N-30D 1 a2047228zn-30d.txt N-30D -------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS FUNDS [LOGO] INSTITUTIONAL SHARES FOCUS FUND LONG-SHORT MARKET NEUTRAL FUND MUNICIPAL BOND FUND February 28, 2001 SEMIANNUAL REPORT (Unaudited) More complete information about the Funds, including charges and expenses, is provided in the Prospectus, which must precede or accompany this document and which should be read carefully before investing. Institutional shareholders may obtain additional copies by calling 800-222-8977 or by writing to Credit Suisse Institutional Shares, P.O. Box 8500, Boston, MA 02266-8500. 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 FUNDS' 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 FUNDS' MANAGEMENT ARE AS OF THE DATE OF THE LETTERS 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 INSTITUTIONAL FUNDS IS THE NAME UNDER WHICH THE INSTITUTIONAL CLASS OF SHARES OF CERTAIN CREDIT SUISSE WARBURG PINCUS FUNDS ARE OFFERED. -------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS FOCUS FUND PORTFOLIO MANAGER'S LETTER March 19, 2001 Dear Shareholders: We are writing to report on the results of the Credit Suisse Warburg Pincus Focus 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 institutional shares was $15.04, compared to an NAV of $19.25 at August 31, 2000. As a result, the institutional shares' total return was -15.85% (assuming the reinvestment of distributions totaling $1.31 per share). By comparison, the Standard & Poor's 500 Index(2) returned -17.84% during the same period. The Fund outperformed its S&P 500 benchmark due to a combination of relatively effective industry weightings and stock selection. We were most successful in this regard in the consumer staples, basic materials and capital goods sectors. - We meaningfully overweighted consumer staples companies compared to the S&P 500. Our research concluded that they offered an attractive mix of fairly stable operating characteristics in a climate of decelerating macroeconomic growth, along with attractive valuations. After stagnating for several quarters in 1999 and 2000 as information-based "New Economy" stocks surged, consumer staples stocks revived on the back of improving fundamentals and industry consolidation activity. The Fund held a few such names that performed especially well. - A similar story applied to our exposure to basic materials companies. - In capital goods, we focused on major aircraft producers whose shares benefited from new contracts and ongoing cost-cutting initiatives. The most negative contributions to overall performance in the fiscal half-year came from our positioning in technology, financial services and health care. We had maintained below-benchmark exposure to technology for much of 2000 due to valuation concerns. Following several pre-announcements of earnings disappointments in the calendar fourth quarter, many tech stocks pulled back to levels that reflected more realistic earnings expectations. We thus began to selectively add to the sector and are now overweighting it for the first time in a year. While we may be early in this positioning, we believe that technology will still be one of the market's areas of fastest growth going forward. We underweighted financial services stocks relative to the benchmark, based on their vulnerability to the slowing economy. While this sector was bolstered by speculation surrounding merger-and-acquisition activity, we viewed it as having weak fundamentals and deteriorating credit quality. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, D. Susan Everly, Director Credit Suisse Asset Management, LLC 1 -------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS FOCUS FUND PORTFOLIO MANAGER'S LETTER (CONCLUDED) PERFORMANCE
SINCE INCEPTION SIX MONTHS ONE YEAR 7/31/98 (9/1/00 - 2/28/01) (3/1/00 - 2/28/01) (ANNUALIZED) ------------------------------------------------------------------------------------------------------------------ CREDIT SUISSE WARBURG PINCUS FOCUS FUND (INSTITUTIONAL)(1,3) (15.85)% (0.86)% +17.44% STANDARD & POOR'S 500 INDEX(2) (17.84)% (8.20)% +5.32% ------------------------------------------------------------------------------------------------------------------
(1) Name changed from Warburg Pincus Focus Fund effective March 26, 2001. (2) The S&P 500 Index is an unmanaged index (with no defined investment objective) of common stocks. It includes reinvestment of dividends, and is a registered trademark of McGraw-Hill Co., Inc. (3) Fee waivers and expense reimbursements or credits reduced expenses for the Fund during 2000 but may be discontinued at any time. -------------------------------------------------------------------------------- 2 CREDIT SUISSE WARBURG PINCUS FOCUS FUND SCHEDULE OF INVESTMENTS FEBRUARY 28, 2001 (UNAUDITED)
NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS -- 98.3% AEROSPACE & DEFENSE -- 4.7% Lockheed Martin Corp. ........... 17,000 $ 636,820 ----------- AGRICULTURE -- 2.3% Archer-Daniels-Midland Co........ 15,000 225,750 IMC Global, Inc.................. 5,900 81,125 ----------- 306,875 ----------- BANKS & SAVINGS & LOANS -- 7.4% Bank of America Corp............. 3,700 184,815 Citigroup, Inc................... 5,500 270,490 FleetBoston Financial Corp....... 4,500 185,625 U.S. Bancorp..................... 7,700 178,640 Wells Fargo & Co................. 3,800 188,632 ----------- 1,008,202 ----------- CHEMICALS -- 3.7% Du Pont (E.I.) de Nemours & Co... 10,700 467,483 Sealed Air Corp. (1)............. 800 31,320 ----------- 498,803 ----------- COMMUNICATIONS & MEDIA -- 4.9% AOL Time Warner, Inc.(1)......... 8,100 356,643 Inktomi Corp.(1)................. 9,400 106,337 Viacom, Inc., Class B(1)......... 4,000 198,800 ----------- 661,780 ----------- COMPUTERS -- 13.8% Ceridian Corp.(1)................ 4,400 89,012 Compaq Computer Corp............. 6,300 127,260 EMC Corp.(1)..................... 8,500 337,960 i2 Technologies, Inc.(1)......... 7,500 201,563 Microsoft Corp.(1)............... 11,900 702,100 Siebel Systems, Inc.(1).......... 2,100 80,325 Veritas Software Corp.(1)........ 5,200 337,675 ----------- 1,875,895 ----------- CONGLOMERATES -- 3.2% General Electric Co.............. 9,500 441,750 ----------- CONSUMER DURABLES -- 3.2% Ford Motor Co.................... 15,837 440,427 ----------- CONSUMER NON-DURABLES -- 2.0% Clorox Co........................ 7,500 269,700 ----------- ELECTRONICS -- 3.9% Intel Corp....................... 12,100 345,606 JDS Uniphase Corp.(1)............ 2,000 53,500 Texas Instruments, Inc........... 4,500 132,975 ----------- 532,081 ----------- ENERGY -- 3.3% Exxon Mobil Corp. 5,500 445,775 ----------- FINANCIAL SERVICES -- 4.7% American Express Co.............. 4,800 $ 210,624 American International Group, Inc. 1,700 139,060 Freddie Mac...................... 2,400 158,040 Morgan Stanley, Dean Witter & Co. 2,000 130,260 ----------- 637,984 ----------- FOOD, BEVERAGE & TOBACCO -- 9.2% Coca-Cola Co..................... 6,000 318,180 Philip Morris Cos., Inc.......... 13,900 669,702 Wrigley (Wm.) Jr. Co............. 2,900 270,048 ----------- 1,257,930 ----------- HEALTHCARE -- 2.8% Guidant Corp.(1)................. 7,400 377,178 ----------- LODGING & RESTAURANTS -- 1.0% McDonald's Corp.................. 4,600 135,240 ----------- MISCELLANEOUS -- 1.9% Nasdaq-100 Shares(1)............. 2,300 108,905 Standard & Poor's Depository Receipts (Spiders)............. 1,200 148,740 ----------- 257,645 ----------- PHARMACEUTICALS -- 11.5% Cardinal Health, Inc............. 2,200 223,300 Gilead Sciences, Inc.(1)......... 2,600 97,175 Lilly (Eli) & Co................. 3,600 286,056 Mylan Laboratories, Inc.......... 6,700 156,780 Pfizer, Inc...................... 7,600 342,000 Pharmacia Corp................... 5,000 258,500 Watson Pharmaceuticals, Inc.(1).. 3,600 199,800 ----------- 1,563,611 ----------- RETAIL -- 5.9% Costco Wholesale Corp.(1)........ 4,500 187,875 Home Depot, Inc.................. 6,000 255,000 Wal-Mart Stores, Inc............. 7,200 360,648 ----------- 803,523 ----------- TELECOMMUNICATIONS & EQUIPMENT -- 8.9% Cisco Systems, Inc.(1)........... 14,300 338,731 Motorola, Inc.................... 8,700 131,979 SBC Communications, Inc.......... 9,600 457,920 WorldCom, Inc.(1)................ 4,200 69,825 XO Communications, Inc., Class A(1)............... 14,500 215,688 ----------- 1,214,143 ----------- TOTAL COMMON STOCKS (Cost $13,820,397) $13,365,362 -----------
