SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-lA
1940 Act File No. 811-4421
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
CO-OPERATIVE BANK INVESTMENT FUND
d/b/a Bank Investment Fund
(Exact Name of Registrant as Specified in Charter)
75 Park Plaza
Boston, Massachusetts 02116-3934
(Address of Principal Executive Offices)
(617) 695-0415
(Registrant's Telephone Number)
JAMES L. BURNS, JR.
President and Chief Executive Officer
Bank Investment Fund
75 Park Plaza
Boston, Massachusetts 02116-3934
(Name and Address of Agent for Service)
Copies to:
ROBERT E. McLAUGHLIN, ESQ.
Steptoe & Johnson
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036
Dated: March 31, 1998
(86 Pages, including Exhibits)<PAGE>
PART A
Items 1-3.
Not applicable, as this Registration Statement is filed
only under the Investment Company Act of 1940 (the 1940 Act")
and does not relate to the registration of any securities of the
Registrant under the Securities Act of 1933.
Item 4. General Description of Registrant; Risk Factors
(a) (I) The Registrant is a corporation organized
effective April 7, 1985 pursuant to a special act of the
Commonwealth of Massachusetts (Massachusetts Acts of 1984,
Chapter 482, as amended by Massachusetts Acts of 1986, Chapter
244, Massachusetts Acts of 1990, Chapter 277, Massachusetts
Acts of 1991, Chapter 285, and Massachusetts Acts of 1993,
Chapter 147) (collectively, the "Charter"). The
Registrant's chartered name is the Co-operative Bank Investment
Fund, and the Registrant does business under the name Bank
Investment Fund. The Registrant commenced active operations on
October 18, 1985. The Registrant was established to provide one
or more mutual investment funds for Massachusetts cooperative
banks and other institutions as described in Item 6(a). From
October 18, 1985 through October 12, 1988, the Registrant's
operations were performed through a single investment fund. On
October 12, 1988, the Registrant organized a second fund as a
money market fund. The Registrant is regulated by the
Massachusetts Commissioner of Banks.
The Registrant is an open-end management company.
The Registrant operates as a diversified management
company, but reserves the freedom of action to change
its portfolio concentration to that of a nondiversified
management company.
(ii) The Registrant's current operation is
performed through a no-load, diversified, open-end
investment fund ("Fund One") and a no-load,
diversified, open-end money market fund (the "Liquidity
Fund") (Fund One and the Liquidity Fund are hereinafter
referred to collectively as the "Funds"). The
objective of each of the Funds is to maximize current
income consistent with liquidity of assets and safety
of principal. The fundamental restrictions and
investment policies of the Registrant for Fund One and
Liquidity Fund are described in the following two
paragraphs.
The Registrant has a policy of investing
Fund One's assets principally in (A) cash on hand and
due from banks, (B) balances payable upon demand or
certificates of deposits due from a Massachusetts trust
company or a national banking association or banking
company, (C bonds and other direct obligations of the
United States or obligations 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, which when
purchased was rated A-1 by Standard & Poor's
Corporation ("Standard & Poor's) or Prime-1 by
Moody's Investors Service, Inc.("Moody's") or, if not
rated, have been determined under procedures adopted
and supervised by the Registrant's Board of Directors
to be of comparable high quality, (E) certain federal
agency obligations which have unexpired terms of five
years or less, to include obligations of, or
instruments issued by and fully guaranteed by, the
Federal National Mortgage Association, debentures,
bonds or other obligations issued by a Federal Home
Loan Bank or consolidated Federal Home Loan Bank
debentures or bonds issued by the Federal Home Loan
Bank Board under the Federal Home Loan Bank Act,
debentures issued by the federal central bank for
co-operatives, or consolidated debentures issued by
said Central Bank and the 12 regional Banks for
co-operatives under the Farm Credit Act of 1933
or any successors thereto, collateral trust
debentures or other similar obligations issued by
any federal intermediate credit bank or consolidated
debentures or other similar obligations issued by
the 12 federal intermediate credit banks under the
Federal Farm Loan Act, farm loan bonds issued by any
federal loan bank under the Federal Farm Loan Act,
and promissory notes representing domestic farm labor
housing loans authorized by Section 514 of the
Federal Housing Act of 1949, as amended by the Federal
Housing Act of 1961,(F) repurchase agreements involving
government securities, (G) debt instruments, to include,
Federal funds and/or deposits in the Federal Home
Loan Bank, deemed eligible for state banks legal
liquidity by the Commonwealth of Massachusetts or the
Commissioner of Banks, and (H) certain short-term
money market instruments. Fund One's investment
policy restricts it from investing more than 25% of
its assets in the securities of any particular
industry other than U.S. Government or Federal
agency securities. Fund One's portfolio of
investments was comprised of items (A), (B), (E), and
(F) as of December 31, 1997.
The Registrant has a policy of investing
the Liquidity Fund's assets principally in
(A) cash on hand and demand deposits 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, acceptances; (D) bonds and other
direct obligations of the United States or
obligations unconditionally guaranteed as to
principal and interest by the United States,
and issues of U.S. Government agencies and
instrumentalities which are established under
the authority of an act of Congress; (E) bonds
and notes of the Commonwealth of Massachusetts
or any political subdivision thereof; which when
purchased, are rated A-1 by Standard & Poor's
Corporation ("Standard & Poor's) or Prime-1 by
Moody's Investors Service, Inc.("Moody's") or,
if not rated, have been determined under
procedures adopted and supervised by the
Registrant's Board of Directors to be of
comparable high quality,(F)repurchase
agreements; (G) commercial paper which, when
purchased, is rated A-1 by Standard & Poor's
Corporation ("Standard & Poor's) 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
Registrant's Board of Directors to be of
comparable high quality, including variable
amount master demand notes and short-term
obligations of corporations; (H)Second Tier
securities to the extent permissible by Rule
2a-7 of the Investment Company Act of 1940
(no more than 5% of the Funds 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) 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,
and supervised 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
and short-term obligations of corporations;
(I) any other debt instrument to include,
Federal funds and/or deposits in the Federal
Home Loan Bank, deemed eligible for state banks
legal liquidity by the Commonwealth of
Massachusetts or the Commissioner of Banks
or the Commissioner of Banks; and (J) certain
short-term money market instruments. All of
the investments for the Liquidity Fund must
have a maturity or remaining maturities of
397 days or less; except for, variable rate
instruments, which provide for adjustment of
interest rates on set dates(currently daily or
weekly) and which upon such adjustment is
expected to have a market values that
approximate their par values, may have a final
maturity in excess of 397 days, but for
purposes of calculating the average maturity
will be deemed to have a maturity equal to (1)
the period remaining until the next
readjustment of the interest rate if it is an
instrument issued or guaranteed by the United
States Government or any agency thereof, or (2)
the longer of the period remaining until the
next readjustment of the interest rate or the
period remaining until the principal amount can
be recovered through demand. The Liquidity Fund
will maintain a dollar-weighted average
maturity of 90 days or less. The Liquidity
Fund may invest more than 25% of its assets in
the banking industry. The Liquidity Fund's
portfolio of investments was comprised of items
(A), (B), (D), (G), (I) and (J) as of December
31, 1997.
