OFFERING CIRCULAR
- -----------------
Bank Investment Fund
Fund One
75 Park Plaza
Boston, Massachusetts 02116-3934
617-695-0415
-------------------
The Bank Investment Fund (the "Corporation") is an investment company
which currently invests and manages two mutual funds derived from voluntary
subscriptions made by eligible investors.
Fund One (the "Fund") is a no-load, diversified, open-end investment fund
whose objective is maximum current income consistent with liquidity and the
maintenance of a portfolio of high quality investments in short and
intermediate term marketable securities issued by the United States Government
and its agencies, repurchase agreements and certain money market instruments.
The Fund is designed solely for use by eligible investors as an economical and
convenient way to make liquid investments. Fund shares are currently offered to
the following eligible investors: Massachusetts Co-operative Banks,
Massachusetts Savings Banks, Massachusetts Trust Companies, Federally Chartered
Savings Banks and Savings and Loan Associations with their principal place of
business in Massachusetts, The Co-operative Central Bank Reserve Fund, The
Savings Bank Life Insurance Company of Massachusetts, the National Cooperative
Bank, and directly or indirectly wholly-owned subsidiaries of such institutions
(sometimes hereinafter called "Banks") (see ELIGIBLE BANKS OR INVESTORS).
Investors should read this Offering Circular and retain it for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSIONER OF BANKS OF THE COMMONWEALTH OF MASSACHUSETTS (the "Commissioner
of Banks"), NOR HAS THE COMMISSIONER OF BANKS PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED OR GUARANTEED. SUCH SHARES ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES ACTS AND HAVE
NOT BEEN REGISTERED OR QUALIFIED UNDER SUCH ACTS.
Shares of beneficial interest are continuously available for daily
purchase by eligible Banks.
-------------------
The date of this Offering Circular is August 25, 1998
Financial Highlights
(For a share outstanding throughout each year)
The following information should be read in conjunction with the current
financial statements included elsewhere herein:
<TABLE>
<CAPTION>
Year Ended December 31,
Six Months Ended ------------------------------------
June 30, 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
(unaudited) (audited)* (audited)* (audited)*
<S> <C> <C> <C> <C>
Net asset value, beginning of period...................... $ 983.75 $ 974.80 $ 996.20 $ 944.75
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income.................................. 28.35 58.35 60.41 66.14
Net realized and unrealized gain (loss) on investment
transactions.......................................... 1.52 8.95 (21.40) 51.45
- ------------------------------------------------------------------------------------------------------------------
Total from investment operations.................... 29.87 67.30 39.01 117.59
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income................... (28.35) (58.35) (60.41) (66.14)
Distributions from capital gains....................... 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------
Total distributions................................. (28.35) (58.35) (60.41) (66.14)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period............................ $ 985.27 $ 983.75 $ 974.80 $ 996.20
==================================================================================================================
Total return........................................... 6.23%** 7.12% 4.10% 12.78%
Ratios/Supplemental data:
Net assets, end of period (in 000's)................... $ 134,369 $ 143,608 $ 151,591 $ 146,555
Ratio of expenses to average net assets................ 0.52% 0.45% 0.43% 0.45%
Ratio of net investment income to average net assets... 5.77% 5.98% 6.21% 6.75%
Portfolio turnover rate................................ 19.00% 25.93% 49.26% 84.45%
Amount of reverse repurchase agreements outstanding at end
of period (in 000's)..................................... $ 0 $ 0 $ 0 $ 0
Average amount of reverse repurchase agreements outstanding
during the period (in 000's)............................. $ 398 $ 0 $ 22 $ 5
Average number shares outstanding during the period (in 000's) 138 151 158 138
Average amount of reverse repurchase agreements per share
during the period........................................ $ 2.8841 $ 0.0000 $ 0.1387 $ 0.0362
Portfolio turnover was computed including U.S. Governments and U.S. Government Agency
obligations with maturities in excess of one year.
- --------------------
<F*> Financial Statements for each of the ten years in the ten year period
ended December 31, 1997 were audited by Parent, McLaughlin & Nangle, the
Fund's independent auditors.
<F**> Annualized.
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988
- --------------------------------------------------------------------------------------------------------------
(audited)* (audited)* (audited)* (audited)* (audited)* (audited)* (audited)*
<S> <C> <C> <C> <C> <C> <C>
$ 1,029.85 $ 1,042.13 $ 1,061.56 $ 1,028.78 $ 1,022.17 $ 1,001.04 $ 1,012.01
- --------------------------------------------------------------------------------------------------------------
62.34 73.54 80.89 84.63 86.58 84.76 77.00
(85.10) (12.28) (19.43) 32.78 6.61 21.13 (10.97)
- --------------------------------------------------------------------------------------------------------------
(22.76) 61.26 61.46 117.41 93.19 105.89 66.03
- --------------------------------------------------------------------------------------------------------------
(62.34) (73.54) (80.89) (84.63) (86.58) (84.76) (77.00)
0.00 0.00 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------
(62.34) (73.54) (80.89) (84.63) (86.58) (84.76) (77.00)
- --------------------------------------------------------------------------------------------------------------
$ 944.75 $ 1,029.85 $ 1,042.13 $ 1,061.56 $ 1,028.78 $ 1,022.17 $ 1,001.04
==============================================================================================================
-2.26% 6.01% 6.03% 12.11% 9.59% 11.02% 6.69%
$ 129,330 $ 146,767 $ 163,972 $ 196,201 $ 210,439 $ 233,920 $ 256,287
0.50% 0.39% 0.33% 0.28% 0.37% 0.37% 0.30%
6.37% 7.01% 7.79% 8.29% 8.54% 8.36% 7.58%
43.43% 30.04% 44.93% 23.24% 50.30% 110.10% 11.53%
$ 0 $ 0 $ 10,700 $ 0 $ 1,000 $ 0 $ 0
$ 288 $ 1,584 $ 1,251 $ 2,042 $ 525 $ 0 $ 0
147 145 175 186 218 234 286
$ 1.9616 $ 10.9248 $ 7.1462 $ 10.9772 $ 2.4102 $ 0.0000 $ 0.0000
</TABLE>
FEE TABLE
<TABLE>
<CAPTION>
Year Ended
December 31, 1997
-----------------
<S> <C> <C>
Shareholder Transaction Expenses*.................. 0%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees.................................. 0%
12b-1 Fees....................................... .11%
Other Expenses
Compensation, Payroll, Taxes, & Benefits....... .20%
Occupancy...................................... .04%
Remainder...................................... .10%
-----
.34%
-----
TOTAL FUND OPERATING EXPENSES...................... .45%
=====
</TABLE>
Example
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) with or without redemption at the end of each time
period:
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund One 10,000 10,669 11,845 12,970 14,541 15,418 16,345 15,976 18,018 18,757 20,092
Lehman Govt. 1-3 yr 10,000 10,620 11,753 12,902 14,437 15,325 16,156 16,237 17,995 18,909 20,166
</TABLE>
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
December 31, 1997............... $4.60 $14.53 $25.50 $58.20
</TABLE>
The purpose of the foregoing table, which is based upon the Fund's fiscal
year ended December 31, 1997, is to assist you in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly. The Example provided is intended to show the dollar amount of
expenses that would be incurred over the indicated periods on a hypothetical
$1,000 investment in the Fund, assuming a 5% annual return and assuming that
the Fund's expenses continue at the rates shown in the table. However, the
actual return on an investment in the Fund may be greater or less than 5%.
Furthermore, the Example should not be considered a representation of past or
future expenses; actual expenses may be greater or less than those shown.
- --------------------
* The Fund charges no sales load or deferred sales load on any purchase,
reinvested dividend, exchange, or redemption transactions.
MANAGEMENT DISCUSSION
Fund One reflected a total return of 7.12% for the year ended December
31, 1997. During the same period, the Lehman 1-3 year index, which consists of
government and agency securities of comparable maturities to the majority of
the portfolio, had a total return of 6.65%. The Fund's favorable portfolio
performance in 1997 relative to the index is attributed to both the investment
income stream and the overall net asset increase in 1997 resulting from higher
coupon investment securities acquired in prior years and retained in the latter
part of 1997 as the overall interest rate environment decreased. After
increasing short-term interest rates by 25 basis points at the end of March
1997, the Federal Reserve made no further adjustment in its monetary policy in
1997. While interest rates fluctuated in all categories in 1997, Federal funds,
or day money, increased from 5.25% to 5.47% from January to December 1997,
while the 30-year Treasury decreased from 6.64% in January 1997 to 5.99% in
December 1997. The portfolio turnover ratio was 25.93% in 1997 as compared to
49.26% in 1996. The established portfolio positions allowed management to limit
its investment activity in 1997, primarily to new share investments and the
reinvestment of maturing or called securities, in light of the declining
interest rate environment in the third and fourth quarters of 1997. Portfolio
transactions in 1996 were based upon yield curve opportunities in addition to
reinvestment of maturities and called securities. Given the uncertainty of the
financial sector in the global economy and the resultant impact that it may
have on the U.S. markets and the Federal Reserve's monetary policy, it is the
Fund's management decision to sacrifice some yield for increased liquidity as
we approach 1998.
Bank Investment Fund-Fund One Investment Comparison
$22,000
$20,166
$20,092
$18,000
$14,000
$10,000
1987 1988 1990 1991 1992 1993 1994 1995 1996 1997
Fund One Lehman Govt. 1-3 yr
Bank Investment Fund--Fund One
Average Annual Total Return--For the Periods Ended December 31, 1997
<TABLE>
<CAPTION>
One Five Ten
Year Year Year
----- ----- -----
<S> <C> <C>
7.12% 5.44% 7.23%
</TABLE>
Total returns are based on past results and are not a prediction of
future performance.
OFFERING CIRCULAR SUMMARY
BANK INVESTMENT FUND
FUND ONE
75 Park Plaza
Boston, Massachusetts 02116-3934
This Summary is qualified in its entirety by the detailed information
appearing elsewhere herein.
For account information or assistance call 617-695-0415.
Shares in the Fund are currently offered only to Massachusetts
Co-operative Banks, Massachusetts Savings Banks, Massachusetts Trust Companies,
Federally Chartered Savings Banks and Savings and Loan Associations with their
principal place of business in Massachusetts, The Co-operative Central Bank
Reserve Fund, The Savings Bank Life Insurance Company of Massachusetts, the
National Cooperative Bank and directly or indirectly wholly-owned subsidiaries
of such institutions.
The minimum initial investment is $50,000.00 (although in certain cases
the Corporation may require a larger minimum investment in accordance with
requirements of applicable securities laws). Additional investments may be made
in any amount in excess of the minimum.
The investment objective of the Fund is to achieve as high a level of
current income as is consistent with safety of principal.
The Fund was formed to provide participating banks with a highly liquid,
diversified, high-quality investment vehicle designed to assist liquidity
management. By pooling the money of its investors, it is able to offer the
economies of size and diversification of maturities normally available to large
corporate and institutional investors.
Furthermore, the participating banks are relieved of safekeeping of
securities and the detailed record keeping and other operational aspects
necessary in managing an investment portfolio. Payment for shares may be made
only in Federal funds or other funds immediately available to the Fund's
deposit account at the State Street Bank and Trust Company ("State Street").
There is no charge for investing or withdrawing money, regardless of frequency.
INVESTMENT OBJECTIVES
Fund One is a no-load, diversified, open-end investment fund.
The investment objective of Fund One is to maximize current income
consistent with liquidity of assets and safety of principal.
The Fund was formed to provide participating banks with a highly liquid,
diversified, high-quality investment vehicle designed to assist liquidity
management. The Fund pursues this objective by investing principally in short
and intermediate term marketable debt securities issued by the United States
Government or by agencies of the United States, repurchase agreements, reverse
repurchase agreements and money market instruments.
INVESTMENT POLICY
Asset investments for Fund One include principally those securities
eligible to be included in legal liquidity for Massachusetts co-operative banks
under Massachusetts General Laws, Chapter 170, Section 22.
The categories of those securities include, but may not be limited to a)
cash on hand and due from banks, b) certificates of deposit due from any trust
company, national banking association or banking company, c) bonds and other
direct obligations of the United States or such obligations as are
unconditionally guaranteed as to principal and interest by the United States,
d) bonds and notes of the Commonwealth of Massachusetts or any political
subdivision thereof, e) federal agency obligations which have unexpired terms
of five years or less, f) repurchase agreements, g) any other debt instrument
deemed eligible for legal liquidity by the Commonwealth or its agent, and h)
certain common money market instruments of temporary duration.
The Fund may enter into reverse repurchase agreements to meet short-term
liquidity needs of the Fund. These agreements may not be in excess of three
business days. Any such borrowing would be limited to borrowing allowable under
Section 18 of the Investment Company Act of 1940 and applicable regulations
promulgated thereunder.
Shares of the Bank Investment Fund are eligible investments to be
included in legal liquidity under Massachusetts General Laws, Chapter 170,
Section 22.
The Board of Directors of the Corporation has investment discretion with
regard to Fund One assets.
INVESTMENT RESTRICTIONS
The Corporation is authorized by statute to invest its assets in a
variety of debt and equity securities. No more than 5% of the Corporation's
assets, at the time of purchase, may be invested in the securities of any one
issuer except for direct obligations of the United States or obligations
guaranteed by the United States, and other obligations issued under certain
federal programs or by certain federal agencies or instrumentalities.
The Fund is further restricted through the investment policy maintained
by the Corporation's Officers and Directors. The investment policy for the Fund
restricts the Corporation from a) making any investment in equity securities
for the Fund, b) making any intermediate or long-term investment in corporate
(non-governmental) debt securities for the Fund, and c) investing more than 25%
of the Fund's total assets in the securities of a particular industry other
than U.S. Government or federal agency securities.
ELIGIBLE BANKS OR INVESTORS
Under Massachusetts General Laws (Chapter 482, Acts of 1984, as amended),
eligible investors include Massachusetts Co-operative Banks, Massachusetts
Savings Banks, Massachusetts Trust Companies, Federally Chartered Savings Banks
and Savings and Loan Associations with their principal place of business in
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank
Life Insurance Company of Massachusetts, the National Cooperative Bank, and
directly or indirectly wholly-owned subsidiaries of such institutions. Only
these eligible investors are currently offered non-voting shares of beneficial
interest in the Fund (see ORGANIZATION).
STATUTORY LIMITATION ON INVESTMENTS IN THE FUND
BY PARTICIPATING BANKS
Under Massachusetts General Laws, Chapter 167F, Section 3(2) as amended,
a participating or eligible savings bank or co-operative bank may invest an
amount in excess of 100% of its capital and surplus in any distinct non-equity
investment fund of the Corporation except to the extent that the Commissioner
of Banks for the Commonwealth of Massachusetts may by regulation set limits and
conditions. The participating bank will be responsible for monitoring and
compliance with this limitation.
Under Massachusetts General Laws, Acts of 1932, Chapter 45, Section 7, as
amended, The Co-operative Central Bank Reserve Fund may not invest or hold at
any one time more than 20% of its assets with the Corporation.
Investments in the Fund are affected by Section 303 of the FDIC
Improvement Act of 1991 which limits investments by FDIC-insured state banks
(including Massachusetts co-operative banks, savings banks and trust companies)
in common or preferred stock or shares of mutual funds to the extent that such
investments are permissible for national banks. Permissible national bank
investments, as described in section 24(7) of the National Bank Act and 12
C.F.R. Part 1, include mutual funds which invest in securities and financial
instruments eligible for direct investment by national banks. A state bank's
investment in Fund One is subject to the quantitative limits, on a pass-through
basis, as are applicable to national banks under 12 C.F.R. Part 1. The
investment portfolio composition of Fund One is comprised of securities and
other financial instruments in which national banks may invest without
limitation (e.g., U.S. Government and federal agency obligations).
Federally chartered savings banks and savings and loan associations (with
their principal place of business in Massachusetts) may invest in an open-end
mutual fund, such as Fund One, which invests in securities and financial
instruments in which such institutions may invest directly. For purposes of
determining compliance with quantitative investment limitations under the Home
Owners Loan Act ("HOLA"), an investing bank's or association's proportionate
share of a mutual fund's individual investments will, under 12 CFR, ss.560.32,
be aggregated with such investments held directly. (The investments held by
Fund One may also be held without limitation by federally chartered savings
banks and savings and loan associations.) Apart from compliance with applicable
investment limitations, a bank or association may invest, without prior notice
to the Office of Thrift Supervision, an amount up to 15% of its total capital
in any one mutual fund, or up to 50% of total capital in all such pass-through
investment vehicles. Investments in excess of the 15% and 50% limits may only
be made when thirty days' advance notice has been provided to the Office of
Thrift Supervision.
Certain federally chartered savings banks who converted from a
Massachusetts savings bank charter may, under certain grandfather provisions of
HOLA, retain broader investment authority than that described in the preceding
paragraph. For example, section 5(i) of HOLA grandfathers state authorized
investment powers of certain Federal savings banks in existence as of the date
of enactment of Federal statutes (e.g., the Financial Institution Reform,
Recovery, and Enforcement Act of 1989) which may have otherwise limited such
investments.
