-----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, KzYEy/F3GodwzBZk3w6b6v7AXQKQZeWWlrDoMlWngfzDDaateNsbDqExr4f8+TKs UVW3YTCWQmBpLYPWufgDfw== 0001047469-03-016192.txt : 20030501 0001047469-03-016192.hdr.sgml : 20030501 20030501141020 ACCESSION NUMBER: 0001047469-03-016192 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030228 FILED AS OF DATE: 20030501 EFFECTIVENESS DATE: 20030501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREDIT SUISSE MUNICIPAL BOND FUND INC CENTRAL INDEX KEY: 0001067475 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08923 FILM NUMBER: 03676301 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 FORMER COMPANY: FORMER CONFORMED NAME: WARBURG PINCUS MUNICIPAL BOND FUND INC DATE OF NAME CHANGE: 19980804 N-30D 1 a2109154zn-30d.txt N-30D [CREDIT SUISSE ASSET MANAGEMENT LOGO] CREDIT SUISSE FUNDS SEMIANNUAL REPORT FEBRUARY 28, 2003 (UNAUDITED) - - CREDIT SUISSE 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 800-927-2874 OR BY WRITING TO CREDIT SUISSE FUNDS, P.O. BOX 55030, BOSTON, MA 02205-5030. CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR, IS LOCATED AT 466 LEXINGTON AVE., NEW YORK, NY 10017-3140. CREDIT SUISSE FUNDS ARE ADVISED BY CREDIT SUISSE ASSET MANAGEMENT, LLC. 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 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 THE FUND HOLDINGS DESCRIBED IN THIS DOCUMENT ARE AS OF FEBRUARY 28, 2003; THESE VIEWS AND FUND 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. CREDIT SUISSE MUNICIPAL BOND FUND SEMIANNUAL INVESTMENT ADVISER'S REPORT February 28, 2003 March 25, 2003 Dear Shareholder: We are writing to report on the results of the Credit Suisse Municipal Bond Fund(1) (the "Fund") for the six months ended February 28, 2003. At February 28, 2003, the net asset value ("NAV") of the Fund's Common Class shares was $14.73, compared to an NAV of $14.95 at August 31, 2002. Assuming the reinvestment of dividends and distributions totaling $0.69569 per share, the total return of Common Class shares was 3.31%. By comparison, the Lehman Brothers Municipal Bond Index(2) gained 3.36% during the same period. At February 28, 2003, the NAV of the Fund's Class A shares(3) was also $14.73, compared to an NAV of $14.95 at August 31, 2002. Assuming the reinvestment of dividends and distributions totaling $0.69451 per share, the total return of Class A shares(3) (without the sales charge of 3.00%) was 3.30%. By comparison, the Lehman Brothers Municipal Bond Index(2) gained 3.36% during the same period. The fact that the Fund performed in line with its benchmark indicates the balanced impact of our investment approach on the Fund's relative return. On the positive side: - We concentrated new purchases on bonds with maturities of 6-8 years and 11-15 years. Our analysis -- which concluded that these maturities offered historically attractive valuations and strong potential for total return -- proved on target, as these bonds were among the best-performing subcategories of the benchmark in the fiscal half-year. - We kept the portfolio's average maturity and average duration slightly shorter than those of the benchmark, which was especially helpful when the market experienced sharp volatility in late 2002. - We reduced exposure to New York City general obligation bonds (which form one of the single biggest individual components of leading municipal indices) early in the period because we felt their valuation was too high and thus likely to deteriorate. This scenario played out as we anticipated, and the Fund benefited accordingly. - We underweighted (I.E., compared to the benchmark) exposure to so-called "specialty states" like Puerto Rico and California, based on our concerns about the prospects for their credit quality. Each underperformed the benchmark as a whole. 