As filed with the Securities and Exchange Commission
on March 2, 2001
Securities Act File No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, 16th Floor, New York, New York 10017
(Address of Principal Executive Offices: Number,
Street, City, State, Zip Code)
(212) 875-3500
(Registrant's Area Code and Telephone Number)
-------------
Hal Liebes, Esq.
Senior Vice President
Credit Suisse Asset Management Income Fund, Inc.
466 Lexington Avenue, 16th Floor
New York, New York 10017
(Name and Address of Agent for Service)
with copies to:
Daniel Schloendorn, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
-------------
Approximate Date of Proposed Public Offering:
As soon as practicable after
this Registration Statement becomes effective
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
================================================================================
TITLE OF PROPOSED PROPOSED
SECURITIES AMOUNT MAXIMUM MAXIMUM AMOUNT OF
BEING BEING OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE (1) FEE
- --------------------------------------------------------------------------------
Common Stock
($0.001 par value) 14,996,378 $6.36 $95,376,964 $23,844.24
================================================================================
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended,
based on the average of the high and low sales prices of the Registrant's
Common Stock as reported on the New York Stock Exchange on March 1,
2001.
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 which 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 Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
o Cover Sheet
o Contents of Registration Statement
o Form N-14 Cross Reference Sheet
o Letter to Shareholders of Credit Suisse Asset Management Income
Fund, Inc.
o Letter to Shareholders of Credit Suisse Asset Management Strategic
Global Income Fund, Inc.
o Notice of Annual Meeting of Shareholders of Credit Suisse Asset
Management Income Fund, Inc.
o Notice of Special Meeting of Shareholders of Credit Suisse Asset
Management Strategic Global Income Fund, Inc.
o Part A - Proxy Statement/Prospectus
o Part B - Statement of Additional Information
o Part C - Other Information
o Signature Page
o Exhibits
CROSS REFERENCE SHEET
PART A Item No. and Caption Proxy Statement/Prospectus Caption
- --------------------------- ----------------------------------
1. Beginning of Registration Statement Cover Page
and Outside Front Cover Page of
Prospectus
2. Beginning and Outside Back Cover Cover Page; Table of Contents
Page of Prospectus Contents
3. Fee Table, Synopsis Information, Synopsis; Risk Factors and Special
and Risk Factors Considerations; Comparison of
Investment Objectives and Policies
4. Information about the Transactions Synopsis - The Proposed
Reorganization; Information about
the Reorganization; Additional
Information about the Funds
5. Information about the Registrant Synopsis; Risk Factors and Special
Considerations; Comparison of
Investment Objectives and
Policies; Additional Information
about the Funds
6. Information about the Company Synopsis; Risk Factors and Special
Being Acquired Considerations; Comparison of
Investment Objectives and
Policies; Additional Information
about the Funds
7. Voting Information Notice of Meeting of Shareholders;
General; Required Vote
8. Interest of Certain Persons and Additional Information about the Funds
Experts
9. Additional Information Required (Not Applicable)
for Reoffering by Persons Deemed
to be Underwriters
PART B Item No. and Caption Statement of Additional Information
Caption
- --------------------------- --------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about the Comparison of Risk Factors and Special
Registrant Considerations (in Part A);
Comparison of Investment
Objectives and Policies (in Part
A); Additional Information about
the Funds (in Part A); Tax
Considerations
13. Additional Information about the Comparison of Risk Factors and Special
Company Being Acquired Considerations (in Part A);
Comparison of Investment
Objectives and Policies;
Additional Information about the
Funds (in Part A); Tax
Considerations
14. Financial Statements Financial Statements
PART C
- ------
15 - 17 Information required to be included in
Part C is set forth under the
appropriate Item, so numbered, in
Part C of this Registration
Statement.
PART A INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
466 Lexington Avenue, 16th Floor
New York, New York 10017
________, 2001
Dear Shareholder:
We are pleased to invite you to the 2001 annual meeting of shareholders of
Credit Suisse Asset Management Income Fund, Inc., which is referred to in this
letter as "CIK."
The annual meeting is scheduled to be held at 2:00 p.m., Eastern time, on
Tuesday, May 1, 2001, at the offices of CIK's investment manager, Credit Suisse
Asset Management, LLC ("CSAM"), 466 Lexington Avenue, 16th Floor, New York, New
York 10017. Shareholders who are unable to attend this meeting are strongly
encouraged to vote by proxy. A Proxy Statement/Prospectus regarding the meeting,
a proxy card for your vote at the meeting and an envelope--postage prepaid--in
which to return your proxy card are enclosed.
At the annual meeting, you will be asked to vote on a number of proposals,
the most significant of which is the proposed reorganization of CIK and Credit
Suisse Asset Management Strategic Global Income Fund, Inc. ("CGF"), in which CIK
will acquire all the assets and liabilities of CGF in exchange for CIK shares.
As a result of the reorganization, each CGF shareholder will receive CIK shares
having an aggregate net asset value equal to the aggregate net asset value of
such shareholder's CGF shares.
The CIK Board's approval and recommendation that you vote for the
reorganization springs from a number of issues which CIK's investment advisor
and directors have been considering over a period of time. First, while very
much wishing to retain the closed-end characteristic of CIK, it has been the
unanimous view of the Board that an increase in CIK's asset size could
potentially benefit shareholders in several ways: the expense ratio could be
reduced, CIK's investment flexibility and opportunities could be enhanced and
analyst coverage of CIK might be expanded, a factor that the investment advisor
has identified as one that may positively affect the discount/premium at which a
closed-end fund trades.
As some of you may recall, CIK participated in a rights offering in 1996
that had the benefit of increasing CIK's size. Presently, the Board has
concluded that the proposed reorganization, which is expected to bring [80
million] of net assets into CIK and result in a combined fund with $295 million
in net assets (based on current asset levels), would offer CIK shareholders the
benefits of a larger size without diluting their net asset value. Of course, it
would also permit CGF, which has less assets than CIK to experience the
advantages of expanded size as well.
In addition, the Board recently adopted a new investment policy whereby
the Fund may invest up to 35% of its net assets in emerging markets debt
securities and accepted a recommendation from the investment advisor to
partially reposition the Fund's portfolio. As a result, the Fund has liquidated
its investment-grade debt securities portfolio (approximately 15% of the Fund's
net assets) and re-deployed those assets in emerging market debt securities.
The Board of Directors and the investment advisor believe that the
reorganization is in step with the Fund's investment objective of seeking
current income and consistent with the repositioning of the Fund's portfolio.
For example, by assuming the assets of CGF, the Fund is expected to be able to
better pursue its objective because some of those assets represent higher
yielding emerging markets debt. In addition, a portion of CGF's portfolio is
comprised of domestic high yield debt that, although still below investment
grade, is rated higher than the domestic high yield debt held by the Fund.
Moreover, studies
have shown that an international component to a portfolio can help to stabilize
it because domestic and international markets will sometimes move in opposite
directions.
Given the advantages of increased size and the change in the investment
portfolio, the Board believes the proposed reorganization is in the best
interests of CIK's shareholders. For the reasons set forth above, the Board has
unanimously approved this reorganization and recommended that shareholders vote
to approve it.
The proposed reorganization is described in more detail in the Proxy
Statement/Prospectus.
You are also being asked to approve a new investment advisory agreement
with CSAM. The new agreement will be substantially the same as the current
agreement except that the investment advisory fee paid to CSAM will be based
upon the lower of the average weekly stock price (market value) of CIK's
outstanding shares or its average weekly net assets. By virtue of this
structure, CIK will:
o reduce its investment advisory fees if its shares trade at a
discount, thereby lowering its expense ratio, and
o more closely align the interests of CSAM with the interests of
the shareholders which are aimed at enhancing the Fund's
market value.
The new investment advisory agreement, which was proposed by CSAM in
recognition of the economies of scale that would result from the combination of
CIK and CGF, would take effect only upon the consummation of the Reorganization.
At the annual meeting, you will also be asked to elect five (5) management
nominees standing for election to the Fund's Board of Directors.
THE BOARD OF DIRECTORS OF YOUR FUND BELIEVES THAT THE PROPOSED
REORGANIZATION AND THE OTHER PROPOSALS ARE IN THE BEST INTERESTS OF THE
SHAREHOLDERS AND RECOMMENDS THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY AND
THEN VOTE IN FAVOR OF THE PROPOSALS, INCLUDING THE FUND'S NOMINEES.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your signed proxy card after a reasonable amount of time, you may receive a
telephone call from our proxy solicitor, Georgeson Shareholder Communications,
reminding you to vote your shares. If you prefer, you can fax the proxy card to
Georgeson Shareholder Communications, Attn.: ______________, at (___) ___-____.
We also encourage you to vote by telephone or through the Internet. Proxies may
be voted by telephone by calling (___) ___-____ between the hours of 9:00 a.m.
and 10:00 p.m. (Eastern time) or through the Internet using the Internet address
located on your proxy card.
Voting by fax, telephone or through the Internet will reduce the time and
costs associated with the proxy solicitation. When the Fund records proxies by
telephone or through the Internet, it will use procedures designed to (i)
authenticate shareholders' identities, (ii) allow shareholders to authorize the
voting of their shares in accordance with their instructions and (iii) confirm
that their instructions have been properly recorded. Shareholders voting via the
Internet should understand that there may be costs associated with electronic
access, such as usage charges from Internet access providers and telephone
companies, that must be borne by the shareholder. We have been advised that
Internet voting procedures that have been made available to you are consistent
with the requirements of applicable law.
Whichever voting method you choose, please read the full text of the proxy
statement before you vote.
If you have any questions regarding the proposed reorganization, please
feel free to call Georgeson Shareholder Communications at (___) ___-____ who
will be pleased to assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY.
Respectfully,
James P. McCaughan
Chairman of the Board of Directors
YOU ARE URGED TO SIGN THE PROXY CARD(S) AND RETURN THE CARD(S) IN THE
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
466 Lexington Avenue, 16th Floor
New York, New York 10017
__________, 2001
Dear Shareholder:
We are pleased to invite you to a special meeting of shareholders of
Credit Suisse Asset Management Strategic Global Income Fund, Inc., which is
referred to in this letter as "CGF."
The special meeting is scheduled to be held at 3:00 p.m., Eastern time, on
Tuesday, May 1, 2001, at the offices of CGF's investment manager, Credit Suisse
Asset Management, LLC ("CSAM"), 466 Lexington Avenue, 16th Floor, New York, New
York 10017. Shareholders who are unable to attend this meeting are strongly
encouraged to vote by proxy. A Proxy Statement/ Prospectus regarding the
meeting, a proxy card for your vote at the meeting and an envelope--postage
prepaid--in which to return your proxy card are enclosed.
At the special meeting, you will be asked to vote on a proposed
reorganization of CGF and Credit Suisse Asset Management Income Fund, Inc.,
referred to below as "CIK", in which CIK will acquire all the assets and
liabilities of CGF in exchange for CIK shares. As a result of the
reorganization, you will receive that number of CIK shares having an aggregate
net asset value equal to the aggregate net asset value of your shares as of the
close of business on the closing date of the reorganization (except that cash
will be paid in lieu of fractional shares).
The recommendation that you vote for the reorganization springs from a
number of issues which CGF's investment advisor and directors have been
considering over a period of time. First, while very much wishing to retain the
closed-end characteristic of CGF, it is the unanimous view of the Board that CGF
has not attained a sufficient critical mass, and that if CGF could combine with
a larger fund, shareholders could potentially benefit in several ways: the
expense ratio could be reduced, investment flexibility and opportunities could
be enhanced and access to analyst coverage would likely be enhanced, a factor
that the investment advisor has identified as one that can positively affect the
discount/premium at which a closed-end fund trades. Currently, analyst coverage
of CGF has not been initiated.
The Board has concluded that the proposed reorganization would offer CGF
shareholders the benefits of a larger size, including a significantly lower
expense ratio, without diluting their net asset value. The reorganization is
expected to result in a combined fund with $295 million in net assets (three
times the size of CGF based on current asset levels).
In addition, following a recommendation by the investment advisor, CGF
recently reduced the percentage of its net assets invested in emerging markets
debt to 15% from approximately 35%, thus aligning CGF's portfolio mix to that of
CIK.
Given the advantages of increased size and the change in the investment
portfolio, the Board of Directors believes the proposed reorganization is in the
best interests of CGF's shareholders. For the reasons set forth above, the Board
(whose members also serve on the Board of Directors of CIK) has unanimously
approved this reorganization, subject to shareholder approval.
The proposed reorganization are described in more detail in the Combined
Proxy Statement/Prospectus.
CIK shareholders are also being asked to approve a new investment advisory
agreement with CSAM. The new agreement will be substantially the same as the
current agreement except that the investment advisory fee paid to CSAM will be
based upon the lower of the average weekly stock price (market value) of CIK's
outstanding shares or its average weekly net assets. By virtue of this
structure, CIK will:
o reduce its investment advisory fees if its shares trade at a
discount, thereby lowering its expense ratio, and
o more closely align the interests of CSAM with the interests of
CIK shareholders which are aimed at enhancing CIK's market
value.
The new investment advisory agreement, which was proposed by CSAM in
recognition of the economies of scale afforded by the combination of CIK and
CGF, will take effect only upon the consummation of the reorganization. If the
reorganization is consummated, as shareholders of CIK you will benefit from the
advisory fee structure changes. You are not being asked to vote separately on
this matter.
THE BOARD OF DIRECTORS OF YOUR FUND BELIEVES THAT THE PROPOSED
REORGANIZATION IS IN THE BEST INTERESTS OF THE SHAREHOLDERS AND RECOMMENDS THAT
YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE "FOR" THE PROPOSAL.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND RETURN YOUR
PROXY CARD IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE. If we do not receive
your signed proxy card after a reasonable amount of time, you may receive a
telephone call from our proxy solicitor, Georgeson Shareholder Communications,
reminding you to vote your shares. If you prefer, you can fax the proxy card to
Georgeson Shareholder Communications, Attn.: ______________, at (___) ___-____.
We also encourage you to vote by telephone or through the Internet. Proxies may
be voted by telephone by calling (___) ___-____ between the hours of 9:00 a.m.
and 10:00 p.m. (Eastern time) or through the Internet using the Internet address
located on your proxy card.
Voting by fax, telephone or through the Internet will reduce the time and
costs associated with the proxy solicitation. When CGF records proxies by
telephone or through the Internet, it will use procedures designed to (i)
authenticate shareholders' identities, (ii) allow shareholders to authorize the
voting of their shares in accordance with their instructions and (iii) confirm
that their instructions have been properly recorded. Shareholders voting via the
Internet should understand that there may be costs associated with electronic
access, such as usage charges from Internet access providers and telephone
companies, that must be borne by the shareholder. We have been advised that
Internet voting procedures that have been made available to you are consistent
with the requirements of applicable law.
Whichever voting method you choose, please read the full text of the proxy
statement before you vote.
If you have any questions regarding the proposed reorganization, please
feel free to call Georgeson Shareholder Communications at (___) ___-____ who
will be pleased to assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY.
Respectfully,
James P. McCaughan
Chairman of the Board of Directors
YOU ARE URGED TO SIGN THE PROXY CARD(S) AND RETURN THE CARD(S) IN THE
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR VOTE IS IMPORTANT
REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Credit Suisse Asset Management Income Fund, Inc.:
Please take notice that the annual meeting of shareholders of Credit
Suisse Asset Management Income Fund, Inc. ("CIK"), a Maryland corporation, will
be held at the offices of Credit Suisse Asset Management, LLC, 466 Lexington
Avenue, 16th Floor, New York, New York 10017, on Tuesday, May 1, 2001, at 2:00
p.m., Eastern time, for the following purposes:
1. To consider and vote upon the approval of an Agreement and
Plan of Reorganization dated as of ________, 2001 between CIK
and Credit Suisse Asset Management Strategic Global Income
Fund, Inc. ("CGF"), a Maryland corporation, whereby (i) CIK
would acquire all the assets and liabilities of CGF, (ii) CIK
would issue CIK shares to CGF in exchange therefor, (iii) such
CIK shares would be distributed to shareholders of CGF in
liquidation of CGF, and (iv) CGF would subsequently be
dissolved under Maryland law and de-registered under the
Investment Company Act of 1940;
2. To consider and vote upon the approval of a new investment
advisory agreement with Credit Suisse Asset Management, LLC;
and
3. To consider and vote upon the election of five (5) management
nominees standing for election to CIK's Board of Directors;
The appointed proxies will vote in their discretion on any other business
that may properly come before the annual meeting or any adjournments or
postponements thereof.
Holders of record of shares of common stock of CIK at the close of
business on March 5, 2001 are entitled to vote at the annual meeting and at any
postponements or adjournments thereof. CGF shareholders must approve the
reorganization as well.
The persons named as proxies or the Chairman of the meeting may propose
one or more adjournments of the annual meeting if the necessary quorum to
transact business or the vote required to approve or reject any proposal is not
obtained at the meeting. Unless it is approved by the Chairman of the meeting,
any such adjournment will require the affirmative vote of the holders of a
majority of CIK's shares present in person or by proxy at the annual meeting.
The persons named as proxies will vote those proxies which they are entitled to
vote on any such proposal in accordance with their best judgment in the interest
of CIK.
The enclosed proxy is being solicited on behalf of the Board of Directors
of CIK.
By Order of the Board of Directors,
Michael A. Pignataro, Chief Financial Officer and Secretary
____________, 2001
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN THE
CARD IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS
INTENDED FOR YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD MAY
SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT
THE MEETING. IF YOU CAN ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Credit Suisse Asset Management Strategic Global Income
Fund, Inc.:
Please take notice that a special meeting of shareholders of Credit Suisse
Asset Management Strategic Global Income Fund, Inc. ("CGF"), a Maryland
corporation, will be held at the offices of Credit Suisse Asset Management, LLC,
466 Lexington Avenue, 16th Floor, New York, New York 10017, on Tuesday, May 1,
2001, at 3:00 p.m., Eastern time, for the following purpose:
1. To consider and vote upon the approval of an Agreement and
Plan of Reorganization dated as of ________, 2001 between CGF
and Credit Suisse Asset Management Income Fund, Inc. ("CIK"),
a Maryland corporation, whereby (i) CIK would acquire all the
assets and liabilities of CGF, (ii) CIK would issue CIK
shares to CGF in exchange therefor, (iii) such CIK shares
would be distributed to shareholders of CGF in liquidation of
CGF, and (iv) CGF would subsequently be dissolved under
Maryland law and de-registered under the Investment Company
Act of 1940.
The appointed proxies will vote in their discretion on any other business
that may properly come before the special meeting or any adjournments or
postponements thereof.
Holders of record of shares of common stock of CGF at the close of
business on March 5, 2001 are entitled to vote at the special meeting and at any
postponements or adjournments thereof. CIK shareholders must approve the
reorganization as well.
The persons named as proxies or the Chairman of the meeting may propose
one or more adjournments of the special meeting if the necessary quorum to
transact business or the vote required to approve or reject any proposal is not
obtained at the meeting. Unless it is approved by the Chairman of the meeting,
any such adjournment will require the affirmative vote of the holders of a
majority of CGF's shares present in person or by proxy at the special meeting.
The persons named as proxies will vote those proxies which they are entitled to
vote on any such proposal in accordance with their best judgment in the interest
of CGF.
The enclosed proxy is being solicited on behalf of the Board of Directors
of CGF.
By Order of the Board of Directors,
Michael A. Pignataro, Chief Financial Officer and Secretary
____________, 2001
IMPORTANT--WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
THE CARD IN THE ENCLOSED ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE AND IS
INTENDED FOR YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD MAY
SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT
THE MEETING. IF YOU CAN ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
Subject to Completion, dated March 2, 2001
Acquisition of the Assets of
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
466 LEXINGTON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10017
(212) 875-3500
By and In Exchange for Shares of
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
466 LEXINGTON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10017
(212) 875-3500
COMBINED PROXY STATEMENT
FOR
MEETINGS OF SHAREHOLDERS
TO BE HELD TUESDAY MAY 1, 2001
PROSPECTUS
FOR
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
This Combined Proxy Statement/Prospectus ("Proxy Statement/Prospectus") is
being furnished to shareholders of Credit Suisse Asset Management Income Fund,
Inc. ("CIK" or, as the Reorganization goes forward, the "Surviving Fund") for
use at CIK's annual meeting of shareholders to be held Tuesday, May 1, 2001 at
3:00 p.m. (Eastern time) and is being furnished to shareholders of Credit Suisse
Asset Management Strategic Global Income Fund, Inc. ("CGF") for use at a special
meeting of CGF shareholders to be held on Tuesday, May 1, 2001 at 2:00 p.m.,
(Eastern time). The meeting of shareholders of each fund will be held at the
offices of Credit Suisse Asset Management, LLC, 466 Lexington Avenue, 16th
Floor, New York, New York 10017. CGF and CIK are sometimes collectively referred
to as the "Funds" and individually, as the context may require, as a "Fund." The
approximate mailing date of this Proxy Statement/Prospectus is _________, 2001.
Purpose of the Meetings. At each of the meetings, shareholders of the
Funds will be asked to approve an Agreement and Plan of Reorganization dated as
of ________, 2001. The Agreement and Plan of Reorganization is referred to in
this Proxy Statement/Prospectus as the "Plan." In addition, CIK's shareholders
are being asked to approve a new investment advisory agreement with Credit
Suisse Asset Management LLC (referred to in this Proxy Statement/Prospectus as
"CSAM"), and to vote on the election of five (5) directors.
Specifics of the Proposed Reorganization. The Plan provides for all the
assets of CGF to be acquired by CIK in exchange for CIK shares and the
assumption by CIK of all of the liabilities of CGF, hereinafter referred to as
the "Reorganization." CIK shares would be distributed to CGF shareholders in
liquidation of CGF and thereafter CGF would be dissolved under Maryland law and
de-registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). As a result of the reorganization, each CGF
shareholder would receive that number of CIK shares having an aggregate net
asset value equal to the aggregate net asset value of such shareholder's CGF
shares as of the close of business on the closing of the reorganization (except
that cash will be paid in lieu of fractional shares).
CGF shareholders will not receive any fractional shares of CIK as part of
the CGF distribution. In lieu thereof, CGF will receive from CIK for
distribution to its shareholders cash in an amount equal to the aggregate net
asset value of the fractional shares otherwise distributable to the CGF
shareholders, and the total
number of CIK shares otherwise issuable to CGF will be reduced by that number of
CIK shares having an aggregate net asset value equal to the cash so paid to CGF.
New Investment Advisory Agreement (for CIK shareholders only).
Shareholders of CIK are also being asked to approve a new investment advisory
agreement with CIK's investment adviser, CSAM. The new agreement will be
substantially the same as the current agreement except that the investment
advisory fee will be based upon the lower of the average weekly stock price
(market value) of the Surviving Fund's outstanding shares or its average weekly
net assets. The new investment advisory agreement with CSAM, which is more fully
described in this Proxy Statement/Prospectus, will take effect only upon the
consummation of the Reorganization.
The terms and conditions of the Reorganization and related transactions
are more fully described in this Proxy Statement/Prospectus and in the Plan, a
copy of which is attached as Exhibit A.
This Proxy Statement/Prospectus serves as a prospectus for shares of CIK
under the Securities Act of 1933, as amended, which is referred to in this Proxy
Statement/Prospectus as the "Securities Act," in connection with the issuance of
CIK common shares in the Reorganization.
Assuming the shareholders of the Funds approve the Reorganization and all
other conditions to the consummation of the Reorganization have been satisfied
or waived, the Funds will jointly file Articles of Transfer with the State
Department of Assessments and Taxation of Maryland (the "Department"). The
Reorganization will become effective when the Department accepts for record the
Articles of Transfer or at such later time, which may not exceed 30 days after
the Articles of Transfer are accepted for record, as specified in the Articles
of Transfer. The date when the Articles of Transfer are accepted for record, or
the later date, is referred to in this Proxy Statement/Prospectus as the
"Effective Date." CGF, as soon as practicable after the Effective Date, will
terminate its registration under the "Investment Company Act" and dissolve under
Maryland law.
Election of Directors (for CIK shareholders only). The shareholders of CIK
will also be asked to consider and vote upon the election of five (5) management
nominees standing for election to CIK's Board of Directors.
You should retain this Proxy Statement/Prospectus for future reference as
it sets forth concisely information about CGF and CIK that you should know
before voting on the proposals described below.
A Statement of Additional Information, dated _________, 2001, which is
referred to in this Proxy Statement/Prospectus as the "SAI" and which contains
additional information about the Reorganization and the Funds, has been filed
with the Securities and Exchange Commission, or "SEC". The SAI is incorporated
by reference into this Proxy Statement/Prospectus. A copy of the SAI is
available upon request, without charge, by calling Georgeson Shareholder
Communications, Inc., the Funds' proxy agent, at (800) 223-2064. You may also
submit your request in writing to Georgeson Shareholder Communications at 17
State Street, 10th Floor, New York, New York 10004. If you should have any
questions regarding the proxy material or how to execute your vote, you may call
Georgeson Shareholder Communications at (800) 223-2064. CGF has provided the
information included in this Proxy Statement/Prospectus regarding that Fund. CIK
has provided the information included in this Proxy Statement/Prospectus
regarding that Fund.
CGF's shares of common stock currently are listed on the New York Stock
Exchange, or NYSE, under the symbol "CGF". CIK's shares of common stock
currently are listed on the NYSE under the symbol "CIK". After the Effective
Date, the shares of CGF will be removed from listing with the NYSE.
Reports, proxy materials and other information concerning each Fund may be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The SEC has not approved or disapproved these securities or determined if
this Proxy Statement/ Prospectus is truthful or complete. To state otherwise is
a crime.
The date of this Proxy Statement/Prospectus is _________, 2001
TABLE OF CONTENTS
Page
----
GENERAL..................................................................3
PROPOSAL 1 (BOTH FUNDS): APPROVAL OF THE AGREEMENT AND PLAN OF
REORGANIZATION PURSUANT TO WHICH CIK WILL ACQUIRE ALL THE ASSETS
AND LIABILITIES OF CGF...................................................5
Synopsis...........................................................6
Expense Table......................................................9
Financial Highlights..............................................11
Risk Factors and Special Considerations...........................14
Comparison of Investment Objectives and Policies..................17
United States Federal Income Taxes................................24
Information About the Reorganization..............................26
Additional Information About the Funds............................31
Management of the Funds...........................................37
Executive Officers of CSAM........................................40
Experts...........................................................43
Required Vote.....................................................43
Legal Proceedings.................................................43
Legal Opinions....................................................43
PROPOSAL 2 (CREDIT SUISSE ASSET MANAGEMENT INCOME FUND
SHAREHOLDERS ONLY): APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT ......44
Background........................................................44
Board Considerations; Reasons for the New Investment
Advisory Agreement................................................44
Information Concerning Credit Suisse Group and CSAM...............45
Description of Current Investment Advisory Agreement..............45
The New Investment Advisory Agreement.............................45
Differences Between the Current and the New Investment
Advisory Agreement................................................45
Required Shareholder Vote.........................................46
PROPOSAL 3 (CREDIT SUISSE ASSET MANAGEMENT INCOME FUND
SHAREHOLDERS ONLY): ELECTION OF DIRECTORS..............................46
Background........................................................46
Required Shareholder Vote.........................................48
ADDITIONAL INFORMATION..................................................48
-i-
EXHIBIT A-FORM OF AGREEMENT AND PLAN OF
REORGANIZATION ........................................................A-1
EXHIBIT B-FORM OF NEW CSAM INVESTMENT ADVISORY AGREEMENT...............B-1
APPENDIX A-DESCRIPTION OF RATING CATEGORIES
APPENDIX B-AUDIT COMMITTEE CHARTER
-ii-
GENERAL
This Proxy Statement/Prospectus is furnished to the shareholders of the
Funds in connection with the solicitation of proxies. The Board of Directors of
each Fund is soliciting proxies for use at the meetings. The mailing address for
both Funds is 466 Lexington Avenue, 16th Floor, New York, New York 10017.
This Proxy Statement/Prospectus, the Notice of Meeting to Shareholders and
the proxy cards are first being mailed to shareholders on or about _________,
2001 or as soon as practicable thereafter. Any shareholder who gives a proxy has
the power to revoke the proxy either:
o by mail, addressed to the Secretary of the respective Fund, at
the Fund's mailing address, or
o in person at the meeting by executing a superseding proxy or
by submitting a notice of revocation to the respective Fund.
All properly executed proxies received in time for the meetings will be
voted as specified in the proxy or, if no specification is made, in favor of
each proposal for that Fund referred to in the Proxy Statement/ Prospectus, and
in accordance with the judgment of the persons named as proxies on other matters
that may properly come before the meetings.
Shareholders of CGF and CIK will be asked to vote on the following
proposals:
Proposal To Be Voted upon by
- -------- -------------------
Proposal 1--Approval of the Plan...... CGF and CIK Shareholders
Proposal 2--Approval of the New
Investment Advisory
Agreement with CSAM................... CIK Shareholders Only
Proposal 3--Election of five (5)
persons to CIK's Board of Directors... CIK Shareholders Only
The holders of one-third of the shares of each Fund outstanding at the
close of business on the record date, present in person or by proxy, will
constitute a quorum for that Fund's meeting. Shares represented by properly
executed Proxies that are marked "ABSTAIN" and broker non-votes will be treated
as shares that are present only for determining whether a quorum has been
achieved at the meeting. In the event that a quorum is not present or
represented, the holders of a majority of the shares present in person or by
proxy or the Chairman of the meeting may adjourn the meeting, without notice
other than announcement at the meeting, until the requisite number of shares
entitled to vote at the meeting shall be present. If a quorum is present, but
sufficient votes to approve one or more of the proposed items are not received,
the persons named as proxies or the Chairman of the meeting may propose one or
more adjournments of the meeting to permit further solicitations or Proxies.
Unless it is approved by the Chairman of the meeting, any such adjournment will
require the affirmative vote of a majority of those shares present at the
meeting or represented by proxy. When voting on a proposed adjournment, the
persons named as proxies will vote thereon in accordance with their best
judgment in the interest of the Fund.
As the Reorganization is expected to result in the issuance of a number of
shares of CIK in excess of 20% of CIK's outstanding shares of common stock, the
NYSE listing rules require that Proposal 1 be approved by the affirmative vote
of a majority of the votes cast by CIK shareholders, provided also that the
number of votes cast on Proposal 1 represent at least a majority of the
outstanding shares of CIK.
-3-
Absent such NYSE rules, the Reorganization would not require approval by the
shareholders of CIK. Under Maryland law and CGF's charter, Proposal 1 requires
the affirmative vote of a majority of the outstanding shares of common stock of
CGF.
Proposal 2 to be submitted at the annual meeting of shareholders of CIK
requires the affirmative vote of a "majority of outstanding voting securities"
of CIK. A "majority of outstanding voting securities" is defined under the
Investment Company Act to mean the lesser of
o 67% of the voting securities represented at a meeting at which
more than 50% of the outstanding voting securities are
represented, or
o more than 50% of the outstanding voting securities.
Proposal 3 to be submitted at the annual meeting of shareholders of CIK
requires the affirmative vote of a plurality of the votes cast at such meeting
in person or by proxy.
Abstentions and broker non-votes will have the effect of a "no" vote on
Proposal 1 for CGF and will not count as CIK shares voted for purposes of
measuring whether the NYSE listing rule requirement that the the total CIK votes
cast on Proposal 1 represent a majority of the outstanding shares of CIK has
been met or whether a majority of the CIK votes cast have been voted in favor of
Proposal 1. Abstentions and broker non-votes will have the effect of a "no" vote
on Proposal 2 and will have no effect on Proposal 3.
Proxy solicitations will be made primarily by mail, but solicitations may
also be made by telephone, telegraph or personal interviews conducted by
officers or employees of the Funds, CSAM, Brown Brothers Harriman & Co., the
administrator to the Funds, or Georgeson Shareholder Communications, the proxy
solicitation firm retained by each Fund in connection with the meetings.
Georgeson is entitled to receive a fee of $5,000 per Fund and an additional
$15,000 per Fund if the Plan is approved, plus per call charges and
reimbursement for its reasonable expenses. The Funds will bear costs of
solicitation, including:
o printing and mailing of this Proxy Statement/Prospectus and
accompanying material,
o the reimbursement of brokerage firms and others for their
expenses in forwarding solicitation material to the beneficial
owners of each Fund's shares,
o payment to Georgeson Shareholder Communications for its
services in soliciting proxies, and
o supplementary solicitations to submit proxies.
Only shareholders of record of each Fund at the close of business on March
5, 2001, the Record Date, are entitled to vote. Each outstanding share of a Fund
is entitled to one vote on all matters voted upon at a meeting of the
shareholders of that Fund. As of March 5, 2001, there were [34,708,369] shares
of CIK outstanding, and [11,976,699] shares of CGF outstanding.
CGF and CIK provide periodic reports to all of their shareholders. These
reports highlight relevant information including investment results and a review
of portfolio changes for each Fund. CIK and CGF have previously furnished their
respective annual report containing audited financial statements for the year
ended December 31, 2000 to their shareholders. CIK and CGF will furnish, without
charge, a copy of their most recent Annual Report and of any more recent interim
report upon request to Georgeson
-4-
Shareholder Communications at 17 State Street, 10th Floor, New York, New York
10004 or at (800) 223-2064. These requests will be honored within three business
days of receipt.
The Boards of Directors of the Funds know of no business other than the
proposals described above which will be presented for consideration at the
meetings. If any other matter is properly presented, it is the intention of the
persons named in the enclosed proxy to vote on that matter in their discretion.
PROPOSAL 1 (BOTH FUNDS): APPROVAL OF THE AGREEMENT AND
PLAN OF REORGANIZATION PURSUANT TO WHICH CIK WILL ACQUIRE
ALL THE ASSETS AND LIABILITIES OF CGF
On February 21, 2001, the Boards of Directors of CGF and CIK, including a
majority of the directors of each Fund who are not "interested persons" of the
respective Fund, or the Independent Directors, unanimously:
o declared the Reorganization advisable,
o approved entering into the Plan, and
o recommended that the Plan be approved by the shareholders of
each Fund.
The Board of Directors of CGF and CIK have common members.
For more information about the Reorganization, see "Information About The
Reorganization." The Plan is subject to the approval of the shareholders of both
Funds and certain other conditions. A copy of the Plan is attached to this Proxy
Statement/Prospectus as Exhibit A, and the description of the Plan included in
this Prospectus/Proxy Statement is qualified in its entirety by reference to
Exhibit A.
The following provides a more detailed discussion about the
Reorganization, each Fund and additional information that you may find helpful
in deciding how to vote on the Plan.
-5-
Synopsis
This synopsis highlights important information included in this Proxy
Statement/Prospectus. This synopsis is qualified by reference to the more
complete information included elsewhere in this Proxy Statement/Prospectus and
the Plan. Shareholders of the Funds should read this entire Proxy Statement/
Prospectus carefully.
The Proposed Reorganization. The Boards of Directors of CGF and CIK,
including the Independent Directors of each Fund, have unanimously approved the
Plan. The Plan provides for a reorganization of CGF and CIK whereby CIK will
acquire all the assets of CGF in exchange for CIK shares and the assumption by
CIK of all the liabilities of CGF. The Plan also calls for the distribution of
these shares of CIK to CGF's shareholders in liquidation of CGF and the
subsequent dissolution of CGF. The reorganization is referred to in this Proxy
Statement/Prospectus as the "Reorganization." If approved, the Reorganization is
expected to be consummated promptly after the meetings. As a result of the
Reorganization, each shareholder of CGF will become a shareholder of the
Surviving Fund and will receive, on the Effective Date, that number of full
shares of common stock of the Surviving Fund (plus cash in lieu of fractional
shares) having an aggregate net asset value equal to the aggregate net asset
value of such shareholder's shares held in CGF as of the close of business on
the Business Day preceding the Effective Date.
For the reasons set forth below under "Information about the
Reorganization--Reasons for the Reorganization." the Board of Directors of CIK
and CGF, including the Independent Directors of each Fund, have unanimously
concluded that:
o the Reorganization is in the best interests of each respective
Fund, and
o the interests of existing shareholders of each respective Fund
will not be diluted as a result of the transactions
contemplated by the Plan.
Accordingly, the Board of Directors of each Fund (which have common
members) recommends approval of the Reorganization. If the Reorganization is not
approved, each Fund will continue as a separate investment company, and the
Board of Directors of each Fund will consider such other alternatives as it
determines to be in the best interests of its shareholders.
Investment Objectives and Policies. The Funds have substantially similar
investment objectives and policies. CIK's fundamental investment objective is
current income consistent with the preservation of capital. CGF's fundamental
investment objective is high current income consistent with the preservation of
capital. In pursuing their respective investment objectives, CIK has a policy of
investing at least 75% of its total assets in fixed-income securities, such as
bonds, debentures and preferred stocks, while CGF has a policy of investing at
least 65% of its total assets in income-producing securities. In February 1997,
the Board of Directors of CGF adopted a non-fundamental policy pursuant to which
CGF may invest up to 35% of its net assets in the securities of issuers located
in emerging markets. In February 2001, the Board of Directors of CIK adopted
this same non-fundamental policy after determining that it could enhance CIK's
ability to achieve its investment objective.
The preceding summary of the Funds' investment objectives and certain
policies should be considered in conjunction with the discussion below under
"Risk Factors and Special Considerations" and "Comparison of Investment
Objectives and Policies."
Fees and Expenses. CSAM serves as the investment adviser to each Fund. As
compensation for its advisory services, CSAM is entitled to receive from each
Fund an annual fee, calculated weekly and
-6-
paid quarterly, equal to 0.50% of such Fund's average weekly net assets. For the
fiscal year ended December 31, 2000, CSAM earned $471,683 in advisory fees from
CGF and $1,148,861 from CIK.
On __________, 2001, CIK's Board of Directors approved a new investment
advisory agreement with CSAM, subject to shareholder approval and consummation
of the Reorganization. The new investment advisory agreement with CSAM will be
the same as the Fund's current investment advisory agreement except that the
investment advisory fee will be equal to a percentage of the lower of the
average weekly stock price (market value) of the Fund's outstanding shares or
its average weekly net assets. For more information about the new investment
advisory agreement, see "Proposal 2 (Credit Suisse Asset Management Income Fund
Shareholders Only): Approval of New Investment Advisory Agreement."
For the fiscal year ended December 31, 2000, CGF's and CIK's total expense
ratios were 1.05% and .78%, respectively. The total expense ratio is the ratio
of total annual operating expenses to average net assets.
The pro forma expense ratio of the Surviving Fund is estimated to be
approximately .77% after giving effect to the Reorganization. The actual expense
ratio for the Surviving Fund for the current and subsequent fiscal years, if the
Reorganization occurs, may be higher or lower than this projection and will
depend upon the Surviving Fund's performance, general bond market and economic
conditions, net asset levels, interest rate levels and other factors.
See "Expense Table" below for the current expenses of each Fund and pro
forma expenses following the Reorganization.
Federal Income Tax Consequences of the Reorganization. As a condition to
the closing of the Reorganization, both Funds will receive an opinion of Willkie
Farr & Gallagher, counsel to the Funds and CSAM, stating that the Reorganization
will constitute a tax-free reorganization within the meaning of Section
368(a)(1) of the Internal Revenue Code of 1986, or the Code. Accordingly,
neither CIK, CGF nor the shareholders of either Fund should recognize any gain
or loss for federal income tax purposes as a result of the Reorganization,
except with respect to the shareholders of CGF who receive cash proceeds from
the purchase of fractional share interests by the Surviving Fund. These
shareholders will be treated for federal income tax purposes as if they received
such fractional share interests and then sold such interests for cash. The
holding period and the aggregate tax basis of CIK shares (including fractional
share interests purchased by the Surviving Fund) received by a CGF shareholder
will be the same as the holding period and aggregate tax basis of the shares of
CGF previously held by the shareholder. The holding period and the aggregate tax
basis of the assets received by CIK in the Reorganization will be the same as
the holding period and the tax basis of such assets in the hands of CGF
immediately before the Reorganization. For more information about the tax
consequences of the Reorganization, see "Information about the
Reorganization--Tax Considerations."
Discount from Net Asset Value. Shares of closed-end funds frequently trade
at a market price that is less than the value of the fund's net assets. The
possibility that shares of the Surviving Fund will trade at a discount from its
net asset value is a risk separate and distinct from the risk that the Fund's
net asset value will decrease. Since the commencement of operations, CIK shares
have generally traded in the market at a discount to net asset value, although
recently they have traded at a premium. Similarly, CGF shares have generally
traded in the market at a discount to net asset value, although recently this
discount has substantially narrowed. As of February 21, 2001, the last trading
day immediately before the announcement of the Reorganization, and _________,
2001, CIK shares traded at a premium of 8.94% and ______%, respectively. As of
those same dates, CGF shares traded at a discount of 2.14% and _______%,
respectively. See "Additional Information about the Funds--Discount to Net Asset
Value."
-7-
Disparity in CGF and CIK Discount/Premium Levels. Recently, the shares of
CIK have been trading at a premium to net asset value. In contrast, as of the
date of this Proxy Statement/Prospectus, the shares of CGF are trading at a
small discount to net asset value. If this pattern continues, the total market
value of CIK shares issued to CGF shareholders on the Effective Date will be
more than the total market value of CGF shares outstanding immediately prior to
the Effective Date, although their total net asset values will be the same
(disregarding fractional shares). The current disparity of discount/premium
patterns would cause CGF shareholders to receive shares in the Reorganization
with a higher aggregate market value, but the relative discount level of the
Funds may be different at the time the Reorganization occurs. While it is not
possible to predict the effect, if any, of the Reorganization on the market
price of CIK's shares relative to net asset value, it is possible that CIK's
shares will trade at a smaller premium or at a discount following the
Reorganization. In fact, the acquisition by a fund whose shares are trading at a
premium of the assets of a fund whose shares are trading at a discount could
have an adverse effect on the acquiring fund's relative share price, as market
participants seek to take advantage of the disparity. Such an acquisition could
also have a positive effect on the relative share price of the selling fund, but
the same market factors that cause the selling fund's shares to trade at a lower
relative share price could affect the acquiring fund once the acquisition takes
place. However, CSAM and the CIK Board both believe that the long-term expected
benefits of the Reorganization, which are more certain to occur, outweigh the
uncertain, unpredictable and potentially short-term effect of the Reorganization
on the relative market price of CIK's shares. CSAM and the Boards also believe
that an increase in asset size, an increase in the number of outstanding shares
and a reduction in expense ratio, all of which CIK is expected to enjoy as the
surviving fund as a result of the Reorganization, are not the kinds of
developments that should aversely affect a closed-end fund's relative share
price over the long term. For more information, see "Additional Information
about the Funds--Discount to Net Asset Value."
Expenses of the Reorganization. In evaluating the proposed Reorganization,
CSAM has estimated the amount of expenses the Funds would incur, including NYSE
listing fees, SEC registration fees, legal and accounting fees and proxy and
distribution costs. The estimated total expenses pertaining to the
Reorganization are approximately $600,000. The aggregate expenses of the
Reorganization will be allocated equally between the Funds, including the SEC
registration fees and the fees for listing additional shares of CIK on the NYSE.
The expenses of the Reorganization are expected to result in a reduction in
CGF's net asset value per share of approximately $.2504, and a reduction in
CIK's net asset value per share of approximately $.00864.
-8-
Expense Table
Pro Forma
CGF CIK Post-Reorganization
--------- --------- -------------------
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering
price).................................. NONE NONE NONE
Dividend Reinvestment and Cash Purchase
Plan Fees............................... $ 5.00 (1) $ 5.00 (1) $ 5.00 (1)
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET ASSETS)(2)
Investment Management Fees.................. 0.50% (3) 0.50%(3) 0.50%(3)
Interest Payments on Borrowed Funds......... 0 0 0
Other Expenses(4)........................... 0.55% 0.28% 0.27%
Total Annual Expenses(5).................... 1.05% 0.78% 0.77%
- ---------------
(1) For optional cash purchases. First time investors are subject to an
initial service charge of $10.
(2) The percentages in the above table expressing annual fund operating
expenses are based on each Fund's operating expenses for the fiscal year
ended December 31, 2000.
(3) For more information about each Fund's investment management fees, see
"Synopsis--Fees and Expenses--Credit Suisse Asset Management Strategic
Global Income Fund" and "Synopsis--Fees and Expenses-- Credit Suisse Asset
Management Income Fund."
(4) Based on actual expenses incurred in 2000. "Other Expenses" include fees
for shareholder services, custody, legal and accounting services, printing
costs, the costs involved in communications with shareholders and the
costs of regulatory compliance, maintaining corporate existence and the
listing of the shares of common stock on the NYSE. These figures do not
reflect the expenses of the Reorganization.
(5) Total annual expenses for the fiscal year 2001 are estimated to represent
.82% of net assets for CIK and 1.10% of net assets for CGF without giving
effect to the Reorganization.
-9-
Example. The purpose of the following example is to help you understand
the costs and expenses you may bear as an investor. This example is based on the
level of total annual operating expenses for each Fund listed in the table
above, the total expenses relating to a $1,000 investment, assuming a 5% annual
return and reinvestment of all dividends and distributions. Shareholders do not
pay these expenses directly; they are paid by the Funds before they distribute
net investment income to shareholders. This example should not be considered a
representation of future expenses, and actual expenses may be greater or less
than those shown. Federal regulations require the example to assume a 5% annual
return, but actual annual returns may vary.
Pro Forma
CGF CIK Post-Reorganization
1 Year........................ $ 11 $ 8 $ 8
3 Years....................... $ 35 $ 26 $ 25
5 Years....................... $ 61 $ 45 $ 44
10 Years...................... $ 139 $ 103 $101
Performance. The table below provides performance data for various periods
ended December 31, 2000 for CGF and CIK based on each Fund's net asset value and
market value. Past performance is not a guarantee of future results, and it is
not possible to predict whether or how investment performance will be affected
by the Reorganization.
CGF CIK
---------------------- ----------------------
Average Average
Cumulative Annual Cumulative Annual
---------- ------ ---------- ------
Net Asset Value One Year ............. (3.95%) ____% 12.37%) ____%
Three Year ........... (7.16%) 2.45% (7.99%) (2.74%)
Five Year (1) ........ 19.70% 3.66% 10.23% 1.97%
Ten Year ............. 127.34% 8.56% 113.36% 7.87%
Market Value One Year ............. 16.11% ____% 3.54% --
Three Year ........... (5.76%) (1.96%) (13.39%) (4.68%)
Five Year(1) ......... 28.02% 5.06% 18.03% 3.37%
Ten Year ............. 245.98% 13.21% 245.14% 13.19%
- ----------
(1) CSAM replaced CS First Boston Investment Management ("CSFBIM") as
investment adviser to each Fund effective June 13, 1995 by virtue of its
acquisition of CSFBIM at that time.
-10-
Financial Highlights
The tables below are intended to help you understand the financial
performance of CGF and CIK. This information is derived from financial and
accounting records of each Fund.
This information has been audited by PricewaterhouseCoopers LLP, the
Funds' independent public accountants, whose reports, along with the Funds'
financial statements, are included in the Funds' Annual Reports to Shareholders
and incorporated in the SAI by reference. The Annual Reports may be obtained
without charge by writing to Georgeson Shareholder Communications, 17 State
Street, 10th Floor, New York, New York 10004, or by calling 1-(800) 223-2064.
-11-
Credit Suisse Asset Management Strategic Global Income Fund, Inc.
Financial Highlights
The following table includes per share operating performance data
for a share of common stock outstanding, total investment return, ratios to
average net assets and other supplemental data for each period indicated. This
information has been derived from information provided in the financial
statements and market price data for the Fund's shares.
