486BPOS: FS Credit Income Fund Announces Fee Waivers and Updates Share Class Details in New Prospectus

FS Credit Income Fund updates its prospectus, detailing fee waivers and share class information, including changes to contingent deferred sales charges.

Summary

• FS Credit Income Fund has released an updated prospectus outlining changes to fees and share class details.
• For Class U-2 Shares purchased before March 1, 2024, a contingent deferred sales charge (CDSC) of 1.50% may apply if repurchased before the one-year anniversary.
• For Class U-2 Shares purchased on or after March 1, 2024, a CDSC of 1.00% may apply if repurchased before the 18-month anniversary.
• FS Credit Income Advisor has agreed to waive the management fee from December 1, 2024, through December 31, 2025, resulting in a 0.00% management fee during this period.
• The management fee is generally calculated quarterly at an annual rate of 1.00% of the Fund's average daily gross assets.
• The fund anticipates selling $300 million and redeeming $151.2 million worth of shares during the following twelve months, resulting in estimated average net assets of $557.4 million.
• The fund also assumes borrowing funds equal to 15% of its average net assets during such period.
• Class A, Class L, Class T, and Class U-2 Shares are subject to a monthly shareholder servicing fee at an annual rate of up to 0.25% of the average daily net assets.
• Distribution fees vary by share class: Class L, M, and T at 0.25%, Class U at 0.75%, and Class U-2 at 0.50% annually.
• FS Credit Income Advisor has agreed to limit the Funds expenses to 0.25% per annum of the Funds average daily net assets attributable to the applicable class of Shares.
• The fund has agreed to repay FS Credit Income Advisor in the amount of any Fund expenses paid or waived, subject to certain limitations.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive. The fee waiver is a positive development for investors, while the rest of the document is informational.

Positives

• FS Credit Income Advisor is waiving the management fee, setting it to 0.00% from December 1, 2024, to December 31, 2025.
• FS Credit Income Advisor has agreed to limit the Funds expenses to 0.25% per annum of the Funds average daily net assets attributable to the applicable class of Shares.

Negatives

• Class A, L, T, and U-2 Shares are subject to a monthly shareholder servicing fee at an annual rate of up to 0.25% of average daily net assets.
• Distribution fees apply to Class L, M, T, U and U-2 Shares, increasing the overall cost for investors in those classes.
• The fund's actual expenses will depend on the number of Shares the Fund sells in this Offering, the number of Shares redeemed, and the amount of leverage the Fund employs, if any.

Risks

• Actual expenses will depend on the number of Shares the Fund sells in this Offering, the number of Shares redeemed, and the amount of leverage the Fund employs, if any.
• There can be no assurance that the Fund will sell $300.0 million or redeem $151.2 million worth of Shares during the following twelve months.
• The Funds use of leverage, if any, will increase the Management Fee paid to FS Credit Income Advisor.

Future Outlook

The Fund intends to continue its investment strategies and operations, with FS Credit Income Advisor overseeing the management of the Funds activities and making all investment decisions for the Funds portfolio.

Industry Context

This announcement is typical for closed-end funds, providing updates on fees, expenses, and share class details to inform potential and current investors. The fee waiver is a positive development, potentially making the fund more attractive compared to peers with higher management fees.

Comparison to Industry Standards

• Management fees for closed-end funds typically range from 1% to 2% of assets, making the post-waiver fee structure competitive.
• Distribution fees are common in funds with multiple share classes, used to compensate intermediaries for distribution and servicing.
• Expense limitations are also common, aiming to protect investors from excessive operating costs.

Stakeholder Impact

• Shareholders in Class A, L, T, and U-2 will continue to pay shareholder servicing fees.
• Shareholders in Class L, M, T, U and U-2 will continue to pay distribution fees.
• All shareholders will benefit from the management fee waiver from December 1, 2024, to December 31, 2025.

Next Steps

• Investors should review the updated prospectus carefully before making investment decisions.
• Financial intermediaries should communicate the changes to their clients.
• The fund will continue to operate under the updated terms.

Key Dates