UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File No. 811-05012
-----------------------------------------
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, New York, New York 10017-3140
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(Address of Principal Executive Offices) (Zip Code)
J. Kevin Gao, Esq.
Credit Suisse Asset Management Income Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3140
Registrant's telephone number, including area code: (212) 875-3500
Date of fiscal year end: December 31st
Date of reporting period: January 1, 2005 to December 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
CREDIT SUISSE ASSET MANAGEMENT
INCOME FUND, INC.
ANNUAL REPORT
DECEMBER 31, 2005
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
ANNUAL INVESTMENT ADVISER'S REPORT
December 31, 2005 (unaudited)
Dear Shareholder:
PERFORMANCE SUMMARY
1/1/05 - 12/31/05
FUND & BENCHMARKS PERFORMANCE
Total Return (based on NAV)(1) 1.74%
Total Return (based on market value)(1) -9.76%
Citigroup High-Yield Market Index(2) (CHYMI) 2.07%
Merrill Lynch US High Yield Master II Constrained Index(3) (MERRILL) 2.78%
MARKET OVERVIEW: RESILIENT ECONOMY RIDES THROUGH THE STORMS
In a year of modest gains for most major markets, the high yield sector
performed relatively well. Although economic growth was robust throughout the
year, markets seemed vulnerable to the possibility of an impending soft patch,
which, in fact, never materialized. The inflationary impact of higher energy
prices was a concern for much of the year, sapping discretionary income and
posing a risk to continued consumer spending. A series of summer storms in the
refinery-heavy Gulf Coast exacerbated oil price pressures while causing a
short-term spike in unemployment claims. Then, in the storms' aftermath, when
the specter of higher oil prices faded due to warmer-than-expected winter
weather, the likelihood of a cooling in the housing market edged to the center
of the national radar screen.
But despite the periodic risk of a slowdown, corporate profit growth remained
resilient and the Fed resolute in its measured pace of policy tightening,
lifting the fed funds rate 200 basis points over the course of the year, to
4.25%. The yield curve flattened and then, at year-end, inverted (the spread
between 2 year and 10 year Treasuries narrowed from 115 to -1 basis points) as a
global savings glut kept a lid on longer yields while the short end rose.
In the Fund's fiscal year, the high yield market (as measured by MERRILL),
outperformed the broad fixed income market (as measured by the Lehman Brothers
Aggregate Bond Index, which returned 2.43%), although the magnitude of
outperformance narrowed significantly from that of the last several years and
might be considered small given the strong fundamental backdrop.
In our view, this was due to the natural progress of the credit and business
cycles. High Yield defaults (as measured by Moody's Investor Services) remained
below 2% through the entire fiscal year period, well below historical averages.
However, after intense focus on balance sheet repair prompted by strong earnings
growth and low interest rates in the last few years, there is simply less "room
for improvement" in credit fundamentals. In addition, corporations are
increasingly turning to other means to address their lackluster share prices
(through share repurchases, dividend increases and other measures) in an effort
to boost shareholder value.
From a technical perspective, the environment was mixed. High yield mutual funds
reported a record $8.7 billion outflow through year-end, although this indicator
does not account for the increasing role of hedge funds and other market
participants. And while the fiscal year saw a decline in the number of high
yield deals and a drop in new issue volume, this decrease in new supply was
easily outweighed by the entrance of Ford, General Motors ("GM") and Delphi debt
into the high yield arena (as of December 31, 2005, the holdings in Ford, GM,
and Delphi debt respectively amounted to 0.67%, 2.18%, and 0.03% of the Fund's
net assets.)
In our view, this influx of fallen angel debt caused the greatest turbulence,
and provided the greatest drag, on the high yield market in the period. High
yield spreads remained below their historical averages for most of the period,
but widened dramatically with the downgrade of GM and Ford to junk status. These
fallen angels brought approximately $82 billion of debt (market value prior to
downgrade) and raised concerns about the high yield market's ability to absorb
that level of supply. Together they now account for about 12% of the Citigroup
High Yield market index.
In sum, we believe that all of these factors, along with the impact of the Gulf
Coast hurricanes, persistently high energy costs, and uncertainty with respect
to Federal Reserve policy weighed on the market, resulting in greater caution
among investors.
STRATEGIC REVIEW: SELECTIVE SECTOR POSITIONING
Several factors accounted for the Fund's performance relative to the Citigroup
High Yield Market Index during the fiscal year:
- Our overweight to the Wireless sector relative to the Index, as well as stock
selection within that sector, provided the greatest positive contribution to
the Fund's performance in the period.
- An overweight to the Gaming sector, our second largest overweight relative to
the Index, also aided.
- The major detractor was the Fund's overweight to the Building Products
sector, which underperformed during the period under review.
- Another hindrance to performance was our underweight allocation to the
Diversified Telecom and Energy sectors, both of which outperformed for the
period under review.
BENCHMARK REVIEW
Structural changes within the high yield universe have necessitated an
evaluation of our benchmark. Specifically, as noted above, the downgrades of
General Motors Corp and Ford Motor Company have created high issuer
concentrations in the traditional high yield indices. After extensively studying
the various benchmarks available, the fund will switch its reference index to
the Merrill Lynch US High Yield Master II Constrained Index. This index caps
issuer weights to a maximum of 2% and therefore addresses current and future
concentration issues.
OUTLOOK: MONETARY POLICY CHANGES AMID FAVORABLE CREDIT CONDITIONS
We maintain a cautiously optimistic view for high yield heading into 2006.
Strong fundamentals, still-robust economic growth and low default risk could be
offset by the increase in shareholder-friendly actions, such as buybacks and LBO
activity. Defaults are expected to remain below their historical average, but we
are of the opinion that the trend of deteriorating new-issue quality may
continue, planting the seeds of future failures. In spite of this, we expect
spreads, which are near-historic lows, to remain range-bound going forward.
Sincerely yours,
/s/ Martha B. Metcalf /s/ Steven B. Plump
Martha B. Metcalf Steven B. Plump
Chief Investment Officer* Chief Executive Officer and President**
HIGH YIELD BONDS ARE LOWER-QUALITY BONDS THAT ARE ALSO KNOWN AS "JUNK
BONDS." SUCH BONDS ENTAIL GREATER RISKS THAN THOSE FOUND IN HIGHER-RATED
SECURITIES. INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS,
INCLUDING CURRENCY FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS,
AND DIFFERENCES IN ACCOUNTING METHODS; THESE RISKS ARE GENERALLY HEIGHTENED FOR
EMERGING-MARKET INVESTMENTS. THE FUND MAY INCLUDE A GREATER DEGREE OF RISK THAN
OTHER FUNDS THAT INVEST IN LARGER, MORE-DEVELOPED MARKETS.
IN ADDITION TO HISTORICAL INFORMATION, THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS, WHICH MAY CONCERN, AMONG OTHER THINGS, DOMESTIC AND FOREIGN MARKET,
INDUSTRY AND ECONOMIC TRENDS AND DEVELOPMENTS AND GOVERNMENT REGULATION AND
THEIR POTENTIAL IMPACT ON THE FUND'S INVESTMENT PORTFOLIO. THESE STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES AND ACTUAL TRENDS, DEVELOPMENTS AND
REGULATIONS IN THE FUTURE AND THEIR IMPACT ON THE FUND COULD BE MATERIALLY
DIFFERENT FROM THOSE PROJECTED, ANTICIPATED OR IMPLIED. THE FUND HAS NO
OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS.
* Martha B. Metcalf is a Managing Director of Credit Suisse Asset Management,
LLC ("Credit Suisse") and head of the U.S. High Yield Management Team. She
has served in these capacities since 2005. As of November 2005, she is
primarily responsible for the management of the Fund's assets. From 2000
until 2005, she was a Managing Director and Portfolio Manager of Global
High Yield bonds, and head of a global high yield business with
responsibility for total return, as well as structured portfolios at
Invesco. Prior to her tenure at Invesco, Ms. Metcalf served for over ten
years at JP Morgan Investment Management, where she was Vice President and
Portfolio Manager for High Yield Corporate bonds.
** Steven B. Plump is a Managing Director of Credit Suisse and CEO/President
of the Fund. He joined Warburg Pincus Asset Management ("WPAM") in 1995 and
came to Credit Suisse in 1999 when it acquired WPAM.
----------
(1) Based on NAV and assuming reinvestment of dividends of $0.40 per share.
(2) The Citigroup High-Yield Market Index is a broad-based, unmanaged index of
high yield securities that is compiled by Citigroup Global Markets Inc. It
does not reflect the impact of taxes. Investors cannot invest directly in
an index.
(3) The Merrill Lynch US High Yield Master IT Index is an unmanaged index that
tracks the performance of below-investment-grade, U.S. dollar-denominated
corporate bonds publicly issued in the U.S. domestic market. It is a
rules-based index that is compiled and distributed by Merrill Lynch & Co.
Qualifying bonds must have at least one year remaining until maturity, a
fixed coupon schedule and a minimum amount outstanding of US$100 million.
Any individual issuer is capped at 2%. Investors cannot invest directly in
an index.
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 12/31/05)
1. General Motors Acceptance Corp.,
Global Notes
6.75%, 12/01/14 1.3%
2. Qwest Corp., Rule 144A, Senior Notes
7.625%, 6/15/15 1.1%
3. Newark Group, Inc., Global Senior
Subordinated Notes
9.75%, 3/15/14 0.9%
4. Hard Rock Hotel, Inc., Global Notes
8.875%, 6/01/13 0.9%
5. Charter Communication Holdings
LLC/Cap Corp.,
Global Senior Notes
8.75%, 11/15/13 0.8%
6. Chesapeake Energy Corp., Senior Notes
6.875%, 1/15/16 0.8%
7. Levi Strauss & Co., Global Senior Notes
9.75%, 1/15/15 0.8%
8. El Paso Production Holding Co.,
Global Company Guaranteed
7.75%, 6/01/13 0.7%
9. JSG Funding plc, Rule 144A,
Senior Subordinated Notes
7.75%, 4/01/15 0.7%
10. WDAC Subsidiary Corp., Rule 144A,
Senior Notes
8.375%, 12/01/14 0.7%
CREDIT QUALITY BREAKDOWN
(AS A % OF TOTAL INVESTMENTS AS OF 12/31/05)
A 0.1%
BBB 0.7
BB 14.0
B 56.0
CCC 22.3
CC 0.7
C 0.2
D 0.4
N/R 1.0
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Subtotal 95.4
Time Deposit 3.9
Equities and Other 0.7
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Total 100.0%
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1
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 2005
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES (86.8%)
CORPORATE OBLIGATIONS (86.1%)
AEROSPACE (0.7%)
$ 300 BE Aerospace, Inc., Series B, Senior Subordinated Notes (B , Caa2) 03/01/08 8.000 $ 301,500
925 L-3 Communication Corp., Global Senior Subordinated Notes
(Callable 1/15/10 @ $102.94) (BB+ , Ba3) 01/15/15 5.875 901,875
250 Sequa Corp., Senior Notes (BB- , B1) 08/01/09 9.000 266,875
--------------
1,470,250
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AIRLINES (0.4%)
900 American Airlines, Inc., Series 01-2, Pass Thru
Certificates (B , B1) 10/01/06 7.800 888,887
--------------
AUTOMOBILE MANUFACTURING/VEHICLE PARTS (5.6%)
525 Accuride Corp., Global Company Guaranteed Notes
(Callable 2/01/10 @ $104.25) (B- , B3) 02/01/15 8.500 519,750
800 American Tire Distributors Holdings, Inc., Global Senior
Notes (Callable 4/01/09 @ $105.38) (CCC+ , Caa2) 04/01/13 10.750 728,000
395 ArvinMeritor, Inc. Notes (BB , Ba2) 03/01/12 8.750 380,187
775 Cambridge Industries, Inc., Senior Subordinated Notes ^ (NR , NR) 07/15/07 10.250 0
400 Cooper-Standard Automotive, Inc., Global Company
Guaranteed Notes (Callable 12/15/09 @ $104.19) (B , B3) 12/15/14 8.375 306,000
125 Delphi Corp., Global Notes 0 (NR , NR) 06/15/06 6.550 63,750
350 Dura Operating Corp., Series D, Company Guaranteed
(Callable 5/01/06 @ $101.50) (CCC+ , Caa2) 05/01/09 9.000 199,500
1,650 Ford Motor Credit Co., Global Notes (BB+ , Baa3) 10/01/13 7.000 1,411,857
550 General Motors Acceptance Corp., Bonds (BB , Ba1) 11/01/31 8.000 528,230
1,625 General Motors Acceptance Corp., Global Notes (BB , Ba1) 05/15/09 5.625 1,446,817
2,920 General Motors Acceptance Corp., Global Notes (BB , Ba1) 12/01/14 6.750 2,631,124
1,250 Goodyear Tire & Rubber Co., Rule 144A, Senior Notes
(Callable 7/01/10 @ $104.50)++ (B- , B3) 07/01/51 9.000 1,237,500
450 Keystone Automotive Operations, Inc., Global Senior
Subordinated Notes (Callable 11/1/08 @ $104.88) (B- , Caa1) 11/01/13 9.750 391,500
400 Stanadyne Corp., Global Senior Subordinated Notes
(Callable 8/15/09 @ $105.00) (B- , Caa1) 08/15/14 10.000 386,000
575 Stoneridge, Inc., Global Company Guaranteed
(Callable 5/01/07 @ $105.75) (B+ , B1) 05/01/12 11.500 587,937
350 Tenneco Automotive, Inc., Global Company Guaranteed Notes
(Callable 11/15/09 @ $104.31) (B- , B3) 11/15/14 8.625 332,500
900 Visteon Corp. Global Senior Notes (B- , B3) 08/01/10 8.250 769,500
--------------
11,920,152
--------------
BROADBAND (0.4%)
750 Level 3 Communications, Inc., Senior Notes
(Callable 5/01/06 @ $100.00) (CC , Ca) 05/01/08 9.125 686,250
250 Level 3 Financing, Inc., Global Company Guaranteed Notes
(Callable 10/15/07 @ $105.38) (CC , Caa1) 10/15/11 10.750 223,125
--------------
909,375
--------------
BROADCAST/OUTDOOR (2.1%)
600 Allbritton Communication Co., Global Senior Subordinated
Notes (Callable 12/15/07 @ $103.88) (B- , B3) 12/15/12 7.750 606,000
750 Emmis Communications Corp., Global Senior Notes
(Callable 1/12/06 @ $100.00) # (B- , B3) 06/15/12 9.314 756,562
175 Nexstar Finance, Inc., Global Senior Subordinated Notes
(Callable 1/15/09 @ $103.50) (CCC+ , B3) 01/15/14 7.000 161,219
475 Rainbow National Services LLC, Rule144A, Private Placement
Senior Subordinated Notes (Callable 9/01/09 @ $105.19)++ (B , B3) 09/01/14 10.375 534,375
550 Sinclair Broadcast Group, Inc., Global Company Guaranteed
Notes (Callable 12/15/06 @ $104.38) (B , B2) 12/15/11 8.750 581,625
750 Sirius Satellite Radio, Inc., Rule 144A, Senior Notes
(Callable 9/01/09 @ $104.81)++ (CCC , Caa1) 08/01/13 9.625 742,500
811 WMG Holdings Corp., Global Senior Discount Notes
(Callable 12/15/09 @ $104.75)+ (B- , B3) 12/15/14 0.000 571,755
575 Young Broadcasting, Inc., Global Company Guaranteed Notes
(Callable 3/01/06 @ $105.00) (CCC , Caa2) 03/01/11 10.000 541,219
--------------
4,495,255
--------------
BUILDING PRODUCTS (3.5%)
250 Ahern Rentals, Inc., Rule 144A, Secured Notes Notes
(Callable 8/15/09 @ $104.63)++ (B- , B3) 08/15/13 9.250 264,375
750 Associated Materials, Inc., Global Senior Discount Notes
(Callable 3/01/09 @ $105.63)+ (CCC+ , Caa2) 03/01/14 0.000 371,250
300 Building Materials Corp. of America, Global Secured Notes
(Callable 8/01/09 @ $103.88) (B+ , B2) 08/01/14 7.750 291,000
750 Compression Polymers Holding Corp., Rule 144A, Senior Notes
(Callable 7/01/09 @ $105.25)++ (B- , B2) 07/01/13 10.500 731,250
300 Dayton Superior Corp., Company Guaranteed Notes
(Callable 6/15/07 @ $102.17) (CCC , Caa3) 06/15/09 13.000 228,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
2
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