DIVIDENDS
The Fund distributes all of its net income on a daily basis. Dividends
are declared on each day that the Fund is open for business. Investors receive
dividends in additional shares unless they elect to receive cash. Payment is
made in additional shares at the net asset value on the payable date or in
cash, on a monthly basis.
Investors wishing to change the method of receiving dividends must notify
the Fund in writing at least one week before payment is to be made.
Net income of the Fund consists of all interest income accrued and
earned, less estimated expenses of the Fund. Distributions of realized net
capital gains, if any, are declared and paid once each year and are reinvested
in additional shares at net asset value or, at each shareholder's option, paid
in cash.
NET ASSET VALUE
The Fund's net asset value per share is determined as of the close of the
New York Stock Exchange on days when the Custodian Bank (State Street Bank) is
open for business. The net asset value per share is determined by adding the
appraised value of all securities and all other assets, deducting liabilities
and dividing by the number of shares outstanding. U.S. debt securities are
normally valued on the basis of valuations provided by market makers. Such
prices are believed to reflect the fair value of such securities and to take
into account appropriate factors such as institutional size trading in similar
groups of securities, yield quality, coupon rate, maturity, type of issue, and
other market data. Securities for which market quotations are not readily
available will be valued at fair value using methods determined in good faith
by or at the direction of the Board of Directors.
INVESTORS' ACCOUNTS
The Fund maintains an account for each investor in full and fractional
shares. All purchase and sale transactions are confirmed to the investor.
Statements of account showing all transactions for the month, including
dividends paid, are sent to participating banks on a monthly basis.
TAXES
The Fund has qualified as a regulated investment company under the
Internal Revenue Code and will not be liable for federal income taxes to the
extent its earnings are distributed. Dividends derived from interest, together
with distributions of any short-term capital gains, are taxable as ordinary
income, whether or not reinvested. Dividends of the Fund do not qualify for the
dividends received exclusion for corporations.
Distributions of net long-term capital gains, if any, realized by the
Fund are made at least annually and are taxable to shareholders. In addition,
an investing Bank may realize a capital gain or loss in any year in which it
redeems shares. It should be noted that long-term capital gain distributions
and/or capital gains or losses realized from redemptions on or after January 1,
1987 will be taxed at the same rates as ordinary income under the provisions of
the Tax Reform Act of 1986.
A statement setting forth the federal income tax status of all
distributions made during each calendar year is sent to each shareholder
promptly after the end of such year.
AUDITORS AND LEGAL
Parent, McLaughlin and Nangle, Certified Public Accountants, Inc., are
the auditors of the Fund. The law firm of Steptoe and Johnson has passed upon
certain legal matters of the Fund in connection with the shares offered by this
offering circular.
CERTAIN RISK FACTORS TO CONSIDER
In general, the value of debt securities held in the Fund's portfolio, as
well as share prices of the Fund, will vary inversely with changes in
prevailing interest rates. Economic or political events may also effect the
value of the share prices of the Fund to the extent that the events impact the
value of debt securities held by the Fund.
YIELD
The yield for the 30-day periods ended December 31, 1997 and June 30,
1998 were 5.72% and 5.54%, respectively. Yield is calculated based on the 30
days ending on the date of the most recent statement of Assets and Liabilities,
(as presented elsewhere within). A standard formula as required by the
Securities and Exchange Commission is utilized for the computation of this
yield amount. Net Investment Income in the formula differs from actual Net
Investment Income as included in the Statement of Operations (included
elsewhere within). Net Investment Income as reflected in the formula includes
yield based upon market valuation of the portfolio at the commencement of the
30 day period. This yield amount may differ from the ratio of Net Investment
Income to Average Net Assets reflected in selected financial information (as
presented elsewhere within).
The Fund yield fluctuates as a result of numerous factors. Therefore, the
yield stated here is not necessarily representative of the Fund's future yield.
PORTFOLIO PERFORMANCE--TOTAL RETURN
An investor bank may judge the Fund's portfolio performance by comparing
it to that of similar mutual funds or to market indices. Performance may also
be gauged by the total return of the portfolio over time. The Fund's total
return for each period is computed by finding, through the use of a formula
prescribed by the Securities and Exchange Commission, the average annual
compounded rates of return over the period that would equate an assumed initial
amount invested to the value of the investment at the end of the period. For
purposes of computing total return, income dividends and capital gains
distributions paid on shares of the Fund are assumed to have been reinvested
when received.
Total return for the years ended December 31, 1997 and June 30, 1998 were
7.12% and 7.23%, respectively. Average annual total return for the five years
ended December 31, 1997 and June 30, 1998 were 5.44% and 5.23%, respectively.
Average annual total return for the ten years ended December 31, 1997 and June
30, 1998 were 7.23% and 7.12%, respectively.
HOW SHARES OF THE FUND ARE PURCHASED--
TELEPHONE INVESTMENT PROCEDURE
Shares of the Fund are offered for sale on days on which both the New
York Stock Exchange and the custodian bank are open for business. There is no
sales charge. The minimum initial investment is $50,000.00 (although in certain
cases the Corporation may require a larger minimum investment in accordance
with requirements of applicable securities laws). Additional investments may be
made in any amount in excess of the minimum.
Bank Wire Transfers
Call your correspondent bank and speak to your account officer. Tell him
that you want to transfer funds to State Street Bank and Trust Company.
Instruct him to wire transfer the money before 12:00 noon, Boston time, to:
State Street Bank and Trust Company
Boston, Massachusetts
Routing number: 0110-0002-8
For account of the Bank Investment Fund, Fund One
Account number: 9006-930-3
Internal Money Transfers
If your correspondent bank account is with the State Street Bank and
Trust Company, contact your account officer and instruct him to transfer funds
from your account to the account of the Bank Investment Fund, Fund One, Account
number: 9006-930-3.
AFTER INSTRUCTING YOUR BANK TO TRANSFER FUNDS, PLEASE CALL THE FUND AND
TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER, IT IS
IMPORTANT TO DO THIS BEFORE 12:00 NOON.
The securities market, in which the Fund buys and sells securities,
usually requires immediate settlement in Federal funds for all security
transactions; therefore, payment for the purchase of Fund shares not received
in the form of Federal funds will be recorded as share subscriptions, and not
invested in Fund shares until such payments are converted into Federal funds.
Payments received by bank wire can be converted immediately into Federal funds;
any other form of payment will result in a delay. Orders received prior to
12:00 noon, Boston time, will be invested in shares of the Fund at the next
determined net asset value.
HOW SHARES OF THE FUND ARE REDEEMED--
TELEPHONE REDEMPTION PROCEDURE
An investor may withdraw all or any portion of his investment by
redeeming shares on any day that the Fund is open for business at the next
determined net asset value. The proceeds of redemptions will be wired directly
to the investor's bank account within one business day. The Fund reserves the
right to delay withdrawal requests up to 7 business days after any investment
that has been made with uncollected funds.
The right of redemption can be suspended and the payment of the
redemption proceeds deferred during any period in which a) the New York Stock
Exchange is closed or trading on such Exchange is restricted or b) the
Securities and Exchange Commission deems an emergency to exist, or during any
other period permitted by order of the Commission for the protection of
investors.
Bank Wire Transfers
Call the Fund by 12:00 noon (Call or Trade Date) to redeem shares the
following day (Settlement Date). When the amount to be redeemed is at least
$5,000.00, the Fund will automatically wire transfer the amount to your
correspondent bank account at settlement.
Internal Money Transfers
If your bank's account is with the State Street Bank and Trust Company,
contact the Fund by 12:00 noon (Call or Trade Date) for redemption of shares
the following day (Settlement Date). The Fund will transfer the amount from its
account to your account at State Street Bank and Trust Company at settlement.
TRANSFER RESTRICTIONS
Fund shares may not be transferred by banks holding such shares to any
persons other than an eligible bank (except that the shares may be pledged to
such other persons or they may be transferred to The Co-operative Central Bank,
hereinafter the "Central Bank"). If the Fund shares are acquired by any other
persons by operation of law or by foreclosure upon the pledge of such shares
(or through transfer, in the case of the Central Bank), the Corporation must
offer to repurchase the shares from such person at net asset value of the
shares. If such offer is refused, no dividend may be paid by the Corporation or
Fund on such shares, and the redemption price which the holder of such shares
may obtain in any subsequent repurchase of those shares by the Corporation or
Fund is limited to the net asset value of the shares on the date of the
Corporation's offer.
In the event of any transfer, it is extremely important to notify the
Corporation immediately of any purchase, sale or transfer of Fund shares not
made through the Corporation or its transfer agent. Immediate notification
should be furnished to the Corporation by telephone, with written notification
as a follow-up thereto. Prompt notification is essential to avoid any delay in
redemption offer and loss of earnings. Please remember that a statutory
restriction exists on the Corporation and it would be unable to pay a dividend
to an ineligible holder after expiry of the 30-day repurchase period which is
statutorily available following such transfer.
ORGANIZATION
The Corporation was organized effective April 7, 1985 pursuant to a
Special Act of the Commonwealth [Acts of 1984, Chapter 482 as amended] of
Massachusetts under its chartered name "Co-operative Bank Investment Fund" and
does business under the name "Bank Investment Fund." The Special Act indicates
that the purpose of the Corporation is to hold, invest, reinvest and manage one
or more mutual investment funds, which shall include all property of the
Corporation, to be derived from voluntary subscription thereto by the Banks.
The Corporation is an open-end diversified management investment company
authorized to invest its assets in certain real estate mortgages, and a variety
of other investments, including direct obligations of the United States,
obligations guaranteed by the United States, obligations guaranteed by the
Federal National Mortgage Association, bonds and other evidences of
indebtedness of corporations, shares of common or preferred stock registered on
a national securities exchange or for which quotations are available through
the National Quotation Bureau, Inc. or a comparable service, or through a
national securities market established in conformance with Section 11A of the
Securities Act of 1934, and other debt and equity securities. Fund One will
only invest in those securities described under "Investment Policy" and
"Investment Restrictions" elsewhere herein.
The business of the Corporation is conducted by a Board of Directors
elected by the Corporation's Incorporators and the Directors have investment
discretion relative to Corporation assets. The Incorporators of the Corporation
are the Directors of The Co-operative Central Bank, which is the statutory
reserve bank and insurer of deposits in excess of Federal deposit insurance
limitations for Massachusetts co-operative banks.
The Corporation operates pursuant to an exemption from the sections of
the Investment Company Act of 1940 which deal with (a) voting rights of
security holders and (b) the manner of sale of redeemable shares.
Only Massachusetts Co-operative Banks, Massachusetts Savings Banks,
Massachusetts Trust Companies, Federally Chartered Savings Banks and Savings
and Loan Associations with their principal place of business in Massachusetts,
The Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance
Company of Massachusetts, The National Cooperative Bank and directly or
indirectly wholly-owned subsidiaries of such institutions are currently offered
shares in the Fund. Such investors may purchase shares of beneficial interest,
which do not entitle the shareholders thereof to voting rights of any nature,
including investment policy matters.
DESCRIPTION OF FUND SHARES
The Corporation has no capital stock. Beneficial ownership in each of the
Corporation's funds is represented by shares of beneficial ownership, as
recorded in book entry form. Each share is equal in every respect to every
other share, except that if the Directors of the Corporation establish distinct
investment funds, shares will be issued in distinct classes and each share
within each class will be equal in every respect to every other share of that
class.
The shares of beneficial ownership are no par, non-voting, with a stated
value of $1,000, issued in book entry form only. Investment and redemption of
shares is effected at the net asset value as described elsewhere herein. Shares
are recorded in whole and/or fractional shares, as applicable. Physical
certificates are not issued. Monthly statements are furnished to reflect share
balance and activity.
With regard to the absence of voting rights, management believes that
eligible investors are adequately protected because of a) regulation by the
Commissioner of Banks, b) the redeemable nature of the shares, c)
representation of co-operative bank investors in the election of Directors of
the Central Bank, who as Incorporators elect the Corporation's Directors, and
d) representation of savings bank investors by an advisor at such corporate
meetings of the Incorporators.
SUPERVISION AND REGULATION
As provided by Massachusetts statute [Chapter 482, Acts of 1984 as
amended] the Corporation is subject to the supervision of the Commissioner of
Banks of the Commonwealth of Massachusetts. Periodic reporting to the
Commissioner of Banks is also required by the same statute. The Corporation is
registered as an open-end diversified management investment company under the
Investment Company Act of 1940, as amended, and is subject to reporting
requirements thereunder.
INVESTMENT ADVISOR
The Corporation presently does not employ the services of any investment
advisory or management services company. Investment decisions for the Fund are
made by authorized officers of the Corporation, subject to approval or
ratification by its Board of Directors. The Corporation reserves the right at
any time in the future to appoint an investment advisor at any reasonable and
customary fee as may be agreed when, in the opinion of the Corporation
Directors, the use of such advisory or management services would improve Fund
performance.
TRANSFER AGENT
The Corporation maintains the records for the investment, redemption,
and/or transfer of Fund shares. The Corporation reserves its right at any time
in the future to appoint a separate transfer agent at any reasonable and
customary fee as may be agreed when, in the opinion of the Corporation
Directors, the use of such transfer service is necessary. The limited number of
shareholders and nature of Fund operation does not, at this time, justify the
use of a separate agent and would only be an extra or unnecessary expense.
OPERATING AND DISTRIBUTION EXPENSES
Normal expenses which may be borne by the Fund include, but are not
limited to: Director fees, salaries and wages, payroll taxes, employee
benefits, taxes, corporate fees, occupancy, furniture and equipment, data
processing, legal, auditing and accounting, telephone and postage, custodial
and other bank fees, preparation, printing and distribution of reports,
insurance, membership fees, organization, and other miscellaneous expenses.
The Corporation has adopted a plan of distribution pursuant to Rule 12b-1
of the Investment Company Act of 1940 (the "Plan") providing that the Fund will
pay certain expenses incurred by the Corporation which may be considered to be
primarily intended to result in the sale of shares in the Fund. The expenses
which may be incurred pursuant to the Plan include, without limitation, those
for the preparation, printing and distribution of written materials for other
than existing investors, preparation and distribution of advertising material
and sales literature, direct payments to sales personnel, and other similar
activities. The maximum expenditures which may be made pursuant to the Plan in
any year is .12 of 1% of the average daily net asset value of the Corporation
for such year. The Board of Directors of the Corporation has concluded that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
Expenditures of $156,988 (.11% of average net assets) pursuant to the
12b-1 plan were incurred in and for the year ended December 31, 1997: $1,906
for advertising in trade journals and similar publications; $9,583 for printing
and mailing of offering circulars; $86,214 for compensation, payroll taxes and
benefits for personnel in sales and customer service; $27,578 for sponsorship
of annual subscriptions and other promotional materials; and $31,707 for other
plan expenses. Expenditures of $73,275 (.11% of average net assets--annualized)
pursuant to the 12b-1 plan were incurred in and for the six months ended June
30, 1998: $2,650 for advertising in trade journals and similar publications;
$4,675 for printing and mailing of offering circulars; $42,707 for
compensation, payroll taxes and benefits for personnel in sales and customer
service; $5,896 for sponsorship of annual subscriptions and other promotional
materials; and $17,347 for other plan expenses.
Because more than one fund will be operated by the Corporation, operating
expenses and expenses incurred pursuant to the Plan related directly to a
single fund operation will be charged directly to that fund. Common or indirect
expenses will be allocated among funds in accordance with the annual budget as
determined by the Board of Directors of the Corporation to be fair and
equitable or on such other basis as the Board of Directors of the Corporation
may determine from time to time to be fair and equitable.
The Corporation reimbursed the Central Bank for expenses paid on behalf
of the Corporation and for its proportionate share of expense items used in
common by both the Corporation and the Central Bank. All fees and expenses for
the Fund are estimated and accrued daily. Actual operating expenses for the
year ended December 31, 1997 and the six months ended June 30, 1998 were .45%
and .52% of average net assets, respectively. Operating expenses paid to the
Central Bank for the year ended December 31, 1997 and the six months ended June
30, 1998 were $36,800 and $20,400, respectively.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of another fund on the
basis of the respective net asset value of the shares involved, to the extent
that additional funds are established by the Corporation.
CUSTODIAN
The Corporation is required by statute to at all times employ a national
banking association located in the Commonwealth of Massachusetts, or a
Massachusetts state-chartered bank authorized to exercise trust powers, as the
Corporation's or Fund's custodian, to hold the securities owned by the
Corporation and any monies delivered by the Corporation's or Fund's
shareholders or due to the Corporation or Fund. Purchase and sale transactions
are effected through or by the custodian bank upon the instructions of the
Corporation.
The State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110 serves as custodian of the Fund's cash and investments.
YEAR 2000
The Fund has committed internal and external resources to ensure that
systems and applications are year 2000 compliant and has developed a plan and
timetable for implementation and testing therewith. This project is scheduled
to be completed in 1998.