Per Share Operating Performance
For a Fund Share Outstanding Throughout Each Period
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95(1)
-------- -------- -------- -------- -------- -----------
Net Asset Value, Beginning of Year ......... $ 8.46 $ 9.29 $10.79 $10.37 $10.01 $ 9.26
Offering Costs .......................... -- (0.04) -- -- -- --
Investment Activities:
Net Investment Income ................. 0.78 0.89 0.94 0.89 0.91 0.95
Net Realized and Unrealized
Gain(Loss) on Investments .......... (1.18) 0.42 (1.49) 0.41 0.26 0.61
------ ------ ------ ------ ------ ------
Total from Investment Activities ........... (0.40) 1.31 (0.55) 1.30 1.17 1.56
Decrease in Net Asset Value
due to Shares Issued
through Rights Offering .................... (1.18)
Less Distributions:
From Net Investment Income .............. (0.94) (0.92) (0.95) (0.88) (0.81) (0.76)
In Excess of Net Investment Income ...... -- -- -- -- -- --
From Return of Capital .................. -- -- -- -- -- (0.05)
------ ------ ------ ------ ------ ------
Total Distributions ........................ (0.94) (0.92) (0.95) (0.88) (0.81) (0.81)
====== ====== ====== ====== ====== ======
Net Asset Value, End of Year ............... $ 7.12 $ 8.46 $ 9.29 $10.79 $10.37 $10.01
====== ====== ====== ====== ====== ======
Per share Market Value, End of Year ........ $ 6.75 $ 6.63 $ 8.63 $10.06 $ 9.00 $ 8.88
====== ====== ====== ====== ====== ======
Total Investment Return
Net Asset Value (2) ..................... (3.95)% 1.89% (5.13)% 13.82% 13.27% 17.57%
Market Value ............................ 12.80% (14.03)%(3) (5.56)% 22.34% 11.03% 18.16%
Year Year Year Year
Ended Ended Ended Ended
12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- --------
Net Asset Value, Beginning of Year ......... $10.45 $ 9.80 $ 9.62 $ 8.70
Offering Costs .......................... -- -- -- --
Investment Activities:
Net Investment Income ................. 0.95 1.04 1.22 1.16
Net Realized and Unrealized
Gain(Loss) on Investments .......... (1.33) 0.66 0.01 0.96
------ ------ ------ ------
Total from Investment Activities ........... (0.38) 1.70 1.23 2.12
Decrease in Net Asset Value
due to Shares Issued
through Rights Offering ....................
Less Distributions:
From Net Investment Income .............. (0.62) (1.04) (1.05) (1.20)
In Excess of Net Investment Income ...... -- (0.01) -- --
From Return of Capital .................. (0.19) -- -- --
------ ------ ------ ------
Total Distributions ........................ (0.81) (1.05) (1.05) (1.20)
====== ====== ====== ======
Net Asset Value, End of Year ............... $ 9.26 $10.45 $ 9.80 $ 9.62
====== ====== ====== ======
Per share Market Value, End of Year ........ $ 8.25 $ 9.50 $ 9.50 $10.38
====== ====== ====== ======
Total Investment Return
Net Asset Value (2) ..................... (3.80)% 18.29% 13.28% 25.32%
Market Value ............................ (4.72)% 10.94% 3.50% 53.35%
Ratios/Supplemental Data
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
12/31/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95(1)
-------- -------- -------- -------- -------- -----------
Net Assets, End of Year (Thousands) ..... $85,332 $101,315 $78,510 $91,914 $87,656 $84,618
Ratio of Expenses to Average Net Assets . 1.05% 1.09% 1.17% 1.10% 1.11% 1.12%
Ratio of Net Investment Income to Average
Net Assets ............................ 9.85% 10.35% 9.17% 8.43% 8.99% 9.80%
Portfolio Turnover Rate ................. 51.1% 41.2% 107.8% 119.1% 65.1% 54.5%
Ratios/Supplemental Data
Year Year Year Year
Ended Ended Ended Ended
12/31/94 12/31/93 12/31/92 12/31/91
-------- -------- -------- --------
Net Assets, End of Year (Thousands) ..... $78,252 $88,319 $82,450 $80,606
Ratio of Expenses to Average Net Assets . 0.99% 1.06% 1.01% 1.00%
Ratio of Net Investment Income to Average
Net Assets ............................ 9.66% 10.28% 12.34% 12.13%
Portfolio Turnover Rate ................. 83.1% 128.5% 107.7% 48.0%
(1) CSAM replaced CS First Boston Investment Management as CGF's investment
adviser effective June 13, 1995.
(2) Total investment return based on per share net asset value reflects the
effects of change in net asset value on the performance of CGF during each
period and assumes dividends and capital gains distributions were
reinvested. These percentages are not an indication of the performance of
a shareholder's investment in CGF based on market value because the market
price of the stock and the net asset value of CGF may differ.
(3) Excluding the effect of the rights offering completed in 1999, total
market value return for that year would have been (12.26)%.
Note: Current period permanent book-tax differences, if any, are not included in
the calculation of net investment income per share.
-12-
Credit Suisse Asset Management Income Fund, Inc.
Financial Highlights
The following table includes per share operating performance data for a
share of common stock outstanding, total investment return, ratios to average
net assets and other supplemental data for each period indicated. This
information has been derived from information provided in the financial
statements and market price data for the Fund's shares.
Per Share Operating Performance
For a Fund Share Outstanding Throughout Each Period
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
----------- ----------- ----------- ----------- -----------
Net Asset Value, Beginning of Year .... $ 7.34 $ 7.77 $ 8.44 $ 8.12 $ 8.63
Offering Costs ..................... -- -- -- -- (0.02)
Investment Activities:
Net Investment Income ........... 0.67 0.75 0.71 0.69 0.75
Net Realized and Unrealized Gains
or Losses on Investments ...... (1.55) (0.46) (0.66) 0.39 0.18
----------- ----------- ----------- ----------- -----------
Total from Investment Activities ...... (0.88) 0.29 0.05 1.08 0.93
----------- ----------- ----------- ----------- -----------
Decrease in Net Asset Value
due to shares Issued
through Rights Offering ............ (0.52)
Less Distributions:
From Net Investment Income ......... (0.76) (0.72) (0.72) (0.76) (0.90)
----------- ----------- ----------- ----------- -----------
Total Distributions ................... (0.76) (0.72) (0.72) (0.76) (0.90)
=========== =========== =========== =========== ===========
Net Asset Value, End of Year .......... $ 5.70 $ 7.34 $ 7.77 $ 8.44 $ 8.12
=========== =========== =========== =========== ===========
Per share Market Value, End of Year ... $ 5.56 $ 6.06 $ 7.56 $ 8.75 $ 7.63
=========== =========== =========== =========== ===========
Total Investment Return
Net Asset Value(2) ................. (12.37)% 4.50% 0.47% 14.03% 10.59%
Market Value ....................... 3.55% (11.32)% (5.68)% 25.90% 10.05%(3)
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95(1) 12/31/94 12/31/93 12/31/92 12/31/91
----------- ----------- ----------- ----------- -----------
Net Asset Value, Beginning of Year .... $ 8.05 $ 9.00 $ 8.42 $ 8.28 $ 7.25
Offering Costs ..................... -- -- -- -- --
Investment Activities:
Net Investment Income ........... 0.86 0.83 0.91 0.89 0.89
Net Realized and Unrealized Gains
or Losses on Investments ...... 0.48 (1.06) 0.57 0.08 1.04
----------- ----------- ----------- ----------- -----------
Total from Investment Activities ...... 1.34 (0.23) 1.48 0.97 1.93
----------- ----------- ----------- ----------- -----------
Decrease in Net Asset Value
due to shares Issued
through Rights Offering ............
Less Distributions:
From Net Investment Income ......... (0.76) (0.72) (0.90) (0.83) (0.90)
----------- ----------- ----------- ----------- -----------
Total Distributions ................... (0.76) (0.72) (0.90) (0.83) (0.90)
=========== =========== =========== =========== ===========
Net Asset Value, End of Year .......... $ 8.63 $ 8.05 $ 9.00 $ 8.42 $ 8.28
=========== =========== =========== =========== ===========
Per share Market Value, End of Year ... $ 7.88 $ 7.00 $ 8.50 $ 8.38 $ 8.38
=========== =========== =========== =========== ===========
Total Investment Return
Net Asset Value(2) ................. 17.41% (2.67%) 18.47% 11.95% 27.71%
Market Value ....................... 24.34% (9.48%) 12.46% 12.09% 50.81%
Ratios/Supplemental Data
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/00 12/31/1999 12/31/1998 12/31/1997 12/31/1996
----------- ----------- ----------- ----------- -----------
Net Assets, End of Year (Thousands) ... $ 197,817 $ 254,857 $ 269,507 $ 291,959 $ 280,634
Ratio of Expenses to Average Net Assets 0.78% 0.78% 0.81% 0.84% 0.95%
Ratio of Net Investment
Income to Average Net Assets(2) .... 10.10% 9.90% 8.59% 8.47% 9.23%
Portfolio Turnover Rate ............... 39.1% 43.5% 84.7% 97.7% 81.0%
Year Year Year Year Year
Ended Ended Ended Ended Ended
12/31/95(2) 12/31/94 12/31/93 12/31/92 12/31/91
----------- ----------- ----------- ----------- -----------
Net Assets, End of Year (Thousands) ... $ 210,441 $ 196,379 $ 219,355 $ 203,846 $ 199,857
Ratio of Expenses to Average Net Assets 0.92% 0.83% 0.88% 0.86% 0.87%
Ratio of Net Investment
Income to Average Net Assets(2) .... 10.22% 9.75% 10.34% 10.38% 11.12%
Portfolio Turnover Rate ............... 44.1% 70.6% 117.5% 115.2% 53.3%
- ----------
(1) CSAM replaced CS First Boston Investment Management Corporation as CIK's
investment adviser effective June 13, 1995.
(2) Total investment return based on per share net asset value reflects the
effects of change in net asset value on the performance of CIK during each
period, and assumes dividends and capital gains distributions were
reinvested. These percentages are not an indication of the performance of
a shareholder's investment in CIK based on market value because the market
value of the stock and the net asset value of CIK may differ.
(3) Excluding the effect of the rights offering completed in 1996, total
market value for that year would have been 9.53%.
Note: Current period permanent book-tax differences, if any, are not
included in the calculation of net investment income per share.
-13-
Risk Factors and Special Considerations
Both CGF and CIK are subject to certain risks which are described below.
Changes in interest rates may reduce your return on investment. Since the
market price of fixed-income securities generally decreases when interest rates
rise, the net asset value and market price of your shares may decline if
interest rates rise. The magnitude of the decrease will generally be greater for
securities with longer maturities and securities with higher yields, which are
those in which the Funds primarily invest. This risk may or may not be offset by
additional income from new or existing securities carrying higher interest
rates. Conversely, if rates decline, you may over time receive less current
income from your investment, although the net asset value and market price of
your shares may immediately increase. No assurance can be given that the
securities purchased by the Funds will continue to earn yields comparable to
those earned historically.
Market fluctuations may affect the value of your investment. The market
value of fixed-income securities may move up and down, sometimes rapidly and
unpredictably. These fluctuations, which are often referred to as "volatility,"
may cause a security to be worth less than it was worth at an earlier time.
Volatility may affect a single issuer, industry, sector of the economy or the
market as a whole. Volatility affects most investments--including bonds, and the
funds that invest in them. The risk of volatility in bond prices can vary
significantly depending upon factors such as issuer and maturity. Volatility
will affect the net asset value and market price of your shares and may reduce
your return on investment.
Your investment is exposed to the credit risk inherent in fixed-income
securities. The issuer of a debt security may fail to make timely payments of
either principal or interest. When holding shares, you indirectly bear this
credit risk. A deterioration in financial or general economic conditions usually
increases credit risk. Even with investment grade securities, differences exist
in credit quality and some investment grade securities may have speculative
characteristics. A security's price may be adversely affected by the market's
opinion of the security's credit quality level even if the issuer or
counterparty has suffered no degradation in its ability to honor the obligation.
In addition, the Funds may purchase securities that are in default or not
current in the payment of interest or principal. No assurance can be given that
issuers whose obligations the Funds acquire will make payments on such
obligations as they become due.
High yield securities present increased and special risks. High yield
securities generally pay a premium above the yields of U.S. government debt
securities or mature corporate issuers because they are subject to greater risks
than these securities. Hence, high yield securities usually carry a medium-grade
or below investment grade rating, which reflects their speculative character and
the following risks:
o greater volatility
o greater credit risk
o potentially greater sensitivity to general economic or
industry conditions
o potential lack of attractive resale opportunities
(illiquidity)
o additional expenses to seek recovery from issuers who default
The market value of lower-rated securities may be more volatile than the
market value of higher-rated securities and generally tends to reflect the
market's perception of the creditworthiness of the issuer and short-term market
developments to a greater extent than more highly rated securities, which
reflect primarily fluctuations in general levels of interest rates.
-14-
Ratings are relative and subjective and not absolute standards of quality.
Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' analysis at the time of rating. Consequently,
the rating assigned to any particular security is not necessarily a reflection
of the issuer's current financial condition.
Investing outside the U.S. presents special risks. The risks which CGF
faces when it invests in foreign debt securities include:
o fluctuations in exchange rates between the U.S. dollar and
foreign currencies
o unavailable or deficient key information about an issuer,
security or market
o expropriations, capital or currency controls, punitive taxes
or nationalizations
o economic policy changes, social and political instability,
military action and war
Additional risks present when investing outside the U.S. include:
o changed circumstances in dealings between nations
o greater volatility and illiquidity of foreign securities
o costs incurred in connection with conversions between various
currencies
o higher foreign brokerage commissions
o possible extended settlement periods
The risks of investing outside the U.S. are compounded for investments in
emerging markets. There are greater risks involved in investing in emerging
markets than in developed foreign markets, including:
o potentially more limited access to investments or less
advantageous terms for foreign investors
o less-developed securities markets
o heightened economic, political and social problems
o deficiencies in regulatory oversight, market infrastructure,
shareholder protections and company laws
o less rigorous and/or enforced accounting, auditing and
financial reporting standards and requirements
o potential difficulties in enforcing contractual obligations
Mortgage-backed securities may reduce current income. Depending on market
conditions, mortgage-backed securities may at times constitute a substantial
portion of the Funds' portfolio. Mortgage-backed securities are subject to the
following risks:
o default on the underlying debt
-15-
o substantial decline in value when interest rates rise
o potential lack of attractive resale opportunities
(illiquidity)
o loss of income due to prepayments and foreclosures
The Funds' shares have traded and may continue to trade at a discount to
net asset value. Shares of closed-end investment companies frequently trade at a
discount to net asset value. This characteristic of shares of a closed-end fund
is a risk separate and distinct from the risk that its net asset value may
decrease. Since the commencement of operations, the shares of each Fund have
generally traded in the market at a discount to net asset value. See "Common
Stock." The risk of purchasing shares of a closed-end fund that might trade at a
discount is more pronounced for investors who wish to sell their shares in a
relatively short period of time. For those investors, realization of a gain or
loss on their investments is likely to be more dependent upon the existence of a
premium or discount than upon portfolio performance.
Other risks may arise from certain investment techniques which the Funds
may use. These techniques include repurchase agreements, lending of portfolio
securities, short sales, options on U.S. government securities, interest rate
futures and related options, direct placement securities, restricted and
illiquid securities and foreign exchange currency transactions. For a
description of risks associated with these techniques, please see "Other
Investment Techniques" in this Proxy Statement/Prospectus beginning on page 22.
-16-
Comparison of Investment Objectives and Policies
Organization. CIK and CGF are both diversified, closed-end management
investment companies registered under the Investment Company Act. CGF was
organized as a Maryland corporation in 1988 and CIK was organized as a Maryland
corporation in 1987. Each Fund's Board of Directors is responsible for the
management of the business and affairs of each Fund, including the supervision
of the duties performed by each Fund's investment manager. The Funds are managed
and advised by CSAM and have Common Directors. The shares of common stock of
each Fund are listed and trade on the NYSE. After the Reorganization, CGF's
shares will be delisted and CGF will be liquidated and dissolved in accordance
with Maryland law and de-registered under the Investment Company Act.
The shares of common stock of each Fund have equal non-cumulative voting
rights and equal rights with respect to dividends, assets and dissolution. Each
Fund's shares of common stock are fully paid and non-assessable and have no
preemptive, conversion or other subscription rights. Fluctuations in the market
price of the Fund's shares is the principal investment risk of an investment in
either Fund. Portfolio management, market conditions, investment policies and
other factors affect such fluctuations. Although the investment objectives,
policies and restrictions of CIK and CGF are similar, there are differences
between them, as discussed below. There can be no assurance that either Fund
will achieve its stated objective.
Investment Objectives and Policies. CGF and CIK have substantially similar
investment objectives and policies. The investment objective of CGF is high
current income consistent with the preservation of capital. CGF seeks to achieve
this objective by investing in higher yielding U.S. and foreign fixed-income
securities, with an emphasis on U.S. high yield (junk bonds) and emerging market
securities. At least 65% of CGF's total assets must be invested in
income-producing securities. CSAM expects that substantially all of CGF's assets
will be invested in income-producing securities. CGF may also invest up to 35%
of its net assets in fixed-income securities of issuers located in emerging
markets. CIK's investment objective is current income consistent with the
preservation of capital. CIK seeks to achieve this objective by investing
primarily in fixed-income securities, such as bonds, debentures and preferred
stocks. Under normal circumstances, CIK invests at least 75% of its assets in
fixed-income securities. Since February 2001, CIK may also invest up to 35% of
its net assets in fixed-income securities of issuers located in emerging
markets. Both Funds' investments are not subject to any rating quality
limitation. Accordingly, each may invest a substantial portion of its assets in
securities rated below investment grade by a nationally recognized rating
service or unrated but in CSAM's opinion of comparable quality.
The investment objectives of CGF and CIK are fundamental policies and
cannot be changed without the approval of the holders of a majority of the
outstanding voting securities. As used herein, a "majority of the 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.
No assurance can be given that the investment objective of either Fund
will be achieved. For a more detailed discussion of the investment objective and
policies, see "Investment Objective and Policies" in the SAI.
Recent Repositioning of CIK and CGF's Investment Portfolio. CIK
historically has pursued its investment objective by investing principally in
high yield fixed income securities of domestic issuers, while investing a
relatively small percentage of its net assets in investment-grade debt
securities (approximately 15% before the recent portfolio repositioning). CGF
has pursued its investment objective by investing not less than 65% of its net
assets in domestic high yield securities, and up to 35% of its net assets in
emerging markets debt. In February 2001, the Board of Directors of CIK
-17-
adopted a policy with respect to investments in emerging market debt similar to
that of CGF and accepted a recommendation from the investment advisor to
partially reposition its portfolio. As a result, CIK is liquidating its
investment-grade debt securities portfolio and re-deploying those assets
(approximately 15% of the Fund's net assets) in emerging market debt securities.
In addition, following a recommendation by the investment advisor, CGF has
reduced the percentage of its net assets invested in emerging markets debt to
15% from approximately 35%. As a result of these changes, the Funds have a
substantially similar investment mix: approximately 85% of their respective net
assets is invested in U.S. high yield fixed-income securities and 15% is
invested in fixed-income securities of issuers located in emerging markets.
The decision to reposition CIK's portfolio was based on a number of
considerations, including CSAM's advice to the CIK Board that:
o during the last several years emerging markets debt has
matured considerably as a separate asset class,
o the movement of the value of emerging markets debt generally
does not highly correlate with the movement of the value of
domestic high yield debt and thus under current market
conditions should result in a less volatile portfolio than one
investing solely in domestic high yield securities, and
o the repositioning should enhance the overall yield on CIK's
portfolio, and thus enable the Board to give consideration to
an increase in CIK's dividend rate at some point in the
future.
The decision to increase CGF's exposure to U.S. high yield fixed-income
securities was based on CSAM's advice to the CGF Board that the spreads over
investment grade debt afforded by emerging market debt have narrowed, while at
present comparable spreads for domestic high yield fixed income securities have
remained high.
THE FOLLOWING FOUR TABLES ARE ALL AS OF DECEMBER 31, 2000 AND DO NOT
REFLECT THE EFFECT OF THE REPOSITIONING OF EACH FUND'S PORTFOLIO APPROVED IN
FEBRUARY 2001 AND DESCRIBED ELSEWHERE HEREIN. ACCORDINGLY, SUCH INFORMATION
SHOULD NOT BE REGARDED AS REPRESENTATIVE OF THE COMPOSITION OF THE FUNDS'
PORTFOLIOS GOING FORWARD.
The following table shows the composition of the portfolio of investments
of each Fund (as a percentage of net assets) as of December 31, 2000 and on a
pro-forma basis after giving effect to the Reorganization:
December 31, 2000 Pro forma(1)
------------------------ ------------
CGF CIK
Corporate Obligations: 65.2% 88.3% 81.3%
Government and Agency Securities: 26.4 0.6 8.5
Collateralized Securities: 0.0 1.0 0.7
Asset Backed Obligations: 0.0 1.4 1.0
Common Stocks: 0.9 1.1 1.0
Preferred Stocks: 1.7 2.6 2.3
Warrants: 0.7 0.6 0.6
- ----------
(1) Does not reflect the effect of the repositioning of each Fund's portfolio
which was approved in February 2001. CSAM expects that government and
agency securities will represent approximately 15% of the Surviving Fund's
net assets after the repositioning is completed.
Investments in fixed-income securities are not subject to any rating
quality limitation. Accordingly, the Funds may invest a substantial portion of
their assets in securities rated below
-18-
investment grade by a nationally recognized rating service or unrated but in
CSAM's opinion of comparable quality. The table below sets forth the percentages
of assets invested by each Fund during the fiscal year ended December 31, 2000
in the various Standard & Poor's Rating Group and Moody's Investors Service,
Inc. rating categories and in unrated securities determined by CSAM to be of
comparable quality. The actual and pro-forma (giving effect to the
Reorganization) percentages are based on the dollar-weighted average of credit
ratings of all securities held during the fiscal year ended December 31, 2000,
computed on a monthly basis. For information regarding the various ratings of
Moody's and Standard & Poor's, see the appendix to this prospectus.
Unrated Securities of
Rated Securities as a Comparable quality as a
percentage of percentage of
Rating Category portfolio value portfolio value Total
- ----------------------------------- ------------------------- ------------------------- -------------------------
Pro- Pro Pro
CGF CIK forma(1) CGF CIK forma(1) CGF CIK forma(1)
----- ----- -------- ----- ----- -------- ----- ----- --------
AAA/Aaa ........................... 0.0% 2.3% 1.6% 0.0% .2% .1% 0.0% 2.5% 1.7%
AA/Aa ............................. 0.0% 1.1% 0.8% 0.0% 0.0% 0.0% 0.0% 1.1% .8%
A/A ............................... 0.0% 2.6% 1.8% 0.0% 0.0% 0.0% 0.0% 2.6% 1.8%
BBB/Baa ........................... 3.0% 7.8% 6.3% 0.0% 0.0% 0.0% 3.0% 7.8% 6.3%
BB/Ba ............................. 12.9% 8.0% 9.5% 1.5% 1.4% 1.4% 14.4% 9.4% 10.9%
B/B ............................... 59.4% 52.0% 54.2% 5.1% 1.6% 2.7% 64.5% 53.6% 56.9%
CCC/Caa ........................... 8.1% 12.3% 11.1% 2.5% 2.5% 2.5% 10.6% 14.8% 13.6%
CC/Ca ............................. 0.5% 0.7% 0.6% 0.6% 1.0% .9% 1.1% 1.7% 1.5%
C/C ............................... 0.0% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% .1% .1%
D ................................. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Subtotal .................... 83.9% 86.9% 86.0% 9.7% 6.7% 7.6% 93.6% 93.6% 93.6%
----- ----- ----- ----- ----- ----- ----- ----- -----
U.S. Government, Equities and Other 6.4% 6.4% 6.4% -- -- -- 6.4 6.4% 6.4%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total ....................... 90.3% 93.3% 92.4% 9.7% 6.7% 7.6% 100.0% 100.0% 100.0%
===== ===== ===== ===== ===== ===== ===== ===== =====
- ----------
(1) Does not reflect the effect of the repositioning of each Fund's portfolio
which was approved in February 2001. CSAM expects that the percentage of
the surviving Fund's assets invested in securities rated below investment
grade or lower or unrated but deemed of comparable quality by CSAM will
increase approximately to __% from its pro-forma level as a result of the
repositioning.
The percentage of the assets of each Fund invested in securities of
various grades may from time to time vary substantially from those set forth
above.
The following table sets forth the composition of each Fund's portfolio by
industry as of December 31, 2000 and on a pro-forma basis, after giving effect
to the Reorganization:
Industry % of Net Assets
- ---------------------------------------------- --------------------------------
December 31, 2000 Pro-Forma
---------------------- ---------
CGF CIK
--------- ---------
Aerospace/Defense ............................ 0.3% 0.8% 0.7%
Automotive ................................... 1.2% 2.5% 2.1%
Broadcasting ................................. 4.8% 4.5% 4.6%
Business Services ............................ 1.0% 1.2% 1.1%
Cable ........................................ 7.2% 11.2% 10.0%
Chemicals .................................... 1.2% 1.7% 1.5%
CMO's & Asset Backed Securities .............. 0.0% 2.3% 1.6%
Construction & Building Materials ............ 1.2% 1.7% 1.6%
Consumer Products & Services ................. 1.8% 2.8% 2.5%
Electronics .................................. 1.3% 0.9% 1.0%
Energy ....................................... 5.3% 8.0% 7.2%
Entertainment ................................ 2.5% 2.1% 2.2%
Financial Services ........................... 1.0% 3.4% 2.7%
Food & Beverages ............................. 1.5% 2.0% 1.9%
Health Care .................................. 0.7% 1.5% 1.2%
Industrial ................................... 1.4% 1.9% 1.8%
Metals/Mining ................................ 1.2% 1.9% 1.7%
Miscellaneous ................................ 0.4% 0.3% 0.3%
Packaging/Containers ......................... 2.6% 2.6% 2.6%
Paper/Forest Products ........................ 1.9% 2.9% 2.6%
Publishing & Information Services ............ 2.1% 2.7% 2.5%
Restaurants, Hotels & Gaming ................. 5.6% 6.9% 6.5%
-19-
Industry % of Net Assets
- ---------------------------------------------- --------------------------------
December 31, 2000 Pro-Forma
---------------------- ---------
CGF CIK
--------- ---------
Retail ....................................... 2.0% 4.7% 3.9%
Rights, Warrants & Other ..................... 0.7% 0.7% 0.7%
Telecommunications ........................... 14.2% 19.8% 18.1%
Textiles/Apparel ............................. 0.9% 1.8% 1.5%
Transport .................................... 1.3% 1.2% 1.2%
Waste Management ............................. 0.0% 0.0% 0.0%
------ ------ ------
Subtotal for Long-term Domestic Investments... 65.3% 94.0% 85.3%
------ ------ ------
Foreign Corporate Obligations ................ 3.1% 1.0% 1.6%
Foreign Government Obligations ............... 25.6% 0.1% 7.8%
Time Deposit ................................. 2.0% 1.4% 1.6%
Net Other Assets ............................. 4.1% 3.5% 3.7%
------ ------ ------
100.0% 100.0% 100.0%
The ten largest holdings (as a percentage of net assets) at December 31,
2000 and on a pro-forma basis, after giving effect to the Reorganization were:
CGF
- --------------------------------------------------------------------------------
% of
Net
Position Assets
- -------------------------------------------------------------------- ------
1) Russian Federation, Unsubordinated, 2.50%, 3/31/30 3.8%
2) Federal Republic of Brazil, Bearer Bonds, 11.00%, 8/17/40 2.7%
3) Federal Republic of Brazil, Capitalization Bonds, 8.00%, 4/15/14 2.6%
4) Argentina Bocon PRO1 Notes 2.953%, 4/1/07 2.0%
5) Republic of Agentina, Unsubordinated, 9.75%, 9/19/27 1.5%
6) Republic of Bulgaria Floating Rate Notes 3.00%, 7/28/12 1.3%
7) Republic of Argentina, Foreign Government Gtd., 6.00%, 3/31/23 1.3%
8) United States Treasury Notes 7.25%, 5/15/04 0.9%
9) Ministry Finance of Russia Debentures 3.00%, 5/14/06 0.9%
10) Republic of Argentina, Debentures 7.625%, 3/31/05 0.9%
CIK
- --------------------------------------------------------------------------------
% of
Net
Position Assets
- -------------------------------------------------------------------- ------
1) Univision Network Holding L.P. Sub. Notes 7.00%,
12/17/02 1.0%
2) Meditrust Conv. Debentures 7.50%, 3/1/01 1.0%
3) Coinstar, Inc. Sr. Discount Notes 13.00%, 10/1/06 0.9%
4) Telewest Comunications plc, Yankee Sr. Sub. Discount
Debentures 0.00%, 10/1/07 0.8%
5) Sprint Spectrum LP/Sprint Spectrum Finance Corp. Sr.
Notes 11.00%, 8/15/06 0.8%
6) Ainsworth Lumber Co., Ltd. Yankee Sr. Secured Notes
12.50%, 7/15/07 0.8%
7) Motors & Gears, Inc. Series D, Sr. Notes 10.75%,
11/15/06 0.7%
8) Key Energy Services, Inc., Sr. Sub. Notes 14.00%,
1/15/09 0.7%
9) Station Casinos Sr. Sub. Notes 9.75%, 4/15/07 0.7%
10) Mrs. Fields Original Cookies, Inc. Gtd. Sr. Notes
10.125%, 12/1/04 0.7%
Pro forma
- --------------------------------------------------------------------------------
% of
Position Net Assets
- -------------------------------------------------------------------- ----------
1) Russian Federation, Unsubordinated, 2.25%, 3/31/30 1.2%
2) Federal Republic of Brazil, Bearer Bonds, 11.00%, 8/17/40 0.8%
3) Federal Republic of Brazil, Capitalization Bonds, 8.00%, 4/15/14 0.8%
4) Univision Network, Holding L.P., Sub. Notes, 7.00%, 12/17/02 0.7%
5) Univision Network Holdings LP 0.7%
6) Meditrust Corp Conv Deb 0.7%
7) Coinstar, Inc., Sr. Discount Notes, 13.00%, 10/1/06 0.6%
8) COINSTAR S/UP 0.6%
9) Bocon PROI Notes 2.953%, 4/1/07 0.6%
10) Telewest, Communications plc, Yankee Sr. Sub., Discount
Debentures, 0.00%, 10/1/07 0.6%
CSAM may take full advantage of the entire range of maturities of
fixed-income securities and may adjust the average maturity of the investments
held in the portfolio from time to time, depending on
-20-
its assessment of relative yields of securities of different maturities and its
expectations of future changes in interest rates.
Investment Techniques
U.S. Fixed-Income Securities
Both Funds invest in higher-yielding, lower rated U.S. corporate fixed
income securities, including debt securities, convertible securities and
preferred stocks. They may also invest in securities rated single A or higher by
Moody's or by Standard & Poor's and unrated corporate fixed-income securities.
Normally substantially all of the high yield securities in which the Funds
invest are in the lower-rated categories. Lower-rated securities generally
provide yields superior to those of more highly rated securities, but involve
greater risks and are speculative in nature. The rating services' descriptions
of these rating categories, including the speculative characteristics of the
lower categories, are set forth in Appendix A. As of December 31, 2000,
corporate fixed-income securities rated below investment grade represented 62.5%
of the net assets of CGF and 77.1% of the net assets of CIK. On a pro-forma
basis, after the Reorganization but before giving effect to the portfolio
repositioning described above such securities would represent _% of the
Surviving Fund's net assets. CSAM expects that after the repositioning, these
securities would represent _% of the Surviving Fund's net assets.
Both Funds may also invest in debt securities issued or guaranteed by the
U.S. government, or by agencies or instrumentalities established or sponsored by
the U.S. government, including mortgage-backed securities. Depending on market
conditions, the Funds may invest a substantial portion of their assets in
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 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. CSAM may take full advantage of the entire range
of maturities of U.S. government securities and may adjust the average maturity
of the investments held in the portfolio from time to time, depending on its
assessment of relative yields of securities of different maturities and its
expectations of future changes in interest rates. To the extent that the Funds
invest in the mortgage market, CSAM will evaluate relevant economic,
environmental and security-specific variables such as housing starts, coupon and
age trends. As of December 31, 2000, CGF did not hold any mortgage-backed
securities and these securities represented 1.0% of CIK's net assets. On a
pro-forma basis, they would represent _% of the net assets of the Surviving
Fund. CSAM does not expect these percentages to change materially as a result of
the repositioning.
Non-US Dollar Denominated Fixed-Income Securities; Fixed-Income Securities
of Foreign Issuers
Each Fund invests in debt obligations and other fixed income securities
denominated in U.S. dollars, non-U.S. currencies or composite currencies,
including:
o debt obligations issued or guaranteed by foreign national,
provincial, state, municipal or other governments with taxing
authority or by their agencies or instrumentalities
o debt obligations of supranational entities
o debt obligations of the U.S. government issued in non-dollar
denominated securities
-21-
o dollar and non-dollar denominated debt obligations and other
fixed-income securities of foreign and U.S. corporate issuers
Each Fund may invest up to 35% of its net assets in the securities of
issuers located in emerging markets. CIK has a fundamental policy not to invest
more than 5% of the value of its total assets in securities denominated in a
currency other than the U.S. dollar. As CGF's investments in the securities of
issuers located in emerging markets consist almost entirely of U.S.
dollar-denominated fixed-income securities, CSAM does not expect that this
limitation will impair to any material extent CIK's ability to invest in those
markets if the Reorganization is approved.
Other Investment Techniques
To enhance return as market opportunities arise, the Funds may use the
following investment techniques. Associated risks are indicated for each
technique.
Repurchase Agreements. The Funds may invest in repurchase agreements
collateralized by U.S. government securities, certificates of deposit and
certain bankers' acceptances for the purpose of realizing additional income. The
use of repurchase agreements involves the risk that the counterparty may default
on its obligation to repurchase the underlying securities at the agreed upon
repurchase price at a time when the value of the underlying securities has
declined, thus causing a loss upon their disposition.
Securities Lending. The Funds may lend their portfolio securities to
banks, brokers, dealers and other financial institutions who may need to borrow
securities in order to complete certain transactions, such as covering short
sales, avoiding failures to deliver securities or completing arbitrage
transactions. Securities lending involves the following risks:
o illiquidity
o credit
Short Sales. Each Fund may engage in short sales (the sale of a security
that it does not own). A Fund will only engage in short sales when they own an
equal amount of such securities or securities convertible into or exchangeable,
without payment of 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 net assets is held as collateral for
such sales at any one time.
Options on U.S. Government Securities. Each Fund may write covered call
options (rights to purchase a security from a Fund) and put options (rights to
sell a security to a Fund) with respect to its U.S. government securities to
hedge against price fluctuations and to increase current income. Each Fund may
also purchase put options (right to sell a security to a third party) or call
options (right to purchase a security from a third party) on U.S. government
securities to protect its portfolio against price fluctuations. These options
involve the following risks:
o volatility
o imperfect correlation between the prices of the option and the
underlying security credit
o illiquidity
o reduced ability to profit from price and interest rate
fluctuations on the securities being hedged
-22-
Interest Rate Futures and Related Options. Each Fund may enter into
interest rate futures contracts and options that are traded on U.S. futures
exchanges or other trading facilities. Each Fund intends to use these techniques
only for bona fide hedging purposes, i.e., for the purpose of protecting its
portfolio against yield and price fluctuations. The Funds are not required to
hedge their investments. Interest rate futures and related options may not be
available or may be too costly, and, as a result, the Funds may not be able to
use them when they decide to do so. When used, interest rate futures contracts
and related options involve the following risks:
o volatility
o imperfect correlation between prices
o reduced ability to profit from price and interest rate
fluctuations on the securities being hedged
Restricted and Illiquid Securities. Each Fund may invest up to 10% of its
total assets in securities that are not readily marketable. These include
securities which are not registered under the Securities Act and not publicly
traded. They are usually considered less liquid than publicly-traded securities
and the Funds may have to accept a lower price upon a decision to sell such a
security or may not be able to sell the security at all. Companies whose
securities are not publicly traded may not be subject to the same investor
protection requirements as publicly traded securities.
Foreign Currency Exchange Transactions. Each Fund may (but is not required
to) engage in foreign currency exchange transactions to hedge against
fluctuations in future exchange rates. Foreign currency hedging involves the
following risks:
o imperfect correlation between prices
o credit risk
o volatility in currency prices
o illiquidity
o reduced ability to profit from price and interest rate
fluctuations on the securities being hedged
Each Fund will have a limited ability to hedge its portfolio denominated
in currencies of emerging markets against potential devaluations because of the
lack of suitable instruments and, even if such instruments are available, may
elect not to hedge its currency exposure.
Defensive Strategies. There may be times when, in CSAM's judgment,
conditions in the securities markets would make pursuing a Fund's basic
investment strategy inconsistent with the best interests of its shareholders. At
such times, CSAM may employ alternative strategies to reduce fluctuations in the
value of the portfolio. In implementing these defensive strategies a 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 a
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. A Fund may
also hold a portion of its assets in cash or
-23-
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 a Fund employs these temporary defensive strategies, it may not
achieve its investment objective.
Portfolio Turnover and Short-Term Trading. CSAM will buy and sell
securities for a Fund to accomplish its investment objective. The investment
policies of a 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, a 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.
United States Federal Income Taxes
The following information is meant to be a summary of certain federal
income tax considerations relevant to an investment in either Fund or, if the
Reorganization is consummated, in the Surviving Fund. Please see the SAI for
additional information. You should rely on your own tax advisor for advice about
the particular federal, state and local tax consequences to you of investing in
the Funds.
Although each Fund intends to operate so that it will not have to pay
federal income or excise tax, if it does have to pay tax, this would adversely
affect investment performance.
Each Fund will distribute substantially all of its income and gains to
shareholders every year, and you will be taxed on distributions you receive,
regardless of whether they are paid in cash or are reinvested in shares. If a
Fund declares a dividend in October, November or December but pays it in
January, you may be taxed on the dividend as if you received it in the previous
year.
Each Fund will send to its shareholders a tax report each year. The report
will tell you which dividends and redemptions must be treated as taxable
ordinary income and which, if any, are long-term capital gain. If the Fund
designates a dividend as a capital gain distribution, you will pay tax on that
dividend at the long-term capital gains tax rate, no matter how long you have
held your shares.
If you hold your shares in a tax-deferred retirement account, such as an
IRA, you generally will not have to pay tax on dividends until they are
distributed from the account. These accounts are subject to complex tax rules,
and you should consult your tax advisor about investment through a tax-deferred
account.
You will generally have a capital gain or loss if you sell your shares.
The amount of the gain or loss and the rate of tax will depend primarily upon
how much you paid for the shares, how much you sell them for, and how long you
held them.
Each Fund may be required to withhold U.S. federal income tax at the rate
of 31% of all taxable distributions payable to you if you fail to provide your
correct taxpayer identification number or to make required certifications, or if
you have been notified by the IRS that you are subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld may be
credited against your U.S federal income tax liability.
Foreign Shareholders. If you are a nonresident alien individual, a foreign
trust or estate, a foreign corporation or a foreign partnership under U.S. tax
laws, you will be subject to U.S. withholding tax at the rate of 30% (or
applicable lower treaty rate) except where such distributions are effectively
connected with a trade or business carried on by you in the United States.
-24-
Under certain circumstances more fully described in the SAI, distributions
of net long-term capital gains to you and gains from sales of shares by you may
not be subject to U.S. income or withholding taxes.
If the income from a Fund is effectively connected with a trade or
business carried on by you, distributions of net investment income and net
long-term capital gains, and any gains realized upon the sale or redemption of
shares, will be subject to U.S. income tax at the graduated rates applicable to
U.S. citizens or domestic corporations.
If you are entitled to claim the benefits of an applicable tax treaty, the
tax consequences to you may be different from those described herein. You are
advised to consult your own tax advisor with respect to the particular tax
consequences to you of an investment in a Fund.
Other Taxation. Income received by a Fund from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. It is impossible to determine the effective rate
of foreign tax in advance since the amount of assets to be invested in various
countries is not known.
Distributions also may be subject to additional state, local and foreign
taxes depending on your particular situation. You are advised to consult your
own tax advisor with respect to the particular tax consequences to you of an
investment in a Fund and of the possible impact of proposed changes in
applicable tax laws. For a discussion of the tax consequences of the
Reorganization on your investment in each Fund, please see "Information about
the Reorganization--Tax Considerations."
-25-
Information About the Reorganization
General. Under the Plan, CIK will acquire all the assets of CGF in
exchange for CIK shares and the assumption by CIK of all the liabilities of CGF
on the Effective Date. As a result of the Reorganization and on the Effective
Date, each CGF shareholder would receive that number of CIK shares (plus cash in
lieu of fractional shares), having an aggregate net asset value equal to the
aggregate net asset value of such shareholder's CGF shares as of the close of
business on the Business Day preceding the Effective Date. The Surviving Fund
will not issue any fractional shares to CGF shareholders. In lieu thereof, the
Surviving Fund will purchase all fractional shares at the current net asset
value of the shares and remit the cash proceeds to former shareholders of CGF in
proportion to their fractional shares. No sales charge or fee of any kind will
be charged to CGF shareholders in connection with their receipt of common stock
of the Surviving Fund in the Reorganization.
CGF would then:
o remove its shares of common stock from listing on the NYSE,
o withdraw from registration under the Securities Exchange Act
of 1934, as amended,
o deregister as an investment company under the Investment
Company Act, and
o dissolve under Maryland law.
If approved, the Reorganization is expected to occur promptly after the
meetings. Under Maryland law, shareholders of a corporation whose shares are
traded publicly on a national securities exchange, such as the Funds' shares,
are not entitled to demand the fair value of their shares upon a Reorganization;
therefore, the shareholders of the Funds will be bound by the terms of the
Reorganization. However, any shareholder of either Fund may sell his or her
shares of common stock at any time prior to the Reorganization on the NYSE.
The Plan may be terminated and the Reorganization abandoned, whether
before or after approval by the Funds' shareholders, at any time prior to the
Effective Date:
o by the mutual written consent of the Board of Directors of
each Fund, or
o by either Fund if the conditions to that Fund's obligations
under the Plan have not been satisfied or waived.
If the Reorganization has not been consummated by September 30, 2001, the
Plan automatically terminates on that date, unless a later date is mutually
agreed upon by the Board of Directors of each Fund.
Reasons for the Reorganization. The Board of Directors of each Fund
informally considered a combination of CIK and CGF over the last several years.
The Boards finally considered the combination at joint meetings of each Board
held on February 5, 2001, February 9, 2001 and February 14, 2001 and unanimously
approved the Reorganization at joint meetings of each Board held on February 21,
2001. The Board of Directors of both Funds have common members and all of the
Directors of each Fund were present at each of these meetings. For the reasons
discussed below, the Board of Directors of each Fund, including the Independent
Directors of each Fund, after consideration of the potential benefits of the
Reorganization to the shareholders of that Fund and the expenses expected to be
incurred by that Fund in connection with the Reorganization, unanimously
determined that:
-26-
o the interests of the existing shareholders of that Fund will
not be diluted as a result of the proposed Reorganization, and
o the proposed Reorganization is in the best interests of that
Fund.
IN THE JUDGMENT OF THE BOARD OF DIRECTORS OF EACH FUND, THE REORGANIZATION
SERVES THE BEST INTERESTS OF EACH FUND AND ITS SHAREHOLDERS.
The approval and recommendation by each Board of Directors that
shareholders vote for the Reorganization springs from a number of issues which
the Fund's investment advisor and the Directors have been considering over a
period of time. Each Board of Directors has consistently held the view that an
increase in the Fund's asset size could potentially benefit the Funds'
shareholders in several ways: the expense ratio could be reduced, the Fund's
investment flexibility and opportunities could be enhanced and analyst coverage
of the Fund perhaps would be expanded or initiated, a factor that the investment
advisor has identified as one that may positively affect the discount/premium at
which a closed-end fund trades.
In deciding to approve the course of action described below, the
Independent Directors considered many factors, including but not limited to
market information, analyses and advice provided to them by CSAM. In addition,
in considering the merits of the proposed Reorganization, the Boards also
considered the larger asset size of the combined Fund relative to each
constituent Fund standing alone, the newly revised fee structure and the
potential for economies of scale that is likely to result from the larger asset
size of the combined Fund. Based on data presented by CSAM, the Board of
Directors of each Fund believes that a combination of the Funds is likely to
result in a total operating expense ratio that will be lower than the current
total operating expense ratio of either Fund.
The Boards also considered CSAM's representation to them that a larger
asset base would provide benefits in portfolio management. After the
Reorganization, the Surviving Fund may be better able to diversify portfolio
holdings and thereby mitigate risks, while participating in more investment
opportunities. In addition, a larger asset size could result in a more liquid
trading market for shares of the Surviving Fund than either Fund currently
enjoys separately. Further, the Reorganization itself may focus the attention of
a wider circle of securities analysts on the Surviving Fund and may eliminate
confusion in the marketplace that results from two funds with a similar
objective, similar policies and similar names managed by the same adviser.
There can be no guarantee that any of these potential beneficial results
will be realized.
The Board of Directors of each Fund, in declaring advisable and
recommending the proposed Reorganization, also considered the following:
2. the capabilities and resources of CSAM and its affiliates in
the areas of investment management and shareholder servicing;
3. expense ratios and information regarding fees and expenses of
the Funds, both currently and on a pro forma basis, including
the new fee arrangement pursuant to which the fees charged by
CSAM to the Surviving Fund will be based upon the lower of the
average weekly stock price (market value) of the Surviving
Fund's outstanding shares or its average weekly net assets;
4. the terms and conditions of the Reorganization and whether it
would result in dilution of the interests of either Fund and
its existing shareholders;
-27-
5. the compatibility of the Fund's portfolio securities,
investment objectives, policies and restrictions;
6. the tax consequences to each Fund and its shareholders in
connection with the Reorganization; and
7. the anticipated expenses of the Reorganization.
In reviewing issues relating to the structure of the Reorganization and
the selection of the surviving corporation in the Reorganization, each Board
also considered information provided to them by CSAM concerning:
o the comparative performance records of the two Funds,
o public and market perception of the two Funds,
o the relative size of the two Funds, and
o the investment policies, strategies and personnel CSAM intends
to utilize in managing the combined fund.
Each Fund's Board of Directors and CSAM believe that the reorganization is
in step with each Fund's objective and consistent with the repositioning of its
portfolio. For example, by acquiring the assets of CGF, CIK is expected to be
able to better pursue its objective of seeking current income because some of
those assets represent higher yielding emerging markets debt. In addition, a
portion of CGF's portfolio is comprised of domestic high yield debt that,
although still below investment grade, is rated higher than the domestic high
yield debt held by CIK. Moreover, studies have shown that adding an
international component to a domestic portfolio can help to stabilize it because
domestic and international markets will sometimes move in opposite directions.
The Boards also considered information provided to them by CSAM which
indicated that the yield on the repositioned CGF portfolio was less than the
yield on the repositioned CIK portfolio. This information showed that the
Reorganization would cause the current yield on the Surviving Fund to be less
than the current yield on CIK, at least in the short term. However, the Board
considered that the average credit quality of the instruments comprising CGF,
although below investment grade, was higher than that of CIK, and that the
Surviving Fund's overall total return (which includes both income and capital
appreciation or stability) should benefit from such higher average credit
quality. The Board was also advised that the relative yields are partly a
function of market conditions at the time the various instruments were purchased
and that, as compared with receiving a cash infusion which would have to be
invested at current rates, the CGF's current yield compared favorably. The Board
also considered average portfolio turnover rates and maturity information and
concluded that the other benefits of the Reorganization, as described throughout
this Proxy/Prospectus, outweigh the short-term reduction in yield.
Based on the factors discussed above, the Board of Directors of each Fund
concluded that the expenses of the Reorganization are outweighed by the benefits
that are anticipated to be derived from the Reorganization.
Terms of the Plan. In addition to the terms of the Plan described earlier
in this Proxy/Prospectus, the following is a summary of certain terms of the
Plan.
-28-
Generally, the Plan sets forth various representations and warranties of
the parties and describes the mechanics of the transaction and includes a number
of other conditions to the completion of the Reorganization, such as the
requirement that good standing certificates be obtained by each party and that
no stop-orders or similar regulatory barriers have been issued by the SEC.
For purposes of valuing assets in connection with the Reorganization, the
assets of CGF will be valued pursuant to the principles and procedures
consistently utilized by CIK, which principles and procedures are also utilized
by CGF in valuing its own assets and determining its own liabilities. As a
result, it is not expected that CIK's valuation procedures as applied to CGF's
portfolio securities will result in any difference from the valuation that would
have resulted from the application of CGF's valuation procedures to such
securities. The net asset value per share of common stock of the Surviving Fund
will be determined in accordance with these principles and procedures, and the
Surviving Fund will certify the computations involved. The net asset value per
share of each Fund will not be adjusted to take into account differences in
unrealized gains and losses.