BUILDING PRODUCTS
$ 500 Dayton Superior Corp., Global Secured Notes
(Callable 6/15/06 @ $105.63) (B- , B3) 09/15/08 10.750 $ 485,000
1,250 Goodman Global Holdings Co., Inc., Rule 144A, Senior
Subordinated Notes (Callable 12/15/08 @ $103.94)++ (B- , Caa1) 12/15/12 7,875 1,168,750
400 Interface, Inc., Global Senior Subordinated Notes
(Callable 2/01/09 @ $104.75) (CCC , Caa3) 02/01/14 9.500 400,000
275 Norcraft Cos/Norcraft Finance Corp., Global Senior
Subordinated Notes (Callable 11/01/07 @ $104.50) (B- , B3) 11/01/11 9.000 286,000
250 Norcraft Holdings L.P./Norcraft Capital, Global Senior
Discount Notes (Callable 9/01/08 @ $104.88)+ (B- , Caa1) 09/01/12 0.000 178,750
750 NTK Holdings, Inc., Global Senior Discount Notes
(Callable 9/01/09 @ $105.38) (CCC+ , Caa2) 03/01/14 10.750 472,500
900 Ply Gem Industries, Inc., Global Senior Subordinated Notes
(Callable 2/15/08 @ $104.50) (B- , B3) 02/15/12 9.000 803,250
500 RMCC Acquisition Co., Rule144A, Senior Subordinated Notes
(Callable 11/01/08 @ $104.75)++ (CCC+ , Caa1) 11/01/12 9.500 505,000
700 THL Buildco (Nortek), Inc., Global Senior Subordinated Notes
(Callable 9/01/09 @ $104.25) (CCC+ , Caa1) 09/01/14 8.500 679,000
1,300 Werner Holdings Co., Inc., Series A, Company
Guaranteed Notes (Callable 2/21/06 @ $100.00) (CCC+ , Caa3) 11/15/07 10.000 422,500
--------------
7,286,625
--------------
CABLE (4.7%)
750 Atlantic Broadband Finance LLC, Rule 144A, Senior
Subordinated Notes (Callable 1/15/09 @ $104.69)++ (CCC+, Caa1) 01/15/14 9.375 673,125
855 Cablevision SystemsCorp., Series B, Global Senior Notes (B , B3) 04/15/12 8.000 803,700
792 CCH I LLC, Rule 144A, Private Placement Secured Notes
(Callable 10/1/10 @ $105.50)++ (CCC-, Caa3) 10/01/15 11.000 669,240
1,700 Charter Communication Holdings II, Senior Notes
(Callable 9/15/08 @ $105.13) (CCC- , Caa1) 09/15/10 10.250 1,700,000
1,150 Charter Communication Holdings LLC/Cap Corp.,
Global Senior Notes (Callable 11/15/08 @ $104.38) (CCC- , B3) 11/15/13 8.750 1,101,125
750 Charter Communications Holdings LLC, Senior Notes
(Callable 4/01/06 @ $101.44) (CCC- , Ca) 04/01/09 8.625 558,750
1,450 CSC Holdings, Inc., Rule 144A, Senior Notes++ (B+ , B2) 04/15/12 6.750 1,377,500
150 CSC Holdings, Inc., Series B, Debentures (B+ , B2) 08/15/09 8.125 152,250
530 CSC Holdings, Inc., Series B, Senior Notes (B+ , B2) 04/01/11 7.625 530,000
3,014 DIVA Systems Corp., Series B, Senior Discount Notes
(Callable 3/01/06 @ $100.00)^^ (NR , NR) 03/01/08 12.625 75,355
250 Insight Communications Co., Inc., Senior Discount Notes
(Callable 2/15/07 @ $104.08)+ (CCC+ , Caa1) 02/15/11 0.000 262,500
500 Insight Midwest/Insight Capital, Global Senior Notes
(Callable 11/01/06 @ $103.50) (B , B2) 11/01/10 10.500 528,125
500 Insight Midwest/Insight Capital, Senior Notes
(Callable 10/01/06 @ $101.63) (B , B2) 10/01/09 9.750 516,250
150 Mediacom Broadband LLC, Rule144A, Senior Notes
(Callable 10/15/10 @ $104.25)++ (B , B2) 10/15/15 8.500 139,687
850 Mediacom LLC/Capital Corp., Senior Notes
(Callable 2/15/06 @ $103.94) (B , B3) 02/15/11 7.875 796,875
--------------
9,884,482
--------------
CAPITAL GOODS (0.6%)
250 Blount, Inc., Senior Subordinated Notes
(Callable 8/01/08 @ $104.44) (B , Caa1) 08/01/12 8.875 265,000
350 Case New Holland, Inc., Global Company Guaranteed Notes
(Callable 8/01/07 @ $104.62) (BB- , Ba3) 08/01/11 9.250 376,250
0 JII Holdings LLC, Global Secured Notes
(Callable 1/01/06 @ $103.25)++ (CCC- , Caa2) 04/01/07 13.000 352
640 Motors& Gears, Inc., Series D, Senior Notes
(Callable3/10/06@ $100.00) (CCC , Caa3) 11/15/06 10.750 617,600
--------------
1,259,202
--------------
CHEMICALS (3.1%)
322 BCP Crystal Holdings Corp., Global Senior Subordinated Notes
(Callable 6/15/09 @ $104.81) (B- , B3) 06/15/14 9.625 359,835
455 Crystal U.S. Holdings/U.S. Sub 3, Series B, Global
Senior Discount Notes (Callable 10/01/09 @ $105.25)+ (B- , Caa2) 10/01/14 0.000 333,287
350 Equistar Chemicals LP/Equistar Funding Corp., Global
Senior Notes (Callable 5/01/07 @ $105.31) (BB- , B2) 05/01/11 10.625 386,750
325 Huntsman Co. LLC, Global Company Guaranteed Notes
(Callable 10/15/07 @ $105.81) (BB- , Ba3) 10/15/10 11.625 371,719
264 Huntsman Co. LLC, Global Company Guaranteed Notes
(Callable 7/15/08 @ $105.75) (B , B2) 07/15/12 11.500 300,300
250 ISP Chemco, Inc., Series B, Global Company Guaranteed Notes
(Callable 7/01/06 @ $105.13) (BB- , B1) 07/01/11 10.250 267,500
600 KI Holdings, Inc., Global Senior Discount Notes
(Callable 11/15/09 @ $104.94) + (B- , Caa2) 11/15/14 0.000 396,000
1,100 Lyondell Chemical Co., Global Company Guaranteed
(Callable 6/01/08 @ $105.25) (BB- , B1) 06/01/13 10.500 1,255,375
300 Millennium America, Inc., Global Company Guaranteed Notes (BB- , B1) 06/15/08 9.250 325,125
750 Nalco Co., Global Senior Notes (Callable 11/15/07 @ $103.88) (B- , B2) 11/15/11 7.750 774,375
400 Polyone Corp., Global Company Guaranteed Notes
(Callable 5/15/07 @ $105.31) (B+ , B3) 05/15/10 10.625 431,000
500 Resolution Performance Products LLC, Global Senior
Subordinated Notes (Callable 11/15/06 @ $104.5) (B- , Caa2) 11/15/10 13.500 531,250
357 Terra Capital, Inc., Global Secured Notes
(Callable 6/01/07 @ $105.75) (B- , B2) 06/01/10 11.500 399,840
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
CHEMICALS
$ 450 Tronox Worldwide LLC/ Tronox Finance Corp., Rule 144A,
Private Placement Senior Notes
(Callable 12/01/09 @ $104.75)++ (B+ , B1) 12/01/12) 9.500 $ 461,250
--------------
6,593,606
--------------
COMPETITIVE LOCAL EXCHANGE CARRIER (0.5%)
750 GCI, Inc., Global Senior Notes (Callable 2/15/09 @ $103.63) (B+ , B2) 02/15/14 7.250 746,250
369 Madison River Capital/Madison River Finance, Senior Notes
(Callable 3/01/06 @ $104.42) (B- , B3) 03/01/10 13.250 391,531
--------------
1,137,781
--------------
CONSUMER PRODUCTS/TOBACCO (4.0%)
400 AAC Group Holding Corp., Global Senior Discount Notes
(Callable 10/01/08 @ $105.13)+ (B- , Caa1) 10/01/12 0.000 291,000
650 ALH Finance LLC, Senior Subordinated Notes
(Callable 1/15/09 @ $104.25) (CCC+ , B3) 01/15/13 8.500 615,875
400 Ames True Temper, Inc., Global Company Guaranteed Notes
(Callable 1/15/07 @ $103.00) # (CCC+ , B3) 01/15/12 8.600 378,000
600 Ames True Temper, Inc., Senior Subordinated Notes
(Callable 7/15/08 @ $105.00) (CCC- , Caa2) 07/15/12 10.000 474,000
950 Amscan Holdings, Inc., Global Senior Subordinated Notes
(Callable 5/01/09 @ $104.38) (CCC+ , B3) 05/01/14 8.750 805,125
750 Del Laboratories, Inc., Global Company Guaranteed Notes (CCC+ , Caa2) 02/01/12 8.000 596,250
400 Interactive Health LLC, Rule 144A, Senior Notes
(Callable 4/01/08 @ $105.69)++ (B- , Caa1) 04/01/11 7.250 326,000
1,100 Johnsondiversey Holdings, Inc., Global Discount Notes
(Callable 5/15/07 @ $105.34) + (B-, Caa1) 05/15/13 0.000 880,000
650 PCA LLC/PCA Finance Corp., Global Senior Notes (C , Ca) 08/01/09 11.875 168,187
970 Playtex Products, Inc., Global Company Guaranteed Notes
(Callable 6/01/06 @ $104.69) (CCC+ , Caa1) 06/01/11 9.375 1,020,925
299 Prestige Brands, Inc., Global Senior Subordinated Notes
(Callable 4/15/08 @ $104.63) (B- , B3) 04/15/12 9.250 296,010
100 Remington Arms Co., Inc., Global Company Guaranteed Notes
(Callable 2/01/07 @ $105.25) (CCC- , B3) 02/01/11 10.500 89,500
500 Revlon, Inc., Debentures (CCC , Caa2) 04/01/11 9.500 458,750
525 Samsonite Corp., Global Senior Subordinated Notes
(Callable 6/01/08 @ $104.44) (B- , B3) 06/01/11 8.875 546,000
750 Sealy Mattress Co., Global Senior Subordinated Notes
(Callable 6/15/09 @ $104.13) (B- , B2) 06/15/14 8.250 776,250
250 Spectrum Brands, Inc., Global Senior Subordinated Notes
(Callable 10/01/08 @ $104.25) (B- , B3) 10/01/13 8.500 219,375
450 True Temper Sports, Inc., Company Guaranteed Notes (CCC+ , Caa1) 09/15/11 8.375 407,250
--------------
8,348,497
--------------
CONTAINERS (2.6%)
600 Berry Plastics Corp., Global Company Guaranteed Notes
(Callable 7/15/07 @ $105.38) (B- , B3) 07/15/12 10.750 648,000
500 Constar International Inc., Senior Subordinated Notes
(Callable 12/01/07 @ $105.50) (CCC , Caa3) 12/01/12 11.000 367,500
485 Crown Americas LLC, Rule 144A, Private Placement Senior Notes
(Callable 11/15/10 @ $103.88)++ (B , B1) 11/15/15 7.750 504,400
525 Graham Packaging Co.,Inc., Global Subordinated Notes
(Callable 10/15/09 @ $104.94) (CCC+ , Caa2) 10/15/14 9.875 514,500
250 Graphic Packaging International Corp., Senior
Subordinated Notes (Callable 8/15/08 @ $104.75) (B- , B3) 08/15/13 9.500 240,000
300 Intertape Polymer U.S., Inc., Global Senior Subordinated Notes
(Callable 8/01/09 @ $104.25) (B- , B3) 08/01/14 8.500 297,610
680 Owens-Brockway Glass, Global Company Guaranteed Notes
(Callable 5/15/08 @ $104.13) (B , B2) 05/15/13 8.250 705,500
850 Owens-Illinois, Inc., Senior Notes (B , B3) 05/15/07 8.100 873,375
850 Pliant Corp., Company Guaranteed (Callable 6/1/06 @ $106.50) (CCC+ , Caa2) 06/01/10 13.000 170,000
500 Solo Cup Co., Global Senior Subordinated Notes
(Callable 2/15/09 @ $104.25) (B- , Caa1) 02/15/14 8.500 440,000
275 U.S. Can Corp., Global Company Guaranteed Notes
(Callable 7/15/07 @ $105.44) (CCC+ , Caa3) 07/15/10 10.875 287,375
425 U.S. Can Corp., Series B, Global Company Guaranteed Notes
(Callable 2/03/06 @ $106.19) (CCC+ , Caa3) 10/01/10 12.375 402,687
--------------
5,450,947
--------------
DIVERSIFIED TELECOMMUNICATIONS (2.6%)
525 Cincinnati Bell, Inc., Global Senior Subordinated Notes
(Callable 1/15/09 @ $104.19) (B- , B3) 01/15/14 8.375 519,094
550 Hawaiian Telecom Communications, Inc., Rule 144A, Senior Notes
(Callable 5/01/09 @ $104.88)++ (CCC+ , B3) 05/01/13 9.750 540,375
300 LCI International, Inc., Senior Notes (NR , NR) 06/15/07 7.250 303,000
1,400 Qwest Capital Funding, Inc., Global Company Guaranteed Notes (B , B3) 02/15/11 7.250 1,424,500
300 Qwest Communications International, Inc., Global Company
Guaranteed Notes (Callable 2/15/08 @ $103.62) (B , B2) 02/15/11 7.250 307,500
2,164 Qwest Corporation, Rule 144A, Senior Notes++ (BB , Ba3) 06/15/15 7,625 2,326,300
--------------
5,420,769
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
ENERGY-OTHER (2.3%)
$ 1,050 Dynegy Holdings, Inc., Rule 144A, Secured Notes
(Callable 7/15/08 @ $105.06)++ (B- ,B1) 07/15/13 10.125 $ 1,191,750
250 Dynegy Holdings, Inc., Senior Notes (CCC+ , B2) 04/01/11 6.875 247,500
500 El Paso Corp., Senior Notes (B- , Caa1) 05/15/11 7.000 498,750
250 El Paso Natural Gas, Series A, Global Senior Notes
(Callable 8/01/07 @ $103.81) (B , B1) 08/01/10 7.625 264,145
200 Giant Industries, Inc., Company Guaranteed Notes
(Callable 5/15/09 @ $104.00) (B- , B3) 05/15/14 8.000 207,500
162 Giant Industries, Inc., Global Company Guaranteed Notes
(Callable 5/15/07 @ $105.50) (B- , B3) 05/15/12 11.000 181,035
250 Inergy LP/Inergy Finance Corp., Global Senior Notes
(Callable 12/15/19 @ $103.44) (B , B1) 12/15/14 6.875 228,750
500 Reliant Energy, Inc., Global Secured Notes
(Callable 7/15/08 @ $104.75) (B+ , B1) 07/15/13 9.500 503,750
250 Reliant Energy, Inc., Secured Notes
(Callable 12/15/09 @ $103.38) (B+ , B1) 12/15/14 6.750 219,375
1,175 Williams Companies, Inc., Notes (B+ , B1) 03/15/12 8.125 1,286,625
--------------
4,829,180
--------------
ENVIRONMENTAL SERVICES (0.7%)
1,100 Allied Waste North America, Inc., Series B, Senior Notes
(Callable 4/15/09 @ $103.69) (B , Caa1) 04/15/14 7.375 1,075,250
400 Waste Services, Inc., Global Senior Subordinated Notes
(Callable 4/15/09 @ $104.75) (CCC , Caa2) 04/15/14 9.500 402,000
--------------
1,477,250
--------------
FINANCE - OTHER (0.6%)
250 E*Trade Financial Corp., Global Senior Notes
(Callable 6/15/08 @ $104.00) (B+ , B3) 06/15/11 8.000 261,250
315 E*Trade Financial Corp., US Domestic Senior Notes
(Callable 12/01/10 @ $103.94) (B+ , B1) 12/01/15 7.875 326,812
700 Insurance Auto Auctions, Inc. Global Company Guaranteed Notes
(Callable 4/01/09 @ $105.50) (CCC+ , Caa1) 04/01/13 11.000 739,129
--------------
1,327,191
--------------
FOOD PROCESSORS/BEVERAGE/BOTTLING (1.7%)
100 Agrilink Foods, Inc., Company Guaranteed Notes
(Callable 11/01/06 @ $100.00) (B- , B3) 11/01/08 11.875 102,500
800 Bear Creek Corp., Rule 144A, Senior Notes
(Callable 3/01/09 @ $104.50)++ (B- , B3) 03/01/13 9.000 808,000
471 Eagle Family Foods, Inc., Series B, Company Guaranteed Notes
(Callable 1/15/06 @ $100.00) (CCC , Caa2) 01/15/08 8.750 357,580
250 Leiner Health Products, Inc., Global Senior Subordinated Notes
(Callable 6/01/08 @ $105.50) (CCC+ , Caa1) 06/01/12 11.000 236,250
250 Le-Natures, Inc., Rule 144A, Senior Subordinated Notes
(Callable 6/15/08 @ $104.25)++ (CCC+ , B3) 06/15/13 9.000 263,750
400 National Beef Packing Co. LLC, Global Senior Notes
(Callable 8/01/07 @ $105.25) (B- , B3) 08/01/11 10.500 416,000
220 National Wine & Spirits, Inc., Company Guaranteed Notes
(Callable 1/15/06 @ $100.00) (CCC+ , B3) 01/15/09 10.125 223,300
700 Pinnacle Foods Holding Corp., Global Senior Subordinated Notes
(Callable 12/01/08 @ $104.13) (B- , B3) 12/01/13 8.250 670,250
250 Swift & Co., Global Company Guaranteed Notes
(Callable 10/01/06 @ $105.06) (B+ , B2) 10/01/09 10.125 259,375
300 Swift & Co., Global Senior Subordinated Notes
(Callable 10/01/06 @ 106.25) (B , B3) 01/01/10 12.500 317,250
--------------
3,654,255
--------------
GAMING (5.9%)
850 155 ETropicana LLC, Global Secured Notes
(Callable 4/01/09 @ $104.38) (B- , B3) 04/01/12 8.750 822,375
400 Aztar Corp., Global Senior Subordinated Notes
(Callable 06/15/09 @ $103.94) (B+ , Ba3) 06/15/14 7.875 421,000
500 Circus & Eldorado/Silver Legacy Capital Corp.,
Global First Mortgage Notes (Callable 3/01/07 @ $105.06) (B , B1) 03/01/12 10.125 531,250
1,740 Hard Rock Hotel, Inc., Global Notes
(Callable 6/01/08 @ $104.44) (B , B3) 06/01/13 8.875 1,883,550
300 Herbst Gaming, Inc., Global Senior Subordinated Notes
(Callable 6/01/08 @ $104.06) (B- , B3) 06/01/12 8.125 313,500
400 Inn of the Mountain Gods, Global Senior Notes
(Callable 11/15/07 @ $106.00) (B , B3) 11/15/10 12.000 398,000
400 Isle of Capri Casinos, Inc., Global Senior Subordinated Notes
(Callable 3/01/09 @ $103.50) (B , B2) 03/01/14 7.000 392,000
750 Majestic Star Casino LLC, Company Guaranteed Notes
(Callable 10/15/07 @ $104.75) (BB- , B2) 10/15/10 9.500 793,125
650 Majestic Star Casino LLC, Rule 144A, Private Placement
Secured Notes (Callable 10/15/08 @ $104.88)++ (B- , B3) 01/15/11 9.750 658,125
750 MGM Mirage, Inc., Company Guaranteed Notes (BB , Ba2) 10/01/09 6.000 749,062
375 MGM Mirage, Inc., Company Guaranteed Notes (BB , Ba2) 09/15/10 8.500 408,281
450 MGM Mirage, Inc., Company Guaranteed Notes (B+ , Ba3) 02/01/11 8.375 483,750
250 MGM Mirage, Inc., Global Senior Notes (BB , Ba2) 09/01/12 6.750 254,687
350 Mohegan Tribal Gaming Authority, Global Senior
Subordinated Notes (Callable 8/15/09 @ $103.56) (B+ , Ba3) 08/15/14 7.125 360,062
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
GAMING
$ 500 OED Corp., Global Company Guaranteed Notes
(Callable 4/15/08 @ $104.38) (B , B2) 04/15/12 8.750 $ 490,000
600 Resorts International Hotel and Casino, Inc., Global
Company Guaranteed Notes (Callable 3/15/07 @ $106.00) (B , B2) 03/15/09 11.500 667,500
400 River Rock Entertainment Authority, Senior Notes
(Callable 11/01/07 @ $104.88) (B+ , B2) 11/01/11 9.750 433,000
550 Riviera Holdings Corp., Global Company Guaranteed Notes
(Callable 6/15/06 @ $105.50) (B , B2) 06/15/10 11.000 594,687
100 Seneca Gaming, Corp., Global Senior Notes
(Callable 5/01/08 @ $103.63) (BB- , B2) 05/01/12 7.250 101,125
500 Station Casinos, Inc., Global Senior Subordinated Notes
(Callable 3/01/09 @ $102.58) (B+ , Ba3) 03/01/16 6.875 513,750
210 Waterford Gaming LLC, Rule 144A, Senior Notes++ (B+ , B1) 09/15/12 8.625 224,700
226 Windsor Woodmont Black Hawk, Series B, First Mortgage
Notes ^^ (NR , NR) 03/15/05 13.000 0
