ck0001517767-20250930
CARLYLE
CREDIT INCOME FUND
ANNUAL
REPORT
SEPTEMBER
30, 2025
Table
of Contents
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| Section |
Page |
| Year
End 2025 Shareholder Letter |
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| Important
Information about this Report and Carlyle Credit Income Fund |
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| Performance
Data |
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| Summary
of Certain Unaudited Portfolio Characteristics |
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| Fees
and Expenses |
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| Statement
of Assets and Liabilities |
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| Schedule
of Investments |
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| Statement
of Operations |
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| Statements
of Changes in Net Assets |
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| Statement
of Cash Flows |
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| Financial
Highlights |
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| Notes
to Financial Statements |
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| Results
of Shareholder Meeting |
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| Report
of Independent Registered Public Accounting Firm |
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| Price
Range of Common Shares |
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| Dividend
Reinvestment Plan |
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| Management
of the Fund |
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| Approval
of Investment Advisory Agreement |
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| Portfolio
Proxy Voting Policies and Proxy Voting Record |
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| Additional
Information |
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Letter
to Shareholders and Management’s Discussion of Fund Performance
FUND
REVIEW & DISCUSSION OF PERFORMANCE
On
November 18, 2025, Carlyle Credit Income Fund (“we,” “us,” “our,” “CCIF” or the
“Fund”) (NYSE: CCIF) announced via press release the financial results for the
fourth quarter ending September 30, 2025. Over the past year, the Fund has
successfully implemented the following:
•The
fund currently holds a diversified portfolio consisting of 54 unique
collateralized loan obligation (“CLO”) investments managed by 27 different
collateral managers with exposure to 2,032 separate loans.
•The
weighted average GAAP yield of the portfolio is 14.44% as of September 30,
2025.
•The
fund completed 30 accretive CLO refinancings and resets in the underlying
portfolio to either reduce the weighted average cost of debt in the CLO or to
extend the reinvestment period.
•We
maintained a 24.14%
annualized
dividend based on the share price as of November 12, 2025.
•The
Fund continues to incorporate an at-the-market (“ATM”) offering program to issue
common shares above net asset value (“NAV”) when the stock price is above NAV.
We continue to believe the implementation of the ATM offering program is an
efficient and accretive way to grow the Fund. ATM issuance for the year totaled
$32.3 million of net proceeds.
•We
continue to efficiently leverage the fund with long-term and flexible-term
preferred stock and convertible preferred stock with limited
covenants.
As
of September 30, 2025, the NAV of the Fund is $6.13 per share.
The
Fund continues to hold one legacy real estate asset in the portfolio that was
inherited from the prior advisor of the Fund. The fair market value of the loan
is $2.2 million and the third party we engaged to sell the position continues to
work through the process in order to maximize proceeds.
We
believe Carlyle’s 15 years of CLO investment experience and its team of over 30+
credit investment professionals across the U.S. and Europe provide
differentiated insights into the CLO market. Carlyle remains one of the largest
CLO managers globally with
over
$49 billion in AUM and $3.1 billion in third party managed CLO
investments.1
MARKET
REVIEW
Leveraged
loans posted positive returns through Q3 2025 amid shifting expectations for the
Federal Reserve’s (“Fed’s”) rate cuts. The LSTA U.S. Leveraged Loan Index (“LSTA
Index”) returned 1.7% for the Q3 2025, compared to 2.4% for high yield bonds and
7.9% for the S&P 500. The year-to-date return for the LSTA Index was
4.6%.2,3,4
The Index price ended the quarter at $97.06, with nearly half of the loans
trading above par.2
The Fed implemented its first rate cut of the cycle in September amid moderating
inflation and relatively stable economic conditions.
Institutional
loan issuance totaled $384.0 billion in Q3 2025, compared to $222.0 billion in
Q3 2024.5
Refinancing and repricing activity accounted for the majority of volume at $66.5
billion and $219.2 billion, respectively, as borrowers continued to focus on
extending maturities and reducing borrowing costs.5
New money issuance remained limited, with LBO and M&A related volume
relatively unchanged from the third quarter of the prior year. Loan secondary
prices held steady through the quarter amid consistent investor demand and
limited net supply.5
Additionally, issuance activity strengthened toward the end of the quarter
driven by steady demand and favorable technical conditions. We expect activity
will continue to increase, supported by declining base rates driving lower
funding costs, normalization of tariff and regulatory policies, and resilient
expectations for economic growth.
The
CLO market remained active through Q3 2025, building on the steady momentum seen
earlier in the year. New issuance totaled $52.2 billion in the quarter, up from
$48.5 billion in Q2 2025, as managers benefited from improved market conditions
and modest tightening in liability spreads.5
CLOs continued to represent the dominant source of demand for leveraged loans,
helping to absorb steady primary issuance and support secondary market
liquidity. Liability spreads compressed across the capital stack, with AAAs
tightening by roughly 10 bps and BBs by around 40 bps, approaching the
post-financial crisis tights we saw earlier in 2025.6
This is creating an attractive environment for new issue and refinancing
activity.
CLO
refinancing and reset activity also remained robust, with $37.7 billion of
refinancings and $66.1 billion of resets pricing during the quarter as managers
extended
1
Carlyle
Internal Sources as of September 30, 2025.
2
Leveraged Commentary & Data (“LCD”) as of September 30, 2025.
3
Bloomberg as of September 30, 2025.
4
Standard and Poor’s Dow Jones Indices as of September 30, 2025.
5
LevFin Insights as of September 30, 2025.
6
Wells Fargo Research as of September 30, 2025.
reinvestment
periods and lowered financing costs.7
Market tone improved late in the quarter following the Federal Reserve’s rate
cut, providing a constructive backdrop for deal execution.
Credit
fundamentals across CLO portfolios remained stable. As of Q2 2025, using
Carlyle’s U.S. loan portfolio of 600+ borrowers as a proxy, more than 67% of
borrowers generated positive free cash flow, and borrower revenue and EBITDA
growth of 5.1% and 4.6% year-over-year, respectively.8
The average Interest Coverage Ratio (“ICR”) was approximately 3.6x, reflecting a
continued focus on managing interest expense and producing steady underlying
cash flows.8
These metrics offer important insight into the health of the underlying
collateral and continue to guide our bottom-up CLO investment
process.
As
of September 30, 2025, the J.P. Morgan Leveraged Loan Index Default Rate,
including distressed exchanges (“DEs”), totals 3.49%, a decline of 1.00% from
the recent peak default rate of 4.49% in December 2024.9
Carlyle continues to leverage the insights of its dedicated Special Credits
Group and 30+ credit analysts when evaluating loan borrowers in third-party
managed CLO portfolios. This is evidenced by a CCIF portfolio default rate of
1.09%, inclusive of DEs, which is approximately one-third of the market’s
rate.1,9
While
lower liability costs and extended reinvestment periods have supported CLO
structures, tighter loan spreads continued to weigh on equity cash-on-cash
distributions to CLO equity and fair market value of CLO equity positions.
Repricing activity has been driven by the supply / demand imbalance in the loan
market as net loan issuance has been limited over the past 3 year while we
continue to see record CLO issuance. As a result, quarterly payments for CLO
equity declined modestly during the quarter. However, locking in low-cost debt
with extended reinvestment periods, positions CLO equity for improved cash flow
potential in the event loan spreads widen due to volatility or a return of net
loan supply.
STRATEGY
& OUTLOOK
We
remain confident in the resilience of our portfolio, which is diversified across
high-quality managers and structured to withstand evolving market
conditions.
We
believe that, despite tighter spreads and moderating equity distributions,
resilient fundamentals and consistent demand will continue to support CLO
performance. Loan spreads have historically moved in multi-year cycles, and
current levels are comparable to those observed in 2018, a period that was
followed by meaningful spread widening.2
CLO
equity is well positioned to benefit from similar dynamics ahead, supported by
transactions with
historically
low funding costs. Future results are likely to depend on manager’s reinvestment
discipline and their effectiveness in actively managing the portfolio and
avoiding losses.
We
continue to monitor the effects of shifting rate policy and have positioned
CCIF’s portfolio defensively, with a focus on experienced managers and
portfolios demonstrating strong par build and credit discipline. This approach
has resulted in a weighted average junior overcollateralization cushion of
4.59%.1
We
continue to deploy capital selectively, focusing on opportunities that offer
compelling relative value across both new and seasoned transactions. Carlyle’s
market-leading platform provides differentiated access to managers and deal
flow, enabling us to identify attractive entry points and maintain a disciplined
investment pace.
For
CCIF, we remain focused on CLO equity positions with clean underlying loan
portfolios. We continue to leverage Carlyle’s 14-step CLO investment process and
the credit expertise of the broader Carlyle Liquid Credit
platform.
7
Citi Global Research as of September 30, 2025.
8
Carlyle Internal Sources as of June 30, 2025.
9
J.P. Morgan as of September 30, 2025.
IMPORTANT
INFORMATION ABOUT THIS REPORT AND CARLYLE CREDIT INCOME FUND
Investment
Objectives and Strategies
The
Fund is a non-diversified, closed-end management investment company that has
registered as an investment company under the 1940 Act. We have elected to be
treated, and intend to qualify annually, as a regulated investment company, or
“RIC,” under Subchapter M of the Internal Revenue Code of 1986, as amended, or
the “Code.”
The
Fund’s primary investment objective is to generate current income, with a
secondary objective to generate capital appreciation. We seek to achieve our
investment objectives by investing primarily in equity and junior debt tranches
of collateralized loan obligations, or “CLOs,” that are collateralized by a
portfolio consisting primarily of below investment grade U.S. senior secured
loans with a large number of distinct underlying borrowers across various
industry sectors. We may also invest in other related securities and instruments
or other securities and instruments that the Adviser believes are consistent
with our investment objectives, including senior debt tranches of CLOs, loan
accumulation facilities (“LAFs”) and securities issued by other securitization
vehicles, such as collateralized bond obligations, or “CBOs.” LAFs are short- to
medium-term facilities often provided by the bank that will serve as the
placement agent or arranger on a CLO transaction. LAFs typically incur leverage
between four and six times equity value prior to a CLO’s pricing. The CLO
securities in which we primarily seek to invest are unrated or rated below
investment grade and are considered speculative with respect to timely payment
of interest and repayment of principal. Unrated and below investment grade
securities are also sometimes referred to as “junk” securities. In addition, the
CLO equity and junior debt securities in which we invest are highly leveraged
(with CLO equity securities typically being leveraged ten times), which
magnifies our risk of loss on such investments.
“Names
Rule” Policy
In
accordance with the requirements of the 1940 Act, we have adopted a policy to
invest at least 80% of our assets in the particular type of investments
suggested by our name. Accordingly, under normal circumstances, we invest at
least 80% of the aggregate of its net assets and borrowings for investment
purposes in credit and credit-related instruments. For purposes of this policy,
the Fund considers credit and credit-related instruments to include, without
limitation: (i) equity and debt tranches of CLOs, LAFs and securities issued by
other securitization vehicles, such as CBOs; (ii) secured and unsecured floating
rate and fixed rate loans; (iii) investments in corporate debt obligations,
including bonds, notes, debentures, commercial paper and other obligations of
corporations to pay interest and repay principal; (iv) debt issued by
governments, their agencies, instrumentalities, and central banks; (v)
commercial paper and short-term notes; (vi) convertible debt securities; (vii)
certificates of deposit, bankers’ acceptances and time deposits; and (viii)
other credit-related instruments. The Fund’s investments in derivatives, other
investment companies, and other instruments designed to obtain indirect exposure
to credit and credit-related instruments will be counted towards its 80%
investment policy to the extent such instruments have similar economic
characteristics to the investments included within that policy.
Our
80% policy with respect to investments in credit and credit-related instruments
is not fundamental and may be changed by the Board without prior approval of our
shareholders. Shareholders will be provided with sixty (60) days notice in the
manner prescribed by the SEC before making any change to this
policy.
Investment
Restrictions
The
Fund’s stated fundamental policies, which may only be changed by the affirmative
vote of a majority of the outstanding voting securities of the Fund (the
shares), are listed below. “Majority of the outstanding voting securities of the
Fund” means the vote, at an annual or special meeting of shareholders, duly
called, (a) of 67% or more of the shares present at such meeting, if the holders
of more than 50% of the outstanding shares are present or represented by proxy;
or (b) of more than 50% of the outstanding shares, whichever is less. The Fund
may not:
1.Borrow
money, except to the extent permitted by the 1940 Act (which currently limits
borrowing to no more than 33-1/3% of the value of the Fund’s total assets,
including the value of the assets purchased with the proceeds of its
indebtedness, if any). The Fund may borrow for investment purposes, for
temporary liquidity, or to finance repurchases of its shares.
2.Issue
senior securities, except to the extent permitted by Section 18 of the 1940 Act
(which currently limits the issuance of a class of senior securities that is
indebtedness to no more than 33-1/3% of the value of the Fund’s total assets or,
if the class of senior security is stock, to no more than 50% of the value of
the Fund’s total assets).
3.Underwrite
securities of other issuers, except insofar as the Fund may be deemed an
underwriter under the Securities Act of 1933, as amended (the “Securities Act”)
in connection with the disposition of its portfolio securities. The Fund may
invest in restricted securities (those that must be registered under the
Securities Act before they may be offered or sold to the public) to the extent
permitted by the 1940 Act.
4.Invest
more than 25% of the market value of its assets in the securities of companies,
entities or issuers engaged in any one industry. This limitation does not apply
to investment in the securities of the U.S. Government, its agencies or
instrumentalities. For purposes of this restriction, an investment in a CLO,
CBO, collateralized debt obligation, or “CDO” or a swap or other derivative will
be considered to be an investment in the industry (if any) of the underlying or
reference security, instrument or asset.
5.Purchase
or sell real estate or interests in real estate. This limitation is not
applicable to investments in securities that are secured by or represent
interests in real estate (e.g. mortgage loans evidenced by notes or other
writings defined to be a type of security). Additionally, the preceding
limitation on real estate or interests in real estate does not preclude the Fund
from investing in mortgage-related securities or investing in companies engaged
in the real estate business or that have a significant portion of their assets
in real estate (including real estate investment trusts), nor from disposing of
real estate that may be acquired pursuant to a foreclosure (or equivalent
procedure) upon a security interest.
6.Purchase
or sell commodities, commodity contracts, including commodity futures contracts,
unless acquired as a result of ownership of securities or other investments,
except that the Fund may invest in securities or other instruments backed by or
linked to commodities, and invest in companies that are engaged in a commodities
business or have a significant portion of their assets in commodities, and may
invest in commodity pools and other entities that purchase and sell commodities
and commodity contracts.
7.Make
loans to others, except (a) through the purchase of debt securities in
accordance with its investment objectives and policies, including notes secured
by real estate, which may be considered loans; (b) to the extent the entry into
a repurchase agreement is deemed to be a loan; and (c) by loaning portfolio
securities. Additionally, the preceding limitation on loans does not preclude
the Fund from modifying note terms.
The
Fund will treat with respect to participation interests both the financial
intermediary and the borrower as “issuers” for purposes of fundamental
investment restriction.
The
fundamental investment limitations set forth above restrict the ability of the
Fund to engage in certain practices and purchase securities and other
instruments other than as permitted by, or consistent with, applicable law,
including the 1940 Act. Relevant limitations of the 1940 Act as they presently
exist are described below. These limitations are based either on the 1940 Act
itself, the rules or regulations thereunder or applicable orders of the SEC. In
addition, interpretations and guidance provided by the SEC staff may be taken
into account to determine if a certain practice or the purchase of securities or
other instruments is permitted by the 1940 Act, the rules or regulations
thereunder or applicable orders of the SEC. As a result, the foregoing
fundamental investment policies may be interpreted differently over time as the
statute, rules, regulations or orders (or, if applicable, interpretations) that
relate to the meaning and effect of these policies change, and no vote of
Shareholders, as applicable, will be required or sought.
Use
of Leverage and Leverage Risks
The
use of leverage, whether directly or indirectly through investments such as CLO
equity or junior debt securities that inherently involve leverage, may magnify
our risk of loss. CLO equity or junior debt securities are very highly leveraged
(with CLO equity securities typically being leveraged ten times), and therefore
the CLO securities in which we invest are subject to a higher degree of loss
since the use of leverage magnifies losses.
We
may incur leverage, directly or indirectly, through one or more special purpose
vehicles (entities primarily engaged in investment activities in securities or
other assets that are wholly owned by the Fund), indebtedness for borrowed
money, as well as leverage in the form of Derivative Transactions, preferred
shares, debt securities and other structures and instruments, in significant
amounts and on terms that the Adviser and the Board deem appropriate, subject to
applicable limitations under the 1940 Act. Such leverage may be used for the
acquisition and financing of our investments, to pay fees and expenses and for
other purposes. Such leverage may be secured and/or unsecured. Any such leverage
does not include leverage embedded or inherent in the CLO structures in which we
invest or in derivative instruments in which we may invest. Accordingly, there
is a layering of leverage in our overall structure.
The
more leverage we employ, the more likely a substantial change will occur in our
NAV. Accordingly, any event that adversely affects the value of an investment
would be magnified to the extent leverage is utilized. For instance, any
decrease in our income would cause net income to decline more sharply than it
would have had we not borrowed. Such a decline could also negatively affect our
ability to make distributions and other payments to our security holders.
Leverage is generally considered a speculative investment technique. Our ability
to service any debt that we incur will depend largely on our financial
performance and will be subject to prevailing economic conditions and
competitive pressures. The cumulative effect of the use of leverage with respect
to any investments in a market that moves adversely to such investments could
result in a substantial loss that would be greater than if our investments were
not leveraged.
As
a registered closed-end management investment company, we are required to meet
certain asset coverage requirements, as defined under the 1940 Act, with respect
to any senior securities. With respect to senior securities representing
indebtedness (i.e., borrowings or deemed borrowings, including any notes), other
than temporary borrowings as defined under the 1940 Act, we are required under
current law to have an asset coverage of at least 300%, as measured at the time
of borrowing and calculated as the ratio of our total assets (less all
liabilities and indebtedness not represented by senior securities) over the
aggregate amount of our outstanding senior securities representing indebtedness.
With respect to senior securities that are stock (i.e., our preferred shares),
we are required under current law to have an asset coverage of at least 200%, as
measured at the time of the issuance of any such preferred shares and calculated
as the ratio of our total assets (less all liabilities and indebtedness not
represented by senior securities) over the aggregate amount of our outstanding
senior securities representing indebtedness plus the aggregate liquidation
preference of any outstanding preferred shares. If legislation were passed that
modifies this section of the 1940 Act and increases the amount of senior
securities that we may incur, we may increase our leverage to the extent then
permitted by the 1940 Act and the risks associated with an investment in us may
increase.
If
our asset coverage declines below 300% (or 200%, as applicable), we would not be
able to incur additional debt or issue additional preferred shares, and could be
required by law to sell a portion of our investments to repay some debt or
redeem preferred shares when it is disadvantageous to do so, which could have a
material adverse effect on our operations, and we may not be able to make
certain distributions or pay dividends of an amount necessary to continue to be
subject to tax as a RIC. The amount of leverage that we employ will depend on
the Adviser’s and the Board’s assessment of market and other factors at the time
of any proposed borrowing. We cannot assure you that we will be able to obtain
credit at all or on terms acceptable to us.
In
addition, any debt facility into which we may enter would likely impose
financial and operating covenants that restrict our business activities,
including limitations that could hinder our ability to finance additional loans
and investments or to make the distributions required to maintain our ability to
be subject to tax as a RIC under Subchapter M of the Code.
The
following table illustrates the effects of the Fund’s leverage due to senior
securities on corresponding share total return, assuming investment portfolio
total returns (consisting of income and changes in the value of investments held
in the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment
portfolio returns are hypothetical figures and are not necessarily indicative of
the investment portfolio returns expected to be experienced by the Fund. Your
actual returns may be greater or less than those appearing below.
The
following table assumes the Fund’s continued use of Preferred Shares represents
35.59% of the Fund’s Managed Assets, its Credit Facility represents 3.18% of the
Fund’s Managed Assets as of September 30, 2025, and the Fund bears expenses
relating to such Preferred Shares and borrowings at annualized average interest
rates of 8.34% and 7.30%, respectively (based on dividend rates for such
Preferred Shares and interest rates for such borrowings as of September 30,
2025). The table below also assumes the annual return that the Fund’s portfolio
must experience (net of expenses not related to Preferred Shares and the Credit
Facility) in order to cover the costs of such leverage would be 3.20%. These
figures are estimates based on current market conditions and are used for
illustration purposes only. Actual expenses associated with Preferred Shares and
borrowings used by the Fund may vary frequently and may be significantly higher
or lower than the rate used for the example below.
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| Assumed
Return on Portfolio (Net of Expenses) |
(10.00)% |
(5.00)% |
—% |
5.00% |
10.00% |
| Corresponding
Share Total Return |
(21.56)% |
(13.40)% |
(5.23)% |
2.94% |
11.10% |
Principal
Risk Factors
For
a description of the principal risk factors associated with an investment in the
Fund, please refer to Note 5. Risk
Factors,
to the Financial Statements.
Additional
Information
We
file with or submit to the SEC annual and semi-annual reports, proxy statements
and other information meeting the informational requirements of the Exchange Act
or pursuant to Rule 30b2-1 under the 1940 Act. The SEC maintains a website that
contains reports, proxy and information statements and other information we file
with the SEC at www.sec.gov. This information is also available free of charge
on our website (www.carlylecreditincomefund.com) or by calling (866) 277-8243
(toll-free).
Forward
Looking Statements
This
report may contain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements other than
statements of historical facts included in this report may constitute
forward-looking
statements
and are not guarantees of future performance or results and involve a number of
risks and uncertainties. Actual results may differ materially from those in the
forward-looking statements as a result of a number of factors, including those
described in the Fund’s filings with the SEC. The Company undertakes no duty to
update any forward-looking statement made herein. All forward-looking statements
speak only as of the date of this report.
