<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 FEBRUARY 29, 2000
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
----------------------------------------------------------------
(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
----------------------------------------------------------------
(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 fifteen shareholders and 486.697 shares of common stock
outstanding as of February 29, 2000.
<PAGE> 2
INDEX
Access Capital Community Investment Fund, Inc.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Statements of Assets and Liabilities-
February 29, 2000, May 31, 1999 and February
28, 1999
Statements of Operations - Three months
ended February 29, 2000 and 1999 Nine months
ended February 29, 2000 and 1999
Statements of Changes in Net Assets -
Three months ended February 29, 2000 and
February 28, 1999 Nine months ended February
29, 2000 and February 28, 1999
Financial Highlights - Three months ended
February 29, 2000, and February 28, 1999
Nine months ended February 29, 2000 and
February 28, 1999
Notes to Consolidated 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.
STATEMENTS OF ASSETS AND LIABILITIES
(UNAUDITED)
<TABLE>
<CAPTION>
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
February 29,2000 May 31, 1999 February 28, 1999
-------------------------------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Investments, at market value (cost: $51,676,165.37 $24,926,915.00 $24,318,525.19
$52,844,389.26)
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Interest Receivable $360,653.04 $540,615.00 $1,262,772.31
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Total Assets: $52,036,818.41 $25,467,530.00 $25,581,297.50
-------------- -------------- --------------
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Accrued expenses $36,946.00 $24,754.00 $23,973.36
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Reverse repurchase agreement $5,404,387.52 0 0
------------- -
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Total Liabilities $5,441,333.52 0 $23,973.36
------------- -
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Net Assets $46,595,484.89 $24,754.00 $25,557,324.14
----------
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
NET ASSETS REPRESENTED BY:
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Paid-in capital $47,629,177.63 $25,624,837.00 $25,624,837.76
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Accumulated undistributed net $429,191.65 $222,475.00 $208,241.89
investment income
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Accumulated net realized (loss) -294,660.50 -74,875.00 -46,581.97
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Net unrealized appreciation/ -1,168,223.89 -329,661.00 -229,173.54
(depreciation) on investments
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Net assets $46,595,484.89 $25,442,776.00 $25,557,324.14
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Net asset value per share $95,738.18 $99,288.88 $99,735.90
--------------------------------------- ---------------------------- ------------------------------ --------------------------------
Shares outstanding 486.697 256.248 256.248
------------------------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
December 1, 1999 December 1, 1998 to June 1,1999 to June 23,1998
to February 29,2000 February 28, 1999 February 29, 2000 (Commencement of
Operations) to
February 28, 1999
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Interest $817,906.11 $353,172.31 $1,808,223.28 $993,242.26
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
EXPENSES:
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Administrative fee $2,641.62 $1,905.90 $6,611.29 $5,345.03
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Management fee $44,026.97 $31,765.00 $110,188.19 $89,083.73
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Custody fee $2,641.62 $1,905.90 $6,611.29 $5,345.02
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Organizational expense $1,761.08 $1,270.60 $4,407.53 $3,563.35
reimbursement fee --------- --------- --------- ---------
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Total Fee Expenses $51,071.29 $36,847.40 $127,818.30 $103,337.13
-----------
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Interest expense $103,226.06 0 $211,013.62 0
----------- - -----------
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Total Expenses $154,297.35 $36,847.40 $338,831.92 $103,337.13
---------- -----------
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
NET INVESTMENT INCOME: $663,608.76 $316,324.91 $1,469,391.36 $889,905.13
----------- ----------- ------------- -----------
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Net realized gain/(loss) on -143,190.33 -23,684.08 -219,785.81 -46,581.97
investments
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
Change in unrealized -555,927.36 -130,822.79 -838,562.43 -229,173.80
appreciation/(depreciation) ---------- ----------- ----------- -----------
of investments
------------------------------------------------- ------------------------------ ----------------------------- ---------------------
Net realized and unrealized -699,117.69 -154,506.87 -1,058,348.24 -275,755.77
gain/ (loss) on investments
---------------------------- -------------------- ------------------------------ ----------------------------- ---------------------
NET INCREASE/(DECREASE) IN -35,508.93 $161,818.04 $411,043.12 $614,149.36
NET ASSETS RESULTING FROM
