-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FwCcir64sR7+Xmnb9sPv4lnyYk2fYTHrTz6BFWmYHDrpfOub1taO0ddgB1XGNMSL ln1mVIpaO+FpcrDxqlDwqQ== 0000912057-01-512346.txt : 20010504 0000912057-01-512346.hdr.sgml : 20010504 ACCESSION NUMBER: 0000912057-01-512346 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010228 FILED AS OF DATE: 20010502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS MUNICIPAL BOND FUND INC CENTRAL INDEX KEY: 0001067475 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08923 FILM NUMBER: 1620559 BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 BUSINESS PHONE: 2127166081 MAIL ADDRESS: STREET 1: 466 LEXINGTON AVENUE CITY: NEW YORK STATE: NY ZIP: 10017-3147 N-30D 1 a2047232zn-30d.txt N-30D CREDIT SUISSE WARBURG PINCUS FUNDS ---------------------------------- CREDIT ASSET SUISSE MANAGEMENT SEMIANNUAL REPORT FEBRUARY 28, 2001 (UNAUDITED) CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND More complete information about the Fund, including charges and expenses, is provided in the Prospectus, which must precede or accompany this document and which should be read carefully before investing. You may obtain additional copies by calling 800-WARBURG (800-927-2874) or by writing to Credit Suisse Warburg Pincus Funds, P.O. Box 9030, Boston, MA 02205-9030. Credit Suisse Asset Management Securities, Inc., Distributor, is located at 466 Lexington Ave., New York, NY 10017-3147. Credit Suisse Warburg Pincus Funds are advised by Credit Suisse Asset Management, LLC. FROM TIME TO TIME, THE FUND'S INVESTMENT ADVISER AND CO-ADMINISTRATORS MAY WAIVE SOME FEES AND/OR REIMBURSE SOME EXPENSES, WITHOUT WHICH PERFORMANCE WOULD BE LOWER. WAIVERS AND/OR REIMBURSEMENTS ARE SUBJECT TO CHANGE. RETURNS ARE HISTORICAL AND INCLUDE CHANGE IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE CANNOT GUARANTEE FUTURE RESULTS. RETURNS AND SHARE PRICE WILL FLUCTUATE, AND REDEMPTION VALUE MAY BE MORE OR LESS THAN ORIGINAL COST. THE VIEWS OF THE FUND'S MANAGEMENT ARE AS OF THE DATE OF THE LETTER AND PORTFOLIO HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF FEBRUARY 28, 2001; THESE VIEWS AND PORTFOLIO HOLDINGS MAY HAVE CHANGED SUBSEQUENT TO THESE DATES. NOTHING IN THIS DOCUMENT IS A RECOMMENDATION TO PURCHASE OR SELL SECURITIES. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM") OR ANY AFFILIATE, ARE NOT FDIC INSURED AND ARE NOT GUARANTEED BY CSAM OR ANY AFFILIATE. FUND INVESTMENTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING LOSS OF YOUR INVESTMENT. CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGER'S LETTER - ------------------------------------------------------------------------------- March 19, 2001 Dear Shareholders: We are writing to report on the results of the Credit Suisse Warburg Pincus Municipal Bond Fund(1) (the "Fund") for the fiscal half-year ended February 28, 2001. At February 28, 2001, the net asset value ("NAV") of the Fund's common shares was $14.93, compared to an NAV of $14.47 on August 31, 2000. Assuming the reinvestment of dividends and distributions totaling $0.30 per share, the common shares' total return was 5.28%. By comparison, the Lehman Brothers Municipal Bond Index(2) returned 5.20% in the same period. We attribute the Fund's outperformance of its Lehman benchmark to the combined impact of several elements in our approach to the portfolio. - - The first of these was our exposure to long-term deep-discount issues. We liked these securities for their attractive valuations and yields, but they didn't contribute much to performance until the year's fourth quarter, when market interest rates meaningfully declined. Since they possess an attribute known as positive convexity--I.E., their prices generally rise more quickly when rates are falling than their prices fall when rates are rising--they fared especially well in this period. We chose to sell most of our deep-discount paper in January and February. Our timing in this regard was fortuitous, as we managed to sell at relatively lofty prices fueled both by the municipal market's "January/July effect" (I.E., in which investors engage in fresh buying with the cash paid out to them in bond maturations and coupon payments, which are heaviest in January and July) and a generalized drop in yields across most fixed income sectors. - - The