The Registrant's board of directors has
established procedures designed to stabilize the per
share net asset value of shares of the Liquidity Fund
at $1,000.
Under repurchase agreements entered into by the
Registrant, the Registrant purchases government
securities from a seller subject to an unconditional
agreement to sell the same securities or other assets
back to the seller at a higher price. If a purchaser
under such a repurchase agreement does not assure its
interest by taking possession of a sufficient amount of
assets, or the market value of such assets does not
remain sufficient, the purchaser is at risk in the
event that the seller under such agreement does not
fulfill its obligations under the agreement. It is the
Registrant's policy to minimize risk under such
agreements by (a) having its custodian take possession
of securities purchased under such agreements and
(b) determining that the market value of the securities
purchased under such an agreement is adequate to secure
its interest at the time of purchase and over the life
of the agreement.
The Funds may enter into reverse repurchase
agreements to meet short term liquidity needs of the
Funds. 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.
Because holders of the shares of beneficial
interest issued by the Registrant do not have voting
rights (see Item 4 below), the objectives of the
Registrant's Funds may be changed without a vote of
those holders.
The Registrant may establish in the future other
distinct investment funds with investment objectives
different from those which the Registrant has adopted
for the Funds. The Registrant's Charter, however,
restricts the Registrant's authority to invest its
assets to certain specified types of securities and
other property. See Item 13 of Part B, "Investment
Objectives and Policies."
(b) No response is required.
(c) (I) Lack of Management Control of the Registrant
by the Investors. The shares of beneficial interest
issued by the Registrant do not provide holders of
such shares with any voting rights. The Registrant's
Board of Directors is elected by the Registrant's
incorporators, who are the directors of The
Co-operative Central Bank (the "Central Bank"), which
is the statutory reserve bank and excess deposit
insurer for Massachusetts co-operative banks. The
Registrant operates pursuant to an exemption from
those provisions of the 1940 Act which require that
shares of stock issued by a registered investment
management company be voting shares.*
(ii) Limited Transferability of Shares. The
Registrant's shares may not be issued to any persons
other than those certain institutions identified as
eligible investors under Item 6(a) below. The
Registrant's shares may not be transferred by such
____________________
*On October 17, 1985 the Securities and Exchange Commission
issued an order pursuant to Section 6(c) of the 1940Act exempting
the Registrant from Sections 13(a), 15(a), 16(a), and (b), 18(I),
22(d) and (e), 24(d), and 32(a) (2) and (3) of the 1940Act (File)
No. 812-6154). This order was amended by the Commission on July
16, 1986. On September 30, 1992 and December 21, 1993, the
Commission issued further orders exempting the Registrant from
Sections 13(a), 15(a), 16(a) and (b), 18(I), 22(d), and 13(a) (2)
and (3) of the 1940 Act (File Nos. 812-7847 and 812-8616,
respectively.
investors to any persons other than other eligible
investors(except that the shares may be pledged to
such other persons, or may be transferred to the
Central Bank). See Item 6, "Capital Stock and Other
Securities." See also the footnote accompanying Item
4(c)(I) above.
(iii) Officers and Employees Not Full-Time. The
executive officers of the Registrant have significant
duties as officers and employees of the Central Bank,
and are not full-time employees of the Registrant.
However, these officers devote to the Registrant's
affairs such time as is reasonably necessary to
conduct its business.
Item 5. Management of the Funds
(a) The Registrant's charter provides that its Board
of Directors shall have full control of the business of the
Registrant, except for certain powers retained by the
Registrant's incorporators. In particular, the Board of
Directors has authority to invest the Registrant's assets,
subject to the limitations of the Registrant's Charter.
(b) The Registrant does not currently employ the
services of an investment advisor. Investment decisions for the
Registrant are made by authorized officers of the Registrant,
pursuant to authority delegated by the Registrant's Board of
Directors. The Registrant reserves the right to appoint an
investment advisor at any reasonable and customary fee as may be
agreed when, in the opinion of the Registrant's Board of
Directors, the use of such services would improve the Funds'
performance.
(c) The primary investment officer of the Funds
is James L. Burns, Jr., President. He has held this
position since inception of the Registrant in 1985.
For more than 15 years prior to the inception of the
Registrant, he managed investment portfolios for the
Co-operative Central Bank and the State Street Bank
and Trust Company, Boston, Massachusetts.
(d) The Registrant does not currently utilize the
services of any person (other than its directors,
officers or employees) to provide significant
administrative or business affairs management services
to the registrant.
(e) The Registrant does not utilize the services of a
transfer agent or a dividend paying agent.
(f) The Registrant has reimbursed the Central Bank for
its proportionate share of expenses for facilities or services
used in common by both the Registrant and the Central Bank, such
as office rent, furniture and equipment. All fees and expenses
for the Registrant are estimated and accrued daily. Actual
operating expenses for the year ended December 31, 1997 were
.453% of average net assets for Fund One and .161% of average net
assets for the Liquidity Fund. Operating expenses of $36,800 were
paid or accrued by Fund One as reimbursement to the Central Bank
during the year ended December 31, 1997.