OPERATIONS
------------------------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
--------------------------- --------------------------- ------------------------- ----------------------- ---------------
December 1, 1999 to December 1, 1998 to June 1,1999 to June 23, 1998
February 29, 2000 February 28, 1999 February 29,2000 (Commencement of
Operations) to
February 28, 1998
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net increase (decrease) in
net assets:
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
OPERATIONS:
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Net investment income $663,608.76 $316,324.91 $1,469,391.36 $889,905.13
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Net realized gain/(loss) on -143,190.33 -23,684.08 -219,785.81 -46,581.97
investments
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Change in unrealized -555,927.36 -130,822.79 -838,562.43 -229,173.80
appreciation/(depreciation) ----------- ----------- ----------- -----------
of investments
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Increase/(decrease) in net -35,508.93 $161,818.04 $411,043.12 $614,149.36
assets resulting from
operations
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Distribution to shareholders $532,609.92 $325,552.83 $1,262,674.82 $681,663.24
from net investment income ----------- ----------- ------------- -----------
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Total distribution to $532,609.92 $325,552.83 $1,262,674.82 $681,663.24
shareholders ----------- ----------- ------------- -----------
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
CAPITAL SHARE TRANSACTIONS:
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Proceeds from sale of $18,824,396.92 0 $22,074,396.94 $34,124,838.02
shares
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Reduction in capital for -70,056.80 0 -70,056.80 0
dividend equalization ---------- - ---------- -
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Shares redeemed 0 0 0 -8,500,000.00
- - - -------------
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Change in net assets $18,754,340.12 0 $22,004,340.14 $25,624,838.02
resulting from capital
share transactions
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Increase (decrease) in net $18,186,221.27 -163,734.79 $21,152,708.44 $25,557,324.14
assets
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
Net assets at beginning of $28,409,263.62 $25,721,058.93 $25,442,776.45 0
period -------------- -------------- -------------- -
--------------------------- --------------------------- ------------------------- ----------------------- --------------------------
NET ASSETS AT END OF PERIOD $46,595,484.89 $25,557,324.14 $46,595,484.89 $25,557,324.14
------------------------------------------------------------------------------------------------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
ACCESS CAPITAL STRATEGIES COMMUNITY INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
------------------------------- ------------------------ ---------------------------- ------------------------ ---------
December 1, 1999 to December 1, 1998 to June 1, 1999 to June 23,1998
February 29, 2000 February 28, 1999 February 29,2000 (Commencement of
Operations) to
February 28,1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Net asset value beginning of $98,079.66 $100,374.86 $99,288.88 $100,000.00
period ---------- -----------
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Net investment income $1,410.21 $1,234.44 $4,362.91 $3,472.80
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Net realized and unrealized -2,193.85 -602.95 -3,564.34 -1,076.75
gain/(loss)
on investments --------- ------- --------- ---------
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Total from investment operations -783.64 $631.49 $798.57 $2,396.05
------- ------ ------- ---------
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Less distributions from net $1,557.84 $1,270.46 $4,349.27 $2,660.17
investment income --------- -------- --------- ---------
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Net asset value end of period $95,738.18 $99,735.90 $95,738.18 $99,735.90
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Net Assets, end of period $46.6 $25.6 $46.6 $25.6
($ Millions)
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Ratio of expenses to average 0.58% 0.58% 0.58% 0.58%
net assets
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Ratio of net Investment Income 6.70% 4.98% 6.36% 4.65%
to average net assets
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
Total return for period -0.82% 0.63% 0.72% 2.36%
------------------------------- ------------------------ ---------------------------- ------------------------ --------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<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-QSB 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 complete 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.
The results of operations and other data for the three months ended February 29,
2000 are not necessarily indicative of the results that may be expected for any
other interim period or fiscal year ending May 31, 2001. The information in this
report should be read in conjunction with the financial statements and
accompanying notes included in the May 31, 1999 Annual Report on Form 10-K. The
Fund has not changed its accounting and reporting policies from those disclosed
in its May 31, 1999 financial statements.