MANAGEMENT OF THE FUND
The Incorporators of the Corporation are the Directors of The
Co-operative Central Bank which is the statutory reserve bank and insurer of
deposits in excess of Federal deposit insurance limitations for Massachusetts
co-operative banks. The Board of Directors of the Corporation is elected by the
Incorporators.
The Fund's primary investment officer is James L. Burns, Jr., President.
He has held this position since inception of the Fund in 1985. For more than 15
years prior to the inception of the Fund, he managed investment portfolios for
the Co-operative Central Bank and the State Street Bank and Trust Company.
Directors and Officers of the Corporation, together with information as
to their principal business occupations during the past five years, are shown
below:
<TABLE>
<S> <S>
James L. Burns, Jr., President President of The Co-operative Central Bank, 75 Park Plaza, Boston, MA
and Chief Executive Officer 02116-3934
William F. Casey, Jr., Executive Vice President and Treasurer of The Co-operative Central Bank,
Executive Vice President 75 Park Plaza, Boston, MA 02116-3934
Susan L. Ellis, Vice President Vice President of The Co-operative Central Bank, 75 Park Plaza,
and Treasurer Boston, MA 02116-3934
Jeremiah J. Foley, Vice President Vice President of The Co-operative Central Bank, 75 Park Plaza,
and Clerk of the Corporation Boston, MA 02116-3934
Robert E. Haley, Vice President Vice President of Bank Investment Fund, 75 Park Plaza,
Boston, MA 02116-3934
Annemarie Lee, Assistant Vice President of The Co-operative Central Bank, 75 Park Plaza,
Vice President Boston, MA 02116-3934
Claire R. Bothwell, Director Chairman of the Board of the Ware Co-operative Bank, Main Street,
Ware, MA 01082
John T. Day, Director and Chairman of the Board of the Mt. Washington Co-operative Bank,
Chairman of the Board 430 W. Broadway, South Boston, MA 02127
Robert F. Day, Director President of The Needham Co-operative Bank, 1063 Great Plain Ave.,
Needham, MA 02192
Charles P. Hooker, Director Chairman of the Board of The Pittsfield Co-operative Bank, 70 South Street,
Pittsfield, MA 01202
Ronald E. Lestan President of The Walpole Co-operative Bank, 982 Main Street,
Walpole, MA 02081
Walter A. Murphy, Director and Chairman of the Board of the Falmouth Co-operative Bank, P.O. Box 567,
Clerk of the Board Falmouth, MA 02541
John H. Pearson, Jr. President of Butler Bank--A Co-operative Bank, 10 George Street,
Lowell, MA 01852
</TABLE>
PMN
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
BANK INVESTMENT FUND--FUND ONE
BOSTON, MASSACHUSETTS
We have audited the accompanying statement of assets and liabilities of
Bank Investment Fund--Fund One, including the schedule of portfolio
investments, as of December 31, 1997 and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the selected per share data and ratios
for each of the ten years in the period then ended. These financial statements
and per share data and ratios are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodians. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of Bank Investment Fund--Fund One as of December 31, 1997,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the selected per
share data and ratios for each of the ten years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ PARENT, MCLAUGHLIN & NANGLE
Certified Public Accountants
Member of the SEC Practice Section,
American Institute of Certified Public Accountants
January 30, 1998
BANK INVESTMENT FUND--FUND ONE
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
(unaudited) (audited)
<S> <C> <C>
ASSETS:
INVESTMENTS IN SECURITIES, at value (Identified cost
$129,546,393 and $138,695,885, respectively)........ $ 130,147,070 $ 139,029,654
REPURCHASE AGREEMENTS................................ 2,485,000 2,770,000
INTEREST RECEIVABLE.................................. 2,248,745 2,450,787
CASH................................................. 67,968 19,831
- ------------------------------------------------------------------------------------------
TOTAL ASSETS .................................... 134,948,783 144,270,272
- ------------------------------------------------------------------------------------------
LIABILITIES:
DIVIDENDS PAYABLE.................................... 412,786 507,680
ACCRUED EXPENSES..................................... 166,493 154,094
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES ............................... 579,279 661,774
- ------------------------------------------------------------------------------------------
NET ASSETS: (Equivalent to $985.2657 and $983.7517
per share based on 136,378.9524 and 145,980.4309
shares of beneficial interest outstanding)............ $ 134,369,504 $ 143,608,498
==========================================================================================
REPRESENTED BY:
Paid-in Capital...................................... $ 151,034,044 $ 160,539,166
Accumulated net losses on investments................ (17,265,212) (17,264,431)
Unrealized appreciation of investments............... 600,672 333,763
- ------------------------------------------------------------------------------------------
TOTAL NET ASSETS ................................ $ 134,369,504 $ 143,608,498
==========================================================================================
</TABLE>
BANK INVESTMENT FUND--FUND ONE
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
---------------- -----------------
(unaudited) (audited)
<S> <C> <C>
INVESTMENT INCOME:
Interest income, net of interest expense of $11,259 and $0,
respectively.................................................... $ 4,229,308 $ 9,508,140
EXPENSES:
Compensation, payroll taxes and benefits--officers............... $ 101,159 $ 209,902
Compensation, payroll taxes and benefits--other.................. 49,824 91,682
Distribution expenses............................................ 73,275 156,988
Professional fees................................................ 27,600 32,615
Occupancy........................................................ 26,944 64,544
Other expenses................................................... 25,373 27,409
Equipment and data processing.................................... 16,400 24,900
Meetings and travel.............................................. 11,550 22,550
Directors' fees.................................................. 8,100 17,600
Postage and telephone............................................ 6,500 15,300
Insurance expense................................................ 1,700 5,600
- --------------------------------------------------------------------------------------------------------
TOTAL EXPENSES .............................................. 348,425 669,090
- --------------------------------------------------------------------------------------------------------
INVESTMENT INCOME--NET ...................................... 3,880,883 8,839,050
- --------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ......................... (781) 5,078
Change in net unrealized appreciation on investment securities .. 266,909 1,330,580
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments ............. 266,128 1,335,658
- --------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $ 4,147,011 $ 10,174,708
========================================================================================================
</TABLE>
BANK INVESTMENT FUND--FUND ONE
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year Ended Year Ended
Ended December 31, December 31,
June 30, 1998 1997 1996
------------- ------------ ------------
(unaudited) (audited) (audited)
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Investment income--net.............................. $ 3,880,883 $ 8,839,050 $ 9,572,248
Net realized gain (loss) on investments............. (781) 5,078 119,293
Unrealized appreciation (depreciation)--net......... 266,909 1,330,580 (3,497,470)
- ------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations..................................... 4,147,011 10,174,708 6,194,071
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net.............................. (3,880,883) (8,839,050) (9,572,248)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST--NET
INCREASE (DECREASE).................................. (9,505,122) (9,318,402) 8,414,388
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......... (9,238,994) (7,982,744) 5,036,211
NET ASSETS:
Beginning of period................................. 143,608,498 151,591,242 146,555,031
- ------------------------------------------------------------------------------------------------------
End of period....................................... $134,369,504 $143,608,498 $151,591,242
======================================================================================================
</TABLE>
BANK INVESTMENT FUND--FUND ONE
PORTFOLIO OF INVESTMENTS
June 30, 1998
(unaudited)
Obligations of Federal Agencies--96.8%
<TABLE>
<CAPTION>
Par Coupon Maturity Date Value
----------- ------ ------------- ------------
<S> <C> <C> <C> <C>
Federal Farm Credit Bank $ 2,500,000 6.19% 03/19/01 $ 2,531,250
2,000,000 6.20 04/09/01 2,025,625
2,500,000 6.78 01/15/02 2,515,625
- ------------------------------------------------------------------------------------------
$ 7,000,000 (Cost $ 7,000,000) $ 7,072,500
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Federal Home Loan Bank $ 2,000,000 5.595% 02/16/99 $ 1,996,875
3,000,000 7.88 02/09/00 3,102,188
1,000,000 6.00 12/14/00 1,006,562
1,985,000 5.745 01/25/01 1,978,177
2,000,000 5.735 02/13/01 1,993,750
2,000,000 6.04 02/14/01 2,002,500
2,000,000 6.00 02/21/01 2,001,250
5,000,000 6.09 03/21/01 5,050,000
5,000,000 6.48 01/08/02 5,045,312
4,000,000 6.72 08/28/02 4,007,500
3,000,000 6.60 09/03/02 3,021,562
2,500,000 6.28 01/28/03 2,489,063
2,000,000 6.015 02/05/03 1,991,875
2,000,000 6.365 05/14/03 1,998,125
- ------------------------------------------------------------------------------------------
$37,485,000 (Cost $ 37,485,000) $ 37,684,739
- ------------------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corporation $ 2,000,000 7.98% 01/19/00 $ 2,068,750
2,000,000 5.99 03/06/01 1,998,750
4,000,000 6.125 03/03/03 3,995,000
2,000,000 6.15 03/06/03 2,003,125
- ------------------------------------------------------------------------------------------
$10,000,000 (Cost $ 9,988,093) $ 10,065,625
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Federal National Mortgage
Association $ 5,000,000 7.85% 09/10/98 $ 5,023,438
1,500,000 5.75 12/10/98 1,498,594
2,000,000 6.00 12/29/00 1,999,375
2,000,000 5.91 01/12/01 1,998,750
2,000,000 5.84 01/19/01 1,996,250
3,000,000 5.82 01/30/01 2,994,375
1,000,000 5.85 02/06/01 999,062
8,000,000 6.05 03/12/01 8,005,000
2,500,000 6.37 03/22/01 2,512,500
3,000,000 6.45 04/12/01 3,014,062
4,500,000 6.40 05/02/01 4,587,188
2,500,000 6.375 01/16/02 2,553,125
2,500,000 6.52 12/10/02 2,500,781
5,000,000 6.45 12/16/02 5,017,187
2,000,000 6.15 12/26/02 2,004,375
2,000,000 5.96 02/07/03 1,993,125
2,500,000 6.16 02/19/03 2,492,969
4,000,000 5.96 03/05/03 4,006,250
2,000,000 6.08 06/23/03 1,996,250
- ------------------------------------------------------------------------------------------
$57,000,000 (Cost $ 56,987,186) $ 57,192,656
- ------------------------------------------------------------------------------------------
Government National Mortgage
Association $ 484,043 6.50% 11/15/07 $ 489,034
2,841,088 6.50 07/15/08 2,870,386
2,708,464 6.50 11/15/08 2,736,395
398,101 6.50 12/15/08 402,206
670,020 5.50 12/15/08 652,014
2,441,958 7.50 03/15/22 2,510,638
3,194,272 7.00 10/15/22 3,245,181
3,052,054 7.00 05/15/23 3,100,696
- ------------------------------------------------------------------------------------------
$15,790,000 (Cost $ 15,993,935) $ 16,006,550
- ------------------------------------------------------------------------------------------
Student Loan Marketing
Association $ 2,000,000 7.723% 01/25/99 $ 2,025,000
- ------------------------------------------------------------------------------------------
(Cost $ 1,992,178)
Certificates of Deposit--0.1%
NCB Savings Association $ 100,000 5.75% 03/19/99 $ 100,000
- ------------------------------------------------------------------------------------------
(Cost $ 100,000)
(Cost $129,546,393) $130,147,070
- ------------------------------------------------------------------------------------------
Repurchase Agreement--1.8%
$2,485,000 Repurchase Agreement dated June 30, 1998 with
PaineWebber, Inc. due July 1, 1998 with respect
to various Federal Agencies ranging from:
Par Value $1,000 - $1,845,000
Rate Range 5.50% - 10.00%
Maturity Range 12/01/01 - 09/01/25
Maturity value of $2,485,380 for an effective
yield of 5.50%.
(Cost $ 2,485,000) $ 2,485,000
- ------------------------------------------------------------------------------------------
Total Investments--98.7% (Cost $132,031,393) $132,632,070
- ------------------------------------------------------------------------------------------
Other assets in excess of liabilities--1.3% 1,737,434
- ------------------------------------------------------------------------------------------
Net assets--100% $134,369,504
==========================================================================================
</TABLE>
BANK INVESTMENT FUND--FUND ONE
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
Obligations of Federal Agencies--96.8%
Par Coupon Maturity Date Value
----------- ------ ------------- ------------
<S> <C> <C> <C> <C>
Federal Farm Credit Bank $ 2,500,000 6.40% 07/25/00 $ 2,507,031
2,000,000 6.05 02/12/01 1,993,125
2,500,000 6.19 03/19/01 2,517,188
2,000,000 6.20 04/09/01 2,013,750
2,500,000 6.78 01/15/02 2,517,969
- ------------------------------------------------------------------------------------------
$11,500,000 (Cost $ 11,500,000) $ 11,549,063
- ------------------------------------------------------------------------------------------
Federal Home Loan Bank $ 2,000,000 5.595% 02/16/99 $ 1,996,875
3,000,000 7.88 02/09/00 3,124,688
1,000,000 6.00 12/14/00 1,000,937
2,000,000 6.24 12/20/00 2,000,625
2,500,000 6.12 01/24/01 2,494,531
1,985,000 5.745 01/25/01 1,965,150
2,000,000 5.735 02/13/01 1,980,625
2,000,000 6.04 02/14/01 1,991,875
2,000,000 6.00 02/21/01 1,990,625
5,000,000 5.945 03/05/01 4,978,125
1,000,000 6.27 03/12/01 1,000,000
5,000,000 6.09 03/21/01 5,018,750
2,500,000 6.51 05/25/01 2,498,438
5,000,000 6.48 01/08/02 5,028,125
2,000,000 7.02 02/05/02 2,000,625
4,000,000 6.72 08/28/02 3,998,750
3,000,000 6.60 09/03/02 3,015,000
- ------------------------------------------------------------------------------------------
$45,985,000 (Cost $ 45,985,000) $ 46,083,744
- ------------------------------------------------------------------------------------------
Federal Home Loan Mortgage
Corporation $ 2,000,000 7.98% 01/19/00 $ 2,083,750
2,000,000 7.70 03/13/00 2,009,375
2,000,000 7.28 05/08/00 2,014,375
1,000,000 6.32 11/13/00 1,000,937
2,000,000 5.99 03/06/01 1,990,625
- ------------------------------------------------------------------------------------------
$ 9,000,000 (Cost $ 8,999,752) $ 9,099,062
Federal National Mortgage
Association $ 5,000,000 7.85% 09/10/98 $ 5,073,438
1,500,000 5.75 12/10/98 1,495,781
2,500,000 6.34 07/17/00 2,504,687
2,000,000 6.08 12/12/00 1,994,375
1,000,000 6.06 12/22/00 996,875
2,000,000 6.00 12/29/00 1,992,500
2,000,000 5.84 01/19/01 1,985,625
3,000,000 5.82 01/30/01 2,975,625
1,000,000 5.85 02/06/01 992,812
8,000,000 6.05 03/12/01 7,965,000
2,500,000 6.37 03/22/01 2,507,812
3,000,000 6.45 04/12/01 3,011,250
4,500,000 6.40 05/02/01 4,547,813
2,500,000 7.00 01/14/02 2,500,000
2,500,000 6.375 01/16/02 2,528,125
2,500,000 6.52 12/10/02 2,502,344
5,000,000 6.45 12/16/02 5,012,500
2,000,000 6.15 12/26/02 2,000,000
- ------------------------------------------------------------------------------------------
$52,500,000 (Cost $ 52,484,885) $ 52,586,562
- ------------------------------------------------------------------------------------------
Government National Mortgage
Association $ 502,672 6.50% 11/15/07 $ 505,657
3,239,813 6.50 07/15/08 3,259,050
1,199,215 6.50 10/15/08 1,206,335
1,822,975 6.50 11/15/08 1,833,799
410,886 6.50 12/15/08 413,326
705,345 5.50 12/15/08 679,115
2,821,023 7.50 03/15/22 2,890,667
3,383,994 7.00 10/15/22 $ 3,412,547
3,337,566 7.00 05/15/23 3,365,727
- ------------------------------------------------------------------------------------------
$17,423,489 (Cost $ 17,635,620) $ 17,566,223
- ------------------------------------------------------------------------------------------
Student Loan Marketing
Association $ 2,000,000 7.723% 01/25/99 $ 2,045,000
- ------------------------------------------------------------------------------------------
(Cost $ 1,990,628)
Certificates of Deposit--0.0%
NCB Savings Association $ 100,000 5.75% 01/16/98 $ 100,000
- ------------------------------------------------------------------------------------------
(Cost $ 100,000)
(Cost $138,695,885) $139,029,654
- ------------------------------------------------------------------------------------------
Repurchase Agreement--1.9%
$2,770,000 Repurchase Agreement dated December 31, 1997
with PaineWebber, Inc. due January 2, 1998 with
respect to $2,650,000 U. S. Treasury Notes
8.875% due February 15, 1999--maturity value
of $2,770,885 for an effective yield of 5.75%.