900 WYNN Las Vegas LLC, Global 1st Mortgage
(Callable 12/1/09 @ $103.31) (B+ , B2) 12/01/14 6.625 879,750
--------------
12,373,279
--------------
HEALTHCARE FACILITIES/SUPPLIES (3.7%)
250 Beverly Enterprises, Inc., Global Senior Subordinated Notes
(Callable 6/15/09 @ $103.94) (B , B2) 06/15/14 7.875 268,750
800 CDRV Investors, Inc., Global Senior Discount Notes
(Callable 1/01/10 @ $104.81) + (B- , Caa2) 01/01/15 0.000 494,000
250 Concentra Operating Corp., Global Company Guaranteed Notes
(Callable 8/15/07 @ $104.75) (B- , B3) 08/15/10 9.500 260,000
500 Fisher Scientific International Inc., Global Senior
Subordinated Notes (Callable 8/15/09 @ $103.38) (BB+ , Ba2) 08/15/14 6.750 523,750
350 HCA Inc., US Domestic Notes (BB+ , Ba1) 10/01/12 6.300 353,498
650 Iasis Healthcare LLC/Iasis Capital Corp., Global
Senior Subordinated Notes (Callable 6/15/09 @ $104.38) (B- , B3) 06/15/14 8.750 685,750
600 Medquest, Inc., Series B, Company Guaranteed Notes
(Callable 8/15/07 @ $105.94) (CCC+ , Caa1) 08/15/12 11.875 582,000
1,000 MQ Associates, Inc., Senior Discount Notes
(Callable 8/15/08 @ $109.00) + (CCC+ , Caa3) 08/15/12 0.000 575,000
735 Tenet Healthcare Corp., Global Senior Notes (B , B3) 07/01/14 9.875 747,862
500 Tenet Healthcare Corp., Rule 144A, Senior Notes ++ (B , B3) 02/01/15 9.250 498,750
1,000 Triad Hospitals, Inc., Senior Subordinated Notes
(Callable 11/15/08 @ $103.50) (B+ , B3) 11/15/13 7.000 1,007,500
800 Universal Hospital Services, Inc., Global Senior Notes
(Callable 11/01/07 @ $105.06) (B- , B3) 11/01/11 10.125 832,000
950 Vanguard Health Holding II, Global Senior Subordinated Notes
(Callable 10/01/09 @ $104.50) (CCC+ , Caa1) 10/01/14 9.000 1,014,125
--------------
7,842,985
--------------
HOME BUILDERS (1.8%)
550 Ashton Woods USA LLC/Finance Co., Rule 144A, Private Placement
Senior Subordinated Notes (Callable 10/01/10 @ $104.75) ++ (B- , B3) 10/01/15 9.500 498,437
500 K Hovnanian Enterprises, Inc., Global Company Guaranteed Notes (BB , Ba1) 01/15/16 6.250 466,413
750 KB HOME, Senior Notes (BB+ , Ba1) 06/15/15 6.250 729,559
625 Standard Pacific Corp., Senior Notes (BB , Ba2) 08/15/15 7.000 579,687
750 Technical Olympic USA, Inc., Global Senior Subordinated Notes (B- , B2) 01/15/15 7.500 633,750
725 WCI Communities, Inc. Company Guaranteed Notes
(Callable 5/01/07 @ $104.56) (B+ , Ba3) 05/01/12 9.125 725,000
250 William Lyon Homes, Inc., Global Senior Notes
(Callable 2/15/09 @ $103.75) (B , B2) 02/15/14 7.500 217,500
--------------
3,850,346
--------------
INDUSTRIAL (1.4%)
400 Altra Industrial Motion, Rule 144A, Secured Notes
(Callable 12/01/08 @ $104.50) ++ (CCC+ , B3) 12/01/11 9.000 390,000
250 Amsted Industries, Inc., Rule 144A, Senior Notes
(Callable 10/15/07 @ $105.13) ++ (B , B3) 10/15/11 10.250 268,750
600 Amtrol, Inc., Senior Subordinated Notes (CCC- , Caa3) 12/31/06 10.625 570,000
1,000 Coleman Cable, Inc., Global Company Guaranteed Notes
(Callable 10/1/0/08 @ $104.94) (B- , B3) 10/01/12 9.875 815,000
400 Polypore, Inc., Global Senior Subordinated Notes
(Callable 5/15/08 @ $104.38) (CCC+ , Caa2) 05/15/12 8.750 354,000
575 Sanmina- SCI Corp., Global Company Guaranteed Notes
(Callable 3/01/09 @ $3/01/05) (B , B1) 03/01/13 6.750 549,844
--------------
2,947,594
--------------
LEISURE (2.1%)
730 Affinity Group Holding, Global Senior Subordinated Notes
(Callable 2/15/08 @ $105.44) (B- , Caa1) 02/15/12 10.875 712,482
250 Affinity Group, Inc., Global Senior Subordinated Notes
(Callable 2/15/08 @ $104.50) (B- , B3) 02/15/12 9.000 250,938
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
LEISURE
$ 400 AMC Entertainment, Inc., Global Senior Subordinated Notes
(Callable 3/01/09 @ $104.00) (CCC+ , B3) 03/01/14 8.000 $ 364,000
650 AMC Entertainment, Inc., Senior Subordinated Notes
(Callable 2/01/07 @ $104.94) (CCC+ , B3) 02/01/12 9.875 640,250
350 Bally Total Fitness Holding Corp., Global Senior Notes
(Callable 7/15/07 @ $105.25) (CCC- , Caa1) 07/15/11 10.500 362,250
500 Bluegreen Corp., Series B, Company Guaranteed Notes (Callable
4/01/06 @ $100.00) (B- , B3) 04/01/08 10.500 500,000
250 Cinemark USA, Inc., Global Senior Subordinated Notes (Callable
2/01/08 @ $104.50) (B- , B3) 02/01/13 9.000 265,625
400 Cinemark, Inc., Global Senior Discount Notes (Callable
3/15/09 @ $104.88) + (B- , Caa1) 03/15/14 0.000 298,000
350 Six Flags, Inc., Global Senior Notes (Callable
4/15/08 @ $104.88) (CCC , Caa1) 04/15/13 9.750 345,188
700 Six Flags, Inc., Global Senior Notes
(Callable 6/01/09 @ $104.81) (CCC , Caa1) 06/01/14 9.625 684,250
-------------
4,422,983
-------------
LODGING (0.6%)
425 Felcor Lodging LP, Global Company Guaranteed Notes (B- , B1) 06/01/11 9.000 467,500
600 Host Marriott LP, Global Company Guaranteed Notes
(Callable 3/15/10 @ $103.19) (BB- , Ba2) 03/15/15 6.375 601,500
200 San Pasqual Casino, Rule 144A, Notes (Callable
9/15/09 @ $104.00)++ (B+ , B2) 09/15/13 8.000 204,000
-------------
1,273,000
-------------
METALS & MINING (2.6%)
250 AK Steel Corp., Company Guaranteed Notes (Callable
2/15/06 @ $101.31) (B+ , B1) 02/15/09 7.875 238,750
450 AK Steel Corp., Global Company Guaranteed Notes
(Callable 6/15/07 @ $103.88) (B+ , B1) 06/15/12 7.750 408,375
900 Aleris International, Inc., Global Company Guaranteed Notes
(Callable 11/15/09 @ $104.50) (B , NR) 11/15/14 9.000 931,500
500 Alpha Natural Resources, Company Guaranteed Notes
(Callable 6/01/08 @ $105.00) (B- , B3) 06/01/12 10.000 543,125
500 American Rock Salt Co. LLC, Global Secured Notes
(Callable 3/15/09 @ $104.75) (B- , B3) 03/15/14 9.500 507,500
750 Egden Acquisition Corp., Global Secured Notes
(Callable 2/01/08 @ $104.94) (B- , B3) 02/01/11 9.875 731,250
1,000 International Steel Group, Inc., Global Senior Notes (BB , Ba2) 04/15/14 6.500 1,005,000
675 Southern Peru Cooper Corp., Rule 144A, Notes++ (BBB- , Ba1) 07/27/35 7.500 674,250
250 WCI Steel, Inc., Series B, Senior Notes 0 (NR , NR) 12/01/04 10.000 163,750
500 Wise Metals Group LLC, Global Secured Notes
(Callable 5/15/08 @ $105.13) (CCC+ , Caa1) 05/15/12 10.250 382,500
-------------
5,586,000
-------------
PAPER & FOREST PRODUCTS (2.1%)
550 Appleton Papers, Inc., Global Senior Subordinated Notes
(Callable 6/15/09 @ $104.88) (B+ , B3) 06/15/14 9.750 517,000
434 Caraustar Industries, Inc., Global Company Guaranteed Notes
(Callable 4/01/06 @ $105.25) (B- , Caa1) 04/01/11 9.875 444,850
850 Cellu Tissue Holdings, Inc., Global Secured Notes
(Callable 3/15/07 @ $107.31) (B , B2) 03/15/10 9.750 845,750
2,250 Newark Group, Inc., Global Senior Subordinated Notes
(Callable 3/15/09 @ $104.88) (B- , Caa1) 03/15/14 9.750 1,991,250
600 Stone Container Corp., Global Senior Notes
(Callable 7/01/07 @ $104.19) (CCC+ , B2) 07/01/12 8.375 583,500
-------------
4,382,350
-------------
PHARMACEUTICALS (0.3%)
650 Athena Neuro Finance LLC, Company Guaranteed Notes (B , B3) 02/21/08 7.250 637,813
-------------
PUBLISHING (3.5%)
500 CBD Media Holdings/CBD Finance, Global Senior Notes (Callable
7/15/08 @ $104.63) (CCC+ , Caa2) 07/15/12 9.250 502,500
1,100 Cenveo Corp., Global Senior Subordinated Notes
(Callable 12/01/08 @ $103.94) (B- , B3) 12/01/13 7.875 1,067,000
500 Dex Media, Inc., Global Discount Notes
(Callable 11/15/08 @ $104.50)+ (B , B3) 11/15/13 0.000 400,000
1,100 Dex Media, Inc., Global Notes (Callable 11/15/08 @ $104.00) (B , B3) 11/15/13 8.000 1,127,500
750 Haights Cross Operating Co., Global Company Guaranteed Notes
(Callable 8/15/08 @ $105.88) (CCC , Caa1) 08/15/11 11.750 797,813
800 Houghton Mifflin Co., Global Senior Subordinated Notes
(Callable 2/01/08 @ $104.94) (B- , Caa1) 02/01/13 9.875 859,000
250 Houghton Mifflin Co., Global Senior Discount Notes
(Callable 10/15/08 @ $105.75)+ (B- , Caa2) 10/15/13 0.000 197,500
2,000 Premier Graphics, Inc., Company Guaranteed Notes
(Callable 7/15/05 @ $100.00)^^ (NR , NR) 12/01/05 11.500 0
350 PRIMEDIA, Inc., Global Senior Notes
(Callable 5/15/08 @ $104.00) (B , B2) 05/15/13 8.000 297,938
150 Vertis, Inc., Global Secured Notes (Callable 4/01/06 @ $105.19) (CCC , B3) 04/01/09 9.750 156,188
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
PUBLISHING
$ 635 Vertis, Inc., Series B, Global Company Guaranteed Notes
(Callable 6/15/06 @ $105.44) (CCC , Caa1) 06/15/09 10.875 $ 628,650
1,500 WDAC Subsidiary Corp., Rule 144A, Senior Notes++ (CCC+ , Caa1) 12/01/14 8.375 1,460,625
-------------
7,494,714
-------------
RESTAURANTS (2.1%)
500 Buffets, Inc., Global Senior Subordinated Notes
(Callable 7/15/06 @ $105.63) (CCC , B3) 07/15/10 11.250 512,500
150 Carrols Corp., Global Company Guaranteed Notes
(Callable 1/15/09 @ $104.50) (B- , B3) 01/15/13 9.000 146,625
500 Denny's Corp./Denny's Holdings Corp., Global Guaranteed Notes
(Callable 10/01/08 @ $105.00) (CCC+ , Caa1) 10/01/12 10.000 510,000
750 Friendly Ice Cream Corp., Global Senior Notes
(Callable 6/15/08 @ $104.19) (B- , B2) 06/15/12 8.375 671,250
300 Morton's Restaurant Group, Inc., Global Secured Notes
(Callable 7/01/07 @ $105.30) (B- , B2) 07/10/10 7.500 298,500
400 O'Charley's, Inc., Global Senior Subordinated Notes
(Callable 11/01/08 @ $104.50) (B , Ba3) 11/01/13 9.000 408,000
1,247 Romacorp, Inc., Senior Notes>> (NR , NR) 12/31/08 10.500 349,272
850 Sbarro, Inc., Company Guaranteed Notes
(Callable 9/15/06 @ $101.84) (CCC+ , Caa2) 09/15/09 11.000 850,000
850 Uno Restaurant Corp., Rule 144A, Senior Notes
(Callable 2/15/08 @ $110.00)++ (B- , B3) 02/15/11 10.000 769,250
-------------
4,515,397
-------------
RETAIL - FOOD & DRUG (1.3%)
350 Delhaize America, Inc., Global Company Guaranteed Notes (BB+ , Ba1) 04/15/11 8.125 383,273
500 Duane Reade, Inc., Global Senior Subordinated Notes (Callable
8/01/08 @ $104.88) (CCC- , Caa2) 08/01/11 9.750 337,500
400 General Nutrition Center, Global Company Guaranteed Notes
(Callable 1/15/08 @ $104.31) (B- , B3) 01/15/11 8.625 388,000
700 Gregg Appliances Inc. Global Company Guaranteed Notes
(Callable 2/01/09 @ $104.50) (B , B2) 02/01/13 9.000 637,000
750 Rite Aid Corp., Global Company Guaranteed Notes
(Callable 1/15/10 @ $103.75) (B+ , B2) 01/15/15 7.500 712,500
375 Stater Brothers Holdings, Inc., Global Senior Notes
(Callable 6/15/08 @ $104.06) (BB- , B1) 06/15/12 8.125 373,125
-------------
2,831,398
-------------
RETAIL STORES (3.0%)
625 Asbury Automotive Group Co., Global Company Guaranteed Notes
(Callable 6/15/07 @ $104.50) (B , B3) 06/15/12 9.000 628,125
750 Brookstone Company, Inc., Rule 144A, Secured Notes
(Callable 10/15/09 @ $106.00)++ (B , B3) 10/15/12 12.000 705,000
500 CSK Auto, Inc., Global Company Guaranteed Notes
(Callable 1/15/09 @ $103.50) (B- , B2) 10/15/14 7.000 455,000
500 Finlay Fine Jewelry Corp., Global Senior Notes
(Callable 6/01/08 @ $104.19) (B , B3) 06/01/12 8.375 452,500
703 Flooring America, Inc., Series B, Company Guaranteed Notes
(Callable 12/13/06 @ $100.00)^^ (NR , NR) 10/15/07 9.250 0
625 GSC Holdings Corp., Rule 144A, Company Guaranteed Notes
(Callable 10/01/09 @ $104)++ (B+ , Ba3) 10/01/12 8.000 590,625
500 Intcomex, Inc., Rule 144A, Secured Notes
(Callable 1/15/07 @ $106.00)++ (B- , Caa1) 01/15/11 11.750 493,750
550 JC PenneyCo., Inc., Series MTNA, Notes (BB+ , Ba1) 10/15/15 6.875 598,217
500 Nebraska Book Co., Inc., Global Senior Subordinated Notes
(Callable 3/15/08 @ $104.31) (CCC+ , Caa1) 03/15/12 8.625 462,500
520 Neiman Marcus Group, Inc., Rule 144A, Senior Subordinated Notes
(Callable 10/15/10 @ $105.19)++ (B- , B3) 10/15/15 10.375 531,050
1,000 Southern States Cooperative, Inc., Rule 144A, Senior Notes
(Callable 11/01/07 @ $108.00)++ (B , B3) 11/01/10 10.500 1,055,000
250 United Auto Group, Inc., Global Company Guaranteed Notes
(Callable 3/15/07 @ $104.81) (B , B3) 03/15/12 9.625 264,375
-------------
6,236,142
-------------
SATELLITE (0.6%)
750 Echostar DBS Corp., Global Company Guaranteed Notes (BB- , Ba3) 10/01/14 6.625 722,813
545 PanAmSat Corp., Global Company Guaranteed Notes
(Callable 8/15/09 @ $104.50) (B+ , B1) 08/15/14 9.000 573,613
-------------
1,296,426
-------------
SECONDARY OIL & GAS PRODUCERS (2.9%)
250 Belden & Blake Corp., Global Secured Notes
(Callable 7/15/08 @ $104.38) (CCC+ , B3) 07/15/12 8.750 256,250
1,627 Chesapeake Energy Corp., Senior Notes
(Callable 1/15/09 @ $103.44) (BB , Ba2) 01/15/16 6.875 1,675,810
1,500 El Paso Production Holding Co., Global Company Guaranteed Notes
(Callable 6/01/08 @ $103.88) (B , B3) 06/01/13 7.750 1,563,750
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
SECONDARY OIL & GAS PRODUCERS
$ 300 Fisher Communications, Inc., Global Senior Notes
(Callable 9/15/09 @ $104.31) (B- , B2) 09/15/14 8.625 $ 318,000
900 Forest Oil Corp., Global Senior Notes (BB- , Ba3) 06/15/08 8.000 942,750
300 Plains E&P Co., Series B, Global Senior Subordinated Notes
(Callable 7/01/07 @ $104.38) (B+ , Ba3) 07/01/12 8.750 324,750
500 Pogo Producing Co., Series B, Senior Subordinated Notes
(Callable 4/15/06 @ $104.13) (B+ , Ba3) 04/15/11 8.250 525,000
200 Range Resources, Corp., Global Company Guaranteed Notes
(Callable 3/15/10 @ $103.19) (B , B2) 03/15/15 6.375 197,000
80 Vintage Petroleum, Inc., Senior Subordinated Notes (B , B1) 05/15/11 7.875 84,000
300 Whiting Petroleum Corp., Senior Subordinated Notes (B- , B2) 05/01/12 7.250 305,250
-------------
6,192,560
-------------
SERVICES (4.8%)
400 Allied Security Escrow Corp., Global Senior Subordinated Notes
(Callable 7/15/08 @ $105.69) (CCC+ , Caa1) 07/15/11 11.375 387,617
600 Brand Services, Inc., Global Company Guaranteed
(Callable 10/15/07 @ $106.00) (CCC+ , Caa1) 10/15/12 12.000 633,000
750 Di Finance/Dyncorp International, Series B, Global Senior
Subordinated Notes (Callable 2/15/09 @ $104.75) (B- , Caa1) 02/15/13 9.500 783,750
300 Hertz Corp., Rule 144A, Private Placement Senior Notes
(Callable 1/01/10 @ $104.44)++ (B , B3) 01/01/14 8.875 307,125
400 Hertz Corp., Rule144A, Private Placement Senior Subordinated
Notes (Callable 1/01/11 @ $105.25)++ (B-, B3) 01/01/16 10.500 414,000
800 Hydrochem Industrial Services, Inc., Rule 144A, Senior
Subordinated Notes (Callable 2/15/09 @ $104.63)++ (CCC+ , Caa1) 02/15/13 9.250 772,000
400 Integrated Alarm Services Group, Inc., Rule 144A, Secured Notes
(Callable 11/15/08 @ $106.00)++ (B- , B3) 11/15/11 12.000 398,000
350 Iron Mountain, Inc., Company Guaranteed Notes
(Callable 4/01/07 @ $102.88) (B , Caa1) 04/01/13 8.625 366,625
300 Iron Mountain, Inc., US Domestic Company Guaranteed Notes
(Callable 7/01/08 @ $103.31) (B , Caa1) 01/01/16 6.625 280,500
500 Knowledge Learning Corp., Inc., Rule144A, Company Guaranteed
Notes (Callable 2/01/10 @ $103.88)++ (B- , B3) 02/01/15 7.750 477,500
815 La Petite Academy, Inc., Series B, Company Guaranteed Notes
(Callable 5/15/06 @ $100.00) (CC , Ca) 05/15/08 10.000 709,050
250 Language Line Holdings, Inc., Global Senior Subordinated Notes
(Callable 6/15/08 @ $105.56) (CCC+ , Caa1) 06/15/12 11.125 233,750
250 Mac-Gray Corp., Global Senior Notes
(Callable 8/15/10 @ $103.81) (BB- , B1) 08/15/15 7.625 253,125
300 Muzak LLC/Muzak Finance Corp., Global Senior Notes
(Callable 2/15/06 @ $105.00) (CCC- , Caa2) 02/15/09 10.000 263,250
700 Rent-Way, Inc., Global Secured Notes (B- , B3) 06/15/10 11.875 748,125
400 SGSInternational, Inc., Rule 144A, Private Placement Senior
Subordinated Notes (Callable 12/15/09 @ $106.00)++ (B- , Caa1) 12/15/13 12.000 402,657
450 Stewart Enterprises, Inc., Rule 144A, Private Placement
Senior Notes (Callable 2/15/09 $103.13)++ (BB- , B1) 02/15/13 6.250 434,250
625 Stripes Acquisition LLC, Rule 144A, Private Placement
Senior Notes (Callable 12/15/09 @ $105.31)++ (B , B2) 12/15/13 10.625 637,500
425 United Rentals North America, Inc., Global Company
Guaranteed Notes (Callable 8/15/09 @ $103.25) (BB- , B3) 02/15/12 6.500 415,969
500 United Rentals North America, Inc., Global Senior
