UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21889
Name of Fund: Access Capital Strategies Community Investment Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
419 Boylston Street, Suite 501
Boston, Massachusetts 02116
(Address of Principal Executive Offices)
David F. Sand
419 Boylston Street, Suite 501
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Registrant's Telephone Number, including Area Code: (617) 236-7274
Date of fiscal year end: 05/31/06
Date of reporting period: 06/01/05 - 05/31/06
Item 1. Report to Stockholders
ACCESS
CAPITAL
WE CONNECT MAIN STREET TO WALL STREET
Access Capital Strategies Community Investment Fund, Inc.
ANNUAL REPORT May 31, 2006
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Access Capital Strategies Community Investment Fund, Inc.
A Letter to Shareholders
- --------------------------------------------------------------------------------
Dear Shareholder
The mission of the Access Capital Strategies Community Investment Fund, Inc.
(the "Fund") is to provide an investment in debt securities that support
community development activities serving low- and moderate-income individuals
and communities. These activities include investments in affordable housing,
education, community health centers and small businesses.
The Fund, organized on May 14, 1997, only invests in securities having the
highest credit rating or that are issued or guaranteed by the U.S. Government,
government agencies, or government-sponsored enterprises, such as Fannie Mae or
Freddie Mac.
This report covers the Fund's fiscal year from June 1, 2005 to May 31,
2006, the eighth year of our operations.
Portfolio Management Report
For the year ended May 31, 2006, the Common Stock of Access Capital Strategies
Community Investment Fund, Inc. had a net annualized yield of 4.87%, based on a
year-end per share net asset value of $9.29 and $.453 per share income
dividends. Over the same period, the total investment return on the Fund's
Common Stock was -.83%, based on a change in per share net asset value from
$9.82 to $9.29, and assuming reinvestment of $.451 per share ordinary income
dividends. These numbers compare with the total returns for the Fund's Benchmark
(80% Merrill Lynch Mortgage Index and 20% Merrill Lynch US Treasuries Index 1-10
years) of +.40% and the Lehman Brothers Aggregate Bond Index total return of
- -.48%.
The year ended May 31, 2006 was an unusual time in the credit markets. The
U.S. Federal Reserve Board (the "Fed") steadily increased short-term interest
rates taking the federal funds rate up in eight consecutive quarter point
increments from 3% in June 2005 to 5% in May 2006. Increased short-term interest
rates impact the Fund by increasing our borrowing costs and lessening the
attractiveness of our use of leverage. During the year, we reduced our use of
leverage from 17% of the portfolio in June 2005 to 10% in May 2006. The
short-term interest rate increases lead to coupon increases in our holdings of
variable rate U.S. Small Business Administration guaranteed small business
loans. During the year ended May 31, 2006, we increased our exposure to this
asset class from 3% to 5% of the portfolio.
For much of the year ended May 31, 2006, the longer end of the bond
market, where most of our assets are priced, did not follow the Fed's lead. The
10-year US Treasury Note went from a yield of 4.0% in June 2005 to 5.1% in May
2006. While this increase was far less than that of the shorter maturity
markets, it was enough to depress bond and mortgage-backed securities ("MBS")
prices and to reduce prior trends in mortgage refinancing, causing extension in
the expected average lives of MBS.
Community Impact Report
All aspects of the Fund's activities continued to experience strong growth. For
the year ended May 31, 2006, net assets grew from $388.3 million to $449.3
million.
Our total number of shareholders grew from 122 to 130. Our Designated
Target Regions, selected by shareholders, expanded from 44 states and
territories, including the District of Columbia and Guam, to 46 states and
territories.
While most of our shareholders are financial institutions, we are pleased
to report that pension funds, foundations, health care and faith-based investors
have also invested in the Fund.
For the year ended May 31, 2006, the Fund's investment in affordable
income mortgages increased approximately 46%, while investment in affordable
rental apartment units increased approximately 143%.
Shareholder Dividend Report
For the year ended May 31, 2006, the Fund paid dividends of 45 cents per share.
Other Items
For most of the Fund's operating history, it elected status as a business
development company under the Investment Company Act of 1940, as amended. On May
30, 2006, and pursuant to a vote by the Fund's shareholders, the Fund withdrew
its election as a business development company and registered as a continuously
offered closed-end investment company. The change will have no impact on the
Fund's mission or objectives. We will, however, have different reporting
requirements with the Securities and Exchange Commission. Starting with this
annual report, you will receive annual and semi-annual reports instead of
reports filed on Form 10-Ks and 10-Qs. We will also be filing semi-annual
reports on Form N-CSR and quarterly portfolio holding information on Form N-Q.
1
In March 2001, Merrill Lynch Investment Managers L.P. ("MLIM") became the
Fund's sub-investment manager and continues in that role. In February 2006, MLIM
and BlackRock Inc. announced their plans to contribute MLIM and certain
affiliates to BlackRock to create a new asset management firm. In June 2006, the
Fund's Board of Directors voted to seek the services of a new sub-adviser in
anticipation that the transaction between BlackRock and MLIM will result in the
termination of the Sub-Management Agreement under which MLIM currently provides
services to the Fund. The selection of a new sub-adviser will require the
approval of the Fund's Board of Directors and shareholders and you should expect
to receive a proxy statement and proxy card concerning this issue in the next
few months.
We would like to thank all of you for your continued interest and support
of the Access Capital Strategies Community Investment Fund, Inc.
Sincerely yours,
/s/ Ronald A. Homer
Ronald A. Homer
Chairman
/s/ David F. Sand
David F. Sand
Chief Executive Officer and
Chief Investment Officer
July 28, 2006
2
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Access Capital Strategies Community Investment Fund, Inc.
Disclosure of Expenses
- --------------------------------------------------------------------------------
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, and (b) operating expenses, including
advisory fees, shareholder services fees and other Fund expenses. The following
example (which is based on a hypothetical investment of $1,000 invested on
December 1, 2005 and held through May 31, 2006) is intended to assist
shareholders both in calculating expenses based on an investment in the Fund and
in comparing these expenses with similar costs of investing in other mutual
funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders'
ongoing costs only and do not reflect any transactional expenses, such as sales
charges. Therefore, the second table is useful in comparing ongoing expenses
only, and will not help shareholders determine the relative total expenses of
owning different funds. If these transactional expenses were included,
shareholder expenses would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value December 1, 2005 to
December 1, 2005 May 31, 2006 May 31, 2006
========================================================================================================================
Actual
========================================================================================================================
Access Capital Strategies Community Investment Fund, Inc. $ 1,000 $1,002.20 $ 3.74
========================================================================================================================
Hypothetical (5% annual return before expenses)**
========================================================================================================================
Access Capital Strategies Community Investment Fund, Inc. $ 1,000 $1,021.16 $ 3.78
- ------------------------------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio of .75%, multiplied by
the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half year divided by 365.
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Access Capital Strategies Community Investment Fund, Inc.
Portfolio Information as of May 31, 2006
- --------------------------------------------------------------------------------
Percent of
Asset Mix Total Investments
- --------------------------------------------------------------------------------
Mortgage-Backed Securities--
Federal National Mortgage Association ................................. 63.8%
Mortgage-Backed Securities--
Federal Home Loan Mortgage Corporation ................................ 26.8
Mortgage-Backed Securities--
Small Business Administration ......................................... 5.3
Promissory Notes ........................................................ 1.8
Mortgage-Backed Securities--Government
National Mortgage Association Pool .................................... 1.4
Mortgage-Backed Securities--
Community Reinvestment Revenue Notes .................................. 0.6
Municipal Bonds ......................................................... 0.3
- --------------------------------------------------------------------------------
3
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Access Capital Strategies Community Investment Fund, Inc.