(Cost $ 2,770,000) $ 2,770,000
- ------------------------------------------------------------------------------------------
Total Investments--98.7% (Cost $141,465,885) $141,799,654
- ------------------------------------------------------------------------------------------
Other assets in excess of liabilities--1.3% 1,808,844
- ------------------------------------------------------------------------------------------
Net assets--100% $143,608,498
==========================================================================================
</TABLE>
BANK INVESTMENT FUND--FUND ONE
NOTES TO FINANCIAL STATEMENTS
(Information for the six months ended June 30, 1998 is unaudited)
NOTE 1. Organization:
The Bank Investment Fund (the "Corporation") was organized effective
April 7, 1985 pursuant to a Special Act of the Commonwealth of Massachusetts
(Acts of 1984, Chapter 482, as amended,) under its chartered name "Co-operative
Bank Investment Fund" and does business under the name "Bank Investment Fund."
The Corporation is registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Corporation invests and manages two mutual
investment funds derived from the voluntary subscriptions made by eligible
investors.
Fund One (the "Fund") is a no-load, diversified, open-end investment
fund. Fund shares are currently offered to the following eligible investors:
Massachusetts Co-operative Banks, Massachusetts Savings Banks, Massachusetts
Trust Companies, Federally Chartered Savings Banks and Savings and Loan
Associations with their principal place of business in Massachusetts, The
Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance Company
of Massachusetts, the National Cooperative Bank, and directly or indirectly
wholly-owned subsidiaries of such institutions.
Because more than one fund will be operated by the Corporation, operating
expenses related directly to a single fund operation will be charged directly
to that fund. Common or indirect expenses will be allocated among funds in
proportion to the ratio of the net assets of each fund to total net assets of
the Corporation or on such other basis as the Board of Directors of the
Corporation may determine from time to time to be fair and equitable.
NOTE 2. Significant Accounting Policies:
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Investment security valuation:
U.S. debt securities are normally valued on the basis of valuations
provided by market makers. Such prices are believed to reflect the fair value
of such securities and to take into account appropriate factors such as
institutional size trading in similar groups of securities, yield quality,
coupon rate, maturity, type of issue, and other market data. Securities for
which market quotations are not readily available will be valued at fair value
using methods determined in good faith by or at the direction of the Board of
Directors.
Accounting for investments:
Security transactions are accounted for on the trade date (date the order
to buy or sell is executed). In computing net investment income prior to
January 1, 1997, the Fund did not amortize premiums or accrete discounts on
fixed income securities in the portfolio, except those original issue discounts
for which amortization is required for federal income tax purposes. Since
January 1, 1997, the Fund amortizes premiums or accretes discounts on related
fixed income securities, which change had an immaterial effect on investment
income. Additionally, with respect to market discount on bonds issued after
July 18, 1984, a portion of any capital gain realized upon disposition may be
recharacterized as taxable ordinary income in accordance with the provisions of
the 1984 Tax Reform Act. Realized gains and losses on security transactions are
determined on the identified cost method.
Repurchase agreements:
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry System
or to have segregated within the custodian bank's vault, all securities held as
collateral in support of repurchase agreement investments. Additionally,
procedures have been established by the Fund to monitor, on a daily basis, the
market value of each repurchase agreement's underlying investments to ensure
the existence of a proper level of collateral.
Federal income taxes:
The Corporation's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required. The Fund realized a
gain of $5,078 during 1997, which will be offset by the available capital loss
carryforward, resulting in a remaining capital loss carryforward of
($6,325,981) at December 31, 1997. Such capital loss carryforward will reduce
the Fund's taxable income arising from future net realized gain on investments,
if any, to the extent permitted by the Internal Revenue Code, and thus will
reduce the amount of the distributions to shareholders which would otherwise be
necessary to relieve the Fund of any liability for federal income tax. Such
capital loss carryforward will expire on December 31, 1998 ($2,419,562), and
2003 ($3,906,419).
Dividends to shareholders:
The Fund distributes all of its net investment income on a daily basis.
Dividends are declared on each day that the Fund is open for business.
Investors receive dividends in additional shares unless they elect to receive
cash. Payment is made in additional shares at the net asset value on the
payable date or in cash, on a monthly basis. Distributions of otherwise taxable
realized net capital gains, if any, are declared and paid once each year and
are reinvested in additional shares at net asset value or, at each
shareholder's option, paid in cash.
Net asset value:
The net asset value per share is determined daily by adding the appraised
value of all securities and all other assets, deducting liabilities and
dividing by the number of shares outstanding.
NOTE 3. Security Transactions:
The cost of securities purchased and the proceeds from the sales of
securities, all of which were Obligations of Federal Agencies, (excluding
short-term investments) aggregated $45,496,300 and $37,005,078, respectively
for the year ended December 31, 1997. As of December 31, 1997, unrealized
appreciation of investments was $333,763; accumulated net realized loss on
investment transactions totaled ($17,264,431). The cost of securities purchased
and the proceeds from sales of securities, all of which were Obligations of
Federal Agencies, (excluding short-term investments) aggregated $25,087,500 and
$32,599,219, respectively for the six months ended June 30, 1998. As of June
30, 1998 unrealized appreciation of investments was $600,672 and accumulated
net realized loss on investment securities totaled ($17,265,212).
NOTE 4. Distribution Expenses:
The Fund has adopted a Plan of Distribution (the "Plan"), pursuant to
rule 12b-1 under the Investment Company Act of 1940, to use the assets of the
Fund to finance certain activities relating to the distribution of its shares
to investors. The Plan authorizes the Fund to pay for the cost of preparing,
printing, and distributing offering circulars to prospective investors, for
certain other direct or indirect marketing expenses, direct payments to sales
personnel, and for the cost of implementing and operating the Plan. Plan
expenses may not exceed an amount computed at an annual rate of .12 of 1% of
the Fund's average daily net assets. The Fund paid or accrued $156,988 (.11% of
average net assets) and $73,275 (.11% of average net assets--annualized)
pursuant to this Plan for the year ended December 31, 1997 and for the six
months ended June 30, 1998, respectively.
NOTE 5. Pension Plans:
The Fund is a participating employer in the Co-operative Banks Employees
Retirement Association, and has, in effect, a Defined Contribution Plan
covering all eligible officers and employees. Under the plan, contributions by
employees are doubled by the Fund, up to a maximum of 10% of each employee's
salary. Effective January 1, 1989, the Fund also participates in a Defined
Benefit Plan, which covers all eligible employees, and is funded currently. The
Fund's contributions to these multi-employer plans for the year ended December
31, 1997 and the six months ended June 30, 1998 were $35,176 and $17,696,
respectively.
NOTE 6. Shares of Beneficial Interest:
Chapter 482 of the Acts of 1984, as amended, of the Commonwealth of
Massachusetts permits the directors to issue an unlimited number of full and
fractional shares of beneficial interest (no par, non-voting, with a stated
value of $1,000 per share). As of December 31, 1997 and June 30, 1998 capital
paid-in aggregated $160,539,166 and $151,034,044, respectively.
Transactions in shares of beneficial interest are summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended Year Ended
June 30, 1998 December 31, 1997 December 31, 1996
- --------------------------------------------------------------------------------------------------------------------
(unaudited) (audited) (audited)
Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sold...................... 1,015.4303 $ 1,000,000 2,216.1487 $ 2,170,000 23,700.6936 $23,325,618
Issued in reinvestment
of dividends............. 1,356.5691 1,337,413 2,790.7661 2,724,117 3,244.8810 3,159,951
- --------------------------------------------------------------------------------------------------------------------
2,371.9994 2,337,413 5,006.9148 4,894,117 26,945.5746 26,485,569
Redeemed.................. 11,973.4721 11,842,535 14,536.5484 14,212,519 18,549.7702 18,071,181
- --------------------------------------------------------------------------------------------------------------------
Net increase/(decrease)... (9,601.4727) $ (9,505,122) (9,529.6336) $ (9,318,402) 8,395.8044 $ 8,414,388
====================================================================================================================
</TABLE>
NOTE 7. Transactions With Related Parties:
The Incorporators of the Corporation are the Directors of The
Co-operative Central Bank, which is the statutory reserve bank and insurer of
deposits in excess of Federal deposit insurance limitations for Massachusetts
co-operative banks. The Board of Directors of the Corporation is elected by the
Incorporators.
The Fund has reimbursed The Co-operative Central Bank for its
proportionate share of expense items used in common by both the Fund and The
Co-operative Central Bank. All fees and expenses for the Fund are estimated and
accrued daily. Actual operating expenses for the year ended December 31, 1997
and the six months ended June 30, 1998 were .45% and .52% of average net
assets, respectively. Operating expenses paid to the Central Bank for the year
ended December 31, 1997 and the six months ended June 30, 1998 were $36,800 and
$20,400, respectively.
The following sheets are perforated for your removal
and use in the establishment or updating of your account.
CERTIFICATE OF CORPORATE RESOLUTION
For Massachusetts Co-operative Banks, Massachusetts Savings Banks,
Massachusetts Trust Companies, Federally Chartered Savings Banks and Savings
and Loan Associations with their principal place of business in Massachusetts,
The Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance
Company of Massachusetts, the National Cooperative Bank and directly or
indirectly wholly-owned subsidiaries of such institutions only. This form
authorizes the individuals below to redeem shares by telephone or exchange.
The undersigned is Secretary or Clerk of ______________________________
and hereby certifies that the following individuals: (name of corporation)
Name Title
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
are duly authorized by corporate resolution or otherwise to act on behalf of
the eligible bank in connection with its ownership of shares in the Bank
Investment Fund, Fund One and in particular to give instructions for the
purchase, sale or exchange of any said shares and to execute any necessary
forms in connection therewith.
The Bank Investment Fund will consider this authorization to be in full
force and in effect until otherwise notified in writing.
IN WITNESS WHEREOF, the undersigned has executed this Certificate the
_______________ day of ___________________ 19__________.
- --------------------------------------------------------------------------------
Secretary or Clerk
BANK INVESTMENT FUND
FUND ONE
ACCOUNT APPLICATION FORM
REGISTRATION. The account should be registered as follows:
DATE: ______________
NAME: __________________________________________________________________________
POST OFFICE BOX: _______________________________________________________________
STREET ADDRESS: ________________________________________________________________
CITY/TOWN: ______________________________________ STATE: _______________________
ZIP CODE: ___________________________ TELEPHONE NUMBER: _______________________
TAX ID NUMBER __________________________________________________________________
INITIAL INVESTMENT: $__________________________________________(Minimum $50,000)
MONTHLY CASH DIVIDENDS
[ ] Check if dividends are to be paid monthly in cash. Otherwise dividends
will be AUTOMATICALLY REINVESTED in additional shares of the Fund.
TELEPHONE REDEMPTION ORDERS
Redemption proceeds will be sent ONLY to the bank or trust company listed
below, for credit to the investor's account. The investor hereby authorizes the
BANK INVESTMENT FUND to honor telephone or written instructions, without a
signature guarantee, for redemption of Fund shares. THE FUND and its Agents
will not be liable for any loss, expense or cost arising out of such
transactions.
Enclose a specimen copy of your check or deposit slip (marked VOID) for
the bank account listed below. To facilitate the wiring of your redemption
proceeds the indicated bank should be a commercial bank.
Name of Bank:
Bank Account No.________________________________________________________________
Bank Address: _________________________________________________________________
street
________________________________________________ MA _____________
city zip
Name on Account: _______________________________________________________________
Bank Routing/Transit No.: ______________________________________________________
AUTHORIZED PERSONS--TELEPHONE INVESTMENTS AND REDEMPTIONS
Authorized person Title Initials
- --------------------------------------------------------------------------------
1. _____________________________________________________________________________
2. _____________________________________________________________________________
3. _____________________________________________________________________________
4. _____________________________________________________________________________
5. _____________________________________________________________________________
CORPORATE RESOLUTIONS
We have enclosed with this application form the necessary corporate
resolutions to authorize corporate officers to make wire or cash payment
transfers to the Bank Investment Fund and to purchase, sell or exchange shares
of beneficial ownership in the Bank Investment Fund, Fund One.
SIGNATURE AND CERTIFICATION
We have received and read the Offering Circular, and agree to its terms
and conditions by signing below. By the execution of this Application, the
undersigned represent and warrant that they are duly authorized to sign this
Application and to purchase or redeem shares of the Fund on behalf of the
investor.
The undersigned hereby certify under penalty of perjury that the above
Taxpayer Identification Number is correct and that the investor is not subject
to backup withholding.
We further certify and agree that the certifications, authorizations and
appointments in this document will continue until the Bank Investment Fund
receives actual written notice of any change thereof.
Signature ______________________________________________ Title _________________
Signature ______________________________________________ Title _________________
Two signatures are required, one of which should be the Secretary or Clerk of
the corporation.
SIGNATURE GUARANTEE
In order to facilitate telephone redemptions, you must have your
signature(s) on this application guaranteed by a commercial bank or stock
exchange member firm.
- --------------------------------------------------------------------------------
Name of Bank or Investment Dealer
- --------------------------------------------------------------------------------
By (signature of authorized person)
- --------------------------------------------------------------------------------
Title (authorized person)
FINANCIAL STATEMENTS
As required by applicable statutes, semi-annual financial statements are
furnished to the shareholders, the Commissioner of Banks and the Securities and
Exchange Commission.
ADDITIONAL INFORMATION
The Bank Investment Fund (the "Corporation") has filed with the
Securities and Exchange Commission in Washington, D.C., under its chartered
name the "Co-operative Bank Investment Fund" a registration statement on Form
N-1A (together with all amendments and exhibits thereto, hereinafter referred
to as the "Registration Statement") under the Investment Company Act of 1940.
This Offering Circular does not contain all of the information in the
Registration Statement. The Registration Statement may be examined at the
office of the Securities and Exchange Commission in Washington, D.C.
The Corporation will provide, without charge to any person to whom this
Offering Circular is delivered on the written or oral request of any such
person, a copy of the Registration Statement and the additional information
contained therein and documents relating to certain exemptions from the
Investment Company Act of 1940 (see ORGANIZATION). Written requests should be
directed to the Bank Investment Fund, 75 Park Plaza, Boston, MA 02116-3934.
Telephone requests may be directed to 617-695-0415.
NOTES
=====================================================
No person has been authorized in connection
with this Offering to give any information or to make
any representation not contained in this Offering
Circular and, if given or made, such information or
representation must not be relied upon as having been
authorized by the Fund. This Offering Circular does
not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby
to any person to whom it is unlawful to make such
offer.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Highlights........................... i
Fee Table...................................... iii
Management Discussion.......................... iv
Summary........................................ 1
Investment Objectives.......................... 1
Investment Policy.............................. 2
Investment Restrictions........................ 2
Eligible Banks or Investors.................... 3
Statutory Limitation on Investments............ 3
Dividends...................................... 4
Net Asset Value................................ 4
Investors' Accounts............................ 4
Taxes.......................................... 4
Auditors and Legal............................. 5
Certain Risk Factors to Consider............... 5
Yield.......................................... 5
Portfolio Performance.......................... 5
How Shares of Fund are Purchased............... 6
How Shares of Fund are Redeemed................ 7
Transfer Restrictions.......................... 7
Organization................................... 8
Description of Fund Shares..................... 8
Supervision and Regulation..................... 9
Investment Advisor............................. 9
Transfer Agent................................. 9
Operating and Distribution Expenses............ 9
Exchange Privilege............................. 10
Custodian...................................... 10
Year 2000...................................... 11
Management of the Fund......................... 11
Independent Auditor's Report................... 13
Financial Statements........................... 14
Investments.................................... 17
Account Application Forms...................... 29
</TABLE>
=====================================================
=====================================================
BANK INVESTMENT FUND
FUND ONE
-------------------
OFFERING CIRCULAR
-------------------
August 25, 1998
-------------------
75 Park Plaza
Boston, MA 02116-3934
617-695-0415
=====================================================
OFFERING CIRCULAR
- -----------------
Bank Investment Fund
Liquidity Fund
75 Park Plaza
Boston, Massachusetts 02116-3934
617-695-0415
-------------------
The Bank Investment Fund (the "Corporation") is an investment company
which currently invests and manages two mutual funds derived from voluntary
subscriptions made by eligible investors.
Liquidity Fund (the "Fund") is a no-load, diversified, open-end money
market investment fund whose objective is maximum current income consistent
with liquidity and the preservation of capital. The Fund is designed solely for
use by eligible investors as an economical and convenient way to make liquid
investments. Fund shares are currently offered to the following eligible
investors: Massachusetts Co-operative Banks, Massachusetts Savings Banks,
Massachusetts Trust Companies, Federally Chartered Savings Banks and Savings
and Loan Associations with their principal place of business in Massachusetts,
The Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance
Company of Massachusetts and the National Cooperative Bank (sometimes
hereinafter called "Banks") (see ELIGIBLE BANKS OR INVESTORS).
Investors should read this Offering Circular and retain it for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSIONER OF BANKS OF THE COMMONWEALTH OF MASSACHUSETTS (the "Commissioner
of Banks"), NOR HAS THE COMMISSIONER OF BANKS PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT
INSURED BY ANY GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND IS NOT GUARANTEED
OR INSURED BY THE U.S. GOVERNMENT AND THERE IS NO ASSURANCE THAT THE FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. SUCH SHARES ARE BEING OFFERED
PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT OF 1933 AND APPLICABLE STATE
SECURITIES ACTS AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER SUCH ACTS.
