SEC Company Response from CREDIT SUISSE OPPORTUNITY FUNDS (CIK 0000946110) — Feb 21, 2020
CREDIT SUISSE OPPORTUNITY FUNDS (CIK 0000946110)
Date: Feb. 21, 2020 · CIK: 0000946110 · Accession: 0001104659-20-023967
AI Filing Summary & Sentiment
File numbers found in text: 811-9054
Letter
VIA EDGAR Securities and Exchange Commission Division of Investment Management Attention: Kim Browning Credit Suisse Opportunity Funds (the “Registrant”) Securities Act File No. 33-92982 Investment Company Act File No. 811-9054
Re:
Dear Ms. Browning:
This letter responds to comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to the undersigned and Elliot J. Gluck on February 13, 2020, regarding Post-Effective Amendment No. 92 to the Registrant’s Registration Statement on Form N-1A under the Securities Act of 1933, as amended, and Amendment No. 93 to the Registrant’s Registration Statement under the Investment Company Act of 1940, as amended (the “Amendment”). The Amendment contains the prospectus and statement of additional information (“SAI”) for the Credit Suisse Multialternative Strategy Fund (the “Fund”).
For your convenience, the substance of the Staff’s comments has been restated below to the best of the Registrant’s understanding in italicized text. The Registrant’s responses to each comment are set out immediately under the restated comment. A Post-Effective Amendment to the Registration Statement, which reflects changes made in response to the Staff’s comments, along with changes made to update certain other information in the Registration Statement will be filed separately. Defined terms, unless otherwise defined herein, have the meanings given to them in the Amendment.
I. General
Comment 1: Please file your responses to the Staff’s comments as correspondence with the SEC via EDGAR at least 5 business days prior to the effective date of the Registration Statement to give the Staff adequate time to review the responses. Please confirm that all excluded and bracketed language (e.g., the performance bar chart, the average annual
NEW YORK WASHINGTON HOUSTON PALO ALTO SAN FRANCISCO PARIS LONDON FRANKFURT BRUSSELS MILAN ROME
total returns table and the financial highlights table) will be updated and provided to the Staff at least 5 days prior to effectiveness to allow the Staff time to review it.
Response 1: The Registrant will seek to respond to the Staff’s comments at least five business days prior to the effective date of the Amendment. A completed fee table, expense example, performance bar chart and table and financial highlights table are attached hereto as Exhibit A. The Registrant will update all information that was excluded or in brackets in the next Post-Effective Amendment to be filed.
II. Prospectus
Comment 2: In the subsection entitled “Fund Summary — Fees and Fund Expenses,” footnote 3 to the fee table states that “any reimbursements must be paid at a date not more than three years after the end of the fiscal year during which such fees were limited or expenses were paid by Credit Suisse and the reimbursements do not cause a class to exceed the applicable expense limitation in the contract at the time the fees were limited or expenses were paid.” Please confirm that the Registrant conducted a FAS 5 analysis and concluded that recoupment of waived fees and/or reimbursed expenses under the Fund’s expense limitation agreement is not probable. Please also confirm that the FAS 5 analysis was provided to the Fund’s auditors. Alternatively, please revise the above-referenced footnote to state that any recoupment must be paid at a date not more than three years after the date of the waiver/reimbursement provided that the recoupment does not cause a class to exceed either (i) the applicable expense limitation in the expense limitation agreement at the time the fees were waived or expenses reimbursed or (ii) the applicable expense limitation at the time of such recoupment.
Response 2: The Registrant notes that its Form N-CSR filed with the SEC on January 6, 2020 contains the following disclosure regarding Credit Suisse’s ability to recoup waived fees and reimbursed expenses:
“The Fund is authorized to reimburse Credit Suisse for management fees previously limited and/or for expenses previously reimbursed by Credit Suisse, provided, however, that any reimbursements must be paid at a date not more than thirty-six months following the applicable month during which such fees were limited or expenses were reimbursed by Credit Suisse and the reimbursements do not cause the Fund to exceed the applicable expense limitation in the contract at the time the fees are recouped.”
