UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10–Q
| x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended February 28, 2005
Or
| ¨ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File No. 817–00807
Access Capital Strategies Community Investment Fund, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 04–3369393 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 124 Mt. Auburn Street, Suite 200N | Cambridge, MA 02138 | |
| (Address of principal executive offices) | (Zip Code) | |
617–576–5858
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant has been required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 126–2 of the Exchange Act): Yes x No ¨
The registrant had 122 shareholders and 38,951,974 shares of common stock outstanding as of February 28, 2005.
Access Capital Strategies Community Investment Fund, Inc.
February 28, 2005 Form 10–Q Quarterly Report
TABLE OF CONTENTS
| PAGE | ||||
| Item 1. |
Condensed Financial Statements | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| 8 | ||||
| 11 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 20 | ||
| Item 4. |
Controls and Procedures | 21 | ||
| 22 | ||||
| Item 1. |
Legal Proceedings | 22 | ||
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 22 | ||
| Item 3. |
Defaults Upon Senior Securities | 22 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 22 | ||
| Item 5. |
Other Information | 22 | ||
| Item 6. |
Exhibits and Reports | 22 | ||
| 24 | ||||
2
Access Capital Strategies Community Investment Fund, Inc.
PART I — FINANCIAL INFORMATION
Condensed Financial Statements
CONDENSED STATEMENTS OF ASSETS AND LIABILITIES
| CONDENSED STATEMENTS OF ASSETS AND LIABILITIES |
||||||||||||
| February 28, 2005 (unaudited) |
May 31, 2004 |
February 29, 2004 (unaudited) |
||||||||||
| Assets: |
||||||||||||
| Investments in unaffiliated securities, at value* |
$ | 440,421,850 | $ | 398,567,401 | $ | 370,572,386 | ||||||
| Cash |
1,187,871 | — | 650,893 | |||||||||
| Receivables: |
||||||||||||
| Capital shares sold |
1,600,000 | 14,785,251 | — | |||||||||
| Securities sold |
5,599,987 | — | 2,969,578 | |||||||||
| Interest |
1,996,883 | 1,776,197 | 1,660,175 | |||||||||
| Principal paydowns |
380,102 | 370,198 | 19,916 | |||||||||
| Variation margin |
181,250 | 191,468 | — | |||||||||
| Prepaid expenses and other assets |
270 | 270 | 182 | |||||||||
| Total assets |
451,368,213 | 415,690,785 | 375,873,130 | |||||||||
| Liabilities: |
||||||||||||
| Payables: |
||||||||||||
| Custodian bank |
— | 956,797 | — | |||||||||
| Reverse repurchase agreements (including accrued interest of $50,224, $17,180 and $17,114, respectively) |
64,050,224 | 51,117,180 | 57,217,114 | |||||||||
| Securities purchased |
4,084,819 | 15,485,800 | 10,271,405 | |||||||||
| Dividends to shareholders |
1,216,615 | 1,310,503 | 1,306,031 | |||||||||
| Investment advisor |
173,915 | 177,414 | 155,894 | |||||||||
| Variation margin |
— | — | 150,000 | |||||||||
| Other affiliates |
3,235 | 2,565 | 17,764 | |||||||||
| Accrued expenses and other liabilities |
82,271 | 73,326 | 17,229 | |||||||||
| Total liabilities |
69,611,079 | 69,123,585 | 69,135,437 | |||||||||
| Net Assets: |
||||||||||||
| Net Assets |
$ | 381,757,134 | $ | 346,567,200 | $ | 306,737,693 | ||||||
| Net Assets Consist of: |
||||||||||||
| Paid-in capital |
$ | 390,245,109 | $ | 359,732,222 | $ | 308,728,483 | ||||||
| Accumulated distributions in excess of investment income - net |
(1,291,491 | ) | (1,310,503 | ) | (1,401,839 | ) | ||||||
| Accumulated realized capital losses - net |
(9,280,661 | ) | (7,361,655 | ) | (7,701,037 | ) | ||||||
| Unrealized appreciation (depreciation) - net |
2,084,177 | (4,492,864 | ) | 7,112,086 | ||||||||
| Total accumulated losses - net |
(8,487,975 | ) | (13,165,022 | ) | (1,990,790 | ) | ||||||
| Net Assets |
$ | 381,757,134 | $ | 346,567,200 | $ | 306,737,693 | ||||||
| Net Asset Value Per Share |
$ | 9.75 | $ | 9.62 | $ | 9.95 | ||||||
| * Identified cost |
$ | 438,510,238 | $ | 403,230,291 | $ | 363,305,723 | ||||||
| Shares issued and outstanding, $.0000001 par value, 100,000,000 shares authorized |
39,149,040 | 36,035,590 | 30,826,619 | |||||||||
See Notes to Condensed Financial Statements.