PERFORMANCE
DATA
The
graph presented below compares the cumulative shareholder return on our common
shares with that of the S&P BDC Index. The Fund commenced operations on
September 20, 2013; however prior to the close of business on July 14, 2023, the
Fund was advised by a different investment adviser that is not affiliated with
the Fund’s current adviser and the Fund’s performance for periods prior to July
14, 2023 are not shown in the graph below. Effective at the close of business on
July 14, 2023, the Fund’s principal investment strategy was changed and the Fund
seeks to achieve its investment objectives by investing primarily in equity and
junior debt tranches of collateralized loan obligations, or “CLOs.” The Fund
believes the S&P BDC Index is the most appropriate and relevant index for
comparative purposes for this investment strategy.
The
graph assumes an investment of $10,000 in the Fund since the change in
investment adviser on July 14, 2023. Total return is calculated assuming
reinvestment of all dividends and distributions. Returns shown do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
repurchase of fund shares.
Past
performance is not indicative of future results or a guarantee of future
returns. Future results may vary and may be higher or lower than the data
shown.
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| Annualized
Total Return |
Since
Change in Strategy (July 14, 2023) |
|
| 3
Month |
6
Month |
9
Month |
1
Year |
| Carlyle
Credit Income Fund |
(19.26)% |
(9.16)% |
(20.06)% |
(15.09)% |
2.40% |
| S&P
BDC Index |
(21.74)% |
(12.25)% |
(7.25)% |
0.34% |
9.16% |
SUMMARY
OF CERTAIN UNAUDITED PORTFOLIO CHARACTERISTICS
The
information presented below is on a look-through basis to the collateralized
loan obligation, or “CLO”, equity and related investments held by the Fund as of
September 30, 2025, and reflects the aggregate underlying exposure of the Fund
based on the portfolios of those investments. The data is estimated, unaudited,
and derived from CLO trustee reports received by the Fund as of and for the year
ended September 30, 2025 and from custody statements and/or other information
received from CLO collateral managers, or third party sources.
Portfolio
Investment Breakdown as of September 30, 2025
(Excludes
cash equivalents and other assets)
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| Summary
of Underlying Portfolio |
| Number
of Unique Underlying Loan Obligors |
1,479 |
| Number
of Underlying Loans |
2,032 |
| Aggregate
Balance of Underlying Loans |
$22.45
Billion |
| Average
Individual Loan Obligor Exposure |
0.07 |
% |
| Currency:
USD Exposure |
100.00 |
% |
| Aggregate
Indirect Exposure to Senior Secured Loans |
96.56 |
% |
| Weighted
Average Junior OC Cushion |
4.59 |
% |
| Weighted
Average Market Price of Loan Collateral |
97.53 |
| Weighted
Average Remaining CLO Reinvestment Period |
3.25
years |
| CCIF’s
Last 12 Month Default Rate including Distressed Exchanges of Underlying
Loans |
1.09 |
% |
| Loan
Market Default Rate including Distressed Exchanges |
3.49 |
% |
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| Top
10 Underlying Obligors |
| Obligor |
%
Total |
| TransDigm |
0.60 |
% |
| Calpine |
0.54 |
% |
| Medline |
0.50 |
% |
| Asurion |
0.45 |
% |
| TIBCO
Software |
0.44 |
% |
| Quikrete
Companies |
0.44 |
% |
| Citadel
Securities LP |
0.43 |
% |
| Sedgwick
Claims Management Service |
0.43 |
% |
| Howden
Group Holdings |
0.40 |
% |
| Acrisure |
0.40 |
% |
| Total |
4.63 |
% |
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| Top
10 Industries of Underlying Obligors |
| Industry |
%
Total |
| High
Tech |
12.34 |
% |
| Healthcare
& Pharmaceuticals |
11.69 |
% |
| Banking,
Finance, Insurance & Real Estate |
10.46 |
% |
| Services:
Business |
8.52 |
% |
| Hotels,
Gaming & Leisure |
5.12 |
% |
| Construction
& Building |
4.56 |
% |
| Beverage,
Food & Tobacco |
4.11 |
% |
| Capital
Equipment |
4.05 |
% |
| Aerospace
& Defense |
3.66 |
% |
| Chemicals,
Plastics & Rubber |
3.44 |
% |
| Total |
67.95 |
% |
Weighted
Average Rating Distribution Weighted Average Maturity
Distribution
Wtd
Avg = B
Wtd
Avg = 4.6 yrs
Weighted
Average Price Distribution
Weighted Average Spread Distribution
Wtd
Avg =
97.53
Wtd Avg = 3.12%
FEES
AND EXPENSES
The
following table is intended to assist in understanding the costs and expenses
that an investor in our common shares will bear, directly or indirectly, based
on the assumptions set forth below. The expenses shown in the table under
“Annual Expenses” are estimated amounts based on historical fees and expenses,
as appropriate. We caution that some of the percentages indicated in the table
below are estimates and may vary. Except where the context suggests otherwise,
whenever this table contains a reference to our fees or expenses, we will pay
such fees and expenses out of our net assets and, consequently, shareholders
will indirectly bear such fees or expenses as investors in the
Fund.
|
|
|
|
|
|
|
|
| |
| SHAREHOLDER
TRANSACTION FEES |
| |
| Sales
load |
— |
% |
(1) |
| Offering
expenses borne by the Fund |
— |
% |
(2) |
| Dividend
reinvestment plan expenses |
— |
% |
(3) |
| Total
shareholder transaction fees |
— |
% |
(4) |
|
|
|
|
|
|
|
|
| |
ESTIMATED
ANNUAL FUND EXPENSES
(as a percentage of net assets attributable to
common shares) |
| |
| Management
Fee |
2.63 |
% |
(5) |
| Incentive
Fee payable under Investment Advisory Agreement (17.5%) |
1.65 |
% |
(6) |
| Interest
payments and fees on borrowed funds |
6.05 |
% |
(7) |
| Other
Expenses |
1.75 |
% |
(8) |
| Total
annual fund expenses |
12.08 |
% |
|
1.In
the event that the Fund sells its securities publicly through underwriters or
agents the related prospectus supplement will disclose the applicable sales
load.
2.In
the event that the Fund sells its securities publicly through underwriters or
agents the related prospectus supplement will disclose the estimated amount of
total offering expenses (which may include offering expenses borne by third
parties on the Fund’s behalf), the offering price and the offering expenses
borne by the Fund as a percentage of the offering
price.
3.The
expenses of administering the dividend reinvestment plan (the “DRP”) are
included in “Other Expenses.” Investors will pay brokerage charges if they
direct their broker or the DRP Plan agent to sell their Common Shares that they
acquired pursuant to the DRP. See “Dividend
Reinvestment Plan.”
4.The
related prospectus supplement will disclose the offering price and the total
stockholder transaction expenses as a percentage of the offering
price.
5.The
Management Fee is calculated and payable monthly in arrears at the annual rate
of 1.75% of the month-end value of the Fund’s managed Assets. “Managed Assets”
means the total assets of the Fund (including any assets attributable to any
preferred shares or to indebtedness) minus the Fund’s liabilities other than
liabilities relating to indebtedness.
6.The
Fund shall pay CGCIM an Incentive Fee calculated and payable quarterly in
arrears based upon the Fund’s “pre-incentive fee net investment income” for the
immediately preceding quarter, and is subject to a hurdle rate, expressed as a
rate of return on the Fund’s net assets, equal to 2.00% per quarter (or an
annualized hurdle rate of 8.00%), subject to a “catch-up” feature. For this
purpose, “pre-incentive fee net investment income” means interest income,
dividend income, income generated from original issue discounts, payment-in-kind
income, and any other income earned or accrued during the calendar quarter,
minus the Fund’s operating expenses (which, for this purpose shall not include
any distribution and/or shareholder servicing fees, litigation, any
extraordinary expenses or Incentive Fee) for the quarter. For purposes of
computing the Fund’s pre-incentive fee net investment income, the calculation
methodology will look through total return swaps as if the Fund owned the
referenced assets directly. As a result, the Fund’s pre-incentive fee net
investment income includes net interest, if any, associated with a derivative or
swap, which is the difference between (a) the interest income and transaction
fees related to the reference assets and (b) all interest and other expenses
paid by the Fund to the derivative or swap counterparty. “Net assets” means the
total assets of the Fund minus the Fund’s liabilities. For purposes of the
Incentive Fee, net assets are calculated for the relevant quarter as the
weighted average of the net asset value of the Fund as of the first business day
of each month therein. The weighted average net asset value shall be calculated
for each month by multiplying the net asset value as of the beginning of the
first business day of the month times the number of days in that month, divided
by the number of days in the applicable calendar quarter.
The
calculation of the Incentive Fee for each calendar quarter is as
follows:
•No
Incentive Fee is payable to CGCIM if the Fund’s pre-incentive fee net investment
income, expressed as a percentage of the Fund’s net assets in respect of the
relevant calendar quarter, does not exceed the quarterly hurdle rate of
2.00%;
•100%
of the portion of the Fund’s pre-incentive fee net investment income that
exceeds the hurdle rate but is less than or equal to 2.4242% (the “catch-up”) is
payable to CGCIM if the Fund’s pre-incentive fee net investment income,
expressed as a percentage of the Fund’s net assets in respect of the relevant
calendar quarter, exceeds the hurdle rate but is less than or equal to 2.4242%
(9.6968% annualized). The “catch-up” provision is intended to provide CGCIM with
an incentive fee of 17.5% on all of the Fund’s pre-incentive fee net investment
income when the Fund’s pre-incentive fee net investment income reaches 2.4242%
of net assets; and
•17.5%
of the portion of the Fund’s pre-incentive fee net investment income that
exceeds the “catch-up” is payable to CGCIM if the Fund’s pre-incentive fee net
investment income, expressed as a percentage of the Fund’s net assets in respect
of the relevant calendar quarter, exceeds 2.4242% (9.6968% annualized). As a
result, once the hurdle rate is reached and the catch-up is achieved, 17.5% of
all the Fund’s pre-incentive fee net investment income thereafter is allocated
to CGCIM.
7.The
Fund may issue preferred shares or debt securities. The above figure assumes an
aggregate of $3.5 million of the Fund’s Series B Convertible Preferred Shares
with an interest rate of 7.125% per annum, $20.0 million of the Fund’s Series C
Convertible Preferred Shares with an interest rate of 7.50% per annum, $30.0
million of the Fund’s Series D Term Preferred Shares with an interest rate of
7.375%, and $17.5 million of the Fund’s Series E Convertible Preferred Shares
with an interest rate of 7.25%. In the event that the Fund were to issue
additional preferred shares or debt securities, the Fund’s borrowing costs, and
correspondingly its total annual expenses, including, in the case of such
preferred shares, the base management fee as a percentage of the Fund’s net
assets attributable to common shares, would increase.
8.“Other
expenses” includes the Fund’s overhead expenses, including payments under the
Administration Agreement based on the Fund’s allocable portion of overhead and
other expenses incurred by Administrator, and payment of fees in connection with
outsourced administrative functions, and are based on estimated amounts for the
current fiscal year. “Other expenses” also includes the ongoing administrative
expenses to the independent accountants and legal counsel of the Fund,
compensation of independent directors, and costs and expenses relating to rating
agencies.
The
following examples illustrate the hypothetical expenses that would be paid on a
$1,000 investment assuming annual expenses attributable to common shares remain
unchanged and common shares earn a 5% annual return:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Example |
1
Year |
3
Years |
5
Years |
10
Years |
| Expenses
on a $1,000 investment, assuming a 5% annual return |
$124 |
$345 |
$534 |
$898 |
The
example and the expenses in the tables above should not be considered a
representation of the Fund’s future expenses, and actual expenses may be greater
or less than those shown. While the example assumes a 5.0% annual return, as
required by the SEC, the Fund’s performance will vary and may result in a return
greater or less than 5.0%.
CARLYLE
CREDIT INCOME FUND
STATEMENT
OF ASSETS AND LIABILITIES
As
of September 30, 2025
(expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
| |
|
|
| September
30, 2025 |
|
| ASSETS |
|
| |
| Investments,
at fair value (cost $206,263,382) |
| $ |
192,203,718 |
| |
| Cash
and cash equivalents |
| 2,465,620 |
| |
| Interest
receivable |
| 6,192,755 |
| |
| Deferred
financing costs |
| 682,483 |
| |
| Receivable
for investments sold |
| 10,948,046 |
| |
| Prepaid
expenses |
| 282,662 |
| |
|
|
|
| |
| Total
assets |
| $ |
212,775,284 |
| |
|
|
|
| |
| LIABILITIES |
|
| |
|
|
|
| |
| Preferred
Shares (net of unamortized deferred issuance costs of $1,872,238) (Note
7) |
| $ |
73,644,762 |
| |
| Secured
credit facility |
| 6,750,000 |
| |
|
|
|
| |
| Incentive
fee payable |
| 670,743 |
| |
| Management
fee payable |
| 305,632 |
| |
| Professional
fees payable |
| 739,283 |
| |
| Interest
payable |
| 366,228 |
| |
| Administration
and custodian fees payable |
| 162,714 |
| |
| Other
payables and accrued expenses |
| 222,300 |
| |
|
|
|
| |
| Total
liabilities |
| $ |
82,861,662 |
| |
|
|
|
| |
| COMMITMENTS
AND CONTINGENCIES (Note 8) |
|
| |
|
|
|
| |
| Net
Assets |
| $ |
129,913,622 |
| |
|
|
|
| |
| COMPOSITION
OF NET ASSETS |
|
| |
|
|
|
| |
| Paid-in
capital |
| $ |
151,629,695 |
| |
| Total
distributable earnings (losses) |
| (21,716,073) |
| |
| Total
Net Assets |
| $ |
129,913,622 |
| |
| Common
shares outstanding (no par value) |
| 21,198,622 |
| |
| Net
asset value per share of common stock |
| $ |
6.13 |
| |
See
accompanying Notes to Financial Statements.
CARLYLE
CREDIT INCOME FUND
SCHEDULE
OF INVESTMENTS
As
of September 30, 2025
(expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Issuer
(1)(7) |
Investment
Description |
Acquisition
Date (2) |
Principal
Amount |
Cost |
Fair
Value (3) |
%
of Net Assets |
|
CLO
- Equity(4)(5) |
|
|
|
|
| |
| 522
Funding CLO 2021-7, Ltd. |
Subordinated
Notes (effective yield 0.00%, 4/23/2034)8 |
7/27/2023 |
$ |
4,505,000 |
| $ |
481,463 |
| $ |
268,926 |
| 0.21 |
% |
| AGL
CLO 17, Ltd. |
Subordinated
Notes (effective yield 16.29%, 1/21/2035) |
5/6/2024 |
2,750,000 |
| 1,912,404 |
| 1,674,561 |
| 1.29 |
% |
| Aimco
CLO 10, Ltd. |
Subordinated
Notes (effective yield 13.00%, 7/22/2032) |
11/27/2023 |
11,071,800 |
| 6,030,589 |
| 5,787,370 |
| 4.45 |
% |
| Aimco
CLO 14, Ltd. |
Subordinated
Notes (effective yield 11.79%, 4/20/2034) |
7/17/2023 |
6,200,000 |
| 4,270,383 |
| 4,549,343 |
| 3.50 |
% |
| Allegro
XVII, Ltd. |
Subordinated
Notes (effective yield 11.26%, 7/25/2038)6 |
5/07/2025 |
1,875,000 |
| 1,494,271 |
| 1,460,690 |
| 1.12 |
% |
| Apidos
CLO XXV, Ltd. |
Subordinated
Notes (effective yield 15.90%, 1/20/2037) |
7/1/2025 |
6,000,000 |
| 2,242,584 |
| 2,028,065 |
| 1.56 |
% |
| Apidos
CLO XXXIII, Ltd. |
Subordinated
Notes (effective yield 12.57%, 10/24/2034)6 |
7/25/2024 |
22,780,000 |
| 12,355,829 |
| 12,049,918 |
| 9.28 |
% |
| Apidos
CLO XXXIX, Ltd. |
Subordinated
Notes (effective yield 12.32%, 4/21/2035) |
5/2/2024 |
5,710,000 |
| 3,719,833 |
| 3,376,793 |
| 2.60 |
% |
| Ares
LIX CLO, Ltd. |
Subordinated
Notes (effective yield 19.36%, 4/25/2034) |
12/7/2023 |
8,000,000 |
| 4,274,067 |
| 3,941,352 |
| 3.03 |
% |
| Ares
LV CLO, Ltd. |
Subordinated
Notes (effective yield 13.94%, 10/15/2037) |
8/19/2025 |
7,500,000 |
| 5,409,375 |
| 5,199,049 |
| 4.00 |
% |
| Ares
LVI CLO, Ltd. |
Subordinated
Notes (effective yield 16.72%, 1/25/2038) |
8/24/2023 |
4,751,000 |
| 2,819,779 |
| 2,956,606 |
| 2.28 |
% |
| Ares
LX CLO, Ltd. |
Subordinated
Notes (effective yield 19.39%, 7/18/2034) |
11/29/2023 |
1,600,000 |
| 769,476 |
| 743,983 |
| 0.57 |
% |
| Ares
LXXIV CLO, Ltd. |
Subordinated
Notes (effective yield 11.91%, 10/15/2037) |
7/23/2025 |
4,000,000 |
| 3,325,000 |
| 3,284,658 |
| 2.53 |
% |
| Audax
CLO 12, Ltd. |
Subordinated
Notes (effective yield 15.51%, 4/22/2037) |
3/03/2025 |
1,330,000 |
| 1,230,250 |
| 1,199,310 |
| 0.92 |
% |
| Ballyrock
CLO 15, Ltd. |
Subordinated
Notes (effective yield 13.79%, 1/15/2038) |
8/16/2023 |
5,450,000 |
| 3,413,252 |
| 3,079,644 |
| 2.37 |
% |
| Ballyrock
CLO 16, Ltd. |
Subordinated
Notes (effective yield 17.28%, 7/20/2034) |
8/20/2024 |
5,867,000 |
| 3,356,512 |
| 3,204,649 |
| 2.47 |
% |
| Ballyrock
CLO 18, Ltd. |
Subordinated
Notes (effective yield 13.97%, 4/15/2038) |
8/16/2023 |
3,260,000 |
| 1,923,546 |
| 1,718,807 |
| 1.32 |
% |
| Barings
CLO, Ltd. 2019-III |
Subordinated
Notes (effective yield 18.54%, 1/20/2036)6 |
12/13/2023 |
7,695,466 |
| 3,534,196 |
| 3,350,965 |
| 2.58 |
% |
| Barings
CLO, Ltd. 2021-I |
Subordinated
Notes (effective yield 17.63%, 4/25/2034) |
7/17/2023 |
3,400,000 |
| 1,872,625 |
| 1,437,359 |
| 1.11 |
% |
| Barings
CLO, Ltd. 2025-I |
Subordinated
Notes (effective yield 13.27%, 4/20/2038) |
2/14/2025 |
6,000,000 |
| 5,184,000 |
| 4,960,581 |
| 3.82 |
% |
| Benefit
Street Partners CLO XXIII, Ltd. |
Subordinated
Notes (effective yield 21.63%, 4/25/2034) |
8/02/2023 |
10,000,000 |
| 6,250,685 |
| 6,745,736 |
| 5.19 |
% |
| Benefit
Street Partners CLO XXXVIII, Ltd. |
Subordinated
Notes (effective yield 10.52%, 1/25/2038) |
12/17/2024 |
5,000,000 |
| 4,733,139 |
| 4,361,582 |
| 3.36 |
% |
| Birch
Grove CLO 3, Ltd. |
Subordinated
Notes (effective yield 15.14%, 1/19/2038) |
9/4/2024 |
8,602,500 |
| 6,942,420 |
| 6,668,832 |
| 5.13 |
% |
| CIFC
Funding 2020-II, Ltd. |
Subordinated
Notes (effective yield 14.02%, 10/20/2034) |
2/11/2025 |
5,000,000 |
| 3,239,283 |
| 2,753,609 |
| 2.12 |
% |
| CIFC
Funding 2020-III, Ltd. |
Subordinated
Notes (effective yield 12.92%, 10/20/2034) |
9/20/2023 |
8,750,000 |
| 6,022,485 |
| 5,040,118 |
| 3.88 |
% |
| Davis
Park CLO, Ltd. |
Subordinated
Notes (effective yield 11.20%, 4/20/2035) |
2/11/2025 |
5,822,940 |
| 4,073,946 |
| 3,931,247 |
| 3.03 |
% |
| Elmwood
CLO 17, Ltd. |
Subordinated
Notes (effective yield 13.50%, 7/17/2037) |
8/13/2025 |
17,500,000 |
| 11,555,250 |
| 11,302,944 |
| 8.70 |
% |
| Elmwood
CLO VII, Ltd. |
Subordinated
Notes (effective yield 12.33%, 1/17/2034) |
7/17/2023 |
3,400,000 |
| 1,598,696 |
| 1,485,176 |
| 1.14 |
% |
| Empower
CLO 2022-1, Ltd. |
Subordinated
Notes (effective yield 14.11%, 10/20/2037) |
9/27/2024 |
9,500,000 |
| 7,464,604 |
| 6,818,464 |
| 5.25 |
% |
| Galaxy
XXII CLO, Ltd. |
Subordinated
Notes (effective yield 16.66%, 4/16/2034) |
12/15/2023 |
3,560,000 |
| 1,880,314 |
| 1,271,699 |
| 0.98 |
% |
| KKR
CLO 25, Ltd. |
Subordinated
Notes (effective yield 16.91%, 7/15/2034) |
12/11/2023 |
2,500,000 |
| 1,572,921 |
| 1,086,934 |
| 0.84 |
% |
| MidOcean
Credit CLO XI, Ltd. |
Subordinated
Notes (effective yield 17.79%, 1/18/2036) |
1/12/2024 |
6,250,000 |
| 3,795,032 |
| 3,720,069 |
| 2.86 |
% |
CARLYLE
CREDIT INCOME FUND
SCHEDULE
OF INVESTMENTS
As
of September 30, 2025
(expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Issuer
(1)(7) |
Investment
Description |
Acquisition
Date (2) |
Principal
Amount |
Cost |
Fair
Value (3) |
%
of Net Assets |
| MidOcean
Credit CLO XIV, Ltd. |
Subordinated
Notes (effective yield 11.06%, 4/15/2037)6 |
2/15/2024 |
$ |
6,750,000 |
| $ |
4,510,173 |
| $ |
3,977,980 |
| 3.06 |
% |
| Neuberger
Berman Loan Advisers CLO 38, Ltd. |
Subordinated
Notes (effective yield 20.36%, 10/20/2035) |
8/1/2023 |
9,500,000 |
| 5,160,348 |
| 4,998,040 |
| 3.85 |
% |
| Neuberger
Berman Loan Advisers CLO 41, Ltd. |
Subordinated
Notes (effective yield 13.18%, 4/15/2034) |
11/1/2023 |
4,500,000 |
| 2,480,389 |
| 2,183,786 |
| 1.68 |
% |
| Niagara
Park CLO, Ltd. |
Subordinated
Notes (effective yield 18.02%, 1/17/2038) |
12/1/2023 |
7,850,000 |
| 4,231,278 |
| 4,528,517 |
| 3.49 |
% |
| Niagara
Park CLO, Ltd. |
Subordinated
Notes (effective yield 11.20%, 1/17/2038) |
11/6/2024 |
425,000 |
| 227,195 |
| 404,157 |
| 0.31 |
% |
| Oaktree
CLO 2019-3, Ltd. |
Subordinated
Notes (effective yield 15.14%, 1/20/2038) |
6/12/2025 |
3,500,000 |
| 2,082,225 |
| 2,001,692 |
| 1.54 |
% |
| OCP
CLO 2015-9, Ltd. |
Subordinated
Notes (effective yield 14.92%, 1/15/2037) |
12/6/2023 |
21,847,700 |
| 8,075,051 |
| 8,838,605 |
| 6.80 |
% |
| OCP
CLO 2017-13, Ltd. |
Subordinated
Notes (effective yield 11.54%, 11/26/2037) |
5/13/2025 |
17,897,237 |
| 5,921,279 |
| 5,681,395 |
| 4.37 |
% |
| Octagon
55, Ltd. |
Subordinated
Notes (effective yield 14.51%, 7/20/2034) |
7/19/2023 |
9,691,000 |
| 4,382,510 |
| 3,692,847 |
| 2.84 |
% |
| OHA
Credit Partners XIII, Ltd. |
Subordinated
Notes (effective yield 15.82%, 10/21/2034) |
7/17/2023 |
2,950,000 |
| 1,702,274 |
| 1,903,316 |
| 1.47 |
% |
| RAD
CLO 12, Ltd. |
Subordinated
Notes (effective yield 12.44%, 10/30/2034) |
11/5/2024 |
7,396,000 |
| 4,382,554 |
| 3,547,732 |
| 2.73 |
% |
| RR
12, Ltd. |
Subordinated
Notes (effective yield 16.00%, 1/15/2036) |
7/31/2024 |
8,542,000 |
| 2,520,434 |
| 1,851,092 |
| 1.42 |
% |
| RR
6, Ltd. |
Subordinated
Notes (effective yield 0.00%, 4/15/2036)8 |
4/25/2024 |
2,206,250 |
| 1,017,197 |
| 264,070 |
| 0.20 |
% |
| Signal
Peak CLO 10, Ltd. |
Subordinated
Notes (effective yield 15.50%, 1/24/2038) |
3/28/2024 |
3,775,995 |
| 2,243,009 |
| 2,166,380 |
| 1.67 |
% |
| Signal
Peak CLO 9, Ltd. |
Subordinated
Notes (effective yield 16.92%, 1/21/2038) |
6/4/2025 |
10,664,718 |
| 5,824,422 |
| 4,978,858 |
| 3.83 |
% |
| Silver
Point CLO 4, Ltd. |
Subordinated
Notes (effective yield 13.71%, 4/15/2037) |
2/28/2025 |
7,140,000 |
| 4,534,702 |
| 4,272,824 |
| 3.29 |
% |
| Voya
CLO 2020-2, Ltd. |
Subordinated
Notes (effective yield 13.89%, 7/19/2034) |
8/02/2023 |
13,597,500 |
| 9,975,981 |
| 9,349,151 |
| 7.20 |
% |
| Voya
CLO 2020-3, Ltd. |
Subordinated
Notes (effective yield 12.56%, 1/20/2038) |
8/3/2023 |
5,798,000 |
| 3,849,777 |
| 3,501,813 |
| 2.70 |
% |
| Total
CLO Equity |
|
|
| $ |
201,869,007 |
| $ |
189,601,294 |
| 145.94 |
% |
|
CLO
- Debt(4) |
|
|
|
|
| |
| Apidos
CLO XXXIII, Ltd. |
12.87%
(3M Term SOFR + 8.55%, 4/24/2038) |
4/23/2025 |
$ |
250,000 |
| $ |
230,269 |
| $ |
242,794 |
| 0.19 |
% |
| Total
CLO Debt |
|
|
| $ |
230,269 |
| $ |
242,794 |
| 0.19 |
% |
|
CLO
- Subordinated Fee Note (4)(5) |
|
|
|
|
| |
| Davis
Park CLO, Ltd. |
Subordinated
Fee Notes (effective yield 41.27%, 4/20/2035) |
2/11/2025 |
$ |
5,822,940 |
| $ |
35,876 |
| $ |
46,650 |
| 0.04 |
% |
| Davis
Park CLO, Ltd. |
Subordinated
Fee Notes (effective yield 39.72%, 4/20/2035) |
2/11/2025 |
5,822,940 |
| 86,268 |
| 111,417 |
| 0.08 |
% |
| Neuberger
Berman Loan Advisers CLO 38, Ltd. |
Subordinated
Fee Notes (effective yield 23.61%, 10/20/2035) |
8/1/2023 |
69,788 |
| 38,083 |
| 26,563 |
| 0.02 |
% |
| Total
CLO Subordinated Fee Notes |
|
|
| $ |
160,227 |
| $ |
184,630 |
| 0.14 |
% |
|
Real
Estate(9) |
|
|
|
|
| |
| Moores
Crossing - Travis County, TX |
| 7/14/2023 |
$ |
4,000,000 |
| $ |
4,003,879 |
| $ |
2,175,000 |
| 1.68 |
% |
|
|
|
|
|
|
| |
| Total
Investments |
|
|
| $ |
206,263,382 |
| $ |
192,203,718 |
| 147.95 |
% |
|
|
|
|
|
|
| |
| Cash
Equivalents |
|
|
|
|
| |
| City
National Bank MMDA |
Money
Market Deposit Account |
| $ |
2,008,834 |
| $ |
2,008,834 |
| $ |
2,008,834 |
| 1.55 |
% |
| U.S.