The Surviving Fund will issue separate certificates or share deposit
receipts for common stock of the Surviving Fund to shareholders of CGF. The
Surviving Fund will deliver these certificates or share deposit receipts
representing shares of common stock of the Surviving Fund to Fleet National Bank
c/o EquiServe, L.P., as the transfer agent and registrar for common stock of the
Surviving Fund. The Surviving Fund will not permit any CGF shareholder to
receive new certificates representing shares of common stock of the Surviving
Fund until the shareholder has surrendered his or her outstanding certificates
representing shares of the common stock of CGF or, in the event of lost
certificates, posted adequate bond. CGF will request its shareholders to
surrender their outstanding certificates representing shares of the common stock
of CGF or post adequate bond therefor. Dividends payable to holders of record of
shares of the Surviving Fund as of any date after the Effective Date and prior
to the exchange of certificates by any shareholder of CGF will be paid to such
shareholder, without interest; however, such dividends will not be paid unless
and until such shareholder surrenders his or her stock certificates of CGF for
exchange.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. UPON
CONSUMMATION OF THE REORGANIZATION, SHAREHOLDERS OF CGF WILL BE FURNISHED WITH
INSTRUCTIONS FOR EXCHANGING THEIR STOCK CERTIFICATES FOR STOCK CERTIFICATES OF
THE SURVIVING FUND.
The net asset value of the shares of the Surviving Fund received by CGF
shareholders plus the cash amounts received upon the purchase of fractional
share interests by the Surviving Fund will equal the net asset value of the CGF
shares exchanged.
The Plan may be terminated at any time prior to the Effective Date by
mutual agreement of each Fund's Board of Directors or by either Fund if any of
the obligations of the other Fund have not been fulfilled or waived or if the
other Fund has made a material and intentional misrepresentation. The Plan will
automatically terminate after September 30, 2001 if the Reorganization has not
been consummated, unless such time is extended by mutual agreement of the Board
of Directors of each Fund.
The Plan may be amended, modified or supplemented by mutual agreement of
CIK and CGF. However, no amendments which would have the effect of changing the
provisions for determining the number of shares issued to CGF shareholders will
be permitted following the special meeting unless those shareholders consent to
the amendment.
Expenses of the Reorganization. In evaluating the proposed Reorganization,
CSAM has estimated the amount of expenses the Funds would incur, including NYSE
listing fees, SEC registration fees, legal and accounting fees and proxy and
distribution costs. The estimated total expenses pertaining
-29-
to the Reorganization are $600,000. For more information about the expenses of
the Reorganization, See "Synopsis--Expenses of the Reorganization."
The expenses of the Reorganization are expected to result in a reduction
in CGF's net asset value per share of approximately $.02504, and a reduction in
CIK's net asset value per share of approximately $.00864.
Tax Considerations. The Plan and Reorganization are conditioned upon the
receipt by the Funds of an opinion from Willkie Farr & Gallagher, counsel to the
Funds, substantially to the effect that, based upon the facts, assumptions and
representations of the parties, for federal income tax purposes:
o the Reorganization will constitute a tax-free "reorganization"
within the meaning of Section 368(a)(1) of the Code, and each
Fund will be "a party to a reorganization" within the meaning
of Section 368(b) of the Code,
o no gain or loss will be recognized by either Fund as a result
of the Reorganization,
o the basis of the assets of CGF in the hands of the Surviving
Fund will be the same as the basis of such assets to CGF
immediately prior to the Reorganization,
o the holding period of the assets of CGF in the hands of the
Surviving Fund will include the period during which such
assets were held by CGF,
o no gain or loss will be recognized by the shareholders of CGF
upon the conversion of their CGF shares into common stock of
the Surviving Fund except with respect to cash received upon
the purchase of fractional share interests by the Surviving
Fund,
o the basis of shares of the Surviving Fund received by each
shareholder of CGF (including any fractional share interests
purchased by the Surviving Fund) will be the same as the basis
of the shares of CGF exchanged therefor,
o the holding period of shares of the Surviving Fund received by
each shareholder of CGF (including any fractional share
interests purchased by the Surviving Fund) will include the
holding period during which the shares of CGF exchanged
therefor were held, provided that at the time of the exchange
the shares of CGF were held as capital assets in the hands of
such shareholder of CGF, and
o cash received for fractional share interests purchased by the
Surviving Fund will generate gain or loss to shareholders
receiving such cash.
While CGF is not aware of any adverse state or local tax consequences of
the proposed Reorganization, it has not requested any ruling or opinion with
respect to such consequences and shareholders may wish to consult their own tax
advisors with respect to such matters.
-30-
Additional Information About the Funds
Description of Securities to Be Issued. The authorized stock of CIK
consists of 100,000,000 shares of common stock, U.S.$0.001 par value. Shares of
CIK entitle its holders to one vote per share. Holders of CIK's common stock are
entitled to share equally in dividends authorized by the Fund's Board of
Directors payable to the holders of such common stock and in the net assets of
CIK available for distribution to holders of such common stock. Shares have
noncumulative voting rights and no conversion, preemptive or other subscription
rights, and are not redeemable. The outstanding shares of common stock of CIK
are fully paid and non-assessable. In the event of liquidation, each share of
common stock is entitled to its proportion of the Fund's assets after payment of
debts and expenses. CIK holds shareholder meetings annually as required by the
rules of the NYSE.
The following table shows information about the common stock of each Fund
as of _____, 2001.
(4)
(3) Amount Issued
(1) (2) Amount held by Fund and Outstanding Exclusive of
Title of Class Amount Authorized for its Own Account Amount Shown Under (3)
-------------- ----------------- ------------------- ----------------------------
CGF Common Stock 100,000,000 None 11,976,699
$0.001 par value
CIK Common Stock, 100,000,000 None 34,708,369
$0.001 par value
The shares of common stock of CGF and CIK are listed and trade on the NYSE
under the symbols "CGF" and "CIK", respectively. As of _______, 2001, the net
asset value per share of CGF common stock was $___, and the market price per
share was $___. As of that same date, the net asset value per share of CIK
common stock was $___, and the market price per share was $___.
Discount to Net Asset Value. Shares of closed-end investment companies,
such as the Funds, have frequently traded at a discount from net asset value.
This characteristic is a risk separate and distinct from the risk that the
Funds' net asset values may decrease, and this risk may be greater for
shareholders expecting to sell their shares in a relatively short period. THE
SHARES OF COMMON STOCK OF THE FUNDS SHOULD THUS BE VIEWED AS BEING DESIGNED
PRIMARILY FOR LONG-TERM INVESTORS AND SHOULD NOT BE CONSIDERED A VEHICLE FOR
TRADING PURPOSES.
During the period since the inception of the Funds, the common stock of
both Funds has generally traded at a discount to net asset value, although CIK
has frequently traded at a premium to net asset value. It is not possible to
state whether shares of the Surviving Fund will trade at a premium or discount
to net asset value following the Reorganization, or the extent of any such
premium or discount. The Directors of both Funds have regularly considered, and
the Directors of the Surviving Fund will continue to consider, the respective
Fund's market price discount and the effect of the discount on the Surviving
Fund and its shareholders.
-31-
Per Share Data for Credit Suisse Asset Management
Strategic Global Income Fund, Inc.
Common Stock Traded on the NYSE
Premium/(Discount)
Market Price Net Asset Value as % of NAV
-------------------- -------------------- --------------------
Period High Low High Low High Low
- ------ ------- ------- ------- ------- ----- -----
1998
First Quarter ........ $10.625 $10.062 $11.030 $10.640 (3.31)% (6.50)%
Second Quarter ....... 10.875 9.806 10.990 10.740 (4.94) (7.02)
Third Quarter ........ 10.125 7.875 10.720 9.240 (4.84) (12.81)
Fourth Quarter ....... 8.875 7.806 9.420 9.080 (4.26) (11.89)
1999
First Quarter ........ 8.682 8.000 9.240 9.050 (5.67) (11.20)
Second Quarter ....... 8.875 8.375 9.530 9.190 (5.41) (11.46)
Third Quarter ........ 9.186 7.186 9.320 8.910 .22 (17.23)
Fourth Quarter ....... 7.310 6.500 8.940 8.170 (15.05) (25.20)
2000
First Quarter ........ 7.375 6.558 8.430 8.290 (10.71) (18.67)
Second Quarter ....... 7.310 6.806 8.160 7.830 (8.25) (14.70)
Third Quarter ........ 7.434 7.125 7.970 7.700 (4.89) (9.25)
Fourth Quarter ....... 7.310 6.434 7.700 6.950 (3.57) (13.45)
2001
First Quarter
(through __/__/01) .....
-32-
Per Share Data for Credit Suisse Asset Management Income Fund, Inc.
Common Stock Traded on the NYSE
Premium/(Discount)
Market Price Net Asset Value as % of NAV
-------------------- -------------------- --------------------
Period High Low High Low High Low
- ------ ------- ------- ------- ------- ----- -----
1998
First Quarter ........ $8.875 $8.062 $8.530 $8.380 4.04% (2.32)%
Second Quarter ....... 8.500 8.125 8.500 8.420 (0.03) (3.68)
Third Quarter ........ 8.625 6.875 8.430 7.840 1.29 (5.74)
Fourth Quarter ....... 8.000 7.062 7.860 7.630 2.95 (5.35)
1999
First Quarter ........ 7.875 7.250 7.800 7.610 0.16 (4.22)
Second Quarter ....... 7.682 7.250 7.800 7.510 0.30 (3.85)
Third Quarter ........ 7.875 6.186 7.630 7.300 4.17 (12.67)
Fourth Quarter ....... 6.625 5.558 7.340 7.180 (8.87) (20.27)
2000
First Quarter ........ 6.625 5.750 7.280 7.040 (11.95) (20.58)
Second Quarter ....... 6.558 5.750 6.960 6.660 (3.27) (16.49)
Third Quarter ........ 7.000 6.250 6.660 6.350 8.53 (6.16)
Fourth Quarter ....... 6.625 5.375 6.350 5.610 5.38 (4.36)
2001
First Quarter
(through __/__/01) ...
Capitalization. The following table shows on an unaudited basis the
capitalization of CGF and CIK as of December 31, 2000 and on a pro forma basis
as of that same date giving effect to the Reorganization(1):
Pro Forma
CGF CIK Adjustments Combined
----------- ------------ ----------- ------------
Net assets .................. $85,331,563 $197,817,004 $283,148,567
Net asset value per share (2) $ 7.12 $ 5.70 5.70
Shares outstanding (3) ...... 11,976,699 34,708,369 14,970,450 49,678,819
- ----------
(1) Assumes the Reorganization had been consummated on December 31, 2000, and
is for information purposes only. No assurance can be given as to how many
shares of CIK common stock shareholders of CGF will receive on the date
the Reorganization takes place, and the foregoing should not be relied
upon to reflect the number of shares of CIK common stock that actually
will be received on or after such date.
(2) Does not reflect estimated reorganization related expenses of $600,000,
which will be allocated equally between CGF and CIK.
(3) Assumes the issuance of 14,970,450 shares in exchange for the net assets
of CGF. The number of shares issued was based on the net asset value of
each Fund, on December 31, 2000.
Dividends and Other Distributions. Each Fund pays dividends of
substantially all its net investment income monthly and makes distributions at
least annually of any net short-term capital gains and net long-term realized
capital gains (the excess of net long-term capital gains over net short-term
capital losses, including capital loss carryforwards). Dividends and
distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with U.S. Federal income tax regulations which may differ from
generally accepted accounting principles. These differences are principally due
to the timing of the recognition of defaulted bond interest and to differing
book and tax treatment for foreign currency transactions.
-33-
Permanent book and tax differences relating to shareholder distributions
may result in reclassifications to undistributed net investment income (loss),
undistributed realized gain (loss) and paid in capital.
If the Reorganization is approved by each Fund's shareholders, then as
soon as practicable before the Effective Date, each Fund will pay its
shareholders a cash distribution of all undistributed 2001 net investment
income. It is expected that any undistributed realized net capital gains will be
offset through the utilization of capital loss carryforwards prior to the
Effective Date.
Unrealized Capital Gains/Losses. As of December 31, 2000, CGF had
approximately $16.9 million of unrealized capital losses, representing
approximately 20% of its net assets. As of that same date, CIK had approximately
$75.8 million of unrealized capital losses, representing approximately 38% of
its net assets. As of December 31, 2000, CGF had approximately $6.9 million of
capital loss carryforwards, while CIK had approximately $10.8 million of capital
loss carryforwards.
CGF will pay its shareholders a cash distribution of substantially all
undistributed 2001 net investment income prior to the Effective Date. It is
expected that any undistributed realized net capital gains will be offset
through the utilization of capital loss carryforwards prior to the Effective
Date.
Portfolio Valuation. Investments of each Fund are stated at value in each
Fund's financial statements. Market values for fixed-income securities are
valued at the latest quoted bid price in the over-the-counter market. However,
fixed-income securities may be valued on the basis of prices provided by a
pricing service which are based primarily on institutional size trading in
similar groups of securities. Other securities listed on an exchange are valued
at the latest quoted sales prices on the day of valuation or, if there were no
sale on such day, the last bid price quoted on such day. Quotations of foreign
currency prices denominated in a foreign currency are converted to U.S. dollars
at the current exchange rate on the valuation date. Securities purchased with
remaining maturities of 60 days or less are valued at amortized cost, if it
approximates market value. Securities for which market quotations are not
readily available (including restricted investments which are subject to
limitations as to their sale) are valued at fair value as determined in good
faith by the board of directors. In determining net asset value, consideration
is given to cost, operating and other financial data.
For purposes of valuing assets in connection with the Reorganization, the
assets of CGF will be valued pursuant to the principles and procedures
consistently utilized by CIK, which principles and procedures are also utilized
by CGF in valuing its own assets and determining its own liabilities. As a
result, it is not expected that CIK's valuation procedures as applied to CGF's
portfolio securities will result in any difference from the valuation that would
have resulted from the application of CGF's valuation procedures to such
securities.
Portfolio Transactions. CSAM will select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Funds. In
connection with the selection of brokers and dealers, the primary objective is
to seek to obtain the execution of each investment transaction at a price and
commission which provides the most favorable total cost or proceeds reasonably
obtainable under the circumstances. For a more detailed discussion of the Funds'
brokerage allocation practices, see the SAI under "Portfolio Transactions."
Dividend Reinvestment and Cash Purchase Plan. Each Fund operates a
Dividend Reinvestment and Cash Purchase Plan, the InvestLink Program, or the
"Program", sponsored and administered by Fleet National Bank, c/o EquiServe,
L.P., pursuant to which Fund dividends and distributions, net of any applicable
U.S. withholding tax, are reinvested in shares of the Fund. Fleet National Bank
c/o EquiServe, L.P., serves as the Program Administrator for the shareholders in
administering the Program.
-34-
An interested shareholder may join the Program at any time by submitting a
completed Authorization Form to the Program Administrator. Such a form can be
obtained by contacting the Administrator at 1-800-730-6001. If a participant
selects the dividend reinvestment option, automatic investment of dividends
generally will begin with the next dividend payable after the Program
Administrator receives his enrollment form. Once in the Program, a person will
remain a participant until he terminates his participation or sells all shares
held in his Program account, or his account is terminated by the Program
Administrator. A participant may change his investment options at any time by
requesting a new enrollment form and returning it to the Program Administrator.
A shareholder whose shares are held by a broker or nominee that does not
provide a dividend reinvestment program may be required to have his shares
registered in his own name to participate in the Program. The receipt of
dividends and distributions in stock under the Program will not relieve
participants of any income tax (including withholding tax) that may be payable
on such dividends or distributions.
If the Board of Directors of a Fund declares an income dividend or a
capital gains distribution payable either in that Fund's common stock or in
cash, as shareholders may have elected, nonparticipants in the Program will
receive cash and participants in the Program who have opted for the dividend
reinvestment option will receive shares of common stock of the Fund purchased on
the open market by the Program Administrator. The number of shares of common
stock to be purchased for a participant depends on the amount of his dividends,
cash payments or bank account or payroll deductions, less applicable fees and
commissions, and the purchase price of the shares. Such purchases will be made
by participating brokers as agent for the participants using normal cash
settlement practices. All shares of common stock purchased through the Program
will be allocated to participants as of the settlement date, which is usually
three Business Days from the purchase date.
Participants in the Program also have the option of making additional cash
payments, or bank account deductions, to the Program Administrator for the
purchase of shares of common stock of the Fund, in any amount from $100 up to
$100,000 annually.
A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. All
optional cash deposit investments will be subject to a service charge. Sales
processed through the Program will have a service fee deducted from the net
proceeds, after brokerage commissions. In addition to these transaction charges,
participants will be assessed per share processing fees which include brokerage
commissions. Participants will not be charged any fee for reinvesting dividends.
All correspondence concerning the Program should be directed to the
Program Administrator at Fleet National Bank c/o EquiServe, L.P., InvestLink
Program, P.O. Box 8040, Boston, MA 02266-8040. For a more complete description
of the Plan, see "Dividend Reinvestment and Cash Purchase Plan" in the SAI.
Corporate Governance Provisions. Both Funds are Maryland corporations and
have similar charter and by-law provisions.
Special Voting Provisions and Requirements. Certain provisions of the
Funds' By-laws could have the effect of limiting the ability of other entities
or persons to acquire control of the Fund, to cause it to engage in certain
transactions or to modify its structure. Each Fund's By-laws contain provisions
the effect of which is to prevent matters, including nominations of directors,
from being considered at shareholders' meetings where the Fund has not received
sufficient prior notice of the matters. Each Fund's By-laws provide, among other
things, that:
-35-
o a majority of the outstanding capital stock of such Fund is
required to request a special meeting of shareholders;
o matters to be discussed and acted upon at special meetings of
the shareholders must be specified in the call for the
meeting;
o certain advance notice requirements must be met in order for
shareholders to submit proposals at meetings of the
shareholders and for nominations by shareholders for election
to the Board of Directors; and
o the power to amend the Bylaws is reserved to the Board of
Directors, except as otherwise required by the Investment
Company Act.
These provisions could have the effect of depriving shareholders of an
opportunity to sell their shares at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of either Fund in a
tender offer or similar transaction. In the opinion of each Fund's Board of
Directors, however, these provisions offer several possible advantages,
including:
o they may require persons seeking control of either Fund to
negotiate with its management regarding the price to be paid
for the shares required to obtain such control,
o they promote continuity and stability, and
o they enhance each Fund's ability to pursue long-term
strategies that are consistent with its investment objectives.
The full text of CIK's and CGF's Articles of Incorporation and Bylaws are
on file with the SEC. The CIK charter and Bylaws, as may be amended from time to
time, will govern the Surviving Fund after the Reorganization.
Interest of Certain Persons. CSAM may be deemed to have an interest in the
Plan and the Reorganization because it provides separate advisory services to
CGF and CIK. CSAM receives compensation from CGF and CIK for services it
provides pursuant to separate advisory agreements. The terms and provisions of
these agreements and the new Investment Advisory Agreement to be entered into
between the Surviving Fund and CSAM upon the consummation of the reorganization
are described under "Proposal 2--Approval of New Investment Advisory Agreement
with CSAM" and in the SAI. Future growth of assets of the Surviving Fund, if
any, can be expected to increase the total amount of fees payable to CSAM.
However, assuming Proposal 2 is approved, CIK's investment advisory fee will be
based upon the lower of the average weekly stock price (market value) of its
outstanding shares or its average weekly net assets, and, as a result, whenever
CIK's shares trade at a discount, the investment advisory fee payable to CSAM by
CIK would be reduced. For example, CIK's average market value was $210,920,089
and its average weekly net assets was $251,048,249 during 2000. If the new fee
structure had been in place as of January 1, 2000, the investment advisory fee
payable to CSAM for that year would have been $1,067,328 (instead of $1,148,844
under the existing arrangement), or .43% of net assets. For more information
about the reduction in CSAM's aggregate advisory fees, see "Proposal 2--Approval
of New Investment Advisory Agreement with CSAM."
-36-
Management of the Funds
Directors and Principal Officers. The business and affairs of each Fund
are managed under the direction of that Fund's Board of Directors, and the day
to day operations are conducted through or under the direction of the officers
of that Fund. All the Directors and Officers of CIK are also Directors and
Officers of CGF.
Directors and Executive Officers of CIK and CGF are as follows:
Shares Beneficially
Name and Address Owned on _______, 2001(2) Position with the Fund
- ----------------------------------- ------------------------ -------------------------------
CGF CIK
James P. McCaughan (47)* ............... 0 0 Director and Chairman of the
Credit Suisse Asset Management Board
466 Lexington Avenue, 16th Floor
New York, New York 10017
William W. Priest (59)* ................ 500 500 Director
Credit Suisse Asset Management
466 Lexington Avenue, 16th Floor
New York, New York 10017
Prof. Enrique R. Arzac (59)(1) ......... Director
Columbia University
Graduate School of Business
New York, New York 10027
Lawrence J. Fox (57)(1) ................ 13,737 11,664 Director
110 PNB Building
Broad and Chestnut Streets
Philadelphia, Pennsylvania
19107
James S. Pasman, Jr. (70)(1) ........... 1,433 1,000 Director
29 The Trillium
Pittsburgh, Pennsylvania 15238
Richard J. Lindquist (40) .............. 1,333 1,000 President and Chief Investment
Credit Suisse Asset Management Officer
466 Lexington Avenue
New York, New York 10017
Michael A. Pignataro (41) .............. 1,000 1,000 Vice President and Chief
Credit Suisse Asset Management Financial Officer and Secretary
466 Lexington Avenue
New York, New York 10017
-37-
Shares Beneficially
Name and Address Owned on _______, 2001(2) Position with the Fund
- ----------------------------------- ------------------------ -------------------------------
CGF CIK
Hal Liebes, Esq. (36) .................. 0 150 Senior Vice President
Credit Suisse Asset Management
466 Lexington Avenue
New York, New York 10017
Gregg Diliberto (45) ................... 0 0 Investment Officer of CGF
Credit Suisse Asset Management
466 Lexington Avenue
New York, New York 10017
Suzanne Moran (35) ..................... 0 0 Investment Officer
Credit Suisse Asset Management
466 Lexington Avenue
New York, New York 10017
- ----------
(1) Indicates Non-interested Director and member of audit committee.
(2) Each Director and Officer listed has sole voting and investment
power with respect to the shares shown.
* Messrs. McCaughan and Priest are interested persons of CGF and CIK
by virtue of their position as an officer of CSAM.
Each Director and all the directors and executive officers, as a group, of
each of CGF and CIK, as of _____, 2001 owned less than 1% of the outstanding
shares of CGF and CIK, respectively.
James P. McCaughan has been a Managing Director and the Chief Executive
Officer of CSAM since April 2000. Prior to joining CSAM, he was President and
Chief Operating Officer of Oppenheimer Capital from April 1998 to December 1999.
He was President and Chief Executive Officer of UBS Asset Management (New York)
from October 1996 to March 1998 and Functional Advisor, Institutional Asset
Management of Union Bank of Switzerland from September 1994 to October 1996. He
is a Director of five other CSAM-advised investment companies.
William W. Priest, Jr., has been Chairman and Managing Director of CSAM
from May 2000 to February 2001. Mr. Priest was Chief Executive Officer and
Managing Director of CSAM from 1990 to 2000. He is a Director of fifty-three
other CSAM-advised investment companies.
Dr. Enrique R. Arzac was a Professor of Finance and Economics at the
Graduate School of Business, Columbia University since 1971. Dr. Arzac is also a
Director of six other CSAM-advised investment companies, and he is a Director of
The Adams Express Company and Petroleum and Resources Corporation.
Lawrence J. Fox has been a Managing Partner and Chairman of the
Professional Responsibility Committee of the law firm of Drinker Biddle & Reath
since January 1992. He has been a partner of Drinker Biddle & Reath since 1976.
Mr. Fox is also a Director of one other CSAM-advised investment company.
-38-
James S. Pasman, Jr. was the President and Chief Operating Officer of
National InterGroup, Inc. from April 1989 to March 1991. Mr. Pasman is also a
Director of forty-seven other CSAM-advised investment companies and is a
director of ADT, Ltd. and a trustee of BT Insurance Funds Trust.
Richard J. Lindquist has been a Managing Director of CSAM and a Vice
President of each Fund since April 1995.
Michael A. Pignataro has been a Director of CSAM since January 2001. He
was a Vice President of CSAM from December 1995 to December 2000. He was an
Assistant Vice President and the Chief Administrative Officer for Investment
Companies of CSAM from September 1989 to December 1995. Mr. Pignataro is also an
executive officer of other CSAM-advised investment companies.
Hal Liebes has been a Managing Director and General Counsel of CSAM since
December 1999. He was Director and General Counsel of CSAM from March 1997 to
December 1999. Mr. Liebes was Vice President and Counsel for Lehman Brothers,
Inc. from June 1996 to March 1997, Vice President and Legal Counsel for CSAM
from June 1995 to June 1996 and Chief Compliance Officer for CS First Boston
Investment Management from March 1994 to June 1995. He is also an executive
officer of other CSAM-advised investment companies.
Gregg Diliberto has been a Managing Director of CSAM since May 1995. He
was a Senior Vice President of CSAM from January 1992 to May 1995.
Suzanne Moran has been a Director of CSAM since January 2001. Prior to
that, she was a Vice President of CSAM from December 1996 to December 2000. She
was Assistant Vice President and Fixed Income Trader of CSAM from May 1995 to
December 1996 and Assistant Vice President and Portfolio Analyst at CS First
Boston from August 1991 to April 1995.
Each Fund pays each of its directors who is not a director, officer or
employee of CSAM or any affiliate thereof an annual fee of $12,500 plus $1,000
for each meeting attended. In addition, each Fund reimburses those directors for
travel and out-of-pocket expenses incurred in connection with meetings. The
aggregate remuneration paid to directors by each Fund during the fiscal year
ended December 31, 2000 was $49,500.
The Articles of Incorporation and By-laws of each Fund provide that the
Fund will indemnify directors and officers and may indemnify employees or agents
of the Fund against liabilities and expenses incurred in connection with
litigation in which they may be involved because of their positions with the
Fund to the fullest extent permitted by law. In addition, each Fund's Articles
of Incorporation provide that the Fund's directors and officers will not be
liable to shareholders for money damages, except in limited instances.
Each of the Independent Directors of the Funds is also party to an
Indemnification Agreement with the Fund or Funds as to which he serves as a
director providing for contractual rights of indemnity and advancement of
expenses. However, nothing in the Articles of Incorporation, the By-laws or the
Indemnification Agreements of either Fund protects or indemnifies a director,
officer, employee or agent against any liability to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office. Insurance obtained by either Fund shall not protect or purport
to protect officers or directors or the investment adviser of that Fund against
any liability to the Fund or its shareholders to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of their obligations and duties.
-39-
Investment Manager. CSAM, located at 466 Lexington Avenue, 16th Floor, New
York, New York 10017-3174, provides investment advisory services to both CGF and
CIK under separate advisory agreements.
CSAM is an indirect wholly-owned U.S. subsidiary of Credit Suisse Group.
Credit Suisse Group is a global financial services company providing a
comprehensive range of banking and insurance products. Active on every continent
and in all major financial centers, Credit Suisse Group comprises five business
units - Credit Suisse Asset Management (asset management), of which CSAM is a
member; Credit Suisse First Boston (investment banking); Credit Suisse Private
Banking (private banking); Credit Suisse (retail banking); and Winterthur
(insurance). Credit Suisse Group has approximately $680 billion of global assets
under management and employs approximately 62,000 people worldwide. The
principal business address of Credit Suisse is Paradeplatz 8, CH 8070, Zurich,
Switzerland. Credit Suisse Asset Management companies managed approximately $94
billion in the U.S. and $298 billion globally as of December 31, 2000.
CSAM's sole member is CSAM Americas Holding Corp. located at 466 Lexington
Avenue, New York, NY 10017, which is wholly-owned by Credit Suisse Asset
Management Holding Corp., of the same address, which in turn is wholly-owned by
Credit Suisse First Boston, Inc., located at 11 Madison Avenue, New York, NY
10010, which is indirectly wholly-owned by Credit Suisse Group.
For information regarding a proposed new investment advisory agreement
with CSAM, see "Proposal 2: Approval of New Investment Advisory Agreement."
CSAM has sole investment discretion for each Fund's assets under the
supervision of that Fund's Board of Directors and in accordance with each Fund's
stated policies. CSAM will select investments for each Fund and will place
purchase and sale orders on behalf of the Funds. For information about each
Fund's investment advisory fees, including amounts paid for the fiscal year
2000, see "Synopsis--Fees and Expenses--The Strategic Global Income Fund" and
"Synopsis--Fees and Expenses--The Income Fund."
Executive Officers of CSAM
The following chart sets forth information with respect to name, address
and principal occupations of the executive officer(s) and managing member(s) of
CSAM. (Unless otherwise noted, the person's position at CSAM constitutes his/her
principal occupation.) Each person's address is 466 Lexington Avenue, New York,
New York 10017.
- --------------------------------------------------------------------------------
Name Position with CSAM and Principal Occupation
- --------------------------------------------------------------------------------
James P. McCaughan Chief Executive Officer, Managing Director and Chairman
of the Management Committee
- --------------------------------------------------------------------------------
G. Moffett Cochran President, Managing Director and Member of the
Management Committee
- --------------------------------------------------------------------------------
Martin Jaffe Chief Financial Officer, Managing Director and Member of
the Management Committee
- --------------------------------------------------------------------------------
Laurence R. Smith Chief Investment Officer, Managing Director and Member
of the Management Committee
- --------------------------------------------------------------------------------
Elizabeth B. Dater Head of Emerging Growth Group, Managing Director and
Member of the Management Committee
- --------------------------------------------------------------------------------
Christopher F. Corapi Head of Equity Research, Managing Director and Member of
the Management Committee
- --------------------------------------------------------------------------------
Sheila Scott Managing Director and Member of the Management Committee
- --------------------------------------------------------------------------------
-40-
In addition, Suzanne Moran, the Funds' Investment Officer, and Michael A.
Pignataro, the Funds' Vice President, Chief Financial Officer and Secretary, are
also employees of CSAM.
Portfolio Management. Richard J. Lindquist, who has been a Managing
Director of CSAM since 1997, is primarily responsible for the management of each
Fund's assets. Mr. Lindquist joined CSAM in May 1995 when CSAM succeeded CS
First Boston Asset Management as the Fund's investment adviser, with whom he was
previously employed, and became President and Chief Investment Officer of each
Fund in November 1996. Mr. Lindquist has served each Fund in various positions
since its inception.
Gregg Diliberto, who has been a Managing Director of CSAM since May 1995,
shares responsibility for the management of CGF's investments in emerging
markets. Mr. Diliberto has been an Investment Officer of CGF since 1997.
If the Reorganization is consummated, it is anticipated that Richard J.
Lindquist and Gregg Diliberto will continue as portfolio managers of the
Surviving Fund. For more information regarding Messrs. Lindquist and Diliberto,
see "--Directors and Principal Officers."
Administrator. The Fund employs Brown Brothers Harriman & Co., 40 Water
Street, Boston, MA 02109, under a service agreement dated as of February 27,
1999, to provide administration and accounting services to each Fund. The
services provided by Brown Brothers Harriman under the service agreement are
subject to the supervision of the directors and officers of each Fund, and
include day to day administration of certain matters such as maintenance of its
records, preparation of financial reports and tax filings.
Brown Brothers Harriman is a private bank organized as a partnership under
the laws of the states of New York, Pennsylvania and Massachusetts. Brown
Brothers Harriman provides corporate management and administrative services to
investment companies that at December 31, 2000 had approximately $13 billion of
net assets.
Each Fund pays Brown Brothers Harriman a fee based on average net assets.
For the fiscal year ended December 31, 2000, Brown Brothers Harriman earned
$84,784 and $170,550 for administrative services rendered to CGF and CIK,
respectively.
Brown Brothers Harriman is also the custodian of each Fund.
Estimated Expenses. CSAM and Brown Brothers Harriman 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
Funds, as well as the fees of all directors of the Funds who are affiliated with
those companies or any of their affiliates.
The Funds pay all other expenses incurred in its operation including,
among other things:
o fees of legal counsel and independent accountants
o costs of printing proxies, stock certificates and shareholder
reports
o charges of the custodians, any sub-custodians and the transfer
and dividend-paying agent
-41-
o expenses in connection with the InvestLink-SM- Program
o Securities and Exchange Commission fees
o fees and expenses of unaffiliated directors
o accounting and pricing costs
o membership fees in trade associations
o fidelity bond coverage for officers and employees
o directors' and officers' errors and omissions insurance
coverage
o interest, brokerage costs and stock exchange fees
o taxes, stock exchange listing fees and expenses
o expenses of qualifying the shares for sale in various states
o litigation and other extraordinary or non-recurring expenses
Custodian. Brown Brothers Harriman & Co., 40 Water Street, Boston, MA
02109, is the custodian for the Funds' assets and also serves as the accounting
agent of each Fund.
Transfer Agent and Registrar. Fleet National Bank, P.O. Box 1865, Mailstop
45-02-62, Boston, Massachusetts 02105-1865 acts as the transfer agent and
registrar of each Fund.
Proxy Solicitor. Each Fund has retained Georgeson Shareholder
Communications, Inc., a proxy solicitation firm, to assist the Funds in
soliciting proxies from shareholders. Georgeson Shareholder Communications, Inc.
will contact individual shareholders of record, beneficial owners and banks,
brokers and other nominee shareholders. In return for its services Georgeson
Shareholder Communications, Inc. is entitled to receive up to $20,000 per Fund
plus per call charges and reimbursement for its reasonable expenses.
Control Persons and Principal Holders of Securities. The following table
shows certain information based on filings made with the SEC concerning persons
who may be deemed beneficial owners of 5% or more of the shares of common stock
of either Fund because they possessed or shared voting or investment power with
respect to the shares of that Fund:
Number of shares Percent of
Fund Name and Address Beneficially Owned Shares
- ---- -------------------------------------- ------------------ ------
CGF Ron Olin Investment Management Company 1,960,901 16.4%(1)
One West Pack Square, Suite 777
Asheville, NC 28801
Ronald G. Olin 1,803,700 15.1%(2)
One West Pack Square, Suite 777
Asheville, NC 28801
CIK None Reported _________ ________
- ----------
(1) Based on a Schedule 13-G filed with the SEC on January 10, 2001.
-42-
(2) Based on a Schedule 13-G filed with the SEC on December 8, 2000.
It is not possible to calculate the ownership of the outstanding shares of
common stock of the Surviving Fund by any of the persons listed above after
consummation of the Reorganization because the Funds are unable to predict what
the net asset value of either Fund will be on the Effective Date.
Experts
Each Fund has selected PricewaterhouseCoopers LLP, Two Commerce Square,
Suite 1700, 2001 Market Street, Philadelphia, PA 19103, as its independent
public accountants who will audit its financial statements. The following table
shows the aggregate fees PricewaterhouseCoopers LLP billed to the Funds and to
CSAM for its professional services rendered for the fiscal year ended December
31, 2000.
------------------------------------------------------------
CIK CGF CSAM
--- --- ----
------------------------------------------------------------
Audit Fees
------------------------------------------------------------
Financial Information Systems
Design and Implementation Fees
------------------------------------------------------------
All Other Fees
------------------------------------------------------------
Required Vote
As the Reorganization is expected to result in the issuance of a number of
shares of CIK in excess of 20% of CIK's outstanding shares of common stock, the
NYSE listing rules (but not Maryland law) require that the Reorganization be
approved by the shareholders of CIK. The shareholder vote required by the NYSE
rules is a majority of the votes cast by CIK shareholders, provided also that
the total number of votes cast represents at least a majority of the outstanding
shares of common stock of CIK. Under Maryland law and CGF's charter, a majority
of the outstanding shares of CGF must approve Proposal 1. To facilitate
compliance with Section 2-419 of the MGCL (which applies to transactions between
corporations with common directors), any shares voted in favor of the
Reorganization by the Directors of the Funds or CSAM will not be counted in
determining whether the required vote has been obtained on Proposal 1. Subject
to such approval, the Reorganization is currently scheduled to be consummated
promptly after the meetings. The Board of Directors of each Fund recommends that
the shareholders of each Fund vote in favor of this Proposal 1.
Legal Proceedings
There are currently no material legal proceedings to which the Funds are a
party.
Legal Opinions
Certain legal matters in connection with the Reorganization will be passed
upon for the Funds by Willkie Farr & Gallagher. Willkie Farr & Gallagher will
rely as to certain matters of Maryland law on the opinion of Venable, Baetjer
and Howard, LLP.
-43-
PROPOSAL 2 (CREDIT SUISSE ASSET MANAGEMENT INCOME FUND SHAREHOLDERS
ONLY): APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT
Background
CSAM currently acts as CIK's investment adviser pursuant to an investment
advisory agreement between CSAM and the Fund dated June 13, 1995, which was last
approved by CIK's shareholders on June 13, 1995. See "Proposal 1 (Both Funds):
Approval of the Agreement and Plan of Reorganization Pursuant to which CIK Will
Acquire All the Assets and Liabilities of CGF--Synopsis--Fees and Expenses of
CIK."
On ___________, 2001, at an in-person meeting of the Board specifically
called for this purpose, the Board of Directors of the Fund, including the
Independent Directors, unanimously approved a new investment advisory agreement
(the "New Investment Advisory Agreement") conditional upon approval of the
Reorganization and recommended that it be approved by the shareholders of the
Fund, to become effective upon the consummation of the Reorganization. The New
Investment Advisory Agreement will be substantially the same as the current
investment advisory agreement except that the investment advisory fee will be
based upon a percentage of the lower of the average weekly stock price (market
value) of the Fund's outstanding shares or its average weekly net assets.
For the fiscal year ended December 31, 2000, CIK paid no brokerage
commissions to affiliated brokers. See "Portfolio Transactions" in the SAI for
more information.
A description of the proposed New Investment Advisory Agreement is
provided below under "--The New Investment Advisory Agreement." This description
is only a summary and is qualified by reference to the form of investment
advisory agreement attached hereto as Exhibit B, which is marked to show changes
from the current investment advisory agreement for CIK.
Board Considerations; Reasons for the New Investment Advisory Agreement
At the __________, 2001 board meeting, CSAM proposed changing the basis
upon which the fee is calculated. Changing the methodology by which the current
investment advisory fees are calculated as described above (that is, based on
the lower of the average weekly stock price (market value) or average weekly net
assets) would reduce investment advisory fees whenever the Surviving Fund trades
at a discount to net asset value, thereby lowering its overall expense ratio.
In addition, the Board of Directors believes that calculating the
investment advisory fee with reference to the stock price (market value) when
the Fund's shares are trading at a discount will more closely align the
interests of CSAM with the interests of the Fund's shareholders in enhancing the
Fund's market value, recognizing that CSAM does not and cannot control the
discount at which Fund shares trade.
The Board of Directors also considered and evaluated the proposed New
Investment Advisory Agreement and determined that, except for the new fee
structure, the New Investment Advisory Agreement is not materially different
from the current investment advisory agreement. CSAM has confirmed that the
level and quality of the services provided to the Fund will not change if the
New Investment Advisory Agreement is approved by the Fund's shareholders.
-44-
Information Concerning Credit Suisse Group and CSAM
For information about the Fund's investment adviser, see "Proposal 1 (Both
Funds): Approval of the Agreement and Plan of Reorganization pursuant to which
CIK will Acquire all the Assets and Liabilities of CGF--Management of the
Funds."
Description of Current Investment Advisory Agreement
Under the current investment advisory agreement, CSAM provides the Fund
with ongoing investment advisory services. CSAM, subject to the general
supervision of the Directors and in accordance with the investment objectives,
policies and restrictions of the Fund, manages the investment operations of the
Fund and the composition of the portfolio of securities and investments
(including cash) belonging to the Fund. It is the responsibility of CSAM to make
investment decisions for the Fund and to place purchase and sale orders for
portfolio transactions. CSAM furnishes a continuous investment program for the
Fund, maintains books and records with respect to its securities transactions,
and pays all expenses involved in management of the Fund's investments. CSAM
pays the salaries, fees and expenses of directors or officers of the Fund who
are officers or employees of CSAM. The current agreement provides that CSAM
shall not be liable to the Fund or any stockholder for anything done or omitted
by it except acts or omissions involving willful misfeasance, bad faith, gross
negligence or reckless disregard of duties imposed upon it pursuant to the
current agreement, or for any losses that may be sustained in the purchase,
holding or sale of securities.
For a description of investment advisory fees paid by CIK, see "Proposal 1
(Both Funds): Approval of the Agreement and Plan of Reorganization Pursuant to
which CIK Will Acquire All the Assets and Liabilities of CGF--Synopsis--Fees and
Expenses--CIK." For the fiscal year ended December 31, 2000, CSAM earned
$1,148,861 for advisory services rendered to CIK.
The New Investment Advisory Agreement
Shareholders are being asked to approve or disapprove the New Investment
Advisory Agreement. The New Investment Advisory Agreement is substantially the
same as the current investment advisory agreement except for modification of the
basis upon which the fee is calculated, that is, the lower of stock price or net
assets.
The New Investment Advisory Agreement will be dated as of the date
shareholder approval is granted. The agreement will be in effect for an initial
two-year term, ending on the second anniversary of the date on which shareholder
approval is granted. The agreement may continue thereafter from year to year
only if specifically approved at least annually by either (i) the Board of
Directors of the Fund or (ii) the "vote of a majority of the outstanding voting
securities" of the Fund, and in either case, the vote of a majority of the
Independent Directors, cast in person at a meeting called for such purpose.
The implementation of the New Investment Advisory Agreement is conditional
upon approval of the Reorganization.
Differences Between the Current and the New Investment Advisory Agreement
Under the current investment advisory agreements, CSAM is entitled to
quarterly investment advisory fees computed at an annual rate of 0.50% of the
Fund's average weekly net assets. Under the New Investment Advisory Agreement,
CSAM will be entitled to receive quarterly investment advisory fees computed at
an annual rate of 0.50% of the Fund's average weekly market value or net assets
(whichever is lower).
-45-
The following table sets forth the investment advisory fee paid for the
fiscal year ended December 31, 2000 under the current investment advisory
agreement and the amount that would have been paid had the New Investment
Advisory Agreement been in effect for CIK for the fiscal year ended December 31,
2000 taking into consideration the new fee structure. Also shown is the
difference between the two amounts in dollars and as a percentage of the fee
paid under the existing agreement.
Fee Paid to CSAM Under Fee Payable Under New
Current Agreement Agreement Reduction in Fee
---------------------- --------------------- ----------------
$1,148,861 $1,067,328 $81,533 .0709%
Required Shareholder Vote
Approval of the New Investment Advisory Agreement requires the affirmative
vote of a "majority of the outstanding voting securities" of the Fund as defined
under "General".
IN THE JUDGMENT OF THE BOARD OF DIRECTORS OF THE FUND, THE NEW INVESTMENT
ADVISORY AGREEMENT SERVES THE BEST INTERESTS OF THE SURVIVING FUND AND ITS
SHAREHOLDERS, AND THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
PROPOSAL 2.
PROPOSAL 3 (CREDIT SUISSE ASSET MANAGEMENT INCOME FUND SHAREHOLDERS
ONLY): ELECTION OF DIRECTORS
Background
At the Meeting, five (5) Directors will be elected to hold office until
the next annual meeting of shareholders following their election and until their
respective successors are elected and qualified. It is the intention of the
person named in the accompanying Proxy to vote for the election of Enrique R.
Arzac, Lawrence J. Fox, James S. Pasman, Jr., James P. McCaughan and William W.
Priest. All of the nominees are currently members of the Board of Directors.
Messrs. Arzac, Fox, Pasman and Priest were re-elected as Directors of CIK at the
2000 annual shareholders' meeting. Mr. McCaughan was appointed a Director and
the Chairman of the Board at a meeting of the Board held on February 5, 2001.
Each of the nominees has consented to be named in this Proxy Statement and to
serve as a Director if elected.
The Board of Directors has no reason to believe that any of the nominees
named above will become unavailable for election as a Director, but if that
should occur before the Meeting, Proxies will be voted for such persons as the
Board may recommend.
If the Reorganization is consummated, the Directors of CIK will be the
Directors of the Surviving Fund.
For information about the Directors of CIK, each of whom has been
nominated for re-election to the Board of Directors, see "Proposal 1(Both
Funds): Approval of the Agreement and Plan of Reorganization pursuant to which
CIK Will Acquire All the Assets and Liabilities of CGF--Management of the
Fund--Directors and Principal Officers."
The Fund pays annual compensation of $12,500, plus $1,000 for attendance
per meeting of the Board of Directors or Committees thereof, plus certain
out-of-pocket expenses, to each Director that is not affiliated with CSAM, its
investment adviser (three Directors are not affiliated with CSAM). Each such
Director is also a director of one or more investment companies advised by CSAM,
and in that capacity receives annual and per-meeting fees, plus certain
out-of-pocket expenses, for services as a
-46-
director of such Fund. The total remuneration paid or accrued by CIK during the
fiscal year ended December 31, 2000 to all such unaffiliated directors was
$43,419.
The following table shows certain compensation information for the fiscal
year ended December 31, 2000 for each Director of CGF and CIK who is not
affiliated with CSAM. The Fund has no bonus, profit sharing, pension or
retirement plans.
Total Number of
Boards of
Pension or CSAM-Advised
Aggregate Retirement Benefits Estimated Annual Total Compensation from Investment
Compensation from Accrued as Part of Benefits upon Funds and Fund Complex Companies Served
Name of Director Funds Fund Expenses Retirement Paid to Directors (1)
- -------------------- ----------------- ------------------- ---------------- ----------------------- -----------------
Dr. Enrique R. Arzac ... CIK: $ 16,500 0 0 $82,500 8
CGF: $ 16,500
Lawrence J. Fox ........ CIK: $ 16,500 0 0 $41,500 3
CGF: $ 16,500
James. S. Pasman, Jr.... CIK: $ 16,500 0 0 $115,250 49
CGF: $ 16,500
- ----------
(1) Includes CGF and CIK
The Board of Directors has an Audit Committee. Pursuant to the Audit
Committee Charter adopted by the CIK's Board, a copy of which is attached to
this Joint Proxy Statement/Prospectus as Appendix B, the Audit Committee is
responsible for conferring with CIK's independent public accountants, reviewing
annual financial statements and recommending the selection of CIK's independent
public accountants. The Audit Committee advises the full Board with respect to
accounting, auditing and financial matters affecting CIK. The Audit Committee
has met with Fund management to discuss, among other things, CIK's audited
financial statements for the year ended December 31, 2000. The Audit Committee
has also met with CIK's independent public accountants, PricewaterhouseCoopers
LLP ("PwC") and discussed with them certain matters required under SAS 61
including, but not limited to, the scope of CIK's audit, CIK's financial
statements and CIK's accounting controls. The Audit Committee has received the
written disclosures and the letter from PwC required by Independence Standards
Board Standard No. 1. The Audit Committee has discussed with PwC their
independence and has considered whether the provision of services by PwC to the
Funds and to CSAM, as more fully described under "Proposal 1 (Both Funds):
Approval of the Agreement and Plan of Reorganization pursuant to which CIK will
Acquire all the Assets and Liabilities of CGF - Experts," was compatible with
maintaining PwC's independence. Based upon these reviews and discussions, the
Audit Committee recommended to the Board that CIK's audited financial statements
be included in CIK's 2000 Annual Report to Shareholders for the year ended
December 31, 2000 and be mailed to Shareholders and filed with the Securities
and Exchange commission.
Messrs. Arzac, Fox and Pasman constitute CIK's Audit Committee, which is
composed of directors who are not interested persons of CIK as defined by the
1940 Act and who are independent as defined by the listing standards of the New
York Stock Exchange. There were two Audit Committee meetings held during the
fiscal year ended December 31, 2000. All directors were present at both
meetings. There is also a Valuation Committee composed of Messrs. Priest, Arzac
and Pasman which reviews prices of illiquid or restricted securities. Messrs.
Arzac, Fox and Pasman constitute CIK's Nominating Committee, which is composed
of directors who are not interested persons of CIK. The Nominating Committee did
not meet during the fiscal year ended December 31, 2000. The Nominating
-47-
Committee selects and nominates new Independent Directors. The Nominating
Committee will consider nominees recommended by shareholders should a vacancy
arise. Recommendations should be submitted to the Nominating Committee in care
of the Secretary of CIK. CIK does not have a compensation committee.
During 2000, there were four meetings of the Board and two meetings of the
Audit Committee. Each Director attended seventy-five percent or more of the
aggregate number of meetings of the Board and committees on which he served held
during the period for which he was a Director.
Mr. McCaughan is the Chairman of the Board of CIK and has served in such
position since February 5, 2001, Mr. Lindquist has been President of CIK since
February 10, 1997 and Chief Investment Officer of CIK since November 21, 1996,
having previously served as Vice President of CIK since CIK's inception. Ms.
