CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
SEMI-ANNUAL REPORT
APRIL 30, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
CIIT CHAIRMAN'S SEMI-ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
It has been an exciting six months for the Cadre Liquid Asset Fund - U.S.
Government Series (the "Fund"), including the implementation of a Master/Feeder
structure for the Fund and new Internet based functionality. In addition, the
Fund has continued to maintain an attractive rate of return versus industry
averages, while maintaining safety of principal and liquidity as our cornerstone
objectives.
In order to grow the Fund to meet our clients' various investment needs, the
Board of Trustees authorized the creation of a Master/Feeder structure through
the introduction of the U.S. Government Money Market Portfolio, a master
portfolio through which the Liquid Asset Fund, now a feeder series, can invest.
In addition, the Board has authorized the offering of two additional series of
the Fund, the Cadre Reserve Fund - U.S. Government Series and the Cadre Affinity
Fund - U.S. Government Series, which are also feeder series and are available to
shareholders. By creating the Master/Feeder arrangement, we should be able to
offer more competitive rates of return since shareholders will be able to choose
the investment vehicle that more precisely meets their individual investment
needs.
Several significant technology enhancements were provided through Cadre
Financial Services, Inc., our investment advisor and administrator. Topping the
list is our new Internet information service called compass. This enhancement
brings Internet functionality to the Fund and enables shareholders to look at
historical rates and Fund information, check account balances, view daily and
monthly statements, and review transaction history and wiring instructions.
Ultimately, this Internet tool will enable shareholders to perform account
transfers and record deposits directly online.
Throughout 1999, the Trustees have monitored the Year 2000 readiness of its
various service providers. Your Trustees continue to exercise diligent oversight
of its contractors' testing results and contingency arrangements throughout the
rest of 1999. In addition, Cadre will provide you with updated Year 2000
Readiness Disclosure reports throughout the year, which are also available on
Cadre's web site, www.ambac-cadre.com. Cadre will also issue a final readiness
report in December 1999.
Finally, on behalf of the Cadre Institutional Investors Trust Liquid Asset Fund
Board of Trustees, we thank you for your continued support and confidence in our
ability to continue to develop and improve our product offerings that will
permit your entity to "maximize" its income potential while maintaining safety
of principal, liquidity, and yield.
William T. Sullivan, Jr.
Chairman, President and Chief Executive Officer
Cadre Institutional Investors Trust
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
THE FEDERAL RESERVE
Although the Federal Reserve at its May 18th Federal Open Market Committee
("FOMC") meeting decided to leave the overnight funds rate unchanged at 4.75%,
it did adopt a bias toward tightening. The Fed issued a 134 word statement which
stated that "the Committee was concerned about the potential buildup of
inflationary imbalances that could undermine the favorable performance of the
economy." The Fed stated that although inflation has "generally remained quite
subdued, domestic financial markets have recovered and foreign economic
prospects have improved since the easing of monetary policy last fall." The Fed
also cited concern over tight labor markets and continued strength in demand in
excess of productivity gains. Chairman Alan Greenspan began preparing the
financial markets for the change in directive with a May 6th speech in which he
warned of inflationary pressures. This speech combined with a worse than
expected reading for April's Consumer Price Index ("CPI") sparked speculation
that the Fed would adopt a tightening bias. However, only sixteen of the thirty
top bond trading firms surveyed expected the Fed to adopt a tightening bias.
OVERVIEW
CPI in April rose .7%, the largest monthly gain in nearly nine years. Energy
prices rose 6.1%. The alarming part of the release was in the core CPI.
Excluding the volatile food and energy component, consumer prices rose .4%, the
biggest monthly increase in more than four years. Furthermore, the increase
occurred in a number of different categories including housing, clothing,
tobacco, medical care and airfares. Although this increase is alarming, CPI has
increased only 2.3% on a year over year ("yoy") basis, and at the wholesale
level, inflation appears to be absent as evidenced by 1.1% yoy increase in the
Producer Price Index
The economy continued to show resilience. First quarter GDP increased at a 4.5%
annual rate from the Fourth quarter's torrid pace of 6.1%. Consumer spending,
which accounts for two thirds of economic activity, posted its largest gain in
eleven years rising at an annual rate of 6.7%.
