<PAGE>
CREDIT ASSET
SUISSE MANAGEMENT
PROSPECTUS
December 6, 2000
CREDIT SUISSE INSTITUTIONAL FUND, INC.
- CASH RESERVE PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
approved this portfolio, nor has it passed upon the adequacy or accuracy of this
PROSPECTUS. It is a criminal offense to state otherwise.
Credit Suisse Institutional Funds are advised by Credit Suisse Asset Management,
LLC.
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
KEY POINTS ...............................................................4
Goal and Principal Strategies ........................................4
Investor Profile .....................................................4
A Word About Risk ....................................................5
INVESTOR EXPENSES ........................................................6
Fees and Portfolio Expenses ..........................................6
Example ..............................................................7
THE PORTFOLIO IN DETAIL ..................................................9
The Management Firm ..................................................9
Portfolio Information Key ............................................9
Goal and Strategies .................................................10
Portfolio Investments ...............................................10
Risk Factors ........................................................10
Portfolio Management ................................................11
Investor Expenses ...................................................11
MORE ABOUT RISK .........................................................12
Introduction ........................................................12
Types of Investment Risk ............................................12
Certain Investment Practices ........................................14
ABOUT YOUR ACCOUNT ......................................................16
Share Valuation .....................................................16
Account Statements ..................................................16
Distributions .......................................................16
Taxes ...............................................................17
BUYING SHARES ...........................................................18
SELLING SHARES ..........................................................20
OTHER POLICIES ..........................................................22
FOR MORE INFORMATION ............................................back cover
</TABLE>
3
<PAGE>
KEY POINTS
GOAL AND PRINCIPAL STRATEGIES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
PORTFOLIO/RISK FACTORS GOAL STRATEGIES
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH RESERVE PORTFOLIO High current income - Invests in high-quality money-
Risk factors: consistent with liquidity and market instruments:
CREDIT RISK stability of pricipal - Obligations issued or guaranteed
INCOME RISK by the U.S. government, its agencies
INTEREST-RATE RISK or instrumentalities
MARKET RISK - bank and corporate debt obligations
REGULATORY RISK - Portfolio managers select investments
based on factors such as yield, maturity
and liquidity, within the context of their
interest-rate outlook
- Seeks to maintain a stable share
price of $1
---------------------------------------------------------------------------------------------------------
</TABLE>
- INVESTOR PROFILE
THIS PORTFOLIO IS DESIGNED FOR INVESTORS WHO:
- want to preserve the value of their investment
- are seeking an investment for the money-market portion of an asset-
allocation portfolio
- want easy access to their money though wire-redemption privileges
- are investing emergency reserves or other money for which safety and
accessibility are more important than total return
IT MAY NOT BE APPROPRIATE IF YOU:
- want federal deposit insurance
- desire the higher income available from longer-term fixed-income funds
- are investing for capital appreciation
You should base your selection of a portfolio on your own goals, risk
preferences and time horizon.
4
<PAGE>
--------------------------
- A WORD ABOUT RISK
--------------------------
All investments involve some level of risk. Simply defined, risk is the
possibility that you will lose money or not make money.
Principal risk factors for the portfolio are discussed below. Before you
invest, please make sure you understand the risks that apply to the portfolio.
As with any mutual fund, you could lose money over any period of time.
Investments in the portfolio are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the portfolio seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by investing in the
portfolio.
CREDIT RISK
The issuer of a security or the counterparty to a contract may default or
otherwise become unable to honor a financial obligation.
INCOME RISK
The portfolio's income level may decline because of falling interest rates
and other market conditions. The portfolio's yield will vary from day to day,
generally reflecting changes in overall short-term interest rates. This should
be an advantage when interest rates are rising, but not when rates are falling.
INTEREST-RATE RISK
Changes in interest rates may cause a decline in the market value of an
investment. With fixed-income securities, a rise in interest rates typically
causes a fall in values, while a fall in interest rates typically causes a rise
in values.
A sharp and unexpected rise in interest rates could cause the portfolio's
share price to drop below $1. However, the relatively short maturity of
securities held in money-market portfolios--a means of achieving an overall
portfolio objective of principal safety--reduces their potential for price
fluctuation.
MARKET RISK
The market value of a security may move up and down, sometimes rapidly and
unpredictably. These fluctuations, which are often referred to as "volatility,"
may cause a security to be worth less than it was worth at an earlier time.
Market risk may affect a single issuer, industry, sector of the economy, or the
market as a whole. Market risk is common to most investments--including stocks
and bonds, and the mutual funds that invest in them.
REGULATORY RISK
Governments, agencies or other regulatory bodies may adopt or change laws or
regulations that could adversely affect the issuer or market value of a
portfolio security, or the portfolio's performance.
5
<PAGE>
INVESTOR EXPENSES
FEES AND PORTFOLIO EXPENSES
This table describes the fees and expenses you may bear as a shareholder. Annual
portfolio operating expense figures are based on estimated expenses (before fee
waivers and expense reimbursements) for the fiscal period ending October 31,
2001.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
SHAREHOLDER FEES
(paid directly from your investment)
--------------------------------------------------------------------------------
<S> <C>
Sales charge "load" on purchases NONE
--------------------------------------------------------------------------------
Deferred sales charge "load" NONE
--------------------------------------------------------------------------------
Sales charge "load" on reinvested distributions NONE
--------------------------------------------------------------------------------
Redemption fees NONE
--------------------------------------------------------------------------------
Exchange fees NONE
--------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
(deducted from portfolio assets)
--------------------------------------------------------------------------------
Management fee .10%
--------------------------------------------------------------------------------
Distribution and service (12b-1) fee NONE
--------------------------------------------------------------------------------
Other expenses(1) .22%
--------------------------------------------------------------------------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES(2) .32%
--------------------------------------------------------------------------------
</TABLE>
(1) Other expenses are based on estimated amounts to be charged in the current
fiscal period.
(2) Portfolio service providers have voluntarily agreed to waive some of their
fees and reimburse some expenses. These waivers and reimbursements are
expected to reduce portfolio expenses as follows:
EXPENSES AFTER WAIVERS AND REIMBURSEMENTS
<TABLE>
<CAPTION>
<S> <C>
Management fee .00%
Distribution and service (12b-1) fee NONE
Other expenses .16%
----
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES .16%
</TABLE>
6
<PAGE>
EXAMPLE
This example may help you compare the cost of investing in the portfolio with
the cost of investing in other mutual funds. Because it uses hypothetical
conditions, your actual costs may be higher or lower.
Assume you invest $10,000, the portfolio returns 5% annually, expense ratios
remain as listed in the first table on the opposite page (before fee waivers and
expense reimbursements or credits), and you close your account at the end of
each of the time periods shown. Based on these assumptions, your cost would be:
<TABLE>
<CAPTION>
----------------------------------------------------
ONE YEAR THREE YEARS
----------------------------------------------------
<S> <C>
$33 $103
----------------------------------------------------
</TABLE>
7
<PAGE>
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8
<PAGE>
THE PORTFOLIO IN DETAIL
-------------------------------
- THE MANAGEMENT FIRM
-------------------------------
CREDIT SUISSE ASSET
MANAGEMENT, LLC
466 Lexington Avenue
New York, NY 10017
- Investment adviser for the portfolio
- Responsible for managing the portfolio's assets according to its goal and
strategies
- A member of Credit Suisse Asset Management, the institutional asset
management and mutual fund arm of Credit Suisse Group (Credit Suisse), one
of the world's leading banks
- Credit Suisse Asset Management companies manage approximately $68 billion in
the U.S. and $198 billion globally
- Credit Suisse Asset Management has offices in 14 countries, including
SEC-registered offices in New York and London; other offices (such as those
in Budapest, Frankfurt, Milan, Moscow, Paris, Prague, Sydney, Tokyo, Warsaw
and Zurich) are not registered with the U.S. Securities and Exchange
Commission
For easier reading, Credit Suisse Asset Management, LLC will be referred to
as "CSAM" or "we" throughout this PROSPECTUS.
-------------------------------
- PORTFOLIO INFORMATION KEY
-------------------------------
A concise description of the portfolio begins on the next page. The
description provides the following information:
GOAL AND STRATEGIES
The portfolio's particular investment goal and the strategies it intends to
use in pursuing that goal. Percentages of portfolio assets are based on total
assets unless indicated otherwise.
PORTFOLIO INVESTMENTS
The primary types of securities in which the portfolio invests. Secondary
investments are described in "More About Risk."
RISK FACTORS
The major risk factors associated with the portfolio. Additional risk
factors are included in "More About Risk."
INVESTOR EXPENSES
Expected expenses for the 2001 fiscal period. Actual expenses may be
higher or lower.
- MANAGEMENT FEE The fee paid to the investment adviser for providing
investment advice to the portfolio. Expressed as a percentage of average net
assets after waivers.
- OTHER EXPENSES Fees paid by the portfolio for items such as
administration, transfer agency, custody, auditing, legal registration fees
and miscellaneous expenses. Expressed as a percentage of average net assets
after waivers, credits and reimbursements.
9
<PAGE>
---------------------------
- GOAL AND STRATEGIES
---------------------------
The Cash Reserve Portfolio seeks high current income consistent with
liquidity and stability of principal. To pursue this goal, it invests in
high-quality, U.S. dollar-denominated money-market instruments. The portfolio
seeks to maintain a stable $1 share price.
In selecting securities, the portfolio managers may examine the
relationships among yields on various types and maturities of money-market
securities in the context of their outlook for interest rates. For example,
commercial paper often offers a yield advantage over Treasury bills. And if
rates are expected to fall, longer maturities may be purchased to try to
preserve the portfolio's income level. Conversely, shorter maturities may be
favored if rates are expected to rise.
