<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______________
COMMISSION FILE NO. 814-143
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC./MA
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 04-3369393
------------------------------------- ----------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
124 MT. AUBURN STREET, SUITE 200N CAMBRIDGE, MA 02138
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
617-576-5858
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
--------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
has been required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [] No [X ]
The registrant had six shareholders and 256.248 shares of common stock
outstanding as of August 31, 1998.
<PAGE> 2
INDEX
Access Capital Community Investment Fund, Inc.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Statements of Assets and Liabilities-
August 31, 1998
Statements of Operations - Three months
ended August 31, 1998
Statements of Changes in Net Assets -
Three months ended August 31, 1998
Financial Highlights - Three months ended
August 31, 1998
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
PART II. OTHER INFORMATION
Item 1. Legal proceedings
Item 2. Changes in securities
Item 3. Defaults upon senior securities
Item 4. Submission of matters to a vote of security holders
Item 5. Other information
Item 6. Exhibits and reports
Signatures
<PAGE> 3
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
AUGUST 31, 1998
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments, at market value (cost:$24,562,891.62) $ 25,146,061.90
Interest Receivable 1,091,843.04
---------------
Total Assets: $ 26,237,904.94
---------------
Liabilities:
Accrued expenses $ 28,706.37
---------------
Total Liabilities $ 28,706.37
---------------
Net Assets $ 26,209,198.57
Net Assets represented by:
Additional paid-in capital $ 25,624,837.76
Accumulated undistributed net investment income 245,851.11
Accumulated net realized loss (9,040.09)
Net unrealized appreciation on investments $ 347,549.53
Net assets $ 26,209,198.57
Net asset value per share $ 102,280.60
Shares outstanding 256.248
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
JUNE 23, 1998 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1998
INVESTMENT INCOME:
Interest $274,557.48
EXPENSES:
Administrative fee 1,484.81
Management fee 24,746.87
Custody fee 1,484.81
Organizational expense reimbursement fee 989.88
-----------
Total Expenses $ 28,706.37
NET INVESTMENT INCOME $245,851.11
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (9,040.09)
Change in unrealized appreciation of investments 347,549.53
-----------
Net realized and unrealized gain on investments $338,509.44
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $584,360.55
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
JUNE 23, 1998 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Net increase (decrease) in net assets:
Operations:
Net investment income $ 245,851.11
Net realized loss on investments (9,040.09)
Change in unrealized appreciation of investments 347,549.53
--------------
Increase in net assets resulting from operations $ 584,360.55
--------------
Distributions to shareholders from:
Net investment income -0-
--------------
Total distribution to shareholders -0-
--------------
Capital share transactions:
Proceeds from sale of shares $28,624,838.02
Shares redeemed (3,000,000.00)
--------------
Change in net assets resulting from
capital share transactions $25,624,838.02
Increase (decrease) in net assets $26,209,198.57
Net assets at beginning of period -0-
--------------
Net assets at end of period $26,209,198.57
==============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
JUNE 23, 1998 (COMMENCEMENT OF OPERATIONS) TO AUGUST 31, 1998
Per share operating performance:
Net asset value beginning of period $100,000.00
-----------
Income from investment operations:
Net investment income $ 959.62
Net realized and unrealized gain on investments $ 1,320.98
-----------
Total from investment operations $ 2,280.60
-----------
Less distributions from net investment income - 0 -
-----------
Net asset value end of period $102,280.60
Net Assets, end of period ($ Millions) $ 26.2
Ratio of Expenses to Average Net Assets 0.58%
Ratio of Net Investment Income to Average Net Assets 5.1%
Total return for period 2.28%
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. Basis Of Presentation
The accompanying unaudited condensed consolidated financial statements reflect
the results of operations for Access Capital Strategies Community Investment
Fund, Inc. and have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for annual financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals and
adjustments) considered necessary for a fair presentation have been included.
In preparing the financial statements, management is required to make estimates
and assumptions that effect the reported amounts of assets and liabilities as of
the date of the statement of assets and liabilities and revenues and expenses
for this period. Actual results could differ from those estimates; any such
differences are expected to be immaterial to the net assets of the Fund.
The Fund completed its organization and registration process in 1997 and early
1998 and commenced operations on June 23, 1998. This report covers the activity
from commencement of operations through the end of the Fund's first fiscal
quarter at August 31, 1998.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly report contains certain statements that may be considered
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. The Company's actual results could differ materially from those
projected in the forward-looking statements as a result of, among factors,
changes in interest rates, fluctuations in assets under management and other
sources of fee income, changes in assumptions used in making such
forward-looking statements.
OVERVIEW
Access Capital Strategies Community Investment Fund, Inc. (the "Fund") is a
non-diversified closed-end management company electing status as a business
development company. The Fund is structured to provide a secondary market for
special securities created to meet certain aspects of the Community Reinvestment
Act ("CRA"). Investors in the Fund must designate a particular geography within
the United States as part of their agreement to purchase Fund shares. The Fund's
Manager, Access Capital Strategies LLC ("Access"), agrees to invest only in
areas where Fund shareholders have made targeted designations. In addition to
their geographic specificity, Fund investments must be of U.S. Government Agency
or AAA credit quality and must support Community Reinvestment Activity.