Bank MMDA |
Money
Market Deposit Account |
| 456,786 |
| 456,786 |
| 456,786 |
| 0.35 |
% |
| Total
Cash Equivalents |
|
|
| $ |
2,465,620 |
| $ |
2,465,620 |
| 1.90 |
% |
|
|
|
|
|
|
| |
| Total
Investments and Cash Equivalents |
|
|
| $ |
208,729,002 |
| $ |
194,669,338 |
| 149.85 |
% |
CARLYLE
CREDIT INCOME FUND
SCHEDULE
OF INVESTMENTS
As
of September 30, 2025
(expressed
in U.S. dollars)
(1)
The
Fund is not affiliated with, nor does it "control" (as such term is defined in
the Investment Company Act of 1940 (the "1940 Act")), any of the issuers listed.
In general, under the 1940 Act, the Fund would be presumed to "control" an
issuer if it owned 25% or more of its voting securities.
(2)
Acquisition
date represents the initial date of purchase or the date the investment was
contributed to the Fund at the time of the Fund's formation.
(3)
Fair
value is determined by the Adviser in accordance with the written valuation
policies and procedures, subject to oversight by the Fund's Board of Trustees,
in accordance with Rule 2a-5 under the 1940 Act.
(4)
Securities
exempt from registration under the Securities Act of 1933, and are deemed to be
"restricted securities." As of September 30, 2025, the aggregate fair value of
these securities is $190,028,718, or 146.27% of the Fund's net
assets.
(5)
CLO subordinated notes and subordinated fee notes are considered CLO equity
positions. CLO equity positions are entitled to recurring distributions which
are generally equal to the remaining cash flow of payments made by underlying
assets less contractual payments to debt holders and fund expenses. The
effective yield is estimated based upon the current projection of the amount and
timing of these recurring distributions in addition to the estimated amount of
terminal principal payment. It is the Fund's policy to calculate the effective
yield for each CLO equity position held within the Fund's portfolio at the
initiation of each investment and to update it each subsequent quarter
thereafter. The effective yield and investment cost may ultimately not be
realized. As of September 30, 2025, the Fund's weighted average effective yield
on its aggregate CLO equity positions, based on current amortized cost, was
14.44%. When excluding called CLOs, the Fund’s weighted average effective yield
on its CLO equity positions was 14.55%.
(6)
Fair
value includes the Fund’s interests in fee rebates on the CLO subordinated
notes.
(7)
The
fair value of the investment was determined using significant unobservable
inputs. See “Note 3. Fair Value Measurements.”
(8)
As
of September 30, 2025, the investment has been called. Expected value of
residual distributions, once received, is anticipated to be recognized as return
of capital, pending any remaining amortized cost, and/or realized gain for any
amounts received in excess of such amortized cost.
(9)
The
Fund inherited a non-income producing defaulted real estate loan from VCIF that
was not included in the legacy portfolio sale. Pursuant to a deed-in-lieu of
foreclosure on August 10, 2023, the Fund has ownership of the real
estate.
See
accompanying Notes to Financial Statements.
CARLYLE
CREDIT INCOME FUND
STATEMENT
OF OPERATIONS
For
the Year Ended September 30, 2025
(expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
| |
|
|
| Year
Ended September 30, 2025 |
| Investment
Income |
| |
| Interest
income |
| $ |
33,179,036 |
|
|
|
| |
| Total
investment income |
| 33,179,036 |
|
|
|
| |
| Expenses |
| |
| Interest
expense |
| 8,597,149 |
|
| Management
fees |
| 3,623,309 |
|
| Incentive
fees |
| 3,225,894 |
|
| Professional
fees |
| 1,076,988 |
|
| Administration
and custodian fees |
| 666,685 |
|
| Insurance
expense |
| 238,533 |
|
| Printing
expense |
| 140,869 |
|
| Transfer
agent fees |
| 134,999 |
|
| Trustees'
fees and expenses |
| 125,000 |
|
| Other
expenses |
| 140,745 |
|
|
|
| |
|
|
| |
|
|
| |
| Total
expenses |
| 17,970,171 |
|
|
|
| |
|
|
| |
| Net
Investment Income |
| 15,208,865 |
|
|
|
| |
| Net
Realized and Unrealized Gain (Loss) |
| |
| Net
realized gain (loss) on investments and foreign currency
transactions |
| (17,706,825) |
|
|
|
| |
| Net
change in unrealized appreciation (depreciation) on investments, foreign
currency, and cash equivalents |
| (3,504,909) |
|
| Net
Realized and Unrealized Gain (Loss) |
| (21,211,734) |
|
|
|
| |
| Net
Decrease in Net Assets Attributable to Common Shares from
Operations |
| $ |
(6,002,869) |
|
|
|
| |
See
accompanying Notes to the Financial Statements.
CARLYLE
CREDIT INCOME FUND
STATEMENTS
OF CHANGES IN NET ASSETS
For
the Years Ended September 30, 2025 and September 30, 2024
(expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
|
| Year
Ended September 30, 2025 |
| Year
Ended September 30, 2024 |
| |
| Net
increase (decrease) in net assets from operations: |
|
|
|
|
| |
| Net
investment income |
| $ |
15,208,865 |
|
| $ |
15,045,543 |
|
| |
| Net
realized gain (loss) on investments and foreign currency
transactions |
| (17,706,825) |
|
| 99,225 |
|
| |
| Net
change in unrealized appreciation (depreciation) on investments, foreign
currency and cash equivalents |
| (3,504,909) |
|
| (9,578,026) |
|
| |
| Net
increase (decrease) in net assets resulting from operations |
| (6,002,869) |
|
| 5,566,742 |
|
| |
|
|
|
|
|
|
| |
| Distributions
to shareholders from: |
|
|
|
|
| |
| Net
investment income |
| (10,363,754) |
|
| (427,365) |
|
| |
| Return
of capital |
| (13,459,803) |
|
| (15,218,076) |
|
| |
| Total
distributions to shareholders |
| (23,823,557) |
|
| (15,645,441) |
|
| |
|
|
|
|
|
|
| |
| Capital
share transactions |
|
|
|
|
| |
| Net
increase (decrease) in net assets resulting from beneficial
interest: |
|
|
|
|
| |
| Issuance
of common shares |
| 40,303,512 |
|
| 28,063,654 |
|
| |
| Reinvestment
of dividends |
| 1,823,533 |
|
| 877,308 |
|
| |
| Net
increase in net assets from capital share transactions |
| 42,127,045 |
|
| 28,940,962 |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
| Total
increase (decrease) in net assets |
| 12,300,619 |
|
| 18,862,263 |
|
| |
| Net
assets at the beginning of the period |
| 117,613,003 |
|
| 98,750,740 |
|
| |
| Net
assets at the end of the period |
| $ |
129,913,622 |
|
| $ |
117,613,003 |
|
| |
See
accompanying Notes to Financial Statements.
CARLYLE
CREDIT INCOME FUND
STATEMENT
OF CASH FLOWS
For
the Year Ended September 30, 2025
(expressed
in U.S. dollars)
|
|
|
|
|
|
|
|
| |
|
|
| Year
Ended September 30, 2025 |
| Cash
flows from operating activities |
| |
| Net
decrease in net assets resulting from operations |
| $ |
(6,002,869) |
|
| Adjustments
to reconcile net decrease in net assets from operations to net cash
provided by operating activities: |
| |
| Purchases
of investments, net of change in payable for investments
purchased |
| (106,130,703) |
|
|
Proceeds
from disposition of investments and reductions to investment cost value
(1) |
| 55,221,617 |
|
| Net
amortization on investments |
| (499) |
|
| Amortization
of deferred issuance costs on preferred shares and credit
facility |
| 2,399,937 |
|
| Net
realized loss on investments |
| 17,706,825 |
|
| Net
change in unrealized depreciation on investments |
| 3,504,909 |
|
| Changes
in assets: |
| |
| Increase
in interest receivable |
| (154,212) |
|
|
|
| |
| Decrease
in prepaid expenses and other assets |
| 294,081 |
|
| Changes
in liabilities: |
| |
|
|
| |
| Decrease
in incentive fee payable |
| (230,211) |
|
| Increase
in management fee payable |
| 44,727 |
|
| Increase
in interest payable on preferred shares |
| 288,728 |
|
| Increase
in professional fees payable |
| 103,398 |
|
| Increase
in administration and custodian fees payable |
| 116,605 |
|
| Decrease
in other payables and accrued expenses |
| (166,513) |
|
| Net
cash used in operating activities |
| (33,004,180) |
|
|
|
| |
| Cash
flows from financing activities |
| |
| Borrowings
on credit facility |
| 26,000,000 |
|
| Repayments
on credit facility |
| (19,250,000) |
|
| Deferred
issuance costs paid for the credit facility |
| (737,620) |
|
| Proceeds
from the issuance of preferred shares |
| 20,000,000 |
|
| Deferred
issuance costs for the issuance of preferred shares |
| (1,571,470) |
|
| Proceeds
from common shares issued, net of commissions and fees |
| 32,303,512 |
|
| Dividends
paid to shareholders, net of reinvestments |
| (22,000,024) |
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
| Net
cash provided by financing activities |
| 34,744,398 |
|
|
|
| |
| Net
increase in cash and cash equivalents |
| 1,740,218 |
|
| Cash
and cash equivalents, beginning of period |
| 725,402 |
|
| Cash
and cash equivalents, end of period |
| $ |
2,465,620 |
|
|
|
|
|
|
|
|
|
| |
| Supplemental
information: |
| |
|
|
| |
| Cash
paid for interest on preferred shares |
| $ |
5,867,872 |
|
| Non-cash
activities: |
| |
| Reinvestment
of dividends |
| $ |
1,823,533 |
|
| Conversion
of preferred shares to common shares (net of deferred issuance
costs) |
| $ |
7,785,030 |
|
(1)
Proceeds
from the disposition of investments and reductions to investment cost value
includes $14,422,841 of return of capital on CLO equity investments from
recurring cash flows and distributions from called deals and refinancings during
the year ended September 30, 2025.
See
accompanying Notes to Financial Statements.
CARLYLE
CREDIT INCOME FUND
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Year
Ended September 30, 2025 |
| Year
Ended September 30, |
|
|
|
| 2024 |
|
2023(6) |
| 2022 |
| 2021 |
|
| |
| Per
Share Operating Data |
|
|
|
|
|
|
|
|
|
|
| |
| Net
asset value, beginning of period |
$ |
7.64 |
|
| $ |
8.42 |
|
| $ |
10.39 |
|
| $ |
11.69 |
|
| $ |
12.05 |
|
|
| |
| Income
(loss) from investment operations: |
|
|
|
|
|
|
|
|
|
|
| |
|
Net
investment income (1) |
0.81 |
|
| 1.19 |
|
| 0.05 |
|
| 0.50 |
|
| 0.42 |
|
|
| |
|
Net
realized and unrealized gain (loss) (2) |
(1.13) |
|
| (0.74) |
|
| (1.20) |
|
| (0.80) |
|
| 0.33 |
|
|
| |
| Total
from investment operations |
(0.32) |
|
| 0.45 |
|
| (1.15) |
|
| (0.30) |
|
| 0.75 |
|
|
| |
| Dividends
to shareholders from: |
|
|
|
|
|
|
|
|
|
|
| |
|
Net
investment income (3) |
(0.55) |
|
| (0.03) |
|
| (0.43) |
|
| (0.73) |
|
| (0.89) |
|
|
| |
|
Net
realized gains (3) |
— |
|
| — |
|
| — |
|
| (0.18) |
|
| (0.22) |
|
|
| |
|
Return
of capital (3) |
(0.71) |
|
| (1.20) |
|
| (0.40) |
|
| (0.09) |
|
| — |
|
|
| |
| Total
dividends |
(1.26) |
|
| (1.23) |
|
| (0.82) |
| — |
| (1.00) |
|
| (1.11) |
|
|
| |
| Effect
of shares issued |
$ |
0.07 |
|
| $ |
— |
|
| $ |
— |
|
| $ |
— |
|
| $ |
— |
|
|
| |
| Net
asset value, end of period |
$ |
6.13 |
|
| $ |
7.64 |
|
| $ |
8.42 |
|
| $ |
10.39 |
|
| $ |
11.69 |
|
|
| |
| Per
share market value at beginning of period |
$ |
8.23 |
|
| $ |
8.18 |
|
| $ |
8.92 |
|
| $ |
10.49 |
|
| $ |
9.93 |
|
|
| |
| Per
share market value at end of period |
$ |
5.82 |
|
| $ |
8.23 |
|
| $ |
8.18 |
|
| $ |
8.92 |
|
| $ |
10.49 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total
Return based on Net Asset Value (4) |
(3.74) |
% |
| 6.07 |
% |
| (11.75) |
% |
| (2.77) |
% |
| 6.52 |
% |
|
| |
|
Total
Return based on Market Value (4) |
(15.09) |
% |
| 17.21 |
% |
| 0.39 |
% |
| (5.95) |
% |
| 17.59 |
% |
|
| |
| Ratios/Supplemental
Data |
|
|
|
|
|
|
|
|
|
|
| |
| Net
assets, end of period (in thousands) |
$ |
129,914 |
|
| $ |
117,613 |
|
| $ |
98,751 |
|
| $ |
107,829 |
|
| $ |
121,324 |
|
|
| |
|
Ratio
of gross expenses to average net assets (5) |
13.85 |
% |
| 12.92 |
% |
| 7.42 |
% |
| 3.27 |
% |
| 3.05 |
% |
|
| |
|
Ratio
of net expenses to average net assets (5) |
13.85 |
% |
| 12.92 |
% |
| 6.72 |
% |
| 3.09 |
% |
| 2.88 |
% |
|
| |
|
Ratio
of net expenses before incentive fees to average net assets (5) |
11.36 |
% |
| 9.72 |
% |
| N/A |
| N/A |
| N/A |
|
| |
|
Ratio
of net investment income to average net assets (5) |
11.72 |
% |
| 15.10 |
% |
| 0.56 |
% |
| 4.53 |
% |
| 3.56 |
% |
|
| |
| Portfolio
turnover rate |
28.91 |
% |
| 17.69 |
% |
| 100.91 |
% |
| 28.39 |
% |
| 14.73 |
% |
|
| |
| Asset
coverage of preferred shares and credit facility |
258 |
% |
| 285 |
% |
| N/A |
| N/A |
| N/A |
|
| |
|
Loan
Outstanding, End of Year/Period (in thousands) (7) |
$ |
6,750 |
|
| N/A |
| N/A |
| $ |
7,455 |
|
| $ |
1,923 |
|
|
| |
|
Asset
Coverage Ratio for Loan Outstanding (7) |
3143 |
% |
| N/A |
| N/A |
| 1546 |
% |
| 6409 |
% |
|
| |
|
Asset
Coverage, per $1,000 Principal Amount of Loan Outstanding (7) |
$ |
31,434 |
|
| N/A |
| N/A |
| $ |
15,463 |
|
| $ |
64,090 |
|
|
| |
|
Weighted
Average Loans Outstanding (in thousands) (7) |
$ |
7,542 |
|
| N/A |
| $ |
3,732 |
|
| $ |
8,051 |
|
| $ |
10,788 |
|
|
| |
|
Weighted
Average Interest Rate on Loans Outstanding (7) |
7.45 |
% |
| N/A |
| 7.94 |
% |
| 4.50 |
% |
| 3.75 |
% |
|
| |
(1)
Per share amounts are calculated based on the average shares outstanding during
the period.
(2)
Net realized and unrealized gain (loss) includes adjustments to reconcile change
in net asset value (“NAV”) per share. The amount may not agree with the change
in the aggregate net realized and unrealized gain (loss) due to the timing of
the issuance of the Fund’s common shares in relation to fluctuating market
values for the portfolio.
(3)
Management monitors available taxable earnings to determine if a tax return of
capital may occur for the period. To the extent the Fund’s taxable earnings fall
below the total amount of the Fund’s distributions for that fiscal year, a
portion of those distributions may be deemed a tax return of capital to the
Fund’s shareholders. The ultimate tax character of the Fund’s earnings cannot be
determined until tax returns are prepared after the end of the fiscal
year.