In April, the economy added 234,000 jobs. Despite a tight labor market, as
evidenced by an unemployment rate of 4.3%, wages are decelerating. In April,
average hourly earnings rose at a 3.2% yoy rate as opposed to 4.4% a year
earlier. Further evidence can be found in the employment cost index, which was
up .4% in the first quarter, the smallest rise on record. The recent strong
growth in productivity has been critical to the combination of low unemployment
and low inflation. Productivity grew at a 4% rate in the first quarter after
increasing at a 4.3% rate in the fourth quarter and is up 2.8% from a year ago.
However, as Chairman Greenspan pointed out in his May 6th speech, even if
productivity growth stabilizes at current levels inflationary pressures could
emerge as businesses raise prices to maintain profit margins.
OUTLOOK
The Fed's decision to adopt a tightening bias does not mean that higher rates
are a definite. Under Chairman Greenspan, the Fed has ended 29 of its meetings
with a tightening bias. In approximately half of the instances, rates were
lifted within six months. In March of 1998, the Fed adopted a tightening bias
and actually lowered rates 75 basis points over a span of six weeks in response
to the global financial
2
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
ECONOMIC OVERVIEW (CONTINUED)
- --------------------------------------------------------------------------------
crisis. However, since the Fed now announces bias changes at the end of FOMC
meetings, a change in bias is a more powerful tool to signal future policy
changes. According to the minutes of the March 30th FOMC meeting, in which the
Fed maintained a neutral bias, many members "believed that the next policy move
likely would be in the direction of some tightening, such an outcome was not a
forgone conclusion, and in any event the timing of the next policy action was
highly uncertain. It also was noted that a biased directive would not be
consistent with the members' view that a policy adjustment was unlikely in the
period just ahead."
It is possible to infer that a tightening bias was adopted on May 18th because a
tightening was generally foreseen as a forgone conclusion and that a tightening
was viewed in the period just ahead. Therefore, the probability that the Fed
will raise rates in the months ahead has increased significantly. Since the Fed
will want to be accommodative to prevent a liquidity crisis as we approach Y2K,
if the Fed is to raise rates, it will probably occur before the fourth quarter
of 1999.
3
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. Donald E. Gray, Jr. C.G.F.M.
Chairman and Trustee Trustee
David L. Boyle C. Roderick O'Neil
Trustee Trustee
Martin G. Flanigan William J. Reynolds
Treasurer Trustee
Russell E. Galipo Anne E. Gill, Esq.
Trustee Secretary
Harvey A. Fein Dr. Don I. Tharpe
Trustee Trustee
Michael P. Flanagan
Trustee
INVESTMENT ADVISOR/ADMINISTRATOR/TRANSFER AGENT
Cadre Financial Services, Inc.
905 Marconi Avenue
Ronkonkoma, New York 11779
DISTRIBUTOR
Cadre Securities, Inc.
905 Marconi Avenue
Ronkonkoma, New York 11779
CUSTODIAN
US Bank
US Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP
757 Third Avenue
New York, New York 10017
LEGAL COUNSEL
Schulte, Roth & Zabel
900 Third Avenue
New York, New York 10022
4
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in Cadre Institutional Investors Trust --
U.S. Government Money Market
Portfolio, at value $26,052,733
Other receivable 12,417
Prepaid expenses 9,356
-----------
Total Assets 26,074,506
-----------
LIABILITIES:
Administration fees payable 2,422
Transfer agent fees payable 3,653
Accrued trustees' fees and expenses 18,991
Other accrued expenses 46,732
-----------
Total Liabilities 71,798
-----------
NET ASSETS $26,002,708
===========
Shares of beneficial interest outstanding 26,002,313
===========
NET ASSET VALUE,
OFFERING AND REDEMPTION PRICE PER SHARE
(NET ASSETS/SHARE OUTSTANDING) $ 1.00
===========
NET ASSETS CONSIST OF:
Common Stock, at par value $ 26,002
Paid-in-capital in excess of par value 25,976,311
Accumulated net realized gain on investment
securities transactions 395
===========
NET ASSETS $26,002,708
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT U.S
GOVERNMENT MONEY MARKET PORTFOLIO
<S> <C>
Interest $ 1,151,554
Total expenses 32,948
-----------
NET INVESTMENT INCOME FROM CIIT U.S.GOVERNMENT MONEY
MARKET PORTFOLIO 1,118,606
INVESTMENT INCOME NOT ATTRIBUTABLE TO INVESTMENT IN CIIT U.S.
