CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
CIIT CHAIRMAN'S ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
Dear Shareholders,
As 1999 comes to a close and we stand poised for the new millenium, I cannot
help but reflect on what a year this has been for the Cadre Institutional
Investors Trust (the "Fund"). Since the Fund's inception in 1995, there has not
been such a robust year of development. This year saw the successful
implementation of Y2K readiness projects by our service providers and the full
implementation of the Fund's new master/feeder investment structure. During this
year, we have enjoyed explosive growth of new assets and investors to record
levels.
As many of you know, the Fund developed a master/feeder investment structure to
permit the Fund to expand its distribution channels to new markets and
shareholders, while permitting us to combine investment assets into our master
portfolios. Through this development, the Fund now offers six investment series,
each of which has received a AAA rating. As a result, the total assets of the
Fund have grown to a record high, as of October 31, 1999, of $893 million; and,
the number of shareholders has reached a new high of 335 shareholders. 2000 will
present a significant challenge if we hope to surpass the accomplishments of
1999, but I am confident that the Fund's service agents, Cadre Financial
Services, Inc. and Cadre Securities, Inc. stand ready to meet this challenge.
We will strive hard to exceed our 1999 accomplishments. For 2000, Cadre will
remain focused on the Fund's guiding principles of safety, liquidity and yield,
while continuing two major Fund initiatives -Technology and Education.
As we move into the new millennium, we are all faced with increasing demands and
decreasing resources. We all face the charge "Do more with less". Therefore, we
will increase our focus on one of the most valuable benefits of the Fund - Time.
Through the greater use of technology, we expect that the Fund will yield
greater TIME savings for you and your staff. Technology gives us the ability to
provide you with immediate access to your investments, online, permitting faster
processing time and the ability to conduct business on your time. Cadre has
invested great resources in the Fund's online reporting system, Compass, and
will do even more in 2000. During this coming year, Compass will be further
developed to provide enhanced reporting and transaction capability. Through
Compass, the Fund will continue to benefit its shareholders by reducing the time
spent managing your liquid assets.
Finally, important to us all, is the role of education. In the ever-changing
landscape of investments, it is very demanding to stay abreast of the latest
developments. The investment world is growing in complexity and the demands of
our positions are becoming increasingly challenging. For 2000, Cadre will focus
on providing value-added education in the many areas affecting your role as a
financial officer. Cadre intends to provide valuable investment and technology
seminars designed to help each of us better understand prudent investing and
effective cash management.
These initiatives will be as rewarding as they are difficult, but with your
continued support of the Fund, we are certain they will be accomplished. We look
forward to the millennium ahead.
Sincerely,
William T. Sullivan, Jr.
Chairman
1
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
In September 1998, the failure of Long Term Capital Management, a large hedge
fund, caused global financial panic, which resulted in a global flight to
quality in the U.S. Treasury market. This flight to quality caused the yield on
the 30-Year Treasury Bond to decline below 4.75%, its lowest level in history.
The Federal Reserve responded by aggressively lowering the overnight bank rate
by 75 basis points. In a period of six weeks, the Fed lowered the Fed Funds
target interest rate, in a series of three 25 basis point moves (from 5.50% to
4.75%), which included a rare inter-meeting move in October of 1998. The decline
in interest rates was a result of the view that the domestic economy would slow
dramatically. However, global financial markets stabilized and the domestic
economy continued to show resilience.
During the period, Gross Domestic Product (GDP) grew at an annualized rate of
4.3% and in the third quarter GDP was up an impressive 5.5%. The consumer has
been the catalyst for this strong economy. The consumer has benefited from a
tight labor market as evidenced by an unemployment rate of 4.1% combined with
the wealth effect, a result of the impressive gains in the stock market. In
fact, in the first quarter of 1999, consumer spending, which accounts for two
thirds of economic activity posted its largest gain in eleven years.
This economic strength combined with a lower rate of unemployment, concerned Fed
officials enough to begin raising the Fed Funds target interest rate. In fact,
beginning on June 30th of 1999, the Fed embarked on a series of three 25 basis
point rate increases, with the most recent move occurring on November 16th. This
last move completely reversed all the monetary stimulus provided by the Fed in
the fourth quarter of 1998.
Although the economy continues to grow at a brisk pace and the Fed has responded
by reversing all of the reductions of 1998, inflation still remains absent. The
GDP price deflator, a measure of price increases followed by many investors,
rose at a 1.1% pace in the third quarter, down from the 1.4% rate of the
previous quarter. This data mirrors other inflationary measures. The Producer
Price Index (PPI) decreased .1% in October and excluding the volatile food and
energy components, the core PPI increased .3%. Through October, core PPI has
risen at a .9% annual rate, down from a 1.6% rate during the first ten months of
last year. Prices also remain well behaved at the consumer level. The Consumer
Price Index (CPI) increased .2% in October and the core CPI increased .2%.
Through October, core CPI has risen at a 1.9% annual rate, down from a 2.0% rate
during the first ten months of last year
Despite the unemployment rate being at its lowest level since 1970, wages remain
well under control. The employment cost index (ECI) increased .9% in the third
quarter and benefit costs rose .8%. For the twelve months ended September 30th
the ECI rose 3.1%, down from a 3.7% increase for the 12 month period ended
September 30th 1998.
Worker productivity has played a large role in the economy's ability to maintain
a low unemployment rate with little signs of inflation. In the third quarter,
worker productivity increased at a 4.2% annual rate, which was the largest gain
since the first quarter of 1998.
In the statement that accompanied the November rate increase, the Fed stated
that "the pool of available workers willing to take jobs has been drawn down
further in recent months, a trend that must eventually be contained if
inflationary imbalances are to remain in check." Therefore, we believe that
continued tightening of the labor market or signs of inflation could force
another Fed rate increase by the first quarter of 2000.
2
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. C. Roderick O'Neil
Chairman and Trustee Trustee
David L. Boyle William J. Reynolds
Trustee Trustee
Russell E. Galipo Dr. Don I. Tharpe
Trustee Trustee
Harvey A. Fein Anne E. Gill, Esq.
Trustee Secretary
Michael P. Flanagan Martin G. Flannigan
Trustee Treasurer
Donald E. Gray, Jr. C.G.F.M.
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
3
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
Cadre Liquid Asset Fund - U.S. Government Series:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Cadre Institutional Investors Trust - Cadre
Liquid Asset Fund - U.S. Government Series (the "Fund"), as of October 31, 1999,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the years in the two year period then
ended, and the financial highlights for each of the years in the four year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cadre
Institutional Investors Trust - Cadre Liquid Asset Fund - U.S. Government Series
as of October 31, 1999, the results of its operations for the year then ended,
the changes in its net assets for the years in the two year period then ended,
and the financial highlights for each year in the four year period then ended,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
New York, New York
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - U.S. GOVERNMENT SERIES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in Cadre Institutional Investors Trust --
U.S. Government Money Market Portfolio, at value --
$44,998,327
Receivable from advisor 11,771
Other assets 165,000
-----------
Total Assets 45,175,098
-----------
LIABILITIES:
Accrued trustees' fees and expenses 2,535
Other accrued expenses 24,592
-----------
Total Liabilities 27,127
-----------
NET ASSETS $45,147,971
===========
Shares of beneficial interest outstanding 45,147,576
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 1.00
===========
NET ASSETS CONSIST OF:
Common Stock, at par value $ 45,148
Paid-in-capital in excess of par value 45,102,428
Accumulated net realized gain on
investment securities transactions 395
-----------
NET ASSETS $45,147,971
===========
</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 YEAR ENDED OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT U.S
GOVERNMENT MONEY MARKET PORTFOLIO
<S> <C>
Interest $ 2,355,891
Expenses 70,345
-----------
NET INVESTMENT INCOME FROM CIIT U.S.GOVERNMENT MONEY
MARKET PORTFOLIO 2,285,546
INVESTMENT INCOME ATTRIBUTABLE TO OTHER INVESTMENTS
Interest income 659,816
-----------
Total investment income 2,945,362
EXPENSES:
Administration fees $ 101,568
Custodian fees 38,867
Transfer agent fees 29,944
Legal fees 23,045
Investment advisory fees 19,536
Rating agency fees 17,319
Audit fees 11,411
Registration fees 5,838
Reports to shareholders' expense 4,398
Insurance fees 4,272
-----------
Total expenses 256,198
Less: Fee waivers and expense
reimbursements (60,412)
-----------
Net expenses 195,786
-----------
Net investment income 2,749,576
Net realized gains on investment/securities sold
(Note 2) 601
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,750,177
===========
</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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER YEAR ENDED OCTOBER
31, 1999 31, 1998
------------------ ------------------
OPERATIONS:
<S> <C> <C>
Net investment income $ 2,749,576 $ 5,523,795
Net realized gains on investment securities transactions 601 --
------------- -------------
Net increase in net assets resulting from operations 2,750,177 5,523,795
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (2,749,576) (5,523,795)
------------- -------------
SHARE TRANSACTIONS:
Net proceeds from sale of shares 384,801,853 365,846,598
Net asset value of shares issued to shareholders from
reinvestment of dividends 2,749,576 5,523,795
Cost of shares redeemed (440,632,708) (411,802,360)
------------- -------------
Net decrease in net assets resulting from share transactions (53,081,279) (40,431,967)
------------- -------------
Net decrease in net assets (53,080,678) (40,431,967)
NET ASSETS:
Beginning of year 98,228,649 138,660,616
------------- -------------
End of year $ 45,147,971 $ 98,228,649
============= =============
OTHER INFORMATION:
Share Transactions:
Shares sold 384,801,853 365,846,598
Shares issued to shareholders from reinvestment of
dividends 2,749,576 5,523,795
Shares repurchased (440,632,708) (411,802,360)
------------- -------------
Net decrease in shares outstanding (53,081,279) (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
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
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 (24.4% at October 31, 1999). The Portfolio
has the same investment objectives as the Fund and 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)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 2 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
INVESTMENT INCOME
The Fund records its proportionate 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)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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, had 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, 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, 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)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
assets. During the year ended October 31, 1999, Cadre waived fees of $24,064 and
reimbursed expenses of $36,348 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. During the year ended October 31, 1999, the Fund did not reimburse Cadre
for any fees waived or expenses reimbursed pursuant to the terms of the Plan.
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>
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 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) 0.046 0.052 0.053 0.027
Less dividends:
Dividends from net investment income (0.046) (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 4.70% 5.17% 5.39% 2.72%**
Net assets, end of period (000's) $ 45,148 $ 98,229 $138,661 $ 70,881
Ratio to average net assets:
Net investment income including 4.61% 5.17% 5.38% 5.18% *
reimbursement/waiver
Operating expenses including 0.45% 0.41% 0.26% 0.20% *
reimbursement/waiver
Operating expenses excluding 0.55% 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 $0.0451, $0.0523, $0.0514 and $0.024 for
the years ended October 31, 1999, 1998 and 1997 and the period ended October 31,
1996, respectively.