The Registrant further notes that Credit Suisse’s ability to recoup waived fees and reimbursed expenses is consistent with such disclosure. In addition, the Registrant will seek to amend the Fund’s expense limitation agreement to provide that any recoupment of fees waived or expenses reimbursed by Credit Suisse will not be made more than three years after the date of the waiver or reimbursement and will not cause a class to
exceed either (i) the applicable expense limitation in the agreement at the time the fees were waived or expenses reimbursed or (ii) the applicable expense limitation at the time of such recoupment. Following such amendment, the Registrant intends to update the above referenced footnote to state as follows (additions bolded and underlined; deletions in strikethrough text):
Credit Suisse Opportunity Funds (the “Trust”) and Credit Suisse Asset Management, LLC (“Credit Suisse”) have entered into a written contract limiting operating expenses to 1.10% of the fund’s average daily net assets for Class A shares and 0.85% of the fund’s average daily net assets for Class I shares at least through February 28, 2021. This limit excludes certain expenses, including interest charges on fund borrowings, taxes, brokerage commissions, dealer spreads and other transaction charges, expenditures that are capitalized in accordance with generally accepted accounting principles, acquired fund fees and expenses, short sale dividends, and extraordinary expenses (e.g., litigation and indemnification and any other costs and expenses that may be approved by the Board of Trustees). The Trust is authorized to reimburse Credit Suisse for management fees previously limited and/or for expenses previously paid by Credit Suisse, provided, however, that any reimbursements must be paid at a date not more than three years after the end of the fiscal year during date on which such fees were limited or expenses were paid by Credit Suisse and the reimbursements do not cause a class to exceed the applicable expense limitation in the contract that was in effect either at the time (i) the fees were limited or expenses were paid or (ii) of such reimbursement. This contract may not be terminated before February 28, 2021.
Comment 3: In footnote 3 of the fee table under the subsection entitled “Fund Summary — Fees and Fund Expenses,” please disclose who can terminate the expense limitation agreement and under what circumstances (see Instruction 3(e) to Item 3 of Form N-1A).
Response 3: The above-referenced footnote is based on the Fund’s current expense limitation agreement, which does not include an explicit right of termination for either party. Accordingly, the Registrant submits that the above-referenced disclosure is accurate and consistent with the requirement of Instruction 3(e) to Item 3 of Form N-1A.
Comment 4: The Fund currently includes “Portfolio Turnover Risk” as a principal risk. Please incorporate disclosure in the subsection entitled “Fund Summary — Principal Investment Strategies” stating that the Fund engages in active and frequent trading.
Response 4: The requested disclosure has been added.
Comment 5: Please confirm that all principal investment strategies of the Fund are contained in the section required by Item 4 of Form N-1A and revise and/or enhance any disclosure as necessary.
Response 5: The Registrant confirms that all principal investment strategies of the Fund are contained in the section of the Prospectus required by Item 4 of Form N-1A.
Comment 6: In the subsection entitled “Fund Summary — Principal Risks of Investing in the Fund,” Emerging Markets Risk is listed as principal risk. As a result, please specifically reference the term “emerging markets” in the subsection entitled “Fund Summary — Principal Investment Strategies.”
Response 6: The requested disclosure has been added.
Comment 7: If the Fund’s principal investment strategies are intended to mimic hedge fund investment strategies, please add appropriate disclosure.
Response 7: The Fund’s principal investment strategies are not intended to mimic those of hedge funds generally.
Comment 8: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please revise the first paragraph to be in plain English and delete the reference to “but not exclusively.”
Response 8: The Registrant has revised the above-referenced paragraph as follows (additions bolded and underlined; deletions in strikethrough text):
The fund seeks to achieve its investment objective by utilizing an investment process to allocate capital across a range of investment strategies. The investment strategies that the fund primarily, but not exclusively, allocates to are directional and/or relative value strategies (i.e., strategies that aim to benefit from relative pricing differences across securities) that take long and/or short positions across all major asset classes, including equities, fixed income, currencies and commodities.
