securities or groups of securities. If the Fund invests in a derivative for speculative purposes, the Fund will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The use of derivatives may involve substantial leverage. The use of derivatives may subject the Fund to various risks, including counterparty risk, currency risk, leverage risk, liquidity risk, correlation risk, index risk andregulatory risk.

Furthermore, the Fund’s ability to successfully use derivatives depends on FS Multi-Alternative Advisor’s ability to predict pertinent securities prices, interest rates, currency exchange rates and other economic factors, which cannot be assured. Additionally, segregated liquid assets, amounts paid by the Fund as premiums and cash or other assets held in margin accounts with respect to derivatives are not otherwise available to the Fund forinvestment purposes.

Rule 144A Securities Risk:The Fund may purchase certain securities eligible for resale to qualified institutional buyers as contemplated by Rule 144A under the Securities Act of 1933 (“Rule 144A Securities”). Rule 144A provides an exemption from the registration requirements of the Securities Act of 1933 for the resale of certain restricted securities to certain qualified institutional buyers. One effect of Rule 144A is that certain restricted securities may be considered liquid, though no assurance can be given that a liquid market for Rule 144A Securities will develop or be maintained. However, where a substantial market of qualified institutional buyers has developed for certain unregistered securities purchased by the Fund pursuant to Rule 144A, the Fund intends to treat such securities as liquid securities in accordance with procedures approved by the Board. Because it is not possible to predict with certainty how the market for Rule 144A Securities will develop, the Board directs FS Multi-Alternative Advisor to carefully monitor the Fund’s investments in such securities with particular regard to trading activity, availability of reliable price information and other relevant information. To the extent that, for a period of time, qualified institutional buyers cease purchasing restricted securities pursuant to Rule 144A, the Fund’s investing in such securities may have the effect of increasing the level of illiquidity in its investment portfolio duringsuch period.

FS Multi-Alternative Income Fund

Notes toConsolidated Financial Statements (continued)
(in thousands, except share and per share amounts)

Note 11. Commitments and Contingencies

The Fund enters into contracts that contain a variety of indemnification provisions. The Fund’s maximum exposure under these arrangements is unknown; however, the Fund has not had prior claims or losses pursuant to these contracts. Management of FS Multi-Alternative Advisor has reviewed the Fund’s existing contracts and expects the risk of loss to the Fund tobe remote.

The Fund is not currently subject to any material legal proceedings and, to the Fund’s knowledge, no material legal proceedings are threatened against the Fund. From time to time, the Fund may be a party to certain legal proceedings in the ordinary course of business, including proceedings related to the enforcement of the Fund’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, to the extent the Fund becomes party to such proceedings, the Fund would assess whether any such proceedings will have a material adverse effect upon its financial condition or resultsof operations.

See Note 4 for a discussion of the Fund’s commitments to FS Multi-Alternative Advisor, the Sub-Advisers and their respective affiliates (including FS Investments) resulting from the expenselimitation agreement.

Supplemental Information (Unaudited)

Changes in Accountants and Disagreements with Accountants on Accounting and Financial Disclosure

The Fund has not had any changes in its independent registered public accounting firm or disagreements with its independent registered public accounting firm on accounting or financial disclosure matters sinceits inception.

Board of Trustees

Information regarding the members of the Board is set forth below. The trustees have been divided into two groups—interested trustees and independent trustees. The address for each trustee is c/o FS Multi-Alternative Income Fund, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112. As set forth in the Fund’s amended and restated declaration of trust, each trustee’s term of office shall continue until his or her death, resignationor removal.

Name

Age

Trustee Since

Title

Principal
Occupation^(s)
During the Past
Five Years

Number of
Registered
Investment
Companies
in Fund
Complex*
Overseen by
Trustee

Other Directorships
Held by Trustee

Interested Trustees

Michael C. Forman⁽¹⁾

April 2018

Chairman

Chairman and Chief Executive Officer of FS Investments

FS Series Trust (since 2016); FS Credit Income Fund (since 2016); FS Credit Real Estate Income Trust, Inc. (since 2016); FS Energy Total Return Fund (since 2016); FS Global Credit Opportunities Fund (since 2013 and including its affiliated feeder funds); FS KKR Capital Corp. II (formerly FS Investment Corporation II) (since 2011); FS Energy and Power Fund (since 2010); and FS KKR Capital Corp. (since 2007)

David J. Adelman⁽²⁾

August 2018

Vice-Chairman

Chief Executive Officer of Campus Technologies, Inc. (since 2001); and President and Chief Executive Officer of Campus Apartments, Inc. (since 1997)

FS Credit Real Estate Income Trust, Inc. (since 2018); FS Series Trust (since 2017);andFS Energy Total Return Fund (since 2017)

Independent Trustees

Holly E. Flanagan

August 2018

Trustee

Managing Director of Gabriel Investments(since 2013)

FS Credit Income Fund (since 2017); and FS Energy Total Return Fund (since 2017)

Brian R. Ford

August 2018

Trustee

Partner of Ernst & Young LLP (1971–2008)

FS KKR Capital Corp. (since 2018); FS KKR Capital Corp. II (formerly known as FS Investment Corporation II) (since 2018); FS Credit Income Fund (since 2017); FS Energy Total Return Fund (since 2016); and Clearway Energy Inc. (formerly NRG Yield, Inc.) (since 2013)

Name

Age

Trustee Since

Title

Principal
Occupation^(s)
During the Past
Five Years

Number of
Registered
Investment
Companies
in Fund
Complex*
Overseen by
Trustee

Other Directorships
Held by Trustee

Daniel J. Hilferty, III

March 2019

Trustee

Chief Executive Officer of Independence Health Group (since 2010)

FS Credit Income Fund (since 2019); FS Energy Total Return Fund (since 2019); and Aqua America, Inc. (since 2017)

*The “Fund Complex” consists of the Fund, FS Series Trust, FS Credit Income Fund, FS Energy Total Return Fund and FS Global Credit Opportunities Fund (and its affiliatedfeeder funds).