Moran and Mr. Diliberto have each been an Investment Officer of CIK since August
15, 1996 and May 12, 1997, respectively. Mr. Liebes is Senior Vice President of
CIK and was appointed to such position on August 11, 1997, having previously
been CIK's Secretary until May 16, 1996. Mr. Pignataro has been Chief Financial
Officer and Vice President of CIK since July 26, 1999 and has been Secretary of
CIK since May 16, 1997, having previously served as Assistant Vice President and
Assistant Secretary of CIK since April 18, 1995. Each officer of CIK will hold
office until the Meeting and until his successor has been elected. For more
biographical information about the executive officers of CIK, see "Proposal
1(Both Funds): Approval of the Agreement and Plan of Reorganization pursuant to
which CIK Will Acquire All the Assets and Liabilities of CGF--Management of the
Fund--Directors and Principal Officers."
By virtue of the responsibilities assumed by its investment adviser, CIK
itself requires no employees other than its officers, and none of its officers
devotes full-time responsibilities to the affairs of CIK. All officers are
employees of and are compensated by CSAM and do not receive any compensation
from CIK.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and Section 30(f) of
the Investment Company Act require the Fund's officers and directors, officers
and directors of the investment adviser, affiliated persons of the investment
adviser, and persons who beneficially own more than ten percent of the Fund's
shares, to file reports of ownership with the Securities and Exchange
Commission, the NYSE and the Fund. Based solely upon its review of the copies of
such forms received by it and written representations from such persons, the
Fund believes that, for the fiscal year ended December 31, 2000, all filing
requirements applicable to such persons were complied with.
Required Shareholder Vote
Approval of the election of each nominee as Director of the Fund requires
the affirmative vote of a plurality of the votes cast on the matter at the
annual meeting of the Fund in person or by proxy.
THE BOARD OF DIRECTORS, INCLUDING THE "NON-INTERESTED" DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE RE-ELECTION OF MESSRS. ARZAC,
FOX, PASMAN, PRIEST AND MCCAUGHAN FOR DIRECTOR.
ADDITIONAL INFORMATION
Further information concerning these securities and their issuer may be
found in the Registration Statement of which this prospectus constitutes a part
on file with the Securities and Exchange Commission. The Commission maintains a
World Wide Web site on the Internet at http://www.sec.gov.
-48-
that contains the prospectus, material incorporated by reference and other
information regarding registrants, such as the Funds, that file electronically
with the Commission. The Registration Statement may also be inspected without
charge at the Commission's office in Washington, D.C., and copies of all or any
part thereof may be obtained from such office after payment of the fees
prescribed by the Commission.
The Funds are subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act, and in accordance therewith files reports
and other information with the Commission. Such reports and other information
can be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, NW, Washington, D.C. 20549 and the Commission's
regional offices at Seven World Trade Center, New York, New York 10048. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, NW, Washington, D.C. 20549 at prescribed rates.
Such reports and other information concerning the Funds also may be inspected at
the offices of the NYSE and are available on the Commission's World Wide Web
site on the Internet at http://www.sec.gov.
Shareholder Proposal (CGF). CGF has received notice that a shareholder,
Ralph Bradshaw intends to solicit proxies in favor of electing himself, Gary
Bentz, Andrew Strauss, Glenn Wilcox and [name of fifth nominee to be inserted
upon receipt], as Directors at the 2001 annual shareholders' meeting of CGF. If
Proposal 1 is approved at the special meeting and the Reorganization is
consummated, that proposed solicitation will be rendered moot, as CGF will be
dissolved as part of the Reorganization. If Proposal 1 is rejected, the Board of
Directors of CGF intends to oppose Mr. Bradshaw and his nominees.
Shareholder Proposals (CIK). Notice is hereby given that for a shareholder
proposal to be considered for inclusion in CIK's proxy material relating to its
2002 annual meeting of shareholders, the shareholder proposal must be received
by CIK no later than ___________, 2002. A shareholder proposal submitted for
inclusion in CIK's proxy statement, including any accompanying supporting
statement, may not exceed 500 words. A shareholder desiring to submit a proposal
for inclusion in CIK's proxy statement must be a record or beneficial owner of
shares with a market value of $2,000 and must have held such shares for at least
one year. Further, the shareholder must continue to hold such shares through the
date on which the meeting is held. Documentary support regarding the foregoing
must be provided along with the proposal. There are additional requirements
regarding proposals of shareholders, and a shareholder contemplating submission
of a proposal for inclusion in CIK's proxy statement is referred to Rule 14a-8
promulgated under the 1934 Act. The timely submission of a proposal does not
guarantee its inclusion in CIK's proxy materials.
Pursuant to the By-laws of CIK, at any annual meeting of the shareholders,
only such business will be conducted as has been properly brought before the
annual meeting. To be properly brought before the annual meeting, the business
must be (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board, (ii) otherwise properly brought before the
meeting by or at the direction of the Board, or (iii) otherwise properly brought
before the meeting by a shareholder.
For business to be properly brought before the annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of CIK. To be timely, any such notice must be delivered to or
mailed and received at Credit Suisse Asset Management Income Fund, Inc. c/o
Credit Suisse Asset Management, LLC, 466 Lexington Avenue, New York, NY 10017
not later than ____________ , 2002; provided, however, that in the event that
the date of the 2002 annual meeting is advanced or delayed by more than 30 days
from May 1, 2002, the first anniversary of the 2001 annual meeting, notice by
such shareholder to be timely must be so received not later than the close of
business on the 10th day following the day on which notice or public
announcement of the date of the 2002 annual meeting is given or made.
-49-
Any notice by a shareholder to CIK must set forth as to each matter the
shareholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on CIK's books, of the shareholder proposing such business, (iii)
the class and number of Shares of the capital stock of CIK which are
beneficially owned by the shareholder, (iv) a representation that the
shareholder is a holder of record of shares of CIK entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to present
such business, (v) whether the shareholder intends or is part of a group which
intends to solicit proxies from other shareholders in support of such business,
and (vi) any material interest of the shareholder in such business.
CIK may exercise discretionary voting authority with respect to any
shareholder proposals that are not submitted in accordance with Rule 14a-8 under
the 1934 Act and which are validly submitted after the advance notice deadline
for submission of proposals pursuant to CIK's By-laws indicated above. Even if
timely notice is received, CIK may exercise discretionary voting authority in
certain other circumstances as described under Rule 14a-4(c) under the 1934 Act
which governs the CIK's use of discretionary proxy voting authority.
Discretionary voting authority is the ability to vote proxies that shareholders
have executed and returned to CIK on matters not specifically reflected on the
form of proxy.
Other Matters to Come Before the Meeting. The Board of Directors of each
Fund is not aware of any matters that will be presented for action at the
Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in their discretion in the interest of the respective Fund. PLEASE
COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards of Directors of Credit Suisse Asset Management
Strategic Global Income Fund, Inc and Credit Suisse Asset Management Income
Fund, Inc.
Michael A. Pignataro
Chief Financial Officer, Vice President and Secretary, Credit Suisse
Asset Management Strategic Global Income Fund, Inc.
Michael A. Pignataro
Chief Financial Officer, Vice President and Secretary, Credit Suisse
Asset Management Income Fund, Inc.
-50-
EXHIBIT A
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
AND
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
DATED AS OF ______, 2001
TABLE OF CONTENTS
Page
1. DEFINITIONS..........................................................A-1
2. BASIC TRANSACTION....................................................A-1
2.1 The Reorganization.................................................A-1
2.2 Transferred Assets.................................................A-1
2.3 Transferred Liabilities............................................A-2
2.4 Dividend...........................................................A-2
2.5 Articles of Transfer...............................................A-2
2.6 Liquidation........................................................A-3
3. VALUATION............................................................A-3
3.1 Transferred Assets.................................................A-3
3.2 CIK Shares.........................................................A-3
3.3 Administrator......................................................A-3
4. CLOSING AND EFFECTIVE DATE...........................................A-3
4.1 Effective Date.....................................................A-3
4.2 Deliveries at Closing..............................................A-3
5. REPRESENTATIONS AND WARRANTIES OF CREDIT SUISSE ASSET
MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.........................A-4
5.1 Organization.......................................................A-4
5.2 Registrations and Qualifications...................................A-4
5.3 Regulatory Consents and Approvals..................................A-4
5.4 Noncontravention...................................................A-4
5.5 Financial Statements...............................................A-5
5.6 Title to Assets....................................................A-5
5.7 Annual Report......................................................A-5
5.8 Qualification, Corporate Power, Authorization of Transaction.......A-5
5.9 Legal Compliance...................................................A-5
5.10 Tax Filings........................................................A-5
5.11 Undisclosed Liabilities............................................A-5
5.12 Tax Filings........................................................A-6
5.13 Qualification Under Subchapter M...................................A-6
5.14 Form N-14..........................................................A-6
5.15 Capitalization.....................................................A-6
5.16 Books and Records..................................................A-7
5.17 CIK Shares.........................................................A-7
6. REPRESENTATIONS AND WARRANTIES OF CREDIT SUISSE ASSET
MANAGEMENT INCOME FUND, INC..........................................A-7
6.1 Organization.......................................................A-7
6.2 Registrations and Qualifications...................................A-7
6.3 Regulatory Consents and Approvals..................................A-7
6.4 Noncontravention...................................................A-7
6.5 Financial Statements...............................................A-7
6.6 Title to Assets....................................................A-8
6.7 Annual Report......................................................A-8
6.8 Qualification, Corporate Power, Authorization of Transaction.......A-8
6.9 Legal Compliance...................................................A-8
6.10 Material Contracts.................................................A-8
6.11 Undisclosed Liabilities............................................A-8
6.12 Tax Filings........................................................A-8
6.13 Qualification Under Subchapter M...................................A-8
6.14 Form N-14..........................................................A-9
6.15 Capitalization.....................................................A-9
6.16 Issuance of Stock..................................................A-9
6.17 Books and Records..................................................A-9
7. COVENANTS OF THE PARTIES.............................................A-10
7.1 Shareholders' Meetings.............................................A-10
7.2 Operations in the Normal Course....................................A-10
7.3 Articles of Transfer...............................................A-10
7.4 Regulatory Filings.................................................A-10
7.5 Preservation of Assets.............................................A-10
7.6 Tax Matters........................................................A-10
7.7 Shareholder List...................................................A-10
7.8 Delisting, Termination of Registration as an Investment Company....A-11
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.........................A-11
8.1 Approval of Reorganization.........................................A-11
8.2 Certificates and Statements by Credit Suisse Asset Management
Strategic Global Income Fund, Inc..................................A-11
8.3 Absence of Litigation..............................................A-12
8.4 Legal Opinions.....................................................A-12
8.5 Auditor's Consent and Certification................................A-14
8.6 Liabilities........................................................A-14
8.7 Effectiveness of Registration Statement............................A-14
8.8 Regulatory Filings.................................................A-14
8.9 Administrative Rulings, Proceedings................................A-14
8.10 Satisfaction of Credit Suisse Asset Management Income Fund, Inc....A-14
8.11 Dividends..........................................................A-14
8.12 Custodian's Certificate............................................A-15
8.13 Books and Records..................................................A-15
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CREDIT SUISSE ASSET
MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.........................A-15
9.1 Approval of Reorganization.........................................A-15
9.2 Certificates and Statements by Credit Suisse Asset Management
Income Fund, Inc...................................................A-15
9.3 Absence of Litigation..............................................A-16
9.4 Legal Opinions.....................................................A-16
9.5 Auditor's Consent and Certification................................A-17
9.6 Effectiveness of Registration Statement............................A-17
9.7 Regulatory Filings.................................................A-17
9.8 Satisfaction of Credit Suisse Asset Management Strategic
Global Income Fund, Inc............................................A-18
10. PAYMENT OF EXPENSES..................................................A-18
10.1 Allocation.........................................................A-18
11. COOPERATION FOLLOWING EFFECTIVE DATE.................................A-18
12. INDEMNIFICATION......................................................A-18
12.1 Credit Suisse Asset Management Strategic Global Income Fund, Inc...A-18
12.2 Credit Suisse Asset Management Income Fund, Inc....................A-18
13. TERMINATION, POSTPONEMENT AND WAIVERS................................A-19
13.1 Termination........................................................A-19
13.2 Waiver.............................................................A-19
13.3 Expiration of Representations and Warranties.......................A-19
14. MISCELLANEOUS........................................................A-20
14.1 Transfer Restriction...............................................A-20
14.2 Material Provisions................................................A-20
14.3 Notices............................................................A-20
14.4 Amendments.........................................................A-21
14.5 Headings...........................................................A-21
14.6 Counterparts.......................................................A-21
14.7 Enforceability.....................................................A-21
14.8 Successors and Assigns.............................................A-21
14.9 Governing Law......................................................A-22
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this __ day of ______, 2001, between Credit Suisse Asset Management Strategic
Global Income Fund, Inc. (the "Target Fund" or "CGF"), a Maryland corporation
and a registered investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and Credit Suisse Asset Management Income Fund, Inc.
(the "Acquiring Fund" or "CIK" and, together with CGF, the "Parties"), a
Maryland corporation and a registered investment company under the 1940 Act.
This agreement contemplates a tax-free transaction which qualifies for
federal income tax purposes as a reorganization within the meaning of Section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization will consist of the transfer of all of the assets of CGF in
exchange for shares of common stock of CIK ("CIK Shares") and cash for
fractional CIK Shares, the assumption by CIK of all the liabilities of CGF, and
the distribution of CIK Shares to the shareholders of CGF in liquidation of CGF,
all upon the terms and conditions set forth in this Agreement.
WHEREAS, the Board of Directors of CGF has determined that the exchange of
substantially all of the assets of CGF for CIK shares and the assumption of all
the liabilities of CGF by CIK is in the best interests of the CGF shareholders
and the interests of the existing shareholders of CGF would not be diluted as a
result of this transaction; and
WHEREAS, the Board of Directors of CIK has determined that the exchange of
substantially all of the assets of CGF for CIK shares and the assumption of
CGF's liabilities by CIK is in the best interests of the CIK's shareholders and
that the interests of the existing shareholders of CIK would not be diluted as a
result of this transaction.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the Parties hereto agree as follows:
1. DEFINITIONS
Certain capitalized terms used in this Agreement are specifically defined
herein.
2. BASIC TRANSACTION
2.1 The Reorganization. Subject to the terms and conditions herein set
forth and on the basis of the representations and warranties contained herein,
CGF agrees to transfer its assets as set forth in paragraph 2.2 to CIK, and CIK
agrees in exchange therefor: (i) to deliver to CGF the number of all CIK Shares
determined by dividing the value of CGF's net assets, computed in the manner and
as of the time and date set forth in paragraph 3.1, by the net asset value per
share of one CIK Share computed in the manner and as of the time and date set
forth in paragraph 3.2 and cash for fractional shares of CIK as set forth in
paragraph 3.2; and (ii) to assume all of the liabilities of CGF. Such
transaction shall take place at the closing provided for in paragraph 4.1 (the
"Closing").
2.2 Transferred Assets.
(a) The assets of CGF to be acquired by CIK shall consist of all property
including, without limitation, all cash, securities and dividend or interest
receivables that are owned by CGF and any deferred or prepaid expenses shown as
an asset on the books of CGF on the Effective Date provided in paragraph 4.1
(the "Effective Date").
(b) CGF has provided CIK with a list of all of CGF's assets as of the date
of execution of this Agreement and CIK has confirmed that all such assets are of
the type in which CIK is permitted to invest
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and to hold. CGF reserves the right to sell any of these securities but will
not, without the prior approval of CIK, acquire any additional securities other
than securities of the type in which CIK is permitted to invest. CIK, will,
within a reasonable time prior to the Effective Date, furnish CGF with a list of
its assets. In the event that CGF holds any investments which CIK identifies as
a type which it may not hold, and CIK so requests, CGF will dispose of such
securities prior to the Effective Date. In addition, if it is determined that
the portfolios of CGF and CIK, when aggregated, would contain investments
exceeding certain percentage limitations imposed upon CIK with respect to such
investments, CGF, if requested by CIK, will dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Effective Date.
2.3 Transferred Liabilities.
(a) The liabilities assumed by CIK shall include all of the CGF's
liabilities, debts, obligations, and duties of whatever kind or nature, whether
absolute, accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable at the Effective Date,
and whether or not specifically referred to in this Agreement.
(b) CGF will endeavor to discharge all of its known liabilities and
obligations prior to the Effective Date, other than those liabilities and
obligations which would otherwise be discharged at a later date in the ordinary
course of business.
2.4 Dividend. As soon as practicable prior to the Effective Date, CGF will
declare and pay to its shareholders of record one or more dividends and/or
distributions so that it will have distributed substantially all of its
investment company taxable income (computed without regard to any deduction for
dividends paid) and realized net capital gain, if any, for the current taxable
year through the Effective Date.
2.5 Articles of Transfer. On the Effective Date (the "Effective Time"),
pursuant to articles of transfer (the "Articles of Transfer") accepted for
record by the State Department of Assessements and Taxation of Maryland (the
"Department"), CGF shall assign, transfer, deliver and convey all of its assets
to CIK, subject to all of its liabilities. CIK shall then accept the assets and
assume the liabilities such that at and after the Effective Time (i) the assets
at or after the Effective Time shall become and be the assets of CIK , and (ii)
the liabilities at the Effective Time shall attach to CIK, enforceable against
CIK to the same extent as if initially incurred by CIK. From and after the
Effective Time, all the assets of CGF shall transfer to, vest in, and devolve on
CIK without further act or deed, and CIK shall be liable for all the debts and
obligations of CGF, all as provided under Maryland law.
2.6 Liquidation. As soon on or after the Effective Date as is conveniently
practicable (the "Liquidation Date"), CGF will liquidate and distribute pro rata
to its shareholders of record determined as of the Effective Time (the "CGF
Shareholders") the CIK Shares and cash it receives pursuant to paragraph 2.1.
Such liquidation and distribution will be accomplished by (i) the transfer of
CIK Shares then credited to the account of CGF on the books of CIK to open
accounts on the share records of CIK in the name of the CGF shareholders
representing the respective pro rata number of CIK Shares due such shareholders
and (ii) the payment of cash for fractional CIK shares in accordance with
paragraph 3.2(b). All issued and outstanding shares of CGF will simultaneously
be canceled on the books of CGF, although share certificates representing
interests in CGF, if any, will represent a number of CIK Shares after the
Effective Date as determined in accordance with paragraph 3.2 until replaced in
accordance with paragraph 7.11. Ownership of CIK Shares will be shown on the
books of CIK's transfer agent.
2.7 Dissolution. CGF shall thereafter dissolve in accordance with Maryland
law.
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3. VALUATION
3.1 Transferred Assets. The value of CGF's assets to be acquired hereunder
shall be the value of such assets computed as of the close of regular trading on
the New York Stock Exchange, Inc. (the "NYSE") on the business day preceding the
Effective Date (such time and date being hereinafter called the "Valuation
Date"), using the valuation procedures set forth in the Registration Statement
consistently utilized by CIK, which principles and procedures are substantially
similar to those employed by CGF when valuing its own assets and determining its
own liabilities. Such valuation and determination shall be the responsibility of
CIK, shall be made in cooperation with CGF and shall be confirmed in writing by
CIK to CGF.
3.2 CIK Shares.
(a) The number of CIK Shares to be issued in exchange for the
corresponding net assets of CGF shall be determined by dividing the value of the
net assets of CGF determined using the valuation procedures referred to in
paragraph 3.1 by the net asset value per Share of CIK. The net asset value per
share of CIK Shares shall be determined in accordance with the valuation
procedures set forth in the Registration Statement and consistently utilized by
CIK, and CIK shall certify the computations involved.
(b) CGF shareholders will not receive any fractional shares of CIK as part
of the CGF distribution. In lieu thereof, CGF will receive from CIK for
distribution to its shareholders cash in an amount equal to the aggregate net
asset value of the fractional shares otherwise distributable to the CGF
shareholders, and the total number of CIK shares otherwise issuable to CGF will
be reduced by that number of CIK shares having an aggregate net asset value
equal to the cash so paid to CGF.
3.3 Administrator. All computations of value shall be made on behalf of
CIK by Brown Brothers Harriman & Co., the administrator and accounting agent to
each Fund, in accordance with the regular practice of CGF and CIK, respectively.
No formula will be used to adjust the net asset value so determined of either of
the Parties to take into account differences in realized and unrealized gains
and losses.
4. CLOSING AND EFFECTIVE DATE
4.1 Effective Date. The Effective Date for the Reorganization shall be
_________, 2001, or such other date as the parties to the Reorganization may
agree to in writing. All acts taking place at the Closing shall be deemed to
take place simultaneously on the Effective Date unless otherwise provided. The
Closing shall be held as of 9:00 a.m., at the offices of Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, New York, or at such other time and/or
place as the parties may agree.
4.2 Deliveries at Closing.
(a) At the Closing, (i) CGF will deliver to CIK the various certificates
and documents referred to in Article 7 below, (ii) CIK will deliver to CGF the
various certificates and documents referred to in Article 8 below, and (iii) CGF
and CIK will file jointly with the State Department of Assessments and Taxation
of Maryland (the "Department") the Articles of Transfer and make all other
filings or recordings required by Maryland law in connection with the
Reorganization. The custodian for CIK (the "Custodian") shall deliver at the
Closing a certificate of an authorized officer stating that: (a) CGF's portfolio
securities, cash and any other assets have been delivered in proper form to CIK
on the Effective Date and (b) all necessary taxes, including all applicable
federal and state stock transfer stamps, if any,
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have been paid, or provision for payment has been made, in conjunction with the
delivery of portfolio securities.
(b) CGF shall deliver at the Closing a list of the names and addresses of
its shareholders and the number of outstanding Shares owned by each such
shareholder immediately prior to the Closing certified by CGF's transfer agent
or President to the best of their knowledge and belief or provide evidence that
such information has been provided to CGF's transfer agent. CIK shall issue and
deliver a confirmation evidencing the CIK Shares to be credited to CGF's account
on the Effective Date to the Secretary of CGF or provide evidence satisfactory
to CGF that the CIK Shares have been credited to the account of CGF on the books
of CIK. At the Closing, each party shall deliver to the relevant other parties
such bills of sale, checks, assignments, share certificates, if any, receipts or
other documents as such other party or its counsel may reasonably request.
4.3 Closing on Business Day. In the event that on the Valuation Date (a)
the NYSE or another primary trading market for portfolio securities of CIK or
CGF shall be closed to trading or trading thereon shall be restricted or (b)
trading or the reporting of trading on the NYSE or elsewhere shall be disrupted
so that accurate appraisal of the value of the net assets of CIK or CGF is
impracticable, the applicable Effective Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
5. REPRESENTATIONS AND WARRANTIES OF CREDIT SUISSE ASSET MANAGEMENT STRATEGIC
GLOBAL INCOME FUND, INC.
CGF represents and warrants to CIK that the statements contained in this
Article 5 are correct and complete in all material respects as of the execution
of this Agreement on the date hereof. CGF represents and warrants to, and agrees
with, CIK that:
5.1 Organization. CGF is a corporation duly organized and validly existing
under the laws of the State of Maryland and is in good standing with the
Department, and has the corporate power to own all of its assets and to carry on
its business as it is now being conducted and to carry out this Agreement.
5.2 Registrations and Qualifications. CGF is duly registered under the
1940 Act as a closed-end, diversified management investment company (File No.
811-05458), and such registration has not been revoked or rescinded and is in
full force and effect. CGF has elected and qualified for the special tax
treatment afforded regulated investment companies ("RICs") under Sections
851-855 of the Code at all times since its inception. CGF is qualified as a
foreign corporation in every jurisdiction where required, except to the extent
that failure to so qualify would not have a material adverse effect on CGF.
5.3 Regulatory Consents and Approvals. No consent, approval, authorization
or order of any court or governmental authority is required for the consummation
by CGF of the transactions contemplated herein, except (i) such as have been
obtained or applied for under the Securities Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934 (the "1934 Act") and the 1940 Act;
(ii) such as may be required by state securities laws and (iii) such as may be
required under Maryland law for the acceptance for record of the Articles of
Transfer by the Department.
5.4 Noncontravention. CGF is not, and the execution, delivery and
performance of this Agreement by CGF will not result in, a violation of the laws
of the State of Maryland or of the Articles of Incorporation or the By-laws of
CGF, or of any material agreement, indenture, instrument, contract, lease or
other undertaking to which CGF is a party or by which it is bound, and the
execution, delivery and performance of this Agreement by CGF will not result in
the acceleration of any obligation, or the
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imposition of any penalty, under any agreement, indenture, instrument, contract,
lease, judgment or decree to which CGF is a party or by which it is bound.
5.5 Financial Statements. CIK has been furnished with a statement of
assets, liabilities and capital and a schedule of investments of CGF, each as of
December 31, 2000, said financial statements having been examined by
PricewaterhouseCoopers LLP, independent public accountants. These financial
statements are in accordance with generally accepted accounting principles
applied on a consistent basis ("GAAP") and present fairly, in all material
respects, the financial position of CGF as of such date in accordance with GAAP,
and there are no known contingent liabilities of CGF required to be reflected on
a balance sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein.
5.6 Title to Assets. At the Effective Date, CGF will have good and
marketable to the assets to be transferred to CIK pursuant to paragraph 2.1 and
full right, power and authority to sell, assign, transfer and deliver such
assets hereunder free of any liens or other encumbrances, except those liens or
encumbrances as to which CIK has received notice at or prior to the Closing, and
upon delivery and payment for such assets and the effectiveness of the Articles
of Transfer, CIK will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, including such restrictions as might
arise under the 1933 Act and the 1940 Act, except those restrictions as to which
CIK has received notice and necessary documentation at or prior to the Closing.
5.7 Annual Report. CIK has been furnished with CGF's Annual Report to
Shareholders for the fiscal year ended December 31, 2000.
5.8 Qualification, Corporate Power, Authorization of Transaction. CGF has
full power and authority to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action of its Board of Directors, and, subject
to shareholder approval, this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto.
5.9 Legal Compliance. Except as may have been previously disclosed to and
accepted by CIK, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
(in which service of process has been received) or, to its knowledge, threatened
against CGF or any properties or assets held by it. Except as may have been
previously disclosed to and accepted by CIK, CGF knows of no facts which might
form the basis for the institution of such proceedings which would materially
and adversely affect its business and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions herein contemplated.
5.10 Material Contracts. There are no material contracts outstanding to
which CGF is a party that have not been disclosed in the Registration Statement
(as defined in Section 3.13 below) or will not be otherwise disclosed to CIK
prior to the Effective Date.
5.11 Undisclosed Liabilities. Since December 31, 2000, there has not been
any material adverse change in CGF's financial condition, assets, liabilities or
business and CGF has no known liabilities of a material amount, contingent or
otherwise, required to be disclosed in a balance sheet in accordance with GAAP
other than those shown on CGF's statements of assets, liabilities and capital
referred to above, those incurred in the ordinary course of its business as an
investment company since
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December 31, 2000, and those incurred in connection with the Reorganization.
There are no contracts or other commitments (other than this Agreement) of CGF
which will be terminated with liability to CGF prior to the Effective Date.
Prior to the Effective Date, CGF will advise CIK in writing of all known
liabilities, contingent or otherwise, whether or not incurred in the ordinary
course of business, existing or accrued. For purposes of this Section 5.11, a
decline in net asset value per share of CGF due to declines in market values of
securities in CGF's portfolio or the discharge of CGF liabilities will not
constitute a material adverse change.
5.12 Tax Filings. All federal and other tax returns and information
reports of CGF required by law to have been filed shall have been filed and are
or will be correct in all material respects, and all federal and other taxes
shown as due or required to be shown as due on said returns and reports shall
have been paid or provision shall have been made for the payment thereof, and,
to the best of CGF's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns. All tax liabilities
of CGF have been adequately provided for on its books, and no tax deficiency or
liability of CGF has been asserted and no question with respect thereto has been
raised by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid, up to and including the taxable year
in which the Effective Date occurs.
5.13 Qualification Under Subchapter M. For each taxable year of its
operation (including the taxable year ending on the Effective Date), CGF has met
the requirements of Subchapter M of the Code for qualification as a RIC and has
elected to be treated as such, has been eligible to and has computed its federal
income tax under Section 852 of the Code, and will have distributed
substantially all of its investment company taxable income and net realized
capital gain (as defined in the Code) that has accrued through the Effective
Date.
5.14 Form N-14. The registration statement to be filed by CIK on Form N-14
relating to CIK Shares to be issued pursuant to this Agreement, and any
supplement or amendment thereto or to the documents therein (as amended, the
"Registration Statement"), on the effective date of the Registration Statement,
at the time of the shareholders' meetings referred to in Article 6 of this
Agreement and at the Effective Date, insofar as it relates to CGF (i) shall have
complied or will comply in all material respects with the provisions of the 1933
Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder and
(ii) did not and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; and the prospectus included therein
did not and will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the representations and warranties in this Section 5.14 shall only apply to
statements in, or omissions from, the Registration Statement made in reliance
upon and in conformity with information furnished by CGF for use in the
Registration Statement.
5.15 Capitalization.
(a) All issued and outstanding shares of CGF (i) have been offered and
sold in compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws, (ii) are, and on the
Effective Date will be, duly and validly issued and outstanding, fully paid and
non-assessable, and (iii) will be held at the time of the Closing by the persons
and in the amounts set forth in the records of the transfer agent as provided in
Section 6.7. CGF does not have outstanding any options, warrants or other rights
to subscribe for or purchase any CGF shares, nor is there outstanding any
security convertible into, or exchangeable for, any CGF shares.
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(b) CGF is authorized to issue 100,000,000 shares of stock, par value
$0.001 per share, all of which shares are classified as Common Stock and each
outstanding share of which is fully paid, non-assessable and has full voting
rights.
5.16 Books and Records. The books and records of CGF made available to CIK
are substantially true and correct and contain no material misstatements or
omissions with respect to the operations of CGF.
5.17 CIK Shares. The CIK Shares to be issued hereunder are not being
acquired for the purpose of making any distribution thereof other than in
accordance with the terms of this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF CREDIT SUISSE ASSET MANAGEMENT INCOME
FUND, INC.
CIK represents and warrants to CGF that the statements contained in this
Article 6 are correct and complete in all material respects as of the execution
of this Agreement on the date hereof. CIK represents and warrants to, and agrees
with, CGF that:
6.1 Organization. CIK is a corporation duly organized and validly existing
under the laws of the State of Maryland and is in good standing with the
Department, and has the corporate power to own all of its assets and to carry on
its business as it is now being conducted and to carry out this Agreement.
6.2 Registrations and Qualifications. CIK is duly registered under the
1940 Act as a closed-end, diversified management investment company (File No.
811-05012) and such registration has not been revoked or rescinded and is in
full force and effect. CIK has elected and qualified for the special tax
treatment afforded RICs under Sections 851-855 of the Code at all times since
its inception. CIK is qualified as a foreign corporation in every jurisdiction
where required, except to the extent that failure to so qualify would not have a
material adverse effect on CIK.
6.3 Regulatory Consents and Approvals. No consent, approval, authorization
or order of any court or governmental authority is required for the consummation
by CIK of the transactions contemplated herein, except (i) such as have been
obtained or applied for under the 1933 Act, the 1934 Act and the 1940 Act, (ii)
such as may be required by state securities laws and (iii) such as may be
required under Maryland law for the acceptance for record of the Articles of
Transfer by the Department.
6.4 Noncontravention. CIK is not, and the execution, delivery and
performance of this Agreement by CIK will not result, in violation of the laws
of the State of Maryland or of the Articles of Incorporation or the By-laws of
CIK, or of any material agreement, indenture, instrument, contract, lease or
other undertaking to which CIK is a party or by which it is bound, and the
execution, delivery and performance of this Agreement by CIK will not result in
the acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
CIK is a party or by which it is bound.
6.5 Financial Statements. CGF has been furnished with a statement of
assets, liabilities and capital and a schedule of investments of CIK, each as of
December 31, 2000, said financial statements having been examined by
PricewaterhouseCoopers LLP, independent public accountants. These financial
statements are in accordance with GAAP and present fairly, in all material
respects, the financial position of CIK as of such date in accordance with GAAP,
and there are no known contingent liabilities of CIK required to be reflected on
a balance sheet (including the notes thereto) in accordance with GAAP as of such
date not disclosed therein.
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6.6 Title to Assets. At the Effective Date, CIK will have good and
marketable to its assets.
6.7 Annual Report. CGF has been furnished with CIK's Annual Report to
Shareholders for the fiscal year ended December 31, 2000.
6.8 Qualification, Corporate Power, Authorization of Transaction. CIK has
full power and authority to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action of its Board of Directors, and, subject
to shareholder approval, this Agreement constitutes a valid and binding contract
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to or
affecting creditors' rights generally and court decisions with respect thereto.
6.9 Legal Compliance. Except as may have been previously disclosed to and
accepted by CGF, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
(in which service of process has been received) or, to its knowledge, threatened
against CIK or any properties or assets held by it. Except as may have been
previously disclosed to and accepted by CGF, CIK knows of no facts which might
form the basis for the institution of such proceedings which would materially
and adversely affect its business and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially and adversely affects its business or its ability to consummate
the transactions herein contemplated.
6.10 Material Contracts. There are no material contracts outstanding to
which CIK is a party that have not been disclosed in the Registration Statement
or will not be otherwise disclosed to CGF prior to the Effective Date.
6.11 Undisclosed Liabilities. Since December 31, 2000, there has not been
any material adverse change in CIK's financial condition, assets, liabilities,
or business and CIK has no known liabilities of a material amount, contingent or
otherwise, required to be disclosed in a balance sheet with GAAP other than
those shown on CIK's statements of assets, liabilities and capital referred to
above, those incurred in the ordinary course of its business as an investment
company since December 31, 2000, and those incurred in connection with the
Reorganization. Prior to the Effective Date, CIK will advise CGF in writing of
all known liabilities, contingent or otherwise, whether or not incurred in the
ordinary course of business, existing or accrued. For purposes of this Section
6.11, a decline in net asset value per share of CIK due to declines in market
values of securities in CIK's portfolio or the discharge of CIK liabilities will
not constitute a material adverse change.
6.12 Tax Filings. All federal and other tax returns and information
reports of CIK required by law to have been filed shall have been filed and are
or will be correct in all material respects, and all federal and other taxes
shown as due or required to be shown as due on said returns and reports shall
have been paid or provision shall have been made for the payment thereof, and,
to the best of CIK's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns. All tax liabilities
of CIK have been adequately provided for on its books, and no tax deficiency or
liability of CIK has been asserted and no question with respect thereto has been
raised by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid, up to and including the taxable year
in which the Effective Date occurs.
6.13 Qualification Under Subchapter M. For each taxable year of its
operation, CIK has met the requirements of Subchapter M of the Code for
qualification as a RIC and has elected to be treated as such, has been eligible
to and has computed its federal income tax under Section 852 of the Code, and
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will have distributed substantially all of its investment company taxable income
and net realized capital gain (as defined in the Code) that has accrued through
the Effective Date.
6.14 Form N-14. The Registration Statement, on the effective date of the
Registration Statement, at the time of the shareholders' meetings referred to in
Section 6 of this Agreement and at the Effective Date, insofar as it relates to
CIK (i) shall have complied or will comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the prospectus included therein did not and will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the representations and warranties
in this Section 4.13 shall not apply to statements in, or omissions from, the
Registration Statement made in reliance upon and in conformity with information
furnished by CGF for use in the Registration Statement.
6.15 Capitalization.
(a) All issued and outstanding shares of CIK (i) have been offered and
sold in compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws, (ii) are, and on the
Effective Date will be, duly and validly issued and outstanding, fully paid and
non-assessable, and (iii) will be held at the time of the Closing by the persons
and in the amounts set forth in the records of the transfer agent. CIK does not
have outstanding any options, warrants or other rights to subscribe for or
purchase any CIK shares, nor is there outstanding any security convertible into,
or exchangeable for, any CIK shares.
(b) CIK is authorized to issue 100,000,000 shares of stock, par value
$0.001 per share, all of which shares are classified as Common Stock and each
outstanding share of which is fully paid, non-assessable and has full voting
rights.
6.16 Issuance of Stock.
(a) The offer and sale of the shares to be issued pursuant to this
Agreement shall be in compliance with all applicable federal and state
securities laws.
(b) The CIK Shares to be issued and delivered to CGF, for the account of
CGF's shareholders pursuant to the terms of this Agreement will at the Effective
Date have been duly authorized and when so issued and delivered, will be duly
and validly issued CIK Shares, and will be fully paid and non-assessable with no
personal liability attaching to the ownership thereof.
(c) At or prior to the Effective Date, CIK shall have obtained any and all
regulatory, director and shareholder approvals necessary to issue CIK Shares.
6.17 Books and Records. The books and records of CIK made available to CGF
are substantially true and correct and contain no material misstatements or
omissions with respect to the operations of CIK.
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7. COVENANTS OF THE PARTIES
7.1 Shareholders' Meetings.
(a) Each of the Parties shall hold a meeting of its respective
shareholders for the purpose of considering the Reorganization as described
herein, which meeting has been called by each Party for May 1, 2001, and any
adjournments thereof.
(b) Each of the Parties agrees to mail to each of its respective
shareholders of record entitled to vote at the meeting of shareholders at which
action is to be considered regarding the Reorganization, in sufficient time to
comply with requirements as to notice thereof, a combined Proxy Statement and
Prospectus which complies in all material respects with the applicable
provisions of Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act,
and the rules and regulations, respectively, thereunder.
7.2 Operations in the Normal Course. Each Party covenants to operate its
business in the ordinary course between the date hereof and the Effective Date,
it being understood that such ordinary course of business will include (i) the
declaration and payment of customary dividends and other distributions and (ii)
in the case of CGF, preparing for its dissolution and deregistration, except
that the distribution of dividends pursuant to Sections 7.11 and 8.9 of this
Agreement shall not be deemed to constitute a breach of the provisions of this
Section 6.2.
7.3 Articles of Transfer. The Parties agree that, as soon as practicable
after satisfaction of all conditions to the Reorganization, they will jointly
file executed Articles of Transfer with the Department and make all other
filings or recordings required by Maryland law in connection with the
Reorganization.
7.4 Regulatory Filings.
(a) CGF undertakes that, if the Reorganization is consummated, it will
file, or cause its agents to file, an application pursuant to Section 8(f) of
the 1940 Act for an order declaring that CGF has ceased to operate as a
registered investment company.
(b) CIK will file the Registration Statement with the Securities and
Exchange Commission ("SEC") and will use its best efforts to ensure that the
Registration Statement becomes effective as promptly as practicable. CGF agrees
to cooperate fully with CIK, and will furnish to CIK the information relating to
itself to be set forth in the Registration Statement as required by the 1933
Act, the 1934 Act, the 1940 Act, the rules and regulations thereunder and the
state securities or blue sky laws.
7.5 Preservation of Assets. CIK agrees that it has no plan or intention to
sell or otherwise dispose of the assets of CGF to be acquired in the
Reorganization, except for dispositions made in the ordinary course of business.
7.6 Tax Matters. Each of the Parties agrees that by the Effective Date all
of its federal and other tax returns and reports required to be filed on or
before such date shall have been filed and all taxes shown as due on said
returns either have been paid or adequate liability reserves have been provided
for the payment of such taxes. In connection with this covenant, the Parties
agree to cooperate with each other in filing any tax return, amended return or
claim for refund, determining a liability for taxes or a right to a refund of
taxes or participating in or conducting any audit or other proceeding in respect
of taxes. CIK agrees to retain for a period of ten (10) years following the
Effective Date all returns, schedules and work papers and all material records
or other documents relating to tax matters of CGF for its final taxable year and
for all prior taxable periods. Any information obtained under this Section 7.6
shall be kept confidential except as otherwise may be necessary in connection
with the filing of returns or
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claims for refund or in conducting an audit or other proceeding. After the
Effective Date, CIK shall prepare, or cause its agents to prepare, any federal,
state or local tax returns, including any Forms 1099, required to be filed and
provided to required persons by CGF with respect to its final taxable years
ending with the Effective Date and for any prior periods or taxable years for
which the due date for such return has not passed as of the Effective Date and
further shall cause such tax returns and Forms 1099 to be duly filed with the
appropriate taxing authorities and provided to required persons. Notwithstanding
the aforementioned provisions of this Section 7.6, any expenses incurred by CIK
(other than for payment of taxes) in excess of any accrual for such expenses by
CGF in connection with the preparation and filing of said tax returns and Forms
1099 after the Effective Date shall be borne by CIK.
7.7 Delisting, Termination of Registration as an Investment Company. CGF
agrees that the (i) delisting of the shares of CGF with the NYSE, (ii)
termination of its registration as a RIC and (iii) its dissolution under
Maryland law will be effected in accordance with applicable law as soon as
practicable following the Effective Date.
7.8 Transfer Taxes. Any transfer taxes payable upon issuance of CIK Shares
in a name other than the registered holder of shares of CGF on the books of CGF
as of that time shall, as a condition of such issuance and transfer, be paid by
the person to whom such CIK Shares are to be issued and transferred.
7.9 Reporting. Any reporting responsibility of CGF is and shall remain the
responsibility of CGF up to and including the applicable Effective Date and such
later dates on which CGF is terminated.
7.10 Surrender of CGF Stock Certificates. With respect to any CGF
shareholder holding certificates representing shares of CGF as of the Effective
Date, and subject to CIK being informed thereof in writing by CGF, CIK will not
permit such shareholder to receive new certificates evidencing ownership of CIK
Shares until such shareholder has surrendered his or her outstanding
certificates evidencing ownership of shares of CGF or, in the event of lost
certificates, posted adequate bond. CGF will request its shareholders to
surrender their outstanding certificates representing certificates of shares of
CGF or post adequate bond therefor. Dividends payable to holders of record of
CIK Shares as of any date after the Effective Date and prior to the exchange of
certificates by any shareholder of CGF shall be paid to such shareholder,
without interest; however, such dividends shall not be paid unless and until
such shareholder surrenders his or her stock certificates of CGF for exchange.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT
INCOME FUND, INC.
The obligations of CIK hereunder shall be subject to the following
conditions:
8.1 Approval of Reorganization. This Agreement shall have been approved by
(i) the affirmative vote of the holders of a majority of the shares of Common
Stock of CGF issued and outstanding and entitled to vote thereon and (ii) the
affirmative vote of a majority of the CIK Shares voted thereon, provided also
that the votes cast represent at least a majority of the shares of Common Stock
of CIK issued and outstanding and entitled to vote thereon; and CGF shall have
delivered to CIK a copy of the resolutions approving this Agreement adopted by
its Board of Directors and shareholders, certified by its secretary.
8.2 Certificates and Statements by Credit Suisse Asset Management
Strategic Global Income Fund, Inc.
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(a) CGF shall have furnished a statement of assets, liabilities and
capital, together with a schedule of investments with their respective dates of
acquisition and tax costs, certified on its behalf by its President (or any Vice
President) and its Treasurer, and a certificate executed by both such officers,
dated the Effective Date, certifying that there has been no material adverse
change in its financial position since December 31, 2000, other than changes in
its portfolio securities since that date or changes in the market value of its
portfolio securities.
(b) CGF shall have furnished to CIK a certificate signed by its President
(or any Vice President), dated the Effective Date, certifying that as of the
Effective Date, all representations and warranties made in this Agreement are
true and correct in all material respects as if made at and as of such date and
each has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to such dates.
(c) CGF shall have delivered to CIK a letter from PricewaterhouseCoopers
LLP, dated the Effective Date, stating that such firm has performed a limited
review of the federal, state and local income tax returns for the period ended
December 31, 2000, and that based on such limited review, nothing came to their
attention which caused them to believe that such returns did not properly
reflect, in all material respects, the federal, state and local income taxes of
CGF for the period covered thereby; and that for the period from December 31,
2000 to and including the Effective Date and for any taxable year ending upon
the effective Date, such firm has performed a limited review to ascertain the
amount of such applicable federal, state and local taxes, and has determined
that either such amount has been paid or reserves have been established for
payment of such taxes, this review to be based on unaudited financial data; and
that based on such limited review, nothing has come to their attention which
caused them to believe that the taxes paid or reserves set aside for payment of
such taxes were not adequate in all material respects for the satisfaction of
federal, state and local taxes for the period from December 31, 2000, to and
including the Effective Date and for any taxable year ending upon the Effective
Date or that CGF would not continue to qualify as a RIC for federal income tax
purposes.
8.3 Absence of Litigation. There shall be no material litigation pending
with respect to the matters contemplated by this Agreement, except as may have
been previously disclosed to and accepted by CIK.
8.4 Legal Opinions.
(a) CIK shall have received an opinion of Willkie Farr & Gallagher, as
counsel to CGF, in form and substance reasonably satisfactory to CIK and dated
the Effective Date, to the effect that (i) CGF is a corporation duly organized
and validly existing under the laws of the State of Maryland and in good
standing with the Department; (ii) CGF has the corporate power to carry on its
business as presently conducted in accordance with the description thereof in
CIK's Registration Statement, (iii) the Agreement has been duly authorized,
executed and delivered by CGF and constitutes a valid and legally binding
obligation of CGF, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws pertaining to the enforcement of creditors' rights generally and by
equitable principles; (iv) to such counsel's knowledge, no consent, approval,
authorization or order of any United States federal or Maryland state court or
governmental authority is required for the consummation by CGF of the
Reorganization, except such as may be required and have been obtained under the
1933 Act, the 1934 Act, the 1940 Act, the published rules and regulations of the
SEC thereunder and under Maryland law and such as may be required by state
securities or blue sky laws; (v) the Registration Statement has become effective
under the 1933 Act, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the 1933 Act, and with
respect to CGF, the Registration Statement, and each amendment or supplement
thereto, as of their respective effective dates, appear on
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their face to be appropriately responsive in all material respects to the
requirement of the 1933 Act, the 1934 Act and the 1940 Act and the published
rules and regulations of the SEC thereunder; (vi) such counsel does not know of
any statutes, legal or governmental proceedings or contracts with respect to CGF
or other documents related to the Reorganization of a character required to be
described in the Registration Statement which are not described therein or, if
required to be filed, filed as required; (vii) the execution and delivery of
this Agreement does not, and the consummation of the Reorganization will not,
violate any material provision of the Articles of Incorporation, as amended, the
by-laws, as amended, or any agreement (known to such counsel) to which CGF is a
party or by which CGF is bound; (viii) to the best of such counsel's knowledge,
no material suit, action or legal or administrative proceeding is pending or
threatened against CGF; and (ix) all corporate actions required to be taken by
CGF to authorize this Agreement and to effect the Reorganization have been duly
authorized by all necessary corporate actions on behalf of CGF. Such counsel
shall also state that (A) while such counsel cannot make any representation as
to the accuracy or completeness of statements of fact in the Registration
Statement or any amendment or supplement thereto with respect to CGF, nothing
has come to their attention that would lead them to believe that, on the
respective effective dates of the Registration Statement and any amendment or
supplement thereto with respect to CGF, (1) the Registration Statement or any
amendment or supplement thereto contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading with respect to CGF, and
(2) the prospectus included in the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading with respect to CGF; provided that such counsel need
not express any opinion or belief as to the financial statements, other
financial data, statistical data or information relating to CGF contained or
incorporated by reference in the Registration Statement. In giving the opinion
set forth above, Willkie Farr & Gallagher may state that it is relying on
certificates of officers of CGF with regard to matters of fact and certain
certificates and written statements of governmental officials with respect to
the good standing of CGF and on the opinion of Venable, Baetjer and Howard, LLP,
as to matters of Maryland law.