3
Access Capital Strategies Community Investment Fund, Inc.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| February 28, 2005 |
February 29, 2004 |
February 28, 2005 |
February 29, 2004 |
|||||||||||||
| Investment Income: |
||||||||||||||||
| Interest |
$ | 5,922,281 | $ | 4,906,079 | $ | 16,888,029 | $ | 13,936,471 | ||||||||
| Expenses: |
||||||||||||||||
| Management fees |
569,693 | 460,522 | 1,626,322 | 1,289,503 | ||||||||||||
| Interest expense |
469,567 | 209,545 | 987,870 | 589,020 | ||||||||||||
| Professional fees |
35,606 | 51,123 | 108,332 | 130,406 | ||||||||||||
| Accounting services |
36,211 | 30,437 | 97,893 | 76,118 | ||||||||||||
| Pricing fees |
14,939 | 15,548 | 39,194 | 38,953 | ||||||||||||
| Custodian fees |
14,783 | 13,897 | 39,659 | 30,379 | ||||||||||||
| Director’s fees and expenses |
7,771 | 8,013 | 21,717 | 21,433 | ||||||||||||
| Transfer agent fees |
5,181 | 5,177 | 14,478 | 13,848 | ||||||||||||
| Other |
10,756 | 8,289 | 23,728 | 16,592 | ||||||||||||
| Total expenses before reimbursement |
1,164,507 | 802,551 | 2,959,193 | 2,206,252 | ||||||||||||
| Reimbursement of expenses |
159,599 | 51,471 | 468,161 | 188,006 | ||||||||||||
| Total expenses after reimbursement |
1,324,106 | 854,022 | 3,427,354 | 2,394,258 | ||||||||||||
| Investment income – net |
4,598,175 | 4,052,057 | 13,460,675 | 11,542,213 | ||||||||||||
| Realized & Unrealized Gain (Loss) – Net: |
||||||||||||||||
| Realized gain (loss) on: |
||||||||||||||||
| Investments – net |
(155,326 | ) | 356,935 | (57,010 | ) | 117,000 | ||||||||||
| Financial futures contracts – net |
(137,102 | ) | (2,490,837 | ) | (1,861,996 | ) | (2,326,584 | ) | ||||||||
| Change in unrealized appreciation (depreciation) on: |
||||||||||||||||
| Investments – net |
(1,655,218 | ) | 5,467,170 | 6,574,502 | (4,373,990 | ) | ||||||||||
| Financial futures contracts – net |
47,207 | 369,787 | 2,539 | 638,268 | ||||||||||||
| Total realized and unrealized gain (loss) – net |
(1,900,439 | ) | 3,703,055 | 4,658,035 | (5,945,306 | ) | ||||||||||
| Net Increase in Net Assets Resulting from Operations |
$ | 2,697,736 | $ | 7,755,112 | $ | 18,118,710 | $ | 5,596,907 | ||||||||
See Notes to Condensed Financial Statements.
4
Access Capital Strategies Community Investment Fund, Inc.
CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| Increase (Decrease) in Net Assets: |
February 28, 2005 |
February 29, 2004 |
February 28, 2005 |
February 29, 2004 |
||||||||||||
| Operations: |
||||||||||||||||
| Investment income–net |
$ | 4,598,175 | $ | 4,052,057 | $ | 13,460,675 | $ | 11,542,213 | ||||||||
| Realized loss – net |
(292,428 | ) | (2,133,902 | ) | (1,919,006 | ) | (2,209,584 | ) | ||||||||
| Change in unrealized appreciation (depreciation) – net |
(1,608,011 | ) | 5,836,957 | 6,577,041 | (3,735,722 | ) | ||||||||||
| Net increase in net assets resulting from operations |
2,697,736 | 7,755,112 | 18,118,710 | 5,596,907 | ||||||||||||
| Dividends to Shareholders: |
||||||||||||||||
| Dividends to shareholders from investment income–net |
(4,583,271 | ) | (4,052,055 | ) | (13,441,663 | ) | (11,542,223 | ) | ||||||||
| Capital Share Transactions: |
||||||||||||||||
| Net proceeds from sale of shares |
11,500,000 | 18,957,000 | 37,975,000 | 78,865,000 | ||||||||||||
| Value of shares issued to shareholders in reinvestment of dividends |
956,948 | 352,674 | 2,883,380 | 1,122,300 | ||||||||||||
| Total issued |
12,456,948 | 19,309,674 | 40,858,380 | 79,987,300 | ||||||||||||
| Cost of shares redeemed |
(5,350,175 | ) | (2,114,019 | ) | (10,345,493 | ) | (14,338,171 | ) | ||||||||
| Net increase in net assets resulting from capital share transactions |
7,106,773 | 17,195,655 | 30,512,887 | 65,649,129 | ||||||||||||
| Net Assets: |
||||||||||||||||
| Total increase in net assets |
5,221,238 | 20,898,712 | 35,189,934 | 59,703,813 | ||||||||||||
| Beginning of period |
376,535,896 | 285,838,981 | 346,567,200 | 247,033,880 | ||||||||||||
| End of period* |
$ | 381,757,134 | $ | 306,737,693 | $ | 381,757,134 | $ | 306,737,693 | ||||||||
| * Accumulated distributions in excess of investment income– net |
$ | (1,291,491 | ) | $ | (1,401,839 | ) | $ | (1,291,491 | ) | $ | (1,401,839 | ) | ||||
See Notes to Condensed Financial Statements.
5
Access Capital Strategies Community Investment Fund, Inc.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended |
||||||||
| February 28, 2005 |
February 29, 2004 |
|||||||
| Cash Used For Operating Activities: |
||||||||
| Net increase in net assets resulting from operations |
$ | 18,118,710 | $ | 5,596,907 | ||||
| Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: |
||||||||
| Increase in receivables |
(210,468 | ) | (147,093 | ) | ||||
| Decrease in other assets |
— | 49,027 | ||||||
| Decrease (increase) in other liabilities |
(917,637 | ) | 73,190 | |||||
| Realized and unrealized gain (loss) – net |
(6,517,492 | ) | 4,256,990 | |||||
| Amortization of premium and discount |
2,578 | 8,918 | ||||||
| Proceeds from paydowns and sales of long–term investments |
107,082,354 | 130,558,628 | ||||||
| Purchases of long–term investments |
(159,432,761 | ) | (204,804,362 | ) | ||||
| Net cash used for operating activities |
(41,874,716 | ) | (64,407,795 | ) | ||||
| Cash Provided By Financing Activities: |
||||||||
| Cash receipts from issuance of common stock |
51,160,251 | 78,965,000 | ||||||
| Cash receipts from reverse repurchase agreements – net |
12,900,000 | 10,200,000 | ||||||
| Cash payments on capital shares redeemed – net |
(10,345,493 | ) | (14,338,171 | ) | ||||
| Dividends to shareholders |
(10,652,171 | ) | (11,266,967 | ) | ||||
| Net cash provided by financing activities |
43,062,587 | 63,559,862 | ||||||
| Cash: |
||||||||
| Net increase (decrease) in cash |
1,187,871 | (847,933 | ) | |||||
| Cash at beginning of period |
— | 1,498,826 | ||||||
| Cash at end of period |
$ | 1,187,871 | $ | 650,893 | ||||
| Cash Flow Information: |
||||||||
| Cash paid for interest |
$ | 954,826 | $ | 590,777 | ||||
| Non–Cash Financing Activities: |
||||||||
| Capital shares issued in reinvestment of dividends paid to shareholders |
$ | 2,883,380 | $ | 1,122,300 | ||||
See Notes to Condensed Financial Statements.
