As filed with the Securities and Exchange Commission on November 16, 2021
Securities Act File No. 333-259294
Investment Company Act File No. 811-05012
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
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Registration Statement Under the Securities Act of 1933
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Pre-Effective Amendment No. 1
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Post-Effective Amendment No.
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☐
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and/or
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Registration Statement Under the Investment Company Act of 1940
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Amendment No. 15
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Credit Suisse Asset Management Income Fund, Inc.
(Exact Name of Registrant as Specified In Charter)
Eleven
Madison Avenue
New York, New York 10010
(Address of Principal Executive Offices)
Registrants Telephone Number, including Area Code:
212-325-2000
John G. Popp
Credit Suisse Asset Management Income Fund, Inc.
Eleven Madison Avenue
New York, New York 10010
(Name and Address of Agent For Service)
Copies of
information to:
Barry P. Barbash
Justin L. Browder
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New
York, New York 10019
Approximate Date of Commencement of Proposed Public Offering: From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following
box ☐
If any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the
Securities Act of 1933 (Securities Act), other than securities offered in connection with a dividend reinvestment plan, check the following box ☒
If this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment
thereto, check the following box ☒
If this Form is a registration statement pursuant to General Instruction B or a post-effective
amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box ☐
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box ☐
It is proposed that this filing will
become effective (check appropriate box):
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when declared effective pursuant to Section 8(c) of the Securities Act
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If appropriate, check the following box:
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This [post-effective] amendment designates a new effective date for a previously filed [post-effective
amendment] [registration statement].
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This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: .
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This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the
Securities Act registration statement number of the earlier effective registration statement for the same offering is: .
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This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the
Securities Act registration statement number of the earlier effective registration statement for the same offering is: .
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Check each box that appropriately characterizes the Registrant:
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Registered Closed-End Fund
(closed-end company that is registered under the Investment Company Act of 1940 (the Investment Company Act)).
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Business Development Company (closed-end company that intends or has
elected to be regulated as a business development company under the Investment Company Act).
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Interval Fund (Registered Closed-End Fund or a Business Development
Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act).
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A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form).
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Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act).
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Emerging Growth Company (as defined by Rule 12b-2 under the Securities
and Exchange Act of 1934).
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If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
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New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months
preceding this filing).
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-2-
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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Title of Securities Being Registered
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Amount Being
Registered(1)
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Proposed
Maximum
Offering Price Per
Share
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Proposed
Maximum
Aggregate
Offering Price
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Amount of
Registration
Fee(2)
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Common Stock, $0.001 par value per share
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$250,000,000
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$23,175
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(1)
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There are being registered hereunder a presently indeterminate number of shares of common stock to be offered
on an immediate, continuous or delayed basis.
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(2)
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Amount represents $109.10 previously paid to register $1,000,000 of Common Stock, plus $23,065.90 to
register the additional $249,000,000 of Common Stock registered hereby.
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THE REGISTRANT HEREBY AMENDS THIS
REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
-3-
The information in this Prospectus is not complete and may be changed. The Fund may not
sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any state where
the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 16, 2021
Preliminary Base Prospectus
$250,000,000
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
Shares of Common Stock
Credit Suisse
Asset Management Income Fund, Inc. (Fund, we, us or our) is a diversified, closed-end management investment company with a leveraged capital structure. The
Funds investment objective is current income consistent with the preservation of capital.
We may offer, from time to time, in one or more
offerings, our shares of common stock, par value $.001 per share (Shares). Shares may be offered at prices and on terms to be set forth in one or more supplements to this Prospectus (each, a Prospectus Supplement). You should
read this Prospectus and the applicable Prospectus Supplement carefully before your invest in our Shares.
Our Shares may be offered directly to one or
more purchasers, through agents designated from time to time by us, or to or through underwriters or dealers. The Prospectus Supplement relating to the offering will identify any agents or underwriters involved in the sale of our Shares, and will
set forth any applicable purchase price, fee, commission or discount arrangement between us and our agents or underwriters, or among our underwriters, or the basis upon which such amount may be calculated. We may not sell any of our Shares through
agents, underwriters or dealers without delivery of a Prospectus Supplement describing the method and terms of the particular offering of our Shares.
Our Shares are listed on the NYSE American under the symbol CIK. The last reported sale price of our Shares, as reported by the NYSE American on
November 15, 2021 was $3.52 per Share. The net asset value of our Shares at the close of business on November 15, 2021, was $3.44 per Share.
Investment in the Shares involves certain risks and special considerations, including risks of leverage and of investing in lower-rated securities
(commonly known as junk bonds). For a discussion of these and other risks, see Risks and Special Considerations.
Shares of
closed-end investment companies frequently trade at a discount to their net asset value. If the Funds Shares trade at a discount to its net asset value, the risk of loss may increase for purchasers in a
public offering. See Risks and Special Considerations.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
This Prospectus, together with any Prospectus Supplement, sets forth concisely the information about the Fund that a prospective investor
should know before investing. You should read this Prospectus and applicable Prospectus Supplement, which contain important information, before deciding whether to invest in the Shares. You should retain the Prospectus and Prospectus Supplement for
future reference. A Statement of Additional Information (SAI), dated November [●], 2021, containing additional information about the Fund, has been filed with the Securities and Exchange Commission (SEC) and is
incorporated by reference in its entirety into this Prospectus. A copy of the SAI can be obtained without charge by writing to the Fund at c/o Credit Suisse Asset Management,
i
LLC, Eleven Madison Avenue, New York, New York 10010, by calling
1-800-293-1232, or from the SECs website at http://www.sec.gov. Copies of the Funds Annual Report and Semi-Annual
Report and other information about the Fund may be obtained upon request by writing to the Fund, by calling 1-800-293-1232, or by
visiting the Funds website at www.credit-suisse.com/us/funds.
Our Shares do not represent a deposit or obligation of, and are not guaranteed or
endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
Prospectus dated November [●], 2021
ii
TABLE OF CONTENTS
You should rely only on the information contained in, or incorporated by reference into, this Prospectus and any
related Prospectus Supplement in making your investment decisions. The Fund has not authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The
Fund is not making an offer to sell the Shares in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this Prospectus and any Prospectus Supplement is accurate only as of the dates on their covers.
The Funds business, financial condition and prospects may have changed since the date of its description in this Prospectus or the date of its description in any Prospectus Supplement.
PROSPECTUS SUMMARY
The following information is only a summary. You should consider the more detailed information contained in the Prospectus and in any
related Prospectus Supplement and in the SAI before purchasing Shares, especially the information under Risks and Special Considerations on page 19 of the Prospectus.
The Fund. The Fund is a diversified, closed-end management investment company.
The Fund commenced operations on March 23, 1987, following its initial public offering. See The Fund.
The
Funds Shares are listed for trading on the NYSE American under the symbol CIK. As of November 15, 2021, the net assets of the Fund were $179,889,329 and the Fund had outstanding 52,330,295 Shares. The last reported sales price
of the Funds Shares, as reported by the NYSE American on November 15, 2021 was $3.52 per Share. The net asset value (NAV) of the Funds Shares at the close of business on November 15, 2021 was $3.44 per Share. See
Description of Shares.
The Offering. We may offer, from time to time, in one or more offerings, up to
$250,000,000 of our Shares on terms to be determined at the time of the offering. The Shares may be offered at prices and on terms to be set forth in one or more Prospectus Supplements. You should read this Prospectus and the
applicable Prospectus Supplement carefully before you invest in our Shares. Our Shares may be offered directly to one or more purchasers, through agents designated from time to time by us, or to or through underwriters or dealers. The Prospectus
Supplement relating to the offering will identify any agents, underwriters or dealers involved in the sale of our Shares, and will set forth any applicable purchase price, fee, commission or discount arrangement between us and our agents or
underwriters, or among our underwriters, or the basis upon which such amount may be calculated. See Plan of Distribution. We may not sell any of our Shares through agents, underwriters or dealers without delivery of a Prospectus
Supplement describing the method and terms of the particular offering of our Shares.
Use of Proceeds. We intend to use the
net proceeds from the sale of our Shares primarily to invest in accordance with our investment objectives and policies. Proceeds will be invested within approximately 30 days of receipt by the Fund. See Use of Proceeds.
Investment Objective and Principal Investment Policies. For a
discussion of the Funds investment objective and principal investment policies, please refer to the section of the Funds most recent annual report
on Form N-CSR for the fiscal year ended December 31, 2020 filed on February 25, 2021 entitled Fund Investment Objective, Policies and RisksInvestment Objective and Policies,
which is incorporated by reference herein.
Investment Restrictions. The Fund has certain investment
restrictions that may not be changed without approval by a majority of the Funds outstanding voting securities. These restrictions concern issuance of senior securities, borrowing, lending, concentration, diversification and other matters. See
Investment Restrictions.
Use of Leverage. The Fund currently utilizes and in the future expects to continue to
utilize leverage through borrowings, including the issuance of debt securities, and derivatives, reverse repurchase agreements and dollar roll transactions, which have the effect of leverage. The Fund may use leverage up to 33
1/3% of its total assets (including the amount obtained through leverage). The Fund generally will not utilize leverage if it anticipates that the Funds leveraged capital structure would result in a lower return to shareholders than that
obtainable over time with an unleveraged capital structure. There can be no guarantee that the Fund will be able to accurately predict when the use of leverage will be beneficial. Use of leverage creates an opportunity for increased income and
capital appreciation for shareholders but, at the same time, creates special risks, and there can be no assurance that a leveraging strategy will be successful during any period in which it is employed.
As provided in the Investment Company Act of 1940, as amended (the 1940 Act), and subject to certain exceptions, the Fund may
issue debt with the condition that immediately after issuance the value of its total assets, less ordinary course liabilities, exceeds 300% of the amount of the debt outstanding. Thus, as noted above, the Fund may use leverage in the form of
borrowings in an amount up to 33 1/3% of the Funds total assets (including the proceeds of such leverage). The total leverage of the Fund in connection with the Credit Agreement (as defined below) is currently expected to range between 20% and
30% of the Funds total assets. The Fund seeks a leverage
1
ratio, based on a variety of factors including market conditions and the market outlook of Credit Suisse Asset
Management, LLC (Credit Suisse), where the rate of return, net of applicable Fund expenses, on the Funds investment portfolio investments purchased with leverage exceeds the costs associated with such leverage. The Fund does not
currently intend to issue or register preferred shares or commercial paper.
The Fund has a line of credit provided by State Street
Bank and Trust Company (State Street). The Fund makes use of the line of credit, which is subject to annual renewal in accordance with the agreement, primarily to leverage its investment portfolio (the Credit Agreement).
Under the Credit Agreement, the Fund may borrow the lesser of: a) $85,000,000; b) an amount that is no greater than 331/3% of the
Funds total assets minus the sum of liabilities (other than aggregate indebtedness constituting leverage); and c) the Borrowing Base as defined in the Credit Agreement. The Funds borrowings under the Credit Agreement at
June 30, 2021 equaled $53,000,000, which was approximately 22% of the Funds total assets (including the proceeds of such leverage) as of such date. The Funds asset coverage ratio as of June 30, 2021 was
446%.
Following the completion of an offering, the Fund may increase the amount of leverage outstanding. The Fund may engage in
additional borrowings in order to maintain the Funds desired leverage ratio. Leverage creates a greater risk of loss, as well as a potential for more gain, for the common shares than if leverage were not used. Interest on borrowings may be at
a fixed or floating rate and generally will be based on short-term rates. The costs associated with the Funds use of leverage, including the issuance of such leverage and the payment of dividends or interest on such leverage, will be borne
entirely by the holders of common shares. As long as the rate of return, net of applicable Fund expenses, on the Funds investment portfolio investments purchased with leverage exceeds the costs associated with such leverage, the Fund will
generate more return or income than will be needed to pay such costs. In this event, the excess will be available to pay higher dividends to holders of common shares. Conversely, if the Funds return on such assets is less than the cost of
leverage and other Fund expenses, the return to the holders of the common shares will diminish. To the extent that the Fund uses leverage, the NAV and market price of the common shares and the yield to holders of common shares will be more volatile.
The Funds leveraging strategy may not be successful. See Use of Leverage and Risks and Special Considerations.
Principal and General Risks. Investing in the Fund involves certain risks.
For a discussion of the principal and general risks of investing in the Fund, please refer to the section
of the Funds most recent annual report on Form N-CSR for the fiscal year ended December 31, 2020 filed on February 25, 2021 entitled Fund Investment Objectives, Policies and
RisksRisk Factors, which is incorporated by reference herein. You should carefully consider those risks, along with other risks relating to investments in the Fund which are described in more detail under Risks and Special
Considerations beginning on page 19 of this Prospectus.
Information Regarding the Investment Adviser. Credit Suisse, the
Funds investment adviser, is part of the asset management business of Credit Suisse Group AG, one of the worlds leading banks. Credit Suisse serves as the Funds investment adviser with respect to all investments and is responsible
for making all investment decisions. Credit Suisse receives from the Fund, as compensation for its advisory services, a fee, computed weekly and payable quarterly at an annual rate of 0.50% of an average weekly base amount which, with respect to
each quarter, is the average of the lower of (i) the stock price (market value) of the Funds outstanding shares and (ii) the Funds net assets, in each case determined as of the last trading day for each week
during the relevant quarter. The Investment Adviser is located at Eleven Madison Avenue, New York, New York 10010. See Management of the FundInvestment Adviser.
Potential Conflicts of Interest. If the Investment Advisers advisory fee, as described above, is calculated based on the net
assets of the Fund, the Investment Adviser will benefit from the increase in Fund assets that will result from offerings of Shares. It is not possible to state precisely the amount of additional compensation that the Investment Adviser might receive
as a result of the offerings because it is not known how many Shares will be sold because the proceeds of offerings will be invested in additional portfolio securities, which will fluctuate in value.
Portfolio Managers. The Credit Suisse Credit Investments Group (CIG) is responsible for the
day-to-day portfolio management of the Fund. The current team members responsible for managing the fund are Thomas J. Flannery, David J. Mechlin, Joshua Shedroff and
Wing Chan. Thomas J. Flannery, David J. Mechlin, Joshua Shedroff and Wing Chan are the portfolio managers of the team sharing in the day-to-day responsibilities of
2
portfolio management, including overall industry, credit, duration, yield curve positioning and security
selection and industry and issuer allocations. See Management of the FundPortfolio Management.
Administrator.
State Street serves as the Funds administrator. The Fund pays State Street, for administrative services, a fee, exclusive of out-of-pocket expenses, calculated in
total for all the funds advised by Credit Suisse that are administered or co-administered by State Street and allocated based upon the relative average net assets of each fund, subject to an annual minimum
fee. See Management of the FundAdministrator.
Custodian and Transfer Agent. State Street acts as the Funds
custodian pursuant to a custody agreement. Computershare Trust Company, N.A. (Computershare), acts as the Funds transfer agent and dividend-paying agent. See Custodian, Transfer Agent and Dividend-Paying Agent.
Dividends and Distributions. The Fund declares and pays dividends on a monthly basis. Distributions of net realized capital gains, if
any, are declared and paid at least annually. See Dividends and Distributions and Dividend Reinvestment and Cash Purchase Plan.
Dividend Reinvestment and Cash Purchase Plan. The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the Plan) to
its common stockholders. Computershare acts as Plan Agent for stockholders in administering the Plan. Participation in the Plan is voluntary. For shareholders participating in the Plan, all dividend and capital gain distributions are reinvested in
additional Shares of the Fund either purchased on the open market, or issued by the Fund if the Shares are trading at or above their NAV. A shareholder whose Shares are held through a bank, broker or nominee should contact such bank, broker or
nominee to confirm that they are able to participate in the Plan. See Dividends and Distributions and Dividend Reinvestment and Cash Purchase Plan.
Taxation. Tax considerations for an investor in the Fund are summarized under Federal Income Taxation.
Repurchase of Shares. The Fund may, from time to time, take action to attempt to reduce or eliminate any market value discount from
NAV. The Board, in consultation with Credit Suisse, will periodically review the possibility of open market repurchases or tender offers for Shares of the Fund. There can be no assurance that the Board will, in fact, decide to undertake either of
these actions or, if undertaken, that such repurchases or tender offers will result in the Shares trading at a price which is equal to or close to NAV. The Fund may borrow to finance such repurchases or tenders. See Repurchase of Shares.
3
SUMMARY OF FUND EXPENSES
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Shareholder Transaction Expenses
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Sales Load (as a percentage of offering price)(1)
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up to 3.00%
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Offering Expenses (as a percentage of offering price)(1)
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0.15%
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Dividend Reinvestment Plan Fees (per sale or per voluntary cash payment transaction fee)
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$5.00(2)
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Annual Fund Operating Expenses (as a percentage of average net assets attributable to the
Funds common shares)
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Management Fees(3)
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0.45%
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Interest Expense on Borrowed Funds(4)
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0.50%
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Other Expenses
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0.30%
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Total Annual Operating Expenses
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1.25%
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(1)
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If the Shares are sold to or through underwriters, the Prospectus Supplement will set forth any applicable
sales load, which may be lower than 3.00%, and the estimated offering expenses.
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(2)
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The Fund bears ongoing expenses associated with the Plan which are included in Other Expenses.
There is no service fee payable by Plan participants for dividend reinvestments; however, shareholders are subject to other transaction costs associated with the Plan. Actual costs will vary for each participant depending on the return and number of
transactions made. For Plan participants that elect to receive voluntary cash payments, Plan participants must pay a service fee of $5.00 per transaction. Plan participants will also be charged a pro rata share of the brokerage commissions for all
open market purchases ($0.03 per share as of October 2021). In addition, if a Plan participant elects by written notice to the Plan administrator to have the plan administrator sell part or all of the shares held by the Plan administrator in the
participants account and remit the proceeds to the participant, the participant will also be charged a service fee of $5.00 for each sale and brokerage commissions of $0.03 per share (as of October 2021). See Dividend Reinvestment and
Cash Purchase Plan.
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(3)
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See Management of the FundInvestment Adviser. Credit Suisse receives from the Fund, as
compensation for its advisory services, a fee, computed weekly and payable quarterly at an annual rate of 0.50% of an average weekly base amount which, with respect to each quarter, is the average of the lower of (i) the stock price (market
value) of the Funds outstanding shares and (ii) the Funds net assets, in each case determined as of the last trading day for each week during the relevant quarter.
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(4)
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The Fund may use leverage through borrowings, the costs of which are borne by holders of Shares of the Fund.
The Fund currently borrows under the Credit Agreement.
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Example:
An investor would directly or indirectly pay the following expenses on a $1,000 investment, assuming a 5% annual return throughout the period.
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1 Year
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3 Years
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5 Years
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10 Years
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Total Expenses Incurred
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$
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44
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$
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70
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$
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98
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$
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178
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The above table and example are intended to assist investors in understanding the various costs and expenses directly or
indirectly associated with investing in Shares of the Fund. The Example assumes that all dividends and other distributions are reinvested at net asset value and that the percentage amounts listed in the table above under Total Annual
Operating Expenses remain the same in the years shown. The above table and example and the assumption in the example of a 5% annual return are required by regulations of the SEC that are applicable to all investment companies; the assumed 5% annual
return is not a prediction of, and does not represent, the projected or actual performance of the Funds Shares. For more complete descriptions of certain of the Funds costs and expenses, see Management of the Fund and
Expenses. In addition, while the example assumes reinvestment of all dividends and distributions at NAV, participants in the Funds dividend reinvestment and cash purchase plan may receive Shares purchased or issued at a price or
value different from NAV. See Dividends and Distributions; Dividend Reinvestment and Cash Purchase Plan.
The example should not be
considered a representation of past or future expenses, and the Funds actual expenses may be greater than or less than those shown. Moreover, the Funds actual rate of return may be greater or less than the hypothetical 5% return shown in
the example.
4
FINANCIAL HIGHLIGHTS
The following financial highlights table is intended to help you understand the Funds financial performance. Certain information reflects financial
results from a single Fund share. The information in the financial highlights for the fiscal year ended 2020 has been audited by PricewaterhouseCoopers LLP, independent registered public accounting firm, whose report appears in
the Funds Annual Report to Shareholders. The financial information for the period ended June 30, 2021 is unaudited. The information in the financial highlights for the fiscal years ended 2016, 2017, 2018 and 2019 was audited by
KPMG LLP, the Funds former independent registered public accounting firm. The Funds financial statements are included in the Funds Annual and Semi-Annual Reports and are incorporated by reference into the Prospectus and the
SAI. The Annual and Semi-Annual Reports may be obtained without charge by calling 1-800-293-1232 or visiting the Funds
website, www.credit-suisse.com/us/funds.
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For the Six
Months Ended
June 30, 2021
(unaudited)
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For the year ended December 31,
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2020
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2019
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2018
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2017
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2016
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Per share operating performance
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Net asset value, beginning of year
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$
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3.42
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$
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3.48
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$
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3.21
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$
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3.58
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$
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3.48
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$
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3.21
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INVESTMENT OPERATIONS
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Net investment income1
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0.12
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0.27
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0.26
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0.27
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0.24
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0.25
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Net gain (loss) on investments, foreign currency transactions and forward foreign currency
contracts (both realized and unrealized)
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0.11
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(0.06
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)
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0.28
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(0.37
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)
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0.12
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0.28
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|
Total from investment activities
|
|
|
0.23
|
|
|
|
0.21
|
|
|
|
0.54
|
|
|
|
(0.10
|
)
|
|
|
0.36
|
|
|
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS DIVIDENDS AND DISTRIBUTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
|
(0.14
|
)
|
|
|
(0.27
|
)
|
|
|
(0.27
|
)
|
|
|
(0.27
|
)
|
|
|
(0.24
|
)
|
|
|
(0.25
|
)
|
Return of capital
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)2
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.14
|
)
|
|
|
(0.27
|
)
|
|
|
(0.27
|
)
|
|
|
(0.27
|
)
|
|
|
(0.26
|
)
|
|
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
3.51
|
|
|
$
|
3.42
|
|
|
$
|
3.48
|
|
|
$
|
3.21
|
|
|
$
|
3.58
|
|
|
$
|
3.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share market value, end of year
|
|
$
|
3.52
|
|
|
$
|
3.15
|
|
|
$
|
3.22
|
|
|
$
|
2.77
|
|
|
$
|
3.31
|
|
|
$
|
3.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENT RETURN3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value
|
|
|
6.80
|
%
|
|
|
8.08
|
%
|
|
|
18.17
|
%
|
|
|
(2.39
|
)%
|
|
|
11.34
|
%
|
|
|
18.64
|
%
|
Market value
|
|
|
16.29
|
%
|
|
|
7.58
|
%
|
|
|
26.71
|
%
|
|
|
(8.89
|
)%
|
|
|
13.37
|
%
|
|
|
24.39
|
%
|
|
|
|
|
|
|
|
RATIOS AND SUPPLEMENTAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000s omitted)
|
|
$
|
183,461
|
|
|
$
|
178,641
|
|
|
$
|
182,030
|
|
|
$
|
167,897
|
|
|
$
|
187,472
|
|
|
$
|
182,019
|
|
Ratio of net expenses to average net assets
|
|
|
1.03
|
%4
|
|
|
1.25
|
%
|
|
|
1.92
|
%
|
|
|
1.82
|
%
|
|
|
1.06
|
%
|
|
|
0.74
|
%
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six
Months Ended
June 30, 2021
(unaudited)
|
|
|
For the year ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Ratio of net expenses to average net assets excluding interest expense
|
|
|
0.77
|
%4
|
|
|
0.75
|
%
|
|
|
0.78
|
%
|
|
|
0.78
|
%
|
|
|
0.90
|
%
|
|
|
0.74
|
%
|
Ratio of net investment income to average net assets
|
|
|
7.09
|
%4
|
|
|
8.55
|
%
|
|
|
7.59
|
%
|
|
|
7.83
|
%
|
|
|
6.75
|
%
|
|
|
7.66
|
%
|
Asset Coverage per $1,000 of Indebtedness
|
|
$
|
4,462
|
|
|
$
|
4,162
|
|
|
$
|
4,021
|
|
|
$
|
3,373
|
|
|
$
|
5,075
|
|
|
$
|
|
|
Portfolio turnover rate5
|
|
|
28
|
%
|
|
|
36
|
%
|
|
|
35
|
%
|
|
|
39
|
%
|
|
|
64
|
%
|
|
|
53
|
%
|
1
|
Per share information is calculated using the average shares outstanding method.
|
2
|
This amount represents less than $(0.01) per share.
|
3
|
Total investment return at net asset value is based on the change in the net asset value of Fund shares and
assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Funds dividend reinvestment program. Total investment return at market value is based on the change in the market price at which the Funds
shares traded on the stock exchange during the period and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Funds dividend reinvestment program. Because the Funds shares trade in the stock
market based on investor demand, the Fund may trade at a price higher or lower than its NAV. Therefore, returns are calculated based on NAV and share price.
|
5
|
Portfolio turnover is calculated by dividing the lesser of total purchases or sales of portfolio securities for
the reporting period by the monthly average of portfolio securities owned during the reporting period. Excluded from both the numerator and denominator are amounts relating to derivatives and securities whose maturities or expiration dates at the
time of acquisition were one year or less.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Per share operating performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
3.62
|
|
|
$
|
3.84
|
|
|
$
|
3.80
|
|
|
$
|
3.60
|
|
|
$
|
3.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
0.25
|
|
|
|
0.25
|
|
|
|
0.28
|
|
|
|
0.32
|
|
|
|
0.30
|
|
Net gain (loss) on investments and foreign currency related items (both realized and
unrealized)
|
|
|
(0.40
|
)
|
|
|
(0.19
|
)
|
|
|
0.05
|
|
|
|
0.20
|
|
|
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment activities
|
|
|
(0.15
|
)
|
|
|
0.06
|
|
|
|
0.33
|
|
|
|
0.52
|
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LESS DIVIDENDS AND DISTRIBUTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from net investment income
|
|
|
(0.26
|
)
|
|
|
(0.27
|
)
|
|
|
(0.29
|
)
|
|
|
(0.32
|
)
|
|
|
(0.29
|
)
|
Return of capital
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions
|
|
|
(0.26
|
)
|
|
|
(0.28
|
)
|
|
|
(0.30
|
)
|
|
|
(0.32
|
)
|
|
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL SHARE TRANSACTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Increase to net asset value due to shares issued through at-the-market offerings
|
|
|
|
|
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
3.21
|
|
|
$
|
3.62
|
|
|
$
|
3.84
|
|
|
$
|
3.80
|
|
|
$
|
3.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share market value, end of year
|
|
$
|
2.78
|
|
|
$
|
3.29
|
|
|
$
|
3.56
|
|
|
$
|
4.03
|
|
|
$
|
3.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENT RETURN1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value
|
|
|
(3.35
|
)%
|
|
|
1.92
|
%
|
|
|
9.34
|
%
|
|
|
14.95
|
%
|
|
|
5.35
|
%
|
Market value
|
|
|
(7.90
|
)%
|
|
|
(0.09
|
)%
|
|
|
(4.42
|
)%
|
|
|
20.24
|
%
|
|
|
11.02
|
%
|
RATIOS AND SUPPLEMENTAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of year (000s omitted)
|
|
$
|
167,848
|
|
|
$
|
189,343
|
|
|
$
|
200,780
|
|
|
$
|
190,673
|
|
|
$
|
180,011
|
|
Ratio of expenses to average net assets
|
|
|
0.66
|
%
|
|
|
0.71
|
%
|
|
|
0.76
|
%
|
|
|
0.75
|
%
|
|
|
0.73
|
%
|
Ratio of expenses to average net assets excluding interest expense
|
|
|
0.66
|
%
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
|
|
|
%
|
Ratio of net investment income to average net assets
|
|
|
7.21
|
%
|
|
|
6.60
|
%
|
|
|
7.40
|
%
|
|
|
8.49
|
%
|
|
|
8.09
|
%
|
Portfolio turnover rate
|
|
|
51
|
%
|
|
|
67
|
%
|
|
|
69
|
%
|
|
|
67
|
%
|
|
|
57
|
%
|
1
|
Total investment return at net asset value is based on changes in the net asset value of Fund shares and
assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Funds dividend reinvestment program. Total investment return at market value is based on changes in the market price at which the Funds shares
traded on the stock exchange during the period and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Funds dividend reinvestment program. Because the Funds shares trade in the stock market
based on investor demand, the Fund may trade at a price higher or lower than its NAV. Therefore, returns are calculated based on share price and NAV.
|
TRADING AND NET ASSET VALUE INFORMATION
In the past, the Funds common shares have traded at both a premium and at a discount in relation to NAV. Shares of
closed-end investment companies such as the Fund frequently trade at a discount from NAV. See Closed-End Fund Structure.
The Funds Shares are listed and traded on the NYSE American. The average weekly trading volume of the Shares on the NYSE American during the twelve
months ended September 30, 2021 was 5,526,766 shares. The following table shows for the quarters indicated: (1) the high and low sale price of the Shares at the close of trading on the NYSE
American; (2) the high and low NAV per Share; and (3) the high and low premium or discount to NAV at which the Funds Shares were trading at the close of trading (as a percentage of NAV).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price
|
|
Net Asset Value
|
|
Premium/(Discount) To Net
Asset Value
|
Fiscal Quarter Ended
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
March 31, 2019
|
|
$3.11
|
|
$2.79
|
|
$3.40
|
|
$3.21
|
|
|
(8.68)%
|
|
|
|
(13.08)%
|
|
June 30, 2019
|
|
$3.17
|
|
$2.98
|
|
$3.47
|
|
$3.37
|
|
|
(8.65)%
|
|
|
|
(11.57)%
|
|
September 30, 2019
|
|
$3.18
|
|
$3.11
|
|
$3.48
|
|
$3.41
|
|
|
(8.62)%
|
|
|
|
(8.80)%
|
|
December 31, 2019
|
|
$3.30
|
|
$3.11
|
|
$3.47
|
|
$3.41
|
|
|
(4.90)%
|
|
|
|
(8.80)%
|
|
March 31, 2020
|
|
$3.43
|
|
$2.07
|
|
$3.48
|
|
$2.52
|
|
|
(1.44)%
|
|
|
|
(17.86)%
|
|
June 30, 2020
|
|
$2.81
|
|
$2.23
|
|
$3.14
|
|
$2.64
|
|
|
(10.51)%
|
|
|
|
(15.53)%
|
|
September 30, 2020
|
|
$2.96
|
|
$2.68
|
|
$3.24
|
|
$3.12
|
|
|
(8.64)%
|
|
|
|
(14.10)%
|
|
December 31, 2020
|
|
$3.22
|
|
$2.91
|
|
$3.40
|
|
$3.25
|
|
|
(5.44)%
|
|
|
|
(10.46)%
|
|
March 31, 2021
|
|
$3.44
|
|
$3.11
|
|
$3.47
|
|
$3.42
|
|
|
(0.86)%
|
|
|
|
(9.06)%
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price
|
|
Net Asset Value
|
|
Premium/(Discount) To Net
Asset Value
|
Fiscal Quarter Ended
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
June 30, 2021
|
|
$3.63
|
|
$3.33
|
|
$3.50
|
|
$3.48
|
|
|
3.71%
|
|
|
|
(4.31)%
|
|
September 30, 2021
|
|
$3.54
|
|
$3.38
|
|
$3.49
|
|
$3.48
|
|
|
1.43%
|
|
|
|
(2.87)%
|
|
On November 15, 2021, the per Share net asset value was $3.44 and the per Share market price was $3.52,
representing a 2.33% premium over such net asset value.
USE OF PROCEEDS
The Fund intends to invest the net proceeds of offerings in accordance with its investment objective and policies. It is anticipated that the Fund will be
able to invest substantially all of the net proceeds of an offering in accordance with its investment objective and policies within approximately 30 days after the completion of the offering. Pending such investment, the Fund anticipates investing
the proceeds in short-term securities issued by the U.S. government or its agencies or instrumentalities or in high quality, short-term or long-term debt obligations or money market instruments. See Investment Objective and
Investment Policies.
THE FUND
The Fund was organized as a corporation under the laws of the State of Maryland on February 10, 1987, and it is registered under the 1940 Act. The Fund
has been engaged in business as a diversified, closed-end management investment company since March 23, 1987, when it completed an initial public offering of shares of common stock, par value $0.001 per
share. The Funds common shares are traded on the NYSE American under the symbol CIK.
The Funds principal office is located
at Eleven Madison Avenue, New York, New York, 10010 and its telephone number is 1-800-295-1232.
The following provides information about the Funds outstanding shares as of September 30, 2021:
|
|
|
|
|
|
|
Title of Class
|
|
Amount Authorized
|
|
Amount Held by the Fund
or for Its Account
|
|
Exclusive of Amount Held
by the Fund or for Its
Account
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Common Stock
|
|
100 million
|
|
0
|
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52,326,006
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INVESTMENT OBJECTIVE AND POLICIES
Investment Objective and Principal Investment Policies
For a discussion of the Funds investment objective and principal investment policies, please refer to the section
of the Funds most recent annual report on Form N-CSR for the fiscal year ended December 31, 2020 filed on February 25, 2021 entitled Fund Investment Objective, Policies and RisksInvestment Objective and
Policies, which is incorporated by reference herein.
8
Principal Portfolio Contents and Techniques
The Funds portfolio will be composed principally of the following investments. Additional information with respect to the Funds investment
policies and certain of the Funds portfolio investments is contained in the SAI. There is no guarantee the Fund will buy all of the types of securities or use all of the investment techniques that are described herein and in the SAI.
Lower-Rated Securities. Lower-rated securities are securities rated below investment grade quality (lower than Baa by Moodys or lower than BBB by
S&P or comparably rated by another rating agency). Such securities are considered to have speculative elements, with higher vulnerability to default than corporate securities with higher ratings. See Appendix A Description of
Ratings in the SAI for additional information concerning rating categories of Moodys and S&P.
Lower-rated securities, though high
yielding, are characterized by high risk.
Bond prices generally are inversely related to interest rate changes; however, bond price volatility also is
inversely related to coupon. Accordingly, lower-rated securities may be relatively less sensitive to interest rate changes than higher quality securities of comparable maturity, because of their higher coupon. This higher coupon is what the investor
receives in return for bearing greater credit risk. The higher credit risk associated with lower-rated securities potentially will have a greater effect on the value of such securities than may be the case with higher quality issues of comparable
maturity, and will be a substantial factor in the Funds relative Share price volatility.
The ratings of Moodys, S&P and the other rating
agencies represent their opinions as to the quality of the obligations which they undertake to rate. Ratings are relative and subjective and, although ratings may be useful in evaluating the safety of interest and principal payments, they do not
evaluate the market value risk of such obligations. Although these ratings may be an initial criterion for selection of portfolio investments, Credit Suisse also will evaluate these securities and the ability of the issuers of such securities to pay
interest and principal. To the extent that the Fund invests in lower-rated securities that have not been rated by a rating agency, the Funds ability to achieve its investment objectives will be more dependent on Credit Suisses credit
analysis than would be the case when the Fund invests in rated securities.
Senior Loans. Senior Loans are loans, including purchases
of loans or portions of loans via assignment from third parties, and loan participations (collectively, Loans) that are senior secured floating rate Loans. Senior Loans are made to corporations and other
non-governmental entities and issuers. Senior Loans typically hold the most senior position in the capital structure of the issuing entity, are typically secured with specific collateral and typically have a
claim on the assets and/or stock of the borrower that is senior to that held by subordinated debt holders and stockholders of the borrower. Collateral may include equity in a borrowers operating companies or other tangible and intangible
assets. The proceeds of Senior Loans primarily are used to finance leveraged buyouts, recapitalizations, mergers, acquisitions, stock repurchases, dividends, and, to a lesser extent, to finance internal growth and for other corporate purposes.
Senior Loans typically have rates of interest that are determined daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium or credit spread. Base lending rates in common usage today are primarily LIBOR, and
secondarily the prime rate offered by one or more major U.S. banks (the Prime Rate) and the certificate of deposit (CD) rate or other base lending rates used by commercial lenders.
A Loan in which the Fund may invest typically is originated, negotiated and structured by a syndicate of lenders
(Co-Lenders) consisting of commercial banks, thrift institutions, insurance companies, finance companies, investment banking firms, securities brokerage houses or other financial institutions or
institutional investors, one or more of which administers the loan on behalf of the syndicate. Senior Loans that are issued by lenders that are banks are commonly referred to as bank loans.