Schedule of Investments as of May 31, 2006
- --------------------------------------------------------------------------------
Face Market
Amount Mortgage-Backed Securities Value
- ---------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage 15-Year Fixed Rate Single Family
Association--71.1% Mortgage-Backed Securities:
$ 12,322,215 4.50%, 6/1/18-11/1/20 ................................................ $ 11,754,946
7,864,401 5.00%, 12/1/17-2/1/21 ................................................ 7,652,534
1,300,324 5.50%, 3/1/16-7/1/19 (c) ............................................. 1,289,039
69,962 7.00%, 1/1/15 ........................................................ 72,218
30-Year Fixed Rate Single Family
Mortgage-Backed Securities:
16,174,038 4.50%, 5/1/33-8/1/35 (c) ............................................. 14,836,773
122,415,131 5.00%, 7/1/32-3/1/36 (c) ............................................. 115,743,965
102,213,825 5.50%, 9/1/32-4/1/36 (c) ............................................. 99,192,458
26,089,087 6.00%, 7/1/29-5/1/36 (c) ............................................. 25,960,796
11,364,164 6.50%, 3/1/31-8/1/34 ................................................. 11,558,848
520,031 7.00%, 6/1/29-3/1/31 ................................................. 536,584
29,126 7.25%, 12/1/29 ....................................................... 30,170
487,753 7.50%, 12/1/29-1/1/31 ................................................ 508,929
199,991 8%, 2/1/30-4/1/30 .................................................... 213,318
-----------------------------------------------------------------------------------------------------
Total Single Family Mortgage-Backed Securities ......................... 289,350,578
-----------------------------------------------------------------------------------------------------
Multi Family Mortgage-Backed Securities:
966,154 4.66%, 10/1/13 ....................................................... 922,314
486,149 4.78%, 5/1/14 ........................................................ 464,231
988,323 4.89%, 6/1/15 ........................................................ 941,488
9,919,145 4.90%, 9/1/15 ........................................................ 9,458,802
964,932 4.93%, 10/1/12 ....................................................... 932,541
2,460,036 5.22%, 6/1/20 ........................................................ 2,348,521
1,926,326 5.23%, 4/1/21 ........................................................ 1,856,994
4,967,659 5.37%, 11/1/21 ....................................................... 4,841,205
1,042,224 5.41%, 2/1/21 ........................................................ 1,019,947
753,740 5.51%, 11/1/21 ....................................................... 737,086
865,984 5.79%, 12/1/15 ....................................................... 873,181
1,181,299 6.38%, 5/1/11 ........................................................ 1,222,311
1,243,782 6.50%, 5/1/17 ........................................................ 1,262,929
806,407 6.53%, 6/1/16 ........................................................ 820,698
645,179 6.70%, 6/1/19 ........................................................ 668,429
275,884 6.85%. 8/1/09 ........................................................ 284,160
599,807 7.58%, 5/1/18 ........................................................ 673,327
706,512 7.97%, 9/1/17 ........................................................ 799,452
-----------------------------------------------------------------------------------------------------
Total Multi Family Mortgage-Backed Securities .......................... 30,127,616
- ---------------------------------------------------------------------------------------------------------------------------------
Total Federal National Mortgage Association ............................ 319,478,194
- ---------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage 15-Year Fixed Rate Single Family
Corporation--29.8% Mortgage-Backed Securities:
1,486,369 4.50%, 1/1/19-11/1/19 ................................................ 1,415,309
3,421,861 5.00%, 11/1/18-1/1/21 (c) ............................................ 3,324,871
1,058,696 5.50%, 9/1/19-11/1/19 (c) ............................................ 1,048,912
30-Year Fixed Rate Single Family
Mortgage-Backed Securities:
1,969,494 4.50%, 8/1/33-9/1/33 ................................................. 1,808,683
40,881,979 5.00%, 6/1/33-2/1/36 ................................................. 38,622,761
63,400,622 5.50%, 11/1/32-5/1/36 (c) ............................................ 61,554,650
20,946,979 6.00%, 3/1/31-6/15/36 ................................................ 20,846,272
4,293,794 6.50%, 3/1/31-8/1/32 ................................................. 4,379,662
625,892 7.00%, 1/1/31-4/1/31 ................................................. 646,238
494,568 7.50%, 12/1/29-2/1/30 ................................................ 517,058
- ---------------------------------------------------------------------------------------------------------------------------------
Total Federal Home Loan Mortgage Corporation ........................... 134,164,416
- ---------------------------------------------------------------------------------------------------------------------------------
4
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Access Capital Strategies Community Investment Fund, Inc.
Schedule of Investments as of May 31, 2006 (continued)
- --------------------------------------------------------------------------------
Face Market
Amount Mortgage-Backed Securities Value
- ---------------------------------------------------------------------------------------------------------------------------------
Government National 30-Year Fixed Rate Single Family
Mortgage Association--1.6% Mortgage-Backed Securities:
$ 2,985,083 5.50%, 1/15/36 ....................................................... $ 2,920,936
629,375 6.00%, 12/15/31 ...................................................... 630,942
87,804 6.50%, 4/15/32 ....................................................... 89,903
86,783 7.00%, 4/15/32 ....................................................... 90,124
Multi Family Mortgage-Backed Securities:
618,217 5.125%, 3/15/34 ...................................................... 597,681
713,271 5.75%, 9/15/23 ....................................................... 704,122
516,001 6.25%, 9/15/32 ....................................................... 525,883
1,430,463 8.25%, 12/15/32 ...................................................... 1,479,402
- ---------------------------------------------------------------------------------------------------------------------------------
Total Government National Mortgage Association ......................... 7,038,993
- ---------------------------------------------------------------------------------------------------------------------------------
Community Reinvestment 3,000,000 4.21%, 9/1/19 ........................................................ 2,885,379
Revenue Notes--0.6%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Community Reinvestment Revenue Notes ............................. 2,885,379
- ---------------------------------------------------------------------------------------------------------------------------------
Small Business 723,850 5.05%, 4/25/28 (a) ................................................... 724,788
Administration--5.9% (b) 2,848,416 5.05%, 3/25/29 ....................................................... 2,852,377
2,589,245 5.05%, 9/25/30 ....................................................... 2,593,207
1,248,565 5.10%, 3/25/28 ....................................................... 1,252,477
1,311,363 5.10%, 9/25/29 ....................................................... 1,315,710
2,010,312 5.10%, 11/25/29 ...................................................... 2,017,015
1,728,960 5.10%, 4/25/30 ....................................................... 1,734,804
3,068,562 5.10%, 2/25/31 ....................................................... 3,079,200
560,413 5.125%, 6/25/18 (a) .................................................. 561,524
320,022 5.15%, 10/25/10 ...................................................... 319,051
1,626,215 5.15%, 3/25/14 ....................................................... 1,627,316
1,727,301 7.625%, 10/25/15 ..................................................... 1,850,371
2,911,535 7.875%, 10/25/15 ..................................................... 3,144,458
1,259,725 7.875%, 5/25/16 ...................................................... 1,340,950
1,458,412 8.08%, 12/25/15 ...................................................... 1,564,033
425,399 8.375%, 1/25/09 ...................................................... 434,228
- ---------------------------------------------------------------------------------------------------------------------------------
Total Small Business Administration .................................... 26,411,509
- ---------------------------------------------------------------------------------------------------------------------------------
Total Mortgage-Backed Securities
(Cost--$508,248,490)--109.0% ........................................... 489,978,491
- ---------------------------------------------------------------------------------------------------------------------------------
Promissory Notes
- ---------------------------------------------------------------------------------------------------------------------------------
9,375,000 Massachusetts Housing Investment Corporation, 6.67%
due 4/1/35 (d) ....................................................... 9,153,281
- ---------------------------------------------------------------------------------------------------------------------------------
Total Promissory Notes
(Cost--$9,375,000)--2.0% ............................................... 9,153,281
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5
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Access Capital Strategies Community Investment Fund, Inc.
Schedule of Investments as of May 31, 2006 (concluded)
- --------------------------------------------------------------------------------
Face Market
Amount Municipal Bonds Value
- ---------------------------------------------------------------------------------------------------------------------------------
$ 140,000 Guam Power Authority Revenue Bonds, Series A,
5% due 10/01/24 ...................................................... $ 143,931
725,000 Utah Housing Corporation Single Family Mortgage
Revenue Bonds, 3.36% due 7/1/14 ...................................... 672,351
835,000 Utah Housing Corporation Single Family Mortgage
Revenue Bonds, 3.48% due 7/1/14 ...................................... 792,532
- ---------------------------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$1,702,501)--0.4% ......................... 1,608,814
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$519,325,991*)--111.4% ........................ 500,740,586
Liabilities in Excess of Other Assets--(11.4%) ......................... (51,416,350)
-------------
Net Assets--100.0% ..................................................... $ 449,324,236
=============
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................ $519,325,991
============
Gross unrealized appreciation ............................. $ 444,904
Gross unrealized depreciation ............................. (19,030,309)
------------
Net unrealized depreciation ............................... $(18,585,405)
============
(a) All or a portion held as collateral in connection with open financial
futures contracts.
(b) Floating rate security.
(c) All or a portion provided as collateral in connection with open reverse
repurchase agreements.