---------------------------
- PORTFOLIO INVESTMENTS
---------------------------
This portfolio invests in the following types of money-market instruments:
- Government securities, including U.S. Treasury bills and other obligations of
the U.S. government, its agencies or instrumentalities
- U.S. and foreign bank obligations such as certificates of deposit, bankers'
acceptances, time deposits, commercial paper and debt obligations
- commercial paper and notes of other corporate issuers, including variable-rate
master demand notes and other variable-rate obligations
- repurchase agreements
No more than 5% of assets may be invested in securities rated in the
second-highest short-term rating category (or unrated equivalents). The rest of
the portfolio's investments must be in the highest short-term rating category.
The portfolio maintains an average maturity of 90 days or less, and only
purchases securities that have (as determined under SEC rules) remaining
maturities of 397 days or less. To a limited extent, the portfolio may also
engage in other investment practices.
---------------------------
- RISK FACTORS
---------------------------
This portfolio's principal risk factors are:
- credit risk
- income risk
- interest-rate risk
- market risk
- regulatory risk
The portfolio's yield will vary with changes in interest rates. If interest
rates fall, your dividend income will likely decline.
Since it is managed to maintain a constant $1 share price, the portfolio
should have little risk of principal loss. However, there is no assurance the
portfolio will avoid principal losses in the rare event that portfolio holdings
default or interest rates rise sharply in an unusually short period.
These risks are discussed in "More About Risk." That section also details
other investment practices the portfolio may use. Please read "More About Risk"
carefully before you invest.
10
<PAGE>
-------------------------------
- PORTFOLIO MANAGEMENT
-------------------------------
A portfolio management team at CSAM makes the portfolio's day-to-day
investment decisions.
-------------------------------
- INVESTOR EXPENSES
-------------------------------
Expected expenses for the 2001 fiscal period:
Management fee .00%
All other expenses .16%
----
Total expenses .16%
11
<PAGE>
MORE ABOUT RISK
-------------------------------
- INTRODUCTION
-------------------------------
A portfolio's goal and principal strategies largely determine its risk
profile. You will find a concise description of the portfolio's risk profile in
"Key Points." The preceding discussion on the portfolio contains more detailed
information. This section discusses other risks that may affect the portfolio.
The "Certain Investment Practices" table in this section takes a more
detailed look at certain investment practices the portfolio may use. Some of
these investment practices have higher risks associated with them. However, the
portfolio has limitations and policies designed to reduce many of the risks.
-------------------------------
- TYPES OF INVESTMENT RISK
-------------------------------
The following risks are referred to throughout this PROSPECTUS.
CREDIT RISK The issuer of a security or the counterparty to a contract may
default or otherwise become unable to honor a financial obligation. An issuer's
failure to make scheduled interest or principal payments to the portfolio could
reduce the portfolio's income level and share price.
EXPOSURE RISK The risk associated with investments (such as derivatives) or
practices (such as short selling) that increase the amount of money the
portfolio could gain or lose on an investment.
- HEDGED Exposure risk could multiply losses generated by a derivative or
practice used for hedging purposes. Such losses should be substantially offset
by gains on the hedged investment. However, while hedging can reduce or
eliminate losses, it can also reduce or eliminate gains.
- SPECULATIVE To the extent that a derivative or practice is not used as a
hedge, the portfolio is directly exposed to its risks. Gains or losses from
speculative positions in a derivative may be much greater than the
derivative's original cost. For example, potential losses from writing
uncovered call options and from speculative short sales are unlimited.
EXTENSION RISK An unexpected rise in interest rates may extend the life
of a mortgage-backed security beyond the expected prepayment time, typically
reducing the security's value.
INCOME RISK The portfolio's income level may decline because of falling
interest rates.
12
<PAGE>
INTEREST-RATE RISK Changes in interest rates may cause a decline in the
market value of an investment. With bonds and other fixed-income securities, a
rise in interest rates typically causes a fall in values, while a fall in
interest rates typically causes a rise in values.
LIQUIDITY RISK Certain portfolio securities may be difficult or impossible
to sell at the time and the price that the portfolio would like. The portfolio
may have to lower the price, sell other securities instead or forego an
investment opportunity. Any of these could have a negative effect on fund
management or performance.
MARKET RISK The market value of a security may move up and down,
sometimes rapidly and unpredictably. These fluctuations, which are often
referred to as "volatility," may cause a security to be worth less than it
was worth at an earlier time. Market risk may affect a single issuer,
industry, sector of the economy, or the market as a whole. Market risk is
common to most investments -- including stocks and bonds, and the mutual
funds that invest in them.
Bonds and other fixed-income securities generally involve less market risk
than stocks. However, the risk of bonds can vary significantly depending upon
factors such as issuer and maturity. The bonds of some companies may be riskier
than the stocks of others.
POLITICAL RISK Foreign governments may expropriate assets, impose capital or
currency controls, impose punitive taxes, or nationalize a company or industry.
Any of these actions could have a severe effect on security prices and impair
the portfolio's ability to bring its capital or income back to the U.S. Other
political risks include economic policy changes, social and political
instability, military action and war.
PREPAYMENT RISK Securities with high stated interest rates may be prepaid
prior to maturity. During periods of falling interest rates, the portfolio would
generally have to reinvest the proceeds at lower rates.
VALUATION RISK The lack of an active trading market may make it difficult to
obtain an accurate price for the portfolio security.
13
<PAGE>
CERTAIN INVESTMENT PRACTICES
For each of the following practices, this table shows the applicable investment
limitation. Risks are indicated for each practice.
KEY TO TABLE:
/X/ Permitted without limitation; does not indicate actual use
/20%/ ITALIC TYPE (E.G., 20%) represents an investment limitation as a
percentage of NET fund assets; does not indicate actual use
20% Roman type (e.g., 20%) represents an investment limitation as a percentage
of TOTAL fund assets; does not indicate actual use
/ / Permitted, but not expected to be used to a significant extent
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
--------------------------------------------------------------------------------
<S> <C>
EURODOLLAR AND YANKEE OBLIGATIONS U.S. dollar-denominated
certificates of deposit and other obligations issued or
backed by foreign and U.S. banks and other issuers. CREDIT,
INCOME, INTEREST RATE, MARKET, POLITICAL RISKS. /X/
--------------------------------------------------------------------------------
INVESTMENT-GRADE DEBT SECURITIES Debt securities rated within
he four highest grades (AAA/Aaa through BBB/Baa) by Standard &
Poor's or Moody's rating service, and unrated securities of
comparable quality. CREDIT, INTEREST-RATE, MARKET RISKS. /X/
--------------------------------------------------------------------------------
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES Debt securities
backed by pools of mortgages, including passthrough certificates
and other senior classes of collateralized mortgage obligations
(CMOs), or other receivables. CREDIT, EXTENSION, INTEREST-RATE,
LIQUIDITY, PREPAYMENT RISKS. /X/
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS The purchase of a security with a
commitment to resell the security back to the counterparty at
the same price plus interest. CREDIT RISK. /X/
--------------------------------------------------------------------------------
RESTRICTED AND OTHER ILLIQUID SECURITIES Certain securities with
restrictions on trading, or those not actively traded. May include
private placements. LIQUIDITY, MARKET, VALUATION RISKS. 10%
--------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
INVESTMENT PRACTICE LIMIT
--------------------------------------------------------------------------------
<S> <C>
TEMPORARY DEFENSIVE TACTICS Placing some or all of the
portfolio's assets in defensive investments when the
investment adviser believes that doing so would be in the
best interests of shareholders. Although intended to avoid
losses in unusual market, economic, political or other
conditions, defensive tactics might be inconsistent with
the portfolio's principal investment strategies and might
prevent the portfolio from achieving its goal. / /
--------------------------------------------------------------------------------
VARIABLE-RATE MASTER DEMAND NOTES Unsecured instruments that
provide for periodic adjustments in their interest rate and
permit the indebtedness of the issuer to vary. CREDIT,
INTEREST-RATE, LIQUIDITY, MARKET RISKS. /X/
--------------------------------------------------------------------------------
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS The purchase
or sale of securities for delivery at a future date; market
value may change before delivery. LIQUIDITY, MARKET,
SPECULATIVE EXPOSURE RISKS. 20%
--------------------------------------------------------------------------------
ZERO-COUPON BONDS Debt securities that pay no cash income
to holders for either an initial period or until maturity and
are issued at a discount from maturity value. At maturity,
return comes from the difference between purchase price and
maturity value. INTEREST-RATE, MARKET RISKS. /X/
--------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
ABOUT YOUR ACCOUNT
--------------------------------------------------------------------------------
- SHARE VALUATION
--------------------------------------------------------------------------------
The price of your shares is also referred to as their net asset value (NAV).
The NAV for the portfolio is determined at 12:00 noon and at the close of
regular trading on the New York Stock Exchange (NYSE) (currently 4 p.m. Eastern
Time) each day the NYSE is open for business. NAV is calculated by dividing the
portfolio's total assets, less its liabilities, by the number of shares
outstanding in the portfolio.
The portfolio values its securities using amortized cost. This method values
the portfolio holding initially at its cost and then assumes a constant
amortization to maturity of any discount or premium. The amortized cost method
ignores any impact of fluctuating interest rates.
--------------------------------------------------------------------------------
- ACCOUNT STATEMENTS
--------------------------------------------------------------------------------
In general, you will receive account statements as follows:
- after every transaction that affects your account balance (except for
distribution reinvestments and automatic transactions)
- after any changes of name or address of the registered owner(s)
- otherwise, every calendar quarter
You will receive annual and semiannual financial reports.
--------------------------------------------------------------------------------
- DISTRIBUTIONS
--------------------------------------------------------------------------------
As an investor in the portfolio, you will receive distributions.
The portfolio may earn interest from bond, money-market and other
investments. These are passed along as dividend distributions. The portfolio
realizes capital gains whenever it sells securities for a higher price than
it paid for them. These are passed along as capital-gain distributions. The
portfolio usually does not make capital-gain distributions.
The portfolio declares dividend distributions daily and pays them monthly.
The portfolio typically distributes capital gains, if any, annually in December.
Most investors have their distributions reinvested in additional shares of
the portfolio. Distributions will be reinvested unless you choose on your
account application to have a check for your distributions mailed to you or sent
by electronic transfer.