6
Access Capital Strategies Community Investment Fund, Inc.
FINANCIAL HIGHLIGHTS (UNAUDITED)
The following per share data and ratios have been derived from information provided in the financial statements.
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| February 28, 2005 |
February 29, 2004 |
February 28, 2005 |
February 29, 2004 |
|||||||||||||
| Per Share Operating Performance: |
||||||||||||||||
| Net asset value, beginning of period |
$ | 9.80 | $ | 9.83 | $ | 9.62 | $ | 10.21 | ||||||||
| Investment income–net++ |
.12 | .14 | .36 | .42 | ||||||||||||
| Realized and unrealized gain (loss) – net |
(.05 | ) | .11 | .13 | (.27 | ) | ||||||||||
| Total from investment operations |
.07 | .25 | .49 | .15 | ||||||||||||
| Less dividends from investment income – net |
(.12 | ) | (.13 | ) | (.36 | ) | (.41 | ) | ||||||||
| Net asset value, end of period |
$ | 9.75 | $ | 9.95 | $ | 9.75 | $ | 9.95 | ||||||||
| Total Investment Return:** |
||||||||||||||||
| Based on net asset value per share |
.67 | %+ | 2.61 | %+ | 5.11 | %+ | 1.55 | %+ | ||||||||
| Ratios to Average Net Assets: |
||||||||||||||||
| Expenses, net of reimbursement and excluding interest expense |
.91 | %* | .88 | %* | .89 | %* | .88 | %* | ||||||||
| Expenses, excluding interest expense |
.74 | %* | .81 | %* | .72 | %* | .78 | %* | ||||||||
| Expenses |
1.23 | %* | 1.09 | %* | 1.08 | %* | 1.07 | %* | ||||||||
| Investment income – net |
4.87 | %* | 5.51 | %* | 4.90 | %* | 5.59 | %* | ||||||||
| Ratios to Average Net Assets, Excluding Borrowings: |
||||||||||||||||
| Expenses, net of reimbursement and excluding interest expense |
.75 | %* | .70 | %* | .75 | %* | .70 | %* | ||||||||
| Expenses, excluding interest expense |
.61 | %* | .64 | %* | .61 | %* | .63 | %* | ||||||||
| Expenses |
1.02 | %* | .87 | %* | .91 | %* | .86 | %* | ||||||||
| Investment income – net |
4.04 | %* | 4.38 | %* | 4.14 | %* | 4.49 | %* | ||||||||
| Supplemental Data: |
||||||||||||||||
| Net assets, end of period (in thousands) |
$ | 381,757 | $ | 306,738 | $ | 381,757 | $ | 306,738 | ||||||||
| * | Annualized. |
| ** | Total investment returns exclude the effects of sales charges. |
| + | Aggregate total investment return. |
| ++ | Based on average shares outstanding. . |
See Notes to Condensed Financial Statements.
7
Access Capital Strategies Community Investment Fund, Inc.
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2005 (UNAUDITED)
MORTGAGE-BACKED SECURITIES (114.9%):
| Face Amount |
Market Value | |||||
| Federal National Mortgage Association (FNMA)(75.0%): |
||||||
| 15 Year Fixed Rate Single Family Mortgage-Backed Securities |
||||||
| 4.50%, 6/1/18 – 3/1/19 (c) |
$ | 6,260,358 | $ | 6,225,878 | ||
| 5.00%, 12/1/17 – 2/1/19 |
8,294,361 | 8,413,394 | ||||
| 5.50%, 3/1/16 – 7/1/19 |
1,442,450 | 1,488,052 | ||||
| 7.00%, 1/1/15 |
76,946 | 81,714 | ||||
| 30 Year Fixed Rate Single Family Mortgage-Backed Securities |
||||||
| 4.50%, 5/1/33 – 9/1/34 |
17,034,407 | 16,517,441 | ||||
| 5.00%, 7/1/32 – 11/1/35 (c) |
93,160,914 | 92,590,280 | ||||
| 5.50%, 9/1/32 – 3/15/35 (b)(c) |
94,996,602 | 96,476,413 | ||||
| 6.00%, 7/1/29 – 10/1/34 (c) |
25,524,970 | 26,355,555 | ||||
| 6.50%, 1/1/31 – 8/1/34 |
18,416,912 | 19,305,020 | ||||
| 7.00%, 6/1/29 – 3/1/31 |
880,709 | 934,782 | ||||
| 7.25%, 12/1/29 |
78,912 | 84,582 | ||||
| 7.50%, 9/1/29 – 1/1/31 |
810,250 | 872,771 | ||||
| 8.00%, 2/1/30 – 4/1/30 |
371,977 | 402,840 | ||||
| Total Single Family Mortgage-Backed Securities |
271,856,515 | |||||
| Multi Family Mortgage-Backed Securities |
||||||
| 4.66%, 10/1/13 |
983,492 | 986,948 | ||||
| 4.78%, 5/1/14 |
494,983 | 498,319 | ||||
| 4.93%, 10/1/12 |
983,072 | 1,000,786 | ||||
| 5.23%, 4/1/21 |
1,958,706 | 1,953,647 | ||||
| 5.37%, 11/1/21 |
5,049,898 | 5,264,455 | ||||
| 5.41%, 2/1/21 |
1,057,793 | 1,106,109 | ||||
| 5.51%, 11/1/21 |
764,320 | 782,342 | ||||
| 6.38%, 5/1/18 |
1,200,911 | 1,308,187 | ||||
| 6.50%, 5/1/17 |
1,273,926 | 1,383,972 | ||||
| 6.70%, 6/1/19 |
653,975 | 723,821 | ||||
| 7.58%, 5/1/18 |
608,704 | 714,099 | ||||
| 7.97%, 9/1/17 |
724,914 | 862,922 | ||||
| Total Multi Family Mortgage-Backed Securities |
14,477,814 | |||||
| Total Federal National Mortgage Association Securities |
286,334,329 | |||||
| Federal Home Loan Mortgage Corporation (33.9%): |
||||||
| 15 Year Fixed Rate Single Family Mortgage-Backed Securities |
||||||
| 4.50%, 1/1/19 – 11/1/19 |
1,951,702 | 1,941,371 | ||||
| 5%, 11/1/18 – 11/1/19 |
2,598,574 | 2,637,027 | ||||
| 5.50%, 9/1/19 – 11/1/19 |
1,683,771 | 1,738,650 | ||||
8
| Face Amount |
Market Value | |||||