*-Annualized
**-Unannualized
</FN>
</TABLE>
12
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
U.S. Government Money Market Portfolio
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - U.S. Government Money Market Portfolio (the
"Portfolio"), including the schedule of investments, as of October 31, 1999, and
the related statements of operations and changes in net assets for the period
December 21, 1998 (commencement of operations) through October 31, 1999. These
financial statements are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadre Institutional Investors
Trust - U.S. Government Money Market Portfolio as of October 31, 1999, the
results of its operations and the changes in its net assets for the period
December 21, 1998 (commencement of operations) through October 31, 1999, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE Value
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 70.2%
<C> <S> <C> <C>
$ 5,851 Federal Farm Credit Bank 5.23 % $ 5,851,000
November 1, 1999
8,000 Federal Home Loan Bank 5.68 7,901,540
January 21, 2000
10,500 Federal Home Loan Bank 5.71 10,351,612
February 1, 2000
6,000 Federal Home Loan Bank 5.70 5,908,833
February 9, 2000
5,000 Federal Home Loan Bank 5.45 5,001,797
July 19, 2000
25,000 Federal Home Loan Mortgage Co. 5.32 24,974,625
November 8, 1999
15,000 Federal Home Loan Mortgage Co. 5.30 14,976,167
November 12, 1999
10,000 Federal Home Loan Mortgage Co. 5.72 9,857,529
February 2, 2000
11,048 Federal Home Loan Mortgage Co. 5.68 10,878,143
February 10, 2000
6,000 Federal National Mortgage Assoc. 5.23 6,000,000
November 1, 1999
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE Value
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - (CONTINUED)
$ 15,000 Federal National Mortgage Assoc. 5.31 % $14,976,121
November 12, 1999
9,500 Federal National Mortgage Assoc. 5.63 9,367,475
February 2, 2000
3,500 Federal National Mortgage Assoc. 5.44 3,497,766
June 9, 2000
-----------
Total U.S. Government Agency Obligations 129,542,608
-----------
(amortized cost $129,542,608)
YIELD TO
RESET ON DATE
OF PURCHASE
U.S. GOVERNMENT AGENCY FLOATING RATE OBLIGATIONS - 8.1%
15,000 Federal Home Loan Bank 4.52 % 14,997,328
3 Month Treasury Bill Floater
Weekly reset
April 12, 2000
-----------
(amortized cost $14,997,328)
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE Value
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
REPURCHASE AGREEMENTS - 21.5%
$ 20,000 Repurchase Agreement with Goldman
Sachs Group LP, 5.25%, dated 5.32 % $20,000,000
October 29, 1999, due November 1,
1999, repurchase price $20,008,750
(collateralized by various Government
National Mortgage Association Pools
with a market value of $20,400,000)
19,721 Repurchase agreement with Morgan
Stanley Group Inc., 5.22%, dated 5.29 19,721,000
October 29, 1999, due November 1, 1999,
repurchase price $19,729,579
(collateralized by various
Government National Mortgage Association
Pools with a market value of $20,518,456)
-----------
Total Repurchase Agreements 39,721,000
-----------
(amortized cost $39,721,000)
Total Investments - 99.8% 184,260,936
(amortized cost $184,260,936)
Other assets in excess of liabilities - 0.2% 212,460
-----------
Net Assets - 100.0% $184,473,396
===========
</TABLE>
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 ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $184,260,936
Cash 41,532
Interest receivable 214,105
------------
Total Assets 184,516,573
------------
LIABILITIES:
Investment advisory fees payable 9,802
Accrued trustees' fees and expenses 6,524
Other accrued expenses 26,851
------------
Total Liabilities 43,177
------------
NET ASSETS $184,473,396
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $6,812,731
EXPENSES:
Investment advisory fees 80,591
Trustees' fees and expenses 16,349
Legal fees 44,549
Audit fees 25,120
Offering costs 15,253
Custodian fees and expenses 13,481
Other expenses 6,515
----------
Total expenses 201,858
----------
NET INVESTMENT INCOME $6,610,873
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 6,610,873
---------------
SHARE TRANSACTIONS:
Contributions 1,431,230,426
Withdrawals (1,253,367,903)
---------------
Net increase in net assets resulting
from share transactions 177,862,523
---------------
Total increase in net assets 184,473,396
NET ASSETS:
Beginning of period 0
---------------
End of period $ 184,473,396
===============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
Ratio to Average Net Assets
Net expenses 0.15% *
Net investment income 4.92% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
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.
20
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
21
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
CIIT CHAIRMAN'S ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
Dear Shareholders,
As 1999 comes to a close and we stand poised for the new millenium, I cannot
help but reflect on what a year this has been for the Cadre Institutional
Investors Trust (the "Fund"). Since the Fund's inception in 1995, there has not
been such a robust year of development. This year saw the successful
implementation of Y2K readiness projects by our service providers and the full
implementation of the Fund's new master/feeder investment structure. During this
year, we have enjoyed explosive growth of new assets and investors to record
levels.
As many of you know, the Fund developed a master/feeder investment structure to
permit the Fund to expand its distribution channels to new markets and
shareholders, while permitting us to combine investment assets into our master
portfolios. Through this development, the Fund now offers six investment series,
each of which has received a AAA rating. As a result, the total assets of the
Fund have grown to a record high, as of October 31, 1999, of $893 million; and,
the number of shareholders has reached a new high of 335 shareholders. 2000 will
present a significant challenge if we hope to surpass the accomplishments of
1999, but I am confident that the Fund's service agents, Cadre Financial
Services, Inc. and Cadre Securities, Inc. stand ready to meet this challenge.
We will strive hard to exceed our 1999 accomplishments. For 2000, Cadre will
remain focused on the Fund's guiding principles of safety, liquidity and yield,
while continuing two major Fund initiatives -Technology and Education.
As we move into the new millennium, we are all faced with increasing demands and
decreasing resources. We all face the charge "Do more with less". Therefore, we
will increase our focus on one of the most valuable benefits of the Fund - Time.
Through the greater use of technology, we expect that the Fund will yield
greater TIME savings for you and your staff. Technology gives us the ability to
provide you with immediate access to your investments, online, permitting faster
processing time and the ability to conduct business on your time. Cadre has
invested great resources in the Fund's online reporting system, Compass, and
will do even more in 2000. During this coming year, Compass will be further
developed to provide enhanced reporting and transaction capability. Through
Compass, the Fund will continue to benefit its shareholders by reducing the time
spent managing your liquid assets.
Finally, important to us all, is the role of education. In the ever-changing
landscape of investments, it is very demanding to stay abreast of the latest
developments. The investment world is growing in complexity and the demands of
our positions are becoming increasingly challenging. For 2000, Cadre will focus
on providing value-added education in the many areas affecting your role as a
financial officer. Cadre intends to provide valuable investment and technology
seminars designed to help each of us better understand prudent investing and
effective cash management.
These initiatives will be as rewarding as they are difficult, but with your
continued support of the Fund, we are certain they will be accomplished. We look
forward to the millennium ahead.
Sincerely,
William T. Sullivan, Jr.
Chairman
1
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
In September 1998, the failure of Long Term Capital Management, a large hedge
fund, caused global financial panic, which resulted in a global flight to
quality in the U.S. Treasury market. This flight to quality caused the yield on
the 30-Year Treasury Bond to decline below 4.75%, its lowest level in history.
The Federal Reserve responded by aggressively lowering the overnight bank rate
by 75 basis points. In a period of six weeks, the Fed lowered the Fed Funds
target interest rate, in a series of three 25 basis point moves (from 5.50% to
4.75%), which included a rare inter-meeting move in October of 1998. The decline
in interest rates was a result of the view that the domestic economy would slow
dramatically. However, global financial markets stabilized and the domestic
economy continued to show resilience.
During the period, Gross Domestic Product (GDP) grew at an annualized rate of
4.3% and in the third quarter GDP was up an impressive 5.5%. The consumer has
been the catalyst for this strong economy. The consumer has benefited from a
tight labor market as evidenced by an unemployment rate of 4.1% combined with
the wealth effect, a result of the impressive gains in the stock market. In
fact, in the first quarter of 1999, consumer spending, which accounts for two
thirds of economic activity posted its largest gain in eleven years.
This economic strength combined with a lower rate of unemployment, concerned Fed
officials enough to begin raising the Fed Funds target interest rate. In fact,
beginning on June 30th of 1999, the Fed embarked on a series of three 25 basis
point rate increases, with the most recent move occurring on November 16th. This
last move completely reversed all the monetary stimulus provided by the Fed in
the fourth quarter of 1998.
Although the economy continues to grow at a brisk pace and the Fed has responded
by reversing all of the reductions of 1998, inflation still remains absent. The
GDP price deflator, a measure of price increases followed by many investors,
rose at a 1.1% pace in the third quarter, down from the 1.4% rate of the
previous quarter. This data mirrors other inflationary measures. The Producer
Price Index (PPI) decreased .1% in October and excluding the volatile food and
energy components, the core PPI increased .3%. Through October, core PPI has
risen at a .9% annual rate, down from a 1.6% rate during the first ten months of
last year. Prices also remain well behaved at the consumer level. The Consumer
Price Index (CPI) increased .2% in October and the core CPI increased .2%.
Through October, core CPI has risen at a 1.9% annual rate, down from a 2.0% rate
during the first ten months of last year
Despite the unemployment rate being at its lowest level since 1970, wages remain
well under control. The employment cost index (ECI) increased .9% in the third
quarter and benefit costs rose .8%. For the twelve months ended September 30th
the ECI rose 3.1%, down from a 3.7% increase for the 12 month period ended
September 30th 1998.
Worker productivity has played a large role in the economy's ability to maintain
a low unemployment rate with little signs of inflation. In the third quarter,
worker productivity increased at a 4.2% annual rate, which was the largest gain
since the first quarter of 1998.
In the statement that accompanied the November rate increase, the Fed stated
that "the pool of available workers willing to take jobs has been drawn down
further in recent months, a trend that must eventually be contained if
inflationary imbalances are to remain in check." Therefore, we believe that
continued tightening of the labor market or signs of inflation could force
another Fed rate increase by the first quarter of 2000.
2
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. C. Roderick O'Neil
Chairman and Trustee Trustee
David L. Boyle William J. Reynolds
Trustee Trustee
Russell E. Galipo Dr. Don I. Tharpe
Trustee Trustee
Harvey A. Fein Anne E. Gill, Esq.
Trustee Secretary
Michael P. Flanagan Martin G. Flannigan
Trustee Treasurer
Donald E. Gray, Jr. C.G.F.M.
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
3
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
Cadre Affinity Fund - U.S. Government Series:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Cadre Affinity Fund - U.S. Government Series
(the "Fund"), as of October 31, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the period May 3, 1999
(commencement of operations) through October 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cadre
Institutional Investors Trust - Cadre Affinity Fund - U.S. Government Series as
of October 31, 1999, the results of its operations, the changes in its net
assets, and the financial highlights for the period May 3, 1999 (commencement of
operations) through October 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
New York, New York
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investment in Cadre Institutional Investors Trust -- U.S. Government
Money Market Portfolio, at value $24,895,390
Receivable from advisor 9,286
Other assets 98,331
-----------
Total Assets 25,003,007
-----------
LIABILITIES:
Accrued trustees' fees and expenses 3,377
Other accrued expenses 43,545
-----------
Total Liabilities 46,922
-----------
NET ASSETS $24,956,085
===========
Shares of beneficial interest outstanding 24,956,085
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 1.00
-----------
NET ASSETS CONSIST OF:
Common Stock, at par value $ 24,956
Paid-in-capital in excess of par value 24,931,129
-----------
Net assets $24,956,085
===========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT U.S
GOVERNMENT MONEY MARKET PORTFOLIO
<S> <C>
Interest $ 719,143
Expenses 20,546
---------
NET INVESTMENT INCOME FROM CIIT U.S .GOVERNMENT MONEY
MARKET PORTFOLIO 698,597
EXPENSES:
Administration fees $ 26,651
Transfer agent fees 7,013
Trustees' fees and expenses 4,410
Offering costs 20,885
Custodian fees 19,375
12b-1 fees 14,027
Registration and filing fees 11,295
Audit fees 10,000
Legal fees 9,734
Reports to shareholders expense 5,910
Other expenses 104
---------
Total expenses 129,404
Less: Fee waivers and expense reimbursements (72,814)
---------
Net expenses 56,590
---------
NET INVESTMENT INCOME $ 642,007
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 642,007
-------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (642,007)
-------------
SHARE TRANSACTIONS:
Net proceeds from sale of shares 169,203,676
Net asset value of shares issued to shareholders from
reinvestment of dividends 642,007
Cost of shares redeemed (144,889,598)
-------------
Net increase in net assets resulting from share transactions 24,956,085
-------------
Net increase in net assets 24,956,085
NET ASSETS:
Beginning of period 0
-------------
End of period $ 24,956,085
=============
OTHER INFORMATION:
Share Transactions:
Shares sold 169,203,676
Shares issued to shareholders from reinvestment of
Dividends 642,007
Shares repurchased (144,889,598)
-------------
Net increase in shares outstanding 24,956,085
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
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 Cadre Affinity Fund - U.S. Government Series
(the "Fund"). The Fund commenced investment operations on May 3, 1999.
The Fund invests all of its investable assets in the U.S. Government Money
Market Portfolio ("the Portfolio"). The Portfolio has the same investment
objectives as the Fund.
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 (13.5% at October 31, 1999). The Portfolio
has the same investment objective as the Fund and 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.
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 2 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
INVESTMENT INCOME
The Fund records its proportionate 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.
8
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust, on behalf of the Fund, has entered into an Administration Agreement
with Cadre Financial Services, Inc. ("Cadre"), a wholly-owned subsidiary of the
Ambac Financial Group, Inc., 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 0.10% of the Fund's first $250 million average daily
net assets, 0.075% of the Fund's next $750 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, 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.