The Liquidity Fund paid $39,900 to Fund One for its
proportionate share of office rent, employee compensation,
equipment and data processing, insurance and other general
expenses in the year ended December 31, 1997.
Expenses directly related to the operation of one of
the Funds are charged to that Fund. Common and indirect expenses
are allocated between the 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.
(g) The Registrant does not engage in, or contemplate
engaging in, any of the practices referred to in subsection (g)
of item 5 of Form N-lA.
Item 5A. Not applicable, as this Registration Statement is filed
only under the 1940 Act and does not relate to the registration
of any securities of the Registrant under the Securities Act of
1933.
Item 6. Capital Stock and Other Securities
(a) The Registrant has no capital stock; beneficial
ownership of the Registrant is represented by shares of
beneficial interest divided into two classes, the Fund One Class
and the Liquidity Fund Class. Each share within each such class
is equal in every respect to every other share of that class.
The shares of beneficial interest in the Registrant do not
provide holders of such shares with any voting rights. The right
to elect the Registrant's board of directors is vested in the
Registrant's incorporators, who are the directors of the Central
Bank.
Under the Registrant's Charter, its shares may not be
issued to any persons other than Massachusetts co-operative
banks, Massachusetts savings banks, the Co-operative Banks
Employees Retirement Association, the Central Bank, the
Massachusetts Co-operative Bank League, The Savings Bank Life
Insurance Company of Massachusetts, the National Consumer
Co-operative Bank, Massachusetts trust companies, credit
unions incorporated in Massachusetts and federally chartered
credit unions, savings banks and savings and loan associations
with their principal places of business in Massachusetts and
affiliates of other eligible investors in the Registrant.
Notwithstanding these charter provisions, the Registrant is not
currently offering its shares to any credit unions, the
Co-operative Banks Employees Retirement Association, or the
Massachusetts League of Community Banks (formerly called the
Massachusetts Co-operative Bank League), nor is it offering its
shares to any affiliate of an eligible investor other than a
wholly-owned subsidiary of an otherwise eligible investor.
Moreover, shares of the Liquidity Fund are not being offered to
any affiliate of any eligible investor, but rather is offered to
eligible banking institutions only. The Registrant's shares may
not be transferred by eligible investors to any persons other
than such eligible investors (except that the shares may be
pledged to such other persons by such investors, or may be
transferred to the Central Bank). If the Registrant's shares are
acquired by any other person by operation of law or by
foreclosure upon the pledge of such shares (or through transfer
in the case of the Central Bank), and if such condition is known
to the Registrant, no dividend may be paid on such shares after
30 days from the date of such acquisition. Furthermore, the
Registrant must offer to repurchase the shares from such person
at net asset value of the shares, less any dividends paid
thereon, after said thirty days. If such offer is refused, the
redemption price which the holder of such shares may obtain in
any subsequent repurchase of those shares by the Registrant is
limited to the net asset value of the shares as last determined
during said thirty days. See Item 8, "Redemption or Repurchase,"
as to eligible shareholders, redemption rights.
(b) As of the date of filing of this Registration
Statement, no person controls the Registrant within the meaning
of subsection (b) of Item 6 of Form N-lA.
(c) There is no authority in the Registrant's charter
or by-laws for modification of the rights of the holders of the
Registrant's shares of beneficial interest.
(d) The Registrant does not have any authority to issue
any securities other than its shares of beneficial interest.
(e) Shareholder inquiries may be made to the Registrant
in writing addressed to Bank Investment Fund, 75 Park Plaza,
Boston, Massachusetts 02116-3934. Telephone inquiries may be
made by calling (617) 695-0415.
(f) The Registrant's policy is to declare dividends from
net income on each day the Funds are open for business and to
make payments thereof to shareholders on a monthly basis.
Distributions of realized net capital gains, if any, are declared
and paid once a year.
Unless an investor elects in writing to receive
dividends on a cash basis, dividends and distributions are
credited to each investor's investment account as additional
shares in the Registrant of the same class as the shares on which
the dividend was paid, at net asset value on the date of payment.
An investor wishing to change the method by which it receives
dividends and distributions must notify the Registrant in writing
at least one week before the effective date of such change.
(g) The Registrant has and intends to continue to meet
the requirements of Subchapter M of the Internal Revenue Code for
regulated investment companies with respect to Fund One and
intends to meet such requirements with respect to the Liquidity
Fund and, therefore, will not be liable for federal income taxes
to the extent that its earnings are distributed.
Each of the Funds must meet several requirements to
maintain its status as a regulated investment company. Among
these requirements are that at least 90% of its gross income be
derived from dividends, interest, payment with respect to
securities loans or other disposition of securities and certain
other income; that at the close of each quarter of its taxable
year at least 50% of the value of its assets consist of cash and
cash items, government securities, securities of other regulated
investment companies and, subject to certain diversification
requirements, other securities; and that no more than 30% of its
gross income be derived from sales of securities held for less
than three months.
Dividends derived from interest, together with
distributions of any short-term capital gains, are taxable as
ordinary income whether or not reinvested in shares of the
Registrant. Dividends of the Registrant will not qualify for the
85% dividends received provisions of the Internal Revenue Code
for corporations. Investors in the Registrant may be
proportionately liable for taxes on income and gains of the
Registrant. The Registrant will inform its shareholders of the
amount and nature of any income or gains.
Item 7. Purchase of Securities Being offered
(a) Not applicable.
(b) (I) The Registrant continuously offers shares of
each class to all eligible investors and such shares
(except shares of which the redemption price has become
fixed under special conditions set forth in the
Charter, as described under Item 6(a), "Capital Stock
and Other Securities") are sold and redeemed by each
Fund only at prices equal to the net asset value of the
shares of such Fund's class outstanding. The net asset
value per share for each Fund is determined by adding
the value of all securities and other assets held by
the applicable Fund, deducting liabilities of such
Fund and dividing by the number of shares of such
Fund's class outstanding.