Comment 9: To the extent that the disclosure in the section required by Item 9 of Form N-1A contains principal investment strategies and/or principal risks that are not summarized in the section required by Item 4 of Form N-1A, please include a summary of such strategies and risks in such section.
Response 9: The Registrant confirms that all principal investment strategies and principal risks of the Fund are summarized in the section of the Prospectus required by Item 4 of Form N-1A.
Comment 10: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please disclose the denomination of the securities in which the Fund invests and the attendant risks.
Response 10: The Registrant has added the following sentence to the above-referenced section: “The instruments in which the fund may invest may be U.S. dollar- or non-U.S. dollar-denominated.” The Registrant submits that the risks associated with non-U.S. dollar-denominated instruments are set out under Foreign Securities Risk — Currency Risk in the section entitled “Fund Summary — Principal Risks of Investing in the Fund.”
Comment 11: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please state the Fund’s policy with respect to maturity and duration for bonds.
Response 11: The Registrant has added the following statement to the above-referenced section: “The fund may invest in bonds of any maturity or duration.”
Comment 12: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please disclose the type of issuers (i.e. public, private, U.S. or non-U.S.) in which the Fund will principally invest and include any applicable risks.
Response 12: The Registrant submits that the disclosure in the above-referenced section describes the types of issuers in which the Fund may invest as part of its principal investment strategies (see, for example, the disclosure in the third paragraph). The Fund does not intend to invest in privately placed securities as part of its principal investment strategies.
Comment 13: In the fourth paragraph of the subsection entitled “Fund Summary — Principal Investment Strategies,” please delete “but not limited to.”
Response 13: The requested deletion has been made.
Comment 14: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please indicate the types of options in which the Fund intends to invest (i.e., puts, calls, over-the-counter or exchange-traded) and include corresponding risks.
Response 14: The Registrant has revised the fourth paragraph in the above-referenced section as follows (additions bolded and underlined):
The fund may invest in a broad range of instruments, including, but not limited to, equities, American Depository Receipts and Global Depository Receipts, other mutual funds, exchange-traded funds (“ETFs”), warrants, bonds (both investment grade and below investment grade (commonly referred to as “junk bonds”)), exchange-traded notes (“ETNs”), currencies, commodities, futures, exchange-traded and over-the-counter put and call options (both covered and uncovered) and total return and excess
swaps, either by investing directly in these instruments or, in the case of commodities and certain commodity-linked instruments, indirectly, by investing in the Subsidiary (as described below) that invests in such commodities and commodity-linked instruments.
Please see Response 20 relating to additional risk disclosure related to options.
Comment 15: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please indicate the types of swaps in which the Fund intends to invest and include corresponding risks.
Response 15: Please see Response 14. The Registrant submits that risks relating to options are included in the Fund’s disclosure of principal risks.
Comment 16: In light of the July 30, 2010 letter from Barry Miller, Associate Director of the Commission’s Office of Legal and Disclosure, to the Investment Company Institute, the Registrant should review its derivative disclosure to assess the accuracy and completeness of the disclosure, including whether the disclosure is presented in an understandable manner using plain English, to ensure that the disclosure related to derivatives is tailored specifically to how the Registrant expects to be managed and should address those strategies that the Registrant expects to be the most important means of achieving its objectives and that it anticipates will have a significant effect on its performance. Additionally, the disclosure concerning the principal risks of the Registrant should similarly be tailored to the types of derivatives used by the Registrant, the extent of their use, and the purpose for using derivative transactions. Generic disclosure, either brief or overly detailed should be avoided.
Response 16: The Registrant has reviewed the disclosure contained in the prospectus regarding its proposed use of derivative instruments and the related risks and believes that such disclosure is accurate and complete and presented in an understandable manner.
Comment 17: In the fifth paragraph of the subsection entitled “Fund Summary — Principal Investment Strategies,” please clearly state the strategies of the Subsidiary and delete open-ended disclosure, such as “but it may also invest in other types of futures, swaps and options.”