(b) CIK shall have received an opinion from Willkie Farr & Gallagher, as
counsel to CGF, dated the Effective Date, to the effect that for federal income
tax purposes (i) the Reorganization as provided in this Agreement will
constitute a reorganization within the meaning of Section 368(a)(1)(C) of the
Code and that CIK and CGF will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code; (ii) no gain or loss will be recognized
by CGF as a result of the Reorganization or upon the conversion of CGF shares to
CIK Shares; (iii) no gain or loss will be recognized by CIK as a result of the
Reorganization; (iv) no gain or loss will be recognized by the shareholders of
CGF upon the conversion of their shares into CIK Shares except to the extent
such shareholders are paid cash in lieu of fractional CIK Shares in the
Reorganization; (v) the tax basis of CGF assets in the hands of CIK will be the
same as the tax basis of such assets in the hands of CGF immediately prior to
the consummation of the Reorganization; (vi) immediately after the
Reorganization, the tax basis of CIK Shares received by each shareholder of CGF
in the Reorganization (including that of fractional share interests purchased
from such shareholder by the Surviving Fund) will be equal, in the aggregate, to
the tax basis of the shares of CGF owned by such shareholder immediately prior
to the Reorganization; (vii) a shareholder's holding period for CIK Shares
(including that of fractional share interests purchased from such shareholder by
the Surviving Fund) will be determined by including the period for which he or
she held shares of CGF exchanged pursuant to the Reorganization, provided, that
such shares of CGF were held as capital assets; (viii) CIK's holding period with
respect to the CGF assets transferred will include the period for which such
assets were held by CGF; and (ix) the payment of cash to a CGF shareholder in
lieu of fractional CIK Shares will be treated as though the fractional shares
were distributed as part of the Reorganization and then redeemed by CIK with the
result that the CGF shareholder will have a capital gain or loss to the extent
the cash distribution differs from such shareholder's basis allocable to the
fractional shares, provided that the shares of CGF exchanged pursuant to the
Reorganization were held as
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capital assets immediately prior to such exchange and that the shareholder's
proportionate interest in CIK will be reduced as a result of such cash
distribution.
8.5 Auditor's Consent and Certification. CIK shall have received from
PricewaterhouseCoopers LLP a letter dated as of the effective date of the
Registration Statement and a similar letter dated within five days prior to the
Effective Date, in form and substance satisfactory to CIK, to the effect that
(i) they are independent public auditors with respect to CGF within the meaning
of the 1933 Act and the applicable published rules and regulations thereunder;
and (ii) in their opinion, the financial statements of CGF audited by
PricewaterhouseCoopers LLP which are included or incorporated by reference in
the Registration Statement and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the published rules and regulations thereunder.
8.6 Liabilities. The assets or liabilities of CGF to be transferred to CIK
shall not include any assets or liabilities which CIK, by reason of limitations
in its investment objective and policies as in effect upon the consummation of
the Reorganization or Articles of Incorporation, may not properly acquire or
assume. CIK does not anticipate that there will be any such assets or
liabilities but CIK will notify CGF if any do exist and will reimburse CGF for
any reasonable transaction costs incurred by CGF for the liquidation of such
assets and liabilities.
8.7 Effectiveness of Registration Statement. The Registration Statement
shall have become effective under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of CIK,
contemplated by the SEC.
8.8 Regulatory Filings.
(a) CIK shall have received from the SEC such orders or interpretations as
Willkie Farr & Gallagher, as counsel to CIK, deems reasonably necessary or
desirable under the 1933 Act and the 1940 Act in connection with the
Reorganization, PROVIDED, that such counsel shall have requested such orders as
promptly as practicable, and all such orders shall be in full force and effect.
(b) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
8.9 Administrative Rulings, Proceedings. The SEC shall not have issued an
unfavorable advisory report under Section 25(b) of the 1940 Act, nor instituted
or threatened to institute any proceeding seeking to enjoin consummation of the
Reorganization under Section 25(c) of the 1940 Act; and no other legal,
administrative or other proceeding shall be instituted or threatened which would
materially affect the financial condition of CGF or would prohibit the
Reorganization.
8.10 Satisfaction of Credit Suisse Asset Management Income Fund, Inc. All
proceedings taken by CGF and its counsel in connection with the Reorganization
and all documents incidental thereto shall be satisfactory in form and substance
to CIK.
8.11 Dividends. Prior to the Effective Date, CGF shall have declared and
paid a dividend or dividends which, together with all such previous dividends,
shall have the effect of distributing to its shareholders substantially all of
its net investment company taxable income that has accrued through the Effective
Date, if any (computed without regard to any deduction of dividends paid), and
substantially all of its net capital gain, if any, realized through the
Effective Date.
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8.12 Custodian's Certificate. CGF's custodian shall have delivered to CIK
a certificate identifying all of the assets of CGF held or maintained by such
custodian as of the Valuation Time.
8.13 Books and Records. CGF's transfer agent shall have provided to CIK
(i) the originals or true copies of all of the records of CGF in the possession
of such transfer agent as of the Effective Date, (ii) a certificate setting
forth the number of shares of CGF outstanding as of the Valuation Time, and
(iii) the name and address of each holder of record of any shares and the number
of shares held of record by each such shareholder.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT
STRATEGIC GLOBAL INCOME FUND, INC.
The obligations of CGF hereunder shall be subject to the following
conditions:
9.1 Approval of Reorganization. This Agreement shall have been approved by
(i) the affirmative vote of the holders of a majority of the shares of Common
Stock of CGF issued and outstanding and entitled to vote thereon and (ii) the
affirmative vote of a majority of the CIK Shares voted thereon, provided also
that the votes cast represent at least a majority of the shares of Common Stock
of CIK issued and outstanding and entitled to vote thereon; and CIK shall have
delivered to CGF a copy of the resolutions approving this Agreement adopted by
its Board of Directors and shareholders, certified by its secretary.
9.2 Certificates and Statements by Credit Suisse Asset Management Income
Fund, Inc.
(a) CIK shall have furnished a statement of assets, liabilities and
capital, together with a schedule of investments with their respective dates of
acquisition and tax costs, certified on its behalf by its President (or any Vice
President) and its Treasurer, and a certificate executed by both such officers,
dated the Effective Date, certifying that there has been no material adverse
change in its financial position since December 31, 2000, other than changes in
its portfolio securities since that date or changes in the market value of its
portfolio securities.
(b) CIK shall have furnished to CGF a certificate signed by its President
(or any Vice President), dated the Effective Date, certifying that as of the
Effective Date, all representations and warranties made in this Agreement are
true and correct in all material respects as if made at and as of such date and
each has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied at or prior to such dates.
(c) CIK shall have delivered to CGF a letter from PricewaterhouseCoopers
LLP, dated the Effective Date, stating that such firm has performed a limited
review of the federal, state and local income tax returns for the period ended
December 31, 2000, and that based on such limited review, nothing came to their
attention which caused them to believe that such returns did not properly
reflect, in all material respects, the federal, state and local income taxes of
CIK for the period covered thereby; and that for the period from December 31,
2000 to and including the Effective Date, such firm has performed a limited
review to ascertain the amount of such applicable federal, state and local
taxes, and has determined that either such amount has been paid or reserves
established for payment of such taxes, this review to be based on unaudited
financial data; and that based on such limited review, nothing has come to their
attention which caused them to believe that the taxes paid or reserves set aside
for payment of such taxes were not adequate in all material respects for the
satisfaction of federal, state and local taxes for the period from December 31,
2000, to and including the Effective Date or that CIK would not continue to
qualify as a RIC for federal income tax purposes.
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9.3 Absence of Litigation. There shall be no material litigation pending
with respect to the matters contemplated by this Agreement, except as may have
been previously disclosed to and accepted by CGF.
9.4 Legal Opinions.
(a) CGF shall have received an opinion of Willkie Farr & Gallagher, as
counsel to CIK, in form and substance reasonably satisfactory to CGF and dated
the Effective Date, to the effect that (i) CIK is a corporation duly organized
and validly existing under the laws of the State of Maryland and in good
standing with the Department; (ii) CIK has the corporate power to carry on its
business as presently conducted in accordance with the description thereof in
CIK's Registration Statement; (iii) the Agreement has been duly authorized,
executed and delivered by CIK, and constitutes a valid and legally binding
obligation of CIK, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws pertaining to the enforcement of creditors' rights generally and by
equitable principles; (iv) to such counsel's knowledge, no consent, approval,
authorization or order of any United States federal or Maryland state court or
governmental authority is required for the consummation by CIK of the
Reorganization, except such as may be required and have been obtained under the
1933 Act, the 1934 Act, the 1940 Act and the published rules and regulations of
the SEC thereunder and under Maryland law and such as may be required under
state securities or blue sky laws; (v) the Registration Statement has become
effective under the 1933 Act, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the 1933 Act, and, with
respect to CIK, the Registration Statement, and each amendment or supplement
thereto, as of their respective effective dates, appear on their face to be
appropriately responsive in all material respects to the requirements of the
1933 Act, the 1934 Act and the 1940 Act and the published rules and regulations
of the SEC thereunder; (vi) such counsel does not know of any statutes, legal or
governmental proceedings or contracts with respect to CIK or other documents
related to the Reorganization of a character required to be described in the
Registration Statement which are not described therein or, if required to be
filed, filed as required; (vii) the execution and delivery of this Agreement
does not, and the consummation of the Reorganizations will not, violate any
material provision of the Articles of Incorporation, as amended, the by-laws, as
amended, or any agreement (known to such counsel) to which CIK is a party or by
which CIK is bound; (viii) to the best of such counsel's knowledge, no material
suit, action or legal or administrative proceeding is pending or threatened
against CIK; and (ix) all corporate actions required to be taken by CIK to
authorize this Agreement and to effect the Reorganization have been duly
authorized by all necessary corporate actions on behalf of CIK. Such counsel
shall also state that (A) while such counsel cannot make any representation as
to the accuracy or completeness of statements of fact in the Registration
Statement or any amendment or supplement thereto with respect to CIK, nothing
has come to their attention that would lead them to believe that, on the
respective effective dates of the Registration Statement and any amendment or
supplement thereto, (1) the Registration Statement or any amendment or
supplement thereto contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading with respect to CIK; and (2) the
prospectus included in the Registration Statement contained any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading with respect to CIK; provided that such counsel need not
express any opinion or belief as to the financial statements, other financial
data, statistical data or information relating to CIK contained or incorporated
by reference in the Registration Statement. In giving the opinion set forth
above, Willkie Farr & Gallagher may state that it is relying on certificates of
officers of CIK with regard to matters of fact and certain certificates and
written statements of governmental officials with respect to the good standing
of CIK and on the opinion of Venable, Baetjer and Howard, LLP as to matters of
Maryland law.
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(b) CGF shall have received an opinion from Willkie Farr & Gallagher and
dated the Effective Date, to the effect that for federal income tax purposes (i)
the Reorganization as provided in this Agreement will constitute a
reorganization within the meaning of Section 368(a)(1) of the Code and that CIK
and CGF will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code; (ii) no gain or loss will be recognized by CGF as a result
of the Reorganization or upon the conversion of the shares of CGF to CIK Shares;
(iii) no gain or loss will be recognized by CIK as a result of the
Reorganization; (iv) no gain or loss will be recognized by the shareholders of
CGF upon the conversion of their shares into CIK Shares except to the extent
such shareholders are paid cash in lieu of fractional CIK Shares in the
Reorganization; (v) the tax basis of CGF assets in the hands of CIK will be the
same as the tax basis of such assets in the hands of CGF immediately prior to
the consummation of the Reorganization; (vi) immediately after the
Reorganization, the tax basis of CIK Shares received by each shareholder of CGF
in the Reorganization (including that of fractional share interests purchased
from such shareholder by CIK) will be equal, in the aggregate, to the tax basis
of the shares of CGF owned by such shareholder immediately prior to the
Reorganization; (vii) a shareholder's holding period for CIK Shares (including
that of fractional share interests purchased from such shareholder by CIK) will
be determined by including the period for which he or she held the shares of CGF
exchanged pursuant to the Reorganization, provided, that such shares of CGF were
held as capital assets; (viii) CIK's holding period with respect to the CGF
assets transferred will include the period for which such assets were held by
CGF; and (ix) the payment of cash to a CGF shareholder in lieu of fractional CIK
Shares will be treated as though the fractional CIK Shares were distributed as
part of the Reorganization and then redeemed by CIK with the result that the CGF
shareholder will have a capital gain or loss to the extent the cash distribution
differs from such shareholder's basis allocable to the fractional CIK Shares,
provided that the shares of CGF exchanged therefor pursuant to the
Reorganization were held as capital assets immediately prior to such exchange
and that the shareholder's proportionate interest in CIK will be reduced as a
result of such cash distribution.
9.5 Auditor's Consent and Certification. CGF shall have received from
PricewaterhouseCoopers LLP a letter dated as of the effective date of the
Registration Statement and a similar letter dated within five days prior to the
Effective Date, in form and substance satisfactory to CGF, to the effect that
(i) they are independent public auditors with respect to CIK within the meaning
of the 1933 Act and the applicable published rules and regulations thereunder;
and (ii) in their opinion, the financial statements of CIK audited by
PricewaterhouseCoopers LLP which are included or incorporated by reference in
the Registration Statement and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the published rules and regulations thereunder.
9.6 Effectiveness of Registration Statement. The Registration Statement
shall have become effective under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of CGF,
contemplated by the SEC.
9.7 Regulatory Filings.
(a) CGF shall have received from the SEC such orders or interpretations as
Willkie Farr & Gallagher, as counsel to CGF, deems reasonably necessary or
desirable under the 1933 Act and the 1940 Act in connection with the
Reorganization, provided, that such counsel or counsel to CIK shall have
requested such orders as promptly as practicable, and all such orders shall be
in full force and effect. Any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") relating to
the transactions contemplated hereby shall have expired or been terminated.
(b) The SEC shall not have issued an unfavorable advisory report under
Section 25(b) of the 1940 Act, nor instituted or threatened to institute any
proceeding seeking to enjoin consummation of the Reorganization under Section
25(c) of the 1940 Act; no other legal, administrative or other proceeding
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shall be instituted or threatened which would materially affect the financial
condition of CGF or would prohibit the Reorganization.
(c) CIK shall have received from any relevant state securities
administrator such order or orders as are reasonably necessary or desirable
under the 1933 Act, the 1934 Act, the 1940 Act and any applicable state
securities or blue sky laws in connection with the transactions contemplated
hereby, and that all such orders shall be in full force and effect.
9.8 Satisfaction of Credit Suisse Asset Management Strategic Global Income
Fund, Inc. All proceedings taken by CIK and its counsel in connection with the
Reorganization and all documents incidental thereto shall be satisfactory in
form and substance to CGF.
10. PAYMENT OF EXPENSES
10.1 Allocation. All expenses incurred in connection with the
Reorganization shall be allocated equally between CIK and CGF in the event the
Reorganization is consummated. Such expenses shall include, but not be limited
to, all costs related to the preparation and distribution of the Registration
Statement, proxy solicitation expenses, legal and accounting fees, SEC
registration fees and NYSE listing fees. Neither of the Parties owes any
broker's or finder's fees in connection with the transactions provided for
herein.
11. COOPERATION FOLLOWING EFFECTIVE DATE
In case at any time after the Effective Date any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party may reasonably request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification as described below). CGF acknowledges and agrees
that from and after the Effective Date, CIK shall be entitled to possession of
all documents, books, records, agreements and financial data of any sort
pertaining to CGF.
12. INDEMNIFICATION
12.1 Credit Suisse Asset Management Strategic Global Income Fund, Inc. CIK
agrees to indemnify and hold harmless CGF and each of CGF's directors and
officers from and against any and all losses, claims, damages, liabilities or
expenses (including, without limitation, the payment of reasonable legal fees
and reasonable costs of investigation) to which CGF or any of its directors or
officers may become subject, insofar as any such loss, claim, damage, liability
or expense (or actions with respect thereto) arises out of or is based on any
breach by CIK of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
12.2 Credit Suisse Asset Management Income Fund, Inc. CGF agrees to
indemnify and hold harmless CIK and each of CIK's directors and officers from
and against any and all losses, claims, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which CIK or any of its directors or officers may become
subject, insofar as any such loss, claim, damage, liability or expense (or
actions with respect thereto) arises out of or is based on any breach by CGF of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
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13. TERMINATION, POSTPONEMENT AND WAIVERS
13.1 Termination. Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated and the Reorganization abandoned at
any time (whether before or after adoption by the shareholders of each of the
Parties) prior to the Effective Date, or the Effective Date may be postponed,
(i) by mutual agreement of the Parties' Board of Directors; (ii) by the Board of
Directors of CIK if any of the obligations of CGF set forth in this Agreement
has not been fulfilled or waived by such Board or if CGF has made a material and
intentional misrepresentation herein or in connection herewith; or (iii) by the
Board of Directors of CGF if any of the obligations of CIK set forth in this
Agreement has not been fulfilled or waived by such Board or if CIK has made a
material and intentional misrepresentation herein or in connection herewith.
(a) If the transaction contemplated by this Agreement shall not have been
consummated by September 30, 2001, this Agreement automatically shall terminate
on that date, unless a later date is mutually agreed to by the Boards of
Directors of the Parties.
(b) In the event of termination of this Agreement pursuant to the
provisions hereof, the Agreement shall become void and have no further effect,
and there shall not be any liability hereunder on the part of either of the
Parties or their respective directors or officers, except for any such material
breach or intentional misrepresentation, as to each of which all remedies at law
or in equity of the party adversely affected shall survive.
13.2 Waiver. At any time prior to the Effective Date, any of the terms or
conditions of this Agreement may be waived by the Board of Directors of either
CGF or CIK (whichever is entitled to the benefit thereof), if, in the judgment
of such Board after consultation with its counsel, such action or waiver will
not have a material adverse effect on the benefits intended in this Agreement to
the shareholders of the Fund, on behalf of which such action is taken.
13.3 Expiration of Representations and Warranties.
(a) The respective representations and warranties contained in Articles 5
and 6 of this Agreement shall expire with, and be terminated by, the
consummation of the Reorganization, and neither of the Parties nor any of their
officers, directors, agents or shareholders shall have any liability with
respect to such representations or warranties after the Effective Date. This
provision shall not protect any officer, director, agent or shareholder of the
Parties against any liability to the entity for which that officer, director,
agent or shareholder so acts or to its shareholders to which that officer,
director, agent or shareholder would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties in
the conduct of such office.
(b) If any order or orders of the SEC with respect to this Agreement shall
be issued prior to the Effective Date and shall impose any terms or conditions
which are determined by action of the Boards of Directors of the Parties to be
acceptable, such terms and conditions shall be binding as if a part of this
Agreement without further vote or approval of the shareholders of the Parties,
unless such terms and conditions shall result in a change in the method of
computing the number of shares of CIK Shares to be issued pursuant to this
Agreement, in which event, unless such terms and conditions shall have been
included in the proxy solicitation materials furnished to the shareholders of
the Parties prior to the meetings at which the Reorganization shall have been
approved, this Agreement shall not be consummated and shall terminate unless the
Parties call special meetings of shareholders at which such conditions so
imposed shall be submitted for approval.
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14. MISCELLANEOUS
14.10 Transfer Restriction. Pursuant to Rule 145 under the 1933 Act, and
in connection with the issuance of any shares to any person who at
the time of the Reorganization is, to its knowledge, an affiliate of
a party to the Reorganization pursuant to Rule 145(c), CIK shall
cause to be affixed upon the certificate(s) issued to such person
(if any) a legend as follows:
THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO CREDIT SUISSE ASSET
MANAGEMENT INCOME FUND, INC. (OR ITS STATUTORY SUCCESSOR) UNLESS (I) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT OF 1933 OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
FUND, SUCH REGISTRATION IS NOT REQUIRED.
and, further, that stop transfer instructions will be issued to CIK's transfer
agent with respect to such shares. CGF will provide CIK on the Effective Date
with the name of any CGF Shareholder who is to the knowledge of CGF an affiliate
of it on such date.
14.2 Material Provisions. All covenants, agreements, representations and
warranties made under this Agreement and any certificates delivered pursuant to
this Agreement shall be deemed to have been material and relied upon by each of
the parties, notwithstanding any investigation made by them or on their behalf.
14.3 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to CGF:
Hal Liebes, Esq.
Senior Vice President
Credit Suisse Asset Management Strategic Global Income
Fund, Inc.
466 Lexington Avenue
New York, New York 10017
With copies to:
With copies to:
Daniel Schloendorn, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Marco E. Adelfio, Esq.
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Suite 5500
Washington, D.C. 20006
A-20
If to CIK:
Hal Liebes, Esq.
Senior Vice President
Credit Suisse Asset Management Income Fund, Inc.
466 Lexington Avenue
New York, New York 10017
With copies to:
Daniel Schloendorn, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Marco E. Adelfio, Esq.
Morrison & Foerster
2000 Pennsylvania Avenue, N.W.
Suite 5500
Washington, D.C. 20006
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
14.4 Amendments. This Agreement may be amended, modified or supplemented
in such manner as may be mutually agreed upon in writing by the authorized
officers of CGF and CIK; provided, however, that following the meeting of CGF
and CIK shareholders to approve the Reorganization, no such amendment may have
the effect of changing the provisions for determining the number of CIK shares
to be issued to CGF shareholders under this Agreement to the detriment of such
shareholders without their further approval.
14.5 Headings. The Article headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
14.7 Enforceability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
14.8 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns, but
no assignment or transfer hereof or of any rights or obligations hereunder shall
be made by any party without the written consent of the other party. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm or
A-21
corporation, other than the parties hereto and the shareholders of the Parties
and their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
14.9 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of New York, without regard to
its principles of conflicts of law.
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement
to be executed by its President or Vice President and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
By:
------------------------------------
Name:
------------------------------------
Attest:
------------------------------------
Title:
------------------------------------
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL
INCOME FUND, INC.
By:
------------------------------------
Name:
------------------------------------
Attest:
------------------------------------
Title:
------------------------------------
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EXHIBIT B
FORM OF
NEW CSAM INVESTMENT ADVISORY AGREEMENT
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
RESTATED INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 5th day of February, 2001 between Credit
Suisse Asset Management Income Fund, Inc., a Maryland corporation (the "Fund"),
and Credit Suisse Asset Management, LLC, a Delaware limited liability company
(the "Adviser").
W I T N E S S E T H
WHEREAS, the Fund is a diversified, closed-end investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Adviser provides investment advisory services to the
Fund pursuant to an Investment Advisory Agreement with the Fund dated as of June
13, 1995 (the "Investment Advisory Agreement");
WHEREAS, following changes in the respective name of the Fund and of
the Adviser, the parties executed an Addendum dated as of February 7, 2000 to
amend the Investment Advisory Agreement to properly reflect the name of the Fund
and the entity that is providing investment advisory services to the Fund;
WHEREAS, the Adviser and the Fund have recently moved to new offices
at 466 Lexington avenue, New York; and
WHEREAS, the parties now wish to restate the Investment Advisory
Agreement for the sole purposes of incorporating the changes made by the
Addendum and properly reflecting the business address of the Adviser and the
Fund and to make certain other ministerial changes.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. The Fund hereby appoints the Adviser to act as investment adviser
to the Fund. The Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. Subject to the supervision of the Board of Directors of the Fund,
the Adviser will manage the portfolio of securities and investments (including
cash) belonging to the Fund including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the
Prospectus (as defined in paragraph 4(f) of this Agreement) and subject to the
following understandings:
(a) The Adviser shall furnish a continuous investment program for
the Fund and in so doing shall determine from time to time what
investments or securities will be purchased, retained or sold by the Fund,
and what portion of the assets will be invested or held uninvested as
cash;
(b) The Adviser shall use its best judgment in the performance of
its duties under this Agreement;
(c) The Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles of
Incorporation, the Bylaws and Prospectus of the Fund and with the
instructions and directions of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations;
(d) The Adviser shall determine the securities to be purchased or
sold by the Fund and as agent for the Fund will effect portfolio
transactions pursuant to its determinations either directly with the
issuer or with any broker and/or dealer in such securities; in placing
orders with brokers and/or dealers the Adviser intends to seek the best
available price and execution for purchases and sales; the Adviser shall
also determine whether or not the Fund shall enter into repurchase or
reverse repurchase agreements;
On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
customers, the Adviser may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be
sold or purchased in order to obtain the best execution and lower
brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and,
if applicable, to such other customers;
(e) The Adviser shall maintain books and records with respect to the
securities transactions of the Fund and shall render to the Fund's Board
of Directors such periodic and special reports as the Board of Directors
may reasonably request;
(f) The Adviser shall provide the Fund's Custodian as required with
information relating to all transactions concerning the assets belonging
to the Fund, except purchases of and any sales of the Fund's Common Stock
("Fund Shares"); and
(g) The investment management services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall
be free to render similar services to others.
3. The Adviser is authorized to select the brokers and dealers that
will execute the purchases and sales of portfolio securities for the Fund and is
directed to use its best
-2-
efforts to obtain the best available price and execution, except as prescribed
herein. Unless and until otherwise directed by the Board of Directors of the
Fund, the Adviser may also effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if the
Adviser determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund. The execution of
such transactions shall not be deemed to represent an unlawful act or breach of
any duty created by this Agreement or otherwise.
4. The Fund has delivered copies of each of the following documents
to the Adviser and will promptly notify and deliver to it all future amendments
and supplements, if any:
(a) Articles of Incorporation of the Fund, filed with the Department
of Assessments and Taxation of the State of Maryland on February 11, 1987
(such Articles of Incorporation, as presently in effect and as amended
from time to time, being herein called the "Articles of Incorporation");
(b) Bylaws of the Fund (such Bylaws, as presently in effect and as
amended from time to time, being herein called the "Bylaws");
(c) Certified resolutions of the Board of Directors of the Fund
authorizing the appointment of the Adviser and approving the form of this
Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-2 (No. 33-10851) (the "Registration
Statement") as filed with the Securities and Exchange Commission (the
"Commission") on September 27, 1996 relating to the Fund and the Fund
Shares, and all amendments thereto;
(e) Notification of Registration of the Fund under the 1940 Act on
Form N-8A as filed with the Commission on February 13, 1987 and all
amendments thereto; and
(f) Prospectus of the Fund dated September 27, 1996 (such prospectus
being herein called the "Prospectus").
5. The Adviser shall authorize and permit any of its partners,
agents and employees who may be elected as directors or officers of the Fund to
serve in the capacities in which they are elected. Services to be furnished by
the Adviser under this Agreement may be furnished through the medium of any of
such partners, agents or employees of the Adviser.
6. The Adviser shall keep the Fund's books and records required to
be maintained by it pursuant to paragraph 2(e) of this Agreement. The Adviser
agrees that all records which it maintains for the Fund are the property of the
Fund and it will promptly surrender any of such records to the Fund upon the
Fund's request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the Adviser with respect to the Fund by Rule
-3-
31a-1 of the Commission under the 1940 Act.
7. During the term of this Agreement the Adviser will pay all
expenses (including without limitation the compensation of all its partners,
agents and employees serving as directors or officers of the Fund pursuant to
paragraph 5 of this Agreement) incurred by it in connection with its activities
under this Agreement other than the cost of securities and investments purchased
for the Fund (including taxes and brokerage commissions, if any).
8. For the services provided and the expenses borne pursuant to this
Agreement, the Fund will pay to the Adviser as full compensation therefor a fee,
computed weekly and payable quarterly, at an annual rate equal to 0.50% per
annum of the average weekly net assets of the Fund. This fee for each quarter
will be paid to the Adviser during the month succeeding such quarter.
9. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
10. This Agreement shall become effective on the date hereof. Upon
becoming effective, this Agreement shall remain in effect for an initial
two-year term and shall continue in effect from year to year thereafter if such
continuance is approved at least annually by (a) a majority of the outstanding
voting securities (as defined in the 1940 Act) or by vote of the Fund's Board of
Directors, cast in person at a meeting called for the purpose of voting on such
approval, and (b) vote of a majority of the Directors of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated by the Fund
at any time, without the payment of any penalty, by the Board of Directors of
the Fund or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund on 60 days' written notice to the Adviser,
or by the Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Fund. This Agreement will automatically and immediately
terminate in the event of its assignment (as defined in the 1940 Act).
11. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized by the Board of Directors of the Fund from time to time, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
12. This Agreement may be amended by mutual consent, but the consent
of the Fund must be approved (a) by vote of a majority of those Directors of the
Fund who are not parties to this Agreement or "interested persons" (as defined
in the 1940 Act) of any such party,
-4-
cast in person at a meeting called for the purpose of voting on such amendment,
and (b) by vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund.
13. Notices of any kind to be given to the Adviser by the Fund shall
be in writing and shall be duly given if mailed or delivered to the Adviser at
466 Lexington Avenue, 16th Floor, New York, New York 10017, Attention: Chief
Executive Officer, with a copy to: General Counsel or at such other address or
to such other individual as shall be specified by the Adviser to the Fund in
accordance with this paragraph 13. Notices of any kind to be given to the Fund
by the Adviser shall be in writing and shall be duly given if mailed or
delivered to the Fund at Credit Suisse Asset Management Income Fund, Inc., 466
Lexington Avenue, 16th Floor, New York, New York 10017, Attention: Chairman,
with a copy to: Senior Vice President or at such other address or to such other
individual as shall be specified by the Fund to the Adviser in accordance with
this paragraph 13. The Adviser agrees to notify the Fund of any change in its
membership within a reasonable time of such change.
14. The Fund agrees that if this Agreement is terminated and the
Adviser shall no longer be the adviser to the Fund, the Fund will, within a
reasonable period of time, change its name to delete reference to "Credit Suisse
Asset Management".
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
By: /s/ Michael Pignataro
---------------------------------------------
Name: Michael Pignataro
Title: Secretary
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:
---------------------------------------------
Name: Hal Liebes
Title: Managing Director
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APPENDIX A
CORPORATE BOND RATINGS
Moody's Investors Service's Corporate Bond Ratings
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than the Aaa
securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds which are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly secured.)
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterize bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers "1", "2" and "3" in each generic
rating classification from Aaa through B in its corporate bond rating system.
The modifier "1" indicates that the security ranks in the higher end of its
generic rating category: the modifier "2" indicates a mid-range ranking; and the
modifier "3" indicates that the issue ranks in the lower end of its generic
rating category.
Standard & Poor's Corporate and Municipal Bond Ratings
AAA -- An obligation rated AAA has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA -- An obligation rated AA differs from the highest-rated
obligations only in a small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A -- 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 obligor's capacity to meet
its financial commitment on the obligation is still strong.
BBB -- An obligation rated BBB exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to meet its financial commitment on
the obligation. Obligations rated BB, B, CCC and CC and C are regarded as having
significant speculative characteristics. BB indicates the lowest degree of
speculation and C the highest. While such bonds will likely have some quality
and protective characteristics, these may be outweighed by large uncertainties
or major exposures to adverse conditions.
BB - 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, which could
lead to the obligor's inadequate capacity to meet its financial commitment on
the obligation.
B - An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
CCC - 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 commitment 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 commitment on the obligation.
CC - An obligation rated CC is currently highly vulnerable to
nonpayment.
C -- The C rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D -- An obligation rated D is in payment default. The D rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.
Plus (+) or minus (-) -- The ratings from AA to CCC may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
r -- This symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating. Examples include:
obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk -- such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.
APPENDIX B
AUDIT COMMITTEE CHARTER
CSAM CLOSED-END FUNDS
Organization
The members of the Audit Committee of the Board of Directors ("Directors")
of each CSAM-advised closed-end registered investment company (each a "Fund" and
together, the "Funds") are selected by the full Board of Directors of the
relevant Fund. The members of the Audit Committee shall consist of not less than
three persons (except as otherwise provided below), all of whom are not
"interested persons" (as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended) of the Fund and who are "independent" within the
meaning of the audit committee rules of any securities exchange on which the
Fund's shares are listed for trading. Each member of the Audit Committee shall
be financially literate, as such qualification is interpreted by the Board of
Directors in its business judgment, or must become financially literate within a
reasonable period of time after his or her appointment to the Audit Committee.
At least one member of the Audit Committee must have accounting or related
financial management expertise, as the Board of Directors interprets such
qualification in its business judgment. Any Fund that currently has less than
three members on its Audit Committee must have three members not later than June
14, 2001. Thereafter, if the number of members on a Fund's Audit Committee falls
below three, such Fund shall fill any vacancies within 90 days.
Statement of Policy
Each Fund's Audit Committee oversees the financial reporting process for
that Fund. A Fund's Board and its Audit Committee recognize that they are the
shareholders' representatives, that the auditors are ultimately accountable to
the Board of Directors and the Audit Committee and that the Board of Directors
and the Audit Committee have the authority and responsibility to select,
evaluate and, where appropriate, recommend to shareholders the selection or
replacement of the outside auditors.
Each Fund's Audit Committee shall monitor the process for the Funds'
valuation of portfolio assets. This is key to providing shareholders and
regulators adequate, meaningful information for decision making. Members of each
Fund's Audit Committee must have a general understanding regarding the
accounting process and the control structure in place for each Fund. Open
communication with management and the independent auditors is essential.
This Charter shall be reviewed annually by the Board of each Fund.
Responsibilities of the Audit Committee
In order to provide reasonable flexibility, the following listed Committee
responsibilities are described in broad terms:
o The Audit Committee's role is clearly one of oversight and review and not of
direct management of the audit process. Each Fund's Board and Audit Committee
recognize that the outside auditors are ultimately accountable to the Board
and the Audit Committee.
o The Audit Committee members are responsible for a general understanding of
the subject Fund's accounting systems and controls.
o Committee members shall periodically evaluate the independent audit firm's
performance and the costs of its services. The Audit Committee will make
recommendations to the full Board of Directors regarding the selection of the
independent audit firm. The Committee shall request from the independent
auditors periodically a formal written statement (1) delineating all
relationships between the auditors and the Fund, its investment adviser and
their corporate affiliates and including disclosures regarding the auditors'
independence required by Independence Standards Board Standard No. 1, as may
be modified or supplemented, and (2) certifying that, in the view of the
auditors, they are independent public accountants with respect to the Fund
within the meaning of the Securities Act of 1933, as amended, and the
applicable rules and regulations thereunder. The Audit Committee is
responsible for actively engaging in a dialogue with the auditors with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the auditors, and for recommending that the
full Board take appropriate steps, if any, in response to the auditors'
response to satisfy itself of the independence of the auditors.
o Each Fund's Audit Committee is responsible for reviewing the scope of the
audit proposed by the Fund's independent auditors.
o Each Fund's Audit Committee is responsible for recording minutes of its
meetings and reporting significant matters to the full Board of Directors.
The Audit Committee shall meet no less frequently than annually and receive
information (as necessary) from, among others, the general counsel of Credit
Suisse Asset Management, LLC and Fund counsel, in addition to the auditors,
in order to be informed about legal and accounting issues having the
possibility of impacting the financial reporting process. This would include
items of industry-wide importance and internal issues such as litigation.
o Each Fund's Audit Committee is responsible for (i) reviewing and discussing
with management and the auditors the Fund's audited financial statements; and
(ii) discussing with the auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, as may be modified or supplemented.
The Audit Committee shall confirm that the independent auditors are satisfied
with the disclosure and content of the Fund's audited financial statements
and shall advise the Board of Directors with respect to its recommendation as
to the inclusion of the Fund's audited financial statements in its Annual
Report to Shareholders.
o In reviewing the activities of the independent auditors, each Fund's Audit
Committee shall consider the auditors' comments with respect to the
appropriateness and adequacy of the Fund's accounting policies, procedures
and principles.
o The Audit Committee should take appropriate steps to keep apprised of
regulatory changes and new accounting pronouncements that affect net asset
value calculations and financial statement reporting requirements.
o The Audit Committee of each Fund shall review and reassess the adequacy of
this Charter on an annual basis.
PROXY CARD FOR CREDIT SUISSE ASSET MANAGEMENT
INCOME FUND, INC.
CREDIT SUISSE ASSET MANAGEMENT
INCOME FUND, INC.
PROXY
P
R
O
X
Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Messrs. Hal Liebes and Michael A. Pignataro as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them severally to represent and to vote, as designated on the reverse side and
in accordance with their judgment on such other matters as may properly come
before the meeting or any adjournments or postponements thereof, all shares of
Credit Suisse Asset Management Income Fund, Inc. (the "Fund") that the
undersigned is entitled to vote at the annual meeting of shareholders to be held
on Tuesday, May 1, 2001, and at any adjournments or postponements thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
[Internet address to be added]
- ---------------- ----------------
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
- ---------------- ----------------
|X| Please mark votes as in this example
The Board of Directors recommends a vote "FOR" Proposal 1, "FOR" Proposal 2, and
"FOR" the nominees in Proposal 3. If no direction is made, this proxy will be
voted in favor of the Fund's nominees for election as Directors and for
Proposals 1 and 2.
1. To approve the Agreement and Plan of Reorganization dated as of ____, 2001
between Credit Suisse Asset Management Strategic Global Income Fund, Inc
("CGF") and the Fund whereby (i) the Fund would acquire all the assets and
liabilities of CGF, (ii) the Fund would issue Fund shares to CGF in
exchange therefor, (iii) such Fund shares would be distributed to
shareholders of CGF in liquidation of CGF, and (iv) CGF would subsequently
be dissolved under Maryland law and de-registered under the Investment
Company Act of 1940.
FOR AGAINST ABSTAIN
|_| |_| |_|
2. To approve a new investment advisory agreement with Credit Suisse Asset
Management, LLC.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. Election of the following nominees as Directors:
Nominees: Enrique R.Arzac
Lawrence J. Fox
James S. Pasman
William W. Priest, Jr.
James P. McCaughan
FOR
ALL
NOMINEES LISTED ABOVE (except as marked to the contrary above)
|_|
|_|
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE
(Instruction: To withhold authority for any individual nominee, strike a line
through such individual's name above.) shareholder
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder.
When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature: Date:
-------------------------------- -------------------------
Signature: Date:
-------------------------------- -------------------------
PROXY CARD FOR CREDIT SUISSE ASSET MANAGEMENT
STRATEGIC GLOBAL INCOME FUND, INC.
CREDIT SUISSE ASSET MANAGEMENT
STRATEGIC GLOBAL INCOME FUND, INC.
PROXY
This Proxy is Solicited on Behalf of the Board of Directors
P
R
O
X
Y
The undersigned hereby appoints Messrs. Hal Liebes and Michael A. Pignataro as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them severally to represent and to vote, as designated on the reverse side and
in accordance with their judgment on such other matters as may properly come
before the meeting or any adjournments or postponements thereof, all shares of
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (the "Fund")
that the undersigned is entitled to vote at the special meeting of shareholders
to be held on Tuesday, May 1, 2001, and at any adjournments or postponements
thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
[Internet address to be added]
- ---------------- ----------------
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
- ---------------- ----------------
|X| Please mark votes as in this example
The Board of Directors recommends a vote "FOR" Proposal 1. If no direction is
made, this proxy will be voted for Proposal 1.
1. To approve the Agreement and Plan of Reorganization dated as of ____, 2001
between the Fund and Credit Suisse Asset Management Income Fund, Inc.
("CGF") whereby (i) the Fund would acquire all the assets and liabilities
of CGF, (ii) the Fund would issue Fund shares to CGF in exchange therefor,
(iii) such Fund shares would be distributed to shareholders of CGF in
liquidation of CGF, and (iv) CGF would subsequently be dissolved under
Maryland law and de-registered under the Investment Company Act od 1940.
FOR AGAINST ABSTAIN
|_| |_| |_|
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder
When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature: Date:
-------------------- -------
Signature:
--------------------
The Information in this Statement of Additional Information is not complete and
may be changed. We may not issue these securities until the registration
statement filed with the Securities and Exchange Commission of which this
Statement of Additional Information forms a part is effective. This Statement of
Additional Information is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
PART B
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
ACQUISITION OF THE ASSETS OF CREDIT SUISSE ASSET
MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
466 LEXINGTON AVENUE, 16th FLOOR
NEW YORK, NY 10017
(212) 875-3500
By and In Exchange for Shares of
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
466 LEXINGTON AVENUE, 16th FLOOR
NEW YORK, NY 10017
(212) 875-3500
This Statement of Additional Information, or SAI, relates specifically to
the proposed reorganization (the "Reorganization") of Credit Suisse Asset
Management Strategic Global Income Fund, Inc. into Credit Suisse Asset
Management Income Fund, Inc. in accordance with the General Corporation Law of
the State of Maryland. Credit Suisse Asset Management Strategic Global Income
Fund is sometimes referred to in this SAI as "CGF," Credit Suisse Asset
Management Income Fund is sometimes referred to in this SAI as "CIK" or,
following consummation of the Reorganization, as the "Surviving Fund," and CGF
and CIK are sometimes collectively referred to as the "Funds" and individually,
as the context may require, as the "Fund."
This Statement of Additional Information consists of this cover page, the
information contained herein, and the following documents, each of which has
been filed electronically and is incorporated by reference herein:
o The audited financial statements, notes to the audited
financial statements and report of the independent public
accountants for CGF for the fiscal year ended December 31,
2000 included in that Fund's Annual Report to Shareholders;
and
o The audited financial statements, notes to the audited
financial statements and report of the independent public
accountants for CIK for the fiscal year ended December 31,
2000 included in that Fund's Annual Report to Shareholders.
This Statement of Additional Information is not a prospectus and should be
read only in conjunction with the Proxy Statement/Prospectus dated ____________,
relating to the Reorganization. This Statement of Additional Information does
not include all information that you should consider before investing in either
Fund, and you should obtain and read the Proxy Statement/Prospectus prior to
doing so. A copy of the Proxy Statement/Prospectus may be obtained without
charge by writing to Georgeson Shareholder Communications at 17 State Street,
16th Floor, New York, New York 10004 or by calling 1-(800) 223-2064.
The Proxy Statement/Prospectus and this Statement of Additional
Information omit certain of the information contained in the registration
statement filed with the Securities and Exchange Commission, Washington, D.C.
You may obtain the registration statement from the Securities and Exchange
Commission upon payment of the fee prescribed, or inspect it at the Securities
and Exchange Commission's office at no charge.
This Statement of Additional Information is dated _______.
TABLE OF CONTENTS
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.............................1
INVESTMENT RESTRICTIONS.....................................................10
MANAGEMENT OF THE FUNDS.....................................................13
PORTFOLIO TRANSACTIONS......................................................15
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN................................16
TAXATION....................................................................22
FINANCIAL STATEMENTS........................................................29
PRO FORMA FINANCIAL STATEMENTS..............................................29
GENERAL INFORMATION
CIK changed its name from CS First Boston Income Fund, Inc. to BEA Income
Fund, Inc. in August 1995 and to Credit Suisse Asset Management Income Fund,
Inc. in May 1999. CGF changed its name from CS First Boston Strategic Income
Fund, Inc. to BEA Strategic Income Fund, Inc. in August 1995, to BEA Strategic
Global Income Fund, Inc. in June of 1997, and to Credit Suisse Asset Management
Strategic Global Income Fund, Inc. in May 1999.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
Organization
CGF and CIK are both closed-end, diversified management investment
companies registered under the Investment Company Act. Both Funds are organized
as corporations under the laws of the State of Maryland. Each Fund is managed
and advised by CSAM. The shares of common stock of each Fund are listed and
trade on the NYSE. After the Reorganization, CGF's shares will be delisted and
CGF be liquidated.
The shares of common stock of each Fund have equal non-cumulative voting
rights and equal rights with respect to dividends, assets and dissolution. Each
Fund's shares of common stock are fully paid and non-assessable and have no
preemptive, conversion or other subscription rights. Fluctuations in the market
price of the Fund's shares is the principal investment risk of an investment in
either Fund. Portfolio management, market conditions, investment policies and
other factors affect such fluctuations. Although currently the investment
objectives, policies and restrictions of the Funds are similar, there are
differences between them, as discussed below. There can be no assurance that
either Fund will achieve its stated objective.
Investment Objectives
The investment objective of CGF is high current income consistent with the
preservation of capital. CGF seeks to achieve this objective by investing in
higher yielding U.S. and foreign fixed-income securities, with an emphasis on
U.S. high yield (junk bonds) and emerging market securities. CIK's investment
objective is current income consistent with the preservation of capital. CIK
seeks to achieve this objective by investing primarily in fixed-income
securities, such as bonds, debentures and preferred stocks. CIK's investment
portfolio is not managed for capital appreciation. No assurance can be given
that the investment objective of either Fund will be achieved.
Investment Policies
CGF must invest at least 65% of its total assets in income-producing
securities. CSAM expects that substantially all of CGF's assets will be invested
in income-producing securities. Under normal circumstances, CIK invests at least
75% of its assets in fixed-income securities.
CGF may invest up to 35% of its net assets in the securities of issuers
located in the emerging markets. In February 2001, the Board of Directors of CIK
adopted this non-fundamental investment policy after determining that it could
enhance CIK's ability to achieve its investment objective.
Neither Funds' investments are subject to a rating quality limitation.
Accordingly, each may invest a substantial portion of its assets in securities
rated below investment grade by a nationally recognized rating service or
unrated but in CSAM's opinion of comparable quality.
Investment Portfolios
CIK historically has pursued its investment objective by investing
principally in high yield fixed income securities of domestic issuers, while
investing a relatively small percentage of its net assets in investment-grade
debt securities (approximately 15% before the recent portfolio repositioning).
CGF has pursued its investment objective by investing not less than 65% of its
net assets in domestic high yield securities, and up to 35% of its net assets in
emerging markets debt. In February 2001, the Board of Directors of CIK adopted a
policy with respect to investments in emerging market debt similar to that of
CGF and accepted a recommendation from the investment advisor to partially
reposition its portfolio. As a result, CIK has liquidated its investment-grade
debt securities portfolio and re-deployed those assets (up to 15% of the Fund's
net assets) in emerging market debt securities. In addition, following a
recommendation by the investment advisor, CGF has reduced the percentage of its
net assets invested in emerging markets debt to 15% from approximately 35%. As a
result of these changes, the Funds have a substantially similar investment mix:
approximately 85% of their respective nets assets is invested in U.S. high yield
fixed-income securities and 15% is invested in fixed-income securities of
issuers located in the emerging markets.
The decision to reposition CIK's portfolio was based on a number of
considerations, including CSAM's advice to the CIK Board that:
o during the last several years emerging markets debt has
matured considerably as a separate asset class,
o emerging markets debt is generally not highly correlated with
domestic high yield debt and thus under current market
conditions should result in a less volatile portfolio than one
investing solely in domestic high yield securities, and
o the repositioning should enhance the overall yield on CIK's
portfolio, and thus enable the Board to give consideration to
an increase in CIK's dividend rate at some point in the
future.
The decision to increase CGF's exposure to U.S. high yield fixed-income
securities was based on CSAM's advice to the CGF Board that the spreads over
investment grade debt afforded by emerging market debt have narrowed, while at
present comparable spreads for domestic high yield fixed income securities have
remained high.
For a more detailed description of each Fund's investment portfolio, see
"Proposal 1 (Both Funds): Approval of the Agreement and Plan of Reorganization
pursuant to which CIK Will Acquire All the Assets and Liabilities of CGF --
Comparison of Investment Objectives and Policies" in the Proxy
Statement/Prospectus.
Investment Techniques
U.S. Fixed-Income Securities
High Yield Fixed-Income Securities. The Funds invest primarily in higher
yielding, lower rated U.S. corporate fixed income securities, including debt
securities, convertible securities and preferred stocks. They may also invest in
securities rated single A or higher by Moody's or by Standard & Poor's and
unrated corporate fixed-income securities when CSAM determines that such
securities are offering high yields in relation to risk due to current market or
other conditions. CIK historically invested a small percentage of its net assets
in investment-grade rated debt securities (approximately _% of net assets in
-2-
average for the past _ years and _% as of December 31, 2000). CGF has focused
almost exclusively on below-investment grade debt securities. CSAM expects that
the Surviving Fund will continue this focus for the foreseeable future.
Differing yields on fixed-income securities of the same maturity are a
function of several factors, including the relative financial strength of the
issuers. Higher yields are generally available from securities in the lower
categories of recognized rating agencies, i.e., Baa or lower by Moody's or BBB
or lower by Standard & Poor's. The Funds may invest in any security which is
rated by Moody's or by Standard & Poor's or in any unrated security which CSAM
determines is of suitable quality. However, substantially all of the securities
in which the Funds invest will be in the lower-rated categories. Lower-rated
securities generally provide yields superior to those of more highly-rated
securities, but involve greater risks and are speculative in nature. Securities
in the rating categories below Baa as determined by Moody's and BBB as
determined by Standard & Poor's are considered to be of poor standing and
predominantly speculative. The rating services' descriptions of these rating
categories, including the speculating characteristics of the lower categories,
are set forth in Appendix A to the Proxy Statement/Prospectus.
Securities ratings are based largely on the issuer's historical financial
information and the rating agencies' investment analysis at the time of rating.
Consequently, the rating assigned to any particular security is not necessarily
a reflection of the issuer's current financial condition, which may be better or
worse than the rating would indicate. Although CSAM considers security ratings
when making investment decisions for high yield securities, it performs its own
investment analysis and does not rely principally on the ratings assigned by the
rating services. CSAM's analysis may include consideration of the issuer's
experience and managerial strength, changing financial condition, borrowing
requirements or debt maturity schedules, and its responsiveness to changes in
business conditions and interest rates. It also considers relative values based
on anticipated cash flow, interest or dividend coverage, asset coverage and
earnings prospects.