See Accompanying Notes to Financial Statements. 3 CREDIT SUISSE WARBURG PINCUS FOCUS FUND (CONCLUDED)
PAR (000) VALUE ----- ------------ SHORT-TERM INVESTMENT -- 0.6% BBH Grand Cayman U.S. Dollar Time Deposit 4.660% 03/01/01 (Cost $81,212) $81 $ 81,212 ----------- TOTAL INVESTMENTS -- 98.9% (Cost $13,901,609(2)).......... 13,446,574 OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.1%......... 153,937 ----------- NET ASSETS -- 100.0%............. $13,600,511 ===========
(1) Non-Income Producing Security. (2) Cost for Federal Income tax purposes at February 28, 2001 is $14,757,022. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation.............. $ 1,380,686 Gross Depreciation.............. (2,691,134) ----------- Net Depreciation................ $(1,310,448) ===========
See Accompanying Notes to Financial Statements. 4 CREDIT SUISSE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND PORTFOLIO MANAGER'S LETTER March 19, 2001 Dear Shareholders: We are writing to report on the results of the Credit Suisse Warburg Pincus Long-Short Market Neutral 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 institutional shares was $14.01, compared to an NAV of $14.78 on August 31, 2000. As a result, the institutional shares' total return was -1.19%, assuming the reinvestment of dividends and distributions totaling $0.60 per share. By comparison, the Salomon Smith Barney U.S. One-Month Treasury Bill Index (2) (the "Index") returned 2.84% during the same period. The Fund underperformed the Index benchmark in the fiscal half-year due to our unsuccessful forecasting of some of the drivers of stock prices that form the basis of our stock selection discipline. The following table summarizes those drivers whose impact on performance was most notable, both negative and positive:
DRIVER INDICATOR NET IMPACT ON PERFORMANCE ------------------------------------------------------------------------------------------ Financial strength Leverage Negative Earnings Earnings revisions Negative Relative valuation Change in sales/price ratio Negative Financial strength Return on assets Negative Relative valuation Sales/price ratio Negative Financial strength Net profit margin Positive Relative valuation Book value/price ratio Positive Financial strength Credit management Positive Financial strength Liquidity Positive Financial strength Inventory turnover Positive ------------------------------------------------------------------------------------------
In terms of how all of this affected the relative success of the portfolio's long and short portions, the long portion significantly underperformed. This was most evident in our net long exposure to consumer cyclical companies (notably autos) due to their attractive relative valuations. Prominent auto stocks fared poorly, though, as consumer confidence plunged late in calendar 2000, causing sales to slow significantly. The two industry sectors that contributed most positively to the Fund's overall return were utilities and energy. Our utility exposure was net short due to our concerns about the industry's vulnerability both to decelerating macroeconomic growth nationwide and the growing electricity crisis in California; and we maintained a net long exposure to energy companies based on the generally rising price of natural gas and home heating oil. In each case, the sectors performed as we anticipated. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. Sincerely yours, Credit Suisse Asset Management Structured Equity Management Team Eric N. Remole, Managing Director Marc E. Bothwell, Vice President Michael A. Welhoelter, Vice President INVESTING IN SHARES OF THE FUND CAN BE MORE VOLATILE AND RISKY THAN SOME OTHER FORMS OF INVESTMENTS. IN ADDITION, IF THE ADVISER TAKES LONG POSITIONS IN STOCKS THAT DECLINE OR SHORT POSITIONS IN STOCKS THAT INCREASE IN VALUE, THEN LOSSES OF THE FUND MAY EXCEED THOSE OF OTHER STOCK MUTUAL FUNDS THAT HOLD LONG POSITIONS ONLY. 5 CREDIT SUISSE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND PORTFOLIO MANAGER'S LETTER (CONCLUDED) PERFORMANCE
SINCE INCEPTION SIX MONTHS ONE YEAR 7/31/98 (9/1/00 - 2/28/01) (3/1/00 - 2/28/01) (ANNUALIZED) ----------------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (INSTITUTIONAL)(1), (3) (1.19)% (5.78)% +2.48% SALOMON SMITH BARNEY U.S. ONE-MONTH TREASURY BILL INDEX(2) +2.84% +5.66% +4.92% -----------------------------------------------------------------------------------------------------------------------------------
(1) Name changed from Warburg Pincus Long-Short Market Neutral Fund effective March 26, 2001. (2) Monthly return equivalents of yield average which are not marked to market. The Salomon Smith Barney U.S. One-Month Treasury Bill Index consists of the last one-month Treasury bill issues. (3) Fee waivers and expense reimbursements or credits reduced expenses for the Fund during 2000 but may be discontinued at any time. 6 CREDIT SUISSE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND SCHEDULE OF INVESTMENTS FEBURARY 28, 2001 (UNAUDITED)
NUMBER OF SHARES VALUE ------------- ------------- COMMON STOCKS -- 85.0% AEROSPACE & DEFENSE -- 2.1% Textron, Inc. ......................... 2,200 $ 116,556 ------------- BANKS & SAVINGS & LOANS -- 2.3% M & T Bank Corp. ...................... 1,900 130,150 ------------- BUILDING & BUILDING MATERIALS -- 1.2% KB Home ............................... 2,400 67,080 ------------- BUSINESS SERVICES -- 2.1% Iron Mountain, Inc.(1) ................ 1,700 66,317 Lamar Advertising Co.(1) .............. 1,300 53,625 ------------- 119,942 ------------- COMMUNICATIONS & MEDIA -- 4.8% AT&T Corp. - Liberty Media Group, Class A(1) ......................... 2,200 32,340 Belo (A.H.) Corp. Class A ............. 3,100 55,800 Charter Communications, Inc. Class A(1) .................... 200 4,275 Cox Communications, Inc. Class A(1) .................... 4,300 178,536 ------------- 270,951 ------------- COMPUTERS -- 5.2% CNET Networks, Inc.(1) ................ 9,400 116,912 Comdisco, Inc.(1) ..................... 900 11,475 Earthlink, Inc.(1) .................... 900 8,100 Microsoft Corp.(1) .................... 1,100 64,900 Oracle Corp.(1) ....................... 4,700 89,300 ------------- 290,687 ------------- CONSUMER DURABLES -- 5.9% Ford Motor Co. ........................ 3,000 83,430 General Motors Corp. .................. 4,700 250,604 ------------- 334,034 ------------- CONSUMER SERVICES -- 3.7% Quanta Services, Inc.(1) .............. 6,500 179,465 Unilever NV ........................... 500 27,950 ------------- 207,415 ------------- ELECTRIC UTILITIES -- 2.6% Energy East Corp. ..................... 2,300 43,240 Pinnacle West Capital Corp. ........... 2,200 102,190 ------------- 145,430 ------------- ELECTRONICS -- 3.5% Applied Micro Circuits Corp.(1) ....... 700 18,725 Intel Corp. ........................... 1,300 37,131 Linear Technology Corp. ............... 2,100 83,212 National Semiconductor Corp.(1) ....... 2,100 42,882 Teradyne, Inc.(1) ..................... 400 12,492 ------------- 194,442 ------------- NUMBER OF SHARES VALUE ------------- ------------- ENERGY -- 4.7% Apache Corp. .......................... 900 $ 52,830 EOG Resources, Inc. ................... 1,500 65,400 FirstEnergy Corp. ..................... 