| 30 Year Fixed Rate Single Family Mortgage-Backed Securities |
||||||
| 4.50%, 8/1/33 – 9/1/33 |
$ | 2,016,203 | $ | 1,955,369 | ||
| 5.00%, 6/1/33 – 1/15/35 (c) |
33,378,363 | 33,203,266 | ||||
| 5.50%, 9/1/29 – 12/1/34 (c) |
55,824,998 | 56,769,920 | ||||
| 6.00%, 3/1/31 – 12/1/34 |
21,755,239 | 22,479,406 | ||||
| 6.50%, 6/1/29 – 8/1/32 |
6,449,798 | 6,758,597 | ||||
| 7.00%, 11/1/29 – 4/1/31 |
868,284 | 921,170 | ||||
| 7.50%, 12/1/29 – 2/1/30 |
821,793 | 885,311 | ||||
| Total Federal Home Loan Mortgage Corporation Single Family Mortgage-Backed Securities |
129,290,087 | |||||
| GNMA Pool (1.3%): |
||||||
| 30 Year Fixed Rate Single Family Mortgage-Backed Securities |
||||||
| 6.00%, 12/15/31 |
826,533 | 859,141 | ||||
| 6.50%, 4/15/32 – 4/20/32 |
446,036 | 470,673 | ||||
| 7.00%, 4/15/32 |
175,904 | 187,381 | ||||
| Multi Family Mortgage-Backed Securities |
||||||
| 5.13%, 3/1/34 |
629,331 | 630,069 | ||||
| 5.75%, 9/15/23 |
740,745 | 766,550 | ||||
| 6.25%, 9/15/32 |
524,524 | 567,608 | ||||
| 8.25%, 12/15/32 |
1,447,364 | 1,596,343 | ||||
| Total GNMA Pool Multi Family Mortgage-Backed Securities |
5,077,765 | |||||
| Community Reinvestment Revenue Notes (0.8%) |
||||||
| 4.21%, 9/1/19 |
3,000,000 | 2,970,000 | ||||
| Total Community Reinvestment Revenue Notes |
2,970,000 | |||||
| Small Business Administration (3.9%) |
||||||
| 2.55%, 4/25/28 (a) |
1,573,671 | 1,567,925 | ||||
| 2.55%, 3/25/29 |
3,177,243 | 3,165,679 | ||||
| 2.60%, 9/1/28 |
1,563,742 | 1,559,833 | ||||
| 2.60%, 9/25/29 |
2,016,796 | 2,011,754 | ||||
| 2.60%, 11/25/29 |
2,195,859 | 2,193,114 | ||||
| 2.63%, 6/25/18 (a) |
653,585 | 651,931 | ||||
| 2.65%, 10/25/10 |
663,909 | 661,769 | ||||
| 2.65%, 3/25/14 |
2,321,831 | 2,316,185 | ||||
| 5.88%, 1/25/09 |
713,710 | 739,635 | ||||
| Total Small Business Administration Securities |
14,867,825 | |||||
| Total Mortgage-Backed Securities |
438,540,006 | |||||
9
MUNICIPAL BONDS (0.5%):
| Face Amount |
Market Value |
||||||
| Guam Power Authority Revenue Bonds, Series A, 5% due 10/01/2024 |
$ | 140,000 | $ | 145,796 | |||
| Utah Housing Corporation Single Family Mortgage Revenue Bonds, 3.36% due 7/1/2014 |
750,000 | 732,908 | |||||
| Utah Housing Corporation Single Family Mortgage Revenue Bonds, 3.48% due 7/1/2014 |
1,000,000 | 1,003,140 | |||||
| Total Municipal Bonds |
1,881,844 | ||||||
| Total investments (cost – $438,510,238) – 115.4% |
440,421,850 | ||||||
| Liabilities in excess of other assets – (15.4%) |
(58,664,716 | ) | |||||
| Net assets – 100.0% |
$ | 381,757,134 | |||||
Pursuant to the financial futures contracts, the Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuation in values of the contract. Such receipts or payments, which are settled the following business day, are known as variation margin and are recorded by the Fund as unrealized gains or losses. Financial futures contracts sold as of February 28, 2005 were as follows:
| Number of Contracts |
Issue |
Expiration Date |
Face Value |
Unrealized Appreciation | ||||||
| 200 |
U.S. Five–Year Treasury Bonds | March 2005 | $ | 21,779,564 | $ | 154,564 | ||||
| 200 |
U.S. Ten–Year Treasury Bonds | March 2005 | $ | 22,193,001 | 18,001 | |||||
| Total Unrealized Appreciation – Net |
$ | 172,565 | ||||||||
| (a) | All or a portion held as collateral in connection with open financial futures contracts. |
| (b) | Represents or includes a “to–be–announced” (TBA) transaction. The Fund has committed to purchasing securities for which all specific information is not available at this time. |
| (c) | All or a portion held as collateral in connection with open reverse repurchase agreements. |
See Notes to Condensed Financial Statements.
10
Access Capital Strategies Community Investment Fund, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed interim financial statements and financial highlights reflect the results of operations for Access Capital Strategies Community Investment Fund, Inc. (the “Fund”) and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10–Q and Article 10 of Regulation S–X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. The results of operations and other data for the nine months and three months ended February 28, 2005 are not necessarily indicative of the results that may be expected for any other future interim period or the fiscal year ending May 31, 2005. The information in this report should be read in conjunction with the financial statements and accompanying notes included in the May 31, 2004 Annual Report on Form 10–K. The Fund has not changed its accounting and reporting policies from those disclosed in its May 31, 2004 financial statements.