Co-Lenders may sell Senior Loans to third parties (Participants). The Fund invests in a Senior Loan either by participating in the primary distribution as a
Co-Lender at the time the loan is originated or by buying an assignment or participation interest in the Senior Loan in the secondary market from a Co-Lender or a
Participant. Loans in which the Fund invests may include covenant-lite loans.
The Fund may invest in a Senior Loan at origination as a Co-Lender or by acquiring an assignment or participation interest in the secondary market from a Co-Lender or Participant. If the Fund purchases an assignment, the Fund
9
typically accepts all of the rights of the assigning lender in a Senior Loan, including the right to receive payments of principal and interest and other amounts directly from the borrower and to
enforce its rights as a lender directly against the borrower and assumes all of the obligations of the assigning lender, including any obligations to make future advances to the borrower. As a result, therefore, the Fund has the status of a Co-Lender. In some cases, the rights and obligations acquired by a purchaser of an assignment may differ from, and may be more limited than, the rights and obligations of the assigning lender. The Fund also may
purchase a participation in a portion of the rights of a Co-Lender or Participant in a Senior Loan by means of a participation agreement. A participation is similar to an assignment in that the Co-Lender or Participant transfers to the Fund all or a portion of an interest in a senior loan. Unlike an assignment, however, a participation does not establish any direct relationship between the Fund and the
borrower. In such a case, the Fund is required to rely on the Co-Lender or Participant that sold the participation not only for the enforcement of the Funds rights against the borrower but also for the
receipt and processing of payments due to the Fund under the Senior Loans.
The Fund may receive and/or pay certain fees in connection with its lending
activities. These fees are in addition to interest payments received and may include facility fees, commitment fees, amendment and waiver fees, commissions and prepayment fees. In certain circumstances, the Fund may receive a prepayment fee on the
prepayment of a Senior Loan by a borrower.
In certain circumstances, Loans may be deemed not to be securities, and in such circumstances, in the event of
fraud or misrepresentation by a Borrower or an arranger, Lenders and purchasers of interests in such Loans, such as the Fund, will not have the protection of the anti-fraud provisions of the federal securities laws, as would be the case for bonds or
stocks. Instead, in such cases, Lenders generally rely on the contractual provisions in the Loan agreement itself, and common-law fraud protections under applicable state law.
Second Lien and Other Secured Loans. Second Lien Loans are second lien secured floating rate Loans made by public and private
corporations and other non-governmental entities and issuers for a variety of purposes. Second Lien Loans are second in right of payment to one or more Senior Loans of the related borrower. Second Lien Loans
typically are secured by a second priority security interest or lien to or on specified collateral securing the borrowers obligation under the Loan and typically have similar protections and rights as Senior Loans. Second Lien Loans are not
(and by their terms cannot become) subordinated in right of payment to any obligation of the related borrower other than Senior Loans of such borrower. Second Lien Loans, like Senior Loans, typically have adjustable floating rate interest payments.
Because Second Lien Loans are second to Senior Loans, they present a greater degree of investment risk but often pay interest at higher rates reflecting this additional risk.
The Fund may also invest in secured Loans other than Senior Loans and Second Lien Loans. Such secured Loans are made by public and private corporations and
other non-governmental entities and issuers for a variety of purposes, and may rank lower in right of payment to one or more Senior Loans and Second Lien Loans of the borrower. Such secured Loans typically are
secured by a lower priority security interest or lien to or on specified collateral securing the borrowers obligation under the Loan, and typically have more subordinated protections and rights than Senior Loans and Second Lien Loans. Secured
Loans may become subordinated in right of payment to more senior obligations of the borrower issued in the future. Such secured Loans may have fixed or adjustable floating rate interest payments. Because other secured Loans rank in payment order
behind Senior Loans and Second Lien Loans, they present a greater degree of investment risk but often pay interest at higher rates reflecting this additional risk.
Second Lien Loans and other secured Loans generally are of below investment grade quality. Other than their subordinated status, Second Lien Loans and other
secured Loans have many characteristics similar to Senior Loans discussed above. As in the case of Senior Loans, the Fund may purchase interests in Second Lien Loans and other secured Loans through assignments or participations.
Collateralized Debt Obligations. The Fund may invest in collateralized debt obligations (CDOs), which include collateralized bond
obligations (CBOs), collateralized loan obligations (CLOs) and other similarly structured securities. CDOs are types of asset-backed securities. A CBO is ordinarily issued by a fund or other special purpose entity
(SPE) and is typically backed by a diversified pool of fixed income securities (which may include high risk, below investment grade securities) held by such issuer. A CLO is ordinarily issued by a trust or other SPE and is typically
collateralized by a pool of loans, which may include, among others, domestic and non-U.S. senior secured
10
loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans, held by such issuer. Although certain CDOs
may benefit from credit enhancement in the form of a senior-subordinate structure, over-collateralization or bond insurance, such enhancement may not always be present, and may fail to protect the Fund against the risk of loss on default of the
collateral. Certain CDO issuers may use derivatives contracts to create synthetic exposure to assets rather than holding such assets directly, which entails the risks of derivative instruments described elsewhere in this Prospectus. CDOs
may charge management fees and administrative expenses, which are in addition to those of the Fund.
For both CBOs and CLOs, the cash flows from the SPE
are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the equity tranche, which bears the first loss from defaults from the bonds or loans in the SPE and serves to protect the other,
more senior tranches from default (though such protection is not complete). Since it is partially protected from defaults, a senior tranche from a CBO or CLO typically has higher ratings and lower yields than its underlying securities, and may be
rated investment grade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults, downgrades of the underlying collateral by rating agencies, forced liquidation of the collateral
pool due to a failure of coverage tests, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults as well as investor aversion to CBO or CLO securities as a class. Interest
on certain tranches of a CDO may be paid in kind or deferred and capitalized (paid in the form of obligations of the same type rather than cash), which involves continued exposure to default risk with respect to such payments.
Convertible Securities. Convertible securities may be converted at either a stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed income and equity securities. Convertible securities generally are subordinated to other similar but non-convertible securities of the same
issuer, although convertible bonds, as corporate debt obligations, enjoy seniority in right of payment to all equity securities, and convertible preferred stock is senior to shares of common stock of the same issuer. Because of the subordination
feature, however, convertible securities typically have lower ratings than similar non-convertible securities.
Although to a lesser extent than with fixed income securities, the market value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of the conversion feature, the market value of convertible securities tends to vary with fluctuations in the market value of the underlying common stock. As the market
price of the underlying common stock declines, convertible securities tend to trade increasingly on a yield basis, and so may not experience market value declines to the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the prices of the convertible securities tend to rise as a reflection of the value of the underlying common stock. While no securities investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
Convertible securities provide for a stable stream of income with generally higher
yields than common stock and offer the potential for capital appreciation through the conversion feature, which enables the holder to benefit from increases in the market price of the underlying common stock. In return, however, convertible
securities generally offer lower interest or dividend yields than non-convertible securities of similar quality.
Credit Default Swap Agreements. The buyer in a credit default swap is obligated to pay the seller an upfront payment or a
periodic stream of payments over the term of the agreement, provided that no credit event on an underlying reference obligation has occurred. If a credit event occurs, the seller must pay the buyer the full notional value, or par value,
of the reference obligation in exchange for the reference obligation. As a result of counterparty risk, certain credit default swap agreements may involve greater risks than if the Fund had invested in the reference obligation directly.
If the Fund is a buyer and no credit event occurs, the cost to the Fund is the premium paid with respect to the agreement. If a credit event occurs, however,
the Fund may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity that may have little or no value. On the other hand, the value of any deliverable obligations
paid by the Fund to the seller, coupled with the up front or periodic payments previously received by the seller, may be less than the full notional value the seller pays to the Fund, resulting in a loss of value to the Fund.
11
If the Fund is a seller and no credit event occurs, the Fund would generally receive an upfront payment or a
fixed rate of income throughout the term of the swap, which typically is between six months and three years. If a credit event occurs, however, generally the Fund would have to pay the buyer the full notional value of the swap in exchange for an
equal face amount of deliverable obligations of the reference entity that may have little or no value. When the Fund acts as a seller of a credit default swap agreement it is exposed to speculative exposure risk since, if a credit event occurs, the
Fund may be required to pay the buyer the full notional value of the contract net of any amounts owed by the buyer related to its delivery of deliverable obligations of the reference entity. As a result, the Fund bears the entire risk of loss due to
a decline in value of a referenced security on a credit default swap it has sold if there is a credit event with respect to the security. The Fund bears the same risk as a buyer of fixed income securities directly. The Fund will sell a credit
derivative only with respect to securities in which it would be authorized to invest.
Certain credit default swap agreements may not have liquidity
beyond the counterparty to the agreement and may be considered illiquid. Other credit default swap agreements, however, may be considered liquid. Moreover, the Fund bears the risk of loss of the amount expected to be received under a credit default
swap agreement in the event of the default or bankruptcy of the counterparty. The Fund will enter into swap agreements as a buyer only with counterparties that are deemed creditworthy by the adviser. Credit default swap agreements are generally
valued at a price at which the counterparty to such agreement would terminate the agreement. As the seller of a credit default swap, the Fund would be subject to investment exposure on the notional amount of the swap. Accordingly, the Fund will
segregate liquid investments in an amount equal to the aggregate market value of the credit default swaps of which it is the seller, marked to market on a daily basis.
When the Fund buys or sells a credit derivative, the underlying issuer(s) or obligor(s) to the transaction will be treated as an issuer for purposes of
complying with the Funds issuer diversification and industry concentration policies, absent regulatory guidance to the contrary. The Fund may, but is not required to, use credit swaps or any other credit derivative. There is no assurance that
credit derivatives will be available at any time or, if used, that the derivatives will be used successfully.
Defensive Strategies. There may be
times when, in Credit Suisses judgment, conditions in the securities markets would make pursuing the Funds basic investment strategy inconsistent with the best interests of its shareholders. At such times, Credit Suisse may employ
alternative strategies to reduce fluctuations in the value of the portfolio. In implementing these defensive strategies, the Fund may temporarily shift its portfolio emphasis to higher rated securities, hedge currency risks, reduce or suspend its
option writing activities or generally reduce the average maturity of its holdings. Under unusual market conditions, the Fund could invest for temporary defensive purposes up to 100% of its total assets in cash or money market instruments. Such
money market instruments include short-term obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities, domestic, foreign and non-U.S. dollar denominated commercial paper,
domestic and foreign certificates of deposit, domestic and foreign bankers acceptances and other bank obligations. The Fund may also hold a portion of its assets in cash or money market instruments for liquidity purposes. It is impossible to
predict when, or for how long, such alternative strategies will be utilized. To the extent that the Fund employs these temporary defensive strategies, it may not achieve its investment objective.
Interest Rate Futures and Related Options. The Fund may purchase and sell interest rate futures contracts and options thereon that are traded on U.S.
futures exchanges or other trading facilities. When the Fund attempts to hedge its portfolio by selling an interest rate futures contract, purchasing a put option thereon, or writing a call option thereon, it will own an amount of U.S. Government
securities corresponding to the open futures or option position. These transactions may be entered into for bona fide hedging purposes as defined in the Commodity Futures Trading Commission (CFTC) regulations and other
permissible purposes, including hedging against changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions and increasing return. The Fund reserves the right to engage in transactions involving
futures contracts and options on futures contracts in accordance with the Funds policies. The Fund is operated by a person who has claimed an exclusion from the definition of the term commodity pool operator under the Commodity
Exchange Act with respect to the Fund, and therefore, who is not subject to registration or regulation as a pool operator under the Commodity Exchange Act with respect to the Fund.
12
In contrast to the purchase or sale of a security, the full purchase price of the futures contract is not
paid or received by the Fund upon its purchase or sale. Instead, the Fund will deposit in a segregated custodial account as initial margin an amount of cash or U.S. Treasury bills equal to approximately 5% of the value of the contract. At any time
prior to expiration of the futures contract, the Fund may elect to terminate the position by taking an opposite position. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund, and
the Fund realizes a loss or gain. No assurance can be given that the Fund will be able to take an opposite position.
The selection of futures and options
strategies requires skills different from those needed to select portfolio securities; however, Credit Suisse does have experience in the use of futures and options.
Money Market Instruments. The Fund may invest in the following types of money market instruments:
Bank Obligations. The Fund may purchase certificates of deposit, time deposits, bankers acceptances and other short-term
obligations issued by domestic banks, foreign subsidiaries or foreign branches of domestic banks, domestic and foreign branches of foreign banks, domestic savings and loan associations and other banking institutions. With respect to such securities
issued by foreign subsidiaries or foreign branches of domestic banks, and domestic and foreign branches of foreign banks, the Fund may be subject to additional investment risks.
Certificates of deposit are negotiable certificates evidencing the obligation of a bank to repay funds deposited with it for a specified
period of time.
Time deposits are non-negotiable deposits maintained in a banking institution for
a specified period of time (in no event longer than seven days) at a stated interest rate.
Bankers acceptances are credit
instruments evidencing the obligation of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and the drawer to pay the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations bearing fixed, floating or variable interest rates.
Commercial Paper.
Commercial paper consists of short-term, unsecured promissory notes issued to finance short-term credit needs. The commercial paper purchased by the Fund will consist only of direct obligations which, at the time of their purchase, are
(a) rated not lower than Prime-1 by Moodys or A-1 by S&P, (b) issued by companies having an outstanding unsecured debt issue currently rated at least
A3 by Moodys or A- by S&P, or (c) if unrated, determined by Credit Suisse to be of comparable quality to those rated obligations which may be purchased by the Fund.
Other Short-Term Corporate Obligations. These instruments include variable amount master demand notes, which are obligations that
permit the Fund to invest fluctuating amounts at varying rates of interest pursuant to direct arrangements between the Fund, as lender, and the borrower. These notes permit daily changes in the amounts borrowed. Because these obligations are direct
lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded, and there generally is no established secondary market for these obligations, although they are redeemable at face value,
plus accrued interest, at any time. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, the Funds right to redeem is dependent on the ability of the borrower to pay principal and
interest on demand. Such obligations frequently are not rated by credit rating agencies, and the Fund may invest in them only if at the time of an investment Credit Suisse determines that such investment is of comparable quality to those rated
obligations which may be purchased by the Fund.
Mortgage-Backed Securities. Mortgage-backed securities are collateralized by mortgages or
interests in mortgages and may be issued by government or non-government entities. Mortgage-backed securities issued by government entities typically provide a monthly payment consisting of interest and
principal payments, and additional payments
13
will be made out of unscheduled prepayments of principal. Non-government issued mortgage-backed securities may offer higher yields than those issued by
government entities, but may be subject to greater price fluctuations.
Options on U.S. Government Securities. The Fund may write covered call
options (rights to purchase a security from the Fund) and put options (rights to sell a security to the Fund) with respect to its U.S. government securities to hedge against price fluctuations and to increase current income. The Fund may also
purchase put options (rights to sell a security to a third party) or call options (rights to purchase a security from a third party) on U.S. government securities to protect its portfolio against price fluctuations.
Portfolio Turnover and Short-Term Trading. Credit Suisse will buy and sell securities for the Fund to accomplish its investment objective. The
investment policies of the Fund may lead to frequent changes in investments, particularly in periods of rapidly fluctuating interest or currency exchange rates. Investments may also be traded to take advantage of perceived short-term disparities in
market values or yields among securities of comparable quality and maturity. From time to time, consistent with its investment objective, the Fund may also trade securities for the purpose of seeking short-term profits to take advantage of
short-term opportunities during periods of fluctuating markets. Securities may be sold in anticipation of a market decline or bought in anticipation of a market rise.
Preferred Stock. Preferred stock represents a share of ownership in a company. Generally, preferred stock has a specified dividend and ranks after
bonds but before common stock on its claim on a companys income for dividend payments and on a companys assets should the companys assets be liquidated. While most preferred stocks pay a dividend, the Fund may purchase preferred
stock where the issuer has failed to pay, or is in danger of failing to pay, the dividends on such preferred stock, or may purchase preferred stock that pays a dividend in kind.
Repurchase Agreements. The Fund may enter into repurchase agreements collateralized by U.S. government securities, certificates of deposit and certain
bankers acceptances for the purpose of realizing additional income. In a repurchase agreement, the Fund buys, and the seller agrees to repurchase, a security at a mutually agreed upon time and price (usually within seven days). The repurchase
agreement thereby determines the yield during the purchasers holding period, while the sellers obligation to repurchase is secured by the value of the underlying security. Repurchase agreements could involve risks in the event of a
default or insolvency of the other party to the agreement, including possible delays or restrictions upon the Funds ability to dispose of the underlying securities. The Fund may enter into repurchase agreements with certain banks or non-bank dealers.
Restricted and Illiquid Securities. The Fund currently invests in securities that are not
readily marketable. These include securities which are not registered under the Securities Act of 1933, as amended (the Securities Act), and not publicly traded.
Securities Lending. The Fund may lend its portfolio securities to banks, brokers, dealers and other financial institutions who need to borrow
securities in order to complete certain transactions, such as covering short sales, avoiding failures to deliver securities or completing arbitrage operations. By lending its portfolio securities, the Fund attempts to increase its income through the
receipt of interest on the loan. Any gain or loss in the market price of the securities lent that might occur during the term of the loan would be for the account of the Fund. The Fund may lend its portfolio securities so long as the terms and the
structure of such loans are not inconsistent with the 1940 Act or the rules and regulations or interpretations of the Securities and Exchange Commission (the Commission) thereunder. The Fund will not lend portfolio securities if, as a
result, the aggregate of such loans exceeds 33 1/3% of the value of the Funds total assets. Loan arrangements made by the Fund will comply with all other applicable regulatory requirements, including the rules of the NYSE American. All
relevant facts and circumstances, including the creditworthiness of the borrower, will be considered by Credit Suisse in making decisions with respect to the lending of securities, subject to review by the Funds Board of Directors (the
Board). The creditworthiness of such bank, broker, dealer or other financial institution will be monitored by Credit Suisse during the time any securities are loaned. In addition, voting rights may pass with the loaned securities but if
a material event were to occur affecting an investment on a loan, the loan must be called and the securities voted by the Fund. Gross income, the fees and/or compensation (including fees paid to the securities lending agent from a revenue split and
rebates paid to borrowers) and net income related to the Funds securities lending activities during any given fiscal year are disclosed in the Funds annual reports to shareholders.
14
Non-Principal Portfolio Contents and Techniques
Equity Securities. To a limited extent, incidental to and in connection with its investment activities or pursuant to a convertible feature in a
security, the Fund may acquire warrants and other equity securities. The Fund may also acquire other equity securities of a borrower or issuer in connection with an amendment, waiver, conversion or exchange of a Senior Loan or other debt security or
in connection with a bankruptcy or workout of the borrower or issuer. The Fund can invest in equities incidental to or in connection with debt investments and can otherwise also invest in equities but in no case will the Funds total
investments in equities exceed 10% of its net assets.
Foreign Currency Exchange Transactions. The Fund may (but is not required to) engage in
foreign currency exchange transactions to hedge against fluctuations in future exchange rates.
Short Sales. The Fund may engage in short sales
(the sale of securities that it does not own), but only when it owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short (short sales against the box), and only if not more than 5% of the Funds net assets (taken at current value) is held as collateral for such sales at any one time.
15
INVESTMENT RESTRICTIONS
In addition to its investment objective, the Fund has adopted the investment restrictions listed below as fundamental policies, which cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of the Funds outstanding voting shares. Unless expressly designated as fundamental, all other policies of the Fund may be changed by the Board without shareholder
approval. Unless otherwise indicated, the restrictions set forth below, as well as those contained elsewhere in this Prospectus, apply at the time a transaction is effected, and a subsequent change in a percentage resulting from market
fluctuations or any other cause other than an action by the Fund will not require the Fund to dispose of portfolio securities or take other action to satisfy the percentage restriction. The Fund may not:
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1.
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Make any investment inconsistent with the Funds classification as a diversified company under the 1940
Act.
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2.
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Borrow money, except to the extent permitted under the 1940 Act.
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3.
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Purchase or sell commodities or commodity contracts, except to the extent permitted by applicable law.
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4.
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Make loans, except through the loans of securities, entry into repurchase agreements, acquisitions of
securities consistent with its investment objective and policies and as otherwise permitted by the 1940 Act.
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5.
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Underwrite the securities of other issuers, except to the extent that in connection with the disposition of
portfolio securities the Fund may be deemed to be an underwriter.
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6.
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Purchase or sell real estate, except as permitted by the 1940 Act.
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7.
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Make any investment if, as a result, the Funds investments will be concentrated in any one industry.
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8.
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Issue senior securities, except as permitted by the 1940 Act.
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The deposit of initial and variation margin and collateral arrangements in connection with interest rate futures contracts and related options shall not be
deemed to be in violation of any of the foregoing investment restrictions. For purposes of investment restriction no. 2, the 1940 Act requires the Fund to maintain at all times an asset coverage of at least 300%. Asset coverage means the
ratio that the value of the Funds total assets (including amounts borrowed), minus liabilities other than borrowings, bears to the aggregate amount of all borrowings. Investment restriction no. 7 will be interpreted to prohibit the Fund
from making any investment if, as a result, the Funds investments will be concentrated in any one industry or group of industries. With respect to the Funds industry classifications, the Fund currently utilizes any one or more of the
industry subclassifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the Investment Adviser. The policy also will be interpreted to give broad authority to the Fund as to how to classify
issuers within or among industries.
USE OF LEVERAGE
The Fund currently utilizes and in the future expects to continue to utilize leverage through borrowings, including the issuance of debt
securities, and derivatives, reverse repurchase agreements and dollar roll transactions which have the effect of leverage.
As
provided in the 1940 Act and subject to certain exceptions, the Fund may issue debt with the condition that immediately after issuance the value of its total assets, less certain ordinary course liabilities, exceeds 300% of the amount of the debt
outstanding. Thus, as noted above, the Fund may use leverage in the form of borrowings in an amount up to 33 1/3% of the Funds total assets (including the proceeds of such leverage). The total leverage of the Fund is currently expected to
range between 20% and 30% of the Funds total assets. The Fund seeks a leverage ratio, based on a variety of factors including market conditions and Credit Suisses market outlook, for which the rate of return, net of applicable Fund
expenses, on the Funds investment portfolio investments purchased with leverage exceeds the costs associated with such leverage. The Fund does not currently intend to issue or register preferred shares or commercial paper.
The use of leverage can create risks. Changes in the value of the Funds portfolio, including securities bought with the proceeds of
leverage, will be borne entirely by the holders of Shares. If there is a net decrease or increase in the value of the Funds investment portfolio, leverage will decrease or increase, as the case may be, the NAV per
16
Share of an applicable class to a greater extent than if the Fund did not utilize leverage. When the
Fund is using leverage, its NAV and rate of distribution will be more volatile. The Funds leveraging strategy may not be successful.
Certain types of borrowings by the Fund may result in the Fund being subject to covenants in credit agreements, including those relating to
asset coverage and portfolio composition requirements. The securities held by the Fund are subject to a lien granted to the lender, to the extent of the borrowing outstanding and any additional expenses. The Funds lenders may establish
guidelines for borrowing which may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. There is no guarantee that the Funds borrowing arrangements or other arrangements for
obtaining leverage will continue to be available, or if available, will be available on terms and conditions acceptable to the Fund. Expiration or termination of available financing for leveraged positions can result in adverse effects to the
Funds access to liquidity and its ability to maintain leverage positions, and may cause the Fund to incur losses. Unfavorable economic conditions also could increase funding costs, limit access to the capital markets or result in a decision by
lenders not to extend credit to the Fund. In addition, a decline in market value of the Funds assets may have particular adverse consequences in instances where the Fund has borrowed money based on the market value of those assets. A decrease
in market value of those assets may result in the lender requiring the Fund to sell assets at a time when it may not be in the Funds best interest to do so.
Following the completion of an offering, the Fund may increase the amount of leverage outstanding. The Fund may engage in additional
borrowings in order to maintain the Funds desired leverage ratio. Leverage creates a greater risk of loss, as well as a potential for more gain, for the Shares than if leverage were not used. Interest on borrowings may be at a fixed or
floating rate and generally will be based on short-term rates. The costs associated with the Funds use of leverage, including the issuance of such leverage and the payment of dividends or interest on such leverage, will be borne entirely by
the holders of common shares. As long as the rate of return, net of applicable Fund expenses, on the Funds investment portfolio investments purchased with leverage exceeds the costs associated with such leverage, the Fund will generate more
return or income than will be needed to pay such costs. In this event, the excess will be available to pay higher dividends to holders of common shares. Conversely, if the Funds return on such assets is less than the cost of leverage and other
Fund expenses, the return to the holders of the common shares will diminish. To the extent that the Fund uses leverage, the NAV and market price of the Shares and the yield to holders of Shares will be more volatile. The Funds leveraging
strategy may not be successful. See Risks and Special Considerations.
Credit Agreement
Please refer to the section
of the Funds most recent semi-annual report on Form N-CSR for the six month period ended June 30, 2021 filed on August 16, 2021 entitled Notes to Financial StatementsNote 4.
Line of Credit, which is incorporated by reference herein, for a summary of the Funds Credit Agreement, the Funds loans outstanding under the Credit Agreement as of June 30, 2021, the average daily loan
balance under the Credit Agreement for the six month period ended June 30, 2021, the weighted average interest rate of the Funds borrowings under the Credit Agreement for the six month period ended June 30, 2021,
the maximum daily loan outstanding under the Credit Agreement during six month period ended June 30, 2021, interest expense paid under the Credit Agreement during the six month period ended June 30, 2021 and the number of days the
Funds borrowings under the Credit Agreement were outstanding for the six month period ended June 30, 2021.
The Funds
borrowings under the Credit Agreement at June 30, 2021 equaled $53,000,000, which was approximately 22% of the Funds total assets (including the proceeds of such leverage) as of such date. The Funds asset coverage
ratio as of June 30, 2021 was 446%.
The Credit Agreement contains customary covenant, negative covenant and
default provisions, including covenants that limit the Funds ability to incur additional debt or consolidate or merge into or with any person, other than as permitted, or sell, lease or otherwise transfer, directly or indirectly, all or
substantially all of its assets. In addition, the Fund agreed not to purchase assets not contemplated by the investment policies and restrictions in effect when the Credit Agreement became effective. Furthermore, the Fund may not incur additional
debt from any other party, except for in limited circumstances (e.g., in the ordinary course of business). Such restrictions shall apply only so long as the Credit Agreement remains in effect.
17
Indebtedness issued under the Credit Agreement is not convertible into any other securities of
the Fund. Outstanding amounts would be payable at maturity or such earlier times as required by the Credit Agreement. The Fund may be required to prepay outstanding amounts under the Credit Agreement in the event of the occurrence of certain events
of default. The Fund is expected to indemnify the lenders under the Credit Agreement against certain liabilities they may incur in connection with the Credit Agreement. The Fund is required to pay commitment fees under the terms of the Credit
Agreement. With the use of borrowings, there is a risk that the interest rates paid by the Fund on the amount it borrows will be higher than the return on the Funds investments. The credit facility with State Street may in the future be
replaced or refinanced by one or more credit facilities.
Effects of Leverage
Assuming that leverage will represent approximately 22% of the Funds total assets (including the proceeds of such leverage)
and that the Fund will bear expenses relating to that leverage at an average annual rate of 0.85%, the income generated by the Funds portfolio (net of estimated expenses) must exceed $450,500 in order to cover the expenses specifically
related to the Funds use of leverage. Of course, these numbers are merely estimates used for illustration. Actual leverage expenses will vary frequently and may be significantly higher or lower than the rate estimated above.
The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on total returns
from an investment in the Shares, assuming investment portfolio total returns (comprised of income and changes in the value of securities held in the Funds portfolio) of (10)%, (5)%, 0%, 5% and 10%. These assumed investment portfolio returns
are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by the Fund. See Risks and Special Considerations. The table further reflects the use of leverage
representing 22% of the Funds total assets (including the proceeds of such leverage) and the Funds currently projected annual leverage expense of 0.85%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed Portfolio Total Return (Net of Expenses)
|
|
|
(10.00
|
)%
|
|
|
(5.00
|
)%
|
|
|
0.00
|
%
|
|
|
5.00
|
%
|
|
|
10.00
|
%
|
|
|
|
|
|
|
Corresponding Common Stock Total Return
|
|
|
(13.06
|
)%
|
|
|
(6.65
|
)%
|
|
|
(0.24
|
)%
|
|
|
6.17
|
%
|
|
|
12.58
|
%
|
The corresponding total return to stockholders is composed of two elements: the common stock dividends
paid by the Fund (the amount of which is largely determined by the net investment income of the Fund) and gains or losses on the value of the securities the Fund owns. As required by SEC rules, the table assumes that the Fund is more likely to
suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0% the Fund must assume that the interest it receives on its investments is entirely offset by losses in the value of those securities.
Reverse Repurchase Agreements
The Fund
may enter into reverse repurchase agreements with respect to its portfolio investments subject to the investment restrictions set forth herein. Reverse repurchase agreements involve the sale of securities held by the Fund with an agreement by the
Fund to repurchase the securities at an agreed upon price, date and interest payment. At the time the Fund enters into a reverse repurchase agreement, it may establish and maintain a segregated account with the custodian containing, or designate on
its books and records, cash and/or liquid assets having a value not less than the repurchase price (including accrued interest). If the Fund establishes and maintains such a segregated account, or earmarks such assets as described, a reverse
repurchase agreement will not be considered a senior security under the 1940 Act and therefore will not be considered a borrowing by the Fund for the purposes of the 1940 Act; however, under certain circumstances in which the Fund does not establish
and maintain such a segregated account, or earmark such assets on its books and records, such reverse repurchase agreement will be considered a borrowing for the purpose of the 1940 Acts limitation on borrowings discussed above. The use by the
Fund of reverse repurchase agreements involves many of the same risks of leverage since the proceeds derived from such reverse repurchase agreements may be invested in additional securities. Reverse repurchase agreements involve the risk that the
market value of the securities acquired in connection with the reverse repurchase agreement may
18
decline below the price of the securities the Fund has sold but is obligated to repurchase. Also, reverse
repurchase agreements involve the risk that the market value of the securities retained in lieu of sale by the Fund in connection with the reverse repurchase agreement may decline in price.
If the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to enforce the Funds obligation to repurchase the securities and the Funds use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such
decision. Also, the Fund would bear the risk of loss to the extent that the proceeds of the reverse repurchase agreement are less than the value of the securities subject to such agreement.
The Fund also may affect simultaneous purchase and sale transactions that are known as sale-buybacks. A sale-buyback is similar to
a reverse repurchase agreement, except that in a sale-buyback, the counterparty that purchases the security is entitled to receive any principal or interest payments made on the underlying security pending settlement of the Funds repurchase of
the underlying security.
Dollar Roll Transactions
The Fund may enter into dollar roll transactions. In a dollar roll transaction, the Fund sells a mortgage-backed, U.S. Treasury or
other security (as permitted by the Funds investment strategies) to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at
a pre-determined price. A dollar roll transaction can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which the Fund pledges a mortgage-related security to a dealer
to obtain cash. However, unlike reverse repurchase agreements, the dealer with which the Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but rather only securities which
are substantially identical, which generally means that the securities repurchased will bear the same interest rate and a similar maturity as those sold, but the pools of mortgages collateralizing those securities may have different
prepayment histories than those sold.
During the period between the sale and repurchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold. Proceeds of the sale will be invested in additional instruments for the Fund and the income from these investments will generate income for the Fund. If such income does not exceed the income,
capital appreciation and gain that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of the Fund compared with what the performance would have been without
the use of dollar rolls.
At the time the Fund enters into a dollar roll transaction, it may establish and maintain a segregated account
with the custodian containing, or designate on its books and records, cash and/or liquid assets having a value not less than the repurchase price (including accrued interest). If the Fund establishes and maintains such a segregated account, or
earmarks such assets as described, a dollar roll transaction will not be considered a senior security under the 1940 Act and therefore will not be considered a borrowing by the Fund for the purposes of the 1940 Act; however, under certain
circumstances in which the Fund does not establish and maintain such a segregated account, or earmark such assets on its books and records, such dollar roll transaction will be considered a borrowing for the purpose of the 1940 Acts limitation
on borrowings.
Dollar roll transactions involve the risk that the market value of the securities the Fund is required to purchase may
decline below the agreed upon repurchase price of those securities. The Funds right to purchase or repurchase securities may be restricted. Successful use of dollar rolls may depend upon the investment managers ability to correctly
predict interest rates and prepayments, depending on the underlying security. There is no assurance that dollar rolls can be successfully employed.
19
Derivatives
The Fund may enter into derivative transactions that have economic leverage embedded in them. There can be no assurance that investments in
derivative transactions that have economic leverage embedded in them will result in a higher return on the Shares.
To the extent the
terms of such transactions obligate the Fund to make payments, the Fund may earmark or segregate cash or liquid assets in an amount at least equal to the current value of the amount then payable by the Fund under the terms of such transactions or
otherwise cover such transactions in accordance with applicable interpretations of the staff of the SEC. If the current value of the amount then payable by the Fund under the terms of such transactions is represented by the notional amounts of such
investments, the Fund would segregate or earmark cash or liquid assets having a market value at least equal to such notional amounts, and if the current value of the amount then payable by the Fund under the terms of such transactions is represented
by the market value of the Funds current obligations, the Fund would segregate or earmark cash or liquid assets having a market value at least equal to such current obligations. To the extent the terms of such transactions obligate the Fund to
deliver particular securities to extinguish the Funds obligations under such transactions, the Fund may cover its obligations under such transactions by either (i) owning the securities or collateral underlying such
transactions or (ii) having an absolute and immediate right to acquire such securities or collateral without additional cash consideration (or, if additional cash consideration is required, having earmarked or segregated an appropriate amount
of cash or liquid assets). Such earmarking, segregation or cover is intended to provide the Fund with available assets to satisfy its obligations under such transactions. As a result of such earmarking, segregation or cover, the Funds
obligations under such transactions will not be considered senior securities representing indebtedness for purposes of the 1940 Act, or considered borrowings subject to the 1940 Acts limitations on borrowings discussed above, but may create
leverage for the Fund. To the extent that the Funds obligations under such transactions are not so earmarked, segregated or covered, such obligations may be considered senior securities representing indebtedness under the 1940 Act
and therefore subject to the 300% asset coverage requirement.
These earmarking, segregation or cover requirements can result in the Fund
maintaining securities positions it would otherwise liquidate, segregating or earmarking assets at a time when it might be disadvantageous to do so or otherwise restrict portfolio management.
On October 28, 2020, the SEC adopted new regulations governing the use of derivatives by registered investment companies (Rule 18f-4). The Fund will be required to implement and comply with Rule 18f-4 by August 19, 2022. Once implemented, Rule
18f-4 will impose limits on the amount of derivatives a fund can enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, treat derivatives
as senior securities and require funds whose use of derivatives is more than a limited specified exposure amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.
Temporary Borrowings
The Fund may also
borrow money under the Facility or from other lenders as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely
dispositions of Fund securities.
Other Forms of Leverage
The Fund may also leverage its portfolio by entering into additional credit facilities or issuing preferred shares.
RISKS AND SPECIAL CONSIDERATIONS
An investment in the Shares of the Fund involves a high degree of risk. You should carefully consider the following risk factors in addition to the other
information set forth in this Prospectus.
20
Principal and General Risks
For a discussion of the principal and general risks of investing in the Fund, please refer to the section of the
Funds most recent annual report on Form N-CSR for the fiscal year ended December 31, 2020 filed on February 25, 2021 entitled Fund Investment Objectives, Policies and RisksRisk
Factors, which is incorporated by reference herein.
In addition, the Fund is subject to the following principal risks:
CDO Risk
In addition to the general risks associated
with fixed income securities discussed herein, CDOs 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; (iii) the possibility that the CDO securities are subordinate to other classes; and (iv) the complex structure of the security may not be fully understood at the time of investment and may
produce disputes with the issuer or unexpected investment results.