(d) Restricted securities as to resale, representing 2.0% of net assets, were
as follows:
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Issue Acquisition Date Cost Value
---------------------------------------------------------------------------------------------------------------
Massachusetts Housing Investment Corporation, 6.67%
due 4/1/35 ................................................. 3/29/05 $9,375,000 $9,153,281
---------------------------------------------------------------------------------------------------------------
o Financial futures contracts sold as of May 31, 2006 were as follows:
-----------------------------------------------------------------------------------------
Unrealized
Number of Expiration Face Appreciation
Contracts Issue Date Value (Depreciation)
-----------------------------------------------------------------------------------------
275 U.S. Treasury Notes September 2006 $28,602,130 $109,552
210 U.S. Treasury Notes September 2006 $22,001,799 (31,795)
-----------------------------------------------------------------------------------------
Total Unrealized Appreciation--Net $ 77,757
========
See Notes to Financial Statements.
6
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Access Capital Strategies Community Investment Fund, Inc.
Statement of Assets, Liabilities and Capital as of May 31, 2006
- --------------------------------------------------------------------------------
Assets:
Investments in unaffiliated securities, at value (Identified cost--$519,325,991) ........... $ 500,740,586
Cash ....................................................................................... 946,039
Receivables:
Interest ................................................................................. $ 2,563,326
Capital shares sold ...................................................................... 2,465,000
Principal paydowns ....................................................................... 462,291
Variation margin ......................................................................... 126,797 5,617,414
-------------
Prepaid expenses and other assets .......................................................... 38,222
-------------
Total assets 507,342,261
-------------
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Reverse repurchase agreements (including accrued interest of $86,606) .................... 52,835,442
Securities purchased ..................................................................... 3,628,400
Dividends to shareholders ................................................................ 1,239,108
Investment adviser ....................................................................... 165,368
Other affiliates ......................................................................... 7,580 57,875,898
-------------
Accrued expenses ........................................................................... 142,127
-------------
Total liabilities .......................................................................... 58,018,025
-------------
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Net Assets:
Net Assets ................................................................................. $ 449,324,236
=============
- -----------------------------------------------------------------------------------------------------------------------------------
Capital:
Common Stock, $.0000001 par value, 100,000,000 shares authorized ........................... $ 5
Paid-in capital in excess of par ........................................................... 478,158,292
Accumulated distributions in excess of investment income--net .............................. $ (1,310,503)
Accumulated realized capital losses--net ................................................... (9,015,910)
Unrealized depreciation--net ............................................................... (18,507,648)
-------------
Total accumulated losses--net .............................................................. (28,834,061)
-------------
Total capital--Equivalent to $9.29 per share based on 48,363,987 shares of capital
stock outstanding ........................................................................ $ 449,324,236
=============
See Notes to Financial Statements.
7
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Access Capital Strategies Community Investment Fund, Inc.
Statement of Operations for the Year Ended May 31, 2006
- --------------------------------------------------------------------------------
Investment Income:
Interest ................................................................................... $ 25,690,061
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Expenses:
Interest expense ........................................................................... $ 2,504,592
Management fees ............................................................................ 2,425,762
Professional fees .......................................................................... 250,409
Accounting services ........................................................................ 148,647
Pricing fees ............................................................................... 60,732
Custodian fees ............................................................................. 58,612
Transfer agent fees ........................................................................ 50,019
Directors' fees and expenses ............................................................... 47,071
Other ...................................................................................... 66,614
-------------
Total expenses before reimbursement ........................................................ 5,612,458
Reimbursement of expenses .................................................................. 36,793
-------------
Total expenses after reimbursement ......................................................... 5,649,251
-------------
Investment income--net ..................................................................... 20,040,810
-------------
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Realized & Unrealized Gain (Loss):
Realized gain (loss) on:
Investments--net ......................................................................... (510,532)
Futures contracts--net ................................................................... 1,902,139 1,391,607
-------------
Change in unrealized appreciation/depreciation on:
Investments--net ......................................................................... (24,641,727)
Futures contracts--net ................................................................... 303,749 (24,337,978)
------------- -------------
Total realized and unrealized loss--net .................................................... (22,946,371)
-------------
Net Decrease in Net Assets Resulting from Operations ....................................... $ (2,905,561)
=============
See Notes to Financial Statements.
8
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Access Capital Strategies Community Investment Fund, Inc.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Year Ended May 31,
----------------------------------
Increase (Decrease) in Net Assets: 2006 2005
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income--net ..................................................................... $ 20,040,810 $ 18,064,128
Realized gain (loss)--net .................................................................. 1,391,607 (3,045,862)
Change in unrealized appreciation/depreciation--net ........................................ (24,337,978) 10,323,194
------------- -------------
Net increase (decrease) in net assets resulting from operations ............................ (2,905,561) 25,341,460
------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends to Shareholders:
Dividends to shareholders from investment income--net ...................................... (20,040,810) (18,064,128)
------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Stock Transactions:
Net proceeds from sale of shares ........................................................... 92,720,000 41,905,000
Value of shares issued to shareholders in reinvestment of dividends ........................ 5,379,818 3,855,491
------------- -------------
Total issued ............................................................................... 98,099,818 45,760,491
Value of shares redeemed ................................................................... (14,128,151) (11,306,083)
------------- -------------
Net increase in net assets derived from capital stock transactions ......................... 83,971,667 34,454,408
------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets ............................................................... 61,025,296 41,731,740
Beginning of year .......................................................................... 388,298,940 346,567,200
------------- -------------
End of year* ............................................................................... $ 449,324,236 $ 388,298,940
============= =============
* Accumulated distributions in excess of investment income--net .......................... $ (1,310,503) $ (1,310,503)
============= =============
See Notes to Financial Statements.
9
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Access Capital Strategies Community Investment Fund, Inc.
Statement of Cash Flows for the Year Ended May 31, 2006
- --------------------------------------------------------------------------------
Cash Used For Operating Activities:
Net decrease in net assets resulting from operations ......................................................... $ (2,905,561)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used for
operating activities:
Increase in other receivables .............................................................................. (555,748)
Increase in prepaid expenses and other assets .............................................................. (37,661)
Decrease in other liabilities .............................................................................. (45,552)
Realized and unrealized loss--net .......................................................................... 22,946,371
Realized and unrealized gain on futures contracts--net ..................................................... 2,205,888
Amortization of premium and discount ....................................................................... 71,998
Proceeds from paydowns and sales of long-term investments................................................... 100,478,226
Purchases of long-term investments ......................................................................... (169,654,267)
-------------
Cash used for operating activities ........................................................................... (47,496,306)
-------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Provided by Financing Activities:
Proceeds from issuance of Common Stock ....................................................................... 92,150,289
Cash receipts from reverse repurchase agreements ............................................................. 172,532,000
Cash payments on reverse repurchase agreements ............................................................... (188,296,164)
Cash payments on Common Stock redeemed ....................................................................... (14,128,151)
Dividends paid to shareholders ............................................................................... (14,910,197)
-------------
Cash provided by financing activities ........................................................................ 47,347,777
-------------
- -----------------------------------------------------------------------------------------------------------------------------------
Cash:
Net decrease in cash ......................................................................................... (148,529)
Cash at beginning of year .................................................................................... 1,094,568
-------------
Cash at end of year .......................................................................................... $ 946,039
=============
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
Cash paid for interest ....................................................................................... $ 2,501,765
=============
- -----------------------------------------------------------------------------------------------------------------------------------
Non-Cash Financing Activities:
Capital shares issued in reinvestment of dividends paid to shareholders ...................................... $ 5,379,818
=============
See Notes to Financial Statements.
10
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Access Capital Strategies Community Investment Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
For the Year Ended May 31,
The following per share data and ratios have been derived ------------------------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002++
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of year ..................... $ 9.82 $ 9.62 $ 10.21 $ 10.19 $ 9.97
-------- -------- -------- -------- --------
Investment income--net ................................. .45** .48** .54** .62** .64
Realized and unrealized gain (loss)--net ............... (.53) .20 (.59) .12 .22
-------- -------- -------- -------- --------
Total from investment operations ....................... (.08) .68 (.05) .74 .86
-------- -------- -------- -------- --------
Less dividends from investment income--net ............. (.45) (.48) (.54) (.72) (.64)
-------- -------- -------- -------- --------
Net asset value, end of year ........................... $ 9.29 $ 9.82 $ 9.62 $ 10.21 $ 10.19
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Return:*
Based on net asset value per share ..................... (.83%) 7.14% (.56%) 7.46% 8.88%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:+
Expenses, net of reimbursement and excluding interest
expense and investment structuring fees .............. .74% .85% .87% .68% .64%
======== ======== ======== ======== ========
Expenses, excluding interest expense ................... .73% .74% .78% .75% .77%
======== ======== ======== ======== ========
Expenses ............................................... 1.32% 1.13% 1.04% 1.04% 1.06%
======== ======== ======== ======== ========
Investment income--net ................................. 4.72% 4.87% 5.43% 6.08% 6.41%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets, Plus Average Borrowings:+@
Expenses, net of reimbursement and excluding interest
expense and investment structuring fees .............. .65% .72% .71% .57% .58%
======== ======== ======== ======== ========
Expenses, excluding interest expense ................... .64% .63% .64% .64% .68%
======== ======== ======== ======== ========
Expenses ............................................... 1.16% .96% .85% .88% .94%
======== ======== ======== ======== ========
Investment income--net ................................. 4.13% 4.13% 4.44% 5.14% 5.73%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of year (in thousands) ................. $449,324 $388,299 $346,567 $247,034 $184,884
======== ======== ======== ======== ========
Portfolio turnover ..................................... 21% 33% 46% 42% 20%
======== ======== ======== ======== ========
* Total investment returns exclude the effects of sales charges.