With respect to Fund One, investments in
United States debt securities and agency
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 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. Prices for
securities with respect to which market quotations are
not readily available will be determined on the basis
of fair market value as determined in good faith by the
Registrant's Board of Directors. The Liquidity Fund's
investment securities are valued based on their
amortized cost without taking into account unrealized
appreciation or depreciation. The Registrant's Board
of Directors has established procedures to stabilize
the net asset value per share of the Liquidity Fund at
$1,000.00.
(ii) The net asset value per share for each Fund
is determined as of the close of the New York Stock
Exchange on days when the Registrant's custodian bank
is open for business. The price at which an order is
effected is based on the next calculation of net asset
value after the order is placed.
(iii)-(v) No sales charge will be made and no
sales load will be involved in the distribution of any
class of the Registrant's shares.
(c) There are no special purchase plans or methods
contemplated by the Registrant.
(d) The minimum initial investment in the Registrant
is $50,000 (although in certain cases the Registrant may require
a larger minimum investment in accordance with the requirements
of applicable securities laws). Additional investments may be
made in any amount in excess of $50,000.
(e) The Registrant does not pay any "trail fees" as
defined in subsection (e) of Item 7 of Form N-lA.
(f) (I) The Registrant, by action of its Board of
Directors, has adopted a plan under Rule 12b-1 of
the 1940 Act for the payment of distribution expenses
for the Funds (the "Plan"). The Plan provides for
quarterly review by the Registrant's Board of Directors
of the amount of and purposes for which expenditures
were made under the Plan and an additional, more
extensive annual review in determining whether the Plan
will be continued. By its terms, continuation of the
Plan from year to year is contingent on an annual
approval (1) by a majority of the Registrant's
Directors and (2) by a majority of the Directors who
are not "interested persons" as defined in the 1940 Act
and who have no direct or indirect financial interest
in the operation of the Plan or any related agreements
(the Directors described in (1) and (2) being herein
referred to as the "Plan Directors"). The Plan may be
terminated at any time by vote of a majority of the
Plan Directors.
(ii) The principal types of activities for
which payments will be made pursuant to the Plan
are: (1) Fees for membership in trade associations,
including associations in which investors eligible to
invest in one or more of the Funds are members; (2)
Sponsorship of program activities at conferences
attended by eligible investors, or attendance at such
conferences by the Registrant's personnel, and related
travel, meal and other expenses; (3) meals and other
expenses, including travel expenses, related to
business meetings with investors and potential
investors in one or more of the Funds; (4) Personal
items marked with the name or logo of the Registrant
for distribution to investors or eligible investors in
the Registrant; (5) Printing and postage expenses for
written materials to be sent to eligible investors who
are not shareholders in the Registrant; (6)
Subscription to publications for re-distribution to
eligible investors of the Registrant; (7) Formulation
and implementation of marketing and promotional
activities; (8) compensation to officer responsible
for sales and customer service and (9) any other
activities of a substantially similar nature which may
result in the sale of Shares, either directly or
through other persons with which the Registrant may
enter into agreements related to the Plan in
accordance with Rule 12b-1.
(iii) There are no unreimbursed expenses
incurred in any previous plan year and carried over to
future plan years.
The Plan is applicable to both Fund One and the
Liquidity Fund. Any expenses incurred pursuant to the Plan which
directly relate to the sale or distribution of shares of either
Fund, e.g., printing and mailing of offering materials, will be
allocated to and paid by the applicable Fund. Expenses which
do not directly relate to the sale and/or distribution of shares
of either Fund will be allocated between the 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.
Item 8. Redemption or Repurchase
(a) The Registrant will redeem shares of either class
from shareholders of record, without any charge, at the per share
net asset value next determined for such class after a request
for redemption is received. Redemption may be requested, if
authorized in advance and in writing, by telephone request to the
Registrant. Shareholders also may make redemption requests by
signed written request addressed to the Registrant. When the
amount to be redeemed is at least $5,000, the Registrant will
wire transfer the amount redeemed to a bank account designated by
the shareholder.
Payment for shares redeemed will be made by the
Registrant within one business day, except as noted in Item 8(d)
below. Redemption of shares or payment may be suspended at times
(a) when the New York Stock Exchange is closed, (b) when trading
on said Exchange is restricted, (c) when an emergency exists as a
result of which disposal by the Registrant of securities owned by
it is not reasonably practicable or it is not reasonably
practicable for the Registrant to fairly determine the value of
the net assets of the Funds, or (d) during any period when the
Securities and Exchange Commission, by order, so permits;
provided that applicable rules and regulations of the Securities
and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist.
The Liquidity Fund reserves the freedom of action to
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.
(b) The Registrant has not established any procedure
whereby a shareholder can sell its shares to the Registrant
through a broker/dealer.
(c) The Registrant has not established any procedure
which would permit it to redeem shares involuntarily in accounts
below a certain number or value of shares.
(d) The Registrant reserves the right to delay payment
upon request for redemption up to seven business days after any
investment that has been made with uncollected funds.
Item 9. Pending Legal Proceedings
There are no legal proceedings pending to which the
Registrant is a party.
PART B
STATEMENT OF ADDITIONAL INFORMATION
CO-OPERATIVE BANK INVESTMENT FUND
d/b/a Bank Investment Fund
This Statement of Additional Information is not a
prospectus, and should be read in conjunction with Part A of the
Registrant's Registration Statement, dated March 31, 1998 under
the Investment Company Act of 1940 of which this Statement of
Additional Information is a part. A copy of the entire
Registration Statement, including Part A, may be obtained upon
request from the Bank Investment Fund, 75 Park Plaza, Boston,
Massachusetts 02116-3934, (617) 695-0415.
Dated: March 31, 1998
Item 11. Table of Contents
Item No. Title Page No.