Subordinated Notes (Callable 2/15/09 @ $103.50) (B+ , Caa1) 02/15/14 7.000 470,000
825 Williams Scotsman, Inc., Global Company Guaranteed Notes
(Callable (Callable 2/15/09 @ $103.50) (B , B3) 10/01/15 8.500 858,000
-------------
10,245,793
-------------
TECHNOLOGY (2.3%)
825 Amkor Technology, Inc., Global Senior Notes (CCC+ , Caa1) 05/15/13 7.750 721,875
159 Ampex Corp., Secured Notes^ (NR , NR) 08/15/08 12.000 159,481
350 Spansion, Inc., Rule 144A, Private Placement Senior Notes
(Callable 1/15/11 @105.62)++ (B , Caa1) 01/15/16 11.250 334,250
500 SunGard Data Systems, Inc., Rule 144A, Private Placement Senior
Unsecured Notes (Callable 8/15/09 @ $104.56)++ (B- , B3) 08/15/13 9.125 520,000
1,000 SunGard Data Systems, Inc., Rule 144A, Senior Subordinated Notes
(Callable 8/15/10 @ $105.13)++ (B- , Caa1) 08/15/15 10,250 1,005,000
600 Viasystems, Inc., Senior Subordinated Notes (CCC+ , Caa2) 01/15/11 10.500 580,500
500 Worldspan LP., Global Company Guaranteed Notes
(Callable 8/15/06 @ $103.00)# (CCC+ , B3) 02/15/11 10.590 437,500
950 Xerox Corp., Senior Notes (Callable 6/15/08 @ $103.81) (BB- , Ba2) 06/15/13 7.625 1,007,000
-------------
4,765,606
-------------
TEXTILE/APPAREL/SHOE MANUFACTURING (1.9%)
250 BGF Industries, Inc., Series B, Senior Subordinated Notes
(Callable 1/15/06 @ $101.25) (CCC- , Ca) 01/15/09 10.250 254,375
1,600 Levi Strauss& Co., Global Senior Notes
(Callable 1/15/10 @ $104.88) (B- , Caa2) 01/15/15 9.750 1,672,000
735 Levi Strauss& Co., Global Senior Notes
(Callable 12/15/07 @ $106.13) (B- , Caa2) 12/15/12 12.250 823,200
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
PAR RATINGS+
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
DOMESTIC SECURITIES
CORPORATE OBLIGATIONS
TEXTILE/APPAREL/SHOE MANUFACTURING
$ 500 Levi Strauss & Co., Global Senior Unsubordinated Notes
(Callable 4/01/07 @ $102.00)# (B- , Caa2) 04/01/12 9.280 $ 506,250
400 Phillips Van-Heusen Corp., Global Senior Notes
(Callable 2/15/08 @ $103.63) (BB , B1) 02/15/11 7.250 408,000
500 Propex Fabrics, Inc., Global Company Guaranteed Notes
(Callable 12/01/08 @ $105.00) (B- , Caa1) 12/01/12 10.000 448,750
-------------
4,112,575
-------------
TOWER (0.3%)
525 American Tower Corp., Global Senior Notes
(Callable 10/15/08 @ $103.56) (BB- , B1) 10/15/12 7.125 542,063
-------------
TRANSPORTATION/OTHER (0.2%)
195 H-Line Finance Holding Corp., Global Senior Discount Notes
(Callable 4/01/08 @ $105.50)+ (CCC+ , Caa2) 04/01/13 0.000 162,338
237 Horizon Lines LLC, Global Company Guaranteed Notes
(Callable 11/01/08 @ $104.50) (CCC+ , B3) 11/01/12 9.000 250,628
-------------
412,966
-------------
UTILITIES (3.0%)
37 AES Corp., Senior Notes (B- , B1) 06/01/09 9.500 39,603
400 AES Corp., Senior Notes (B- , B1) 03/01/14 7.750 421,500
400 Allegheny Energy Supply Company LLC, Global Notes (B , Ba3) 03/15/11 7.800 438,000
400 Aquila, Inc., Senior Notes (B- , B2) 11/15/09 7.625 410,000
800 Calpine Generating Co., Global Secured Notes
(Callable 4/01/08 @ $103.50)# (D , Caa1) 04/01/10 10.041 836,000
250 CMS Energy Corp., Global Senior Notes (B+ , B1) 08/01/10 7.750 263,438
700 CMS Energy Corp., Senior Notes (B+ , B1) 01/15/09 7.500 724,500
500 Edison Mission Energy, Global Senior Notes (B+ , B1) 08/15/08 10.000 550,000
500 Edison Mission Energy, Senior Notes (B+ , B1) 06/15/09 7.730 518,750
400 Midwest Generation LLC, Global Secured Notes
(Callable 5/01/09 @ $104.38) (B , B1) 05/01/34 8.750 442,500
500 Mirant Americas Generation LLC, Senior Notes^^ (NR , NR) 05/01/06 7.625 612,500
300 Mirant Corp., Rule 144A, Senior Notes ++^^ (NR , NR) 07/15/04 7.400 373.500
248 NRG Energy, Inc., Global Company Guaranteed Notes
(Callable 12/15/08 @ $104.00) (B , B1) 12/15/13 8.000 277,760
300 Sierra Pacific Resources, Global Senior Notes
(Callable 3/15/09 @ $104.31) (B- , B1) 03/15/14 8.625 326,097
-------------
6,234,148
-------------
WIRELESS (3.6%)
50 Airgate PCS, Inc., Rule 144A, Secured Notes
(Callable 1/01/06 @ $104.69)++ (CCC , Caa1) 09/01/09 9.375 52,500
350 Airgate PCS, Inc., Secured Notes (Callable 1/12/06 @ $104.69) (CCC , Caa1) 09/01/09 9.375 367,500
500 American Cellular Corp., Series B, Global Senior Notes
(Callable 8/01/07 @ $105.00) (B- , B3) 08/01/11 10.000 545,000
450 Centennial Cellular Operating Co./Centennial Communications
Corp., Global Company Guaranteed Notes
(Callable 6/15/08 @ $106.00) (CCC , B3) 06/15/13 10.125 491,625
455 Dobson Cellular Systems, Global Secured Notes
(Callable 11/1/08 @ $104.94) (CCC , B2) 11/01/12 9.875 503,913
600 Dobson Communications Corp., Global Senior Notes
(Callable 10/01/08 @ $104.44) (CCC , Caa2) 10/01/13 8.875 601,500
350 Horizon PCS, Inc., Global Company Guaranteed Notes
(Callable 7/15/08 @ $105.69) (CCC , B3) 07/15/12 11.375 403,375
250 IPCS, Inc., Global Senior Notes (Callable 5/01/08 @ $105.75) (CCC , B3) 05/01/12 11.500 288,125
250 IWO Holdings, Inc., Global Company Guaranteed Notes
(Callable 1/15/10 @ $105.38)+ (BB+ , Caa2) 01/15/15 0.000 181,875
100 Nextel Communications, Inc., Series B, Senior Notes
(Callable 8/01/08 @ $103.69)+ (A- , Baa2) 08/01/15 7.375 105,614
100 Rural Cellular Corp., Global Senior Notes
(Callable 8/01/07 @ $104.94) (CCC , Caa1) 02/01/10 9.875 106,000
1,025 Rural Cellular Corp., Global Senior Subordinated Notes
(Callable 1/15/06 @ $104.88) (CCC , Caa2) 01/15/10 9.750 1,040,375
505 Rural Cellular Corp., Rule 144A,Private Placement Senior
Subordinated Notes (Callable 11/01/07 @ $102.00)++# (CCC, Caa2) 11/01/12 10.041 511,313
1,510 Triton PCS, Inc., Company Guaranteed Notes (CCC- , Caa1) 06/01/13 8.500 1,411,850
400 U.S. Unwired, Inc., Series B, Global Secured Notes
(Callable 6/15/08 @ $105.00) (BBB- , Caa1) 06/15/12 10.000 452,000
450 Ubiquitel Operating Co., Global Senior Notes
(Callable 3/01/07 @ $107.41) (B- , Caa1) 03/01/11 9.875 500,625
-------------
7,563,190
-------------
TOTAL CORPORATE OBLIGATIONS (Cost $189,567,023) 182,113,032
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
NUMBER
OF SHARES VALUE
--------- -----
DOMESTIC SECURITIES
COMMON STOCKS (0.7%)
BROADCAST/OUTDOOR (0.1%)
5,567 Equinix, Inc.* $ 226,911
--------------
CABLE (0.0%)
69,987 Digitalglobe, Inc. ^* 69,987
--------------
CHEMICALS (0.1%)
4,893 Huntsman Corp.* 84,257
--------------
CONTAINERS (0.0%)
20,689 Continental AFA Dispensing Co. ^* 0
--------------
FOOD PROCESSORS/BEVERAGE/BOTTLING (0.3%)
590 Crunch Equity Holdings LLC* 634,685
--------------
HEALTHCARE FACILITIES/SUPPLIES (0.0%)
232 Magellan Health Services, Inc.* 7,296
--------------
RETAIL STORES (0.0%)
18,064 Safelite Glass Corp., Class B ^* 15,354
1,219 Safelite Realty Corp. ^* 9,752
--------------
25,106
--------------
SERVICES (0.2%)
21,306 Cenveo, Inc.* 280,387
10,652 Cenveo, Inc., Rule 144A++* 140,180
--------------
420,567
--------------
TOTAL COMMON STOCKS (Cost $894,635) 1,468,809
--------------
PREFERRED STOCKS (0.0%)
CABLE (0.0%)
7,500 Adelphia Communications Corp., 13% cumulative exchangeable Series B
(Callable 7/15/06 @ $102.17)*
(Cost $750,000) 3,750
--------------
WARRANTS (0.0%)
AEROSPACE (0.0%)
800 Decrane Aircraft Holdings, strike price $35.65, Rule 144A, expires 9/30/08++^* 0
--------------
BROADBAND (0.0%)
400 Colt Telecom Group Plc, strike price $75.63, expires 12/31/06* 6,898
--------------
BUILDING PRODUCTS (0.0%)
1,250 Dayton Superior Corp., strike price $0.01, Rule 144A, expires 6/15/09 ++* 13
--------------
CABLE (0.0%)
4 NTL, Inc., strike price $262.93, Series A, expires 1/13/11* 2
--------------
COMPETITIVE LOCAL EXCHANGE CARRIER (0.0%)
6,290 Loral Space & Communications, strike price $23.70, expires 12/27/06* 0
--------------
CONTAINERS (0.0%)
747 Pliant Corp., strike price $0.01, Rule 144A, expires 6/01/10 ++^* 0
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
NUMBER
OF SHARES VALUE
--------- -----
DOMESTIC SECURITIES
WARRANTS
GAMING (0.0%)
3,000 Mikohn Gaming Corp., strike price $7.70, expires 8/15/08* $ 90
100 Windsor Woodmont Black Hawk, strike price $0.01, expires 3/15/10++*^ 0
--------------
90
--------------
RETAIL STORES (0.0%)
44,271 Safelite Glass Corp., strike price $0.01, Class A, expires 09/29/06*^ 0
29,514 Safelite Glass Corp., strike price $0.01, Class B, expires 09/29/07*^ 0
--------------
0
--------------
SATELLITE (0.0%)
250 Pegasus Communications Corp., strike price $75.00, expires 1/01/07*^ 0
--------------
TEXTILE/APPAREL/SHOE MANUFACTURING (0.0%)
117 AGY Holding Corp., strike price $0.01, expires 1/01/10*^ 1
--------------
TOTAL WARRANTS (Cost $86,124) 7,004
--------------
TOTAL DOMESTIC SECURITIES (Cost $191,297,782) 183,592,595
--------------
PAR RATINGS
(000) (S&P/MOODY'S) MATURITY RATE%
----- ------------- -------- -----
FOREIGN SECURITIES (7.8%)
CORPORATE OBLIGATIONS (7.6%)
BROADBAND (0.3%)
$ 750 Global Crossing Finance Plc., Global Company Guaranteed Notes
(Callable 12/15/09 @ $105.38) (United Kingdom) (B- , Caa1) 12/15/14 10.750 693,750
--------------
BROADCAST/OUTDOOR (0.1%)
150 Corus Entertainment, Inc., Global Senior Subordinated Notes
(Callable 3/01/07 @ $104.38) (Canada) (B+ , B1) 03/01/12 8.750 163,125
--------------
BUILDING PRODUCTS (0.4%)
750 MAAX Corp., Global Senior Subordinated Notes
(Callable 6/15/08 @ $104.88) (Canada) (CCC , B3) 06/15/12 9.750 596,250
500 Maax Holdings, Inc., Global Senior Discount Notes
(Callable 12/15/08 @ $105.62) (Canada) + (CCC, Caa1) 12/15/12 0.000 158,125
--------------
754,375
--------------
CABLE (0.4%)
4,600 Australis Holdings Pty. Ltd., Yankee Senior Discount
Notes (Australia) ^^ (D , NR) 11/01/02 15.000 0
500 Kabel Deutschland GmbH, Rule 144A, Company Guaranteed Notes
(Callable 7/01/09 @ $105.31) (Germany)++ (B- , B2) 07/01/14 10.625 528,750
393 Telenet Group Holding NV, Rule 144A, Discount Notes
(Callable 12/15/08 @ $105.75) (Belgium)+++ (CCC+ , Caa1) 06/15/14 0.000 324,225
--------------
852,975
--------------
CHEMICALS (0.3%)
575 Rhodia SA, Global Senior Notes (France) (CCC+ , B3) 06/01/10 10.250 632,500
--------------
CONSUMER PRODUCTS/TOBACCO (0.1%)
250 Bombardier Recreational Products, Inc., Global Senior
Subordinated Notes (Callable 12/15/08 @ $104.19) (Canada) (B , B3) 12/15/13 8.375 251,563
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
PAR RATINGS
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
FOREIGN SECURITIES
CORPORATE OBLIGATIONS
INDUSTRIAL (0.1%)
$ 250 Ashtead Holdings Plc., Rule 144A, Private Placement
Secured Notes (Callable 8/01/10 @ $104.31) (United Kingdom)++ (B , B2) 08/01/15 8.625 $ 264,375
924 International Utility Structures, Inc., Subordinated Notes
(Canada) ^^ (NR , NR) 02/01/08 13.000 0
800 International Utility Structures, Inc., Yankee Senior
Subordinated Notes (Canada) ^^ (NR , NR) 02/01/08 10.750 0
--------------
264,375
--------------
LEISURE (0.5%)
250 Intrawest Corp., Global Senior Notes
(Callable 10/15/08 @ $103.75) (Canada) (B+ , B1) 10/15/13 7.500 254,375
750 NCL Corp., Global Senior Notes (Callable 7/15/09 @ $105.31)
(Bermuda) (B+ , B2) 07/15/14 10.625 778,125
--------------
1,032,500
--------------
METALS & MINING (0.3%)
250 Gerdau Ameristeel Corp., Global Senior Notes
(Callable 7/15/07 @ $105.38) (Canada) (BB- , Ba3) 07/15/11 10.375 276,875
259 Ispat Inland ULC, Global Secured Notes
(Callable 4/01/09 @ $104.88) (Canada) (BBB+ , Ba1) 04/01/14 9.750 294,613
--------------
571,488
--------------
PAPER & FOREST PRODUCTS (1.9%)
100 Abitibi-Consolidated, Inc., Yankee Senior Notes (Canada) (B+ , B1) 04/01/15 8.375 96,250
150 Abitibi-Consolidated, Inc., Global Notes (Canada) (B+ , B1) 06/15/11 7.750 143,625
250 Ainsworth Lumber Co. Ltd., Global Company Guaranteed Notes
(Callable 10/01/08 @ 103.63) (Canada) (B+ , B2) 10/01/12 7.250 226,250
750 Fraser Papers, Inc., Rule 144A, Company Guaranteed Notes
(Callable 3/15/10 @ $104.38) (Canada)++ (B , B3) 03/15/15 8.750 656,250
500 JSG Funding Plc., Global Senior Notes
(Callable 10/01/07 @ $104.81) (Ireland) (B- , B3) 10/01/12 9.625 502,500
1,750 JSG Funding Plc., Senior Subordinated Notes
(Callable 1/31/10 @ $103.88) (Ireland) (B- , Caa1) 04/01/15 7.750 1,461,250
250 Norske Skog Ltd., Global Senior Notes
(Callable 3/01/09 @ $103.69) (Canada) (B+ , B1) 03/01/14 7.375 220,000
450 Quebecor World Capital Corp., Global Company Guaranteed Notes
(Canada) (BB , Ba2) 11/15/13 6.125 403,751
250 Tembec Industries, Inc., Global Company Guaranteed Notes
(Canada) (CCC+ , B3) 03/15/12 7.750 135,000
400 Tembec Industries, Inc., Yankee Company Guaranteed
(Callable 6/30/06 @ $101.44) (Canada) (CCC+ , B3) 06/30/09 8.625 230,000
--------------
4,074,876
--------------
PHARMACEUTICALS (0.2%)
400 Biovail Corp. Yankee Senior Subordinated Notes
(Callable 4/01/06 @ $103.94) (Canada) (BB- , B2) 04/01/10 7.875 416,500
--------------
RETAIL - FOOD & DRUG (0.3%)
700 Jean Coutu Group (PJC), Inc., Global Senior Subordinated Notes
(Callable 8/01/09 @ $104.25) (Canada) (B- , Caa1) 08/01/14 8.500 644,000
--------------
SATELLITE (0.5%)
600 Intelsat Bermuda Ltd., Rule 144A, Senior Notes
(Callable 1/15/09 @ $104.13) (Bermuda)++ (B+ , B2) 01/15/13 8.250 609,000
450 Intelsat Ltd., Global Senior Notes (Bermuda) (B , Caa1) 11/01/08 5.250 412,313
--------------
1,021,313
--------------
TECHNOLOGY (0.9%)
750 Celestica, Inc., Senior Subordinated Notes
(Callable 7/01/08 @ $103.94) (Canada) (B , B2) 07/01/11 7.875 759,375
425 Flextronics International Ltd., Global Senior Subordinated
Notes (Callable 11/15/09 @ $103.13) (Singapore) (BB- , Ba2) 11/15/14 6.250 421,281
650 Magnachip Semiconductor, Senior Subordinated Notes
(Callable 12/15/09 @ $104.00) (South Korea) (B- , B2) 12/15/14 8.000 624,000
--------------
1,804,656
--------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
PAR RATINGS
(000) (S&P/MOODY'S) MATURITY RATE% VALUE
----- ------------- -------- ----- -----
FOREIGN SECURITIES
CORPORATE OBLIGATIONS
TRANSPORTATION - OTHER (1.1%)
$ 700 Sea Containers Ltd., Series B, Yankee Senior Notes
(Callable 2/21/06 @ $100.00) (Bermuda) (B , B3) 02/15/08 7.875 $ 674,625
1,350 Ship Finance International Ltd., Global Senior Notes
(Callable 12/15/08 @ $104.25) (Bermuda) (B , B1) 12/15/13 8.500 1,269,000
250 Stena AB, Global Senior Notes
(Callable 12/01/09 @ $103.50) (Sweden) (BB- , Ba3) 12/01/16 7.000 230,000
150 Titan Petrochemicals Group Ltd., Rule 144A, Company
Guaranteed Notes (Bermuda) ++ (B+ , B1) 03/18/12 8.500 144,750
--------------
2,318,375
--------------
WIRELESS (0.2%)
500 Millicom International Cellular S.A., Global Senior Notes
(Callable 12/01/08 @ $105.00) (Luxembourg) (B- , B3) 12/01/13 10.000 518,750
--------------
TOTAL CORPORATE OBLIGATIONS (Cost $20,342,818) 16,015,121
--------------
GOVERNMENT OBLIGATION (0.2%)
ARGENTINA (0.2%)
1,193 (ARP) Republic of Argentina, Notes (B- , NR) 12/31/33 5.830 461,848
82,494 (ARP) Republic of Argentina, Notes (NR , NR) 12/15/35 0.000 49,930
--------------
TOTAL GOVERNMENT OBLIGATIONS (Cost $511,778) 511,778
--------------
TOTAL FOREIGN SECURITIES (Cost $20,859,106) 16,526,899
--------------
SHORT-TERM INVESTMENTS (3.8%)
4,990 HSBC Bank (Grand Cayman) overnight deposit 01/03/06 3.300 4,990,000
3,055 Bank of America (London) overnight deposit 01/03/06 3.300 3,055,000
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost $8,045,000) 8,045,000
--------------
TOTAL INVESTMENTS (98.4%) (Cost $220,201,888) 208,164,494
--------------
OTHER ASSETS IN EXCESS OF LIABILITIES (1.6%) 3,371,759
--------------
NET ASSETS (100%)
Applicable to 49,895,588 issued and outstanding $.001 par value
shares (authorized 100,000,000 shares) $ 211,536,253
==============
INVESTMENT ABBREVIATIONS
ARP = Argentine Peso
MTNA = Medium Term Note Series A
NR= Not Rated
+ Credit ratings given by the Standard & Poor's Division of The McGraw-Hill
Companies, Inc. ("S&P") and Moody's Investors Service, Inc. ("Moody's") are
unaudited.