Shares of beneficial interest are continuously available for daily
purchase by eligible Banks.
-------------------
The date of this Offering Circular is August 25, 1998
Financial Highlights
(For a share outstanding throughout each year)
The following information should be read in conjunction with the
financial statements included elsewhere herein:
<TABLE>
<CAPTION>
Six Months Year Ended December 31, Year Ended December 31,
Ended ----------------------------------------------------------------------
June 30, 1998 1997 1996 1995 1994 1993 1992
------------- ---------- ---------- ---------- ---------- ---------- ----------
(unaudited) (audited)* (audited)* (audited)* (audited)* (audited)* (audited)*
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
--------- --------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 26.72 53.83 52.53 57.12 38.00 31.18 39.95
Total from investment operations 26.72 53.83 52.53 57.12 38.00 31.18 39.95
Less distributions:
Dividends from net investment income (26.72) (53.83) (52.53) (57.12) (38.00) (31.18) (39.95)
Total distributions (26.72) (53.83) (52.53) (57.12) (38.00) (31.18) (39.95)
Net asset value, end of period $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Total return 5.48%** 5.52% 5.38% 5.86% 3.87% 3.15% 4.07%
Ratios/Supplemental data:
Net assets, end of period (in 000's) $ 259,194 $ 235,204 $ 210,208 $ 245,151 $ 91,623 $ 266,821 $ 364,171
Ratio of expenses to average net assets 0.17% 0.16% 0.15% 0.13% 0.30% 0.28% 0.20%
Ratio of net investment income to
average net assets 5.38% 5.22% 5.26% 5.75% 3.63% 3.12% 3.99%
Amount of reverse repurchase agreements
outstanding at end of period (in 000's) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Average amount of reverse repurchase
agreements outstanding during the
period (in 000's) $ 0 $ 0 $ 0 $ 58 $ 0 $ 28 $ 0
Average number of shares outstanding
during the period (in 000's) 280 225 243 194 183 321 433
Average amount of reverse repurchase
agreements per share during the period $ 0.0000 $ 0.0000 $ 0.0000 $ 0.2980 $ 0.0000 $ 0.0865 $ 0.0000
[TABLE CONTINUED]
<CAPTION>
Year Ended December 31, October 12, 1988
---------------------------------- (Inception) to
1991 1990 1989 December 31, 1988
---------- ---------- ---------- -----------------
(audited)* (audited)* (audited)* (audited)*
<S> <C> <C> <C> <C>
Net asset value, beginning of period $1,000.00 $1,000.00 $1,000.00 $1,000.00
--------- --------- --------- ---------
Income from investment operations:
Net investment income 61.44 82.74 91.14 17.63
Total from investment operations 61.44 82.74 91.14 17.63
Less distributions:
Dividends from net investment income (61.44) (82.74) (91.14) (17.63)
Total distributions (61.44) (82.74) (91.14) (17.63)
Net asset value, end of period $1,000.00 $1,000.00 $1,000.00 $1,000.00
Total return 6.32% 8.37% 9.23% 8.53%
Ratios/Supplemental data:
Net assets, end of period (in 000's) $ 383,771 $ 64,115 $ 19,782 $ 870
Ratio of expenses to average net assets 0.19% 0.25% 0.25% 0.25%
Ratio of net investment income to
average net assets 5.98% 7.99% 8.77% 7.94%
Amount of reverse repurchase agreements
outstanding at end of period (in 000's) $ 0 $ 0 $ 0 $ 0
Average amount of reverse repurchase
agreements outstanding during the
period (in 000's) $ 0 $ 0 $ 0 $ 0
Average number of shares outstanding
during the period (in 000's) 250 37 8 1
Average amount of reverse repurchase
agreements per share during the period $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
<FN>
- -------------------
<F*> Financial Statements for the period October 12, 1988 (inception) to
December 31, 1988 and for each of the nine years in the nine year period
ended December 31, 1997 were audited by Parent, McLaughlin & Nangle, the
Fund's independent auditors.
<F**> Annualized.
</FN>
</TABLE>
See notes to financial statements.
FEE TABLE
<TABLE>
<CAPTION>
Year Ended
December 31, 1997
-----------------
<S> <C> <C>
Shareholder Transaction Expenses*................... 0%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees................................... 0%
12b-1 Fees........................................ .04%
Other Expenses
Compensation, Payroll, Taxes, & Benefits........ .07%
Occupancy....................................... .01%
Remainder....................................... .04%
-----
.12%
-----
TOTAL FUND OPERATING EXPENSES....................... .16%
=====
</TABLE>
Example
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) with or without redemption at the end of each time
period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
December 31, 1997................. $1.65 $5.21 $9.14 $20.86
The purpose of the foregoing table, which is based upon the Fund's fiscal
year ended December 31, 1997, is to assist you in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly. The Example provided is intended to show the dollar amount of
expenses that would be incurred over the indicated periods on a hypothetical
$1,000 investment in the Fund, assuming a 5% annual return and assuming that
the Fund's expenses continue at the rates shown in the table. However, the
actual return on an investment in the Fund may be greater or less than 5%.
Furthermore, the Example should not be considered a representation of past or
future expenses; actual expenses may be greater or less than those shown.
- -------------------
* The Fund charges no sales load or deferred sales load on any purchase,
reinvested dividend, exchange, or redemption transactions.
See notes to financial statements.
OFFERING CIRCULAR SUMMARY
BANK INVESTMENT FUND
LIQUIDITY FUND
75 Park Plaza
Boston, Massachusetts 02116-3934
This Summary is qualified in its entirety by the detailed information
appearing elsewhere herein.
For account information or assistance call 617-695-0415.
Shares in the Fund are currently offered only to Massachusetts
Co-operative Banks, Massachusetts Savings Banks, Massachusetts Trust Companies,
Federally Chartered Savings Banks and Savings and Loan Associations with their
principal place of business in Massachusetts, The Co-operative Central Bank
Reserve Fund, The Savings Bank Life Insurance Company of Massachusetts and the
National Cooperative Bank.
The minimum initial investment is $50,000.00 (although in certain cases
the Corporation may require a larger minimum investment in accordance with
requirements of applicable securities laws). Additional investments may be made
in any amount in excess of the minimum.
The investment objective of the Fund is to achieve as high a level of
current income as is consistent with preservation of capital and liquidity by
investing in short-term money market instruments.
The Fund was formed to provide participating banks with a highly liquid,
diversified, high-quality short-term investment vehicle designed to assist
liquidity management while seeking preservation of capital. By pooling the
money of its investors, it is able to offer the economies of size and
diversification of maturities normally available to large corporate and
institutional investors.
Furthermore, the participating banks are relieved of safekeeping of
securities and the detailed record keeping and other operational aspects
necessary in managing an investment portfolio. Payment for shares may be made
only in Federal funds or other funds immediately available to the Fund's
deposit account at the State Street Bank and Trust Company ("State Street").
There is no charge for investing or withdrawing money, regardless of frequency.
INVESTMENT OBJECTIVES
The Liquidity Fund is a no-load, diversified, open-end money market fund.
The investment objective of Liquidity Fund is to maximize current income
consistent with liquidity of assets and safety of principal.
The Fund was formed to provide participating banks with a highly liquid,
diversified, high-quality investment vehicle designed to assist liquidity
management while seeking preservation of capital. The Fund pursues this
objective by investing principally in short-term marketable debt securities
issued by the United States Government or by agencies of the United States,
bank money instruments, short-term corporate debt instruments including
commercial paper, repurchase agreements and reverse repurchase agreements.
INVESTMENT POLICY
Asset investments for Liquidity Fund include principally those securities
eligible to be included in legal liquidity for Massachusetts General Laws,
Chapter 170, Section 22.
The categories of these eligible investments include, but may not be
limited to: a) cash on hand and due from banks; b) certificates of deposit due
from any trust company, national banking association, banking company, or any
federally insured savings bank, co-operative bank or savings & loan
association; c) bankers' acceptences; d) bonds and other direct obligations of
the United States or such obligations as are unconditionally guaranteed as to
principal and interest by the United States, including U.S. Treasury issues,
such as bills, certificates of indebtedness, notes and bonds, and issues of
U.S. Government agencies and instrumentalities which are established under the
authority of an Act of Congress, such as the Government National Mortgage
Association, Tennessee Valley Authority, Bank for Cooperatives, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Land Banks, Export-Import Bank of the U.S., Federal Housing
Administration ("FHA"), Federal Loan Mortgage Corporation, U.S. Postal Service,
Federal Financial Bank, Federal National Mortgage Association and Student Loan
Marketing Association; e) bonds and notes of the Commonwealth of Massachusetts
or any political subdivision thereof; f) repurchase agreements; g) commercial
paper which, when purchased, is rated A-1 by Standard & Poor's Corporation
("Standard & Poor's") and/or Prime-1 by Moody's Investors Service, Inc.
("Moody's") or, if not rated, has been determined under procedures adopted and
supervised by the Fund's Board of Directors to be of comparable high quality.
Commercial paper obligations may include variable amount master demand notes;
short-term obligations of corporations; h) Second Tier securities to the extent
permissible by Rule 2a-7 of the Investment Company Act of 1940 (see investment
restrictions) including commercial paper which when purchased is rated A-2 by
Standard & Poor's or Prime-2 by Moody's or if not rated, has been determined
under procedures adopted, supervised and approved by the Fund's Board of
Directors to be of comparable quality. Commercial paper obligations in the
second tier category may include variable amount master demand notes,
short-term obligations of corporations; i) any other debt instrument deemed
eligible for legal liquidity by the Commonwealth or its agent; and j) certain
common money market instruments of temporary duration.
All the above eligible investments must have original maturities or
remaining maturities of 397 days or less. In addition, the Fund will maintain a
dollar weighted average maturity of 90 days or less.
The Fund may invest more than 25% of its assets in the banking industry
through Certificates of Deposit and Federal Funds sold in the ordinary course
of its business.
The Fund may enter into reverse repurchase agreements to meet short-term
liquidity needs of the Fund. These agreements may not be in excess of three
business days. Any such borrowing would be limited to borrowings allowable
under Section 18 of the Investment Company Act of 1940 and applicable
regulations promulgated thereunder.
Shares of the Bank Investment Fund are eligible investments to be
included in legal liquidity under Massachusetts General Laws, Chapter 170,
Section 22.
The Board of Directors of the Corporation has investment discretion with
regard to Liquidity Fund assets.
INVESTMENT RESTRICTIONS
No more than 5% of the Fund's assets at the time of purchase may be
invested in the securities of any one issuer except for direct obligations of
the United States or obligations guaranteed by the United States, and other
obligations issued under certain federal programs or by certain federal
agencies.
In accordance with amendments, effective June 1, 1991 to Rule 2a-7 of the
Investment Company Acts of 1940, no more than 5% of the Fund's assets, in the
aggregate, may be invested in "second tier" securities, with no more than 1% of
the Fund's assets or one million dollars, whichever is greater, invested in the
second tier securities of any one issuer.
The Fund is further restricted through the investment policy maintained
by the Corporation's Officers and Directors. The investment policy restricts
the Fund from a) purchasing any securities other than money market and other
securities described under "Investment Policy", and b) investing more than 25%
of its total assets in the securities of a particular industry other than U.S.
Government securities, Government Agency securities or bank money instruments.
ELIGIBLE BANKS OR INVESTORS
Under Massachusetts General Laws (Chapter 482, Acts of 1984, as amended),
eligible investors include Massachusetts Co-operative Banks, Massachusetts
Savings Banks, Massachusetts Trust Companies, Federally Chartered Savings Banks
and Savings and Loan Associations with their principal place of business in
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank
Life Insurance Company of Massachusetts and the National Cooperative Bank. Only
these eligible investors are currently offered non-voting shares of beneficial
interest in the Fund (see ORGANIZATION).
STATUTORY LIMITATION ON INVESTMENTS IN THE FUND
BY PARTICIPATING BANKS
Under Massachusetts General Laws, Chapter 167F, Section 3(2) as amended,
a participating or eligible savings bank or co-operative bank may invest an
amount in excess of 100% of its capital and surplus in any distinct non-equity
investment fund of the Corporation except to the extent that the Commissioner
of Banks for the Commonwealth of Massachusetts may by regulation set limits and
conditions. The participating bank will be responsible for monitoring and
compliance with this limitation.
Under Massachusetts General Laws, Acts of 1932, Chapter 45, Section 7, as
amended, The Co-operative Central Bank Reserve Fund may not invest or hold at
any one time more than 20% of its assets with the Corporation.
Investments in the Fund are affected by Section 303 of the FDIC
Improvement Act of 1991 which limits investments by FDIC-insured state banks
(including Massachusetts co-operative banks, savings banks and trust companies)
in common or preferred stock or shares of mutual funds to the extent that such
investments are permissible for national banks. However, that Act and FDIC
implementing regulations (12 C.F.R. Part 362) generally permit a qualifying
institution which is well capitalized or, absent mitigating factors, adequately
capitalized to invest in common and preferred stock and mutual fund shares in
an aggregate maximum amount equal to 100% of the institution's Tier I capital.
Investment limits for institutions which are not well or adequately capitalized
are determined by the FDIC on an individual basis. To qualify for this partial
exemption, a state bank must (a) have owned qualifying stocks or mutual funds
during the period from September 30, 1990 through November 26, 1991, (b) be
from a state which authorized such investments and (c) file a one-time notice
with the FDIC of the bank's intention to retain or acquire stock or mutual fund
shares and receive the FDIC's approval. Banks should consult the FDIC's
regulation (Part 362) and the FDIC's notice, FIL-80-92, issued November 13,
1992, for more detailed information regarding these statutory and regulatory
standards.
Federally chartered savings banks and savings and loan associations (with
their principal place of business in Massachusetts) may invest in an open-end
mutual fund, such as the Liquidity Fund, which invests in securities and
financial instruments in which such institutions may invest directly (e.g.,
Federal agency obligations and high quality commercial paper and corporate
debt). For purposes of determining compliance with quantitative investment
limitations under the Home Owners Loan Act ("HOLA"), an investing bank's or
association's proportionate share of a mutual fund's individual investments
will, under 12 CFR, ss.560.32, be aggregated with such investments held
directly by the bank or association. Apart from this requirement, a bank or
association may invest, without prior notice to the Office of Thrift
Supervision, an amount up to 15% of its total capital in any one mutual fund or
up to 50% of total capital in all such pass-through investment vehicles.
Investments in excess of the 15% and 50% limits may only be made when thirty
days' advance notice has been provided to the Office of Thrift Supervision.
Certain federally chartered savings banks which converted from a
Massachusetts savings bank charter may, under certain grandfather provisions of
HOLA, retain broader investment authority than that described in the preceding
paragraph. For example, section 5(i) of HOLA grandfathers state authorized
investment powers of certain Federal savings banks in existence as of the date
of enactment of Federal statutes (e.g., the Financial Institution Reform,
Recovery and Enforcement Act of 1989) which may have otherwise limited such
investments.
DIVIDENDS
The Fund distributes all of its net income on a daily basis. Dividends
are declared on each day that the Fund is open for business. Investors receive
dividends in additional shares unless they elect to receive cash. Payment is
made in additional shares at the net asset value on the payable date or in
cash, on a monthly basis.
Investors wishing to change the method of receiving dividends must notify
the Fund in writing at least one week before payment is to be made. Net income
for dividend purposes consists of interest accrued and discount earned, less
amortization of any premium and accrued expenses, plus or minus all realized
short-term gains or losses, if any.
NET ASSET VALUE
The Fund's net asset value per share is determined by dividing the value
of all investment securities and all other assets, less liabilities, by the
number of shares outstanding. The Fund's investment securities are valued based
on their amortized cost, which does not take into account unrealized
appreciation or depreciation. The Corporation's Board of Directors has
established procedures reasonably designed to stabilize the net asset value per
share at $1,000.00.
INVESTORS' ACCOUNTS
The Fund maintains an account for each investor in full and fractional
shares. All purchase and sale transactions are confirmed to the investor.
Statements of account showing all transactions for the month, including
dividends paid, are sent to participating banks on a monthly basis.
TAXES
The Fund has qualified as a regulated investment company under the
Internal Revenue Code and will not be liable for federal income taxes to the
extent its earnings are distributed. Dividends derived from interest, together
with distributions of any short-term capital gains, are taxable as ordinary
income, whether or not reinvested. Dividends of the Fund do not qualify for the
dividends received exclusion for corporations.
A statement setting forth the federal income tax status of all
distributions made during each calendar year is sent to each shareholder
promptly after the end of such year.
AUDITORS AND LEGAL
Parent, McLaughlin and Nangle, Certified Public Accountants, Inc., are
the auditors of the Fund. The law firm of Steptoe & Johnson has passed upon
certain legal matters of the Fund in connection with the shares offered by this
offering circular.