12 General Information and History 15
13 Investment objectives and Policies 15
14 Management of the Fund 19
15 Control Persons and Principal Holders 23
of Securities
16 Investment Advisory and Other Services 24
17 Brokerage Allocation 27
18 Capital Stock and Other Securities 27
19 Purchase, Redemption and Pricing of 28
Securities Being Offered
20 Tax Status 30
21 Underwriters 30
22 Calculations of Yield Quotations of 30
Money Market Funds
23 Financial Statements 31
<PAGE>
Item 12. General Information and History
The Registrant commenced active operations as an
investment company on October 18, 1985. General information
regarding the Registrant is included under Item 4 of Part A of
the Registration Statement of which this Statement of Additional
Information is a part.
Item 13. Investment Objectives and Policies
(a) The fundamental investment policies and
restrictions of the Registrant followed in connection with the
Registrant's operations are described under Item 4(a) of Part A
of the Registration Statement of which this Statement of
Additional Information is a part.
The Registrant may establish other distinct investment
funds with investment policies which differ from the policies to
be followed with regard to the Registrant's current operations
through the Funds. The Registrant is, however, limited in its
discretion to establish investment policies by certain provisions
of its Charter, which restrict the Registrant's authority to
invest its assets to the following powers:
(1) to make and acquire loans insured by the
Federal Housing Administrator which are secured by
mortgages on real property located within
Massachusetts, or to service such loans;
(2) to invest in debt obligations of the United
States and Massachusetts, certain debt obligations of
other states, certain debt obligations of Canada, debt
obligations of certain other nations (subject to an
aggregate three percent limitation), most federal
agency obligations, debt obligations of Massachusetts
municipalities and certain debt obligations of the
municipalities of other states;
(3) to invest in bonds and other evidences of
indebtedness registered on a national securities
exchange, or for which price quotations are available
through publications of The National Quotation Bureau,
Inc. or a comparable service, or through a national
securities market established in accordance with
Section 11A of the Securities Exchange Act of 1934, or
securities commonly known as 'money market"
instruments, including, but not limited to, commercial
paper, banker's acceptances, certificates of deposit,
repurchase agreements entered into with a bank and
repurchase agreements with entities other than banks,
provided that the term of such agreements may not be in
excess of three business days;
(4) to invest in shares of common stock or
preferred stock, provided that, as regards common
stock, such stock is registered on a national
securities exchange, and, as regards preferred stock,
the common stock of the corporation issuing or having
issued such preferred stock, is so registered;
(5) to invest in any shares of common stock or
preferred stock, other than those registered on a
national securities exchange, for which quotations are
available through publications of The National
Quotation Bureau, Inc. or any comparable service, or
through a national securities market.
The Registrant is not authorized to, and does not,
invest in shares of common or preferred stock as described in
paragraph (4) and (5) above in either Fund One or Liquidity Fund.
The Registrant's authority to invest in the shares of
common or preferred stock described in paragraph (5) above is
limited by its Charter to 10% of the Registrant's total assets.
Furthermore, the Registrant's Charter provides that no
more than 5% of the Registrant's assets may be invested in the
securities of any one issuer except for: (I) direct obligations
of the United States; (ii) obligations unconditionally guaranteed
by the United States; (iii) obligations of, or instruments issued
by and fully guaranteed by, the Federal National mortgage
Association; (iv) debentures, bonds or other obligations issued
by a Federal Home Loan Bank or consolidated Federal Home Loan
Bank debentures or bonds issued by the Federal Home Loan Bank
Board under the Federal Home Loan Bank Act; (v) debentures issued
by the central bank for co-operatives, or consolidated debentures
issued by said central bank and the 12 regional banks for co-
operatives under the Farm Credit Act of 1933 or any successors
thereto; (vi) collateral trust debentures or other similar
obligations issued by any federal intermediate credit bank or
consolidated debentures or other similar obligations issued by
the 12 federal intermediate credit banks under the Federal Farm
Loan Act; (vii) farm loan bonds issued by any federal loan bank
under the Federal Farm Loan Act; and (viii) promissory notes
representing domestic farm labor housing loans authorized by
Section 514 of the Federal Housing Act of 1949, as amended by the
Federal Housing Act of 1961.
Fund One's investment policy restricts it from
investing more than 25% of its assets in the securities of
any particular industry other than U.S. Government or Federal
agency securities.
The Liquidity Fund may invest more than 25% of its
assets in the banking industry through Certificates of Deposits
and Federal Funds sold in the ordinary course of its business.
(b) (1) The Registrant does not have any authority to
issue any securities, including senior securities, other than the
shares of beneficial interest which will be sold to eligible
investors pursuant to the Registrant's Charter.
(2) The Registrant has no power under its
Charter or otherwise to engage in short sales, purchases on
margin, or the writing of put or call options.
(3) The Registrant may borrow money under its
Charter, provided that the term of such borrowing may not be in
excess of three business days. This authority is designed to
meet short-term liquidity needs of the Registrant which might
otherwise require liquidation of portfolio assets. Any such
borrowing, including reverse repurchase agreements, would be
limited to borrowing allowable under Section 18 of the 1940 Act
and applicable regulations promulgated thereunder.
(4) The Registrant has no power under its
Charter to underwrite securities of other issuers, or to acquire
securities that must be registered under the Securities Act of
1933 before they may be offered or sold to the public.
(5) As described in Item 4 of Part A of the
Registration Statement of which this Statement of Additional
Information is a part, the investment policy for the Registrant's
operation of the Funds is to maintain investments principally in
assets which are eligible for inclusion in the reserve account
which must be maintained by Massachusetts co-operative banks
under Section 22 of Chapter 170 of the Massachusetts General
Laws.
(6) As indicated above under Item 13(a)(1)
"Investment Objectives and Policies," the Registrant's Charter
allows the Registrant to make and acquire certain real estate
mortgage loans. The Registrant does not currently intend to
exercise such power.
(7) The Registrant has no power under its
Charter to engage in the purchase or sale of commodities or
commodity contracts.
(8) Other than the securities which are of the
nature excepted from Item 13(b)(8) of Form N-lA, the Registrant
does not make loans to other persons, except that the Registrant
may make short-term loans of portfolio securities to
broker/dealers collateralized by securities received from such
broker/dealers of like quality and value of which the Registrant
will take possession.