The credit quality of CDOs depends primarily upon the quality of the underlying assets
and the level of credit support and/or enhancement provided. The underlying assets (e.g., securities or loans) of CDOs may be subject to prepayments, which would shorten the weighted average maturity and may lower the return of the CDO. If a credit
support or enhancement is exhausted, losses or delays in payment may result if the required payments of principal and interest are not made. The transaction documents relating to the issuance of CDOs may impose eligibility criteria on the assets of
the issuing SPE, restrict the ability of the investment manager to trade investments and impose certain portfolio-wide asset quality requirements. These criteria, restrictions and requirements may limit the ability of the SPEs investment
manager to maximize returns on the CDOs. In addition, other parties involved in structured products, such as third party credit enhancers and investors in the rated tranches, may impose requirements that have an adverse effect on the returns of the
various tranches of CDOs. Furthermore, CDO transaction documents generally contain provisions that, in the event that certain tests are not met (generally interest coverage and over-collateralization tests at varying levels in the capital
structure), require that proceeds that would otherwise be distributed to holders of a junior tranche must be diverted to pay down the senior tranches until such tests are satisfied. Failure (or increased likelihood of failure) of a CDO to make
timely payments on a particular tranche will have an adverse effect on the liquidity and market value of such tranche.
Payments to holders of CDOs may be
subject to deferral. If cash flows generated by the underlying assets are insufficient to make all current and, if applicable, deferred payments on the CDOs, no other assets will be available for payment of the deficiency and, following realization
of the underlying assets, the obligations of the issuer to pay such deficiency will be extinguished.
The value of CDO securities also may change because
of changes in the markets perception of the creditworthiness of the servicing agent for the pool, the originator of the pool, or the financial institution or fund providing the credit support or enhancement. 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
the assets and availability, price and interest rates of the assets. CDOs are limited recourse, may not be paid in full and may be subject to up to 100% loss.
CDOs are typically privately offered and sold, and thus are not registered under the securities laws. As a result, investments in CDOs may be characterized as
illiquid securities; however, an active dealer market may exist which would allow such securities to be considered liquid in some circumstances.
Covenant-Lite Loans Risk
The Fund may invest in
covenant-lite Loans. Certain financial institutions may define covenant-lite Loans differently. Covenant-lite Loans may have tranches that contain fewer or no restrictive covenants. The tranche of
the covenant-lite Loan that has fewer restrictions typically does not include the legal clauses which allow an investor to proactively enforce financial tests or prevent or restrict undesired actions taken by the
borrower/issuer. Covenant-
21
lite Loans also generally give the borrower/issuer more flexibility if it has met certain loan terms and
provide fewer investor protections if certain criteria are breached. The Fund may experience relatively greater realized or unrealized losses or delays in enforcing its rights on its holdings of certain covenant-lite Loans than its
holdings of non-covenant lite Loans.
In the event of a breach of a covenant in
non-covenant lite Loans, lenders may have the ability to intervene and either prevent or restrict actions that may potentially compromise the borrowers ability to pay or lenders may be in a position
to obtain concessions from the borrower in exchange for a waiver or amendment of the specific covenant(s). In contrast, covenant-lite Loans do not always or necessarily offer the same ability to intervene or obtain additional concessions from
borrowers/issuers. Covenant-lite corporate Loans, however, may foster a capital structure designed to avoid defaults by giving borrowers or issuers increased financial flexibility when they need it the most.
Interest Rate Futures and Related Options Risk
The Fund
may purchase and sell interest rate futures contracts and options thereon that are traded on U.S. futures exchanges or other trading facilities. These transactions may be entered into for bona fide hedging purposes as defined in CFTC
regulations and other permissible purposes, including hedging against changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions and increasing return. There are several risks in connection
with the use of interest rate futures contracts as a hedge for transactions and anticipated transactions, including the risk of unlimited loss and significant distortions between the prices of futures contracts and those of the securities being
hedged. Although the Fund intends to purchase or sell interest rate futures contracts only on exchanges or boards of trade where there appears to be an active market for such contracts, there is no assurance that a liquid market on an exchange or
board of trade will exist for any particular contract or at any particular time. The Fund is not required to hedge interest rate risk. In addition, there are special risks relating to options on interest rate futures contracts. The ability to
establish and close out positions on such options is subject to the maintenance of a liquid secondary market. The Fund will only purchase or write options on futures contracts which, in the opinion of Credit Suisse, are traded in sufficiently
developed markets such that the risks of illiquidity in connection with such options are not greater than the risks of illiquidity in connection with transactions in the underlying interest rate futures contracts.
Securities Lending Risk
The Fund may lend its portfolio
securities to banks, brokers, dealers and other financial institutions who need to borrow securities in order to complete certain transactions, such as covering short sales, avoiding failures to deliver securities or completing arbitrage operations.
The Funds securities lending arrangement provides that the Fund and its securities lending agent will share the net income earned from its securities lending activities. In connection with its loans of portfolio securities, the Fund may be
exposed to the risk of delay in recovery of the loaned securities or possible loss of rights in the collateral should the borrower become insolvent. There is also the risk that, in the event of default by the borrower, the collateral might not be
sufficient to cover any losses incurred by the Fund. The Fund bears the entire risk of loss for any collateral in connection with securities lending. The Fund also bears the risk of loss on the investment of cash collateral. There can be no
assurance that the return to the Fund from a particular loan, or from its loans overall, will exceed the related costs and any related losses.
Other Risks
Short Sale Risk
The Fund may engage in short sales (the sale of securities that it does not own), but only when it owns an equal amount of such securities or securities
convertible into or exchangeable without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short (short sales against the box). Short sales involve the risk that the
Fund will incur a loss by subsequently being required to buy a security at a higher price than the price at which the Fund previously sold the security short. Because the Funds loss on a short sale stems from increases in the value of the
security sold short, the extent of such loss, like the price of the security sold short, is theoretically unlimited. The use of short sales is in effect a form of leveraging the Funds portfolio that could increase the Funds exposure to
the market, magnify losses and increase the volatility of returns. The Fund may not always be able to close out a short position at a particular time or at a favorable price.
22
LIBOR Risk
Many financial instruments may be tied to the London Interbank Offered Rate, or LIBOR, to determine payment obligations, financing terms, hedging
strategies, or investment value. LIBOR is the offered rate for short-term Eurodollar deposits between major international banks. On July 27, 2017, the head of the UK Financial Conduct Authority announced a desire to phase out the use of LIBOR
by the end of 2021. The UK Financial Conduct Authority later announced a phase out of LIBOR such that after December 31, 2021, all sterling, euro, Swiss franc and Japanese yen LIBOR settings and the 1-week and 2-month U.S. dollar LIBOR settings will cease to be published or will no longer be representative, and after June 30, 2023, the overnight, 1-month, 3-month, 6-month and 12-month U.S. dollar LIBOR settings will cease to be
published or will no longer be representative. Regulators and industry working groups have suggested alternative reference rates, and in July 2021, the Alternative Reference Rates Committee of the Federal Reserve Board and the Federal Reserve Board
of New York formally recommended the Secured Overnight Financing Rate (SOFR) to replace LIBOR. However, the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. There also remains
uncertainty and risk regarding the willingness and ability of issuers to include enhanced provisions in new and existing contracts or instruments. As such, the transition away from LIBOR may lead to increased volatility and illiquidity in markets
that are tied to LIBOR, reduced values of LIBOR-related investments, and reduced effectiveness of hedging strategies, adversely affecting the Funds performance or net asset value. In addition, the alternative reference rate may be an
ineffective substitute resulting in prolonged adverse market conditions for the Fund.
For additional information about the risks that may be
associated with an investment in the Fund, see Other Investment Practices in the SAI.
MANAGEMENT OF THE FUND
Board of Directors
The business and affairs of the Fund
are managed by or under the direction of the Board of Directors of the Fund. Background information regarding the Directors and officers of the Fund is contained in the proxy statement for the annual meeting of the Funds shareholders, which is
incorporated by reference into the SAI.
Investment Adviser
Credit Suisse serves as the Funds investment adviser with respect to all investments and makes all investment decisions for the Fund. Credit Suisse is
part of the asset management business of Credit Suisse Group AG, one of the worlds leading banks. Credit Suisse Group AG provides its clients with investment banking, private banking and wealth management services worldwide. The asset
management business of Credit Suisse Group AG is comprised of a number of legal entities around the world that are subject to distinct regulatory requirements. Credit Suisses address is Eleven Madison Avenue, New York, New York 10010. As of
June 30, 2021, Credit Suisse managed over $74 billion in the U.S. and, together with its global affiliates, managed assets of over $509 billion in 21 countries.
Advisory Agreement
Under the Funds Investment
Advisory Agreement with Credit Suisse, Credit Suisse receives as compensation for its advisory services from the Fund an annual fee, computed weekly and payable quarterly at an annual rate of 0.50% of an average weekly base amount which, with
respect to each quarter, is the average of the lower of (i) the stock price (market value) of the Funds outstanding shares and (ii) the Funds net assets, in each case determined as of the last trading day for each
week during the relevant quarter.
23
Potential Conflicts of Interest. If the Investment Advisers advisory fee, as described above, is
calculated based on the net assets of the Fund, the Investment Adviser will benefit from the increase in Fund assets that will result from offerings of Shares. It is not possible to state precisely the amount of additional compensation that
the Investment Adviser might receive as a result of the offerings because it is not known how many Shares will be sold and because the proceeds of offerings will be invested in additional portfolio securities, which will fluctuate in value.
A discussion regarding the basis for the Boards approval of the Investment Advisory Agreement is available in the Funds 2020 Annual Report to
shareholders.
Administrator
State Street serves as
the Funds administrator. The Fund pays State Street, for administrative services, a fee, exclusive of out-of-pocket expenses, calculated in total for all the funds
advised by Credit Suisse that are administered or co-administered by State Street and allocated based upon the relative average net assets of each fund, subject to an annual minimum fee.
Portfolio Management
The Credit Investments Group
(previously defined as CIG) is responsible for the day-to-day portfolio management of the Fund. The current team members responsible for managing the Fund
are Thomas J. Flannery, David J. Mechlin, Joshua Shedroff and Wing Chan. Thomas J. Flannery, David J. Mechlin, Joshua Shedroff and Wing Chan are the portfolio managers of the team sharing in the day-to-day responsibilities of portfolio management, including overall industry, credit, duration, yield curve positioning and security selection and industry and issuer allocations.
Thomas J. Flannery is a Managing Director of Credit Suisse and a Portfolio Manager for CIG, with responsibility for trading, directing investment decisions,
and originating and analyzing investment opportunities. Mr. Flannery is also a member of the CIG Credit Committee and is currently a high yield bond portfolio manager and trader for CIG. Mr. Flannery joined Credit Suisse in November 2000
through the merger with DLJ. Previous to CIG, Mr. Flannery served as an Associate at First Dominion Capital, LLC, which he joined in 1998. Mr. Flannery began his career with Houlihan Lokey Howard & Zukin, Inc., where he served as
an Analyst in the Financial Restructuring Group, working on a variety of debtor and creditor representation assignments. Mr. Flannery graduated with a Bachelor of Science degree in Finance from Georgetown University.
David Mechlin is a Managing Director of Credit Suisse and a Portfolio Manager for CIG with responsibility for senior loans and high yield bonds. He joined CIG
as a credit analyst in 2006. Mr. Mechlin holds a B.S. in Finance and Accounting from Stern School of Business at New York University. Mr. Mechlin is a CFA Charterholder.
Joshua Shedroff is a Director of Credit Suisse and a Portfolio Manager for the Credit Investments Group with responsibility for senior loans and high yield.
Previously he served as an Associate at The GlenRock Group, a private equity firm, where he evaluated and executed growth equity and leveraged buyout transactions. Prior to that, he worked in the Corporate Development Group at AboveNet, where he
focused on their Chapter 11 restructuring. Mr. Shedroff began his career in the Investment Banking Division at Salomon Smith Barney. Mr. Shedroff received an M.B.A. with honors from the Wharton School at the University of Pennsylvania and
a B.A. with honors in Economics from Brandeis University.
Wing Chan is a Managing Director of Credit Suisse and a Portfolio Manager for CIG.
Ms. Chan is also a member of the CIG Credit Committee. Prior to joining Credit Suisse in 2005, Ms. Chan served as an Associate Portfolio Manager in Invescos High Yield group. Previously, Ms. Chan worked at JP Morgan Fleming
Asset Management where she shared responsibility for the management of Structured and Long Duration products. Ms. Chan earned a double B.S. in Economics and Finance from the Massachusetts Institute of Technology. Ms. Chan is a CFA
Charterholder, and holds Series 3, 7 and 63 licenses.
The SAI provides additional information about the portfolio managers compensation, other
accounts managed by the portfolio managers and the portfolio managers ownership of securities in the Fund.
24
EXPENSES
Credit Suisse and State Street are each obligated to pay expenses associated with providing the services contemplated by the agreements to which they are
parties, including compensation of and office space for their respective officers and employees connected with investment and economic research, trading and investment management and administration of the Fund, as well as the fees of all Directors
of the Fund who are affiliated with those companies or any of their affiliates, if any. The Fund pays all other expenses incurred in the operation of the Fund including, among other things, expenses for legal and independent registered public
accounting firms services, costs of printing proxies, stock certificates and shareholder reports, charges of the custodian, any sub-custodians and the transfer and dividend-paying agent, expenses in
connection with the dividend reinvestment and cash purchase plan (see Dividends and Distributions and Dividend Reinvestment and Cash Purchase Plan), SEC fees, fees and expenses of Independent Directors, accounting and pricing
costs, membership fees in trade associations, fidelity bond coverage for the Funds officers and employees, directors and officers errors and omissions insurance coverage, interest, brokerage costs and stock exchange fees, stock
exchange listing fees and expenses, expenses of qualifying the Funds shares for sale in various states, litigation and other extraordinary or non-recurring expenses, and other expenses properly payable
by the Fund.
NET ASSET VALUE
The net asset value of the Fund is determined daily as of the close of regular trading on the New York Stock Exchange, Inc. (the Exchange) on each
day the Exchange is open for business. For purposes of determining the net asset value, the value of the securities held by the Fund plus any cash or other assets (including interest accrued but not yet received) minus all liabilities (including
accrued expenses) is divided by the total number of Shares outstanding at such time. The Fund determines and makes available for publication the net asset value of its Shares daily.
The following is a description of the procedures used by the Fund in valuing its assets.
Debt securities with a remaining maturity greater than 60 days are valued in accordance with the price supplied by a pricing service, which may use a matrix,
formula or other objective method that takes into consideration market indices, yield curves and other specific adjustments. Debt obligations that will mature in 60 days or less are valued on the basis of amortized cost, which approximates market
value, unless it is determined that using this method would not represent fair value.
Equity investments are valued at market value, which is generally
determined using the closing price on the exchange or market on which the security is primarily traded at the time of valuation (the Valuation Time). If no sales are reported, equity investments are generally valued at the most recent
bid quotation as of the Valuation Time or at the lowest asked quotation in the case of a short sale of securities.
Forward currency contracts are valued
at the prevailing forward exchange rate of the underlying currencies.
Investments in open-end investment
companies are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available, or
whose values have been materially affected by events occurring before the Funds Valuation Time but after the close of the securities primary markets, are valued at fair value as determined in good faith by, or under the direction of, the
Board under procedures established by the Board. The Funds estimate of fair value assumes a willing buyer and a willing seller neither acting under the compulsion to buy or sell. Although these securities may be resold in privately negotiated
transactions, the prices realized on such sales could differ from the prices originally paid by the Fund or the current carrying values, and the difference could be material.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends on a monthly basis. Distributions of net realized capital gains, if any, are declared and paid at least annually. The
Funds dividend policy is to distribute substantially all of its net investment
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income to its shareholders on a monthly basis. However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of common stock of the Fund, the Fund may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any month pay out such accumulated but
undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the Fund for any particular month may be more or less than the amount of net investment income earned by the Fund during such month.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund offers a Dividend Reinvestment and Cash Purchase Plan (the Plan) to its common stockholders. Please refer to the
section of the Funds most recent annual report on Form N-CSR for
the fiscal year ended December 31, 2020 filed on February 25, 2021 entitled Dividend Reinvestment and Cash Purchase Plan, which is incorporated by reference herein, for a discussion of the Plan.
FEDERAL INCOME TAXATION
Taxation of the Fund
The Fund is treated as a separate
entity for U.S. federal income tax purposes. The Fund has elected to be treated, and has qualified and intends to continue to qualify each year, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the Code), so that it will not pay U.S. federal income tax on income and capital gains distributed to shareholders. In order to qualify as a regulated investment company under Subchapter M of the Code, the Fund must, among
other things, (i) derive at least 90% of its gross income for each taxable year from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures, and forward contracts) derived with respect to its business of investing in such stock, securities or currencies, and net income derived from an interest in a qualified publicly traded partnership
(as defined in Section 851(h) of the Code) (the 90% income test) and (ii) diversify its holdings so that, at the end of each quarter of each taxable year: (a) at least 50% of the value of the Funds total assets is
represented by (1) cash and cash items, U.S. government securities, securities of other regulated investment companies, and (2) other securities, with such other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the Funds total assets and to not more than 10% of the outstanding voting securities of such issuer and (b) not more than 25% of the value of the Funds total assets is invested in (1) the securities
(other than U.S. government securities and securities of other regulated investment companies) of any one issuer, (2) the securities (other than securities of other regulated investment companies) of two or more issuers that the Fund controls
and that are engaged in the same, similar, or related trades or businesses, or (3) the securities of one or more qualified publicly traded partnerships.
For purposes of the 90% income test, the character of income earned by any entities in which the Fund may invest that are not treated as corporations for U.S.
federal income tax purposes (e.g., partnerships other than certain publicly traded partnerships taxable as corporations or grantor trusts) will generally pass through to the fund. Consequently, in order to
qualify as a regulated investment company, the Fund may be required to limit its equity investments in such entities that earn fee income, rental income, insurance income or other non-qualifying income.
Although in general the passive loss rules of the Code do not apply to regulated investment companies, such rules do apply to a regulated investment
company with respect to items attributable to an interest in a qualified publicly traded partnership. Fund investments in partnerships, including in qualified publicly traded partnerships, may result in the funds being subject to state, local
or foreign income, franchise or withholding tax liabilities.
If the Fund qualifies as a regulated investment company and properly distributes to its
shareholders each taxable year an amount equal to or exceeding the sum of (i) 90% of its investment company taxable income as that term is defined in the Code (which includes, among other things, dividends, taxable interest, and the
excess of any net short-term capital gains over net long-term capital losses, as reduced by certain deductible expenses) without regard to the deduction for dividends paid and (ii) 90% of the excess of its gross
tax-exempt interest income, if any, over certain disallowed deductions, the Fund generally will not be subject to U.S. federal income tax on any income of the Fund, distributed to shareholders, including
net capital gain (the excess of net long-term capital gain over net short-term capital loss). However, if the Fund meets such distribution requirements, but chooses to retain some portion of its
26
taxable income or gains, it generally will be subject to U.S. federal income tax at regular corporate rates on
the amount retained. The Fund may designate certain amounts retained as undistributed net capital gain in a notice to its shareholders, who (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital
gain, their proportionate shares of the undistributed amount so designated, (ii) will be entitled to credit their proportionate shares of the income tax paid by the Fund on that undistributed amount against their federal income tax liabilities
and to claim refunds to the extent such credits exceed their liabilities and (iii) will be entitled to increase their tax basis, for federal income tax purposes, in their Shares by an amount equal to the excess of the amount of undistributed
net capital gain included in their respective income over their respective income tax credits. The Fund intends to distribute at least annually all or substantially all of its investment company taxable income (computed without regard to the
dividends-paid deduction), net tax-exempt interest income, and net capital gain.
The Funds investment
strategy will potentially be limited by its intention to qualify for treatment as a RIC. The tax treatment of certain of the Funds investments under one or more of the qualification or distribution tests applicable to RICs is not certain. An
adverse determination or future guidance by the IRS or a change in law might affect the Funds ability to qualify for such treatment.
The Fund
may be able to cure a failure to derive 90% of its income from the sources specified above or a failure to diversity its holdings in the manner described above by paying a tax and/or by disposing of certain assets. If, in any taxable year, the Fund
fails one of these tests and does not timely cure the failure or does not satisfy the 90% distribution requirement, the Fund will be taxed in the same manner as an ordinary corporation and distributions to its shareholders will not be deductible by
the Fund in computing its taxable income.
The Code imposes a 4% nondeductible excise tax on the Fund to the extent it does not distribute by the end
of any calendar year at least the sum of (i) 98% of its taxable ordinary income for that year and (ii) 98.2% of its capital gain net income (both long-term and short-term) for the one-year period ending, as a
general rule, on October 31 of that year. For this purpose, however, any ordinary income or capital gain net income retained by the Fund that is subject to corporate income tax will be considered to have been distributed by year-end. In addition, the minimum amounts that must be distributed in any year to avoid the excise tax will be increased or decreased to reflect any underdistribution or overdistribution, as the case may be, from
the previous year. The Fund anticipates that it will pay such dividends and will make such distributions as are necessary in order to avoid the application of this excise tax.
Fund Distributions
The Fund declares a dividend from
net investment income (excluding capital gains) each month. Dividends are normally paid on the last business day of the month or shortly thereafter. The Fund typically distributes any net short-term and long-term capital gains in December. Dividends
from income and/or capital gains may also be paid at such other times as may be necessary for the Fund to avoid U.S. federal income or excise tax.
For
U.S. federal income tax purposes, all dividends from the Fund generally are taxable whether a shareholder takes them in cash or reinvests them in additional shares of the Fund. In general, assuming that the Fund has sufficient earnings and profits,
dividends from net investment income and from net short-term capital gains are taxable as ordinary income.
Dividends from income and/or capital gains may
also be paid at such other times as may be necessary for the Fund to avoid U.S. federal income or excise tax.
A 3.8% excise tax will be imposed on net
investment income, including, among other things, dividends, interest and net gains from investments, of individuals with annual income of $200,000 or more ($250,000 if married, filing jointly), and of estates and trusts.
Distributions by the Fund in excess of the Funds current and accumulated earnings and profits will be treated as a return of capital to the extent of
the shareholders tax basis in its Shares and will reduce such basis. Any such amount in excess of that basis will be treated as gain from the sale of Shares, as discussed below.
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Distributions from net capital gains, if any, that are reported as capital gain dividends by the Fund are taxable
as long-term capital gains for U.S. federal income tax purposes without regard to the length of time the shareholder has held Shares of the Fund. Capital gain dividends distributed by the Fund to individual and certain other noncorporate
shareholders generally will qualify for reduced U.S. federal income tax rates (a maximum rate of 20% for individuals with income above certain inflation-adjusted thresholds) on long-term capital gains, subject to certain limited exceptions. A
shareholder should also be aware that the benefits of the favorable tax rate applicable to long-term capital gains and qualified dividend income may be affected by the application of the alternative minimum tax to individual shareholders.
The U.S. federal income tax status of all distributions will be reported to shareholders annually.
Although dividends generally will be treated as distributed when paid, any dividend declared by the Fund in October, November or December and payable to
shareholders of record in such a month that is paid during the following January will be treated for U.S. federal income tax purposes as received by shareholders on December 31 of the calendar year in which it was declared. In addition, certain
other distributions made after the close of a taxable year of the Fund may be spilled back and treated for certain purposes as paid by the Fund during such taxable year. In such case, shareholders generally will be treated as having
received such dividends in the taxable year in which the distributions were actually made. For purposes of calculating the amount of a regulated investment companys undistributed income and gain subject to the 4% excise tax described above,
such spilled back dividends are treated as paid by the regulated investment company when they are actually paid.
For U.S. federal income
tax purposes, the Fund is permitted to carry forward a net capital loss for any year to offset its future short-term and long-term capital gains, respectively. Capital loss carry forwards are not subject to expiration. To the extent
subsequent capital gains are offset by such losses, they would not result in U.S. federal income tax liability to the Fund and may not be distributed as such to shareholders. The Fund may not carry forward any losses other than net capital losses.
In the event that the Fund were to experience an ownership change as defined under the Code, the Funds loss carryforwards and other favorable tax attributes, if any, may be subject to limitation.
At the time of an investors purchase of fund Shares, a portion of the purchase price may be attributable to realized or unrealized appreciation in the
Funds portfolio or to undistributed capital gains of the Fund. Consequently, subsequent distributions by the Fund with respect to these Shares from such appreciation or gains may be taxable to such investor even if the NAV of the
investors Shares is, as a result of the distributions, reduced below the investors cost for such shares and the distributions economically represent a return of a portion of the investment.
Expenses Subject to Special Pass-Through Rules
The Fund
will not be considered to be a publicly offered RIC if it does not have at least 500 shareholders at all times during a taxable year and its shares are not treated as continuously offered pursuant to a public offering. It is possible
that the Fund will not be treated as a publicly offered RIC for one or more of its taxable years. Very generally, pursuant to Treasury Department regulations, expenses of a RIC that is not publicly offered, except those
specific to its status as a RIC or separate entity (e.g., registration fees or transfer agency fees), are subject to special pass-through rules. These expenses (which include direct and certain indirect advisory fees) are treated as
additional dividends to certain Fund shareholders (generally including other RICs that are not publicly offered, individuals and entities that compute their taxable income in the same manner as an individual), and, other than in the case
of a shareholder that is a RIC that is not publicly offered, are not deductible by those shareholders under current law.
Sale, Exchange or
Repurchase of Shares
Sales and exchanges generally are taxable events for shareholders that are subject to tax. Shareholders should consult their own
tax advisers with reference to their individual circumstances to determine whether any particular transaction in fund shares is properly treated as a sale for tax purposes, as the following discussion assumes, and the tax treatment of any gains or
losses recognized in such transactions. In general, if fund shares are sold, the shareholder will recognize gain or loss equal to the difference between the amount realized on the sale and the shareholders adjusted basis in the shares. Such
gain or loss generally will be treated as long-term capital gain or
28
loss if the shares were held for more than one year and otherwise generally will be treated as short-term capital
gain or loss. Any loss recognized by a shareholder upon the sale or other disposition of Shares with a tax holding period of six months or less will be treated as a long-term capital loss to the extent of any amounts treated as distributions to the
shareholder of long-term capital gain with respect to such Shares (including any amounts credited to the shareholder as undistributed capital gains).
The
Fund may report to the IRS the amount of proceeds that a shareholder receives from a repurchase of Shares. The Fund may also report the shareholders basis in those Shares and whether any gain or loss that the shareholder realizes on the
repurchase is short-term or long-term gain or loss. If a shareholder has a different basis for different Shares of the Fund in the same account (e.g., if a shareholder purchased Shares in the same account at different times for different prices,
including as the result of reinvestment of dividends), the Fund will calculate the basis of the Shares using its default method unless the shareholder has properly elected to use a different method. The Funds default method for calculating
basis will be the average basis method, under which the basis per share is reported as the average of the bases of all of the shareholders Shares in the account. A shareholder may elect, on an account-by-account basis, to use a method other than average basis by following procedures established by the Fund. If such an election is made on or prior to the date of the first repurchase of Shares in the
account and on or prior to the date that is one year after the shareholder receives notice of the Funds default method, the new election will generally apply as if the average basis method had never been in effect for such account. If such an
election is not made on or prior to such dates, the Shares in the account at the time of the election will generally retain their averaged bases. Shareholders should consult their tax advisers concerning the tax consequences of applying the average
basis method or electing another method of basis calculation.
Losses on sales or other dispositions of Shares may be disallowed under wash
sale rules in the event of other investments in the Fund (including those made pursuant to reinvestment of dividends and/or capital gain distributions) within a period of 61 days beginning 30 days before and ending 30 days after a sale or
other disposition of Shares. In such a case, the disallowed portion of any loss generally would be included in the U.S. federal tax basis of the Shares acquired in the other investments.
Tax Shelter Reporting Regulations
Under Treasury
regulations, if a shareholder recognizes a loss with respect to Shares of $2 million or more for an individual shareholder, or $10 million or more for a corporate shareholder, in any single taxable year (or of certain greater amounts over
a combination of years), the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Shareholders who own portfolio securities directly are in many cases excepted from this reporting requirement but, under current guidance,
shareholders of regulated investment companies are not excepted. A shareholder who fails to make the required disclosure to the IRS may be subject to substantial penalties. The fact that a loss is reportable under these regulations does not affect
the legal determination of whether or not the taxpayers treatment of the loss is proper. Shareholders should consult with their tax advisers to determine the applicability of these regulations in light of their individual circumstances.
Tax-Exempt Shareholders
Shareholders that are exempt from U.S. federal income tax, such as retirement plans that are qualified under Section 401 of the Code, generally are not
subject to U.S. federal income tax on otherwise-taxable fund dividends or distributions, or on sales or exchanges of fund Shares unless the Shares are debt-financed property within the meaning of the Code. However, in the case of fund
shares held through a non-qualified deferred compensation plan, fund dividends and distributions received by the plan and sales and exchanges of fund shares by the plan generally are taxable to the employer
sponsoring such plan in accordance with the U.S. federal income tax laws that are generally applicable to shareholders receiving such dividends or distributions from regulated investment companies such as the Fund.
A plan participant whose retirement plan invests in the Fund, whether such plan is qualified or not, generally is not taxed on any fund dividends or
distributions received by the plan or on sales or exchanges of fund shares by the plan for U.S. federal income tax purposes. However, distributions to plan participants from a retirement plan account generally are taxable as ordinary income, and
different tax treatment, including penalties on certain excess contributions and deferrals, certain pre-retirement and post-retirement distributions and certain prohibited
29
transactions, is accorded to accounts maintained as qualified retirement plans. Shareholders should consult their
tax advisers for more information.
Taxation of Fund Investments
The Fund may invest to a significant extent in debt obligations that are in the lowest rating categories or that are unrated, including debt obligations of
issuers not currently paying interest or that are in default. Investments in debt obligations that are at risk of or in default present special tax issues for the Fund. Federal income tax rules are not entirely clear about issues such as when the
Fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless securities, how payments received on obligations in default should be allocated between
principal and interest and whether certain exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by the Fund, in the event it invests in or holds such securities, in order to seek to ensure that it
distributes sufficient income to preserve its status as a regulated investment company and does not become subject to U.S. federal income or excise tax.
If the Fund invests in certain pay-in-kind securities, zero coupon securities,
deferred interest securities or, in general, any other securities with original issue discount (or with market discount if the Fund elects to include market discount in income currently), the Fund generally must accrue income on such investments for
each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, the Fund must distribute to its shareholders, at least annually, all or substantially all of its investment company taxable income
(determined without regard to the deduction for dividends paid) and net tax-exempt income, including such accrued income, to qualify to be treated as a regulated investment company under the Code and avoid
U.S. federal income and excise taxes. Therefore, the Fund may have to dispose of its portfolio securities, potentially under disadvantageous circumstances, to generate cash, or may have to borrow the cash, to satisfy distribution requirements. Such
a disposition of securities may potentially result in additional taxable gain or loss to the Fund.
Options written or purchased and futures contracts
entered into by the Fund on certain securities, indices and foreign currencies, as well as certain forward foreign currency contracts, may cause the Fund to recognize gains or losses from marking-to-market even though such options may not have lapsed or been closed out or exercised, or such futures or forward contracts may not have been performed or closed out. The tax rules applicable to
these contracts may affect the characterization of some capital gains and losses realized by the Fund as long-term or short-term. Certain options, futures and forward contracts relating to foreign currency may be subject to Section 988 of the
Code, and accordingly may produce ordinary income or loss. Additionally, the Fund may be required to recognize gain if an option, futures contract, forward contract, or short sale that is not subject to the mark-to-market rules is treated as a constructive sale of an appreciated financial position held by the Fund under Section 1259 of the Code. Any net
mark-to-market gains and/or gains from constructive sales may also have to be distributed to satisfy the distribution requirements referred to above even though the Fund
may receive no corresponding cash amounts, possibly requiring the disposition of portfolio securities or borrowing to obtain the necessary cash. Such a disposition of securities may potentially result in additional taxable gain or loss to the Fund.
Losses on certain options, futures or forward contracts and/or offsetting positions (portfolio securities or other positions with respect to which the Funds risk of loss is substantially diminished by one or more options, futures or forward
contracts) may also be deferred under the tax straddle rules of the Code, which may also affect the characterization of capital gains or losses from straddle positions and certain successor positions as long-term or short-term. Certain tax elections
may be available that would enable the Fund to ameliorate some adverse effects of the tax rules described in this paragraph. The tax rules applicable to options, futures, forward contracts and straddles may affect the amount, timing and character of
the Funds income and gains or losses and hence of its distributions to shareholders.
As a result of entering into swap contracts, the Fund may
make or receive periodic net payments. The Fund may also make or receive a payment when a swap is terminated prior to maturity through an assignment of the swap or other closing transaction. Periodic net payments will generally constitute ordinary
income or deductions, while termination of a swap will generally result in capital gain or loss (which will be a long-term capital gain or loss if the fund has been a party to the swap for more than one year). With respect to certain types of swaps,
the Fund may be required to currently recognize income or loss with respect to future payments on such swaps or may elect under certain circumstances to mark such swaps to market annually for tax purposes as ordinary income or loss.
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The Fund may be subject to withholding and other taxes imposed by foreign countries, including taxes on
interest, dividends and capital gains with respect to its investments in those countries. Any such taxes would, if imposed, reduce the yield on or return from those investments. Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes in some cases. The Fund may be able to elect to pass through to its shareholders any share of foreign taxes paid by the Fund; if the Fund is able to, and makes, this election, shareholders would include such taxes
in their gross incomes and would be entitled to a tax deduction or credit for such taxes on their own tax returns.
Backup Withholding
The Fund is required to withhold (as backup withholding) 24% of reportable payments, including dividends, capital gain distributions and
the proceeds of redemptions or repurchases of Shares paid to shareholders who have not complied with certain IRS regulations. In order to avoid this withholding requirement, shareholders, other than certain exempt entities, must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security Number or other Taxpayer Identification Number they provide is their correct number and that they are not currently subject to
backup withholding, or that they are exempt from backup withholding. The Fund may nevertheless be required to backup withhold if it receives notice from the IRS or a broker that the number provided is incorrect or backup withholding is applicable as
a result of previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment company under the
Code, it will not be required to pay any Massachusetts income, corporate excise or franchise taxes or any Delaware corporation income tax.
A state income
(and possibly local income and/or intangible property) tax exemption is generally available to shareholders to the extent the Funds distributions are derived from interest on (or, in the case of intangible property taxes, the value of its
assets is attributable to) certain U.S. government obligations, provided in some states that certain thresholds for holdings of such obligations and/or reporting requirements are satisfied. The Fund will not seek to satisfy any threshold or
reporting requirements that may apply in particular taxing jurisdictions, although the Fund may in its sole discretion provide relevant information to shareholders.
Non-U.S. Shareholders
In general, dividends (other than capital gain dividends) paid by the Fund to a person who is not a U.S. person within the meaning of the Code are
subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate). However, the Code provides a withholding tax exemption, if the Fund so elects, for certain interest-related dividends and short-term capital gain
dividends paid to such shareholders.
Separately, a 30% withholding tax is currently imposed on U.S.-source dividends, interest and other income items
paid to (i) foreign financial institutions including non-U.S. investment funds unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and
(ii) certain other foreign entities, unless they certify certain information regarding their direct and indirect U.S. owners. To avoid withholding, foreign financial institutions will need to (i) enter into agreements with the IRS that
state that they will provide the IRS information, including the names, addresses and taxpayer identification numbers of direct and indirect U.S. account holders, comply with due diligence procedures with respect to the identification of U.S.
accounts, report to the IRS certain information with respect to U.S. accounts maintained, agree to withhold tax on certain payments made to non-compliant foreign financial institutions or to account holders
who fail to provide the required information, and determine certain other information as to their account holders, or (ii) in the event that an applicable intergovernmental agreement and implementing legislation are adopted, provide local
revenue authorities with similar account holder information. Other foreign entities will need to either provide the name, address, and taxpayer identification number of each substantial U.S. owner or certifications of no substantial U.S. ownership
unless certain exceptions apply.
Shares of the Fund held by a non-U.S. shareholder at death will be considered
situated within the United States and subject to the U.S. estate tax.