Response 17: The Registrant has revised the above-referenced paragraph as follows (additions bolded and underlined; deletions in strikethrough text):
The fund primarily will gain exposure to commodities and commodity-linked instruments through investments in the Credit Suisse Cayman Multialternative Strategy Fund, Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the fund organized under
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CORRESP 1 filename1.htm February 21, 2020 VIA EDGAR Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Attention: Kim Browning Re: Credit Suisse Opportunity Funds (the “Registrant”) Securities Act File No. 33-92982 Investment Company Act File No. 811-9054 Dear Ms. Browning: This letter responds to comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to the undersigned and Elliot J. Gluck on February 13, 2020, regarding Post-Effective Amendment No. 92 to the Registrant’s Registration Statement on Form N-1A under the Securities Act of 1933, as amended, and Amendment No. 93 to the Registrant’s Registration Statement under the Investment Company Act of 1940, as amended (the “Amendment”). The Amendment contains the prospectus and statement of additional information (“SAI”) for the Credit Suisse Multialternative Strategy Fund (the “Fund”). For your convenience, the substance of the Staff’s comments has been restated below to the best of the Registrant’s understanding in italicized text. The Registrant’s responses to each comment are set out immediately under the restated comment. A Post-Effective Amendment to the Registration Statement, which reflects changes made in response to the Staff’s comments, along with changes made to update certain other information in the Registration Statement will be filed separately. Defined terms, unless otherwise defined herein, have the meanings given to them in the Amendment. I. General Comment 1: Please file your responses to the Staff’s comments as correspondence with the SEC via EDGAR at least 5 business days prior to the effective date of the Registration Statement to give the Staff adequate time to review the responses. Please confirm that all excluded and bracketed language (e.g., the performance bar chart, the average annual NEW YORK WASHINGTON HOUSTON PALO ALTO SAN FRANCISCO PARIS LONDON FRANKFURT BRUSSELS MILAN ROME total returns table and the financial highlights table) will be updated and provided to the Staff at least 5 days prior to effectiveness to allow the Staff time to review it. Response 1: The Registrant will seek to respond to the Staff’s comments at least five business days prior to the effective date of the Amendment. A completed fee table, expense example, performance bar chart and table and financial highlights table are attached hereto as Exhibit A. The Registrant will update all information that was excluded or in brackets in the next Post-Effective Amendment to be filed. II. Prospectus Comment 2: In the subsection entitled “Fund Summary — Fees and Fund Expenses,” footnote 3 to the fee table states that “any reimbursements must be paid at a date not more than three years after the end of the fiscal year during which such fees were limited or expenses were paid by Credit Suisse and the reimbursements do not cause a class to exceed the applicable expense limitation in the contract at the time the fees were limited or expenses were paid.” Please confirm that the Registrant conducted a FAS 5 analysis and concluded that recoupment of waived fees and/or reimbursed expenses under the Fund’s expense limitation agreement is not probable. Please also confirm that the FAS 5 analysis was provided to the Fund’s auditors. Alternatively, please revise the above-referenced footnote to state that any recoupment must be paid at a date not more than three years after the date of the waiver/reimbursement provided that the recoupment does not cause a class to exceed either (i) the applicable expense limitation in the expense limitation agreement at the time the fees were waived or expenses reimbursed or (ii) the applicable expense limitation at the time of such recoupment. Response 2: The Registrant notes that its Form N-CSR filed with the SEC on January 6, 2020 contains the following disclosure regarding Credit Suisse’s ability to recoup waived fees and reimbursed expenses: “The Fund is authorized to reimburse Credit Suisse for management fees previously limited and/or for expenses previously reimbursed by Credit Suisse, provided, however, that any reimbursements must be paid at a date not more than thirty-six months following the applicable month during which such fees were limited or expenses were reimbursed by Credit Suisse and the reimbursements do not cause the Fund to exceed the applicable expense limitation in the contract at the time the fees are recouped.” The Registrant further notes that Credit Suisse’s ability to recoup waived fees and reimbursed expenses is consistent with such disclosure. In addition, the Registrant will seek to amend the Fund’s expense limitation agreement to provide that any recoupment of fees waived or expenses reimbursed by Credit Suisse