(4)
Total returns are historical in nature and assume changes in share price,
reinvestment of dividends and capital gains distributions, if any, and excludes
the effect of sales charges. Had the Adviser not waived expenses, total returns
would have been lower. Returns do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
(5)
Annualized for periods less than one full year. For years ended September 2021,
2022, and 2023 the Fund waived certain expenses in connection with an expense
limitation agreement. For the year ended September 30, 2025, there were no
expenses waived. See Note 4. Related
Party Transactions,
for further information.
(6)
Effective at the close of business on July 14, 2023, CGCIM replaced Oakline
Advisors as the Fund’s new investment adviser and the Fund’s investment strategy
was changed to invest primarily in debt and equity tranches issued by
collateralized loan obligations. Prior to the close of business on July 14,
2023, the investment strategy was to invest primarily in mortgage notes secured
by residential real estate.
CARLYLE
CREDIT INCOME FUND
FINANCIAL
HIGHLIGHTS (Continued)
(7)
On July 11, 2025, the Fund entered into a revolving credit and security
agreement (the “Credit Facility”). The weighted average loans outstanding and
weighted average interest rate on loans outstanding are calculated from August
13, 2025 (initial date the Fund borrowed under the Credit Facility) through
September 30, 2025. The obligations under the Credit Facility are secured by a
first priority lien on substantially all of the Fund’s portfolio investments
(see Note 6, Borrowings). A revolving line of credit agreement between the Fund
and Nexbank was terminated on July 5, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Senior
Securities |
|
|
|
|
|
|
| |
| Class and
Period Ended |
|
Total
Amount Outstanding Exclusive of Treasury
Securities
(1) |
|
Asset
Coverage
Per
Unit (2) |
|
Involuntary
Liquidating Preference Per Unit (3) |
|
Average
Market Value Per Unit (4) |
| Credit
Facility |
|
|
|
|
|
|
| |
| September
30, 2025 |
| $ |
6,750,000 |
|
| $ |
31,434.17 |
|
| $ |
— |
|
| N/A |
|
8.75%
Series A Term Preferred Shares |
|
|
|
|
|
|
| |
| September
30, 2025 |
| $ |
52,000,000 |
|
| $ |
64.48 |
|
| $ |
25.00 |
|
| $ |
25.74 |
|
| September
30, 2024 |
| $ |
52,000,000 |
|
| $ |
71.29 |
|
| $ |
25.00 |
|
| $ |
25.60 |
|
|
7.125%
Series B Convertible Preferred Shares |
|
|
|
|
|
|
| |
| September
30, 2025 |
| $ |
3,517,000 |
|
| $ |
2,579.17 |
|
| $ |
1,000.00 |
|
| N/A |
| September
30, 2024 |
| $ |
11,517,000 |
|
| $ |
2,851.68 |
|
| $ |
1,000.00 |
|
| N/A |
|
7.50%
Series C Convertible Preferred Shares |
|
|
|
|
|
|
| |
| September
30, 2025 |
| $ |
20,000,000 |
|
| $ |
2,579.17 |
|
| $ |
1,000.00 |
|
| N/A |
(1)
Total amount of each class of senior securities outstanding at principal value
at the end of the period presented.
(2)
Asset coverage per unit is the ratio of the carrying value of the Fund’s total
assets, less all liabilities and indebtedness not represented by senior
securities, to the aggregate amount of the outstanding senior securities as
calculated in accordance with Section 18(h) of the 1940 Act. The asset coverage
per unit figure is expressed in terms of dollar amounts per share of outstanding
Preferred Shares (based on a per share liquidation preference of $25 in the case
of the 8.75% Series A Term Preferred Shares and $1,000 in the case of the 7.125%
Series B Convertible Preferred Shares and the 7.50% Series C Convertible
Preferred Shares). With respect to the Credit Facility, the asset coverage ratio
is multiplied by $1,000 to determine the asset coverage per unit.
(3)
The amount to which such class of senior security would be entitled upon our
involuntary liquidation in preference to any security junior to it.
(4)
The average market value per unit is calculated by taking the average of the
closing price of the 8.75% Series A Term Preferred Shares (NYSE: CCIA) for each
day during the year for which it was listed on the NYSE. Not applicable for the
7.125% Series B Convertible Preferred Shares, the 7.50% Series C Convertible
Preferred Shares, and the Credit
Facility.
See
accompanying Notes to Financial Statements.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS
1.ORGANIZATION
Carlyle
Credit Income Fund (the “Fund”) is a non-diversified, closed-end management
investment company registered under the Investment Company Act of 1940, as
amended (the “1940 Act”). The Fund was organized as a Delaware statutory trust
on April 8, 2011. In addition, the Fund has elected to be treated, and intends
to continue to comply with the requirements to qualify annually, as a regulated
investment company (“RIC”) under Subchapter M of the Internal Revenue Code of
1986, as amended (together with the rules and regulations promulgated
thereunder, the “Code”). The Fund currently has one class of common shares which
commenced operations on December 30, 2011. The Fund was previously named
Vertical Capital Income Fund (“VCIF”) and was managed by its Adviser, Oakline
Advisors LLC (“Oakline”). Effective at the close of business on July 14, 2023,
the Fund is managed by its Adviser, Carlyle Global Credit Investment Management
L.L.C. (“CGCIM” or the “Adviser”), a wholly owned subsidiary of Carlyle
Investment Management L.L.C.
On
January 12, 2023, the Fund entered into a definitive agreement (the “Transaction
Agreement”) with the Adviser pursuant to which, among other things, CGCIM would
become the investment adviser to the Fund (the “Transaction”). Pursuant to the
Transaction Agreement, the investment advisory agreement between the Fund and
Oakline terminated at or near the closing of the Transaction (the “Closing”). As
a result, the holders of the Fund’s common shares (“Shareholders”) were asked to
approve a new investment advisory agreement between the Fund and CGCIM and to
approve certain other proposals upon which the Closing was conditioned. The
Shareholders approved the new Investment Advisory Agreement and the other
proposals at a shareholder meeting on June 15, 2023, followed by the Closing,
which occurred on July 14, 2023. In connection with Closing, (i) the Fund sold
existing investments with a gross asset value equal to approximately 97% of the
total gross asset value of such investments as of August 31, 2022, subject to
certain exclusions; (ii) CGCIM replaced Oakline as the Fund’s new investment
adviser; (iii) the Fund’s investment strategy was changed to invest primarily in
debt and equity tranches issued by collateralized loan obligations; (iv) each of
the Fund’s trustees and officers were replaced; (v) the Fund changed its name on
July 14, 2023 from Vertical Capital Income Fund to Carlyle Credit Income Fund;
and (vi) on July 27, 2023 the Fund’s common shares began trading on NYSE under
the symbol “CCIF.” In addition, Shareholders of the Fund received a special
one-time payment of $10,000,000 from CGCIM (or one of its affiliates), or
approximately $0.96 per common share.
Following
the closing of the Transaction and pursuant to the Transaction Agreement, (i) CG
Subsidiary Holdings L.L.C., an affiliate of the Adviser (the “Purchaser”)
commenced a tender offer on July 18, 2023 to purchase up to $25,000,000 of
outstanding Fund common shares at the then-current net asset value per common
share (the “Tender Offer”), and (ii) the Purchaser agreed to invest $15,000,000
into the Fund through the purchase of newly issued Fund common shares at a price
equal to the greater of the then-current net asset value per common share and
the net asset value per common share that represents the tender offer purchase
price (the “New Issuance”), and through acquiring common shares in private
purchases (the “Private Purchase”).
The
Tender Offer expired on August 28, 2023, and the Purchaser accepted for purchase
3,012,049 common shares at a purchase price of $8.30 per common share for an
aggregate purchase price of $25,000,007, excluding fees and expenses relating to
the Tender Offer.
On
September 12, 2023, the Fund closed the New Issuance and issued and sold
1,269,537 common shares to the Purchaser at a purchase price of $8.52 per common
share, which price represented the net asset value per common share as of the
closing of the New Issuance, for an aggregate purchase price of
$10,816,451.
On
September 12, 2023, the Purchaser closed the Private Purchase and acquired
504,042 common shares from existing shareholders of the Fund.
Prior
to the close of business on July 14, 2023, the Fund’s investment objective was
to generate income by primarily investing in mortgage notes secured by
residential real estate. Following the closing of the Transaction, the Fund’s
primary investment objective is to generate current income, with a secondary
objective to generate capital appreciation. The Fund seeks to achieve its
investment objectives by investing primarily in equity and junior debt tranches
of collateralized loan obligations (“CLO”) that are collateralized by a
portfolio consisting primarily of below investment grade U.S. senior secured
loans with a large number of distinct underlying borrowers across various
industry sectors. The Fund may also invest in other related securities and
instruments or other securities and instruments that the Adviser believes are
consistent with its investment objectives, including senior debt tranches of
CLOs, loan accumulation facilities (“LAFs”) and securities issued by other
securitization vehicles, such as collateralized bond obligations, or “CBOs.”
LAFs are short- to medium-term facilities often provided by the bank that will
serve as the placement agent or arranger on a CLO transaction. LAFs typically
incur leverage between four and six times equity value prior to a CLO’s pricing.
The CLO securities in which the Fund primarily seek to invest are unrated or
rated below investment grade and are considered speculative with respect to
timely payment of interest and repayment of principal. Unrated and below
investment grade securities are also sometimes referred to as “junk” securities.
In
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
addition,
the CLO equity and junior debt securities in which the Fund invests are highly
leveraged (with CLO equity securities typically being leveraged ten times),
which magnifies the Fund’s risk of loss on such investments.
To
qualify as a RIC, the Fund must, among other things, meet certain
source-of-income and asset diversification requirements and timely distribute to
its shareholders generally at least 90% of its investment company taxable
income, as defined by the Code, for each year. Pursuant to this election, the
Fund generally does not have to pay corporate level taxes on any income that it
distributes to shareholders, provided that the Fund satisfies those
requirements.
2.
SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
financial statements have been prepared on the accrual basis of accounting in
accordance with accounting principles generally accepted in the United States
(“U.S. GAAP”). The Fund is an investment company for the purposes of accounting
and financial reporting in accordance with Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial
Services—Investment Companies
(“ASC 946”).
U.S. GAAP for an investment company requires investments to be recorded at fair
value. With the exception of the line item entitled “preferred shares” which is
reported at amortized cost, the carrying value for all other assets and
liabilities approximates their fair value. The Fund’s fiscal year ends on
September 30, and unless otherwise noted, references to fiscal year or year are
for fiscal years ended September 30.
Use
of Estimates
The
preparation of the financial statements in conformity with U.S. GAAP requires
management to make assumptions and estimates that affect the reported amounts
reported in the financial statements and accompanying notes. Management’s
estimates are based on historical experiences and other factors, including
expectations of future events that management believes to be reasonable under
the circumstances. It also requires management to exercise judgment in the
process of applying the Fund’s accounting policies.
Investments
Investment
transactions are recorded as of the applicable trade date. Realized gains or
losses are measured by the difference between the net proceeds from the
repayment or sale and the amortized cost basis of the investment using the
specific identification method without regard to unrealized appreciation or
depreciation previously recognized, and includes investments charged off during
the period, net of recoveries. Net change in unrealized appreciation or
depreciation on investments as presented in the accompanying Statement of
Operations reflects the net change in the fair value of investments, including
the reversal of previously recorded unrealized appreciation or depreciation when
gains or losses are realized. See Note 3. Fair
Value Measurements,
for further information.
Cash
and Cash Equivalents
Cash
and cash equivalents consist of demand deposits and highly liquid investments
(e.g., money market funds, U.S. treasury notes) with original maturities of
three months or less. The Fund’s cash and cash equivalents are held at one or
more large financial institutions and cash held in such financial institutions
may, at times, exceed the Federal Deposit Insurance Corporation insured limit.
The Fund classifies cash equivalents as Level I in the fair value hierarchy.
Cash equivalents are carried at cost or amortized cost which approximates fair
value.
Interest
from Investments
CLO
equity investments recognize investment income by utilizing an effective
interest methodology based upon an effective yield to maturity utilizing
projected cash flow, as required by ASC Topic 325-40, Beneficial
Interest in Securitized Financial Assets.
The Fund monitors the expected residual payments, and effective yield is
determined and updated periodically, as needed. Accordingly, investment income
recognized on CLO equity securities in the U.S. GAAP statement of operations
differs from both the tax-basis investment income and from the cash
distributions actually received by the Fund during the quarterly
period.
Interest
income is recorded on an accrual basis and includes the accretion of discounts
and amortization of premiums. Discounts from and premiums to par value on debt
investments purchased are accreted/amortized into interest income over the life
of the respective security using the effective interest method. The amortized
cost of debt investments represents the original cost, including origination
fees and upfront fees received that are deemed to be an adjustment to yield,
adjusted for the accretion of discounts and amortization of premiums, if any.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
Interest
Expense
Interest
expense includes the Fund’s dividends associated with its 8.75% Series A Term
Preferred Shares due October 31, 2028 (the “Series A Term Preferred Shares”),
its 7.125% Series B Convertible Preferred Shares (the “Series B Convertible
Preferred Shares”), its 7.50% Series C Convertible Preferred Shares (the “Series
C Convertible Preferred Shares”), and its Credit Facility. Interest expense also
includes the Fund’s amortization of deferred issuance costs associated with its
Series A Term Preferred Shares, its Series B Convertible Preferred Shares, its
Series C Convertible Preferred Shares, and its Credit Facility.
Prepaid
Expenses
Prepaid
expenses consist primarily of insurance premiums and ATM program expenses. See
Note 9. Capital,
for further information.
Insurance premiums are amortized over the term of the current policy. Prepaid
ATM program expenses represent fees and expenses incurred in connection with the
ATM program. Such costs are allocated pro-rata based on the amount issued
relative to the total respective offering amount and are charged to
paid-in-capital. Any remaining prepaid expense balance associated with the ATM
program is charged to expense at the earlier of the end of the program period,
or at the effective date of a new ATM program.
Preferred
Shares (See
Note 7.
Preferred Shares, for
further information)
The
Fund authorized and issued its Series A Term Preferred and its Series B
Convertible Preferred Shares during the year ended September 30, 2024. The Fund
authorized and issued its Series C Convertible Preferred Shares during the year
ended September 30, 2025. The Fund carries its mandatory redeemable Series A
Term Preferred Shares, Series B Convertible Preferred Shares and Series C
Convertible Preferred Shares at amortized cost, and such shares are included as
a liability on the Statement of Assets and Liabilities.
Deferred
Issuance Costs
Deferred
issuance costs consist of fees and expenses incurred in connection with the
closing of the Fund’s Series A Term Preferred Shares, Series B Convertible
Preferred Shares, Series C Convertible Preferred Shares, and Credit Facility.
Deferred issuance costs related to the Series A Term Preferred Shares are
amortized over the period the shares are outstanding. Deferred issuance costs
related to the Series B Convertible Preferred Shares and Series C Convertible
Preferred Shares are amortized over the shorter of 12 months or the period the
shares are outstanding. Deferred issuance costs related to the Credit Facility
are amortized on the straight-line basis over the term of the Credit Facility.
The amortized expenses are included in interest expense in the Fund’s financial
statements. The unamortized deferred issuance costs related to the Series A Term
Preferred Shares, Series B Convertible Preferred Shares, and Series C
Convertible Preferred Shares are included on the Fund’s Statement of Assets and
Liabilities as a direct deduction from the related preferred share liability.
The unamortized balance of such costs related to the Credit Facility is included
in Deferred Issuance Costs on the Fund’s Statement of Assets and
Liabilities.
Income
Taxes
For
federal income tax purposes, the Fund has elected to be treated as a RIC under
the Code, and intends to make the required distributions to its shareholders as
specified therein. In order to qualify as a RIC, the Fund must meet certain
minimum distribution, source-of-income and asset diversification requirements.
If such requirements are met, then the Fund is generally required to pay income
taxes only on the portion of its taxable income and gains it does not
distribute.
The
minimum distribution requirements applicable to RICs require the Fund to
distribute to its shareholders at least 90% of its investment company taxable
income (“ICTI”), as defined by the Code, each year (the “Annual Distribution
Requirement”). Depending on the level of ICTI earned in a tax year, the Fund may
choose to carry forward ICTI in excess of current year distributions into the
next tax year. Any such carryover ICTI must be distributed before the end of
that next tax year through a dividend declared prior to filing the final tax
return related to the year which generated such ICTI.
In
addition, based on the excise distribution requirements, the Fund is subject to
a 4% nondeductible federal excise tax on undistributed income unless the Fund
distributes in a timely manner an amount at least equal to the sum of (1) 98% of
its ordinary income for each calendar year, (2) 98.2% of capital gain net income
(both long-term and short-term) for the one-year period ending October 31 in
that calendar year and (3) any income realized, but not distributed, in the
preceding year. For this purpose, however, any ordinary income or capital gain
net income retained by the Fund that is subject to corporate income tax is
considered to have been distributed. The Fund intends to make sufficient
distributions each taxable year to satisfy the excise distribution requirements.
Due
to timing of dividends and distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or net realized
gain was recorded by the Fund.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
Dividends
The
composition of distributions paid to common shareholders from net investment
income and capital gains are determined in accordance with U.S. federal income
tax regulations, which differ from U.S. GAAP. Distributions to common
shareholders can be comprised of net investment income, net realized capital
gains and return of capital for U.S. federal income tax purposes and are
intended to be paid monthly. Distributions payable to common shareholders are
recorded as a liability on ex-dividend date.
The
Fund has an “opt out” dividend reinvestment plan (“DRP”) that provides for
reinvestment of dividends and other distributions on behalf of the shareholder,
other than those shareholders who have “opted out” of the plan. As a result of
adopting the plan, if the Board of Trustees authorizes, and the Fund declares, a
cash dividend or distribution, the shareholders who have not elected to “opt
out” of the DRP will have their cash dividends or distributions automatically
reinvested in additional shares of the Fund’s shares of beneficial interest,
rather than receiving cash. Each registered shareholder may elect to have such
shareholder’s dividends and distributions distributed in cash rather than
participate in the plan. For any registered shareholder that does not so elect,
distributions on such shareholder’s shares will be reinvested by the Transfer
Agent, the Fund’s plan administrator, in additional shares. The number of shares
to be issued to the shareholder will be determined based on the total dollar
amount of the cash distribution payable, net of applicable withholding
taxes.
Functional
Currency
The
functional currency of the Fund is the U.S. Dollar. Investments are generally
made in the local currency of the country in which the investments are domiciled
and are translated into U.S. Dollars with foreign currency translation gains or
losses recorded within net change in unrealized appreciation (depreciation) on
investments in the accompanying Statement of Operations.
3.
FAIR VALUE MEASUREMENTS
The
Fund applies fair value accounting in accordance with the terms of FASB ASC
Topic 820, Fair
Value Measurement
(“ASC 820”). ASC 820 defines fair value as the amount that would be exchanged to
sell an asset or transfer a liability in an orderly transfer between market
participants at the measurement date. The Fund values securities/instruments
traded in active markets on the measurement date by multiplying the bid price of
such traded securities/instruments by the quantity of shares or amount of the
instrument held. The Fund may also obtain quotes with respect to certain of its
investments, such as its securities/instruments traded in active markets and its
liquid securities/instruments that are not traded in active markets, from
pricing services, brokers, or counterparties (i.e., “consensus pricing”). When
doing so, the Adviser determines whether the quote obtained is sufficient
according to U.S. GAAP to determine the fair value of the security. The Fund may
use the quote obtained or alternative pricing sources may be utilized including
valuation techniques typically utilized for illiquid
securities/instruments.
The
Board of Trustees has designated the Adviser as the Fund’s valuation designee
for purposes of Rule 2a-5 under the Investment Company Act to perform the fair
value determination of all of the Fund’s assets in accordance with the terms of
ASC 820. Securities/instruments that are illiquid or for which the pricing
source does not provide a valuation or methodology or provides a valuation or
methodology that, in the judgment of the Adviser, does not represent fair value
shall each be valued as of the measurement date using all techniques appropriate
under the circumstances and for which sufficient data is available. These
valuation techniques may vary by investment and include comparable public market
valuations, comparable precedent transaction valuations and/or discounted cash
flow analyses. The Adviser engages third-party valuation firms to provide
independent prices on securities/instruments. The Adviser’s Valuation Committee
(the “Valuation Committee”) reviews the assessments of the third-party valuation
firms and provides any recommendations with respect to changes to the fair value
of each investment in the portfolio and approves the fair value of each
investment in the portfolio in good faith based on the input of the third-party
valuation firms. If the Adviser reasonably believes a valuation from a pricing
vendor is inaccurate or unreliable, the Valuation Committee will consider an
“override” of the particular valuation. The Valuation Committee will consider
all available information at its disposal prior to making a valuation
determination.
U.S.
GAAP establishes a hierarchical disclosure framework which ranks the level of
observability of market price inputs used in measuring investments at fair
value. The observability of inputs is impacted by a number of factors, including
the type of investment and the characteristics specific to the investment and
state of the marketplace, including the existence and transparency of
transactions between market participants. Investments with readily available
quoted prices or for which fair value can be measured from quoted prices in
active markets generally have a higher degree of market price observability and
a lesser degree of judgment applied in determining fair value.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
Investments
measured and reported at fair value are classified and disclosed based on the
observability of inputs used in determination of fair values, as
follows:
•Level
1— inputs to the valuation methodology are quoted prices available in active
markets for identical investments as of the reporting date. The types of
financial instruments included in Level 1 generally include unrestricted
securities, including equities and derivatives, listed in active markets. The
Adviser does not adjust the quoted price for these investments, even in
situations where we hold a large position and a sale could reasonably impact the
quoted price.
•Level
2—inputs to the valuation methodology are either directly or indirectly
observable as of the reporting date and are those other than quoted prices in
active markets. The type of financial instruments in this category generally
includes less liquid and restricted securities listed in active markets,
securities traded in other than active markets, government and agency
securities, and certain over-the-counter derivatives where the fair value is
based on observable inputs.