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REPURCHASE OF SHARES
Shares of closed-end management investment companies often trade at a discount to their net asset values, and the
Shares may likewise trade at a discount to their net asset value, although it is possible that they may trade at a premium above net asset value. The market price of the Shares will be determined by such factors as relative demand for and supply of
such Shares in the market, the Funds net asset value, general market and economic conditions and other factors beyond the control of the Fund. See Net Asset Value. Although the shareholders will not have the right to redeem their
Shares, the Fund may take action to repurchase Shares in the open market or make tender offers for Shares at their net asset value. This may have the effect of reducing any market discount from net asset value.
There is no assurance that if action is undertaken to repurchase or tender for Shares, such action will result in the Shares trading at a price which
approximates their net asset value. Although Share repurchases and tenders could have a favorable effect on the market price of the Shares, it should be recognized that the acquisition of Shares by the Fund will decrease the total assets of the Fund
and, therefore, have the effect of increasing the Funds expense ratio. Any Share repurchases or tender offers will be made in accordance with requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act.
DESCRIPTION OF SHARES
General
The Fund is authorized to issue 100,000,000
Shares. Each Share has one vote and, when issued and paid for in accordance with the terms of the offer, will be fully paid and non-assessable. Shares of one class have equal rights as to dividends and in
liquidation. Shares have no preemptive, subscription or conversion rights and are freely transferable. The Fund will send annual and semi-annual financial statements to all its Shareholders.
Offerings of Shares, if made, will require approval of the Board. Any additional offering will not be made at a price per Share below the then current net
asset value (exclusive of underwriting discounts and commissions) except in connection with an offering to existing shareholders or with the consent of a majority of the Funds outstanding Shares.
Common Stock
The Funds common stock is publicly
held and are listed and traded on the NYSE American under the symbol CIK.
As of November 15, 2021, the net asset value per Share of
the Fund was $3.44 and on that date the closing price per Share on the NYSE American was $3.52, meaning the Funds Shares were trading at a 2.33% premium to the Funds net asset value per Share.
Although the Funds Shares have recently traded at a premium to their net asset value, the Funds Shares have in the past traded at a discount to
their net asset value. The Fund cannot determine the reasons why the Funds Shares trade at a premium to or discount from net asset value, nor can the Fund predict whether its Shares will trade in the future at a premium to or discount from net
asset value, or the level of any premium or discount. Shares of closed-end investment companies frequently trade at a discount from net asset value.
Anti-Takeover Provisions in the Articles of Incorporation
The Maryland General Corporation Law and the Charter and Bylaws contain provisions that could make it more difficult for a potential acquirer to acquire
control of the Fund or to change the composition of its Board of Directors, and could have the effect of depriving shareholders of certain opportunities to sell their Shares at a premium over prevailing market prices by discouraging a third party
from seeking to obtain control of the Fund. These provisions are designed to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of the Fund to negotiate first with the
Board of Directors. The Fund
32
believes that the benefits of these provisions outweigh the potential disadvantages of discouraging any such
acquisition proposals because, among other things, the negotiation of such proposals may improve their terms. The Board has determined that these provisions are in the best interests of shareholders generally.
The Charter and By-laws provide that the Board of Directors shall be divided into three staggered classes, each having
a three-year term, so that only one class of directors is elected each year. This provision could delay for up to two years the replacement of a majority of the Board. Removal of any director may occur by a majority shareholder vote (but not without
cause), which is not higher than the minimum requirements under Maryland law. The Charter and By-laws give the Board of Directors sole authority over By-law amendments.
The By-laws provide that with respect to an annual meeting of shareholders, nominations of persons for election
to the Board of Directors and the proposal of business to be considered by shareholders may be made only (1) pursuant to the notice of the meeting, (2) by the Board or (3) by a shareholder who is entitled to vote at the meeting and
who has complied with the advance notice procedures of the By-laws. With respect to special meetings of the shareholders, only the business specified in the notice of the meeting may be brought before the
meeting. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) pursuant to the notice of the meeting, (2) by the Board or (3) provided that the Board has determined that directors will
be elected at the meeting, by a shareholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws.
The By-laws provide that special meetings of shareholders may be called by the Board and certain of the Funds
officers. Additionally, the Bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the shareholders requesting the meeting, a special meeting of shareholders will be called by the secretary of the
Fund upon the written request of shareholders entitled to cast not less than a majority of all votes entitled to be cast at such meeting.
PLAN OF DISTRIBUTION
We may sell Shares through underwriters or dealers, directly to one or more purchasers, through agents, to or through underwriters or dealers, or through a
combination of any such methods of sale. The applicable Prospectus Supplement will identify any underwriter or agent involved in the offer and sale of our Shares, any sales loads, discounts, commissions, fees or other compensation paid to any
underwriter, dealer or agent, the offering price, net proceeds and use of proceeds and the terms of any sale.
The distribution of our Shares may be
effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, or at negotiated prices. Sales of Shares
may be made in negotiated transactions or transactions that are deemed to be at the market as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE American or sales made to or through a market maker
other than on an exchange.
We may sell our Shares directly to, and solicit offers from, institutional investors or others who may be deemed to be
underwriters as defined in the Securities Act for any resales of the securities. In this case, no underwriters or agents would be involved. We may use electronic media, including the Internet, to sell offered securities directly.
In connection with the sale of our Shares, underwriters or agents may receive compensation from us in the form of discounts, concessions or commissions.
Underwriters may sell our Shares to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of our Shares may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from us and any profit realized by them on the resale of
our Shares may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified and any such compensation received from us will be described in the applicable Prospectus Supplement.
The maximum amount of compensation to be received by any FINRA member or independent broker-dealer will not exceed eight percent for the sale of any securities being registered pursuant to SEC Rule 415. We will not pay any compensation to any
underwriter or agent in the form of warrants, options, consulting or structuring fees or similar arrangements.
33
If a Prospectus Supplement so indicates, we may grant the underwriters an option to purchase additional Shares at
the public offering price, less the underwriting discounts and commissions, within 45 days from the date of the Prospectus Supplement, to cover any over-allotments.
Under agreements into which we may enter, underwriters, dealers and agents who participate in the distribution of our Shares may be entitled to
indemnification by us against certain liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, we will ourselves, or will authorize underwriters or other persons acting as our agents to solicit
offers by certain institutions to purchase our Shares from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies,
pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by us. The obligation of any purchaser under any such contract will be subject to the condition that the
purchase of the Shares shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or
performance of such contracts. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement, and the Prospectus Supplement will set forth the commission payable for solicitation of such contracts.
To the extent permitted under the 1940 Act and the rules and regulations promulgated thereunder, the underwriters may from time to time act as brokers or
dealers and receive fees in connection with the execution of our portfolio transactions after the underwriters have ceased to be underwriters and, subject to certain restrictions, each may act as a broker while it is an underwriter.
A Prospectus and accompanying Prospectus Supplement in electronic form may be made available on the websites maintained by underwriters. The underwriters may
agree to allocate a number of securities for sale to their online brokerage account holders. Such allocations of securities for Internet distributions will be made on the same basis as other allocations. In addition, securities may be sold by the
underwriters to securities dealers who resell securities to online brokerage account holders.
In order to comply with the securities laws of certain
states, if applicable, our Shares offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers.
CLOSED-END FUND STRUCTURE
Closed-end funds differ from open-end investment companies (commonly referred
to as mutual funds) in that closed-end funds generally list their shares for trading on a securities exchange and do not redeem their shares at the option of the shareholder. By comparison, mutual funds issue
securities redeemable at NAV at the option of the shareholder and typically engage in a continuous offering of their shares. Mutual funds are subject to continuous asset in-flows and out-flows that can complicate portfolio management, whereas closed-end funds generally can stay more fully invested in securities consistent with the closed-end funds investment objective and policies. In addition, in comparison to open-end funds, closed-end funds have greater
flexibility in their ability to make certain types of investments, including investments in illiquid securities.
However, shares of closed-end investment companies listed for trading on a securities exchange frequently trade at a discount from NAV, although in some cases they may trade at a premium. The market price may be affected by trading
volume of the shares, general market and economic conditions and other factors beyond the control of the closed-end fund. The foregoing factors may result in the market price of the shares being greater than,
less than or equal to NAV. The Board has reviewed the structure of the Fund in light of its investment objective and policies and has determined that the closed-end structure is in the best interests of the
shareholders. As described above, however, the Board will review periodically the trading range and activity of the Funds shares of common stock with respect to its NAV and the Board may take certain actions to seek to reduce or eliminate any
such discount. Such actions may include open market repurchases or tender offers for the shares of common stock at net asset value or the possible conversion of the Fund to an open-end investment company.
There can be no assurance that the
34
Board will decide to undertake any of these actions or that, if undertaken, such actions would result in the
shares of common stock trading at a price equal to or close to net asset value per share.
CUSTODIAN,
TRANSFER AGENT AND DIVIDEND-PAYING AGENT
State Street serves as the Funds custodian pursuant to a custody agreement. Under the custody
agreement, the Custodian holds the Funds assets in compliance with the 1940 Act. State Street is located at One Lincoln Street, Boston, Massachusetts 02111.
Computershare Trust Company, N.A. acts as the Funds transfer agent and dividend-paying agent under the Funds dividend reinvestment and cash
purchase plan. Computershare Trust Company, N.A. is located at P.O. Box 30170, College Station, TX 77842-3170.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Fund or the Investment Adviser is a party.
REPORTS TO SHAREHOLDERS
The Fund will send unaudited semi-annual and audited annual reports to shareholders, including a list of the portfolio investments held by the Fund.
INCORPORATION BY REFERENCE
This Prospectus is part of a registration statement that we have filed with the SEC. We are allowed to incorporate by reference the information
that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. We incorporate by reference into this Prospectus the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any filings on or after the date of this Prospectus from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered
securities to which this Prospectus and any accompanying prospectus supplement relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this Prospectus. Any statement in a document
incorporated by reference into this Prospectus will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this Prospectus or (2) any other subsequently filed document that is incorporated by
reference into this Prospectus modifies or supersedes such statement. The documents incorporated by reference herein include:
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our annual
report on Form N-CSR for the fiscal year ended December 31, 2020 filed with the SEC on February 25, 2021;
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our semi-annual report
on Form N-CSR for semi-annual fiscal period ended June 30, 2021 filed with the SEC on August 16, 2021; and
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the description of the Funds
common stock contained in our Registration Statement on Form 8-A (File No. 001-09452) filed with the SEC on May 11, 2006, including any
amendment or report filed for the purpose of updating such description prior to the termination of the offering registered hereby.
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The Fund will provide, free of charge, to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or
oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this Prospectus or the accompanying prospectus supplement. You should direct requests for documents by writing to:
c/o Credit Suisse Asset Management, LLC
Eleven Madison Avenue
35
New York, New York 10010
The Fund makes available this Prospectus, SAI and the Funds annual and semi-annual reports, free of charge, at www.credit-suisse.com/us/funds. You may
also obtain this Prospectus, the SAI, other documents incorporated by reference and other information the Fund files electronically, including reports and proxy statements, on the SEC website (http://www.sec.gov) or with the payment of a duplication
fee, by electronic request at publicinfo@sec.gov. Information contained in, or that can be accessed through, the Funds website is not incorporated by reference into this Prospectus and should not be considered to be part of this Prospectus or
the accompanying prospectus supplement.
36
$250,000,000
Shares of Common Stock
CREDIT SUISSE ASSET MANAGEMENT
INCOME FUND, INC.
PROSPECTUS
November
[●], 2021
PROSPECTUS SUPPLEMENT
(To Prospectus dated as of [●], 2021)
Filed Pursuant to Rule 424(b)[(2)][(5)]
Registration Statement No. 333-259294
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
Up to $[●] of Common Shares
Credit Suisse Asset Management Income Fund, Inc. (the Fund) has entered into a sales agreement (the sales agreement) with [●]
([●]) relating to its shares of common stock, par value $0.001 per share (Common Shares), offered by this Prospectus Supplement and the accompanying Prospectus. In accordance with the terms of the sales agreement, the
Fund may offer and sell its Common Shares having an aggregate offering price of up to $250,000,000 from time to time through [●] as its agent for the offer and sale of the Common Shares. Under
the Investment Company Act of 1940, as amended (the 1940 Act), the Fund may not sell any Common Shares at a price below the current net asset value of such Common Shares, exclusive of any distributing commission or discount. The Fund is
a diversified, closed-end management investment company with a leveraged capital structure. The Funds investment objective is current income consistent with the preservation of capital. There can be no
assurance that the Fund will achieve its investment objective.
The Funds currently outstanding Common Shares are, and the Common Shares
offered by this Prospectus Supplement and the accompanying Prospectus will be, subject to notice of issuance, listed on the NYSE American under the symbol CIK. The last reported sale price for the Funds Common Shares on the NYSE
American on [●], 2021 was $[●] per share. The net asset value of the Funds Common Shares at the close of business on [●], 2021 was $[●] per share.
Sales of the Common Shares, if any, under this Prospectus Supplement and the accompanying Prospectus may be made in negotiated transactions or transactions
that are deemed to be at the market as defined in Rule 415 under the Securities Act of 1933, as amended (the 1933 Act), including sales made directly on the NYSE American or sales made to or through a market maker other than
on an exchange, at prices related to the prevailing market prices or at negotiated prices.
[●] will be entitled to compensation of between
[●] and [●] basis points of the gross sales price per share for any Common Shares sold under the sales agreement, with the exact amount of such compensation to be mutually agreed upon by the Fund and [●] from time to time. In
connection with the sale of the Common Shares on the Funds behalf, [●] may be deemed to be an underwriter within the meaning of the 1933 Act and the compensation of [●] may be deemed to be underwriting commissions or
discounts.
You should review the information set forth under Risks and Special Considerations on page [●] of the
accompanying Prospectus before investing in the Funds Common Shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this Prospectus Supplement or the accompanying Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus Supplement is [●], 2021.
You should rely only on the information contained in or incorporated by reference into this Prospectus Supplement
and the accompanying Prospectus. This Prospectus Supplement and the accompanying Prospectus set forth certain information about the Fund that a prospective investor should carefully consider before deciding whether to invest in the Funds
Common Shares. This Prospectus Supplement, which describes the specific terms of this offering including the method of distribution, also adds to and updates information contained in the accompanying Prospectus and the documents incorporated by
reference into the accompanying Prospectus. The accompanying Prospectus gives more general information, some of which may not apply to this offering. If the description of this offering varies between this Prospectus Supplement and the accompanying
Prospectus, you should rely on the information contained in this Prospectus Supplement; provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date and incorporated by reference
into the accompanying Prospectus or Prospectus Supplement, the statement in the incorporated document having a later date modifies or supersedes the earlier statement. Neither the Fund nor [●] has authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent information, you should not rely on it. The Fund is not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The
information contained in or incorporated by reference into this Prospectus Supplement and the accompanying Prospectus is accurate only as of the respective dates on their front covers, regardless of the time of delivery of this Prospectus
Supplement, the accompanying Prospectus, or the sale of the Common Shares. The Funds business, financial condition, results of operations and prospects may have changed since those dates.
S-ii
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
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PROSPECTUS SUPPLEMENT SUMMARY
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1
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SUMMARY OF FUND EXPENSES
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2
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USE OF PROCEEDS
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3
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CAPITALIZATION
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3
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TRADING AND NET ASSET VALUE
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4
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PLAN OF DISTRIBUTION
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5
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LEGAL MATTERS
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6
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FINANCIAL STATEMENTS
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6
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ADDITIONAL INFORMATION
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7
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S-iii
You should read this Prospectus Supplement and the accompanying Prospectus before deciding whether to invest
and retain them for future reference. A Statement of Additional Information, dated [●], 2021 (SAI), as supplemented from time to time, containing additional information about the Fund, has been filed with the Securities and
Exchange Commission (SEC) and is incorporated by reference in its entirety into this Prospectus Supplement. You may request a copy of the SAI or request other information, in each case free of charge, about the Fund (including the
Funds annual and semi-annual reports to shareholders) or make shareholder inquiries by calling 1-800-293-1232 or by writing
to the Fund at c/o Credit Suisse Asset Management, LLC, Eleven Madison Avenue, New York, New York 10010. The Funds SAI, as well as the annual and semi-annual reports to shareholders, are also available at the Funds website at
www.credit-suisse.com/us. You may also obtain copies of these documents (and other information regarding the Fund) from the SECs website (http://www.sec.gov).
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement, the accompanying Prospectus and the SAI contain forward-looking statements. Forward-looking statements can be
identified by the words may, will, intend, expect, estimate, continue, plan, anticipate, and similar terms and the negative of such terms. By their
nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Funds actual results
are the performance of the portfolio of securities the Fund holds, the price at which the Funds shares will trade in the public markets and other factors discussed in the Funds periodic filings with the SEC.
Although the Fund believes that the expectations expressed in the forward-looking statements are reasonable, actual results could differ materially from those
projected or assumed in such forward-looking statements. The Funds future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties, such
as those disclosed in the Risks and Special Considerations section of the accompanying Prospectus. All forward-looking statements contained in or incorporated by reference into this Prospectus Supplement or the accompanying Prospectus
are made as of the date of this Prospectus Supplement or the accompanying Prospectus, as the case may be. Except for the Funds ongoing obligations under the federal securities laws, it does not intend, and it undertakes no obligation, to
update any forward-looking statements. The forward-looking statements contained in this Prospectus Supplement, the accompanying Prospectus and the SAI are excluded from the safe harbor protection provided by Section 27A of the 1933 Act.
S-iv
PROSPECTUS SUPPLEMENT SUMMARY
The following information is only a summary. You should consider the more detailed information contained in this Prospectus Supplement, the accompanying
Prospectus, dated [●], 2021 and the SAI, dated [●], 2021, especially the information under Risks and Special Considerations on page [●] of the accompanying Prospectus.
The Fund. The Fund is a diversified, closed-end management investment company organized as a corporation under
the laws of the State of Maryland.
The Funds Common Shares are listed for trading on the NYSE American under the symbol CIK. As of
[●], 2021, the net assets of the Fund were $[●] and the Fund had outstanding [●] Common Shares. As of [●], 2021, the per share net asset value of the Funds Common Shares was $[●] and the per share market price of
the Funds Common Shares was $[●], representing a [●]% premium over such net asset value. See Description of Shares in the accompanying Prospectus.
The investment objective of the Fund is to provide current income consistent with the preservation of capital. The Funds investment portfolio will not
be managed for capital appreciation. The Funds investment objective is a fundamental policy and cannot be changed without the approval of the holders of a majority of the Funds outstanding voting securities. As used herein, a
majority of the Funds outstanding voting securities means the lesser of (a) 67% of the shares represented at a meeting at which more than 50% of the outstanding shares are represented or (b) more than 50% of the outstanding
shares. The Fund is not intended to be a complete investment program and there can be no assurance that the Fund will achieve its objectives.
Under
normal circumstances, the Fund invests at least 75% of its total assets in fixed income securities, such as bonds, convertible securities and preferred stocks. The Funds investments in fixed income securities are not subject to any rating
quality limitation. The Fund primarily invests in high yield fixed income securities that are in the lower rating categories of Moodys Investor Service, Inc. (Moodys), S&P Global Ratings (S&P), a division
of S&P Global Inc., or another nationally recognized ratings service (commonly referred to as junk bonds). Lower-rated securities generally provide yields superior to those of more highly-rated securities, but involve greater risks
and are speculative in nature. The Fund may also invest in securities rated single A or higher by Moodys or S&P and unrated corporate fixed income securities.
Information Regarding the Investment Adviser. Credit Suisse Asset Management, LLC (Credit Suisse or the Investment Adviser),
the Funds investment adviser, is part of the asset management business of Credit Suisse Group AG, one of the worlds leading banks. Credit Suisse serves as the Funds investment adviser with respect to all investments and is
responsible for making all investment decisions. Credit Suisse receives from the Fund, as compensation for its advisory services, a fee, computed weekly and payable quarterly at an annual rate of 0.50% of an average weekly base amount
which, with respect to each quarter, is the average of the lower of (i) the stock price (market value) of the Funds outstanding shares and (ii) the Funds net assets, in each case determined as of the last
trading day for each week during the relevant quarter. [Although it does not currently do so,] Credit Suisse may waive voluntarily a portion of its fees from time to time and temporarily limit the expenses to be borne by the Fund. The Investment
Adviser is located at Eleven Madison Avenue, New York, New York 10010. See Management of the FundInvestment Adviser in the accompanying Prospectus.
The Offering. The Fund and the Investment Adviser entered into a sales agreement with [●] relating to the Common Shares offered by this
Prospectus Supplement and the accompanying Prospectus. In accordance with the terms of the sales agreement, the Fund may offer and sell its Common Shares having an aggregate offering price of up to $[●] from time to
time through [●] as its agent for the offer and sale of the Common Shares.
Sales of the
Funds Common Shares, if any, under this Prospectus Supplement and the accompanying Prospectus may be made in negotiated transactions or transactions that are deemed to be at the market as defined in Rule 415 under the 1933 Act,
including sales made directly on the NYSE American or sales made to or through a market maker other than on an exchange, at prices related to the prevailing market prices or at negotiated prices. See Plan of Distribution in this
Prospectus Supplement. The Funds Common Shares may not be sold through agents, underwriters or dealers without delivery or deemed delivery of a prospectus and a prospectus supplement describing the method and terms of the offering of the
Funds securities. Under the 1940 Act, the Fund may not sell any
S-1
Common Shares at a price below the current net asset value of such Common Shares, exclusive of any distributing
commission or discount.
Use of Proceeds. The Fund intends to invest the net proceeds of this offering in accordance with its investment objectives
and policies as stated in the accompanying Prospectus. Proceeds will be invested within approximately [30] days of receipt by the Fund. Pending such investment, the Fund anticipates investing the proceeds in short-term securities issued by the U.S.
government or its agencies or instrumentalities or in high quality, short-term or long-term debt obligations or money market instruments.
Leverage. The Fund, as of [●], 2021, is leveraged through borrowings from a credit facility in the amount of $[●] or [●]% of the
Funds total assets (including the proceeds of such leverage). The Funds asset coverage ratio as of [●], 2021 was [●]%.
Risks
and Special Considerations. See Risks and Special Considerations beginning on page [●] of the accompanying Prospectus for a discussion of factors you should consider carefully before deciding to invest in the Funds
Common Shares.
SUMMARY OF FUND EXPENSES
The following table and example are intended to assist you in understanding the various costs and expenses directly or indirectly associated with investing in
Common Shares of the Fund. Some of the percentages indicated in the table below are estimates and may vary.
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Shareholder Transaction Expenses
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Sales Load (as a percentage of offering price)
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[●]% (1)
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Offering Expenses (as a percentage of offering price)
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[●]% (2)
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Dividend Reinvestment Plan Fees (per sale or per voluntary cash payment transaction fee)
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$
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5.00 (3)
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Annual Operating Expenses (as a percentage of average net assets attributable to the Funds
Common Shares)
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Management Fees(4)
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0.45%
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Interest Expense on Borrowed Funds(5)
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0.50%
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Other Expenses
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0.30%
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Total Annual Operating Expenses
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1.25%
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(1)
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Represents the estimated commission with respect to the Funds Common Shares being sold in this offering,
which the Fund will pay to [●] in connection with the sales of Common Shares effected by [●] in this offering. While [●] is entitled to a commission of between [●]% and [●]% of the gross sales price for Common Shares
sold, with the exact amount to be agreed upon by the parties, the Fund has assumed, for purposes of this offering, that [●] will receive a commission of [●]% of such gross sales price. This is the only sales load to be paid in connection
with this offering. There is no guarantee that there will be any sales of the Funds Common Shares pursuant to this Prospectus Supplement and the accompanying Prospectus. Actual sales of the Funds Common Shares under this Prospectus
Supplement and the accompanying Prospectus, if any, may be less than as set forth under Capitalization below. In addition, the price per share of any such sale may be greater or less than the price set forth under
Capitalization below, depending on market price of the Funds Common Shares at the time of any such sale.
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(2)
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[Includes the Funds payment of the reasonable fees and expenses of counsel for [●] in
connection with the transactions contemplated by the sales agreement, as described under Plan of Distribution below.]
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(3)
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The Fund bears ongoing expenses associated with the Plan which are included in Other Expenses. There
is no service fee payable by Plan participants for dividend reinvestments; however, shareholders are subject to other transaction costs associated with the Plan. Actual costs will vary for each participant depending on the return and number of
transactions made. For Plan participants that elect to receive voluntary cash payments, Plan participants must pay a service fee of $5.00 per transaction. Plan participants will also be charged a pro rata share of the brokerage commissions for all
open market purchases ($0.03 per share as of October 2021). In addition, if a Plan participant elects by written notice to the Plan administrator to have the plan administrator sell part or all of the shares held by the Plan administrator in the
participants account and remit the proceeds to the participant, the participant will also be charged a service fee of $5.00 for each sale and brokerage commissions of $0.03 per share (as of October 2021). See Dividend Reinvestment and
Cash Purchase Plan in the accompanying Prospectus.
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S-2
(4)
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See Management of the FundInvestment Adviser in the accompanying Prospectus. Credit Suisse
receives from the Fund, as compensation for its advisory services, a fee, computed weekly and payable quarterly at an annual rate of 0.50% of an average weekly base amount which, with respect to each quarter, is the average of the lower of
(i) the stock price (market value) of the Funds outstanding shares and (ii) the Funds net assets, in each case determined as of the last trading day for each week during the relevant quarter.
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(5)
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The Fund may use leverage through borrowings, the costs of which are borne by holders of Shares of the Fund. The
Fund currently borrows under a credit facility.
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Example
An investor would pay the following expenses on a $1,000 investment in the Fund, assuming (1) Total Annual Operating Expenses of [●]%, (2) a Sales
Load (commission) of $[●] and estimated offering expenses of $[●] and (3) a 5% annual return:
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One Year
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Three Years
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Five Years
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Ten Years
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$ [●]
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$ [●]
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$ [●]
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$ [●]
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The Example assumes that all dividends and other distributions are reinvested at net asset value and that the
percentage amounts listed in the table above under Total Annual Operating Expenses remain the same in the years shown. The above table and example and the assumption in the example of a 5% annual return are required by regulations of the SEC that
are applicable to all investment companies; the assumed 5% annual return is not a prediction of, and does not represent, the projected or actual performance of the Funds Common Shares.
The example should not be considered a representation of past or future expenses, and the Funds actual expenses may be greater than or less than
those shown. Moreover, the Funds actual rate of return may be greater or less than the hypothetical 5% return shown in the example.
USE OF PROCEEDS
Sales of the Funds Common Shares, if any, under this Prospectus Supplement and the accompanying Prospectus may be made in negotiated transactions or
transactions that are deemed to be at the market as defined in Rule 415 under the 1933 Act, including sales made directly on the NYSE American or sales made to or through a market maker other than on an exchange, at prices related to the
prevailing market prices or at negotiated prices. There is no guarantee that there will be any sales of the Funds Common Shares pursuant to this Prospectus Supplement and the accompanying Prospectus. Actual sales, if any, of the Funds
Common Shares under this Prospectus Supplement and the accompanying Prospectus may be less than as set forth in this paragraph. In addition, the price per share of any such sale may be greater or less than the price set forth in this paragraph,
depending on the market price of the Funds Common Shares at the time of any such sale. Assuming the sale of all of the Funds Common Shares offered under this Prospectus Supplement and the accompanying Prospectus, at the last
reported sale price of $[●] per share for the Funds Common Shares on the NYSE American as of [●], 2021, the Fund estimates that the net proceeds of this offering will be approximately $[●] after deducting the estimated sales
load and the estimated offering expenses payable by the Fund.
The Fund intends to invest the net proceeds of this offering in accordance with its
investment objectives and policies as stated in the accompanying Prospectus within approximately [30] days of receipt of such proceeds. Pending such investment, the Fund anticipates investing the proceeds in short-term securities issued by the U.S.
government or its agencies or instrumentalities or in high quality, short-term or long-term debt obligations or money market instruments. Following the completion of this offering, the Fund may increase the amount of leverage outstanding.
CAPITALIZATION
Pursuant to the sales agreement with [●] dated [●], 2021 the Fund may offer and sell its Common Shares having an
aggregated offering price of up to $[●] from time to time through [●] as its agent for the offer and sale of the Common Shares under this Prospectus Supplement and the accompanying Prospectus. There is no
guarantee that there will be any sales of the Funds Common Shares pursuant to this Prospectus Supplement and the accompanying
S-3
Prospectus. The table below assumes that the Fund will sell [●] Common Shares, at a price of $[●] per
share (the last reported sale price per share of the Funds Common Shares on the NYSE American on [●], 2021). Actual sales, if any, of the Funds Common Shares under this Prospectus Supplement and the accompanying Prospectus may be
less than as set forth in the table below. In addition, the price per share of any such sale may be greater or less than $[●], depending on the market price of the Funds Common Shares at the time of any such sale. To the extent that the
market price per share of the Funds Common Shares on any given day is less than the net asset value per share on such day, the Fund will instruct [●] not to make any sales on such day.
The following table sets forth the capitalization of the Fund (i) on an actual basis as of December 31, 2020 (audited), (ii) on an
actual basis as of June 30, 2021, and (iii) on a pro forma basis as adjusted to reflect the assumed sale of [●] Common Shares at $[●] per share (the last reported sale price per share of the Funds Common Shares on the
NYSE American on [●], 2021), in an offering under this Prospectus Supplement and the accompanying Prospectus.
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As of
December 31,
2020
(audited)
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As of
June 30,
2021
(unaudited)
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Pro Forma
(unaudited)
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Actual
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Actual
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As Adjusted
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Composition of Net Assets:
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Common stock, par value $0.001 per share, 100,000,000 shares authorized ([●] shares
issued and outstanding as of December 31, 2020, [●] shares issued and outstanding as of June 30, 2021 and [●] shares estimated issued and outstanding as adjusted(1)(2)
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$
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[
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●]
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$
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[
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●]
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$
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[
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●]
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Paid-in capital in excess of par(2)
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$
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[
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●]
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$
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[
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●]
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$
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[
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●]
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Distributable earnings(loss)
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$
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[
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●]
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$
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[
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●]
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$
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[
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●]
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Net Assets
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$
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[
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●]
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$
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[
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●]
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$
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[
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●]
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(1)
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The Fund does not hold any of these outstanding shares for its account.
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(2)
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As adjusted, additional paid-in capital reflects the issuance of Common
Shares offered hereby ($[●]), less $0.001 par value per Common Share ($[●]), less the estimated sales load ($[●]) and the offering expenses ($[●]) related to the issuance of shares.
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TRADING AND NET ASSET VALUE
The
Funds Shares are listed and traded on the NYSE American. The average weekly trading volume of the Shares on the NYSE American during the twelve months ended [●], 2021 was [●] shares. The following table shows for the quarters
indicated: (1) the high and low sale price of the Shares at the close of trading on the NYSE American; (2) the high and low NAV per Share; and (3) the high and low premium or discount to NAV at which the Funds Shares were trading at
the close of trading (as a percentage of NAV).
[To be provided.]
On [●], 2021, the per Share net asset value was $[●] and the per Share market price was $[●], representing a [●]% premium over such
net asset value.
S-4
PLAN OF DISTRIBUTION
Under the sales agreement among the Fund, the Investment Adviser and [●], upon written instructions from the Fund, [●] will use its commercially
reasonable efforts consistent with its normal trading and sales practices to sell, as the Funds agent, the Common Shares under the terms and subject to the conditions set forth in the sales agreement. [●]s sales efforts will
continue until the Fund instructs [●] to suspend sales. The Fund will instruct [●] as to the amount of Common Shares to be sold by [●]. The Fund may instruct [●] not to sell Common Shares if the sales cannot be effected at or
above the price designated by the Fund in any instruction. The Fund or [●] may suspend the offering of Common Shares upon proper notice and subject to other conditions.
Sales of the Funds Common Shares, if any, under this Prospectus Supplement and the accompanying Prospectus may be made in negotiated transactions or
transactions that are deemed to be at the market as defined in Rule 415 under the 1933 Act, including sales made directly on the NYSE American or sales made to or through a market maker other than on an exchange, at prices related to the
prevailing market prices or at negotiated prices.
[●] will provide written confirmation to the Fund no later than the opening of the trading
day on the NYSE American immediately following the trading day on which Common Shares are sold under the sales agreement. Each confirmation will include the number of shares sold on the preceding day, the net proceeds to the Fund and the
compensation payable by the Fund to [●] in connection with the sales.
The Fund will pay [●] commissions for its services in acting as agent
in the sale of Common Shares. [●] will be entitled to compensation of between [●] and [●] basis points of the gross sales price per share of any Common Shares sold under the sales agreement, with the exact amount of such
compensation to be mutually agreed upon by the Fund and [●] from time to time. The Fund has also agreed to pay the reasonable fees and expenses of counsel for [●] in connection with the transactions contemplated under the sales agreement
(provided such fees and expenses (a) shall not exceed $[●] in connection with (i) the preparation and execution of the sales agreement, (ii) the preparation and filing of this Prospectus Supplement, (iii) the preparation
and printing of a Blue Sky Survey and (iv) the review by the Financial Industry Regulatory Authority (FINRA) of the terms of the sale of the Common Shares and (b) shall not exceed $25,000 on an annual basis in each annual
period following the date of the sales agreement). There is no guarantee that there will be any sales of the Funds Common Shares pursuant to this Prospectus Supplement and the accompanying Prospectus. Actual sales, if any, of the Funds
Common Shares under this Prospectus Supplement and the accompanying Prospectus may be less than as set forth in this paragraph. In addition, the price per share of any such sale may be greater or less than the price set forth in this paragraph,
depending on the market price of the Funds Common Shares at the time of any such sale. Assuming [●] of the Funds Common Shares offered hereby are sold at a market price of $[●] per share (the last reported sale price for the
Funds Common Shares on the NYSE American on [●], 2021), the Fund estimates that the total expenses for the offering, including reimbursable expenses payable to [●] as described above and excluding compensation payable to [●]
under the terms of the sales agreement, would be approximately $[●].
Settlement for sales of Common Shares will occur on the second
business day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made, or on some other date that is agreed upon by the Fund and [●] in
connection with a particular transaction, in return for payment of the net proceeds to the Fund. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.
In connection with the sale of the Common Shares on the Funds behalf, [●] may, and will with respect to sales effected in an at the market
offering, be deemed to be an underwriter within the meaning of the 1933 Act, and the compensation of [●] may be deemed to be underwriting commissions or discounts. The Fund has agreed to provide indemnification and
contribution to [●] against certain civil liabilities, including liabilities under the 1933 Act.
The offering of the Funds Common Shares
pursuant to the sales agreement will terminate upon the earlier of (1) the sale of all Common Shares subject to the sales agreement or (2) termination of the sales agreement. The sales agreement may be terminated by the Fund in its sole
discretion at any time by giving notice to [●]. In addition, [●] may terminate the sales agreement under the circumstances specified in the sales agreement and in its sole discretion at any time following a period of 12 months from the
date of the sales agreement by giving notice to the Fund.
S-5
The principal business address of [●] is [●].
LEGAL MATTERS
Certain legal matters will be passed on by Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019, counsel to the Fund, in
connection with the offering of the Common Shares. Willkie Farr & Gallagher LLP will rely as to matters of Maryland law on the opinion of Miles & Stockbridge P.C., 100 Light Street,
Baltimore, Maryland 21202.
FINANCIAL STATEMENTS
[The Funds unaudited financial statements as of and for the six months ended June 30, 202[●] should be read in conjunction with the audited
financial statements of the Fund and the Notes thereto included in the Annual Report to the Funds shareholders for the fiscal year ended December 31, 202[●].] The audited annual financial statements of the Fund for the fiscal
year ended December 31, 202[●] [and the unaudited semiannual financial statements of the Fund for the six months ended June 30, 202[●]] are incorporated by reference into this Prospectus Supplement, the accompanying
Prospectus and the SAI.]