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive distributor of the Trust's shares.
9
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 0.55% (annualized) of the Funds average daily net assets. During the
period May 3, 1999 (commencement of operations) through October 31, 1999, Cadre
waived fees of $33,664 and reimbursed expenses of $39,150 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 go below
the expense limitation of 0.55% (annualized) of the Fund's average daily net
assets. The Plan has a term of three years from its adoption date of March 16,
2002. During the period May 3, 1999 (commencement of operations) through October
31, 1999, the Fund did not reimburse Cadre for any fees waived or expenses
reimbursed pursuant to the terms of the plan.
10
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - U.S. GOVERNMENT SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS),
THROUGH OCTOBER 31, 1999
Selected data for a share of beneficial interest outstanding, is as follows:
<TABLE>
<CAPTION>
For a share outstanding throughout the period:
<S> <C>
Net asset value, beginning of period $ 1.00
-------
Income from investment operations:
Net investment income (1) 0.023
Less dividends:
Dividends from net investment income (0.023)
-------
Net increase in net asset value --
-------
Net asset value, end of period $ 1.00
=======
Ratio/Supplemental Data:
Total return 2.29% **
Net assets, end of period (000's) $24,956
Ratio to average net assets:
Net investment income including reimbursement/waiver 4.58% *
Operating expenses including reimbursement/waiver 0.55% *
Operating expenses excluding reimbursement/waiver 1.07% *
-------
<FN>
(1) Net investment income per share before waiver of fees and reimbursement of
expenses by the Investment Advisor was $0.0406 for the period ended October
31,1999.
* - Annualized
** - Unannualized
</FN>
</TABLE>
11
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
U.S. Government Money Market Portfolio
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - U.S. Government Money Market Portfolio (the
"Portfolio"), including the schedule of investments, as of October 31, 1999, and
the related statements of operations and changes in net assets for the period
December 21, 1998 (commencement of operations) through October 31, 1999. These
financial statements are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadre Institutional Investors
Trust - U.S. Government Money Market Portfolio as of October 31, 1999, the
results of its operations and the changes in its net assets for the period
December 21, 1998 (commencement of operations) through October 31, 1999, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE Value
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 70.2%
<C> <S> <C> <C>
$ 5,851 Federal Farm Credit Bank 5.23 % $ 5,851,000
November 1, 1999
8,000 Federal Home Loan Bank 5.68 7,901,540
January 21, 2000
10,500 Federal Home Loan Bank 5.71 10,351,612
February 1, 2000
6,000 Federal Home Loan Bank 5.70 5,908,833
February 9, 2000
5,000 Federal Home Loan Bank 5.45 5,001,797
July 19, 2000
25,000 Federal Home Loan Mortgage Co. 5.32 24,974,625
November 8, 1999
15,000 Federal Home Loan Mortgage Co. 5.30 14,976,167
November 12, 1999
10,000 Federal Home Loan Mortgage Co. 5.72 9,857,529
February 2, 2000
11,048 Federal Home Loan Mortgage Co. 5.68 10,878,143
February 10, 2000
6,000 Federal National Mortgage Assoc. 5.23 6,000,000
November 1, 1999
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
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - (CONTINUED)
$ 15,000 Federal National Mortgage Assoc. 5.31 % $ 14,976,121
November 12, 1999
9,500 Federal National Mortgage Assoc. 5.63 9,367,475
February 2, 2000
3,500 Federal National Mortgage Assoc. 5.44 3,497,766
June 9, 2000
-------------
Total U.S. Government Agency Obligations 129,542,608
-------------
(amortized cost $129,542,608)
YIELD TO
RESET ON DATE
OF PURCHASE
-----------
U.S. GOVERNMENT AGENCY FLOATING RATE OBLIGATIONS - 8.1%
15,000 Federal Home Loan Bank 4.52 % 14,997,328
3 Month Treasury Bill Floater
Weekly reset
April 12, 2000
(amortized cost $14,997,328) -------------
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
REPURCHASE AGREEMENTS - 21.5%
$ 20,000 Repurchase Agreement with Goldman 5.32 % $ 20,000,000
Sachs Group LP, 5.25%, dated October
29, 1999, due November 1, 1999,
repurchase price $20,008,750
(collateralized by various
Government National Mortgage
Association Pools with a market value
of $20,400,000)
19,721 Repurchase agreement with Morgan 5.29 19,721,000
Stanley Group Inc., 5.22%, dated
October 29, 1999, due November 1,
1999, repurchase price $19,729,579
(collateralized by various
Government National Mortgage
Association Pools with a market value
of $20,518,456)
-------------
Total Repurchase Agreements 39,721,000
-------------
(amortized cost $39,721,000)
Total Investments - 99.8% 184,260,936
(amortized cost $184,260,936)
Other assets in excess of liabilities - 0.2% 212,460
-------------
Net Assets - 100.0% $ 184,473,396
=============
</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 ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $184,260,936
Cash 41,532
Interest receivable 214,105
------------
Total Assets 184,516,573
------------
LIABILITIES:
Investment advisory fees payable 9,802
Accrued trustees' fees and expenses 6,524
Other accrued expenses 26,851
------------
Total Liabilities 43,177
------------
NET ASSETS $184,473,396
============
</TABLE>
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 OPERATIONS
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $6,812,731
EXPENSES:
Investment advisory fees 80,591
Trustees' fees and expenses 16,349
Legal fees 44,549
Audit fees 25,120
Offering costs 15,253
Custodian fees and expenses 13,481
Other expenses 6,515
----------
Total expenses 201,858
----------
NET INVESTMENT INCOME $6,610,873
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 6,610,873
---------------
SHARE TRANSACTIONS:
Contributions 1,431,230,426
Withdrawals (1,253,367,903)
---------------
Net increase in net assets resulting
from share transactions 177,862,523
---------------
Total increase in net assets 184,473,396
NET ASSETS:
Beginning of period 0
---------------
End of period $ 184,473,396
===============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
Ratio to Average Net Assets
Net expenses 0.15% *
Net investment income 4.92% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
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.
19
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
20
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
CIIT CHAIRMAN'S ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
Dear Shareholders,
As 1999 comes to a close and we stand poised for the new millenium, I cannot
help but reflect on what a year this has been for the Cadre Institutional
Investors Trust (the "Fund"). Since the Fund's inception in 1995, there has not
been such a robust year of development. This year saw the successful
implementation of Y2K readiness projects by our service providers and the full
implementation of the Fund's new master/feeder investment structure. During this
year, we have enjoyed explosive growth of new assets and investors to record
levels.
As many of you know, the Fund developed a master/feeder investment structure to
permit the Fund to expand its distribution channels to new markets and
shareholders, while permitting us to combine investment assets into our master
portfolios. Through this development, the Fund now offers six investment series,
each of which has received a AAA rating. As a result, the total assets of the
Fund have grown to a record high, as of October 31, 1999, of $893 million; and,
the number of shareholders has reached a new high of 335 shareholders. 2000 will
present a significant challenge if we hope to surpass the accomplishments of
1999, but I am confident that the Fund's service agents, Cadre Financial
Services, Inc. and Cadre Securities, Inc. stand ready to meet this challenge.
We will strive hard to exceed our 1999 accomplishments. For 2000, Cadre will
remain focused on the Fund's guiding principles of safety, liquidity and yield,
while continuing two major Fund initiatives -Technology and Education.
As we move into the new millennium, we are all faced with increasing demands and
decreasing resources. We all face the charge "Do more with less". Therefore, we
will increase our focus on one of the most valuable benefits of the Fund - Time.
Through the greater use of technology, we expect that the Fund will yield
greater TIME savings for you and your staff. Technology gives us the ability to
provide you with immediate access to your investments, online, permitting faster
processing time and the ability to conduct business on your time. Cadre has
invested great resources in the Fund's online reporting system, Compass, and
will do even more in 2000. During this coming year, Compass will be further
developed to provide enhanced reporting and transaction capability. Through
Compass, the Fund will continue to benefit its shareholders by reducing the time
spent managing your liquid assets.
Finally, important to us all, is the role of education. In the ever-changing
landscape of investments, it is very demanding to stay abreast of the latest
developments. The investment world is growing in complexity and the demands of
our positions are becoming increasingly challenging. For 2000, Cadre will focus
on providing value-added education in the many areas affecting your role as a
financial officer. Cadre intends to provide valuable investment and technology
seminars designed to help each of us better understand prudent investing and
effective cash management.
These initiatives will be as rewarding as they are difficult, but with your
continued support of the Fund, we are certain they will be accomplished. We look
forward to the millennium ahead.
Sincerely,
William T. Sullivan, Jr.
Chairman
1
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
In September 1998, the failure of Long Term Capital Management, a large hedge
fund, caused global financial panic, which resulted in a global flight to
quality in the U.S. Treasury market. This flight to quality caused the yield on
the 30-Year Treasury Bond to decline below 4.75%, its lowest level in history.
The Federal Reserve responded by aggressively lowering the overnight bank rate
by 75 basis points. In a period of six weeks, the Fed lowered the Fed Funds
target interest rate, in a series of three 25 basis point moves (from 5.50% to
4.75%), which included a rare inter-meeting move in October of 1998. The decline
in interest rates was a result of the view that the domestic economy would slow
dramatically. However, global financial markets stabilized and the domestic
economy continued to show resilience.
During the period, Gross Domestic Product (GDP) grew at an annualized rate of
4.3% and in the third quarter GDP was up an impressive 5.5%. The consumer has
been the catalyst for this strong economy. The consumer has benefited from a
tight labor market as evidenced by an unemployment rate of 4.1% combined with
the wealth effect, a result of the impressive gains in the stock market. In
fact, in the first quarter of 1999, consumer spending, which accounts for two
thirds of economic activity posted its largest gain in eleven years.
This economic strength combined with a lower rate of unemployment, concerned Fed
officials enough to begin raising the Fed Funds target interest rate. In fact,
beginning on June 30th of 1999, the Fed embarked on a series of three 25 basis
point rate increases, with the most recent move occurring on November 16th. This
last move completely reversed all the monetary stimulus provided by the Fed in
the fourth quarter of 1998.
Although the economy continues to grow at a brisk pace and the Fed has responded
by reversing all of the reductions of 1998, inflation still remains absent. The
GDP price deflator, a measure of price increases followed by many investors,
rose at a 1.1% pace in the third quarter, down from the 1.4% rate of the
previous quarter. This data mirrors other inflationary measures. The Producer
Price Index (PPI) decreased .1% in October and excluding the volatile food and
energy components, the core PPI increased .3%. Through October, core PPI has
risen at a .9% annual rate, down from a 1.6% rate during the first ten months of
last year. Prices also remain well behaved at the consumer level. The Consumer
Price Index (CPI) increased .2% in October and the core CPI increased .2%.
Through October, core CPI has risen at a 1.9% annual rate, down from a 2.0% rate
during the first ten months of last year
Despite the unemployment rate being at its lowest level since 1970, wages remain
well under control. The employment cost index (ECI) increased .9% in the third
quarter and benefit costs rose .8%. For the twelve months ended September 30th
the ECI rose 3.1%, down from a 3.7% increase for the 12 month period ended
September 30th 1998.
Worker productivity has played a large role in the economy's ability to maintain
a low unemployment rate with little signs of inflation. In the third quarter,
worker productivity increased at a 4.2% annual rate, which was the largest gain
since the first quarter of 1998.
In the statement that accompanied the November rate increase, the Fed stated
that "the pool of available workers willing to take jobs has been drawn down
further in recent months, a trend that must eventually be contained if
inflationary imbalances are to remain in check." Therefore, we believe that
continued tightening of the labor market or signs of inflation could force
another Fed rate increase by the first quarter of 2000.
2
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. C. Roderick O'Neil
Chairman and Trustee Trustee
David L. Boyle William J. Reynolds
Trustee Trustee
Russell E. Galipo Dr. Don I. Tharpe
Trustee Trustee
Harvey A. Fein Anne E. Gill, Esq.
Trustee Secretary
Michael P. Flanagan Martin G. Flannigan
Trustee Treasurer
Donald E. Gray, Jr. C.G.F.M.