3,000 84,510 Valero Energy Corp. ................... 1,700 62,305 ------------- 265,045 ------------- FINANCIAL SERVICES -- 9.3% Ambac Financial Group, Inc. ........... 600 33,840 CNA Financial Corp.(1) ................ 900 34,029 Fannie Mae ............................ 100 7,970 Hartford Financial Services, Inc. ..... 500 31,925 Internet Capital Group, Inc.(1) ....... 3,700 14,222 Lehman Brothers Holdings, Inc. ........ 600 41,190 MBIA, Inc. ............................ 200 15,196 Merrill Lynch & Co., Inc. ............. 900 53,910 MONY Group, Inc. ...................... 2,900 107,300 UnionBanCal Corp. ..................... 2,300 61,226 Wesco Financial Corp. ................. 400 119,960 ------------- 520,768 ------------- FOOD, BEVERAGE & TOBACCO -- 4.2% Adolph Coors Co., Class B ............. 1,100 73,645 Anheuser-Busch Companies, Inc. ........ 2,200 96,140 Pepsi Bottling Group, Inc. ............ 1,700 68,595 ------------- 238,380 ------------- HEALTHCARE -- 4.2% Abbott Laboratories ................... 2,000 97,980 Aetna, Inc.(1) ........................ 600 22,338 HEALTHSOUTH Corp.(1) .................. 1,300 20,696 Tenet Healthcare Corp.(1) ............. 2,100 96,873 ------------- 237,887 ------------- INDUSTRIAL MFG. & PROCESSING -- 1.1% Paccar, Inc. .......................... 1,100 51,012 Waters Corp.(1) ....................... 200 13,172 ------------- 64,184 ------------- LODGING & RESTAURANTS -- 0.8% Darden Restaurants .................... 2,000 43,460 ------------- METALS & MINING -- 1.2% Barrick Gold Corp. .................... 2,700 43,740 Newmont Mining Corp. .................. 1,500 25,275 ------------- 69,015 ------------- OIL SERVICES -- 3.3% Occidental Petroleum Corp. ............ 5,000 119,950 Tidewater, Inc. ....................... 1,400 68,180 ------------- 188,130 ------------- PAPER & FOREST PRODUCTS -- 3.3% Plum Creek Timber Co., Inc. ........... 5,100 132,243 Weyerhaeuser Co. ...................... 1,000 53,740 ------------- 185,983 -------------
See Accompanying Notes to Financial Statements. 7 CREDIT SUISSE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONTINUED)
NUMBER OF SHARES VALUE ------------- ------------- PHARMACEUTICALS -- 3.8% Chiron Corp.(1) ....................... 800 $ 37,450 Genzyme Corp.(1) ...................... 100 8,794 IDEC Pharmaceuticals Corp.(1) ......... 3,000 169,125 ------------- 215,369 ------------- REAL ESTATE -- 2.9% Carramerica Realty Corp. .............. 3,000 89,700 Equity Residential Properties Trust ... 1,100 57,310 Simon Debartolo Group ................. 700 17,927 ------------- 164,937 ------------- RETAIL -- 1.4% Circuit City Stores, Inc. ............. 1,600 24,272 Intimate Brands, Inc. ................. 2,300 36,340 Ticketmaster, Class B(1) .............. 1,700 15,831 ------------- 76,443 ------------- TELECOMMUNICATIONS & EQUIPMENT -- 6.2% Copper Mountain Networks, Inc.(1) ..... 500 2,047 Juniper Networks, Inc.(1) ............. 200 12,913 NTL, Inc.(1) .......................... 2,200 57,178 QUALCOMM, Inc.(1) ..................... 600 32,888 Telephone and Data Systems ............ 2,600 242,970 ------------- 347,996 ------------- TRANSPORTATION -- 2.5% Autonation, Inc.(1) ................... 4,400 36,520 Florida East Coast Industries, Inc. Class A ....................... 600 20,550 Ryder System .......................... 1,400 28,714 Southwest Airlines .................... 3,000 55,800 ------------- 141,584 ------------- WASTE MANAGEMENT -- 2.7% Allied Waste Industries, Inc.(1) ...... 400 6,460 Waste Management, Inc. ................ 5,800 147,146 ------------- 153,606 ------------- TOTAL COMMON STOCKS (Cost $4,916,268) .................. $ 4,789,474 ------------- SECURITIES SOLD SHORT -- (86.7%) AEROSPACE & DEFENSE -- (1.3%) General Dynamics Corp. ................ (1,100) $ (74,998) ------------- BANKS & SAVINGS & LOANS -- (5.6%) Bank One Corp. ........................ (800) (28,216) FirstMerit Corp. ...................... (11,100) (289,294) ------------- (317,510) ------------- BUILDING & BUILDING MATERIALS -- (0.8%) Vulcan Materials Co. .................. (1,100) (46,563) ------------- BUSINESS SERVICES -- (6.2%) Catalina Marketing Corp.(1) ........... (1,500) (49,950) Fluor Corp. ........................... (4,800) (182,976) NUMBER OF SHARES VALUE ------------- ------------- BUSINESS SERVICES -- (CONTINUED) Omnicom Group, Inc. ................... (700) $ (63,483) Schwab, Charles Corp. ................. (2,500) (52,250) ------------- (348,659) ------------- CAPITAL EQUIPMENT -- (2.2%) American Standard Companies, Inc.(1) ............................ (2,200) (124,586) ------------- CHEMICALS -- (0.3%) Hercules, Inc. ........................ (1,300) (18,304) ------------- COMMUNICATIONS & MEDIA -- (3.6%) Ariba, Inc.(1) ........................ (1,100) (18,150) Cablevision Systems Corp. Class A(1) ......................... (900) (69,840) Critical Path, Inc.(1) ................ (600) (1,640) Fox Entertainment Group, Inc.(1) ...... (2,900) (69,310) Liberty Digital, Inc.(1) .............. (1,600) (14,000) McGraw-Hill Cos., Inc. ................ (400) (23,584) Scripps (E.W.) Co. Class A ............ (100) (6,293) ------------- (202,817) ------------- COMPUTERS -- (3.3%) Extreme Networks, Inc.(1) ............. (200) (4,522) International Business Machines Corp. .............................. (1,100) (109,890) Liberate Technologies, Inc.(1) ........ (2,100) (19,819) Radioshack ............................ (1,200) (51,360) ------------- (185,591) ------------- CONGLOMERATES -- (0.9%) General Electric Co. .................. (1,100) (51,150) ------------- CONSUMER DURABLES -- (5.1%) Eastman Kodak Co. ..................... (1,300) (58,500) Lear Corp.(1) ......................... (1,800) (57,708) Maytag Corp. .......................... (5,100) (170,850) ------------- (287,058) ------------- CONSUMER NON-DURABLES -- (1.9%) Gillette Co. .......................... (1,900) (61,769) Procter & Gamble Co. .................. (600) (42,300) ------------- (104,069) ------------- ELECTRIC UTILITIES -- (2.3%) AES Corp.(1) .......................... (1,400) (75,558) DQE, Inc. ............................. (1,600) (51,920) ------------- (127,478) ------------- ELECTRONICS -- (4.3%) Arrow Electronics, Inc.(1) ............ (1,100) (30,140) Atmel Corp.(1) ........................ (1,600) (16,800) Broadcom Corp. Class A(1) ............. (100) (4,925) SPX Corp.(1) .......................... (1,800) (174,600) Vitesse Semiconductor Corp.(1) ........ (400) (15,775) ------------- (242,240) -------------
See Accompanying Notes to Financial Statements. 8 CREDIT SUISSE WARBURG PINCUS LONG-SHORT MARKET NEUTRAL FUND (CONCLUDED)
NUMBER OF SHARES VALUE ------------- ------------- ENERGY -- (4.3%) Edison International .................. (5,900) $ (87,910) Massey Energy Co. ..................... (4,800) (94,272) National Fuel Gas Co. ................. (1,100) (56,980) ------------- (239,162) ------------- FINANCIAL SERVICES -- (10.2%) American International Group, Inc. ............................... (200) (16,360) H & R Block, Inc. ..................... (6,300) (310,590) Investment Technology Group(1) ........ (1,500) (77,250) Marsh & McLennan Cos., Inc. ........... (700) (74,900) Nationwide Financial Services, Inc. ............................... (500) (20,700) Neuberger Berman, Inc. ................ (600) (44,820) People's Bank ......................... (1,200) (31,875) ------------- (576,495) ------------- FOOD, BEVERAGE & TOBACCO -- (3.7%) Campbell Soup Co. ..................... (2,300) (68,839) Coca-Cola Co. ......................... (1,400) (74,242) Dole Food Co. ......................... (4,000) (66,000) ------------- (209,081) ------------- GAS UTILITIES -- (2.2%) Equitable Resources, Inc. ............. (2,100) (120,540) ------------- HEALTHCARE -- (4.9%) Beckman Coulter, Inc. ................. (3,900) (157,755) UnitedHealth Group, Inc. .............. (2,000) (118,460) ------------- (276,215) ------------- INDUSTRIAL MFG. & PROCESSING -- (3.4%) Dana Corp. ............................ (2,500) (42,325) FMC Corp.(1) .......................... (1,900) (145,844) ------------- (188,169) ------------- LODGING & RESTAURANTS -- (2.4%) International Game Technology(1) ...... (1,900) (102,600) Tricon Global Restaurants, Inc.(1) .... (900) (34,650) ------------- (137,250) ------------- OFFICE EQUIPMENT & SUPPLIES -- (0.4%) Pitney Bowes, Inc. .................... (700) (23,835) ------------- OIL SERVICES -- (2.8%) Cooper Cameron Corp.(1) ............... (300) (17,934) Schlumberger, Ltd. .................... (2,200) (140,250) ------------- (158,184) ------------- PHARMACEUTICALS -- (6.5%) Applera Corp - Celera Genomics Group(1) .................. (800) (34,800) Cardinal Health, Inc. ................. (700) (71,050) Genentech, Inc.(1) .................... (1,200) (63,000) Icos Corp.(1) ......................... (800) (43,300) Medarex, Inc.(1) ...................... (400) (10,225) NUMBER OF SHARES VALUE ------------- ------------- PHARMACEUTICALS -- (CONTINUED) Millennium Pharmaceuticals, Inc.(1) ... (1,500) $ (50,625) Pharmacia Corp. ....................... (1,800) (93,060) ------------- (366,060) ------------- RETAIL -- (1.0%) Dillard's, Inc. Class A ............... (3,000) (56,400) ------------- TELECOMMUNICATIONS & EQUIPMENT -- (5.2%) Allegiance Telecom, Inc.(1) ........... (500) (10,125) ALLTEL Corp.(1) ....................... (900) (48,330) Globespan, Inc.(1) .................... (200) (4,000) Infospace, Inc.(1) .................... (700) (2,669) Level 3 Communications, Inc.(1) ....... (900) (22,781) Lucent Technologies, Inc. ............. (600) (6,954) Metromedia Fiber Network, Inc. Class A(1) .................... (2,000) (19,000) Nextel Communications, Inc., Class A(1) ......................... (2,300) (55,344) Nextel Partners, Inc., Class A(1) ..... (1,900) (36,931) RCN Corp.(1) .......................... (5,700) (52,725) Redback Networks, Inc.(1) ............. (1,100) (33,945) ------------- (292,804) ------------- TRANSPORTATION -- (1.9%) AMR Corp. ............................. (1,100) (36,575) UAL Corp. ............................. (1,900) (72,295) ------------- (108,870) ------------- TOTAL SECURITIES SOLD SHORT (Cost ($5,039,385)) ................ (4,884,088) ------------- PAR (000) ------------- REPURCHASE AGREEMENT -- 11.5% Bear Stearns (Agreement dated 2/28/01, to be repurchased at $645,327, collateralized by $610,000 U.S. Treasury Note 3.875% due 4/15/29. Market Value of collateral is $654,603.) 5.38% 3/1/01 (Cost $645,230) .................... $ 645 645,230 ------------- TOTAL INVESTMENTS-- 9.8% (Cost $522,113(2)) ................. 550,616 OTHER ASSETS IN EXCESS OF LIABILITIES-- 90.2% ............. 5,082,241 ------------- NET ASSETS-- 100.0% ................... $ 5,632,857 ============= (1) Non-Income Producing Security. (2) Cost for Federal Income tax purposes at February 28, 2001 is $874,848. The gross appreciation (depreciation) on a tax basis is as follows: Gross Appreciation - Investments ................... $ 478,992 Gross Depreciation - Investments ................... (795,660) Gross Appreciation - Short Sales ................... 703,676 Gross Depreciation - Short Sales ................... (711,240) ------------- Net Depreciation ................................... $ (324,232) =============
See Accompanying Notes to Financial Statements. 9 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 institutional shares was $14.93, compared to an NAV of $14.47 on August 31, 2000. Assuming the reinvestment of dividends and distributions totaling $0.32 per share, the institutional shares' total return was 5.42%. By comparison, the Lehman Brothers Municipal Bond Index2 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. 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, Managing Director Patrick A. Bittner, 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. 10 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND PORTFOLIO MANAGER'S LETTER (CONCLUDED) PERFORMANCE
ONE YEAR FIVE YEARS SINCE INCEPTION SIX MONTHS (3/1/00 - (3/1/96 - 2/28/01) 6/17/94 (9/1/00 - 2/28/01) 2/28/01) (ANNUALIZED) (ANNUALIZED) ---------------------------------------------------------------------------------------------------------------------------- CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND (INSTITUTIONAL)(1)(3) +5.42% +12.48% +5.75% +6.05% LEHMAN BROTHERS MUNICIPAL BOND INDEX(2) +5.20% +12.32% +6.10% +6.98% ----------------------------------------------------------------------------------------------------------------------------
(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. 11 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS FEBURARY 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 PAR (000) VALUE ------------- ------------- MASSACHUSETTS -- (CONTINUED) 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 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
See Accompanying Notes to Financial Statements. 12 CREDIT SUISSE WARBURG PINCUS MUNICIPAL BOND FUND (CONCLUDED)
PAR (000) VALUE ------------- ------------- NEW YORK -- (CONTINUED) 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 ------------- PAR (000) VALUE ------------- ------------- 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 ------------- SHORT-TERM INVESTMENT -- 3.7% BBH Grand Cayman U.S. Dollar Time Deposit 4.660% 03/01/01 (Cost $577,00) ..................... 577 577,000 ------------- TOTAL INVESTMENTS -- 105.7% (Cost $15,941,5681) ................ 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 =============
See Accompanying Notes to Financial Statements. 13 CREDIT SUISSE WARBURG PINCUS FUNDS STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 28, 2001 (UNAUDITED)
LONG-SHORT FOCUS MARKET NEUTRAL MUNICIPAL FUND FUND BOND FUND ----------- -------------- ----------- ASSETS Investments, at value (cost - $13,901,609, $4,916,268 and $15,941,568, respectively).......................................... $13,446,574 $ 4,789,474 $16,638,267 Repurchase aggreement, at value (cost-$645,230 for the Long-Short Market Mutual Fund)...................................... -- 645,230 -- Deposits with brokers and custodian bank for securities sold short ... -- 5,093,867 -- Cash.................................................................. 1,907 -- 887 Receivable for investments sold ...................................... 127,826 -- -- Receivable for Fund shares sold ...................................... 2,238 -- -- Receivable from investment adviser ................................... 4,778 9,870 780 Dividends and interest receivable .................................... 19,106 16,910 190,373 Prepaid expenses and other assets .................................... 20,596 15,376 20,610 ----------- ----------- ----------- Total Assets ....................................................... 13,623,025 10,570,727 16,850,917 ----------- ----------- ----------- LIABILITIES Securities sold short (proceeds $5,039,385 for the Long-Short Market Neutral Fund)...................................................... -- 4,884,088 -- Distribution fee payable (Common shares) ............................ 866 389 117 Payable for investments purchased ................................... -- -- 1,077,100 Payable for Fund shares repurchased ................................. -- 23,697 400 Dividend payable .................................................... -- -- 3,153 Accrued expenses payable ............................................ 21,648 29,696 27,337 ----------- ----------- ----------- Total Liabilities ................................................. 22,514 4,937,870 1,108,107 ----------- ----------- ----------- NET ASSETS Capital stock, $0.001 par value ..................................... 