INCORPORATION BY REFERENCE
This Prospectus Supplement is part of a registration statement that we have filed with the SEC. We are allowed to incorporate by reference the
information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. We incorporate by reference into this Prospectus Supplement the documents listed below and any future filings
we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any filings on or after the date of this Prospectus Supplement from the date of filing (excluding any information furnished, rather than filed), until we
have sold all of the offered securities to which this Prospectus Supplement relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this Prospectus Supplement. Any statement in a document
incorporated by reference into this Prospectus Supplement will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this Prospectus Supplement or (2) any other subsequently filed document that is
incorporated by reference into this Prospectus Supplement modifies or supersedes such statement. The documents incorporated by reference herein include:
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The Funds SAI, dated [●], 2021, filed with the accompanying Prospectus;
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our annual report on Form N-CSR for the fiscal year ended
December 31, 202[●] filed with the SEC on February [●], 202[●];
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our semi-annual report on Form N-CSR for semi-annual fiscal period ended
June 30, 202[●] filed with the SEC on August [●], 202[●]; and
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the description of the Funds
common stock contained in our Registration Statement on Form 8-A (File No. 001-09452) filed with the SEC on May 11, 2006, including any amendment or
report filed for the purpose of updating such description prior to the termination of the offering registered hereby.
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The Fund will
provide, free of charge, to each person, including any beneficial owner, to whom this Prospectus Supplement is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this
Prospectus Supplement or the accompanying Prospectus. You should direct requests for documents by writing to:
c/o Credit Suisse Asset
Management, LLC
Eleven Madison Avenue
New York, New York 10010
S-6
ADDITIONAL INFORMATION
This Prospectus Supplement and the accompanying Prospectus constitute part of a Registration Statement filed by the Fund with the SEC under the 1933 Act and
the 1940 Act. This Prospectus Supplement and the accompanying Prospectus omit certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and related exhibits for further information
with respect to the Fund and the Common Shares offered hereby. Any statements contained herein concerning the provisions of any document are not necessarily complete, and, in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the SEC. Each such statement is qualified in its entirety by such reference. The complete Registration Statement may be obtained from the SEC upon payment of the fee prescribed by its
rules and regulations or free of charge through the SECs web site (http://www.sec.gov).
S-7
Up to $[●] Common Shares
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
PROSPECTUS SUPPLEMENT
[●], 2021
Until [●], 2021 (25 days after the date of this Prospectus Supplement), all dealers that buy, sell or trade the Common Shares, whether
or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers obligation to deliver a prospectus when acting as underwriters.
The information in this Statement of Additional Information is not
complete and may be changed. The Fund may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities
and is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
CREDIT SUISSE
ASSET MANAGEMENT INCOME FUND, INC.
Eleven Madison Avenue
New York, New York 10010
STATEMENT OF ADDITIONAL INFORMATION
Subject to Completion, Dated November 16, 2021
Credit Suisse Asset Management Income Fund, Inc. (the Fund) is a diversified, closed-end management
investment company, registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Company Act of 1940, as amended (1940 Act).
This Statement of Additional Information (SAI) for the Fund is not a prospectus. It should be read in conjunction with the Funds prospectus,
dated November [●], 2021 (the Prospectus) and any related prospectus supplement. Capitalized terms used but not defined in this SAI have the meanings ascribed to them in the Prospectus and any related prospectus supplement.
A copy of the Prospectus and any related prospectus supplement can be obtained free of charge by calling Credit Suisse Asset Management, LLC at 800-293-1232 or by written request to the Fund at Eleven Madison Avenue, New York, New York 10010. You can also obtain a copy of the Prospectus or any related prospectus
supplement from our website at: www.credit-suisse.com/us. The Funds financial statements for the fiscal year ended December
31, 2020, including the independent registered public accounting firms report thereon, and the Funds financial
statements for the six months ended June 30, 2021, are incorporated into this SAI by reference.
No person has been authorized to give any
information or to make any representations not contained in the Prospectus or any related prospectus supplement or in this SAI in connection with the offering made by the Prospectus and any related prospectus supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized by the Fund. The Prospectus and any related prospectus supplement and the SAI do not constitute an offering by the Fund in any jurisdiction in which such offering may
not lawfully be made.
TABLE OF CONTENTS
FUND HISTORY
The Fund is a diversified, closed-end management investment company organized as a corporation under
the laws of the State of Maryland on February 10, 1987. Credit Suisse Asset Management, LLC (Credit Suisse or the Adviser) is the Funds investment adviser.
OTHER INVESTMENT PRACTICES
The Prospectus presents the investment objective and the principal investment policies and risks of the Fund. This section supplements the
disclosure in the Funds Prospectus and provides additional information on the Funds other investment practices.
The Fund may
utilize certain investment practices and portfolio management techniques as set forth below.
Fixed Income Securities. The Fund may
invest in debt securities, including corporate obligations issued by domestic and foreign corporations and governments and money market instruments, without regard to the maturities of such securities.
Fixed income securities are broadly characterized as those that provide for periodic payments to the holder of the security at a stated rate.
Most fixed income securities, such as bonds, represent indebtedness of the issuer and provide for repayment of principal at a stated time in the future. Others do not provide for repayment of a principal amount, although they may represent a
priority over common stockholders in the event of the issuers liquidation. Many fixed income securities are subject to scheduled retirement, or may be retired or called by the issuer prior to their maturity dates. The interest rate
on certain fixed income securities, known as variable rate obligations, is determined by reference to or is a percentage of an objective standard, such as a banks prime rate, the 90-day
Treasury bill rate, or the rate of return on commercial paper or bank certificates of deposit, and is periodically adjusted. Certain variable rate obligations may have a demand feature entitling the holder to resell the securities at a predetermined
amount. The interest rate on certain fixed income securities, called floating rate instruments, changes whenever there is a change in a designated base rate.
The market values of fixed income securities tend to vary inversely with the level of interest rates. When interest rates rise, their values
will tend to decline; when interest rates decline, their values generally will tend to rise. The potential for capital appreciation with respect to variable rate obligations or floating rate instruments will be less than with respect to fixed-rate
obligations. Long-term instruments are generally more sensitive to these changes than short-term instruments. The market value of fixed income securities and therefore their yield are also affected by the perceived ability of the issuer to make
timely payments of principal and interest.
The fixed income securities in which the Fund invests primarily will be below investment
grade.
Investment grade is a designation applied to intermediate and long-term corporate debt securities rated within the
highest four rating categories assigned by the S&P Global Ratings, a division of S&P Global Inc. (S&P) (AAA, AA, A or BBB, including the + or designations) or by Moodys Investors Service, Inc.
(Moodys) (Aaa, Aa, A or Baa, including any numerical designations), or, if unrated, considered by Credit Suisse to be of comparable quality. The ability of the issuer of an investment grade debt security to pay interest and to
repay principal is considered to vary from extremely strong (for the highest ratings) through adequate (for the lowest ratings given above), although the lower-rated investment grade securities may be viewed as having speculative elements as well.
Those debt securities rated BBB or Baa, while considered to be investment grade, may have speculative
characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case with higher grade bonds. As a consequence of the foregoing, the
opportunities for income and gain may be limited.
Below Investment Grade Securities. The Fund invests primarily in fixed income
securities rated below investment grade and in comparable unrated securities. Investment in such securities involves substantial risk.
1
Below investment grade and comparable unrated securities (commonly referred to as junk
bonds or high yield securities) (i) will likely have some quality and protective characteristics that, in the judgment of the rating organization, are outweighed by large uncertainties or major risk exposures to adverse conditions
and (ii) are predominantly speculative with respect to the issuers capacity to pay interest and repay principal in accordance with the terms of the obligation. The market values of certain of these securities also tend to be more
sensitive to individual corporate developments and changes in economic conditions than higher-quality securities. Issuers of such securities are often highly leveraged and may not have more traditional methods of financing available to them so that
their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. Investors should be aware that ratings are relative and subjective and are not absolute standards of
quality.
To the extent a secondary trading market for below investment grade securities does exist, it generally is not as liquid as the
secondary market for investment grade securities. The lack of a liquid secondary market, as well as adverse publicity and investor perception with respect to these securities, may have an adverse impact on market price and the Funds ability to
dispose of particular issues when necessary to meet the Funds liquidity needs or in response to a specific economic event such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain
securities also may make it more difficult for the Fund to obtain accurate market quotations for purposes of valuing the Fund and calculating its net asset value.
The market value of securities rated below investment grade is more volatile than that of investment grade securities. Factors adversely
impacting the market value of these securities will adversely impact the Funds net asset value. The Fund will rely on the judgment, analysis and experience of the Adviser in evaluating the creditworthiness of an issuer. In this evaluation, the
Adviser will take into consideration, among other things, the issuers financial resources, its sensitivity to economic conditions and trends, its operating history, the quality of the issuers management and regulatory matters. The Fund
may incur additional expenses to the extent it is required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings of such securities.
See Appendix A for a further description of securities ratings.
U.S. Government Securities. The obligations issued or guaranteed by the U.S. government in which the Fund may invest include direct
obligations of the U.S. Treasury and obligations issued by U.S. government agencies and instrumentalities. Included among direct obligations of the United States are Treasury Bills, Treasury Notes and Treasury Bonds, which differ in terms of their
interest rates, maturities and dates of issuance. Treasury Bills have maturities of less than one year, Treasury Notes have maturities of one to 10 years and Treasury Bonds generally have maturities of greater than 10 years at the date of issuance.
Included among the obligations issued by agencies and instrumentalities and government-sponsored enterprises of the United States are: instruments that are supported by the full faith and credit of the United States (such as certificates issued by
the Government National Mortgage Association (GNMA)); instruments that are supported by the right of the issuer to borrow from the U.S. Treasury (such as securities of Federal Home Loan Banks); and instruments that are supported by the
credit of the instrumentality (such as Fannie Mae and Freddie Mac bonds).
Fannie Mae and Freddie Mac were previously government-sponsored
corporations owned entirely by private stockholders. Both issue mortgage-related securities that contain guarantees as to timely payment of interest and principal but that are not backed by the full faith and credit of the U.S. government. In 2008,
the U.S. Treasury announced that Fannie Mae and Freddie Mac had been placed in conservatorship by the Federal Housing Finance Agency (FHFA), an independent regulator.
Other U.S. government securities in which the Fund may invest include securities issued or guaranteed by the Federal Housing Administration,
Farmers Home Loan Administration, Export-Import Bank of the United States, Small Business Administration, GNMA, General Services Administration, Central Bank for Cooperatives, Federal Farm Credit Banks, Federal Home Loan Banks, Freddie Mac, Federal
Intermediate Credit Banks, Federal Land Banks, Fannie Mae, Maritime Administration, Tennessee Valley Authority, District of Columbia Armory Board and Student Loan Marketing Association. The Fund may invest in instruments that are supported by the
right of the issuer to borrow from the U.S. Treasury and instruments that are supported solely by the credit of the instrumentality or enterprise. Because the U.S. government is not obligated by law to provide support to an instrumentality it
2
sponsors, the Fund will invest in obligations issued by such an instrumentality only if Credit Suisse determines that the credit risk with respect to the instrumentality does not make its
securities unsuitable for investment by the Fund.
Mortgage-Backed Securities. Depending on market conditions, the Fund may invest
a substantial portion of its assets in mortgage-backed securities, such as those issued by GNMA, Fannie Mae, Freddie Mac and certain foreign issuers, as well as non-governmental issuers. Non-government issued mortgage-backed securities may offer higher yields than those issued by government entities, but may be subject to greater price fluctuations. Mortgage-backed securities represent direct or
indirect participations in, or are secured by and payable from, mortgage loans secured by real property. These securities generally are pass-through instruments, through which the holders receive a share of all interest and principal
payments from the mortgages underlying the securities, net of certain fees. Some mortgage-backed securities, such as collateralized mortgage obligations (CMOs), make payouts of both principal and interest at a variety of intervals;
others make semiannual interest payments at a predetermined rate and repay principal at maturity (like a typical bond). The mortgages backing these securities include, among other mortgage instruments, conventional
30-year fixed-rate mortgages, 15-year fixed-rate mortgages, graduated payment mortgages and adjustable rate mortgages. The government or the issuing agency typically
guarantees the payment of interest and principal of these securities. However, the guarantees do not extend to the securities yield or value, which are likely to vary inversely with fluctuations in interest rates, nor do the guarantees extend
to the yield or value of the Funds shares.
Yields on pass-through securities are typically quoted by investment dealers and vendors
based on the maturity of the underlying instruments and the associated average life assumption. The average life of pass-through pools varies with the maturities of the underlying mortgage loans. A pools term may be shortened by unscheduled or
early payments of principal on the underlying mortgages. The occurrence of mortgage prepayments is affected by various factors, including the level of interest rates, general economic conditions, the location, scheduled maturity and age of the
mortgage and other social and demographic conditions. Because prepayment rates of individual pools vary widely, it is not possible to predict accurately the average life of a particular pool. For pools of fixed-rate
30-year mortgages in a stable fixed-rate environment, a common industry practice in the U.S. has been to assume that prepayments will result in a 12-year average life.
At present, pools, particularly those with loans with other maturities or different characteristics, are priced on an assumption of average life determined for each pool. In periods of falling interest rates, the rate of prepayment tends to
increase, thereby shortening the actual average life of a pool of mortgage-related securities. Conversely, in periods of rising rates the rate of prepayment tends to decrease, thereby lengthening the actual average life of the pool. However, these
effects may not be present, or may differ in degree, if the mortgage loans in the pools have adjustable interest rates or other special payment terms, such as a prepayment charge. Actual prepayment experience may cause the yield of mortgage-backed
securities to differ from the assumed average life yield. Reinvestment of prepayments may occur at higher or lower interest rates than the original investment, thus affecting the Funds yield.
The rate of interest on mortgage-backed securities is lower than the interest rates paid on the mortgages included in the underlying pool due
to the annual fees paid to the servicer of the mortgage pool for passing through monthly payments to certificate holders and to any guarantor, such as GNMA, and due to any yield retained by the issuer. Actual yield to the holder may vary from the
coupon rate, even if adjustable, if the mortgage-backed securities are purchased or traded in the secondary market at a premium or discount. In addition, there is normally some delay between the time the issuer receives mortgage payments from the
servicer and the time the issuer makes the payments on the mortgage-backed securities, and this delay reduces the effective yield to the holder of such securities.
Foreign Investments. Investors should recognize that investing in foreign companies involves certain risks, including those discussed
below, which are in addition to those associated with investing in U.S. issuers. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, and balance of payments position. The Fund may invest in securities of foreign governments (or agencies or instrumentalities thereof), and many, if not all, of the foregoing considerations apply to such
investments as well.
Foreign Currency Exchange. Since the Fund may invest up to 5% of the value of its total assets in securities
denominated in currencies of non-U.S. countries, the Fund may be affected favorably or unfavorably by exchange control regulations or changes in the exchange rate between such currencies and the dollar. A
change in
3
the value of a foreign currency relative to the U.S. dollar will result in a corresponding change in the dollar value of the Fund assets denominated in that foreign currency. Changes in foreign
currency exchange rates may also affect the value of dividends and interest earned, gains and losses realized on the sale of securities and net investment income and gains, if any, to be distributed to shareholders by the Fund. Unless otherwise
contracted, the rate of exchange between the U.S. dollar and other currencies is determined by the forces of supply and demand in the foreign exchange markets. Changes in the exchange rate may result over time from the interaction of many factors
directly or indirectly affecting economic and political conditions in the U.S. and a particular foreign country, including economic and political developments in other countries. Governmental intervention may also play a significant role. National
governments rarely voluntarily allow their currencies to float freely in response to economic forces. Sovereign governments use a variety of techniques, such as intervention by a countrys central bank or imposition of regulatory controls or
taxes, to affect the exchange rates of their currencies. The Fund may use hedging techniques with the objective of protecting against loss through the fluctuation of the value of a foreign currency against the U.S. dollar, particularly the forward
market in foreign exchange, currency options and currency futures.
Information. The majority of the foreign securities held by the
Fund will not be registered with, nor will the issuers thereof be subject to reporting requirements of, the SEC. Accordingly, there may be less publicly available information about these securities and about the foreign company or government issuing
them than is available about a domestic company or government entity. Foreign companies are generally subject to financial reporting standards, practices and requirements that are either not uniform or less rigorous than those applicable to U.S.
companies.
Political Instability. With respect to some foreign countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of the Fund, political or social instability, military action, war or domestic developments which could affect U.S. investments in those and neighboring countries. Any of
these actions or events could have a severe effect on security prices and impair the Funds ability to bring its capital or income back to the United States.
Foreign Markets. Securities of some foreign companies are less liquid and their prices are more volatile than securities of comparable
U.S. companies. Some countries have less developed securities markets (and related transaction, registration and custody practices). Certain foreign countries are known to experience long delays between the trade and settlement dates of securities
purchased or sold which may result in increased exposure to market and foreign exchange fluctuations and increased illiquidity. In addition to losses from such delays, less-developed securities markets could subject the Fund to losses from fraud,
negligence, or other actions.
Increased Expenses. The operating expenses of the Fund can be expected to be higher than those of an
investment company investing exclusively in U.S. securities, since the expenses of the Fund, such as cost of converting foreign currency into U.S. dollars, the payment of fixed brokerage commissions on foreign exchanges, custodial costs, valuation
costs and communication costs are higher than those costs incurred by other investment companies not investing in foreign securities. In addition, foreign securities may be subject to foreign government taxes that would reduce the net yield on such
securities.
Foreign Debt Securities. The returns on foreign debt securities reflect interest rates and other market conditions
prevailing in those countries. The relative performance of various countries fixed income markets historically has reflected wide variations relating to the unique characteristics of the countrys economy.
Year-to-year fluctuations in certain markets have been significant, and negative returns have been experienced in various markets from time to time.
The foreign government securities in which the Fund may invest generally consist of obligations issued or backed by national, state or
provincial governments or similar political subdivisions or central banks in foreign countries. Foreign government securities also include debt obligations of supranational entities, which include international organizations designated or backed by
governmental entities to promote economic reconstruction or development, international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the World Bank), the
Asian Development Bank and the Inter-American Development Bank.
4
Foreign government securities also include debt securities of quasi-governmental
agencies and debt securities denominated in multinational currency units of an issuer (including supranational issuers). Debt securities of quasi-governmental agencies are issued by entities owned by either a national, state or equivalent
government or are obligations of a political unit that is not backed by the national governments full faith and credit and general taxing powers.
Investment in sovereign debt can involve a high degree of risk. The governmental entity that controls the repayment of sovereign debt may not
be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A governmental entitys willingness or ability to repay principal and interest due in a timely manner may be affected by, among other
factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the governmental
entitys policy towards the International Monetary Fund and the political constraints to which a governmental entity may be subject. Governmental entities may also be dependent on expected disbursements from foreign governments, multilateral
agencies and others abroad to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on the implementation of economic reforms and/or
economic performance and the timely service of such debtors obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third
parties commitments to lend funds to the governmental entity, which may further impair such debtors ability or willingness to timely service its debts. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt may be requested to participate in the rescheduling of such debt and to extend further loans to governmental
entities. In the event of a default by a governmental entity, there may be few or no effective legal remedies for collecting on such debt.
Emerging Markets. The Fund may invest a portion of its assets in the securities of issuers located in emerging market countries (less
developed countries located outside of the United States). Investing in securities of issuers, including governments, located in emerging market countries (less developed countries located outside of the United States) involves not only
the risks described above with respect to investing in foreign securities, but also other risks, including exposure to economic structures that are generally less diverse and mature than, and to political systems that can be expected to have less
stability than, those of developed countries. Emerging markets often face economic problems that could subject the fund to increased volatility or substantial declines in value, and emerging markets may experience periods of market illiquidity.
Other characteristics of emerging markets that may affect investment include certain national policies that may restrict investment by foreigners in issuers deemed sensitive to relevant national interests and the absence of developed structures
governing private and foreign investments and private property. Deficiencies in regulatory oversight, market infrastructure, shareholder protections and company laws and differences in regulatory, accounting, auditing and financial reporting and
recordkeeping standards could expose the fund to risks beyond those generally encountered in developed countries. The typically small size of the markets of securities of issuers located in emerging markets and the possibility of a low or
nonexistent volume of trading in those securities may also result in a lack of liquidity and in price volatility of those securities.
Europe Recent Events. A number of countries in Europe have experienced severe economic and financial difficulties. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts; many other issuers have faced difficulties obtaining credit or refinancing existing obligations;
financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit; and financial markets in Europe and elsewhere have experienced extreme
volatility and declines in asset values and liquidity. These difficulties may continue, worsen or spread within and outside of Europe. Responses to the financial problems by European governments, central banks and others, including austerity
measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional
adverse effects on economies, financial markets and asset valuations around the world. In addition, the United Kingdom (UK) has withdrawn from the European Union (EU) pursuant to an agreement between the UK and the EU on
January 31, 2020. The UK and EU have reached an agreement effective January 1, 2021 on the terms of their future trading relationship
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relating principally to the trading of goods; however, negotiations are ongoing for matters not covered by the agreement, such as the trade of financial services. The longer term economic, legal,
political and social framework to be put in place between the UK and the EU remains unclear at this stage and ongoing political and economic uncertainty and periods of exacerbated volatility in both the UK and in wider European markets may continue
for some time. In addition, one or more countries may abandon the euro, the common currency of the (EU) and/or withdraw from the (EU). The impact of these actions is not clear but could be significant and far-reaching. These events could negatively affect the value and liquidity of a Funds investments.
Repurchase Agreements. The Fund may enter into repurchase agreement transactions with member banks of the Federal Reserve System and
certain non-bank dealers. Repurchase agreements are contracts under which the buyer of a security simultaneously commits to resell the security to the seller at an agreed-upon price and date. Under the terms
of a typical repurchase agreement, the Fund would acquire any underlying security for a relatively short period (usually not more than one week) subject to an obligation of the seller to repurchase, and the Fund to resell, the obligation at an
agreed-upon price and time, thereby determining the yield during the Funds holding period. This arrangement results in a fixed rate of return that is not subject to market fluctuations during the Funds holding period. The value of the
underlying securities will at all times be at least equal to the total amount of the purchase obligation, including interest. The Fund bears a risk of loss in the event that the other party to a repurchase agreement defaults on its obligations or
becomes bankrupt and the Fund is delayed or prevented from exercising its right to dispose of the collateral securities, including the risk of a possible decline in the value of the underlying securities during the period in which the Fund seeks to
assert this right. The Adviser monitors the creditworthiness of those bank and non-bank dealers with which the Fund enters into repurchase agreements to evaluate this risk. A repurchase agreement is considered
to be a loan under the 1940 Act.
Short Sales Against the Box. The Fund may enter into short sales against the
box only if not more than 5% of the Funds net assets (taken at current value) are held as collateral for such sales at any one time. A short sale is against the box to the extent that the Fund contemporaneously owns or has
the right to obtain without additional cost an equal amount of the security being sold short. It may be entered into by the Fund to, for example, lock in a sale price for a security the Fund does not wish to sell immediately. If the Fund engages in
a short sale, the collateral for the short position will be segregated in an account with the Funds custodian or qualified sub-custodian. While the short sale is open, the Fund will continue to segregate
an amount of securities equal in kind and amount to the securities sold short or securities convertible into or exchangeable for such equivalent securities. These securities constitute the Funds long position.
The Fund may make a short sale as a hedge when it believes that the price of a security may decline and cause a decline in the value of a
security owned by the Fund (or a security convertible or exchangeable for such security). In such case, any future losses in the Funds long position should be offset by a gain in the short position and, conversely, any gain in the long
position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount the Fund owns. There will be certain additional
transaction costs associated with short sales against the box, but the Fund will endeavor to offset these costs with the income from the investment of the cash proceeds of short sales.
Lending of Portfolio Securities. The Fund may lend securities from its portfolio to brokers, dealers and other financial institutions
needing to borrow securities to complete certain transactions. The Fund continues to be entitled to payments in amounts equal to the interest, dividends or other distributions payable on the loaned securities, which affords the Fund an opportunity
to earn interest on the amount of the loan and on the loaned securities collateral. Loans of portfolio securities may not exceed 33-1/3% of the value of the Funds total assets, and the SEC
currently requires the Fund to receive collateral consisting of cash, U.S. Government securities or irrevocable letters of credit which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned
securities. According to the SEC, such loans currently must be terminable by the Fund at any time upon specified notice. The Fund might experience risk of loss if the institution with which it has engaged in a portfolio loan transaction breaches its
agreement with the Fund. In connection with its securities lending transactions, the Fund may return to the borrower or a third party which is acting as a placing broker, a part of the interest earned from the investment of collateral
received for securities loaned.
Generally, the SEC currently requires that the following conditions must be met whenever portfolio
securities are loaned: (1) the Fund must receive at least 100% cash or equivalent collateral from the borrower; (2)
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the borrower must increase such collateral whenever the market value of the securities rises above the level of such collateral; (3) the Fund must be able to terminate the loan at any time;
(4) the Fund must receive reasonable interest on the loan, as well as any dividends, interest or other distributions payable on the loaned securities, and any increase in market value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the loaned securities may pass to the borrower, the Board of Directors of the Fund (the Board) must terminate the loan and regain the right to vote the securities if a
material event adversely affecting the investment occurs. If the regulatory requirements pertaining to portfolio securities lending were to change, the Fund would comply with such changes as required.
Illiquid Securities. The Fund may invest without limit in securities subject to legal or contractual restrictions, or that are
otherwise illiquid. When purchasing securities that have not been registered under the Securities Act of 1933, as amended, and are not readily marketable, the Fund will endeavor, to the extent practicable, to obtain the right to registration at the
expense of the issuer. Generally, there will be a lapse of time between the Funds decision to sell any such security and the registration of the security permitting sale. During any such period, the price of the securities will be subject to
market fluctuations. However, where a substantial market of qualified institutional buyers has developed for certain unregistered securities purchased by the Fund pursuant to Rule 144A under the Securities Act of 1933, as amended, 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 assurance how the market for specific restricted securities sold pursuant to Rule 144A will develop, the
Board has directed Credit Suisse to monitor carefully the Funds 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 Funds investing in such securities may have the effect of increasing the level of illiquidity in its investment portfolio during
such period. Substantial illiquid positions in the Fund could adversely impact its ability to convert to open-end status.
Options on U.S. Government Securities. The Fund may seek to increase its current income by writing covered call or put options with
respect to some or all of the U.S. government securities held in its portfolio. In addition, the Fund may at times, through the writing and purchase of options on U.S. government securities, seek to reduce fluctuations in net asset value by hedging
against a decline in the value of its U.S. government securities or an increase in the price of securities which the Fund plans to purchase.
Significant option writing opportunities generally exist only with respect to longer term U.S. government securities. The Fund may only write
covered options, which means that, so long as the Fund is obligated as the writer of a call option, it will own the underlying securities subject to the option (or comparable securities satisfying the cover requirements of securities exchanges). In
the case of put options, the Fund will maintain short term U.S. government securities with a value equal to or greater than the exercise price of the underlying securities. The Fund may also write combinations of covered puts and calls on the same
security.
The Fund receives a premium from writing a put or call option, which increases return on the underlying security in the event
the option expires unexercised or is closed out at a profit. The amount of premium reflects, among other things, the relationship of the market price of the underlying security to the exercise price of the option and the remaining term of the
option. The Fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written. The Fund realizes a profit or loss from
a transaction if the cost of the transaction is less or more than the premium received from writing the option. Because increases in the market price of a call option generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option may be offset in whole or in part by unrealized appreciation of the underlying security.
The Fund may purchase put options on U.S. government securities to protect its portfolio holdings in an underlying security against a
substantial decline in market value. Such hedge protection is provided during the life of the put option since the Fund, as holder of the put option, is able to sell the underlying security at the put exercise price regardless of any decline in the
underlying securitys market price. In order for a put option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs.
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The Fund may purchase call options on U.S. government securities to hedge against an increase in
prices of securities that the Fund ultimately wants to buy. Such hedge protection is provided during the life of the call option since the Fund, as holder of the option, is able to buy the underlying security at the exercise price regardless of any
increase in such securitys market price. In order for a call option to be profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover the premium and transaction costs.
The Fund will not purchase put and call options if as a result more than 5% of the value of its total assets would at the time be invested in
such options.
Interest Rate Futures and Related Options. The Fund may enter into interest rate futures contracts to purchase or
sell U.S. government securities or other interest rate-sensitive instruments and options thereon that are traded on U.S. futures exchanges or other trading facilities. When the Fund attempts to hedge its portfolio by selling an interest rate futures
contract, purchasing a put option thereon, or writing a call option thereon, it will own an amount of U.S. government securities corresponding to the open futures or option position thereby ensuring that the position is unleveraged. These
transactions may be entered into for bona fide hedging purposes as defined in Commodity Futures Trading Commission (CFTC) regulations and other permissible purposes, including hedging against changes in the value of portfolio
securities due to anticipated changes in interest rates and/or market conditions and increasing return. The Fund reserves the right to engage in transactions involving futures contracts and options on futures contracts in accordance with the
Funds policies. The Fund is operated by a person who has claimed an exclusion from the definition of the term commodity pool operator under the Commodity Exchange Act with respect to the Fund, and therefore, who is not subject to
registration or regulation as a pool operator under the Commodity Exchange Act.
Interest rate futures contracts are contracts that
obligate the buyer to take and the seller to make delivery at a future date of a specified quantity of the underlying financial instrument. However, some interest rate futures contracts provide for settlement in cash rather than by delivery of the
securities underlying the contract. Interest rate futures contracts are currently available on several types of fixed income securities, including U.S. Treasury Bonds, U.S. Treasury Notes and GNMA securities on The Chicago Board of Trade, and on
U.S. Treasury Bills on the International Monetary Market Division of The Chicago Mercantile Exchange.
A call option for a futures
contract gives the purchaser, in return for a premium paid, the right to buy the futures contract underlying the option at a specified exercise price at any time during the term of the option. The writer of the call option, who receives the premium,
has the obligation, upon exercise of the option, to deliver the underlying futures contract against payment of the exercise price. A put option for a futures contract gives the purchaser, in return for a premium, the right to sell the underlying
futures contract at a specified price during the term of the option. The writer of the put, who receives the premium, has the obligation to buy the underlying futures contract upon demand at the exercise price.
In contrast to the purchase or sale of a security, the full purchase price of the futures contract is not paid or received by the Fund upon
its purchase or sale. Instead, the Fund will deposit in a segregated custodial account as initial margin an amount of cash or U.S. Treasury bills equal to approximately 5% of the value of the contract. This amount is known as initial margin. The
nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds by the customer to finance the transactions. Rather, the initial
margin is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund upon termination of the futures contract assuming all contractual obligations have been satisfied. Subsequent payments to and from the
broker, called variation margin, will be made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as mark to the market.
For example, when the Fund has purchased an interest rate futures contract and the price of the underlying security has risen, that position will have increased in value and the Fund will receive from the broker a variation margin payment equal to
that increase in value. Conversely, where the Fund has purchased an interest rate futures contract and the price of the underlying security has declined, the position would be less valuable and the Fund would be required to make a variation margin
payment to the broker. At any time prior to expiration of the futures contract, the Fund may elect to terminate the position by taking an opposite position. A final determination of variation margin is then made, additional cash is required to be
paid by or released to the Fund, and the Fund realizes a loss or gain. No assurance can be given that the Fund will be able to take an opposite position.
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The purpose of selling an interest rate futures contract is to protect a portfolio from
fluctuations in asset value resulting from interest rate changes. Selling a futures contract has an effect similar to selling portfolio securities. If interest rates were to increase, the value of the securities in the portfolio would decline, but
the value of the Funds futures contracts would increase, thereby keeping the net asset value of the Fund from declining as much as it otherwise might have. In this way, selling futures contracts acts as a hedge against the effects of rising
interest rates. However, a decline in interest rates resulting in an increase in the value of portfolio securities tends to be offset by a decrease in the value of the corresponding futures contracts.
Similarly, when interest rates are expected to decline, futures contracts may be purchased to hedge against anticipated subsequent purchases
of portfolio securities at higher prices. By buying futures, the Fund could effectively hedge against an increase in the price of the securities it intends to purchase at a later date in order to permit the purchase to be effected in an orderly
manner. At that time, the futures contracts could be liquidated at a profit if rates had in fact declined as expected, and the Funds cash position could be used to purchase securities.
Although most interest rate futures contracts call for making or taking delivery of the underlying securities, these obligations are typically
canceled or closed out before the scheduled settlement date. The closing is accomplished by purchasing (or selling) an identical futures contract to offset a short (or long) position. Such an offsetting transaction cancels the contractual
obligations established by the original futures transaction. If the price of an offsetting futures transaction varies from the price of the original futures transaction, the Fund will realize a gain or loss corresponding to the difference. That gain
or loss will tend to offset the unrealized loss or gain on the hedged securities transaction, but may not always or completely do so.
The
selection of futures and options strategies requires skills different from those needed to select portfolio securities; however, Credit Suisse does have experience in the use of futures and options.
Regulatory Aspects of Derivatives Instruments. Pursuant to a notice of eligibility filed with the CFTC, the Fund is not deemed to be a
commodity pool operator under the Commodity Exchange Act, and therefore is not subject to registration as such under the Commodity Exchange Act. The Adviser is not required to be registered as a commodity trading advisor with
respect to its service as the investment adviser to the Fund.
Transactions in options by the Fund are subject to limitations established
by each of the exchanges governing the maximum number of options that may be written or held by a single investor or group of investors acting in concert, regardless of whether the options were written or purchased on the same or different exchanges
or are held in one or more accounts or through one or more exchanges or brokers. Thus, the number of options the Fund may write or hold may be affected by options written or held by other entities, including other investment companies having the
same or an affiliated investment adviser. Position limits also apply to futures. An exchange may order the liquidation of positions found to be in violation of those limits and may impose certain other sanctions. With respect to futures contracts
that are not contractually required to cash-settle and which the Funds Board has not determined to treat as cash-settled, the Fund covers its open positions by setting aside liquid assets equal to the contracts
full notional value. With respect to futures contracts that are contractually required to cash-settle and those which the Board has determined to treat as cash-settled (including currency forwards that settle in currencies of
G-10 countries), however, the Fund sets aside liquid assets in an amount equal to that Funds daily mark-to-market (net)
obligation (i.e., the Funds daily net liability, if any), rather than the notional value.
In October 2020, the Securities and
Exchange Commission adopted new regulations governing the use of derivatives by registered investment companies. The Fund will be required to implement and comply with new Rule 18f-4 by August 19, 2022.
Once implemented, Rule 18f-4 will impose limits on the amount of derivatives a fund can enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940
Act, treat derivatives as senior securities and require funds whose use of derivatives is more than a limited specified exposure to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager.
Asset Coverage for Certain Derivative Transactions. The Fund will comply with guidelines established by the SEC with respect to
coverage of certain derivative transactions. These guidelines may, in certain instances, require segregation by the Fund of cash or liquid securities with its custodian or a designated sub-custodian to the
extent the Funds obligations with respect to these strategies are not otherwise covered through ownership of the
9
underlying security, financial instrument or currency or by other portfolio positions or by other means consistent with applicable regulatory policies. Segregated assets cannot be sold or
transferred unless equivalent assets are substituted in their place or it is no longer necessary to segregate them. As a result, there is a possibility that segregation of a large percentage of the Funds assets could impede portfolio
management or the Funds ability to meet other current obligations. See Regulatory Aspects of Derivatives Instruments for information regarding new Rule 18f-4 under the 1940 Act, which, once
implemented by the Fund, will eliminate the asset segregation framework currently used by the Fund to comply with Section 18 of the 1940 Act with respect to funds use of derivatives and treat derivatives as senior securities.
For example, a call option written by the Fund on securities may require the Fund to hold the securities subject to the call (or securities
convertible into the securities without additional consideration) or to segregate assets (as described above) sufficient to purchase and deliver the securities if the call is exercised. A call option written by the Fund on an index may require the
Fund to own portfolio securities that correlate with the index or to segregate assets (as described above) equal to the excess of the index value over the exercise price on a current basis. A put option written by the Fund may require the Fund to
segregate assets (as described above) equal to the exercise price. The Fund could purchase a put option if the strike price of that option is the same or higher than the strike price of a put option sold by the Fund. If the Fund holds a futures or
forward contract, the Fund could purchase a put option on the same futures or forward contract with a strike price as high or higher than the price of the contract held. The Fund may enter into fully or partially offsetting transactions so that its
net position, coupled with any segregated assets (equal to any remaining obligation), equals its net obligation. Asset coverage may be achieved by other means when consistent with applicable regulatory policies.