(9) Fundamental investment policies and
restrictions of the Registrant for Fund one and Liquidity Fund,
followed in connection with the Registrant's operations, are
described under Item 4(a) of Part A of the Registration Statement
of which this Statement of Additional Information is a part. The
Registrant does not treat any other policy as a matter of
"fundamental policy" pursuant to Section 8(b)(3) of the 1940 Act.
(c) The Registrant does not have any significant
investment policies other than as described above and in Item 4
of Part A of the Registration Statement of which this Statement
of Additional Information is a part.
(d) The portfolio turnover ratio of Fund One for the
year ended December 31, 1997 was 25.9% as compared to 49.3% in
1996. Portfolio purchase and sale activity was lower in 1997
than 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.The
portfolio turnover ratio of Fund One for the year ended
December 31, 1996 was 49.3%. Portfolio transactions in 1996
were based upon yield curve opportunities in addition to
reinvestment of maturities and called securities together
with normal response to share investment and redemption
activity.
As described in Item 4(a)(ii) of Part A of the
Registration Statement of which this Statement of Additional
Information is a part, all of the investments for the Liquidity
Fund must have a remaining maturity of 397 days or less and the
Liquidity Fund will maintain a dollar weighted average maturity
of 90 days or less. Due to the short-term nature of such a
portfolio, investments are expected to be held to maturity, in
most instances, except when redemption, market conditions, or
other liquidity needs warrant sales in advance of maturity,
except for, variable rate instruments which provide for
adjustment of interest rates on set dates (currently daily or
weekly) and which upon such adjustment can reasonably be expected
to have a market value that approximates its par value may have a
final maturity in excess of 397 days, but for purposes of
calculating the average maturity will be deemed to have a
maturity equal to (1) the period remaining until the next
readjustment of the interest rate if it is an instrument issued
or guaranteed by the United States Government or any agency
thereof, or (2) the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand.
Item 14. Management of the Fund
(a)
(1) (2) (3)
Position(s)
Name Held with Principal Occupation(s)
and Address Registrant during past 5 years
James L. Burns, Jr. President and President and Chief
75 Park Plaza Chief Execu- Executive Officer of the
Boston, MA 02116-3934 tive officer Registrant and President
(since November 1991) and
Executive Vice President
(from February 1973 to
October 1991) of The
Co-operative Central
Bank, Boston,
Massachusetts
William F. Casey, Jr. Executive Executive Vice President
75 Park Plaza Vice President of the Registrant and
Boston, MA 02116-3934 Executive Vice President
(since November 1991),
Financial vice President
(from May 1980 to October
1991) and Treasurer of
The Co-operative Central
Bank, Boston,
Massachusetts
Susan L. Ellis Vice President Vice President of
75 Park Plaza and Treasurer The Co-operative Central
Boston, MA 02116-3934 Bank, Boston,
Massachusetts, and
Vice President of the
Registrant, and (since
March 1990) Treasurer
of the Registrant
Jeremiah J. Foley Vice President Vice President of the
75 Park Plaza and Clerk of Registrant and Vice
Boston, MA 02116-3934 the Corpora- President, and (since
tion October 1990) Clerk of
The Co-operative Central
Bank, Boston,
Massachusetts
(a) (Cont'd)
(1) (2) (3)
Position(s)
Name Held with Principal Occupation(s)
and Address Registrant during past 5 years
Robert E. Haley Vice President Vice President of the
75 Park Plaza Registrant since August
Boston, MA 02116-3934 1990
Annemarie Lee Vice President Vice President (since
75 Park Plaza December 1993) and
Boston, MA 02116-3934 Assistant President of
the Registrant,
(1987-1993), and employed
in various capacities
since 1979 with The
Co-operative Central
Bank, Boston,
Massachusetts
Claire R. Bothwell Director Chairman of the Board
P.O. Box 849 the Ware Co-operative
Ware, MA 01082 Bank, Ware, Massachusetts
John T. Day Director and Chairman of the Board
430 W. Broadway Chairman of of Mount Washington
S. Boston, MA 02127 the Board Co-operative Bank,
S. Boston, Massachusetts
Robert F. Day Director President of The Needham
1063 Great Plain Ave. Co-operative Bank, Need-
Needham, MA 02192 ham, Massachusetts
Charles P. Hooker Director Chairman of the Board of
70 South Street Pittsfield Co-operative
Pittsfield, MA 01202 Bank,
Pittsfield, Massachusetts
Frederic D. Legate Director President of The Sandwich
100 Old King's Highway Co-operative Bank,
Sandwich, MA 02563 Sandwich, Massachusetts
(a) (Cont'd)
(1) (2) (3)
Position(s)
Name Held with Principal Occupation(s)
and Address Registrant during past 5 years
Walter A. Murphy Director and Chairman of the Board of
P.O. Box 557 Clerk of the Falmouth Co-Operative
Falmouth, MA 02541 Board Bank,
Falmouth, Massachusetts
Charles G. Peterson Director Member of the Board of The
1010 Washington St. Braintree Co-operative
S. Braintree, MA 02184 Bank, S. Braintree,
Massachusetts
(b) Not applicable.
(c) The following table sets forth, for each of the
three highest paid officers and directors of the Registrant whose
total direct or indirect remuneration from the Registrant
exceeded $60,000 and for all directors and officers of the
Registrant as a group, all direct and indirect remuneration paid
or accrued by the Registrant for services in all capacities
during the year ended December 31, 1997.
(1) (2) (3) (4)
Name of Person, Aggregate Pension or Estimated
Position Compensation Retirement Annual
From Registrant Benefits Accrued Benefits
(1) As Part of Upon(2)
Fund Expenses Retirement
__________________________________________________________________
Claire R. Bothwell
Director $ 3,000 0 0
John T. Day
Director and Chairman
of the Board 4,000 0 0
Robert F. Day
Director 4,000 0 0
Charles P. Hooker
Director 4,000* 0 0
Frederic D. Legate
Director 3,000* 0 0
Walter A. Murphy
Director and Clerk of
the Board 4,100 0 0
Charles G. Peterson
Director 4,100 0 0
James L. Burns, Jr.