906 400 1,054 Paid-in capital ..................................................... 14,921,888 7,206,357 14,753,743 Undistributed net investment income ................................. 374 32,797 42,948 Accumulated net realized gain/(loss) from investments and securities sold short ............................. (867,622) (1,635,200) 162,022 Net unrealized appreciation/(depreciation) on investments and securities sold short ............................. (455,035) 28,503 783,043 ----------- ----------- ----------- Net Assets ........................................................ $13,600,511 $ 5,632,857 $15,742,810 =========== =========== =========== INSTITUTIONAL SHARES Net assets ......................................................... $ 9,242,617 $ 3,685,315 $15,265,448 ----------- ----------- ----------- Shares outstanding ................................................. 614,578 263,084 1,022,296 ----------- ----------- ----------- Net asset value, offering price and redemption price per share ..... $ 15.04 $ 14.01 $ 14.93 =========== =========== =========== COMMON SHARES Net assets ......................................................... $ 4,357,894 $ 1,947,542 $ 477,362 ----------- ----------- ----------- Shares outstanding ................................................. 291,649 137,366 31,972 ----------- ----------- ----------- Net asset value, offering price and redemption price per share ..... $ 14.94 $ 14.18 $ 14.93 =========== =========== ===========
See Accompanying Notes to Financial Statements. 14 CREDIT SUISSE WARBURG PINCUS FUNDS STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 (UNAUDITED)
LONG-SHORT FOCUS MARKET NEUTRAL MUNICIPAL FUND FUND BOND FUND ----------- -------------- ----------- INVESTMENT INCOME: Dividends ........................................................... $ 85,872 $ 50,053 $ -- Interest ............................................................ 6,894 194,854 406,583 Foreign taxes withheld .............................................. (174) (235) -- ----------- ---------- -------- Total investment income ........................................... 92,592 244,672 406,583 ----------- ---------- -------- EXPENSES: Investment advisory fees ............................................ 52,563 39,233 54,282 Administration fees ................................................. 8,611 6,298 8,149 Registration fees ................................................... 18,844 21,748 17,098 Printing fees ....................................................... 17,307 18,875 8,804 Custodian fees ...................................................... 13,226 10,902 9,692 Transfer agent fees ................................................. 11,951 7,681 8,288 Audit Fees .......................................................... 6,527 7,519 7,050 Directors fees ...................................................... 6,330 6,330 6,330 Distribution fees ................................................... 4,906 2,661 526 Legal fees .......................................................... 3,342 3,026 3,404 Insurance expense ................................................... 1,625 1,595 1,595 Interest expense .................................................... 210 170 41 Dividend expense .................................................... -- 49,294 -- Miscellaneous fees .................................................. 2,038 2,345 3,053 ----------- ---------- -------- 147,480 177,677 128,312 Less: fees waived and expenses reimbursed ........................... (72,294) (61,818) (50,179) ----------- ---------- -------- Total expenses .................................................... 75,186 115,859 78,133 ----------- ---------- -------- Net investment income ............................................... 17,406 128,813 328,450 ----------- ---------- -------- NET REALIZED AND UNREALIZED GAIN/(LOSS) FROM INVESTMENTS: Net realized gain/(loss) from: Investments ....................................................... (350,320) (87,157) 383,068 Securities sold short ............................................. -- (142,049) -- ----------- ---------- -------- (350,320) (229,206) 383,068 ----------- ---------- -------- Net change in unrealized appreciation/(depreciation): Investments ....................................................... (2,112,753) 31,254 77,342 ----------- ---------- -------- Net realized and unrealized gain/(loss) from investments ............ (2,463,073) (197,952) 460,410 ----------- ---------- -------- Net increase/(decrease) in net assets resulting from operations ..... $(2,445,667) $ (69,139) $788,860 =========== ========== ========
See Accompanying Notes to Financial Statements. 15 CREDIT SUISSE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
FOCUS FUND LONG-SHORT MARKET NEUTRAL FUND ------------------------------------ ---------------------------------- FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED MONTHS ENDED ENDED FEBRUARY 28, 2001 AUGUST 31, 2000 FEBRUARY 28, 2001 AUGUST 31, 2000 ------------------ ---------------- ----------------- ---------------- (UNAUDITED) (UNAUDITED) FROM OPERATIONS: Net investment income ......................... $ 17,406 $ 25,877 $ 128,813 $ 251,591 Net realized and unrealized gain/(loss) from investments ................................. (2,463,073) 1,946,458 (197,952) 515,058 ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets resulting from operations ................... (2,445,667) 1,972,335 (69,139) 766,649 ----------- ----------- ----------- ----------- FROM DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income: Institutional Class shares .................. (34,572) (124,682) (184,484) (345,792) Common Class shares ......................... (8,382) (623) (75,842) (127,325) Distributions from net realized capital gains: Institutional Class shares .................. (709,500) (9,020,862) -- -- Common Class shares ......................... (294,273) (77,776) -- -- ----------- ----------- ----------- ----------- Net decrease in net assets from dividends and distributions ........................... (1,046,727) (9,223,943) (260,326) (473,117) ----------- ----------- ----------- ----------- FROM CAPITAL SHARE TRANSACTIONS: Proceeds from sale of shares .................. 3,575,997 11,899,918 1,537,978 4,991,679 Reinvestment of dividends and distributions ... 1,044,843 1,368,909 211,148 432,479 Net asset value of shares redeemed ............ (943,581) (28,090,859) (2,476,066) (6,814,009) ----------- ----------- ----------- ----------- Net increase/(decrease) in net assets from capital share transactions .................. 3,677,259 (14,822,032) (726,940) (1,389,851) ----------- ----------- ----------- ----------- Total increase/(decrease) in net assets ....... 184,865 (22,073,640) (1,056,405) (1,096,319) NET ASSETS: Beginning of period ........................... 13,415,646 35,489,286 6,689,262 7,785,581 ----------- ----------- ----------- ----------- End of period ................................. $13,600,511 $13,415,646 $ 5,632,857 $ 6,689,262 =========== =========== =========== =========== Undistributed net investment income ........... $ 374 $ 25,921 $ 32,797 $ 164,310 =========== =========== =========== ===========
See Accompanying Notes to Financial Statements. 16 CREDIT SUISSE WARBURG PINCUS FUNDS STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL BOND FUND ------------------------------------ FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED FEBRUARY 28, 2001 AUGUST 31, 2000 ------------------- --------------- (UNAUDITED) 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. 17 CREDIT SUISSE WARBURG PINCUS FUNDS FOCUS FUND FINANCIAL HIGHLIGHTS (FOR A INSTITUTIONAL CLASS SHARE OF THE FUND OUTSTANDING THROUGHOUT EACH PERIOD)