Foreign Currency Exchange Transactions. The Fund may engage in foreign currency exchange transactions to protect against changes in
future exchange rates. The Fund will only engage in foreign currency exchange transactions for transaction hedging (in connection with the purchase or sale of portfolio securities) or position hedging (to protect the value of a specific portfolio
position). The Fund may engage in U.S. dollar-denominated or non-U.S. dollar denominated hedging. The Funds ability to engage in hedging and related option transactions may be limited by tax
considerations. See Taxation below.
The Fund may engage in transaction hedging to protect against a change in the
foreign currency exchange rate between the date on which it contracts to purchase or sell the security and the settlement date, or to lock in the U.S. dollar equivalent of a dividend or interest payment in a foreign currency. For that
purpose, the Fund may purchase or sell a foreign currency on a spot (or cash) basis at the prevailing spot rate in connection with the settlement of transactions in portfolio securities denominated in that foreign currency. The Fund may also enter
into forward currency exchange contracts and purchase exchange-listed and over-the-counter call and put options on foreign currency futures contracts and on foreign
currencies. A foreign currency forward contract is a negotiated agreement to exchange currency at a future time at a rate or rates that may be higher or lower than the spot rate. Foreign currency futures contracts are standardized exchange-traded
contracts and have margin requirements.
For transaction hedging purposes, the Fund may also purchase exchange-listed and over-the-counter call and put options on foreign currency futures contracts and on foreign currencies. A put option on a futures contract gives the Funds the right to assume a
short position in the futures contract until expiration of the option. A put option on currency gives the Funds the right to sell a currency at an exercise price until the expiration of the option. A call option on a futures contract gives the Fund
the right to assume a long position in the futures contract until the expiration of the option. A call option on currency gives the Fund the right to purchase a currency at the exercise price until the expiration of the option.
The Fund may engage in position hedging to protect against the decline in the value relative the U.S. dollar of the currencies in
which its portfolio securities are denominated or quoted (or an increase in the value of currency for securities which the portfolio intends to buy, when it holds cash reserves and short term investments). For position hedging purposes the Fund may
purchase or sell foreign currency futures contracts and foreign currency forward contracts, and may purchase put or call options on foreign currency futures contracts and on foreign currencies on exchanges or over-the-counter markets. In connection with position hedging, the Fund may also purchase or sell foreign currency on a spot basis.
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Hedging transactions involves costs and may result in losses. The Fund may write covered call
options on foreign currencies to offset some of the costs of hedging those currencies. The Fund engages in over-the-counter transactions only when appropriate
exchange-traded transactions are unavailable and when, in the opinion of Credit Suisse, the pricing mechanism and liquidity are satisfactory and the participants are responsible parties likely to meet their contractual obligations.
Positions in foreign currency futures contracts may be closed out only on an exchange or board of trade that provides a secondary market in
such contracts. The Fund intends to purchase or sell foreign currency futures contracts only on exchanges or boards of trade where there appears to be an active secondary market.
The Fund may enter into forward foreign currency exchange contracts (an obligation to purchase or sell a specific currency at a future date)
solely for hedging or other appropriate risk management purposes as defined in regulations of the Commodities Futures Trading Commission.
The Fund may also write or purchase options on foreign currencies. Such options are purchased or written only when Credit Suisse believes that
a liquid secondary market exists for such options. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. If the Fund sells call options on foreign currencies, it may cover by holding that
currency or by holding a separate call option on the currency with a strike price no higher than that of the call option sold.
Senior
Loans. Senior secured floating rate loans (Senior Loans) are loans and loan participations (collectively, Loans) that are senior secured floating rate Loans. Senior Loans are made to corporations and other non-governmental entities and issuers. Senior Loans typically hold the most senior position in the capital structure of the issuing entity, are typically secured with specific collateral and typically have a claim
on the assets and/or stock of the borrower that is senior to that held by subordinated debt holders and stockholders of the borrower. The proceeds of Senior Loans primarily are used to finance leveraged buyouts, recapitalizations, mergers,
acquisitions, stock repurchases, dividends, and, to a lesser extent, to finance internal growth and for other corporate purposes. Senior Loans typically have rates of interest that are determined daily, monthly, quarterly or semi-annually by
reference to a base lending rate, plus a premium or credit spread. Base lending rates in common usage today are primarily the London Interbank Offered Rate (LIBOR), and secondarily the prime rate offered by one or more major U.S. banks
(the Prime Rate) and the certificate of deposit (CD) rate or other base lending rates used by commercial lenders.
The risks associated with Senior Loans of below investment grade quality are similar to the risks of bonds rated below investment grade,
although Senior Loans are typically senior and secured in contrast to bonds rated below investment grade, which are generally subordinated and unsecured. Senior Loans higher standing has historically resulted in generally higher recoveries in
the event of a corporate reorganization. In addition, because their interest payments are adjusted for changes in short-term interest rates, investments in Senior Loans generally have less interest rate risk than below-investment-grade rated bonds.
The Funds investments in Senior Loans are expected to typically be below investment grade, which are considered speculative because of the credit risk of their issuers. Such companies are more likely to default on their payments of interest
and principal owed to the Fund, and such defaults could reduce the Funds net asset value and income distributions. An economic downturn generally leads to a higher non-payment rate, and a debt obligation
may lose significant value before a default occurs. Moreover, any specific collateral used to secure a Loan may decline in value or become illiquid, which would adversely affect the Loans value.
Like other debt instruments, Senior Loans are subject to the risk of non-payment of scheduled interest
or principal. Such non-payment would result in a reduction of income to the Fund, a reduction in the value of the investment and a potential decrease in the net asset value per share of the Fund. There can be
no assurance that the liquidation of any collateral securing a Loan would satisfy the borrowers obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral
could be readily liquidated. Senior Loans are also subject to heightened prepayment risk, as they usually have mandatory and optional prepayment provisions. 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 a Senior Loan. The collateral securing a Senior Loan may lose all or substantially all of its value in the event of bankruptcy of a borrower. In the event of default, the
Fund may have difficulty collecting on any collateral. Some Senior Loans are subject to the risk that a court, pursuant to fraudulent
11
conveyance or other similar laws, could subordinate such Senior Loans to presently existing or future indebtedness of the borrower or take other action detrimental to the holders of Senior Loans
including, in certain circumstances, invalidating such Senior Loans or causing interest previously paid to be refunded to the borrower. Due to the above factors, a collateralized Senior Loan may not be fully collateralized and may decline
significantly in value. If interest were required to be refunded, it could negatively affect the Funds performance.
The Fund may
purchase and retain in its portfolio Senior Loans where the borrowers have experienced, or may be perceived to be likely to experience, credit problems, including default, involvement in or recent emergence from bankruptcy reorganization proceedings
or other forms of debt restructuring. At times, in connection with the restructuring of a Senior Loan either outside of bankruptcy court or in the context of bankruptcy court proceedings, the Fund may determine or be required to accept equity
securities or junior debt securities in exchange for all or a portion of a Senior Loan. Senior Loans in which the Fund will invest may not be rated by a nationally recognized statistical ratings organization (NRSRO), may not be
registered with the SEC or any state securities commission, and may not be listed on any national securities exchange. The amount of public information available with respect to Senior Loans may be less extensive than available for registered or
exchange-listed securities. In evaluating the creditworthiness of borrowers, the Adviser will consider, and may rely in part, on analyses performed by others.
Borrowers may have outstanding debt obligations that are rated below investment grade by a NRSRO. Most of the Senior Loans held by the Fund
will have been assigned ratings below investment grade by a NRSRO. In the event Senior Loans are not rated, they are likely to be the equivalent of below investment grade quality. The Fund will rely on the judgment, analysis and experience of the
Adviser in evaluating the creditworthiness of a borrower. In this evaluation, the Adviser will take into consideration, among other things, the borrowers financial resources, its sensitivity to economic conditions and trends, its operating
history, the quality of the borrowers management and regulatory matters.
No active trading market may exist for some Senior Loans
and some Senior Loans may be subject to restrictions on resale. Secondary markets may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods, which may impair the ability to realize full value and thus
cause a decline in the Funds net asset value. During periods of limited demand and liquidity for Senior Loans, the Funds net asset value may be adversely affected.
Although changes in prevailing interest rates can be expected to cause some fluctuations in the value of Senior Loans (due to the fact that
floating rates on Senior Loans only reset periodically), the value of Senior Loans tends to be substantially less sensitive to changes in market interest rates than fixed-rate instruments. Nevertheless, a sudden and significant increase in market
interest rates may cause a decline in the value of these investments and an associated decline in the Funds net asset value.
Other
factors (including, but not limited to, rating downgrades, credit deterioration, a large downward movement in stock prices, a disparity in supply and demand of certain investments or market conditions that reduce liquidity) can reduce the value of
Senior Loans and other debt obligations, impairing the Funds net asset value.
The Fund may purchase Senior Loans by assignment from
a participant in the original syndicate of lenders or from subsequent assignees of such interests, or can buy a participation in a loan. The Fund may also purchase participations in the original syndicate making Senior Loans. Loan participations
typically represent indirect participations in a loan to a corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates. When purchasing loan participations, the Fund assumes the credit risk associated
with the corporate borrower and may assume the credit risk associated with an interposed bank or other financial intermediary. The Fund will acquire participations only if the lender interpositioned between the Fund and the borrower is determined by
the Adviser to be creditworthy. In circumstances where the Fund is a participant in a loan, it does not have any direct claim on the loan or any rights of set-off against the borrower and may not benefit
directly from any collateral supporting the loan. In these situations, the Fund is subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a
participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.
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Economic and other events (whether real or perceived) can reduce the demand for certain Senior
Loans or Senior Loans generally, which may reduce market prices and cause the Funds net asset value per share to fall. The frequency and magnitude of such changes cannot be predicted.
Loans and other debt instruments are also subject to the risk of price declines due to increases in prevailing interest rates, although
floating-rate debt instruments are less exposed to this risk than fixed-rate debt instruments. Interest rate changes may also increase prepayments of debt obligations and require the Fund to invest assets at lower yields. No active trading market
may exist for certain Loans, which may impair the ability of the Fund to realize full value in the event of the need to liquidate such assets.
Adverse market conditions may impair the liquidity of some actively traded Loans.
Second Lien and Other Secured Loans. Second Lien Loans are second lien secured floating rate Loans made by
public and private corporations and other non-governmental entities and issuers for a variety of purposes. Second Lien Loans are second in right of payment to one or more Senior Loans of the related borrower.
Second Lien Loans typically are secured by a second priority security interest or lien to or on specified collateral securing the borrowers obligation under the Loan and typically have similar protections and rights as Senior Loans. Second
Lien Loans are not (and by their terms cannot) become subordinated in right of payment to any obligation of the related borrower other than Senior Loans of such borrower. Second Lien Loans, like Senior Loans, typically have adjustable floating rate
interest payments. Because Second Lien Loans are second to Senior Loans, they present a greater degree of investment risk but often pay interest at higher rates reflecting this additional risk.
The Fund may also invest in secured Loans other than Senior Loans and Second Lien Loans. Such secured Loans are made by public and private
corporations and other non-governmental entities and issuers for a variety of purposes, and may rank lower in right of payment to one or more Senior Loans and Second Lien Loans of the borrower. Such secured
Loans typically are secured by a lower priority security interest or lien to or on specified collateral securing the borrowers obligation under the Loan, and typically have more subordinated protections and rights than Senior Loans and Second
Lien Loans. Secured Loans may become subordinated in right of payment to more senior obligations of the borrower issued in the future. Such secured Loans may have fixed or adjustable floating rate interest payments. Because other secured Loans rank
in payment order behind Senior Loans and Second Lien Loans, they present a greater degree of investment risk but often pay interest at higher rates reflecting this additional risk.
Second Lien Loans and other secured Loans generally are of below investment grade quality. Other than their subordinated status, Second Lien
Loans and other secured Loans have many characteristics similar to Senior Loans discussed above. As in the case of Senior Loans, the Fund may purchase interests in Second Lien Loans and other secured Loans through assignments or participations.
Second Lien Loans and other secured Loans are subject to the same risks associated with investment in Senior Loans and bonds rated below
investment grade. However, because Second Lien Loans are second in right of payment to one or more Senior Loans of the related borrower, and other secured Loans rank lower in right of payment to Second Lien Loans, they are subject to the additional
risk that the cash flow of the borrower and any property securing the Loan may be insufficient to meet scheduled payments after giving effect to the more senior secured obligations of the borrower. Second Lien Loans and other secured Loans also are
expected to have greater price volatility than Senior Loans and may be less liquid. There also is a possibility that originators will not be able to sell participations in Second Lien Loans and other secured Loans, which would create greater credit
risk exposure.
MANAGEMENT OF THE FUND
The Funds business and affairs are managed under the direction of the Funds Board of Directors, including the supervision of
duties performed for the Fund under the investment advisory agreement with Credit Suisse (the Investment Advisory Agreement). The Directors set broad policies for the Fund and choose its officers, who serve at the Boards
discretion. The Board currently consists of five Directors, four of whom are not interested persons as defined in Section 2(a)(19) of the 1940 Act (Independent Directors). The Board of Directors is divided into three
classes, each having a term of three years. Each year the term of office of one class
13
expires and the successor or successors elected to such class will serve for a three-year term. Shareholders who wish to send communications to the Board should send them to the address of the
Fund (Eleven Madison Avenue, New York, New York 10010) and to the attention of the Board c/o the Secretary of the Fund. All such communications will be directed to the Directors attention.
Directors
For a discussion of the
Funds Directors, their principal occupations and other affiliations during the past five years, the number of portfolios in the Fund Complex that they oversee, and other information about them, please refer to the section
of the Funds proxy statement on Schedule 14A for the annual meeting of the Funds shareholders entitled Proposal 1: Election of DirectorsDirectors/Nominees, filed March 15, 2021 (File No. 811-05012) which is incorporated by reference herein.
Officers Who Are Not Directors
For a discussion of the Funds officers who are not Directors, please refer to the section
of the Funds proxy statement on Schedule 14A for the annual meeting of the Funds shareholders entitled Proposal 1: Election of DirectorsOfficers Who Are Not Directors, filed March 15, 2021 (File No. 811-05012), which is incorporated by reference herein.
Leadership Structure and Oversight
Responsibilities
For a discussion of the Boards leadership structure and oversight responsibilities, including the Audit
Committee and Nominating Committee of the Board, please refer to the section of the Funds proxy statement on Schedule 14A for the annual meeting of
the Funds shareholders entitled Proposal 1: Election of DirectorsLeadership Structure and Oversight Responsibility, filed March 15, 2021 (File No. 811-05012), which is
incorporated by reference herein.
Qualification of Board of Directors
For a discussion of the experience, qualifications, attributes and skills of the Directors, please refer to the section
of the Funds proxy statement on Schedule 14A for the annual meeting of the Funds shareholders entitled Proposal 1: Election of DirectorsQualifications of Board of Directors/Nominees, filed March
15, 2021 (File No. 811-05012), which is incorporated by reference herein.
Ownership of the Fund by
Directors
For a discussion of ownership of the Fund by the Directors, please refer to the section
of the Funds proxy statement on Schedule 14A for the annual meeting of the Funds shareholders entitled Proposal 1: Election of DirectorsQualification of Board of Directors/Nominees, filed March
15, 2021 (File No. 811-05012),which is incorporated by reference herein.
Director Compensation
For a discussion of Director compensation, please refer to the sections
of the Funds proxy statement on Schedule 14A for the annual meeting of the Funds shareholders entitled Proposal 1: Election of DirectorsQualification of Board of Directors/Nominees and Compensation, filed
March 15, 2021 (File No. 811-05012), which are incorporated by reference herein.
CODE OF ETHICS
The Fund and Credit Suisse have each adopted a code of ethics, as required by federal securities laws. Under these codes of ethics, employees
who are designated as access persons may engage in personal securities transactions, including transactions involving securities that are being considered for the Funds portfolio or that are currently held by the Fund, subject to certain
general restrictions and procedures. The personal securities
14
transactions of the Funds access persons and those of Credit Suisse will be governed by the applicable code of ethics.
Credit Suisse and its affiliates manage other investment companies and accounts. Credit Suisse may give advice and take action with respect to
any of the other funds it manages, or for its own account, that may differ from action taken by Credit Suisse on behalf of the Fund. Similarly, with respect to the Funds portfolio, Credit Suisse is not obligated to recommend, buy or sell, or
to refrain from recommending, buying or selling any security that Credit Suisse and its access persons, as defined by applicable federal securities laws, may buy or sell for its or their own account or for the accounts of any other fund. Credit
Suisse is not obligated to refrain from investing in securities held by the Fund or for any other funds it manages.
Copies of these codes
of ethics are also available on the EDGAR Database on the SECs Internet site at http://www.sec.gov, and copies of these codes of ethics may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov.
PROXY VOTING POLICIES AND PROCEDURES
The Fund has adopted Credit Suisses policies and procedures with respect to the voting of proxies related to portfolio
securities. A copy of the Funds proxy voting policies and procedures is attached as Appendix B.
Information regarding how the
Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available without charge:
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by calling
1-800-293-1232
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on the Funds website, www.credit-suisse.com/us
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on the SECs website, www.sec.gov.
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PRINCIPAL HOLDERS OF SECURITIES
The following table sets forth the beneficial ownership of shares of the Fund, as of October 30, 2021, by
each person (including any group) known to the Fund to be deemed to be the beneficial owner of more than 5% of the outstanding shares of the Fund:
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Name of Beneficial Owner
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Number of Shares Beneficially Owned
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Percent Ownership*
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First Trust Portfolios L.P.
First Trust Advisors L.P.
The Charger Corporation
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5,684,545
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10.87%
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*
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Stated in Schedule 13G/A filed with the SEC on January 29, 2021,
First Trust Portfolios, First Trust Advisors L.P., and The Charger Corporation share beneficial ownership of 5,684,545 shares, or 10.87% of the common stock.
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INVESTMENT ADVISER
Credit Suisse serves as the Funds investment adviser with respect to all investments and makes all investment decisions for the Fund.
Under the Investment Advisory Agreement, Credit Suisse receives as compensation for its advisory services from the Fund an annual fee, computed weekly and payable quarterly at an annual rate of 0.50% of an average weekly base amount which,
with respect to each quarter, is the average of the lower of (i) the stock price (market value) of the Funds outstanding shares and (ii) the Funds net assets, in each case determined as of the last
trading day for each week during the relevant quarter. Although it does not currently do so, Credit Suisse may voluntarily waive a portion of its fee from time to time and temporarily limit the expenses borne by the Fund.
For the fiscal years ended December 31, 2018, 2019 and 2020, the Fund incurred $820,968, $809,594 and $754,491, respectively, in advisory
fees under the Investment Advisory Agreement.
15
Credit Suisse is part of the asset management business of Credit Suisse Group AG, one of the
worlds leading banks. Credit Suisse Group AG provides its clients with investment banking, private banking and wealth management services worldwide. The asset management business of Credit Suisse Group AG is comprised of a number of legal
entities around the world that are subject to distinct regulatory requirements. Credit Suisse is an indirect, wholly owned subsidiary of Credit Suisse Group AG, a leading global financial services organization headquartered in Zurich. No one person
or any entity possesses a controlling interest in Credit Suisse Group AG. Credit Suisse is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Credit Suisses address is Eleven Madison Avenue, New York,
New York 10010. As of June 30, 2021, Credit Suisse managed over $74 billion in the U.S. and, together with its global affiliates, managed assets of over $509 billion in 21 countries.
The Investment Advisory Agreement provides that Credit Suisse will not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with matters to which the Investment Advisory Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on Credit Suisses part in the performance of its duties or from reckless disregard of its obligations and duties under the Investment Advisory Agreement.
The Investment Advisory Agreement will remain in effect from year to year if approved annually (1) by the Board of Directors of the Fund
or by the holders of a majority (as defined in the 1940 Act) of the Funds outstanding voting securities and (2) by a majority of the Directors who are not parties to the Investment Advisory Agreement, or interested persons (as
defined in the 1940 Act) of the Fund or the Adviser. The Board of Directors last approved the Investment Advisory Agreement at meetings held on November 16-17, 2020.
The Investment Advisory Agreement terminates on its assignment by any party. The Investment Advisory Agreement is terminable, without penalty,
on 60 days written notice by the Board of Directors or by the vote of holders of a majority (as defined in the 1940 Act) of the Funds outstanding voting securities or upon 90 days written notice by Credit Suisse.
The services of Credit Suisse are not deemed to be exclusive, and nothing in the Investment Advisory Agreement will present it or its
affiliates from providing similar services to other investment companies and other clients (whether or not their investment objectives and policies are similar to those of the Fund) or from engaging in other activities.
ADMINISTRATOR
State Street serves as the Funds administrator. As administrator, State Street provides certain administrative services to the Fund,
including but not limited to preparing and maintaining books, records, and tax and financial reports, and monitoring compliance with regulatory requirements. State Street is located at One Lincoln Street, Boston, Massachusetts 02111. The Fund pays
State Street, for administrative services, a fee, exclusive of out-of-pocket expenses, calculated in total for all the funds advised by Credit Suisse that are
administered or co-administered by State Street and allocated based upon the relative average net assets of each fund, subject to an annual minimum fee. The services of State Street are not deemed to be
exclusive, and nothing in the agreement between the Fund and State Street (the Administration Agreement) will prevent State Street or its affiliates from providing similar services to other investment companies and other clients (whether
or not their investment objectives and policies are similar to those of the Fund) or from engaging in other activities. The Administration Agreement is terminable upon 60 days notice by either party.
For the fiscal years ended December 31, 2018, 2019 and 2020, the Fund incurred $63,250, $60,499 and $59,373, respectively, in
administrative fees.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-PAYING AGENT
State Street serves as the Funds custodian and may employ sub-custodians outside the U.S. in
accordance with regulations of the SEC. State Street is located at One Lincoln Street, Boston, Massachusetts 02111. The
16
custodians responsibilities include safekeeping and controlling the Funds cash and securities, handling the receipt and delivery of securities, and collecting interest and dividends
on the Funds investments.
Computershare Trust Company, N.A. acts as the Funds transfer agent and dividend-paying agent under
the Funds automatic dividend reinvestment plan. Computershare Trust Company, N.A. is located at P.O. Box 30170 College Station, TX 77842-3170.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP acts as the Funds independent registered public accounting firm and provides audit and
tax services to the Fund. PricewaterhouseCoopers LLPs address is 300 Madison Avenue New York, NY 10017.
PORTFOLIO MANAGEMENT
Additional information regarding the Funds portfolio managers is provided below.
Registered Investment Companies, Pooled Investment Vehicles and Other Accounts Managed
As reported to the Fund, the information in the following table reflects the number of registered investment companies, pooled investment
vehicles and other accounts managed by each portfolio manager of the Fund and the total assets managed within each category as of December 31, 2020.
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Registered Investment
Companies
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Other Pooled Investment
Vehicles
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Other Accounts
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Name
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Number of
Accounts
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Total Assets
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Number of
Accounts
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Total Assets
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Number of
Accounts
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Total Assets
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Thomas J. Flannery*
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5
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$2,858 million
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54
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$36,039 million
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33
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$17,531 million
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Wing Chan
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5
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$2,858 million
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15
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$11,046 million
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33
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$17,531 million
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David Mechlin**
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4
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$3,861 million
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53
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$37,609 million
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31
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$16,237 million
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Joshua Shedroff**
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4
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$3,861 million
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53
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$37,609 million
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31
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$16,237 million
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*
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As of December 31, 2020, Mr. Flannery manages 39 accounts which have total assets under management of
$24,994 million, and which have additional fees based on the performance of the accounts.
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**
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As of September 30, 2021, Messrs. Mechlin and Shedroff managed 41 accounts which have total assets under
management of $26,746 million, and which have additional fees based on the performance of the accounts.
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Potential
Conflicts of Interest
It is possible that conflicts of interest may arise in connection with the portfolio managers management
of the Funds investments on the one hand and the investments of other accounts on the other. For example, the portfolio managers may have conflicts of interest in allocating management time, resources and investment opportunities among the
funds and other accounts they advise. In addition due to differences in the investment strategies or restrictions between the Fund and the other accounts, the portfolio managers may take action with respect to another account that differs from the
action taken with respect to the Fund. Credit Suisse has adopted policies and procedures that are designed to minimize the effects of these conflicts.
If Credit Suisse believes that the purchase or sale of a security is in the best interest of more than one client, it may (but is not
obligated to) aggregate the orders to be sold or purchased to seek favorable execution or lower brokerage commissions, to the extent permitted by applicable laws and regulations. Credit Suisse may aggregate
17
orders if all participating client accounts benefit equally (i.e., all receive an average price of the aggregated orders). In the event Credit Suisse aggregates an order for participating
accounts, the method of allocation will generally be determined prior to the trade execution. Although no specific method of allocation of transactions (as well as expenses incurred in the transactions) is expected to be used, allocations will be
designed to ensure that over time all clients receive fair treatment consistent with Credit Suisses fiduciary duty to its clients (including its duty to seek to obtain best execution of client trades). The accounts aggregated may include
registered and unregistered investment companies managed by Credit Suisses affiliates and accounts in which Credit Suisses officers, directors, agents, employees or affiliates own interests. Credit Suisse may not be able to aggregate
securities transactions for clients who direct the use of a particular broker-dealer, and the client also may not benefit from any improved execution or lower commissions that may be available for such transactions.
Portfolio Manager Compensation
Thomas
J. Flannery, Wing Chan and David Mechlin are compensated for their services by Credit Suisse. Their compensation consists of a fixed base salary and a discretionary bonus that is not tied by formula to the performance of any fund or account. The
factors taken into account in determining each of their bonuses includes the Funds performance, assets held in the Fund and other accounts managed by each of them, business growth, team work, management, corporate citizenship, etc.
A portion of the bonus may be paid in phantom shares of Credit Suisse Group AG stock as deferred compensation. Phantom shares are shares
representing an unsecured right to receive on a particular date a specified number of registered shares subject to certain terms and conditions. A portion of the bonus will receive the notional return of the fund(s) the portfolio manager manages and
a portion of the bonus will receive the notional return of a basket of other Credit Suisse funds along the product line of the portfolio manager.
Like all employees of Credit Suisse, portfolio managers participate in Credit Suisse Group AGs profit sharing and 401(k) plans.
Portfolio Manager Ownership of Shares
As reported to the Fund, the information in the following table reflects beneficial ownership by the portfolio managers of Shares as of
December 31, 2020:
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Name of Portfolio Manager
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Dollar Range of Equity Securities
in the
Fund*(1)
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Thomas J. Flannery
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E
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Wing Chan
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B
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David Mechlin**
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B
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Joshua Shedroff***
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A
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**
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Information provided as of June 30, 2021.
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***
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Information provided as of October 26, 2021
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(1)
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Beneficial Ownership is determined in accordance with Rule
16a-1(a)(2) promulgated under the 1934 Act.
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PORTFOLIO TRANSACTIONS
Credit Suisse is responsible for establishing, reviewing and, where necessary, modifying the Funds investment program to achieve its
investment objectives. Purchases and sales of newly issued portfolio securities are usually principal transactions without brokerage commissions effected directly with the issuer or with an
18
underwriter acting as principal. Other purchases and sales may be effected on a securities exchange or
over-the-counter, depending on where it appears that the best price or execution will be obtained. The purchase price paid by the Fund to underwriters of newly issued
securities usually includes a concession paid by the issuer to the underwriter, and purchases of securities from dealers, acting as either principals or agents in the after-market, are normally executed at a price between the bid and asked price,
which includes a dealers mark-up or mark-down. Transactions on U.S. stock exchanges and some foreign stock exchanges involve the payment of negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary among different brokers. On most foreign exchanges, commissions are generally fixed. There is generally no stated commission in the case of securities traded in domestic or foreign over-the-counter markets, but the price of securities traded in over-the-counter markets
includes an undisclosed commission or mark-up. U.S. government securities are generally purchased from underwriters or dealers, although certain newly issued U.S. government securities may be purchased
directly from the U.S. Treasury or from the issuing agency or instrumentality. No brokerage commissions are typically paid on purchases and sales of U.S. government securities. For the 2018, 2019 and 2020 fiscal years, the Fund paid $0, $0 and $606,
respectively, in brokerage commissions.
Credit Suisse will select portfolio investments and effect transactions for the Fund. In
selecting broker-dealers, Credit Suisse does business exclusively with those broker-dealers that, in Credit Suisses judgment, can be expected to provide the best service. The service has two main aspects: the execution of buy and sell orders
and the provision of research. In negotiating commissions with broker-dealers, Credit Suisse will pay no more for execution and research services than it considers either, or both together, to be worth. The worth of execution service depends on the
ability of the broker-dealer to minimize costs of securities purchased and to maximize prices obtained for securities sold. The worth of research depends on its usefulness in optimizing portfolio composition and its changes over time. Commissions
for the combination of execution and research services that meet Credit Suisses standards may be higher than for execution services alone or for services that fall below Credit Suisses standards. Credit Suisse believes that these
arrangements may benefit all clients and not necessarily only the accounts in which the particular investment transactions occur that are so executed. Further, Credit Suisse will receive only brokerage or research services in connection with
securities transactions that are consistent with the safe harbor provisions of Section 28(e) of the 1934 Act when paying such higher commissions. Research services may include research on specific industries or companies,
macroeconomic analyses, analyses of national and international events and trends, evaluations of thinly traded securities, computerized trading screening techniques and securities ranking services, and general research services. Research received
from brokers or dealers is supplemental to Credit Suisses own research program. For the fiscal year ended December 31, 2020, the Fund paid no brokerage commissions to brokers and dealers who provided such research services.
All orders for transactions in securities or options on behalf of the Fund are placed by the Adviser with broker-dealers that it selects,
including Credit Suisse Securities (USA) LLC (CSSU) and other affiliates of Credit Suisse Group AG. The Fund may utilize CSSU or other affiliates of Credit Suisse Group AG in connection with a purchase or sale of securities when the
Adviser believes that the charge for the transaction does not exceed usual and customary levels and when doing so is consistent with guidelines adopted by the Board. The Fund did not pay any commissions to affiliated broker-dealers during the
fiscal years ended December 31, 2018, 2019 and 2020, respectively.
Investment decisions for the Fund concerning specific
portfolio securities are made independently from those for other clients advised by Credit Suisse. Such other investment clients may invest in the same securities as the Fund. When purchases or sales of the same security are made at substantially
the same time on behalf of such other clients, transactions are averaged as to price and available investments allocated as to amount, in a manner which Credit Suisse believes to be equitable to each client, including the Fund. In some instances,
this investment procedure may adversely affect the price paid or received by the Fund or the size of the position obtained or sold for the Fund. To the extent permitted by law, Credit Suisse may aggregate the securities to be sold or purchased for
the Fund with those to be sold or purchased for such other investment clients in order to obtain best execution.
Transactions for the
Fund may be effected on foreign securities exchanges. In transactions for securities not actively traded on a foreign securities exchange, the Fund will deal directly with the dealers who make a market in the securities involved, except in those
circumstances where better prices and execution are available elsewhere. Such dealers usually are acting as principal for their own account. On occasion, securities may be purchased directly from the issuer. Such portfolio securities are generally
traded on a net basis and do not normally involve
19
brokerage commissions. Securities firms may receive brokerage commissions on certain portfolio transactions, including options, futures and options on futures transactions and the purchase and
sale of underlying securities upon exercise of options.
The Fund may participate, if and when practicable, in bidding for the purchase of
securities for the Funds portfolio directly from an issuer in order to take advantage of the lower purchase price available to members of such a group. The Fund will engage in this practice, however, only when Credit Suisse, in its sole
discretion, believes such practice to be otherwise in the Funds interest.
In no instance will portfolio securities be purchased
from or sold to Credit Suisse or CSSU or any affiliated person of such companies except as permitted by SEC exemptive order or by applicable law. In addition, the Fund will not give preference to any institutions with whom the Fund enters into
distribution or shareholder servicing agreements concerning the provision of distribution services or support services.
CONFLICTS OF INTEREST
Credit Suisse, which, for purposes of this section, shall mean, collectively, Credit Suisse Group AG, the
Adviser and their respective affiliates, directors, partners, trustees, managers, officers and employees, is a worldwide, full-service investment banking, broker-dealer, asset management and financial services organization. As such, Credit Suisse
provides a wide range of financial services to a substantial and diversified client base. In those and other capacities, Credit Suisse advises clients in all markets and transactions and purchases, sells, holds and recommends a broad array of
investments for its own account as well as for the accounts of its clients and of its personnel, through client accounts and the relationships and products it sponsors, manages and advises. Credit Suisse has direct and indirect interests in the
global fixed income, currency, commodity, equities, bank loan and alternative asset management markets, including the types of securities and issuers in which the Fund may directly and indirectly invest. As a result of Credit Suisses
activities and dealings, Credit Suisses interests or the interests of its clients (other than the Fund) may conflict with the interests of the Fund.
Credit Suisse has established certain information barriers and other policies to address the sharing of information between different
businesses within Credit Suisse. As a result of those information barriers, except as otherwise described herein, the Adviser generally will not have access, or will have limited access, to information and personnel in other areas of Credit Suisse,
and generally will not be able to manage the Fund with the benefit of information held by such other areas. Such other areas will have broad access to detailed information that is not available to the Adviser, which, if known to the Adviser, might
cause the Adviser to seek to dispose of, retain, make available or increase interests in investments held by the Fund or acquire certain positions on the Funds behalf, or take other actions. Credit Suisse will be under no obligation or
fiduciary duty to make any such information available to the Adviser or personnel of the Adviser involved in decision-making. In addition, Credit Suisse will not have any obligation to make available any information regarding its trading activities,
strategies or views, or the activities, strategies or views used for other accounts, or for the Funds behalf.
The Adviser and its
officers, agents and their employees, may serve on creditor or equity committees or advise companies that have issued securities or obligations in which the Fund may invest. The issuers of such underlying securities or obligations may be subject to
bankruptcy or insolvency proceedings or otherwise be engaged in financial restructuring activities in a variety of capacities. Such activities may result in the Adviser receiving confidential or material
non-public information and may limit or restrict the Advisers ability to purchase or sell securities or other obligations or conduct transactions relating to the Funds investments because the
Adviser could be deemed to be in possession of material non-public information that cannot be used in effecting purchases and sales in securities transactions for the Fund. Additionally, at times, the Adviser
and its personnel, in an effort to avoid restrictions for the investments that they manage may, but are under no obligation to, elect not to receive information that other market participants or counterparties are eligible to receive or have
received with respect to the issuers of underlying securities or obligations that may be held by the Fund or other accounts that the Adviser manages, and the election not to receive such information could be disadvantageous to the Fund insofar as
Adviser may not be able to respond to market information at the same time as other market participants.
20
Additional conflicts of interest may arise in connection with the Advisers management of
the Funds investments, on the one hand, and the investments of other accounts, on the other hand. For example, the Adviser may have conflicts of interest in allocating management time, resources and investment opportunities among the Fund and
other accounts that the Adviser advises. In addition due to differences in the investment strategies or restrictions between the Fund and the other accounts managed by the Adviser, the portfolio management teams responsible for the Fund may take
action with respect to another account that differs from the action taken with respect to the Fund. The Adviser has adopted policies and procedures that are designed to minimize the effects of these conflicts.
The Adviser is the sponsor and investment manager or adviser to other registered and unregistered investment funds and accounts other than the
Fund and may sponsor similar investment funds or manage accounts in the future that have similar investment objectives, investment strategies and securities investments to that of the Fund. As a result, the Adviser may face conflicts in allocating
investment opportunities among the Fund and such other investment funds and accounts, particularly in circumstances where the availability of such investment opportunities is limited. Although no specific method of allocation of transactions (as
well as expenses incurred in the transactions), is expected to be used, allocations will be designed to ensure that over time all clients receive fair treatment consistent with Credit Suisses fiduciary duty to clients (including its duty to
seek to obtain best execution of client trades).