•Level
3—inputs to the valuation methodology are unobservable and significant to
overall fair value measurement. The inputs into the determination of fair value
require significant management judgment or estimation. Financial instruments
that are included in this category generally include investments in privately
held entities, non-investment grade residual interests in securitizations,
collateralized loan obligations, and certain over-the-counter derivatives where
the fair value is based on unobservable inputs.
In
certain cases, the inputs used to measure fair value may fall into different
levels of the fair value hierarchy. In such cases, an investment’s level within
the fair value hierarchy is based on the lowest level of input that is
significant to the overall fair value measurement. The Adviser’s assessment of
the significance of a particular input to the fair value measurement in its
entirety requires judgment, and considers factors specific to the
investment.
Transfers
between levels, if any, are recognized at the beginning of the period in which
the transfers occur. During the year ended September 30, 2025, there were no
transfers.
The
following table summarizes the Fund’s investments measured at fair value on a
recurring basis by the above fair value hierarchy levels as of September 30,
2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| As
of September 30, 2025 |
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| Assets |
|
|
|
| |
| Cash
Equivalents |
$ |
2,465,620 |
|
| $ |
— |
|
| $ |
— |
|
| $ |
2,465,620 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Collateralized
Loan Obligations |
— |
|
| — |
|
| 190,028,718 |
|
| 190,028,718 |
|
| Real
Estate |
— |
|
| — |
|
| 2,175,000 |
|
| 2,175,000 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
| Total
Investments, at Fair Value |
$ |
2,465,620 |
|
| $ |
— |
|
| $ |
192,203,718 |
|
| $ |
194,669,338 |
|
|
|
|
|
|
|
|
| |
The
changes in the Fund’s investments at fair value for which the Fund has
classified as Level 3 for the year ended September 30, 2025, are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| For
the Year Ended September 30, 2025 |
|
|
|
|
|
|
|
| Collateralized
Loan Obligations |
| Real
Estate |
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Balance,
beginning of period |
|
|
|
|
|
|
|
|
|
| $ |
171,278,913 |
|
| $ |
2,175,000 |
|
|
|
|
|
| $ |
173,453,913 |
|
| Purchases
of investments |
|
|
|
|
|
|
|
|
|
| 106,130,703 |
|
| — |
|
|
|
|
|
| 106,130,703 |
|
|
Proceeds
from sales and paydowns of investments (1) |
|
|
|
|
|
|
|
|
|
| (66,169,663) |
|
| — |
|
|
|
|
|
| (66,169,663) |
|
| Net
realized gains (losses) |
|
|
|
|
|
|
|
|
|
| (17,706,825) |
|
| — |
|
|
|
|
|
| (17,706,825) |
|
| Accretion
of discount (premium) |
|
|
|
|
|
|
|
|
|
| 499 |
|
| — |
|
|
|
|
|
| 499 |
|
| Net
change in unrealized appreciation (depreciation) |
|
|
|
|
|
|
|
|
|
| (3,504,909) |
|
| — |
|
|
|
|
|
| (3,504,909) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Balance,
end of period |
|
|
|
|
|
|
|
|
|
| $ |
190,028,718 |
|
| $ |
2,175,000 |
|
|
|
|
|
| $ |
192,203,718 |
|
| Net
change in unrealized appreciation (depreciation) included in earnings
related to investments still held at the reporting date |
|
|
|
|
|
|
|
|
|
| $ |
(7,854,210) |
|
| $ |
— |
|
|
|
|
|
| $ |
(7,854,210) |
|
(1)
Includes
$14,422,841 of return of capital on CLO investments from recurring cash flows
and refinancings.
The
Fund generally uses the following framework when determining the fair value of
investments that are categorized as Level 3:
The
fair value of CLOs is estimated based on various valuation models from
third-party pricing services. Those analyses consider the current trading
activity, position size, liquidity, current financial condition of the CLOs, the
third-party
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
financing
environment, reinvestment rates, recovery lags, discount rates, and default
forecasts. The Fund corroborates quotations from pricing services either with
other available pricing data and subsequent or recent trading information. These
securities are classified as Level 3.
The
following table summarizes the quantitative information related to the
significant unobservable inputs for Level 3 instruments which are carried at
fair value as of September 30, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Fair
Value as of September 30, 2025 |
| Valuation
Techniques |
| Significant
Unobservable
Inputs |
| Range |
| Weighted
Average |
|
| Low |
| High |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Collateralized
Loan Obligations |
$ |
188,667,074 |
|
| Consensus
Pricing |
| Indicative
Quotes |
| 0.85 |
% |
| 97.6 |
% |
| 60.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
| $ |
1,361,644 |
|
| Discounted
Cash Flow |
| Discount
Rate |
| 20.0 |
% |
| 20.0 |
% |
| 20.0 |
% |
| Real
Estate |
2,175,000 |
|
| Market
Approach |
| Bid
Price |
| 54.4 |
% |
| 54.4 |
% |
| 54.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
| Total
Level 3 Investments |
$ |
192,203,718 |
|
|
|
|
|
|
|
|
|
| |
The
significant unobservable inputs used in the fair value measurement of the Fund’s
investments in CLOs are indicative quotes. Significant decreases in indicative
quotes may result in a significantly lower fair value measurement. The Fund’s
Real Estate investment is being valued based on an indicative bid
received.
4.
RELATED PARTY TRANSACTIONS
Investment
Advisory Agreement
On
November 28, 2022, the Fund’s Board of Trustees, including a majority of the
Trustees who are not “interested persons” as that term is defined in the 1940
Act, as amended, approved the Investment Advisory Agreement, subject to
Shareholder approval. The Board weighed a number of factors in reaching its
decision to approve the Investment Advisory Agreement, including, without
limitation, the history, reputation, and resources of CGCIM, prior performance
results achieved by CGCIM, and quality of services to be provided by CGCIM. The
Board considered CGCIM’s expertise in managing collateralized loan obligation
securities.
The
Shareholders approved the Investment Advisory Agreement on June 15, 2023 and it
became effective on July 14, 2023, at which time the original Investment
Advisory Agreement between the Fund and Oakline Advisors, LLC terminated.
Pursuant to the Investment Advisory Agreement, by and between the Fund and the
Adviser, and in consideration of the advisory services provided by the Adviser
to the Fund, the Adviser is entitled to a fee consisting of two components—a
base management fee (the “Management Fee”) and an incentive fee (the “Incentive
Fee”).
The
Management Fee is calculated and payable monthly in arrears at the annual rate
of 1.75% of the month-end value of the Fund’s Managed Assets. “Managed Assets”
means the total assets of the Fund (including any assets attributable to any
preferred shares or to indebtedness) minus the Fund’s liabilities other than
liabilities relating to indebtedness.
The
incentive fee is calculated and payable quarterly in arrears based upon the
Fund’s pre-incentive fee net investment income for the immediately preceding
quarter, and is subject to a hurdle rate, expressed as a rate of return on the
Fund’s net assets, equal to 2.00% per quarter (or an annualized hurdle rate of
8.00%), subject to a “catch-up” feature. For this purpose, “pre-incentive fee
net investment income” means interest income, dividend income, income generated
from original issue discounts, payment-in-kind income, and any other income
earned or accrued during the calendar quarter, minus the Fund’s operating
expenses (which, for this purpose shall not include any distribution and/or
shareholder servicing fees, litigation, any extraordinary expenses or Incentive
Fee) for the quarter. For purposes of computing the Fund’s pre-incentive fee net
investment income, the calculation methodology will look through total return
swaps as if the Fund owned the referenced assets directly. As a result, the
Fund’s pre-incentive fee net investment income includes net interest, if any,
associated with a derivative or swap, which is the difference between (a) the
interest income and transaction fees related to the reference assets and (b) all
interest and other expenses paid by the Fund to the derivative or swap
counterparty. For purposes of the Incentive Fee, net assets are calculated for
the relevant quarter as the weighted average of the net asset value of the Fund
as of the first business day of each month therein. The weighted average net
asset value shall be calculated for each month by multiplying the net asset
value as of the beginning of the first business day of the month times the
number of days in that month, divided by the number of days in the applicable
calendar quarter.
The
Fund pays its Adviser an incentive fee with respect to its pre-incentive fee net
investment income in each calendar quarter as follows:
•No
incentive fee based on pre-incentive fee net investment income in any calendar
quarter in which its pre-incentive fee net investment income does not exceed the
hurdle rate of 2.00%;
•100%
of the portion of the Fund’s pre-incentive fee net investment income that
exceeds the hurdle rate but is less than or equal to 2.4242% (the “catch-up”) is
payable to the Adviser if the Fund’s pre-incentive fee net investment income,
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
expressed
as a percentage of the Fund’s net assets in respect of the relevant calendar
quarter, exceeds the hurdle rate but is less than or equal to 2.4242% (9.6968%
annualized). The “catch-up” provision is intended to provide the Adviser with an
incentive fee of 17.5% on all of the Fund’s pre-incentive fee net investment
income when the Fund’s pre-incentive fee net investment income reaches 2.4242%
of net assets; and
•17.5%
of the portion of the Fund’s pre-incentive fee net investment income that
exceeds the “catch-up” will be payable to the Adviser if the Fund’s
pre-incentive fee net investment income, expressed as a percentage of the Fund’s
net assets in respect of the relevant calendar quarter, exceeds 2.4242% (9.6968%
annualized). As a result, once the hurdle rate is reached and the catch-up is
achieved, 17.5% of all the Fund’s pre-incentive fee net investment income
thereafter is allocated to the Adviser.
During
the year ended September 30, 2025, the management fee was $3,623,309 and
incentive fee related to pre-incentive fee net investment income was
$3,225,894.
As
of September 30, 2025, $305,632 and $670,743 was included in management fee
payable and incentive fee payable, respectively, in the accompanying Statement
of Assets and Liabilities.
Expense
Limitation Agreement
The
Adviser and the Fund entered into an Expense Limitation Agreement under which
the Adviser had agreed contractually to waive its Management Fee and/or
reimburse the Fund’s operating expenses on a monthly basis to the extent that
the Fund’s monthly total annualized fund operating expenses (excluding (i)
expenses directly related to the costs of making investments, including interest
and structuring costs for borrowings and line(s) of credit, taxes, brokerage
costs, the Fund’s proportionate share of expenses related to co-investments,
litigation and extraordinary expenses, (ii) Incentive Fees, expenses related to
equity or debt offerings, and (iii) expenses associated with the Transaction
Agreement, including expenses related to the liquidation as defined therein) in
respect of the relevant month not to exceed 2.50% of the Fund’s average daily
net assets. The Expense Limitation Agreement terminated based on its terms on
August 17, 2023, which was the date that 75% of the Fund’s gross assets were
invested in collateralized loan obligation equity and debt
investments.
CGCIM
also had a Fee Waiver Agreement under which it had agreed to irrevocably waive
the portion of its management and incentive fees on Fund managed assets invested
in exchange traded funds through January 12, 2024 (the “Termination Date”), as
the Fund’s portfolio transitioned to the new investment strategy. CGCIM was not
entitled to recoup any waived fees under the Fee Waiver Agreement. For the
period from July 14, 2023, the date CGCIM
replaced Oakline as the Fund’s new investment adviser, through the Termination
Date, the Fund did not have any investments in exchange traded funds, and thus
no management or incentive fees were waived under the Fee Waiver
Agreement.
The
Adviser is obligated to pay expenses associated with providing the investment
services stated in the Investment Advisory Agreement, including compensation of
and office space for its officers and employees connected with investment and
economic research, trading and investment management of the Fund.
Board
of Trustees
The
Fund’s Board of Trustees currently consists of five members, three of whom are
Independent Trustees. The Board of Trustees has established an Audit Committee,
a Nominating and Governance Committee and an Independent Trustees Committee, the
members of each of which consist entirely of the Fund’s Independent Trustees.
The Board of Trustees may establish additional committees in the future. During
the year ended September 30, 2025, the Fund incurred $125,000 in fees and
expenses associated with its Independent Trustees' services on the Fund's Board
of Trustees and its committees. As of September 30, 2025, no fees or expenses
associated with the Fund’s Independent Trustees were payable.
Shareholder
Concentration
Related
parties owned approximately 23% of the Fund's total outstanding shares as of
September 30, 2025. Related parties may include, but are not limited to, the
Adviser and its affiliates, affiliated broker dealers, fund of funds, and
directors or employees.
5.
RISK FACTORS
Investment
Risks
Portfolio
Fair Value Risk
Under
the Investment Company Act, the Fund is required to carry its portfolio
investments at market value or, if there is no readily available market value,
at fair value. There is not a public market for the CLO investments we target.
As a result, the Adviser values these securities at least quarterly, or more
frequently as may be required from time to time, at fair value. The
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
Adviser,
as valuation designee, is responsible for the valuation of the Fund’s portfolio
investments and implementing the portfolio.
The
Fund expects that it will hold a high proportion of Level 3 investments relative
to its total investments, which is directly related to the Fund’s investment
philosophy and target portfolio. The Adviser has engaged an independent
valuation firm to fair value the Fund’s Level 3 investments on a monthly basis.
A retained independent valuation firm will have expertise in complex valuations
associated with alternative investments and utilize a variety of techniques to
calculate a security’s/instrument’s valuation. The valuation approach may vary
by security/instrument but may include comparable public market valuations,
comparable transaction valuations and discounted cash flow analyses. All factors
that might materially impact the value of an investment (e.g., operating
results, financial condition, achievement of milestones, economic and/or market
events and recent sales prices) may be considered. The factors and methodologies
used for the valuation of such securities are not necessarily an indication of
the risks associated with investing in those securities nor can it be assured
that the Fund can realize the fair value assigned to a security if it were to
sell the security. Because such valuations are inherently uncertain, they often
reflect only periodic information received by the Adviser about such companies’
financial condition and/or business operations, which may be on a lagged basis
and therefore fluctuate over time and can be based on estimates. Determinations
of fair value may differ materially from the values that would have been used if
an exchange-traded market for these securities
existed.
Potential
Conflicts of Interest Risk—Allocation of Investment
Opportunities
The Adviser has adopted allocation procedures that are intended to
treat each fund they advise in a manner that, over a period of time, is fair and
equitable. The Adviser and its affiliates currently provide investment advisory
and administration services and may provide in the future similar services to
other entities (collectively, “Advised Funds”). Certain existing Advised Funds
have, and future Advised Funds may have, investment objectives similar to those
of the Fund, and such Advised Funds will invest in asset classes similar to
those targeted by the Fund. Certain other existing Advised Funds do not, and
future Advised Funds may not, have similar investment objectives, but such funds
may from time to time invest in asset classes similar to those targeted by the
Fund. The Adviser will endeavor to allocate investment opportunities in a fair
and equitable manner, and in any event consistent with any fiduciary duties owed
to the Fund and other clients and in an effort to avoid favoring one client over
another and taking into account all relevant facts and circumstances, including
(without limitation): (i) differences with respect to available capital, size of
client, and remaining life of a client; (ii) differences with respect to
investment objectives or current investment strategies, including regarding: (a)
current and total return requirements, (b) emphasizing or limiting exposure to
the security or type of security in question, (c) diversification, including
industry or company exposure, currency and jurisdiction, or (d) rating agency
ratings; (iii) differences in risk profile at the time an opportunity becomes
available; (iv) the potential transaction and other costs of allocating an
opportunity among various clients; (v) potential conflicts of interest,
including whether a client has an existing investment in the security in
question or the issuer of such security; (vi) the nature of the security or the
transaction, including minimum investment amounts and the source of the
opportunity; (vii) current and anticipated market and general economic
conditions; (viii) existing positions in a borrower/loan/security; and (ix)
prior positions in a borrower/loan/security. Nevertheless, it is possible that
the Fund may not be given the opportunity to participate in certain investments
made by investment funds managed by investment managers affiliated with the
Adviser.
Collateralized
Loan Obligations
The
Fund invests in CLOs. Investments in CLO securities involve certain risks. CLOs
are generally backed by an asset or a pool of assets that serve as collateral.
The Fund and other investors in CLO securities ultimately bear the credit risk
of the underlying collateral. Most CLOs are issued in multiple tranches,
offering investors various maturity and credit risk characteristics, often
categorized as senior, mezzanine and subordinated/equity according to their
degree of risk. If there are defaults or the relevant collateral otherwise
underperforms, scheduled payments to senior tranches of such securities take
precedence over those of junior tranches which are the focus of our investment
strategy, and scheduled payments to junior tranches have a priority in right of
payment to subordinated/equity tranches. CLOs may present risks similar to those
of the other types of debt obligations and, in fact, such risks may be of
greater significance in the case of CLOs. For example, investments in junior
debt and equity securities issued by CLOs, involve risks, including credit risk
and market risk. Changes in interest rates and credit quality may cause
significant price fluctuations. In addition to the general risks associated with
investing in debt securities, CLO securities carry additional risks, including:
(1) the possibility that distributions from collateral assets will not be
adequate to make interest or other payments; (2) the quality of the collateral
may decline in value or default; (3) investments in CLO junior debt and equity
tranches will likely be subordinate in right of payment to other senior classes
of CLO debt; and (4) the complex structure of a particular security may not be
fully understood at the time of investment and may produce disputes with the
issuer or unexpected investment results. Changes in the collateral held by a CLO
may cause payments on the instruments the Fund holds to be reduced, either
temporarily or permanently.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
Covenant-Lite
Loans Risk
Covenant-lite
loans may comprise a significant portion of the senior secured loans underlying
the CLOs in which we invest. Over the past decade, the senior secured loan
market has evolved from one in which covenant-lite loans represented a minority
of the market to one in which such loans represent a significant majority of the
market. Generally, covenant-lite loans provide borrower companies more freedom
to negatively impact lenders because their covenants are incurrence-based, which
means they are only tested and can only be breached following an affirmative
action of the borrower, rather than by a deterioration in the borrower’s
financial condition. Accordingly, to the extent that the CLOs that we invest in
hold covenant-lite loans, our CLOs may have fewer rights against a borrower and
may have a greater risk of loss on such investments as compared to investments
in or exposure to loans with financial maintenance
covenants.
Subordinated
Securities
CLO equity and junior debt securities are subordinated to more senior
tranches of CLO debt. CLO equity and junior debt securities are subject to
increased risks of default relative to the holders of superior priority
interests in the same CLO. In addition, at the time of issuance, CLO equity
securities are under-collateralized in that the face amount of the CLO debt and
CLO equity of a CLO at inception exceed its total assets. The Fund will
typically be in a subordinated or first loss position with respect to realized
losses on the underlying assets held by the CLOs in which we are
invested.
High
Yield Investment Risk
The
CLO equity and junior debt securities are typically rated below investment
grade, or in the case of CLO equity securities unrated, and are therefore
considered “higher yield” or “junk” securities and are considered speculative
with respect to timely payment of interest and repayment of principal. The
senior secured loans and other credit-related assets underlying CLOs are also
typically higher yield investments. Investing in CLO equity and junior debt
securities and other high yield investments involves greater credit and
liquidity risk than investment grade obligations, which may adversely impact the
Fund’s performance.
Default
Risk
The
Fund is subject to risks associated with defaults on an underlying asset held by
a CLO.
•A
default and any resulting loss, as well as other losses on an underlying asset
held by a CLO may reduce the fair value of our corresponding CLO investment. A
wide range of factors could adversely affect the ability of the borrower of an
underlying asset to make interest or other payments on that asset. To the extent
that actual defaults and losses on the collateral of an investment exceed the
level of defaults and losses factored into its purchase price, the value of the
anticipated return from the investment will be reduced. The more deeply
subordinated the tranche of securities in which we invest, the greater the risk
of loss upon a default. For example, CLO equity is the most subordinated tranche
within a CLO and is therefore subject to the greatest risk of loss resulting
from defaults on the CLO’s collateral, whether due to bankruptcy or otherwise.
Any defaults and losses in excess of expected default rates and loss model
inputs will have a negative impact on the fair value of our investments, will
reduce the cash flows that the Fund receives from its investments, adversely
affect the fair value of the Fund’s assets and could adversely impact the Fund’s
ability to pay dividends. Furthermore, the holders of the junior equity and debt
tranches typically have limited rights with respect to decisions made with
respect to collateral following an event of default on a CLO. In some cases, the
senior most class of notes can elect to liquidate the collateral even if the
expected proceeds are not expected to be able to pay in full all classes of
notes. The Fund could experience a complete loss of its investment in such a
scenario.
•In
addition, the collateral of CLOs may require substantial workout negotiations or
restructuring in the event of a default or liquidation. Any such workout or
restructuring is likely to lead to a substantial reduction in the interest rate
of such asset and/or a substantial write-down or write-off of all or a portion
of the principal of such asset. Any such reduction in interest rates or
principal will negatively affect the fair value of the Fund’s
portfolio.
Non-Diversification
Risk
The
Fund is a non-diversified investment company under the 1940 Act and expects to
hold a narrower range of investments than a diversified fund under the 1940
Act.
Leverage
Risk
The
use of leverage, whether directly or indirectly through investments such as CLO
equity or junior debt securities that inherently involve leverage, may magnify
the Fund’s risk of loss. CLO equity or junior debt securities are very highly
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
leveraged
(with CLO equity securities typically being leveraged ten times), and therefore
the CLO securities in which the Fund invests are subject to a higher degree of
loss since the use of leverage magnifies
losses.
Senior
Management Personnel of the Adviser
Since
the Fund has no employees, it depends on the investment expertise, skill and
network of business contacts of the Adviser. The Adviser evaluates, negotiates,
structures, executes, monitors and services the Fund’s investments. The Fund’s
future success depends to a significant extent on the continued service and
coordination of the Adviser and its senior management team. The departure of any
members of the Adviser’s senior management team could have a material adverse
effect on the Fund’s ability to achieve its investment
objective.
Conflicts
of Interest Risk
The
Fund’s executive officers and trustees, other current and future principals of
the Adviser and certain members of the Adviser’s investment committee may serve
as officers, trustees or principals of other entities and affiliates of the
Adviser and funds managed by the Fund’s affiliates that operate in the same or a
related line of business as the Fund does. Currently, the Fund’s executive
officers, as well as the other principals of the Adviser, manage other funds
affiliated with Carlyle, including other existing and future affiliated BDCs and
registered closed-end funds, including Carlyle Secured Lending, Inc., Carlyle
Credit Solutions, Inc. and Carlyle Tactical Private Credit Fund. In addition,
the Adviser’s investment team has responsibilities for sourcing and managing
private debt investments for certain other investment funds and accounts.