(1)Mr. Forman is deemed to be an “interested person” of the Fund, as defined in Section 2(a)(19) of the 1940 Act, due to his role as a controlling person of FSMulti-Alternative Advisor.

(2)Mr. Adelman is deemed to be an “interested person” of the Fund, as defined in Section 2(a)(19) of the 1940 Act, due to his role as a controlling person of FSMulti-Alternative Advisor.

Executive Officers

Information regarding the executive officers of the Fund is set forth below. The address for each executive officer is c/o FS Multi-Alternative Income Fund, 201 Rouse Boulevard, Philadelphia,Pennsylvania 19112.


Name	Age	Position Held with Registrant	Length of Time Served	Principal Occupation^(s) During the Past Five Years
Michael C. Forman	58	Chairman, Chief Executive Officer & President	Since 2018	Chairman and Chief Executive Officer, FS Investments
Edward T. Gallivan, Jr.	57	Chief Financial Officer & Treasurer	Since 2018	Chief Financial Officer, FS Energy and Power Fund, FS Energy Total Return Fund, FS Credit Income Fund, FS Global Credit Opportunities Fund and its affiliated feeder funds, FS Credit Real Estate Income Trust, Inc.
Stephen S. Sypherd	42	General Counsel & Secretary	Since 2018	General Counsel, FS Investments
James F. Volk	57	Chief Compliance Officer	Since 2018	Managing Director, Fund Compliance, FS Investments; and Chief Compliance Officer, Chief Accounting Officer and Head of Traditional Fund Operations at SEI’s Investment Manager Services market unit (1996–2014)

Statement of Additional Information

The Fund’s statement of additional information contains additional information regarding the Fund’s trustees and executive officers and is available upon request and without charge by calling the Fund collect at 215-495-1150 or by accessing the Fund’s “SEC Filings” page on FS Investments’website at www.fsinvestments.com.

Availability of Quarterly Portfolio Schedules

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT reports (and its predecessor form, Form N-Q) are available on the SEC’s websiteatwww.sec.gov.

Proxy Voting Policies and Procedures

The Fund has delegated its proxy voting responsibility to FS Multi-Alternative Advisor, the Fund’s investment adviser. In addition, FS Multi-Alternative Advisor has delegated the responsibilities of voting and administering proxies received by the Fund to KKR Credit, an investment sub-adviser to the Fund, and the GoldenTree Sub-Adviser, an investment sub-adviser to the Fund, with respect to the allocated portion of the Fund’s assets managed by each such sub-adviser. Shareholders may obtain a copy of the proxy voting policies and procedures of FS Multi-Alternative Advisor, KKR Credit and the GoldenTree Sub-Adviser upon request and without charge by calling the Fund collect at 215-495-1150 or on the SEC’swebsite at http://www.sec.gov.

Proxy Voting Record

Information regarding how FS Multi-Alternative Advisor, KKR Credit and the GoldenTree Sub-Adviser voted proxies relating to the Fund’s portfolio securities during the most recent twelve-month period ended June 30 is available upon request and without charge by making a written request to the Fund’s Chief Compliance Officer at FS Multi-Alternative Income Fund, 201 Rouse Boulevard, Philadelphia, Pennsylvania 19112, Attn: Chief Compliance Officer, by calling the Fund collect at 215-495-1150 or on the SEC’swebsite at http://www.sec.gov.

Board of Trustees’ Considerations in Approving the Investment Advisory Agreement and Investment Sub-Advisory Agreements

At a meeting of the Board held on September 11, 2018 (the “Organizational Meeting”), the Board, including a majority of those trustees of the Fund who are not “interested persons” (as that term is defined in the 1940 Act) (the “Independent Trustees”) of the Fund, FS Multi-Alternative Advisor (the “Adviser”), the GoldenTree Sub-Adviser, KKR Credit and StepStone (StepStone together with the GoldenTree Sub-Adviser and KKR Credit, the “Sub-Advisers”), considered and approved: (1) the Fund’s investment advisory agreement (“Initial Investment Advisory Agreement”) between the Fund and the Adviser; (2) the investment sub-advisory agreement among the Fund, the Adviser and the GoldenTree Sub-Adviser; (3) the investment sub-advisory agreement among the Fund, the Adviser and KKR Credit; and (4) the investment sub-advisory agreement among the Fund, the Adviser and StepStone (each, an “Initial Sub-Advisory Agreement”). At a subsequent meeting of the Board held on July 26, 2019 (the “July Meeting” and together with the Organizational Meeting, the “Meetings”), the Board, including a majority of the Independent Trustees of the Fund considered and approved amendments to the Initial Investment Advisory Agreement (the “Amended Investment Advisory Agreement” and together with the Initial Investment Advisory Agreement, the “Investment Advisory Agreement”) and amendments to the Initial Sub-Advisory Agreements (each, an “Amended Sub-Advisory Agreement” and together with the Initial Sub-Advisory Agreement, each a “Sub-Advisory Agreement”). The Investment Advisory Agreement and the Sub-Advisory Agreements are referred to collectively as the “Advisory Agreements.” During the Organizational Meeting, representatives of the Adviser reviewed the significant provisions in each of the Advisory Agreements. During the July Meeting, representatives of the Adviser reviewed the proposed changes as reflected in the Amended Investment Advisory Agreement and Amended Sub-Advisory Agreements, which primarily resulted from discussions between management and the staff of the SEC related to the Fund’sinitial registration.