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
3
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
Cadre Reserve Fund - U.S. Government Series:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Cadre Reserve Fund - U.S. Government Series (the
"Fund"), as of October 31, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the period January 5,
1999 (commencement of operations) through October 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cadre
Institutional Investors Trust - Cadre Reserve Fund - U.S Government Series as of
October 31, 1999, the results of its operations, the changes in its net assets,
and the financial highlights for the period January 5, 1999 (commencement of
operations) through October 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
Investment in Cadre Institutional Investors Trust -- U.S. Government
<S> <C>
Money Market Portfolio, at value $114,579,643
Receivable from advisor 48,783
Other receivable 3,525
------------
Total Assets 114,631,951
------------
LIABILITIES:
Accrued trustees' fees and expenses 6,588
Other accrued expenses 62,854
------------
Total Liabilities 69,442
------------
NET ASSETS $114,562,509
============
Shares of beneficial interest outstanding 114,562,509
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 1.00
============
NET ASSETS CONSIST OF:
Common Stock, at par value $ 114,563
Paid-in-capital in excess of par value 114,447,946
------------
Net assets $114,562,509
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 5, 1999 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT U.S
GOVERNMENT MONEY MARKET PORTFOLIO
<S> <C>
Interest $ 3,737,649
Expenses 108,837
-----------
NET INVESTMENT INCOME FROM CIIT U.S .GOVERNMENT MONEY
MARKET PORTFOLIO 3,628,812
EXPENSES:
Administration fees $ 73,618
Transfer agent fees 36,809
Offering costs 43,841
Registration and filing fees 37,245
Legal fees 28,434
Trustees' fees and expenses 11,027
Audit fees 10,720
Reports to shareholders expense 8,389
Liability insurance expense 1,171
Other expenses 4,198
-----------
Total expenses 255,452
Less: Fee waivers and expense reimbursements (216,663)
-----------
Net expenses 38,789
-----------
NET INVESTMENT INCOME $ 3,590,023
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JANUARY 5, 1999 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
OPERATIONS:
<S> <C>
Net investment income $ 3,590,023
-------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (3,590,023)
-------------
SHARE TRANSACTIONS:
Net proceeds from sale of shares 822,103,703
Net asset value of shares issued to shareholders from
reinvestment of dividends 3,590,023
Cost of shares redeemed (711,131,217)
-------------
Net increase in net assets resulting from share transactions 114,562,509
-------------
Net increase in net assets 114,562,509
NET ASSETS:
Beginning of period 0
-------------
End of period $ 114,562,509
=============
OTHER INFORMATION:
Share Transactions:
Shares sold 822,103,703
Shares issued to shareholders from reinvestment of
dividends 3,590,023
Shares repurchased (711,131,217)
-------------
Net increase in shares outstanding 114,562,509
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
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 Cadre Reserve Fund - U.S. Government Series
(the "Fund"). The Fund commenced investment operations on January 5, 1999.
The Fund invests all of its investable assets in the U.S. Government Money
Market Portfolio (the "Portfolio"). The Portfolio is a series of the trust that
has substantially the same investment objectives, policies and restrictions as
the Fund.
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 (62.1% at October 31, 1999). The Portfolio
has the same investment objective as the Fund and 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.
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 2 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
8
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
The Fund records its proportionate 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.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust, on behalf of the Fund, has entered into an Administration Agreement
with Cadre Financial Services, Inc. ("Cadre"), a wholly-owned subsidiary of
Ambac Financial Group, Inc., 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 0.10% of the Fund's first $250 million average daily
net assets, 0.075% of the Fund's next $750 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, 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.
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive distributor of the Trust's shares.
9
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 0.20% (annualized) of the Funds average daily net assets. During the
period January 5, 1999(commencement of operations) through October 31, 1999,
Cadre waived fees of $110,427 and reimbursed expenses of $106,236 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 go below
the expense limitation of 0.20% (annualized) of the Fund's average daily net
assets. The Plan has a term of three years from its adoption date of March 16,
2002. During the period January 5, 1999 (commencement of operations) through
October 31, 1999, the Fund did not reimburse Cadre for any waived fees or
reimbursed expenses pursuant to the terms of the Plan.
10
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - U.S. GOVERNMENT SERIES
FINANCIAL HIGHLIGHTS
FOR THE PERIOD JANUARY 5, 1999 (COMMENCEMENT OF OPERATIONS),
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding, is as follows:
<TABLE>
For a share outstanding throughout the period:
<S> <C>
Net asset value, beginning of period $ 1.00
------------
Income from investment operations:
Net investment income (1) 0.040
Less dividends:
Dividends from net investment income (0.040)
------------
Net increase in net asset value --
------------
Net asset value, end of period (000's) $ 1.00
============
Ratio/Supplemental Data:
Total return 4.04% **
Net assets, end of period $ 114,563
Ratio to average net assets:
Net investment income including reimbursement/waiver 4.86% *
Operating expenses including reimbursement/waiver 0.20% *
Operating expenses excluding reimbursement/waiver 0.49% *
<FN>
(1) Net investment income per share before waiver of fees and reimbursement of
expenses by the Investment Advisor was $0.0457 for the period ended October
31,1999.
* - Annualized
** - Unannualized
</FN>
</TABLE>
11
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
U.S. Government Money Market Portfolio
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - U.S. Government Money Market Portfolio (the
"Portfolio"), including the schedule of investments, as of October 31, 1999, and
the related statements of operations and changes in net assets for the period
December 21, 1998 (commencement of operations) through October 31, 1999. These
financial statements are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadre Institutional Investors
Trust - U.S. Government Money Market Portfolio as of October 31, 1999, the
results of its operations and the changes in its net assets for the period
December 21, 1998 (commencement of operations) through October 31, 1999, in
conformity with generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 70.2%
<C> <S> <C> <C>
$ 5,851 Federal Farm Credit Bank 5.23 % $ 5,851,000
November 1, 1999
8,000 Federal Home Loan Bank 5.68 7,901,540
January 21, 2000
10,500 Federal Home Loan Bank 5.71 10,351,612
February 1, 2000
6,000 Federal Home Loan Bank 5.70 5,908,833
February 9, 2000
5,000 Federal Home Loan Bank 5.45 5,001,797
July 19, 2000
25,000 Federal Home Loan Mortgage Co. 5.32 24,974,625
November 8, 1999
15,000 Federal Home Loan Mortgage Co. 5.30 14,976,167
November 12, 1999
10,000 Federal Home Loan Mortgage Co. 5.72 9,857,529
February 2, 2000
11,048 Federal Home Loan Mortgage Co. 5.68 10,878,143
February 10, 2000
6,000 Federal National Mortgage Assoc. 5.23 6,000,000
November 1, 1999
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
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS - (CONTINUED)
$ 15,000 Federal National Mortgage Assoc. 5.31 % $ 14,976,121
November 12, 1999
9,500 Federal National Mortgage Assoc. 5.63 9,367,475
February 2, 2000
3,500 Federal National Mortgage Assoc. 5.44 3,497,766
June 9, 2000
------------
Total U.S. Government Agency Obligations 129,542,608
------------
(amortized cost $129,542,608)
YIELD TO
RESET ON DATE
OF PURCHASE
-----------
U.S. GOVERNMENT AGENCY FLOATING RATE OBLIGATIONS - 8.1%
15,000 Federal Home Loan Bank 4.52 % 14,997,328
3 Month Treasury Bill Floater
Weekly reset
April 12, 2000
------------
(amortized cost $14,997,328)
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- --------
REPURCHASE AGREEMENTS - 21.5%
$ 20,000 Repurchase Agreement with Goldman
Sachs Group LP, 5.25%, dated 5.32 % $ 20,000,000
October 29, 1999, due November 1,
1999, repurchase price $20,008,750
(collateralized by various
Government National Mortgage
Association Pools with a market value
of $20,400,000)
19,721 Repurchase agreement with Morgan
Stanley Group Inc., 5.22%, dated 5.29 19,721,000
October 29, 1999, due November 1,
1999, repurchase price $19,729,579
(collateralized by various
Government National Mortgage
Association Pools with a market value
of $20,518,456)
------------
Total Repurchase Agreements 39,721,000
------------
(amortized cost $39,721,000)
Total Investments - 99.8% 184,260,936
(amortized cost $184,260,936)
Other assets in excess of liabilities - 0.2% 212,460
------------
Net Assets - 100.0% $184,473,396
============
</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 ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $184,260,936
Cash 41,532
Interest receivable 214,105
------------
Total Assets 184,516,573
------------
LIABILITIES:
Investment advisory fees payable 9,802
Accrued trustees' fees and expenses 6,524
Other accrued expenses 26,851
------------
Total Liabilities 43,177
------------
NET ASSETS $184,473,396
============
</TABLE>
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 OPERATIONS
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $6,812,731
EXPENSES:
Investment advisory fees 80,591
Trustees' fees and expenses 16,349
Legal fees 44,549
Audit fees 25,120
Offering costs 15,253
Custodian fees and expenses 13,481
Other expenses 6,515
----------
Total expenses 201,858
----------
NET INVESTMENT INCOME $6,610,873
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE PERIOD DECEMBER 21, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 6,610,873
-----------------------
SHARE TRANSACTIONS:
Contributions 1,431,230,426
Withdrawals (1,253,367,903)
-----------------------
Net increase in net assets resulting
from share transactions 177,862,523
-----------------------
Total increase in net assets 184,473,396
NET ASSETS:
Beginning of period 0
-----------------------
End of period $ 184,473,396
=======================
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
Ratio to Average Net Assets
Net expenses 0.15% *
Net investment income 4.92% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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.
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.
19
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 whollyo-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.
20
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
CIIT CHAIRMAN'S ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
Dear Shareholders,
As 1999 comes to a close and we stand poised for the new millenium, I cannot
help but reflect on what a year this has been for the Cadre Institutional
Investors Trust (the "Fund"). Since the Fund's inception in 1995, there has not
been such a robust year of development. This year saw the successful
implementation of Y2K readiness projects by our service providers and the full
implementation of the Fund's new master/feeder investment structure. During this
year, we have enjoyed explosive growth of new assets and investors to record
levels.
As many of you know, the Fund developed a master/feeder investment structure to
permit the Fund to expand its distribution channels to new markets and
shareholders, while permitting us to combine investment assets into our master
portfolios. Through this development, the Fund now offers six investment series,
each of which has received a AAA rating. As a result, the total assets of the
Fund have grown to a record high, as of October 31, 1999, of $893 million; and,
the number of shareholders has reached a new high of 335 shareholders. 2000 will
present a significant challenge if we hope to surpass the accomplishments of
1999, but I am confident that the Fund's service agents, Cadre Financial
Services, Inc. and Cadre Securities, Inc. stand ready to meet this challenge.
We will strive hard to exceed our 1999 accomplishments. For 2000, Cadre will
remain focused on the Fund's guiding principles of safety, liquidity and yield,
while continuing two major Fund initiatives -Technology and Education.
As we move into the new millennium, we are all faced with increasing demands and
decreasing resources. We all face the charge "Do more with less". Therefore, we
will increase our focus on one of the most valuable benefits of the Fund - Time.
Through the greater use of technology, we expect that the Fund will yield
greater TIME savings for you and your staff. Technology gives us the ability to
provide you with immediate access to your investments, online, permitting faster
processing time and the ability to conduct business on your time. Cadre has
invested great resources in the Fund's online reporting system, Compass, and
will do even more in 2000. During this coming year, Compass will be further
developed to provide enhanced reporting and transaction capability. Through
Compass, the Fund will continue to benefit its shareholders by reducing the time
spent managing your liquid assets.
Finally, important to us all, is the role of education. In the ever-changing
landscape of investments, it is very demanding to stay abreast of the latest
developments. The investment world is growing in complexity and the demands of
our positions are becoming increasingly challenging. For 2000, Cadre will focus
on providing value-added education in the many areas affecting your role as a
financial officer. Cadre intends to provide valuable investment and technology
seminars designed to help each of us better understand prudent investing and
effective cash management.
These initiatives will be as rewarding as they are difficult, but with your
continued support of the Fund, we are certain they will be accomplished. We look
forward to the millennium ahead.
Sincerely,
William T. Sullivan, Jr.
Chairman
1
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
In September 1998, the failure of Long Term Capital Management, a large hedge
fund, caused global financial panic, which resulted in a global flight to
quality in the U.S. Treasury market. This flight to quality caused the yield on
the 30-Year Treasury Bond to decline below 4.75%, its lowest level in history.