Accordingly, they have obligations to investors in those entities, the
fulfillment of which may not be in the best interests of, or may be adverse to
the interests of, the Fund and its Shareholders. Although the professional staff
of the Adviser will devote as much time to management of the Fund as appropriate
to enable the Adviser to perform its duties in accordance with the Investment
Advisory Agreement, the investment professionals of the Adviser may have
conflicts in allocating their time and services among the Fund, on the one hand,
and investment vehicles managed by Carlyle or one or more of its affiliates on
the other hand.
Liquidity
Risk
Generally,
there is no public market for the CLO investments the Fund targets. As such, the
Fund may not be able to sell such investments quickly, or at all. If the Fund is
able to sell such investments, the prices the Fund receives may not reflect the
Adviser’s assessment of their fair value or the amount paid for such investments
by the Fund.
The
Adviser’s Incentive Fee Risk
The
Investment Advisory Agreement entitles the Adviser to receive incentive
compensation on income regardless of any capital losses. In such case, the Fund
may be required to pay the Adviser incentive compensation for a fiscal quarter
even if there is a decline in the value of the Fund’s portfolio or if the Fund
incurs a net loss for that quarter. Any Incentive Fee payable by the Fund that
relates to its net investment income may be computed and paid on income that may
include interest that has been accrued but not yet received. If an investment
defaults on a loan that is structured to provide accrued interest, it is
possible that accrued interest previously included in the calculation of the
Incentive Fee will become uncollectible. The Adviser is not under any obligation
to reimburse the Fund for any part of the Incentive Fee it received that was
based on accrued income that the Fund never received as a result of a default by
an entity on the obligation that resulted in the accrual of such income, and
such circumstances would result in the Fund’s paying an Incentive Fee on income
it never received. The Incentive Fee payable by the Fund to the Adviser may
create an incentive for it to make investments on the Fund’s behalf that are
risky or more speculative than would be the case in the absence of such
compensation arrangement. The way in which the Incentive Fee payable to the
Adviser is determined may encourage it to use leverage to increase the return on
the Fund’s investments. In addition, the fact that the Management Fee is payable
based upon the Fund’s Managed Assets, which would include any borrowings for
investment purposes, may encourage the Adviser to use leverage to make
additional investments. Under certain circumstances, the use of leverage may
increase the likelihood of default, which would disfavor Shareholders. Such a
practice could result in the Fund’s investing in more speculative securities
than would otherwise be in its best interests, which could result in higher
investment losses, particularly during cyclical economic
downturns.
Market
Risks
The
success of the Fund’s activities will be affected by general economic and market
conditions, such as interest rates, availability of credit, credit defaults,
inflation rates, economic uncertainty, changes in laws (including laws relating
to taxation of the Fund’s investments), trade barriers and tariffs, currency
exchange controls, disease outbreaks, pandemics, and national and international
political, environmental and socioeconomic circumstances (including wars,
terrorist acts or security operations). In addition, the current U.S. political
environment and the resulting uncertainties regarding actual and potential
shifts in U.S. foreign investment, trade, taxation, economic, environmental and
other policies under the current Administration, as well as the impact of
geopolitical tension, such as a deterioration in the bilateral relationship
between the U.S. and China or an escalation in conflict in the Middle East or
between Russia and Ukraine, could lead to disruption, instability and volatility
in
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
the
global markets. It is not possible to predict the duration or extent of
longer-term consequences of these conflicts, which could include further
sanctions, retaliatory and escalating measures, embargoes, regional instability,
geopolitical shifts and adverse effects on or involving macroeconomic
conditions, the energy sector, supply chains, inflation, security conditions,
currency exchange rates and financial markets around the globe. Any such market
disruptions could have a material adverse effect on our business, financial
condition and results of operations. Unfavorable economic conditions also would
be expected to increase our funding costs, limit our access to the capital
markets or result in a decision by lenders not to extend credit to
us.
Current and historic market turmoil has illustrated that market
environments may, at any time, be characterized by uncertainty, volatility and
instability. For example, the outbreak of COVID-19 caused materially reduced
consumer demand and economic output, disrupting supply chains, resulting in
market closures, travel restrictions and quarantines, and adversely impacting
local and global economies. As with other serious economic disruptions,
governmental authorities and regulators are responding to this crisis with
significant fiscal and monetary policy changes, including by providing direct
capital infusions into companies, introducing new monetary programs and
considerably lowering interest rates, which, in some cases resulted in negative
interest rates.
Inflation
Risk
Inflation
risk is the risk that the value of certain assets or income from the Fund’s
investments will be worth less in the future as inflation decreases the value of
money. As inflation increases, the real value of investments and distributions
can decline. In addition, during any periods of rising inflation, the dividend
rates or borrowing costs associated with the Fund’s use of leverage would likely
increase, which would tend to further reduce returns to
shareholders.
Interest
Rate Risk
The
senior secured loans underlying the CLOs in which the Fund invests typically
have floating interest rates. A fluctuating interest rate environment may
increase loan defaults, resulting in losses for the CLOs in which the Fund
invests. In addition, fluctuating interest rates may lead to higher prepayment
rates, as corporate borrowers look to avoid escalating interest payments or
refinance floating rate loans. Further, a general rise in interest rates will
increase the financing costs of the CLOs. However, since many of the senior
secured loans within these CLOs have Benchmark floors, if the Benchmark is below
the applicable Benchmark floor, there may not be corresponding increases in
investment income which could result in the CLO not having adequate cash to make
interest or other payments on the securities which the Fund
holds.
Regulatory
Risk
Government regulation and/or intervention may change the way the Fund
is regulated, affect the expenses incurred directly by the Fund, affect the
value of its investments and limit the Fund’s ability to achieve its investment
objective. Government regulation may change frequently and may have significant
adverse consequences. Moreover, government regulation may have unpredictable and
unintended effects. In addition to exposing the Fund to potential new costs and
expenses, additional regulation or changes to existing regulation may also
require changes to the Fund’s investment practices.
Credit
Risk
Credit
risk relates to the ability of the borrower under an instrument to make interest
and principal payments as they become due. If (1) a CLO in which the Fund
invests, (2) an underlying asset of any such CLO or (3) any other type of credit
investment in the Fund’s portfolio declines in price or fails to pay interest or
principal when due because the issuer or debtor, as the case may be, experiences
a decline in its financial status, our income, NAV and/or market price would be
adversely impacted.
Credit
Spread Risk
Credit
spread risk is the risk that credit spreads (i.e., the difference in yield
between securities that is due to differences in their credit quality) may
increase when the market expects below-investment-grade bonds to default more
frequently. Widening credit spreads may quickly reduce the market values of
below-investment-grade and unrated securities. In recent years, the U.S. capital
markets experienced extreme volatility and disruption following the spread of
COVID-19, which increased the spread between yields realized on risk-free and
higher risk securities, resulting in illiquidity in parts of the capital
markets. Central banks and governments played a key role in reintroducing
liquidity to parts of the capital markets. Future exits of these financial
institutions from the market may reintroduce temporary illiquidity. These and
future market disruptions and/or illiquidity would be expected to have an
adverse effect on the Fund’s business, financial condition, results of
operations and cash flows.
Prepayment
Risk
The
assets underlying the CLO securities are subject to prepayment by the underlying
corporate borrowers. In addition, the CLO securities and related investments are
subject to prepayment risk. If the Fund or a CLO collateral manager is
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
unable
to reinvest prepaid amounts in a new investment with an expected rate of return
at least equal to that of the investment repaid, the Fund’s investment
performance will be adversely
impacted.
Volatility
Risk
Volatility
risk refers to the magnitude of the movement, but not the direction of the
movement, in a financial instrument’s price over a defined time period. Large
increases or decreases in a financial instrument’s price over a relative time
period typically indicate greater volatility risk, while small increases or
decreases in its price typically indicate lower volatility
risk.
Equity
Risk
Equity risk relates to the change in value of equity securities as
they relate to increases or decreases in the general market.
Foreign
Exchange Rate Risk
Foreign
exchange rate risk relates to the change in the U.S. dollar value of a security
held that is denominated in a foreign currency. The U.S. dollar value of a
foreign currency denominated security will decrease as the dollar appreciates
against the currency, while the U.S. dollar value will increase as the dollar
depreciates against the currency.
Cybersecurity
Risk
Cybersecurity
incidents and cyber-attacks have been occurring globally at a more frequent and
severe level and will likely continue to increase in frequency in the future.
The Adviser faces various security threats on a regular basis, including ongoing
cyber security threats to and attacks on its information technology
infrastructure that are intended to gain access to its proprietary information,
destroy data or disable, degrade or sabotage its systems. These security threats
could originate from a wide variety of sources, including unknown third parties
outside of the Adviser. Although the Adviser is not currently aware that it has
been subject to cyber-attacks or other cyber incidents which, individually or in
the aggregate, have materially affected its operations or financial condition,
there can be no assurance that the various procedures and controls utilized to
mitigate these threats will be sufficient to prevent disruptions to its
systems.
6.
BORROWINGS
In
accordance with the Investment Company Act, the Fund is currently only allowed
to borrow amounts such that its asset coverage, as defined in the Investment
Company Act, is 300% or more for leverage obtained through debt or 200% or more
for leverage obtained through preferred shares. As of September 30, 2025, asset
coverage (exclusive of preferred shares) was 3,143% and asset coverage
(inclusive of preferred shares) was 258%.
Credit
Facility
On
July 11, 2025, the Fund entered into a revolving credit and security agreement
(the “Credit Facility”). The Credit Facility provides for maximum borrowings up
to $30 million and includes an uncommitted accordion feature that permits
increases up to $50 million, subject to lender consent and other
conditions.
The
Credit Facility has an initial stated maturity of 36 months from the closing
date, with the option for the Fund to extend such maturity on up to two
occasions for additional one-year terms, subject to certain conditions. Proceeds
of the facility may be used for general corporate purposes, including investment
activities and working capital needs, subject to compliance with the asset
coverage requirements under the Investment Company Act of 1940.
Borrowings
under the Credit Facility bear interest, at the Fund’s election, at either (i)
Term SOFR plus 3.25%, or (ii) the Prime Rate plus 3.25%. The facility includes
customary financial and restrictive covenants, including leverage, asset
coverage, and liquidity requirements, as well as restrictions on incurrence of
additional debt and liens. As of September 30, 2025, the Fund was in compliance
with all covenants and other requirements under the Credit Facility. The
obligations under the Credit Facility are secured by a first priority lien on
substantially all of the Fund’s portfolio investments, subject to customary
exceptions.
The
Credit Facility consisted of the following as of September 30, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Total Facility |
| Borrowings
Outstanding |
|
Amount
Available (1) |
| Credit
Facility |
$ |
30,000,000 |
|
| $ |
6,750,000 |
|
| $ |
23,250,000 |
|
(1)
The Amount Available for borrowing is the Total Facility less Borrowings
Outstanding, and is subject to compliance with applicable covenants and
financial ratios.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
For
the year ended September 30, 2025, $76,049 of interest expense related to the
Credit Facility was included in interest expense on the Statement of Operations.
Costs incurred in connection with the closing of the Credit Facility are being
amortized to interest expense over the term of the Credit Facility. For the year
ended September 30, 2025, the Fund recorded $55,137 of amortization of deferred
issuance costs related to the Credit Facility.
7.
PREFERRED SHARES
8.75%
Series A Term Preferred Shares
On
October 24, 2023, the Fund issued 1,200,000 shares of 8.75% Series A Term
Preferred Shares due October 31, 2028, for aggregate gross proceeds of
$30,000,000. On November 6, 2023, pursuant to the overallotment option granted
to the Underwriters in the Underwriting Agreement, dated October 18, 2023, the
Fund issued 80,000 additional shares for gross proceeds of $2,000,000. On
November 30, 2023, the Fund issued an additional 800,000 shares for gross
proceeds of $20,000,000. The shares are listed on the New York Stock Exchange
under the symbol “CCIA”. The following table summarizes the details of the
Fund’s Series A Term Preferred Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Initial
Issuance Date |
Redemption
Date |
Dividend
Rate |
Share
Amount |
Price
Per share |
Total
Raise |
| Series
A Term Preferred Shares |
10/24/2023 |
10/31/2028 |
8.75 |
% |
2,080,000 |
| $ |
25.00 |
| $ |
52,000,000 |
|
Each
holder of Series A Term Preferred Shares is entitled to a liquidation preference
of $25.00 per share (the “Series A Liquidation Preference”), plus an amount
equal to accumulated but unpaid dividends, if any, on such shares (whether or
not earned or declared, but excluding interest on such dividends) to, but
excluding, the date fixed for such redemption. The Fund is required to redeem
all outstanding shares of the Series A Term Preferred Shares on October 31, 2028
(the “Mandatory Redemption Date”), at a redemption price equal to the Series A
Liquidation Preference plus an amount equal to accumulated but unpaid dividends,
if any, to the date of redemption. The Fund cannot effect any modification of or
repeal its obligation to redeem the Series A Term Preferred Shares on the
Mandatory Redemption Date without the prior, unanimous approval of the holders
of the Series A Term Preferred Shares. At any time on or after October 31, 2025,
(the “Optional Redemption Date”), the Fund may, at its sole option, redeem the
outstanding Series A Term Preferred Shares in whole or, from time to time, in
part, at the Series A Liquidation Preference plus an amount equal to accumulated
but unpaid dividends, if any, on such shares.
The
holders of Series A Term Preferred Shares are entitled to receive monthly
dividends at a fixed annual rate of 8.75% of the Series A Liquidation Preference
($2.1875 per share per year), or the dividend rate. Cumulative cash dividends on
each share of Series A Term Preferred Shares accumulate from and include the
original issue date. Dividends on the Series A Term Preferred Shares are accrued
daily, payable monthly in arrears, and are included in Interest expense on the
Statement of Operations. For the year ended September 30, 2025, $4,550,208 of
dividend expense related to the Series A Term Preferred Shares was included in
interest expense on the Statement of Operations. Costs incurred in connection
with the issuance of the Series A Term Preferred Shares are being amortized to
interest expense over the term of the Series A Term Preferred Shares. For the
year ended September 30, 2025, the Fund recorded $439,792 of amortization of
deferred issuance costs related to the Series A Term Preferred Shares.
The
Series A Term Preferred Shares are recorded net of unamortized deferred issuance
costs and included as a liability on the Statement of Assets and Liabilities.
The carrying value of the Series A Term Preferred Shares is $50,645,278. The
Fund’s Series A Term Preferred Shares balances as of September 30, 2025, were as
follows:
|
|
|
|
|
| |
|
|
As
of September
30, 2025 |
| Series
A Liquidation Preference |
$ |
52,000,000 |
|
| Less:
Unamortized deferred issuance costs |
1,354,722 |
|
| Carrying
value |
$ |
50,645,278 |
|
|
Fair
value
(1) |
$ |
52,520,000 |
|
|
Fair
value price per share
(1) |
$ |
25.25 |
|
(1)
Represents
the September 30, 2025 closing market price per share of the Series A Term
Preferred Shares on the New York Stock
Exchange.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
7.125%
Series B Convertible Preferred Shares
On
August 27, 2024, the Fund issued 11,517 shares of 7.125% Series B Convertible
Preferred Shares due August 27, 2029, in a private placement for aggregate gross
proceeds of $11,517,000. The Series B Convertible Preferred Shares have a
liquidation preference of $1,000.00 per share (the “Series B Liquidation
Preference”), and pay a quarterly dividend at a fixed annual rate of 7.125% of
the Series B Liquidation Preference, or $71.25 per share, per year. The Series B
Convertible Preferred Shares rank senior to the common shares in priority of
payment of dividends and as to the distribution of assets upon dissolution,
liquidation, or winding up of the Fund’s affairs. The Series B Convertible
Preferred Shares rank equal in priority with the Series A Term Preferred Shares
and Series C Convertible Preferred Shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Initial
Issuance Date |
Redemption
Date |
Dividend
Rate |
Share
Amount |
Price
Per share |
Total
Raise |
| Series
B Convertible Preferred Shares |
8/27/2024 |
8/27/2029 |
7.125 |
% |
11,517 |
| $ |
1,000.00 |
| $ |
11,517,000 |
|
At
any time on or after February 27, 2025, at the Fund’s sole option, the Fund may
redeem, from time to time, the outstanding Series B Convertible Preferred Shares
in whole or in part, at a price per share equal to the sum of the Series B
Liquidation Preference plus an amount equal to accumulated but unpaid dividends,
if any, on such shares. The Fund is required to redeem, all outstanding Series B
Convertible Preferred Shares on August 27, 2029 (the “Series B Term Redemption
Date”), at a redemption price equal to the Series B Liquidation Preference plus
an amount equal to accumulated but unpaid dividends, if any, to the date of
redemption. The Fund cannot effect any amendment, alteration or repeal its
obligation to redeem all of the Series B Convertible Preferred Shares on the
Series B Term Redemption Date without the prior, unanimous approval of the
holders of the Series B Convertible Preferred Shares.
Shareholders
of the Series B Convertible Preferred Shares may opt to convert the shares at
any time on or after the date six months after the issuance of the Series B
Convertible Preferred Share into common shares equal to the Series B Liquidation
Preference of the Series B Convertible Preferred Shares, plus an amount equal to
accumulated but unpaid dividends, if any, divided by the Conversion Price. The
“Series B Conversion Price” is the greater of (i) the market price per common
share, represented by the average official closing price for the five trading
days immediately prior to the date of exercise, or (ii) the Fund’s most recently
reported net asset value per common share immediately prior to the date of
exercise. If the Fund fails to fulfill its obligations to deliver common shares
upon conversion, the quarterly dividend rate payable on the Series B Convertible
Preferred Shares will increase to a fixed annual rate of 9.125% of the Series B
Liquidation Preference until the date on which the Fund fulfills its delivery
obligations. No holder of Series B Convertible Preferred Shares may exercise its
conversion right if upon conversion the holder would receive common Shares that
would cause funds and accounts managed by the investment adviser to such funds
and account and any person controlled by the parent company of such investment
adviser to beneficially own in the aggregate more than 4.9% of the common
Shares. In addition, notwithstanding anything in the Fund's Declaration of Trust
to the contrary, no holder of Series B Convertible Preferred Shares that is an
investment company (as defined in the 1940 Act) or would be an investment
company but for Section 3(c)(1) or 3(c)(7) of the 1940 Act may exercise its
conversion privilege or be entitled to receive common Shares upon the exercise
of its conversion privilege, to the extent (but only to the extent) that the
receipt of such common Shares would cause such holder to become, directly or
indirectly, a beneficial owner of more than 3% of the Fund's outstanding voting
securities.
For
the year ended September 30, 2025, $569,107 of dividend expense related to the
Series B Convertible Preferred Shares was included in interest expense in the
Statement of Operations. Costs incurred in connection with the issuance of the
Series B Convertible Preferred Shares are being amortized to interest expense
over the term of the Series B Convertible Preferred Shares. For the year ended
September 30, 2025, the Fund recorded $876,300 of amortization of deferred
issuance costs related to the Series B Convertible Preferred Shares.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
The
Series B Convertible Preferred Shares are recorded net of unamortized deferred
issuance costs and included as a liability on the Statement of Assets and
Liabilities. The carrying value of the Series B Convertible Preferred Shares is
$3,517,000. As of September 30, 2025, 8,000 shares have been converted into
common shares of the Fund. The Fund’s Series B Convertible Preferred Shares
balance as of September 30, 2025, was as follows:
|
|
|
|
|
| |
|
|
As
of September
30, 2025 |
| Series
B Liquidation Preference |
$ |
3,517,000 |
|
|
Less:
Unamortized deferred issuance costs(1) |
— |
|
| Carrying
value |
$ |
3,517,000 |
|
|
Fair
value
(2) |
$ |
3,517,000 |
|
|
Fair
value price per share
(2) |
$ |
1,000.00 |
|
(1)
As of September 30, 2025, the deferred issuance costs related to the Series B
Convertible Preferred Shares were fully
amortized.
(2)
The Series B Convertible Preferred Shares are recorded at carrying value, which
approximates fair value.
7.50%
Series C Convertible Preferred Shares
On
January 31, 2025, the Fund issued 20,000 shares of 7.50% Series C Convertible
Preferred Shares due January 31, 2030, in a private placement for aggregate net
proceeds (before expenses) of approximately $18,600,000. The Series C
Convertible Preferred Shares have a liquidation preference of $1,000.00 per
share (the “Series C Liquidation Preference”), and pay a quarterly dividend at a
fixed annual rate of 7.50% of the Series C Liquidation Preference, or $75.00 per
share, per year. The Series C Convertible Preferred Shares rank senior to the
common shares in priority of payment of dividends and as to the distribution of
assets upon dissolution, liquidation, or winding up of the Fund’s affairs. The
Series C Convertible Preferred Shares rank equal in priority with the Fund’s
Series A Term Preferred Shares and Series B Convertible Preferred
Shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Initial
Issuance Date |
Redemption
Date |
Dividend
Rate |
Share
Amount |
Price
Per share |
Total
Raise |
| Series
C Convertible Preferred Shares |
1/31/2025 |
1/31/2030 |
7.50 |
% |
20,000 |
| $ |
1,000.00 |
| $ |
20,000,000 |
|
At
any time on or after July 31, 2025, at the Fund’s sole option, the Fund may
redeem, from time to time, the outstanding Series C Convertible Preferred Shares
in whole or in part, at a price per share equal to the sum of the Series C
Liquidation Preference plus an amount equal to accumulated but unpaid dividends,
if any, on such shares. The Fund is required to redeem, all outstanding Series C
Convertible Preferred Shares on January 31, 2030 (the “Series C Term Redemption
Date”), at a redemption price equal to the Series C Liquidation Preference plus
an amount equal to accumulated but unpaid dividends, if any, to the date of
redemption. The Fund cannot effect any amendment, alteration or repeal its
obligation to redeem all of the Series C Convertible Preferred Shares on the
Series C Term Redemption Date without the prior, unanimous approval of the
holders of the Series C Convertible Preferred Shares.