16
<PAGE>
--------------------------------------------------------------------------------
- TAXES
--------------------------------------------------------------------------------
As with any investment, you should consider how your investment in the
portfolio will be taxed. If your account is not a tax-advantaged account, you
should be especially aware of the following potential tax implications. Please
consult your tax professional concerning your own tax situation.
TAXES ON DISTRIBUTIONS
As long as the portfolio continues to meet the requirements for being a
tax-qualified regulated investment company, the portfolio pays no federal income
tax on the earnings it distributes to shareholders.
Any time you sell or exchange shares, it is considered a taxable event
for you. Because the portfolio seeks to maintain a stable $1 share price, you
should not realize a taxable gain or loss when you sell shares.
Distributions you receive from the portfolio, whether reinvested or taken in
cash, are generally considered taxable. Distributions from the portfolio's
long-term capital gains are taxed as long-term capital gains, regardless of how
long you have held portfolio shares. The portfolio does not expect to realize
long-term capital gains or to make capital-gain distributions. The portfolio
will mostly make dividend distributions from other sources (including short-term
capital gains), which are generally taxed as ordinary income.
The Form 1099 that is mailed to you every January details your distributions
and their federal tax category, including the portion taxable as long-term
capital gains.
Depending on provisions in your state's tax law, the portion of the
portfolio's income derived from "full faith and credit" U.S. Treasury
obligations may be exempt from state and local taxes. The portfolio will
indicate each year the portion of its income, if any, that may qualify for
this exemption.
TAXES ON TRANSACTIONS
Any time you sell or exchange shares, it is considered a taxable event for
you. Depending on the purchase price and the sale price of the shares you sell
or exchange, you may have a gain or loss on the transaction. You are responsible
for any tax liabilities generated by your transactions.
17
<PAGE>
BUYING SHARES
--------------------------------------------------------------------------------
- OPENING AN ACCOUNT
--------------------------------------------------------------------------------
Your account application provides us with key information we need to set up
your account correctly. It also lets you authorize services that you may find
convenient in the future.
If you need an application, call our Institutional Shareholder Service
Center to receive one by mail or fax.
You can make your initial investment by wire. The "By Wire" method in the
table enables you to buy shares on a particular day at that day's closing NAV.
--------------------------------------------------------------------------------
- BUYING AND SELLING SHARES
--------------------------------------------------------------------------------
The Institutional Fund is open on those days when the NYSE is open,
typically Monday through Friday. If we receive your request in proper form by 12
p.m. noon or by the close of the NYSE (usually 4 p.m. ET), your transaction will
be priced at the NAV determined at 12 p.m. noon or at that day's closing NAV,
respectively. If we receive a request after that time, it will be priced on the
next business day at the NAV determined at 12 p.m. noon.
MINIMUM INITIAL
INVESTMENT
<TABLE>
<CAPTION>
<S> <C>
Cash Reserve Portfolio $1,000,000
</TABLE>
The minimum initial investment for any group of related persons is an
aggregate $4,000,000. Certain retirement plans for which recordkeeping is
performed on an omnibus basis for multiple participants are not subject to
investment minimums.
FINANCIAL-SERVICES FIRMS
You may be able to buy and sell portfolio shares through financial-services
firms such as banks, brokers and financial advisors. The portfolio may authorize
these firms (and other intermediaries that the firms may designate) to accept
orders. When an authorized firm or its designee has received your order, it is
considered received by the portfolio and will be priced at the next-computed
NAV.
Financial-services firms may charge transaction fees or other fees that you
could avoid by investing directly with the portfolio. Please read the firm's
program materials for any special provisions or additional service features
that may apply to your investment. Certain features of the portfolio, such as
the minimum initial investment amount, may be modified.
--------------------------------------------------------------------------------
- ADDING TO AN ACCOUNT
--------------------------------------------------------------------------------
You can add to your account in a variety of ways, as shown in the table.
18
<PAGE>
--------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
--------------------------------------------------------------------------------
BY EXCHANGE
--------------------------------------------------------------------------------
- Call our Institutional - Call our Institutional Shareholder
Shareholder Service Center to Service Center to request an
request an exchange from another exchange from another Credit
Credit Suisse Institutional fund Suisse Institutional fund or
or portfolio. Be sure to read portfolio.
the current PROSPECTUS for the
new fund or portfolio. If you do not have telephone
privileges, mail or fax a letter
If you do not have telephone of instruction.
privileges, mail or fax a letter
of instruction.
--------------------------------------------------------------------------------
BY WIRE
--------------------------------------------------------------------------------
- Complete and sign the NEW ACCOUNT - Call our Institutional Shareholder
APPLICATION. Service Center by 12 p.m. noon or 4
- Call our Institutional Shareholder p.m. ET to inform us of the incoming
Service Center and fax the signed wire. Please be sure to specify the
NEW ACCOUNT APPLICATION by 12 p.m. account registration, account
noon or 4 p.m. ET. number and the fund and portfolio
- Institutional Shareholder Services name on your wire advice.
will telephone you with your
account number. Please be sure to - Wire the money for receipt that
specify the account, registration day.
account number and the fund and
portfolio name on your wire
advice.
- Wire your initial investment for
receipt that day.
--------------------------------------------------------------------------------
INSTITUTIONAL SHAREHOLDER SERVICE CENTER
800-222-8977
MONDAY-FRIDAY, 8 A.M.-5 P.M. ET
19
<PAGE>
SELLING SHARES
--------------------------------------------------------------------------------
SELLING SOME OR ALL OF YOUR SHARES CAN BE USED FOR
--------------------------------------------------------------------------------
BY MAIL
--------------------------------------------------------------------------------
Write us a letter of instruction - Sales of any amount.
that includes:
- your name(s) and signature(s)
- the fund and portfolio name and
account number
- the dollar amount you want to
sell
- how to send the proceeds
Obtain a signature guarantee or
other documentation, if required
(see "Selling Shares in Writing").
Mail the materials to Credit
Suisse Institutional Fund, Inc.
If only a letter of instruction is
required, you can fax it to the
Institutional Shareholder Service
Center (unless signature guarantee
is required).
--------------------------------------------------------------------------------
BY EXCHANGE
--------------------------------------------------------------------------------
- Call our Institutional Shareholder - Accounts with telephone privileges.
Service Center to request an
exchange into another Credit If you do not have telephone privileges,
Suisse Institutional fund or mail or fax a letter of instruction to
portfolio. Be sure to read the exchange shares.
current PROSPECTUS for the new
fund or portfolio.
--------------------------------------------------------------------------------
BY PHONE
--------------------------------------------------------------------------------
Call our Institutional Shareholder - Accounts with telephone privileges.
Service Center to request a
redemption. You can receive the
proceeds as:
- a check mailed to the address of
record
- a wire to your bank
See "By Wire" for details.
--------------------------------------------------------------------------------
BY WIRE
--------------------------------------------------------------------------------
- Complete the "Wire Instructions" - Requests by phone or mail.
section of your NEW ACCOUNT
APPLICATION.
- For federal-funds wires, proceeds
will be wired on the next business
day.
--------------------------------------------------------------------------------
20
<PAGE>
HOW TO REACH US
Institutional Shareholder Service Center
Toll Free: 800-222-8977
Fax: 212-370-9833
MAIL:
Credit Suisse Institutional Fund, Inc.
P.O. Box 9030
Boston, MA 02205-9030
OVERNIGHT/COURIER SERVICE:
Boston Financial
Attn: Credit Suisse Institutional
Fund, Inc.
66 Brooks Drive
Braintree, MA 02184
WIRE INSTRUCTIONS
State Street Bank and Trust Company
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
Credit Suisse Institutional Fund, Inc.
[INSTITUTIONAL FUND PORTFOLIO NAME]
DDA# 9904-649-2
F/F/C: [ACCOUNT NUMBER AND REGISTRATION]
-------------------------------------------------------------------------------
- SELLING SHARES IN WRITING
-------------------------------------------------------------------------------
Some circumstances require a written sell order, along with a signature
guarantee. These include:
- accounts whose address of record has been changed within the past 30 days
- redemption in certain large accounts (other than by exchange)
- requests to send the proceeds to a different payee or address
- shares represented by certificates, which must be returned with your sell
order
A signature guarantee helps protect against fraud. You can obtain one from
most banks or securities dealers, but not from a notary public.
--------------------------------------------------------------------------------
- RECENTLY PURCHASED SHARES
--------------------------------------------------------------------------------
For portfolio shares purchased other than by bank wire, bank check, U.S.
Treasury check, certified check or money order, the portfolio will delay payment
of your cash redemption proceeds for 10 calendar days from the day of purchase.
At any time during this period, you may exchange into another portfolio.
INSTITUTIONAL SHAREHOLDER SERVICE CENTER
800-222-8977
MONDAY-FRIDAY, 8 A.M.-5 P.M. ET
21
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OTHER POLICIES
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- TRANSACTION DETAILS
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You are entitled to capital-gain and earned-dividend distributions as soon
as your purchase order is executed. You begin to earn dividend distributions the
business day after your purchase order is executed. However, if we receive your
purchase order and payment to purchase shares of the portfolio before 12 p.m.
(noon), you begin to earn dividend distributions on that day.
Your purchase order will be canceled and you may be liable for losses of
fees incurred by the portfolio if:
- your investment check does not clear
- you place a telephone order by 4 p.m. ET and we do not receive your wire
that day
If you wire money without first calling our Institutional Shareholder
Service Center to place an order, and your wire arrives after the close of
regular trading on the NYSE, then your order will not be executed until 12:00
noon. In the meantime, your payment will be held uninvested. Your bank or other
financial-services firm may charge a fee to send or receive wire transfers
While we monitor telephone-servicing resources carefully, during periods of
significant economic or market change it may be difficult to place orders by
telephone.
Uncashed redemption or distribution checks do not earn interest.
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- ACCOUNT CHANGES
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Call our Institutional Shareholder Service Center to update your account
records whenever you change your address. Institutional Shareholder Services can
also help you change your account information or privileges.