FOR THE SIX FOR THE YEAR ENDED FOR THE PERIOD MONTHS ENDED AUGUST 31, JULY 31, 1998(1) FEBRUARY 28, 2001 ------------------ TO AUGUST 31, (UNAUDITED) 2000 1999 1998 ----------------- ---- ---- -------------- PER-SHARE DATA Net asset value, beginning of period................ $19.25 $20.15 $ 13.17 $15.00 ------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income............................. 0.03 0.04 0.08 0.01 Net gain/(loss) on investments (both realized and unrealized).................. (2.93) 4.83 6.92 (1.84) ------- -------- -------- -------- Total from investment activities................ (2.90) 4.87 7.00 (1.83) ------- -------- -------- -------- LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income.............. (0.06) (0.07) (0.02) -- Distributions from net realized gains............. (1.25) (5.70) -- -- ------- -------- -------- -------- Total dividends and distributions............... (1.31) (5.77) (0.02) -- ------ -------- -------- -------- NET ASSET VALUE, END OF PERIOD...................... $15.04 $ 19.25 $ 20.15 $ 13.17 ====== ======== ======== ======== Total return........................................ (15.85)%(2) 33.88% 53.21% (12.20)%(2) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)............ $9,243 $10,658 $35,394 $22,659 Ratio of expenses to average net assets........... 1.00%(3) 1.00%(4) 0.99% 1.00%(3) Ratio of net investment income to average net assets........................... 0.33%(3) 0.19% 0.47% 0.92%(3) Decrease reflected in above operating expense ratios due to waivers/reimbursements.... 1.02%(3) 1.25% 0.43% 0.30%(3) Portfolio turnover rate............................. 55% 235% 209% 52% -------------------------------------------------------------------------------------------------------------------
(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. 18 CREDIT SUISSE WARBURG PINCUS FUNDS LONG-SHORT MARKET NEUTRAL FUND FINANCIAL HIGHLIGHTS (FOR A INSTITUTIONAL CLASS SHARE OF THE FUND OUTSTANDING THROUGHOUT EACH PERIOD)
FOR THE SIX FOR THE YEAR ENDED FOR THE PERIOD MONTHS ENDED AUGUST 31, JULY 31, 1998(1) FEBRUARY 28, 2001 -------------------- TO AUGUST 31, (UNAUDITED) 2000 1999 1998 ------------------- ------- -------- -------------- PER-SHARE DATA Net asset value, beginning of period................ $14.78 $14.21 $15.27 $15.00 ----- ----- ------ ------ INVESTMENT ACTIVITIES: Net investment income............................. 0.30(2) 0.70 0.39(2) 0.05 Net gain/(loss) on investments and securities sold short (both realized and unrealized)....... (0.47) 0.99 (1.25) 0.22 ------ ----- ------ ------ Total from investment activities................ (0.17) 1.69 (0.86) 0.27 ------ ------ ------ ------ LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income.............. (0.60) (1.12) (0.07) -- Distributions from net realized gains............. -- -- (0.13) -- ------ ------ ------ ------ Total dividends and distributions............... (0.60) (1.12) (0.20) -- ------ ------ ------ ------ Net asset value, end of period...................... $14.01 $14.78 $14.21 $15.27 ======= ====== ====== ====== Total return........................................ (1.19)%(3) 12.29% (5.68)% 1.80%(3) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted)............ $3,685 $4,588 $5,901 $6,302 Ratio of expenses to average net assets (including dividend expense).................... 3.55%(4) 3.44%(5) 3.33% 4.32%(4) Ratio of expenses to average net assets (excluding dividend expense).................... 2.00%(4) 2.00% 2.00% 2.00%(4) Ratio of net investment income to average net assets........................... 4.12%(4) 3.69% 2.65% 1.96%(4) Decrease reflected in above operating expense ratios due to waivers/reimbursements.... 1.91%(4) 2.15% 0.56% 3.12%(4) Portfolio turnover rate............................. 135% 313% 705% 130% -----------------------------------------------------------------------------------------------------------------------
(1) Inception date. (2) Per share information is calculated using the average share outstanding method. (3) Not annualized. (4) Annualized. (5) 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. 19 CREDIT SUISSE WARBURG PINCUS FUNDS MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (FOR A INSTITUTIONAL CLASS SHARE OF THE FUND OUTSTANDING THROUGHOUT EACH PERIOD)
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED AUGUST 31 FEBRUARY 28, 2001 -------------------------------------------------- (UNAUDITED) 2000 1999 1998 1997 1996 ----------------- -------- -------- -------- -------- -------- PER-SHARE DATA Net asset value, beginning of period................ $ 14.47 $ 14.30 $15.12 $ 14.84 $ 14.65 $ 15.46 -------- -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income............................. 0.32 0.69 0.67 0.70 0.72 0.73 Net gain/(loss) on investments (both realized and unrealized).................. 0.46 0.21 (0.60) 0.40 0.65 (0.37) -------- -------- -------- -------- -------- -------- Total from investment activities................ 0.78 0.90 0.07 1.10 1.37 0.36 -------- -------- -------- -------- -------- -------- LESS DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income.......................................... (0.32) (0.71) (0.68) (0.71) (0.72) (0.74) Distributions from net realized gains........................................... -- (0.02) (0.21) (0.11) (0.46) (0.43) -------- -------- -------- -------- -------- -------- Total dividends and distributions............... (0.32) (0.73) (0.89) (0.82) (1.18) (1.17) -------- -------- -------- -------- -------- -------- Net asset value, end of period...................... $ 14.93 $ 14.47 $14.30 $ 15.12 $ 14.84 $ 14.65 ======== ======== ======== ======== ======== ======== Total return........................................ 5.42%(1) 6.62% 0.36% 7.62% 9.74% 2.27% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000s omitted).................................. $15,265 $14,628 $22,423 $22,229 $19,810 $19,581 Ratio of expenses to average net assets 1.00%(2) 1.00%(3) .99% 1.00% 1.00% 1.00% Ratio of net investment income to average net assets........................... 4.24%(2) 4.79% 4.49% 4.72% 4.88% 4.62% Decrease reflected in above operating expense ratios due to waivers/reimbursements.......................... 0.65%(2) 0.78% 0.44% 0.39% 0.37% 0.42% Portfolio turnover rate............................. 31% 5% 26% 57% 43% 34% -----------------------------------------------------------------------------------------------------------------------------------
(1) Not annualized. (2) Annualized. (3) 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. 20 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Credit Suisse Warburg Pincus Funds covered in this report are comprised of Credit Suisse Warburg Pincus Focus Fund, Inc. ("Focus"), Credit Suisse Warburg Pincus Long-Short Market Neutral Fund, Inc. ("Long-Short Neutral"), and Credit Suisse Warburg Pincus Municipal Bond Fund, Inc. ("Municipal") (each, a "Fund" and collectively, the "Funds"), which are registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as non-diversified, open-end management investment companies. Each Fund is authorized to offer three classes of shares: Common, Advisor and Institutional, although only Common shares and Institutional shares of each Fund are currently offered. Common shares for each 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. Certain of the Funds are permitted to engage in the investment strategies described in the Notes to Financial Statements. The Funds are not obligated to pursue any of the following strategies and do not represent that these techniques are available now or will be available at any time in the future. Please refer to each Fund's prospectus(es) and statement of additional information for a description of its investment strategies. A) SECURITY VALUATION -- The net asset value of each Fund is determined daily as of the close of regular trading on The New York Stock Exchange, Inc. Each 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 each 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. C) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each 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. Focus and Long-Short Neutral will each distribute substantially all of its net realized capital gains and all net investment income, if any, to its shareholders at least annually. The Municipal 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 each Fund's intention 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 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. 