++ Security exempt from registration under Rule 144A under the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
2005, these securities amounted to a value of $32,794,577 or 15.5% of net
assests.
^ Not readily marketable security; security is valued at fair value as
determined in good faith by, or under the direction of, the Board of
Directors.
# 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,
2005.
+ Step Bond-- The interest rate stated is the rate as of December 31, 2005.
^^ Security in default.
* Non-income producing security.
>> Payment-in-kind.
++ Less than 1,000 par.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2005
ASSETS
Investments at value (Cost $220,201,888) (Note 2) $ 208,164,494
Cash 780
Receivable for investments sold 289,810
Interest receivable (Note 2) 4,406,299
Other assets 1,710
---------------
Total assets 212,863,093
---------------
LIABILITIES
Payable for investments purchased 921,513
Investment advisory fees (Note 3) 239,847
Shareholders' reports 87,528
Administrative fees (Note 3) 22,305
Custodian fees 20,700
Legal fees 14,000
Audit and tax fees 11,986
Shareholders' servicing fees 6,774
Accrued expenses 2,187
---------------
Total Liabilities 1,326,840
---------------
NET ASSETS $ 211,536,253
===============
NET ASSETS CONSIST OF
Capital shares at $.001 par value $ 49,897
Capital paid in excess of par value 390,325,867
Distributions in excess of net investment income (2,344,015)
Accumulated net realized loss on investments and foreign currency transactions (164,457,666)
Unrealized depreciation on investments and foreign currency translations (12,037,830)
---------------
Net Assets applicable to 49,895,588 issued and outstanding shares (authorized 100,000,000 shares) $ 211,536,253
===============
NET ASSET VALUE PER SHARE $ 4.24
===============
MARKET PRICE PER SHARE $ 3.67
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2005
INVESTMENT INCOME
Interest (Net of foreign taxes withheld of $2,271) (Note 2) $ 19,577,164
---------------
EXPENSES
Investment advisory fees (Note 3) 1,053,905
Shareholders' reports 177,841
Custodian fees 118,402
Administrative fees (Note 3) 105,390
Directors' fees and expenses 88,761
Legal fees 65,024
Shareholder servicing fees 62,461
Audit and tax fees 44,830
New York Stock Exchange fees 43,646
Miscellaneous 23,579
---------------
Total expenses 1,783,839
---------------
Net investment income 17,793,325
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS AND FOREIGN CURRENCY RELATED ITEMS
Net realized loss from investments (3,591,779)
Net realized gain on foreign currency transactions (Note 2) 71,037
Net change in unrealized appreciation (depreciation) from investments (10,423,902)
Net change in unrealized appreciation (depreciation) from foreign currency translations (Note 2) 22,419
---------------
Net realized and unrealized loss from investments and foreign currency related items (13,922,225)
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,871,100
===============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- --------------------
FROM OPERATIONS
Net investment income $ 17,793,325 $ 17,700,572
Net realized gain (loss) on investments and foreign currency
transactions (3,520,742) 3,019,985
Net change in unrealized appreciation (depreciation) of investments
and foreign currency translations (10,401,483) 7,746,019
-------------------- --------------------
Net increase in net assets resulting from operations 3,871,100 28,466,576
-------------------- --------------------
FROM DISTRIBUTIONS
Net investment income (19,491,595) (20,005,808)
Return of capital (217,186) (950,339)
-------------------- --------------------
Total distributions (19,708,781) (20,956,147)
-------------------- --------------------
Total increase (decrease) in net assets (15,837,681) 7,510,429
-------------------- --------------------
NET ASSETS
Beginning of year 227,373,934 219,863,505
-------------------- --------------------
End of year $ 211,536,253 $ 227,373,934
==================== ====================
Distributions in excess of net investment income $ (2,344,015) $ (3,889,740)
==================== ====================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
----------------------------------------------
2005 2004 2003
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 4.56 $ 4.41 $ 3.91
------------ ------------ ------------
Offering Costs -- -- --
------------ ------------ ------------
INVESTMENT ACTIVITIES
Net investment income 0.36 0.35 0.37
Net realized and unrealized gain (loss) on investments and futures contracts (0.28) 0.22 0.58
------------ ------------ ------------
Total from investment activities 0.08 0.57 0.95
------------ ------------ ------------
DISTRIBUTIONS
Net investment income (0.40) (0.40) (0.43)
Return of capital (0.00)(2) (0.02) (0.02)
------------ ------------ ------------
Total distributions (0.40) (0.42) (0.45)
------------ ------------ ------------
Decrease in net asset value due to shares issued through rights offering -- -- --
------------ ------------ ------------
NET ASSET VALUE, END OF YEAR $ 4.24 $ 4.56 $ 4.41
============ ============ ============
PER SHARE MARKET VALUE, END OF YEAR $ 3.67 $ 4.45 $ 4.50
============ ============ ============
TOTAL INVESTMENT RETURN
Net asset value(1) 1.74% 13.55% 24.59%
Market value (9.76)% 8.60% 28.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (000s omitted) $ 211,536 $ 227,374 $ 219,864
Ratio of expenses to average net assets including expense offsets 0.82% 0.78% 0.78%
Ratio of expenses to average net assets 0.82% 0.78% 0.78%
Ratio of net investment income to average net assets 8.20% 8.08% 8.83%
Portfolio turnover rate 61.5% 57.8% 77.8%
* Adjusted for Rights Offering.
+ Calculated using the average share method.
(1) Total investment return based on per share net asset value reflects the
effects of change in net asset value on the performance of the Fund during
each year, and assumes dividends and capital gains distributions, if any,
were reinvested. These percentages are not an indication of the performance
of a shareholder's investment in the Fund based on market value, due to
differences between the market price of the stock and the net asset value
of the Fund.
(2) This amount represents less than $(0.01) per share.
(3) As required, effective January 1, 2001 the Fund has adopted provisions of
AICPA Audit and Accounting Guide for Investment Companies and has begun
amortizing premium on debt securities. The effect of this change for the
year ended December 31, 2001 was a decrease to net investment income per
share by $0.004 and an increase to net realized and unrealized gains and
losses per share by $0.004 and a decrease to the net ratio of net
investment income to average net assets from 11.73% to 11.66%. Per share
ratios and supplemental data for prior periods have not been restated to
reflect this change.
(4) Due to the realignment of the Fund's portfolio in connection with the
combination with Credit Suisse Strategic Global Income Fund, Inc., the cost
of purchases of $30,040,944 and proceeds from sales of $37,801,151 have
been excluded from the Portfolio Turnover calculation.
Note: Current Year permanent book-tax differences, if any, are not included
in the calculation of net investment income per share.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
YEAR ENDED DECEMBER 31,
-----------------------------------
2002 2001(3) 2000
--------- --------- ---------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 4.74 $ 5.70 $ 7.34
--------- --------- ---------
Offering Costs -- -- --
--------- --------- ---------
INVESTMENT ACTIVITIES
Net investment income 0.42 0.61+ 0.67
Net realized and unrealized gain (loss) on investments and
futures contracts (0.55) (0.85) (1.55)
--------- --------- ---------
Total from investment activities (0.13) (0.24) (0.88)
--------- --------- ---------
DISTRIBUTIONS
Net investment income (0.62) (0.72) (0.76)
Return of capital (0.08) -- --
--------- --------- ---------
Total distributions (0.70) (0.72) (0.76)
--------- --------- ---------
Decrease in net asset value due to shares issued through rights offering -- -- --
--------- --------- ---------
NET ASSET VALUE, END OF YEAR $ 3.91 $ 4.74 $ 5.70
========= ========= =========
PER SHARE MARKET VALUE, END OF YEAR $ 3.88 $ 4.98 $ 5.56
========= ========= =========
TOTAL INVESTMENT RETURN
Net asset value(1) (5.26)% (6.04)% (12.37)%
Market value (10.52)% 1.15% 3.55%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (000s omitted) $ 195,089 $ 236,652 $ 197,817
Ratio of expenses to average net assets including expense offsets 0.79% 1.07% 0.78%
Ratio of expenses to average net assets 0.79% 1.07% 0.78%
Ratio of net investment income to average net assets 9.93% 11.66% 10.10%
Portfolio turnover rate 61.1% 50.1%(4) 39.1%
YEAR ENDED DECEMBER 31,
------------------------------------------------
1999 1998 1997 1996
--------- --------- --------- ---------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 7.77 $ 8.44 $ 8.12 $ 8.63
--------- --------- --------- ---------
Offering Costs -- -- -- (0.02)
--------- --------- --------- ---------
INVESTMENT ACTIVITIES
Net investment income 0.75 0.71 0.69 0.75
Net realized and unrealized gain (loss) on investments and
futures contracts (0.46) (0.66) 0.39 0.18
--------- --------- --------- ---------
Total from investment activities 0.29 0.05 1.08 0.93
--------- --------- --------- ---------
DISTRIBUTIONS
Net investment income (0.72) (0.72) (0.76) (0.90)
Return of capital -- -- -- --
--------- --------- --------- ---------
Total distributions (0.72) (0.72) (0.76) (0.90)
--------- --------- --------- ---------
Decrease in net asset value due to shares issued through rights offering -- -- -- (0.52)
--------- --------- --------- ---------
NET ASSET VALUE, END OF YEAR $ 7.34 $ 7.77 $ 8.44 $ 8.12
========= ========= ========= =========
PER SHARE MARKET VALUE, END OF YEAR $ 6.06 $ 7.56 $ 8.75 $ 7.63
========= ========= ========= =========
TOTAL INVESTMENT RETURN
Net asset value(1) 4.50% 0.47% 14.03% 10.59%*
Market value (11.32)% (5.68)% 25.90% 10.05%*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (000s omitted) $ 254,857 $ 269,507 $ 291,959 $ 280,634
Ratio of expenses to average net assets including expense offsets 0.78% 0.81% 0.84% 0.94%
Ratio of expenses to average net assets 0.78% 0.81% 0.84% 0.95%
Ratio of net investment income to average net assets 9.90% 8.59% 8.47% 9.23%
Portfolio turnover rate 43.5% 84.7% 97.7% 81.0%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2005
NOTE 1. ORGANIZATION
Credit Suisse Asset Management Income Fund, Inc. (the "Fund") was
incorporated on February 11, 1987 and is registered as a diversified, closed-end
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to seek current income through investment
primarily in debt securities.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
A) SECURITY VALUATION -- The net asset value of the Fund is determined
daily as of the close of regular trading on the New York Stock Exchange, Inc.
(the "Exchange") on each day the Exchange is open for business. Debt securities
with a remaining maturity greater than 60 days are valued in accordance with the
price supplied by a pricing service, which may use a matrix, formula or other
objective method that takes into consideration market indices, yield curves and
other specific adjustments. Debt obligations that will mature in 60 days or less
are valued on the basis of amortized cost, which approximates market value,
unless it is determined that using this method would not represent fair value.
The Fund's equity investments are valued at market value, which is generally
determined using the closing price on the exchange or market on which the
security is primarily traded at the time of valuation ("Valuation Time"). If no
sales are reported, equity investments are generally valued at the most recent
bid quotation as of the Valuation Time or at the lowest asked quotation in the
case of a short sale of securities. Securities and other assets for which market
quotations are not readily available, or whose values have been materially
affected by events occurring before the Fund's Valuation Time but after the
close of the securities' primary markets, are valued at fair value as determined
in good faith by, or under the direction of, the Board of Directors under
procedures established by the Board of Directors.
The Fund may invest up to 10% of its total assets in securities which are
not readily marketable, including those which are restricted as to disposition
under securities law ("restricted securities") (excludes 144A securities that
have been determined to be liquid under procedures established by the Board of
Directors). These securities are valued pursuant to the valuation procedures
noted above.
B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on a trade date basis. Interest income is accrued as earned. The
Fund amortizes premium and accretes discount using the effective yield method.
Dividends are recorded on the ex-dividend date. The cost of investments sold is
determined by use of the specific identification method for both financial
reporting and income tax purposes. Discount or premium on mortgage backed
securities is recorded upon receipt of principal payments on the underlying
mortgage pools.
C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net
investment income are declared and paid monthly. Distributions of net realized
capital gains, if any, are declared and paid at least annually. However, to the
extent that a net realized capital gain can be reduced by a capital loss
carryover, such gain will not be distributed. Income and capital gains
distributions are determined in accordance with federal income tax regulations,
which may differ from generally accepted accounting principles in the United
States of America ("GAAP").
D) FEDERAL INCOME TAXES -- No provision is made for federal taxes as it is
the Fund's intention to continue to qualify for and elect the tax treatment
applicable to regulated investment companies under the Internal Revenue Code of
1986, as amended, and to make the requisite distributions to its shareholders,
which will be sufficient to relieve it from federal income and excise taxes.
20
E) USE OF ESTIMATES -- The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
F) SHORT-TERM INVESTMENTS -- The Fund, together with other funds/portfolios
advised by Credit Suisse Asset Management, LLC ("Credit Suisse"), an indirect
wholly-owned subsidiary of Credit Suisse Group, sweeps available cash into
either a short-term variable rate time deposit issued by Brown Brothers Harriman
& Co. ("BBH&Co."), the Fund's custodian, Grand Cayman branch, or with other
highly rated banks. The short-term time deposit is a variable rate account
classified as a short-term investment.
G) DELAYED DELIVERY COMMITMENTS -- The Fund may purchase or sell securities
on a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered and
paid for are fixed at the time the transaction is negotiated.
H) FUTURES CONTRACTS -- The Fund may enter into futures contracts to the
extent permitted by its investment policies and objectives. Upon entering into a
futures contract, the Fund is required to deposit cash or pledge U.S. Government
securities as initial margin. Subsequent payments, which are dependent on the
daily fluctuations in the value of the underlying instrument, are made or
received by the Fund each day (daily variation margin) and are recorded as
unrealized gains or losses until the contracts are closed. When the contracts
are closed, the Fund records a realized gain or loss equal to the difference
between the proceeds from (or cost of) the closing transactions and the Fund's
basis in the contracts. Risks of entering into futures contracts for hedging
purposes include the possibility that a change in the value of the contracts may
not correlate with the changes in the value of the underlying instruments. In
addition, the purchase of futures contracts involves the risk that the Fund
could lose more than the original margin deposit and subsequent payments
required for a futures transaction. At December 31, 2005, the Fund had no open
futures contracts.
I) FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
foreign currency contracts for the purchase or sale of a specific foreign
currency at a fixed price on a future date. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and from unanticipated movements in the value of a foreign
currency. The Fund will enter into forward foreign currency contracts primarily
for hedging purposes. Forward foreign currency contracts are adjusted by the
daily exchange rate of the underlying currency and any gains or losses are
recorded for financial statement purposes as unrealized until the contract
settlement date, or an offsetting position is entered into. At December 31,
2005, the Fund had no open forward foreign currency contracts.
J) OTHER -- The Fund may invest in securities of foreign countries and
governments which involve certain risks in addition to those inherent in
domestic investments. Such risks generally include, among others, currency risks
(fluctuations in currency exchange rates), information risk (key information may
be inaccurate or unavailable) and political risk (expropriation, nationalization
or the imposition of capital or currency controls or punitive taxes). Other
risks of investing in foreign securities include liquidity and valuation risks.
The Fund may be subject to taxes imposed by countries in which it invests
with respect to its investments in issuers existing or operating in such
countries. Such taxes are generally based on income earned or repatriated and
capital gains realized on the sale of such investments. The Fund accrues such
taxes when the related income or gains are earned.
21
The Fund's investments in securities of issuers located in less developed
countries considered to be "emerging markets" involve risks in addition to those
generally applicable to foreign securities. Focusing on emerging (less
developed) markets involves higher levels of risk, including increased currency,
information, liquidity, market, political and valuation risks. Deficiencies in
regulatory oversight, market infrastructure, shareholder protections and company
laws could expose the Fund to operational and other risks as well. Some
countries may have restrictions that could limit the Fund's access to attractive
investment opportunities. Additionally, emerging markets often face serious
economic problems (such as high external debt, inflation and unemployment) that
could subject the portfolio to increased volatility or substantial declines in
value.
Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations and
risk of lost income and principal than higher-rated debt securities for a
variety of reasons. Also, during an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial stress
which would adversely effect their ability to service their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing.
In addition, periods of economic uncertainty and changes can be expected to
result in increased volatility of market prices of lower-rated debt securities
and (to the extent the Fund invests in junk bonds) the Fund's net asset value.
NOTE 3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Credit Suisse serves as investment adviser for the Fund. For its investment
advisory services, Credit Suisse is entitled to receive a fee from the Fund at a
rate per annum, computed weekly and paid quarterly, as follows: 0.50% of the
lower of the weekly stock price (market value) of the Fund's outstanding shares
or its average weekly net assets. For the year ended December 31, 2005,
investment advisory fees earned were $1,053,905.
Credit Suisse Asset Management Limited (Credit Suisse U.K.) ("Credit Suisse
U.K."), an affiliate of Credit Suisse, is sub-investment adviser to the Fund.
Credit Suisse U.K.'s sub-investment advisory fees are paid by Credit Suisse out
of Credit Suisse's net investment advisory fee and are not paid by the Fund.
BBH&Co. provides administrative and custodial services to the Fund. Under
the Administration and Custody Agreements, BBH&Co. is paid a fee based on
average net assets. For the year ended December 31, 2005, BBH&Co. earned
administrative service fees (including out-of-pocket expenses) of $105,390.
Merrill Corporation ("Merrill"), an affiliate of Credit Suisse, has been
engaged by the Fund to provide certain financial printing services. For the year
ended December 31, 2005, Merrill was paid $40,633 for its services to the Fund.
NOTE 4. LINE OF CREDIT
The Fund, together with other funds/portfolios advised by Credit Suisse
(collectively, the "Participating Funds"), participates in a $75 million
committed, unsecured line of credit facility ("Credit Facility") for temporary
or emergency purposes with Deutsche Bank, A.G. as administrative agent and
syndication agent and State Street Bank and Trust Company as operations agent.
Under the terms of the Credit Facility, the Participating Funds pay an aggregate
commitment fee at a rate of 0.10% per annum on the average unused amount of the
Credit Facility, which is allocated among the Participating Funds in such manner
as is determined by the governing Boards of the
22
Participating Funds. In addition, the Participating Funds pay interest on
borrowings at the Federal Funds rate plus 0.50%. At December 31, 2005 and during
the year ended December 31, 2005, the Fund had no borrowings under the Credit
Facility.
NOTE 5. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 2005, the Fund had no investments in U.S.
Government and Agency Obligations. Purchases and sales of investment securities
(excluding short-term investments) were $135,185,708 and $129,721,831,
respectively.
NOTE 6. FEDERAL INCOME TAXES
Income and capital gain distributions are determined in accordance with
federal income tax regulations, which may differ from GAAP.