Shareholders
of the Series C Convertible Preferred Shares may opt to convert the shares at
any time on or after the date six months after the issuance of the Series C
Convertible Preferred Shares into common shares equal to the Series C
Liquidation Preference of the Series C Convertible Preferred Shares, plus an
amount equal to accumulated but unpaid dividends, if any, divided by the Series
C Conversion Price. The “Series C Conversion Price” is the greater of (i) the
market price per common share, represented by the average official closing price
for the five trading days immediately prior to the date of exercise, or (ii) the
Fund’s most recently reported net asset value per common share immediately prior
to the date of exercise. If the Fund fails to fulfill its obligations to deliver
common shares upon conversion, the quarterly dividend rate payable on the Series
C Convertible Preferred Shares will increase to a fixed annual rate of 9.125% of
the Series C Liquidation Preference until the date on which the Fund fulfills
its delivery obligations. No holder of the Series C Convertible Preferred Shares
may exercise its conversion right if upon conversion the holder would receive
common Shares that would cause funds and accounts managed by the investment
adviser to such funds and account and any person controlled by the parent
company of such investment adviser to beneficially own in the aggregate more
than 4.9% of the common Shares. In addition, notwithstanding anything in the
Fund’s Declaration of Trust to the contrary, no holder of Series C Convertible
Preferred Shares that is an investment company (as defined in the 1940 Act) or
would be an investment company but for Section 3(c)(1) or 3(c)(7) of the 1940
Act may exercise its conversion privilege or be entitled to receive common
Shares upon the exercise of its conversion privilege, to the extent (but
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
only
to the extent) that the receipt of such common Shares would cause such holder to
become, directly or indirectly, a beneficial owner of more than 3% of the Fund’s
outstanding voting securities.
Except
where otherwise stated in the 1940 Act or the Fund's Declaration of Trust, each
holder of Series A Term Preferred Shares, Series B Convertible Preferred Shares,
or Series C Convertible Preferred Shares will be entitled to one vote for each
share of preferred shares held on each matter submitted to a vote of the Fund's
shareholders. The Fund's preferred shareholders and common shareholders will
vote together as a single class on all matters submitted to the Fund's
shareholders. Additionally, the Fund's preferred shareholders will have the
right to elect two Preferred Trustees at all times, while the Fund's preferred
shareholders and common shareholders, voting together as a single class, will
elect the remaining members of the Board.
For
the year ended September 30, 2025, $998,642 of dividend expense related to the
Series C Convertible Preferred Shares was included in interest expense in the
Statement of Operations. Costs incurred in connection with the issuance of the
Series C Convertible Preferred Shares are being amortized to interest expense
over the term of the Series C Convertible Preferred Shares. For the year ended
September 30, 2025, the Fund recorded $1,031,914 of amortization of deferred
issuance costs related to the Series C Convertible Preferred Shares.
The
Series C Convertible Preferred Shares are recorded net of unamortized deferred
issuance costs and included as a liability on the Statement of Assets and
Liabilities. The carrying value of the Series C Convertible Preferred Shares is
$19,482,484. The Fund’s Series C Convertible Preferred Shares balance as of
September 30, 2025, was as follows:
|
|
|
|
|
| |
|
|
As
of September
30, 2025 |
| Series
C Liquidation Preference |
$ |
20,000,000 |
|
| Less:
Unamortized deferred issuance costs |
517,516 |
|
| Carrying
value |
$ |
19,482,484 |
|
|
Fair
value
(1) |
$ |
19,482,484 |
|
|
Fair
value price per share
(1) |
$ |
974.12 |
|
(1)
The Series C Convertible Preferred Shares are recorded at carrying value, which
approximates fair value.
8.
COMMITMENTS AND CONTINGENCIES
The
Fund is not currently subject to any material legal proceedings. From time to
time, the Fund may be a party to certain legal proceedings in the ordinary
course of business, including proceedings relating to the enforcement of the
Fund’s rights under contracts with its portfolio companies. While the outcomes
of these legal proceedings, if any, cannot be predicted with certainty, the Fund
does not expect that these proceedings will have a material effect upon its
financial condition or results of operations.
9.
CAPITAL
The
Fund has an unlimited amount of common shares, no par value, authorized and
21,198,622 issued and outstanding. Transactions in common shares for the year
ended September 30, 2025 were as follows:
|
|
|
|
|
|
|
|
| |
|
|
| Year
Ended September 30, 2025 |
| Beginning
Shares |
| 15,387,448 |
|
| Shares
issued through dividend reinvestment |
| 276,341 |
|
| Shares
issued pursuant to the ATM program |
| 4,387,746 |
|
| Shares
issued in connection with conversion from 7.125% Series B Convertible
Preferred Shares |
| 1,147,087 |
|
| Ending
Shares |
| 21,198,622 |
|
|
|
| |
At-The-Market
(“ATM”) Program
On
October 4, 2023, the Fund entered into an Equity Distribution Agreement, as
amended on May 20, 2024, November 21, 2024, and May 21, 2025, with Ladenburg
Thalmann & Co. Inc., B. Riley Securities, Inc., Oppenheimer & Co. Inc.,
and Lucid Capital Markets, LLC (the “Placement Agents”). The Equity Distribution
Agreement originally allowed for the offer and sale of up to $75,000,000 in
aggregate amount of the Fund’s common shares, through the Placement Agents,
through an ATM offering, as defined in Rule 415 under the Securities Act of
1933. As of the amendment on May 21, 2025, the Fund increased the maximum
aggregate amount of common shares to be sold through the ATM program from
$75,000,000 to
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
$125,000,000.
The minimum price on any day at which common shares may be sold will not be
below the current net asset value of such common shares. For the year ended
September 30, 2025, the Fund sold a total of 4,387,746 common shares pursuant to
the ATM program. The total amount of capital raised under these issuances was
$33,059,527 and net proceeds were $32,449,173 after deducting the Placement
Agents’ commissions and offering expenses.
Registered
Direct Placement of Common Shares
On
August 26, 2024, the Fund entered into a purchase agreement for the purchase and
sale of common shares in a registered direct placement pursuant to the Fund’s
effective shelf registration filed with the SEC. On August 27, 2024, the Fund
sold 1,444,865 common shares and received approximately $11.5 million in
proceeds before expenses. The offering, which was accretive to shareholders, was
executed at a price above the Fund’s NAV per common
share.
10.
SEGMENT REPORTING
The
Fund operates through a single operating and reporting segment and its primary
investment objectives is to generate current income, with a secondary objective
to generate capital appreciation. The chief operating decision maker (“CODM”) is
the Fund’s Principal Executive Officer. The CODM assesses the performance of the
Fund and makes operating decisions, primarily based on the Fund’s net asset
value, net investment income and increase/decrease in net assets resulting from
operations. These performance measures also aid the CODM in determining the
amount of dividends to be distributed to the Fund’s shareholders, implementing
investment policy decisions, strategic initiatives, and managing and assessing
the Fund’s portfolio. As the Fund’s operations comprise of a single reporting
segment, the segment assets are reflected on the accompanying Statement of
Assets and Liabilities as total assets and the significant segment expenses are
listed on the accompanying Statement of Operations.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
11.
TAX
The
Fund has not recorded a liability for any uncertain tax positions pursuant to
the provisions of ASC 740, Income
Taxes,
as of September 30, 2025.
In
the normal course of business, the Fund is subject to examination by federal and
certain state, local and foreign tax regulators. The Fund’s federal tax returns
are generally subject to examination by the Internal Revenue Service for a
period of three years after they are filed.
The
tax components of capital shown in the following table represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes. The capital loss carryforward is subject to
limitations in future years under the Code and related regulations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Total
Distributable Earnings |
| Accumulated
Loss Carryforward |
| Post
October Loss and Late Year Loss |
| Other
Timing Differences |
| Net
Unrealized Appreciation Based on Cost of Securities and Other Investments
for Federal Income Tax Purposes |
| $— |
| $(27,504,910) |
| $— |
| $(290,178) |
| $6,079,015 |
Net
investment income (loss) and net realized gain (loss) may differ for financial
statement and tax purposes. The character of dividends and distributions made
during the fiscal year from net investment income or net realized gains is
determined in accordance with federal income tax requirements, which may differ
from the character of net investment income or net realized gains presented in
those financial statements in accordance with U.S. GAAP. Also, due to timing of
dividends and distributions, the fiscal year in which amounts are distributed
may differ from the fiscal year in which the income or net realized gain was
recorded by the Fund.
Accordingly,
the following amounts have been reclassified for the reporting period. Net
assets of the Fund were unaffected by the reclassifications.
|
|
|
|
|
|
|
|
| |
| Reduction
to Paid-in-Capital |
| Increase
to Retained Earnings |
| $2,347,558 |
| $2,347,558 |
The
tax character of dividends paid on common shares for the years ended September
30, 2025 and September 30, 2024 was as follows:
|
|
|
|
|
|
|
|
|
|
|
| |
| |
Year
ended September 30, |
| |
2025 |
| 2024 |
| Ordinary
income |
$ |
10,363,754 |
|
| $ |
427,365 |
|
| Tax
return of capital |
$ |
13,459,803 |
|
| $ |
15,218,076 |
|
The
aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes at period end are noted in the following table. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to partnership
and non-deductible expense adjustments.
|
|
|
|
|
| |
|
| For
the Year Ended September 30, 2025 |
| Federal
tax cost of securities |
$ |
186,124,703 |
|
| Gross
unrealized appreciation |
$ |
22,536,762 |
|
| Gross
unrealized depreciation |
$ |
(16,457,747) |
|
| Net
unrealized appreciation |
$ |
6,079,015 |
|
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
12.
SUBSEQUENT EVENTS
On
October 30, 2025, the Fund issued 1,200,000 shares of 7.375% Series D Term
Preferred Shares (the “Series D Term Preferred Shares”) due October 30, 2028,
for aggregate gross proceeds of $30,000,000. The shares are listed on the New
York Stock Exchange under the symbol “CCID”.
Each
holder of Series D Term Preferred Shares is entitled to a liquidation preference
of $25.00 per share (the “Series D Liquidation Preference”), plus an amount
equal to accumulated but unpaid dividends, if any, on such shares (whether or
not earned or declared, but excluding interest on such dividends) to, but
excluding, the date fixed for such redemption. The Fund is required to redeem
all outstanding shares of the Series D Term Preferred Shares on October 30, 2028
(the “Series D Mandatory Redemption Date”), at a redemption price equal to the
Series D Liquidation Preference plus an amount equal to accumulated but unpaid
dividends, if any, to the date of redemption. The Fund cannot effect any
modification of or repeal its obligation to redeem the Series D Term Preferred
Shares on the Series D Mandatory Redemption Date without the prior, unanimous
approval of the holders of the Series D Term Preferred Shares. At any time on or
after October 30, 2026, (the “Optional Redemption Date”), the Fund may, at its
sole option, redeem the outstanding Series D Term Preferred Shares in whole or,
from time to time, in part, at the Series D Liquidation Preference plus an
amount equal to accumulated but unpaid dividends, if any, on such shares.
The
holders of Series D Term Preferred Shares are entitled to receive monthly
dividends at a fixed annual rate of 7.375% of the Series D Liquidation
Preference ($1.84375 per share per year), or the dividend rate. Cumulative cash
dividends on each share of Series D Term Preferred Shares accumulate from, and
including, the original issue date.
On
October 30, 2025, the Fund issued 17,500 shares of 7.25% Series E Convertible
Preferred Shares due January 31, 2030 (the “Series E Convertible Preferred
Shares”), in a private placement for aggregate net proceeds (before expenses) of
approximately $16,275,000. The Series E Convertible Preferred Shares have a
liquidation preference of $1,000.00 per share (the “Series E Liquidation
Preference”), and pay a quarterly dividend at a fixed annual rate of 7.25% of
the liquidation preference, or $72.50 per share, per year. The Series E
Convertible Preferred Shares rank senior to the common shares in priority of
payment of dividends and as to the distribution of assets upon dissolution,
liquidation, or winding up of the Fund’s affairs. The Series E Convertible
Preferred Shares rank equal in priority with the Fund’s Series B Convertible
Preferred Shares, Series C Convertible Preferred Shares, and Series D Term
Preferred Shares.
At
any time on or after May 1, 2026, at the Fund’s sole option, the Fund may
redeem, from time to time, the outstanding Series E Convertible Preferred Shares
in whole or in part, at a price per share equal to the sum of the Series E
Liquidation Preference plus an amount equal to accumulated but unpaid dividends,
if any, on such shares. The Fund is required to redeem, all outstanding Series E
Convertible Preferred Shares on October 30, 2030 (the “Series E Term Redemption
Date”), at a redemption price equal to the Series E Liquidation Preference plus
an amount equal to accumulated but unpaid dividends, if any, to the date of
redemption. The Fund cannot effect any amendment, alteration or repeal its
obligation to redeem all of the Series E Convertible Preferred Shares on the
Series E Term Redemption Date without the prior, unanimous approval of the
holders of the Series E Convertible Preferred Shares.
Shareholders
of the Series E Convertible Preferred Shares may opt to convert the shares at
any time on or after the date six months after the issuance of the Series E
Convertible Preferred Shares into common shares equal to the Series E
Liquidation Preference of the Series E Convertible Preferred Shares, plus an
amount equal to accumulated but unpaid dividends, if any, divided by the Series
E Conversion Price. The “Series E Conversion Price” is the greater of (i) the
market price per common share, represented by the average official closing price
for the five trading days immediately prior to the date of exercise, or (ii) the
Fund’s most recently reported net asset value per common share immediately prior
to the date of exercise. If the Fund fails to fulfill its obligations to deliver
common shares upon conversion, the quarterly dividend rate payable on the Series
E Convertible Preferred Shares will increase to a fixed annual rate of 9.25% of
the liquidation preference until the date on which the Fund fulfills its
delivery obligations. No holder of the Series E Convertible Preferred Shares may
exercise its conversion right if upon conversion the holder would receive common
Shares that would cause funds and accounts managed by the investment adviser to
such funds and account and any person controlled by the parent company of such
investment adviser to beneficially own in the aggregate more than 4.9% of the
common Shares. In addition, notwithstanding anything in the Fund’s Declaration
of Trust to the contrary, no holder of Series E Convertible Preferred Shares
that is an investment company (as defined in the 1940 Act) or would be an
investment company but for Section 3(c)(1) or 3(c)(7) of the 1940 Act may
exercise its conversion privilege or be entitled to receive common Shares upon
the exercise of its conversion privilege, to the extent (but only to the extent)
that the receipt of such common Shares would cause such holder to become,
directly or indirectly, a beneficial owner of more than 3% of the Fund’s
outstanding voting securities.
CARLYLE
CREDIT INCOME FUND
NOTES
TO FINANCIAL STATEMENTS (Continued)
On
October 31, 2025, the Fund paid a monthly dividend of $0.1050 per common share
to holders of record on October 21, 2025. Additionally, on November 18, 2025,
the Fund declared dividends of $0.1050 per common share, payable on each of
December 31, 2025, January 30, 2026, and February 27, 2026, to holders of record
as of December 18, 2025, January 20, 2026, and February 17, 2026, respectively.
On
October 31, 2025, the Fund paid a monthly dividend of $0.1823 per share on its
8.75% Series A Term Preferred Shares to holders of record on October 21,
2025.
On
October 31, 2025, the Fund paid a quarterly dividend of $17.8125 per share on
its 7.125% Series B Convertible Preferred Shares to holders of record on October
21, 2025.
On
October 31, 2025, the Fund paid a quarterly dividend of $18.75 per share on its
7.50% Series C Convertible Preferred Shares to holders of record on October 21,
2025.
On
November 3, 2025 (the “Redemption Date”), the Fund redeemed all of the
outstanding 8.75% Series A Term Preferred Shares. The redemption price of the
Series A Term Preferred Shares was $25 per share, plus an amount equal to all
unpaid dividends and distributions on each share accumulated to (but excluding)
the Redemption Date.
On
November 18, 2025, the Fund declared dividends of $0.1536 on its Series D Term
Preferred Shares, payable on each of December 31, 2025, January 30, 2026, and
February 27, 2026, to holders of record as of December 18, 2025, January 20,
2026, and February 17, 2026, respectively.
The
Fund evaluated subsequent events through the date the financial statements were
issued and noted no other events that require recognition or disclosure in the
financial statements.
RESULTS
OF SHAREHOLDER MEETING
At
the Annual Meeting of Shareholders (“Annual Meeting”) held on September 4, 2025,
shareholders approved the election of Mark Garbin as a Class I Trustee to the
Board of Trustees to serve a term expiring in 2028 based on the following
results:
|
|
|
|
|
| |
|
Total
Outstanding Shares |
23,260,552 |
|
Total
Shares Voted |
16,181,401 |
|
For |
16,043,638 |
|
Withheld |
940,365 |
At
the Annual Meeting, shareholders approved the election of Nishil Mehta as a
Class I Trustee to the Board of Trustees to serve a term expiring in 2028 based
on the following results:
|
|
|
|
|
| |
|
Total
Outstanding Shares |
23,260,552 |
|
Total
Shares Voted |
16,181,401 |
|
For |
16,114,123 |
|
Withheld |
869,880 |
The
Fund’s other Trustees, Lauren Basmadjian, Sanjeev Handa, and Joan McCabe
continued to serve their respective terms following the Annual
Meeting.
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and the Board of Trustees of Carlyle Credit Income Fund
Opinion
on the Financial Statements
We
have audited the accompanying statement of assets and liabilities of Carlyle
Credit Income Fund (the “Fund”), including the schedule of investments, as of
September 30, 2025, and the related statements of operations and cash flows for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, the financial highlights for each of the three
years in the period then ended and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Fund at
September 30, 2025, the results of its operations and cash flows for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and its financial highlights for each of the three years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
The
accompanying financial highlights of the Fund for the two years in the period
ended September 30, 2022 were audited by another independent registered public
accounting firm whose report, dated December 12, 2022, expressed unqualified
opinions on the financial statements of the Fund containing those financial
highlights.
Basis
for Opinion
These
financial statements are the responsibility of the Fund’s management. Our
responsibility is to express an opinion on the Fund’s financial statements based
on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) ("PCAOB") and are required to
be independent with respect to the Fund in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Fund is not required to have,
nor were we engaged to perform, an audit of the Fund’s internal control over
financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Fund’s internal
control over financial reporting. Accordingly, we express no such
opinion.
Our
audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of September 30, 2025, by correspondence with the custodians and
counterparties. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
/s/
Ernst & Young LLP
We
have served as the auditor of one or more CGCIM investment companies since 2020.
New
York, NY
November
18, 2025
PRICE
RANGE OF COMMON SHARES
Our
common shares began trading on May 29, 2019 and are currently traded on the NYSE
under the symbol “CCIF.” Prior to July 27, 2023, the Fund’s common shares traded
on NYSE under the symbol “VCIF.” The following table lists the high and low
closing sale price for our common shares, the high and low closing sale price as
a percentage of NAV and distributions declared per common share for each quarter
since October 1, 2023.
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| Period |
NAV
(1) |
| High |
| Low |
|
Premium
(Discount) of High Sales Price to NAV (2) |
|
Premium
(Discount) of Low Sales Price to NAV (2) |
|
Distributions
Declared
(3) |
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| Fiscal
year ending September 30, 2024 |
|
|
|
|
|
|
|
|
|
| |
| First
quarter |
7.99 |
| 8.16 |
| 7.48 |
| 2.13% |
| (6.38)% |
| 0.2982 |
| Second
quarter |
7.88 |
| 8.16 |
| 7.78 |
| 3.55% |
| (1.27)% |
| 0.3038 |
| Third
quarter |
7.68 |
| 8.60 |
| 7.73 |
| 11.98% |
| 0.65% |
| 0.3150 |
| Fourth
quarter |
7.64 |
| 8.75 |
| 7.75 |
| 14.53% |
| 1.44% |
| 0.3150 |
| Fiscal
year ending September 30, 2025 |
|
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|
|
|
|
|
|
|
| |
| First
quarter |
7.44 |
| 8.41 |
| 7.92 |
| 13.04% |
| 6.45% |
| 0.3150 |
| Second
quarter |
6.98 |
| 7.99 |
| 6.76 |
| 14.47% |
| (3.15)% |
| 0.3150 |
| Third
quarter |
6.51 |
| 7.03 |
| 5.98 |
| 7.99% |
| (8.14)% |
| 0.3150 |
| Fourth
quarter |
6.13 |
| 6.50 |
| 5.29 |
| 6.04% |
| (13.70)% |
| 0.3150 |
1.NAV
per common share is determined as of the last day in the relevant quarter and
therefore may not reflect the NAV per common share on the date of the high and
low sales prices. The NAVs shown are based on outstanding common shares at the
end of each period.
2.Calculated
as of the respective high or low closing sales price divided by the quarter end
NAV.
3.Represents
the cash distributions (including dividends, dividends reinvested and returns of
capital, if any) per common share that we have declared on our common shares in
the specified quarter. Tax characteristics of distributions will vary.
Common
shares of closed-end management investment companies may trade at a market price
that is less than the NAV that is attributable to those common shares. The
possibility that our common shares will trade at a discount to NAV or at a
premium to NAV that is unsustainable over the long term is separate and distinct
from the risk that our NAV will decrease. It is not possible to predict whether
our common shares will trade at, above or below NAV in the future. Our NAV per
common share was $6.13 as of September 30, 2025. The closing sales price for
common shares on the NYSE on September 30, 2025 was $5.82 which represented a
5.06% discount to NAV per common share.
DIVIDEND
REINVESTMENT PLAN
The
Fund operates under the DRP administered by Equiniti. Pursuant to the DRP, the
Fund’s Distributions (as defined below), net of any applicable U.S. withholding
tax, are reinvested in the same class of shares of the Fund.
Shareholders
automatically participate in the DRP, unless and until an election is made to
withdraw from the plan on behalf of such participating Shareholder. A
Shareholder who does not wish to have Distributions automatically reinvested may
terminate participation in the DRP by written instructions to that effect to
Equiniti. Shareholders who elect not to participate in the DRP will receive all
distributions in cash paid to the Shareholder of record (or, if the shares are
held in street or other nominee name, then to such nominee). Such written
instructions must be received by Equiniti within 15 days prior to the applicable
dividend payment date, or the Shareholder will receive such Distribution in
shares through the DRP. Under the DRP, the Fund’s Distributions to Shareholders
are automatically reinvested in full and fractional shares as described
below.