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- SPECIAL SITUATIONS
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The Institutional Fund reserves the right to:
- refuse any purchase or exchange request, including those from any person or
group who, in the fund's view, is likely to engage in excessive trading
- change or discontinue its exchange privilege after 30 days' notice to
current investors, or temporarily suspend this privilege during unusual
market conditions
- change minimum investment amounts after 15 days' notice to current
investors of any increases
- charge a wire-redemption fee
- make a "redemption in kind"--payment in portfolio securities rather than
cash--for certain large redemption amounts that could hurt portfolio
operations
- suspend redemptions or postpone payment dates as permitted by the
Investment Company Act of 1940 (such as during periods other than weekends
or holidays when the NYSE is closed or trading on the NYSE is restricted,
or any other time that the SEC permits)
- modify or waive its minimum investment requirements for employees and
clients of its adviser and the adviser's affiliates
- stop offering the portfolio's shares for a period of time (such as when
management believes that a substantial increase in assets could adversely
affect it)
INSTITUTIONAL SHAREHOLDER SERVICE CENTER
800-222-8977
MONDAY-FRIDAY, 8 A.M.-5 P.M. ET
22
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FOR MORE INFORMATION
More information about the portfolio is available free upon request,
including the following:
---------------------------
ANNUAL/SEMIANNUAL
REPORTS TO SHAREHOLDERS
---------------------------
Includes financial statements, portfolio investments and detailed
performance information.
The ANNUAL REPORT also contains a letter from the portfolio manager
discussing market conditions and investment strategies that significantly
affected portfolio performance during its past fiscal year.
---------------------------
OTHER INFORMATION
---------------------------
A current STATEMENT OF ADDITIONAL INFORMATION (SAI), which provides more
details about the portfolio, is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference.
You may visit the SEC's Internet Web site (www.sec.gov) to view the SAI,
material incorporated by reference and other information. You can also obtain
copies by visiting the SEC's Public Reference Room in Washington, DC (phone
202-942-8090) or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009 or electronically at
[email protected].
Please contact Credit Suisse Institutional Fund, Inc. to obtain, without
charge, the SAI, ANNUAL and SEMIANNUAL REPORTS, portfolio holdings and other
information and to make shareholder inquiries:
BY TELEPHONE:
800-222-8977
BY MAIL:
Credit Suisse Institutional Fund, Inc.
P.O. Box 9030
Boston, MA 02205-9030
BY OVERNIGHT OR COURIER SERVICE:
Boston Financial
Attn: Credit Suisse Institutional
Fund, Inc.
66 Brooks Drive
Braintree, MA 02184
SEC FILE NUMBER:
Credit Suisse Institutional Fund, Inc. 811-6670
P.O. BOX 9030, BOSTON, MA 02205-9030
800-222-8977
CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., DISTRIBUTOR CSCRV-1-1200
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 6, 2000
CREDIT SUISSE INSTITUTIONAL FUND, INC.
WARBURG PINCUS CASH RESERVE PORTFOLIO
This STATEMENT OF ADDITIONAL INFORMATION provides information
about Credit Suisse Institutional Fund, Inc. (the "Fund"), relating to the
Cash Reserve Portfolio (the "Portfolio") that supplements information that is
contained in the Prospectus for the Portfolio dated December 6, 2000, as
amended from time to time (the "PROSPECTUS"), and is incorporated by
reference in its entirety into that PROSPECTUS.
This STATEMENT OF ADDITIONAL INFORMATION is not itself a
prospectus and no investment in shares of the Portfolio should be made solely
upon the information contained herein. Copies of the PROSPECTUS and information
regarding the Portfolio's current performance and the status of shareholder
accounts may be obtained by writing or telephoning:
Credit Suisse Institutional Funds
P.O. Box 9030
Boston, MA 02205-9030
1-800-222-8977
<PAGE>
CONTENTS
PAGE
INVESTMENT OBJECTIVE......................................................1
GENERAL...................................................................1
Price and Portfolio Maturity.....................................1
Portfolio Quality and Diversification............................1
INVESTMENT POLICIES.......................................................2
Bank Obligations.................................................2
Variable Rate Master Demand Notes................................2
Government Securities............................................3
When-Issued Securities...........................................3
Repurchase Agreements............................................4
Reverse Repurchase Agreements and Borrowings.....................4
OTHER INVESTMENT LIMITATIONS..............................................4
PORTFOLIO VALUATION.......................................................6
PORTFOLIO TRANSACTIONS AND TURNOVER.......................................6
MANAGEMENT OF THE FUND....................................................7
Officers and Board of Directors..................................7
Estimated Directors' Compensation...............................11
Control Persons and Principal Holders of Securities.............11
Investment Adviser and Administrator............................11
Custodian and Transfer Agent....................................12
Distribution and Shareholder Servicing..........................13
Organization of the Fund........................................13
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...........................13
EXCHANGE PRIVILEGE.......................................................14
ADDITIONAL INFORMATION CONCERNING TAXES..................................14
The Portfolio and Its Investments...............................15
DETERMINATION OF YIELD...................................................17
INDEPENDENT ACCOUNTANTS AND COUNSEL......................................18
FINANCIAL STATEMENTS.....................................................18
APPENDIX................................................................A-1
Description of Commercial Paper Ratings........................A-1
<PAGE>
INVESTMENT OBJECTIVE
The following information supplements the discussion of the
Portfolio's investment objective and policies in the PROSPECTUS. There are no
assurances that the Portfolio will achieve its investment objective.
The investment objective of the Portfolio is to provide investors
with high current income consistent with liquidity and stability of principal.
Unless otherwise indicated, the Portfolio is permitted, but not
obligated, to engage in the following investment strategies, subject to any
percentage limitations set forth below.
The Portfolio is not obligated to pursue any of the following
strategies and does not represent that these techniques are available now or
will be available at any time in the future.
GENERAL
PRICE AND PORTFOLIO MATURITY. The Portfolio invests only in
securities which are purchased with and payable in U.S. dollars and which have
(or, pursuant to regulations adopted by the Securities and Exchange Commission
(the "SEC"), are deemed to have) remaining maturities of 397 calendar days or
less at the date of purchase by the Portfolio. For this purpose, variable rate
master demand notes (as described below), which are payable on demand, or, under
certain conditions, at specified periodic intervals not exceeding 397 calendar
days, in either case on not more than 30 days' notice, will be deemed to have
remaining maturities of 397 calendar days or less. The Portfolio maintains a
dollar-weighted average portfolio maturity of 90 days or less. The Portfolio
follows these policies to maintain a constant net asset value of $1.00 per
share, although there is no assurance that it can do so on a continuing basis.
PORTFOLIO QUALITY AND DIVERSIFICATION. The Portfolio will limit
its investments to securities that its Board determines present minimal credit
risks and which are "Eligible Securities" at the time of acquisition by the
Portfolio. The term Eligible Securities includes securities rated by the
"Requisite NRSROs" in one of the two highest short-term rating categories,
securities of issuers that have received such ratings with respect to other
short-term debt securities and comparable unrated securities. "Requisite NRSROs"
means (i) any two nationally recognized statistical rating organizations
("NRSROs") that have issued a rating with respect to a security or class of debt
obligations of an issuer, or (ii) one NRSRO, if only one NRSRO has issued a
rating with respect to such security or issuer at the time that the Portfolio
acquires the security. The Portfolio may purchase securities that are unrated at
the time of purchase that the Portfolio's investment adviser (the "Adviser")
deems to be of comparable quality to rated securities that the Portfolio may
purchase. The NRSROs currently designated as such by the SEC are Standard &
Poor's Ratings Services ("S&P"), Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Services, Inc., Duff and Phelps, Inc. and IBCA Limited and its
affiliate, IBCA, Inc. A discussion of the ratings categories of the NRSROs is
contained in the Appendix to this STATEMENT OF ADDITIONAL INFORMATION.
<PAGE>
The Portfolio is subject to certain credit quality, maturity and
diversification requirements under Rule 2a-7 under the Investment Company Act of
1940, as amended (the "1940 Act"), as operating policies. Under these policies,
there are two tiers of Eligible Securities, first and second tier, based on
their ratings by NRSROs or, if the securities are unrated, on determinations by
the Adviser. These policies generally restrict the Portfolio from investing more
than 5% of its assets in second tier securities and limit to 5% of assets the
portion that may be invested in any one issuer. In accordance with Rule 2a-7,
the Portfolio may invest up to 25% of its assets in the first tier securities of
a single issuer for a period of up to three days.
INVESTMENT POLICIES
BANK OBLIGATIONS. The Portfolio may purchase bank obligations,
including United States dollar-denominated instruments issued or supported by
the credit of the United States or foreign banks or savings institutions having
total assets at the time of purchase in excess of $1 billion. While the
Portfolio will invest in obligations of foreign banks or foreign branches of
United States banks only if the Adviser deems the instrument to present minimal
credit risks, such investments may nevertheless entail risks that are different
from those of investments in domestic obligations of United States banks due to
differences in political, regulatory and economic systems and conditions. Such
risks include future political and economic developments, the possible
imposition of withholding taxes on interest income, possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. The Portfolio may also make interest-bearing savings deposits in
commercial and savings banks.
VARIABLE RATE MASTER DEMAND NOTES. The Portfolio may also purchase
variable rate master demand notes, which are unsecured instruments that permit
the indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Although the notes are not normally traded and there may be no
secondary market in the notes, the Portfolio may demand payment of principal and
accrued interest at any time and may resell the note at any time to a third
party. In the event an issuer of a variable rate master demand note defaulted on
its payment obligation, the Portfolio might be unable to dispose of the note
because of the absence of a secondary market and might, for this or other
reasons, suffer a loss to the extent of the default.