In connection with its consideration of the Advisory Agreements at the Meetings, the Board considered information provided by the Adviser and the Sub-Advisers specifically in relation to the consideration of the initial approval of the Advisory Agreements in response to requests from the Independent Trustees and their independent legal counsel. The Board considered a range of materials and information regarding the nature, extent and quality of services to be provided by the Adviser and the Sub-Advisers; the investment performance of similar investment strategies managed by the Adviser and the Sub-Advisers (or their affiliates), as applicable; the anticipated fees and expenses of the Fund compared to those of other registered investment companies that the Adviser believed were relatively comparable to the Fund in terms of structure, investment objectives, portfolio mix and/or other similar criteria; the possibility of economies of scale that could be passed on to the Fund; and the anticipated profitability of the Adviser and the Sub-Advisers, to the extent provided, related to their proposed services to the Fund. The Board also considered information related to potential ancillary benefits that may be enjoyed by the Adviser and each Sub-Adviser (and their affiliates) as a result of their relationship withthe Fund.

In addition to evaluating, among other things, the written information provided by the Adviser and the Sub-Advisers, the Board also considered the presentations from the Adviser and each Sub-Adviser on the services proposed to be provided to the Fund and, at the July Meeting, the changes to each Advisory Agreement, and the answers to questions posed by the Board to representatives of the Adviser and each Sub-Adviser. The Independent Trustees also met separately in an executive session at both Meetings with their independent legal counsel to review and consider the information provided regarding theAdvisory Agreements.

Based on their review, the Board and the Independent Trustees determined to approve each of the Advisory Agreements at both Meetings. In their deliberations, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together. The material factors and conclusions that formed the basis for the Board’s determinations arediscussed below.

Nature, Extent and Quality of Services

In evaluating the nature, extent and quality of the services to be provided by the Adviser and the Sub-Advisers, the Board reviewed information describing the financial strength, experience, resources, compliance programs, and key personnel of the Adviser and Sub-Advisers (and their affiliates), including the personnel who would provide investment management services to the Fund. With respect to the Adviser, the Board recognized the significant anticipated investment of time, capital and human resources to be provided by the Adviser and its affiliates and the Adviser’s proposed role in, among other things, setting investment guidelines forthe Fund’s

portfolio and determining the composition and allocation of the Fund’s portfolio, the nature and timing of changes to the portfolio and the manner of implementingsuch changes.

In addition to evaluating, among other things, the written information provided by the Adviser and each Sub-Adviser, the Board also considered the answers to questions posed by the Board to representatives of the Adviser and each Sub-Adviser, including questions relating to the KKR and GTAM exclusivity and termination provisions, as well as the KKR minimum allocation and GoldenTree minimum allocation provisions and the changes to such provisions in light of the SEC’s comments. With regard to the KKR and GTAM exclusivity and termination provisions, the Board took into account the commercial context and particular investment opportunities made available through the combination of the Adviser and KKR Credit and GTAM. The Board considered that the Fund was being designed with KKR’s private credit investment allocation as one of the staples of the Fund’s investments and acknowledged the importance of KKR to the strategy of the Fund. In addition, the Board noted the Adviser’s explanation that the Advisory Agreement and the Sub-Advisory Agreement with KKR would be akin to a co-investment management arrangement where one agreement was contingent on the other. With regard to the minimum allocation provisions, the Board took into account the fact that the interval fund product offering was specifically conceived as a vehicle to provide investors with access to investment opportunities in each of the three initial alternative income investment strategies (real estate, private credit and multi-sector credit) and that it was understood that the Adviser’s intention and plan was to build the allocated portions of the Fund in a manner that was consistent with the minimum allocation provisions. The Board also specifically considered the Fund’s ability to terminate each Advisory Agreement at the direction ofthe Board.

The Board and the Independent Trustees determined that they were satisfied with the nature, quality and extent of the services to be provided to the Fund by the Adviser and each Sub-Adviser, the expertise and capabilities of the Adviser’s and the Sub-Advisers’ personnel, the Adviser’s anticipated collaboration with and oversight of the Sub-Advisers and the Sub-Advisers’ (or their affiliates’, as applicable) financial strength and proposed efforts to develop and allocate resources necessary to manage theFund’s portfolio.

Review of Investment Performance of Affiliates

The Board and the Independent Trustees noted that, because the Fund is new, it had no investment performance to consider as of the Organizational Meeting and limited investment performance to consider as of the July Meeting. The Board reviewed the experience of the Adviser’s and Sub-Advisers’ personnel including the experience of the Adviser’s personnel in managing continuously-offered closed-end funds and other types of funds within the framework of the 1940 Act. In addition, the Board reviewed performance of similar accounts managed by the Adviser and Sub-Advisers to the extent available. The Board and the Independent Trustees determined that they were generally satisfied with the investment experience of the personnel of the Adviser andthe Sub-Advisers.

Costs of Services to be Provided and Anticipated Profits

The Board then considered the Adviser’s and Sub-Adviser’s proposed management fees and a projected net expense ratio of the Fund (as a percentage of average net assets) for its first year of operations. The Board also considered the Adviser’s management fee and net expense ratios as compared to a group of investment companies that the Adviser believed to be relatively comparable to the Fund (the “Comparable Companies”). The Board acknowledged the Adviser’s and its affiliates’ proposed financial support of the Fund through the provision of fee waivers, expense reimbursements, and additional support payments pursuant to an expense limitation agreement by and between the Fund and the Adviser. With respect to the Fund’s net expense ratios, the Board considered the expense ratios compared to the Comparable Companies and the Adviser’s explanation as to the comparability ofthe expenses.

The Board then reviewed the estimated profitability information provided by the Adviser and the Sub-Advisers and their methodology for determining profitability, to the extent provided. The profitability data included detail on projections related to capital raise and overall anticipated future profitability of the relationship between the Fund andthe Adviser.