The Federal Reserve responded by aggressively lowering the overnight bank rate
by 75 basis points. In a period of six weeks, the Fed lowered the Fed Funds
target interest rate, in a series of three 25 basis point moves (from 5.50% to
4.75%), which included a rare inter-meeting move in October of 1998. The decline
in interest rates was a result of the view that the domestic economy would slow
dramatically. However, global financial markets stabilized and the domestic
economy continued to show resilience.
During the period, Gross Domestic Product (GDP) grew at an annualized rate of
4.3% and in the third quarter GDP was up an impressive 5.5%. The consumer has
been the catalyst for this strong economy. The consumer has benefited from a
tight labor market as evidenced by an unemployment rate of 4.1% combined with
the wealth effect, a result of the impressive gains in the stock market. In
fact, in the first quarter of 1999, consumer spending, which accounts for two
thirds of economic activity posted its largest gain in eleven years.
This economic strength combined with a lower rate of unemployment, concerned Fed
officials enough to begin raising the Fed Funds target interest rate. In fact,
beginning on June 30th of 1999, the Fed embarked on a series of three 25 basis
point rate increases, with the most recent move occurring on November 16th. This
last move completely reversed all the monetary stimulus provided by the Fed in
the fourth quarter of 1998.
Although the economy continues to grow at a brisk pace and the Fed has responded
by reversing all of the reductions of 1998, inflation still remains absent. The
GDP price deflator, a measure of price increases followed by many investors,
rose at a 1.1% pace in the third quarter, down from the 1.4% rate of the
previous quarter. This data mirrors other inflationary measures. The Producer
Price Index (PPI) decreased .1% in October and excluding the volatile food and
energy components, the core PPI increased .3%. Through October, core PPI has
risen at a .9% annual rate, down from a 1.6% rate during the first ten months of
last year. Prices also remain well behaved at the consumer level. The Consumer
Price Index (CPI) increased .2% in October and the core CPI increased .2%.
Through October, core CPI has risen at a 1.9% annual rate, down from a 2.0% rate
during the first ten months of last year
Despite the unemployment rate being at its lowest level since 1970, wages remain
well under control. The employment cost index (ECI) increased .9% in the third
quarter and benefit costs rose .8%. For the twelve months ended September 30th
the ECI rose 3.1%, down from a 3.7% increase for the 12 month period ended
September 30th 1998.
Worker productivity has played a large role in the economy's ability to maintain
a low unemployment rate with little signs of inflation. In the third quarter,
worker productivity increased at a 4.2% annual rate, which was the largest gain
since the first quarter of 1998.
In the statement that accompanied the November rate increase, the Fed stated
that "the pool of available workers willing to take jobs has been drawn down
further in recent months, a trend that must eventually be contained if
inflationary imbalances are to remain in check." Therefore, we believe that
continued tightening of the labor market or signs of inflation could force
another Fed rate increase by the first quarter of 2000.
2
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. C. Roderick O'Neil
Chairman and Trustee Trustee
David L. Boyle William J. Reynolds
Trustee Trustee
Russell E. Galipo Dr. Don I. Tharpe
Trustee Trustee
Harvey A. Fein Anne G. Gill, Esq.
Trustee Secretary
Michael P. Flanagan Martin G. Flanigan
Trustee Treasurer
Donald E. Gray, Jr. C.G.F.M.
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
3
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of Cadre Institutional Investors Trust
Cadre Liquid Asset Fund - Money Market Series:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Cadre Liquid Asset Fund - Money Market Series
(the "Fund"), as of October 31, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the period May 3, 1999
(commencement of operations) through October 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cadre
Institutional Investors Trust - Cadre Liquid Asset Fund - Money Market Series as
of October 31, 1999, the results of its operations, the changes in its net
assets, and the financial highlights for the period May 3, 1999 (commencement of
operations) through October 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in Cadre Institutional Investors Trust --
Money Market Portfolio, at value $36,407,750
Cash 26,000
Receivable from Advisor 22,724
Prepaid expenses
8,065
Total Assets 36,464,539
-----------
LIABILITIES:
Accrued trustees' fees and expenses 646
Other accrued expenses
48,988
Total Liabilities
49,634
NET ASSETS $36,414,905
===========
Shares of beneficial interest outstanding 36,414,905
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $ 1.00
===========
NET ASSETS CONSIST OF:
Common Stock, at par value $ 36,415
Paid-in capital in excess of par value 36,378,490
-----------
NET ASSETS $36,414,905
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT MONEY MARKET
PORTFOLIO
<S> <C> <C>
Interest $ 1,006,861
Expenses
35,352
NET INVESTMENT INCOME FROM CIIT
MONEY MARKET PORTFOLIO 971,509
EXPENSES:
Administration fees $ 36,830
Transfer agent fees 9,692
Trustees' fees and expenses 1,336
Offering costs 23,279
Registration and filing fees 12,917
Audit fees 10,000
Legal fees 3,893
Custodian fees 41,085
Printing fees 7,418
Other expenses 789
-----------
Total expenses 147,239
Less: Fee waivers and
expense reimbursements (91,339)
-----------
Net expenses
55,900
NET INVESTMENT INCOME $ 915,609
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 915,609
-------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (915,609)
-------------
SHARE TRANSACTIONS:
Net proceeds from sale of shares 260,956,239
Net asset value of shares issued to shareholders from
reinvestment of dividends 915,609
Cost of shares redeemed (225,456,943)
-------------
Net increase in net assets resulting from share transactions 36,414,905
-------------
Total increase in net assets 36,414,905
NET ASSETS:
Beginning of period
0
End of period $ 36,414,905
=============
OTHER INFORMATION
Share Transactions:
Shares sold 260,956,239
Shares issued to shareholders from reinvestment of dividends 915,609
Shares repurchased (225,456,943)
-------------
Net increase in shares outstanding 36,414,905
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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. 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 Cadre Liquid Asset Fund - Money Market Series (the "Fund"). The
Fund commenced operations on May 3, 1999.
The Fund invests all of its investable assets in the Money Market Portfolio (the
"Portfolio"). The Portfolio has the same investment objectives as the Fund.
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 (5.1% at October 31, 1999.) The Portfolio has
the same investment objectives as the Fund and 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.
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 2 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
8
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
The Fund records its proportionate share of net investment income and realized
gains and losses each day. 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 Trust 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 income 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.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust, on behalf of the Fund, has entered into an Administration Agreement
with Cadre Financial Services, Inc., a wholly-owned subsidiary of Ambac
Financial Group, 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.
The Trust, on behalf of the Fund, has entered into a Transfer Agent Agreement
with 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.
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive distributor of the Trust's shares.
9
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
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 0.47% (annualized) of the Funds average daily net assets. During the
period May 3, 1999 (commencement of operations) through October 31, 1999, Cadre
waived fees of $42,118 and reimbursed expenses of $49,221 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 go below
the expense limitation of 0.47% (annualized) of the Fund's average daily net
assets. The Plan has a term of three years from its adoption date of March 16,
2002. During the period May 3, 1999 (commencement of operations) through October
31, 1999, the Fund did not reimburse Cadre for any amounts pursuant to the terms
of the Plan.
10
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE LIQUID ASSET FUND - MONEY MARKET SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding, is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 3, 1999
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1999
----------------
For a share outstanding throughout the period:
<S> <C>
Net asset value, beginning of period $ 1.00
-------
Income from investment operations:
Net investment income (1)
0.0236
Less dividends:
Dividends from net investment income
(0.0236)
Net increase in net asset value
-------
Net asset value, end of period $ 1.00
=======
Ratio/Supplemental Data:
Total return 2.40%**
Net assets, end of period (000's) $36,415
Ratio to average net assets:
Net investment income including reimbursement/waiver 4.72%*
Operating expenses including reimbursement/waiver 0.47%*
Operating expenses excluding reimbursement/waiver 0.94%*
<FN>
(1) Net investment income per share before waiver of fees and reimbursement of
expense by the Investment Advisor was $0.0212 for the period ended October 31,
1999.
*- Annualized
**- Unannualized
</FN>
</TABLE>
11
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Money Market Portfolio (the "Portfolio"),
including the schedule of investment, as of October 31, 1999, and the related
statement of operations and the statement of changes in net assets for the
period May 3, 1999 (commencement of operations) through October 31, 1999. These
financial statements are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadre Institutional Investors
Trust - Money Market Portfolio as of October 31, 1999, the results of its
operations and the changes in its net assets for the period May 3, 1999
(commencement of operations) through October 31, 1999, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - 97.0%
<C> <S> <C> <C>
$ 2,000 Akzo Nobel Inc. 5.99 % $ 1,970,779
January 31, 2000
25,000 American Express Credit Corp. 5.39 24,974,285
November 8, 1999
25,000 American General Corp. 5.44 24,870,451
December 6, 1999
16,500 Archer Daniels Midland Co. 5.61 16,239,593
February 15, 2000
25,000 AT&T Corp. 5.39 24,967,000
November 10, 1999
18,000 Bankamerica Corp. 5.82 17,718,715
February 10, 2000
23,000 Bear Stearns Co. Inc. 6.21 22,677,463
January 24, 2000
2,000 Bear Stearns Co. Inc. 5.59 1,963,783
March 3, 2000
25,000 Bell Atlantic Network Funding 5.39 24,897,333
November 29, 1999
20,000 Ciesco LP 5.43 19,988,178
November 5, 1999
25,000 Citicorp 5.40 24,937,431
November 18, 1999
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 25,000 Coca Cola Company 5.35 % $ 24,938,021
November 18, 1999
14,000 CS First Boston 5.59 13,746,483
March 3, 2000
25,000 Daimler-Chrysler NA Hldg 5.42 24,933,500
November 19, 1999
25,000 Ford Motor Credit Company 5.41 24,882,222
December 3, 1999
2,000 General Motors Acceptance Corp. 5.82
1,969,365
February 8, 2000
18,000 General Motors Acceptance Corp. 5.95 17,701,275
February 14, 2000
14,000 Golden Peanut 5.41 13,942,289
November 29, 1999
14,000 Goldman Sachs Group LP 6.19 13,794,667
January 28, 2000
16,500 Goldman Sachs Group LP 5.94 16,258,807
February 1, 2000
24,653 Hasbro, Inc. 5.47 24,499,124
December 13, 1999
3,450 Hasbro, Inc. 5.94 3,398,106
February 4, 2000
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 25,000 IBM Credit Corp. 5.35 % $24,934,375
November 19, 1999
18,000 Morgan Stanley Dean Witter 5.97 17,772,875
January 19, 2000
17,000 National Rural Utilities 5.89 16,790,787
January 18, 2000
25,000 New Center Asset Funding A-1+ 5.43 24,940,889
November 17, 1999
21,000 Proctor & Gamble Co. 5.39 21,000,000
November 1, 1999
25,000 Prudential Funding Corp. 6.19 24,608,333
February 3, 2000
25,000 Riverwoods Funding Corp. 6.29 24,686,014
January 14, 2000
18,000 Salomon Smith Barney Holdings 5.95 17,737,340
February 1, 2000
25,000 San Paolo US Financial Co. 5.36 24,923,292
November 22, 1999
25,000 Sara Lee Corporation 5.40 25,000,000
November 1, 1999
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 9,025 Sweetwater Capital 5.46 % $ 9,006,153
November 15, 1999
10,000 Teachers Ins. and Annuity Assoc. 5.39 10,000,000
November 1, 1999
23,000 Triple-A One Funding Corp. 5.47 22,969,123
November 10, 1999
21,000 Wal-Mart Stores Inc. 5.39 21,000,000
November 1, 1999
17,000 Wells Fargo & Company 5.94 16,736,217
------------
February 7, 2000
Total Commercial Paper 687,374,268
------------
(amortized cost $687,374,268)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.7%
5,000 Federal Home Loan Bank 5.50 4,999,640
------------
(amortized cost $4,999,640)
July 21, 2000
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
REPURCHASE AGREEMENT - 2.3%
$ 16,143 Repurchase agreement with 5.32 % $ 16,143,000
Goldman Sachs, due November 1,
1999 (collateralized by
$16,143,000 Government National
Mortgage Association Pools, value
$16,465,860)
(amortized cost $16,143,000)
-------------
Total investments - 100.0% 708,516,908
(amortized cost $708,516,908)
Other assets in excess of
3,604
liabilities - 0.0%
Total net assets - 100.0% $ 708,520,512
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $708,516,908
Cash
2,367
Interest receivable 83,452
Prepaid expenses
3,348
Total Assets
708,606,075
------------
LIABILITIES:
Investment advisory fees payable 46,693
Accrued trustees' fees and expenses 1,965
Other accrued expenses 36,905
------------
Total Liabilities
85,563
------------
NET ASSETS $708,520,512
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $5,119,880
EXPENSES:
Investment advisory fees 76,092
Accrued trustees' fees and expenses 3,580
Audit fees 25,000
Offering costs 15,253
Custodian fees 14,386
Legal fees 5,569
Other expenses
3,813
------
Net expenses 143,693
----------
NET INVESTMENT INCOME $4,976,187
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 4,976,187
---------------
SHARE TRANSACTIONS:
Contributions 1,913,721,258
Withdrawals (1,210,176,933)
---------------
Net increase in net assets resulting from share transactions 703,544,325
---------------
Total increase in net assets 708,520,512
NET ASSETS:
Beginning of period
0
End of period $ 708,520,512
===============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
Ratio to average net assets:
Net expenses 0.15% *
Net investment income 5.23% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 supplementary data are those of the Money Market Portfolio (the
"Portfolio"). The Portfolio commenced operations on May 3, 1999.