President and Chief
Executive Officer 81,730 3,360 107,655
William F. Casey, Jr.
Executive Vice President 51,000 3,957 99,250
Susan L. Ellis
Vice President 57,250 5,725 128,003
Robert E. Haley
Vice President 105,696 10,500 76,853
Officers and $388,209 $30,175 $621,138
Directors
as a Group
(thirteen
persons
including
the above)
__________________________
(1) Includes Directors fees; does not include health and
hospitalization insurance benefits provided to all salaried
employees of the Registrant pursuant to plans which do not
discriminate in favor of officers and directors; Does not
include remuneration paid by the Co-operative Central Bank
for services provided to such Bank.
(2) Includes all estimated benefits accrued with respect to
the Co-operative Banks Employees' Retirement Association (the
retirement association for the Central Bank, the Registrant,
Massachusetts co-operative banks, and certain other
institutions), whether attributable to the Central Bank or
the Registrant.
* The above figures are deferred compensation totaling $7,000.
_______________________________
Item 15. Control Persons and Principal Holders of Securities
(a) No person is in a control relationship with the
Registrant.
(b) As of February 28, 1998 the following five (5)
investors of Fund One and one investor of Liquidity Fund
owned of record 5% or more of the shares of beneficial interest.
The shares of beneficial interest do not provide the holders of
such shares with any voting rights.
% of ownership,
both beneficially
Holder and of record
Fund One
The Co-operative Central Bank 14.03%
Boston, Massachusetts
Needham Co-operative Bank
Needham, Massachusetts 10.13%
Pittsfield Co-operative Bank
Pittsfield, Massachusetts 6.68%
Mt. Washington Co-operative Bank
S.Boston, Massachusetts 5.96%
United Co-operative Bank
W. Springfield, Massachusetts 5.79%
Liquidity Fund
MassBank for Savings
Melrose, Massachusetts 8.95%
(c) The directors and officers of the Registrant are
not eligible to hold the equity securities of the Registrant; the
Registrant's Charter limits its eligible shareholders to certain
Massachusetts banks and certain other institutions. The
directors are also directors and/or officers of co-operative
banks which own beneficial interests in shares of the Funds.
Item 16. Investment Advisory and Other Services
(a)-(b) The Registrant does not currently utilize the
services of an investment advisor. Investment decisions for the
Registrant are made by authorized officers of the Registrant,
subject to authority delegated by the Registrant's Board
of Directors. The Registrant reserves the right to appoint an
investment advisor at any reasonable and customary fee as may be
agreed when, in the opinion of the Registrant's Board of
Directors, the use of such services would improve the Funds'
performance.
(c)-(d) See Item 5(e) of Part A of the Registration
Statement of which this Statement of Additional Information is
apart for a discussion of the Registrant's reimbursement
arrangement with the Central Bank in connection with operating
expenses paid by the Central Bank on behalf of the Registrant.
(e) No person other than a director, officer or
employee of the Registrant furnishes advice to the Registrant
with respect to investments.
(f) See Item 7(f) of Part A of the Registration
Statement of which this Statement of Additional Information is a
part for a discussion of the Plan adopted by the Registrant
pursuant to which it will incur expenses related to the
distribution of each class of Shares. The expenditures to be
made pursuant to the Plan may not exceed an amount calculated at
the rate of .12% per annum of the average daily net assets of
each of the Funds with respect to direct expenses and of both of
the Funds with respect to indirect expenses.
(I) The Registrant spent $242,878 ($156,988
Fund One and $85,890 Liquidity Fund) in the
year ended December 31, 1997 for the following
activities indicated under the Plan:
(A) $1,906 and $439 for advertising in
trade journals and similar publications for
Fund One and Liquidity Fund which the
Registrant determines are likely to be read
by representatives of eligible investors;
(B) $9,583 and $9,775 for printing and
mailing the offering materials for Fund
One and Liquidity Fund to eligible
investors which are not currently owners
of shares of such Funds;
(C, D and F) No amounts were spent for the
activities described in Item 16(f)(I) (C, D
and F) of the instructions to Form N-lA; and
(E) $86,214 and $42,464 for compensation,
payroll taxes and benefits to officer
responsible for sales and customer service;
(G-1) $13,951 and $6,871 for sponsorship of
annual subscriptions on behalf of
participating investors to IDC Financial
Publishing, Inc.;
(G-2) $13,627 and $6,712 for other
promotional material;
(G-3) $15,546 and $7,657 for sponsorship of
and/or attendance at conferences and
conventions of banking and other groups
including eligible investors as members or
participants; and
(G-4) $15,257 and $11,472 for other related
expenses (telephone, travel, etc.).
(ii) No interested person of the Registrant or
director of the Registrant who is not an
interested person of the Registrant has or will
have any direct or indirect financial
interest in the operation of the Plan, except
that compensation, payroll taxes and other
benefits to an officer responsible for sales
and customer service are deemed by the
Registrant to be expenses related to the
distribution of the Registrant's shares and
counted toward the limits of the Plan.
(iii) The Registrant is required by applicable
state statute to distribute offering materials
and periodic reports to all entities which are
eligible investors of the Funds. The
Registrant believes that the investors in the
Funds will benefit from expenditures made to
ensure that the Funds are operated in
accordance with applicable state law and from
the spread of the Funds, operating expenses
over a larger pool of Fund assets resulting from
increased subscriptions to the Funds.
(g) The portfolio securities of the Registrant are held
by a commercial bank pursuant to a custodian agreement.
(h) The Registrant's custodian is State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.
This custodian holds cash and investments, other than Federal
funds sold, and investments held under custody include
certificates of deposit. The Fund maintains Federal funds sold
balances with qualified national banks located in Massachusetts
and Massachusetts state chartered banks, including State Street
Bank and Trust Company. While the banks utilized have been
determined by the officers and directors of the Fund to qualify
as custodian banks themselves, the Fund acts as self custodian
for Federal funds sold.