The Board determined that, based on the information reviewed, the Adviser’s management fees are reasonable in relation to the services to be rendered and within the range of what would have been negotiated at arm’s length in similar circumstances. With respect to the approval of each Sub-Advisory Agreement, the Board determined that it was satisfied with the level of fees to be paid by the Adviser to each Sub-Adviser given the quality and extent of services to be provided and that the Sub-Advisers’ fees are reasonable in relation to the services tobe rendered.

Economies of Scale

The Board considered the extent to which economies of scale would be realized as the Fund grows and whether the Fund’s fee levels reflect these economies of scale for the benefit of Fund shareholders. The Board considered the fact that the Fund is new and that such economies may be less likely to be significant given the Fund’s structure andbusiness model.

Other Benefits

The Board considered other benefits that may accrue to the Adviser, the Sub-Advisers and their affiliates from their relationships with the Fund, including that the Adviser and the Sub-Advisers may potentially benefit from their relationship with the Fund in the sense that the success of the Fund could attract other business to the Adviser andthe Sub-Advisers.

Overall Conclusions

Based on all of the information considered and the conclusions reached, the Board, including a majority of the Independent Trustees, determined that the terms of the Investment Advisory Agreement and Sub-Advisory Agreements were fair and reasonable and determined to approve each for an initial twoyear period.

www.fsinvestments.comAR19-MAI

Item 2.Code of Ethics.

(a)On June 19, 2019, the Fund’s board of trustees (the “Board”) adopted an amended Code of Business Conduct and Ethics (as amended, the “Code of Ethics”) that applies to all officers, trustees, directors and employees of the Fund and FS Multi-Alternative Advisor, LLC (“FS Multi-Alternative Advisor”), the investment adviser to the Fund, including the Fund’s principal executive officer, principal financial officer, principal accounting officer or controller and persons performingsimilar functions.

(b)Not applicable.

(c)On June 19, 2019, the Board approved the Code of Ethics, which was amended to eliminate the periodic open window period concept in connection with the purchase and sale of Fund shares by access persons and replace it with the right to impose temporary event-driven blackout periods in situations when Fund management believes access persons could be in possession of material non-public information. A copy of the Code of Ethics is included herein as exhibit (a)(1) and also is available on the Fund’s “Corporate Governance” page of FS Investments’ websiteatwww.fsinvestments.com.

(d)During the period covered by the Annual Report included in Item 1 of this Form N-CSR, the Fund did not grant any waivers, explicit or implicit, from a provision of the Code of Ethics to its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The amendments reflected in the Code of Ethics and discussed above did not relate to or result in any waiver, explicit or implicit, of any provision of the Fund’s previous Code of Business Conductand Ethics.

(e)Not applicable.

(f)A copy of the Code of Ethics is included herein as Exhibit (a)(1) and also is available on the Fund’s “Corporate Governance” page on FS Investments’ websiteatwww.fsinvestments.com.

Item 3.Audit Committee Financial Expert.

(a)(1)The Board has determined that the Fund has at least one “audit committee financial expert” serving on the audit committee of the Board (the “Audit Committee”), as such term is defined for purposes of Item 3 ofForm N-CSR.

(a)(2)The Board has determined that Brian R. Ford is an “audit committee financial expert” and is “independent,” as such terms are defined for purposes of Item 3 ofForm N-CSR.

(a)(3)Not applicable.

Item 4.Principal Accountant Fees and Services.

(a)Audit Fees. The aggregate fees billed to the Fund for the fiscal years ended October 31, 2019 and 2018 for professional services rendered by Ernst & Young LLP, the Fund’s independent registered public accounting firm (“Ernst & Young”), for the audit of the Fund’s annual financial statements and services that are normally provided by Ernst & Young in connection with statutory and regulatory filings or engagements were $85,000 and$67,500, respectively.

(b)Audit-Related Fees. The aggregate fees billed to the Fund for the fiscal years ended October 31, 2019 and 2018 for assurance and related services by Ernst & Young that were reasonably related to the performance of the audit of the Fund’s financial statements and not reported in Item 4(a) above were $10,000 and $0, respectively. Audit-related fees for the fiscal years ended October 31, 2019 represent fees billed for services provided in connection with ourN-2 filings.

(c)Tax Fees. The aggregate fees billed to the Fund for the fiscal years ended October 31, 2019 and 2018 for professional services rendered by Ernst & Young for tax compliance, tax advice and tax planning were $23,200 and $15,000, respectively. Tax fees for the fiscal years ended October 31, 2019 and 2018 represent fees billed for tax compliance services provided in connection with the review of the Fund’stax returns.

(d)All Other Fees. No fees were billed to the Fund for the fiscal years ended October 31, 2019 and 2018 for products and services provided by Ernst & Young, other than the services reported in Items 4(a) through(c) above.

(e)Audit Committee Pre-Approval Policiesand Procedures.

(1)The Audit Committee has adopted, and the Board has approved, a Policy on Pre-Approval of Audit and Non-Audit Services (the “Policy”), which is intended to comply with Rule 2-01 of Regulation S-X and sets forth guidelines and procedures to be followed by the Fund when retaining an auditor to perform audit, audit-related, tax and other services for the Fund. The Policy permits such services to be pre-approved by the Audit Committee pursuant to either a general pre-approval or specific pre-approval. Unless a type of service provided by the auditor has received general pre-approval, it requires specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels require specific pre-approval by theAudit Committee.

(2)All services described in paragraphs (b) and (c) of this Item 4 were pre-approved before the engagement by the Audit Committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 ofRegulation S-X.

(f)Not applicable.

(g)The aggregate non-audit fees billed by Ernst & Young for services rendered to the Fund, FS Multi-Alternative Advisor and any entity controlling, controlled by or under common control with FS Multi-Alternative Advisor that provides ongoing services to the Fund for the fiscal years ended October 31, 2019 and 2018 were $33,200 and$15,000, respectively.

(h)Not applicable.

Item 5.Audit Committee of Listed Registrants.