The tax characteristics of dividends paid during the year ended December
31, 2005 and the year ended December 31, 2004, respectively, for the Fund were
as follows:
ORDINARY INCOME RETURN OF CAPITAL
------------------------------ ------------------------
2005 2004 2005 2004
------------ ------------ --------- ---------
$ 19,491,595 $ 20,005,808 $ 217,186 $ 950,339
The tax basis of components of distributable earnings differ from the
amounts reflected in the Statement of Assets and Liabilities by temporary
book/tax differences. These differences are primarily due to differing
treatments of foreign currency transactions, interest accrual from defaulted
bonds, losses deferred due to wash sales and deferral of Post-October losses.
At December 31, 2005, the components of distributable earnings on a tax
basis for the Fund were as follows:
Accumulated Ordinary Losses -- Other $ (2,344,015)
Accumulated Capital Losses (160,492,900)
Deferral of Post-October Losses (3,781,910)
Unrealized appreciation (depreciation) (12,220,686)
--------------
$ (178,839,511)
==============
At December 31, 2005, the Fund had capital loss carryforwards available to
offset possible future capital gains as follows:
EXPIRES DECEMBER 31,
--------------------------------------------------------------------------------------------------------------
2006 2007 2008 2009 2010 2011 2012 2013
----------- ----------- ----------- ------------ ------------ ------------ ----------- -----------
$ 3,565,110 $ 9,512,339 $ 2,335,946 $ 50,358,903 $ 72,148,258 $ 18,379,472 $ 1,091,025 $ 3,101,847
It is uncertain that the Fund will realize the full benefit of these losses
prior to expiration.
At December 31, 2005, the identified cost for federal income tax purposes,
as well as the gross unrealized appreciation from investments for those
securities having an excess of value over cost, gross unrealized depreciation
from investments for those securities having an excess of cost over value and
the net unrealized depreciation from investments were $220,384,744, $5,312,138,
$(17,532,388) and $(12,220,250), respectively.
At December 31, 2005, the Fund reclassified $3,461,181 from accumulated
undistributed net investment income and $(3,356,059) from accumulated net
realized loss to paid in capital, to adjust for permanent book/tax treatments
23
of foreign currency transactions, interest accrual from defaulted bonds sold and
return of capital. Net assets were not affected by these reclassifications.
NOTE 7. OTHER
The Fund issued to its shareholders of record as of the close of business
on September 27, 1996 transferable Rights to subscribe for up to an aggregate of
10,160,570 shares of Common Stock of the Fund at a rate of one share of Common
Stock for three Rights held at the subscription price of $7.15 per share. During
October 1996, the Fund issued a total of 10,160,570 shares of Common Stock on
exercise of such Rights. Rights offering costs of $550,000 were charged directly
against the proceeds of the offering.
NOTE 8. CONTINGENCIES
In the normal course of business, the Fund may provide general
indemnifications pursuant to certain contracts and organizational documents. The
Fund's maximum exposure under these arrangements is dependent on future claims
that may be made against the Fund and, therefore, cannot be estimated; however,
based on experience, the risk of loss from such claims is considered remote.
24
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Credit Suisse Asset Management Income Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Credit Suisse Asset Management
Income Fund, Inc. (the "Fund") at December 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the ten years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2005 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 17, 2006
25
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
ADDITIONAL INFORMATION (UNAUDITED)
DESCRIPTION OF INVESTLINK(SM) PROGRAM
The InvestLink(SM) Program is sponsored and administered by Computershare
Shareholder Services, Inc., not by Credit Suisse Asset Management Income Fund,
Inc. (the "Fund"). Computershare Shareholder Services, Inc. will act as program
administrator (the "Program Administrator") of the InvestLink(SM) Program (the
"Program"). The purpose of the Program is to provide interested investors with a
simple and convenient way to invest funds and reinvest dividends in shares of
the Fund's common stock ("Shares") at prevailing prices, with reduced brokerage
commissions and fees.
An interested investor may join the Program at any time. Purchases of
Shares with funds from a participant's cash payment or automatic account
deduction will begin on the next day on which funds are invested. 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 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 the transaction charges
outlined above, participants will be assessed per share processing fees (which
include brokerage commissions.) Participants will not be charged any fee for
reinvesting dividends.
The number of Shares 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. The
Program Administrator uses dividends and funds of participants to purchase
Shares of the Fund's common stock in the open market. Such purchases will be
made by participating brokers as agent for the participants using normal cash
settlement practices. All Shares purchased through the Program will be allocated
to participants as of the settlement date, which is usually three business days
from the purchase date. In all cases, transaction processing will occur within
30 days of the receipt of funds, except where temporary curtailment or
suspension of purchases is necessary to comply with applicable provisions of the
Federal Securities laws or when unusual market conditions make prudent
investment impracticable. 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 the participants.
The 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 a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The 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 a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period.
Computershare Shareholder Services, Inc., as Program Administrator
administers the Program for participants, keeps records, sends statements of
account to participants and performs other duties relating to the Program. Each
participant in the Program will receive a statement of his account following
each purchase of Shares. The statements will also show the amount of dividends
credited to such participant's account (if applicable), as well as fees paid by
26
the participant. In addition, each participant will receive copies of the Fund's
annual and semi-annual reports to shareholders, proxy statements and, if
applicable, dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the
name of the accounts of the respective participants. Unless requested, the Fund
will not issue to participants certificates for Shares of the Fund purchased
under the Program. The Program Administrator will hold the Shares in book-entry
form until a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split
will be based upon both the Shares of the Fund 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 Fund, 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.
All Shares of the Fund (including any fractional share) credited to his
account under the Program will be voted as the participant directs. The
participants will be sent the proxy materials for the annual meetings of
shareholders. When a participant returns an executed proxy, all of such shares
will be voted as indicated. A participant may also elect to vote his Shares in
person at the Shareholders' meeting.
A participant will receive tax information annually for his personal
records and to help him prepare his U.S. federal income tax return. The
automatic reinvestment of dividends does not relieve him 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.
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 Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
27
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
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 in accordance with the terms and conditions of the Program. 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 in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested investor may participate in the Program. To participate in
the Program, an investor who is not already a registered owner of the Shares
must make an initial investment of 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. An interested investor may join the Program by reading the Program
description, completing and signing the enrollment form and returning it to the
Program Administrator. The enrollment form and information relating to the
Program (including terms and conditions) may be obtained by calling the Program
Administrator at (800) 730-6001. All correspondence regarding the Program should
be directed to: Computershare Trust Company N.A., InvestLink Program, P.O.
43010, Providence, RI 02940-3010.
28
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
BOARD CONSIDERATION AND RE-APPROVAL OF INVESTMENT ADVISORY AGREEMENT (UNAUDITED)
Section 15(c) of the Investment Company Act of 1940 (the "1940 Act")
contemplates that the Board of Directors (the "Board") of Credit Suisse Asset
Management Income Fund, Inc. (the "Fund"), including a majority of the Directors
who have no direct or indirect interest in the investment advisory agreement and
are not "interested persons" of the Fund, as defined in the 1940 Act (the
"Independent Directors"), will annually review and re-approve the terms of the
Fund's existing investment advisory agreement. In this regard, the Board
reviewed and re-approved, during the most recent six months covered by this
report, (i) an investment advisory agreement with Credit Suisse Asset
Management, LLC ("Credit Suisse") for the Fund, and (ii) a sub-advisory
agreement with Credit Suisse Asset Management Limited ("Credit Suisse U.K." or
the "Sub-Adviser") for the Fund (collectively, the "Advisory Agreements").
More specifically, at a meeting held on November 16-17, 2005, the Board,
including the Independent Directors advised by their independent legal counsel,
considered the factors and reached the conclusions described below relating to
the selection of Credit Suisse and Credit Suisse U.K. and the re-approval of the
Advisory Agreements.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board received and considered various data and information regarding
the nature, extent and quality of services provided to the Fund by Credit Suisse
and Credit Suisse U.K. under the Advisory Agreements. The most recent investment
adviser registration forms ("Forms ADV") for Credit Suisse and Credit Suisse
U.K. were provided to the Board, as were responses of Credit Suisse and Credit
Suisse U.K. to a detailed series of requests submitted by the Independent
Directors' independent legal counsel on behalf of such Directors. The Board
reviewed and analyzed these materials, which included, among other things,
information about the background and experience of the senior management and the
expertise of, and amount of attention devoted to the Fund by, investment
personnel of Credit Suisse and Credit Suisse U.K. In this regard, the Board
specifically reviewed the qualifications, background and responsibilities of the
chief investment officer who is primarily responsible for day-to-day portfolio
management services for the Fund.
In addition, the Board received and reviewed information on Securities and
Exchange Commission ("SEC") and other regulatory inquiries and examinations
relating to the Fund, Credit Suisse and Credit Suisse U.K. The Board considered
the investment and legal compliance programs of each of these entities,
including their implementation of enhanced compliance policies and procedures in
response to SEC rule changes and other regulatory initiatives. The Board also
considered the Fund's Chief Compliance Officer's report and recommendations.
The Board evaluated the ability of Credit Suisse and Credit Suisse U.K.,
including their resources, reputation and other attributes, to attract and
retain highly qualified investment professionals, including research, advisory,
and supervisory personnel. In this regard, the Board considered information
regarding Credit Suisse's compensation arrangements for its personnel involved
in the management of the Fund.
Based on the above factors, together with those referenced below, the Board
concluded that it was generally satisfied with the nature, extent and quality of
the investment advisory services provided to the Fund by Credit Suisse and
Credit Suisse U.K.
FUND PERFORMANCE AND EXPENSES
The Board considered the performance results for the Fund over a number of
years, as well as for recent periods. It also considered these results in
comparison to the group of funds consisting of all closed-end flexible income
funds and closed-end high current yield funds (the "Performance Universe"), as
well as to the Fund's benchmark index, the Citigroup High Yield Market Index.
Lipper Inc. ("Lipper"), an independent provider of investment company data,
determined the Performance Universe for the Fund and provided the comparative
data. The Board
29
was provided with a description of the methodology used by Lipper to select the
closed-end mutual funds in the Fund's Performance Universe. The Board also noted
that the Fund performed better than the median in its Performance Universe for
the most recent periods.
The Board received and considered statistical information regarding the
Fund's total expense ratio and its various components, including management
fees, non-management fees, fee waivers/caps and/or expense reimbursements and
actual total expenses of the Fund, including and excluding investment-related
expenses and taxes. It also considered comparisons of these fees to the expense
information of the group of funds that was determined to be the most similar to
the Fund (the "Peer Group") and to the median expenses of a broader universe of
relevant funds (the "Expense Universe"), which comparative data was provided by
Lipper. The Board was provided with a description of the methodology used by
Lipper to select the closed-end mutual funds in the Fund's Peer Group and
Expense Universe. The Board noted that the overall expense ratio of the Fund was
lower than the Peer Group's median overall expense ratio.
Based on the above-referenced considerations and other factors, the Board
concluded that the overall performance and expense results supported the
re-approval of the Advisory Agreements for the Fund.
INVESTMENT ADVISORY FEE RATE
The Board reviewed and considered the proposed contractual investment
advisory fee rate (the "Advisory Agreement Rate") payable by the Fund to Credit
Suisse for investment advisory services. The Board also reviewed and considered
the proposed contractual investment sub-advisory fee rate (the "Sub-Advisory
Agreement Rate") payable by Credit Suisse to the Sub-Adviser for investment
sub-advisory services. In addition, the Board reviewed and considered the
proposed fee waiver/cap arrangements applicable to the Advisory Agreement Rate
and considered the Advisory Agreement Rate after taking the waivers into account
(the "Net Advisory Rate"). The Board noted that Credit Suisse had voluntary fee
waivers in effect to base its current investment advisory fee upon the lower of
the average weekly stock price or its average weekly net assets.
Additionally, the Board received and considered information comparing the
Advisory Agreement Rate (both on a stand-alone basis and on a combined basis
with the Fund's administration fee rate) with those of the other funds in its
Peer Group. The Board noted that the Fund's administrator is not affiliated with
Credit Suisse and that the Fund's administration agreement and corresponding
fees were negotiated at arm's-length. The Board noted that the combined rate of
investment advisory and administration fees for the Fund was lower than the
median rate of the Fund's Peer Group. The Board also noted that the Fund's
non-management expense rate was lower than the median rate of the Fund's Peer
Group. The Board concluded that these factors supported the Advisory Agreement
Rate and the Net Advisory Rate.
The Board also reviewed the Sub-Advisory Agreement Rate charged by Credit
Suisse U.K. which serves as Sub-Adviser to the Fund. The Board concluded that
the Sub-Advisory Agreement Rate was fair and equitable, based on its
consideration of the factors described here.
PROFITABILITY
The Board received and considered a detailed estimated profitability
analysis of Credit Suisse based on the Advisory Agreement Rate, as well as on
any other relationships between the Fund and Credit Suisse and its affiliates,
including Credit Suisse U.K. The Board concluded that, in light of the costs of
providing investment management and other services to the Fund, the profits and
other ancillary benefits that Credit Suisse and its affiliates received with
regard to providing these services to the Fund were not unreasonable.
30
The Board received and considered financial statements and an estimated
profitability analysis of Credit Suisse U.K. based on the Sub-Advisory Agreement
Rate, as well as on other relationships between the Fund and Credit Suisse U.K.
and its affiliates. The Board noted the costs of providing portfolio management
and other services to the Fund. The Board also noted that the sub-advisory fees
are paid to the Sub-Adviser by Credit Suisse and not directly by the Fund, and
that the Board separately determined that the Advisory Agreement Rate for the
Fund was fair and equitable. Based on these factors, the Board concluded that
the profits and other ancillary benefits that the Sub-Adviser and its affiliates
received with regard to providing these services to the Fund were not
unreasonable.
ECONOMIES OF SCALE
The Board received and considered information regarding whether there have
been economies of scale with respect to the management of the Fund, whether the
Fund has appropriately benefited from any economies of scale, and whether there
is potential for realization of any further economies of scale.
The Board observed that the Advisory Agreements do not offer breakpoints.
However, the Board considered the diminished impact of economies of scale in the
context of a closed-end fund and concluded that the fees were fair and equitable
based on relevant factors.
INFORMATION ABOUT SERVICES TO OTHER CLIENTS
The Board also received and considered information about the nature and
extent of services and fee rates offered by Credit Suisse to its other clients,
including other registered investment companies and institutional investors and
investment companies to which Credit Suisse serves as an unaffiliated
sub-adviser. The Board also received and considered information about the nature
and extent of services, and general information about the fees, offered by
Credit Suisse U.K. to other clients. The Board concluded that the Advisory
Agreement Rate and Sub-Advisory Agreement Rate were reasonable, given the nature
and extent of services provided and comparison with rates offered to other
clients. Where rates offered to other clients were relatively lower, the Board
considered that Credit Suisse's voluntary fee waivers would potentially decrease
the Advisory Agreement Rate. The Board concluded, based on information provided
by Credit Suisse, that the costs associated with managing and operating a
registered, closed-end bond fund, compared with other clients and other funds,
provided a justification for the higher fee rates charged to the Fund.
OTHER FACTORS AND BROADER REVIEW
As discussed above, the Board reviews detailed materials received from
Credit Suisse annually as part of the re-approval process under Section 15(c) of
the 1940 Act. The Board also reviews and assesses the quality of the services
that the Fund receives throughout the year. In this regard, the Board reviews
reports of Credit Suisse at least in each of its quarterly meetings, which
include, among other things, a detailed portfolio review, and detailed fund
performance reports, and confers with the chief investment officer of the Fund
at various times throughout the year.
After considering the above-described factors and based on its
deliberations and its evaluation of the information provided to it, the Board
concluded that re-approval of the Advisory Agreements for the Fund was in the
best interest of the Fund and its remaining shareholders. Accordingly, the Board
unanimously re-approved the Advisory Agreements.
31
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
TERM NUMBER OF
OF OFFICE PORTFOLIOS IN
AND FUND
LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS POSITION(S) OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
AND DATE OF BIRTH HELD WITH FUND SERVED PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
----------------- -------------- --------- -------------------- ------------- ---------------
INDEPENDENT DIRECTORS
Enrique R. Arzac Chairman of the Board of Chairman since Professor of Finance 47 Director of The Adams
c/o Credit Suisse Asset Directors, Nominating 2005 and and Economics, Express Company (a
Management, LLC Committee Chairman and Director since Graduate School of closed-end investment
Attn: General Counsel Audit Committee Member 1990; current Business, Columbia company); Director of
466 Lexington Avenue term ends at University since 1971 Petroleum and
New York, New York the 2007 Resources Corporation
10017-3140 annual meeting (a closed-end
investment company)
Date of Birth: 10/02/41
Lawrence J. Fox Director, Audit Committee Since 1990; Partner of Drinker 3 Director, Winthrop
One Logan Square Chairman and Nominating current term Biddle & Reath (law Trust Company
18th & Cherry Streets Committee Member ends at the firm) since 1972
Philadelphia, 2006 annual
Pennsylvania 19103 meeting
Date of Birth: 07/17/43
James S. Pasman, Jr Director,Audit and Since Fund Currently retired 42 Director of Education
c/o Credit Suisse Asset Nominating Committee inception; Management Corp.
Management, LLC Member current term
Attn: General Counsel ends at the
466 Lexington Avenue 2008 annual
New York, New York meeting
10017-3140
Date of Birth: 12/20/30
Steven N. Rappaport Director,Audit and Since 2005; Partner of Lehigh 46 Director of Presstek,
Lehigh Court, LLC Nominating Committee current term Court, LLC and RZ Inc. (digital imaging
40 East 52nd Street Member ends at the Capital (private technologies
New York, New York 2008 annual investment firms) from company); Director of
10022 meeting July 2002 to present; Wood Resources, LLC.
Transition Adviser to (plywood
Date of Birth: 07/10/48 SunGard Securities manufacturing company)
Finance, Inc. from
February 2002 to July
2002; President of
SunGard Securities
Finance, Inc. from
2001 to February 2002;
President of Loanet,
Inc. (on-line
accounting service)
from 1997 to 2001
32
TERM
OF OFFICE
AND
LENGTH
NAME, ADDRESS POSITION(S) OF TIME
AND DATE OF BIRTH HELD WITH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
----------------- -------------- --------- ----------------------------------------------
OFFICERS*
Martha B. Metcalf Chief Investment Officer Since 2005 Managing Director; Associated with Credit
Credit Suisse Asset Suisse since 2005; Managing Director and
Management, LLC Portfolio Manager of Invesco from 2000 to
466 Lexington Avenue 2005; Officer of other Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 04/09/65
Steven B. Plump Chief Executive Officer Since 2005 Managing Director; Associated with Credit
Credit Suisse Asset and President Suisse or its predecessor since 1995; Officer
Management, LLC of other Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 02/08/59
Michael E. Gray Investment Officer Since 2005 Managing Director; Associated with Credit
Credit Suisse Asset Suisse since 2004; Managing Director of
Management, LLC Deutsche Asset Management from 2002 until
466 Lexington Avenue 2004; Executive Director of UBS (London) from
New York, New York 1999 until 2002; Officer of other Credit
10017-3140 Suisse Funds
Date of Birth: 07/08/68
Michael A. Pignataro Chief Financial Officer, Since 1995 Director and Director of Fund Administration
Credit Suisse Asset Vice President and of Credit Suisse; Associated with Credit
Management, LLC Secretary Suisse or its predecessor since 1984; Officer
466 Lexington Avenue of other Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 11/15/59
Emidio Morizio Chief Compliance Officer Since 2004 Director and Global Head of Compliance of
Credit Suisse Asset Credit Suisse; Associated with Credit Suisse
Management, LLC since July 2000; Vice President and Director
466 Lexington Avenue of Compliance of Forstmann-Leff Associates
New York, New York from 1998 to June 2000; Officer of other
10017-3140 Credit Suisse Funds
Date of Birth: 09/21/66
33
TERM
OF OFFICE
AND
LENGTH
NAME, ADDRESS POSITION(S) OF TIME
AND DATE OF BIRTH HELD WITH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
----------------- -------------- --------- ----------------------------------------------
OFFICERS*
Ajay Mehra Chief Legal Officer Since 2004 Director and Head of Legal Americas
Credit Suisse Asset Traditional Asset Management and Hedge Funds;
Management, LLC Associated with Credit Suisse since September
466 Lexington Avenue 2004; Senior Associate of Shearman & Sterling
New York, New York LLP from September 2000 to September 2004;
10017-3140 Senior Counsel of the SEC Division of
Investment Management from June 1997 to
Date of Birth: 08/14/70 September 2000; Officer of other Credit Suisse
Funds
J. Kevin Gao Senior Vice President Since 2004 Director and Legal Counsel of Credit Suisse;
Credit Suisse Asset Associated with Credit Suisse since July 2003;
Management, LLC Associated with the law firm of Willkie Farr &
466 Lexington Avenue Gallagher LLP from 1998 to 2003; Officer of
New York, New York other Credit Suisse Funds
10017-3140
Date of Birth: 10/13/67
Robert Rizza Treasurer Since 1999 Vice President of Credit Suisse; Associated
Credit Suisse Asset with Credit Suisse since 1998; Officer of
Management, LLC other Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 12/09/65
----------
* The officers of the Fund shown are officers that make policy decisions.