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 the period. Actual results could differ from those estimates; any such
differences are expected to be immaterial to the net assets of the Fund.
This report covers the activity from December 1, 1999 to February 29, 2000.
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, as well as the factors
listed under "Risk Factors and Factors Affecting Forward Looking
Statements" in the Company's Annual Report on Form 10-K for the year ended
May 31, 2000.
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
<PAGE> 8
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).
Management believes the Fund was in compliance with the above requirements for
the period ended February 29, 2000.
FUND OPERATIONS
INVESTMENT ACTIVITY
During the quarter, the Fund purchased $25,957,770 in new securities with yields
to maturity of 7% to 7.99%. In the year ago quarter ended February 28, 1999
there were no transactions other than short-term investment of portfolio income.
The Fund exchanged its position in ten small FannieMae 6 1/2% Mortgage Backed
Securities for one $11 million FannieMae MEGA MBS. FannieMae received a fee of
$11,241 for this transaction.
The Fund sold its remaining position, $8,896,046, in a Federal Home Loan
Adjustable Rate MBS in February 2000 for a realized loss of $153,074.
The Fund is permitted to use leverage in its investment program. For the period
ended February 29, 2000 the Fund averaged $7.1 million in borrowings at an
average rate of 5.47%. There was no use of leverage in the year ago quarter. The
total proceeds from borrowings were used to support additional investments in
the Fund's Designated Target Regions.
NET ASSETS AND FUND HOLDINGS AT FEBRUARY 29, 2000
At February 29, 2000 the Fund's Net Asset Value was $46.6 million, or $95,738.18
per share. At the year ended May 31, 2000 the Net Asset Value was $25.4 million,
or $99,288.88 per share. A year ago at February 28, 1999 the Fund's Net Asset
Value was $25.6 million, or $99,735.90 per share.
The $21.2 million, or 83% year to date increase in assets was due to the $22.1
million in new shares sold less the loss for the period.
For the quarter ended February 29, 2000 the Net Asset Value per share of
$95,738.18 represented a decrease of $3550.70 or -3.6% from the year ended May
31,1999 Net Asset Value per share of $99,288.88 and a decrease of $3,998, or
-4.0%, from the year ago February 28, 1999 Net Asset Value per share of
$99,735.90. The declines in net asset values for both the nine-month period and
the year were due to the negative effect that rising rates had on the market
values of the Fund's fixed rate investments.
The Fund owned:
1 Taxable municipal bond in support of affordable housing in the amount of
$1.28 million
2 FannieMae multi-family MBS with prepayment protection in the aggregate
amount of $2.5 million
41 Fixed Rate U.S. Agency Mortgage Backed Securities in the aggregate amount
of $47.9 million
1 State Street Bank Repurchase Agreement in the amount of $5,587
INVESTMENT INCOME
The Fund had investment income net of all fees (as discussed below) of $663,609
for the quarter ended February 29, 2000, representing a 110% increase from the
year-ago period ended February 28, 1999 when the Fund had investment
<PAGE> 9
income of $316,325. This increase was attributable to a combination of factors
including a lengthening of maturities and an 82% increase in average net assets
invested at higher yields for the quarter ended February 29, 200 compared to the
quarter ended February 28, 1999.
The Fund had investment income net of all fees (as discussed below) of
$1,469,391 for the nine month period ended February 29, 2000, representing a 65%
increase from the year ago eight month period ended February 28, 1999 when the
Fund had investment income of $889,905. This increase is attributable to a
combination of factors including 22 more days in the current period, a
lengthening of maturities and an increase in yields due to the sale of the
Fund's ARM securities and reinvestment in fixed rate securities and a 14%
increase in average net assets invested in a higher interest environment for the
nine months ended February 29, 2000 compared to the eight months ended February
28, 1999.
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.
For the quarter ended February 29, 2000, the Management Fee was $44,027 and the
combined reimbursement of fees for operating expenses were $7,044. From December
1, 1998 to February 28, 1999, the Management Fee was $31,765 and the combined
reimbursement of fees for operating expenses was $5,082. These increases were
due to increases in the net assets of the Fund.