(a)Not applicable. The Fund is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the“Exchange Act”).

(b)Not applicable. The Fund is not a listed issuer as defined in Rule 10A-3 under theExchange Act.

Item 6.Investments.

(a)The Fund’s consolidated schedule of investments as of October 31, 2019 is included as part of the Annual Report included in Item 1 of thisForm N-CSR.

(b)Not applicable.

Item 7.Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The Fund has delegated its proxy voting responsibility to FS Multi-Alternative Advisor, pursuant to the proxy voting policies and procedures of FS Multi-Alternative Advisor. In addition, FS Multi-Alternative Advisor has delegated the responsibilities of voting and administering proxies received by the Fund to KKR Credit Advisors (US) LLC (“KKR Credit”), an investment sub-adviser to the Fund, and GoldenTree Asset Management Credit Advisor LLC (the “GoldenTree Sub-Adviser”), an investment sub-adviser to the Fund, with respect to the allocated portion of the Fund’s assets managed by each such sub-adviser. FS Multi-Alternative Advisor’s proxy voting policies and procedures are included herein as Exhibit (a)(5). The proxy voting policies and procedures of KKR Credit and the GoldenTree Sub-Adviser aredescribed below.

Proxy Policies of KKR Credit

As an investment adviser registered under the Investment Advisers Act of 1940, as amended (the Advisers Act”), KKR Credit has a fiduciary duty to act in the best interests of its clients and will vote proxies relating to the allocated portion of the Fund’s assets that it manages in a manner that it believes, in its discretion, to be in the best interest of the Fund’s shareholders. These policies and procedures for voting proxies for the investment advisory clients of KKR Credit are intended to comply with Section 206 of, and Rule 206(4)-6 under, theAdvisers Act.

KKR Credit has engaged Institutional Shareholder Services, Inc. (“ISS”) to provide KKR Credit with its independent analysis and recommendation with respect to generally all proxy proposals voted on behalf of its clients, with respect to both U.S. and non-U.S. securities of publicly traded companies. KKR Credit utilizes ISS to assist with its proxy voting; however, KKR Credit retains ultimate voting discretion with respect to its clients. KKR Credit may depart from an ISS recommendation in order to avoid voting decisions believed to be contrary to the best interests of its clients. In each instance where KKR Credit votes contrary to the ISS recommendation, KKR Credit’s legal/compliance group, in conjunction with the KKR Credit investment analyst who provides coverage for the relevant issuer, will document the basis for its contrary voting decision. KKR Credit may choose not to vote proxies in certain situations. If KKR Credit becomes aware of an existing or potential conflict of interest relating to a particular proxy proposal, the KKR Credit Conflicts Committee will be notified to provide guidance as to the conflict. If such a conflict exists, the proxy must be voted in alignment with the recommendation set forthby ISS.

Shareholders may obtain information regarding how KKR Credit votes proxies with respect to the Fund’s portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, c/o FS Multi-Alternative Income Fund, 201 Rouse Boulevard, Philadelphia,Pennsylvania 19112.

Proxy Policies of the GoldenTree Sub-Adviser

As an investment adviser registered under the Advisers Act, the GoldenTree Sub-Adviser has a fiduciary duty to act in the best interests of its clients. These policies and procedures for voting proxies for the investment advisory clients of the GoldenTree Sub-Adviser are intended to comply with Section 206 of, and Rule 206(4)-6 under, theAdvisers Act.

The GoldenTree Sub-Adviser will vote proxies relating to the allocated portion of the Fund’s assets that it manages in a manner that it believes to be in the best interest of theFund’s shareholders.

The GoldenTree Sub-Adviser has engaged ISS to provide the GoldenTree Sub-Adviser with its independent analysis and recommendation with respect to proxy proposals voted on behalf of its clients. The GoldenTree Sub-Adviser utilizes ISS to assist with its proxy voting, however, the GoldenTree Sub-Adviser retains voting discretion with respect to its Clients and may depart from an ISS recommendation in order to avoid voting decisions believed to be contrary to the best interests of its clients. In exercising voting discretion on behalf of its clients and in instances where the GoldenTree Sub-Adviser departs from an ISS recommendation, the GoldenTree Sub-Adviser will seek to avoid any direct or indirect conflictof interest.

Shareholders may obtain information regarding how the GoldenTree Sub-Adviser votes proxies with respect to the Fund’s portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, c/o FS Multi-Alternative Income Fund, 201 Rouse Boulevard, Philadelphia,Pennsylvania 19112.

Item 8.Portfolio Managers of Closed-End Management Investment Companies.

(a)(1)Information regarding the portfolio managers primarily responsible for the day-to-day management of the Fund’s portfolio as of the date hereof is set forth below. Each person listed below has served as a portfolio manager since theFund’s inception.

Brian Gerson joined FS Investments in November 2017 as its Head of Private Credit and has more than 25 years of experience in credit investing and corporate lending. Prior to joining FS Investments, he most recently served as Group Head and Managing Director at LStar Capital, the credit affiliate of Lone Star Funds, from April 2015 to November 2017, where he significantly expanded LStar’s corporate credit business. Prior to joining LStar, Mr. Gerson was a founding member of Solar Capital Partners, which serves as investment adviser to two yield-oriented business development companies. At Solar Capital, he spent seven years from January 2007 to September 2014 in various credit, origination, management, and business development roles, most recently serving as Executive Vice President of Solar Capital Limited. Prior to joining Solar Capital, Mr. Gerson spent 12 years in various positions, including Managing Director at CIBC World Markets in its Leveraged Finance and Financial Sponsors Group, which acquired his predecessor firm, The Argosy Group, in 1995. Mr. Gersonbegan his career at Merrill Lynch after graduating summa cum laude and Phi Beta Kappa from Tufts University where he earned a Bachelor of Artsin Mathematics.