In preparing the condensed interim financial statements and financial highlights, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the statement of assets and liabilities, and revenue and expenses for the period. Actual results could differ from those estimates; any such differences are expected to be immaterial to the net assets of the Fund.
This report covers the activity from June 1, 2004 to February 28, 2005.
11
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
This quarterly report contains certain statements that may be considered forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Fund’s actual results could differ materially from those projected in the forward–looking statements as a result of, among other factors, changes in interest rates, fluctuations in assets under management and other sources of fee income, and changes in assumptions used in making such forward–looking statements. The Fund’s investment objective is to invest in geographically specific private placement debt securities located in portions of the United States designated by Fund investors.
Overview
The Fund is a non–diversified, closed–end management investment company electing status as a business development company. The Fund’s investment objective is to invest in geographically specific private placement debt securities located in portions of the United States designated by Fund investors. The Fund invests primarily in private placement debt securities specifically designed to support underlying community development activities targeted to low– and moderate–income individuals such as affordable housing, education, small business lending, and job–creating activities in areas of the United States designated by Fund investors.
Investors in the Fund must designate a particular geographic area or region within the United States as part of their agreement to purchase Fund shares. The Fund invests only in areas where Fund shareholders have made targeted designations.
In addition to their geographic specificity, Fund investments must carry a AAA credit rating or carry credit enhancement from a AAA–rated credit enhancer or be issued or guaranteed by the U.S. Government, government agencies or government–sponsored enterprises. The Fund expects (but cannot guarantee) that all investments made by the Fund will be considered eligible for regulatory credit under the Community Reinvestment Act (“CRA”).
Compliance
To qualify as a Regulated Investment Company (“RIC”), the Fund must, among other things, satisfy a diversification standard under the Internal Revenue Code (the “Code”) such that, at the close of each quarter of the Fund’s taxable year, (i) not more than 25% of the value of its total assets is invested in the securities (other than government securities (including its agencies and instrumentalities) or securities of other RICs) of a single issuer, or two or more issuers which the Fund controls (under a 20% test) and which are engaged in the same or similar trades or business or related trades or businesses, and (ii) at least 50% of the market value of its total assets is represented by cash, cash items, government securities, securities of other RICs and other securities (with each investment in such other securities limited so that not more than 5% of the value of the Fund’s total assets is invested in the securities of a single issuer and the Fund does not own more than 10% of the outstanding voting securities of a single issuer).
Management believes the Fund was in compliance with the above requirements for the quarter ended February 28, 2005.
12
Fund Operations
Investment Activity
Purchases
During the quarter ended February 28, 2005, the Fund purchased $38.2 million aggregate amount of new community development securities. During the quarter ended February 29, 2004, the Fund had purchased $38.3 million aggregate amount of new community development securities.
During the nine months ended February 28, 2005, the Fund purchased $148.0 million aggregate amount of new community development securities. During the nine months ended February 29, 2004, the Fund had purchased $191.7 million aggregate amount of new community development securities.
Sales
During the quarter ended February 28, 2005, the Fund sold $50.2 million aggregate amount of securities (including principal paydowns). During the quarter ended February 29, 2004, the Fund had sold $38.8 million aggregate amount of securities (including principal paydowns).
During the nine months ended February 28, 2005, the Fund sold $112.7 million aggregate amount of securities (including principal paydowns). During the nine months ended February 29, 2004, the Fund had sold $133.5 million aggregate amount of securities (including principal paydowns).
Borrowings
The Fund is permitted to use leverage in its investment program, subject to certain restrictions set forth in its Private Offering Memorandum and the Investment Company Act of 1940 (the “1940 Act”).
For the quarter ended February 28, 2005, the Fund averaged approximately $79.5 million in borrowings at an average rate of approximately 2.39% compared to the quarter ended February 29, 2004 when the Fund averaged approximately $73.6 million in borrowings at an average rate of approximately 1.14%.
For the nine month period ended February 28, 2005, the Fund averaged approximately $67.7 million in borrowings at an average rate of approximately 1.95% compared to the nine month period ended February 29, 2004 when the Fund averaged approximately $68.8 million in borrowings at an average rate of approximately 1.15%.
In each of the above referenced periods, the total proceeds from borrowings were primarily used to support additional investments in the Fund’s Designated Target Regions.
13
Net Assets and Fund Holdings at February 28, 2005
At February 28, 2005, the Fund’s Net Asset Value was $381.8 million, or $9.75 per share. At the end of the prior fiscal quarter, November 30, 2004, the Fund’s Net Asset Value was $376.5 million, or $9.80 per share. At the end of the most recent fiscal year, May 31, 2004, the Net Asset Value was $346.6 million, or $9.62 per share. A year ago at February 29, 2004, the Fund’s Net Asset Value was $306.7 million, or $9.95 per share.
The $5.3 million, or 1.4%, quarter–to–quarter increase in net assets from $376.5 million to $381.8 million was primarily attributable to the sale of new shares in the Fund. The $75.1 million, or 24.5%, year–to–year increase in net assets was also primarily attributable to the sale of new shares in the Fund.
The Fund’s primary investments are listed on the Schedule of Investments included with this report.
Investment Income
The Fund had investment income net of all fees and expenses (as discussed below) of $4.6 million for the quarter ended February 28, 2005, an increase of approximately $0.1 million, or 2.2%, from net investment income of $4.5 million for the prior fiscal quarter, which ended November 30, 2004, and an increase of approximately $0.5 million, or 12.2%, from net investment income of $4.1 million for the fiscal quarter ended February 29, 2004. The increases were each largely due to an increase in the average net assets of the Fund.
The Fund had investment income net of all fees and expenses (as discussed below) of $13.5 million for the nine month period ended February 28, 2005, an increase of approximately $2.0 million, or 17.4% from net investment income of $11.5 million for the nine month period ended February 29, 2004. The increase is largely due to an increase in average net assets of the Fund.