ANNUAL CERTIFICATIONS (UNAUDITED)
The Fund's Chief Executive Officer has filed an annual certification with
the NYSE that, as of the date of the certification, he was unaware of any
violation by the Fund of the NYSE's corporate governance listing standards. The
Fund's Chief Executive Officer and Chief Financial Officer have also filed
certifications with the SEC as part of the Fund's Form N-CSR filings that cover
certain public disclosure documents of the Fund, including its annual and
semi-annual reports to stockholders.
34
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
ADDITIONAL FEDERAL TAX INFORMATION (UNAUDITED)
The percentage of ordinary income dividends paid by the Fund during the
year ended December 31, 2005, which qualify for the Dividends Received Deduction
available to corporate shareholders was 0.00%.
In January, 2006, the Fund will report on Form 1099 the tax status of all
distributions made during the calendar year 2005. Shareholders should use the
information on Form 1099 for their income tax returns.
Please consult your Tax Advisor if you have any questions concerning the
above information.
35
PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION
Information regarding how the Credit Suisse Asset Management Income Fund,
Inc. (the "Fund") voted proxies related to its portfolio securities during the
12-month period ended June 30 of each year, as well as policies and procedures
that the Fund uses to determine how to vote proxies relating to its portfolio
securities are available:
- By calling 1-800-293-1232
- On the Fund's website, www.credit-suisse.com/us
- On the website of the Securities and Exchange Commission, http://www.sec.gov
The Fund files a complete schedule of its portfolio holdings for the first
and third quarters of its fiscal year with the SEC on Form N-Q. The Fund's Forms
N-Q are available on the SEC's website at http://www.sec.gov and may be reviewed
and copied at the SEC's Public Reference Room in Washington, DC. Information on
the operation of the SEC's Public Reference Room may be obtained by calling
1-800-SEC-0330.
36
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Commodity Return Strategy Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Fixed Income Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Small Cap Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Blend Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Mid-Cap Growth Fund
Credit Suisse New York Municipal Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value Fund
Credit Suisse Strategic Allocation Fund
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC or any affiliate, are not FDIC-insured and are not guaranteed by
Credit Suisse Asset Management, LLC or any affiliate. Fund investments are
subject to investment risks, including loss of your investment. There are
special risk considerations associated with international, global,
emerging-market, small-company, private equity, high-yield debt,
single-industry, single-country and other special, aggressive or concentrated
investment strategies. Past performance cannot guarantee future results.
More complete information about a fund, including charges and expenses, is
provided in the Prospectus, which should be read carefully before investing. You
may obtain copies by calling Credit Suisse Funds at 800-927-2874. For up-to-date
performance, please look in the mutual fund section of your newspaper under
Credit Suisse.
Credit Suisse Asset Management Securities, Inc., Distributor.
37
SUMMARY OF GENERAL INFORMATION (UNAUDITED)
Credit Suisse Asset Management Income Fund is a closed-end, non-diversified
management investment company whose shares trade on the New York Stock Exchange,
Inc. Its investment objective is to seek current income. Credit Suisse Asset
Management, LLC, the Fund's investment adviser, is part of the Asset Management
business of Credit Suisse, a leading global financial services organization
headquartered in Zurich, with offices focused on asset management in 18
countries.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (DAILY) under the
designation "CrSuisinco" and THE WALL STREET JOURNAL (DAILY), and BARRON'S (EACH
MONDAY) under the designation "CSAM Income Fd". The Fund's New York Stock
Exchange, Inc. trading symbol is CIK. Weekly comparative net asset value (NAV)
and market price information about The Credit Suisse Asset Management Income
Fund, Inc.'s shares are published each Sunday in THE NEW YORK TIMES and each
Monday in THE WALL STREET JOURNAL and BARRON'S, as well as other newspapers, in
a table called "Closed-End Funds."
THE CREDIT SUISSE GROUP OF FUNDS
LITERATURE REQUEST -- Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.credit-suisse.com/us.
CLOSED-END FUNDS
SINGLE COUNTRY
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
MULTIPLE COUNTRY
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
FIXED INCOME
Credit Suisse High Yield Bond Fund (DHY)
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that the Credit Suisse Asset Management Income
Fund, Inc. may from time to time purchase shares of its capital stock in the
open market.
38
800-293-1232 - www.credit-suisse.com/us
CIK-AR-1205
CREDIT SUISSE ASSET MANAGEMENT
INCOME FUND, INC.
466 LEXINGTON AVENUE
NEW YORK, NY 10017
DIRECTORS
Enrique R. Arzac
CHAIRMAN OF THE BOARD
Lawrence J. Fox
James S. Pasman, Jr.
Steven Rappaport
OFFICERS
Steven B. Plump
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Martha B. Metcalf
CHIEF INVESTMENT OFFICER
Michael E. Gray
INVESTMENT OFFICER
J. Kevin Gao
SENIOR VICE PRESIDENT
Ajay Mehra
CHIEF LEGAL OFFICER
Emidio Morizio
CHIEF COMPLIANCE OFFICER
Michael A. Pignataro
CHIEF FINANCIAL OFFICER, VICE PRESIDENT AND SECRETARY
Robert Rizza
TREASURER
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, New York 10017
INVESTMENT SUB-ADVISER
Credit Suisse Asset Management Limited
Beaufort House
15 St. Botolph Street
London EC3A 7JJ, England
ADMINISTRATOR AND CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
SHAREHOLDER SERVICING AGENT
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
LEGAL COUNSEL
Willkie Farr & Gallagher
787 7th Avenue
New York, New York 10019
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, Pennsylvania 19103
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics applicable to its Chief Executive
Officer, President, Chief Financial Officer and Chief Accounting Officer, or
persons performing similar functions. A copy of the code is filed as Exhibit
12(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended December 31, 2005. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended December 31, 2005.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's governing board has determined that it has two audit committee
financial experts serving on its audit committee: Enrique R. Arzac, and Steven
N. Rappaport. Each audit committee financial expert is "independent" for
purposes of this item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) through (d). The information in the table below is provided for services
rendered to the registrant by its independent registered public accounting firm,
PricewaterhouseCoopers LLP ("PwC"), for its fiscal years ended December 31, 2004
and December 31, 2005.
2004 2005
-------- --------
Audit Fees $ 37,410 $ 39,280
Audit-Related Fees(1) $ 4,500 $ 3,150
Tax Fees(2) $ 2,284 $ 2,400
All Other Fees -- --
Total $ 44,194 $ 44,830
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements ($3,000 in 2004 and $3,150 in 2005)
and the registrant's third quarter 2004 Form N-Q filing ($1,500) in
2004.
(2) Tax services in connection with the registrant's excise tax calculations and
review of the registrant's applicable tax returns.
The information in the table below is provided with respect to non-audit
services that directly relate to the registrant's operations and financial
reporting and that were rendered by PwC to the registrant's investment adviser,
Credit Suisse Asset Management, LLC ("Credit Suisse"), and any service provider
to the registrant controlling, controlled by or under common control with Credit
Suisse that provided ongoing services to the registrant ("Covered Services
Provider"), for the registrant's fiscal years ended December 31, 2004 and
December 31, 2005.
2004 2005
-------- ---------
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A $ 394,000
Total N/A $ 394,000
(e)(1) Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and permissible
non-audit services to be provided by the independent registered public
accounting firm to the registrant and (ii) all permissible non-audit services to
be provided by the independent registered public accounting firm to Credit
Suisse and any Covered Services Provider if the engagement relates directly to
the operations and financial reporting of the registrant. The Committee may
delegate its responsibility to pre-approve any such audit and permissible
non-audit services to the Chairperson of the Committee, and the Chairperson
shall report to the Committee, at its next regularly scheduled meeting after the
Chairperson's pre-approval of such services, his or her decision(s). The
Committee may also establish detailed pre-approval policies and procedures for
pre-approval of such services in accordance with applicable laws, including the
delegation of some or all of the Committee's pre-approval responsibilities to
other persons (other than Credit Suisse or the registrant's officers).
Pre-approval by the Committee of any permissible non-audit services shall not be
required so long as: (i) the aggregate amount of all such permissible non-audit
services provided to the registrant, Credit Suisse and any Covered Services
Provider constitutes not more than 5% of the total amount of revenues paid by
the registrant to its independent registered public accounting firm during the
fiscal year in which the permissible non-audit services are provided; (ii) the
permissible non-audit services were not recognized by the registrant at the time
of the engagement to be non-audit services; and (iii) such services are promptly
brought to the attention of the Committee and approved by the Committee (or its
delegate(s)) prior to the completion of the audit.
(e)(2) The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to the
registrant for which the pre-approval requirement was waived pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X:
2004 2005
-------- --------
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to Credit
Suisse and any Covered Services Provider required to be approved pursuant to
Rule 2-01(c)(7)(ii)of Regulation S-X, for the registrant's fiscal years ended
December 31, 2004 and December 31, 2005:
2004 2005
-------- --------
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
(f) Not Applicable.
(g) The aggregate fees billed by PwC for non-audit services rendered to the
registrant, Credit Suisse and Covered Service Providers for the fiscal years
ended December 31, 2004 and December 31, 2005 were $6,784 and $5,550,
respectively.
(h) Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended. The members of the committee are Enrique R. Arzac, Lawrence Fox and
Steven N. Rappaport.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
CREDIT SUISSE ASSET MANAGEMENT, LLC
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
CSAM CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC ("CSAM") is a fiduciary that owes each
of its clients duties of care and loyalty with respect to proxy voting. The
duty of care requires CSAM to monitor corporate events and to vote proxies.
To satisfy its duty of loyalty, CSAM must cast proxy votes in the best
interests of each of its clients.
The Credit Suisse Funds, Credit Suisse Institutional Funds, and CSAM
Closed-End Funds (the "Funds"), which have engaged Credit Suisse Asset
Management, LLC as their investment adviser, are of the belief that the
proxy voting process is a means of addressing corporate governance issues
and encouraging corporate actions both of which can enhance shareholder
value.
Policy
The Proxy Voting Policy (the "Policy") set forth below is designed to
ensure that proxies are voted in the best interests of CSAM's clients. The
Policy addresses particular issues and gives a general indication of how
CSAM will vote proxies. The Policy is not exhaustive and does not include
all potential issues.
Proxy Voting Committee
The Proxy Voting Committee will consist of a member of the Portfolio
Management Department, a member of the Legal and Compliance Department, and
a member of the Operations Department (or their designees). The purpose of
the Proxy Voting Committee is to administer the voting of all clients'
proxies in accordance with the Policy. The Proxy Voting Committee will
review the Policy annually to ensure that it is designed to promote the
best interests of CSAM's clients.
For the reasons disclosed below under "Conflicts," the Proxy Voting
Committee has engaged the services of an independent third party
(initially, Institutional Shareholder Services ("ISS")) to assist in issue
analysis and vote recommendation for proxy proposals. Proxy proposals
addressed by the Policy will be voted in accordance with the Policy. Proxy
proposals addressed by the Policy that require a case-by-case analysis will
be voted in accordance with the vote
recommendation of ISS. Proxy proposals not addressed by the Policy will
also be voted in accordance with the vote recommendation of ISS. To the
extent that the Proxy Voting Committee proposes to deviate from the Policy
or the ISS vote recommendation, the Committee shall obtain client consent
as described below.
CSAM investment professionals may submit a written recommendation to the
Proxy Voting Committee to vote in a manner inconsistent with the Policy
and/or the recommendation of ISS. Such recommendation will set forth its
basis and rationale. In addition, the investment professional must confirm
in writing that he/she is not aware of any conflicts of interest concerning
the proxy matter or provide a full and complete description of the
conflict.
Conflicts
CSAM is the institutional and mutual fund asset management arm of Credit
Suisse First Boston, which is part of Credit Suisse Group, one of the
world's largest financial organizations. As part of a global, full service
investment-bank, broker-dealer, and asset-management organization, CSAM and
its affiliates and personnel may have multiple advisory, transactional,
financial, and other interests in securities, instruments, and companies
that may be purchased or sold by CSAM for its clients' accounts. The
interests of CSAM and/or its affiliates and personnel may conflict with the
interests of CSAM's clients in connection with any proxy issue. In
addition, CSAM may not be able to identify all of the conflicts of interest
relating to any proxy matter.
Consent
In each and every instance in which the Proxy Voting Committee favors
voting in a manner that is inconsistent with the Policy or the vote
recommendation of ISS (including proxy proposals addressed and not
addressed by the Policy), it shall disclose to the client conflicts of
interest information and obtain client consent to vote. Where the client is
a Fund, disclosure shall be made to any one director who is not an
"interested person," as that term is defined under the Investment Company
Act of 1940, as amended, of the Fund.
Recordkeeping
CSAM is required to maintain in an easily accessible place for five years all
records relating to proxy voting.
These records include the following:
- a copy of the Policy;
- a copy of each proxy statement received on behalf of CSAM clients;
- a record of each vote cast on behalf of CSAM clients;
- a copy of all documents created by CSAM personnel that were material
to making a decision on a vote or that memorializes the basis for the
decision; and
- a copy of each written request by a client for information on how CSAM
voted proxies, as well as a copy of any written response.
CSAM reserves the right to maintain certain required proxy records with ISS
in accordance with all applicable regulations.
Disclosure
CSAM will describe the Policy to each client. Upon request, CSAM will
provide any client with a copy of the Policy. CSAM will also disclose to
its clients how they can obtain information on their proxy votes.
ISS will capture data necessary for Funds to file Form N-PX on an annual
basis concerning their proxy voting record in accordance with applicable
law.
Procedures
The Proxy Voting Committee will administer the voting of all client
proxies. CSAM has engaged ISS as an independent third party proxy voting
service to assist in the voting of client proxies. ISS will coordinate with
each client's custodian to ensure that proxy materials reviewed by the
custodians are processed in a timely fashion. ISS will provide CSAM with an
analysis of proxy issues and a vote recommendation for proxy proposals. ISS
will refer proxies to the Proxy Voting Committee for instructions when the
application of the Policy is not clear. The Proxy Voting Committee will
notify ISS of any changes to the Policy or deviating thereof.
PROXY VOTING POLICY
Operational Items
Adjourn Meeting
Proposals to provide management with the authority to adjourn an
annual or special meeting will be determined on a case-by-case basis.
Amend Quorum Requirements
Proposals to reduce quorum requirements for shareholder meetings below
a majority of the shares outstanding will be determined on a
case-by-case basis.
Amend Minor Bylaws
Generally vote for bylaw or charter changes that are of a housekeeping
nature.
Change Date, Time, or Location of Annual Meeting
Generally vote for management proposals to change the
date/time/location of the annual meeting unless the proposed change is
unreasonable. Generally vote against shareholder proposals to change
the date/time/location of the annual meeting unless the current
scheduling or location is unreasonable.
Ratify Auditors
Generally vote for proposals to ratify auditors unless: (1) an auditor
has a financial interest in or association with the company, and is
therefore not independent; (2) fees for non-audit services are
excessive, or (3) there is reason to believe that the independent
auditor has rendered an opinion, which is neither accurate nor
indicative of the company's financial position. Generally vote on a
case-by-case basis on shareholder proposals asking companies to
prohibit their auditors from engaging in non-audit services (or
capping the level of non-audit services). Generally vote on a
case-by-case basis on auditor rotation proposals taking into
consideration: (1) tenure of audit firm; (2) establishment and
disclosure of a renewal process whereby the auditor is regularly
evaluated for both audit quality and competitive price; (3) length of
the rotation period advocated in the proposal, and (4) significant
audit related issues.
Board of Directors
Voting on Director Nominees in Uncontested Elections
Generally votes on director nominees on a case-by-case basis. Votes
may be withheld: (1) from directors who attended less than 75% of the
board and committee meetings without a valid reason for the absences;
(2) implemented or renewed a dead-hand poison pill; (3) ignored a
shareholder proposal that was approved by a majority of the votes cast
for two consecutive years; (4) ignored a shareholder proposal approved
by a majority of the shares outstanding; (5) have failed to act on
takeover offers where the majority of the shareholders have tendered
their shares; (6) are inside directors or affiliated outside directors
and sit on the audit, compensation, or nominating committee; (7) are
inside directors or affiliated outside directors and the full board
serves as the audit, compensation, or nominating committee or the
company does not have one of these committees; or (8) are audit
committee members and the non-audit fees paid to the auditor are
excessive
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a
case-by-case basis. Proposals to restore or provide for cumulative
voting in the absence of sufficient good governance provisions and/or
poor relative shareholder returns will be determined on a case-by-case
basis.
Director and Officer Indemnification and Liability Protection
Proposals on director and officer indemnification and liability
protection generally evaluated on a case-by-case basis. Generally vote
against proposals that would: (1) eliminate entirely directors' and
officers' liability for monetary damages for violating the duty of
care; or (2) expand coverage beyond just legal expenses to acts, such
as negligence, that are more serious violations of fiduciary
obligation than mere carelessness. Generally vote for only those
proposals providing such expanded coverage in cases when a director's
or officer's legal defense was unsuccessful if: (1) the director was
found to have acted in good faith and in a manner that he reasonably
believed was in the best interests of the company, and (2) only if the
director's legal expenses would be covered.
Filling Vacancies/Removal of Directors
Generally vote against proposals that provide that directors may be
removed only for cause. Generally vote for proposals to restore
shareholder ability to remove directors with or without cause.
Proposals that provide that only continuing directors may elect
replacements to fill board vacancies will be determined on a
case-by-case basis. Generally vote for proposals that permit
shareholders to elect directors to fill board vacancies.
Independent Chairman (Separate Chairman/CEO)
Generally vote for shareholder proposals requiring the position of
chairman be filled by an independent director unless there are
compelling reasons to recommend against the proposal, including: (1)
designated lead director, elected by and from the independent board
members with clearly delineated duties; (2) 2/3 independent board; (3)
all independent key committees; or (4) established governance
guidelines.
Majority of Independent Directors
Generally vote for shareholder proposals requiring that the board
consist of a majority or substantial majority (two-thirds) of
independent directors unless the board composition already meets the
adequate threshold. Generally vote for shareholder proposals requiring
the board audit, compensation, and/or nominating committees be
composed exclusively of independent directors if they currently do not
meet that standard. Generally withhold votes from insiders and
affiliated outsiders sitting on the audit, compensation, or nominating
committees. Generally withhold votes from insiders and affiliated
outsiders on boards that are
lacking any of these three panels. Generally withhold votes from
insiders and affiliated outsiders on boards that are not at least
majority independent.
Term Limits
Generally vote against shareholder proposals to limit the tenure of
outside directors.