CSAM bases its investment decisions in high yield securities on the
results of issuer and security-specific credit analysis. CSAM evaluates each
issuer's rating, cash flow, financial structure and business risk. CSAM takes
into account, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. CSAM evaluates the
covenants of each security and pursues a strategy of broad issuer and industry
diversification.
U.S. Government Fixed-Income Securities. The Funds may invest in U.S.
government securities and may engage in options, futures contracts and
repurchase transactions with respect to such securities. U.S. government
securities refers to debt securities issued or guaranteed by the U.S.
government, by various of its agencies, or by various instrumentalities
established or sponsored by the U.S. government. These securities may or may not
be supported by the full faith and credit of the United States.
Depending on market conditions, the Funds may invest a substantial portion
of their assets in 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 will be made out of unscheduled
payments 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.
Mortgage securities that are government securities include the securities
of GNMA, Federal Home Loan Mortgage Corporation ("FHLMC"), and Federal National
Mortgage Association ("FNMA").
-3-
Each of these agencies issue mortgage pass-through securities. Pass-through
securities are bonds backed by pools of mortgages. These securities include
mortgage pass-through Certificates, collateralized mortgage obligations,
including real estate investment conduits as authorized under the Internal
Revenue Code of 1986, as amended ("CMO's"), and mortgage-backed bonds.
Mortgage-related securities may also be issued by financial institutions such as
commercial banks, savings and loan associations, mortgage bankers and securities
broker-dealers (or separate trusts or affiliates of such institutions
established to issue the securities), with the underlying securities being U.S.
Government securities or non-U.S. government issued securities. Mortgage-related
securities issued by financial institutions (or separate trusts or affiliates of
such institutions), even where backed by U.S. Government securities, are not
considered U.S. Government securities and have a different set of risks and
features.
Interests in pools of mortgage-related securities differ from other forms
of debt securities, which normally provide for periodic payment of interest in
fixed amounts and principal payments at maturity or specified call dates.
Instead, mortgage-related securities provide a "pass-through" of monthly
payments of interest and principal made by the borrowers on their residential
mortgage loans, net of any fees paid to the issuer or guarantor of such
securities. Additional payments are caused by repayments of principal resulting
from the sale of the underlying residential property, refinancing or
foreclosure, net of fees or costs which may be incurred. Some mortgage-related
securities (such as securities issued by GNMA) are described as "modified
pass-through." These securities entitle the holder to receive timely payment of
all interest and principal payments owed on the mortgages in the pool, net of
certain fees, regardless of whether or not the mortgagors actually make the
payments.
A CMO series is made up of a group of bonds that together are fully
collateralized directly or indirectly by a pool of mortgages on which the
payments of principal and interest are dedicated to payment of principal and
interest on the bonds in the series. Each class of bonds in the series may have
a different maturity than the other classes of bonds in the series, bear a
different coupon and have a different priority in receiving payments. The
different maturities come from the fact that all principal payments, both
regular principal payments as well as any prepayment of principal, are passed
through first to the holders of the class with the shortest maturity until it is
completely retired. Thereafter, principal payments are passed through to the
next class of bonds in the series, until all the classes have been paid off. As
a result, an acceleration in the rate of prepayments that may be associated with
declining interest rates shortens the expected life of each class, with the
greatest impact on those classes with the shortest maturities. Similarly, should
the rate of prepayments slow down, as may happen in times of rising interest
rates, the expected life of each class lengthens, again with the greatest impact
on those classes with the shortest maturities. In the case of some CMO series,
each class may receive a differing proportion of the monthly interest and
principal repayments on the underlying collateral. In these series, the classes
having proportionally greater interests in principal repayments generally would
be more affected by an acceleration (or slowing) in the rate of prepayments.
Mortgage-backed bonds are general obligations of the issuer fully collateralized
directly or indirectly by a pool of mortgages. The mortgages serve as collateral
for the issuer's payment obligations on the bonds, but interest and principal
payments on the mortgages are not passed through either directly (as with
mortgage pass-through certificates) or on a modified basis (as with CMO's).
Accordingly, a change in the rate of prepayments on the pool of mortgages could
change the effective maturity of a CMO but not that of a mortgage-backed bond
(although, like many bonds, mortgage-backed bonds can provide that they are
callable by the issuer prior to maturity).
To the extent that the Funds invest in the mortgage market, CSAM evaluates
relevant economic, environmental and security-specific variables such as housing
starts, coupon and age trends.
-4-
Non U.S. Dollar Denominated Fixed-Income Securities; Fixed-Income
Securities of Foreign Issuers
CGF invests in debt obligations and other fixed income securities
denominated in U.S. dollars, non-U.S. currencies or composite currencies
including:
o debt obligations issued or guaranteed by foreign national,
provincial, state, municipal or other governments with taxing
authority or by their agencies or instrumentalities
o debt obligations of supranational entities
o debt obligations of the U.S. government issued in non-dollar
denominated securities
o dollar and non-dollar denominated debt obligations and other
fixed-income securities of foreign and U.S. corporate issuers
Each Fund may invest up to 35% of its net assets in the securities of
issuers located in the emerging markets. CIK has a fundamental policy not to
invest more than 5% of the value of its total assets in securities denominated
in a currency other than the U.S. dollar. As CGF's investments in the securities
of issuers located in the emerging markets consist predominantly of U.S.
dollar-denominated fixed-income securities, CSAM does not expect that this
policy will impair to any material extent CIK's ability to invest in those
markets going forward.
In making these investments CSAM considers the relative growth and
inflation rates of different countries. CSAM considers expected changes in
foreign currency exchange rates, including the prospects for central bank
intervention, in determining the anticipated returns of securities denominated
in foreign currencies. CSAM further evaluates, among other things, foreign yield
curves and regulatory and political factors, including the fiscal and monetary
policies of such countries.
In the past, during periods of falling U.S. exchange rates, yields
available from securities denominated in foreign currencies have often been
higher, in U.S. dollar terms, than those of securities denominated in U.S.
dollars. CSAM considers expected changes in foreign currency exchange rates in
determining the anticipated returns of securities denominated in foreign
currencies. The obligations of foreign governmental entities, including
supranational issuers, have various kinds of government support. Obligations of
foreign governmental entities include obligations issued or guaranteed by
national, provincial, state or other governments with taxing power or by their
agencies. These obligations may or may not be supported by the full faith and
credit of a foreign government.
Other Investment Techniques
To enhance return as market opportunities arise, the Funds may use the
following investment techniques.
Repurchase Agreements
The Funds may invest in repurchase agreements collateralized by U.S.
government securities, certificates of deposit and certain bankers' acceptances
for the purpose of realizing additional income. Repurchase agreements are
transactions by which the Funds purchase a security and simultaneously commits
to resell that security to the seller (a bank or securities dealer) at an agreed
upon price on an
-5-
agreed upon date (usually within seven days of purchase). The resale price
reflects the purchase price plus an agreed-upon market rate of interest that is
unrelated to the coupon rate or date of maturity of the purchased security. Use
of repurchase agreements can permit the Funds to keep their assets at work while
retaining short-term flexibility in pursuit of investments of a longer-term
nature. CSAM will continually monitor the value of the underlying securities to
ensure that their value always equals or exceeds the repurchase price.
Securities Lending
The Funds may lend their portfolio securities to banks, brokers, dealers
and other financial institutions who may 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 their
portfolio securities, the Funds attempt to increase their 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 Funds.
The Funds may lend their portfolio securities so long as the terms and the
structure of such loans are not inconsistent with the Investment Company Act or
the rules and regulations or interpretations of the Securities and Exchange
Commission. The Funds will not lend portfolio securities if, as a result, the
aggregate of such loans exceeds 33-1/3% of the value of their total assets. Loan
arrangements made by the Funds will comply with all other applicable regulatory
requirements, including, if applicable, those of the rules of the NYSE.
CSAM will consider all relevant facts and circumstances, including the
creditworthiness of the borrower, in making decisions about the lending of
securities, subject to review by the board of directors of the lending Fund. The
creditworthiness of such bank, broker, dealer or other financial institution
will be monitored by CSAM during the time any securities are loaned. Voting
rights, if any, may pass with the loaned securities. If a material event were to
occur affecting an investment on loan, however, the loan must be called and the
securities voted by the Fund.
Short Sales
Each Fund may engage in short sales (the sale of a security that it does
not own), but only when it ows an equal amount of such securities or securities
convertible into or exchangeable, without payment of 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
Fund's net assets is held as collateral for the sales of such Fund at any one
time.
Options on U.S. Government Securities
The Funds may seek to increase their current income by writing covered
call or put options with respect to some or all of the U.S. government
securities held in their portfolios. In addition, the Funds 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 their U.S. government securities or an increase in the price of
securities which the Funds plan to purchase.
Significant option writing opportunities generally exist only with respect
to longer term U.S. government securities. The Funds may only write covered
options, which means that, so long as the Funds are obligated as the writer of a
call option, they 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 Funds will maintain short term U.S.
government securities with a value equal to or
-6-
greater than the exercise price of the underlying securities. The Funds may also
write combinations of covered puts and calls on the same security.
The Funds receive 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 Funds
may terminate an option that they have written prior to its expiration by
entering into a closing purchase transaction in which they purchase an option
having the same terms as the option written. The Funds realize 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 Funds may purchase put options on U.S. government securities to
protect their 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 Funds, as holders of the put option, are able to sell
the underlying security at the put exercise price regardless of any decline in
the underlying security's 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.
The Funds may purchase call options on U.S. government securities to hedge
against an increase in prices of securities that the Funds ultimately want to
buy. Such hedge protection is provided during the life of the call option since
the Funds, as holders of the option, are able to buy the underlying security at
the exercise price regardless of any increase in such security's 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.
Neither Fund will 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 Funds 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. When the Funds
attempt to hedge their portfolio by selling an interest rate futures contract,
purchasing a put option thereon, or writing a call option thereon, they will own
an amount of U.S. government securities corresponding to the open futures or
option position thereby ensuring that the position is unleveraged. The Funds
only intend to engage in futures contracts or options for bona fide hedging
purposes. In accordance with the current rules of the Commodity Futures Trading
Commission, neither Fund will enter into any interest rate futures contract or
option thereon if, immediately thereafter, the aggregate initial margin and
premiums paid for all existing futures contracts and options thereon not entered
into for bona fide hedging purposes would exceed 5% of its total assets.
Positions in interest rate futures contracts may be closed out only on the
exchange where the contract was made (or on a linked exchange). The Funds intend
to purchase or sell interest rate futures contracts only on exchanges, boards of
trade or trading facilities where there appears to be an active market for such
contracts.
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
-7-
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 Funds upon its purchase
or sale. Instead, the Funds 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 Funds 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 Funds have purchased an
interest rate futures contract and the price of the underlying security has
risen, that position will have increased in value and the Funds will receive
from the broker a variation margin payment equal to that increase in value.
Conversely, where the Funds have purchased an interest rate futures contract and
the price of the underlying security has declined, the position would be less
valuable and the Funds would be required to make a variation margin payment to
the broker. At any time prior to expiration of the futures contract, the Funds
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 Funds, and the Funds realize a loss or gain. No
assurance can be given that the Funds will be able to take an opposite position.
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 Funds 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 Funds 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
-8-
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 Funds 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, CSAM does have
experience in the use of futures and options.
Restricted and Illiquid Securities
Each Fund may invest up to 10% of its total assets in securities that are
not readily marketable. These include securities which are not registered under
the Securities Act and not publicly traded. Restricted and illiquid securities
are purchased in placements from the issuer or in the secondary market. The
purchase of these securities will depend on their relative attractiveness as
compared to securities that have been publicly offered.
Restricted and illiquid securities have frequently resulted in higher
yields and restrictive covenants providing greater protection for the purchaser,
such as longer call or refunding protection, than typically would be available
with publicly offered securities of the same type. An issuer is often willing to
create more attractive features in its securities issued privately, because it
has avoided the expense and delay involved in a public offering of its
securities. For various reasons, an issuer may prefer or be required as a
practical matter to obtain private financing. At certain times adverse
conditions in the public securities markets may preclude a public offering of an
issuer's securities.
These securities can only be resold to certain categories of purchasers,
including qualified institutional buyers, and are usually considered less liquid
than publicly-traded securities, which means that the Funds may take longer to
liquidate them than would be the case for publicly-traded securities.
Foreign Currency Exchange Transactions
The Funds may engage in foreign currency exchange transactions to protect
against changes in future exchange rates. The Funds 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 Funds 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 Funds 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 Funds 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
Funds 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.
-9-
For transaction hedging purposes, the Funds 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 Funds the right to assume
a long position in the futures contract until the expiration of the option. A
call option on currency gives the Funds the right to purchase a currency at the
exercise price until the expiration of the option.
The Funds 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 Funds 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 Funds may also purchase or sell foreign
currency on a spot basis.
Hedging transactions involves costs and may result in losses. The Funds
may write covered call options on foreign currencies to offset some of the costs
of hedging those currencies. They simply establish a rate of exchange that one
can achieve at some future point in time. The Funds engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of CSAM, 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 Funds intend 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 Funds 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 Funds may also write or purchase options on foreign currencies. Such
options are purchased or written only when CSAM 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
Funds sell call options on foreign currencies, they 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.
INVESTMENT RESTRICTIONS
Each Fund is subject to fundamental investment restrictions that may not
be changed without the approval of at least a majority of its outstanding voting
securities, as defined in the Investment Company Act. The Investment Company Act
defines a "majority" as the lesser of (1) 67% of the shares represented at a
meeting of which more than 50% of the outstanding shares are present in person
or represented by proxy, or (2) more than 50% of the outstanding shares.
Following is a description of each Fund's current fundamental investment
restrictions:
1. Neither Fund may invest more than 5% of the value of its total
assets in the securities of any one issuer, excluding obligations of
the U.S. government or any
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agency or instrumentality thereof and except that up to 25% of the
value of its total assets may be invested without regard to this
limitation;
2. Neither Fund may own more than 10% of the outstanding voting stock
or other securities (other than securities of the U.S. government or
any agency or instrumentality thereof), or both, of any one issuer;
3. Neither Fund may purchase shares of other investment companies
except as part of a plan of reorganization, merger, consolidation or
an offer of exchange;
4. Neither Fund may borrow money except as a temporary measure for
extraordinary or emergency purposes, and in no event in excess of
15% of the value of its total assets, except that for the purpose of
this restriction, short-term credits necessary for settlement of
securities transactions are not considered borrowings (neither Fund
will purchase any securities at any time while such borrowings
exceed 5% of total assets);
5. Neither Fund may purchase securities on margin, except that it may
make margin payments in connection with transactions in future
contracts and related options;
6. Neither Fund may sell securities short unless at all times when a
short position is open it owns an equal amount of such securities or
securities convertible into or exchangeable, for, without payment of
any further consideration, securities of the same issue as, and
equal in amount to, the securities sold short, and unless not more
than 5% of the value of CIK's net assets or CGF's total assets are
held as collateral for such sales at any one time;
7. Neither Fund may purchase or sell commodities or commodity
contracts, except that it may write, purchase or sell financial
futures contracts and related options, and futures, forward
contracts and options on foreign currencies;
8. Neither Fund may invest for the purpose of exercising control over
management of any company;
9. Neither Fund may make loans, except (i) by purchasing bonds,
debentures or similar obligations (including repurchase agreements,
subject to the limitation described in 11 below), which are either
publicly distributed or customarily purchased by institutional
investors, and (ii) by lending their securities to banks, brokers,
dealers and other financial institutions so long as such loans are
not inconsistent with the Investment Company Act or the rules and
regulations or interpretations of the Securities and Exchange
Commission thereunder;
10. Neither Fund may underwrite the securities of other issuers, except
to the extent that in connection with the disposition of portfolio
securities the Funds may be deemed to be underwriters;
11. Neither Fund may invest more than 10% of the value of its total
assets in securities subject to legal or contractual restrictions on
resale or in securities which are not readily marketable, including
repurchase agreements having maturities of more than 7 days and
restricted and illiquid securities;
-11-
12. Neither Fund may purchase real estate, although the Funds may
purchase or sell securities of companies which deal in real estate
or interests therein;
13. Neither Fund may invest directly in interests in oil, gas or other
mineral exploration development programs;
In addition, CIK may not:
14. invest in the aggregate more than 5% of the value of its total
assets in securities denominated in a currency other than the United
States dollar; or
15. invest in non-dividend paying equity securities if after such
investment, total non-dividend paying equity securities would
comprise more than 15% of CIK's total assets.
And, CGF may not:
16. pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 20% of the value of its total assets and then only to
secure borrowings permitted by restriction 4 above;
17. invest 25% or more of the value of its total assets in any one
industry, except that (i) for purposes of this restriction
securities of the U.S. government, its agencies or instrumentalities
are not considered to represent industries, and (ii) CGF may invest
25% or more of the value of its total assets in securities issued by
or backed by the credit of supranational entities and securities of
foreign governments, their agencies or instrumentalities, provided
that it will not invest 25% or more of the value of its total assets
in securities issued or backed by the credit of the national
government of any single country or its agencies or
instrumentalities or of any single supranational entity; or
18. issue senior securities, except as permitted under the 1940 Act.
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.
If a percentage restriction on investment or use of assets set forth above
is adhered to at the time a transaction is effected, later changes in
percentages resulting from changing values will not be considered a violation.
Under the Investment Company Act, the Funds may neither invest more than
5% of their total assets in the securities of any one investment company, nor
acquire more than 3% of the outstanding voting securities of any such investment
company. In addition, the Funds may not invest more than 10% of their total
assets in securities issued by all investment companies. As a shareholder in any
investment company, a Fund would bear its ratable share of that investment
company's expenses, and would remain subject to payment of the advisory,
sub-advisory and administrative fees with respect to assets so invested.
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MANAGEMENT OF THE FUNDS
Directors and Principal Officers
The names, addresses and principal occupations of the directors and
principal officers of each Fund are described under "Proposal 1 (Both Funds):
Approval of the Agreement and Plan of Reorganization pursuant to which CIK Will
Acquire All the Assets and Liabilities of CGF -- Management of the Funds --
Directors and Principal Officers" in the Proxy Statement/Prospectus.
Compensation of Directors and Principal Officers
For information about the compensation of the directors of CGF and CIK for
the fiscal year ended December 31, 2000, see "Proposal 1 (Both Funds): Approval
of the Agreement and Plan of Reorganization pursuant to which CIK Will Acquire
All the Assets and Liabilities of CGF --- Management of the Funds" and "Proposal
3 (Credit Suisse Asset Management Income Fund Shareholders Only): Re-election of
Directors -- Background" in the Proxy Statement/Prospectus.
Control Persons and Principal Holders of Securities
For information concerning persons who may be deemed beneficial owners of
5% or more of the shares of common stock of either Fund see "Proposal 1 (Both
Funds): Approval of the Agreement and Plan of Reorganization pursuant to which
CIK Will Acquire All the Assets and Liabilities of CGF --- Management of the
Funds" in the Proxy Statement/Prospectus.
Advisory Arrangements
CSAM serves as the investment adviser to both Funds pursuant to advisory
agreements with each Fund (the "Advisory Agreements"). Each Advisory Agreement
provides that the Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which the Advisory Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services (in which case any award of damages shall be limited to the period and
the amount set forth in Section 36(b)(3) of the Investment Company Act) or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of CSAM in the performance of its duties or from reckless disregard of its
obligations and duties under the Advisory Agreement.
The table below sets forth the investment advisory fees earned by CSAM for
each Fund for the last three fiscal years.
Fiscal year Ended CGF CIK
December 31,
1998 $433,203 $1,421,865
1999 $406,567 $1,304,143
2000 $471,683 $1,148,861
For more information about CSAM and the Advisory Agreements, see "Proposal
1 (Both Funds): Approval of the Agreement and Plan of Reorganization pursuant to
which CIK Will Acquire All the Assets and Liabilities of CGF -- Synopsis -- Fees
and Expenses of CGF," "Proposal 1 (Both Funds): Approval of the Agreement and
Plan of Reorganization pursuant to which CIK Will Acquire All the Assets and
Liabilities of CGF--Synopsis--Fees and Expenses of CIK" and "Proposal 1 (Both
Funds): Approval of the Agreement and Plan of Reorganization pursuant to which
CIK Will Acquire All the
-13-
Assets and Liabilities of CGF -- Management" in the Proxy Statement/Prospectus.
Shareholders of CIK have been requested to consider and approve a new investment
advisory agreement with CSAM. For information regarding the terms of the new
investment advisory agreement, see "Proposal 3 (CIK Shareholders Only): Approval
of New Investment Advisory Agreement" in the Proxy Statement/Prospectus.
Administrative Arrangements
Brown Brothers Harriman & Co. ("BBH") is the Funds' administrator. The
services provided by BBH under its Administration Agreement with the Funds are
subject to the supervision of the directors and officers, and include day to day
administration of matters related to its corporate existence, maintenance of its
records, preparation of reports and supervision of arrangements with custodians
and the transfer and dividend disbursing agent.
The following table sets forth the amounts paid by each Fund as
administrative fees for the last three fiscal years.
Fiscal CGF CIK
year Ended
December
31,
1998(1) $132,539 $325,115
1999 $ 76,576 $203,030
2000 $ 84,784 $170,550
------------
(1) Paid to Chase Manhattan Bank. Effective March 1, 1999, BBH
replaced Chase Manhattan Bank as administrator to each Fund.
Custodian
BBH acts as custodian under a Custodian Agreement dated February 27, 1999.
Foreign securities are held by certain foreign banks and securities
depositories which have been approved by the board of directors upon the
recommendation of BBH, in accordance with Rule 17f-5 under the 1940 Act as
currently in effect. Approval of a foreign subcustodian is made by the board
following a consideration of a number of factors, including, but not limited to,
the reliability and financial stability of the institution; the ability of the
institution to perform capably custodial services; the reputation of the
institution in its national market; the political and economic stability of the
country or countries in which the subcustodian will be located; and the risk of
potential nationalization or expropriation of the assets.
For additional information about the Funds' custodian, transfer agent and
registrar, see "Proposal 1 (Both Funds): Approval of the Agreement and Plan of
Reorganization pursuant to which CIK Will Acquire All the Assets and Liabilities
of CGF--Management of the Funds" in the Proxy Statement/Prospectus. For
information about the Funds' independent accountants, see "Proposal 1 (Both
Funds): Approval of the Agreement and Plan of Reorganization pursuant to which
CIK Will Acquire All the Assets and Liabilities of CGF--Experts" in the Proxy
Statement/Prospectus.
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Duration and Termination; Non-Exclusive Services
The Advisory Agreements became effective on June 13, 1995 and were amended
to reflect changes in the name and address of the respective parties thereto in
February 2001. Unless earlier terminated as described below, each Advisory
Agreement remains in effect if approved annually (a) by the board of directors
or by the holders of a majority of the outstanding voting securities (as defined
in the Investment Company Act) and (b) by a majority of the directors who are
not parties to the Advisory Agreement or "interested persons" (as defined in the
1940 Act) of any such party. Each Advisory Agreement terminates on its
assignment by any party and may be terminated without penalty on 60 days'
written notice at the option of the board of directors or by the vote of the
majority of the holders of the shares, or upon 90 days' written notice, by CSAM.
The Administration Agreement is terminable upon 60 days' notice by either party.
The services of CSAM and BBH are not deemed to be exclusive, and nothing
in the relevant service agreements will prevent any of them or their affiliates
from providing similar services to other investment companies and other clients
(whether or not such clients' investment objectives and policies are similar to
those of the Funds) or from engaging in other activities.
Code of Ethics
Each Fund and CSAM have adopted a written Code of Ethics, which permits
personnel covered by the Code of Ethics ("Covered Persons") to invest in
securities, including securities that may be purchased or held by the respective
Fund. The Code of Ethics also contains provisions designed to address the
conflicts of interest that could arise from personal trading by advisory
personnel, including: (1) all Covered Persons must report their personal
securities transactions at the end of each quarter; (2) with certain limited
exceptions, all Covered Persons must obtain preclearance before executing any
personal securities transactions; (3) Covered Persons may not execute personal
trades in a security if there are any pending orders in that security by the
respective Fund; and (4) Covered Persons may not invest in initial public
offerings.
The Board of Directors of each Fund reviews the administration of the Code
of Ethics at least annually and may impose sanctions for violations of the Code
of Ethics.
Each Fund's Code of Ethics can be reviewed and copied at the Securities
and Exchange Commission's Public Reference Room in Washington, D.C. Information
on the operation of the Public Reference Room may be obtained by calling the
Securities and Exchange Commission at (202) 942-8090. Each Fund's Code of Ethics
is also available on the EDGAR Database on the Securities and Exchange
Commission's Internet site at http:/www.sec.gov. Copies of each Fund's Code of
Ethics may be obtained, after paying a duplicating fee, by electronic request at
the following E-mail address: publicinfo@sec.gov, or by writing the Securities
and Exchange Commission's Public Reference Section, Washington, D.C.,
20549-0102.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for a Fund are made by CSAM, subject
to the overall review of the board of directors of such Fund. Portfolio
securities transactions are placed on behalf of the Funds by persons authorized
by CSAM. CSAM manages other investment companies and accounts that invest in
fixed-income securities. Although investment decisions for the Funds are made
independently from those of these other accounts, CSAM may make investments of
the type the Funds make on behalf of these other accounts. When the Funds and
one or more other accounts is prepared to invest in, or desires to dispose of,
the same security, CSAM will allocate available investments or opportunities for
each in a
-15-
manner believed by CSAM to be equitable to each. In some cases, this procedure
may adversely affect the price paid or received by the Funds or the size of the
position it obtains or disposes of. The Funds may utilize CS First Boston
Corporation and other affiliates of Credit Suisse in connection with the
purchase or sale of securities in accordance with rules or exemptive orders
adopted by the Securities and Exchange Commission when CSAM believes that the
charge for the transaction does not exceed usual and customary levels.
Transactions on U.S. and some foreign stock exchanges involve the payment
of negotiated brokerage commissions, which may vary among different brokers. The
cost of securities purchased from underwriters includes an underwriter's
commission or concession, and the prices at which securities are purchased from
and sold to dealers in the over-the-counter markets include a dealer's mark-up
or mark-down, which normally is not disclosed. Fixed-income securities are
generally traded on a "net" basis with dealers acting as principal for their own
accounts without a stated commission, although the price of the security will
likely include a profit to the dealer.
In selecting brokers or dealers to execute portfolio transactions on
behalf of the Funds, CSAM will seek the best overall terms available. In
addition, unless otherwise directed by the board of directors, the Advisory
Agreement authorizes CSAM, in selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) and cause the Funds to pay
a broker-dealer which furnishes such services a higher commission than that
which might be charged by another broker-dealer for effecting the same
transaction, provided that such commission is deemed reasonable in terms of
either that particular transaction or the overall responsibilities of CSAM to
the Funds. The fees payable under the Advisory Agreement are not reduced as a
result of CSAM's receiving such brokerage and research services.
Currently, it is the Funds' policy that CSAM may at times pay higher
commissions than might otherwise be obtainable in recognition of brokerage
services felt necessary for the achievement of best available price and most
favorable execution of certain securities transactions. CSAM will only pay such
higher commissions if it believes this to be in the best interest of the Funds.
Some brokers or dealers who may receive such higher commissions in recognition
of brokerage services related to execution of securities transactions are also
providers of research information to CSAM and/or the Funds. Subject to the
primary objective set forth above, CSAM has informed the Funds that they may pay
higher commission rates specifically for the purpose of obtaining research
services. The Funds will not pay to any affiliate of CSAM a higher commission
rate specifically for the purpose of obtaining research services.
The Funds paid no brokerage commissions in any of the fiscal years ended
December 31, 2000, 1999 and 1998.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Each Fund distributes monthly to shareholders substantially all of its net
investment income. Net short-term capital gains, if any, are distributed
annually. The board of each Fund intend to distribute annually any net long-term
realized capital gains (the excess of net long-term capital gains over net
short-term capital losses). See "Taxation."
You may elect to have all dividends and distributions, net of any U.S.
withholding tax, automatically reinvested in additional shares through the
Fund's "InvestLink"(SM)- Program. Fleet National Bank, c/o EquiServe, L.O., is
the program administrator for the "InvestLink"(SM)- Program. "InvestLink"(SM) is
a service mark of EquiServe, L.P.
-16-
Purpose of the Investlink(SM) Program
The purpose of the "InvestLink"(SM)- Program is to provide you with a
simple and convenient way to invest funds and reinvest dividends in shares of
the Funds stock at prevailing prices, with reduced brokerage commissions and
fees.
Eligibility and Participation
You may join the program at any time by completing and signing the
enrollment form and returning it to Fleet National Bank, c/o EquiServe, L.P..
Enrollment forms may be obtained at any time by calling the program
administrator at one of the telephone numbers listed below:
- First Time Investors - 1-888-697-8026 (CIK)
1-800-523-8566 (CGF)
- Current Shareholders - 1-800-730-6001
Beneficial owners whose shares are registered in the name of a bank,
broker or other nominee ("streetname") must make arrangements with such bank,
broker or nominee to have the shares transferred into their own names if they
wish to have dividends on such shares paid to the program administrator pursuant
to the program.
Purchases of shares with funds from your cash payment will begin on the
next investment date, provided that the payment is received at least two
business days prior ("cash cut-off date"). Automatic account deduction will
begin on the next debit date, provided the automatic deduction request was
received during the month prior. If you select the dividend reinvestment option,
automatic investment of dividends will begin with the next dividend payable
after the program administrator receives your enrollment form, provided it is
received prior to the dividend record date. If your enrollment form arrives
after the record date, automatic investment of dividends will begin with the
following dividend. Once in the program, you will remain a participant until you
terminate your participation or sell all shares held in your program account, or
your account is terminated by the program administrator.
Program Options
The program offers various investment options, as outlined below:
o "Automatic Bank Account Deduction": Funds in the amount you
specify, with a minimum of $100.00, will be debited from your
bank account each month on the 20th or next business day. The
program administrator will invest such funds on the first
Wednesday, or next business day, of the month following to
purchase additional shares of the Funds.
o "Full Dividend Reinvestment": The program administrator will
receive all cash dividends payable on shares held in your
program account and on any other shares registered in your
name. In addition, the program administrator will invest in
shares of the Funds all of your cash dividends on all of the
shares then or subsequently registered in your name or held in
your program account. You will have the ability to send in
optional cash payments that will be invested weekly.
o "Partial Dividend Reinvestment": The program administrator
will receive a portion of cash dividends payable on shares
held in your program account and
-17-
on any other shares of the Funds registered in your name. In
addition, the program administrator will invest that portion
of cash dividends on shares held in your program account and
any other shares of the Funds registered in your name. You
will have the ability to send in optional cash payments that
will be invested weekly.
o "Cash Investments": The program administrator will not invest
any portion of cash dividends due you on shares held in your
program account or on shares registered in your name. You will
have the ability to send in optional cash payments that will
be invested weekly.
You may change your investment options at any time by requesting a new
authorization form and returning it to the program administrator. The program
administrator must receive notice on or before the record date preceding a
dividend payment date in order for a change in your dividend reinvestment option
to be effective for that dividend.
Costs to participants in connection with purchases and sales under the program
In connection with the following transactions, participants will be
assessed the following charges:
o First-time investors will be subject to an initial service
charge of $10.00 which will be deducted from the initial cash
deposit.
o All optional cash deposit investments and automatic account
deductions will have a service charge of $5.00 deducted from
the cash to be invested.
o Sales processed through the program will have a service fee of
$10.00 deducted from the net proceeds, after brokerage
commissions.
o Participants are responsible for all commission costs
associated with purchases and sales. In addition to the
transaction charges outlined above, participants will be
assessed per share processing fees which include brokerage
commissions.
Purchase of the Funds' shares
The program administrator uses dividends and funds of participants to
purchase shares of the Funds' common stock in the open market. Such purchases
will be made by participating brokers as agent for the participants. Dividends
will be invested on the 15th of each month or next business day. Optional cash
payments will be invested weekly on Wednesday except in dividend paying weeks.
On those weeks, the optional cash will be invested with the dividend.
Transaction processing will generally occur within 30 days of the receipt of
funds. In the event the program administrator is unable to purchase shares
within 30 days of the receipt of funds, such funds will be returned to you.
Shares offered under the program to participants in certain jurisdictions
may be offered only through broker-dealers registered in these jurisdictions.
The weighted average price of all shares purchased by the program
administrator with all funds received during the time period from two business
days preceding any investment date up to the second business day preceding the
next investment date shall be the price per share allocable to you in connection
with the shares purchased for your account with your funds or dividends received
by the program
-18-
administrator during such time period. The weighted average price of all shares
sold by the program administrator pursuant to sell orders received during such
time period shall be the price per share allocable to you in connection with the
shares sold for your account pursuant to your sell orders received by the
program administrator during such time period.
Cash payments and automatic bank account deductions
If you are not already a registered owner of the Funds' common stock, your
initial investment under the program must be at least $250.00. All other cash
payments or bank account deductions must be at least $100.00, up to a maximum of
$100,000.00 annually.
The same amount of cash payment need not be sent each month and you are
under no obligation to make a cash payment in any month. The amount of automatic
bank account deduction must be specified by you on the enrollment form and will
continue until changed by you by notifying the program administrator.
Administration
Fleet National Bank, c/o EquiServe, L.P., as program administrator,
administers the program for participants, keeps records, sends statements of
account to participants and performs other duties relating to the program.
Shares of the Funds' common stock purchased under the program will be registered
in the name of the accounts of the respective participants.
Reports to participants
Each participant in the program will receive a statement of his or her
account following each purchase of shares. These statements are a record of the
cost of purchase of shares under the program and should be retained for tax
purposes. The statements will also show the amount of dividends credited to such
participant's account (if applicable), as well as the fees paid by the
participant. In addition, each participant will receive copies of the Funds'
annual reports to shareholders, proxy statements and, if applicable, dividend
income information for tax reporting purposes.
Certificates for shares
Unless requested, the Funds will not issue to participants certificates
for shares of the Funds' common stock purchased under the program. The number of
shares purchased for your account under the program will be shown on your
statement of account. This feature protects against loss, theft or destruction
of stock certificates.
Certificates for any number of whole shares credited to your account under
the program will be issued to you at no charge upon your written request to
withdraw such shares from your account. Certificates for fractions of shares
will not be issued.
Withdrawal of shares in program accounts
You may withdraw all or a portion of the shares from your program account
by notifying the program administrator. A withdrawal/termination form is
provided on the account statement for this purpose. This notice should be mailed
to the address on the form.
Within five business days of receipt of your request, certificates for the
whole shares of the Funds' common stock so withdrawn will be issued to you or,
if you request, the program administrator will sell the shares for you and send
you the proceeds, less applicable brokerage commissions, fees, and
-19-
transfer taxes, if any. Proceeds are normally paid by check and will be
distributed to you within four business days after your shares are sold. In no
case will certificates for fractional shares be issued.
If you withdraw all full and fractional shares in your program account,
your participation in the program will be terminated by the program
administrator. Also, the program administrator must receive such termination
notice at least seven business days prior to the dividend payment date in order
for you to receive such dividend in cash.
Rights offerings, stock dividends and stock splits
Participation in any rights offering (including the offer), dividend
distribution or stock split will be based upon both the shares of the Funds
registered in participants' names and the shares (including fractional shares)
credited to participants' program accounts. Any stock dividend or shares
resulting from stock splits with respect to shares of the Funds, both full and
fractional, which participants hold in their program accounts and with respect
to all shares registered in their names will be automatically credited to their
accounts in book-entry form.
Voting of a participant's program shares at a meeting of shareholders
All shares (including any fractional share) credited to your account under
the program will be voted as you direct. If on the record date for a meeting of
shareholders there are shares credited to your account under the program, you
will be sent the proxy materials for such meeting. When you return an executed
proxy, all of such shares will be voted as indicated. Or, if you so elect, you
may vote all of such shares in person at the shareholders' meeting. If you do
not provide instructions or return an executed proxy, the plan will not vote
your shares.
Federal income tax consequences of participation in the program
You will receive tax information annually for your personal records and to
help you prepare your federal income tax return. The automatic reinvestment of
dividends does not relieve you of any income tax which may be payable on
dividends. For further information as to tax consequences of participation in
the program, participants should consult with their own tax advisors.
Responsibility of the program administrator under the program
The program administrator in administering the program will not be liable
for any act done in good faith or for any good faith omission to act. However,
the program administrator will be liable for loss or damage due to error caused
by its negligence, bad faith or willful misconduct. Shares held in custody by
the program administrator are not subject to protection under the Securities
Investors Protection Act of 1970. The participant should recognize that neither
the funds nor the program administrator can provide any assurance of a profit or
protection against loss on any shares purchased under the program. While the
program administrator hopes to continue the program indefinitely, the program
administrator reserves the right to suspend or terminate the program at any
time. It also reserves the right to make modifications to the program.
Participants will be notified of any such suspension, termination or
modification. The program administrator also reserves the right to terminate any
participant's participation in the program at any time. Any question of
interpretation arising under the program will be determined by the program
administrator in good faith and any such determination will be final.
-20-
Contact information
All correspondence regarding the program should be directed to:
Fleet National Bank
C/o EquiServe, L.P.
"InvestLink" Program
P.O. Box 43010
Providence, RI 02940-3010
First Time Investors: 1-888-697-8026 (CIK)
1-800-523-8566 (CGF)
Current Shareholders: 1-800-730-6001
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TAXATION
The following is a summary of the material United States federal income
tax considerations regarding the purchase, ownership and disposition of shares.
You are urged to consult your own tax adviser with respect to the specific
federal, state, local and foreign tax consequences of investing in the Funds.
The summary is based on the laws in effect on the date of this statement of
additional information, which are subject to change.
The Funds and their investments
Each of the Funds has qualified and continues to qualify to be treated as
a regulated investment company for each taxable year under the Code. To so
qualify, a Fund must, among other things:
derive at least 90% of its gross income in each taxable year from:
o dividends
o interest
o payments with respect to securities loans
o gains from the sale or other disposition of stock or
securities or foreign currencies
o other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect to
its business of investing in such stock, securities or
currencies, and
diversify its holdings so that, at the end of each quarter of the taxable
year:
o at least 50% of the market value of the Fund's assets is
represented by cash, securities of other regulated investment
companies, United States government securities and other
securities, with such other securities limited, in respect of
any one issuer, to an amount not greater than 5% of the Funds'
assets and not greater than 10% of the outstanding voting
securities of such issuer, and
o not more than 25% of the value of its assets is invested in
the securities (other than United States government securities
or securities of other regulated investment companies) of any
one issuer or any two or more issuers that the Fund controls
and which are determined to be engaged in the same or similar
trades or businesses or related trades or businesses.
As a regulated investment company, a Fund is not subject to United States
federal income tax on its net investment income (i.e., income other than its net
realized long-term and short-term capital gains) and its net realized long-term
and short-term capital gains, if any, that it distributes to its shareholders,
provided that an amount equal to at least 90% of the sum of its investment
company taxable income (i.e., its taxable income minus the excess, if any, of
its net realized long-term capital gains over its net realized short-term
capital losses (including any capital loss carryovers), plus or minus certain
other adjustments specified in section 852 of the Code) and its net tax-exempt
income for the taxable year, if any, is distributed to its shareholders, but is
subject to tax at regular corporate rates on any taxable income or gains that it
does not distribute.
-22-
The Code imposes a 4% nondeductible excise tax on a Fund to the extent it
does not distribute by the end of any calendar year at least 98% of its net
investment income for that year and 98% of the net amount of its capital gains
(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 income or gain
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 Funds anticipate that they will pay such
dividends and will make such distributions as are necessary in order to avoid
the application of this tax. If, in any taxable year, a Fund fails to qualify as
a regulated investment company under the Code, the Fund would be taxed in the
same manner as an ordinary corporation and distributions to its shareholders
would not be deductible by the Fund in computing its taxable income. In
addition, in the event of a failure to qualify, a Fund's distributions, to the
extent derived from current or accumulated earnings and profits, would
constitute dividends (eligible for the corporate dividends-received deduction)
which are taxable to its shareholders as ordinary income, even though those
distributions might otherwise (at least in part) have been treated as long-term
capital gains when received by its shareholders. If a Fund fails to qualify as a
regulated investment company in any year, it must pay out its earnings and
profits accumulated in that year in order to qualify again as a regulated
investment company. In addition, if a Fund failed to qualify as a regulated
investment company for a period greater than one taxable year, it may be
required to recognize any net built-in gains with respect to certain of its
assets (the excess of the aggregate gains, including items of income, over
aggregate losses that would have been realized if it had been liquidated) in
order to qualify as a regulated investment company in a subsequent year.
Each of the Funds pays dividends of net investment income monthly and
makes distributions at least annually of any net realized long-term and
short-term capital gains in excess of applicable capital losses, including
capital loss carryforwards. The board of directors of each Fund determines
annually whether to distribute any net realized long-term capital gains in
excess of its net realized short-term capital losses (including any capital loss
carryovers). Each of the Funds currently expects to distribute any such excess
annually to its shareholders. However, if a Fund retains for investment an
amount equal to all or a portion of its net realized long-term capital gains in
excess of its net realized short-term capital losses and capital loss
carryovers, it will be subject to a corporate tax (currently at a rate of 35%)
on the amount retained. In that event, the Fund expects to designate such
retained amounts as undistributed capital gains in a notice to its shareholders
who (a) will be required to include in income for United States federal income
tax purposes, as long-term capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit their proportionate shares
of the 35% tax paid by the Fund on the undistributed amount against their United
States federal income tax liabilities, if any, and to claim refunds to the
extent their credits exceed their liabilities, if any, and (c) will be entitled
to increase their tax basis, for United States federal income tax purposes, in
their shares by an amount equal to 65% of the amount of undistributed capital
gains included in their income.
Any dividend declared by the Funds in October, November or December of any
calendar year and payable to shareholders of record on a specified date in such
a month shall be deemed to have been received by each shareholder on December 31
of such calendar year and to have been paid by the Funds not later than such
December 31, provided that such dividends are actually paid by the Funds during
January of the following calendar year.
Dividends and distributions
If you are a U.S. shareholder, dividends of net investment income and
distributions of net realized short-term capital gains are taxable to you as
ordinary income, whether paid in cash or in shares. Distributions of net
long-term capital gains, if any, that a Fund designates as capital gains
dividends are
-23-
taxable as long-term capital gains, whether paid in cash or in shares and
regardless of how long you have held your shares. Dividends and distributions
paid by a Fund (except for the portion thereof, if any, attributable to
dividends on stock of U.S. corporations received by the Fund) will not qualify
for the deduction for dividends received by corporations. Distributions in
excess of a Fund's current and accumulated earnings and profits will, as to you,
be treated as a tax-free return of capital, to the extent of your basis in your
shares, and as a capital gain thereafter (if you hold your shares as capital
assets).
If you receive dividends or distributions in the form of additional shares
pursuant to the Dividend Reinvestment and Cash Purchase Plan you should be
treated for United States federal income tax purposes as receiving a
distribution in the amount equal to the amount of money that shareholders
receiving cash dividends or distributions will receive, and should have a cost
basis in the shares received equal to such amount.
If you are considering buying shares just prior to a dividend or capital
gain distribution you should be aware that, although the price of shares just
purchased at that time may reflect the amount of the forthcoming distribution,
such dividend or distribution may nevertheless be taxable to you.
If a Fund is the holder of record of any stock on the record date for any
dividends payable with respect to such stock, such dividends are included in the
Fund's gross income not as of the date received but as of the later of (a) the
date such stock went ex-dividend (i.e., the date on which a buyer of the stock
would not be entitled to receive the declared, but unpaid, dividends) or (b) the
date the Fund acquired such stock. Accordingly, in order to satisfy its income
distribution requirements, a Fund may be required to pay dividends based on
anticipated earnings, and you may receive dividends in an earlier year than
would otherwise be the case.
Sales of shares
Upon the sale or exchange of your shares, you will realize a taxable gain
or loss equal to the difference between the amount realized and the basis in
your shares. Such gain or loss will be treated as capital gain or loss, if the
shares are capital assets in your hands, and will be long-term capital gain or
loss if the shares are held for more than one year and short-term capital gain
or loss if the shares are held for one year or less. Any loss realized on a sale
or exchange will be disallowed to the extent the shares disposed of are
replaced, including replacement through the reinvesting of dividends and capital
gains distributions in the Fund under the Dividend Reinvestment and Cash
Purchase Plan, within a 61-day period beginning 30 days before and ending 30
days after the disposition of the shares. In such a case, the basis of the
shares acquired will be increased to reflect the disallowed loss. Any loss
realized by you on the sale of a share held by you for six months or less will
be treated for United States federal income tax purposes as a long-term capital
loss to the extent of any distributions or deemed distributions of long-term
capital gains received by you with respect to such share.
Backup withholding
If you fail to provide your Fund with your correct taxpayer identification
number or to make required certifications, or have been notified by the Internal
Revenue Service that you are subject to backup withholding, the Fund may be
required to withhold, for United States federal income tax purposes, 31% of the
dividends and distributions payable. Corporate shareholders and certain other
shareholders are or may be exempt from backup withholding. Backup withholding is
not an additional tax and any amount withheld may be credited against your
United States federal income tax liabilities. If you are a foreign investor,
additional tax withholding requirements which may apply are discussed below.
-24-
Foreign shareholders
If you are a foreign investor (such as a nonresident alien individual, a
foreign trust or estate, a foreign corporation or a foreign partnership) under
U.S. laws, taxation depends, in part, on whether your income from the Funds is
"effectively connected" with a United States trade or business carried on by
you.
If you are not a resident alien and your income from a Fund is not
effectively connected with a United States trade or business carried on by you,
distributions of net investment income and net realized short-term capital gains
will be subject to a 30% (or lower treaty rate) United States withholding tax.
If you are a nonresident alien, distributions of net realized long-term capital
gains, amounts retained by the Funds which are designated as undistributed
capital gains, and gains realized upon the sale of shares of a Fund generally
will not be subject to United States tax unless you are physically present in
the United States for more than 182 days during the taxable year and, in the
case of gain realized upon the sale of shares, unless (a) such gain is
attributable to an office or fixed place of business in the United States or (b)
you have a tax home in the United States and such gain is not attributable to an
office or fixed place of business located outside the United States. However, a
determination by a Fund not to distribute long-term capital gains will cause the
Fund to incur a U.S. federal tax liability with respect to retained long-term
capital gains, thereby reducing the amount of cash held by the Funds that is
available for investment, and you may not be able to claim a credit or deduction
with respect to such taxes.
In general, if you are a resident alien or if dividends or distributions
from a Fund are effectively connected with a United States trade or business
carried on by you, then dividends of net investment income, distributions of net
short-term and long-term capital gains, amounts retained by the Fund that are
designated as undistributed capital gains and any gains realized upon the sale
of shares will be subject to United States income tax at the rates applicable to
United States citizens or domestic corporations. If you are a corporation, and
your income from a Fund is effectively connected with a United States trade or
business, you may also be subject to the 30% (or lower treaty rate) branch
profits tax. If you are entitled to claim the benefits of an applicable tax
treaty, the tax consequences to you may be different from those described in
this section. You may be required to provide appropriate documentation to
establish your entitlement to the benefits of such a treaty. You are advised to
consult your own tax adviser with respect to (a) whether your income from a Fund
is or is not effectively connected with a United States trade or business
carried on by you, (b) whether you may claim the benefits of an applicable tax
treaty, and (c) any other tax consequences to you of an investment in the Funds.
Notices
You will be notified annually by each Fund as to the United States federal
income tax status of the dividends, distributions and deemed distributions made
by the Fund to you. Furthermore, you will also receive, if appropriate, various
written notices after the close of the Fund's taxable year regarding the United
States federal income tax status of certain dividends, distributions and deemed
distributions that were paid (or that are treated as having been paid) by the
Funds to you during the preceding taxable year.
OTHER TAXATION. Distributions also may be subject to additional state,
local and foreign taxes depending on your particular situation.
Fund investments
Market discount
-25-
If a Fund purchases a debt security at a price lower than the stated
redemption price of such debt security, the excess of the stated redemption
price over the purchase price is "market discount." If the amount of market
discount is more than a de minimis amount, the Fund must include a portion of
such market discount as ordinary income (not capital gain) in each taxable year
in which the Fund owns an interest in such debt security and receives a
principal payment on it. In particular, the Fund will be required to allocate
that principal payment first to the portion of the market discount on the debt
security that has accrued but has not previously been includable in income. In
general, the amount of market discount that must be included for each period is
equal to the lesser of (i) the amount of market discount accruing during such
period (plus any accrued market discount for prior periods not previously taken
into account) or (ii) the amount of the principal payment with respect to such
period. Generally, market discount accrues on a daily basis for each day the
debt security is held by the Fund at a constant rate over the time remaining to
the debt security's maturity or, at the election of the Fund, at a constant
yield to maturity which takes into account the semi-annual compounding of
interest. Gain realized on the disposition of a market discount obligation must
be recognized as ordinary interest income (not capital gain) to the extent of
the "accrued market discount."