CERTAIN RISK FACTORS TO CONSIDER
The Fund may enter into repurchase agreements and borrow money in such
amounts and upon such security as the Directors deem appropriate; provided,
that such agreements or borrowing shall not be for a term in excess of three
business days.
CAPITAL GAINS
The Fund does not expect to experience long-term capital gains or losses
due to the short-term nature of the portfolio, and therefore the Fund does not
expect to pay capital gain dividends.
YIELD PERFORMANCE
The annualized average net yield for the seven-day period ending December
31, 1997 and June 30, 1998 were 5.60% and 5.48%, respectively. Yield is
calculated based on the last 7 days ending on the date of the most recent
statement of Assets and Liabilities, (as presented elsewhere within). A
standard formula as required by the Securities and Exchange Commission is
utilized for the computation of this yield amount.
The Fund's yield fluctuates as a result of numerous factors. Therefore,
the yield stated here is not necessarily representative of the Fund's future
yield.
HOW SHARES OF THE FUND ARE PURCHASED--
TELEPHONE INVESTMENT PROCEDURE
Shares of the Fund are offered for sale on days on which both the New
York Stock Exchange and the custodian bank are open for business. There is no
sales charge. The minimum initial investment is $50,000.00 (although in certain
cases the Corporation may require a larger minimum investment in accordance
with requirements of applicable securities laws). Additional investments may be
made in any amount in excess of the minimum.
Bank Wire Transfers
Call your correspondent bank and speak to your account officer. Tell him
that you want to transfer funds to State Street Bank and Trust Company.
Instruct him to wire transfer the money before 12:00 noon, Boston time, to:
State Street Bank and Trust Company
Boston, Massachusetts
Routing number: 0110-0002-8
For account of the Bank Investment
Fund, Liquidity Fund
Account number: 9006-884-2
Internal Money Transfers
If your correspondent bank account is with the State Street Bank and
Trust Company, contact your account officer and instruct him to transfer funds
from your account to the account of the Bank Investment Fund, Liquidity Fund,
Account number: 9006-884-2.
AFTER INSTRUCTING YOUR BANK TO TRANSFER FUNDS, PLEASE CALL THE FUND AND
TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER, IT IS
IMPORTANT TO DO THIS BEFORE 12:00 NOON.
The securities market, in which the Fund buys and sells securities,
usually requires immediate settlement in Federal funds for all security
transactions; therefore, payment for the purchase of Fund shares not received
in the form of Federal funds will be recorded as share subscriptions, and not
invested in Fund shares until such payments are converted into Federal funds.
Payments received by bank wire can be converted immediately into Federal funds;
any other form of payment will result in a delay. Orders received prior to
12:00 noon, Boston time, will be invested in shares of the Fund at the next
determined net asset value.
HOW SHARES OF THE FUND ARE REDEEMED--
TELEPHONE REDEMPTION PROCEDURE
An investor may withdraw all or any portion of his investment by
redeeming shares on any day that the Fund is open for business at the next
determined net asset value. The proceeds of redemptions will be wired directly
to the investor's bank account within one business day. The Fund reserves the
right to delay withdrawal requests up to 7 business days after any investment
that has been made with uncollected funds.
The right of redemption can be suspended and the payment of the
redemption proceeds deferred during any period in which a) the New York Stock
Exchange is closed or trading on such Exchange is restricted or b) the
Securities and Exchange Commission deems an emergency to exist, or during any
other period permitted by order of the Commission for the protection of
investors.
Bank Wire Transfers
Call the Fund by 12:00 noon (Call or Trade Date) to redeem shares the
following day (Settlement Date). When the amount to be redeemed is at least
$5,000.00, the Fund will automatically wire transfer the amount to your
correspondent bank account at settlement.
Internal Money Transfers
If your bank's account is with the State Street Bank and Trust Company,
contact the Fund by 12:00 noon (Call or Trade Date) for redemption of shares
the following day (Settlement Date). The Fund will transfer the amount from its
account to your account at State Street Bank and Trust Company at settlement.
TRANSFER RESTRICTIONS
Fund shares may not be transferred by banks holding such shares to any
persons other than an eligible bank (except that the shares may be pledged to
such other persons or they may be transferred to the Central Bank). If the Fund
shares are acquired by any other persons by operation of law or by foreclosure
upon the pledge of such shares (or through transfer, in the case of the Central
Bank), the Corporation must offer to repurchase the shares from such person at
net asset value of the shares. If such offer is refused, no dividend may be
paid by the Corporation or Fund on such shares, and the redemption price which
the holder of such shares may obtain in any subsequent repurchase of those
shares by the Corporation or Fund is limited to the net asset value of the
shares on the date of the Corporation's offer.
In the event of any transfer, it is extremely important to notify the
Corporation immediately of any purchase, sale or transfer of Fund shares not
made through the Corporation or its transfer agent. Immediate notification
should be furnished to the Corporation by telephone, with written notification
as a follow-up thereto. Prompt notification is essential to avoid any delay in
redemption offer and loss of earnings. Please remember that a statutory
restriction exists on the Corporation and it would be unable to pay a dividend
to an ineligible holder after expiration of the 30-day repurchase period which
is statutorily available following such transfer.
ORGANIZATION
The Corporation was organized effective April 7, 1985 pursuant to a
Special Act of the Commonwealth [Acts of 1984, Chapter 482 as amended] of
Massachusetts under its chartered name "Co-operative Bank Investment Fund" and
does business under the name "Bank Investment Fund." The Special Act indicates
that the purpose of the Corporation is to hold, invest, reinvest and manage one
or more mutual investment funds, which shall include all property of the
Corporation, to be derived from voluntary subscription thereto by the Banks.
The Liquidity Fund commenced operations on October 12, 1988.
The Corporation is an open-end diversified management investment company
authorized to invest its assets in certain real estate mortgages, and a variety
of other investments, including direct obligations of the United States,
obligations guaranteed by the United States, obligations guaranteed by the
Federal National Mortgage Association, bonds and other evidences of
indebtedness of corporations, shares of common or preferred stock registered on
a national securities exchange or for which quotations are available through
the National Quotation Bureau, Inc. or a comparable service, or through a
national securities market established in conformance with Section 11A of the
Securities Act of 1934, and other debt and equity securities. The Liquidity
Fund will only invest in those securities described under "Investment Policy"
and "Investment Restrictions" elsewhere herein.
The business of the Corporation is conducted by a Board of Directors
elected by the Corporation's Incorporators and the Directors have investment
discretion relative to Corporation assets. The Incorporators of the Corporation
are the Directors of The Co-operative Central Bank, which is the statutory
reserve bank and insurer of deposits in excess of Federal deposit insurance
limitations for Massachusetts co-operative banks.
The Corporation operates pursuant to an exemption from the sections of
the Investment Company Act of 1940 which deal with a) voting rights of security
holders and b) the manner of sale of redeemable securities.
Only Massachusetts Co-operative Banks, Massachusetts Savings Banks,
Massachusetts Trust Companies, Federally Chartered Savings Banks and Savings
and Loan Associations with their principal place of business in Massachusetts,
The Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance
Company of Massachusetts and the National Cooperative Bank are currently
offered shares in the Fund. Such investors may purchase shares of beneficial
interest, which do not entitle the shareholders thereof to voting rights of any
nature, including investment policy matters.
DESCRIPTION OF FUND SHARES
The Corporation has no capital stock. Beneficial ownership in each of the
Corporation's funds is represented by shares of beneficial ownership in such
fund, as recorded in book entry form. Each share of beneficial interest in each
fund is equal in every respect to every other share of that fund. As the
Directors of the Corporation establish distinct investment funds, shares will
be issued in distinct classes and each share within each class will be equal in
every respect to every other share of that class.
The shares of beneficial ownership are no par, non-voting, with a stated
value of $1,000, issued in book entry form only. Investment and redemption of
shares is effected at the net asset value as described elsewhere herein. Shares
are recorded in whole and/or fractional shares, as applicable. Physical
certificates are not issued. Monthly statements are furnished to reflect share
balance and activity.
With regard to the absence of voting rights, management believes that
eligible investors are adequately protected because of a) regulation by the
Commissioner of Banks, b) the redeemable nature of the shares, c)
representation of co-operative bank investors in the election of Directors of
the Central Bank, who as Incorporators elect the Corporation's Directors, and
d) representation of savings bank investors by an advisor at such corporate
meetings of the Incorporators.
SUPERVISION AND REGULATION
As provided by Massachusetts statute [Chapter 482, Acts of 1984 as
amended] the Corporation is subject to the supervision of the Commissioner of
Banks of the Commonwealth of Massachusetts. Periodic reporting to the
Commissioner of Banks is also required by the same statute. The Corporation is
registered as an open-end diversified management investment company under the
Investment Company Act of 1940, as amended, and is subject to reporting
requirements thereunder.
INVESTMENT ADVISOR
The Corporation presently does not employ the services of any investment
advisory or management services company. Investment decisions for the Fund are
made by authorized officers of the Corporation, subject to approval or
ratification by its Board of Directors. The Corporation reserves the right at
any time in the future to appoint an investment advisor at any reasonable and
customary fee as may be agreed when, in the opinion of the Corporation
Directors, the use of such advisory or management services would improve Fund
performance.
TRANSFER AGENT
The Corporation maintains the records for the investment, redemption,
and/or transfer of Fund shares. The Corporation reserves its right at any time
in the future to appoint a separate transfer agent at any reasonable and
customary fee as may be agreed when, in the opinion of the Corporation
Directors, the use of such transfer service is necessary. The limited number of
shareholders and nature of Fund operation does not, at this time, justify the
use of a separate agent and would only be an extra or unnecessary expense.
OPERATING AND DISTRIBUTION EXPENSES
Normal expenses which may be borne by the Fund include, but are not
limited to: Director fees, salaries and wages, payroll taxes, employee
benefits, taxes, corporate fees, occupancy, furniture and equipment, data
processing, legal, auditing and accounting, telephone and postage, custodial
and other bank fees, preparation, printing and distribution of reports,
insurance, membership fees, organization, and other miscellaneous expenses.
The Corporation has adopted a plan of distribution pursuant to Rule 12b-1
of the Investment Company Act of 1940 (the "Plan") providing that the Fund will
pay certain expenses incurred by the Corporation which may be considered to be
primarily intended to result in the sale of shares in the Fund. The expenses
which may be incurred pursuant to the Plan include, without limitation, those
for the preparation, printing and distribution of written materials for other
than existing investors, preparation and distribution of advertising material
and sales literature, direct payments to sales personnel, and other similar
activities. The maximum expenditures which may be made pursuant to the Plan in
any year is .12 of 1% of the average daily net asset value of the Corporation
for such year. The Board of Directors of the Corporation has concluded that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
Expenditures of $85,890 (.04% of average net assets) pursuant to the
12b-1 plan were incurred in and for the year ended December 31, 1997: $939 for
advertising in trade journals and similar publications; $9,775 for printing and
mailing of offering circulars; $42,464 for compensation, payroll taxes and
benefits for personnel in sales and customer service; $13,583 for sponsorship
of annual subscriptions and other promotional materials; and $19,129 for other
plan expenses. Expenditures of $48,635 (.04% of average net assets--annualized)
pursuant to the 12b-1 plan were incurred in and for the six months ended June
30, 1998: $1,624 for advertising in trade journals and similar publications;
$4,675 for printing and mailing of offering circulars; $26,175 for
compensation, payroll taxes and benefits for personnel in sales and customer
service; $3,614 for sponsorship of annual subscriptions and other promotional
materials; and $12,547 for other plan expenses.
Because more than one fund will be operated by the Corporation, operating
expenses and expenses incurred pursuant to the Plan related directly to a
single fund operation will be charged directly to that fund. Common or indirect
expenses will be allocated among funds in accordance with the annual budget as
determined by the Board of Directors of the Corporation to be fair and
equitable or on such other basis as the Board of Directors of the Corporation
may determine from time to time to be fair and equitable. Operating expenses
paid or accrued to Bank Investment Fund--Fund One for the year ended December
31, 1997 and the six months ended June 30, 1998 were $39,900 and $9,000,
respectively.
EXCHANGE PRIVILEGE
Shares of the Fund may be exchanged for shares of another fund of the
Corporation on the basis of the respective net asset value of the shares
involved.
CUSTODIAN
The Corporation is required by statute to at all times employ a national
banking association located in the Commonwealth of Massachusetts, or a
Massachusetts state-chartered bank authorized to exercise trust powers, as the
Corporation's or Fund's custodian, to hold the securities owned by the
Corporation and any monies delivered by the Corporation's or Fund's
shareholders or due to the Corporation or Fund. Purchase and sale transactions
are effected through or by the custodian bank upon the instructions of the
Corporation.
The State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110, serves as custodian of the Fund's cash and investments, other than cash
and Federal funds sold. Investments held under custody include certificates of
deposit. The Fund also maintains cash and Federal fund balances with a number
of qualified national banks (located in Massachusetts) or Massachusetts state
chartered banks. The banks utilized have been determined by the officers and
directors of the Fund to have been qualified to be custodian banks themselves.
State Street Bank and Trust Company, the Fund's custodian, and other qualified
banks, as discussed above, may be used by the Fund for the placement of
short-term, usually overnight, funds in Federal funds sold.
YEAR 2000
The Fund has committed internal and external resources to ensure that
systems and applications are year 2000 compliant and has developed a plan and
timetable for implementation and testing therewith. This project is scheduled
to be completed in 1998.
MANAGEMENT OF THE FUND
The Incorporators of the Corporation are the Directors of The
Co-operative Central Bank which is the statutory reserve bank and insurer of
deposits in excess of Federal deposit insurance limitations for Massachusetts
co-operative banks. The Board of Directors of the Corporation is elected by the
Incorporators.
The Fund's primary investment officer is James L. Burns, Jr., President.
He has held this position since inception of the Fund in 1988. For more than 15
years prior to the inception of the Fund, he managed investment portfolios for
The Co-operative Central Bank and the State Street Bank and Trust Company.
Directors and Officers of the Corporation, together with information as
to their principal business occupations during the past five years, are shown
below:
<TABLE>
<S> <C>
James L. Burns, Jr., President President of The Co-operative Central Bank
and Chief Executive Officer 75 Park Plaza, Boston, MA 02116-3934
William F. Casey, Jr., Executive Vice President and Treasurer of The Co-operative
Executive Vice President Central Bank, 75 Park Plaza, Boston, MA 02116-3934
Susan L. Ellis, Vice President Vice President of The Co-operative Central Bank, 75 Park Plaza,
and Treasurer Boston, MA 02116-3934
Jeremiah J. Foley, Vice President Vice President of The Co-operative Central Bank, 75 Park Plaza,
and Clerk of the Corporation Boston, MA 02116-3934
Robert E. Haley, Vice President Vice President of Bank Investment Fund, 75 Park Plaza,
Boston, MA 02116-3934
Annemarie Lee, Assistant Vice President of The Co-operative Central Bank,
Vice President 75 Park Plaza, Boston, MA 02116-3934
Claire R. Bothwell, Director Chairman of the Board of the Ware Co-operative Bank,
Main Street, Ware, MA 01082
John T. Day, Director and Chairman of the Board of the Mt. Washington Co-operative
Chairman of the Board Bank, 430 W. Broadway, South Boston, MA 02127
Robert F. Day, Director President of The Needham Co-operative Bank,
1063 Great Plain Ave., Needham, MA 02192
Charles P. Hooker, Director Chairman of the Board of The Pittsfield Co-operative Bank,
70 South St., Pittsfield, MA 01202
Ronald E. Lestan President of The Walpole Co-operative Bank,
982 Main Street, Walpole, MA 02081
Walter A. Murphy, Director and Chairman of the Board of the Falmouth Co-operative Bank,
Clerk of the Board P.O. Box 567, Falmouth, MA 02541
John H. Pearson, Jr. President of Butler Bank--A Co-operative Bank,
10 George Street, Lowell, MA 01852
</TABLE>
PMN
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
BANK INVESTMENT FUND--LIQUIDITY FUND
BOSTON, MASSACHUSETTS
We have audited the accompanying statement of assets and liabilities of
Bank Investment Fund--Liquidity Fund, including the schedule of portfolio
investments, as of December 31, 1997, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the selected per share data and ratios
for each of the ten periods in the period then ended. These financial
statements and per share data and ratios are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodians. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of Bank Investment Fund--Liquidity Fund as of December 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the selected
per share data and ratios for each of the ten periods in the period then ended,
in conformity with generally accepted accounting principles.