GOVERNMENT MONEY MARKET PORTFOLIO
Interest income 660,890
-----------
TOTAL INVESTMENT INCOME 1,779,496
EXPENSES:
Administration fees $ 55,211
Investment advisory fees 20,041
Transfer agent fees 18,223
Trustees' fees and expenses 10,017
Rating agency fees 5,822
Audit fees 5,524
Legal fees 1,800
Other expenses 17,444
-----------
Total expenses 134,082
Less: Fee waiver (6,313)
-----------
Net expenses 127,769
-----------
NET INVESTMENT INCOME 1,651,727
Net realized gains on investments/securities sold (Note 2) 601
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,652,328
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX YEAR ENDED
MONTHS ENDED OCTOBER 31,
APRIL 30, 1999 1998
-------------- -------------
OPERATIONS:
<S> <C> <C>
Net investment income $ 1,651,727 $ 5,523,795
Net realized gains on investment securities transactions 601 --
------------- -------------
Net increase in net assets resulting from operations 1,652,328 5,523,795
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (1,651,727) (5,523,795)
------------- -------------
SHARE TRANSACTIONS:
Net proceeds from sales of shares 154,755,312 365,846,598
Net asset value of shares issued to shareholders in
reinvestment of dividends 1,651,727 5,523,795
Cost of shares redeemed (228,633,581) (411,802,360)
------------- -------------
Net decrease in net assets resulting from share transactions (72,226,542) (40,431,967)
------------- -------------
Net decrease in net assets (72,225,941) (40,431,967)
------------- -------------
NET ASSETS:
Beginning of period 98,228,649 138,660,616
============= =============
End of period $ 26,002,708 $ 98,228,649
============= =============
OTHER INFORMATION:
Share Transactions:
Shares sold 154,755,312 365,846,598
Shares issued to shareholders in reinvestment of
Dividends 1,651,727 5,523,795
Shares repurchased (228,633,581) (411,802,360)
============= =============
Net decrease in shares outstanding (72,226,542) (40,431,967)
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Cadre Institutional Investors Trust (the "Trust") (formerly known as Ambac
Treasurer's Trust), was organized in April, 1996 as a Delaware business trust
and is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended, (the "1940 Act"). The Trust is
comprised of ten series as follows: Cadre Liquid Asset Fund - U.S. Government
Series, Cadre Liquid Asset Fund - Money Market Series, Cadre Affinity Fund -
U.S. Government Series, Cadre Affinity Fund Money Market Series, Cadre Reserve
Fund - U.S. Government Series, Cadre Reserve Fund - Money Market Series, Cadre
SweepCash Fund - U.S. Government Series, Cadre SweepCash Fund - Money Market
Series , U.S. Government Money Market Portfolio and Money Market Portfolio
(collectively, the "Funds"). Previously the Trust offered shares of Ambac U.S.
Treasury Money Market Fund, which ceased operations on June 30, 1997. The
accompanying financial statements and financial highlights are those of Cadre
Liquid Asset Fund - U.S. Government Series (the "Fund") (formerly known as Cadre
Institutional Investors Trust Liquid Asset Fund and U.S. Government Money Market
Fund). The Fund commenced investment operations on April 24, 1996.
At a meeting of the Fund's Board of Trustees (the "Trustees") held on June 17,
1998, the Trustees approved an amendment to the investment policy of the Fund to
permit the Fund to pursue its investment objective by investing all of its
investable assets in shares of the U.S. Government Money Market Portfolio (the
"Portfolio"). The Portfolio is a series of the Trust that has substantially the
same investment objective, policies and restrictions as the Fund. The Trustees
also approved certain amendments to the investment restrictions of the Fund and
a new investment advisory agreement with the investment adviser, in order to
permit implementation of this new policy. These amendments were subsequently
approved by the shareholders of the Fund at a meeting held on October 30, 1998.
On December 21, 1998, the Fund transferred all of its securities to the
Portfolio in exchange for interests in the Portfolio. This transfer of
securities was not a taxable event. Upon transfer of these securities, the Fund
began investing all of its investable assets in the Portfolio.