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 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 and losses on sales of securities are
determined by the identified cost method.
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 custodians, as the case may be under tri-party repurchase agreements,
takes possession of the collateral pledged for investments in
21
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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
obligations to repurchase, the Portfolio has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligations. 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 Fund, has entered into an Investment Advisory
Agreement with Cadre Financial Services, Inc. ("Cadre"), a wholly-owned
subsidiary of Ambac Financial Group, Inc., 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 0.08% of the Portfolio'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 the 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.
22
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
CIIT CHAIRMAN'S ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
Dear Shareholders,
As 1999 comes to a close and we stand poised for the new millenium, I cannot
help but reflect on what a year this has been for the Cadre Institutional
Investors Trust (the "Fund"). Since the Fund's inception in 1995, there has not
been such a robust year of development. This year saw the successful
implementation of Y2K readiness projects by our service providers and the full
implementation of the Fund's new master/feeder investment structure. During this
year, we have enjoyed explosive growth of new assets and investors to record
levels.
As many of you know, the Fund developed a master/feeder investment structure to
permit the Fund to expand its distribution channels to new markets and
shareholders, while permitting us to combine investment assets into our master
portfolios. Through this development, the Fund now offers six investment series,
each of which has received a AAA rating. As a result, the total assets of the
Fund have grown to a record high, as of October 31, 1999, of $893 million; and,
the number of shareholders has reached a new high of 335 shareholders. 2000 will
present a significant challenge if we hope to surpass the accomplishments of
1999, but I am confident that the Fund's service agents, Cadre Financial
Services, Inc. and Cadre Securities, Inc. stand ready to meet this challenge.
We will strive hard to exceed our 1999 accomplishments. For 2000, Cadre will
remain focused on the Fund's guiding principles of safety, liquidity and yield,
while continuing two major Fund initiatives -Technology and Education.
As we move into the new millennium, we are all faced with increasing demands and
decreasing resources. We all face the charge "Do more with less". Therefore, we
will increase our focus on one of the most valuable benefits of the Fund - Time.
Through the greater use of technology, we expect that the Fund will yield
greater TIME savings for you and your staff. Technology gives us the ability to
provide you with immediate access to your investments, online, permitting faster
processing time and the ability to conduct business on your time. Cadre has
invested great resources in the Fund's online reporting system, Compass, and
will do even more in 2000. During this coming year, Compass will be further
developed to provide enhanced reporting and transaction capability. Through
Compass, the Fund will continue to benefit its shareholders by reducing the time
spent managing your liquid assets.
Finally, important to us all, is the role of education. In the ever-changing
landscape of investments, it is very demanding to stay abreast of the latest
developments. The investment world is growing in complexity and the demands of
our positions are becoming increasingly challenging. For 2000, Cadre will focus
on providing value-added education in the many areas affecting your role as a
financial officer. Cadre intends to provide valuable investment and technology
seminars designed to help each of us better understand prudent investing and
effective cash management.
These initiatives will be as rewarding as they are difficult, but with your
continued support of the Fund, we are certain they will be accomplished. We look
forward to the millennium ahead.
Sincerely,
William T. Sullivan, Jr.
Chairman
1
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
In September 1998, the failure of Long Term Capital Management, a large hedge
fund, caused global financial panic, which resulted in a global flight to
quality in the U.S. Treasury market. This flight to quality caused the yield on
the 30-Year Treasury Bond to decline below 4.75%, its lowest level in history.
The Federal Reserve responded by aggressively lowering the overnight bank rate
by 75 basis points. In a period of six weeks, the Fed lowered the Fed Funds
target interest rate, in a series of three 25 basis point moves (from 5.50% to
4.75%), which included a rare inter-meeting move in October of 1998. The decline
in interest rates was a result of the view that the domestic economy would slow
dramatically. However, global financial markets stabilized and the domestic
economy continued to show resilience.
During the period, Gross Domestic Product (GDP) grew at an annualized rate of
4.3% and in the third quarter GDP was up an impressive 5.5%. The consumer has
been the catalyst for this strong economy. The consumer has benefited from a
tight labor market as evidenced by an unemployment rate of 4.1% combined with
the wealth effect, a result of the impressive gains in the stock market. In
fact, in the first quarter of 1999, consumer spending, which accounts for two
thirds of economic activity posted its largest gain in eleven years.
This economic strength combined with a lower rate of unemployment, concerned Fed
officials enough to begin raising the Fed Funds target interest rate. In fact,
beginning on June 30th of 1999, the Fed embarked on a series of three 25 basis
point rate increases, with the most recent move occurring on November 16th. This
last move completely reversed all the monetary stimulus provided by the Fed in
the fourth quarter of 1998.
Although the economy continues to grow at a brisk pace and the Fed has responded
by reversing all of the reductions of 1998, inflation still remains absent. The
GDP price deflator, a measure of price increases followed by many investors,
rose at a 1.1% pace in the third quarter, down from the 1.4% rate of the
previous quarter. This data mirrors other inflationary measures. The Producer
Price Index (PPI) decreased .1% in October and excluding the volatile food and
energy components, the core PPI increased .3%. Through October, core PPI has
risen at a .9% annual rate, down from a 1.6% rate during the first ten months of
last year. Prices also remain well behaved at the consumer level. The Consumer
Price Index (CPI) increased .2% in October and the core CPI increased .2%.
Through October, core CPI has risen at a 1.9% annual rate, down from a 2.0% rate
during the first ten months of last year
Despite the unemployment rate being at its lowest level since 1970, wages remain
well under control. The employment cost index (ECI) increased .9% in the third
quarter and benefit costs rose .8%. For the twelve months ended September 30th
the ECI rose 3.1%, down from a 3.7% increase for the 12 month period ended
September 30th 1998.
Worker productivity has played a large role in the economy's ability to maintain
a low unemployment rate with little signs of inflation. In the third quarter,
worker productivity increased at a 4.2% annual rate, which was the largest gain
since the first quarter of 1998.
In the statement that accompanied the November rate increase, the Fed stated
that "the pool of available workers willing to take jobs has been drawn down
further in recent months, a trend that must eventually be contained if
inflationary imbalances are to remain in check." Therefore, we believe that
continued tightening of the labor market or signs of inflation could force
another Fed rate increase by the first quarter of 2000.
2
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. C. Roderick O'Neil
Chairman and Trustee Trustee
David L. Boyle William J. Reynolds
Trustee Trustee
Russell E. Galipo Dr. Don I. Tharpe
Trustee Trustee
Harvey A. Fein Anne G. Gill, Esq.
Trustee Secretary
Michael P. Flanagan Martin G. Flanigan
Trustee Treasurer
Donald E. Gray, Jr. C.G.F.M.
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
3
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of Cadre Institutional Investors Trust
Cadre Affinity Fund - Money Market Series:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Cadre Affinity Fund - Money Market Series (the
"Fund"), as of October 31, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the period May 3, 1999
(commencement of operations) through October 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cadre
Institutional Investors Trust - Cadre Affinity Fund - Money Market Series as of
October 31, 1999, the results of its operations, the changes in its net assets,
and the financial highlights for the period May 3, 1999 (commencement of
operations) through October 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in Cadre Institutional Investors Trust - Money Market
Portfolio, at value $49,508,229
Other assets 50,000
Prepaid expenses
499
Total Assets 49,558,728
-----------
LIABILITIES:
Administration fees payable 3,603
Transfer agent fees payable 948
Accrued trustees' fees and expenses 527
Other accrued expenses
41,892
Total Liabilities
46,970
NET ASSETS $49,511,758
===========
Shares of beneficial interest outstanding 49,511,758
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $ 1.00
===========
NET ASSETS CONSIST OF:
Common Stock, at par value $ 49,512
Paid-in capital in excess of par value 49,462,246
-----------
NET ASSETS $49,511,758
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT
MONEY MARKET PORTFOLIO
<S> <C> <C>
Interest $ 1,200,036
Expenses 41,538
-----------
NET INVESTMENT INCOME FROM CIIT
MONEY MARKET PORTFOLIO 1,158,498
EXPENSES:
Administration fees $ 43,702
Transfer agent fees 11,500
12b-1 fees 23,001
Trustees' fees and expenses 1,336
Offering costs 25,834
Registration and filing fees 15,084
Custodian fees 13,056
Audit fees 10,000
Printing fees 7,418
Legal fees 4,031
Other expenses 756
-----------
Total expenses 155,718
Less: Fee waivers and
expense reimbursements (65,959)
-----------
Net expenses 89,759
-----------
NET INVESTMENT INCOME $ 1,068,739
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 1,068,739
-------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (1,068,739)
-------------
SHARE TRANSACTIONS:
Net proceeds from sale of shares 364,356,774
Net asset value of shares issued to shareholders from
reinvestment of dividends 1,068,739
Cost of shares redeemed (315,913,755)
-------------
Net increase in net assets resulting from share transactions 49,511,758
-------------
Total increase in net assets 49,511,758
NET ASSETS:
Beginning of period
0
End of period $ 49,511,758
=============
OTHER INFORMATION
Share Transactions:
Shares sold 364,356,774
Shares issued to shareholders from reinvestment of dividends 1,068,739
Shares repurchased (315,913,755)
-------------
Net increase in shares outstanding 49,511,758
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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. 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 Cadre Affinity Fund - Money Market Series (the "Fund"). The
Fund commenced operations on May 3, 1999.
The Fund invests all of its investable assets in the Money Market Portfolio (the
"Portfolio"). The portfolio has the same investment objective as the Fund.
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 (7.0% at October 31, 1999.) The Portfolio has
the same investment objective as the Fund and 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.
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 2 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
8
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
The Fund records its proportionate share of net investment income and realized
gains and losses each day. 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 Trust 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 income 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.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust, on behalf of the Fund, has entered into an Administration Agreement
with Cadre Financial Services, Inc., a wholly-owned subsidiary of Ambac
Financial Group, 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.
The Trust, on behalf of the Fund, has entered into a Transfer Agent Agreement
with 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.
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive distributor of the Trust's shares.
9
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
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 find
exceed 0.57% (annualized) of the Funds average daily net assets. During the
period May 3, 1999 (commencement of operations) through October 31, 1999, Cadre
waived fees of $36,349 and reimbursed expenses of $29,610 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 go below
the expense limitation of 0.57% (annualized) of the Fund's average daily net
assets. The Plan has a term of three years from its adoption date of March 16,
2002. During the period May 3, 1999 (commencement of operations) through October
31, 1999, the Fund did not reimburse Cadre for any amounts pursuant to the terms
of the Plan.
10
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE AFFINITY FUND - MONEY MARKET SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding, is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 3, 1999
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1999
-----------------------
For a share outstanding throughout the period:
<S> <C>
Net asset value, beginning of period $ 1.00
------------
Income from investment operations:
Net investment income (1)
0.0232
Less dividends:
Dividends from net investment income
(0.0232)
Net increase in net asset value
------------
Net asset value, end of period $ 1.00
============
Ratio/Supplemental Data:
Total return 2.35%**
Net assets, end of period (000's) $ 49,512
Ratio to average net assets:
Net investment income including reimbursement/waiver 4.65%*
Operating expenses including reimbursement/waiver 0.57%*
Operating expenses excluding reimbursement/waiver 0.86%*
<FN>
(1) Net investment income per share before waiver of fees and reimbursement of
expense by the Investment Advisor was $0.0217 for the period ended October 31,
1999.