For the nine months ended February 29, 2000 the Management Fee was $110,188 and
the combined reimbursement fees of operating expenses were $17,630. For the
eight month period ended February 28, 1999 The Management Fee was $89,084 and
the combined reimbursement fees were $14,253. These increases were due to
increases in the net assets of the Fund.
YIELD
For the quarter ending February 29, 2000 the SEC current yield was 7.03%
compared to SEC yield of 4.87% for the year ago period ending February 28, 1999.
The increase is due to higher interest rates. For the nine months ended February
29, 2000 the ratio of net investment income to average net assets was 6.36%
compared to 4.65% for the similar period ended February 28, 1999.The increase
was due to the switch from an all ARM portfolio of securities in the year ago
period to an all fixed rate portfolio of securities in the current period.
REALIZED GAIN/LOSS
For the quarter ended February 29, 2000, the realized loss was $143,190 compared
to a realized loss of $23,684 in the comparable year ago period. The increase in
realized loss is due to the disposition during the quarter of the Fund's
remaining position in its initial purchase of a FreddieMac adjustable rate
mortgage backed security in addition to paydown losses, all attributable to a
rise in interest rates during the time period.
For the nine months ended February 29, 2000 the realized loss was $219,786
compared to a realized loss of $46,582 in the comparable eight month period a
year ago. The increase in realized loss is due to the disposition during the
period of the Fund's remaining position in its initial purchase of a FreddieMac
ARM MBS in addition to pay down losses, all attributable to a rise in interest
rates during the time period.
<PAGE> 10
DIVIDEND PAID
The Fund distributes to shareholders substantially all of its net investment
income and net realized capital gains, if any, 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, will be distributed annually with the
Fund's dividend distribution in December.
The Fund pays dividends on a calendar quarter, the Fund paid a quarterly
dividend of $1,557.84 per share on December 30, 1999 to shareholders of record
December 30, 1999. A year ago, the Fund paid a quarterly dividend of $1,270.46
per share on December 31, 1998 to shareholders of record December 30, 1998. The
higher dividend is attributable to higher yields in the portfolio as a result of
lengthening of the Fund's average maturities in its investments and the higher
yields obtained from investments of prepayments and proceeds from sales and new
share purchases.
The Fund paid three quarterly dividends totaling $4,349.24 per share during the
nine-month period ending February 29, 2000. A year ago, the Fund paid two
quarterly dividends totaling $2660.17. The proportionally higher dividends are
attributable to higher yields in the portfolio as a result of a lengthening of
the Fund's average maturity in its investments and the higher yields obtained
from investment of prepayments and proceeds from sales and new share purchases.
TOTAL RETURN
For the nine-month period ended February 29, 2000 the total return was 0.72%
compared to a total return of 2.36% in the comparable year ago eight month
period. The difference is attributable to an increase in interest rates and a
corresponding decline in the market values for fixed rate MBS partially offset
by increased investment income.
FUND DESIGNATED TARGET REGIONS AT FEBRUARY 29, 2000
The Fund's Designated Target Regions ("DTRs") are provided by Fund shareholders
at the time of investment. At February 29, 2000 DTRs were:
---------------------------------- -------------------------------------------
DTRS AMOUNT
---------------------------------- -------------------------------------------
Boston & Cambridge, MA $500,000
---------------------------------- -------------------------------------------
California 5,000,000
---------------------------------- -------------------------------------------
Texas/Louisiana 2,055,570
---------------------------------- -------------------------------------------
Massachusetts 10,250,000
---------------------------------- -------------------------------------------
New England 17,123,838
---------------------------------- -------------------------------------------
New Jersey/NY/DC 10,261,245
---------------------------------- -------------------------------------------
Texas 2,507,581
---------------------------------- -------------------------------------------
TOTAL $47,698,234
---------------------------------- -------------------------------------------
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 February 29, 2000 the Fund's investments made loans to 804 homebuyers with
incomes below 80% of median income from the following states in the following
numbers.