Proxy Contests
Voting on Director Nominees in Contested Elections
Votes in a contested election of directors should be decided on a
case-by-case basis, with shareholders determining which directors are
best suited to add value for shareholders. The major decision factors
are: (1) company performance relative to its peers; (2) strategy of
the incumbents versus the dissidents; (3) independence of
directors/nominees; (4) experience and skills of board candidates; (5)
governance profile of the company; (6) evidence of management
entrenchment; (7) responsiveness to shareholders; or (8) whether
takeover offer has been rebuffed.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws
will be determined on a case-by-case basis. Proposals giving the board
the ability to amend the bylaws in addition to shareholders will be
determined on a case-by-case basis.
Confidential Voting
Generally vote for shareholder proposals requesting that corporations
adopt confidential voting, use independent vote tabulators and use
independent inspectors of election, as long as the proposal includes a
provision for proxy contests as follows: In the case of a contested
election, management should be permitted to request that the dissident
group honor its confidential voting policy. If the dissidents agree,
the policy may remain in place. If the dissidents will not agree, the
confidential voting policy may be waived. Generally vote for
management proposals to adopt confidential voting.
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a
case-by-case basis. Proposals to restore or provide for cumulative
voting in the absence of sufficient good governance provisions and/or
poor relative shareholder returns will be determined on a case-by-case
basis.
Antitakeover Defenses and Voting Related Issues
Advance Notice Requirements for Shareholder Proposals/Nominations
Votes on advance notice proposals are determined on a case-by-case
basis.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws
will be determined on a case-by-case basis. Generally vote for
proposals giving the board the ability to amend the bylaws in addition
to shareholders.
Poison Pills (Shareholder Rights Plans)
Generally vote for shareholder proposals requesting that the company
submit its poison pill to a shareholder vote or redeem it. Votes
regarding management proposals to ratify a poison pill should be
determined on a case-by-case basis. Plans should embody the following
attributes: (1) 20% or higher flip-in or flip-over; (2) two to three
year sunset provision; (3) no dead-hand or no-hand features; or (4)
shareholder redemption feature
Shareholders' Ability to Act by Written Consent
Generally vote against proposals to restrict or prohibit shareholders'
ability to take action by written consent. Generally vote for
proposals to allow or make easier shareholder action by written
consent.
Shareholders' Ability to Call Special Meetings
Proposals to restrict or prohibit shareholders' ability to call
special meetings or that remove restrictions on the right of
shareholders to act independently of management will be determined on
a case-by-case basis.
Supermajority Vote Requirements
Proposals to require a supermajority shareholder vote will be
determined on a case-by-case basis Proposals to lower supermajority
vote requirements will be determined on a case-by-case basis.
Merger and Corporate Restructuring
Appraisal Rights
Generally vote for proposals to restore, or provide shareholders with,
rights of appraisal.
Asset Purchases
Generally vote case-by-case on asset purchase proposals, taking into
account: (1) purchase price, including earnout and contingent
payments; (2) fairness opinion; (3) financial and strategic benefits;
(4) how the deal was negotiated; (5) conflicts of interest; (6) other
alternatives for the business; or (7) noncompletion risk (company's
going concern prospects, possible bankruptcy).
Asset Sales
Votes on asset sales should be determined on a case-by-case basis
after considering: (1) impact on the balance sheet/working capital;
(2) potential elimination of diseconomies; (3) anticipated financial
and operating benefits; (4) anticipated use of funds; (5) value
received for the asset; fairness opinion (if any); (6) how the deal
was negotiated; or (6) Conflicts of interest
Conversion of Securities
Votes on proposals regarding conversion of securities are determined
on a case-by-case basis. When evaluating these proposals, should
review (1) dilution to existing shareholders' position; (2) conversion
price relative to market value; (3) financial issues: company's
financial situation and degree of need for capital; effect of the
transaction on the company's cost of capital; (4) control issues:
change in management; change in control; standstill provisions and
voting agreements; guaranteed contractual board and committee seats
for investor; veto power over certain corporate actions; (5)
termination penalties; (6) conflict of interest: arm's length
transactions, managerial incentives. Generally vote for the conversion
if it is expected that the company will be subject to onerous
penalties or will be forced to file for bankruptcy if the transaction
is not approved.
Corporate Reorganization
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing
shareholders' position; (2) terms of the offer; (3) financial issues;
(4) management's efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest. Generally vote for the debt
restructuring if it is expected that the company will file for
bankruptcy if the transaction is not approved.
Reverse Leveraged Buyouts
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing
shareholders' position; (2) terms of the offer; (3) financial issues;
(4) management's efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest. Generally vote
for the debt restructuring if it is expected that the company will
file for bankruptcy if the transaction is not approved.
Formation of Holding Company
Votes on proposals regarding the formation of a holding company should
be determined on a case-by-case basis taking into consideration: (1)
the reasons for the change; (2) any financial or tax benefits; (3)
regulatory benefits; (4) increases in capital structure; (5) changes
to the articles of incorporation or bylaws of the company. Absent
compelling financial reasons to recommend the transaction, generally
vote against the formation of a holding company if the transaction
would include either of the following: (1) increases in common or
preferred stock in excess of the allowable maximum as calculated a
model capital structure; (2) adverse changes in shareholder rights;
(3) going private transactions; (4) votes going private transactions
on a case-by-case basis, taking into account: (a) offer price/premium;
(b) fairness opinion; (c) how the deal was negotiated; (d) conflicts
of interest; (e) other alternatives/offers considered; (f)
noncompletion risk.
Joint Ventures
Vote on a case-by-case basis on proposals to form joint ventures,
taking into account: (1) percentage of assets/business contributed;
(2) percentage ownership; (3) financial and strategic benefits; (4)
governance structure; (5) conflicts of interest; (6) other
alternatives; (7) noncompletion risk; (8) liquidations. Votes on
liquidations should be determined on a case-by-case basis after
reviewing: (1) management's efforts to pursue other alternatives such
as mergers; (2) appraisal value of the assets (including any fairness
opinions); (3) compensation plan for executives managing the
liquidation. Generally vote for the liquidation if the company will
file for bankruptcy if the proposal is not approved.
Mergers and Acquisitions
Votes on mergers and acquisitions should be considered on a
case-by-case basis, determining whether the transaction enhances
shareholder value by giving consideration to: (1) prospects of the
combined companies; (2) anticipated financial and operating benefits;
(3) offer price; (4) fairness opinion; (5) how the deal was
negotiated; (6) changes in corporate governance and their impact on
shareholder rights; (7) change in the capital structure; (8) conflicts
of interest.
Private Placements
Votes on proposals regarding private placements should be determined
on a case-by-case basis. When evaluating these proposals, should
review: (1) dilution to existing shareholders' position; (2) terms of
the offer; (3) financial issues; (4) management's efforts to pursue
alternatives such as mergers; (5) control issues; (6) conflict of
interest. Generally vote for the
private placement if it is expected that the company will file for
bankruptcy if the transaction is not approved.
Prepackaged Bankruptcy Plans
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing
shareholders' position; (2) terms of the offer; (3) financial issues;
(4) management's efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest. Generally vote for the debt
restructuring if it is expected that the company will file for
bankruptcy if the transaction is not approved.
Recapitalization
Votes case-by-case on recapitalizations (reclassifications of
securities), taking into account: (1) more simplified capital
structure; (2) enhanced liquidity; (3) fairness of conversion terms,
including fairness opinion; (4) impact on voting power and dividends;
(5) reasons for the reclassification; (6) conflicts of interest; (7)
other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse stock
split when the number of authorized shares will be proportionately
reduced. Generally vote for management proposals to implement a
reverse stock split to avoid delisting. Votes on proposals to
implement a reverse stock split that do not proportionately reduce the
number of shares authorized for issue should be determined on a
case-by-case basis.
Spinoffs
Votes on spinoffs should be considered on a case-by-case basis
depending on: (1) tax and regulatory advantages; (2) planned use of
the sale proceeds; (3) valuation of spinoff; fairness opinion; (3)
benefits that the spinoff may have on the parent company including
improved market focus; (4) conflicts of interest; managerial
incentives; (5) any changes in corporate governance and their impact
on shareholder rights; (6) change in the capital structure
Value Maximization Proposals
Vote case-by-case on shareholder proposals seeking to maximize
shareholder value.
Capital Structure
Adjustments to Par Value of Common Stock
Generally vote for management proposals to reduce the par value of
common stock unless the action is being taken to facilitate an
antitakeover device or some other negative corporate governance
action. Generally vote for management proposals to eliminate par
value.
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock
authorized for issuance are determined on a case-by-case basis.
Generally vote against proposals at companies with dual-class capital
structures to increase the number of authorized shares of the class of
stock that has superior voting rights. Generally vote for proposals to
approve increases beyond the allowable increase when a company's
shares are in danger of being delisted or if a company's ability to
continue to operate as a going concern is uncertain.
Dual-class Stock
Generally vote against proposals to create a new class of common stock
with superior voting rights. Generally vote for proposals to create a
new class of nonvoting or subvoting common stock if: (1) it is
intended for financing purposes with minimal or no dilution to current
shareholders; (2) it is not designed to preserve the voting power of
an insider or significant shareholder.
Issue Stock for Use with Rights Plan
Generally vote against proposals that increase authorized common stock
for the explicit purpose of implementing a shareholder rights plan.
Preemptive Rights
Votes regarding shareholder proposals seeking preemptive rights should
be determined on a case-by-case basis after evaluating: (1) the size
of the company; (2) the shareholder base; (3) the liquidity of the
stock
Preferred Stock
Generally vote against proposals authorizing the creation of new
classes of preferred stock with unspecified voting, conversion,
dividend distribution, and other rights ("blank check" preferred
stock). Generally vote for proposals to create "declawed" blank check
preferred stock (stock that cannot be used as a takeover defense).
Generally vote for proposals to authorize preferred stock in cases
where the company specifies the voting, dividend, conversion, and
other rights of such stock and the terms of the preferred stock appear
reasonable. Generally vote against proposals to increase the number of
blank check preferred stock authorized for issuance when no shares
have been issued or reserved for a specific purpose. Generally vote
case-by-case on proposals to increase the number of blank check
preferred shares after analyzing the number of preferred shares
available for issue given a company's industry and performance in
terms of shareholder returns.
Recapitalization
Vote case-by-case on recapitalizations (reclassifications of
securities), taking into account: (1) more simplified capital
structure; (2) enhanced liquidity; (3) fairness of conversion terms,
including fairness opinion; (4) impact on voting power and dividends;
(5) reasons for the reclassification; (6) conflicts of interest; (7)
other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse stock
split when the number of authorized shares will be proportionately
reduced. Generally vote for management proposals to implement a
reverse stock split to avoid delisting. Votes on proposals to
implement a reverse stock split that do not proportionately reduce the
number of shares authorized for issue should be determined on a
case-by-case basis.
Share Repurchase Programs
Generally vote for management proposals to institute open-market share
repurchase plans in which all shareholders may participate on equal
terms.
Stock Distributions: Splits and Dividends
Generally vote for management proposals to increase the common share
authorization for a stock split or share dividend, provided that the
increase in authorized shares would not result in an excessive number
of shares available for issuance.
Tracking Stock
Votes on the creation of tracking stock are determined on a
case-by-case basis, weighing the strategic value of the transaction
against such factors as: (1) adverse governance changes; (2) excessive
increases in authorized capital stock; (3) unfair method of
distribution; (4) diminution of voting rights; (5) adverse conversion
features; (6) negative impact on stock option plans; (7) other
alternatives such as a spinoff.
Executive and Director Compensation
Executive and Director Compensation
Votes on compensation plans for directors are determined on a
case-by-case basis.
Stock Plans in Lieu of Cash
Votes for plans which provide participants with the option of taking
all or a portion of their cash compensation in the form of stock are
determined on a case-by-case basis. Generally vote for plans which
provide a dollar-for-dollar cash for stock exchange. Votes for plans
which do not provide a dollar-for-dollar cash for stock exchange
should be determined on a case-by-case basis.
Director Retirement Plans
Generally vote against retirement plans for nonemployee directors.
Generally vote for shareholder proposals to eliminate retirement plans
for nonemployee directors.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are
evaluated on a case-by-case basis giving consideration to the
following: (1) historic trading patterns; (2) rationale for the
repricing; (3) value-for-value exchange; (4) option vesting; (5) term
of the option; (6) exercise price; (7) participants; (8) employee
stock purchase plans. Votes on employee stock purchase plans should be
determined on a case-by-case basis. Generally vote for employee stock
purchase plans where: (1) purchase price is at least 85 percent of
fair market value; (2) offering period is 27 months or less, and (3)
potential voting power dilution (VPD) is ten percent or less.
Generally vote against employee stock purchase plans where either: (1)
purchase price is less than 85 percent of fair market value; (2)
Offering period is greater than 27 months, or (3) VPD is greater than
ten percent
Incentive Bonus Plans and Tax Deductibility Proposals
Generally vote for proposals that simply amend shareholder-approved
compensation plans to include administrative features or place a cap
on the annual grants any one participant may receive. Generally vote
for proposals to add performance goals to existing compensation plans.
Votes to amend existing plans to increase shares reserved and to
qualify for favorable tax treatment considered on a case-by-case
basis. Generally vote for cash or cash and stock bonus plans that are
submitted to shareholders for the purpose of exempting compensation
from taxes if no increase in shares is requested.
Employee Stock Ownership Plans (ESOPs)
Generally vote for proposals to implement an ESOP or increase
authorized shares for existing ESOPs, unless the number of shares
allocated to the ESOP is excessive (more than five percent of
outstanding shares.)
401(k) Employee Benefit Plans
Generally vote for proposals to implement a 401(k) savings plan for
employees.
Shareholder Proposals Regarding Executive and Director Pay
Generally vote for shareholder proposals seeking additional disclosure
of executive and director pay information, provided the information
requested is relevant to shareholders' needs, would not put the
company at a competitive disadvantage relative to its industry, and is
not unduly burdensome to the company. Generally vote against
shareholder proposals seeking to set absolute levels on compensation
or otherwise dictate the amount or form of compensation. Generally
vote against shareholder proposals requiring director fees be paid in
stock only. Generally vote for shareholder proposals to put option
repricings to a shareholder vote. Vote for shareholders proposals to
exclude pension fund income in the calculation of earnings used in
determining executive bonuses/compensation. Vote on a case-by-case
basis for all other shareholder proposals regarding executive and
director pay, taking into account company performance, pay level
versus peers, pay level versus industry, and long term corporate
outlook.
Performance-Based Option Proposals
Generally vote for shareholder proposals advocating the use of
performance-based equity awards (indexed, premium-priced, and
performance-vested options), unless: (1) the proposal is overly
restrictive; or (2) the company demonstrates that it is using a
substantial portion of performance-based awards for its top
executives.
Stock Option Expensing
Generally vote for shareholder proposals asking the company to expense
stock options unless the company has already publicly committed to
start expensing by a specific date.
Golden and Tin Parachutes
Generally vote for shareholder proposals to require golden and tin
parachutes to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into
employment contracts. Vote on a case-by-case basis on proposals to
ratify or cancel golden or tin parachutes.
May 17, 2005
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information pertaining to the Chief Investment Officer and Investment Officer of
the Credit Suisse Asset Management Income Fund, Inc., as of December 31, 2005,
is set forth below.
Martha B. Metcalf Managing Director; Associated with Credit Suisse
Chief Investment Officer since 2005; Managing Director and Portfolio Manager of
Since 2005 Invesco from 2000 to 2005; Officer of other Credit
Suisse Funds
Date of Birth: 04/09/65
Michael E. Gray Managing Director; Associated with Credit Suisse
Investment Officer since 2004; Managing Director of Deutsche Asset
Since 2005 Management from 2002 until 2004; Executive Director
of UBS (London) from 1999 until 2002; Officer of
other Credit Suisse Funds
Date of Birth: 07/08/68
Registered Investment Companies, Pooled Investment Vehicles and Other
Accounts Managed
As reported to the Registrant, the information in the following table
reflects the number of registered investment companies, pooled investment
vehicles and other accounts managed by Ms. Metcalf and Mr. Gray and the total
assets managed within each category as of December 31, 2005.
REGISTERED INVESTMENT OTHER POOLED INVESTMENT
COMPANIES VEHICLES OTHER ACCOUNTS
-----------------------------------------------------------------------------------------
Martha Metcalf 4 $721 million 3 $144 million 4 $99 million
Michael Gray 9 $1,149 million 8 $327 million 36 $3,566 million
No advisory fee is paid based on performance for any of the accounts listed
above.
Potential Conflicts of Interest
It is possible that conflicts of interest may arise in connection with
the portfolio managers' management of the Portfolio's investments on the one
hand and the investments of other accounts on the other. For example, the
portfolio managers may have conflicts of interest in allocating management time,
resources and investment opportunities among the Portfolio and other accounts
they advise. In addition due to differences in the investment strategies or
restrictions between the
Portfolio and the other accounts, the portfolio managers may take action with
respect to another account that differs from the action taken with respect to
the Portfolio. Credit Suisse has adopted policies and procedures that are
designed to minimize the effects of these conflicts.
If Credit Suisse believes that the purchase or sale of a security is
in the best interest of more than one client, it may (but is not obligated to)
aggregate the orders to be sold or purchased to seek favorable execution or
lower brokerage commissions, to the extent permitted by applicable laws and
regulations. Credit Suisse may aggregate orders if all participating client
accounts benefit equally (i.e., all receive an average price of the aggregated
orders). In the event Credit Suisse aggregates an order for participating
accounts, the method of allocation will generally be determined prior to the
trade execution. Although no specific method of allocation of transactions (as
well as expenses incurred in the transactions) is expected to be used,
allocations will be designed to ensure that over time all clients receive fair
treatment consistent with Credit Suisse's fiduciary duty to its clients
(including its duty to seek to obtain best execution of client trades). The
accounts aggregated may include registered and unregistered investment companies
managed by Credit Suisse's affiliates and accounts in which Credit Suisse's
officers, directors, agents, employees or affiliates own interests. Applicant
may not be able to aggregate securities transactions for clients who direct the
use of a particular broker-dealer, and the client also may not benefit from any
improved execution or lower commissions that may be available for such
transactions.
Compensation
Each portfolio manager is compensated for his or her services by Credit
Suisse. The portfolio managers' compensation consists of a fixed base salary and
a discretionary bonus that is not tied by formula to the performance of any Fund
or account. The factors taken into account in determining a portfolio manager's
bonus include the Fund's absolute performance, assets held in the Fund and other
accounts managed by the portfolio managers, business growth, team work,
management, corporate citizenship, etc. A portion of the bonus may be paid in
phantom shares of Credit Suisse Group stock as deferred compensation. Phantom
shares are shares representing an unsecured right to receive on a particular
date a specified number of registered shares subject to certain terms and
conditions. Like all employees of Credit Suisse, portfolio managers participate
in Credit Suisse's profit sharing and 401(k) plans.
Securities Ownership. As of December 31, 2005, Ms. Metcalf and Mr. Gray did not
own any shares of the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors since the registrant
last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(g)
of Schedule 14A in its definitive proxy statement dated March 21, 2005.
ITEM 11. CONTROLS AND PROCEDURES.
(a) As of a date within 90 days from the filing date of this report, the
principal executive officer and principal financial officer concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")) were effective based on
their evaluation of the disclosure controls and procedures required by Rule
30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934.
(b) There were no changes in registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
second fiscal quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Registrant's Code of Ethics is an exhibit to this report.
(a)(2) The certifications of the registrant as required by Rule 30a-2(a) under
the Act are exhibits to this report.
(a)(3) Not applicable.
(b) The certifications of the registrant as required by Rule 30a-2(b) under
the Act are an exhibit to this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC.
/s/ Steven B. Plump
--------------------------------
Name: Steven B. Plump
Title: Chief Executive Officer
Date: March 9, 2006
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Steven B. Plump
--------------------------------
Name: Steven B. Plump
Title: Chief Executive Officer
Date: March 9, 2006
/s/ Michael A. Pignataro
--------------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: March 9, 2006