The value of the Fund's investment in the Portfolio, as reflected in the
Statement of Assets and Liabilities, reflects the Fund's proportionate interest
in the net assets of the Portfolio (34% at April 30, 1999). The performance of
the Fund is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the Schedule of Investments, are included
elsewhere in this report and should be read in conjunction with the Fund's
financial statements.
8
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
VALUATION OF SECURITIES
Valuation of securities by the Portfolio is discussed in Note 1 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
INVESTMENT INCOME
The Fund records its share of net investment income and realized gains and
losses each day. All of the net investment income and realized gain and loss of
the Portfolio is allocated on a pro-rata basis among the Fund and the other
investors in the Portfolio at the time of such determination.
DIVIDENDS TO SHAREHOLDERS
Substantially all of the Fund's net investment income and net realized capital
gains, if any, are declared as dividends daily and paid monthly. Net short-term
capital gains, if any, will be distributed in accordance with the requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), and may be
reflected in the Fund's daily dividend rate. Substantially all of the realized
net long-term capital gains, if any, are declared and paid annually, except that
an additional capital gains distribution may be made in a given year to the
extent necessary to avoid the imposition of federal excise tax on the Fund.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations, which may differ from generally accepted accounting
principles.
FEDERAL INCOME TAXES
The Fund is treated as a separate entity for federal income tax purposes and
intends to qualify each year as a "regulated investment company" under
Subchapter M of the Code and to make distributions of substantially all of its
income, including net realized capital gains, if any, to relieve it from
substantially all Federal and excise taxes. Therefore, no Federal tax provision
is required.
EXPENSES
Expenses incurred by the Trust with respect to any two or more funds in the
Trust are allocated in proportion to the net assets of each fund, except where
allocation of direct expenses to each fund can otherwise be made fairly.
Expenses directly attributable to a fund are charged to that fund.
9
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 3 - TRANSACTIONS WITH AFFILIATES
Prior to December 21, 1998, the Fund did not invest all of its investable assets
in the Portfolio. Rather, the Trust, on behalf of the Fund, entered into an
Investment Advisory Agreement with Cadre Financial Services, Inc. ("Cadre"), a
wholly-owned subsidiary of Ambac Financial Group, Inc., whereby Cadre provided
investment advisory services to the Fund. For its services, Cadre was paid an
annual fee of 0.15% of the Fund's average daily net assets. This agreement was
terminated on December 21, 1998.
The Trust, on behalf of the Fund, has entered into an Administration Agreement
with Cadre Financial Services, Inc. ("Cadre"), under which Cadre is responsible
for certain aspects of the administration and operation of the Fund. For its
services, Cadre is paid an annual fee of 0.19% of the Fund's first $250 million
average daily net assets, 0.165% of the Fund's next $750 million average daily
net assets and 0.14% of the Fund's average daily net assets in excess of $1
billion. Prior to December 21, 1998, Cadre was entitled to administration fees
of 0.10% of the Fund's first $500 million average daily net assets, 0.075% of
the Fund's next $500 million average daily net assets and 0.05% of the Fund's
average daily net assets in excess of $1 billion.
The Trust, on behalf of the Fund, has entered into a Transfer Agent Agreement
with Cadre Financial Services, Inc. ("Cadre"), under which Cadre is responsible
for providing shareholder recordkeeping services to the Fund. For its services,
Cadre is paid an annual fee of 0.05% of the Fund's first $250 million average
daily net assets, 0.04% of the Fund's next $750 million average daily net assets
and 0.03% of the Fund's average daily net assets in excess of $1 billion. Prior
to December 21, 1998, Cadre was entitled to transfer agent fees of 0.05% of the
Fund's average daily net assets.
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive distributor of the Trust's shares.
Certain officers of the Trust may be officers of Cadre and/or the Distributor or
their affiliates. Such officers receive no compensation from the Trust for
serving in their respective roles. Trustees who are not employees of Cadre
and/or the Distributor or their affiliated companies, are each paid an annual
retainer of $5,000 and receive an attendance fee of $750 for each meeting of the
Board of Trustees they attend. Members of the Audit Committee receive an
attendance fee of $750 for each Audit Committee meeting they attend. The
Chairman of the Audit Committee receives an additional $1,000 annual fee.