Management Fees & Expenses
Access Capital Strategies LLC (“Access”), the Fund’s Manager, is paid an annual management fee, paid monthly, of fifty basis points (.50%) of the Fund’s average monthly gross assets less accrued liabilities, other than indebtedness for borrowing. Merrill Lynch Investment Managers, L.P. (“MLIM”) receives from Access an annual sub–management fee, paid monthly, of twenty–five basis points (.25%) of the Fund’s average gross monthly assets less accrued liabilities, other than indebtedness for borrowings.
For the quarter and nine- month period ended February 28, 2005, the management fee paid by the Fund was $569,693 and $1,626,322, respectively. For the prior quarter ended November 30, 2004, the management fee paid by the Fund was $544,965. For the year ago fiscal quarter and nine-month period ended February 29, 2004, the management fee paid by the Fund was $460,522 and $1,289,503, respectively. The increases were primarily due to increases in the net assets of the Fund.
The Fund’s private offering memorandum provides for reimbursement of expenses relating to the Fund paid by Access and MLIM. Total unreimbursed expenses as of February 28, 2005 amount to $15,213 compared to $545,858 a year ago at February 29, 2004.
14
Yield
At the quarter ended February 28, 2005, the SEC current yield was 5.42%, compared to 4.73% for the quarter ended November 30, 2004 and 4.94% for the year ago quarter ended February 29, 2004.
For the quarter ended February 28, 2005, the ratio of net investment income to average net assets was 4.87% compared to 4.11% for the prior quarter, which ended November 30, 2004, and 5.51% for the quarter ended February 29, 2004.
Realized Gain/Loss
For the quarter and nine months ended February 28, 2005, the net realized loss was $292,428 and $1,919,006, respectively, compared to a net realized gain of $122,663 for the prior quarter, which ended November 30, 2004, and a realized loss of $2,133,902 and $2,209,584, respectively, for the quarter and nine months ended February 29, 2004. The net realized losses for the quarter and nine months ended February 28, 2005 were primarily due to the losses on financial futures contracts reflecting the Fund’s hedging activities as the Fund experiences a net realized loss on its hedges when the positions are closed or when they are rolled from one expiration cycle to the next.
Dividends Paid
The Fund distributes to shareholders substantially all of its net investment income and net realized capital gains, if any, as determined for income tax purposes. Applicable law, including provisions of the 1940 Act, may limit the amount of dividends and other distributions payable by the Fund. Substantially all of the Fund’s net capital gain (the excess of net long–term capital gain over net short–term capital loss) and the excess of net short–term capital gain over net long–term capital loss, if any, are distributed annually with the Fund’s dividend distribution in December.
The Fund declares and distributes dividends on a monthly basis. The Fund paid total monthly dividends of $.117769 and $.358601, respectively, during the quarter and nine months ended February 28, 2005. The dividends were paid as follows:
| June 2004 |
$ | .040113 | |
| July 2004 |
$ | .041624 | |
| August 2004 |
$ | .039350 | |
| September 2004 |
$ | .040395 | |
| October 2004 |
$ | .039403 | |
| November 2004 |
$ | .039947 | |
| December 2004 |
$ | .042152 | |
| January 2005 |
$ | .036253 | |
| February 2005 |
$ | .039364 |
During the previous quarter ended November 30, 2004, the Fund paid total monthly dividends of $.119745. A year ago, during the quarter ended February 29, 2004, the Fund paid total monthly dividends of $.135100. The slightly lower dividend in the current period is attributable to the U.S. Federal Reserve raising short-term interest rates by twenty–five basis points in December 2004 and February 2005. An increase in short term rates elevates the Fund’s cost for borrowings and lowers the net investment income available for dividends.
15
Total Return
For the quarter ended February 28, 2005, the total return was .67%, compared to a total return of .61% in the quarter ended November 30, 2004 and a total return of 2.61% in the comparable quarter ended February 29, 2004.
For the nine-month period ended February 28, 2005 the total return was 5.11%. For the nine-month period ended February 29, 2004, the total return was 1.55%.
Although short-term rates rose during the period, most of the Fund’s assets are priced off of longer-term assets. Longer maturity issues did better than shorter-term instruments during most of the period.
Fund Designated Target Regions at February 28, 2005
The Fund’s Designated Target Regions (“DTRs”) are provided by Fund shareholders at the time of investment. At February 28, 2005 DTRs were:
| DTRs |
AMOUNT | ||
| California |
$ | 60,668,939 | |
| Colorado |
1,159,436 | ||
| Connecticut |
7,084,919 | ||
| Florida |
1,500,000 | ||
| Georgia |
500,000 | ||
| Hawaii |
150,594 | ||
| Illinois |
3,645,018 | ||
| Indiana |
1,040,042 | ||
| Iowa |
618,541 | ||
| Louisiana |
5,000,000 | ||
| Maine |
109,733 | ||
| Maryland |
650,000 | ||
| Massachusetts |
90,187,269 | ||
| Nebraska |
10,000,000 | ||
| New York |
16,928,178 | ||
| New Jersey |
95,544,461 | ||
| New Mexico |
1,131,734 | ||
| North Carolina |
850,000 | ||
| Ohio |
12,057,148 | ||
| Oregon |
2,300,000 | ||
| Pennsylvania |
34,782,175 | ||
| Rhode Island |
250,000 | ||
| South Dakota |
5,655,359 | ||
| Tennessee |
600,000 | ||
| Texas |
21,090,674 | ||
| Utah |
12,695,228 | ||
| Vermont |
1,341,773 | ||
| Washington |
1,500,000 | ||
| Wisconsin |
531,734 | ||
| TOTAL |
$ | 389,572,955 | |
| * | All investors are listed by headquarters location |
16
Fund Impact per the Community Reinvestment Act
The Fund invests in securities that support community development economic activity as defined in the CRA.