second element was the fact that bonds from so-called "specialty states" like California, New York and Puerto Rico outperformed. We had favored bonds from such states for some time, and the Fund thus benefited when we opted to take advantage of unusually high demand for California and Puerto Rico issues by reducing our positions. - - Finally, we worked throughout late 2000 to reconfigure the portfolio in a way that added to the trading liquidity of our holdings. On the negative side, our least effective move was to begin to reduce the portfolio's overall duration in mid-December. We did so based on our belief that market rates and yields were unlikely to fall much further, which suggested that long-duration securities had probably reaped their biggest gains already. The Fund's performance suffered to the extent that market rates and yields kept falling. 1 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGER'S LETTER (CONT'D) As developments occur in the fixed income markets or at Credit Suisse Asset Management that we believe would be of interest to you, we will be sure to keep you informed. Meanwhile, if you have questions, please feel free to call upon us at any time. Sincerely yours, Gregg M. Diliberto, Patrick A. Bittner, Managing Director Vice President Credit Suisse Asset Management, LLC A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO STATE AND CITY TAXES OR FEDERAL ALTERNATIVE MINIMUM TAX. PERFORMANCE
ONE YEAR SINCE INCEPTION SIX MONTHS (3/1/00 - 10/30/98 (9/1/00 - 2/28/01) 2/28/01) (ANNUALIZED) - ------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND (COMMON)(1)(3) +5.28% +12.12% +4.60% LEHMAN BROTHERS MUNICIPAL BOND INDEX(2) +5.20% +12.32% +4.77% - ------------------------------------------------------------------------------------------
- -------------- (1) Name changed from Warburg Pincus Municipal Bond Fund effective March 26, 2001. (2) The Lehman Brothers Municipal Bond Index is an unmanaged index (with no defined investment objective) of municipal bonds and is calculated by Lehman Brothers, Inc. (3) Fee waivers and/or expense reimbursements reduced expenses for the Fund, without which performance would be lower. Waivers and/or reimbursements may be discontinued at any time. 2 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS February 28, 2001 (Unaudited)
PAR (000) VALUE ------- ---------- MUNICIPAL BONDS (102.0%) ARIZONA (0.9%) Salt River Project, Agricultural Improvement & Power District Electricity Systems, Revenue Bonds 6.000% 01/01/08 $ 125 $ 138,844 --------- CALIFORNIA (5.0%) California State, General Obligation 6.300% 09/11/11 670 783,404 --------- COLORADO (4.2%) Colorado Springs, CO, Utility Revenue Bonds 5.875% 11/15/17 595 656,826 --------- FLORIDA (4.6%) Florida State Turnpike Authority, Turnpike Revenue, Department Transportation, Series A 5.500% 07/01/13 150 157,422 Tallahassee, FL, Electric Revenue Bonds 6.100% 10/01/06 530 563,183 --------- 720,605 --------- ILLINOIS (5.5%) Chicago, IL, Series 1993, General Obligation 5.250% 01/01/18 200 201,084 Illinois State, Sales Tax Revenue Bonds, Series Q 5.750% 06/15/14 650 673,121 --------- 874,205 --------- INDIANA (4.9%) Indiana Board, Bank Revenue Bonds, Series A 5.000% 02/01/22 800 772,792 --------- LOUISIANA (4.6%) New Orleans, LA, Home Mortgage Authority, Special Obligation Bonds 6.250% 01/15/11 635 721,074 --------- MARYLAND (6.4%) Maryland State Transportation Authority, Project Revenue Bonds 6.800% 07/01/16 850 1,008,670 --------- MASSACHUSETTS (4.1%) Massachusetts State Water Resources Authority, Series A 6.500% 07/15/19 20 23,656 Massachusetts State, Construction Loan, General Obligation, Series A 5.300% 11/01/05 100 106,384 Massachusetts State, Grant Anticipation Notes, Series A 5.500% 12/15/07 200 217,026 University of Massachusetts, Building Authority Project, Revenue Bonds, Series 1 5.125% 11/01/17 300 303,282 --------- 650,348 --------- MICHIGAN (1.2%) Michigan Municipal Bond Authority, Revenue Bonds (Clean Water Revolving Fund) 5.500% 10/01/08 170 185,468 --------- NEVADA (1.0%) University of Nevada, University Revenues System, Community College Revenue Bonds 5.375% 07/01/19 150 152,907 --------- NEW YORK (35.4%) Erie County, NY, Public Improvement, General Obligation 6.125% 01/15/09 100 112,413 Metropolitan Transit Authority, Commuter Facilities, Revenue Bonds, Series A 5.000% 07/01/23 600 584,214 Metropolitan Transportation Authority, New York Commuter Facilities, Revenue Bonds, Series C-1 6.000% 07/01/06 150 164,621 New York City General Obligation Bonds, Series H, Prerefunded 7.200% 02/01/02 450 472,316