*- Annualized
**- Unannualized
</FN>
</TABLE>
11
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Money Market Portfolio (the "Portfolio"),
including the schedule of investment, as of October 31, 1999, and the related
statement of operations and the statement of changes in net assets for the
period May 3, 1999 (commencement of operations) through October 31, 1999. These
financial statements are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadre Institutional Investors
Trust - Money Market Portfolio as of October 31, 1999, the results of its
operations and the changes in its net assets for the period May 3, 1999
(commencement of operations) through October 31, 1999, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - 97.0%
<C> <S> <C> <C>
$ 2,000 Akzo Nobel Inc. 5.99 % $ 1,970,779
January 31, 2000
25,000 American Express Credit Corp. 5.39 24,974,285
November 8, 1999
25,000 American General Corp. 5.44 24,870,451
December 6, 1999
16,500 Archer Daniels Midland Co. 5.61 16,239,593
February 15, 2000
25,000 AT&T Corp. 5.39 24,967,000
November 10, 1999
18,000 Bankamerica Corp. 5.82 17,718,715
February 10, 2000
23,000 Bear Stearns Co. Inc. 6.21 22,677,463
January 24, 2000
2,000 Bear Stearns Co. Inc. 5.59 1,963,783
March 3, 2000
25,000 Bell Atlantic Network Funding 5.39 24,897,333
November 29, 1999
20,000 Ciesco LP 5.43 19,988,178
November 5, 1999
25,000 Citicorp 5.40 24,937,431
November 18, 1999
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 25,000 Coca Cola Company 5.35 % $ 24,938,021
November 18, 1999
14,000 CS First Boston 5.59 13,746,483
March 3, 2000
25,000 Daimler-Chrysler NA Hldg 5.42 24,933,500
November 19, 1999
25,000 Ford Motor Credit Company 5.41 24,882,222
December 3, 1999
2,000 General Motors Acceptance Corp. 5.82
1,969,365
February 8, 2000
18,000 General Motors Acceptance Corp. 5.95 17,701,275
February 14, 2000
14,000 Golden Peanut 5.41 13,942,289
November 29, 1999
14,000 Goldman Sachs Group LP 6.19 13,794,667
January 28, 2000
16,500 Goldman Sachs Group LP 5.94 16,258,807
February 1, 2000
24,653 Hasbro, Inc. 5.47 24,499,124
December 13, 1999
3,450 Hasbro, Inc. 5.94 3,398,106
February 4, 2000
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 25,000 IBM Credit Corp. 5.35 % $24,934,375
November 19, 1999
18,000 Morgan Stanley Dean Witter 5.97 17,772,875
January 19, 2000
17,000 National Rural Utilities 5.89 16,790,787
January 18, 2000
25,000 New Center Asset Funding A-1+ 5.43 24,940,889
November 17, 1999
21,000 Proctor & Gamble Co. 5.39 21,000,000
November 1, 1999
25,000 Prudential Funding Corp. 6.19 24,608,333
February 3, 2000
25,000 Riverwoods Funding Corp. 6.29 24,686,014
January 14, 2000
18,000 Salomon Smith Barney Holdings 5.95 17,737,340
February 1, 2000
25,000 San Paolo US Financial Co. 5.36 24,923,292
November 22, 1999
25,000 Sara Lee Corporation 5.40 25,000,000
November 1, 1999
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 9,025 Sweetwater Capital 5.46 % $ 9,006,153
November 15, 1999
10,000 Teachers Ins. and Annuity Assoc. 5.39 10,000,000
November 1, 1999
23,000 Triple-A One Funding Corp. 5.47 22,969,123
November 10, 1999
21,000 Wal-Mart Stores Inc. 5.39 21,000,000
November 1, 1999
17,000 Wells Fargo & Company 5.94 16,736,217
------------
February 7, 2000
Total Commercial Paper 687,374,268
------------
(amortized cost $687,374,268)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.7%
5,000 Federal Home Loan Bank 5.50 4,999,640
------------
(amortized cost $4,999,640)
July 21, 2000
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
REPURCHASE AGREEMENT - 2.3%
$ 16,143 Repurchase agreement with 5.32 % $ 16,143,000
Goldman Sachs, due November 1,
1999 (collateralized by
$16,143,000 Government National
Mortgage Association Pools, value
$16,465,860)
(amortized cost $16,143,000)
-------------
Total investments - 100.0% 708,516,908
(amortized cost $708,516,908)
Other assets in excess of
3,604
liabilities - 0.0%
Total net assets - 100.0% $ 708,520,512
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $708,516,908
Cash
2,367
Interest receivable 83,452
Prepaid expenses
3,348
Total Assets
708,606,075
------------
LIABILITIES:
Investment advisory fees payable 46,693
Accrued trustees' fees and expenses 1,965
Other accrued expenses 36,905
------------
Total Liabilities
85,563
------------
NET ASSETS $708,520,512
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $5,119,880
EXPENSES:
Investment advisory fees 76,092
Accrued trustees' fees and expenses 3,580
Audit fees 25,000
Offering costs 15,253
Custodian fees 14,386
Legal fees 5,569
Other expenses
3,813
------
Net expenses 143,693
----------
NET INVESTMENT INCOME $4,976,187
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 4,976,187
---------------
SHARE TRANSACTIONS:
Contributions 1,913,721,258
Withdrawals (1,210,176,933)
---------------
Net increase in net assets resulting from share transactions 703,544,325
---------------
Total increase in net assets 708,520,512
NET ASSETS:
Beginning of period
0
End of period $ 708,520,512
===============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
Ratio to average net assets:
Net expenses 0.15% *
Net investment income 5.23% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 supplementary data are those of the Money Market Portfolio (the
"Portfolio"). The Portfolio commenced operations on May 3, 1999.
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 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 and losses on sales of securities are
determined by the identified cost method.
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 custodians, as the case may be under tri-party repurchase agreements,
takes possession of the collateral pledged for investments in
21
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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
obligations to repurchase, the Portfolio has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligations. 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 Fund, has entered into an Investment Advisory
Agreement with Cadre Financial Services, Inc. ("Cadre"), a wholly-owned
subsidiary of Ambac Financial Group, Inc., 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 0.08% of the Portfolio'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 the 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.
22
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
ANNUAL REPORT
OCTOBER 31, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
CIIT CHAIRMAN'S ANNUAL REPORT LETTER
- --------------------------------------------------------------------------------
Dear Shareholders,
As 1999 comes to a close and we stand poised for the new millenium, I cannot
help but reflect on what a year this has been for the Cadre Institutional
Investors Trust (the "Fund"). Since the Fund's inception in 1995, there has not
been such a robust year of development. This year saw the successful
implementation of Y2K readiness projects by our service providers and the full
implementation of the Fund's new master/feeder investment structure. During this
year, we have enjoyed explosive growth of new assets and investors to record
levels.
As many of you know, the Fund developed a master/feeder investment structure to
permit the Fund to expand its distribution channels to new markets and
shareholders, while permitting us to combine investment assets into our master
portfolios. Through this development, the Fund now offers six investment series,
each of which has received a AAA rating. As a result, the total assets of the
Fund have grown to a record high, as of October 31, 1999, of $893 million; and,
the number of shareholders has reached a new high of 335 shareholders. 2000 will
present a significant challenge if we hope to surpass the accomplishments of
1999, but I am confident that the Fund's service agents, Cadre Financial
Services, Inc. and Cadre Securities, Inc. stand ready to meet this challenge.
We will strive hard to exceed our 1999 accomplishments. For 2000, Cadre will
remain focused on the Fund's guiding principles of safety, liquidity and yield,
while continuing two major Fund initiatives -Technology and Education.
As we move into the new millennium, we are all faced with increasing demands and
decreasing resources. We all face the charge "Do more with less". Therefore, we
will increase our focus on one of the most valuable benefits of the Fund - Time.
Through the greater use of technology, we expect that the Fund will yield
greater TIME savings for you and your staff. Technology gives us the ability to
provide you with immediate access to your investments, online, permitting faster
processing time and the ability to conduct business on your time. Cadre has
invested great resources in the Fund's online reporting system, Compass, and
will do even more in 2000. During this coming year, Compass will be further
developed to provide enhanced reporting and transaction capability. Through
Compass, the Fund will continue to benefit its shareholders by reducing the time
spent managing your liquid assets.
Finally, important to us all, is the role of education. In the ever-changing
landscape of investments, it is very demanding to stay abreast of the latest
developments. The investment world is growing in complexity and the demands of
our positions are becoming increasingly challenging. For 2000, Cadre will focus
on providing value-added education in the many areas affecting your role as a
financial officer. Cadre intends to provide valuable investment and technology
seminars designed to help each of us better understand prudent investing and
effective cash management.
These initiatives will be as rewarding as they are difficult, but with your
continued support of the Fund, we are certain they will be accomplished. We look
forward to the millennium ahead.
Sincerely,
William T. Sullivan, Jr.
Chairman
1
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
In September 1998, the failure of Long Term Capital Management, a large hedge
fund, caused global financial panic, which resulted in a global flight to
quality in the U.S. Treasury market. This flight to quality caused the yield on
the 30-Year Treasury Bond to decline below 4.75%, its lowest level in history.
The Federal Reserve responded by aggressively lowering the overnight bank rate
by 75 basis points. In a period of six weeks, the Fed lowered the Fed Funds
target interest rate, in a series of three 25 basis point moves (from 5.50% to
4.75%), which included a rare inter-meeting move in October of 1998. The decline
in interest rates was a result of the view that the domestic economy would slow
dramatically. However, global financial markets stabilized and the domestic
economy continued to show resilience.
During the period, Gross Domestic Product (GDP) grew at an annualized rate of
4.3% and in the third quarter GDP was up an impressive 5.5%. The consumer has
been the catalyst for this strong economy. The consumer has benefited from a
tight labor market as evidenced by an unemployment rate of 4.1% combined with
the wealth effect, a result of the impressive gains in the stock market. In
fact, in the first quarter of 1999, consumer spending, which accounts for two
thirds of economic activity posted its largest gain in eleven years.
This economic strength combined with a lower rate of unemployment, concerned Fed
officials enough to begin raising the Fed Funds target interest rate. In fact,
beginning on June 30th of 1999, the Fed embarked on a series of three 25 basis
point rate increases, with the most recent move occurring on November 16th. This
last move completely reversed all the monetary stimulus provided by the Fed in
the fourth quarter of 1998.
Although the economy continues to grow at a brisk pace and the Fed has responded
by reversing all of the reductions of 1998, inflation still remains absent. The
GDP price deflator, a measure of price increases followed by many investors,
rose at a 1.1% pace in the third quarter, down from the 1.4% rate of the
previous quarter. This data mirrors other inflationary measures. The Producer
Price Index (PPI) decreased .1% in October and excluding the volatile food and
energy components, the core PPI increased .3%. Through October, core PPI has
risen at a .9% annual rate, down from a 1.6% rate during the first ten months of
last year. Prices also remain well behaved at the consumer level. The Consumer
Price Index (CPI) increased .2% in October and the core CPI increased .2%.
Through October, core CPI has risen at a 1.9% annual rate, down from a 2.0% rate
during the first ten months of last year
Despite the unemployment rate being at its lowest level since 1970, wages remain
well under control. The employment cost index (ECI) increased .9% in the third
quarter and benefit costs rose .8%. For the twelve months ended September 30th
the ECI rose 3.1%, down from a 3.7% increase for the 12 month period ended
September 30th 1998.
Worker productivity has played a large role in the economy's ability to maintain
a low unemployment rate with little signs of inflation. In the third quarter,
worker productivity increased at a 4.2% annual rate, which was the largest gain
since the first quarter of 1998.
In the statement that accompanied the November rate increase, the Fed stated
that "the pool of available workers willing to take jobs has been drawn down
further in recent months, a trend that must eventually be contained if
inflationary imbalances are to remain in check." Therefore, we believe that
continued tightening of the labor market or signs of inflation could force
another Fed rate increase by the first quarter of 2000.