Variable rate master demand notes held by the Portfolio may have
maturities of more than thirteen months, provided: (i) the Portfolio is entitled
to payment of principal and accrued interest upon not more than seven days'
notice and (ii) the rate of interest on such notes is adjusted automatically at
periodic intervals which may extend up to thirteen months. In determining the
Portfolio's average weighted portfolio maturity and whether a variable rate
master demand note has a remaining maturity of thirteen months or less, each
note will be deemed by the Portfolio to have a maturity equal to the longer of
the period remaining until its next interest rate adjustment or the period
remaining until the principal amount owed can be recovered through demand. In
determining whether an unrated variable rate master demand note is of comparable
quality at the time of purchase to instruments rated "high quality" by any major
rating service or when purchasing variable rate master demand notes, the Adviser
will consider the earning power, cash flow and other liquidity ratios of the
issuer of the note and will
2
<PAGE>
continuously monitor its financial condition. In addition, when necessary to
ensure that a note is of "high quality," the Portfolio will require that the
issuer's obligation to pay the principal of the note be backed by an
unconditional bank letter of line of credit, guarantee or commitment to lend.
In the event an issuer of a variable rate master demand note
defaults on its payment obligation, the Portfolio might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. However, the
Portfolio will invest in such instruments only where the Adviser believes that
the risk of such loss is minimal. In determining average weighted portfolio
maturity, a variable rate master demand note will be deemed to have a maturity
equal to the longer of the period remaining to the next interest rate adjustment
or the demand note period.
GOVERNMENT SECURITIES. Government Securities in which the
Portfolio may invest include Treasury Bills, Treasury Notes and Treasury Bonds;
other obligations that are supported by the full faith and credit of the United
States Treasury, such as Government National Mortgage Association pass-through
certificates; obligations that are supported by the right of the issuer to
borrow from the Treasury, such as securities of Federal Home Loan Banks; and
obligations that are supported only by the credit of the instrumentality, such
as Federal National Mortgage Association bonds.
WHEN-ISSUED SECURITIES. The Portfolio may purchase securities on a
"when-issued" basis (i.e., for delivery beyond the normal settlement date at a
stated price and yield). When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield. The
Portfolio will generally not pay for such securities or start earning interest
on them until they are received. Securities purchased on a when-issued basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. The Portfolio expects that commitments to
purchase when-issued securities will not exceed 20% of the value of its total
assets absent unusual market conditions, and that a commitment by the Portfolio
to purchase when-issued securities will generally not exceed 45 days. The
Portfolio does not intend to purchase when-issued securities for speculative
purposes but only in furtherance of its investment objective.
When the Portfolio agrees to purchase when-issued securities, its
custodian will set aside cash or liquid securities in a segregated account equal
to the amount of the commitment. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case the
Portfolio may be required subsequently to place additional assets in the
segregated account in order to ensure that the value of the account remains
equal to the amount of the Portfolio's commitment. It may be expected that the
Portfolio's net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets aside
cash. Because the Portfolio will set aside cash and liquid assets to satisfy its
purchase commitments in the manner described, the Portfolio's liquidity and
ability to manage its portfolio might be affected in the event its commitments
to purchase when-issued securities ever exceeded 25% of the value of its assets.
3
<PAGE>
When the Portfolio engages in when-issued transactions, it relies
on the seller to consummate the trade. Failure of the seller to do so may result
in the Portfolio's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
REPURCHASE AGREEMENTS. The Portfolio may agree to purchase money
market instruments from financial institutions such as banks and broker-dealers
subject to the seller's agreement to repurchase them at an agreed-upon date and
price ("repurchase agreements"). The repurchase price generally equals the price
paid by the Portfolio plus interest negotiated on the basis of current
short-term rates (which may be more or less than the rate on the securities
underlying the repurchase agreement). Default by a seller, if the Portfolio is
delayed or prevented from exercising its rights to dispose of the collateral
securities, could expose the Portfolio to possible loss, including the risk of a
possible decline in the value of the underlying securities during the period
while the Portfolio seeks to assert its rights thereto. Repurchase agreements
are considered to be loans by the Portfolio under the 1940 Act. The seller under
a repurchase agreement will be required to maintain the value of the securities
subject to the agreement at not less than the repurchase price (including
accrued interest). Securities subject to repurchase agreements will be held by
the Portfolio's custodian or in the Federal Reserve/Treasury book-entry system
or another authorized securities depository.
REVERSE REPURCHASE AGREEMENTS AND BORROWINGS. The Portfolio may
borrow funds for temporary purposes and not for leverage by agreeing to sell
portfolio securities to financial institutions such as banks and broker-dealers
and to repurchase them at a mutually agreed-upon date and price. At the time the
Portfolio enters into such an arrangement (a "reverse repurchase agreement"), it
will place in a segregated custodial account cash or liquid securities having a
value equal to the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure that such equivalent value is
maintained. Reverse repurchase agreements involve the risk that the market value
of the securities sold by the Portfolio may decline below the repurchase price
of those securities. Reverse repurchase agreements are considered to be
borrowings by the Portfolio under the 1940 Act.
OTHER INVESTMENT LIMITATIONS
The investment limitations numbered 1 through 5 may not be changed
without the affirmative vote of the holders of a majority of the Portfolio's
outstanding shares. Such majority is defined as the lesser of (i) 67% or more of
the shares present at a meeting, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy, or (ii)
more than 50% of the outstanding shares. Investment limitations 6 through 9 may
be changed by a vote of the Fund's Board of Directors (the "Board") at any time.
If a percentage restriction (other than the percentage limitations set forth in
No. 1 and No. 8) is adhered to at the time of an investment, a later increase or
decrease in the percentage of assets resulting from a change in the values of
portfolio securities or in the amount of the Portfolio's assets will not
constitute a violation of such restriction.
4
<PAGE>
The Portfolio may not:
1. Borrow money, issue senior securities or enter into reverse repurchase
agreements except for temporary or emergency purposes and not for
leveraging, and then in amounts not in excess of 10% of the value of the
Portfolio's assets at the time of such transactions constituting
borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the
Portfolio's assets at the time of such borrowing. Whenever borrowings
exceed 5% of the value of the Portfolio's total assets, the Portfolio
will not make any additional investments.
2. Purchase any securities which would cause more than 25% of the value of
the Portfolio's total assets at the time of purchase to be invested in
the securities of issuers conducting their principal business activities
in the same industry; provided that there shall be no limit on the
purchase of obligations issued or guaranteed by the United States, any
state, territory or possession of the United States, the District of
Columbia or any of their authorities, agencies, instrumentalities or
political sub-divisions or certificates of deposit, time deposits,
savings deposits and bankers' acceptances.
3. Make loans except that the Portfolio may lend portfolio securities, may
purchase or hold debt obligations in accordance with its investment
objective, policies and limitations and may enter into repurchase
agreements.
4. Underwrite any issue of securities except to the extent that the purchase
of debt obligations directly from the issuer thereof in accordance with
the Portfolio's investment objective, policies and limitations may be
deemed to be underwriting.
5. Purchase or sell real estate, real estate investment trust securities,
commodities or commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that the Portfolio may
purchase securities issued by companies that invest in real estate or
interests therein.
6. Write or sell puts, calls, straddles, spreads or combinations thereof.
7. Purchase securities on margin, make short sales of securities or maintain
a short position.
8. Invest more than 10% of the value of the Portfolio's net assets in
securities which may be illiquid because of legal or contractual
restrictions on resale or securities for which there are no readily
available market quotations. For purposes of this limitation, repurchase
agreements with maturities greater than seven days after notice by the
Portfolio, variable rate master demand notes providing for settlement
upon maturities longer than seven days and savings accounts which require
more than seven days' notice prior to withdrawal shall be considered
illiquid securities.
9. Invest in oil, gas or mineral leases.
5
<PAGE>
PORTFOLIO VALUATION
The Portfolio's securities are valued on the basis of amortized
cost. Under this method, the Portfolio values a portfolio security at cost on
the date of purchase and thereafter assumes a constant value of the security for
purposes of determining net asset value, which normally does not change in
response to fluctuating interest rates. Although the amortized cost method seems
to provide certainty in portfolio valuation, it may result in periods during
which values, as determined by amortized cost, are higher or lower than the
amount the Portfolio would receive if it sold the securities. In connection with
amortized cost valuation, the Board has established procedures that are intended
to stabilize the Portfolio's net asset value per share for purposes of sales and
redemptions at $1.00. These procedures include review by the Board, at such
intervals as it deems appropriate, to determine the extent, if any, to which the
Portfolio's net asset value per share calculated by using available market
quotations deviates from $1.00 per share. In the event such deviation exceeds
1/2 of 1%, the Board will promptly consider what action, if any, should be
initiated. If the Board believes that the amount of any deviations from the
Portfolio's $1.00 amortized cost price per share may result in material dilution
or other unfair results to investors or existing shareholders, it will take such
steps as it considers appropriate to eliminate or reduce to the extent
reasonably practicable any such dilution or unfair results. These steps may
include selling portfolio instruments prior to maturity; shortening the
Portfolio's average portfolio maturity; withholding or reducing dividends;
redeeming shares in kind; reducing the number of the Portfolio's outstanding
shares without monetary consideration; or utilizing a net asset value per share
determined by using available market quotations.
PORTFOLIO TRANSACTIONS AND TURNOVER
Credit Suisse Asset Management, LLC, the Portfolio's investment
adviser ("CSAM"), is responsible for establishing, reviewing, and, where
necessary, modifying the Portfolio's investment program to achieve its
investment objective and will select specific portfolio investments and effect
transactions for the Portfolio. Purchases and sales of portfolio securities are
usually principal transactions without brokerage commissions effected directly
with the issuer or with dealers who specialize in money market instruments. CSAM
seeks to obtain the best net price and the most favorable execution of orders.
To the extent that the execution and price offered by more than one dealer are
comparable, CSAM may, in its discretion, effect transactions in portfolio
securities with dealers who provide the Portfolio with research advice or other
services.
Investment decisions for the Portfolio concerning specific
portfolio securities are made independently from those for other clients advised
by CSAM. Such other investment clients may invest in the same securities as the
Portfolio. When purchases or sales of the same security are made at
substantially the same time on behalf of such other clients, transactions are
averaged as to price, and available investments allocated as to amount, in a
manner which CSAM believes to be equitable to each client, including the
Portfolio. In some instances, this investment procedure may adversely affect the
price paid or received by the Portfolio or the size of the position obtained or
sold for the Portfolio. To the extent permitted by law, CSAM may aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for such other investment clients in order to obtain best execution.