See Accompanying Notes to Financial Statements. 3 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONT'D) February 28, 2001 (Unaudited)
PAR (000) VALUE ------- --------- MUNICIPAL BONDS (CONT'D) NEW YORK (CONT'D) New York City Municipal Water Finance Authority, Water & Sewer System Revenue Bonds, Series D 4.875% 06/15/21 $ 400 $ 382,832 New York City Transitional Finance Authority Revenue, Series B, Future Tax Secured 5.500% 02/01/08 1000 1,080,300 New York City Transitional Financial Authority, Revenue Bonds, Series A, Future Tax Secured 5.750% 02/15/13 100 109,403 New York State Dormitory Authority, Revenue Bonds (Judicial Facilities Lease) 7.375% 07/01/16 40 48,432 New York State Local Government Assistance Corp., Revenue Bonds, Series B 4.875% 04/01/20 580 556,667 New York State Power Authority, General Purpose Revenue Bonds 7.000% 01/01/10 360 435,121 Suffolk County, NY, Water Authority Waterworks, Revenue Bonds, Series V 6.750% 06/01/12 580 682,271 Triborough Bridge and Tunnel Authority, New York, General Purpose Bonds, Series A 5.200% 01/01/20 730 730,869 New York City General Obligation, Series E 5.250% 08/01/08 200 212,584 ----------- 5,572,043 ----------- OREGON (1.4%) Portland Oregon Revenue, General Obligation, Series A 5.500% 06/01/09 200 217,646 ----------- PENNSYLVANIA (3.8%) Pennsylvania State, General Obligation, First Series 5.125% 01/15/18 600 602,346 ----------- PUERTO RICO (0.6%) University of Puerto Rico, University & College Improvements, Revenue Bonds, Series M 5.500% 06/01/15 100 104,739 ----------- SOUTH DAKOTA (0.8%) Heartland Consumers Power District, SD, Electric Revenue Bonds 6.375% 01/01/16 115 129,550 ----------- TENNESSEE (1.1%) Shelby County, TN, General Obligation, Series B 5.500% 08/01/07 155 167,836 ----------- TEXAS (7.5%) Cypress - Fairbanks, TX, Independent School District, General Obligation 6.000% 02/15/16 250 270,655 Houston, TX, Sewer Systems, Revenue Bonds 6.375% 10/01/08 95 103,907 Lower Colorado River Authority, Texas Revenue Bonds, Series A 5.875% 05/15/15 750 811,237 ----------- 1,185,799 ----------- VIRGINIA (4.9%) Fairfax County, VA, Redevelopment & Housing Authority, Revenue Bonds (Island Walk Project) 7.100% 04/01/19 630 770,811 ----------- WASHINGTON (4.1%) Clark County, WA, School District Number 117 Camas, General Obligation 5.875% 12/01/13 600 645,354 ----------- TOTAL MUNICIPAL BONDS (Cost $15,364,568) 16,061,267
See Accompanying Notes to Financial Statements. 4 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS (CONT'D) February 28, 2001 (Unaudited)
PAR (000) VALUE ------- --------- SHORT-TERM INVESTMENT (3.7%) BBH Grand Cayman U.S. Dollar Time Deposit 4.660% 03/01/01 (Cost $577,000) $ 577 $ 577,000 ------------ TOTAL INVESTMENTS (105.7%) (Cost $15,941,568(1)) 16,638,267 LIABILITIES IN EXCESS OF OTHER ASSETS (5.7%) (895,457) ------------ NET ASSETS (100.0%) $15,742,810 ------------ ------------
- ------------------------------------------------------------------------------- (1) Also cost for Federal Income tax purposes at February 28, 2001. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation $737,319 Gross Depreciation (40,620) -------- Net Appreciation $696,699 -------- --------
5 See Accompanying Notes to Financial Statements. CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES February 28, 2001 (Unaudited) ASSETS Investments, at value (cost - $15,941,568) $16,638,267 Cash 887 Receivable from investment adviser 780 Dividends and interest receivable 190,373 Prepaid expenses and other assets 20,610 ----------- Total Assets 16,850,917 ----------- LIABILITIES Distribution fee payable (Common shares) 117 Payable for investments purchased 1,077,100 Dividend payable 3,153 Payable for Fund shares repurchased 400 Accrued expenses payable 27,337 ----------- Total Liabilities 1,108,107 ----------- NET ASSETS Capital stock, $0.001 par value 1,054 Paid-in capital 14,753,743 Undistributed net investment income 42,948 Accumulated net realized gain from investments 162,022 Net unrealized appreciation on investments 783,043 ----------- Net Assets $15,742,810 ----------- ----------- COMMON SHARES Net assets $ 477,362 ----------- Shares outstanding 31,972 ----------- Net asset value, offering price and redemption price per share $14.93 ------ ------ INSTITUTIONAL SHARES Net assets $15,265,448 ----------- Shares outstanding 1,022,296 ----------- Net asset value, offering price and redemption price per share $14.93 ------ ------