TAXATION
Taxation of the Fund
The Fund is treated as a separate
entity for U.S. federal income tax purposes. The Fund has elected to be treated, and has qualified and intends to continue to qualify each year, as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the Code), so that it will not pay U.S. federal income tax on income and capital gains distributed to shareholders. In order to qualify as a regulated investment company under Subchapter M of the Code, the Fund must, among
other things, (i) derive at least 90% of its gross income for each taxable year from dividends, interest, payments with respect to certain securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or
other income (including gains from options, futures, and forward contracts) derived with respect to its business of investing in such stock, securities or currencies, and net income derived from an interest in a qualified publicly traded partnership
(as defined in Section 851(h) of the Code) (the 90% income test) and (ii) diversify its holdings so that, at the end of each quarter of each taxable year: (a) at least 50% of the value of the Funds total assets is
represented by (1) cash and cash items, U.S. government securities, securities of other regulated investment companies, and (2) other securities, with such other securities limited, in respect of any one issuer, to an amount not greater
than 5% of the value of the Funds total assets and to not more than 10% of the outstanding voting securities of such issuer and (b) not more than 25% of the value of the Funds total assets is invested in (1) the securities
(other than U.S. government securities and securities of other regulated investment companies) of any one issuer, (2) the securities (other than securities of other regulated investment companies) of two or more issuers that the Fund controls
and that are engaged in the same, similar, or related trades or businesses, or (3) the securities of one or more qualified publicly traded partnerships.
For purposes of the 90% income test, the character of income earned by any entities in which the Fund may invest that are not treated as corporations for U.S.
federal income tax purposes (e.g., partnerships other than certain publicly traded partnerships taxable as corporations or grantor trusts) will generally pass through to the fund. Consequently, in order to qualify as a regulated investment company ,
the Fund may be required to limit its equity investments in such entities that earn fee income, rental income, insurance income or other non-qualifying income.
Although in general the passive loss rules of the Code do not apply to regulated investment companies, such rules do apply to a regulated investment company
with respect to items attributable to an interest in a qualified publicly traded partnership. Fund investments in partnerships, including in qualified publicly traded partnerships, may result in the funds being subject to state, local or
foreign income, franchise or withholding tax liabilities.
If the Fund qualifies as a regulated investment company and properly distributes to its
shareholders each taxable year an amount equal to or exceeding the sum of (i) 90% of its investment company taxable income as that term is defined in the Code (which includes, among other things, dividends, taxable interest, and the
excess of any net short-term capital gains over net long-term capital losses, as reduced by certain deductible expenses) without regard to the
21
deduction for dividends paid and (ii) 90% of the excess of its gross tax-exempt interest income, if any, over certain disallowed deductions, the Fund
generally will not be subject to U.S. federal income tax on any income of the Fund, distributed to shareholders, including net capital gain (the excess of net long-term capital gain over net short-term capital loss). However, if the Fund
meets such distribution requirements, but chooses to retain some portion of its taxable income or gains, it generally will be subject to U.S. federal income tax at regular corporate rates on the amount retained. The Fund may designate certain
amounts retained as undistributed net capital gain in a notice to its shareholders, who (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their proportionate shares of the undistributed
amount so designated, (ii) will be entitled to credit their proportionate shares of the income tax paid by the Fund on that undistributed amount against their federal income tax liabilities and to claim refunds to the extent such credits exceed
their liabilities and (iii) will be entitled to increase their tax basis, for federal income tax purposes, in their Shares by an amount equal to the excess of the amount of undistributed net capital gain included in their respective income over
their respective income tax credits. The Fund intends to distribute at least annually all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction), net
tax-exempt interest income, and net capital gain.
The Funds investment strategy will potentially be limited
by its intention to qualify for treatment as a RIC. The tax treatment of certain of the Funds investments under one or more of the qualification or distribution tests applicable to RICs is not certain. An adverse determination or future
guidance by the IRS or a change in law might affect the Funds ability to qualify for such treatment.
The Fund may be able to cure
a failure to derive 90% of its income from the sources specified above or a failure to diversity its holdings in the manner described above by paying a tax and/or by disposing of certain assets. If, in any taxable year, the Fund fails one of these
tests and does not timely cure the failure or does not satisfy the 90% distribution requirement, the Fund will be taxed in the same manner as an ordinary corporation and distributions to its shareholders will not be deductible by the Fund in
computing its taxable income.
The Code imposes a 4% nondeductible excise tax on the Fund to the extent it does not distribute by the end of any
calendar year at least the sum of (i) 98% of its taxable ordinary income for that year and (ii) 98.2% of its capital gain net income (both long-term and short-term) for the one-year period ending, as a general
rule, on October 31 of that year. For this purpose, however, any ordinary income or capital gain net income retained by the Fund that is subject to corporate income tax will be considered to have been distributed by year-end. In addition, the minimum amounts that must be distributed in any year to avoid the excise tax will be increased or decreased to reflect any underdistribution or overdistribution, as the case may be, from
the previous year. The Fund anticipates that it will pay such dividends and will make such distributions as are necessary in order to avoid the application of this excise tax.
Fund Distributions
The Fund declares a dividend from
net investment income (excluding capital gains) each month. Dividends are normally paid on the last business day of the month or shortly thereafter. The Fund typically distributes any net short-term and long-term capital gains in December. Dividends
from income and/or capital gains may also be paid at such other times as may be necessary for the Fund to avoid U.S. federal income or excise tax.
For
U.S. federal income tax purposes, all dividends from the Fund generally are taxable whether a shareholder takes them in cash or reinvests them in additional shares of the Fund. In general, assuming that the Fund has sufficient earnings and profits,
dividends from net investment income and from net short-term capital gains are taxable as ordinary income.
Dividends from income and/or capital gains may
also be paid at such other times as may be necessary for the Fund to avoid U.S. federal income or excise tax.
A 3.8% excise tax will be imposed on net
investment income, including, among other things, dividends, interest and net gains from investments, of individuals with annual income of $200,000 or more ($250,000 if married, filing jointly), and of estates and trusts.
22
Distributions by the Fund in excess of the Funds current and accumulated earnings and profits will be
treated as a return of capital to the extent of the shareholders tax basis in its Shares and will reduce such basis. Any such amount in excess of that basis will be treated as gain from the sale of Shares, as discussed below.
Distributions from net capital gains, if any, that are reported as capital gain dividends by the Fund are taxable as long-term capital gains for U.S. federal
income tax purposes without regard to the length of time the shareholder has held Shares of the Fund. Capital gain dividends distributed by the Fund to individual and certain other noncorporate shareholders generally will qualify for reduced U.S.
federal income tax rates (a maximum rate of 20% for individuals with income above certain inflation-adjusted thresholds) on long-term capital gains, subject to certain limited exceptions. A shareholder should also be aware that the benefits of the
favorable tax rate applicable to long-term capital gains and qualified dividend income may be affected by the application of the alternative minimum tax to individual shareholders.
The U.S. federal income tax status of all distributions will be reported to shareholders annually.
Although dividends generally will be treated as distributed when paid, any dividend declared by the Fund in October, November or December and payable to
shareholders of record in such a month that is paid during the following January will be treated for U.S. federal income tax purposes as received by shareholders on December 31 of the calendar year in which it was declared. In addition, certain
other distributions made after the close of a taxable year of the Fund may be spilled back and treated for certain purposes as paid by the Fund during such taxable year. In such case, shareholders generally will be treated as having
received such dividends in the taxable year in which the distributions were actually made. For purposes of calculating the amount of a regulated investment companys undistributed income and gain subject to the 4% excise tax described above,
such spilled back dividends are treated as paid by the regulated investment company when they are actually paid.
For U.S. federal income
tax purposes, the Fund is permitted to carry forward a net capital loss for any year to offset its future short-term and long-term capital gains, respectively. Capital loss carry forwards are not subject to expiration. To the extent subsequent
capital gains are offset by such losses, they would not result in U.S. federal income tax liability to the Fund and may not be distributed as such to shareholders. The Fund may not carry forward any losses other than net capital losses. In the event
that the Fund were to experience an ownership change as defined under the Code, the Funds loss carryforwards and other favorable tax attributes, if any, may be subject to limitation.
At the time of an investors purchase of fund Shares, a portion of the purchase price may be attributable to realized or unrealized appreciation in the
Funds portfolio or to undistributed capital gains of the Fund. Consequently, subsequent distributions by the Fund with respect to these Shares from such appreciation or gains may be taxable to such investor even if the NAV of the
investors Shares is, as a result of the distributions, reduced below the investors cost for such shares and the distributions economically represent a return of a portion of the investment.
Expenses Subject to Special Pass-Through Rules
The Fund
will not be considered to be a publicly offered RIC if it does not have at least 500 shareholders at all times during a taxable year and its shares are not treated as continuously offered pursuant to a public offering. It is possible
that the Fund will not be treated as a publicly offered RIC for one or more of its taxable years. Very generally, pursuant to Treasury Department regulations, expenses of a RIC that is not publicly offered, except those
specific to its status as a RIC or separate entity (e.g., registration fees or transfer agency fees), are subject to special pass-through rules. These expenses (which include direct and certain indirect advisory fees) are treated as
additional dividends to certain Fund shareholders (generally including other RICs that are not publicly offered, individuals and entities that compute their taxable income in the same manner as an individual), and, other than in the case
of a shareholder that is a RIC that is not publicly offered, are not deductible by those shareholders under current law.
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Sale, Exchange or Repurchase of Shares
Sales and exchanges generally are taxable events for shareholders that are subject to tax. Shareholders should consult their own tax advisers with reference
to their individual circumstances to determine whether any particular transaction in fund shares is properly treated as a sale for tax purposes, as the following discussion assumes, and the tax treatment of any gains or losses recognized in such
transactions. In general, if fund shares are sold, the shareholder will recognize gain or loss equal to the difference between the amount realized on the sale and the shareholders adjusted basis in the shares. Such gain or loss generally will
be treated as long-term capital gain or loss if the shares were held for more than one year and otherwise generally will be treated as short-term capital gain or loss. Any loss recognized by a shareholder upon the sale or other disposition of Shares
with a tax holding period of six months or less will be treated as a long-term capital loss to the extent of any amounts treated as distributions to the shareholder of long-term capital gain with respect to such Shares (including any amounts
credited to the shareholder as undistributed capital gains).
The Fund may report to the IRS the amount of proceeds that a shareholder receives from a
repurchase of Shares. The Fund may also report the shareholders basis in those Shares and whether any gain or loss that the shareholder realizes on the repurchase is short-term or long-term gain or loss. If a shareholder has a different basis
for different Shares of the Fund in the same account (e.g., if a shareholder purchased Shares in the same account at different times for different prices, including as the result of reinvestment of dividends), the Fund will calculate the basis of
the Shares using its default method unless the shareholder has properly elected to use a different method. The Funds default method for calculating basis will be the average basis method, under which the basis per share is reported as the
average of the bases of all of the shareholders Shares in the account. A shareholder may elect, on an account-by-account basis, to use a method other than average
basis by following procedures established by the Fund. If such an election is made on or prior to the date of the first repurchase of Shares in the account and on or prior to the date that is one year after the shareholder receives notice of the
Funds default method, the new election will generally apply as if the average basis method had never been in effect for such account. If such an election is not made on or prior to such dates, the Shares in the account at the time of the
election will generally retain their averaged bases. Shareholders should consult their tax advisers concerning the tax consequences of applying the average basis method or electing another method of basis calculation.
Losses on sales or other dispositions of Shares may be disallowed under wash sale rules in the event of other investments in the Fund (including
those made pursuant to reinvestment of dividends and/or capital gain distributions) within a period of 61 days beginning 30 days before and ending 30 days after a sale or other disposition of Shares. In such a case, the disallowed portion of any
loss generally would be included in the U.S. federal tax basis of the Shares acquired in the other investments.
Tax Shelter Reporting Regulations
Under Treasury regulations, if a shareholder recognizes a loss with respect to Shares of $2 million or more for an individual shareholder, or
$10 million or more for a corporate shareholder, in any single taxable year (or of certain greater amounts over a combination of years), the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Shareholders who own
portfolio securities directly are in many cases excepted from this reporting requirement but, under current guidance, shareholders of regulated investment companies are not excepted. A shareholder who fails to make the required disclosure to the IRS
may be subject to substantial penalties. The fact that a loss is reportable under these regulations does not affect the legal determination of whether or not the taxpayers treatment of the loss is proper. Shareholders should consult with their
tax advisers to determine the applicability of these regulations in light of their individual circumstances.
Tax-Exempt Shareholders
Shareholders that are exempt from U.S. federal income tax, such as retirement plans that are qualified under Section 401 of the Code, generally are not
subject to U.S. federal income tax on otherwise-taxable fund dividends or distributions, or on sales or exchanges of fund Shares unless the Shares are debt-financed property within the meaning of the Code. However, in the case of fund
shares held through a non-qualified deferred compensation plan, fund dividends and distributions received by the plan and sales and exchanges of fund shares by the plan generally are taxable to the employer
sponsoring such plan in accordance with the U.S. federal income tax laws that are
24
generally applicable to shareholders receiving such dividends or distributions from regulated investment companies such as the Fund.
A plan participant whose retirement plan invests in the Fund, whether such plan is qualified or not, generally is not taxed on any fund dividends or
distributions received by the plan or on sales or exchanges of fund shares by the plan for U.S. federal income tax purposes. However, distributions to plan participants from a retirement plan account generally are taxable as ordinary income, and
different tax treatment, including penalties on certain excess contributions and deferrals, certain pre-retirement and post-retirement distributions and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans. Shareholders should consult their tax advisers for more information.
Taxation of Fund Investments
The Fund may invest to a significant extent in debt obligations that are in the lowest rating categories or that are unrated, including debt obligations of
issuers not currently paying interest or that are in default. Investments in debt obligations that are at risk of or in default present special tax issues for the Fund. Federal income tax rules are not entirely clear about issues such as when the
Fund may cease to accrue interest, original issue discount or market discount, when and to what extent deductions may be taken for bad debts or worthless securities, how payments received on obligations in default should be allocated between
principal and interest and whether certain exchanges of debt obligations in a workout context are taxable. These and other issues will be addressed by the Fund, in the event it invests in or holds such securities, in order to seek to ensure that it
distributes sufficient income to preserve its status as a regulated investment company and does not become subject to U.S. federal income or excise tax.
If the Fund invests in certain pay-in-kind securities, zero coupon securities,
deferred interest securities or, in general, any other securities with original issue discount (or with market discount if the Fund elects to include market discount in income currently), the Fund generally must accrue income on such investments for
each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, the Fund must distribute to its shareholders, at least annually, all or substantially all of its investment company taxable income
(determined without regard to the deduction for dividends paid) and net tax-exempt income, including such accrued income, to qualify to be treated as a regulated investment company under the Code and avoid
U.S. federal income and excise taxes. Therefore, the Fund may have to dispose of its portfolio securities, potentially under disadvantageous circumstances, to generate cash, or may have to borrow the cash, to satisfy distribution requirements. Such
a disposition of securities may potentially result in additional taxable gain or loss to the Fund.
Options written or purchased and futures contracts
entered into by the Fund on certain securities, indices and foreign currencies, as well as certain forward foreign currency contracts, may cause the Fund to recognize gains or losses from marking-to-market even though such options may not have lapsed or been closed out or exercised, or such futures or forward contracts may not have been performed or closed out. The tax rules applicable to
these contracts may affect the characterization of some capital gains and losses realized by the Fund as long-term or short-term. Certain options, futures and forward contracts relating to foreign currency may be subject to Section 988 of the
Code, and accordingly may produce ordinary income or loss. Additionally, the Fund may be required to recognize gain if an option, futures contract, forward contract, or short sale that is not subject to the
mark-to-market rules is treated as a constructive sale of an appreciated financial position held by the Fund under Section 1259 of the Code. Any net
mark-to-market gains and/or gains from constructive sales may also have to be distributed to satisfy the distribution requirements referred to above even though the Fund
may receive no corresponding cash amounts, possibly requiring the disposition of portfolio securities or borrowing to obtain the necessary cash. Such a disposition of securities may potentially result in additional taxable gain or loss to the Fund.
Losses on certain options, futures or forward contracts and/or offsetting positions (portfolio securities or other positions with respect to which the Funds risk of loss is substantially diminished by one or more options, futures or forward
contracts) may also be deferred under the tax straddle rules of the Code, which may also affect the characterization of capital gains or losses from straddle positions and certain successor positions as long-term or short-term. Certain tax elections
may be available that would enable the Fund to ameliorate some adverse effects of the tax rules described in this paragraph. The tax rules applicable to options, futures, forward contracts and straddles may affect the amount, timing and character of
the Funds income and gains or losses and hence of its distributions to shareholders.
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As a result of entering into swap contracts, the Fund may make or receive periodic net payments. The Fund may
also make or receive a payment when a swap is terminated prior to maturity through an assignment of the swap or other closing transaction. Periodic net payments will generally constitute ordinary income or deductions, while termination of a swap
will generally result in capital gain or loss (which will be a long-term capital gain or loss if the fund has been a party to the swap for more than one year). With respect to certain types of swaps, the Fund may be required to currently recognize
income or loss with respect to future payments on such swaps or may elect under certain circumstances to mark such swaps to market annually for tax purposes as ordinary income or loss.
The Fund may be subject to withholding and other taxes imposed by foreign countries, including taxes on interest, dividends and capital gains with respect to
its investments in those countries. Any such taxes would, if imposed, reduce the yield on or return from those investments. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes in some cases. The Fund may be able
to elect to pass through to its shareholders any share of foreign taxes paid by the Fund; if the Fund is able to, and makes, this election, shareholders would include such taxes in their gross incomes and would be entitled to a tax deduction or
credit for such taxes on their own tax returns.
Backup Withholding
The Fund is required to withhold (as backup withholding) 24% of reportable payments, including dividends, capital gain distributions and the
proceeds of redemptions or repurchases of Shares paid to shareholders who have not complied with certain IRS regulations. In order to avoid this withholding requirement, shareholders, other than certain exempt entities, must certify on their Account
Applications, or on separate IRS Forms W-9, that the Social Security Number or other Taxpayer Identification Number they provide is their correct number and that they are not currently subject to backup
withholding, or that they are exempt from backup withholding. The Fund may nevertheless be required to backup withhold if it receives notice from the IRS or a broker that the number provided is incorrect or backup withholding is applicable as a
result of previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment company under the
Code, it will not be required to pay any Massachusetts income, corporate excise or franchise taxes or any Delaware corporation income tax.
A state income
(and possibly local income and/or intangible property) tax exemption is generally available to shareholders to the extent the Funds distributions are derived from interest on (or, in the case of intangible property taxes, the value of its
assets is attributable to) certain U.S. government obligations, provided in some states that certain thresholds for holdings of such obligations and/or reporting requirements are satisfied. The Fund will not seek to satisfy any threshold or
reporting requirements that may apply in particular taxing jurisdictions, although the Fund may in its sole discretion provide relevant information to shareholders.
Non-U.S. Shareholders
In general, dividends (other than capital gain dividends) paid by the Fund to a person who is not a U.S. person within the meaning of the Code are
subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate). However, the Code provides a withholding tax exemption, if the Fund so elects, for certain interest-related dividends and short-term capital gain
dividends paid to such shareholders.
Separately, a 30% withholding tax is currently imposed on U.S.-source dividends, interest and other income items
paid to (i) foreign financial institutions including non-U.S. investment funds unless they agree to collect and disclose to the IRS information regarding their direct and indirect U.S. account holders and
(ii) certain other foreign entities, unless they certify certain information regarding their direct and indirect U.S. owners. To avoid withholding, foreign financial institutions will need to (i) enter into agreements with the IRS that
state that they will provide the IRS information, including the names, addresses and taxpayer identification numbers of direct and indirect U.S. account holders, comply with due diligence procedures with respect to the identification of U.S.
accounts, report to the IRS certain information with respect to U.S. accounts maintained, agree to withhold tax on certain payments made to non-compliant foreign financial institutions or to account holders
who fail to provide the required information, and determine certain other information as to their account holders, or (ii) in the event that an applicable intergovernmental agreement and implementing legislation are adopted, provide local
revenue authorities with
26
similar account holder information. Other foreign entities will need to either provide the name, address, and taxpayer identification number of each substantial U.S. owner or certifications of no
substantial U.S. ownership unless certain exceptions apply.
Shares of the Fund held by a non-U.S. shareholder at
death will be considered situated within the United States and subject to the U.S. estate tax.
LEGAL
MATTERS
The validity of the Shares offered hereby will be passed on for the Fund by Miles & Stockbridge P.C., 100 Light
Street, Maryland 21202.
Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019, is counsel to the Fund
and has represented the Fund in connection with this registration statement.
INCORPORATION BY REFERENCE
This SAI is part of a registration statement that we have filed with the SEC. We are allowed to incorporate by reference the information
that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. We incorporate by reference into this SAI the documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any filings on or after the date of this SAI from the date of filing (excluding any information furnished, rather than filed), until we have sold all of the offered securities to
which this SAI and any accompanying prospectus supplement relates or the offering is otherwise terminated. The information incorporated by reference is an important part of this SAI. Any statement in a document incorporated by reference into this
SAI will be deemed to be automatically modified or superseded to the extent a statement contained in (1) this SAI or (2) any other subsequently filed document that is incorporated by reference into this SAI modifies or supersedes such
statement. The documents incorporated by reference herein include:
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our annual
report on Form N-CSR for the fiscal year ended December 31, 2020 filed with the SEC on February 25, 2021;
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our semi-annual report
on Form N-CSR for semi-annual fiscal period ended June 30, 2021 filed with the SEC on August 16, 2021; and
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the description of the Funds
common stock contained in our Registration Statement on Form 8-A (File No. 001-09452) filed with the SEC on May 11, 2006, including any amendment or
report filed for the purpose of updating such description prior to the termination of the offering registered hereby.
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the Funds proxy
statement on Schedule 14A for the annual meeting of the Funds shareholders filed with the SEC on March 15, 2021.
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The
Fund will provide, free of charge, to each person, including any beneficial owner, to whom this SAI is delivered, upon written or oral request, a copy of any and all of the documents that have been or may be incorporated by reference in this SAI or
the accompanying prospectus supplement. You should direct requests for documents by writing to:
c/o Credit Suisse Asset Management,
LLC
Eleven Madison Avenue
New
York, New York 10010
The Fund makes available this SAI, the Prospectus and the Funds annual and semi-annual reports, free of charge, at
www.credit-suisse.com/us/funds. You may also obtain this SAI, the Prospectus, other documents incorporated by
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reference and other information the Fund files electronically, including reports and proxy statements, on the SEC website (http://www.sec.gov) or with the payment of a duplication fee, by
electronic request at publicinfo@sec.gov. Information contained in, or that can be accessed through, the Funds website is not incorporated by reference into this SAI and should not be considered to be part of this SAI, the Prospectus or the
accompanying prospectus supplement.
FINANCIAL STATEMENTS
The audited financial statements and financial highlights included in the annual
report to the Funds shareholders for the fiscal year ended December
31, 2020 (the 2020 Annual Report), together with the report of PricewaterhouseCoopers LLP on the financial statements and financial highlights included in the Funds 2020 Annual Report, and the unaudited financial statements and financial
highlights included in the semi-annual report to the Funds shareholders for the six months ended June 30, 2021, are incorporated herein
by reference.
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APPENDIX A
DESCRIPTION OF RATINGS
A Description
of Moodys Investors Service, Inc.s (Moodys) Global Rating Scales
Ratings assigned on Moodys global long-term and
short-term rating scales are forward-looking opinions of the relative credit risks of financial obligations issued by non-financial corporates, financial institutions, structured finance vehicles, project
finance vehicles, and public sector entities. Moodys defines credit risk as the risk that an entity may not meet its contractual financial obligations as they come due and any estimated financial loss in the event of default or impairment. The
contractual financial obligations addressed by Moodys ratings are those that call for, without regard to enforceability, the payment of an ascertainable amount, which may vary based upon standard sources of variation (e.g., floating interest
rates), by an ascertainable date. Moodys rating addresses the issuers ability to obtain cash sufficient to service the obligation, and its willingness to pay. Moodys ratings do not address
non-standard sources of variation in the amount of the principal obligation (e.g., equity indexed), absent an express statement to the contrary in a press release accompanying an initial rating. Long-term
ratings are assigned to issuers or obligations with an original maturity of one year or more and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial loss suffered in the event of
default or impairment. Short-term ratings are assigned for obligations with an original maturity of thirteen months or less and reflect both on the likelihood of a default or impairment on contractual financial obligations and the expected financial
loss suffered in the event of default or impairment. Moodys issues ratings at the issuer level and instrument level on both the long-term scale and the short-term scale. Typically, ratings are made publicly available although private and
unpublished ratings may also be assigned.
Moodys differentiates structured finance ratings from fundamental ratings (i.e., ratings on nonfinancial
corporate, financial institution, and public sector entities) on the global long-term scale by adding (sf) to all structured finance ratings. The addition of (sf) to structured finance ratings should eliminate any presumption that such ratings and
fundamental ratings at the same letter grade level will behave the same. The (sf) indicator for structured finance security ratings indicates that otherwise similarly rated structured finance and fundamental securities may have different risk
characteristics. Through its current methodologies, however, Moodys aspires to achieve broad expected equivalence in structured finance and fundamental rating performance when measured over a long period of time.
Description of Moodys Global Long-Term Rating Scale
Aaa
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Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
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Aa
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Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
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A
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Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
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Baa
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Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess
certain speculative characteristics.
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Ba
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Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
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B
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Obligations rated B are considered speculative and are subject to high credit risk.
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Caa
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Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
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Ca
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Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of
recovery of principal and interest.
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C
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Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of
principal or interest.
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A-1
Note: Moodys appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa
through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category. Additionally, a (hyb) indicator is appended to all ratings of hybrid securities issued by banks, insurers, finance companies, and securities firms.
By their terms, hybrid securities allow for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairment
if such an omission occurs. Hybrid securities may also be subject to contractually allowable write-downs of principal that could result in impairment. Together with the hybrid indicator, the long-term obligation rating assigned to a hybrid security
is an expression of the relative credit risk associated with that security.
Description of Moodys Global Short-Term Rating Scale
P-1
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Ratings of Prime-1 reflect a superior ability to repay short-term
obligations.
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P-2
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Ratings of Prime-2 reflect a strong ability to repay short-term
obligations.
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P-3
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Ratings of Prime-3 reflect an acceptable ability to repay short-term
obligations.
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NP
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Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
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Description of Moodys U.S. Municipal Short-Term Debt and Demand Obligation Ratings
Description of Moodys Short-Term Obligation Ratings
Moodys uses the global short-term Prime rating scale for commercial paper issued by U.S. municipalities and nonprofits. These commercial paper programs
may be backed by external letters of credit or liquidity facilities, or by an issuers self-liquidity.
For other short-term municipal obligations,
Moodys uses one of two other short-term rating scales, the Municipal Investment Grade (MIG) and Variable Municipal Investment Grade (VMIG) scales discussed below.
Moodys uses the MIG scale for U.S. municipal cash flow notes, bond anticipation notes and certain other short-term obligations, which typically mature
in three years or less. Under certain circumstances, Moodys uses the MIG scale for bond anticipation notes with maturities of up to five years.
MIG Scale
MIG 1
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This designation denotes superior credit quality. Excellent protection is afforded by established cash flows,
highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
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MIG 2
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This designation denotes strong credit quality. Margins of protection are ample, although not as large as in
the preceding group.
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MIG 3
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This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and
market access for refinancing is likely to be less well-established.
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SG
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This designation denotes speculative-grade credit quality. Debt instruments in this category may lack
sufficient margins of protection.
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Description of Moodys Demand Obligation Ratings
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned. The
components are a long-term rating and a short-term demand obligation rating. The long-term rating addresses the issuers ability
A-2
to meet scheduled principal and interest payments. The short-term demand obligation rating addresses the ability of the issuer or the liquidity provider to make payments associated with the
purchase-price-upon-demand feature (demand feature) of the VRDO. The short-term demand obligation rating uses the VMIG scale. VMIG ratings with liquidity support use as an input the short-term Counterparty Risk Assessment of the support
provider, or the long-term rating of the underlying obligor in the absence of third party liquidity support. Transitions of VMIG ratings of demand obligations with conditional liquidity support differ from transitions on the Prime scale to reflect
the risk that external liquidity support will terminate if the issuers long-term rating drops below investment grade.
Moodys typically
assigns the VMIG short-term demand obligation rating if the frequency of the demand feature is less than every three years. If the frequency of the demand feature is less than three years but the purchase price is payable only with remarketing
proceeds, the short-term demand obligation rating is NR.
VMIG Scale
VMIG 1
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This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term
credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
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VMIG 2
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This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit
strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
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VMIG 3
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This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory
short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
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SG
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This designation denotes speculative-grade credit quality. Demand features rated in this category may be
supported by a liquidity provider that does not have a sufficiently strong short-term rating or may lack the structural or legal protections necessary to ensure the timely payment of purchase price upon demand.
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Description of S&P Global Ratings (S&P), a Division of S&P Global Inc., Issue Credit Ratings
An S&P issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a
specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of
credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion reflects S&Ps view of the obligors capacity and willingness to meet its financial commitments as they come
due, and this opinion may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default.
Issue
credit ratings can be either long-term or short-term. Short-term issue credit ratings are generally assigned to those obligations considered short-term in the relevant market, typically with an original maturity of no more than 365 days. Short-term
issue credit ratings are also used to indicate the creditworthiness of an obligor with respect to put features on long-term obligations. S&P would typically assign a long-term issue credit rating to an obligation with an original maturity of
greater than 365 days. However, the ratings S&P assigns to certain instruments may diverge from these guidelines based on market practices. Medium-term notes are assigned long-term ratings.
Issue credit ratings are based, in varying degrees, on S&Ps analysis of the following considerations:
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The likelihood of paymentthe capacity and willingness of the obligor to meet its financial commitments on
an obligation in accordance with the terms of the obligation;
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The nature and provisions of the financial obligation, and the promise S&P imputes; and
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A-3
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The protection afforded by, and relative position of, the financial obligation in the event of a bankruptcy,
reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors rights.
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An issue rating is
an assessment of default risk but may incorporate an assessment of relative seniority or ultimate recovery in the event of default. Junior obligations are typically rated lower than senior obligations, to reflect lower priority in bankruptcy, as
noted above. (Such differentiation may apply when an entity has both senior and subordinated obligations, secured and unsecured obligations, or operating company and holding company obligations.)
Long-Term Issue Credit Ratings*
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AAA
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An obligation rated AAA has the highest rating assigned by S&P. The obligors capacity to meet its financial commitments on the obligation is extremely strong.
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AA
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An obligation rated AA differs from the highest-rated obligations only to a small degree. The obligors capacity to meet its financial commitments on the obligation is very strong.
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A
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An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligors capacity to meet its
financial commitments on the obligation is still strong.
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BBB
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An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligors capacity to meet its financial commitments on
the obligation.
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BB, B, CCC, CC, and C
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Obligations rated BB, B, CCC, CC, and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and
C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposure to adverse conditions.
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BB
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An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to
the obligors inadequate capacity to meet its financial commitments on the obligation.
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B
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An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial,
or economic conditions will likely impair the obligors capacity or willingness to meet its financial commitments on the obligation.
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CCC
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An obligation rated CCC is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation. In the event
of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitments on the obligation.
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CC
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An obligation rated CC is currently highly vulnerable to nonpayment. The CC rating is used when a default has not yet occurred but S&P expects default to be a virtual certainty, regardless of the
anticipated time to default.
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C
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An obligation rated C is currently highly vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared with obligations that are rated higher.
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D
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An obligation rated D is in default or in breach of an imputed promise. For non-hybrid capital instruments, the D rating category is used when payments on an obligation
are not made on the date due, unless S&P believes that such payments will be made within five business days in the absence of a stated grace period
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or within the earlier of the stated grace period or 30 calendar days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a
virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to D if it is subject to a distressed debt restructuring.
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* Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show
relative standing within the rating categories.
Short-Term Issue Credit Ratings
A-1
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A short-term obligation rated A-1 is rated in the highest
category by S&P. The obligors capacity to meet its financial commitments on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligors capacity to meet
its financial commitments on these obligations is extremely strong.
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A short-term obligation rated A-2 is somewhat more
susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligors capacity to meet its financial commitments on the obligation is satisfactory.
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A short-term obligation rated A-3 exhibits adequate
protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken an obligors capacity to meet its financial commitments on the obligation.
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B
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A short-term obligation rated B is regarded as vulnerable and has significant speculative
characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligors inadequate capacity to meet its financial commitments.
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C
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A short-term obligation rated C is currently vulnerable to nonpayment and is dependent upon
favorable business, financial, and economic conditions for the obligor to meet its financial commitments on the obligation.
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D
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A short-term obligation rated D is in default or in breach of an imputed promise. For non-hybrid capital instruments, the D rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within any stated grace
period. However, any stated grace period longer than five business days will be treated as five business days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action and where default on
an obligation is a virtual certainty, for example due to automatic stay provisions. A rating on an obligation is lowered to D if it is subject to a distressed debt restructuring.
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Description of S&Ps Municipal Short-Term Note Ratings
An S&P U.S. municipal note rating reflects S&Ps opinion about the liquidity factors and market access risks unique to the notes. Notes due in
three years or less will likely receive a note rating. Notes with an original maturity of more than three years will most likely receive a long-term debt rating. In determining which type of rating, if any, to assign, S&Ps analysis will
review the following considerations:
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Amortization schedulethe larger the final maturity relative to other maturities, the more likely it will be
treated as a note; and
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Source of paymentthe more dependent the issue is on the market for its refinancing, the more likely it will
be treated as a note.
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A-5
S&Ps
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municipal short-term note rating symbols are as follows:
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SP-1
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Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay
debt service is given a plus (+) designation.
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SP-2
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Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic
changes over the term of the notes.
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SP-3
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Speculative capacity to pay principal and interest.
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D
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D is assigned upon failure to pay the note when due, completion of a distressed debt restructuring,
or the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions.
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Description of Fitch Ratings (Fitchs) Credit Ratings Scales
Fitch Ratings publishes opinions on a variety of scales. The most common of these are credit ratings, but the agency also publishes ratings, scores and other
relative opinions relating to financial or operational strength. For example, Fitch also provides specialized ratings of servicers of residential and commercial mortgages, asset managers and funds. In each case, users should refer to the definitions
of each individual scale for guidance on the dimensions of risk covered in each assessment.
Fitchs credit ratings relating to issuers are an
opinion on the relative ability of an entity to meet financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Credit ratings relating to securities and obligations of an
issuer can include a recovery expectation. Credit ratings are used by investors as indications of the likelihood of receiving the money owed to them in accordance with the terms on which they invested. The agencys credit ratings cover the
global spectrum of corporate, sovereign financial, bank, insurance, and public finance entities (including supranational and sub-national entities) and the securities or other obligations they issue, as well
as structured finance securities backed by receivables or other financial assets.
The terms investment grade and speculative
grade have established themselves over time as shorthand to describe the categories AAA to BBB (investment grade) and BB to D (speculative grade). The terms investment grade and speculative grade
are market conventions and do not imply any recommendation or endorsement of a specific security for investment purposes. Investment grade categories indicate relatively low to moderate credit risk, while ratings in the speculative categories either
signal a higher level of credit risk or that a default has already occurred.
For the convenience of investors, Fitch may also include issues relating to
a rated issuer that are not and have not been rated on its web page. Such issues are also denoted as NR.
Credit ratings express risk in
relative rank order, which is to say they are ordinal measures of credit risk and are not predictive of a specific frequency of default or loss. For information about the historical performance of ratings please refer to Fitchs Ratings
Transition and Default studies which detail the historical default rates and their meaning. The European Securities and Markets Authority also maintains a central repository of historical default rates.
Fitchs credit ratings do not directly address any risk other than credit risk. In particular, ratings do not deal with the risk of a market value loss
on a rated security due to changes in interest rates, liquidity and other market considerations. However, in terms of payment obligation on the rated liability, market risk may be considered to the extent that it influences the ability of an issuer
to pay upon a commitment.
Ratings nonetheless do not reflect market risk to the extent that they influence the size or other conditionality of the
obligation to pay upon a commitment (for example, in the case of index-linked bonds).
A-6
In the default components of ratings assigned to individual obligations or instruments, the agency typically
rates to the likelihood of non-payment or default in accordance with the terms of that instruments documentation. In limited cases, Fitch may include additional considerations (i.e. rate to a higher or
lower standard than that implied in the obligations documentation).