** Based on average shares outstanding.
+ Effective June 1, 2003, the 6 basis point (0.06%) and 2 basis point
(0.02%) expense reimbursement caps described below were replaced with and
superceded by a 25 basis point (0.25%) expense reimbursement cap. To the
extent that the Fund's operating expenses (exclusive of management fees
and interest expense) in a given fiscal year are less than 25 basis points
(0.25%) of the Fund's monthly average net assets, the Fund will repay the
Fund's investment manager ("Access") and sub-investment manager ("MLIM")
for operating expenses previously borne or reimbursed by Access and MLIM
(provided that in no circumstance will the Fund pay or reimburse more than
25 basis points (0.25%) of the Fund's monthly average assets for operating
expenses and expense reimbursement collectively in any fiscal year). Prior
to that time, the Fund's operating expenses were being recorded by the
Fund and the Fund was being reimbursed by Access and MLIM for operating
expenses in excess of 6 basis points (0.06%). Prior to June 1, 2003, the
expense reimbursement cap was 6 basis points (0.06%). During the fiscal
year ended May 31, 2003, the Fund also continued to be charged 2 basis
points (0.02%) of the Fund's total assets, including assets purchased with
borrowed funds, to reimburse Access for unreimbursed expenses relating to
the Fund paid by Access prior to March 2001.
++ For the year ended May 31, 2002, per share operating performance figures
have been adjusted to reflect a 10,000-for-1 stock split that occurred on
July 9, 2001.
@ This ratio is calculated based upon the average net assets plus average
borrowings.
See Notes to Financial Statements.
11
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Notes to Financial Statements
- --------------------------------------------------------------------------------
(1) Organization
Access Capital Strategies Community Investment Fund, Inc. (the "Fund"), a
Maryland Corporation, is registered as a non-diversified, continuously offered,
closed-end management investment company. Since its inception, the Fund elected
status as a business development company under the Investment Company Act of
1940 (the "1940 Act"), but withdrew its election on May 30, 2006, and is now
registered as a continuously offered, closed-end interval fund under the 1940
Act.
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. The
Fund's Articles of Incorporation provide that on December 31, 2032 the Fund will
terminate operations and all investors will be required to tender all shares
outstanding.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with U.S. generally accepted accounting principles,
which require management to make estimates and assumptions that effect amounts
reported therein. Although actual results may differ from these estimates, any
such differences are expected to be immaterial to the net assets of the Fund.
(a) Valuation of Securities--Portfolio securities for which the principal
market is a securities exchange will be valued at the closing sales price on
that exchange on the day of computation, or, if there have been no sales during
such day, at the bid quotations. If no such bid prices are available, then the
securities will be valued in good faith at their respective fair market values
using methods determined by or under the supervision of the Board of Directors
of the Fund (the "Board"). Promissory Notes are valued at the mean between the
last available bid and asked prices from one or more brokers or dealers as
obtained from a pricing service. Portfolio securities for which the principal
market is not a securities exchange and for which the Fund can obtain a price
from an independent pricing agent are valued at a price obtained from the
independent pricing agent. The price is adjusted for the Community Reinvestment
Act ("CRA") premium, which is obtained from an independent source. Portfolio
securities for which the principal market is not a securities exchange and the
Fund cannot obtain a price from an independent pricing agent, are valued at
their respective fair market values by the Merrill Lynch Investment Managers,
L.P. ("MLIM") Fixed Income Pricing Committee, provided that the price (or change
in price) does not affect the Fund's Net Asset Value ("NAV") by more than 1 1/42
of 1%. Portfolio securities for which the principal market is not a securities
exchange, and the Fund cannot obtain a price from an independent pricing agent,
and the price (or change in price) of which the MLIM Fixed Income Pricing
Committee determines would affect the Fund's NAV by more than 1 1/42 of 1% are
valued at their respective fair market values by the Fund's Pricing Committee.
Financial futures contracts are stated at market value. All other assets
and securities including securities for which market quotations are not readily
available are valued at their fair value as determined in good faith under the
general supervision of the Board. Occasionally, events affecting the values of
securities and other assets may occur between the times at which valuations of
such securities are determined (that is, the close of the market on which such
securities trade) and the close of business on the New York Stock Exchange. If
events (for example, company announcement, natural disasters, market volatility)
occur during such periods that are expected to materially affect the value for
such securities, those securities may be valued at their fair market value as
determined in good faith by the Board, or by the Fund's investment manager,
Access Capital Strategies LLC ("Access"), or its sub-manager, MLIM, using a
pricing service and/or procedures approved by the Board.
(b) Repurchase Agreements--It is the policy of the Fund to require the
custodian to take possession by having legally segregated in the Federal Reserve
book entry system all securities held as collateral in support of the repurchase
agreement investments. Additionally, procedures have been established by the
Fund to monitor, on a daily basis, the market value of each repurchase
12
agreement's underlying securities to ensure the existence of a proper level of
collateral.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by the
manager or the sub-manager to be creditworthy pursuant to guidelines established
by the Board. Risk may arise from potential inability of counterparties to honor
the terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of the collateral securities.
(c) Reverse Repurchase Agreements--To obtain short-term financing, the
Fund may enter into reverse repurchase agreements with banks and other
recognized financial institutions such as broker/dealers that are deemed by the
Fund's manager or sub-manager to be creditworthy pursuant to the guidelines
established by the Board. Interest on the value of the reverse repurchase
agreements is based upon competitive market rates at the time of issuance. At
the time the Fund enters into a reverse repurchase agreement, it will establish
and maintain a segregated account with the custodian containing qualifying
assets having a value not less than the repurchase price, including accrued
interest. If the counterparty to the transaction is rendered insolvent, the
ultimate realization of the securities to be repurchased by the Fund may be
delayed or limited.
(d) Derivatives--The Fund may use derivative instruments, including
futures, forwards, options, indexed securities and inverse securities for
hedging purposes only. During the fiscal year ended May 31, 2006, the Fund only
used financial futures contracts. Derivatives allow the Fund to increase or
decrease its risk exposure more quickly and efficiently than other types of
instruments. 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 and may be increased.
Losses may also arise due to changes in the value of the contract or if the
counterparty does not perform under the contract. There can be no assurance that
the Fund's hedging strategy will reduce risk or that hedging transactions will
be available or cost effective.
o Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at a specific
price or yield. Upon entering into a contract, the Fund deposits and maintains
as collateral such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed.
(e) Leverage--The Fund may borrow money from and issue debt securities to
banks, insurance companies, and other lenders to obtain additional funds to
invest in private placement debt securities.
(f) Security Transactions and Investment Income--Security transactions are
recorded on the trade date. Realized gains and losses from security transactions
are reported on an identified-cost basis. Income and expenses are recorded on
the accrual basis. Premiums and discounts on mortgage-backed securities are
amortized and accreted into interest income using the effective-yield method.
(g) Federal Income Taxes--No provision for federal income or excise taxes
is required since the Fund intends to continue to qualify as a regulated
investment company and distribute all of its taxable income to its shareholders.
(h) Distributions to Shareholders--The Fund declares daily and distributes
dividends monthly from net investment income. The Fund distributes dividends
annually from net realized capital gains, if any, after offsetting capital loss
carryforwards.
(i) Securities Sold Short--When the Fund engages in a short sale, an
amount equal to the proceeds received by the Fund is reflected as an asset and
an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the market value of the short sale. The Fund
maintains a segregated account of securities as collateral for the short sales.
The Fund is exposed to market risk based on the amount, if any, that the market
value of the securities exceeds the market value of the securities in the
segregated account. The Fund is required to repay the counterparty
13
any dividends or interest declared or accrued during the period that the
security is sold short.