/s/ PARENT, MCLAUGHLIN & NANGLE
Certified Public Accountants
January 30, 1998
BANK INVESTMENT FUND--LIQUIDITY FUND
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
(unaudited) (audited)
<S> <C> <C>
ASSETS:
INVESTMENTS, at cost which approximates value......... $ 248,332,053 $ 234,252,515
REPURCHASE AGREEMENTS................................. 8,750,000 --
INTEREST RECEIVABLE................................... 1,162,738 1,281,073
CASH.................................................. 949,021 188,563
--------------------------------
TOTAL ASSETS ..................................... 259,193,812 235,722,151
--------------------------------
LIABILITIES:
DIVIDENDS PAYABLE..................................... 462,337 456,766
ACCRUED EXPENSES...................................... 94,218 60,921
--------------------------------
TOTAL LIABILITIES ................................ 556,555 517,687
--------------------------------
NET ASSETS: (Equivalent to $1,000 per share for each
period based on 258,637.2573 and 235,204.4649 shares
of beneficial interest outstanding)................... $ 258,637,257 $ 235,204,464
================================
REPRESENTED BY:
Paid-in Capital ...................................... $ 258,637,257 $ 235,204,464
================================
</TABLE>
BANK INVESTMENT FUND--LIQUIDITY FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
---------------- -----------------
(unaudited) (audited)
<S> <C> <C>
INVESTMENT INCOME:
Interest income................................................ $ 7,707,493 $ 12,453,997
EXPENSES:
Compensation, payroll taxes and benefits--officers............. $ 57,888 $ 103,426
Compensation, payroll taxes and benefits--other................ 28,512 45,174
Distribution expenses.......................................... 48,635 85,890
Professional fees.............................................. 23,638 24,793
Occupancy...................................................... 18,200 31,800
Other general expenses......................................... 16,560 15,588
Bank service fees.............................................. 14,988 15,128
Equipment and data processing.................................. 11,997 12,245
Meetings and travel............................................ 7,082 11,140
Directors' fees................................................ 4,950 8,600
Printing and postage........................................... 3,200 5,715
Insurance expense.............................................. 1,125 2,796
--------------------------------
TOTAL EXPENSES ............................................ 236,775 362,295
--------------------------------
INVESTMENT INCOME--NET .................................... 7,470,718 12,091,702
--------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... $ 7,470,718 $ 12,091,702
================================
</TABLE>
BANK INVESTMENT FUND--LIQUIDITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year Ended Year Ended
June 30, 1998 December 31, 1997 December 31, 1996
---------------- ----------------- -----------------
(unaudited) (audited) (audited)
<S> <C> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Investment income--net............................ $ 7,470,718 $ 12,091,702 $ 12,774,375
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net............................ (7,470,718) (12,091,702) (12,774,375)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST--NET
INCREASE (DECREASE) ............................... 23,432,793 24,996,908 (34,942,957)
-----------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...... 23,432,793 24,996,908 (34,942,957)
NET ASSETS:
Beginning of period............................... 235,204,464 210,207,556 245,150,513
-----------------------------------------------------
End of period..................................... $ 258,637,257 $ 235,204,464 $ 210,207,556
=====================================================
</TABLE>
BANK INVESTMENT FUND--LIQUIDITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1998
(unaudited)
Obligations of Federal Agencies--14.8%
<TABLE>
<CAPTION>
Par Coupon Maturity Date Cost
------------ -------- ------------- ------------
<S> <C> <C> <C> <C>
Federal Farm Credit Bank $ 3,000,000 5.70% 11/03/98 $ 3,002,878
Federal Home Loan Bank 2,000,000 5.72 07/07/98 2,002,420
Federal Home Loan Bank 2,000,000 5.72 11/16/98 2,000,120
Federal Home Loan Mortgage
Corporation 5,000,000 5.39* 07/23/98 4,982,782
Federal Home Loan Mortgage
Corporation 5,000,000 5.40* 08/04/98 4,973,750
Federal National Mortgage
Association 5,000,000 5.71 09/09/98 5,001,797
Student Loan Marketing
Association 2,500,000 5.79 09/16/98 2,501,437
Student Loan Marketing
Association--Floater 14,000,000 5.351** 08/02/99 14,000,000
------------ ------------
$ 38,500,000 (Value $ 38,443,785) $ 38,465,184
------------ ------------
Certificates of Deposit--4.5%
Avon Cooperative Bank $ 250,000 5.50% 11/02/98 $ 250,000
Ben Franklin Savings Bank 1,000,000 5.50 07/31/98 1,000,000
Ben Franklin Savings Bank 300,000 5.65 12/28/98 300,000
Bank of Fall River,
a Cooperative Bank 500,000 5.50 07/22/98 500,000
Fidelity Cooperative Bank 500,000 5.50 07/29/98 500,000
Foxborough Savings Bank 250,000 5.60 07/16/98 250,000
Foxborough Savings Bank 200,000 5.50 09/30/98 200,000
Foxborough Savings Bank 300,000 5.50 12/01/98 300,000
Hyde Park Cooperative Bank 250,000 5.50 08/04/98 250,000
Lowell Cooperative Bank 200,000 5.50 08/06/98 200,000
Marlborough Cooperative Bank 250,000 5.75 07/02/98 250,000
Marlborough Cooperative Bank 250,000 5.85 09/30/98 250,000
Marlborough Cooperative Bank 500,000 5.60 01/27/99 500,000
Mechanics Cooperative Bank 500,000 5.50 12/28/98 500,000
Mt. Washington Cooperative Bank 600,000 5.60 07/13/98 600,000
Mt. Washington Cooperative Bank 450,000 5.45 12/17/98 450,000
Mt. Washington Cooperative Bank 300,000 5.55 02/25/99 300,000
NCB Savings Association 100,000 5.50 10/05/98 100,000
Pittsfield Cooperative Bank 500,000 5.50 07/03/98 500,000
Pittsfield Cooperative Bank 500,000 5.53 07/03/98 500,000
Pittsfield Cooperative Bank 500,000 5.50 08/03/98 500,000
Pittsfield Cooperative Bank 500,000 5.56 08/03/98 500,000
Pittsfield Cooperative Bank 500,000 5.50 09/03/98 500,000
South Shore Savings Bank 500,000 5.50 08/10/98 500,000
South Shore Savings Bank 1,000,000 5.50 08/26/98 1,000,000
South Shore Savings Bank 1,000,000 5.55 02/25/99 1,000,000
------------ ------------
$ 11,700,000 (Value $ 11,700,000) $ 11,700,000
------------ ------------
Commercial Paper--56.0%
Alabama Power & Light Co. $ 3,000,000 5.50%* 07/08/98 $ 2,996,333
Anheuser Busch Corp. 5,000,000 5.45* 07/09/98 4,993,187
Bank One Funding Corp. 2,000,000 5.53* 07/06/98 1,998,157
Bank One Funding Corp. 2,000,000 5.58* 07/15/98 1,995,350
Bank One Funding Corp. 2,900,000 5.53* 07/28/98 2,887,527
Bank One Funding Corp. 3,000,000 5.51* 08/21/98 2,976,123
Bell Atlantic Network Funding
Corp. 3,000,000 5.51* 07/06/98 2,997,245
Carnival Corp. 1,000,000 5.53* 07/27/98 995,852
Carolina Power & Light Co. 2,000,000 5.51* 07/17/98 1,994,796
Coca Cola & Co. 4,000,000 5.47* 07/22/98 3,986,629
Coca Cola & Co. 2,000,000 5.47* 07/22/98 1,993,315
Consolidated Natural Gas Co. 4,000,000 5.54* 07/10/98 3,993,845
Duke Energy Corp. 5,000,000 6.05* 07/01/98 4,999,160
Exxon Asset Management Co. 4,000,000 5.40* 07/14/98 3,991,600
Fleet Funding Corp. 5,000,000 5.54* 07/02/98 4,998,461
Fleet Funding Corp. 3,000,000 5.52* 07/10/98 2,995,400
Fleet Funding Corp. 2,000,000 5.52* 07/24/98 1,992,640
Ford Motor Credit Co. 5,000,000 5.50* 07/16/98 4,987,778
General Mills Inc. 5,000,000 6.00* 07/01/98 4,999,167
GTE Funding Inc. 3,092,000 5.52* 07/06/98 3,089,155
GTE Funding Inc. 3,000,000 5.52* 07/07/98 2,996,780
GTE Funding Inc. 2,000,000 5.52* 07/08/98 1,997,547
International Lease Corp. 2,000,000 5.46* 07/21/98 1,993,630
Kimberly-Clark Corp. 2,750,000 5.50* 07/10/98 2,745,799
Kimberly-Clark Corp. 2,470,000 5.48* 08/07/98 2,455,712
Lucent Technologies Inc. 2,120,000 5.49* 07/02/98 2,119,353
Lucent Technologies Inc. 4,000,000 5.50* 07/13/98 3,992,056
Lucent Technologies Inc. 3,000,000 5.49* 07/13/98 2,994,052
Merrill Lynch & Co. Inc. 5,000,000 6.10* 07/01/98 4,999,153
Merrill Lynch & Co. Inc. 2,000,000 5.51* 07/06/98 1,998,163
Merrill Lynch & Co. Inc. 2,000,000 5.58* 07/30/98 1,990,700
MetLife Funding Inc. 2,453,000 5.50* 07/13/98 2,448,128
MetLife Funding Inc. 4,000,000 5.53* 07/21/98 3,987,097
MetLife Funding Inc. 5,000,000 5.54* 07/15/98 4,988,458
National Rural Utilities Inc. 4,000,000 5.50* 08/10/98 3,974,944
National Rural Utilities Inc. 1,205,000 5.50* 08/25/98 1,194,691
Potomac Electric Power Inc. 4,000,000 5.49* 07/29/98 3,982,310
Receivables Captial Corp. 5,000,000 5.54* 08/14/98 4,965,375
Sherman-Williams Co. 1,575,000 5.49* 07/09/98 1,572,838
Sherman-Williams Co. 1,600,000 5.48* 07/27/98 1,593,424
Sherman-Williams Co. 2,000,000 5.50* 08/03/98 1,989,611
Sherman-Williams Co. 3,000,000 5.50* 08/12/98 2,980,292
USAA Capital Corp. 2,000,000 5.52* 07/14/98 1,995,707
USAA Capital Corp. 3,000,000 5.55* 07/28/98 2,987,050
USAA Capital Corp. 2,000,000 5.51* 07/17/98 1,994,796
USAA Capital Corp. 2,000,000 5.48* 07/08/98 1,997,564
Winn-Dixie Stores, Inc. 3,000,000 5.52* 08/11/98 2,980,680
Winn-Dixie Stores, Inc. 3,000,000 5.50* 08/25/98 2,974,333
------------ ------------
$145,165,000 (Value $144,745,994) $144,751,963
------------ ------------
Short-Term Corporate Bonds and Notes--15.3%
Asssociates Corp. of N.A. $ 3,000,000 5.29% 11/02/08 $ 2,997,117
Asssociates Corp. of N.A. 2,000,000 8.35 12/23/98 2,027,032
Avco Financial Corp. 2,000,000 7.25 07/15/99 2,029,791
Coca Cola Co. 1,500,000 7.875 09/15/98 1,506,545
Ford Motor Corp. 4,139,000 5.625 12/15/98 4,134,853
Ford Motor Corp. 530,000 5.625 01/15/99 530,345
GMAC Corp. 1,000,000 5.625 10/22/98 999,430
GMAC Corp. 1,500,000 6.20 12/07/98 1,502,026
GMAC Corp. 4,594,000 7.75 01/15/99 4,646,724
GMAC Corp. 1,000,000 8.50 01/15/99 1,014,614
IBM Corp. 1,500,000 5.40 01/27/99 1,499,757
International Lease Finance Corp. 1,000,000 7.68 11/02/98 1,005,991
International Lease Finance Corp. 2,000,000 5.75 01/15/99 2,000,503
International Lease Finance Corp. 1,500,000 5.99 01/15/99 1,503,560
International Lease Finance Corp. 1,500,000 6.55 02/01/99 1,509,001
International Lease Finance Corp. 2,000,000 5.96 07/07/99 2,007,343
Morgan Stanley Co. 4,000,000 6.125 01/05/99 4,005,771
Morgan Stanley Co. 1,000,000 7.44 06/08/99 1,015,494
Pepsi Co. 1,000,000 7.75 10/01/98 1,005,310
Transamerica Financial Corp. 2,500,000 6.80 03/15/99 2,519,932
------------ ------------
$ 39,263,000 (Value $ 39,462,900) $ 39,461,139
------------ ------------
Federal Funds Sold--5.4%
Par Coupon Maturity Date Cost
------------ -------- ------------- ------------
BankBoston $ 4,254,751 5.50% 07/01/98 $ 4,254,751
U. S. Trust Co. 9,699,016 5.563 07/01/98 9,699,016
------------ ------------
$ 13,953,767 (Value $ 13,953,767) $ 13,953,767
------------ ------------
(Value $248,306,446) $248,332,053
------------
Repurchase Agreement--3.4%
$8,750,000 Repurchase Agreement dated June 30, 1998 with
PaineWebber, Inc. due July 1, 1998 with respect
to $8,785,000 U.S. Treasury Notes 5.50% due
February 28, 2003--maturity value $8,751,337 for
an effective yield of 5.50%.
(Value $ 8,750,000) $ 8,750,000
------------
Total Investments--99.4% (Value $257,056,446) $257,082,053
------------
Other assets in excess of liabilities--0.6% 1,555,204
------------
Net assets--100% $258,637,257
============
</TABLE>
BANK INVESTMENT FUND--LIQUIDITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
Obligations of Federal Agencies--11.1%
<TABLE>
<CAPTION>
Amortized
Par Coupon Maturity Date Cost
------------ -------- ------------- ------------
<S> <C> <C> <C> <C>
Federal Home Loan Bank $ 5,000,000 5.87% 01/30/98 $ 5,000,000
Federal National Mortgage
Association 2,000,000 5.625 02/12/98 2,000,000
Federal National Mortgage
Association 2,000,000 5.74 06/09/98 2,000,000
Student Loan Marketing
Association 3,000,000 5.82 01/23/98 3,000,000
Student Loan Marketing
Association--Floater 14,000,000 5.649** 08/02/99 14,000,000
------------ ------------
$ 26,000,000 (Value $ 25,977,500) $ 26,000,000
------------ ------------
Certificates of Deposit--4.8%
Avon Cooperative Bank $ 250,000 5.625% 05/01/98 $ 250,000
Ben Franklin Savings Bank 1,000,000 5.50 01/30/98 1,000,000
Ben Franklin Savings Bank 300,000 5.65 06/26/98 300,000
Bank of Fall River,
a Cooperative Bank 500,000 5.75 01/21/98 500,000
Fidelity Cooperative Bank 500,000 5.50 01/28/98 500,000
Foxborough Savings Bank 250,000 5.75 01/15/98 250,000
Foxborough Savings Bank 200,000 5.50 04/01/98 200,000
Foxborough Savings Bank 300,000 5.75 06/01/98 300,000
Haymarket Cooperative Bank 500,000 5.50 02/02/98 500,000
Haymarket Cooperative Bank 500,000 5.55 05/01/98 500,000
Hyde Park Cooperative Bank 250,000 5.50 02/03/98 250,000
Lowell Cooperative Bank 200,000 5.50 02/05/98 200,000
Marlborough Cooperative Bank 500,000 5.50 01/27/98 250,000
Marlborough Cooperative Bank 250,000 5.75 07/02/98 250,000
Marlborough Cooperative Bank 250,000 5.85 09/30/98 500,000
Mechanics Cooperative Bank 500,000 6.00 06/26/98 500,000
Mt. Washington Cooperative Bank 600,000 5.70 01/14/98 600,000
Mt. Washington Cooperative Bank 300,000 5.55 02/25/98 300,000
Mt. Washington Cooperative Bank 450,000 5.65 06/18/98 450,000
NCB Savings Bank 100,000 5.55 04/06/98 100,000
Pittsfield Cooperative Bank 500,000 5.60 03/27/98 500,000
Pittsfield Cooperative Bank 500,000 5.50 04/27/98 500,000
South Weymouth Savings Bank 500,000 5.50 02/09/98 500,000
Weymouth Savings Bank 1,000,000 5.75 01/23/98 1,000,000
Weymouth Savings Bank 1,000,000 5.50 02/25/98 1,000,000
------------ ------------
$ 11,200,000 (Value $ 11,200,000) $ 11,200,000
------------ ------------
Commercial Paper--54.5%
Anheuser Busch Corp. $ 5,000,000 5.68%* 01/16/98 $ 4,987,378
Anheuser Busch Corp. 5,000,000 5.64* 01/21/98 4,983,550
American Tel. & Tel. Corp. 5,000,000 5.63* 02/23/98 4,957,775
Baltimore Gas & Electric Corp. 6,000,000 5.67* 01/07/98 5,993,385
Bank One Funding Corp. 5,000,000 5.78* 01/29/98 4,976,719
Bank One Funding Corp. 4,179,000 5.80* 02/06/98 4,154,088
Cargill Inc. 3,000,000 5.55* 01/09/98 2,995,838
Cargill Inc. 4,000,000 5.59* 01/16/98 3,990,062
Carolina Power & Light Co. 5,200,000 5.73* 01/26/98 5,178,481
Coca-Cola Co. 6,000,000 5.68* 01/08/98 5,992,427
Co nsolidated Natural Gas Co. 6,000,000 6.05* 01/09/98 5,990,925
Ford Motor Corp. 4,000,000 5.63* 01/05/98 3,996,872
General Electric Co. 5,000,000 5.68* 01/12/98 4,990,533
General Electric Co. 6,000,000 5.64* 02/10/98 5,961,460
Gillette Co. 3,000,000 5.70* 01/06/98 2,997,150
Kimberly-Clark Corp. 3,000,000 5.68* 01/29/98 2,986,273
Lucent Technologies, Inc. 5,000,000 5.65* 01/08/98 4,993,722
Merrill Lynch & Co., Inc. 3,000,000 5.81* 01/08/98 2,996,127
Merrill Lynch & Co., Inc. 6,000,000 5.72* 01/13/98 5,987,607
Metropolitan Life Insurance Inc. 5,000,000 5.75* 02/09/98 4,968,056
National Rural Utilities, Inc. 4,000,000 5.70* 02/18/98 3,968,967
PHH Corp. 3,000,000 5.73* 02/17/98 2,977,080
PHH Corp. 5,000,000 5.73* 02/20/98 4,959,412
Sherman-Williams Co. 4,000,000 5.70* 01/15/98 3,990,500
USAA Capital Corp. 5,000,000 5.71* 02/03/98 4,973,036
USAA Capital Corp. 3,000,000 5.69* 02/24/98 2,973,921
Vermont American Corp. 6,000,000 5.71* 01/02/98 5,998,097
Vermont American Corp. 4,000,000 5.55* 01/06/98 3,996,300
------------ ------------
$128,379,000 (Value $127,915,741) $127,915,741
------------ ------------
Short-Term Corporate Bonds and Notes--12.6%
American Financial Corp. $ 1,000,000 7.48% 03/02/98 $ 1,003,127
Chase Manhattan Bank 3,300,000 6.625 01/15/98 3,301,254
Coca-Cola Co. 1,000,000 7.875 09/15/98 1,014,013
First Union Bank Corp. 1,500,000 6.75 01/15/98 1,500,571
Ford Motor Corp. 4,139,000 5.625 12/15/98 4,130,386
Ford Motor Corp. 1,000,000 6.45 02/11/98 1,000,866
Ford Motor Corp. 2,000,000 9.70 06/10/98 2,034,135
GE Capital Corp. 1,000,000 7.95 02/02/98 1,002,020
GMAC Corp. 1,000,000 5.625 10/22/98 998,525
GMAC Corp. 1,500,000 6.20 12/07/98 1,504,319
International Lease Finance Corp. 750,000 8.125 01/15/98 750,733
International Lease Finance Corp. 3,000,000 5.87 02/13/98 3,000,450
International Lease Finance Corp. 1,000,000 7.68 11/02/98 1,014,667
Morgan Stanley & Co. 3,000,000 6.125 01/05/99 3,007,009
Northern Trust Co. 1,500,000 9.15 03/13/98 1,510,114
Pepsico Inc. 200,000 6.125 01/15/98 200,030
Transamerica Financial Corp. 500,000 6.75 01/15/98 500,180
Upjohn & Co. 2,050,000 6.25 02/02/98 2,051,117
------------ ------------
$ 29,439,000 (Value $ 29,527,941) $ 29,523,516
------------ ------------
Federal Funds Sold--16.8%
BankBoston $ 10,000,000 5.50% 01/02/98 $ 10,000,000
Boston Safe Deposit and Trust Co. 9,065,859 5.25 01/02/98 9,065,859
Fleet Bank, N.A. 10,000,000 5.50 01/02/98 10,000,000
U.S. Trust Co. 10,547,400 5.563 01/02/98 10,547,400
------------ ------------
$ 39,613,259 (Value $ 39,613,259) $ 39,613,259
------------ ------------
Total Investments--99.6% (Value $234,234,441) $234,252,515
------------
Other assets in excess of liabilities--0.4% 951,949
------------
Net assets--100% $235,204,464
============
</TABLE>
BANK INVESTMENT FUND--LIQUIDITY FUND
NOTES TO FINANCIAL STATEMENTS
(Information for the six months ended June 30, 1998 is unaudited)
NOTE 1. Organization:
The Bank Investment Fund (the "Corporation") was organized effective
April 7, 1985 pursuant to a Special Act of the Commonwealth of Massachusetts
(Acts of 1984, Chapter 482, as amended,) under the chartered name "Co-operative
Bank Investment Fund" and does business under the name "Bank Investment Fund."