6
<PAGE>
In no instance will portfolio securities be purchased from or sold
to CSAM, Credit Suisse Asset Management Securities, Inc. ("CSAMSI") or Credit
Suisse First Boston ("CS First Boston") or any affiliated person of such
companies, except pursuant to an exemption received from the SEC. In addition,
the Portfolio will not give preference to any institutions with whom the Fund on
behalf of the Portfolio enters into distribution or shareholder servicing
agreements concerning the provision of distribution services or support
services.
The Portfolio does not intend to seek profits through short-term
trading. The Portfolio's annual portfolio turnover will be relatively high but
its portfolio turnover is not expected to have a material effect on its net
income. Portfolio turnover is expected to be zero for regulatory reporting
purposes.
MANAGEMENT OF THE FUND
OFFICERS AND BOARD OF DIRECTORS
The business and affairs of the Fund are managed by the Board of
Directors in accordance with the laws of the State of Maryland. The Board elects
officers who are responsible for the day-to-day operations of the Fund and who
execute policies authorized by the Board. Under the Fund's Charter, the Board
may classify or reclassify any unissued shares of the Fund into one or more
additional classes by setting or changing in any one or more respects their
relative rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption. The Board may similarly
classify or reclassify any class of its shares into one or more series and,
without shareholder approval, may increase the number of authorized shares of
the Fund.
The names (and ages) of the Fund's Directors and officers, their
addresses, present positions and principal occupations during the past five
years and other affiliations are set forth below.
Richard H. Francis (68) Director
40 Grosvenor Road Currently retired; Executive Vice President
Short Hills, New Jersey 07078 and Chief Financial Officer of Pan Am
Corporation and Pan American World Airways,
Inc. from 1988 to 1991; Director of The
Infinity Mutual Funds, BISYS Group
Incorporated; Director/Trustee of other
CSAM-advised investment companies.
7
<PAGE>
Jack W. Fritz (73) Director
2425 North Fish Creek Road Private investor; Consultant and Director of
P.O. Box 483 Fritz Broadcasting, Inc. and Fritz
Wilson, Wyoming 83014 Communications (developers and operators of
radio stations) since 1987; Director of
Advo, Inc. (direct mail advertising);
Director/Trustee of other CSAM-advised
investment companies.
Jeffrey E. Garten (53) DIRECTOR
Box 208200 Dean of Yale School of Management and
New Haven, Connecticut 06520-8200 William S. Beinecke Professor in the
Practice of International Trade and Finance;
Undersecretary of Commerce for International
Trade from November 1993 to October 1995;
Professor at Columbia University from
September 1992 to November 1993; Director of
Aetna, Inc.; Director of Calpine Energy
Corporation; Director/Trustee of other
CSAM-advised investment companies.
James S. Pasman, Jr. (69) Director
29 The Trillium Currently retired; President and Chief
Pittsburgh, Pennsylvania 15238 Operating Officer of National InterGroup,
Inc. from April 1989 to March 1991; Chairman
of Permian Oil Co. from April 1989 to March
1991; Director of Education Management
Corp., Tyco International Ltd.; Trustee, BT
Insurance Funds Trust; Director/Trustee of
other CSAM-advised investment companies.
William W. Priest* (58) Chairman of the Board
466 Lexington Avenue Chairman of CSAM since 2000, Managing
New York, New York 10017 Director of CSAM since 1990, Chief
Executive Officer of CSAM from
1990 to 2000; Director/Trustee of other
CSAM-advised investment companies.
--------
* Indicates a Director/Trustee who is an "interested person" of the Fund as
defined in the 1940 Act.
8
<PAGE>
Steven N. Rappaport (52) Director
40 East 52nd Street, President of Loanet, Inc. (on-line
New York, New York 10022 accounting service) since 1997; Executive
Vice President of Loanet, Inc. from 1994 to
1997; Director, President, North American
Operations, and former Executive Vice
President from 1992 to 1993 of Worldwide
Operations of Metallurg Inc.; Executive Vice
President, Telerate, Inc. from 1987 to 1992;
Partner in the law firm of Hartman & Craven
until 1987; Director/Trustee of other
Warburg Pincus Funds and other CSAM-advised
investment companies.
Alexander B. Trowbridge (70) Director
1317 F Street, N.W., 5th Floor President of Trowbridge Partners, Inc.
Washington, DC 20004 (business consulting) since January 1990;
Director or Trustee of ICOS Corporation
(biopharmaceuticals), IRI International
(energy services), The Rouse Company (real
estate development), Harris Corp.
(electronics and communications equipment),
The Gillette Co. (personal care products)
and Sunoco, Inc. (petroleum refining and
marketing); Director/Trustee of other
CSAM-advised investment companies.
Eugene L. Podsiadlo (43) President
466 Lexington Avenue Managing Director of CSAM; Associated with
New York, New York 10017-3147 CSAM since New Credit Suisse acquired the
Funds' predecessor adviser in July 1999;
with the predecessor adviser since 1991;
Vice President of Citibank, N.A. from 1987
to 1991; Officer of CSAMSI and of other
CSAM-advised investment companies.
Hal Liebes, Esq. (36) Vice President and Secretary
466 Lexington Avenue Managing Director and General Counsel of
New York, New York 10017 CSAM; Associated with Lehman Brothers, Inc.
from 1996 to 1997; Associated with CSAM from
1995 to 1996; Associated with CS First
Boston Investment Management from 1994 to
1995; Associated with Division of
Enforcement, U.S. Securities and Exchange
Commission from 1991 to 1994; Officer of
CSAMSI and other CSAM-advised investment
companies.
9
<PAGE>
Michael A. Pignataro (40) Treasurer and Chief Financial Officer
466 Lexington Avenue Vice President and Director of Fund
New York, New York 10017 Administration of CSAM; Associated with CSAM
since 1984; Officer of other CSAM-advised
investment companies.
Stuart J. Cohen, Esq. (31) Assistant Secretary
466 Lexington Avenue Vice President and Legal Counsel of CSAM;
New York, New York 10017-3147 Associated with CSAM since Credit Suisse
acquired the Funds' predecessor adviser in
July 1999; with the predecessor adviser
since 1997; Associated with the law firm of
Gordon Altman Butowsky Weitzen Shalov & Wein
from 1995 to 1997; Officer of other
CSAM-advised investment companies.
Gregory N. Bressler, Esq.(34) Assistant Secretary
466 Lexington Avenue Vice President and Legal Counsel of CSAM
New York, New York 10017 since January 2000; Associated with the
law firm of Swidler Berlin Shereff
Friedman LLP from 1996 to 2000; Officer of
other CSAM-advised investment companies.
Rocco A. DelGuercio (37) Assistant Treasurer
466 Lexington Avenue Assistant Vice President and Administrative
New York, New York 10017 Officer of CSAM; Associated with CSAM since
June 1996; Assistant Treasurer, Bankers
Trust Corp. -- Fund Administration from
March 1994 to June 1996; Officer of other
CSAM-advised investment companies.
Joseph Parascondola (37) Assistant Treasurer
466 Lexington Avenue Assistant Vice President -- Fund
New York, New York 10017 Administration of CSAM since April 2000;
Assistant Vice President, Deutsche Asset
Management from January 1999 to April
2000; Assistant Vice President, Weiss,
Peck & Greer LLC from November 1995 to
December 1998; Officer of other
CSAM-advised investment companies.
No employee of CSAM, CSAMSI, PFPC Inc., the Fund's
administrator ("PFPC"), or any of their affiliates receives any compensation
from the Fund for acting as an officer or director of the Fund. Each Director
who is not a director, trustee, officer or employee of CSAM, CSAMSI, PFPC or
any of their affiliates receives the following annual and per-meeting fees:
<TABLE>
<CAPTION>
------------------------------- -------------------------------- -----------------------------
ANNUAL FEE AS DIRECTOR FEE FOR EACH BOARD ANNUAL FEE AS AUDIT
MEETING ATTENDED COMMITTEE MEMBER
------------------------------- -------------------------------- -----------------------------
<S> <C> <C>
$750 $250 $250*
------------------------------- -------------------------------- -----------------------------
</TABLE>
--------------------
* The Chairman of the Audit Committee receives $325 for serving on the
Audit Committee.
Each Director is reimbursed for expenses incurred in connection
with his attendance at Board meetings.
10
<PAGE>
ESTIMATED DIRECTORS' COMPENSATION
<TABLE>
<CAPTION>
TOTAL COMPENSATION FROM ALL
COMPENSATION FROM INVESTMENT COMPANIES IN FUND
NAME OF DIRECTOR THE FUND COMPLEX(1)
---------------- -------- ----------
<S> <C> <C>
WILLIAM W. PRIEST(2) NONE NONE
RICHARD H. FRANCIS $2,500 $112,500
JACK W. FRITZ $2,500 $112,500
JEFFREY E. GARTEN $2,500 $60,000
JAMES S. PASMAN, JR. $2,500 $112,500
STEVEN N. RAPPAPORT $2,500 $112,500
ALEXANDER B. TROWBRIDGE $2,725 $122,625
</TABLE>
--------------------
(1) Each Director serves as a Director or Trustee of 45 investment companies
and portfolios for which CSAM serves as investment adviser ("Fund
Complex"), except for Mr. Garten, who serves as Director or Trustee of 24
investment companies and portfolios in the Fund Complex.
(2) Mr. Priest receives compensation as an affiliate of CSAM, and,
accordingly, receives no compensation from any Fund or any other
investment company advised by CSAM.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Credit Suisse Asset Management International, an affiliate of
CSAM, held all of the shares of the Portfolio on the date the Fund's
Registration Statement became effective.