1 - We generally overweighted high-quality securities in the AAA and AA ratings categories, which outperformed. - We emphasized the bonds of local municipalities versus those issued by states, since local issuers' creditworthiness was less vulnerable to the sharply declining trend in revenues from taxes collected on the state level (E.G., income tax, sales tax, capital gains tax). The least favorable contributions to the Fund's overall return came from two sources. First, we defensively held an underweight position in bonds with the longest maturities (I.E., 15-25 years) due to our anticipation of a rising interest-rate environment; as it turned out, though, long-maturity issues were the period's top performers. Second, we chose to underweight bonds selling at or below face value for the same reason, but they, too, performed relatively well. As developments occur 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, Credit Suisse Asset Management, LLC Lori A. Cohane Frank J. Biondo Co-Portfolio Manager Co-Portfolio Manager A PORTION OF INCOME MAY BE SUBJECT TO STATE, LOCAL AND CITY TAXES OR THE FEDERAL ALTERNATIVE MINIMUM TAX. 2 AVERAGE ANNUAL RETURNS AS OF FEBRUARY 28, 2003(1)
SINCE INCEPTION 1 YEAR 3 YEARS INCEPTION DATE ------ ------- --------- --------- Common Class 7.30% 8.58% 5.64% 10/30/98 Class A Without Sales Charge 7.36% -- 7.39% 11/30/01 Class A With Maximum Sales Charge 4.17% -- 4.79% 11/30/01
AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2003(1)
SINCE INCEPTION 1 YEAR 3 YEARS INCEPTION DATE ------ ------- --------- --------- Common Class 9.33% 7.62% 5.48% 10/30/98 Class A Without Sales Charge 9.39% -- 6.74% 11/30/01 Class A With Maximum Sales Charge 6.13% -- 4.32% 11/30/01
Note: Past performance is not predictive of future performance. Investment return and principal value of an investment will fluctuate so that an investor's shares upon redemption may be worth more or less than their original cost. The performance results do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. - ---------- (1) 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) 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. Investors cannot invest directly in an index. (3) Total return for Class A Shares for the reporting period, based on offering price (with sales charge of 3.00%) was 0.22%. 3 CREDIT SUISSE MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS February 28, 2003 (Unaudited)
PAR RATINGS+ (000) (S&P/MOODY'S) MATURITY RATE% VALUE ----- ------------- -------- ----- ------------ MUNICIPAL BONDS (97.0%) ALASKA (8.2%) $ 1,000 Anchorage, AK, General Obligation, Series B (AAA , Aaa) 07/01/13 5.500 $ 1,131,190 ------------ TOTAL ALASKA (Cost $1,056,407) 1,131,190 ------------ COLORADO (5.2%) 595 Colorado Springs, CO, Utility Revenue Bonds (AAA , Aaa) 11/15/17 5.875 713,119 ------------ TOTAL COLORADO (Cost $574,398) 713,119 ------------ CONNECTICUT (1.6%) 200 West Hartford, CT, General Obligation, Series C (AAA , Aaa) 07/15/09 4.500 220,250 ------------ TOTAL CONNECTICUT (Cost $217,287) 220,250 ------------ FLORIDA (3.1%) 390 Tallahassee, FL, Electric Revenue Bonds (AAA , Aaa) 10/01/06 6.100 426,204 ------------ TOTAL FLORIDA (Cost $392,938) 426,204 ------------ ILLINOIS (11.2%) 1,000 Chicago, IL, Metro Water Reclamation District Greater Chicago, Capital Improvement Bonds, General Obligation (AA+ , Aaa) 01/01/11 7.000 1,236,910 300 Illinois Development Finance Authority, Adventist Health Systems, Sunbelt Obligation, Revenue Bonds (A- , A3) 11/15/24 5.650 303,159 ------------ TOTAL ILLINOIS (Cost $1,398,609) 1,540,069 ------------ LOUISIANA (5.5%) 630 New Orleans, LA, Home Mortgage Authority, Special Obligation Bonds (NR , Aaa) 01/15/11 6.250 753,423 ------------ TOTAL LOUISIANA (Cost $621,046) 753,423 ------------ MASSACHUSETTS (0.2%) 20 Massachusetts State, Water Resources Authority, Series A (AA , Aa3) 07/15/19 6.500 25,229 ------------ TOTAL MASSACHUSETTS (Cost $20,978) 25,229 ------------ MINNESOTA (7.2%) 910 Minnesota Public Facilities Authority, Water Pollution, Series A (AAA , Aaa) 03/01/16 5.250 991,754 ------------ TOTAL MINNESOTA (Cost $917,939) 991,754 ------------ NEW JERSEY (3.3%) 440 New Jersey Health Care Facilities, Financing Authority, Trintas Hospital Obligation Group, Revenue Bonds (BBB- , Baa3) 07/01/04 6.500 456,597 ------------ TOTAL NEW JERSEY (Cost $447,337) 456,597 ------------
See Accompanying Notes to Financial Statements. 4