See Accompanying Notes to Financial Statements. 6 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND STATEMENT OF OPERATIONS For the Six Months Ended February 28, 2001 (Unaudited) - ------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $406,583 -------- Total investment income 406,583 -------- EXPENSES: Investment advisory fees 54,282 Administration fees 8,149 Registration fees 17,098 Custodian fees 9,692 Printing fees 8,804 Transfer agent fees 8,288 Audit fees 7,050 Directors fees 6,330 Legal fees 3,404 Insurance expense 1,595 Distribution fees 526 Interest expense 41 Miscellaneous fees 3,053 -------- 128,312 Less: fees waived and expenses reimbursed (50,179) -------- Total expenses 78,133 -------- Net investment income 328,450 -------- NET REALIZED AND UNREALIZED GAIN FROM INVESTMENTS: Net realized gain from investments 383,068 Net change in unrealized appreciation investments 77,342 -------- Net realized and unrealized gain from investments 460,410 -------- Net increase in net assets resulting from operations $788,860 -------- -------- See Accompanying Notes to Financial Statements. 7 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 28, YEAR ENDED 2001 AUGUST 31, (UNAUDITED) 2000 -------------- ------------ FROM OPERATIONS: Net investment income $ 328,450 $ 811,105 Net realized and unrealized gain from investments 460,410 169,992 ----------- ----------- Net increase in net assets resulting from operations 788,860 981,097 ----------- ----------- FROM DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income: Institutional Class shares (320,303) (840,967) Common Class shares (8,274) (12,785) Distributions from net realized capital gains: Institutional Class shares -- (27,430) Common Class shares -- (376) ----------- ----------- Net decrease in net assets from dividends and distributions (328,577) (881,558) ----------- ----------- FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares 11,077,653 449,903 Reinvestment of dividends and distributions 307,361 830,332 Net asset value of shares redeemed (11,254,591) (8,861,870) ----------- ----------- Net increase/(decrease) in net assets from capital share transactions 130,423 (7,581,635) ----------- ----------- Total increase/(decrease) in net assets 590,706 (7,482,096) NET ASSETS: Beginning of period 15,152,104 22,634,200 ----------- ----------- End of period $15,742,810 $15,152,104 ----------- ----------- ----------- ----------- UNDISTRIBUTED NET INVESTMENT INCOME $ 42,948 $ 43,075 ----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements. 8 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (For a Common Class share of the Fund Outstanding Throughout Each Period) - -------------------------------------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD MONTHS ENDED ENDED OCTOBER 30, 1998(1) FEBRUARY 28, 2001 AUGUST 31, TO AUGUST 31, (UNAUDITED) 2000 1999 ----------------- ------------- -------------------- PER-SHARE DATA Net asset value, beginning of period $14.47 $14.29 $15.14 ------ ------ ------ INVESTMENT ACTIVITIES: Net investment income 0.31 0.63 0.54 Net gain/(loss) on investments (both realized and unrealized) 0.45 0.25 (0.66) ------ ------ ------ Total from investment activities 0.76 0.88 (0.12) ------ ------ ------ LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income (0.30) (0.68) (0.52) Distributions from net realized gains 0.00 (0.02) (0.21) ------ ------ ------ Total dividends and distributions (0.30) (0.70) (0.73) ------ ------ ------ NET ASSET VALUE, END OF PERIOD $14.93 $14.47 $14.29 ------ ------ ------ ------ ------ ------ Total return 5.28%(2) 6.42% (0.85)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted) $ 477 $ 524 $ 211 Ratio of expenses to average net assets 1.26%(3) 1.27%(4) 1.26%(3) Ratio of net investment income to average net assets 4.14%(3) 4.55% 4.44%(3) Decrease reflected in above operating expense ratios due to waivers/reimbursements 0.70%(3) 0.82% 0.45%(3) Portfolio turnover rate 31% 5% 26%