(3) Investments
Purchases and sales of investments (including paydowns), excluding short-term
securities, for the year ended May 31, 2006 were $168,945,654 and $100,679,723,
respectively.
(4) Investment Management Agreement and Other Transactions with Affiliates
Access serves as the Fund's Investment Manager. Access is a registered
investment adviser under the Investment Advisers Act of 1940. As of May 31,
2006, the Federal National Mortgage Association ("Fannie Mae") through its
affiliate, the Fannie Mae American Communities Fund, holds 32% equity interest
in Access. At May 31, 2006, the Fund held $319,478,194 in Fannie Mae
mortgage-backed securities representing 71.1% of the Fund's net assets.
For the fiscal year ended May 31, 2006, Access was paid an annual
management fee, paid monthly, of 50 basis points (0.50%) of the Fund's average
monthly gross assets less accrued liabilities, other than indebtedness for
borrowings.
Access has entered into a sub-management agreement (the "Sub-Management
Agreement") with MLIM. Under the Sub-Management Agreement, MLIM has assumed
certain investment and administrative duties of Access and for such services
MLIM receives from Access an annual sub-management fee paid monthly at an annual
rate of 25 basis points (0.25%) of the Fund's average gross monthly assets, less
accrued liabilities other than indebtedness for borrowings. For the year ended
May 31, 2006, 12.2% of the Fund's outstanding shares are owned by Merrill Lynch
Community Development Corp., an affiliate of MLIM.
Access and MLIM have agreed to reimburse the Fund so that the annual
operating expenses (excluding management fees and interest expense) will not
exceed 25 basis points (0.25%) (the "Expense Cap") of the Fund's average gross
monthly assets, less accrued liabilities other than indebtedness for borrowings.
For the year ended May 31, 2006, Access and MLIM have reimbursed the Fund
$5,615, which represents the amount of total annual operating expenses that
exceeded the Expense Cap. To the extent that the Fund's operating expenses in a
given fiscal year are less than 25 basis points (0.25%) of the Fund's monthly
average net assets, the Fund will repay Access and MLIM for operating expenses
previously borne or reimbursed by Access and MLIM (provided that in no
circumstance will the Fund pay or reimburse more than 25 basis points (0.25%) of
the Fund's monthly average assets for operating expenses and expense
reimbursement collectively in any fiscal year). For the year ended May 31, 2006,
the Fund repaid Access and MLIM $42,408, which was the remainder of the
previously unreimbursed expenses.
For certain issues purchased by the Fund, the issuer may pay a 100 basis
point (1%) structuring fee to the Fund. In the event that the Fund receives a
structuring fee from an issuer, Access charges the Fund an investment
structuring fee equal to 100 basis points (1%). No structuring fees were
received or paid in the year ended May 31, 2006.
Access maintains a shareholder account for each investor in the Fund.
Investors making a commitment to the Fund pay Access a one-time commitment fee
of 25 basis points (0.25%) of the commitment. During the year ended May 31,
2006, Access received $90,500 in commitment fees, of which $37,000 was paid to
FAM Distributors, Inc. ("FAMD"), an affiliate of MLIM.
For the year ended May 31, 2006, the Fund reimbursed MLIM $9,632 for
certain accounting services.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S"), an affiliate of MLIM, received $126 in commissions on the execution
of portfolio security transactions for the Fund for the year ended May 31, 2006.
Merrill Lynch Alternative Investments LLC ("MLAI"), an affiliate of MLIM,
is the Fund's transfer agent. Effective on or around August 1, 2006, the Fund
will begin to use UMB Fund Services, Inc. for its transfer agent services.
Certain officers and/or directors of the Fund are officers and/or
directors of MLIM, MLAI, FAMD, and/or ML & Co.
In February 2006, Merrill Lynch & Co. ("ML & Co.") and BlackRock, Inc.
("BlackRock") entered into an agreement to contribute ML & Co.'s investment
management business, including MLIM, to the investment management business of
BlackRock. The transaction is expected to close in the third quarter of 2006.
14
(5) Capital Share Transactions
The Fund has authorized 100,000,000 shares of $.0000001 par value Common Stock.
Shares issued and outstanding during the year ended May 31, 2006 increased by
8,811,609; 9,731,141 as a result of shares sold and 564,913 as a result of
dividend reinvestment. 1,484,445 shares were redeemed. During the year ended May
31, 2005, shares issued and outstanding increased by 3,516,788; 4,271,086 as a
result of shares sold and 393,911 as a result of dividend reinvestment.
1,148,209 shares were redeemed.
As described in the Fund's Private Offering Memorandum ("Offering
Memorandum"), shareholders of the Fund may be offered the opportunity to
participate in a quarterly repurchase program. In every quarter since inception,
June 23, 1998, the Fund has offered shareholders the opportunity to participate
in this program. Four times each year shareholders receive a letter asking if
they wish to redeem some or all of their Fund shares. Investors redeeming their
shares will receive the then current net asset value per share and have
transferred to their account the net proceeds from liquidation of their shares
of the Fund. During the fiscal year ended May 31, 2006, four shareholders opted
to redeem a total of 1,484,445 Fund shares for total proceeds of $14,128,151.
During the fiscal year ended May 31, 2005, four shareholders opted to redeem a
total of 1,148,209 Fund shares for total proceeds of $11,306,083. Furthermore,
as described in the Offering Memorandum, certain institutional investors
("accredited investors") may periodically purchase shares of the Fund at its
current net asset value per share. During the year ended May 31, 2006, 56
accredited investors purchased and reinvested dividends of 10,296,054 shares for
total proceeds of $98,099,818. During the prior year period, 58 accredited
investors purchased and reinvested dividends of 4,664,997 shares for total
proceeds of $45,760,491. As stipulated by the Offering Memorandum, the Fund will
terminate operations, and all investors will be required to tender all shares
outstanding on December 31, 2032.
(6) Reverse Repurchase Agreements
For the year ended May 31, 2006, the average amount borrowed was approximately
$60,755,000 and the daily weighted average interest rate was 4.12%.
(7) Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended May 31,
2006 and May 31, 2005 was as follows:
- --------------------------------------------------------------------------------
5/31/2006 5/31/2005
- --------------------------------------------------------------------------------
Distributions from:
Ordinary income ........................ $20,040,810 $18,064,128
----------- -----------
Total taxable distributions .............. $20,040,810 $18,064,128
=========== ===========
- --------------------------------------------------------------------------------
As of May 31, 2006, the components of accumulated losses on a tax basis
were as follows:
- -----------------------------------------------------------------------------
Accumulated distributions in excess of
investment income--net ................................ $ (1,310,503)
Undistributed long-term capital gains--net .............. --
------------
Total undistributed losses--net ......................... (1,310,503)
Capital loss carryforward ............................... (8,644,698)*
Post-October losses--net ................................ (226,439)
Unrealized losses--net .................................. (18,652,421)**
------------
Total accumulated losses--net ........................... $(28,834,061)
============
- -----------------------------------------------------------------------------
* On May 31, 2006, the Fund had a net capital loss carryforward of
$8,644,698, of which $16,310 expires in 2007, $137,249 expires in 2008,
$644,962 expires in 2009, $310,646 expires in 2010, $1,093,937 expires in
2011, $2,026,076 expires in 2012, $3,756,334 expires in 2013 and $659,184
expires in 2014. This amount will be available to offset like amounts of
any future taxable gains.
** The difference between book-basis and tax-basis net unrealized losses is
attributable primarily to the tax deferral of losses on straddles and the
realization for tax purposes of unrealized gains (losses) on certain
futures contracts.
(8) Subsequent Event
On June 27, 2006, the Board directed Access to solicit proposals for a new
sub-manager in anticipation that the transaction between BlackRock and ML & Co.
will result in the termination of the Sub-Management Agreement, and MLIM will
cease to serve as the Fund's Sub-Manager after the transaction with BlackRock
has been consummated.
15
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of Access Capital Strategies
Community Investment Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of Access Capital Strategies Community
Investment Fund, Inc. as of May 31, 2006, and the related statements of
operations and cash flows for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the 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 the standards of the Public
Company Accounting Oversight Board (United States). 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.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of May 31, 2006, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. 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
Access Capital Strategies Community Investment Fund, Inc. as of May 31, 2006,
the results of its operations and cash flows for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
July 27, 2006
16
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Matters Submitted to Vote of Shareholders
- --------------------------------------------------------------------------------
During the twelve-month period ended May 31, 2006, Access Capital Strategies
Community Investment Fund, Inc.'s shareholders voted on the following proposals.