<PAGE> 11
California 49
Connecticut 74
Louisiana 16
Massachusetts 451
New Jersey 27
New York 51
Rhode Island 76
Texas 53
Washington, D.C. 7
-----
804
The Fund's investments made loans to sponsors of 178 multi-family affordable
housing rental units in Low Income Housing Tax Credit or HUD insured subsidized
properties from the following states in the following amounts.
California 152
New York 26
----
178
The Fund also owned a U.S. Housing & Urban Development guaranteed security
supporting community development in low-income areas of Boston, Massachusetts
LIQUIDITY DISCUSSION
SALE AND REDEMPTION OF FUND SHARES
Fund shares are sold only to qualified investors who complete a Subscription
Agreement. All investors in the Fund must provide a Designated Target Region as
the desired location for their investment.
During the nine-month period ending February 29, 2000 the Fund sold 230.449 new
shares for a proceeds of $18,824,396 to eight new investors. The new investors
chose Designated Target Regions of Massachusetts, New York, New Jersey,
Washington D.C., California, Texas, and Louisiana. In the year ago period from
inception to February 28, 1999 there were 340.41 shares sold for a total of
$34.12 million.
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.
There were no redemptions of Fund shares during this period. There were 84.16
shares redeemed for a total of $8.5 million in the year ago period from
inception on June 23,1998 through February 28,1999.
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.
<PAGE> 12
LIQUIDITY RISK. Securities purchased by the Fund will generally 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 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.
<PAGE> 13
<TABLE>
<CAPTION>
Market Risk associated with Fund portfolio holdings at February 29, 2000:
------------------------------------------- ------------------------------------- ------------------------------------------------
<S> <C> <C>
Investments (at market) Variable Rate Fixed Rate
------------------------------------------- ------------------------------------- ------------------------------------------------
Maturities less than 1 year - $5,586.88 State Street repurchase agreement
------------------------------------------- ------------------------------------- ------------------------------------------------
Maturities (or weighted average lives) - -
greater than 1 year less than 7
------------------------------------------- ------------------------------------- ------------------------------------------------
Maturities (or weighted average lives) - $1,382,489.68 FannieMae 6% MBS
greater than 7 years less than 10 $11,058,587.68 FannieMae 6 1/2% MBS
$1,028,542.33 FreddieMac 6 1/2% MBS
$1,777,126.18 FannieMae 6.84% MBS
$1,275,681.00 US Gov't 6.85% HUD note
$9,698,276.14 FannieMae 7% MBS
$3,965,124.54 FreddieMac 7% MBS
$576,257.29 FannieMae 7.09% MBS
$81,205.62 FannieMae 7 1/4% MBS
$453,427.96 FannieMae 7.44% MBS
$4,560,231.67 FreddieMac 7 1/2% MBS
$13,313,178.15 FannieMae 7 1/2% MBS
------------------------------------------- ------------------------------------- ------------------------------------------------
Maturities (or weighted average - $254,746.91 FannieMae 6.53% Multi-family
lives) greater than 10 years housing MBS
$2,245,702.78 FannieMae 7.9% Multi-family
housing MBS
----------------------------------------------------------------------------------------------------------------------------------
TOTAL $51,676,165
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------ ---------------------- -----------------------------------
Borrowings Variable Rate Fixed Rate
------------------------------------------------------------------------ ---------------------- -----------------------------------
<S> <C> <C>
Maturities less than 1 year ($5,400,000.00) Reverse
repurchase agreement with State
Street Bank
------------------------------------------------------------------------ ---------------------- -----------------------------------
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 - -
------------------------------------------------------------------------ ----------------------------------------------------------
TOTAL ($5,400,000)
------------------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
All Fund activities occur in U.S. dollars.
<PAGE> 14
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) Incorporated by Reference from an exhibit filed in Form
10-Q for the period ended August 31, 1998
(ii) Incorporated by Reference from an exhibit filed in Form
10-Q for the period ended August 31, 1998
(4) N/A
(5) N/A
(8) N/A
(9) None
(10) (i) Incorporated by Reference from an exhibit filed in Form
10-Q for the period ended August 31, 1998
(iii)(A)Incorporated by Reference from an exhibit filed in Form
10-Q for the period ended August 31, 1998
(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) None
(25) N/A
(26) N/A
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
<PAGE> 15
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