INVESTMENT ADVISER AND ADMINISTRATOR
CSAM, located at 466 Lexington Avenue, New York, New York 10017,
serves as investment adviser to the Portfolio pursuant to a written agreement
(the "Advisory Agreement"). CSAM is an indirect wholly-owned U.S. subsidiary of
Credit Suisse Group ("Credit Suisse"). Credit Suisse is a global financial
services company, providing a comprehensive range of banking and insurance
products. Active on every continent and in all major financial centers, Credit
Suisse comprises five business units -- Credit Suisse Asset Management (asset
management); Credit Suisse First Boston (investment banking); Credit Suisse
Private Banking (private banking); Credit Suisse (retail banking); and
Winterthur (insurance). Credit Suisse has approximately $737.5 billion of global
assets under management and employs approximately 63,000 people worldwide. The
principal business address of Credit Suisse is Paradeplatz 8, CH 8070, Zurich,
Switzerland.
CSAM, subject to the control of the Fund's officers and the Board,
manages the investment and reinvestment of the assets of the Portfolio in
accordance with the Portfolio's investment objective and stated investment
policies. CSAM makes investment decisions for the Portfolio and places orders to
purchase or sell securities on behalf of the Portfolio. CSAM also
11
<PAGE>
employs a support staff of management personnel to provide services to the Fund
and furnishes the Fund with office space, furnishings and equipment.
For the services provided pursuant to the Advisory Agreement, CSAM
is entitled to receive a fee, computed daily and payable monthly, at the annual
rate of .10% of the value of the Portfolio's average daily net assets. CSAM and
the Portfolio's administrator may voluntarily waive a portion of their fees
from time to time and temporarily limit the expenses to be paid by the
Portfolio.
PFPC serves as administrator to the Portfolio pursuant to a
separate written agreement. As administrator, PFPC calculates the Portfolio's
net asset value, provides all accounting services for the Portfolio and assists
in related aspects of the Portfolio's operations. As compensation, the Portfolio
pays PFPC a fee calculated at an annual rate of .10% of the Portfolio's first
$500 million in average daily net assets, .075% of the next $1 billion in
average daily net assets, and .05% of average daily net assets over $1.5
billion. PFPC has its principal offices at 400 Bellevue Parkway, Wilmington,
Delaware 19809.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street") acts as the
custodian for the Portfolio pursuant to a Custodian Agreement (the "Custodian
Agreement"). Under the Custodian Agreement, State Street (a) maintains a
separate account or accounts in the name of the Portfolio, (b) holds and
transfers portfolio securities on account of the Portfolio, (c) accepts receipts
and makes disbursements of money on behalf of the Portfolio, (d) collects and
receives all income and other payments and distributions on account of the
Portfolio's portfolio securities, and (e) makes periodic reports to the Board of
Directors concerning the Portfolio operations. State Street is authorized to
select one or more banks or trust companies to serve as sub-custodian on behalf
of the Portfolio, provided that State Street remains responsible for the
performance of all its duties under the Custodian Agreement and hold the
Portfolio harmless from the negligent acts and omissions of any sub-custodian.
For its services to the Portfolio under the Custodian Agreement, State Street
receives a fee which is calculated based upon the average daily market value of
the Portfolio's assets, exclusive of transaction charges and out-of-pocket
expenses, which are also charged to the Portfolio.
State Street has agreed to serve as the Portfolio's shareholder
servicing, transfer and dividend disbursing agent pursuant to a Transfer Agency
and Service Agreement, under which State Street (i) issues and redeems shares of
the Portfolio, (ii) addresses and mails all communications by the Portfolio to
record owners of the Portfolio shares, including reports to shareholders,
dividend and distribution notices and proxy material for its meetings of
shareholders, (iii) maintains shareholder accounts and, if requested,
sub-accounts, and (iv) makes periodic reports to the Board concerning the
transfer agent's operations with respect to the Portfolio. State Street has
delegated to Boston Financial Data Services, Inc. ("BFDS"), a 50% owned
subsidiary, responsibility for most shareholder servicing functions. The
principal business address of State Street is 225 Franklin Street, Boston,
Massachusetts 02110. BFDS's principal business address is 2 Heritage Drive,
Boston, Massachusetts 02171.
12
<PAGE>
DISTRIBUTION AND SHAREHOLDER SERVICING
CSAMSI serves as the distributor of the Portfolio. CSAMSI's
principal business address is 466 Lexington Avenue, New York, New York 10017.
The Portfolio has authorized certain broker-dealers, financial
institutions, recordkeeping organizations and other industry professionals
(collectively, "Service Organizations") or, if applicable, their designees to
enter confirmed purchase and redemption orders on behalf of their clients and
customers, with payment to follow no later than the Portfolio's pricing on the
following business day. If payment is not received by such time, the Service
Organization could be held liable for resulting fees or losses. The Portfolio
may be deemed to have received a purchase or redemption order when a Service
Organization, or, if applicable, its authorized designee, accepts the order.
Such orders received by the Portfolio in proper form will be priced at the
Portfolio's net asset value next computed after they are accepted by the Service
Organization or its authorized designee. Service Organizations may impose
transaction or administrative charges or other direct fees, which charges or
fees would not be imposed if shares are purchased directly from the Portfolio.
Service Organizations may also be reimbursed for marketing costs. The Portfolio
may reimburse part of the Service Fee at rates they would normally pay to the
transfer agent for providing the services.
ORGANIZATION OF THE FUND
The Portfolio is a portfolio of an open-end series investment
company, the Fund, which has one class of common stock outstanding. The Fund was
incorporated on May 13, 1992 under the laws of the State of Maryland under the
name of "Warburg, Pincus Institutional Fund, Inc." On May 11, 2000, the Fund
changed its name to "Credit Suisse Institutional Fund, Inc." The Fund's charter
authorizes the Board of Directors to issue sixteen billion full and fractional
shares of capital stock, par value $.001 per share. Shares of twelve series have
been classified, one of which constitute the interests in the Portfolio.
The Portfolio is a diversified, open-end management investment
company.
All shareholders of the Portfolio, upon liquidation, will
participate ratably in the Portfolio's net assets. Shares do not have cumulative
voting rights, which means that holders of more than 50% of the shares voting
for the election of Directors can elect all Directors. Shares are transferable
but have no preemptive, conversion or subscription rights.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Portfolio has elected to be governed by Rule 18f-1 under the
1940 Act as a result of which the Portfolio is obligated to redeem shares, with
respect to any one shareholder during any 90 day period, solely in cash up to
the lesser of $250,000 or 1% of the net asset value of the Portfolio at the
beginning of the period.
13
<PAGE>
EXCHANGE PRIVILEGE
Shareholders of the Portfolio may exchange all or part of their
shares for shares of another portfolio or other portfolios of the Fund organized
by CSAM in the future or another Credit Suisse Institutional Fund on the basis
of their relative net asset values per share at the time of exchange. The
exchange privilege enables shareholders to acquire shares in a fund or portfolio
with a different investment objective when they believe that a shift between
funds or portfolios is an appropriate investment decision.
If an exchange request is received by Credit Suisse Institutional
Funds or its agent prior to the close of regular trading on the NYSE, the
exchange will be made at the Portfolio's net asset value next determined on that
business day. Exchanges will be effected without a sales charge but must satisfy
the minimum dollar amount necessary for new purchases. The Portfolio may refuse
exchange purchases at any time without notice.
The exchange privilege is available to investors in any state in
which the shares being acquired may be legally sold. When an investor effects an
exchange of shares, the exchange is treated for federal income tax purposes as a
redemption. Therefore, the investor may realize a taxable gain or loss in
connection with the exchange. Investors wishing to exchange shares of the
Portfolio for shares in another Credit Suisse Institutional Fund or portfolio of
the Fund should review the prospectus of the other fund or portfolio prior to
making an exchange. For further information regarding the exchange privilege or
to obtain an current prospectus for another Credit Suisse Institutional Fund or
portfolio of the Fund, an investor should contact Credit Suisse Institutional
Funds at 1-800-222-8977.
The Portfolio reserves the right to refuse exchange purchases by
any person or group if, in CSAM's judgment, the Portfolio would be unable to
invest the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected. Examples of when
an exchange purchase could be refused are when the Portfolio receives or
anticipates receiving large exchange orders at or about the same time and when a
pattern of exchanges within a short period of time (often associated with a
marketing timing strategy) is discerned. The Portfolio reserves the right to
terminate or modify the exchange privilege at any time upon 30 days' notice to
shareholders.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is a summary of the material United States federal
income tax considerations regarding the purchase, ownership and disposition of
shares in the Portfolio. Each prospective shareholder is urged to consult his
own tax adviser with respect to the specific federal, state, local and foreign
tax consequences of investing in the Portfolio. The summary is based on the laws
in effect on the date of this STATEMENT OF ADDITIONAL INFORMATION and existing
judicial and administrative interpretations thereof, both of which are subject
to change.
14
<PAGE>
THE PORTFOLIO AND ITS INVESTMENTS
The Portfolio intends to continue to qualify as a regulated
investment company during each taxable year under Part I of Subchapter M of the
Code. To so qualify, the Portfolio must, among other things: (a) derive at least
90% of its gross income in each taxable year from dividends, interest, payments
with respect to securities loans and gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including, but not
limited to, gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies;
and (b) diversify its holdings so that, at the end of each quarter of the
Portfolio's taxable year, (i) at least 50% of the market value of the
Portfolio's assets is represented by cash, securities of other regulated
investment companies, United States government securities and other securities,
with such other securities limited, in respect of any one issuer, to an amount
not greater than 5% of the market value of the Portfolio's assets and not
greater than 10% of the outstanding voting securities of such issuer and (ii)
not more than 25% of the value of its assets is invested in the securities
(other than United States government securities or securities of other regulated
investment companies) of any one issuer or any two or more issuers that the
Portfolio controls and which are determined to be engaged in the same or similar
trades or businesses or related trades or businesses.