At February 28, 2005, the Fund’s investments had outstanding loans to 5,441 homebuyers with incomes below 80% of median income from the following states in the following numbers.
| Whole Loans |
||
| Alabama |
28 | |
| Arizona |
111 | |
| California |
411 | |
| Colorado |
31 | |
| Connecticut |
122 | |
| Delaware |
31 | |
| Florida |
120 | |
| Georgia |
18 | |
| Guam |
2 | |
| Illinois |
87 | |
| Indiana |
6 | |
| Iowa |
31 | |
| Kansas |
2 | |
| Kentucky |
10 | |
| Louisiana |
17 | |
| Maine |
2 | |
| Maryland |
4 | |
| Massachusetts |
1,021 | |
| Michigan |
7 | |
| Mississippi |
7 | |
| Missouri |
5 | |
| Montana |
2 | |
| Nebraska |
50 | |
| Nevada |
45 | |
| New Hampshire |
57 | |
| New Jersey |
1,027 | |
| New Mexico |
70 | |
| New York |
225 | |
| North Carolina |
19 | |
| Ohio |
50 | |
| Oregon |
62 | |
| Pennsylvania |
706 | |
| Rhode Island |
15 | |
| South Carolina |
14 | |
| South Dakota |
110 | |
| Tennessee |
8 | |
| Texas |
463 | |
| Utah |
370 | |
| Vermont |
14 | |
| Virginia |
3 | |
| Washington |
46 | |
| Washington, D.C. |
3 | |
| Wisconsin |
9 | |
| 5,441 | ||
Many of the above loans were made under targeted CRA lending initiatives such as Acorn, Mass Housing Partnership and other individual banks’ tailor -made CRA lending programs.
17
In addition as of February 28, 2005, the Fund’s investments had outstanding loans to sponsors of 1,345 multi–family rental units, 14 community based non–profit affordable housing rental units, 97 SBA loans and 9 Economic Development loans from the following states in the following amounts.
Multi–Family Units
| Alabama |
52 | |
| California |
160 | |
| Delaware |
120 | |
| Louisiana |
230 | |
| Mississippi |
47 | |
| New York |
222 | |
| South Dakota |
48 | |
| Texas |
294 | |
| Utah |
172 | |
| 1,345 | ||
Affordable Housing
Sub Total 6,795
| Community Based Non–Profit |
||
| Rhode Island |
12 | |
| Massachusetts |
1 | |
| Connecticut |
1 | |
| 14 | ||
| SBA Loans |
||
| CA |
2 | |
| FL |
1 | |
| KY |
1 | |
| MA |
7 | |
| MD |
1 | |
| MN |
2 | |
| NJ |
6 | |
| NY |
1 | |
| UT |
76 | |
| 97 | ||
| Economic Development Loans |
||
| CA |
4 | |
| MA |
4 | |
| TX |
1 | |
| 9 | ||
18
Liquidity Discussion
Sale and Redemption of Fund Shares
Fund shares are sold only to qualified investors who complete a Subscription Agreement. All investors in the Fund must provide a Designated Target Region as the desired location for their investment.
During the quarter ended February 28, 2005, new shareholders purchased an additional 1,171,692 shares of the Fund for total proceeds of $11,500,000. In addition, dividend reinvestments resulted in 97,562 additional new shares being issued by the Fund for total proceeds of $956,948. During the year ago quarter ended February 29, 2004, new shareholders purchased an additional 1,915,991 shares of the Fund for total proceeds of $18,957,000, and dividend reimbursements resulted in 35,641 additional new shares being issued by the Fund for total proceeds of $352,674.
During the nine months ended February 28, 2005, new shareholders purchased an additional 3,868,903 shares of the Fund for total proceeds of $37,975,000. In addition, dividend reinvestments resulted in 294,234 additional new shares being issued by the Fund for total proceeds of $2,883,380. During the year ago nine months ended February 29, 2004, new shareholders purchased an additional 7,977,600 shares of the Fund for total proceeds of $78,865,000 and dividend reinvestments resulted in 113,567 additional new shares being issued by the Fund for total proceeds of $1,122,300.
As discussed in the Private Offering Memorandum, the Fund allows shareholders to redeem their shares in accordance with Rule 23c–3 of the 1940 Act.
During the quarter ended February 28, 2005, 541,516 shares of the Fund were redeemed for $5,350,175. During the year ago quarter February 29, 2004, 212,892 shares of the Fund were redeemed for $2,114,019.
During the nine months ended February 28, 2005, 1,049,687 shares of the Fund were redeemed for $10,345,493. During the year ago nine months February 29, 2004, 1,460,254 shares of the Fund were redeemed for $14,338,171.
19
Quantitative and Qualitative Disclosures About Market Risk
A full discussion of the risks associated with ownership of Fund shares appears in the Fund’s Private Offering Memorandum. The Fund’s principal market risks may be summarized as follows:
Credit Risk. All investments made by the Fund must be in securities of a U.S. Government Agency or AAA credit quality. Fund investments will typically have one or more forms of credit enhancement.
Liquidity Risk. Securities purchased by the Fund will generally be privately placed debt instruments. The market for resale of these securities may be limited. Furthermore, the Fund may pay a premium for CRA securities without any assurance that a comparable premium can be received upon sale of the security.
Interest Rate Risk. The Fund will generally invest in fixed rate investments that have their market values directly affected by changes in prevailing interest rates. An increase in interest rates will generally reduce the value of Fund investments and a decline in interest rates will generally increase the value of those investments. There may be exceptions due to shifts in the yield curve, the performance of individual securities, changes in the prepayment rates of mortgages underlying fixed income securities and other market factors.
Most of the Fund’s holdings are in mortgage-backed securities (MBS) that are comprised of pooled mortgages to low and moderate income homebuyers. These homebuyers generally have the right to prepay or refinance their mortgages at anytime making prepayment risk an important component of the market risk for the portfolio. While prepayments can occur for a variety of reasons (e.g., selling a home, death, default) they are most often associated with a consumer refinancing a mortgage to take advantage of lower interest rates. There is, therefore, a structural asymmetry, also known as negative convexity, in the MBS market as lower rates will raise the value of most fixed rate payment streams, but may cause wide scale prepayments for fixed rate MBS due to mortgage refinancing.