When
the Fund declares a dividend, capital gain or other distribution (each, a
“Distribution” and collectively, “Distributions”) Equiniti, on the Shareholder’s
behalf, will receive additional authorized shares from the Fund either newly
issued or repurchased from Shareholders by the Fund and held as treasury stock.
Distributions that are reinvested through the issuance of new shares increase
our Shareholders’ equity on which a management fee is payable to the Adviser.
The number of shares to be received when Distributions are reinvested will be
determined by dividing the amount of the Distribution by the lesser of (1) 95%
of the market price per share of the Fund’s common stock at the close of regular
trading on the NYSE or (2) the NAV per share. The newly issued shares would be
issued whether our shares are trading at a premium or discount to NAV. However,
the Fund reserves the right to purchase shares in the open market in connection
with the implementation of the DRP to the extent that shares are trading at a
price below NAV per share. Shares purchased in open market transactions by the
plan administrator will be allocated to a Shareholder based on the average
purchase price, excluding any brokerage charges or other charges, of all shares
purchased in the open market.
Equiniti
will maintain all Shareholder accounts and furnish written confirmations of all
transactions in the accounts, including information needed by Shareholders for
personal and tax records. Equiniti will hold shares in the account of the
Shareholders in non-certificated form in the name of the participant, and each
Shareholder’s proxy, if any, will include those shares purchased pursuant to the
DRP. Each participant, nevertheless, has the right to request certificates for
whole and fractional shares owned. The Fund will issue certificates in its sole
discretion. Equiniti will distribute all proxy solicitation materials, if any,
to participating Shareholders.
In
the case of Shareholders, such as banks, brokers or nominees, that hold shares
for others who are beneficial owners participating under the DRP, Equiniti will
administer the DRP on the basis of the number of shares certified from time to
time by the record shareholder as representing the total amount of shares
registered in the Shareholder’s name and held for the account of beneficial
owners participating under the DRP.
Neither
Equiniti nor the Fund shall have any responsibility or liability beyond the
exercise of ordinary care for any action taken or omitted pursuant to the DRP,
nor shall they have any duties, responsibilities or liabilities except such as
expressly set forth herein. Neither shall they be liable hereunder for any act
done in good faith or for any good faith omissions to act, including, without
limitation, failure to terminate a participant’s account prior to receipt of
written notice of his or her death or with respect to prices at which shares are
purchased or sold for the participant’s account and the terms on which such
purchases and sales are made, subject to applicable provisions of the federal
securities laws.
The
automatic reinvestment of Distributions will not relieve participants of any
federal, state or local income tax that may be payable (or required to be
withheld) on such Distributions. See “U.S. Federal Income Tax
Matters.”
The
Fund reserves the right to amend or terminate the DRP upon 60 days’ notice to
Shareholders. There is no direct service charge to participants with regard to
purchases under the DRP; however, the Fund reserves the right to amend the DRP
to include a service charge payable by the participants.
All
correspondence concerning the DRP should be directed to Equiniti at PO Box 500,
Newark, NJ 07101. Certain transactions can be performed by calling the toll free
number (866) 277-8243.
MANAGEMENT
OF THE FUND
The
Fund’s business and affairs are managed under the direction of the Board. The
Board currently consists of five members, three of whom are not “interested
persons” of the Fund as defined in Section 2(a)(19) of the Investment Company
Act. The Fund refers to these individuals as its independent trustees. The Board
annually elects the Fund’s officers, who serve at the discretion of the Board.
The Board maintains an audit committee, a nominating and governance committee
and an independent trustees committee and may establish additional committees
from time to time as necessary.
Board
of Trustees and Officers
Trustees
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|
Name,
Address
(1),
Age |
| Position(s)
Held with the Trust |
|
Term
of Office and Length of Time Served
(2) |
| Principal
Occupation(s) During Past 5 Years |
| Number
of Portfolios in Fund Complex Overseen by Trustee |
| Other
Directorships Held by Trustee |
|
Interested
Trustees (2) |
| Lauren
Basmadjian (1979) |
| Trustee |
| Class
III Board member until 2027 annual shareholder meeting. – since July
2023 |
| Managing
Director, The Carlyle Group Inc. (Since 2020); Senior Portfolio Manager,
Octagon Credit Investors, LLC (2001 - 2020) |
| 1 |
| None |
| Nishil
Mehta (1981) |
| Trustee |
| Class
I Board member until 2028 annual shareholder meeting. – since May
2025 |
| Managing
Director, The Carlyle Group Inc. (Since 2022); Managing Director, First
Eagle (2021 - 2022); Managing Director, Prospect Capital (2010 - 2020);
Priority Income Fund, Inc. (2010 to 2020) |
| 1 |
| None |
| Independent
Trustees |
Mark
Garbin
(1951) |
| Trustee |
| Class
I Board member until 2028 annual shareholder meeting –since July
2023 |
| Managing
Principal,
Coherent Capital
Management LLC
(since 2008) |
| 2 |
| Independent
Trustee of Two Roads Shared Trust (since 2012), Forethought Variable
Insurance Trust (since 2013), Northern Lights Fund Trust (since 2013),
Northern Lights Variable Trust (since 2013), iCapital KKR Private Markets
Fund (since 2014), Independent Director of OHA CLO Enhanced Equity II
Genpar LLP (since 2021), and Independent Trustee, Carlyle Tactical Private
Credit Fund (since 2018). |
Sanjeev
Handa
(1961) |
| Trustee |
| Class
III Board member until 2027 annual shareholder meeting –since July
2023 |
| Managing
Member, Old Orchard Lane, LLC (since 2014); Adjunct Professor, Fairfield
University (since 2020) |
| 2 |
| Advisory
Board Member of White Oak Partners (since 2021) and Independent Director
of OHA CLO Enhanced Equity II Genpar LLP (since 2021), Independent
Trustee, Carlyle Tactical Private Credit Fund (since March 2018); Board of
Trustees Investment Committee Member for the Cooper Union for Advancement
of Science and Art (since 2016); Board of Directors Member for the Mutual
Fund Directors Forum (Since 2022); Independent Director of Fitch Ratings,
Inc.(2015-2020). |
Joan
McCabe
(1955) |
| Trustee |
| Class
II Board member until 2026 annual shareholder meeting. –since July
2023 |
| Managing
Member, JMYME, LLC (since 2020); and CEO/Founder, Lipotriad LLC
(2015-
2019) |
| 2 |
| Board
member of Elevation Brands (since 2017 to 11/2022);Sensible Organics
(2017-2021); Goodwill International, Inc. (2015-2021); Gulfstream
Goodwill, Inc. (since 2017; Board Chair since 2021); Gulfstream Goodwill
Academy, Inc. (since 2017), Goodwill International (2015-2021) Independent
Trustee Carlyle Tactical Private Credit Fund (since
2018). |
(1)
The address of each Trustee is care of the Secretary of the Fund at One
Vanderbilt Avenue, Suite 3400, New York, NY 10017.
(2)
“Interested person,” as defined in the 1940 Act, of the Fund. Mr. Marcus and Ms.
Basmadjian are interested persons of the Fund due to their
affiliation
with the Adviser.
Officers
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Name,
address
(1),
age |
| Position(s)
Held with the Trust |
|
Term
of Office and Length of Time Served
|
| Principal
Occupation(s) During Past 5 Years |
| Nishil
Mehta (1981) |
| President,
Principal Executive Officer |
| Indefinite
Length – since February 2025 |
| Managing
Director, The Carlyle Group Inc. (Since 2022); Managing Director, First
Eagle (2021 - 2022); Managing Director, Prospect Capital (2010 - 2020);
Priority Income Fund, Inc. (2010 to 2020) |
Nelson
Joseph
(1979) |
| Principal
Financial Officer, Principal Accounting Officer, and Treasurer |
| Indefinite
Length – since July 2023 |
| Principal,
Carlyle Group (Since 2023); Director, Apollo Global Management LLC (2016 –
2022) |
Joshua
Lefkowitz
(1974) |
| Secretary;
Chief Legal Officer |
| Indefinite
Length – since July 2023 |
| Managing
Director and Chief Legal Officer (Global Credit), Carlyle Group (Since
2018); Principal and Associate General Counsel, Ares Management, Ltd. (Jan
2017 – Mar 2018); Vice President and Associate General Counsel, American
Capital, Ltd. (Mar 2006 – Jan 2017) |
Jennifer
Juste
(1980) |
| Chief
Compliance Officer |
| Indefinite
Length – since May 2024 |
| Vice
President, Carlyle Group (Since 2022); Natixis Investment Managers 2019 -
2022 (Deputy Chief Compliance Officer/Deputy General Counsel Mirova US LLC
2020-2022 and Chief Compliance Officer/General Counsel Ostrum US LLC
2019-2020) |
(1)
The address of each officer is care of the Secretary of the Fund at One
Vanderbilt Avenue, Suite 3400, New York, NY 10017.
Biographical
Information and Discussion of Experience and Qualifications, etc.
The
following is a summary of the experience, qualifications, attributes and skills
of each Trustee that support the conclusion, as of the date of this Annual
Report, that each Trustee should serve as a Trustee of the Fund.
Interested
Trustees
Lauren
Basmadjian.
Lauren Basmadjian has over 20 years of experience in financial and corporate
markets. She is a Managing Director, Co-Head of Liquid Credit and Head of US
Loans & Structured Credit within The Carlyle Group Inc.’s Global Credit
platform, overseeing over $48 billion of AUM. She is based in New York and sits
on the Investment Committees for all of The Carlyle Group Inc.’s US Loan, CLO
and Liquid and Illiquid Credit investing activities. Ms. Basmadjian joined The
Carlyle Group Inc. in 2020 after 19 years at Octagon Credit Investors, LLC,
where she was a Senior Portfolio Manager, member of the Investment Committee and
managed XAI Octagon Floating Rate & Alternative Income Term Trust, a public
1940 Act fund invested in CLO tranches and leveraged loans. Prior to becoming a
Portfolio Manager, Ms. Basmadjian managed Octagon’s workout efforts and also
oversaw the leisure & entertainment, retail, consumer products, business
services, food & beverage and technology industries. Before joining Octagon,
Ms. Basmadjian worked in the Acquisition Finance Group at Chase Securities, Inc.
She graduated Cum Laude from the Stern School of Business at New York University
with a B.S. in Finance and Economics. Her diverse experience and financial
background, among other things, qualifies her to serve as a
Trustee.
Nishil
Mehta.
Nishil Mehta has over 20 years of experience in financial markets. Additionally,
he is a Managing Director of Carlyle Global Credit Investment Management L.L.C.
where he focuses on the firm’s third-party CLO investing platform and is Head of
Shareholder Relations for Carlyle Secured Lending (NASDAQ: CGBD) within Global
Credit platform of The Carlyle Group Inc. (the ultimate parent company of
CGCIM). Prior to coming to Carlyle, Mr.Mehta was a Managing Director at First
Eagle where he was the co-portfolio manager for the firm’s structured credit
investments. After First Eagle, Mr.Mehta was a Managing Director at Prospect
Capital where he was responsible for the firm’s $2.5billion of investments in
CLO mezzanine debt and CLO equity. He was also the Head of Capital Markets
spearheading over $8billion of debt and equity capital raised for
the
firm’s 1940 Act funds. Mr.Mehta received his BBA from Goizueta Business School
at Emory University with Honors and currently holds Series 7 and 63 licenses.
Independent
Trustees
Mark
Garbin.
Mark Garbin has over 30 years of experience in corporate balance sheet and
income statement risk management for large asset managers. Mr. Garbin has
extensive derivatives experience and has provided consulting services to
alternative asset managers. Mr. Garbin holds the CFA and Professional Risk
Manager (PRM) Charters and has advanced degrees in international business,
negotiation and derivatives. He also has extensive experience with respect to
investments and also to compliance and corporate governance matters as a result
of, among other things, his service as a board member to other investment
companies.
Sanjeev
Handa. Sanjeev
Handa has over 30 years of experience in the financial industry sector,
including global experience in the financial, real estate and securitization
markets. Mr. Handa is also an advisory board member of White Oak Partners (since
2021), and a member of the Investment Committee of the Board of Trustees of The
Cooper Union for Advancement of Science and Art. He also formerly served as an
independent director of Fitch Ratings, Inc. and Fitch Ratings, Ltd. (2015-2020).
Mr. Handa also serves as an independent director of OHA CLO Enhanced Equity II
Genpar LLP (since 2021). Mr. Handa has extensive experience with respect to
investments and also to compliance and corporate governance matters as a result
of, among other things, his service as a board member to another investment
company. He also serves as an audit committee chairman and audit committee
financial expert for another investment company.
Joan
McCabe.
Joan McCabe has over 30 years of financial and corporate experience, including
investing in private equity along with debt financings for those private equity
investments. Ms. McCabe is also a board member of Gulfstream Goodwill, Inc.
(since 2017 and current Board Chair), Gulfstream Goodwill Academy, Inc. (since
2018) and Elevation Brands (since 2017). She formerly served as a board member
of Goodwill International, Inc. (2015-2021) and Sensible Organics (2017-2021).
Ms. McCabe has served as a board member to a variety of companies, including
another investment company, and her diverse experience and financial background,
among other things, qualifies her to serve as a Trustee.
The
Fund’s statement of additional information includes additional information about
the Trustees and is available (i) without charge, upon request, by calling the
Fund toll-free at (866) 277-8243.
Approval
of Investment Advisory Agreement
In
connection with the Independent Trustees’ approval to renew the Investment
Advisory Agreement for a one-year period, the Independent Trustees considered,
among other things, the nature, extent and quality of the investment selection
process employed by the Adviser, including the flow of transaction opportunities
resulting from the significant capital markets, trading and research expertise
of the Adviser’s investment professionals, the employment of the Adviser’s
investment philosophy, diligence procedures, investment selection process and
ongoing monitoring of portfolio companies, in light of the investment objective
of the Fund. The Independent Trustees also considered the Adviser’s key
personnel and their background and prior experience in connection with the types
of investments made by the Fund. The Independent Trustees determined that the
background and experience of the management team and access to the Carlyle
Global Credit platform, including through agreements to which the Adviser is a
party, were suitable and appropriate for achieving the investment objective of
the Fund. The Independent Trustees further determined that the Adviser is served
by a team of investment professionals with extensive investment experience in
private credit and leveraged finance market, as well as an extensive network of
relationships with financial sponsors. In addition, the Independent Trustees
considered the fact that they retain the ability to terminate the Investment
Advisory Agreement without penalty upon 60 days’ written notice to the
Adviser.
The
Independent Trustees considered the investment performance of the Fund, which is
provided to the Independent Trustees on a regular basis, as compared to the
performance of other funds included in the group of peer funds (the “Peer
Group”) in the Adviser’s presentation. The Independent Trustees also considered
the operating expenses of the Fund compared to the Peer Group listed in the
Adviser’s presentation.
In
addition, based on information provided by the Adviser, including the Adviser’s
responses to a detailed series of questions, the Independent Trustees considered
the Adviser’s performance in providing services related to corporate operations,
including preparation and filing of various reports, maintenance of general
organizational and corporate records and accounts, administration of the affairs
of the Fund, including relationships with the Fund’s various service providers,
and compliance with applicable laws and regulations.
The
Independent Trustees considered the other terms and conditions of the Investment
Advisory Agreement. The Independent Trustees determined that the substantive
terms of the Investment Advisory Agreement (other than the fees payable
thereunder, which the Independent Trustees reviewed separately), including the
services to be provided, are generally similar to those of comparable funds
described in the available market data and that it would be difficult to obtain
similar services of similar quality on a comparable basis from other third-party
service providers or through an internally-managed structure.
The
Independent Trustees considered comparative data based on publicly available
information with respect to services rendered and the advisory fee of the other
funds in the Peer Group. Based upon its review, the Independent Trustees noted
that the base management fee rate paid by the Fund and the Fund’s overall fee
rate, including incentive fees, under the Investment Advisory Agreement were
higher than, but within the range of, the fees paid under the agreements of the
Peer Group described in the available market data. In addition, the Independent
Trustees considered the Fund’s total expenses.
The
Independent Trustees considered the extent to which economies of scale may be
realized as the Fund grows. The Independent Trustees also considered the
potential economies of scale in which the Fund may share, to the extent that the
Carlyle Global Credit platform as a whole continues to grow.
The
Independent Trustees considered the Adviser’s allocation of direct and indirect
expenses to the Fund. Having considered the Adviser’s analysis of these
expenses, the Independent Trustees determined expenses were reasonably allocated
to the Fund.
The
Independent Trustees considered the profitability of the Adviser and noted that
such information was based, in particular, on the fact that the management fee
payable to the Adviser by the Fund is at the annual rate of 1.75%, of the
month-end value of the Fund’s managed assets.
They
further noted that market data regarding the detailed expenses and profitability
of investment advisers to other funds in the Peer Group, and that the
methodologies by which such advisers calculated their profitability, were
generally not publicly available.
The
Independent Trustees considered whether there was potential for additional
benefits.
The
Independent Trustees considered the interests of senior management and concluded
that the judgment and performance of senior management were not impaired by
those interests.
In
view of the wide variety of factors that the Independent Trustees considered in
connection with its evaluation of the Investment Advisory Agreement, the
Independent Trustees determined that it was not practical to quantify, rank or
otherwise assign relative weights to the specific factors it considered in
reaching its decision. The Independent Trustees did not undertake to make any
specific determination as to whether any particular factor, or any aspect of any
particular factor, was favorable or unfavorable to the ultimate determination of
the Board. Rather, the Independent Trustees based their determination on the
totality of information presented to, and the investigation conducted by, them.
In considering the factors discussed above, the Independent Trustees noted that
individual Trustees may give different weights to different
factors.
PORTFOLIO
PROXY VOTING POLICIES AND PROXY VOTING RECORD (Unaudited)
The
Fund has delegated its proxy voting responsibility to the Adviser. The proxy
voting policies and procedures of the Adviser are set forth below. The
guidelines are reviewed periodically by the Adviser and the Independent Trustees
and, accordingly, are subject to change. Based on the nature of the registrant’s
investment strategy, the Adviser does not expect to receive proxy proposals but
may from time to time receive amendments, consents or resolutions applicable to
investments held by the Fund.
It
is the policy of the Fund to delegate the responsibility for voting proxies
relating to portfolio securities held by the Fund to the Fund’s Adviser as a
part of the Adviser’s general management of the Fund’s portfolio, subject to the
continuing oversight of the Board. The Board has delegated such responsibility
to the Adviser, and directs the Adviser to vote proxies relating to portfolio
securities held by the Fund consistent with the proxy voting policies and
procedures. The Adviser may retain one or more vendors to review, monitor and
recommend how to vote proxies in a manner consistent with the proxy voting
policies and procedures, to ensure that such proxies are voted on a timely basis
and to provide reporting and/or record retention services in connection with
proxy voting for the Fund.
The
right to vote a proxy with respect to portfolio securities held by the Fund is
an asset of the Fund. The Adviser, to which authority to vote on behalf of the
Fund is delegated, acts as a fiduciary of the Fund and must vote proxies in a
manner consistent with the best interest of the Fund and its Shareholders. In
discharging this fiduciary duty, the Adviser must maintain and adhere to its
policies and procedures for addressing conflicts of interest and must vote
proxies in a manner substantially consistent with its policies, procedures and
guidelines, as presented to the Board.
The
Fund shall file an annual report of each proxy voted with respect to portfolio
securities of the Fund during the twelve-month period ended June 30 on Form N-PX
not later than August 31 of each year. The Fund’s voting record is available (i)
without charge, upon request, by calling the Fund toll-free at (866) 277-8243,
(ii) free of charge on our website (www.carlylecreditincomefund.com), and (iii)
in the Form N-PX filing on the SEC’s website at www.sec.gov.
The
Fund files its complete schedule of portfolio holdings with the SEC for the
first quarter and the third quarter of each fiscal year on Form N-PORT. The
Fund’s Form N-PORT filings are available on the SEC’s website at
www.sec.gov.
ADDITIONAL
INFORMATION
CARLYLE
CREDIT INCOME FUND
|
|
|
|
|
| |
| Adviser |
Carlyle
Global Credit Investment Management L.L.C. |
|
| |
|
| |
| Transfer
Agent |
Equiniti
Trust Company LLC, (formerly known as American Stock Transfer & Trust
Company) |
|
| |
| Legal
Counsel |
Dechert
LLP |
|
| |
| Ticker
Symbols |
|
| Common
Shares |
CCIF |
| Preferred
Shares |
CCIA |
©
2025 The Carlyle Group Inc. All rights reserved.
PRIVACY
NOTICE
As
a Carlyle Credit Income Fund shareholder, you are entitled to know how we
protect your personal information and how we limit its disclosure.
Information
Sources
We
obtain non-public personal information about our shareholders from transactions
with us, our affiliates, or others.
Protection
of Information
We
do not disclose any non-public personal information (such as names on a customer
list) about current or former customers to anyone, except as permitted by
law.
Disclosure
of Information
We
may use details about you and your investments to help us, our financial service
affiliates, or firms that jointly market their financial products and services
with ours, to better serve your investment needs or suggest educational material
that may be of interest to you. If this requires us to provide you with an
opportunity to “opt in” or “opt out” of such information sharing with a firm not
affiliated with us, you will receive notification on how to do so, before any
such sharing takes place.
Right
of Refusal
We
will not disclose your personal information to unaffiliated third parties
(except as permitted by law), unless we first offer you a reasonable opportunity
to refuse or “opt out” of such disclosure.
Other
Security Measures
We
maintain physical, electronic and procedural safeguards to protect your personal
account information. Our employees and agents have access to that information
only so that they may offer you products or provide services, for example, when
responding to your account questions.
Who
We Are
This
notice describes the privacy policy of the Carlyle Credit Income Fund. In the
event it is updated or changed, we will post an updated notice on our website at
www.CarlyleCreditIncomeFund.com. If you have any questions about this privacy
policy, write to us at PO Box 500, Newark, NJ 07101 or call us at (866)
277-8243.
This
report must be preceded or accompanied by a prospectus.
Visit
Us
CarlyleCreditIncomeFund.com
Call
Us
866
277 8243
The
Fund’s transfer agent is Equiniti Trust Company, LLC
PO
Box 500, Newark, NJ 07101
All
rights reserved.
CCIFAR
11182025