Original issue discount
Certain debt securities acquired by a Fund may be treated as debt
securities that were originally issued at a discount. Generally, original issue
discount is defined as the difference between the price at which a security was
issued and its stated redemption price at maturity.
Although no cash income is actually received by the Fund, original issue
discount that accrues on a debt security in a given year generally is treated
for federal income tax purposes as interest and, therefore, such income would be
subject to the distribution requirements applicable to regulated investment
companies. In order to maintain its status as a regulated investment company,
the Fund could therefore be required to incur debt or to dispose of portfolio
securities to generate cash for distribution. Some debt securities may be
purchased by a Fund at a discount that exceeds the original issue discount on
such debt securities, if any. This additional discount represents market
discount for federal income tax purposes (see above).
Options, futures and forward contracts
A Fund's transactions in options and futures contracts will be subject to
special provisions of the Code that, among other things, may affect the
character of gains and losses realized by the Fund (i.e., it may affect whether
gains or losses are ordinary or capital), accelerate recognition of income and
defer losses. These rules could therefore affect the character, amount and
timing of distributions to the Fund's shareholders. These provisions also (a)
will require the Fund to mark-to-market certain types of the positions in its
portfolio (i.e., treat them as if they were closed out) and (b) may cause the
Fund to recognize income without receiving cash to pay dividends or make
distributions in amounts necessary to satisfy the distribution requirements for
avoiding income and excise taxes. Each Fund will monitor its transactions, will
make the appropriate tax elections and will make the appropriate entries in its
books and records when it acquires any option, futures contract or hedged
investment in order to mitigate the effect of these rules and prevent its
disqualification as a regulated investment company.
Any regulated futures contracts and certain options (namely, nonequity
options and dealer equity options) in which a Fund may invest may be "section
1256 contracts." Gains (or losses) on these contracts generally are considered
to be 60% long-term and 40% short-term capital gains or losses. Also, section
1256 contracts held by a Fund at the end of each taxable year (and on certain
other dates prescribed in the Code) are "marked to market" with the result that
unrealized gains or losses are treated as though they were realized.
-26-
Transactions in options, futures and forward contracts undertaken by a
Fund may result in "straddles" for federal income tax purposes. The straddle
rules may affect the character of gains (or losses) realized from such
transactions, and losses realized by the Fund on positions that are part of a
straddle may be deferred under the straddle rules, rather than being taken into
account in calculating the taxable income for the taxable year in which the
losses are realized. In addition, certain carrying charges (including interest
expense) associated with positions in a straddle may be required to be
capitalized rather than deducted currently. Certain elections that a Fund may
make with respect to its straddle positions may also affect the amount,
character and timing of the recognition of gains or losses from the affected
positions.
Because only a few regulations implementing the straddle rules have been
promulgated, the consequences of such transactions to a Fund are not entirely
clear. The straddle rules may increase the amount of short-term capital gain
realized by a Fund, which is taxed as ordinary income when distributed to its
shareholders. Because application of the straddle rules may affect the character
of gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to you as ordinary income or long-term capital gain may be increased
or decreased substantially as compared to a fund that did not engage in such
transactions.
Constructive sales
Under certain circumstances, a Fund may recognize gain from a constructive
sale of an "appreciated financial position" it holds if it enters into a short
sale, forward contract or other transaction that substantially reduces the risk
of loss with respect to the appreciated position. In that event, the Fund would
be treated as if it had sold and immediately repurchased the property and would
be taxed on any gain (but not loss) from the constructive sale. The character of
gain from a constructive sale would depend upon the Fund's holding period in the
property. Loss from a constructive sale would be recognized when the property
was subsequently disposed of, and its character would depend on the Fund's
holding period and the application of various loss deferral provisions of the
code. Constructive sale treatment does not apply to transactions closed prior to
the end of the 30th day after the close of the taxable year, if certain
conditions are met.
Section 988 gains or losses
Gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues income or other receivables or accrues expenses
or other liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition of some
investments, including debt securities and certain forward contracts denominated
in a foreign currency, gains or losses attributable to fluctuations in the value
of the foreign currency between the acquisition and disposition of the position
also are treated as ordinary gain or loss. These gains and losses, referred to
under the Code as "section 988" gains or losses, increase or decrease the amount
of the Fund's investment company taxable income available to be distributed to
its shareholders as ordinary income. If section 988 losses exceed other
investment company taxable income during a taxable year, the Fund would not be
able to make any ordinary dividend distributions, or distributions made before
the losses were realized would be recharacterized as a return of capital to its
shareholders, rather than as an ordinary dividend, thereby reducing the basis of
the Fund shares.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN MATERIAL TAX CONSEQUENCES
AFFECTING THE FUNDS AND YOURSELF. YOU ARE ADVISED TO CONSULT YOUR OWN TAX
ADVISER WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF AN INVESTMENT
IN THE FUNDS.
-27-
FINANCIAL STATEMENTS
The audited financial statements, notes to the audited financial
statements and report of the independent public accountants of CIK and CGF for
the fiscal year ended December 31, 2000 are included in the annual report of
each Fund for such fiscal year. The annual report of each Fund, which either
accompany this Statement of Additional Information or has previously been
provided to you, is incorporated herein by reference with respect to such
information. The annual report of each Fund may be obtained without charge, by
writing to Shareholder Communications Corporation, 17 State Street, New York,
New York 10004, or by calling 1(800) 223-2064.
PRO FORMA FINANCIAL STATEMENTS
The following tables set forth the unaudited pro forma condensed statement
of assets and liabilities and unaudited pro forma condensed statement of
operations for each Fund as of and for the year ended December 31, 2000 as
adjusted to give effect to the Reorganization.
-28-
YEAR ENDED DECEMBER 31, 2000
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
Pro-Forma of
Combined
Statement of
Assets and
CGF CIK Adjustments Liabilities
---------------------------------------------------------------------
ASSETS
Investments at Value
(CGF Cost $99,627,659) (CIK Cost $267,765,551)........ $ 82,645,303 $ 191,985,690 $ 274,630,993
Receivables:
Dividend and Interest ................................ 2,737,843 6,212,535 8,950,378
Investments Sold...................................... 135,095 135,095
Other Assets.......................................... 17,117 24,695 41,812
------------- -------------- -------------
Total Assets............................................. 85,535,358 198,222,920 283,758,278
============= ============== =============
LIABILITIES
Payables:
Unrealized Depreciation of Forward Foreign Currency
Exchange Contracts................................. 7,411 0 7,411
Investment Advisory Fees.............................. 100,691 258,798 359,489
Professional Fees..................................... 39,613 45,581 85,194
Shareholders' Reports................................. 17,870 44,798 62,668
Custodian Fees........................................ 13,465 15,575 29,040
Administrative Fees................................... 12,243 27,000 39,243
Investments Purchased................................. 7,044 0 7,044
Shareholder Servicing Fees............................ 4,295 0 4,295
Directors' Fees....................................... 750 750 1,500
Other Liabilities..................................... 413 13,414 13,827
------------- -------------- -------------
Total Liabilities........................................ 203,795 405,916 609,711
------------- -------------- -------------
Net Assets............................................... 85,331,563 197,817,004 283,148,567
------------- -------------- -------------
Net Assets Consist of:
Capital Shares at $.001 Par Value........................ 11,977 34,708 2,995 49,680
Capital Paid in Excess of Par Value...................... 110,670,038 288,994,680 (2,995) 399,661,723
Distributions in Excess of Net
Investment Loss....................................... (43,455) (61,160) (104,615)
Accumulated Net Realized Loss............................ (8,319,202) (15,371,363) (23,690,565)
Unrealized Depreciation on Investments and Foreign
Currency Translations................................. (16,987,795) (75,779,861) (92,767,656)
------------- -------------- -------------
Net Assets............................................... $ 85,331,563 $ 197,817,004 0 $ 283,148,567
------------- -------------- ------------ -------------
Shares Outstanding....................................... 11,976,699 34,708,369 2,993,751 49,678,819
------------- -------------- ------------ -------------
Net Asset Value Per Share................................ $7.12 $5.70 $5.70
See Notes to Pro Forma Financial Statements
YEAR ENDED DECEMBER 31, 2000
PRO-FORMA COMBINED STATEMENT OF OPERATIONS
Pro-Forma of
Combined
Statement
CGF CIK Adjustments of Operations Notes
-----------------------------------------------------------------------------
INVESTMENT INCOME
Interest
(Net of foreign taxes withheld of $134,649)...... $ 10,080,876 $ 24,488,930 $ 0 $ 34,569,806
Dividends........................................... 200,962 528,610 0 729,572
------------- --------------- ----------- -------------
Total Income..................................... 10,281,838 25,017,540 0 35,299,378
------------- -------------- ----------- -------------
EXPENSES
Investment Advisory Fees......................... 471,683 1,148,861 (131,056) 1,489,488 a
Shareholders' Reports............................ 154,091 143,814 (113,198) 184,707 b
Administrative Fees.............................. 84,784 170,550 (42,719) 212,615 c
Professional Fees................................ 80,825 68,699 (49,024) 100,500 d
Custodian Fees................................... 78,483 91,182 (72,786) 96,879 e
Directors' Fees and Expenses..................... 43,932 43,419 (32,061) 55,290 f
Shareholder Servicing Fees....................... 36,583 73,001 (25,584) 84,000 g
Annual Meeting Fees.............................. 26,836 0 7,933 34,769 h
Other............................................ 10,913 61,342 1,744 73,999 i
------------- --------------- ----------- -------------
Total Expenses...................................... 988,130 1,800,868 (456,751) 2,332,247
------------- --------------- ----------- -------------
Net Investment Income............................... 9,293,708 23,216,672 32,967,131
------------- -------------- -------------
Net Realized Gain (Loss):
Investments...................................... 1,381,434 (4,981,733) 0 (3,600,299)
Foreign Currency................................. 35,478 (50,319) 0 (14,841)
Total Net Realized Gain (Loss)...................... 1,416,912 (5,032,052) 0 (3,615,140)
Change in Unrealized Appreciation (Depreciation):
Investments...................................... (15,495,992) (48,839,274) 0 (64,335,266)
------------- --------------- ----------- -------------
Net Realized Loss and Change in Unrealized
Appreciation (Depreciation)...................... (14,079,080) (53,871,326) 0 (67,950,406)
------------- --------------- ----------- -------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $ (4,785,372) $ (30,654,654) $ (456,751) $ (34,983,275)
------------- --------------- ----------- -------------
- ------------------
(a) Based on the New Investment Advisory Agreement if it had been in place for
the year ended 12/31/00.
(b) Estimated expenses of combined Funds.
(c) Estimated fees using current administration contract.
(d) Estimated expenses of combined Funds.
(e) Estimated fees based on current agreement in place.
(f) Estimated fees based on current agreement plus additional out of pocket
expenses and meeting fees.
(g) Estimated expenses of combined Funds.
(h) Estimated expenses of combined Funds.
(i) Estimated expenses includes NYSE expense, Insurance expense and
miscellaneous charges.
See Notes to Pro Forma Financial Statements
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
DOMESTIC SECURITIES (86.0%)
CORPORATE OBLIGATIONS (79.7%)
Aerospace/Defense (0.7%)
Decrane Aircraft Holdings Series B, Gtd.
12.00%, 9/30/08 (1) Caa1 800 732,000 $800 $732,000
Lockheed Martin Corp. Notes 7.95%, 12/1/05 Baa3 195 207,908 195 207,908
Raytheon Co. Notes 6.45%, 8/15/02 Baa2 400 398,580 400 398,580
Sequa Corp. Sr. Notes 9.00%, 8/1/09 Ba2 250 249,375 250 249,375
United Technologies Corp. Notes 6.625%,
11/15/04 A2 260 265,216 260 265,216
Group Total 249,375 1,603,704 1,853,079
Automotive (2.1%)
Aetna Industries, Inc. Sr. Notes 11.875%,
10/1/06 B3 600 303,750 600 303,750
Cambridge Industries, Inc. Series B, Gtd.
Sr. Sub. Notes 10.25%, 7/15/07 (2) N/R 250 63,750 500 127,500 750 191,250
Collins & Aikman Products Corp. Sr. Sub.
Notes 11.50%, 4/15/06 B2 250 196,250 700 686,000 950 882,250
Daimler Chrysler NA Holdings, Corp.:
Gtd.7.40%, 1/20/05 A2 125 125,643 125 125,643
8.00%, 6/15/10 A2 100 101,046 100 101,046
Delco Remy International, Inc. Gtd. Sr.
Sub. Notes 10.625%, 8/1/06 B2 250 211,250 750 633,750
Diamond Triumph Auto Gtd. 9.25%, 4/1/08 B3 500 367,500
Hayes Lemmerz International, Inc.: Series
B, Gtd. Sr. Notes 9.125%, 7/15/07 B2 500 332,500
8.25%, 12/15/08 B2 1,000 650,000
Motor Coach Industries International, Inc.
Gtd. 11.25%, 5/1/09 B2 1,250 343,750
Oxford Automotive, Inc. Gtd. Sr. Sub. Notes
10.125%, 6/15/07 Caa1 $1,625 $1,113,125
PEP Boys-Manny Moe & Jack Notes 7.00%,
6/1/05 Ba3 750 470,692
Safety Components International, Inc.
Series B, Gtd. Sr. Sub. Notes 10.125%,
7/15/07 (2) B3 500 107,500
Stanadyne Automotive Series B, Gtd. Sr.
Sub. Notes 10.25%, 12/15/07 Caa1 400 299,000
Visteon Corp. Sr. Notes 8.25%, 8/1/10 Baa2 50 49,380
Group Total 5,971,136
Broadcasting (4.2%)
ACME Television LLC/ ACME Financial Corp.
Gtd. Sr. Discount Notes 0.00%, 9/30/04
(3) B3 500 435,000
Australis Holdings Pty. Ltd. Yankee Sr.
Secured Discount Notes 0.00%, 11/1/02
(2)(3) N/R 4,600 460
Australis Media Ltd. Yankee Units 15.75%,
5/15/03 (2)(6) N/R 3,141 15,704
Citadel Broadcasting Co. Gtd. 9.25%,
11/15/08 B3 $250 $243,750
Cumulus Media, Inc. Sr. Sub. Notes 10.375%,
7/1/08 B3 800 646,000
EchoStar Communications Corp. Sr. Notes
9.375%, 2/1/09 B1 1,000 975,000
Granite Broadcasting Corp.: Series A, Sr.
Sub. Notes 9.375%, 12/1/05 Caa1 300 184,500
8.875%, 5/15/08 Caa1 1,150 707,250
Pegasus Media &Communications, Inc.Series
B, Notes12.50%, 7/1/05 B3 500 505,000
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Salem Communications Corp. Series B, Gtd.
9.50%, 10/1/07 B3 850 808,563
Sinclair Broadcast Group, Inc.: Sr. Sub.
Notes 10.00%, 9/30/05 B2 1,200 1,170,000
8.75%, 12/15/07 B2 600 540,000
Susquehanna Media Co. Sr. Sub. Notes 8.50%,
5/15/09 B1 150 148,500
Time Warner Telecom, LLC Sr. Notes 9.75%,
7/15/08 B2 $750 $693,750
Turner Broadcasting Systems, Inc. Sr. Notes
7.40%, 2/1/04 Baa1 65 66,676
United International Holdings, Inc. Series
B, Sr. Discount Notes 0.00%, 2/15/08 (3) B3 1,950 809,250
Univision Network Holding L.P. Sub. Notes
7.00%, 12/17/02 N/R 2,073 2,798,650
Young Broadcasting, Inc. Series B, Gtd. Sr.
Sub. Notes 8.75%, 6/15/07 B2 1,315 1,198,294
Group Total 11,946,347
Business Services (1.1%)
General Binding Corp. Gtd. Sr. Sub. Notes
9.375%, 6/1/08 Caa1 500 367,500
Iron Mountain, Inc. Sr. Sub. Notes 8.75%,
9/30/09 B2 700 691,250
La Petite Academy, Inc. Gtd. 10.00%, 5/15/08 B3 1,250 668,750
Maxxam Group Holdings, Inc. Series B, Sr.
Notes 12.00%, 8/1/03 Caa1 700 556,500
Pentacon, Inc. Series A, Gtd. 12.25%, 4/1/09 B3 900 490,500
Werner Holdings Series A, Gtd. 10.00%,
11/15/07 B2 450 416,250
Group Total 3,190,750
Cable (9.6%)
Adelphia Communications Corp. Series B, Sr.
Notes 8.375%, 2/1/08 B2 1,000 865,000
Alliance Atlantis Communications Corp.
Yankee Sr Sub. Notes 13.00%, 12/15/09 B2 500 498,125
CSC Holdings, Inc.: Sr. Sub. Notes 9.875%,
5/15/06 Ba3 400 410,000
Series B, Sr. Sub. Debentures 8.125%,
8/15/09 9.875%, 2/15/13 Ba1 $350 $357,201
Ba3 1,100 1,133,000
Cablevision S.A. Bonds 13.75%, 5/1/09 B1 330 241,725
Century Communications Corp.: Series B, Sr.
Notes 0.00%, 1/15/08 B2 650 253,500
Sr. Notes 9.75%, 2/15/02 B2 500 491,250
8.75%, 10/1/07 B2 650 559,813
Charter Communications Holdings: Sr. Notes
8.625%, 4/1/09 10.25%, 1/15/10 (1) B2 750 684,375
B2 1,050 1,029,000
Sr. Discount Notes 0.00%, 4/1/11 (3) B2 1,300 757,250
Classic Cable, Inc. Series B, Gtd. 9.375%,
8/1/09 Caa1 650 295,750
Coaxial Communications, Inc. Gtd. Notes
10.00%, 8/15/06 B3 1,250 1,195,313
Comcast UK Cable Partners, Ltd. Yankee Sr.
Debentures 0.00%, 11/15/07 (3) B2 500 427,500
DIVA Systems Corp. Series B, Sr. Discount
Notes 0.00%, 3/1/08 (3) N/R 3,885 1,612,275
Diamond Cable Communications plc Yankee
Discount Notes 0.00%, 12/15/05 (3) Caa1 1,800 1,620,000
James Cable Partners L.P. Series B, Sr.
Notes 10.75%, 8/15/04 Caa 1,800 1,143,000
Jones Intercable, Inc. Sr. Notes 7.625%,
4/15/08 Baa2 1,150 1,185,423
Lenfest Communications, Inc.: Sr. Notes
8.375%, 11/1/05 Baa2 500 535,421
- 2 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
10.50%, 6/15/06 Baa3 1,250 1,447,280
8.25%, 2/15/08 Baa3 200 207,544
Mediacom LLC/Capital Corp. Sr. Notes
7.875%, 2/15/11 B2 850 720,375
NTL Communications Corp.: Series B, Sr.
Notes 0.00%, 10/1/08 (3) B2 1,750 953,750
11.50%, 10/1/08 B2 600 532,500
NTL, Inc.: Sr. Notes Series A, 0.00%,
4/15/05 (3) B2 $1,000 $945,000
Series B, Sr. Notes 0.00%, 2/1/06 (3) B2 1,550 1,356,250
10.00%, 2/15/07 B2 750 650,625
Northland Cable Television Sr. Sub. Notes
10.25%, 11/15/07 B3 750 506,250
Olympus Communications, L.P./ Olympus
Capital Corp. Series B, Sr. Notes
10.625%, 11/15/06 B2 1,250 1,156,250
Renaissance Media Group Sr. Discount Notes
0.00%, 4/15/08 (3) B3 1,000 688,750
Rogers Cablesystems, Ltd. Gtd. 10.00%,
12/1/07 Baa3 700 738,500
Rogers Communications, Inc. Sr. Notes
8.875%, 7/15/07 Ba2 200 199,000
Telewest Communications plc Yankee Sr. Sub.
Discount Debentures 0.00%, 10/1/07 (3) B1 2,100 1,879,500
Group Total 27,276,495
Chemicals (1.5%)
Applied Extrusion Technologies Series B,
Sr. Notes 11.50%, 4/1/02 B2 1,500 885,000
Huntsman Corp. Sr. Sub. Notes 9.50%, 7/1/07
(1) B2 1,050 635,250
Huntsman Polymers Corp. Sr. Notes 11.75%,
12/1/04 B1 1,150 891,250
Laroche Industries, Inc. Series B, Sr. Sub.
Notes 9.50%, 9/15/07 (2) Ca 400 22,000
Lyondell Chemical Co. Series B, Secured
Notes 9.875%, 5/1/07 Ba3 750 729,375
NL Industries, Inc. Sr. Secured Notes
11.75%, 10/15/03 B1 317 321,755
Philipp Brothers Chemicals, Inc. Gtd.
9.875%, 6/1/08 B3 150 108,750
Sterling Chemical Holdings, Inc. Sr.
Secured Discount Notes 0.00%, 8/15/08 (3) Caa1 $1,000 $110,000
Sterling Chemicals, Inc. Sr. Sub. Notes
11.75%, 8/15/06 B3 434 210,490
Texas Petrochemical Corp. Series B, Sr.
Sub. Notes 11.125%, 7/1/06 Caa1 600 456,000
Group Total 4,369,870
Construction & Building Materials(1.6%)
AFC Enterprises Sr. Sub. Notes 10.25%,
5/15/07 B2 500 472,500
American Architectural Products Corp. Gtd.
Sr. Notes 11.75%, 12/1/07 (2) Ca 1,400 371,000
Brand Scaffold Services, Inc. Sr. Notes
10.25%, 2/15/08 B3 400 361,499
Collins & Aikman Floor Coverings, Inc.
Series B, Sr. Sub. Notes 10.00%, 1/15/07 B2 1,250 1,030,000
D.R. Horton, Inc. Sr. Sub. Notes 9.75%,
9/15/10 Ba3 150 141,750
Dayton Superior Corp. Gtd. 13.00%, 6/15/09 B3 1,250 1,131,250
International Utility Structures, Inc.
Yankee Sr. Sub. Notes 10.75%, 2/1/08 Caa1 650 445,250
MMI Products, Inc. Series B, Sr. Sub. Notes
11.25%, 4/15/07 B2 250 245,000
Presley Companies Sr. Notes 12.50%, 7/1/01 Caa3 250 233,750
Group Total 4,431,999
- 3 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Consumer Products & Services (2.5%)
Coinstar, Inc. Sr. Discount Notes 13.00%,
10/1/06 N/R 2,050 2,111,500
Doskocil Manufacturing Co., Inc. Gtd. Sr.
Sub. Notes 10.125%, 9/15/07 B3 500 127,500
Drypers Corp. Series B, Sr. Notes 10.25%,
6/15/07 Ca $400 $35,000
Fort James Corp. Sr. Notes 6.234%, 3/15/01 Baa3 45 44,814
Holmes Products Corp. Gtd. Sr. Sub. Notes
9.875%, 11/15/07 B3 1,000 445,000
Indesco International, Inc. Gtd. Sr. Sub.
Notes 9.75%, 4/15/08 (2) B3 600 117,000
Jordan Industries, Inc. Series B, Sr. Notes
10.375%, 8/1/07 B3 1,375 1,161,875
Jostens, Inc. Sr. Sub. Notes 12.75%, 5/1/10
(1) B3 900 814,500
Knology Holdings, Inc. Sr. Discount Notes
0.00%, 10/15/07 (3) N/R 1,250 243,750
Packaged Ice, Inc. Gtd. Sr. Notes 9.75%,
2/1/05 B3 100 79,500
Playtex Products, Inc. Series B, Gtd. Sr.
Notes 8.875%, 7/15/04 B1 425 405,875
Scotts Co. Sr. Sub. Notes 8.625%, 1/15/09
(1) B2 750 731,250
Sealy Mattress Co. Gtd. Sr. Sub. Notes
9.875%, 12/15/07 B3 200 194,000
United Rentals, Inc. Sr. Sub. Notes 9.25%,
1/15/09 B1 750 573,750
Group Total 7,085,314
Electronics (1.0%)
Aavid Thermal Technologies, Inc. Gtd.
12.75%, 2/1/07 B2 150 128,250
Condor Systems, Inc. Gtd. 11.875%, 5/1/09 B3 650 430,625
Details, Inc. Series B, Sr. Sub. Notes
10.00%, 11/15/05 B3 750 693,750
Metromedia Fiber Network, Inc. Series B,
Sr. Notes 10.00%, 11/15/08 B2 250 208,750
Numatics, Inc. Series B, Gtd. 9.625%, 4/1/08 B3 200 125,000
Unisys Corp.: Sr. Notes 11.75%, 10/15/04 Ba1 325 344,500
7.875%, 4/1/08 Ba1 250 233,125
Viasystems, Inc.: Sr. Sub. Notes 9.75%,
6/1/07 B3 650 518,375
Series B, Sr. Sub. Notes 9.75%, 6/1/07 B3 $150 $119,625
Group Total 2,802,000
Energy (7.2%)
AES Corp. Sr. Notes 9.50%, 6/1/09 Ba1 250 260,000
Abraxas Petroleum Corp. Series D, Sr.
Notes. 11.50%, 11/1/04 Caa3 1,454 1,301,330
Bellwether Exploration Co. Gtd. Sr. Sub.
Notes 10.875%, 4/1/07 B3 1,500 1,432,500
CMS Energy Corp. Sr. Notes 7.50%, 1/15/09 Ba3 250 229,632
CMS Energy/Atlantic Methanol Secured Notes
10.875%, 12/15/04 (1) B1 250 251,250
Calpine Corp. Sr. Notes 7.75%, 4/15/09 Ba1 700 653,189
Canadian Forest Oil Ltd. Gtd. Sr. Sub.
Notes 8.75%, 9/15/07 B2 750 740,625
Clark R & M, Inc. Sr. Notes 8.625%, 8/15/08 Ba3 350 264,250
Cliffs Drilling Co. Series D, Gtd. Sr.
Notes 10.25%, 5/15/03 Ba3 1,350 1,375,312
Cogentrix Energy, Inc. Gtd. Unsecured Notes
8.75%, 10/15/08 Baa3 1,000 1,021,839
Conoco, Inc. Sr. Notes 5.90%, 4/15/04 A3 220 217,976
Continental Resources Gtd. Sr. Notes
10.25%, 8/1/08 Caa1 400 349,000
Contour Energy Co. Gtd. 14.00%, 4/15/03 B3 1,219 1,273,855
Dominion Resources, Inc. Sr. Notes 8.125%,
6/15/10 Baa1 185 200,160
- 4 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Duke Energy Field Services: Notes 7.50%,
8/16/05 Baa2 115 119,799
7.875%, 8/16/10 Baa2 90 96,094
El Paso Energy Corp. Sr. Notes 6.75%,
5/15/09 Baa2 255 251,784
Energy Corp. of America Series A, Sr. Sub.
Notes 9.50%, 5/15/07 Caa1 250 199,375
FPL Group Capital, Inc. Gtd. 6.875%, 6/1/04 A2 $380 $385,521
Frontier Oil Corp. Series A, Sr. Notes
9.125%, 2/15/06 B2 200 178,250
11.75%, 11/15/09 B2 1,050 1,046,063
Giant Industries, Inc. Gtd. Sr. Sub. Notes
9.00%, 9/1/07 B2 500 457,500
Gothic Production Corp. Series B, Gtd. Sr.
Secured Notes 11.125%, 5/1/05 B3 800 860,000
H.S. Resources, Inc.: Sr. Sub. Notes
9.875%, 12/1/03 B2 500 507,500
Gtd. Sr. Sub. Notes 9.25%, 11/15/06 B2 850 858,500
Key Energy Services, Inc. Sr. Sub. Notes
14.00%, 1/15/09 B3 1,500 1,710,000
KeySpan Corp. Notes 7.25%, 11/15/05 A3 185 192,502
Keyspan Gas East Unsub. Notes 7.875%, 2/1/10 A2 230 247,247
Nuevo Energy Co. Series B, Sr. Sub. Notes
9.50%, 6/1/08 B1 150 152,250
Occidental Petroleum Corp. Sr. Notes
7.375%, 11/15/08 Baa3 140 144,029
Ocean Energy, Inc. Series B, Gtd. 8.375%,
7/1/08 Ba3 150 153,375
Pacific Gas & Electric Co. Sr. Notes
7.375%, 11/1/05 (1) A2 55 45,952
Parker Drilling Co. Series D, Gtd. 9.75%,
11/15/06 B1 750 757,500
Phillips Petroleum Co.: Notes 8.50%, 5/25/05 Baa2 35 37,893
8.75%, 5/25/10 Baa2 55 62,922
Plains Resources, Inc. Series B, Gtd. Sr.
Sub. Notes 10.25%, 3/15/06 B2 375 376,875
Southwest Royalties, Inc. Series B, Gtd.
Sr. Notes 10.50%, 10/15/04 Caa 1,300 1,108,250
Triton Energy, Ltd. Sr. Notes 8.875%,
10/1/07 Ba3 200 203,250
Wiser Oil Co. Gtd. Sr. Sub. Notes 9.50%, 563,500
5/15/07 Caa3 $700 $20,286,849
Group Total
Entertainment (2.1%)
Ackerley Group, Inc. Series B, Sr. Sub.
Notes 9.00%, 1/15/09 B2 250 220,000
American Skiing Co. Series B, Sr. Sub.
Notes 12.00%, 7/15/06 Caa3 625 503,125
Bally Total Fitness Holdings Series D, Sr.
Sub. Notes 9.875%, 10/15/07 B3 500 466,250
Booth Creek Ski Holdings, Inc. Series B,
Sr. Sub. Notes 12.50%, 3/15/07 Caa1 1,250 918,750
Cinemark U.S.A., Inc. Series D, Sr. Sub.
Notes 9.625%, 8/1/08 Caa 450 294,750
KSL Recreation Group, Inc. Series B, Sr.
Sub. Notes 10.25%, 5/1/07 B2 430 423,550
Loews Cineplex Sr. Sub. Notes 8.875%, 8/1/08 B3 900 139,500
Outboard Marine Corp. Series B, Gtd. Sr.
Notes 10.75%, 6/1/08 B3 500 102,500
PTI Holdings, Inc. Sub. Notes 7.00%,
12/17/02 N/R 507 684,335
Premier Parks, Inc. Sr. Notes 9.75%, 6/15/07 B3 150 146,250
Production Resource Group, LLC/PRG Finance
Group Gtd. Sr. Sub. Notes 11.50%, 1/15/08 N/R 1,000 505,000
Regal Cinemas, Inc.: Sr. Sub. Notes 9.50%,
6/1/08 Ca 1,450 97,875
8.875%, 12/15/10 Ca 250 16,875
Silver Cinemas, Inc. Sr. Sub. Notes 10.50%,
4/15/05 (2) Caa1 1,900 152,000
Time Warner, Inc.: Debentures 7.48%, 1/15/08 Baa1 210 215,460
- 5 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Notes 8.11%, 8/15/06 Baa1 60 63,722
Yanknets LLC/ Yanknets CP Sr. Notes 12.75%,
3/1/07 (1)(5) B1 1,050 1,018,500
Group Total 5,968,442
Financial Services (2.6%)
Allstate Corp. Sr. Notes 7.875%, 5/1/05 A1 $135 $142,862
Associates Corp. Sr. Notes 6.25%, 11/1/08 A1 400 386,286
Bank of America Corp. Notes 7.875%, 5/16/05 Aa2 100 105,644
Sub. Notes 7.80%, 2/15/10 Aa3 345 359,657
Chase Manhattan Corp. Sub. Notes 7.00%,
11/15/09 A1 260 259,245
Citicorp Series F, Sub. Notes 6.375%,
11/15/08 A1 140 136,216
Citigroup, Inc. Sub. Notes 7.25%, 10/1/10 Aa3 100 103,217
Conseco Finance Trust III Bonds 8.796%,
4/1/27 Caa 55 21,175
Conseco, Inc.: Notes 6.40%, 2/10/03 B1 155 118,575
9.00%, 10/15/06 B1 100 70,000
Duke Capital Corp. Sr. Notes 7.25%, 10/1/04 A3 405 417,605
ERAC USA Finance Co. Notes 7.95%, 12/15/09
(1) Baa1 50 49,631
Enron Corp. Notes 7.875%, 6/15/03 Baa1 60 62,002
Finova Capital Corp.: Notes 6.55%, 11/15/02 Baa1 155 94,990
7.25%, 11/8/04 Baa1 135 81,143
Ford Motor Credit Co. Notes 7.875%, 6/15/10 A2 290 299,341
GE Global Insurance Notes 7.50%, 6/15/10 Aa1 355 378,485
General Electric Capital Corp. Notes 7.00%,
2/3/03 Aaa 375 382,901
General Motors Acceptance Corp. Notes
7.50%, 7/15/05 A2 $375 $384,315
Goldman Sachs Group, Inc. Sr. Unsub. Notes
7.80%, 1/28/10 A1 175 184,333
Hanvit Bank Sub. Notes 11.75%, 3/1/10 Ba3 150 146,390
John Hancock Global Funding II Notes 7.90%,
7/2/10 (1) Aa2 240 259,728
Lehman Brothers Holdings, Inc.: Notes
6.625%, 4/1/04 A2 50 49,871
8.25%, 6/15/07 A2 60 63,027
Madison River Capital/ Finance Sr. Notes
13.25%, 3/1/10 Caa1 1,500 982,500
Morgan Stanley Dean Witter & Co. Notes
7.75%, 6/15/05 Aa3 95 99,919
Potomac Capital Investment Corp. Notes
7.55%, 11/19/01 (1) A3 150 151,863
Sovereign Bancorp Sr. Notes 10.50%, 11/15/06 Ba3 250 247,500
US West Cap Funding, Inc. Gtd. 6.875%,
8/15/01 (1) Baa1 120 120,302
Wells Fargo & Co.: Sr. Notes 7.25%, 8/24/05 Aa2 180 187,498
Subordinated 7.55%, 6/21/10 Aa2 100 106,016
Westfed Holdings Sr. Debentures 15.50%,
9/15/99 (2) N/R 2,000 680,000
Windsor Woodmont Black Hawk Units 13.00%,
3/15/05 N/R 200 198,000
Group Total 7,330,237
Food & Beverages (1.9%)
Archibald Candy Corp. Gtd. Sr. Secured
Notes 10.25%, 7/1/04 B3 1,250 618,750
Aurora Foods, Inc. Series B, Sr. Sub. Notes
9.875%, 2/15/07 Caa1 1,150 825,125
B & G Foods, Inc. Gtd. 9.625%, 8/1/07 B3 $700 $453,250
- 6 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Carrols Corp. Gtd. 9.50%, 12/1/08 B3 150 97,875
Eagle Family Foods Series B, Gtd. Sr. Notes
8.75%, 1/15/08 B3 450 227,250
Fleming Companies, Inc. Sr. Sub. Notes
10.50%, 12/1/04 B3 900 702,000
Kroger Co. Sr. Notes 7.625%, 9/15/06 Baa3 400 416,412
Premier International Foods, plc Sr. Notes
12.00%, 9/1/09 B3 1,400 1,155,000
Stater Brothers Holdings, Inc. Sr. Notes
10.75%, 8/15/06 B2 750 618,750
Vlasic Foods International, Inc. Sr. Sub.
Notes 10.25%, 7/1/09 C 650 146,250
Group Total 5,260,662
Health Care (1.3%)
American General Corp. Notes 7.50%, 8/11/10 A2 65 68,275
ICN Pharmaceutical Sr. Notes 8.75%,
11/15/08 Ba3 750 753,750
Icon Health & Fitness, Inc. Gtd. 12.00%,
9/27/05 N/R 222 122,100
Insight Health Services Corp. Gtd. Sr. Sub.
Notes 9.625%, 6/15/08 B3 $200 $187,000
Meditrust Conv. Debentures 7.50%, 3/1/01 B2 2,000 1,950,000
Paracelsus Healthcare Sr. Sub. Notes
10.00%, 8/15/06 (2) B3 750 300,000
Unilab Finance Corp. Sr. Sub. Notes 12.75%,
10/1/09 (1) B3 150 163,500
Group Total 3,544,625
Industrial Goods & Materials (1.8%)
AAF-McQuay, Inc. Sr. Notes 8.875%, 2/15/03 N/R 150 129,750
APCOA, Inc. Gtd. Sr. Notes 9.25%, 3/15/08 Caa1 430 144,050
Applied Extrusion Technologies Corp. Sr.
Notes 11.50%, 4/1/02 B2 250 147,500
Atlantis Plastics, Inc. Sr. Notes 11.00%,
2/15/03 N/R 835 571,975
CLARK Material Handling Co. Gtd. Sr. Notes
10.75%, 11/15/06 (2) B1 550 30,938
Elgar Holdings Corp. Gtd. 9.875%, 2/1/08 B2 $200 $130,000
GSI Group, Inc. Gtd. 10.25%, 11/1/07 B2 150 114,750
Haynes International, Inc. Sr. Notes
11.625%, 9/1/04 Caa1 750 528,750
Holley Performance Products Sr. Notes
12.25%, 9/15/07 (1) B3 750 401,250
International Knife & Saw, Inc. Sr. Sub.
Notes 11.375%, 11/15/06 B3 750 373,125
Jackson Products, Inc. Series B, Gtd.
9.50%, 4/15/05 B3 100 86,500
Motors & Gears, Inc. Series D, Sr. Notes
10.75%, 11/15/06 B3 1,700 1,521,500
Neenah Corp. Series B, Sr. Sub. Notes
11.125%, 5/1/07 B3 250 182,500
Park-Ohio Industries, Inc. Sr. Sub. Notes
9.25%, 12/1/07 B2 600 453,000
Thermadyne Manufacturing, LLC/ Thermadyne
Capital Corp. Gtd. Sr. Sub. Notes 0.00%,
6/1/08 (3) B3 975 190,500
Thermadyne Holdings Corp. Sr. Discount
Notes 9.875%, 6/1/08 Caa1 300 14,625
Group Total 5,020,713
Medical (0.1%)
Triad Hospitals Holdings Series B, Gtd.
11.00%, 5/15/09 B3 200 212,250
Metals & Mining (1.6%)
AK Steel Corp. Sr. Notes 9.125%, 12/15/06 Ba2 250 239,375
- 7 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Alcoa, Inc. Notes 7.375%, 8/1/10 A1 155 164,078
Algoma Steel, Inc. Yankee First Mortgage
Notes 12.375%, 7/15/05 B2 1,250 446,875
Bayou Steel Corp. First Mortgage Notes
9.50%, 5/15/08 B2 500 178,750
GS Technologies Operating Co. Sr. Notes
12.00%, 9/1/04 Ca 675 23,625
Kaiser Aluminum & Chemical Corp. Series D,
Sr. Notes 10.875%, 10/15/06 B2 675 529,875
Lodestar Holdings, Inc. Sr. Notes 11.50%,
5/15/05 (2) Caa2 800 74,000
Metallurg, Inc. Series B, First Mortgage
Gtd. Sr. Notes 11.00%, 12/1/07 B3 $1,200 $966,000
National Steel Corp. Series D, First
Mortgage Bonds 9.875%, 3/1/09 B2 1,000 405,000
Sheffield Steel Corp. Series B, First
Mortgage Bonds 11.50%, 12/1/05 Caa 1,000 455,000
WCI Steel, Inc. Series B, Sr. Secured Notes
10.00%, 12/1/04 B2 1,175 840,125
Weirton Steel Corp. Sr. Notes 11.375%,
7/1/04 B2 700 290,500
Wheeling-Pittsburg Corp. Sr. Notes 9.25%,
11/15/07 (2) Caa3 1,000 37,500
Group Total 4,650,703
Packaging/Containers (2.6%)
AEP Industries, Inc. Sr. Sub. Notes 9.875%,
11/15/07 B3 650 555,750
Amtrol, Inc. Sr. Sub. Notes 10.625%,
12/31/06 B3 600 480,000
BPC Holding Corp. Series B, Sr. Secured
Notes 12.50%, 6/15/06 Caa3 1,090 594,200
BWAY Corp. Gtd. Sr. Sub. Notes 10.25%,
4/15/07 B2 150 138,000
Berry Plastics Corp. Series B, Gtd. 11.00%,
7/15/07 (1) B3 150 108,750
Container Corp. of America Gtd. Sr. Notes
9.75%, 4/1/03 B2 750 753,750
Crown Packaging Enterprises, Ltd. Yankee
Sr. Secured Discount Notes 0.00%, 8/1/06
(3) Ca 3,375 338
Fonda Group, Inc. Sr. Sub. Notes 9.50%,
3/1/07 B3 1,000 785,000
Four M Corp. Series B, Sr. Notes 12.00%,
6/1/06 Caa2 500 482,500
Gaylord Container Corp. Series B, Sr. Notes
9.75%, 6/15/07 Caa1 950 603,250
Huntsman Packaging Corp. Gtd. 13.00%, 6/1/10 B3 $1,000 $560,000
Owens-Illinois, Inc. Sr. Note 8.10%, 5/15/07 B1 1,250 681,250
Radnor Holdings, Inc. Series B, Gtd. Sr.
Notes 10.00%, 12/1/03 B2 900 770,625
Stone Container Finance Co. Yankee Gtd. Sr.
Notes 11.50%, 8/15/06 B2 780 811,200
Group Total 7,324,613
Paper & Forest Products (2.6%)
Abitibi-Consolidated, Inc. Yankee Bonds
8.55%, 8/1/10 Baa3 270 272,052
Ainsworth Lumber Co., Ltd. Yankee Sr.
Secured Notes 12.50%, 7/15/07 B2 2,150 1,773,750
American Tissue, Inc. Series B, Gtd.
12.50%, 7/15/06 B3 340 273,700
Color Spot Nurseries Sr. Sub. Notes 10.50%,
12/15/07 Caa 1,200 462,000
Crown Paper Co. Sr. Sub. Notes 11.00%,
9/1/05 (2) B3 1,050 81,375
Doman Industries, Ltd. Yankee Sr. Notes
8.75%, 3/15/04 Caa1 400 252,500
QUNO Corp. Yankee Sr. Notes 9.125%, 5/15/05 Baa3 315 329,289
Repap New Brunswick, Inc. Sr. Secured
Debentures 10.625%, 4/15/05 Ba2 1,000 1,036,250
Riverwood International Corp. Gtd. Sr.
Notes 10.875%, 4/1/08 Caa1 1,150 1,040,750
SD Warren Co. Debentures 14.00%, 12/15/06 Ba3 1,598 1,740,920
Group Total 7,262,586
- 8 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Publishing & Information Services (2.2%)
American Lawyer Media Holdings, Inc. Gtd.
Sr. Notes 9.75%, 12/15/07 B2 600 528,000
American Media Operation Sr. Sub. Notes
10.25%, 5/1/09 (1) B2 250 244,375
Ampex Corp. Series B, Sr. Notes 12.00%,
3/15/03 N/R 1,000 500,000
Earthwatch, Inc. Sr. Discount Notes 13.00%,
7/15/07 N/R 1,150 810,750
Hollinger International Publishing Gtd. Sr.
Notes 9.25%, 3/15/07 Ba3 1,150 1,155,750
Lamar Advertising Co. Gtd. Sr. Sub. Notes
9.625%, 12/1/06 B1 250 258,750
Liberty Group Operating Gtd. 9.375%, 2/1/08 Caa1 100 75,500
Liberty Group Publishing, Inc. Sr. Discount
Debentures 0.00%, 2/1/09 (3) Caa 900 445,500
Mentus Media Corp. Units 12.00%, 2/1/03 N/R 2,258 903,544
Premier Graphics, Inc. Gtd. 11.50%, 12/1/05
(2) Caa3 2,000 70,000
Printpack, Inc. Series B, Sr. Sub. Notes
10.625%, 8/15/06 Caa1 300 283,500
Tri-State Outdoor Media Sr. Notes 11.00%,
5/15/08 N/R 1,323 1,012,095
Group Total 6,287,764
Real Estate (0.2%)
Bluegreen Corp. Gtd. Sr. Secured Notes
10.50%, 4/1/08 B3 1,200 642,000
EOP Operating, L.P. Sr. Notes 6.375%,
2/15/03 Baa1 65 64,541
Group Total 706,541
Restaurants, Hotels & Gaming (6.5%)
AFC Enterprises Sr. Sub. Notes 10.25%,
5/15/07 B2 150 141,750
American Restaurant Group, Inc. Gtd. Sr.
Secured Notes 11.50%, 2/15/03 B3 899 813,595
AmeriKing, Inc. Sr. Notes 10.75%, 12/1/06 B3 250 101,250
Argosy Gaming Co. Gtd 10.75%, 6/1/09 B2 100 104,750
Autotote Corp. Sr. Sub. Notes 12.25%,
8/15/10 (1) B3 1,065 1,006,425
Aztar Corp. Sr. Sub. Notes 8.875%, 5/15/07 B2 750 727,500
Boyd Gaming Corp. Sr. Sub. Notes 9.50%,
7/15/07 B1 400 356,000
CapStar Hotel Co. Sr. Sub. Notes 8.75%,
8/15/07 Ba3 375 349,688
Coast Hotels & Casinos, Inc. Gtd. 9.50%,
4/1/09 B3 700 681,625
Fitzgeralds Gaming Corp. Series B, Gtd. Sr.
Notes 12.25%, 12/15/04 (2) Caa3 700 423,500
Friendly Ice Cream Corp. Gtd. Sr. Notes
10.50%, 12/1/07 B3 1,050 614,250
HMH Properties Series B, Gtd. Sr. Notes
7.875%, 8/1/08 Ba2 750 723,750
Hard Rock Hotel, Inc. Sr. Sub. Notes 9.25%,
4/1/05 Caa 1,800 1,611,000
Hollywood Park, Inc. Series B, Gtd. Sr.
Sub. Notes 9.50%, 8/1/07 B2 875 888,125
Horseshoe Gaming Holdings: Series B, Sr.
Sub. Notes 9.375%, 6/15/07 B2 1,050 1,057,875
8.625%, 5/15/09 B2 1,000 983,751
ITT Corp. Notes 6.75%, 11/15/05 Ba1 45 43,770
Intrawest Corp. Sr. Notes 9.75%, 8/15/08 B1 250 252,500
Isle of Capri Casinos, Inc. Sr. Sub. Notes
8.75%, 4/15/09 B2 700 623,000
Jazz Casino Co. LLC Sr. Sub. Notes 5.987%,
11/15/09 (8) N/R 159 18,303
Lodgian Financing Corp. Sr. Sub. Notes
12.25%, 7/15/09 B3 500 452,500
MGM Mirage, Inc. Gtd. 8.50%, 9/15/10 Baa3 280 292,471
- 9 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Majestic Star Casino, LLC Secured Notes
10.875%, 7/1/06 (1) B2 750 648,750
Mandalay Resort Group Sr. Sub. Notes 9.25%,
12/1/05 Ba3 $300 $294,000
Mohegan Tribal Gaming Authority Sr. Notes
8.125%, 1/1/06 Ba2 1,100 1,108,250
Park Place Entertainment Corp. Sr. Sub
Notes 9.375%, 2/15/07 (1) Ba2 750 763,125
Prime Hospitality Corp. Secured First
Mortgage Notes 9.25%, 1/15/06 Ba2 1,100 1,122,000
Romacorp, Inc. Sr. Notes 12.00%, 7/1/06 B3 1,000 496,251
Station Casinos Sr. Sub. Notes 9.75%,
4/15/07 B1 1,615 1,643,263
Group Total 18,343,017
Retail (3.4%)
Advance Holdings Corp. Series B, Sr.
Discount Debentures 0.00%, 4/15/09 (3) Caa1 1,850 638,250
Advance Stores Co. Gtd. Sr. Sub. Notes
10.25%, 4/15/08 B3 1,250 943,750
Buhrmann US, Inc. Gtd. 12.25%, 11/1/09 B2 500 505,000
Dairy Mart Convenience Stores, Inc. Sr.
Sub. Notes 10.25%, 3/15/04 B3 526 302,450
Finlay Enterprises, Inc. Sr. Debentures
9.00%, 5/1/08 B2 400 350,000
Finlay Fine Jewelry Corp. Gtd. Sr. Notes
8.375%, 5/1/08 Ba3 1,050 939,750
Flooring America, Inc. Series B, Gtd.