PAR RATINGS+ (000) (S&P/MOODY'S) MATURITY RATE% VALUE ----- ------------- -------- ----- ------------ MUNICIPAL BONDS (CONTINUED) NEW YORK (25.6%) $ 205 Metropolitan Transportation Authority, NY, Commuter Facilities, Revenue Bonds, Series A (AAA , Baa1) 07/01/06 5.000 $ 228,616 200 Metropolitan Transportation Authority, NY, Service Contract Transportation Facilities, Revenue Bonds, Series O (AAA , A3) 07/01/08 5.750 234,654 500 Nassau County, NY, General Obligation Unlimited, Series F (BBB- , Baa2) 03/01/04 7.000 525,330 100 New York City, General Obligation Unlimited, Series A (A , A2) 08/01/04 6.000 106,118 800 New York City, General Obligation Unlimited, Series G (A , A2) 02/01/08 5.750 886,824 360 New York State Power Authority, General Purpose Revenue Bonds (AAA , Aaa) 01/01/18 7.000 449,842 225 Port Authority New York & New Jersey, Revenue Bonds, Series 114 (AA- , A1) 08/01/13 5.500 246,789 580 Suffolk County, NY, Water Authority Waterworks, Revenue Bonds, Series V (AAA , NR) 06/01/12 6.750 707,432 120 Triborough Bridge & Tunnel Authority, New York, Revenue Bonds, Series A (AAA , Aa3) 01/01/08 5.500 137,762 ------------ TOTAL NEW YORK (Cost $3,171,875) 3,523,367 ------------ SOUTH DAKOTA (1.4%) 155 Heartland Consumers Power District, SD, Electric Revenue Bonds (AAA , Aaa) 01/01/16 6.375 184,475 ------------ TOTAL SOUTH DAKOTA (Cost $166,750) 184,475 ------------ TEXAS (8.5%) 325 Harris County Texas (AA+ , Aa1) 10/01/14 5.250 361,962 415 Hidalgo County, TX, Certificates of Obligation (AAA , Aaa) 08/15/17 5.500 463,813 300 University of Texas, Revenue Bonds, Series B (AAA , Aaa) 08/15/10 5.250 342,102 ------------ TOTAL TEXAS (Cost $1,153,875) 1,167,877 ------------ UTAH (4.5%) 600 Utah State Building Ownership Authority Lease, Revenue Bonds, Series A (AAA , Aa1) 05/15/21 5.000 621,168 ------------ TOTAL UTAH (Cost $579,427) 621,168 ------------ VIRGINIA (7.3%) 630 Fairfax County, VA, Redevelopment & Housing Authority, Revenue Bonds (Island Walk Project) (AAA , NR) 04/01/19 7.100 834,630 150 Loudoun County, VA, Public Improvement, General Obligation, Series B (AA+ , Aa1) 01/01/07 5.000 166,880 ------------ TOTAL VIRGINIA (Cost $836,152) 1,001,510 ------------
See Accompanying Notes to Financial Statements. 5
PAR RATINGS+ (000) (S&P/MOODY'S) MATURITY RATE% VALUE ----- ------------- -------- ----- ------------ MUNICIPAL BONDS (CONCLUDED) WASHINGTON (4.2%) $ 500 King County, WA, General Obligation (AA+ , Aa1) 12/01/14 5.500 $ 576,630 ------------ TOTAL WASHINGTON (Cost $559,290) 576,630 ------------ TOTAL MUNICIPAL BONDS (Cost $12,114,308) 13,332,862 ------------ SHORT-TERM INVESTMENT (1.8%) 248 State Street Bank and Trust Co. Euro Time Deposit (Cost $248,000) 03/03/03 1.188 248,000 ------------ TOTAL INVESTMENTS AT VALUE (98.8%) (Cost $12,362,308) 13,580,862 OTHER ASSETS IN EXCESS OF LIABILITIES (1.2%) 164,160 ------------ NET ASSETS (100.0%) $ 13,745,022 ============
+ Credit ratings given by the Standard & Poor's Division of the McGraw-Hill Companies, Inc. ("S&P") and Moody's Investors Service, Inc. ("Moody's") are unaudited. See Accompanying Notes to Financial Statements. 6 CREDIT SUISSE MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES February 28, 2003 (Unaudited) ASSETS Investments at value (Cost $12,362,308) (Note 1) $ 13,580,862 Cash 195 Dividend and interest receivable 169,284 Receivable for fund shares sold 20,180 Receivable from investment adviser (Note 2) 8,454 Prepaid expenses and other assets 24,909 ------------- Total Assets 13,803,884 ------------- LIABILITIES Administrative services fee payable (Note 2) 1,740 Dividend payable 7,799 Distribution fee payable (Note 2) 2,598 Directors' fee payable 2,208 Payable for fund shares redeemed 649 Other accrued expenses payable 43,868 ------------- Total Liabilities 58,862 ------------- NET ASSETS Capital stock, $0.001 par value (Note 5) 933 Paid-in capital 12,508,878 Accumulated net investment loss (2) Accumulated net realized gain on investments 16,659 Net unrealized appreciation from investments 1,218,554 ------------- Net Assets $ 13,745,022 ============= COMMON SHARES Net assets $ 13,200,803 Shares outstanding 896,338 ------------- Net asset value, offering price, and redemption price per share $ 14.73 ============= A SHARES Net assets $ 544,219 Shares outstanding 36,952 ------------- Net asset value and redemption price per share $ 14.73 ============= Maximum offering price per share (net asset value/(1-3.00%)) $ 15.19 =============