Michael Kelly has served as President of FS Investments since July 2017. Mr. Kelly has also served as chief investment officer of FS Investments since January 2015. Among other things, Mr. Kelly oversees the investment managementand product developmentfunctions at FS Investments. Before joining FS Investments, Mr. Kelly was the chief executive officer of ORIX USA Asset Management (“ORIX”), where he led the company’s acquisition of Robeco, a $250 billion global asset management company and the largest acquisition in ORIX’s 50-year history. Mr. Kelly started his career on Wall Street at Salomon Brothers and went on to join hedge fund pioneers Omega Advisors and Tiger Management. Mr. Kelly then helped build and lead the hedge fund firm, FrontPoint Partners, where he first served as chief investment officer and eventually co-chief executive officer. Mr. Kelly is a graduate of Cornell University and earned his M.B.A. at Stanford University. Mr. Kelly is a co-founder and board member of the Spotlight Foundation, and serves as a trustee of the Tiger Foundation and the Stanford BusinessSchool Trust.

Robert Haas currently serves as fund chief operating officer of FS Investments. Mr. Haas has also served in various capacities for FS Investments and its affiliated investment advisers since the later of September 2010 or such entity’s inception date. In his current role, Mr. Haasoversees fund management for FS’ funds. Prior to joining FS Investments, Mr. Haas served on the commercial real estate investment team at American Capital, a private equity firm and global asset manager, from 2007 to 2010. At American Capital, Mr. Haas was involved in all aspects of the company’s commercial real estate investing activities, including bond investment selection, due diligence, structuring, securitization and surveillance. Prior to American Capital, Mr. Haas served in the structured finance group at Capital Source, a specialty finance company, where he sourced, underwrote, negotiated, structured and managed investments in middle-market finance companies. Prior to Capital Source, Mr. Haas was an analyst at Goldman Sachs’ Archon Group, where he analyzed and evaluated debt and equity investments in commercial real estate. Mr. Haas earned a B.S. in finance from Georgetown University’s McDonough School of Business and holds the CFA Institute’s Chartered Financial Analyst designation. Mr. Haas is a co-founder and chairman of the board of The 1789 Fund, a non-profit organization focused on improving the health of mothers and newborns inunderserved populations.

Robert Lawrence has served asGlobal Head of Real Estate at FS Investments since September 2017 and is responsible for overseeing all real estate-related businesses and strategies. Before joining FS Investments, Mr. Lawrence served as Executive Managing Director at Singer & Bassuk, a boutique real estate finance firm. Prior to joining Singer & Bassuk, he was Senior Managing Director and Co-Head of Origination at Guggenheim Commercial Real Estate Finance, where he led and managed the origination platform for CMBS and affiliated life companies.Mr. Lawrencealso spent 17 years andheld several high-level positions at JPMorgan Chase and Bear Stearns. At JPMorgan Chase, he served as Managing Director and Head of the Securitized Products Group in Asia. Prior to the merger with JPMorgan Chase in 2008, he was Senior Managing Director and Co-Head of Origination at Bear Stearns, and a founding member of the firm’s Global CMBS department. Mr. Lawrence received a Bachelor of Science in Business Administration from the University of Vermont and a Master of Science in Real Estate Investment and Development from New York University. Mr. Lawrence is a member of the Urban Land Institute, the Young Presidents’ Organization,the Vanderbilt University Undergraduate Real Estate Advisory Boardand the Nassau County Disaster Action Team for the AmericanRed Cross.

Daniel Picard currently serves as Head of Product Developmentand Due Diligenceand has been with FS Investments since June 2012. He is responsible for researching, designing and launching new alternative investmentofferings as well as onboarding new products with FS’s broker-dealer partners and RIAs. Before joining the Product Development team, Mr. Picard worked in the firm’s Product Strategy group, where he produced education, research and marketing content for financial advisors. Prior to FS Investments, Mr. Picard was a Vice President at Barclays Capital, where he worked for five years as a trader of leveraged loans and loan credit derivatives. Prior to Barclays, he spent three years at Citi, working first as a corporate banking analyst in Citi’s energy group in Houston and then as a fixed income analyst in Citi’s project finance group in New York. Mr. Picard graduated with honors from Trinity College where he received his BAin Economics.

(a)(2)The portfolio managers primarily responsible for the day-to-day management of the Fund also manage other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following table identifies, as of October 31, 2019: (i) the number of other registered investment companies, other pooled investment vehicles and other accounts managed by each portfolio manager; (ii) the total assets of such companies, vehicles and accounts; and (iii) the number and total assets of such companies, vehicles and accounts that are subject to an advisory fee based on performance, unlessotherwise noted:


	Number of Accounts	Assets of Accounts (in thousands)			Number of Accounts Subject to a Performance Fee	Assets Subject to a Performance Fee (in thousands)
Brian Gerson
Registered Investment Companies	—		—		—		—
Other Pooled Investment Vehicles	6		$20,656,211	⁽²⁾	6		$20,656,211	⁽²⁾
Other Accounts	—		—		—		—

Michael Kelly
Registered Investment Companies	9		$ 530,022	⁽¹⁾	—		—
Other Pooled Investment Vehicles	7		$21,036,019	⁽²⁾	7		$21,036,019	⁽²⁾
Other Accounts	—		—		—		—

Robert Haas
Registered Investment Companies	1		$ 51,335		—		—
Other Pooled Investment Vehicles	1		$ 379,808	⁽²⁾	1		$ 379,808	⁽²⁾
Other Accounts	—		—		—		—


	Number of Accounts	Assets of Accounts (in thousands)			Number of Accounts Subject to a Performance Fee	Assets Subject to a Performance Fee (in thousands)
Robert Lawrence
Registered Investment Companies	—		—		—		—
Other Pooled Investment Vehicles	1		$ 379,808	⁽²⁾	1		$ 379,808	⁽²⁾
Other Accounts	—		—		—		—

Daniel Picard
Registered Investment Companies	2		$ 301,854		—		—
Other Pooled Investment Vehicles	—		—		—		—
Other Accounts	—		—		—		—

(1)The assets for one of the accounts, FS Series Trust, representsassets as of September30, 2019.