9.25%, 10/15/07 (2) C 703 17,566
Jo-Ann Stores, Inc. Sr. Sub. Notes 10.375%,
5/1/07 B2 250 151,250
Kmart Corp. Debentures 7.75%, 10/1/12 Baa3 $1,375 $986,716
Levi Strauss & Co. Notes 7.00%, 11/1/06 Ba3 1,250 987,500
Mrs. Fields Holding, Co. Sr. Discount Notes
14.00%, 12/1/05 Caa2 2,250 1,046,250
Mrs. Fields Original Cookies, Inc. Gtd. Sr.
Notes 10.125%, 12/1/04 (1) B2 1,650 1,419,000
Pantry, Inc. Sr. Sub. Notes 10.25%, 10/15/07 B3 750 708750
Safelite Glass Corp. Series B, Sr. Sub.
Notes 9.875%, 12/15/06 N/R 2,000 25,000
Saks, Inc.: Gtd. 7.00%, 7/15/04 Baa3 90 65,250
8.25%, 11/15/08 Baa3 80 48,400
Target Corp. Notes 7.50%, 8/15/10 A2 105 110,908
Wal-Mart Stores, Inc.: Sr. Notes 6.55%,
8/10/04 Aa2 250 255,745
6.875%, 8/10/09 Aa2 215 225,189
Group Total 9,726,724
Telecommunications (16.6%)
AMSC Acquisition Co., Inc. Series B, Gtd.
Sr. Notes 12.25%, 4/1/08 N/R 150 56,250
AT&T Corp. Notes 5.625%, 3/15/04 A2 45 43,012
6.00%, 3/15/09 A2 70 62,478
Alamosa PCS Holdings, Inc. Gtd. 0.00%,
2/15/10 (3) Caa1 600 282,000
Asia Global Crossings, Ltd. Sr. Notes
13.375%, 10/15/10 (1) B2 1,250 1,084,375
British Telecom plcNotes 7.625%, 12/15/05 A2 50 50,649
Carrier1 International SA Sr. Notes 13.25%,
2/15/09 B3 300 210,000
COLT Telecom Group, plc Yankee Units 0.00%,
12/15/06 (3) B1 400 704,000
COX Communications, Inc. Notes 7.75%,
11/1/10 Baa2 $215 $223,661
Call-Net Enterprises, Inc. Sr. Discount
Notes 0.00%, 5/15/09 (3) B2 500 102,500
CenturyTel, Inc. Sr. Notes 8.375%, 10/15/10 Baa2 55 57,386
Colo.Com Units 13.875%, 3/15/10 N/R 600 381000
- 10 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Concentric Network Corp. Units 12.75%,
12/15/07 N/R 1,000 855,000
DTI Holdings, Inc. Units 0.00%, 3/1/08 (3) N/R 2,150 585,875
Dobson/Sygnet Communications, Co. Sr. Notes
12.25%, 12/15/08 B3 1,550 1,534,500
Dolphin Telecom plc: Sr. Discount Notes
0.00%, 11/1/05 (3) Caa 250 36,250
0.00%, 6/1/08 Caa 750 108,750
Series B, Yankee Sr. Discount Notes 14.00%,
5/15/09 Caa 1,000 115,000
e. spire Communications, Inc. Sr. Discount
Notes 0.00%, 11/1/05 (3) N/R 3,450 914,250
Energis, plc Sr. Unsub. Notes 9.75%,
6/15/09 (1) B1 100 91,500
Equinix, Inc. Sr. Notes 13.00%, 12/1/07 N/R 200 141,000
Exodus Communications, Inc. Sr. Notes
11.25%, 7/1/08 B3 600 537,000
Focal Communications Corp. Sr. Discount
Notes 0.00%, 2/15/08 (3) B3 1,800 765,000
GST USA, Inc. Gtd. Sr. Discount Notes
0.00%, 12/15/05 (3) N/R 2,400 900,000
GT Group Telecom, Inc. Sr. Discount Notes
13.25%, 2/1/10 (1) Caa1 400 134,000
GTE Corp. Notes 7.51%, 4/1/09 A2 200 207,560
Global Crossing Holdings, Ltd. Gtd. Sr.
Notes 9.625%, 5/15/08 Ba2 1,350 1,275,750
Globalstar, L.P./ Globalstar Capital Corp.:
Sr. Notes 10.75%, 11/1/04 Caa1 1,300 169,000
11.25%, 6/15/04 Caa1 200 26,000
11.50%, 6/1/05 Caa1 500 65,000
Golden Sky DBS, Inc. Series B, Sr. Discount
Notes 0.00%, 3/1/07 (3) Caa1 250 162,500
Hyperion Telecommunications, Inc. Series B,
Sr. Discount Notes 0.00%, 4/15/03 (3) B3 450 317,250
ICG Holdings, Inc.: Gtd. Sr. Discount Notes
13.50%, 9/15/05 Ca 1,000 115,000
0.00%, 5/1/06 (3) Ca 855 98,325
0.00%, 3/15/07 (3) Ca 2,500 228,124
ICG Services, Inc.: Gtd. Sr. Discount Notes
0.00%, 2/15/08 (3) Ca 500 42,500
0.00%, 5/1/08 Ca 1,600 136,000
ITC Delta Com, Inc. Sr. Notes 11.00%, 6/1/07 B2 259 203,315
Innova S. de R.L. Sr. Notes 12.875%, 4/1/07 B3 385 339,763
Insight Midwest/Insight Capital: Sr. Notes
9.75%, 10/1/09 B1 900 897,750
10.50%, 11/1/10 B1 500 521,250
Interact Operating Co. Notes 14.00%, 8/1/03
(1) N/R 773 77
Intermedia Communications, Inc. Series B,
Sr. Discount Notes 0.00%, 7/15/07 (3) B2 300 181,500
Sr. Notes 8.875%, 11/1/07 B2 450 246,750
KMC Telecom Holdings, Inc. Sr. Notes
13.50%, 5/15/09 Caa2 500 137,500
Level 3 Communication, Inc.: Sr. Notes
9.125%, 5/1/08 B3 1,325 1,076,562
Sr. Discount Notes 0.00%, 12/1/08 (3) B3 1,300 708,500
McLeod USA, Inc.: Sr. Discount Notes 0.00%,
3/1/07 (3) B1 900 751,500
11.50%, 5/1/09 B1 150 150,375
Sr. Notes 9.25%, 7/15/07 B1 600 552,000
9.50%, 11/1/08 B1 1,000 915,000
Metromedia Fiber Network, Inc. Series B,
Sr. Notes 10.00%, 11/15/08 B2 500 417,500
Metromedia International Group Series B,
Sr. Discount Notes 10.50%, 9/30/07 N/R 3,551 1,668,955
MetroNet Communications Corp.: Sr. Discount
Notes 0.00%, 11/1/07 (3) Baa3 1,450 1,292,429
- 11 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
0.00%, 6/15/08 Baa3 1,250 1,014,738
Microcell Telecommunications, Inc. Series
B, Yankee Sr. Discount Notes 14.00%,
6/1/06 B3 770 739,200
Millicom International Cellular Yankee Sr.
Sub. Discount Notes 0.00%, 6/1/06 (3) Caa1 1,150 908,500
NEXTLINK Communications, Inc.: Sr. Discount
Notes 0.00%, 4/15/08 (3) B2 1,700 892,500
Sr. Notes 12.50%, 4/15/06 B2 450 407,250
10.75%, 11/15/08 B2 750 622,500
10.50%, 12/1/09 (1) B2 250 201,250
Nextel Communications, Inc. Sr. Discount
Notes 0.00%, 2/15/08 (3) B1 2,580 1,889,850
Orange plc Sr. Notes 9.00%, 6/1/09 A1 100 103,250
Orbital Imaging Corp. Series B, Sr. Notes
11.625%, 3/1/05 N/R 500 77,500
Orion Network Systems, Inc. Gtd. Sr. Notes
11.25%, 1/15/07 B2 750 311,250
PSINet, Inc. Sr. Notes 11.50%, 11/1/08 B3 1,300 355,000
Pagemart Nationwide, Inc. Sr. Discount
Notes 0.00%, 2/1/05 (3) B3 2,500 1,762,500
Pegasus Communications Corp. Series B, Sr.
Notes 12.50%, 8/1/07 B3 1,000 1,030,000
Qwest Communications International, Inc.
Sr. Discount Notes 0.00%, 10/15/07 (3) Baa1 1,350 1,238,299
Series B, 0.00%, 2/1/08 Baa1 250 218,466
RCN Corp.: Series B, Sr. Discount Notes
0.00%, 10/15/07 (3) B3 150 53,250
0.00%, 2/15/08 B3 1,200 390,000
Sr. Notes 10.125%, 1/15/10 B3 500 257,500
RSL Communications plc: Yankee Gtd. Sr.
Notes 9.125%, 3/1/08 Caa3 450 20,250
10.50%, 11/15/08 Caa3 250 17,500
7.875%, 11/15/09 Caa3 1,100 77,000
Rhythms Netconnections, Inc.: Sr. Notes
12.75%, 4/15/09 B3 250 63,750
Series B, Sr. Discount Notes 0.00%,
5/15/08 (3) Caa1 1,750 218,750
Rogers Cablesystems, Ltd. Series B, Yankee
Sr. Secured 2nd Priority Notes 10.00%,
3/15/05 Baa3 250 265,000
Rogers Cantel, Inc. Yankee Sr. Secured
Debentures 9.375%, 6/1/08 Baa3 350 362,250
Sprint Capital Corp. Medium Term Notes
6.50%, 11/15/01 Baa1 300 300,722
Sprint Spectrum L.P./ Sprint Spectrum
Finance Corp. Sr. Notes 11.00%, 8/15/06 Baa2 1,950 2,092,544
Star Choice Communications, Inc. Yankee Sr.
Notes 13.00%, 12/15/05 B3 700 739,375
Startec Global Communications Corp. Units
12.00%, 5/15/08 N/R 1,100 664,126
T/SF Communications Corp. Series B, Gtd.
Sr. Sub. Notes 10.375%, 11/1/07 B3 200 167,000
Telesystem International Wireless Series B,
Sr. Discount Notes 13.25%, 6/30/07 Caa1 $500 $250,000
Teligent, Inc. Sr. Notes 11.50%, 12/1/07 Caa1 950 128,250
Tritel PCS, Inc. Sr. Discount Notes 0.00%,
5/15/09 (1)(3) B3 500 345,000
Triton PCS, Inc. Gtd. 0.00%, 5/1/08 (3) B3 1,100 874,500
US Unwired, Inc. Series B, Gtd. 13.375%,
11/1/09 (1) Caa1 1,100 506,000
Viatel, Inc.: Sr. Notes 11.25%, 4/15/08 Caa1 850 259,250
11.50%, 3/15/09 (1) B3 1,343 416,330
VoiceStream Wireless Sr. Notes 10.375%,
11/1/09 B2 800 861,000
WebLink Wireless, Inc. Sr. Discount Notes
0.00%, 2/1/08 Caa 300 69,000
- 12 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Western Wireless Corp. Sr. Sub. Notes
10.50%, 2/1/07 B1 600 621,751
Williams Communications Group, Inc.: Sr.
Notes 10.70%, 10/1/07 B2 400 310,000
10.875%, 10/1/09 B2 750 562,500
Winstar Communications, Inc. Sr. Notes
12.75%, 4/15/10 B3 1,000 665,000
Worldcom, Inc. Sr. Notes 7.55%, 4/1/04 A3 110 110,386
Worldwide Fiber, Inc. Sr. Notes 12.00%,
8/1/09 (1) B3 950 712,500
Group Total 47,031,708
Textiles/Apparel (1.4%)
Galey & Lord Gtd. 9.125%, 3/1/08 Ca 1,000 545,000
Phillips-Van Heusen Corp. Sr. Sub. Notes
9.50%, 5/1/08 B1 800 748,000
Pillowtex Corp. Gtd. Sr. Sub. Notes 10.00%,
11/15/06 (2) B2 $500 $22,500
Simmons Co. Series B, Sr. Sub. Notes
10.25%, 3/15/09 B3 900 837,000
Tropical Sportswear International Series A,
Gtd. Sr. Notes 11.00%, 6/15/08 B3 1,000 855,000
Westpoint Stevens, Inc. Sr. Notes 7.875%,
6/15/05 B1 1,000 750,000
William Carter Co. Series A, Sr. Sub. Notes
10.375%, 12/1/06 B3 500 487,500
Group Total 4,245,000
Transportation (1.3%)
AirTran Airlines, Inc. Yankee Sr. Notes
10.50%, 4/15/01 B2 1,500 1,485,000
Allied Holdings Series B, Gtd. 8.625%,
10/1/07 B1 250 183,750
Cenargo International plc First Priority
Ship Mortgage Notes 9.75%, 6/15/08 Ba3 100 78,250
First Wave Marine, Inc. Gtd. Sr. Notes
11.00%, 2/1/08 B3 1,100 244,750
Golden Ocean Group, Ltd. Gtd. Sr. Notes
10.00%, 8/31/01 (2)(6) N/R 1,411 229,288
Norfolk Southern Corp. Notes 7.875%, 2/15/04 Baa1 260 270,050
Pegasus Shipping (Hellas), Ltd. Series A,
First Preferred Ship Mortgage Notes
11.875%, 11/15/04 (2) B3 300 106,500
Sea Containers, Ltd. Yankee Sr. Notes
10.75%, 10/15/06 Ba3 700 509,250
Trans World Airlines, Inc. Sr. Notes
11.375%, 3/1/06 Caa1 1,750 341,250
Ultrapetrol (Bahamas) Ltd. First Mortgage
Notes 10.50%, 4/1/08 B1 150 113,250
Group Total 3,561,338
TOTAL CORPORATE OBLIGATIONS (Cost $311,248,828) 2 25,690,762
GOVERNMENT & AGENCY SECURITIES (0.7%)
Federal National Mortgage Association (0.2%)
STRIPS, Series H, Class 2 11.50%, 5/1/09 Aaa 416 458,185
Government National Mortgage Association (0.0%)
Various Pools:10.50%, 9/15/15 Aaa $33 $35,444
10.50%, 12/15/15 Aaa 3 3,304
10.50%, 3/15/16 Aaa 25 26,958
10.50%, 8/15/16 Aaa 33 35,863
- 13 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Group Total 101,569
United States Treasury Notes (0.5%)
5.75%, 10/31/02 Aaa 10 10,093
5.75%, 8/15/10 Aaa 220 230,639
7.25%, 5/15/04 Aaa 990 1,054,075
Group Total 1,294,807
TOTAL GOVERNMENT & AGENCY SECURITIES (Cost
$1,784,977) 1,854,561
COLLATERALIZED MORTGAGE OBLIGATIONS (0.7%)
Aames Mortgage Trust Series 00-1, Class A
4F 7.76%, 1/25/29 Aaa 135 139,198
Commercial Mortgage Asset Trust Series
1999, Class A3 6.64%, 9/17/10 Aaa 310 318,004
Conseco Finance 2000-D A4 8.17%, 12/15/25 Aaa 85 89,677
First Union Series 1997, Class 1 7.38%,
4/18/29 Aaa 85 89,631
GMAC Commercial Mortgage Securities, Inc.:
6.853%, 9/15/06 Aaa 80 81,778
6.945%, 9/15/33 Aaa 550 567,286
Korea Asset Funding Ltd. Series 2000-1A,
Class 1 8.8912%, 2/10/09 (7) Baa2 50 49,187
Nomura Asset Securities Corp. Series
1998-D6, Class A1B6 6.59%, 3/17/28 Aaa 310 313,410
Salomon Brothers Mortgage Securities VII
Series 2000-C3, Class A2 6.592%, 10/18/10 Aaa 280 282,059
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $1,903,022) 1,930,230
ASSET BACKED OBLIGATIONS (1.0%)
Chase Credit Card Master Trust Series
1999-3, Class A 6.66%, 1/15/07 Aaa 420 430,273
Constellation Finance, LLC Series 1997-1,
Class 1 9.80%, 12/15/02 (1) N/R 250 232,500
Contimortgage Home Equity Loan Trust 7.22%,
1/15/28 Aaa 125 126,889
Green Tree Recreational, Equipment &
Consumer Trust, Consumer Products &
Equipment Retail Installment Sale
Contracts Series 1997-C, Class A-1,
6.49%, 2/15/18 N/R 288 290,217
MBNA Master Credit Card Trust: Series
1999-G, Class A 6.35%, 12/15/06 Aaa 130 132,205
Series 1997-I, Class A 6.55%, 1/15/07 Aaa 160 163,766
Peco Energy Transition Trust: Series
1999-A, Class A7 6.13%, 3/1/09 Aaa 335 336,989
Series 2000-A, ClassA4 7.65%, 3/1/10 Aaa 290 309,646
Prudential Securities Secured Financing
Corp. Series 1999-C2, Class A2 7.193%,
4/15/09 Aaa 385 402,836
Residential Asset Securities Corp. Series
1999-KS3, Class AI2 7.075%, 9/25/20 Aaa 125 125,742
UCFC Home Equity Loan: Series 1996-B1,
Class A7 8.20%, 9/15/27 Aaa 110 112,183
Series 1998-A, Class A7 6.87%, 7/15/29 Aaa 50 48,635
TOTAL ASSET BACKED OBLIGATIONS (Cost
$2,668,771) 2,711,881
Value
- 14 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
COMMON STOCKS (1.0%)
Automotive (0.0%)
Safety Components International, Inc. (4) 500,000 $62,500
Broadcasting (0.1%)
Spanish Broadcasting System, Inc. Class B
(1)(4) 35,700 $176,269
UnitedGlobalCom, Inc. Class A (4) 5,442 74,147
Group Total 250,416
Cable (0.0%)
OpTel, Inc. (1)(4) 1,500 15
Consumer Products & Services (0.0%)
Crown Packaging Enterprises, Ltd. (4) 354,594 3,546
Entertainment (0.1%)
Premier Cruises, Ltd. (4)(6) 85,168 223,566
Financial Services (0.0%)
Westfed Holdings, Inc. Class B (acquired
9/20/88, cost $510) (4)(5)(6) 16,893 0
Food & Beverages (0.0%)
Aurora Foods, Inc. 15,940 38,854
Specialty Foods Corp. (4)(6) 52,500 525
Group Total 39,379
Metals & Mining (0.0%)
Sheffield Steel Corp. (4) 8,750 88
Paper & Forest Products (0.1%)
Mail-Well, Inc. (1)(4)(6) 31,958 137,818
Restaurants, Hotels & Gaming (0.0%)
Motels of America, Inc. (1)(4) 750 5,250
Retail (0.4%)
Pathmark Stores, Inc. (4) 72,018 1,188,298
Telecommunications (0.3%)
CompleTel Europe N.V. (4) 45,000 160,312
e. spire Communications, Inc. (4) 42,505 21,253
Intermedia Communications, Inc. (4) 12,640 90,850
- 15 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Loral Space & Communications, Co. (4) 453 1,443
Price Communications Corp. (4) 7,346 123,505
Spanish Broadcasting System, Inc. Class B
(1)(4) 107,100 528,806
UnitedGlobalCom, Inc. Class A (4) 2,058 28,040
Viatel, Inc. (4) 182 677
Group Total 954,886
TOTAL COMMON STOCKS (Cost $2,064,371) 2,865,762
PREFERRED STOCKS (2.3%)
Broadcasting (0.3%)
Benedek Communications Corp. 11.50% Sr.
Exchangeable 150 $73,688
Granite Broadcasting Corp. 12.75%, Cum.
Exchangeable (4)(8) 11 550
Pegasus Communications Corp.: 12.75% Cum.
Exchangeable, Series A (4) 110 102,987
Units 250 253,062
Source Media, Inc. 13.50% Units (4) 87,680 482,241
Group Total 912,528
Cable (0.4%)
Adelphia Communications Corp. 13% Cum.
Exchangeable, Series B 7,500 669,375
DIVA Systems Corp. Series D (4) 56,913 455,304
NTL, Inc. 13% Exchangeable, Series B 2 1,178
Group Total 1,125,857
Financial Services (0.1%)
Deutsche Bank Capital Funding Tr I 7.872%
Non-cumulated (1) 120,000 118,594
Lehman Brothers Holdings: 5.67% 1,100 44,138
5.94%, Series C 500 21,000
Westfed Holdings, Inc. Class A (acquired
9/20/88-6/18/93, cost $4,815,472) (5)(6) 57,005 57,005
Group Total 240,737
Metals & Mining (0.0%)
International Utility Structures, Inc.: 13%
Units (1)(4) 150 82,875
14% Units 39 2,457
Group Total 85,332
Publishing & Information Services (0.3%)
Earthwatch, Inc. 8.50% Convertible Preferred 57,657 14,415
Interact Electronic Marketing 14% Conv.
Preferred (4) 1,350 81,000
Primedia, Inc. 10% Cum. Exchangeable,
Series D 8,500 699,125
Group Total 794,540
- 16 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Restaurants, Hotels & Gaming (0.0%)
AmeriKing, Inc. 13% Cum. Exchangeable 32,280 40,350
Telecommunications (1.2%)
e. spire Communications, Inc.12.75% 359 $26,027
Intermedia Communications, Inc.: 13.50%
Exchangeable, Series B 396 99,000
7.00% Jr. Convertible, Series E 59,000 582,625
Nextel Communications, Inc. 13%
Exchangeable, Series D 1,574 1,522,844
Rural Cellular Corp. 11.375% Sr.
Exchangeable 326 261,615
XO Communications, Inc. 14% PIK
(Pay-In-Kind) 25,962 785,350
Group Total 3,277,461
TOTAL PREFERRED STOCKS (Cost $15,157,969) 6,476,805
RIGHTS (0.0%)
Abraxas Petroleum Corp. expiring 11/1/04 92,408 11,551
Terex Corp. expiring 5/15/02 8,000 112,000
TOTAL RIGHTS (Cost $0) 123,551
WARRANTS (0.6%)
Aavid Thermal Technologies, Inc. expiring
2/1/07 (4) 150 1,500
Ampex Corp. expiring 3/15/03 (1)(4) 34,000 340
Arcadia Financial Ltd. expiring 3/15/07 (4) 475 0
Australis Holdings Pty. Ltd. expiring
10/30/01 (1)(4) 2,500 25
Australis Media Ltd. expiring 5/15/03 (4) 225 2
CHC Helicopter Corp. expiring 12/15/00 (4) 8,000 28,000
Carrier1 International SA expiring 2/19/09
(1)(4) 300 3,000
Crown Packaging Holdings, Ltd. expiring
11/1/03 (4) 3,000 30
DIVA Systems Corp.: expiring 5/15/06 (1)(4) 2,825 1,299,500
expiring 3/1/08 11,655 93,240
DTI Holdings, Inc. expiring 3/1/08 (1)(4) 10,750 1,290
Dairy Mart Convenience Stores, Inc.
expiring 12/1/01 (4) 15,837 5,543
Dayton Superior Corp. expiring 6/15/09 (4) 1,250 25,000
Decrane Aircraft Holdings expiring 9/30/08
(4) 800 800
Equinix, Inc. expiring 12/01/07 (4) 200 18,000
GT Group Telecom, Inc. expiring 2/1/10 (4) 400 20,000
Golden Ocean Group, Ltd. expiring 8/31/01
(4)(6) 1,374 $5,514
HF Holdings Inc. expiring 9/27/09 (4) 11,330 114
Interact Electronic Marketing expiring
12/31/09 (4) 1,350 13
Interact Systems, Inc. expiring 8/1/03
(1)(4) 1,150 0
Isle of Capri Casinos, Inc. expiring 5/3/01
(4) 3,528 476
Key Energy Services expiring 1/15/09 (1)(4) 1,500 75,000
McCaw International, Ltd. expiring 4/15/07
(4) 1,750 43,750
- 17 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Mentus Media Corp. expiring 2/1/08 (1)(4) 4,731 48
Mrs. Fields Holding expiring 12/1/05 (1)(4) 2,250 22,500
PLD Telekom, Inc. expiring 6/1/06 (4) 2,170 21,700
Pliant Corp. expiring 6/1/10 (4) 1,000 10,125
Source Media, Inc. expiring 11/1/07 (4) 32,966 32,966
Star Choice Communications, Inc. expiring
12/5/05 (1)(4) 16,212 129,696
Startec Global Communications Corp.
expiring 5/15/08 (4) 1,100 715
USN Communications, Inc. expiring 8/15/04
(4) 10,650 0
Waste Systems International, Inc. expiring
3/2/04 (4) 5,250 53
Wright Medical Technology expiring 6/30/03
(4) 824 0
TOTAL WARRANTS (Cost $1,961,705) 1,838,940
TOTAL DOMESTIC SECURITIES (Cost $336,789,641) 243,492,492
FOREIGN SECURITIES (9.4%)
CORPORATE OBLIGATIONS (1.6%)
Argentina (0.4%)
CIA Internacional Telecommunicacoes Sr.
Notes 10.375%, 8/1/04 (1) N/R 635 512,763
Hidroelectrica Piedra del Aguila S.A.:
Collateral Trust 8.25%, 6/30/09 (1) N/R 890 571,998
8.00%, 12/31/09 N/R $277 $191,569
Group Total 1,276,330
Netherlands (0.8%)
CompleTel Europe N.V. Yankee Gtd. 0.00%,
2/15/09 Caa2 $900 450,000
Hermes Europe Railtel B.V. Sr. Notes
11.50%, 8/15/07 B3 1,300 539,500
KPNQwest N.V. Sr. Notes 8.125%, 6/1/04 Ba1 150 132,750
Netia Holdings B.V. Gtd. 13.75%, 6/15/10 B2 455 377,203
United Pan-Europe Communications N.V. Sr.
Notes 10.875%, 8/1/09 B2 $1,150 $741,750
Group Total 2,241,203
Poland (0.3%)
PTC International Finance B.V. Yankee Gtd.
10.75%, 7/1/07 (1) B2 350 256,375
PTC International Finance II SA Gtd.
11.25%, 12/1/09 B2 750 716,250
Group Total 972,625
South Korea (0.1%)
Cho Hung Bank Sub. Notes 11.50%, 4/1/10 Ba3 150 145,643
TOTAL CORPORATE OBLIGATIONS (Cost $4,987,444) 4,635,801
- 18 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
GOVERNMENT OBLIGATIONS (7.8%)
Argentina (2.5%)
Bocon PRO1 Notes 2.953%, 4/1/07 (7) Ba3 2,842 1,726,784
Republic of Argentina: Notes 11.00%,
12/4/05 (3) B1 750 708,750
Series BGL5 11.375%, 1/30/17 Ba3 560 502,040
Unsubordinated 11.75% 4/07/09 B1 790 738,058
9.75%, 9/19/27 Ba3 1,580 1,275,850
Debentures 6.188%, 3/31/05 B1 878 799,124
Foreign Government Gtd. 6.00%, 3/31/23 B1 1,600 1,110,000
Series B, Gtd. 0.00%, 4/15/01 Ba3 125 119,844
Gtd. 0.00%, 10/15/04 Ba3 95 62,225
Group Total 7,042,675
Brazil (2.0%)
Federal Republic of Brazil: Series RG
7.6875%, 4/15/09 B2 570 495,900
Series EI-L Debentures 10.125%, 5/15/27 B2 910 729,365
Capitalization Bonds 8.00%, 4/15/14 B2 2,814 2,179,794
Bearer Bonds 11.00%, 8/17/40 B2 2,826 2,307,429
Group Total 5,712,488
Bulgaria (0.5%)
Republic of Bulgaria: Notes 3.00%, 7/28/12 B2 1,510 1,124,950
Front Loaded Interest Reduction Bonds,
Series A 5.875%, 7/28/24 B2 475 363,375
Debentures Series PDI, 6.50% 7/28/11 B2 105 79,275
Group Total 1,567,600
Mexico (0.1%)
United Mexican States Bonds 10.375%, 2/17/09 Baa3 210 230,160
Morocco (0.1%)
Republic of Morocco 7.5625%, 1/1/09 N/R 242 209,803
Peru (0.1%)
Republic of Peru Collateralized 7.1875%,
3/8/27 N/R 410 260,350
Philippines (0.4%)
Republic of Philippines: Gtd. 7.50%, 6/1/08 Ba1 304 267,667
Notes 10.625%, 3/16/25 Ba1 $930 $764,925
Group Total 1,032,592
Poland (0.0%)
Republic of Poland Bonds 3.75%, 10/27/24 Baa1 140 96,600
- 19 -
PRO FORMA PORTFOLIO OF INVESTMENTS OF COMBINED FUND
December 31, 2000
CGF CGF
--------------- -----------------
Moody's Face Face Face
Ratings Amount Amount Amount
(Unaudited) (000) Value (000) Value (000) Value
----------- ------ ----- ------ ----- ------ -----
Russia (2.1%)
Ministry Finance Russia Debentures 3.00%,
5/14/06 N/R 1,750 800,449
Russia Federation: Registered Series 8.75%,
7/24/05 B3 150 114,375
10.00%, 6/26/07 B3 420 308,175
11.00%, 7/24/18 B3 570 401,850
Unsubordinated 8.25%, 3/31/10 B3 1,047 655,491
11.00%, 7/24/18 B3 30 21,075
12.75%, 6/24/28 B3 50 41,750
2.25%, 3/31/30 B3 8,714 3,278,548
Registered Bonds 12.75%, 6/24/28 B3 375 311,719
Group Total 5,933,432
TOTAL GOVERNMENT OBLIGATIONS (Cost $21,199,123) 22,085,700
TOTAL FOREIGN SECURITIES (Cost $26,186,567) 26,721,501
TIME DEPOSITS (1.6%) (Cost $4,417,000) 4,417,000
TOTAL INVESTMENTS (97.0%) (Cost $367,393,210) 274,630,993
OTHER ASSETS IN EXCESS OF LIABILITIES (3.0%) 8,517,574
NET ASSETS (100%) $283,148,567
- --------------------
N/R - Not Rated
STRIPS - Separate Trading of Registered Interest and Principal Securities.
(1) 144A Security. Certain conditions for public sale may exist.
(2) Defaulted security.
(3) Step Bond - Coupon rate is low or zero for an initial period and then
increases to a higher coupon rate thereafter. Maturity date disclosed is
the ultimate maturity.
(4) Non-income producing security.
(5) Restricted as to private and public resale. Total cost of restricted
securities at December 31, 2000 aggregated $3,611,992. Total market value
of restricted securities owned at December 31, 2000 was $42,579 or 0.02%
of net assets.
(6) Securities for which market quotations are not readily available are valued
at fair value as determined in good faith by the Board of Directors. (7)
Floating Rate - The interest rate changes on these instruments based upon a
designated base rate. The rates shown are those in effect at December
31, 2000.
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Combination
The unaudited Pro Forma Combining Financial Statements reflect the accounts of
the Credit Suisse Asset Management Strategic Global Income Fund, Inc. ("CGF")
and Credit Suisse Asset Management Income Fund, Inc. ("CIK"), collectively the
Funds, as of and for the twelve months ended December 31, 2000. These statements
have been derived from the books and records utilized in calculating the
respective weekly net asset values of the Funds as of December 31, 2000. The pro
forma financial statements give effect to the proposed transfers of the assets
and stated liabilities of CGF in exchange for shares of CIK. Under the purchase
method of accounting for business combinations, the basis of portfolio
securities in CGF at the time of the reorganization will be the fair value of
such assets at the close of business of the day immediately preceding the
reorganization. The Pro Forma Financial Statements reflect the combined results
of operations of CGF and CIK. All ordinary and reasonable expenses incurred in
connection with the reorganization will be borne by CGF and CIK. See the Notes
to the Pro Forma Statement of Operations for details of the pro forma expense
adjustments. The Pro Forma Combining Statement of Assets and Liabilities,
Statement of Operations, and Schedule of Portfolio Investments should be read in
conjunction with the historical financial statements of CGF and CIK which have
been incorporated by reference in the Statement of Additional Information
constituting part of the Form N-14 Registration Statement.
2. Advisory, Administration, Transfer Agent and Custodian Fees
Credit Suisse Asset Management, LLC (the "Adviser") provides investment advisory
services to the Funds under the terms of an Advisory Agreement. Under the
Advisory Agreement, the Adviser is paid a fee, computed weekly and payable
quarterly at an annual rate of 0.50% of average weekly net assets. Brown
Brothers Harriman & Co. provides administrative and custodial services to the
Funds and they are compensated at a fee rate based on average net assets. Fleet
National Bank provides transfer agent services to the Funds and they are
compensated at a fee rate based on the number of accounts per year, plus
out-of-pocket expenses.
3. Portfolio Valuation
Market values for fixed income securities are valued at the latest quoted bid
price in the over-the-counter market. However, fixed-income securities may be
valued on the basis of prices provided by a pricing service which are based
primarily on institutional size trading in similar groups of securities. Other
securities listed on an exchange are valued at the latest quoted sales prices on
the day of valuation or if there was no sale on such day, the last bid price
quoted on such day. Securities purchased with remaining maturities of 60 days or
less are valued at amortized cost, if it approximates market value. Securities
for which market quotations are not readily available (including restricted
securities) are valued at fair value as determined in good faith by the Board of
Directors.
4. Capital Shares
Both CGF and CIK have 100,000,000 of shares authorized, each with a par value of
$0.001 per share. The pro forma net asset value per share assumes the issuance
of shares of CIK to
shareholders of CGF in connection with the proposed reorganization. Fractional
shares will not be issued in connection with this reorganization. Cash will be
remitted to CGF shareholders in exchange for their fractional shares.
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PART C
OTHER INFORMATION
Item 15. Indemnification
Section 2-418 of the Corporation Law of the State of Maryland gives
Registrant the power to indemnify its directors and officers. Section 2-418
provides in pertinent part:
"(b)(1) A corporation may indemnify any director made a party
to any proceeding by reason of service in that capacity unless it is
established that:
(i) The act or omission of the director was material
to the cause matter giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate
dishonesty; or
(ii) The director actually received an improper
personal benefit in money, property or services; or
(iii) In the case of any criminal proceeding, the
director had reasonable cause to believe that the act or omission
was unlawful.
(2)(i) Indemnification may be against judgments,
penalties, fines, settlements, and reasonable expenses actually
incurred by the director in connection with the proceeding.
(ii) However, if the proceeding was one by or in the
right of the corporation, indemnification may not be made in respect
of any proceeding in which the director shall have been adjudged to
be liable to the corporation.
(3)(i) The termination of any proceeding by judgment,
order, or settlement does not create a presumption that the director
did not meet the requisite standard of conduct set forth in this
subsection.
(ii) The termination of any proceeding by conviction, or
a plea of nolo contendere or its equivalent, or an entry of an order
of probation prior to judgment, creates a rebuttable presumption
that the director did not meet that standard of conduct.
(4) A corporation may not indemnify a director or advance
expenses under this section for a proceeding brought by that
director against the corporation, except:
(i) For a proceeding brought to enforce indemnification
under this section; or
(ii) If the charter or bylaws of the corporation, a
resolution of the board of directors of the corporation, or an
agreement approved by the board of directors of the corporation to
which the corporation is a party expressly provide otherwise.
"(c) A director may not be indemnified under subsection (b)
of this section in respect of any proceeding charging improper personal
benefit to the director, whether or not involving action in the
director's official capacity, in which the director was adjudged to be
liable on the basis that personal benefit was improperly received.
"(d) Unless limited by the charter:
(1) A director who has been successful, on the merits or
otherwise, in the defense of any proceeding referred to in
subsection (b) of this section shall be indemnified against
reasonable expenses incurred by the director in connection with the
proceeding.
(2) A court of appropriate jurisdiction upon application of a
director and such notice as the court shall require, may order
indemnification in the following circumstances:
(i) If it determines a director is entitled to
reimbursement under paragraph (1) of this subsection, the court
shall order indemnification, in which case the director shall be
entitled to recover the expenses in securing such reimbursement; or
(ii) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not the director has met the standards of
conduct set forth in Subsection (b) of this section or has been
adjudged liable under the circumstances described in subsection (c)
of this section, the court may order such indemnification as the
court shall deem proper. However, indemnification with respect to
any proceeding by or in the right of the corporation or in which
liability shall have been adjudged in the circumstances described in
subsection (c) shall be limited to expenses.
(3) A court of appropriate jurisdiction may be the same
court in which the proceeding involving the director's liability
took place.
(e)(1) Indemnification under subsection (b) of this section
may not be made by the corporation unless authorized for a specific
proceeding after a determination has been made that indemnification of
the director is permissible in the circumstances because the director has
met the standard of conduct set forth in subsection (b) of this section.
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(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a
quorum consisting of directors not, at the time, parties to the
proceeding, or, if such a quorum cannot be obtained, then by a
majority vote of a committee of the board consisting solely of two
or more directors not, at the time, parties to such proceeding and
who were duly designated to act in the matter by a majority vote of
the full board in which the designated directors who are parties may
participate;
(ii) By special legal counsel selected by the board of
directors or a committee of the board by vote as set forth in
subparagraph (i) of this paragraph, or, if the requisite quorum of
the full board cannot be obtained therefor and the committee cannot
be established, by a majority vote of the full board in which
directors who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and determination
as to reasonableness of expenses shall be made in the same manner as
the determination that indemnification is permissible. However, if
the determination that indemnification is permissible is made by
special legal counsel, authorization of indemnification and
determination as to reasonableness of expenses shall be made in the
manner specified in subparagraph (ii) of paragraph (2) of this
subsection for selection of such counsel.
(4) Shares held by directors who are parties to the
proceeding may not be voted on the subject matter under this
subsection.
(f)(1) Reasonable expenses incurred by a director who is a
party to a proceeding may be paid or reimbursed by the corporation in
advance of the final disposition of the proceeding upon receipt by the
corporation of:
(i) A written affirmation by the director of the
director's good faith belief that the standard of conduct necessary
for indemnification by the corporation as authorized in this section
has been met; and
(ii) A written undertaking by or on behalf of the
director to repay the amount if it shall ultimately be determined
that the standard of conduct has not been met.
(2) The undertaking by or on behalf of the director to
repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
(2) The undertaking required by subparagraph (ii) of
paragraph (1) of this subsection shall be an unlimited general
obligation of the director but need not be secured and may be
accepted without reference to financial ability to make the
repayment.
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(3) Payments under this subsection shall be made as
provided by the charter, bylaws, or contract or as specified in
subsection (e) of this section.
(g) The indemnification and advancement of expenses provided
or authorized by this section may not be deemed exclusive of any other
rights, by indemnification or otherwise, to which a director may be
entitled under the charter, the bylaws, a resolution of stockholders or
directors, an agreement or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.
(h) This section does not limit the corporation's power to
pay or reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when the director has
not been made a named defendant or respondent in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have requested a
director to serve an employee benefit plan where the performance of
the director's duties to the corporation also imposes duties on, or
otherwise involves services by, the director to the plan or
participants or beneficiaries of the plan;
(2) Excise taxes assessed on a director with respect to
an employee benefit plan pursuant to applicable law shall be deemed
fines; and
(3) Action taken or omitted by the director with respect
to an employee benefit plan in the performance of the director's
duties for a purpose reasonably believed by the director to be in
the interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be indemnified
as and to the extent provided in subsection (d) of this section for
a director and shall be entitled, to the same extent as a director,
to seek indemnification pursuant to the provisions of subsection
(d);
(2) A corporation may indemnify and advance expenses to
an officer, employee, or agent of the corporation to the same extent
that it may indemnify directors under this section; and
(3) A corporation, in addition, may indemnify and
advance expenses to an officer, employee, or agent who is not a
director to such further extent, consistent with law, as may be
provided by its charter, bylaws, general or specific action of its
board of directors, or contract.
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(k)(1) A corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or
agent of the corporation, or who, while a director, officer, employee, or
agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, or agent
of another foreign or domestic corporation, partnership, joint venture,
trust, other enterprise, or employee benefit plan against any liability
asserted against and incurred by such person in any such capacity or
arising out of such person's position, whether or not the corporation
would have the power to indemnify against liability under the provisions
of this section.
(2) A corporation may provide similar protection,
including a trust fund, letter of credit, or surety bond, not
inconsistent with this section.
(3) The insurance or similar protection may be provided
by a subsidiary or an affiliate of the corporation.
(l) Any indemnification of, or advance of expenses to, a
director in accordance with this section, if arising out of a proceeding
by or in the right of the corporation, shall be reported in writing to
the stockholders with the notice of the next stockholders' meeting or
prior to the meeting.
(2) A corporation may provide similar protection,
including a trust Fund, letter of credit, or surety bond, not
inconsistent with this section.
(3) The insurance or similar protection may be provided
by a subsidiary or an affiliate of the corporation."
Article Eight of the Registrant's Articles of Incorporation states
as follows:
"Section 3. The Corporation shall indemnify to the fullest extent
permitted by law (including the Investment Company Act of 1940) as currently in
effect or as may hereafter be amended, any person made or threatened to be made
a party to any action, suit or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that such person or such
person's testator or intestate is or was a Director or Officer. To the fullest
extent permitted by law (including the Investment Company Act of 1940) as
currently in effect or as the same may hereafter be amended, expenses incurred
by any such person in defending any such action, suit or proceeding shall be
paid or reimbursed by the Corporation promptly upon receipt by it of an
undertaking of such person to repay such expenses if it shall ultimately be
determined that such person is not entitled to be indemnified by the Fund.
Before the Fund may advance such expenses, one of the following provisions must
be satisfied: 1) such Director or Officer shall provide a security for his
undertaking, 2) the Corporation shall be insured against losses arising by
reason of any lawful advances, or 3) a majority of a quorum of disinterested,
non-party directors of the Corporation, or an independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts,
that there is reason to believe that such Director or Officer ultimately will be
found entitled to indemnification. The rights provided to any person by this
Section of this Article shall be enforceable against the Corporation by such
person who shall be presumed to have relied upon it in serving or continuing to
serve as a
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Director or Officer as provided above. No amendment of this Section of this
Article shall impair the rights of any person arising at any time with respect
to events occurring prior to such amendment. For purposes of this Section of
this Article, the term "Corporation" shall include any predecessor of the
Corporation and any constituent corporation (including any constituent of a
constituent) absorbed by the Corporation in a consolidation or merger; the term
"other enterprise" shall include any corporation, partnership, joint venture,
trust or employee benefit plan; service "at the request of the Corporation"
shall include service as a Director or Officer of the Corporation which imposes
duties on, or involves services by, such Director or Officer with respect to an
employee benefit plan, its participants or beneficiaries; any excise taxes
assessed on a person with respect to an employee benefit plan, its participants
or beneficiaries; any excise taxes assessed on a person with respect to an
employee benefit plan shall be deemed to be indemnifiable expenses; and action
by a person with respect to any employee benefit plan which such person
reasonably believes to be in the interest of the participants and beneficiaries
of such plan shall be deemed to be action not opposed to the best interests of
the Corporation.
"Section 4. Nothing in this Article protects or purports to protect,
any director or officer against any liability to the Corporation or its security
holders to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
"Section 5. A Director or Officer of the Corporation shall not be
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director or Officer, except to the extent such exemption
from liability or limitation thereof is not permitted by law (including the
Investment Company Act of 1940 and rules or regulations thereunder or any
releases issued by the Securities and Exchange Commission or its staff) as
currently in effect or as the same may hereafter be amended.
Article VII of Registrant's By-Laws states as follows:
"Article VII. The Corporation shall indemnify its Directors and
officers against judgments, fines, settlements and expenses to the fullest
extent authorized and in the manner permitted, by applicable federal and state
law and the Articles of Incorporation of the Corporation."
A policy of insurance covering Credit Suisse Asset Management, LLC,
its affiliates, and all of the registered investment companies advised by Credit
Suisse Asset Management, LLC insures the Registrant's directors and officers and
others against liability arising by reason of an alleged breach of duty caused
by any negligent act, error or accidental omission in the scope of its duties
and the Registrant against any payments which it is obligated to make to such
persons under the indemnification provisions described above.
Each of the Non-interested Directors of the Funds is party to an
Indemnification Agreement with the Fund or Funds as to which he serves as a
director providing for contractual rights of indemnity and advancement of
expenses.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Fund pursuant to the
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provisions described above, or otherwise, the Fund has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Fund of expenses incurred or
paid by a director, officer or controlling person of the Fund in the successful
defense of any action, suit or proceeding) is asserted against the Fund by such
director, officer or controlling person in connection with the securities being
registered, the Fund 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 of 1933 and will be governed by the
final adjudication of such issue.
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Item 16. Exhibits
1. Articles of Incorporation of the Registrant, as
amended
2. Amended and Restated By-laws of the Registrant*
3. Not Applicable
4. Form of Agreement and Plan of Reorganization**
5. Not Applicable
6. Restated Investment Advisory Agreement between the
Registrant and Credit Suisse Asset Management, LLC
dated February ____, 2001+
7. Not Applicable
8. Not Applicable
9. Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co. dated January 29, 1999***
10. Not Applicable
11. (a) Opinion of Willkie Farr & Gallagher***
(b) Opinion of Venable, Baetjer and Howard, LLP***
12. Opinion of Willkie Farr & Gallagher with respect to
tax matters***
13. (a) Registrar, Transfer Agency and Service Agreement
between the Registrant and Bank Boston, N.A. (now
Fleet National Bank) dated October 26, 1998
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* Incorporated by reference to Registrant's Form N-SAR filed on February 27,
2001.
** Included as Exhibit A to the Proxy Statement/Prospectus forming part of
the Registration Statement.
+ If the reorganization of Credit Suisse Asset Management Strategic Global
Income Fund, Inc. into the Registrant is consummated and the new
Investment Advisory Agreement between CSAM and the Registrant is approved
by the shareholders of the Registrant, this Agreement will be replaced
with the Investment Advisory Agreement which is attached as Exhibit B to
the Proxy Statement/Prospectus which forms Part A of this Registration
Statement.
*** To be filed by amendment.
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(b) Administrative and Accounting Agency Agreement
between the Registrant and Brown Brothers Harriman &
Co. dated February 27, 1999
(c) Credit Agreement dated June 23, 1999, among the
Registrant, other CSAM-advised investment companies,
Deutsche Bank AG, as administrative agent, State
Street Bank and Trust Company, as operations agent,
Bank of Nova Scotia, as syndication agent, and the
other lenders party thereto (the "Credit Agreement")
(d) First Amendment to Credit Agreement dated June 21,
2000
14. Consent of PricewaterhouseCoopers LLP
15. Not Applicable
16. Not Applicable
17. Code of Ethics
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Item 17. Undertakings
(1) The Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
(3) The Registrant agrees to file the Opinion of Willkie Farr &
Gallagher with respect to tax matters as an amendment to this registration
statement pursuant to Rule 485(b) of the Securities Act as soon as practicable
after the Closing Date (as such term is defined in this registration statement).
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-14 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 2nd
day of March 2001.
Credit Suisse Asset Management Income Fund, Inc.
By: /s/ Michael A. Pignataro
------------------------------------
Michael A. Pignataro,
Chief Financial Officer and Secretary
Each person whose signature appears below hereby constitutes and
appoints Michael A. Pignataro and Hal Liebes, severally, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and hereby
grants to such attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ James McCaughan Chairman of the Board and
- ------------------- Director March 2, 2001
James McCaughan
/s/ William W. Priest Director March 2, 2001
- ---------------------
William W. Priest
/s/ Dr. Enrique R. Arzac Director March 2, 2001
- ------------------------
Dr. Enrique R. Arzac
/s/ Lawrence J. Fox Director March 2, 2001
- -------------------
Lawrence J. Fox
/s/ James S. Pasman Director March 2, 2001
- -------------------
James S. Pasman
/s/ Richard J. Lindquist President, Chief Investment March 2, 2001
- ------------------------ Officer
Richard J. Lindquist
/s/ Michael A. Pignataro Chief Financial Officer and March 2, 2001
- ------------------------ and Secretary
Michael A. Pignataro
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Exhibit No
1. Amended Articles of Incorporation of the Registrant
13.(a) Registrar, Transfer Agency and Service Agreement
between the Registrant and BankBoston, N.A. (now
Fleet National Bank) dated October 26, 1998
(b) Administrative and Accounting Agency Agreement
between the Registrant and Brown Brothers Harriman &
Co. dated February 27, 1999
(c) Credit Agreement dated June 23, 1999, among the
Registrant, other CSAM-advised investment companies,
Deutsche Bank AG, as administrative agent, State
Street Bank and Trust Company, as operations agent,
Bank of Nova Scotia, as syndication agent, and the
other lenders party thereto (the "Credit Agreement")
(d) First Amendment to Credit Agreement dated June 21,
2000
14. Consent of PricewaterhouseCoopers LLP
17. Code of Ethics
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