The primary credit rating scales can be used to provide a rating of privately
issued obligations or certain note issuance programs or for private ratings. In this case the rating is not published, but only provided to the issuer or its agents in the form of a rating letter.
The primary credit rating scales may also be used to provide ratings for a more narrow scope, including interest strips and return of principal or in other
forms of opinions such as credit opinions or rating assessment services. Credit opinions are either a notch- or category-specific view using the primary rating scale and omit one or more characteristics of a full rating or meet them to a different
standard. Credit opinions will be indicated using a lower case letter symbol combined with either an * (e.g. bbb+*) or (cat) suffix to denote the opinion status. Credit opinions will be point-in-time typically but may be monitored if the analytical group believes information will be sufficiently available. Rating assessment services are a notch-specific view using the primary rating scale of
how an existing or potential rating may be changed by a given set of hypothetical circumstances. While credit opinions and rating assessment services are point-in-time
and are not monitored, they may have a directional watch or outlook assigned, which can signify the trajectory of the credit profile.
Description of
Fitchs Long-Term Corporate Finance Obligations Rating Scales
Ratings of individual securities or financial obligations of a corporate issuer
address relative vulnerability to default on an ordinal scale. In addition, for financial obligations in corporate finance, a measure of recovery given default on that liability is also included in the rating assessment. This notably applies to
covered bonds ratings, which incorporate both an indication of the probability of default and of the recovery given a default of this debt instrument. On the contrary, Ratings of
debtor-in-possession (DIP) obligations incorporate the expectation of full repayment.
The relationship between the issuer scale and obligation scale assumes a generic historical average recovery. Individual obligations can be assigned ratings
higher, lower, or the same as that entitys issuer rating or issuer default rating (IDR), based on their relative ranking, relative vulnerability to default or based on explicit Recovery Ratings.
As a result, individual obligations of entities, such as corporations, are assigned ratings higher, lower, or the same as that entitys issuer rating or
IDR, except DIP obligation ratings that are not based off an IDR. At the lower end of the ratings scale, Fitch publishes explicit Recovery Ratings in many cases to complement issuer and obligation ratings.
Fitch long-term obligations rating scales are as follows:
AAA
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Highest Credit Quality. AAA ratings denote the lowest expectation of credit risk. They are assigned
only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
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AA
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Very High Credit Quality. AA ratings denote expectations of very low credit risk. They indicate
very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
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A
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High Credit Quality. A ratings denote expectations of low credit risk. The capacity for payment of
financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
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A-7
BBB
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Good Credit Quality. BBB ratings indicate that expectations of credit risk are currently low. The
capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.
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BB
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Speculative. BB ratings indicate an elevated vulnerability to credit risk, particularly in the
event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met.
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B
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Highly Speculative. B ratings indicate that material credit risk is present.
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CCC
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Substantial Credit Risk. CCC ratings indicate that substantial credit risk is present.
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CC
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Very High Levels of Credit Risk. CC ratings indicate very high levels of credit risk.
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C
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Exceptionally High Levels of Credit Risk. C indicates exceptionally high levels of credit risk.
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Within rating categories, Fitch may use modifiers. The modifiers + or - may be appended to a rating to denote
relative status within major rating categories.
For example, the rating category AA has three notch-specific rating levels (AA+;
AA; AA; each a rating level). Such suffixes are not added to AAA ratings and ratings below the CCC category. For the short-term rating category of F1, a + may be appended.
Description of Fitchs Short-Term Ratings Assigned to Issuers and Obligations
A short-term issuer or obligation rating is based in all cases on the short-term vulnerability to default of the rated entity and relates to the capacity to
meet financial obligations in accordance with the documentation governing the relevant obligation. Short-term deposit ratings may be adjusted for loss severity. Short-term ratings are assigned to obligations whose initial maturity is viewed as
short term based on market convention. Typically, this means up to 13 months for corporate, sovereign, and structured obligations and up to 36 months for obligations in U.S. public finance markets.
Fitch short-term ratings are as follows:
F1
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Highest Short-Term Credit Quality. Indicates the strongest intrinsic capacity for timely payment of financial
commitments; may have an added + to denote any exceptionally strong credit feature.
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F2
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Good Short-Term Credit Quality. Good intrinsic capacity for timely payment of financial commitments.
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F3
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Fair Short-Term Credit Quality. The intrinsic capacity for timely payment of financial commitments is
adequate.
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B
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Speculative Short-Term Credit Quality. Minimal capacity for timely payment of financial commitments, plus
heightened vulnerability to near term adverse changes in financial and economic conditions.
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C
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High Short-Term Default Risk. Default is a real possibility.
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RD
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Restricted Default. Indicates an entity that has defaulted on one or more of its financial commitments,
although it continues to meet other financial obligations. Typically applicable to entity ratings only.
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D
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Default. Indicates a broad-based default event for an entity, or the default of a short-term obligation.
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A-8
APPENDIX B
CREDIT SUISSE ASSET MANAGEMENT, LLC
CREDIT SUISSE FUNDS
PROXY VOTING
PROCEDURES
Introduction
Credit Suisse Asset Management, LLC (Credit Suisse) is a fiduciary that owes each of its clients duties of
care and loyalty with respect to proxy voting. The duty of care requires Credit Suisse to monitor corporate events and to vote proxies. To satisfy its duty of loyalty, Credit Suisse must cast proxy votes in the best interests of each of its clients.
The Credit Suisse Funds (the Funds), which have engaged Credit Suisse Asset Management, LLC as their
investment adviser, are of the belief that the proxy voting process is a means of addressing corporate governance issues and encouraging corporate actions both of which can enhance shareholder value.
Procedures
The Proxy
Voting Procedures (the Procedures) set forth below are designed to ensure that proxies are voted in the best interests of Credit Suisses clients. The Procedures addresses particular issues and gives a general indication of how
Credit Suisse will vote proxies. The Procedures are not exhaustive and does not include all potential issues.
Proxy Voting Committee
The Proxy Voting Committee will consist of a disinterested member of the Portfolio Management Department, a member of the
General Counsel Department, a member of the Compliance and Risk Department, a member of the Operations Department (or their designees), and a member of Fund Administration. The purpose of the Proxy Voting Committee is to administer the voting of all
clients proxies in accordance with the Procedures. The Proxy Voting Committee will review the Procedures as necessary to ensure that it is designed to promote the best interests of Credit Suisses clients.
For the reasons disclosed below under Conflicts, the Proxy Voting Committee has engaged the services of an
independent third party (initially, Risk Metrics Groups ISS Governance Services Unit (ISS)) to assist in issue analysis and vote recommendation for proxy proposals for all of the Funds except Credit Suisse Commodity Return Strategy
Fund and Credit Suisse Trust Commodity Return Strategy Portfolio. Proxy proposals addressed by the Procedures will be voted in accordance with the Procedures. Proxy proposals addressed by the Procedures that require a case-by-case analysis will be voted in accordance with the vote recommendation of ISS. Proxy proposals not addressed by the Procedures will also be voted in accordance with
the vote recommendation of ISS. To the extent that the Proxy Voting Committee proposes to deviate from the Procedures or the ISS vote recommendation, the Committee shall obtain client consent as described below.
Credit Suisse investment professionals may submit a written recommendation to the Proxy Voting Committee to vote in a manner
inconsistent with the Procedures and/or the recommendation of ISS. Such recommendation will set forth its basis and rationale. In addition, the investment professional must confirm in writing that he/she is not aware of any conflicts of interest
concerning the proxy matter or provide a full and complete description of the conflict.
In the event a Portfolio Manager
(PM) desires to deviate from the stated voting parameters outlined in the Procedures, the PM is required to submit a memo detailing the request and rationale for the deviation to the Chair of the Proxy Voting Committee. The Chair of the
Proxy Voting Committee (Committee) will convene a meeting where the PM will present their recommendation. In the event an in person or telephonic meeting cannot be organized, the Chair of the Committee will circulate the PMs
request for an exception to the Proxy Voting Committee for consideration.
B-1
Should such Procedures exception be approved by the Proxy Voting Committee, the
Committee will forward the instructions to ISS for processing and will minute the meeting.
Conflicts
Credit Suisse is the part of the asset management business of Credit Suisse, one of the worlds leading banks. As part of
a global, full service investment-bank, broker-dealer, and wealth-management organization, Credit Suisse and its affiliates and personnel may have multiple advisory, transactional, financial, and other interests in securities, instruments, and
companies that may be purchased or sold by Credit Suisse for its clients accounts. The interests of Credit Suisse and/or its affiliates and personnel may conflict with the interests of Credit Suisses clients in connection with any proxy
issue. In addition, Credit Suisse may not be able to identify all of the conflicts of interest relating to any proxy matter.
Consent
In each and every instance in which the Proxy Voting Committee favors voting in a manner that is inconsistent with the
Procedures or the vote recommendation of ISS (including proxy proposals addressed and not addressed by the Procedures), it shall disclose to the client conflicts of interest information and obtain client consent to vote. Where the client is a Fund,
disclosure shall be made to any one director who is not an interested person, as that term is defined under the Investment Company Act of 1940, as amended, of the Fund.
Recordkeeping
Credit
Suisse is required to maintain in an easily accessible place for six years all records relating to proxy voting.
These
records include the following:
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a copy of the Procedures;
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a copy of each proxy statement received on behalf of Credit Suisse clients;
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a record of each vote cast on behalf of Credit Suisse clients;
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a copy of all documents created by Credit Suisse personnel that were material to making a decision on a vote or
that memorializes the basis for the decision; and
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a copy of each written request by a client for information on how Credit Suisse voted proxies, as well as a copy
of any written response.
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Credit Suisse reserves the right to maintain certain required proxy records
with ISS in accordance with all applicable regulations.
Disclosure
Credit Suisse will describe the Procedures to each client. Upon request, Credit Suisse will provide any client with a copy of
the Procedures. Credit Suisse will also disclose to its clients how they can obtain information on their proxy votes.
ISS
will capture data necessary for Funds to file Form N-PX on an annual basis concerning their proxy voting record in accordance with applicable law.
A description of the Procedures is contained in each Funds Statement of Additional Information the telephone number for
more information must be disclosed in each Funds Form N-CSR.
Procedures
The Proxy Voting Committee will administer the voting of all client proxies. Credit Suisse has engaged ISS as an independent
third party proxy voting service to assist in the voting of client proxies. ISS will coordinate with each clients custodian to ensure that proxy materials reviewed by the custodians are processed in a timely fashion. ISS will provide Credit
Suisse with an analysis of proxy issues and a vote recommendation for proxy proposals.
B-2
ISS will refer proxies to the Proxy Voting Committee for instructions when the application of the Procedures is not clear. The Proxy Voting Committee will notify ISS of any changes to the
Procedures or deviating thereof.
PROXY VOTING PROCEDURES
Operational Items
Adjourn Meeting
Proposals to provide management with the authority to adjourn an annual or special meeting will be determined on a case-by-case basis.
Amend Quorum Requirements
Proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding will be
determined on a case-by-case basis.
Amend
Minor Bylaws
Generally vote for bylaw or charter changes that are of a housekeeping nature.
Change Date, Time, or Location of Annual Meeting
Generally vote for management proposals to change the date/time/location of the annual meeting unless the proposed change is
unreasonable. Generally vote against shareholder proposals to change the date/time/location of the annual meeting unless the current scheduling or location is unreasonable.
Ratify Auditors
Generally vote for proposals to ratify auditors unless: (1) an auditor has a financial interest in or association with the
company, and is therefore not independent; (2) fees for non-audit services are excessive, or (3) there is reason to believe that the independent auditor has rendered an opinion, which is neither
accurate nor indicative of the companys financial position. Generally vote on a case-by-case basis on shareholder proposals asking companies to prohibit their
auditors from engaging in non-audit services (or capping the level of non-audit services). Generally vote on a case-by-case basis on auditor rotation proposals taking into consideration: (1) tenure of audit firm; (2) establishment and disclosure of a renewal process whereby the auditor is regularly evaluated
for both audit quality and competitive price; (3) length of the rotation period advocated in the proposal, and (4) significant audit related issues.
Board of Directors
Voting on Director Nominees in Uncontested Elections
Generally votes on director nominees on a
case-by-case basis. Votes may be withheld: from directors who (1) attended less than 75% of the board and committee meetings without a valid reason for the
absences; (2) implemented or renewed a dead-hand poison pill; (3) ignored a shareholder proposal that was approved by a majority of the votes cast for two consecutive years; (4) ignored a shareholder proposal approved by a majority of
the shares outstanding; (5) have failed to act on takeover offers where the majority of the shareholders have tendered their shares; (6) are inside directors or affiliated outside directors and sit on the audit, compensation, or nominating
committee; (7) are inside directors or affiliated outside directors and the full board serves as the audit, compensation, or nominating committee or the company does not have one of these committees; or (8) are audit committee members and
the non-audit fees paid to the auditor are excessive.
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a case-by-case basis. Proposals to restore or provide for cumulative voting in the absence of sufficient good governance provisions and/or poor relative shareholder returns will be determined on a case-by-case basis.
Director and Officer
Indemnification and Liability Protection
Proposals on director and officer indemnification and liability protection
generally evaluated on a case-by-case basis. Generally vote against proposals that would: (1) eliminate entirely directors and officers liability for
monetary damages for violating the duty of care; or (2) expand coverage beyond just legal expenses to acts, such as negligence, that are more serious violations of fiduciary obligation than mere carelessness.
B-3
Generally vote for only those proposals providing such expanded coverage in cases when a directors or officers legal defense was unsuccessful if: (1) the director was found to
have acted in good faith and in a manner that he reasonably believed was in the best interests of the company, and (2) only if the directors legal expenses would be covered.
Filling Vacancies/Removal of Directors
Generally vote against proposals that provide that directors may be removed only for cause. Generally vote for proposals to
restore shareholder ability to remove directors with or without cause. Proposals that provide that only continuing directors may elect replacements to fill board vacancies will be determined on a case-by-case basis. Generally vote for proposals that permit shareholders to elect directors to fill board vacancies.
Independent Chairman (Separate Chairman/CEO)
Generally vote for shareholder proposals requiring the position of chairman be filled by an independent director unless there
are compelling reasons to recommend against the proposal, including: (1) designated lead director, elected by and from the independent board members with clearly delineated duties; (2) 2/3 independent board; (3) all independent key
committees; or (4) established governance guidelines.
Majority of Independent Directors
Generally vote for shareholder proposals requiring that the board consist of a majority or substantial majority (two-thirds) of independent directors unless the board composition already meets the adequate threshold. Generally vote for shareholder proposals requiring the board audit, compensation, and/or nominating committees
be composed exclusively of independent directors if they currently do not meet that standard. Generally withhold votes from insiders and affiliated outsiders sitting on the audit, compensation, or nominating committees. Generally withhold votes from
insiders and affiliated outsiders on boards that are lacking any of these three panels. Generally withhold votes from insiders and affiliated outsiders on boards that are not at least majority independent.
Term Limits
Generally vote against shareholder proposals to limit the tenure of outside directors.
Proxy Contests
Voting
on Director Nominees in Contested Elections
Votes in a contested election of directors should be decided on a case-by-case basis, with shareholders determining which directors are best suited to add value for shareholders. The major decision factors are: (1) company performance
relative to its peers; (2) strategy of the incumbents versus the dissidents; (3) independence of directors/nominees; (4) experience and skills of board candidates; (5) governance profile of the company; (6) evidence of
management entrenchment; (7) responsiveness to shareholders; or (8) whether takeover offer has been rebuffed.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws will be determined on a case-by-case basis. Proposals giving the board the ability to amend the bylaws in addition to shareholders will be determined on a
case-by-case basis.
Confidential Voting
Generally vote for shareholder proposals requesting that corporations adopt confidential voting, use independent vote
tabulators and use independent inspectors of election, as long as the proposal includes a provision for proxy contests as follows: In the case of a contested election, management should be permitted to request that the dissident group honor its
confidential voting policy. If the dissidents agree, the policy may remain in place. If the dissidents will not agree, the confidential voting policy may be waived. Generally vote for management proposals to adopt confidential voting.
B-4
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a case-by-case basis. Proposals to restore or provide for cumulative voting in the absence of sufficient good governance provisions and/or poor relative shareholder returns will be determined on a case-by-case basis.
Antitakeover Defenses and Voting Related Issues
Advance Notice Requirements for Shareholder Proposals/Nominations
Votes on advance notice proposals are determined on a
case-by-case basis.
Amend Bylaws without
Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws will be determined on a case-by-case basis. Generally vote for proposals giving the board the ability to amend the bylaws in addition to shareholders.
Poison Pills (Shareholder Rights Plans)
Generally vote for shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it.
Votes regarding management proposals to ratify a poison pill should be determined on a case-by-case basis. Plans should embody the following attributes: (1) 20% or
higher flip-in or flip-over; (2) two to three year sunset provision; (3) no dead-hand or no-hand features; or (4) shareholder redemption feature.
Shareholders Ability to Act by Written Consent
Generally vote against proposals to restrict or prohibit shareholders ability to take action by written consent.
Generally vote for proposals to allow or make easier shareholder action by written consent.
Shareholders Ability to
Call Special Meetings
Proposals to restrict or prohibit shareholders ability to call special meetings or that remove
restrictions on the right of shareholders to act independently of management will be determined on a case-by-case basis.
Supermajority Vote Requirements
Proposals to require a supermajority shareholder vote will be determined on a case-by-case basis. Proposals to lower supermajority vote requirements will be determined on a case-by-case basis.
Merger and Corporate Restructuring
Appraisal Rights
Generally vote for proposals to restore, or provide shareholders with, rights of appraisal.
Asset Purchases
Generally vote case-by-case on asset purchase
proposals, taking into account: (1) purchase price, including earn out and contingent payments; (2) fairness opinion; (3) financial and strategic benefits; (4) how the deal was negotiated; (5) conflicts of interest;
(6) other alternatives for the business; or (7) noncompletion risk (companys going concern prospects, possible bankruptcy).
Asset Sales
Votes on asset sales should be determined on a
case-by-case basis after considering: (1) impact on the balance sheet/working capital; (2) potential elimination of diseconomies; (3) anticipated
financial and operating benefits; (4) anticipated use of funds; (5) value received for the asset; fairness opinion (if any); (6) how the deal was negotiated; or (6) conflicts of interest
Conversion of Securities
Votes on proposals regarding conversion of securities are determined on a case-by-case basis. When evaluating these proposals, should review (1) dilution to existing shareholders position; (2) conversion price relative to market value; (3) financial issues:
companys financial situation and degree of need for capital; effect of the transaction on the companys cost of capital; (4) control issues: change in management; change
B-5
in control; standstill provisions and voting agreements; guaranteed contractual board and committee seats for investor; veto power over certain corporate actions; (5) termination penalties;
(6) conflict of interest: arms length transactions, managerial incentives. Generally vote for the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the
transaction is not approved.
Corporate Reorganization
Votes on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan are
determined on a case-by-case basis, after evaluating: (1) dilution to existing shareholders position; (2) terms of the offer; (3) financial issues;
(4) managements efforts to pursue other alternatives; (5) control issues; (6) conflict of interest. Generally vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not
approved.
Reverse Leveraged Buyouts
Votes on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan are
determined on a case-by-case basis, after evaluating: (1) dilution to existing shareholders position; (2) terms of the offer; (3) financial issues;
(4) managements efforts to pursue other alternatives; (5) control issues; (6) conflict of interest. Generally vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not
approved.
Formation of Holding Company
Votes on proposals regarding the formation of a holding company should be determined on a case-by-case basis taking into consideration: (1) the reasons for the change; (2) any financial or tax benefits; (3) regulatory benefits; (4) increases in capital structure;
(5) changes to the articles of incorporation or bylaws of the company. Absent compelling financial reasons to recommend the transaction, generally vote against the formation of a holding company if the transaction would include either of the
following: (1) increases in common or preferred stock in excess of the allowable maximum as calculated a model capital structure; (2) adverse changes in shareholder rights; (3) going private transactions; (4) votes going private
transactions on a case-by-case basis, taking into account: (a) offer price/premium; (b) fairness opinion; (c) how the deal was negotiated;
(d) conflicts of interest; (e) other alternatives/offers considered; (f) noncompletion risk.
Joint
Ventures
Vote on a case-by-case basis on
proposals to form joint ventures, taking into account: (1) percentage of assets/business contributed; (2) percentage ownership; (3) financial and strategic benefits; (4) governance structure; (5) conflicts of interest;
(6) other alternatives; (7) noncompletion risk; (8) liquidations. Votes on liquidations should be determined on a case-by-case basis after reviewing:
(1) managements efforts to pursue other alternatives such as mergers; (2) appraisal value of the assets (including any fairness opinions); (3) compensation plan for executives managing the liquidation. Generally vote for the
liquidation if the company will file for bankruptcy if the proposal is not approved.
Mergers and Acquisitions
Votes on mergers and acquisitions should be considered on a
case-by-case basis, determining whether the transaction enhances shareholder value by giving consideration to: (1) prospects of the combined companies;
(2) anticipated financial and operating benefits; (3) offer price; (4) fairness opinion; (5) how the deal was negotiated; (6) changes in corporate governance and their impact on shareholder rights; (7) change in the
capital structure; (8) conflicts of interest.
Private Placements
Votes on proposals regarding private placements should be determined on a case-by-case basis. When evaluating these proposals, should review: (1) dilution to existing shareholders position; (2) terms of the offer; (3) financial issues;
(4) managements efforts to pursue alternatives such as mergers; (5) control issues; (6) conflict of interest. Generally vote for the private placement if it is expected that the company will file for bankruptcy if the
transaction is not approved.
B-6
Prepackaged Bankruptcy Plans
Votes on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan are
determined on a case-by-case basis, after evaluating: (1) dilution to existing shareholders position; (2) terms of the offer; (3) financial issues;
(4) managements efforts to pursue other alternatives; (5) control issues; (6) conflict of interest. Generally vote for the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not
approved.
Recapitalization
Votes case-by-case on recapitalizations
(reclassifications of securities), taking into account: (1) more simplified capital structure; (2) enhanced liquidity; (3) fairness of conversion terms, including fairness opinion; (4) impact on voting power and dividends;
(5) reasons for the reclassification; (6) conflicts of interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse stock split when the number of authorized shares will be
proportionately reduced. Generally vote for management proposals to implement a reverse stock split to avoid delisting. Votes on proposals to implement a reverse stock split that do not proportionately reduce the number of shares authorized for
issue should be determined on a case-by-case basis.
Spinoffs
Votes on spinoffs should be considered on a
case-by-case basis depending on: (1) tax and regulatory advantages; (2) planned use of the sale proceeds; (3) valuation of spinoff; fairness opinion;
(3) benefits that the spinoff may have on the parent company including improved market focus; (4) conflicts of interest; managerial incentives; (5) any changes in corporate governance and their impact on shareholder rights;
(6) change in the capital structure.
Value Maximization Proposals
Vote case-by-case on shareholder proposals
seeking to maximize shareholder value.
Capital Structure
Adjustments to Par Value of Common Stock
Generally vote for management proposals to reduce the par value of common stock unless the action is being taken to facilitate
an antitakeover device or some other negative corporate governance action. Generally vote for management proposals to eliminate par value.
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock authorized for issuance are determined on a case-by-case basis. Generally vote against proposals at companies with dual-class capital structures to increase the number of authorized shares of the class of stock that has
superior voting rights. Generally vote for proposals to approve increases beyond the allowable increase when a companys shares are in danger of being delisted or if a companys ability to continue to operate as a going concern is
uncertain.
Dual-class Stock
Generally vote against proposals to create a new class of common stock with superior voting rights. Generally vote for
proposals to create a new class of nonvoting or subvoting common stock if: (1) it is intended for financing purposes with minimal or no dilution to current shareholders; (2) it is not designed to preserve the voting power of an insider or
significant shareholder.
Issue Stock for Use with Rights Plan
Generally vote against proposals that increase authorized common stock for the explicit purpose of implementing a shareholder
rights plan.
B-7
Preemptive Rights
Votes regarding shareholder proposals seeking preemptive rights should be determined on a case-by-case basis after evaluating: (1) the size of the company; (2) the shareholder base; (3) the liquidity of the stock.
Preferred Stock
Generally vote against proposals authorizing the creation of new classes of preferred stock with unspecified voting,
conversion, dividend distribution, and other rights (blank check preferred stock). Generally vote for proposals to create declawed blank check preferred stock (stock that cannot be used as a takeover defense). Generally vote
for proposals to authorize preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock and the terms of the preferred stock appear reasonable. Generally vote against proposals to increase the
number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose. Generally vote case-by-case on
proposals to increase the number of blank check preferred shares after analyzing the number of preferred shares available for issue given a companys industry and performance in terms of shareholder returns.
Recapitalization
Vote case-by-case on recapitalizations
(reclassifications of securities), taking into account: (1) more simplified capital structure; (2) enhanced liquidity; (3) fairness of conversion terms, including fairness opinion; (4) impact on voting power and dividends;
(5) reasons for the reclassification; (6) conflicts of interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse stock split when the number of authorized shares will be
proportionately reduced. Generally vote for management proposals to implement a reverse stock split to avoid delisting. Votes on proposals to implement a reverse stock split that do not proportionately reduce the number of shares authorized for
issue should be determined on a case-by-case basis.
Share Repurchase Programs
Generally vote for management proposals to institute open-market share repurchase plans in which all shareholders may
participate on equal terms.
Stock Distributions: Splits and Dividends
Generally vote for management proposals to increase the common share authorization for a stock split or share dividend,
provided that the increase in authorized shares would not result in an excessive number of shares available for issuance.
Tracking Stock
Votes on the creation of tracking stock are determined on a
case-by-case basis, weighing the strategic value of the transaction against such factors as: (1) adverse governance changes; (2) excessive increases in
authorized capital stock; (3) unfair method of distribution; (4) diminution of voting rights; (5) adverse conversion features; (6) negative impact on stock option plans; (7) other alternatives such as a spinoff.
Executive and Director Compensation
Executive and Director Compensation
Votes on compensation plans for directors are determined on a
case-by-case basis.
Stock Plans in Lieu
of Cash
Votes for plans which provide participants with the option of taking all or a portion of their cash compensation
in the form of stock are determined on a case-by-case basis. Generally vote for plans which provide a
dollar-for-dollar cash for stock exchange. Votes for plans which do not provide a
dollar-for-dollar cash for stock exchange should be determined on a case-by-case basis.
B-8
Director Retirement Plans
Generally vote against retirement plans for nonemployee directors. Generally vote for shareholder proposals to eliminate
retirement plans for nonemployee directors.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are evaluated on a case-by-case basis giving consideration to the following: (1) historic trading patterns; (2) rationale for the repricing;
(3) value-for-value exchange; (4) option vesting; (5) term of the option; (6) exercise price; (7) participants; (8) employee stock purchase
plans. Votes on employee stock purchase plans should be determined on a case-by-case basis. Generally vote for employee stock purchase plans where: (1) purchase
price is at least 85 percent of fair market value; (2) offering period is 27 months or less, and (3) potential voting power dilution (VPD) is ten percent or less. Generally vote against employee stock purchase plans where either:
(1) purchase price is less than 85 percent of fair market value; (2) Offering period is greater than 27 months, or (3) VPD is greater than ten percent.
Incentive Bonus Plans and Tax Deductibility Proposals
Generally vote for proposals that simply amend shareholder-approved compensation plans to include administrative features or
place a cap on the annual grants any one participant may receive. Generally vote for proposals to add performance goals to existing compensation plans. Votes to amend existing plans to increase shares reserved and to qualify for favorable tax
treatment considered on a case-by-case basis. Generally vote for cash or cash and stock bonus plans that are submitted to shareholders for the purpose of exempting
compensation from taxes if no increase in shares is requested.
Employee Stock Ownership Plans (ESOPs)
Generally vote for proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares
allocated to the ESOP is excessive (more than five percent of outstanding shares.)
401(k) Employee Benefit Plans
Generally vote for proposals to implement a 401(k) savings plan for employees.
Shareholder Proposals Regarding Executive and Director Pay
Generally vote for shareholder proposals seeking additional disclosure of executive and director pay information, provided the
information requested is relevant to shareholders needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company. Generally vote against shareholder proposals seeking to set
absolute levels on compensation or otherwise dictate the amount or form of compensation. Generally vote against shareholder proposals requiring director fees be paid in stock only. Generally vote for shareholder proposals to put option repricings to
a shareholder vote. Vote for shareholders proposals to exclude pension fund income in the calculation of earnings used in determining executive bonuses/compensation. Vote on a
case-by-case basis for all other shareholder proposals regarding executive and director pay, taking into account company performance, pay level versus peers, pay level
versus industry, and long term corporate outlook.
Performance-Based Option Proposals
Generally vote for shareholder proposals advocating the use of performance-based equity awards (indexed, premium-priced, and
performance-vested options), unless: (1) the proposal is overly restrictive; or (2) the company demonstrates that it is using a substantial portion of performance-based awards for its top executives.
Stock Option Expensing
Generally vote for shareholder proposals asking the company to expense stock options unless the company has already publicly
committed to start expensing by a specific date.
Golden and Tin Parachutes
Generally vote for shareholder proposals to require golden and tin parachutes to be submitted for shareholder ratification,
unless the proposal requires shareholder approval prior to entering into employment contracts. Vote on a case-by-case basis on proposals to ratify or cancel golden or
tin parachutes.
May 25, 2021
B-9
Open-End Funds:
Credit Suisse Commodity Strategy Funds
Credit Suisse Commodity Return Strategy Fund
Credit Suisse Gold and Income Strategy Fund
Credit Suisse Opportunity Funds
Credit Suisse Floating Rate High Income Fund
Credit Suisse Managed Futures Strategy Fund
Credit Suisse Multialternative Strategy Fund
Credit Suisse Strategic Income Fund
Credit Suisse Trust
Commodity Return Strategy Portfolio
Closed-End Funds:
Credit Suisse High Yield Bond Fund
Credit Suisse Asset
Management Income Fund
B-10
PART C
Other Information
Item 25. Financial Statements and Exhibits
Part A The annual report to the Funds shareholder for
the fiscal year ended December
31, 2020 (the 2020 Annual Report) is incorporated by reference. The semi-annual report to the Funds shareholder for the six months ended
June
30, 2021 (the 2021 Semi-Annual Report) is incorporated by reference.
Part
B Audited financial statements for the fiscal year ended December
31, 2020 and related Report of Independent Registered Public Accounting Firm are incorporated by reference herein to the 2020 Annual Report, which is also incorporated by reference. Unaudited
financial statements for the six months ended June 30, 2021 are incorporated by reference herein to the 2021 Semi-Annual Report, which is also incorporated by reference.
(d)
|
Provisions of instruments defining the rights of holders of securities are contained in the
Registrants Articles of Incorporation and Bylaws, each as amended.
|
C-1
(h)
|
Form of Underwriting Agreement to be filed by amendment.
|
C-2
C-3
C-4
Item 26. Marketing Arrangements
The information contained under the section entitled Plan of Distribution in the Prospectus is incorporated by
reference, and any information concerning any underwriters will be contained in the accompanying Prospectus Supplement, if any.
Item 27. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be incurred in connection with the offer described in this
Registration Statement:
|
|
|
|
|
Legal
|
|
$
|
|
$170,000
|
Printing and Mailing
|
|
|
|
$20,000
|
SEC Registration Fee
|
|
|
|
$23,175
|
NYSE American listing fee
|
|
|
|
$65,000
|
FINRA Fees
|
|
|
|
$38,000
|
Auditing fees and expenses
|
|
|
|
$60,000
|
Other
|
|
|
|
$1,000
|
Total
|
|
$
|
|
$377,175
|
Note:
|
Estimate is based on the aggregate estimated expenses to be incurred during a three year shelf offering
period.
|
Item 28. Persons Controlled by or Under Common Control with the Registrant
None.
Item 29. Number of Holders of Shares
As of September 30, 2021, there are the following number of Record Holders:
|
|
|
Title of Class
|
|
Number of
Record Holders
|
Common Stock
|
|
112
|
Item 30. Indemnification
Section 2-418 of the General Corporation Law of the State of Maryland, Article
VIII of the Funds Articles of Incorporation, Article VII of the Funds Bylaws provide for indemnification.
C-5
Item 31. Business and Other Connections of Investment Adviser
Credit Suisse acts as investment adviser to the Registrant. Credit Suisse renders investment advice to a wide variety of
individual and institutional clients. The list required by this Item 31 of officers and Trustees of Credit Suisse, together with information as to their other business, profession, vocation or employment of a substantial nature during the past two
years, is incorporated by reference to Schedules A and D of Form ADV filed by Credit Suisse (SEC File No. 801-37170).
Item 32. Location of Accounts and Records
(1) Credit Suisse Asset Management Income Fund, Inc.
Eleven Madison Avenue
New York, New York 10010
(Funds Articles, By-laws and minute books)
(2) Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, New York 10010
(records relating to its functions as investment adviser)
(3) State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
(records relating to its functions as administrator, custodian and accounting agent)
(4) Computershare Trust Company, N.A.
P.O. Box 30170
College Station, TX 77842-3170
Item 33. Management Services
Not Applicable.
Item 34. Undertakings
(1) Not applicable.
(2) Not applicable.
(3) The securities being registered will be offered on a delayed or continuous basis in reliance on Rule
415 under the Securities Act of 1933. Accordingly, the Registrant undertakes:
(a) to
file, during and period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(1) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) to reflect in the prospectus any facts or
events after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in
the Calculation of Registration Fee table in the effective registration statement.
C-6
(3) to include any material
information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.
(b) that for the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(c) to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering;
(d) that, for the purpose of determining liability under the Securities Act of 1933
to any purchaser:
(1) if the Registrant is relying on Rule 430B [17
CFR 230.430B]:
(A) Each prospectus filed by the Registrant pursuant
to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (x), or (xi) for the purpose of providing the information required by Section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to
the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately
prior to such effective date; or
(2) if the Registrant is subject to
Rule 430C [17 CFR 230.430C]: each prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933 as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first
use.
(e) that for the purpose of determining liability of the Registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of securities: The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of
the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to the purchaser: (1) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424 under the Securities Act of 1933; (2)
free
C-7
writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; (3) the portion of any other free
writing prospectus or advertisement pursuant to Rule 482 under the Securities Act of 1933 relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned
Registrant; and (4) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(4) If applicable:
(a) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant under Rule 424(b)(1) under the Securities Act of 1933
shall be deemed to be part of the Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each filing of the Registrants annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
into the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(7) The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery within two business days of receipt of a written or oral request, any prospectus or Statement of Additional Information constituting Part B of this Registration Statement.
C-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant
certifies that it has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and the State of New York, on the
16th day of November, 2021.
|
|
|
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
|
|
|
By:
|
|
/s/ John G. Popp
|
|
|
John G. Popp
|
|
|
Chief Executive Officer and President
|
Pursuant to the requirements of the Securities Act of 1933, as amended this Registration Statement has
been signed below by the following persons in the capacities and on the date indicated:
|
|
|
|
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
/s/ John G. Popp
John G. Popp
|
|
Director, Chief Executive Officer and President
|
|
November 16, 2021
|
|
|
|
/s/ Omar Tariq
Omar Tariq
|
|
Chief Financial Officer and Treasurer
|
|
November 16, 2021
|
|
|
|
*
Laura A.
DeFelice
|
|
Director
|
|
November 16, 2021
|
|
|
|
*
Jeffery E.
Garten
|
|
Director
|
|
November 16, 2021
|
|
|
|
*
Mahendra R.
Gupta
|
|
Director
|
|
November 16, 2021
|
|
|
|
*
Steven N.
Rappaport
|
|
Chairman of the Board and Director
|
|
November 16, 2021
|
|
|
|
|
|
*By:
|
|
/s/ Karen Regan
|
|
|
Karen Regan, as Attorney-in-Fact
|
C-9
EXHIBIT INDEX
|
|
|
EXHIBIT
NUMBER
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DESCRIPTION
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(l)
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Opinion and Consent of Miles & Stockbridge P.C.
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(n)(1)
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Consent of PricewaterhouseCoopers LLP
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(n)(2)
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Consent of KPMG LLP
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