See Accompanying Notes to Financial Statements. 7 CREDIT SUISSE MUNICIPAL BOND FUND STATEMENT OF OPERATIONS For the Six Months Ended February 28, 2003 (Unaudited) INTEREST INCOME (Note 1) $ 319,784 ------------- EXPENSES Investment advisory fees (Note 2) 47,335 Administrative services fees (Note 2) 9,924 Distribution fees (Note 2) 15,523 Printing fees (Note 2) 28,049 Legal fees 22,892 Registration fees 21,612 Transfer agent fees (Note 2) 11,380 Audit fees 7,889 Directors' fees 6,017 Insurance expense 1,647 Custodian fees 1,346 Interest expense 255 Miscellaneous expense 353 ------------- Total expenses 174,222 Less: fees waived and expenses reimbursed (Note 2) (111,419) ------------- Net expenses 62,803 ------------- Net investment income 256,981 ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS Net realized gain from investments 56,396 Net change in unrealized appreciation (depreciation) from investments 121,169 ------------- Net realized and unrealized gain from investments 177,565 ------------- Net increase in net assets resulting from operations $ 434,546 =============
See Accompanying Notes to Financial Statements. 8 CREDIT SUISSE MUNICIPAL BOND FUND STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FOR THE YEAR FEBRUARY 28, 2003 ENDED (UNAUDITED) AUGUST 31, 2002 ------------------ --------------- FROM OPERATIONS Net investment income $ 256,981 $ 769,678 Net realized gain from investments 56,396 440,911 Net change in unrealized appreciation (depreciation) from investments 121,169 (305,718) ------------------ --------------- Net increase in net assets resulting from operations 434,546 904,871 ------------------ --------------- FROM DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income Common Class Shares (236,628) (588,148) Institutional Class Shares (12,729) (178,809) Class A Shares (7,650) (2,697) Distributions from net realized gains Common Class Shares (362,774) (675,184) Institutional Class Shares -- (176,272) Class A Shares (9,667) (37) ------------------ --------------- Net decrease in net assets from dividends and distributions (629,448) (1,621,147) ------------------ --------------- FROM CAPITAL SHARE TRANSACTIONS (Note 5) Proceeds from sale of shares 5,552,940 5,343,677 Reinvestment of dividends and distributions 518,867 1,290,433 Net asset value of shares redeemed (6,112,120) (15,556,179) ------------------ --------------- Net decrease in net assets from capital share transactions (40,313) (8,922,069) ------------------ --------------- Net decrease in net assets (235,215) (9,638,345) NET ASSETS Beginning of period 13,980,237 23,618,582 ------------------ --------------- End of period $ 13,745,022 $ 13,980,237 ================== =============== UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) $ (2) $ 24 ================== ===============
See Accompanying Notes to Financial Statements. 9 CREDIT SUISSE MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (For a Common Class Share of the Fund Outstanding Throughout Each Period)
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED AUGUST 31, FEBRUARY 28, 2003 ----------------------------------------------- (UNAUDITED) 2002 2001 2000 1999(1) ------------------ -------- -------- -------- -------- PER SHARE DATA Net asset value, beginning of period $ 14.95 $ 15.30 $ 14.47 $ 14.29 $ 15.14 ------------------ -------- -------- -------- -------- INVESTMENT OPERATIONS Net investment income 0.28(2) 0.55(2) 0.62 0.63 0.54 Net gain (loss) on investments (both realized and unrealized) 0.20 0.24 0.83 0.25 (0.66) ------------------ -------- -------- -------- -------- Total from investment operations 0.48 0.79 1.45 0.88 (0.12) ------------------ -------- -------- -------- -------- LESS DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (0.28) (0.59) (0.62) (0.68) (0.52) Distributions from net realized gains (0.42) (0.55) -- (0.02) (0.21) ------------------ -------- -------- -------- -------- Total dividends and distributions (0.70) (1.14) (0.62) (0.70) (0.73) ------------------ -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD $ 14.73 $ 14.95 $ 15.30 $ 14.47 $ 14.29 ================== ======== ======== ======== ======== Total return(3) 3.31% 5.56% 10.24% 6.42% (0.85)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000s omitted) $ 13,201 $ 9,821 $ 18,672 $ 524 $ 211 Ratio of expenses to average net assets(4) 0.95%(5) 0.95% 0.96% 1.27% 1.26%(5) Ratio of net investment income to average net assets 3.79%(5) 3.68% 4.06% 4.55% 4.44%(5) Decrease reflected in above operating expense ratios due to waivers/reimbursements 1.64%(5) 1.42% 1.10% 0.82% 0.45%(5) Portfolio turnover rate 15% 79% 139% 5% 26%