The proposals were approved at a special shareholders' meeting on March 28,
2006. The total number of shares of stock of the Fund entitled to vote at the
meeting was 47,324,197.255 and the numbers of shares of stock of the Fund
represented in person or by proxies received with respect to the meeting and not
revoked at or prior to the meeting were 28,420,426.250. A description of the
proposals and number of shares voted are as follows:
Shares Shares Shares
Voted For Voted Against Abstaining
- ------------------------------------------------------------------------------------------------------------------------------------
26,489,418.822 1,931,007.43 0
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 1. Approval of authorization to withdraw the Fund's election to be treated as a business development company and continue
operations as a registered closed-end investment company.
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Shares Shares
Voted For Voted Against Abstaining
- ------------------------------------------------------------------------------------------------------------------------------------
26,489,418.822 1,931,007.43 0
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 2. Election of Directors: Peter Blampied
Ronald Homer
Carl Kester
Kevin Mulvaney
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Shares Shares
Voted For Voted Against Abstaining
- ------------------------------------------------------------------------------------------------------------------------------------
28,420,426.252 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 3. Ratification of the selection of Deloitte & Touche, LLP, as the independent auditors of the Fund for the fiscal year
ended May 31, 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Shares Shares
Voted For Voted Against Abstaining
- ------------------------------------------------------------------------------------------------------------------------------------
22,855,330.510 2,934,359.762 2,630,735.976
- ------------------------------------------------------------------------------------------------------------------------------------
Proposal 4. Transaction of such other business as may properly come before the Meeting.
- ------------------------------------------------------------------------------------------------------------------------------------
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Availability of Quarterly Schedule of Investments
- --------------------------------------------------------------------------------
Starting in the fiscal year ending May 31, 2007, the Fund will file its complete
schedule of portfolio holdings with the Securities and Exchange Commission
("SEC") for the first and third quarters of each fiscal year on Form N-Q. The
Fund's Forms N-Q will be available on the SEC's Web site at http://www.sec.gov.
The Fund's Forms N-Q may also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
17
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Disclosure of Investment Advisory Agreement
- --------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that the Investment Advisory and
Subadvisory Agreements of the Fund be approved annually by the Fund's Board of
Directors (the "Board"), including a majority of the independent directors (the
"Independent Directors") voting separately.
At an in-person meeting held on March 28, 2006, the Board considered and
approved the continuance of the Fund's Investment Advisory Agreement with Access
Capital Strategies, LLC (the "Adviser") and the Subadvisory Agreement with
Merrill Lynch Investment Management, LP (the "Subadviser"). In their
deliberations, the Independent Directors had the opportunity to meet privately
in executive session without representatives of the Adviser or the Subadviser
present. In evaluating the Investment Advisory and Subadvisory Agreements, the
Board reviewed materials furnished by the Adviser and the Subadviser, including
information about their respective affiliates, personnel, and operations and
relied upon their knowledge of the Adviser resulting from their quarterly
meetings, periodic telephonic meetings and other communications throughout the
year.
At the March 28, 2006 meeting, which had been called for the purpose of
considering approval of the Investment Advisory and Subadvisory Agreements, and
at other prior meetings during the course of the year, the Board, including the
Independent Directors, requested and received materials and presentations
relating to Fund performance and the services rendered by the Adviser and
Subadviser. In considering the approval of the Fund's Investment Advisory and
Subadvisory Agreements, the Board, including the Independent Directors,
evaluated a number of factors relevant to their determination. They did not
identify any single factor as all-important or controlling, and individual
members of the Board did not necessarily attribute the same weight or importance
to each factor. Among the factors considered by the Board in approving the
Advisory and Subadvisory Agreements were the following:
Nature, Scope and Extent of Services
The Board considered the nature, scope and extent of the services provided by
the Adviser and Subadviser. In their deliberations as to the approval of the
Fund's Investment Advisory and Subadvisory Agreements, the members of the Board
were mindful of the Adviser's services to the Fund since its inception and by
the Subadviser since assuming its function in 2001. The Board also evaluated the
financial and other resources devoted by the Adviser and Subadviser to the Fund,
including the experience and skills of their management, investment, legal,
compliance and administrative personnel. The Board also considered the resources
made available to such personnel and the organizational depth and stability of
both the Adviser and Subadviser. The Board noted in particular the good working
relationships the Adviser enjoys with portfolio management personnel at the
Subadviser. The Board also noted that, with the February 15, 2006 announcement
that the Subadviser was to become part of a new asset management firm, it would
become necessary for the Fund's Board and shareholders to consider and approve
any agreement for the provision of advisory or management services that might be
proposed by the new company.
Investment Performance, Advisory Fees and Expense Ratios
In considering the Fund's performance, advisory fees and expense ratio, the
Board requested and received from the Adviser data comparing the Fund's
performance to that of its most relevant peer. The Board considered the Fund's
relative performance, evaluating net total returns for the 12-month, 3-year
(annualized), and 5-year (annualized) periods as of February 28, 2006. On the
basis of this evaluation, the Board concluded that the nature and quality of
services provided by the Adviser historically have been and continue to be
satisfactory, and that the performance of the Fund over time has been
satisfactory. The Board noted that assets under management, relative to the
Fund's chief competitor, were lower, but that its performance was stronger over
the periods described by the Adviser.
The Board also considered the fee structure under the Advisory and
Subadvisory Agreements and other expenses. The Adviser reviewed the fees, noting
that the formula had remained the same since the Board last approved changes in
2003, and that they were favorable in comparison to its most relevant peer. The
Subadviser noted that it has provided services beyond those described under the
Subadvisory Agreement, including certain back office and administrative
services. Based on these descriptions, the Board determined that the fees and
expenses were reasonable and the product of arm's length negotiation.
18
The Board also considered the Fund's expense ratios, noting that these
were favorable in that they averaged around 14 or 15 basis points, which is well
below the 25 basis point expense cap on reimbursements, and compared favorably
to its most relevant peer.
Profitability--The Board also considered the Adviser's profitability in managing
the Fund as presented by the Adviser. The Board acknowledged that a reasonable
level of profitability was important to provide suitable incentives to the
Adviser, particularly to invest in infrastructure and other resources to support
and enhance the Fund's operations, and noted that the Adviser reported a
negative net income for its most recent reporting period, attributable to, among
other things, its investments in staffing and infrastructure improvements.
Economies of Scale--The Board also considered the extent to which economies of
scale might be realized as the Fund grows, and the extent to which the Fund's
advisory fee level reflects these economies of scale for the benefit of Fund
investors. The Board concluded that the existing fee structures reflected
economies of scale to date. The Board intends to monitor the Fund's asset growth
in connection with future determinations as to advisory agreement approvals to
determine whether any economies of scale achieved may require reevaluation of
the Fund's advisory fee.
In an executive session, the Independent Directors thoroughly reviewed and
evaluated the factors to be considered for approval of the Advisory and
Subadvisory Agreements including, but not limited to, the expenses incurred in
performance of services under the Advisory and Subadvisory Agreements; the
compensation to be received by the Advisor and Subadvisor; the profitability of
the Advisor; the fees charged by the adviser of the Fund's nearest peer; the
past performance of the Adviser; the range and quality of services provided by
the Adviser and Subadviser.
The Independent Directors expressed that they were satisfied with the
information provided at the Board meeting and prior Board meetings, and that
they had received sufficient information to consider and approve the renewal of
the Advisory and Subadvisory Agreements.
Conclusion
The foregoing factors were among those weighed by the Board in determining that
they had a reasonable basis to approve the terms and conditions of the Fund's
Advisory and Subadvisory Agreements as fair and reasonable to be continued for a
one-year period.
19
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Officers and Directors
- --------------------------------------------------------------------------------
Interested Director and Fund Officers
Number of
Portfolios in
Fund Complex
Position(s) Held Term of Office and Principal Occupation(s) Overseen Other Directorships
Name, Address & Age** with Registrant Length of Time Served During Past 5 Years by Director Held by Director
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald A. Homer Director and Director since 1997 CEO & Co-Managing Member, Access None None
419 Boylston Street Chairman of Capital Strategies LLC (the
Suite 501 the Board Manager) since 1997; President &
Boston, MA 02116 CEO, Boston Bank of Commerce,
Age: 59 from 1983 to 1996.