The Corporation is registered with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Corporation invests and manages two mutual
funds derived from the voluntary subscriptions made by eligible banks.
Liquidity Fund (the "Fund") is a no-load, diversified, open-end money
market fund, which commenced operations on October 12, 1988. Fund shares are
currently offered to the following eligible investors: Massachusetts
Co-operative Banks, Massachusetts Savings Banks, Massachusetts Trust Companies,
Federally Chartered Savings Banks and Savings and Loan Associations with their
principal place of business in Massachusetts, The Co-operative Central Bank
Reserve Fund, The Savings Bank Life Insurance Company of Massachusetts and the
National Cooperative Bank.
Because more than one fund will be operated by the Corporation, operating
expenses related directly to a single fund operation will be charged directly
to that fund. Common or indirect expenses will be allocated among funds in
proportion to the ratio of the net assets of each fund to total net assets of
the Corporation or on such other basis as the Board of Directors of the
Corporation may determine from time to time to be fair and equitable.
NOTE 2. Significant Accounting Policies:
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles which require the use of management estimates.
The policies described below are followed consistently by the Fund in the
preparation of its financial statements.
Accounting for investments:
Security transactions are accounted for on the trade date (date the order
to buy or sell is executed). The Fund's investment securities are carried at
their amortized cost, which does not take into account unrealized appreciation
or depreciation. Interest income is accrued on all debt securities on a daily
basis and includes accretion of original issue discount.
Repurchase agreements:
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry System
or to have segregated within the custodian bank's vault, all securities held as
collateral in support of repurchase agreement investments. Additionally,
procedures have been established by the Fund to monitor, on a daily basis, the
market value of each repurchase agreement's underlying investments to ensure
the existence of a proper level of collateral.
Federal income taxes:
The Corporation's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
Dividends to shareholders:
The Fund distributes all of its net investment income on a daily basis.
Dividends are declared on each day that the Fund is open for business.
Investors receive dividends in additional shares unless they elect to receive
cash. Payment is made in additional shares at the net asset value on the
payable date or in cash, on a monthly basis. Distributions of realized net
capital gains, if any, are declared and paid once each year and are reinvested
in additional shares at net asset value or, at each shareholder's option, paid
in cash.
Net asset value:
The net asset value per share is determined daily by dividing the value
of all investment securities and all other assets, less liabilities, by the
number of shares outstanding. The Fund has established procedures reasonably
designed to stabilize the net asset value per share at $1,000.
NOTE 3. Shares of Beneficial Interest:
Chapter 482 of the Acts of 1984, as amended by Chapter 244, Acts of 1986,
of the Commonwealth of Massachusetts permits the directors to issue an
unlimited number of full and fractional shares of beneficial interest (no par,
non-voting, with a stated value of $1,000 per share).
Transactions in shares of beneficial interest are summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended Year Ended
June 30, 1998 December 31, 1997 December 31, 1996
--------------------------- --------------------------- ---------------------------
(unaudited) (audited) (audited)
Shares Amount Shares Amount Shares Amount
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sold...................... 655,910.9930 $655,910,993 763,373.3134 $763,373,313 784,710.5650 $784,710,565
Issued in reinvestment of
dividends................ 4,384.4444 4,384,444 7,740.8565 7,740,856 7,679.4060 7,679,406
---------------------------------------------------------------------------------------
660,295.4374 660,295,437 771,114.1699 771,114,169 792,389.9710 792,389,971
Redeemed.................. 636,862.6444 636,862,644 746,117.2619 746,117,261 827,332.9277 827,332,928
---------------------------------------------------------------------------------------
Net increase (decrease)... 23,432.7930 $ 23,432,793 24,996.9080 $ 24,996,908 (34,942.9567) $(34,942,957)
=======================================================================================
</TABLE>
NOTE 4. Distribution Expenses:
The Fund has adopted a Plan of Distribution (the "Plan"), pursuant to
rule 12b-1 under the Investment Company Act of 1940, to use the assets of the
Fund to finance certain activities relating to the distribution of its shares
to investors. The Plan authorizes the Fund to pay for the cost of preparing,
printing, and distributing offering circulars to prospective investors, direct
payments to sales personnel, for certain other direct or indirect marketing
expenses, and for the cost of implementing and operating the Plan. Plan
expenses may not exceed an amount computed at an annual rate of .12 of 1% of
the Fund's average daily net assets. The Fund paid or accrued $85,890 (.04% of
average net assets) and $48,635 (.04% of average net assets--annualized)
pursuant to the Plan for the year ended December 31, 1997 and the six months
ended June 30, 1998, respectively.
NOTE 5. Pension Plans:
The Fund is a participating employer in the Co-operative Banks Employees
Retirement Association, and has, in effect, a Defined Contribution Plan
covering all eligible officers and employees. Under the Plan, contributions by
employees are doubled by the Fund, up to a maximum of 10% of each employee's
salary. Effective January 1, 1989, the Fund also participates in a Defined
Benefit Plan, which covers all eligible employees, and is funded currently. The
Fund's contributions to these multi-employer plans for the year ended December
31, 1997 and the six months ended June 30, 1998 were $17,325 and $10,846,
respectively.
NOTE 6. Transactions With Related Parties:
The Incorporators of the Corporation are the Directors of The
Co-operative Central Bank, which is the statutory reserve bank and insurer of
deposits in excess of Federal deposit insurance limitations for Massachusetts
co-operative banks. The Board of Directors of the Corporation is elected by the
Incorporators.
The Fund reimburses The Co-operative Central Bank and/or the Bank
Investment Fund--Fund One for its proportionate share of expense items used in
common. All fees and expenses for the Fund are estimated and accrued daily.
Annual operating expenses were .16% and .17% of the Fund's net assets for the
year ended December 31, 1997 and the six months ended June 30, 1998,
respectively. As reimbursement of allocated expenses, the Fund paid or accrued
$39,900 and $9,000 to the Bank Investment Fund--Fund One, for the year ended
December 31, 1997 and the six months ended June 30, 1998, respectively.
The following sheets are perforated for your removal
and use in the establishment or updating of your account.
BANK INVESTMENT FUND
LIQUIDITY FUND
ACCOUNT APPLICATION FORM
REGISTRATION. The account should be registered as follows:
DATE:__________________
NAME: ________________________________________________________________________
POST OFFICE BOX: _____________________________________________________________
STREET ADDRESS: ______________________________________________________________
CITY/TOWN: ______________________________________________ STATE: _____________
ZIP CODE: ____________________________________ TELEPHONE NUMBER: _____________
TAX ID NUMBER ________________________________________________________________
INITIAL INVESTMENT: $ _______________________________________(Minimum $50,000)
MONTHLY CASH DIVIDENDS
[ ] Check if dividends are to be paid monthly in cash. Otherwise dividends
will be AUTOMATICALLY REINVESTED in additional shares of the Fund.
TELEPHONE REDEMPTION ORDERS
Redemption proceeds will be sent ONLY to the bank or trust company listed
below, for credit to the investor's account. The investor hereby authorizes the
BANK INVESTMENT FUND to honor telephone or written instructions, without a
signature guarantee, for redemption of Fund shares. THE FUND and its Agents
will not be liable for any loss, expense or cost arising out of such
transactions.
Enclose a specimen copy of your check or deposit slip (marked VOID) for
the bank account listed below. To facilitate the wiring of your redemption
proceeds the indicated bank should be a commercial bank.
Name of Bank:
Bank Account No.______________________________________________________________
Bank Address: _______________________________________________________________
street
___________________________________________________ MA ________
city zip
Name on Account: _____________________________________________________________
Bank Routing/Transit No.: ____________________________________________________
AUTHORIZED PERSONS--TELEPHONE INVESTMENTS AND REDEMPTIONS
Authorized person Title Initials
----------------- ----- --------
1. ___________________________________________________________________________
2. ___________________________________________________________________________
3. ___________________________________________________________________________
4. ___________________________________________________________________________
5. ___________________________________________________________________________
CORPORATE RESOLUTIONS
We have enclosed with this application form the necessary corporate
resolutions to authorize corporate officers to make wire or cash payment
transfers to the Bank Investment Fund and to purchase, sell or exchange shares
of beneficial ownership in the Bank Investment Fund.
SIGNATURE AND CERTIFICATION
We have received and read the Offering Circular, and agree to its terms
and conditions by signing below. By the execution of this Application, the
undersigned represent and warrant that they are duly authorized to sign this
Application and to purchase or redeem shares of the Fund on behalf of the
investor.
The undersigned hereby certify under penalty of perjury that the above
Taxpayer Identification Number is correct and that the investor is not subject
to backup withholding.
We further certify and agree that the certifications, authorizations and
appointments in this document will continue until the Bank Investment Fund
receives actual written notice of any change thereof.
Signature _______________________________ Title ______________________________
Signature _______________________________ Title ______________________________
Two signatures are required, one of which should be the Secretary or Clerk of
the corporation.
SIGNATURE GUARANTEE
In order to facilitate telephone redemptions, you must have your
signature(s) on this application guaranteed by a commercial bank or stock
exchange member firm.
______________________________________________________________________________
Name of Bank or Investment Dealer
______________________________________________________________________________
By (signature of authorized person)
______________________________________________________________________________
Title (authorized person)
CERTIFICATE OF CORPORATE RESOLUTION
For Massachusetts Co-operative Banks, Massachusetts Savings Banks,
Massachusetts Trust Companies, Federally Chartered Savings Banks and Savings
and Loan Associations with their principal place of business in Massachusetts,
The Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance
Company of Massachusetts and the National Cooperative Bank only. This form
authorizes the individuals below to redeem shares by telephone or exchange.
The undersigned is Secretary or Clerk of _______________________________
and hereby certifies that the following individuals: (name of corporation)
Name Title
---- -----
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
are duly authorized by corporate resolution or otherwise to act on behalf of
the eligible bank in connection with its ownership of shares in the Bank
Investment Fund, Liquidity Fund and in particular to give instructions for the
purchase, sale or exchange of any said shares and to execute any necessary
forms in connection therewith.
The Bank Investment Fund will consider this authorization to be in full
force and in effect until otherwise notified in writing.
IN WITNESS WHEREOF, the undersigned has executed this Certificate the
_______________ day of ___________________ 19__________.
______________________________________________________________________________
Secretary or Clerk
FINANCIAL STATEMENTS
As required by applicable statutes, semi-annual financial statements are
furnished to the shareholders, the Commissioner of Banks and the Securities and
Exchange Commission.
ADDITIONAL INFORMATION
The Bank Investment Fund (the "Corporation") has filed with the
Securities and Exchange Commission in Washington, D.C., under its chartered
name the "Co-operative Bank Investment Fund" a registration statement on Form
N-1A (together with all amendments and exhibits thereto, hereinafter referred
to as the "Registration Statement") under the Investment Company Act of 1940.
This Offering Circular does not contain all of the information in the
Registration Statement. The Registration Statement may be examined at the
office of the Securities and Exchange Commission in Washington, D.C.
The Corporation will provide, without charge to any person to whom this
Offering Circular is delivered on the written or oral request of any such
person, a copy of the Registration Statement and the additional information
contained therein and documents relating to certain exemptions from the
Investment Company Act of 1940 (see ORGANIZATION). Written requests should be
directed to the Bank Investment Fund, 75 Park Plaza, Boston, MA 02116-3934.
Telephone requests may be directed to 617-695-0415.
NOTES
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No person has been authorized in connection with
this Offering to give any information or to make any
representation not contained in this Offering Circular
and, if given or made, such information or
representation must not be relied upon as having been
authorized by the Fund. This Offering Circular does not
constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby to
any person to whom it is unlawful to make such offer.
TABLE OF CONTENTS
Page
----
Financial Highlights........................... i
Fee Table...................................... ii
Summary........................................ 1
Investment Objectives.......................... 1
Investment Policy.............................. 2
Investment Restrictions........................ 3
Eligible Banks or Investors.................... 3
Statutory Limitation on Investments............ 3
Dividends...................................... 4
Net Asset Value................................ 4
Investors' Accounts............................ 5
Taxes.......................................... 5
Auditors and Legal............................. 5
Certain Risk Factors to Consider............... 5
Capital Gains.................................. 5
Yield Performance.............................. 5
How Shares of Fund are Purchased............... 6
How Shares of Fund are Redeemed................ 7
Transfer Restrictions.......................... 7
Organization................................... 8
Description of Fund Shares..................... 8
Supervision and Regulation..................... 9
Investment Advisor............................. 9
Transfer Agent................................. 9
Operating and Distribution Expenses............ 9
Exchange Privilege............................. 10
Custodian...................................... 10
Year 2000...................................... 11
Management of the Fund......................... 11
Independent Auditor's Report................... 13
Financial Statements........................... 14
Investments.................................... 17
Account Application Forms...................... 31
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BANK INVESTMENT FUND
LIQUIDITY FUND
-------------------
OFFERING CIRCULAR
-------------------
August 25, 1998
-------------------
75 Park Plaza
Boston, MA 02116-3934
617-695-0415
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