An industry standard method for evaluating interest rate risk in a portfolio is to run a scenario analysis that calls for an instantaneous increase or decrease in interest rates across the board. While the scenario is a highly unlikely one, it does produce a widely used measurement for a portfolio’s interest rate convexity and negative convexity.
At February 28, 2005 an instant rate increase of 100 basis points (1.0%) would have caused the Fund’s portfolio to decline in value by –4.5%. An instant rate decrease of 100 basis points (–1.0%) would have caused the Fund’s portfolio to increase in value by +2.7%. At the previous quarter end, November 30, 2004, a 1% rate increase would have produced a –4.9% decrease in value and a 1% rate decrease would have produced a +2.8% increase in value.
Leverage Risk. The Fund may use leverage as part of its investment program. Typically, the Fund will borrow money short term using portions of the portfolio as collateral. The proceeds received from borrowing are invested in additional portfolio securities. Interest income on securities purchased with borrowed funds is usually above the interest expense associated with borrowings although the precise amount is a function of the slope of the yield curve and changes with market conditions. The purchase of additional investments using borrowed funds may increase the portfolio’s interest rate risk. The managers may use derivatives (see below) to hedge the incremental interest rate risk associated with the use of leverage. An important component of a successful leverage strategy is the ability to deleverage without interfering with core portfolio management functions. In the past, the managers have been able to raise and lower the level of leverage in response to changing market conditions. The managers and the Fund’s Board of Directors regularly review the amount of leverage being deployed.
Derivatives Risk. The Fund may use derivative instruments, including futures, forwards, options, indexed securities, and inverse securities for hedging purposes. Hedging is a strategy in which the Fund uses a derivative to offset the risk that other Fund holdings may decrease in value. While hedging can reduce losses, it can also reduce or eliminate gains if the market moves in a different manner than anticipated by the Fund or if the cost of the derivative outweighs the benefit of the hedge. Hedging also involves the risk that changes in the value of the derivative will not match those of the holdings being hedged as expected by the Fund, in which case any losses on the holdings being hedged may not be reduced. There can be no assurance that the Fund’s hedging strategy will reduce risk or that hedging transactions will be either available or cost effective.
A summary of the Fund’s portfolio holdings as of February 28, 2005 is contained in Item 1 of this report.
20
Controls and Procedures
Within the 90–day period prior to the filing of this report, the Fund’s management, including the Chief Executive Officer and principal financial officer, conducted an evaluation of the effectiveness of the design and operation of the Fund’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and principal financial officer concluded that, as of the date of the evaluation, the disclosure controls and procedures were effective in alerting them in a timely manner to material information required to be disclosed in the Fund’s periodic reports filed with the SEC. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving it stated goals under all potential future conditions, regardless of how remote. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date of the most recent evaluation.
21
The Fund is not involved in any pending legal proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
None.
The following Exhibits are filed as part of this Report:
| (a) | (1) | N/A | ||||
| (2) | None | |||||
| (3) | (i) | Articles of Incorporation are incorporated by reference to the Fund’s Form 10–Q for the period ended August 31, 1998. | ||||
| (ii) | By–Laws are incorporated by reference to the Fund’s Form 10–Q for the period ended August 31, 1998. | |||||
| (4) | N/A | |||||
| (5) | N/A | |||||
| (8) | N/A | |||||
| (9) | None | |||||
| (10) | (i) | Private Offering Memorandum dated February 18, 1998, revised as June 1, 2003, is incorporated by reference to the Fund’s Form 10–K filed on August 29, 2004. | ||||
| (iii)(A) | Management Agreement is incorporated by reference to the Fund’s Form 10–Q for the period ended August 31, 1998. | |||||
| (B) | Amendment to the Management Agreement dated as of May 23, 2003 is incorporated by reference to the Fund’s Form 10–K filed on August 29, 2004. | |||||
| (11) | N/A | |||||
| (12) | N/A | |||||
| (13) | N/A | |||||
| (15) | N/A | |||||
| (16) | None | |||||
22
| (17) | N/A | |||||
| (18) | N/A | |||||
| (19) | N/A | |||||
| (20) | N/A | |||||
| (21) | None | |||||
| (22) | N/A | |||||
| (23) | N/A | |||||
| (24) | Powers of Attorney incorporated by reference to the Fund’s Form 10–K for the fiscal year ended May 31, 2002 filed on August 29, 2002. | |||||
| (25) | N/A | |||||
| (26) | N/A | |||||
| (27) | Reserved | |||||
| (28) | Reserved | |||||
| (29) | Reserved | |||||
| (30) | Reserved | |||||
| (31) | Certification required by the Sarbanes–Oxley Act of 2002 | |||||
| (32) | Certification required by the Sarbanes–Oxley Act of 2002 | |||||
| (b) | Reports on Form 8–K | |||||
| None. | ||||||
23
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Access Capital Strategies Community Investment Fund, Inc. | ||
| Date: April 8, 2005 | /S/ Ronald A. Homer* | |
| Ronald A. Homer, Chairman | ||
| Date: April 8, 2005 | /S/ Kevin J. Mulvaney* | |
| Kevin J. Mulvaney, Director | ||
| Date: April 8, 2005 | /S/ Peter Blampied* | |
| Peter Blampied, Director | ||
| Date: April 8, 2005 | /S/ W. Carl Kester* | |
| W. Carl Kester, Director | ||
| Date: April 8, 2005 | /S/ Andrew J. Donohue* | |
| Andrew J. Donohue, Director | ||
| Date: April 8, 2005 | /S/ Stephen B. Swensrud* | |
| Stephen B. Swensrud, Director | ||
| Date: April 8, 2005 | /S/ David F. Sand* | |
| David F. Sand, Chief Executive Officer, | ||
| Principal Accounting Officer, Principal Financial Officer | ||
| * By: |
/s/ Martin E. Lybecker | |
| Martin E. Lybecker | ||
| Attorney–in–fact |
24