2
<PAGE>
TRUSTEES AND OFFICERS
William T. Sullivan, Jr. C. Roderick O'Neil
Chairman and Trustee Trustee
David L. Boyle William J. Reynolds
Trustee Trustee
Russell E. Galipo Dr. Don I. Tharpe
Trustee Trustee
Harvey A. Fein Anne G. Gill, Esq.
Trustee Secretary
Michael P. Flanagan Martin G. Flanigan
Trustee Treasurer
Donald E. Gray, Jr. C.G.F.M.
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
3
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of Cadre Institutional Investors Trust
Cadre Reserve Fund - Money Market Series:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Cadre Reserve Fund - Money Market Series (the
"Fund"), as of October 31, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the period May 3, 1999
(commencement of operations) through October 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cadre
Institutional Investors Trust - Cadre Reserve Fund - Money Market Series as of
October 31, 1999, the results of its operations, the changes in its net assets,
and the financial highlights for the period May 3, 1999 (commencement of
operations) through October 31, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
Investment in Cadre Institutional Investors Trust - Money Market
<S> <C>
Portfolio, at value $22,402,720
Receivable from Advisor 19,561
Prepaid expenses
2,514
Total Assets 22,424,795
-----------
LIABILITIES:
Accrued trustees' fees and expenses 55
Other accrued expenses
27,296
Total Liabilities
27,351
NET ASSETS $22,397,444
===========
Shares of beneficial interest outstanding 22,397,444
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE $ 1.00
===========
NET ASSETS CONSIST OF:
Common Stock, at par value $ 22,397
Paid-in capital in excess of par value 22,375,047
-----------
NET ASSETS $22,397,444
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 19, 1999 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
INVESTMENT INCOME AND EXPENSES ALLOCATED FROM CIIT
MONEY MARKET PORTFOLIO
<S> <C>
Interest $ 190,939
Expenses 6,114
---------
NET INVESTMENT INCOME FROM CIIT
MONEY MARKET PORTFOLIO 184,825
EXPENSES:
Administration fees $ 3,601
Transfer agent fees 1,800
Trustees' fees and expenses 172
Offering costs 23,434
Audit fees 10,000
Custodian fees 9,891
Printing fees 6,766
Registration and filing fees 2,871
Legal fees 2,329
Other expenses 535
---------
Total expenses 61,399
Less: Fee waivers and
expense reimbursements (59,578)
---------
Net expenses 1,821
---------
NET INVESTMENT INCOME $ 183,004
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 19, 1999 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 183,004
------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (Note 2) (183,004)
------------
SHARE TRANSACTIONS:
Net proceeds from sale of shares 29,768,655
Net asset value of shares issued to shareholders from
reinvestment of dividends 183,004
Cost of shares redeemed (7,554,215)
------------
Net increase in net assets resulting from share transactions 22,397,444
------------
Total increase in net assets 22,397,444
NET ASSETS:
Beginning of period
0
End of period $ 22,397,444
============
OTHER INFORMATION
Share Transactions:
Shares sold 29,768,655
Shares issued to shareholders from reinvestment of dividends 183,004
Shares repurchased (7,554,215)
------------
Net increase in shares outstanding 22,397,444
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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. 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 Cadre Reserve Fund - Money Market Series (the "Fund"). The Fund
commenced operations on May 19, 1999.
The Fund invests all of its investable assets in the Money Market Portfolio (the
"Portfolio"). The Portfolio has the same investment objective as the Fund.
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 (0.3% at October 31, 1999.) The Portfolio has
the same investment objective as the Fund and 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.
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 2 of the
Portfolio's Notes to Financial Statements, which are included elsewhere in this
report.
8
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME
The Fund records its proportionate share of net investment income and realized
gains and losses each day. 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 Trust 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 income 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.
NOTE 3 - TRANSACTIONS WITH AFFILIATES
The Trust, on behalf of the Fund, has entered into an Administration Agreement
with Cadre Financial Services, Inc., a wholly-owned subsidiary of Ambac
Financial Group, 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 0.10% of the Fund's first $250 million average daily
net assets, 0.075% of the Fund's next $750 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, 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.
Cadre Securities, Inc. (the "Distributor"), a wholly-owned subsidiary of Ambac
Financial Group, Inc., acts as the exclusive distributor of the Trust's shares.
9
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 0.22% (annualized) of the Funds average daily net assets. During the
period May 19, 1999 (commencement of operations) through October 31, 1999, Cadre
waived fees of $5,401 and reimbursed expenses of $ 54,177 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 go below
the expense limitation of 0.22% (annualized) of the Fund's average daily net
assets. The Plan has a term of three years from its adoption date of March 16,
2002. During the period May 19, 1999 (commencement of operations) through
October 31, 1999, the Fund did not reimburse Cadre for any amounts pursuant to
the terms of the Plan.
10
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
CADRE RESERVE FUND - MONEY MARKET SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding, is as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 19, 1999
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1999
----------------
For a share outstanding throughout the period:
<S> <C>
Net asset value, beginning of period $ 1.00
------------
Income from investment operations:
Net investment income (1)
0.0230
Less dividends:
Dividends from net investment income
0.0230
Net increase in net asset value
------------
Net asset value, end of period $ 1.00
============
Ratio/Supplemental Data:
Total return 2.50%**
Net assets, end of period (000's) $ 22,397
Ratio to average net assets:
Net investment income including reimbursement/waiver 5.08%*
Operating expenses including reimbursement/waiver 0.22%*
Operating expenses excluding reimbursement/waiver 1.87%*
<FN>
(1) Net investment income per share before waiver of fees and reimbursement of
expense by the Investment Advisor was $0.0156 for the period ended October 31,
1999.
*- Annualized
**- Unannualized
</FN>
</TABLE>
11
<PAGE>
KPMG LOGO
Financial Services
757 Third Avenue
New York, NY 10017
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Shareholders and Board of Trustees of
Cadre Institutional Investors Trust
Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of Cadre
Institutional Investors Trust - Money Market Portfolio (the "Portfolio"),
including the schedule of investment, as of October 31, 1999, and the related
statement of operations and the statement of changes in net assets for the
period May 3, 1999 (commencement of operations) through October 31, 1999. These
financial statements are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of October 31, 1999, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cadre Institutional Investors
Trust - Money Market Portfolio as of October 31, 1999, the results of its
operations and the changes in its net assets for the period May 3, 1999
(commencement of operations) through October 31, 1999, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
------------
KPMG LLP
December 14, 1999
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - 97.0%
<C> <S> <C> <C>
$ 2,000 Akzo Nobel Inc. 5.99 % $ 1,970,779
January 31, 2000
25,000 American Express Credit Corp. 5.39 24,974,285
November 8, 1999
25,000 American General Corp. 5.44 24,870,451
December 6, 1999
16,500 Archer Daniels Midland Co. 5.61 16,239,593
February 15, 2000
25,000 AT&T Corp. 5.39 24,967,000
November 10, 1999
18,000 Bankamerica Corp. 5.82 17,718,715
February 10, 2000
23,000 Bear Stearns Co. Inc. 6.21 22,677,463
January 24, 2000
2,000 Bear Stearns Co. Inc. 5.59 1,963,783
March 3, 2000
25,000 Bell Atlantic Network Funding 5.39 24,897,333
November 29, 1999
20,000 Ciesco LP 5.43 19,988,178
November 5, 1999
25,000 Citicorp 5.40 24,937,431
November 18, 1999
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 25,000 Coca Cola Company 5.35 % $ 24,938,021
November 18, 1999
14,000 CS First Boston 5.59 13,746,483
March 3, 2000
25,000 Daimler-Chrysler NA Hldg 5.42 24,933,500
November 19, 1999
25,000 Ford Motor Credit Company 5.41 24,882,222
December 3, 1999
2,000 General Motors Acceptance Corp. 5.82
1,969,365
February 8, 2000
18,000 General Motors Acceptance Corp. 5.95 17,701,275
February 14, 2000
14,000 Golden Peanut 5.41 13,942,289
November 29, 1999
14,000 Goldman Sachs Group LP 6.19 13,794,667
January 28, 2000
16,500 Goldman Sachs Group LP 5.94 16,258,807
February 1, 2000
24,653 Hasbro, Inc. 5.47 24,499,124
December 13, 1999
3,450 Hasbro, Inc. 5.94 3,398,106
February 4, 2000
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 25,000 IBM Credit Corp. 5.35 % $24,934,375
November 19, 1999
18,000 Morgan Stanley Dean Witter 5.97 17,772,875
January 19, 2000
17,000 National Rural Utilities 5.89 16,790,787
January 18, 2000
25,000 New Center Asset Funding A-1+ 5.43 24,940,889
November 17, 1999
21,000 Proctor & Gamble Co. 5.39 21,000,000
November 1, 1999
25,000 Prudential Funding Corp. 6.19 24,608,333
February 3, 2000
25,000 Riverwoods Funding Corp. 6.29 24,686,014
January 14, 2000
18,000 Salomon Smith Barney Holdings 5.95 17,737,340
February 1, 2000
25,000 San Paolo US Financial Co. 5.36 24,923,292
November 22, 1999
25,000 Sara Lee Corporation 5.40 25,000,000
November 1, 1999
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
COMMERCIAL PAPER - (CONTINUED)
$ 9,025 Sweetwater Capital 5.46 % $ 9,006,153
November 15, 1999
10,000 Teachers Ins. and Annuity Assoc. 5.39 10,000,000
November 1, 1999
23,000 Triple-A One Funding Corp. 5.47 22,969,123
November 10, 1999
21,000 Wal-Mart Stores Inc. 5.39 21,000,000
November 1, 1999
17,000 Wells Fargo & Company 5.94 16,736,217
------------
February 7, 2000
Total Commercial Paper 687,374,268
------------
(amortized cost $687,374,268)
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.7%
5,000 Federal Home Loan Bank 5.50 4,999,640
------------
(amortized cost $4,999,640)
July 21, 2000
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PRINCIPAL YIELD TO
AMOUNT DESCRIPTION MATURITY ON DATE VALUE
(IN THOUSANDS) MATURITY DATE OF PURCHASE (NOTE 2)
- -------------- ------------- ----------- -------
REPURCHASE AGREEMENT - 2.3%
$ 16,143 Repurchase agreement with 5.32 % $ 16,143,000
Goldman Sachs, due November 1,
1999 (collateralized by
$16,143,000 Government National
Mortgage Association Pools, value
$16,465,860)
(amortized cost $16,143,000)
-------------
Total investments - 100.0% 708,516,908
(amortized cost $708,516,908)
Other assets in excess of
3,604
liabilities - 0.0%
Total net assets - 100.0% $ 708,520,512
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value $708,516,908
Cash
2,367
Interest receivable 83,452
Prepaid expenses
3,348
Total Assets
708,606,075
------------
LIABILITIES:
Investment advisory fees payable 46,693
Accrued trustees' fees and expenses 1,965
Other accrued expenses 36,905
------------
Total Liabilities
85,563
------------
NET ASSETS $708,520,512
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Interest $5,119,880
EXPENSES:
Investment advisory fees 76,092
Accrued trustees' fees and expenses 3,580
Audit fees 25,000
Offering costs 15,253
Custodian fees 14,386
Legal fees 5,569
Other expenses
3,813
------
Net expenses 143,693
----------
NET INVESTMENT INCOME $4,976,187
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD MAY 3, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OPERATIONS:
<S> <C>
Net investment income $ 4,976,187
---------------
SHARE TRANSACTIONS:
Contributions 1,913,721,258
Withdrawals (1,210,176,933)
---------------
Net increase in net assets resulting from share transactions 703,544,325
---------------
Total increase in net assets 708,520,512
NET ASSETS:
Beginning of period
0
End of period $ 708,520,512
===============
- --------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
Ratio to average net assets:
Net expenses 0.15% *
Net investment income 5.23% *
<FN>
* - Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 supplementary data are those of the Money Market Portfolio (the
"Portfolio"). The Portfolio commenced operations on May 3, 1999.
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 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 and losses on sales of securities are
determined by the identified cost method.
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 custodians, as the case may be under tri-party repurchase agreements,
takes possession of the collateral pledged for investments in
21
<PAGE>
CADRE INSTITUTIONAL INVESTORS TRUST
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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
obligations to repurchase, the Portfolio has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligations. 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 Fund, has entered into an Investment Advisory
Agreement with Cadre Financial Services, Inc. ("Cadre"), a wholly-owned
subsidiary of Ambac Financial Group, Inc., 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 0.08% of the Portfolio'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 the 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.
22