21 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 each Fund's custodian or an authorized securities depository. Long-Short Neutral Fund had an open repurchase agreement at February 28, 2001. G) FUTURES TRANSACTIONS -- A Fund invests in futures contracts for the purpose of hedging its existing portfolio securities, or securities that the Fund intends to purchase, against fluctuations in fair value caused by changes in prevailing market interest rates or securities prices, or for other purposes. Certain Funds may enter into futures contracts subject to certain limitations. Upon entering into a futures contract, each Fund is required to deposit cash or pledge U.S. Government securities of an initial margin. Subsequent payments, which are dependent on the daily fluctuations in the value of the underlying instrument, are made or received by the Fund each day (daily variations margin) and are recorded as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund's basis in the contracts. Risks of entering into futures contracts include the possibility that there will be an imperfect price correlation between the futures contracts and the underlying securities. Second, it is possible that a lack of liquidity for futures contracts could exist in the secondary market, resulting in an inability to close a futures position prior to its maturity date. Third, the purchase of a futures contract involves the risk that a Fund could lose more than the original margin deposit required to initiate a futures transaction. At February 28, 2001, none of the funds had any open futures contracts. H) 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 a 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. None of the Funds had any securities on loan to brokers at February 28, 2001. I) SHORT SALES -- When a Fund's investment advisor believes that a security is overvalued, it may sell the security short by borrowing the same security from a broker or other institution and selling the security. A Fund will incur a loss as a result of the short sale if the price of the borrowed security increases between the date of the short sale and the date on which the Fund replaces such security. A Fund will realize a gain if there is a decline in price of the security between those dates, which decline exceeds the cost of borrowing the security and other transaction costs. There can be no assurance that a Fund will be able to close out a short position at any particular time or at an acceptable price. Although a Fund's gain is limited to the amount at which it has sold a security short, its potential loss is limited only by the maximum attainable price of the security less the price at which the security was sold. Until a Fund replaces a borrowed security, it will maintain at all times cash or other liquid securities in an amount which, when added to any amount deposited with a broker as collateral, will at least equal the current market value of the security sold short. Depending on arrangements made with brokers, a Fund may not receive any payments (including interest) on collateral deposited with them. Long-Short Neutral will not make a short sale if, after giving effect to such sale, the market value of all securities sold short exceeds 100% of the value of its net assets. J) OTHER -- Securities denominated in currencies other than U.S. dollars are subject to changes in value due to fluctuations in exchange rates. Some countries in which the Funds invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is a deterioration in a 22 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) country's balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad. The securities exchanges of certain foreign markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by each Fund may be inhibited. In addition, a significant proportion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets are held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by a Fund. Lower-rated debt securities (commonly known as "junk bonds") possess speculative characteristics and are subject to greater market fluctuations and risk of lost income and principal than higher-rated debt securities for a variety of reasons. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of lower-rated debt securities and (to the extent a Fund invests in junk bonds) the Fund's net asset value. 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 each of the three Funds described herein. For its advisory services, CSAM is entitled to receive the following fees, computed daily and payable monthly on each Fund's average daily net assets (except Long-Short Neutral):
FUND ANNUAL RATE --------------- --------------------------------- Focus 0.75% of average daily net assets Municipal 0.70% of average daily net assets
For Long-Short Neutral, CSAM is entitled to receive from the Fund a monthly fee equal to an annual rate of 1.50% of the Fund's average daily net assets. In addition, CSAM is entitled to a monthly performance adjustment fee, which may increase or decrease the total advisory fee by up to .50% per year. The performance adjustment fee decreased the total advisory fee by $8,616 or .27% annualized of average daily net assets due to lower performance in comparison to the Salomon Smith Barney U.S. 1-Month Treasury Bill Index plus 5 percentage points for the six months ended February 28, 2001. 23 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) CSAM may, at its discretion, voluntarily waive all or any portion of its advisory fee for any of the Funds. For the six months ended February 28, 2001, advisory fees and waivers for each of the three investment Funds were as follows:
GROSS NET FUND ADVISORY FEE WAIVER ADVISORY FEE --------------- ------------ ------ ------------ Focus $52,563 $(52,563) $ -- Long-Short Neutral 39,233 (39,233) -- Municipal 54,282 (49,315) 4,967
CSAM reimbursed expenses of Focus, Long-Short Neutral, and Municipal in the amount of $12,172, $19,064 and $780, respectively, for the six months ended February 28, 2001. Boston Financial Data Services, Inc. (BFDS) serves as each Fund's transfer and dividend disbursement agent. The Funds have an arrangement with their transfer agent whereby interest earned on uninvested cash balances were used to offset a portion of their transfer agent expense. For the six months ended February 28, 2001, none of the Funds received credits or reimbursements under this agreement. Credit Suisse Asset Management Securities, Inc. ("CSAMSI"), an affiliate of CSAM, serves as co-administrator to each Fund. PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Financial Services Group, also serves as each Fund's co-administrator. For administration services, each 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 Funds 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 any of the Funds. 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 FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE --------------- --------------------- ------ --------------------- Focus $981 $(785) $196 Long-Short Neutral 532 (426) 106 Municipal 105 (84) 21