As a regulated investment company, the Portfolio will not be
subject to United States federal income tax on its investment company taxable
income (I.E., income other than any excess of its net realized long-term capital
gains over its net realized short-term capital losses ("net realized capital
gains")) or on its net realized capital gains, if any, that it distributes to
its shareholders, provided that an amount equal to at least 90% of the sum of
its investment company taxable income, plus or minus certain other adjustments
as specified in the Code, is distributed to its shareholders, but will be
subject to tax at regular corporate rates on any taxable income or gains that it
does not distribute. Any dividend declared by the Portfolio in October, November
or December of any calendar year and payable to shareholders of record on a
specified date in such a month shall be deemed to have been received by each
shareholder on December 31 of such calendar year and to have been paid by the
Portfolio not later than such December 31, provided that such dividend is
actually paid by the Portfolio during January of the following calendar year.
The Portfolio intends to declare dividend distributions daily and
pay them monthly. The Board will determine annually whether to distribute any
net realized capital gains. The Portfolio currently expects to distribute any
such excess annually to its shareholders. However, if the Portfolio retains for
investment an amount equal to all or a portion of its net realized capital
gains, it will be subject to a corporate tax (currently at a rate of 35%) on the
amount retained. In that event, the Portfolio will designate such retained
amounts as undistributed capital gains in a notice to its shareholders who (a)
will be required to include in income for United Stares federal income tax
purposes, as long-term capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit their proportionate shares
of the 35% tax paid by the Portfolio on the undistributed amount against their
United States federal income tax liabilities, if any, and to claim refunds to
the extent their credits exceed their tax liabilities, if any, and (c) will be
entitled to increase their tax basis, for United States federal income tax
purposes, in their shares by an amount equal to 65% of the amount of
15
<PAGE>
undistributed capital gains included in their income. Organizations or persons
not subject to federal income tax on such capital gains will be entitled to a
refund of their pro rata share of such taxes paid by the Portfolio upon filing
appropriate returns or claims for refund with the Internal Revenue Service (the
"IRS").
The Code imposes a 4% nondeductible excise tax on the Portfolio to
the extent the Portfolio does not distribute by the end of any calendar year at
least 98% of its ordinary income for that year and at least 98% of its net
capital gains (both long-term and short-term) for the one-year period ending, as
a general rule, on October 31 of that year. For this purpose, however, any
ordinary income or net capital gains retained by the Portfolio that is subject
to corporate income tax will be considered to have been distributed by year-end.
In addition, the minimum amounts that must be distributed in any year to avoid
the excise tax will be increased or decreased to reflect any underdistribution
or over distribution, as the case may be, from the previous year. The Portfolio
anticipates that it will pay such dividends and will make such distributions as
are necessary in order to avoid the application of this excise tax.
Although the Portfolio expects to be relieved of all or
substantially all federal income taxes, depending upon the extent of its
activities in states and localities in which its offices are maintained, in
which its agents or independent contractors are located or in which it is
otherwise deemed to be conducting business, that portion of the Portfolio's
income which is treated as earned in any such state or locality could be subject
to state and local tax. Any taxes paid by the Portfolio would reduce the amount
of income and gains available for distribution to shareholders.
If, in any taxable year, the Portfolio fails to qualify as a
regulated investment company under the Code or fails to meet the distribution
requirement, it would be taxed in the same manner as an ordinary corporation and
distributions to its shareholders would not be deductible by the Portfolio in
computing its taxable income. In addition, in the event of a failure to qualify,
the Portfolio's distributions, to the extent derived from the Portfolio's
current or accumulated earnings and profits, would constitute dividends
(eligible for the corporate dividends-received deduction) which are taxable to
shareholders as ordinary income, even though those distributions might otherwise
(at least in part) have been treated in the shareholders' hands as long-term
capital gains or tax-exempt interest income. If the Portfolio fails to qualify
as a regulated investment company in any year, it must pay out its earnings and
profits accumulated in that year in order to qualify again as a regulated
investment company. In addition, if the Portfolio failed to qualify as a
regulated investment company for a period greater than one taxable year, the
Portfolio may be required to recognize any net built-in gains with respect to
certain of its assets (the excess of the aggregate gains, including items of
income, over aggregate losses that would have been realized if it had been
liquidated) in order to qualify as a regulated investment company in a
subsequent year.
Investors in the Portfolio should be aware that it is possible
that some portion of the Portfolio's income from investments in obligations of
foreign banks could become subject to foreign taxes.
16
<PAGE>
While the Portfolio does not expect to realize net realized
capital gains, any such realized gains will be distributed as described in the
PROSPECTUS. Such distributions ("capital gain dividends") will be taxable to
shareholders as long-term capital gains, regardless of how long a shareholder
has held Portfolio shares, and will be designated as capital gain dividends in a
written notice mailed by the Portfolio to shareholders after the close of the
Portfolio's taxable year. Gain or loss, if any, recognized on the sale or other
disposition of shares of the Portfolio will be taxed as capital gain or loss if
the shares are capital assets in the shareholder's hands. Generally, a
shareholder's gain or loss will be a long-term gain or loss if the shares have
been held for more than one year. If a shareholder sells or otherwise disposes
of a share of the Portfolio before holding it for more than six months, any loss
on the sale or other disposition of such share shall be treated as a long-term
capital loss to the extent of any capital gain dividends received by the
shareholder with respect to such share.
A shareholder of the Portfolio receiving dividends or
distributions in additional shares should be treated for federal income tax
purposes as receiving a distribution in an amount equal to the amount of money
that a shareholder receiving cash dividends or distributions receives, and
should have a cost basis in the shares received equal to that amount.
Each shareholder of the Portfolio will receive an annual statement
as to the federal income tax status of his dividends and distributions from the
Portfolio for the prior calendar year. Furthermore, shareholders will also
receive, if appropriate, various written notices after the close of the
Portfolio's taxable year regarding the federal income tax status of certain
dividends and distributions that were paid (or that are treated as having been
paid) by the Portfolio to its shareholders during the preceding year.
If a shareholder fails to furnish a correct taxpayer
identification number, fails to report fully dividend or interest income, or
fails to certify that he has provided a correct taxpayer identification number
and that he is not subject to withholding, then the shareholder may be subject
to a 31% "backup withholding" tax with respect to taxable dividends and
distributions. An individual's taxpayer identification number is his social
security number. Corporate shareholders and other shareholders specified in the
Code are or may be exempt from backup withholding. The backup withholding tax is
not an additional tax and may be credited against a taxpayer's federal income
tax liability.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN MATERIAL TAX
CONSEQUENCES AFFECTING THE PORTFOLIO AND ITS SHAREHOLDERS.
SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS WITH
RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF AN
INVESTMENT IN THE PORTFOLIO.
DETERMINATION OF YIELD
From time to time, the Portfolio may quote its yield and effective
yield, in advertisements or in reports and other communications to shareholders.
The Portfolio's seven-day yield is calculated by (i) determining the net change
in the value of a hypothetical pre-existing account in the Portfolio having a
balance of one share at the beginning of a seven
17
<PAGE>
calendar day period for which yield is to be quoted, (ii) dividing the net
change by the value of the account at the beginning of the period to obtain the
base period return and (iii) annualizing the results (i.e., multiplying the base
period return by 365/7). The net change in the value of the account reflects the
value of additional shares purchased with dividends declared on the original
share and any such additional shares, but does not include realized gains and
losses or unrealized appreciation and depreciation. The Portfolio's seven-day
compound effective annualized yield is calculated by adding 1 to the base period
return (calculated as described above), raising the sum to a power equal to
365/7 and subtracting 1.
The Portfolio's yield will vary from time to time depending upon
market conditions, the composition of the Portfolio and operating expenses
allocable to it. Yield information may be useful in reviewing the Fund's
performance and for providing a basis for comparison with other investment
alternatives. However, the Portfolio's yield will fluctuate, unlike certain bank
deposits or other investments which pay a fixed yield for a stated period of
time. In comparing the Portfolio's yield with that of other money market funds,
investors should give consideration to the quality and maturity of the portfolio
securities of the respective funds.
INDEPENDENT ACCOUNTANTS AND COUNSEL
PricewaterhouseCoopers LLP ("PwC"), with principal offices at 2
Commerce Square, Suite 1700, 2001 Market Street, Philadelphia, Pennsylvania
19103, serves as independent accountants for the Fund. The financial statement
that is incorporated by reference into this Statement of Additional Information
have been audited by PwC and have been incorporated by reference herein in
reliance upon the report of such firm of independent accountants given upon
their authority as experts in accounting and auditing.
Willkie Farr & Gallagher serves as counsel for the Fund and
provides legal services from time to time for CSAM and CSAMSI.
FINANCIAL STATEMENT
Shares of the Portfolio have not been offered as of October 31,
2000, accordingly, no financial information is provided with respect to such
shares of the Portfolio.
18
<PAGE>
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Commercial paper rated A-1 by Standard & Poor's Ratings Services
("S&P") indicates that the degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted with a plus sign designation. Capacity for timely payment on commercial
paper rated A-2 is satisfactory, but the relative degree of safety is not as
high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned
by Moody's Investor Services, Inc. ("Moody's"). Issuers rated Prime-1 (or
related supporting institutions) are considered to have a superior capacity for
repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) are considered to have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is maintained.
Short term obligations, including commercial paper, rated A1 + by
IBCA are obligations supported by the highest capacity for timely repayment.
Obligations rated A1 have a very strong capacity for timely repayment.
Obligations rated A2 have a strong capacity for timely repayment, although such
capacity may be susceptible to adverse changes in business, economic or
financial conditions.
Fitch Investors Services, Inc. employs the rating F-1+ to indicate
issues regarded as having the strongest degree of assurance for timely payment.
The rating F-1 reflects an assurance of timely payment only slightly less in
degree than issues rated F-1+, while the rating F-2 indicates a satisfactory
degree of assurance for timely payment, although the margin of safety is not as
great as indicated by the F-1+ and F-1 categories.
Duff & Phelps, Inc. employs the designation of Duff 1 with respect
to top grade commercial paper and bank money instruments. Duff 1+ indicates the
highest certainty of timely payment: short-term liquidity is clearly outstanding
and safety is just below risk-free U.S. Treasury short-term obligations. Duff 1-
indicates high certainty of timely payment. Duff 2 indicates good certainty of
timely payment: liquidity factors and company fundamentals are sound.
A-1