- ------------------------------------------------------------------------------------------------------------------------------------
David F. Sand Chief Executive CEO since President & Co-Managing Member, None None
419 Boylston Street Officer ("CEO") 1997 Access Capital Strategies LLC.
Suite 501
Boston, MA 02116
Age: 49
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey Hiller Chief Compliance Chief Compliance Chief Compliance Officers of the None None
P.O. Box 9095 Officer Officer since 2005 MLIM/FAM-advised funds and First
Princeton, NJ 08543 Vice President and Chief
Age: 54 Compliance Officer of MLIM
(Americas Region) since 2004;
Chief Compliance Officer of the
IQ Funds since 2004; Global
Director of Compliance at Morgan
Stanley Investment Management
from 2002 to 2004; Managing
Director and Global Director of
Compliance at Citigroup Asset
Management from 2000 to 2002;
Chief Compliance Officer at Soros
Fund Management in 2000; Chief
Compliance Officer at Prudential
Financial from 1995 to 2000;
Senior Counsel in the
Commission's Division of
Enforcement in Washington, D.C.
from 1990 to 1995.
- ------------------------------------------------------------------------------------------------------------------------------------
Alice A. Pellegrino Secretary Secretary Director (Legal Advisory) of None None
P.O. Box 9095 since 2005 MLIM since 2002; Vice President
Princeton, NJ 08543 of MLIM from 1999 to 2002;
Age: 46 Attorney associated with Merrill
Lynch Investment Managers, L.P.
since 1997; Secretary of MLIM,
Fund Asset Management L.P., FAMD
and Princeton Services, Inc.
since 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
20
================================================================================
Access Capital Strategies Community Investment Fund, Inc.
Officers and Directors (concluded)
- --------------------------------------------------------------------------------
Independent Directors
Number of
Portfolios in
Fund Complex
Position(s) Held Term of Office and Principal Occupation(s) Overseen Other Directorships
Name, Address & Age** with Registrant Length of Time Served During Past 5 Years by Director Held by Director
- ------------------------------------------------------------------------------------------------------------------------------------
Peter J. Blampied* Director Director since President, Corcoran Management None Director of A.W.
25 Lincoln Street 1997 Company, a real estate firm, Perry, Inv.
Hingham, MA 02043 since 1998; Vice Chairman, (1998-present) and
Age: 63 Citizens Bank of Massachusetts, a Trustee of
from 1993 to 1994; Chairman, Northeast
President & CEO Boston Five Investors Trust
Bancorp, from 1989 to 1993. (2000-present)
- ------------------------------------------------------------------------------------------------------------------------------------
W. Carl Kester Director Director since Deputy Dean for Academic Affairs None Director of 19
P.O. Box 9095 2005 of Harvard Business School since registered invest-
Princeton, NJ 08543 2006; Mizuho Financial Group, ment companies
Age: 54 Professor of Finance, Harvard consisting of 25
Business School, Unit Head, portfolios advised
Finance since 2005; Senior by Merrill Lynch
Associate Dean and Chairman of Investment
the MBA Program of Harvard Managers, L.P. or
Business School from 1999 to its affiliates
2005; Member of the faculty of
Harvard Business School since
1981; Independent Consultant
since 1978.
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin J. Mulvaney Director Director since President, Strategic Advisors None None
33 Trout Brook Lane 1997 Group, a management-consulting
Norwell, MA 01061 firm, since 1997; Formerly
Age: 58 President of DRI/McGraw Hill,
from 1994 to 1997; Executive
Vice President, Bank of Boston
(prior to 1993).
- ------------------------------------------------------------------------------------------------------------------------------------
* Chairman of the Audit Committee.
** Further information about the Fund's Directors is available in the Fund's Prospectus, which has been filed with
the SEC but has not been deemed effective as of the date of this filing, and which can be obtained upon request,
without charge, by calling 1-617-236-7274.
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Office of the Fund
Access Capital Strategies Community Investment Fund,Inc.
419 Boylston Street, Suite 501
Boston, MA 02116
Custodian
State Street Bank and Trust Company
P.O Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Alternative Investments LLC
800 Scudders Mill Road
Plainsboro, NJ 08536
21
ACCESS Access Capital Strategies Community
CAPITAL Investment Fund, Inc. invests in
WE CONNECT MAIN STREET TO WALL STREET geographically specific private
placement debt securities located in
portions of the United States
designated by Fund investors.
This report is not authorized for use
as an offer of sale or solicitation of
an offer to buy shares of the Fund
unless accompanied or preceded by the
Fund's current prospectus. Past
performance results shown in this
report should not be considered a
representation of future performance.
Statements and other information
herein are as dated and are subject to
change.
Access Capital Strategies LLC
419 Boylston Street, Suite 501
Boston, MA 02116
Phone: 617-236-7274
Fax: 617-236-7251
www.AccessCapitalFunds.com
Item 2. Code of Ethics
The registrant has adopted a code of ethics, as of the end of the period covered
by this report, that applies to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or persons
performing similar functions. A copy of the code of ethics is available without
charge upon request by calling 1-607-236-7274.
Item 3. Audit Committee Financial Expert
The registrant's board of directors has determined that (i) the registrant has
the following audit committee financial experts serving on its audit committee
and (ii) each audit committee financial expert is independent: (1) Peter J.
Blampied and (2) Kevin J. Mulvaney.
Item 4. Principal Accountant Fees and Services
During the fiscal year ended May 31, 2006, Deloitte & Touche LLP was employed
principally to perform the annual audit and to render tax services. Fees paid to
Deloitte & Touche LLP for each of the last two fiscal years are listed in the
following table.
2006 2005
-------- --------
Audit fees $ 57,000 $114,000
Audit-related fees -- --
Tax fees $ 6,000 $ 5,700
All other fees -- --
$ 63,000 $119,700
Audit Fees
Audit fees for 2006 are $57,000 which include $52,000 for the annual audit
of the May 31, 2005 financial statements and the reviews of the quarterly
financial statements and $5,000 relating to review of the Fund's filing on Form
N-2.
Audit Fees for 2005 include $49,000 for the annual audit of the May 31,
2004 financial statements and the reviews of quarterly financial statements in
accordance with generally accepted auditing standards. Fees also include an
estimated $65,000, representing the fees incurred relating to management's
assessment of the effectiveness of internal control over financial reporting.
Audit-Related Fees
Audit-Related Fees consist of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and are not reported under Audit Fees.
These services include attest services that are not required by statute or
regulation and consultations concerning financial accounting and reporting
standards.
Tax Fees
Tax Fees consist of fees billed for professional services for tax
compliance. These services include assistance regarding federal, state and local
tax compliance. Tax fees for 2005 and 2006 are $5,700 and $6,000, respectively.
All Other Fees
All Other Fees include fees for products and services other than the
services reported above.
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services. The
registrant's Committee pre-approves all audit and non-audit services to be
performed by the auditor. Its policies and procedures are in place to ensure
that the Fund is in compliance with the requirements for pre-approval set forth
in the Sarbanes-Oxley Act of 2002 and the SEC rules regarding auditor
independence. These policies and procedures provide a mechanism by which
management can request and secure pre-approval of audit and non-audit services
in an orderly manner with minimal disruption to normal business operations. The
policies and procedures are detailed as to the particular service and do not
delegate the Committee's responsibility to management. They address any service
provided by the auditor, and any audit or audit-related services to be provided
by any other audit service provider. The pre-approval process includes an annual
and interim component. There were no fees approved pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
The Audit Committee has reviewed the audit and any non-audit services
provided by the Fund's independent auditor and has determined that the provision
of such services is compatible with the independent auditor's independence.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending May 31, 2006 - $0
Fiscal Year Ending May 31, 2005 - $0
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $0, 0%
Item 5. Audit Committee of Listed Registrants
Not Applicable.
Item 6. Schedule of Investments
Please see Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not Applicable. The registrant invests exclusively in non-voting securities.
Item 8. Portfolio Managers of Closed-End Management Investment Companies -- as
of May 31, 2006.
(a)(1) The portfolio managers are David Sand, Frank Viola and Teresa Giacino.
They are responsible for the day-to-day management of the Fund's portfolio.
David Sand has been the Chief Investment Officer, President and Co-Managing
Member of Access Capital Strategies LLC ("Access Capital") since 1997. Mr. Viola
has been a portfolio manager at Merrill Lynch Investment Managers, L.P. ("MLIM")
since 1997 and a Managing Director MLIM of since 2002, and was a Director of
MLIM from 2000 to 2002 and a Vice President of MLIM from 1997 to 2000. He has
been a portfolio manager of the Fund since 2001. Mr. Giacino has been a Vice
President and Portfolio Manager of MLIM since 1992. She has been a portfolio
manager of the Fund since 2001.