- ------------------------------------------------------------------------------- (1) Inception Date. (2) Not annualized. (3) Annualized. (4) Interest earned on uninvested cash balances is used to offset portions of the transfer agent expense. These arrangements had no effect on the fund's expense ratio. See Accompanying Notes to Financial Statements. 9 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS (Unaudited) - ------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Credit Suisse Warburg Pincus Municipal Bond Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a non-diversified, open-end management investment company. The Fund is authorized to offer three classes of shares: Common, Advisor and Institutional, although only Common shares and Institutional shares of the Fund are currently offered. Common shares for the Fund bear expenses paid pursuant to a shareholder servicing and distribution agreement at an annual rate not to exceed .25% of the average daily net asset value of the Fund's outstanding Common shares. In addition, the Common shares bear a co-administration fee. The Fund is permitted to engage in the investment strategies described in the Notes to Financial Statements. The Fund is not obligated to pursue any of the following strategies and does not represent that these techniques are available now or will be available at any time in the future. Please refer to the Fund's prospectus and statement of additional information for a description of its investment strategies. A) SECURITY VALUATION -- The net asset value of the Fund is determined daily as of the close of regular trading on The New York Stock Exchange, Inc. The Fund's securities for which market quotations are readily available are valued at market value, which is currently determined using the last reported sales price. If no sales are reported, as in the case of some securities traded over-the-counter, the securities are valued at the mean between the last reported bid and asked prices. All other securities and assets are valued as determined in good faith by the Fund's Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value. B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Certain expenses are class specific expenses and vary by class. Expenses not directly attributable to a specific Fund or class are allocated based on relative net assets of each Fund and class, respectively. 10 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) (Unaudited) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-- (CONT'D) C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund calculates its dividends from net investment income. Net investment income includes interest accrued and dividends earned on the Fund's portfolio securities for the applicable period less applicable expense. The Fund will distribute substantially all of its net realized capital gains, if any, at least annually and all net investment income monthly. The character of distributions made during the year for net investment income or net realized gains may differ from their ultimate characterization for Federal income tax purposes due to generally accepted accounting principles (GAAP) and tax differences in the character of income and expense recognition. These differences are primarily due to differing treatments for net operating losses, paydowns on mortgage-backed securities, passive foreign investment companies, and forward foreign currency contracts. To the extent these differences are permanent in nature, such amounts are reclassified within capital accounts based on U.S. tax-basis treatment. Temporary differences do not require reclassification. D) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as it is the Fund's intention to qualify for and elect the tax treatment applicable to a regulated investment company under the Internal Revenue Code of 1986, as amended and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. E) USE OF ESTIMATES -- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F) REPURCHASE AGREEMENTS -- Money market instruments may be purchased from banks and non-bank dealers subject to the seller's agreement to repurchase them at an agreed upon date and price. Collateral for repurchase agreements may have longer maturities than the maximum permissible remaining maturity of portfolio investments. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price. The agreements are conditional upon the collateral being deposited under the Federal Reserve book-entry system or held in a separate account by the Fund's custodian or an authorized securities depository. The Fund had no open repurchase agreements at February 28, 2001. 11 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) (Unaudited) - ------------------------------------------------------------------------------- NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONT'D) G) SECURITIES LENDING -- Loans of the securities are required at all times to be secured by collateral at least equal to 102% of the market value of domestic securities on loan including any accrued interest thereon and 105% of the market value of foreign securities on loan including any accrued interest thereon. Cash collateral received by the Fund in connection with securities lending activity is invested in the Boston Global Investment Trust. However, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. The Fund had no securities on loan to brokers at February 28, 2001. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to investment advisory agreements, Credit Suisse Asset Management, LLC ("CSAM"), an indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment advisor for the Fund described herein. For its advisory services, CSAM is entitled to receive from the Fund a monthly fee equal to an annual rate of 0.70% of the Fund's average daily net assets. CSAM may, at its discretion, voluntarily waive all or any portion of its advisory fee for the Fund. For the six months ended February 28, 2001, the advisory fee earned and waived by CSAM was as follows:
GROSS NET ADVISORY FEE WAIVER ADVISORY FEE ------------ --------- ------------ $54,282 $(49,315) $4,967
CSAM reimbursed expenses of the Fund in the amount of $780 for the six months ended February 28, 2001. Boston Financial Data Services, Inc. (BFDS) serves as the Fund's transfer and dividend disbursement agent. The Fund has an arrangement with its transfer agent whereby interest earned on uninvested cash balances were used to offset a portion of its transfer agent expense. For the six months ended February 28, 2001, the Fund received no credits or reimbursements under this agreement. 12 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) (Unaudited) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D) Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), an affiliate of CSAM, serves as co-administrator to the Fund. PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Financial Services Group, also serves as the Fund's co-administrator. For administration services, the Fund pays CSAMSI a fee calculated at an annual rate .05% of the Fund's first $125 million in average daily nets assets of the Common shares and .10% of average daily net assets of the Common shares over $125 million. No compensation is payable by the Fund to CSAMSI for co-administration services for the Institutional shares. CSAMSI may, at its discretion, voluntarily waive all or any portion of its administration fee for the Fund. For the six months ended February 28, 2001, co-administration fees earned and waived by CSAMSI on the Common shares were as follows:
GROSS NET CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE --------------------- ------ --------------------- $105 $(84) $21
For co-administration services, PFPC receives a fee calculated on the Fund's average daily net assets subject to a minimum annual fee and exclusive of out-of-pocket expenses, as follows: ANNUAL RATE ----------- .07% for first $150 million .06% for next $150 million .05% for over $300 million 13 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) (Unaudited) - ------------------------------------------------------------------------------- NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES -- (CONT'D) PFPC may, at its discretion, voluntarily waive all or any portion of it administration fee for the Fund. For the six months ended February 28, 2001, the co-administration fee earned and waived by PFPC was as follows:
GROSS NET CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE ---------------------- -------- ----------------------- $2,616 $ -- $2,616
In addition to serving as the Fund's co-administrator, CSAMSI serves as distributor of the Fund's shares. No compensation is payable by any of the Funds to CSAMSI for distribution services, but CSAMSI receives compensation from the Fund's Common shares under the co-administration agreement for shareholder servicing and distribution. Under the Shareholder Servicing and Distribution Plan for the Common shares, CSAMSI receives a fee calculated at an annual rate of .25% of the average daily net assets of the Common shares of the Fund. For the six months ended February 28, 2001, the shareholder services fee earned by CSAMSI was $526. Merrill Corporation ("Merrill"), an affiliate of CSAM, has been engaged by the Funds to provide certain financial printing services. For the period ended February 28, 2001, Merrill was paid $119 by the Fund. NOTE 3. PURCHASES AND SALES OF SECURITIES For the six months ended February 28, 2001, purchases and sales of investment securities (other than short-term investments) were $6,522,654 and $4,682,048, respectively. NOTE 4. CAPITAL SHARES Transactions in capital shares for each period were as follows:
COMMON INSTITUTIONAL ----------------------------------------- ------------------------------------------------- FOR THE FOR THE FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, AUGUST 31, FEBRUARY 28, AUGUST 31, 2001 (UNAUDITED) 2000 2001 (UNAUDITED) 2000 ----------------------- ---------------- ----------------------- ------------------------ SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE ---------- ----------- ------- ------- --------- ----------- ------------ ----------- Shares sold 74,228 $1,114,226 25,803 $369,861 658,538 $9,963,427 5,754 $ 80,042 Shares issued in reinvestment of dividends 273 4,019 929 13,086 20,696 303,342 58,141 817,246 Shares repurchased (78,756) (1,175,256) (5,265) (74,484) (667,799) (10,079,335) (621,552) (8,787,386) ---------- ----------- ------- ------- --------- ----------- ------------ ----------- Net increase/(decrease) (4,255) $ (57,011) 21,467 $308,463 11,435 $ 187,434 (557,657) $(7,890,098) ========== =========== ======= ======= ========= =========== ============ ===========
14 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS (CONT'D) (Unaudited) NOTE 4. CAPITAL SHARES -- (CONT'D) On February 28, 2001, the number of shareholders that held 5% or more of the outstanding shares are as follows:
NUMBER OF APPROXIMATE PERCENTAGE SHAREHOLDERS OF OUTSTANDING SHARES ------------ --------------------- Institutional shares 2 73.41% Common shares 3 93.07
NOTE 5. LINE OF CREDIT The Fund, together with other Funds advised by CSAM, have established a $350 million committed, unsecured line of credit facility ("Credit Facility") with Deutche Bank, AG as administrative agent, State Street Bank and Trust Company as operations agent, Bank of Nova Scotia as syndication agent and certain other lenders, for temporary or emergency purposes primarily relating to unanticipated Fund share redemptions. Under the terms of the Credit Facility, the Funds with access to the Credit Facility pay an aggregate commitment fee at a rate of .075% per annum on the entire amount of the Credit Facility, which is allocated among the participating Funds in such manner as is determined by the governing Boards of the various Funds. In addition the participating Funds will pay interest on borrowings at the Federal Funds rate plus .50%. For the six months ended February 28, 2001, the Fund had no borrowings under the credit facility. NOTE 6. SUBSEQUENT EVENT On March 23, 2001, a shareholder meeting was held for the Credit Suisse Warburg Pincus Municipal Trust II Fund ("Muni Trust") to approve the merger into the Fund. The merger was approved by the shareholders without incidents. The closing date of the merger was April 6, 2001 at which point the Fund acquired all of the assets and liabilities of Muni Trust. CREDIT SUISSE WARBURG PINCUS ---------------------------- CREDIT ASSET SUISSE MANAGEMENT P.O. BOX 9030, BOSTON, MA 02205-9030 800-WARBURG (800-927-2874) - www.warburg.com CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. CSMBD-3-0201 -----END PRIVACY-ENHANCED MESSAGE-----