For Co-administration services, PFPC received a fee, for the period September 1, 2000 to February 4, 2001, calculated on each Fund's average daily net assets subject to a minimum annual fee and exclusive of out-of-pocket expenses, as follows:
FUND ANNUAL RATE --------------- --------------------------------- Focus & Long-Short Neutral .10% for first $500 million .08% for next $1 billion .06% for over $1.5 billion Municipal .07% for first $150 million .06% for next $150 million .05% for over $300 million
24 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) As of February 5, 2001 PFPC receives a fee calculated on each Fund's average daily net assets, subject to a minimum annual fee and exclusive of out-of-pocket expenses, as follows:
FUND ANNUAL RATE --------------- --------------------------------- Focus & Long-Short Neutral .075% for first $500 million .065% for next $1 billion .055% for over $1.5 billion Municipal .07% for first $150 million .06% for next $150 million .05% for over $300 million
PFPC may, at its discretion, voluntarily waive all or any portion of its administration fee for any of the Funds. For the six months ended February 28, 2001, the co-administration fees earned and waived by PFPC were as follows:
GROSS NET FUND CO-ADMINISTRATION FEE WAIVER CO-ADMINISTRATION FEE --------------- --------------------- ------ --------------------- Focus $6,774 $(6,774) $ -- Long-Short Neutral 3,095 (3,095) -- Municipal 2,616 -- 2,616
In addition to serving as each Fund's co-administrator, CSAMSI serves as distributor of each Fund's shares. No compensation is payable by any of the Funds to CSAMSI for distribution services, but CSAMSI receives compensation from each 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 each Fund. For the six months ended February 28, 2001, shareholder services fees earned by CSAMSI were as follows:
FUND DISTRIBUTION FEE --------------- ---------------- Focus $4,906 Long-Short Neutral 2,661 Municipal 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 each of the Funds. 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 as follows:
INVESTMENT SECURITIES SHORT SECURITIES --------------------------- ---------------- FUND PURCHASES SALES SALES --------------- ----------- ---------- ---------------- Focus $10,548,477 $7,720,533 $ -- Long-Short Neutral 7,684,936 4,014,262 3,613,108 Municipal 6,522,654 4,682,048 --
25 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 4. CAPITAL SHARES Transactions in capital shares for each period were as follows:
FOCUS FUND ---------------------------------------------------------------- INSTITUTIONAL ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2001 (UNAUDITED) AUGUST 31, 2000 ------------------------------ ------------------------------ SHARES VALUE SHARES VALUE ------------- ------------- ------------- ------------- Shares sold 28,536 $ 510,239 492,615 $ 8,749,735 Shares issued in reinvestment of dividends 43,769 744,072 86,539 1,293,067 Shares repurchased (11,314) (188,527) (1,782,034) (27,333,275) ------------- ------------- ------------- ------------- Net increase/(decrease) 60,991 $ 1,065,784 (1,202,880) $ (17,290,473) ============= ============= ============= ============= FOCUS FUND ---------------------------------------------------------------- COMMON ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2001 (UNAUDITED) AUGUST 31, 2000 ------------------------------ ------------------------------ SHARES VALUE SHARES VALUE ------------- ------------- ------------- ------------- Shares sold 171,625 $ 3,065,758 176,045 $ 3,150,183 Shares issued in reinvestment of dividends 17,797 300,771 4,960 75,842 Shares repurchased (41,899) (755,054) (41,610) (757,584) ------------- ------------- ------------- ------------- Net increase/(decrease) 147,523 $ 2,611,475 139,395 $ 2,468,441 ============= ============= ============= ============= LONG-SHORT MARKET NEUTRAL FUND ---------------------------------------------------------------- INSTITUTIONAL ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2001 (UNAUDITED) AUGUST 31, 2000 ------------------------------ ------------------------------ SHARES VALUE SHARES VALUE ------------- ------------- ------------- ------------- Shares sold 44,777 $ 641,648 141,588 $ 2,105,343 Shares issued in reinvestment of dividends 9,662 136,521 21,825 307,514 Shares repurchased (101,810) (1,452,952) (268,139) (3,928,705) ------------- ------------- ------------- ------------- Net increase/(decrease) (47,371) $ (674,783) (104,726) $ (1,515,848) ============= ============= ============= ============= LONG-SHORT MARKET NEUTRAL FUND ---------------------------------------------------------------- COMMON ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2001 (UNAUDITED) AUGUST 31, 2000 ------------------------------ ------------------------------ SHARES VALUE SHARES VALUE ------------- ------------- ------------- ------------- Shares sold 61,008 $ 896,330 190,472 $ 2,886,336 Shares issued in reinvestment of dividends 5,215 74,627 8,769 124,965 Shares repurchased (69,719) (1,023,114) (191,177) (2,885,304) ------------- ------------- ------------- ------------- Net increase/(decrease) (3,496) $ (52,157) 8,064 $ 125,997 ============= ============= ============= ============= MUNICIPAL BOND FUND ---------------------------------------------------------------- INSTITUTIONAL ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2001 (UNAUDITED) AUGUST 31, 2000 ------------------------------ ------------------------------ SHARES VALUE SHARES VALUE ------------- ------------- ------------- ------------- Shares sold 658,538 $ 9,963,427 5,754 $ 80,042 Shares issued in reinvestment of dividends 20,696 303,342 58,141 817,246 Shares repurchased (667,799) (10,079,335) (621,552) (8,787,386) ------------- ------------- ------------- ------------- Net increase/(decrease) 11,435 $ 187,434 (557,657) $ (7,890,098) ============= ============= ============= ============= MUNICIPAL BOND FUND ---------------------------------------------------------------- COMMON ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED FEBRUARY 28, 2001 (UNAUDITED) AUGUST 31, 2000 ------------------------------ ------------------------------ SHARES VALUE SHARES VALUE ------------- ------------- ------------- ------------- Shares sold 74,228 $ 1,114,226 25,803 $ 369,861 Shares issued in reinvestment of dividends 273 4,019 929 13,086 Shares repurchased (78,756) (1,175,256) (5,265) (74,484) ------------- ------------- ------------- ------------- Net increase/(decrease) (4,255) $ (57,011) 21,467 $ 308,463 ============= ============= ============= =============
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 ------------ ---------------------- Focus Fund Institutional shares 4 88.93% Focus Fund Common shares 3 47.72 Long-Short Market Neutral Institutional shares 4 92.58 Long-Short Market Neutral Common shares 2 95.09 Municipal Institutional shares 2 73.41 Municipal Common shares 3 93.07
26 CREDIT SUISSE WARBURG PINCUS FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 5. LINE OF CREDIT The Funds, 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, none of the Funds had borrowings under the credit facility. NOTE 6. SUBSEQUENT EVENT On March 23, 2001, a shareholder meeting was held for the Credit Suisse Warburg Pincus Strategic Growth Fund ("Strategic Growth") and the Credit Suisse Warburg Pincus Municipal Trust II Fund ("Muni Trust") (collectively, the "Acquired Funds") to approve the merger into Focus and Municipal (collectively, the "Acquiring Funds"), respectively. All mergers were approved by the shareholders without incidents. The closing date of the mergers was April 6, 2001 at which point the Acquiring Funds acquired all of the assets and liabilities of the Acquired Funds. 27 P.O. Box 8500, Boston, MA 02266-8500 800-222-8977 CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR. CSBSK-3-0201