will not be made more than three years after the date of the waiver or reimbursement and will not cause a class to 2 exceed either (i) the applicable expense limitation in the agreement at the time the fees were waived or expenses reimbursed or (ii) the applicable expense limitation at the time of such recoupment. Following such amendment, the Registrant intends to update the above referenced footnote to state as follows (additions bolded and underlined; deletions in strikethrough text): Credit Suisse Opportunity Funds (the “Trust”) and Credit Suisse Asset Management, LLC (“Credit Suisse”) have entered into a written contract limiting operating expenses to 1.10% of the fund’s average daily net assets for Class A shares and 0.85% of the fund’s average daily net assets for Class I shares at least through February 28, 2021. This limit excludes certain expenses, including interest charges on fund borrowings, taxes, brokerage commissions, dealer spreads and other transaction charges, expenditures that are capitalized in accordance with generally accepted accounting principles, acquired fund fees and expenses, short sale dividends, and extraordinary expenses (e.g., litigation and indemnification and any other costs and expenses that may be approved by the Board of Trustees). The Trust is authorized to reimburse Credit Suisse for management fees previously limited and/or for expenses previously paid by Credit Suisse, provided, however, that any reimbursements must be paid at a date not more than three years after the end of the fiscal year during date on which such fees were limited or expenses were paid by Credit Suisse and the reimbursements do not cause a class to exceed the applicable expense limitation in the contract that was in effect either at the time (i) the fees were limited or expenses were paid or (ii) of such reimbursement. This contract may not be terminated before February 28, 2021. Comment 3: In footnote 3 of the fee table under the subsection entitled “Fund Summary — Fees and Fund Expenses,” please disclose who can terminate the expense limitation agreement and under what circumstances (see Instruction 3(e) to Item 3 of Form N-1A). Response 3: The above-referenced footnote is based on the Fund’s current expense limitation agreement, which does not include an explicit right of termination for either party. Accordingly, the Registrant submits that the above-referenced disclosure is accurate and consistent with the requirement of Instruction 3(e) to Item 3 of Form N-1A. Comment 4: The Fund currently includes “Portfolio Turnover Risk” as a principal risk. Please incorporate disclosure in the subsection entitled “Fund Summary — Principal Investment Strategies” stating that the Fund engages in active and frequent trading. Response 4: The requested disclosure has been added. 3 Comment 5: Please confirm that all principal investment strategies of the Fund are contained in the section required by Item 4 of Form N-1A and revise and/or enhance any disclosure as necessary. Response 5: The Registrant confirms that all principal investment strategies of the Fund are contained in the section of the Prospectus required by Item 4 of Form N-1A. Comment 6: In the subsection entitled “Fund Summary — Principal Risks of Investing in the Fund,” Emerging Markets Risk is listed as principal risk. As a result, please specifically reference the term “emerging markets” in the subsection entitled “Fund Summary — Principal Investment Strategies.” Response 6: The requested disclosure has been added. Comment 7: If the Fund’s principal investment strategies are intended to mimic hedge fund investment strategies, please add appropriate disclosure. Response 7: The Fund’s principal investment strategies are not intended to mimic those of hedge funds generally. Comment 8: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please revise the first paragraph to be in plain English and delete the reference to “but not exclusively.” Response 8: The Registrant has revised the above-referenced paragraph as follows (additions bolded and underlined; deletions in strikethrough text): The fund seeks to achieve its investment objective by utilizing an investment process to allocate capital across a range of investment strategies. The investment strategies that the fund primarily, but not exclusively, allocates to are directional and/or relative value strategies (i.e., strategies that aim to benefit from relative pricing differences across securities) that take long and/or short positions across all major asset classes, including equities, fixed income, currencies and commodities. Comment 9: To the extent that the disclosure in the section required by Item 9 of Form N-1A contains principal investment strategies and/or principal risks that are not summarized in the section required by Item 4 of Form N-1A, please include a summary of such strategies and risks in such section. Response 9: The Registrant confirms that all principal investment strategies and principal risks of the Fund are summarized in the section of the Prospectus required by Item 4 of Form N-1A. 4 Comment 