(1) For the period October 30, 1998 (inception date) through August 31, 1999. (2) Per share information is calculated using the average share outstanding method. (3) Total returns are historical and assume changes in share price and reinvestments of all dividends and distributions. Had certain expenses not been reduced during the period shown, total returns would have been lower. Total returns for periods of less than one year are not 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. (5) Annualized. See Accompanying Notes to Financial Statements. 10
FOR THE SIX MONTHS ENDED FOR THE PERIOD FEBRUARY 28, 2003 ENDED (UNAUDITED) AUGUST 31, 2002(1) ------------------ ------------------ PER SHARE DATA Net asset value, beginning of period $ 14.95 $ 15.12 ------------------ ------------------ INVESTMENT OPERATIONS Net investment income 0.28(2) 0.42(2) Net gain on investments (both realized and unrealized) 0.20 0.40 ------------------ ------------------ Total from investment operations 0.48 0.82 ------------------ ------------------ LESS DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income (0.28) (0.44) Distributions from net realized gains (0.42) (0.55) ------------------ ------------------ Total dividends and distributions (0.70) (0.99) ------------------ ------------------ NET ASSET VALUE, END OF PERIOD $ 14.73 $ 14.95 ================== ================== Total return(3) 3.30% 5.82% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (000s omitted) $ 544 $ 343 Ratio of expenses to average net assets(4),(5) 0.95% 0.95% Ratio of net investment income to average net assets(5) 3.80% 3.78% Decrease reflected in above operating expense ratios due to waivers/reimbursements(5) 1.69% 3.74% Portfolio turnover rate 15% 79%
(1) For the period November 30, 2001 (inception date) through August 31, 2002. (2) Per share information is calculated using the average share outstanding method. (3) Total returns are historical and assume changes in share price, reinvestments of all dividends and distributions, and no sales charge. Had certain expenses not been reduced during the period shown, total returns would have been lower. Total returns for periods of less than one year are not 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. (5) Annualized. See Accompanying Notes to Financial Statements. 11 CREDIT SUISSE MUNICIPAL BOND FUND NOTES TO FINANCIAL STATEMENTS February 28, 2003 (Unaudited) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Credit Suisse Municipal Bond Fund, (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 that seeks high total return. The Fund was incorporated under the laws of the State of Maryland on July 31, 1998. The Fund is authorized to offer four classes of shares: Common Class, Institutional Class, Advisor Class and Class A shares, although only Common Class and Class A shares are being offered. Effective December 12, 2001, Common Class closed to new investors. Effective October 24, 2002 the Institutional Class of the Fund closed. Common Class shares of the Fund bear expenses paid pursuant to a distribution agreement at an annual rate of .25% of the average daily net assets of the Fund's outstanding Common Class shares. Class A shares are sold with a front-end sales charge of up to 3.00% and bear expenses paid pursuant to a plan of distribution at an annual rate of .25% of the average daily net assets of the Fund's Class A shares. In addition, the Common Class and Class A shares bear co-administration fees. 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. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service which may use a matrix, formula or other objective method that takes into consideration market indices, yield curves and other specific adjustments. The Fund's equity investments are valued at market value, which is generally determined using the last reported sales price. If no sales are reported, equity investments are generally valued at the last reported bid price. Securities and other assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors under procedures established by the Board of Directors in the absence of readily ascertainable market values. Debt obligations that will mature in 60 days or less are valued on the basis of amortized cost, which approximates market value, unless the Board of Directors determines that using this method would not reflect an investment's fair value. B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. 