(2)The assets for the accounts FS KKR Capital Corp.,FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV,Corporate Capital Trust II,FS Energy & Power Fund and FSCredit Real Estate Income Trust representassets as of September30, 2019.

Potential Conflicts of Interest

FS Multi-Alternative Advisor, the GoldenTree Sub-Adviser, KKR Credit and StepStone Group Real Estate LP (“StepStone” and, collectively with the GoldenTree Sub-Adviser and KKR Credit, the “Sub-Advisers”) and certain of their affiliates may experience conflicts of interest in connection with the management of the Fund, including, but not limited to,the following:

•The managers, officers and other personnel of FS Multi-Alternative Advisor allocate their time as they deem appropriate between advising the Fund and managing and operating other investment activities and business activities in which they maybe involved;

•The personnel of the Sub-Advisers as they deem appropriate allocate their time between assisting FS Multi-Alternative Advisor in identifying investment opportunities and making investment recommendations or decisions and performing similar functions for other business activities in which they maybe involved;

•The principals of FS Multi-Alternative Advisor or the Sub-Advisers may serve as officers, paid advisors, directors or in comparable management functions for portfolio companies in which the Fund invests, and may receive compensation inconnection therewith;

•The Fund may now, or in the future, compete with certain affiliates for investments, subjecting FS Multi-Alternative Advisor and its affiliates to certain conflicts of interest in evaluating the suitability of investment opportunities and making or recommending acquisitions on theFund’s behalf;

•The Fund may compete with other funds or clients managed or advised by the Sub-Advisers or affiliates of the Sub-Advisers for investment opportunities, subjecting the Sub-Advisers and its affiliates to certain conflicts of interest in evaluating the suitability of investment opportunities and making or recommending acquisitions on theFund’s behalf;

•FS Multi-Alternative Advisor or the Sub-Advisers could be subject to a conflict of interest because of the varying compensation arrangements among their respective clients. For example, the Fund is not subject to incentive compensation while certain other funds of FS Multi-Alternative Advisor or the Sub-Advisers are, which could incentivize FS Multi-Alternative Advisor or the Sub-Advisers to favor such funds over the Fund whenallocating investments;

•GoldenTree Asset Management LP (“GoldenTree”) also has an interest in an entity that it has retained to provide various services for its structured products group, including the Fund. Specifically, GoldenTree, through an affiliated entity, has acquired a 20% membership interest in Clarity Solutions Group LLC, the remaining 80% of which is controlled by a former employeeof GoldenTree;

•The Sub-Advisers and their affiliates may now, or in the future, acquire securities in which theFund invests;

•Regardless of the quality of the assets acquired by the Fund, the services provided to the Fund or whether the Fund makes distributions to shareholders, FS Multi-Alternative Advisor and the Sub-Advisers will receive the management fee in connection with the management of theFund’s portfolio;

•From time to time, to the extent consistent with the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations promulgated thereunder, the Fund and other clients for which FS Multi-Alternative Advisor or the Sub-Advisers provide investment management services or carry on investment activities may make investments at different levels of an issuer’s capital structure or otherwise in different classes of an issuer’s securities, as may be permitted by law and subject to compliance with appropriate procedures. These investments may give rise to inherent conflicts of interest or perceived conflicts of interest between or among the various classes of securities that may be held by the Fund and such other clients and may make certain investment opportunities, which might otherwise be desirable, unavailable or impractical even if appropriate procedures are in place. Additionally, investment at different levels of an issuer’s capital structure or otherwise in different classes of an issuer’s securities by the Fund and other clients of FS Multi-Alternative Advisor or the Sub-Advisers may result in FS Multi-Alternative Advisor or the Sub-Advisers coming into possession of confidential or material, non-public information that would limit the ability of the Fund to acquire or dispose of investments (or of the Sub-Advisers to recommend to FS Multi-Alternative Advisor the acquisition or disposition of an investment), even if such acquisition or disposition would otherwise be desirable. This could constrain the Fund’s investment flexibility and result in the Fund being unable or restricted from initiating transactions in certain securities or liquidating or selling certain investments at a time when FS Multi-Alternative Advisor or the Sub-Advisers would otherwise takean action;

•FS Multi-Alternative Advisor, the Sub-Advisers and their respective affiliates may give advice and recommend securities to other clients, in accordance with the investment objectives and strategies of such other clients, which may differ from advice given to, or the timing or nature of the action taken with respect to, the Fund so long as it is their policy, to the extent practicable, to recommend for allocation and/or allocate investment opportunities to the Fund on a fair and equitable basis relative to their other clients, even though their investment objectives may overlap with those ofthe Fund;

•The Sub-Advisers and their affiliates may have existing business relationships or access to material non-public information that would prevent such Sub-Adviser from recommending, considering or consummating certain investment opportunities (including a disposition of an existing investment) that would otherwise fit within the Fund’s investment objective and strategies. Similarly, FS Multi-Alternative Advisor and its affiliates may have existing business relationships or access to material non-public information that would prevent it from considering, approving or consummating an investment opportunity (including a disposition of an existing investment) that would otherwise fit within the Fund’s investment objective and strategies. This could constrain the Fund’s investment flexibility and result in the Fund being unable or restricted from initiating transactions in certain securities or liquidating or selling certain investments at a time when FS Multi-Alternative Advisor or a Sub-Adviser would otherwise take suchan action;