Officers of the Trust receive no compensation from the Trust.
NOTE 4 - WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
Cadre has voluntarily agreed to waive a portion of its fees and to reimburse the
Fund for certain expenses to the extent the total operating expenses of the Fund
exceed 0.45% (annualized) of the Funds average daily net
10
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
assets. During the six months ended April 30, 1999, Cadre waived fees of $6,313
so that the Fund could meet this expense limitation.
The Fund has adopted an Excess Expense Reimbursement Plan (the "Plan") pursuant
to which the Fund has agreed to reimburse Cadre for any waived fees or
reimbursed expenses to the extent the Fund's total operating expenses are less
than the expense limitation of 0.45% (annualized) of the Fund's average daily
net assets. The Plan which has a term of three years, terminates on March 16,
2002.
11
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding, is as follows:
<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS PERIOD
ENDED YEAR ENDED YEAR ENDED ENDED
APRIL 30, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1997 1996 (1)
--------- ----------- ----------- -----------
For a share outstanding throughout the period
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- ---------
Income from investment operations:
Net investment income (2) 0.022 0.052 0.053 0.027
Less dividends:
Dividends from net investment income (0.022) (0.052) (0.053) (0.027)
--------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= =========
Ratio/Supplemental Data:
Total Return 4.59% ** 5.17% 5.39% 2.72% **
Net assets, end of period 26,003 98,229 138,661 70,881
Ratio to average net assets:
Net investment income including 4.30% * 5.17% 5.38% 5.18% *
reimbursement/waiver
Operating expenses including 0.41% * 0.41% 0.26% 0.20% *
reimbursement/waiver
Operating expenses excluding 0.43% * 0.47% 0.49% 0.75% *
reimbursement/waiver
<FN>
(1) The Fund commenced investment operations on April 24, 1996.
(2) Net investment income per share before waiver of fees and reimbursement of
expenses by the Investment Advisor was $0.0215, $0.0523, $0.0514 and $0.024 for
the period ended April 30,1999 and the years ended October 31, 1998 and 1997 and
the period ended October 31, 1996, respectively.
*-Annualized
**-Unannualized
</FN>
</TABLE>
12
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 75.92%
<C> <S> <C> <C>
$15,000 Federal Farm Credit Bank 4.89 % $15,000,000
April 3, 2000
15,000 Federal Home Loan Bank 4.90 14,716,800
September 24, 1999
15,000 Federal Home Loan Bank 3.97 14,994,344
April 12, 2000
857 Federal Home Loan Mortgage Co. 4.83 844,160
August 26, 1999
8,000 Federal National Mortgage Assoc. 4.81 7,916,712
July 22, 1999
5,000 Federal National Mortgage Assoc. 4.88 4,892,292
October 15, 1999
-----------
Total U.S. Government Agency Obligations 58,364,308
-----------
(amortized cost $58,364,308)
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
REPURCHASE AGREEMENT - 23.98%
<C> <S> <C> <C>
$18,438 Repurchase Agreement with Morgan
Stanley Group 4.89 % $18,438,000
Inc., 4.89% due May 3, 1999.