12 C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared and paid monthly. Distributions of net realized capital gains, if any, are declared and paid at least annually. However, to the extent that a net realized capital gain can be reduced by a capital loss carryover, such gain will not be distributed. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from accounting principles generally accepted in the United States of America ("GAAP"). D) FEDERAL INCOME TAXES -- No provision is made for federal taxes as it is the Fund's intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended, and 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 and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. F) SHORT-TERM INVESTMENTS -- The Fund, together with other funds/portfolios advised by Credit Suisse Asset Management, LLC ("CSAM"), an indirect, wholly-owned subsidiary of Credit Suisse Group, pool available cash into a short-term time deposit issued by State Street Bank and Trust Company, the Fund's custodian. The short-term time deposit is a variable rate account classified as a short-term investment. G) SECURITIES LENDING -- Loans of 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 AIM Institutional Funds - Liquid Asset Portfolio. 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 out on loan during the six months ended February 28, 2003. 13 Credit Suisse First Boston ("CSFB"), an affiliate of CSAM, has been engaged by the Fund to act as the Fund's securities lending agent. CSFB has agreed to charge the Fund fees for its securities lending activities equal to its costs in providing services as securities lending agent. CSFB also has voluntarily agreed to waive its fees for the securities lending agent services that it provides. CSFB may discontinue its voluntary fee waivers at any time. H) ASSET CONCENTRATION There are certain risks arising from the Fund's concentration in New York municipal securities. Certain New York constitutional amendments, legislative measures, executive orders, administrative regulations, court decisions, and voter initiatives could result in certain adverse consequences including impairing the ability of certain issuers of New York municipal securities to pay principal and interest on their obligations. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES CSAM serves as investment adviser for the Fund. For its investment advisory services, CSAM is entitled to receive a fee from the Fund at an annual rate of ..70% of the Fund's average daily net assets. For the six months ended February 28, 2003, investment advisory fees earned and voluntarily waived, and expenses reimbursed were as follows:
GROSS NET EXPENSE ADVISORY FEE WAIVER ADVISORY FEE REIMBURSEMENTS ------------ ------ ------------ -------------- $ 47,335 $ (47,335) $ -- $ (64,084)
During the period covered by this report, management determined that the Fund's advisory contract had lapsed due to an administrative error. CSAM has taken all necessary steps to remedy this error, including obtaining Board and shareholder approval of retention or payment of fees paid or payable to CSAM during the period the contract had lapsed and of a new contract on the same terms as in the lapsed contract. Credit Suisse Asset Management Securities, Inc. ("CSAMSI") an affiliate of CSAM, and State Street Bank and Trust Company ("SSB"), serve as the co-administrators to the Fund. For its co-administrative services, CSAMSI currently receives a fee for Common Class shares calculated at an annual rate of .05% of the first 14 $125 million in average daily net assets and .10% of the average daily net assets over $125 million. For Class A shares, CSAMSI receives a fee calculated at an annual rate of .10% of the average daily net assets. For the six months ended February 28, 2003, co-administrative services fees earned by CSAMSI were as follows:
CLASS CO-ADMINISTRATIVE SERVICES FEE ----- ------------------------------ Common Class $ 3,010 Class A 194 ------- $ 3,204
For its co-administrative services, SSB receives a fee, exclusive of out-of-pocket expenses, based upon the following fee structure calculated in total for all the Credit Suisse Funds/Portfolios co-administered by SSB and allocated based upon relative average net assets of each fund/portfolio.
AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------------ --------------------------------- First $5 billion .050% of average daily net assets Next $5 billion .035% of average daily net assets Over $10 billion .020% of average daily net assets
For the six months ended February 28, 2003, co-administrative service fees earned by SSB (including out-of-pocket expenses) were $6,720. In addition to serving as the Fund's co-administrator, CSAMSI serves as distributor to the Fund's shares. Pursuant to a distribution plan adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act, CSAMSI receives a fee for its distribution services. This fee is calculated at an annual rate of .25% of the average daily net assets of the Common Class and Class A shares. For the six months ended February 28, 2003, distribution fees earned by CSAMSI for Common and Class A shares were $15,039 and $484, respectively. Certain brokers, dealers and financial representatives provide transfer agent related services to the Fund, and receive compensation from CSAM. CSAM is then reimbursed by the Fund. For the six months ended February 28, 2003, the Fund reimbursed CSAM $3,125, which is included in the Fund's transfer agent expense. For the six months ended February 28, 2003, CSAMSI and its affiliates advised the Fund that they retained $4,106 from commissions earned on the sale of the Fund's shares. 15 Merrill Corporation ("Merrill"), an affiliate of CSAM, has been engaged by the Fund to provide certain financial printing and fulfillment services. For the six months ended February 28, 2003, Merrill was paid $11,730 for its services to the Fund. NOTE 3. LINE OF CREDIT The Fund, together with other funds/portfolios advised by CSAM (collectively, the "Participating Funds"), participates in a $150 million committed, unsecured line of credit facility ("Credit Facility") with Deutsche Bank, A.G. as administrative agent and syndication agent and State Street Bank and Trust Company as operations agent for temporary or emergency purposes. Under the terms of the Credit Facility, the Participating Funds pay an aggregate commitment fee at a rate of 0.10% per annum on the average unused amount of the Credit Facility, which is allocated among the Participating Funds in such manner as is determined by the governing Boards of the Participating Funds. In addition, the Participating Funds pay interest on borrowings at the Federal Funds rate plus 0.50%. At February 28, 2003, the Fund had no loans outstanding for the Fund under the Credit Facility. During the six months ended February 28, 2003, the Fund had borrowings under the Credit Facility as follows:
AVERAGE DAILY WEIGHTED AVERAGE MAXIMUM DAILY LOAN BALANCE INTEREST RATE% LOAN OUTSTANDING ------------- ---------------- ---------------- $ 110,000 2.287% $ 301,000
NOTE 4. PURCHASES AND SALES OF SECURITIES For the six months ended February 28, 2003, purchases and sales of investment securities (excluding short-term investments) were $2,156,833 and $2,023,124, respectively. At February 28, 2003, the identified cost for federal income tax purposes, as well as the gross unrealized appreciation from investments for those securities having an excess of value over cost, gross unrealized depreciation from investments for those securities having an excess of cost over value and net unrealized appreciation (based on cost for federal income tax purposes) were $12,362,308, $1,219,119, $(565) and $1,218,554, respectively. 16 NOTE 5. CAPITAL SHARE TRANSACTIONS The Fund is authorized to issue four billion full and fractional shares of capital stock, $.001 par value per share. Transactions in capital shares for each class were as follows:
COMMON CLASS ------------------------------------------------------------------------ FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2003 (UNAUDITED) AUGUST 31, 2002 ------------------------------------------------------------------------ SHARES VALUE SHARES VALUE --------------- --------------- --------------- --------------- Shares sold 358,603 $ 5,303,527 333,564 $ 4,921,135 Shares issued in reinvestment of dividends and distributions 33,925 493,156 65,892 958,721 Shares redeemed (153,169) (2,279,701) (962,968) (14,153,158) --------------- --------------- --------------- --------------- Net increase (decrease) 239,359 $ 3,516,982 (563,512) $ (8,273,302) =============== =============== =============== =============== INSTITUTIONAL CLASS ------------------------------------------------------------------------ FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2003(1) (UNAUDITED) AUGUST 