10: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please disclose the denomination of the securities in which the Fund invests and the attendant risks. Response 10: The Registrant has added the following sentence to the above-referenced section: “The instruments in which the fund may invest may be U.S. dollar- or non-U.S. dollar-denominated.” The Registrant submits that the risks associated with non-U.S. dollar-denominated instruments are set out under Foreign Securities Risk — Currency Risk in the section entitled “Fund Summary — Principal Risks of Investing in the Fund.” Comment 11: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please state the Fund’s policy with respect to maturity and duration for bonds. Response 11: The Registrant has added the following statement to the above-referenced section: “The fund may invest in bonds of any maturity or duration.” Comment 12: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please disclose the type of issuers (i.e. public, private, U.S. or non-U.S.) in which the Fund will principally invest and include any applicable risks. Response 12: The Registrant submits that the disclosure in the above-referenced section describes the types of issuers in which the Fund may invest as part of its principal investment strategies (see, for example, the disclosure in the third paragraph). The Fund does not intend to invest in privately placed securities as part of its principal investment strategies. Comment 13: In the fourth paragraph of the subsection entitled “Fund Summary — Principal Investment Strategies,” please delete “but not limited to.” Response 13: The requested deletion has been made. Comment 14: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please indicate the types of options in which the Fund intends to invest (i.e., puts, calls, over-the-counter or exchange-traded) and include corresponding risks. Response 14: The Registrant has revised the fourth paragraph in the above-referenced section as follows (additions bolded and underlined): The fund may invest in a broad range of instruments, including, but not limited to, equities, American Depository Receipts and Global Depository Receipts, other mutual funds, exchange-traded funds (“ETFs”), warrants, bonds (both investment grade and below investment grade (commonly referred to as “junk bonds”)), exchange-traded notes (“ETNs”), currencies, commodities, futures, exchange-traded and over-the-counter put and call options (both covered and uncovered) and total return and excess 5 swaps, either by investing directly in these instruments or, in the case of commodities and certain commodity-linked instruments, indirectly, by investing in the Subsidiary (as described below) that invests in such commodities and commodity-linked instruments. Please see Response 20 relating to additional risk disclosure related to options. Comment 15: In the subsection entitled “Fund Summary — Principal Investment Strategies,” please indicate the types of swaps in which the Fund intends to invest and include corresponding risks. Response 15: Please see Response 14. The Registrant submits that risks relating to options are included in the Fund’s disclosure of principal risks. Comment 16: In light of the July 30, 2010 letter from Barry Miller, Associate Director of the Commission’s Office of Legal and Disclosure, to the Investment Company Institute, the Registrant should review its derivative disclosure to assess the accuracy and completeness of the disclosure, including whether the disclosure is presented in an understandable manner using plain English, to ensure that the disclosure related to derivatives is tailored specifically to how the Registrant expects to be managed and should address those strategies that the Registrant expects to be the most important means of achieving its objectives and that it anticipates will have a significant effect on its performance. Additionally, the disclosure concerning the principal risks of the Registrant should similarly be tailored to the types of derivatives used by the Registrant, the extent of their use, and the purpose for using derivative transactions. Generic disclosure, either brief or overly detailed should be avoided. Response 16: The Registrant has reviewed the disclosure contained in the prospectus regarding its proposed use of derivative instruments and the related risks and believes that such disclosure is accurate and complete and presented in an understandable manner. Comment 17: In the fifth paragraph of the subsection entitled “Fund Summary — Principal Investment Strategies,” please clearly state the strategies of the Subsidiary and delete open-ended disclosure, such as “but it may also invest in other types of futures, swaps and options.” Response 17: The Registrant has revised the above-referenced paragraph as follows (additions bolded and underlined; deletions in strikethrough text): The fund primarily will gain exposure to commodities and commodity-linked instruments through investments in the Credit Suisse Cayman Multialternative Strategy Fund, Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the fund organized under