COMPLIANCE
To qualify as a Regulated Investment Company, the Fund must, among other things,
satisfy a diversification standard under the Code such that, at the close of
each quarter of the Fund's taxable year, (i) not more than 25% of the value of
its total assets is invested in the securities (other than government securities
or securities of other RICs) of a single issuer, or two or more issuers which
the Fund controls (under a 20% test) and which are engaged in the same or
similar trades or business or related trades or businesses, and (ii) at least
50% of the market value of its total assets is represented by cash, cash items,
government securities, securities of other RICs and other securities (with each
investment in such other securities limited so that not more than 5% of the
value of the Fund's total assets is invested in the securities of a single
issuer and the Fund does not own more than 10% of the outstanding voting
securities of a single issuer).
<PAGE> 8
Management believes the Fund was in compliance with the above requirements for
the period ended August 31, 1998.
FUND OPERATIONS
INVESTMENT ACTIVITY
The Fund's initial investment was in a $25,281,046 original face hybrid
Adjustable Rate Mortgage Backed Security guaranteed by the Federal Home Loan
Mortgage Corp. The initial coupon rate was 6.042%. The bond equivalent yield to
maturity at purchase was 6.5% however the yield to reset was 5.39%. There were
no additional transactions other than short-term investment of portfolio income.
The Fund is permitted to use leverage in its investment program. There was no
leverage for the period ending August 31, 1998.
NET ASSETS AND FUND HOLDINGS AT AUGUST 31, 1998
At August 31, 1998 the Fund's Net Asset Value per share was $102,280.60 and net
assets totaled $26,209,199.
The Fund owned:
1 Federal Home Loan Mortgage Corp Adjustable Rate Mortgage Backed
Security in the amount of $24.9million
1 State Street Bank Repurchase Agreement in the amount of $234,000
INVESTMENT INCOME
The Fund had investment income net of all fees of $245,851 from June 23, 1998
(Commencement of Operations) to quarter end August 31, 1998.
MANAGEMENT FEES & EXPENSES
Access Capital Strategies LLC, the Fund's Manager is paid an annual management
fee, paid quarterly, of fifty basis points (0.50%) of the Fund's average monthly
gross assets less accrued liabilities, other than indebtedness for borrowing.
Access pays all expenses incurred for the organization and operation of the
Fund, including Custody of Fund assets. Access is reimbursed for these expenses
up to a total of eight basis points (0.08%) of the Fund's monthly net assets;
three basis points (0.03%) of the Fund's monthly net assets for Custody; three
basis points (0.03%) of the Fund's monthly net assets for Administration; and
two basis points (0.02%) of the Fund's monthly net assets as reimbursement for
organizational expenses.
From June 23, 1998 (Commencement of Operations) to August 31, 1998 the
Management Fee was $24,747 and the combined reimbursement fees were $3,960.
YIELD
For the quarter ending August 31, 1998 the SEC current yield was 5.11% and the
ratio of net investment income to average net assets was 5.1%.
REALIZED GAIN/LOSS
For the quarter ended August 31, 1998 the realized loss was $9,040 due to
paydowns.
DIVIDEND PAID
The Fund distributes to shareholders substantially all of its net investment
income and net realized capital gains, if any,
<PAGE> 9
as determined for income tax purposes. Applicable law, including provisions of
the 1940 Act, may limit the amount of dividends and other distributions payable
by the Fund. Substantially all of the Fund's net capital gain (the excess of net
long-term capital gain over net short-term capital loss) and the excess of net
short-term capital gain over net long-term capital loss, if any, are distributed
annually with the Fund's dividend distribution in December.
The Fund pays dividends on a calendar quarter. The Fund's initial dividend will
be paid subsequent to September 30, 1998.
TOTAL RETURN
For the quarter ended August 31, 1998 the total return was 2.28%.
FUND DESIGNATED TARGET REGIONS AT AUGUST 31, 1998
The Fund's Designated Target Regions ("DTRs") are provided by Fund shareholders
at the time of investment. At August 31, 1998 DTRs were:
<TABLE>
<CAPTION>
----------------------------------------- ---------------------------------
DTRS AMOUNT
----------------------------------------- ---------------------------------
<S> <C>
Boston & Cambridge, MA $500,000
----------------------------------------- ---------------------------------
Massachusetts 2,500,000
----------------------------------------- ---------------------------------
New England 25,623,838
----------------------------------------- ---------------------------------
TOTAL $28,623,838
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</TABLE>
FUND IMPACT PER THE COMMUNITY REINVESTMENT ACT.
The Fund invests in securities that support community development economic
activity as defined in the Community Reinvestment Act.
At August 31, 1998 the Fund's investments made loans to 226 homebuyers with
incomes below 80% of median income from the following states in the following
numbers.
Connecticut 13
Massachusetts 144
Rhode Island 69
----
226
LIQUIDITY DISCUSSION
SALE AND REDEMPTION OF FUND SHARES
Fund shares are sold only to qualified investors who complete a Subscription
Agreement.