31, 2002 ------------------------------------------------------------------------ SHARES VALUE SHARES VALUE --------------- --------------- --------------- --------------- Shares sold $ -- -- $ -- $ -- Shares issued in reinvestment of dividends and distributions 763 11,622 22,577 329,045 Shares redeemed (256,000) (3,772,404) (90,571) (1,318,146) --------------- --------------- --------------- --------------- Net decrease (255,237) $ (3,760,782) (67,994) $ (989,101) =============== =============== =============== =============== CLASS A ------------------------------------------------------------------------ FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED FEBRUARY 28, 2003 (UNAUDITED) AUGUST 31, 2002(2) ------------------------------------------------------------------------ SHARES VALUE SHARES VALUE --------------- --------------- --------------- --------------- Shares sold 17,012 $ 249,413 28,597 $ 422,542 Shares issued in reinvestment of dividends and distributions 968 14,089 180 2,667 Shares redeemed (3,956) (60,015) (5,849) (84,875) --------------- --------------- --------------- --------------- Net increase (decrease) 14,024 $ 203,487 (22,928) $ 340,334 =============== =============== =============== ===============
(1) Effective October 24, 2002, the Institutional Class shares ceased operations. (2) For the period November 30, 2001 (inception date) through August 31, 2002. On February 28, 2003, the number of shareholders that held 5% or more of the outstanding shares of each class of the Fund was as follows:
NUMBER OF APPROXIMATE PERCENTAGE SHAREHOLDERS OF OUTSTANDING SHARES ------------ ---------------------- Common Class 3 30% Class A 5 85%
Some of the shareholders are comprised of omnibus accounts, which are held on behalf of several individual shareholders. 17 CREDIT SUISSE MUNICIPAL BOND FUND PRIVACY POLICY NOTICE We are committed to maintaining the privacy of every current and prospective customer. We recognize that you entrust important personal information to us, and we wish to assure you that we take seriously our responsibilities in protecting and safeguarding this information. In connection with making available investment products and services to current and potential customers, we may obtain nonpublic personal information about you. This information may include your name, address, e-mail address, social security number, account number, assets, income, financial situation, transaction history and other personal information. We may collect nonpublic information about you from the following sources: - Information we receive on applications, forms, questionnaires, web sites, agreements or in the course of establishing or maintaining a customer relationship; and - Information about your transactions with us, our affiliates, or others. We do not disclose any nonpublic personal information about our customers or former customers to anyone, except with your consent or as otherwise permitted by law. In cases where we believe that additional products and services may be of interest to you, we may share the information described above with our affiliates. We may also disclose this information to firms that perform services on our behalf. These agents and service providers are required to treat the information confidentially and use it only for the purpose for which it is provided. We restrict access to nonpublic personal information about you to those employees, agents or other parties who need to know that information to provide products or services to you or in connection with your investments with or through us. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information. NOTE: THIS NOTICE IS PROVIDED TO CLIENTS AND PROSPECTIVE CLIENTS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM"), CSAM CAPITAL INC., AND CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., AND SHAREHOLDERS AND PROSPECTIVE SHAREHOLDERS IN CSAM SPONSORED AND ADVISED INVESTMENT COMPANIES, INCLUDING CREDIT SUISSE FUNDS, AND OTHER CONSUMERS AND CUSTOMERS, AS APPLICABLE. THIS NOTICE IS NOT INTENDED TO BE INCORPORATED IN ANY OFFERING MATERIALS BUT IS MERELY A STATEMENT OF OUR CURRENT PRIVACY POLICY, AND MAY BE AMENDED FROM TIME TO TIME UPON NOTICE TO YOU. THIS NOTICE IS DATED AS OF MARCH 29, 2002. 18 This page intentionally left blank This page intentionally left blank [CREDIT SUISSE ASSET MANAGEMENT LOGO] P.O. BOX 55030, BOSTON, MA 02205-5030 800-927-2874 - www.csam-americas.com CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. CSMBD-3-0203 -----END PRIVACY-ENHANCED MESSAGE-----