•To the extent permitted by the 1940 Act and interpretations of the staff of the U.S. Securities and Exchange Commission (“SEC”), and subject to the allocation policies of FS Multi-Alternative Advisor, the Sub-Advisers and any of their respective affiliates, as applicable, FS Multi-Alternative Advisor, the Sub-Advisers and any of their respective affiliates may deem it appropriate for the Fund and one or more other investment accounts managed by FS Multi-Alternative Advisor, the Sub-Advisers or any of their respective affiliates to participate in an investment opportunity. The Fund intends to seek exemptive relief from the SEC to engage in privately negotiated co-investment transactions with certain affiliates of FS Multi-Alternative Advisor and KKR Credit and GoldenTree. However, there can be no assurance that the Fund will obtain such exemptive relief. Any of these co-investment opportunities may give rise to conflicts of interest or perceived conflicts of interest among the Fund and the other participating accounts. To mitigate these conflicts, FS Multi-Alternative Advisor and/or KKR Credit and GoldenTree, as applicable, will seek to execute such transactions for all of the participating investment accounts, including the Fund, on a fair and equitable basis and in accordance with their respective allocation policies, taking into account such factors as the relative amounts of capital available for new investments and the investment programs and portfolio positions of the Fund, the clients for which participation is appropriate and any other factors deemedappropriate; and

•The 1940 Act prohibits certain “joint” transactions with certain of the Fund’s affiliates, which in certain circumstances could include investments in the same portfolio company (whether at the same or different times), without the prior approval of the SEC. If a person, directly or indirectly, acquires more than 5% of the voting securities of the Fund, FS Multi-Alternative Advisor or the Sub-Advisers (or either of their respective controlling entities), the Fund will be prohibited from buying any securities or other property from or selling any securities or other property to such person or certain of that person’s affiliates, or entering into joint transactions with such persons, absent the availability of an exemption or prior approval of the SEC. Similar restrictions limit the Fund’s ability to transact business with its officers or trustees or their affiliates. The SEC has interpreted the 1940 Act rules governing transactions with affiliates to prohibit certain “joint transactions” involving entities that share a common investment adviser. As a result of these restrictions, the scope of investment opportunities that would otherwise be available to the Fund maybe limited.

(a)(3)FS Multi-Alternative Advisor’s investment personnel are not employed by the Fund and receive no direct compensation from the Fund in connection with their investmentmanagement activities.

Consistent with FS Investments’ integrated culture, FS Investments has one firm-wide compensation and incentive structure, which covers investment personnel who render services to the Fund on behalf of FS Multi-Alternative Advisor. FS Investments’ compensation structure is designed to align the interests of the investment personnel serving the Fund with those of shareholders and to give everyone a direct financial incentive to ensure that all of FS Investments’ resources, knowledge and relationships are utilized to maximize risk-adjusted returns foreach strategy.

Each of FS Investments’ senior executives, including each of the investment personnel who render services to the Fund on behalf of FS Multi-Alternative Advisor, receives a base salary and is eligible for adiscretionary bonus.

All final compensation decisions are made by the management committee of FS Investments based on input from managers. Compensation and other incentives are not formulaic, but rather are judgment and merit driven, and are determined based on a combination of overall firm performance, individual contribution and performance and relevant market and competitive compensation practices forother businesses.

(a)(4)The following table shows the dollar range of equity securities in the Fund beneficially owned by each member of FS Multi-Alternative Advisor’s investment committee as of October 31, 2019, based on the NAV per Class I common share of the Fund of $12.67 on October31, 2019.


Name of Investment Committee Member		Dollar Range of Equity Securities in the Fund⁽¹⁾
Brian Gerson		None
Michael Kelly		None
Robert Haas		None
Robert Lawrence		None
Daniel Picard		None

(1)Dollar ranges are as follows: None, $1–$10,000, $10,001–$50,000, $50,001–$100,000, $100,001–$500,000, $500,001–$1,000,000 orOver $1,000,000.

(b)Not applicable.

Item 9.Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

No such purchases were made by or on behalf of the Fund during the period covered by this annual report onForm N-CSR.

Item 10.Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which the Fund’s shareholders may recommend nominees to the Fund’s board of trustees during the period covered by this annual report included in Item 1 of thisForm N-CSR.

Item 11.Controls and Procedures.

(a)The Fund’s principal executive officer and principal financial officer have evaluated the Fund’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act) as of a date within 90 days of the filing date of this annual report on Form N-CSR and have concluded that the Fund’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the Fund in this annual report on Form N-CSR was recorded, processed, summarized andreported timely.

(b)There was no change in the Fund’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the period covered by this annual report on Form N-CSR that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control overfinancial reporting.

Item 12.Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

(a)Not applicable.

(b)Not applicable.

Item 13.Exhibits.

(a)(1)The Fund’s Code of Business Conduct and Ethics is attached hereto in response toItem 2(f).

(a)(2)The certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Rule 30a-2(a) under the 1940 Act areattached hereto.

(a)(3)Not applicable.

(a)(4)Not applicable.

(a)(5)The Proxy Voting Policies and Procedures of FS Multi-Alternative Advisor are attached hereto in response toItem 7.

(b)The certifications of the Fund’s Chief Executive Officer and Chief Financial Officer required by Rule 30a-2(b) under the 1940 Act areattached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Actof 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.


	FS Multi-Alternative Income Fund

	By:	/s/Michael C. Forman
		Michael C. Forman
		President and Chief Executive Officer
		Date: December26, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on thedates indicated.


	By:	/s/Michael C. Forman
		Michael C. Forman
		President and Chief Executive Officer
		(Principal Executive Officer)
		Date: December 26, 2019


	By:	/s/Edward T. Gallivan, Jr.
		Edward T. Gallivan, Jr.
		Chief Financial Officer
		(Principal Financial Officer)
		Date: December26, 2019

FS Multi-Alternative Income Fund (FNNAX) N-CSRCertified annual shareholder report (management investment company)