Dated April 30, 1999, Repurchase
price $18,445,513 (collateralized
by U.S. Treasury Bills with a
market value of $19,066,485)
-----------
Total Repurchase Agreement 18,438,000
-----------
(amortized cost $18,438,000)
Total Investments - 99.90% 76,802,308
(amortized cost $76,802,308)
Other Assets in Excess of Liabilities - 00.01% 74,993
-----------
Net Assets - 100.00% $76,877,301
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $76,802,308
Cash 169
Interest receivable 112,383
Prepaid expenses 726
-----------
Total Assets 76,916,586
-----------
LIABILITIES:
Investment advisory fee payable 6,044
Accrued trustees' fees and expenses 4,764
Other accrued expenses 27,477
-----------
Total Liabilities 38,285
-----------
NET ASSETS $76,877,301
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $2,111,872
EXPENSES:
Investment advisory fees 25,705
Audit fees 12,753
Legal fees 9,109
Custodian fees 5,841
Trustees' fees and expenses 5,466
Other expenses 911
----------
Net expenses 59,785
==========
NET INVESTMENT INCOME $2,052,087
==========
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 2,052,087
-------------
SHARE TRANSACTIONS:
Net proceeds from sales of shares 552,061,111
Cost of shares redeemed (477,235,897)
-------------
Net increase in net assets resulting
from share transactions 74,825,214
-------------
Total increase in net assets 76,877,301
-------------
NET ASSETS:
Beginning of period 0
=============
End of period $ 76,877,301
=============
SUPPLEMENTARY DATA:
Ratio to Average Net Assets
Net expenses 0.14% *
Net investment income 4.83% %
Expenses without reimbursement 0.14% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Cadre Institutional Investors Trust (the "Trust") (formerly known as Ambac
Treasurer's Trust), was organized in April, 1996 as a Delaware business trust
and is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended, (the "1940 Act"). The Trust is
comprised of ten series as follows: Cadre Liquid Asset Fund - U.S. Government
Series, Cadre Liquid Asset Fund - Money Market Series, Cadre Affinity Fund -
U.S. Government Series, Cadre Affinity Fund Money Market Series, Cadre Reserve
Fund - U.S. Government Series, Cadre Reserve Fund - Money Market Series, Cadre
SweepCash Fund - U.S. Government Series, Cadre SweepCash Fund - Money Market
Series, U.S. Government Money Market Portfolio and Money Market Portfolio
(collectively, the "Funds"). Previously the Trust offered the Ambac U.S.
Treasury Money Market Fund, which ceased operations on June 30, 1997. The
accompanying financial statements and financial highlights are those of the U.S.
Government Money Market Portfolio (the "Portfolio"). The Portfolio commenced
investment operations on December 21, 1998 upon a tax free transfer of
securities from the Cadre Liquid Asset Fund - U.S. Government Series.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
VALUATION OF SECURITIES
Investments are valued at amortized cost, which approximates market value. The
amortized cost method of valuation values a security at its cost on the date of
purchase and thereafter assumes a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instruments.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on a trade date basis. Interest income,
which includes the amortization of discounts and premiums, if any, is recorded
on an accrual basis. Net realized gains or losses on sales of securities are
determined by the identified cost method.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
The Portfolio may engage in repurchase agreement transactions with institutions
that the Trust's adviser has determined are creditworthy pursuant to guidelines
established by the Trust's Board of Trustees. The Portfolio's custodian or
designated subcustodians, as the case may be under tri-party repurchase
agreements, takes possession of the collateral pledged for investments in
repurchase agreements on behalf of the Portfolio. It is the policy of the
Portfolio to value the underlying collateral daily on a mark-to-market basis to
determine that the value, including accrued interest, is at least equal to the
repurchase price plus accrued interest. In the event of default of the
obligation to repurchase, the Portfolio has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
FEDERAL INCOME TAXES
The Portfolio intends to be treated as a partnership for federal income tax
purposes. As such, each investor in the Portfolio will be taxed on its share of
the Portfolio's ordinary income and capital gains. It is intended that the
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended. The cost of securities is
substantially the same for book and tax purposes.
EXPENSES
Expenses incurred by the Trust with respect to any two or more funds in the
Trust are allocated in proportion to the net assets of each fund, except where
allocation of direct expenses to each fund can otherwise be made fairly.
Expenses directly attributable to a fund are charged to that fund.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust, on behalf of the Portfolio, has entered into an Investment Advisory
Agreement with Cadre Financial Services, Inc. ("Cadre"), a wholly-owned
subsidiary of Ambac Financial Group, Inc., whereby Cadre provides investment
advisory services and administrative services to the Portfolio. For its
services, Cadre is paid an annual fee of 0.06% of the Fund's average daily net
assets
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive placement agent of the Portfolio's
shares.
Certain officers of the Trust may be officers of Cadre and/or the Distributor or
their affiliates. Such officers receive no compensation from the Trust for
serving in their respective roles. Trustees who are not employees of Cadre
and/or the Distributor or their affiliated companies, are each paid an annual
retainer of $5,000 and receive an attendance fee of $750 for each meeting of the
Board of Trustees they attend. Members of the Audit Committee receive an
attendance fee of $750 for each Audit Committee meeting they attend. The
Chairman of the Audit Committee receives an additional $1,000 annual fee.
Officers of the Trust receive no compensation from the Trust.
19