(a)(2) As of May 31, 2006:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee
is and Assets by Account Type Performance-Based
Other Other
(i) Name of Other Registered Other Pooled Registered Pooled
Portfolio Investment Investment Investment Investment
Manager Companies Vehicles Other Accounts Companies Vehicles Other Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
David Sand 0 0 0 0 0 0
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Frank Viola 15 4 13 0 0 1
$ 7,190,047,546 $10,113,082,550 $ 2,665,460,095 $ 0 $ 0 $ 146,791,118
Teresa Giacino 1 0 0 0 0 0
$ 124,376,601 $ 0 $ 0 $ 0 $ 0 $ 0
(iv) Potential Material Conflicts of Interest
Real, potential or apparent conflicts of interest may arise when a portfolio
manager has day-to-day portfolio management responsibilities with respect to
more than one fund or account, including the following:
The Manager's and the Sub-Manager's services to the Fund are not exclusive.
Neither Access nor MLIM is prohibited under the Management Agreement or the
Sub-Management Agreement from establishing additional investment entities that
will engage in similar transactions as the Fund.
To the extent that portfolios of other funds advised by the Manager or
Sub-Manager desire to invest in opportunities available to the Fund, such
opportunities will be allocated among the Fund and such other funds in a manner
deemed fair and equitable considering all of the circumstances in accordance
with procedures approved by the Board (including a majority of the
non-interested directors). The participation by such other funds in the
community investment market could make it more difficult for the Fund to acquire
such private placement debt securities on attractive terms.
(a)(3) As of May 31, 2006:
Portfolio Manager Compensation
The compensation plan of Access Capital's portfolio managers is critical to
attract and retain talented asset management professionals.
The Portfolio Manager Compensation Program of MLIM and its affiliates, including
the registrant's sub-adviser (collectively, "MLIM"), is critical to MLIM's
ability to attract and retain the most talented asset management professionals.
This program ensures that compensation is aligned with maximizing investment
returns and it provides a competitive pay opportunity for competitive
performance.
Compensation Program
The elements of total compensation for Access Capital portfolio managers are a
fixed base salary and stock compensation.
The elements of total compensation for MLIM portfolio managers are a fixed base
salary, annual performance-based cash and stock compensation (cash and stock
bonus) and other benefits. MLIM has balanced these components of pay to provide
portfolio managers with a powerful incentive to achieve consistently superior
investment performance. By design, portfolio manager compensation levels
fluctuate -- both up and down -- with the relative investment performance of the
portfolios that they manage.
Base Salary
Access Capital compensates its portfolio managers through base salaries that are
fixed on an annual basis.
Under the MLIM approach, like that of many asset management firms, base salaries
that are fixed on an annual basis represent a relatively small portion of a
portfolio manager's total compensation. This approach serves to enhance the
motivational value of the performance-based (and therefore variable)
compensation elements of the compensation program.
Performance-Based Compensation
Access Capital does not use performance-based compensation as a method of
compensating its portfolio managers.
MLIM believes that the best interests of investors are served by recruiting and
retaining exceptional asset management talent and managing their compensation
within a consistent and disciplined framework that emphasizes pay for
performance in the context of an intensely competitive market for talent.
To that end, portfolio manager incentive compensation for MLIM and its
affiliates is based on a formulaic compensation program. MLIM's formulaic
portfolio manager compensation program includes: investment performance relative
to US Treasuries (1-10 years) over 1-, 3-, and 5-year performance periods and a
measure of operational efficiency. Portfolio managers are compensated based on
the pre-tax performance of the products they manage. A discretionary element of
portfolio manager compensation may include consideration of: financial results
of MLIM, expense control, profit margins, strategic planning and implementation,
quality of client service, market share, corporate reputation, capital
allocation, compliance and risk control, leadership, workforce diversity,
technology and innovation. MLIM and its affiliates also consider the extent to
which individuals exemplify and foster Merrill Lynch's principles of client
focus, respect for the individual, teamwork, responsible citizenship and
integrity. All factors are considered collectively by MLIM management.
Cash Bonus
Access Capital does not provide its portfolio managers a cash bonus as a method
of compensating its portfolio managers.
Performance-based compensation is distributed to MLIM portfolio managers in a
combination of cash and stock. Typically, the cash bonus, when combined with
base salary, represents more than 60% of total compensation for MLIM portfolio
managers.
Stock Bonus
Access Capital compensates its portfolio managers by providing equity in the
firm.
Under the MLIM compensation plan, a portion of the dollar value of the total
annual performance-based bonus is paid in restricted shares of Merrill Lynch &
Co., Inc. (herein, the "Company") stock. Paying a portion of annual bonuses in
stock puts compensation earned by a MLIM portfolio manager for a given year "at
risk" based on the Company's ability to sustain and improve its performance over
future periods. The ultimate value of stock bonuses is dependent on future
Company stock price performance. As such, the stock bonus aligns each portfolio
manager's financial interests with those of the Company shareholders and
encourages a balance between short-term goals and long-term strategic
objectives. Management strongly believes that providing a significant portion of
competitive performance-based compensation in stock is in the best interests of
investors and shareholders. This approach ensures that portfolio managers
participate as shareholders in both the "downside risk" and "upside opportunity"
of the Company's performance. Portfolio managers therefore have a direct
incentive to protect the Company's reputation for integrity.
Other Compensation Programs
Access Capital does not compensate its portfolio managers through other
compensation programs.
MLIM portfolio managers who meet relative investment performance and financial
management objectives during a performance year are eligible to participate in a
deferred cash program. Awards under this program are in the form of deferred
cash that may be benchmarked to a menu of MLIM mutual funds (including their own
fund) during a five-year vesting period. The deferred cash program aligns the
interests of participating portfolio managers with the investment results of
MLIM products and promotes continuity of successful portfolio management teams.
Other Benefits
Access Capital and MLIM Portfolio managers are also eligible to participate in
broad-based plans offered generally to the Company's employees, including
broad-based retirement, 401(k), health, and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of May 31, 2006, Mr. Sand, does
not beneficially own any shares issued by the Fund. As of May 31, 2006, Mr.
Viola does not beneficially own any shares issued by the Fund. As of May 31,
2006, Ms. Giacino does not beneficially own any shares issued by the Fund.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
REGISTRANT PURCHASES OF EQUITY SECURITIES
- -----------------------------------------------------------------------------------------------------------
Period (a) Total Number of (b) Average Price (c) Total Number of (d) Maximum Number
Shares (or Units) Paid per Share (or Shares (or Units) (or Approximate
Purchased Unit) Purchased as Part Dollar Value) of
of Publicly Shares (or Units)
Announced Plans or that May Yet Be
Programs Purchased Under
the Plans or
Programs
- -----------------------------------------------------------------------------------------------------------
Dec. 1-31, 2005 0 0 0 0
- -----------------------------------------------------------------------------------------------------------
Jan. 1-31, 2006* 1,124,738.640 $9.52 0 0
- -----------------------------------------------------------------------------------------------------------
Feb. 1-28, 2006 0 0 0 0
- -----------------------------------------------------------------------------------------------------------
Mar. 1-31, 2006 0 0 0 0
- -----------------------------------------------------------------------------------------------------------
Apr. 1 - 30, 2006* 157,889.837 $9.33 0 0
- -----------------------------------------------------------------------------------------------------------
May 1 - 31, 2006 0 0 0 0
- -----------------------------------------------------------------------------------------------------------
Total 1,282,628.477 $9.50 0 0
- -----------------------------------------------------------------------------------------------------------
*On January 10, 2006 and April 7, 2006, the Fund offered to repurchase
10,707,511.85 and 1,473,112.17 shares, respectively pursuant to its periodic
repurchase plans. The Fund's plans expired on February 3, 2006 and May 2, 2006,
respectively. None of the repurchase plans were terminated prior to expiration.
Item 10. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 11. Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information relating to
the registrant is made known to us by others particularly during the period in
which this report is being prepared. The registrant's certifying officers have
determined that the registrant's disclosure controls and procedures are
effective based on an evaluation of these controls and procedures as of a date
within 90 days prior to the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the second fiscal half-year of the period
covered by this report that have materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits
12(a)(1) - Code of Ethics - See Item 2.
12(a)(2) - Certifications - Attached hereto.
12(a)(3) - Not Applicable.
12(b) - Certifications - Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, 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.
By: /s/ David F. Sand
-------------------------------
David F. Sand
Chief Executive Officer and Principal Financial Officer of
Access Capital Strategies Community Investment Fund, Inc.
Date: August 10, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ David F. Sand
-------------------------------
David F. Sand
Chief Executive Officer and Principal Financial Officer of
Access Capital Strategies Community Investment Fund, Inc.
Date: August 10, 2006