On June 23, 1998 (Commencement of Operations), Access Capital Strategies, the
Fund's manager, purchased 0.01 shares of the Fund and the Fund commenced its
investment activities with an initial investment when one investor paid
$25,623,838 to purchase 256.238 shares of the Fund at a Net Asset Value per
share of $100,000. All investors in the Fund must provide a Designated Target
Region as the desired location for their investment; the initial investor
designated the region of New England.
<PAGE> 10
On August 4,1998 four investors purchased a total of 29.735 shares at a Net
Asset Value per share of $100,892.72 resulting in total new proceeds of
$3,000,000. These investors designated Massachusetts as their Designated Target
Regions.
As discussed in the Private Offering Memorandum, the Fund allows shareholders to
redeem their shares in accordance with Rule 23c-3 of the Investment Company Act
of 1940.
On August 4, 1998, one investor redeemed 29.735 Fund shares at a Net Asset Value
per share of $100,892.72.
ITEM 3:
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A full discussion of the risks associated with ownership of Fund shares appears
in the Fund's Private Offering Memorandum. The Fund's market risks may be
summarized as follows:
CREDIT RISK. All investments made by the Fund must be in securities of Agency or
AAA credit quality. Fund investments will typically have one or more form of
Agency or AAA credit enhancement. All credit risk of default will be borne by
the credit enhancer.
LIQUIDITY RISK. Securities purchased by the Fund will be privately placed debt
instruments. The market for resale of these securities may be limited.
Furthermore, the Fund may pay a premium for securities with special CRA
characteristics purchased without any assurance that a comparable premium can be
received upon sale of the security.
INTEREST RATE RISK. The Fund will generally invest in fixed rate investments
that have their market values directly affected by changes in prevailing
interest rates. An increase in rates will generally reduce the value of Fund
investments and a decline in interest rates will generally increase the value of
those investments. There may be exceptions due to shifts in the yield curve, the
performance of individual securities and other market factors.
Market Risk Associated with Fund portfolio holdings at August 31, 1998:
<TABLE>
<CAPTION>
---------------------------------- ---------------------------------------------- ------------------------------------------
INVESTMENTS (AT MARKET) Variable Rate Fixed Rate
---------------------------------- ---------------------------------------------- ------------------------------------------
<S> <C> <C>
Maturities less than 1 year - $1,620.75 cash
$234,000 State Street repurchase
agreement
---------------------------------- ---------------------------------------------- ------------------------------------------
Maturities (or weighted average - $24,910,441.15 hybrid Fed Home Loan
lives) greater than 1 year less Adjustable Rate MBS
than 7
---------------------------------- ---------------------------------------------- ------------------------------------------
Maturities (or weighted average - -
lives) greater than 7 year less
than 10
---------------------------------- ---------------------------------------------- ------------------------------------------
Maturities (or weighted average - -
lives) greater than 10 years
---------------------------------- ---------------------------------------------- ------------------------------------------
TOTAL $25,146,062
---------------------------------- ---------------------------------------------- ------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------- -------------------------------- ---------------
BORROWINGS Variable Rate Fixed Rate
--------------------------------------------------------------------------- -------------------------------- ---------------
<S> <C> <C>
Maturities less than 1 year - -
--------------------------------------------------------------------------- -------------------------------- ---------------
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
--------------------------------------------------------------------------- -------------------------------- ---------------
<S> <C> <C>
Maturities (or weighted average lives) greater than 1 year less than 7 - -
--------------------------------------------------------------------------- -------------------------------- ---------------
Maturities (or weighted average lives) greater than 7 year less than 10 - -
--------------------------------------------------------------------------- -------------------------------- ---------------
Maturities (or weighted average lives) greater than 10 years - -
--------------------------------------------------------------------------- -------------------------------- ---------------
</TABLE>
All Fund activities occur in U.S. dollars.
<PAGE> 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not involved in any pending legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports
The following Exhibits are filed as part of this Report:
(a) (1) N/A
(2) None
(3) (i) Articles of Incorporation
(ii) By-Laws
(4) N/A
(5) N/A
(8) N/A
(9) None
(10) (i) Private Offering Memorandum
(iii) (A)Management Agreement
(11) N/A
(12) N/A
(13) N/A
(15) N/A
(16) None
(17) N/A
(18) None
(19) N/A
(20) N/A
(21) None
(22) None
(23) None
(24) N/A
(25) N/A
(26) N/A
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
December 18, 2000 /S/ RONALD A. HOMER
---------------------------------
Ronald A. Homer
Chairman of the Board of Directors
December 18, 2000 /S/ KEVIN J. MULVANEY
---------------------------------
Kevin J. Mulvaney
Director
December 18, 2000 /S/ PETER BLAMPIED
----------------------------------
Peter Blampied
Director
December 18, 2000 /S/ DAVID F. SAND
----------------------------------
David F. Sand
Chief Executive Officer, Principal Financial Officer,
Principal Accounting Officer