The Registrant's independent public accountant is
Parent, McLaughlin & Nangle, Certified Public Accountants, Inc.,
176 Federal Street, Boston, Massachusetts 02110. This firm
functions as the Registrant's auditors in the preparation of
annual financial statements required by federal and state law,
and provides general accounting services to the Registrant.
The Registrant has also made arrangements with Parent
McLaughlin & Nangle to increase the audit scope of their 1998
engagement and thereafter to include the confirmation of its
federal funds sold position at least three times during the
fiscal year, at least two of which shall be chosen by such
accountants without prior notice to the Fund, in accordance
with paragraph (f) of Rule 17f-2.
(I) Not applicable.
Item 17. Brokerage Allocation
(a) Transactions in portfolio securities are effected,
by or through broker/dealers chosen by the Registrant.
Securities are received, delivered or exchanged by the
Registrant's custodian bank in connection with such transactions
upon written instructions received from such brokers or
representatives of the Registrant. The Registrant has to date
purchased and sold securities at prices reflecting broker/dealer
markup and for which no separate commission has been paid.
Information regarding the amount of broker/dealer markups are not
provided by broker/ dealers and it is not possible to calculate
the aggregate amount of such markups; however, the Registrant
monitors securities prices available from a number of
broker/dealers to ensure that competitive prices for securities
purchases are obtained.
(b) Not applicable.
(c) The Registrant selects broker/dealers on the basis
of prior experience of the Registrant's management with various
broker/dealers and monitors the reliability and quality of their
services to ensure that services rendered are comparable, and
that securities prices paid and commissions paid, if any, are
competitive, with those of other qualified broker/dealers.
(d) Not applicable.
(e) Not applicable.
Item 18. Capital Stock and Other Securities
(a) (I) Section 3 of the Registrant's Charter provides
that the Registrant will have no capital stock;
beneficial ownership of the Registrant is represented
by shares of beneficial interest without par value
divided into Fund One Class shares and Liquidity Fund
Class shares. Such shares are referred to as the
Registrant's shares.
(ii) (A) The declaration of dividends is in the
discretion of the Registrant's Board of Directors,
subject to certain limitations specified in the
Registrant's Charter.
(B) For the reasons stated in the response to Item
6, "Capital Stock and other Surplus," of Part A of the
Registration Statement of which this Statement of
Additional Information is a part, there are no
securities of the Registrant having voting rights.
(C) All shares of each class of the Registrant's
shares have equal rights upon any liquidation to the
assets of the Fund for which such class of shares was
issued.
(D) Holders of the Registrant's shares do not have
pre-emptive rights.
(E) Holders of the Registrant's shares do not have
any conversion rights.
(F) See Item 8, "Redemption or Repurchase," of Part
A of the Registration Statement of which this Statement
of Additional Information is a part for a discussion of
the redemption provisions applicable to the
Registrant's shares.
(G) There are no sinking fund provisions applicable
to the Registrant's shares.
(H) Holders of the Registrant's shares have no
liability to further calls or to assessments by the
Registrant.
(b) Not applicable.
Item 19. Purchase, Redemption and Pricing of Securities Being
Offered
(a) See Item 7(b) of Part A of the Registration
Statement of which this Statement of Additional Information is a
part as to the manner in which the Registrant's shares are
offered to eligible investors.
(b) The Registrant's shares are offered and sold
pursuant to a private offering to eligible investors. The
offering price of the shares of each Fund's class is the net
asset value per share of that Fund's shares as of the date of
purchase of such shares. The net asset value per share for each
class of the Registrant's shares is determined by the Registrant
as of the close of trading on the New York Stock Exchange
(currently 4:00 p.m. New York time) on days when the Registrant's
custodian bank is open for business. The net asset value
per share for each Fund is computed by taking the value of all
assets of the applicable Fund, subtracting its liabilities, and
dividing by the number of shares of such Fund's class
outstanding.
With respect to Fund One, investments in United States
government and Federal agency debt securities held by the
Registrant 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 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.
The Liquidity Fund's investment securities are
valued based on their amortized cost without taking into account
unrealized appreciation or depreciation. This method of
valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or
lower than the price the Liquidity Fund would receive if it sold
the instrument.
The valuation of portfolio instruments based upon their
amortized cost and the concomitant maintenance of the Liquidity
Fund's per share net asset value of $1,000 is permitted
in accordance with Rule 2a-7 of the 1940 Act, subject to the
adherence by the Liquidity Fund to certain conditions. The
Liquidity Fund must (I) maintain a dollar-weighted average
maturity of 90 days or less, (ii) purchase only instruments
having remaining maturities of one year or less, and (iii) invest
only in securities determined by the Registrant's Board
of directors to present minimal credit risks and which are of
high quality as determined by a major rating service, or, in
the case of any instrument which is not rated, which are of
comparable quality as determined by the Registrant's Board
of Directors. The Board of Directors has established procedures
designed to stabilize the Liquidity Fund's net asset value per
share at $1,000. Such procedures will include review of the
Liquidity Fund's investments by the Board of Directors, at
such intervals as they may deem appropriate, to determine
whether the Liquidity Fund's net asset value calculated by
using available market quotations deviates from $1,000 per
share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to existing shareholders. In
the event the Board of Directors determines that such a
deviation exists, it will take such corrective action as it
regards as necessary and appropriate, including (I) the sale
of portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity, (ii)
withholding dividends, or (iii) establishing a net asset value
per share by using available market quotations.
The information requested in Instructions 2 and 4 of
Item 19 are not applicable to either of the Registrant's Funds
and the information requested in Instruction 6 of Item 19 is not
applicable to Fund One. A specimen price make up sheet, as
requested by Instruction 5, is furnished as part of Exhibit 17.
(c) The Registrant has not received an order of
exemption from Section 18(f) of the 1940 Act from the Commission
nor filed a notice of election pursuant to Rule 18f-1.
Item 20. Tax Status
See discussion under Item 6(g) of Part A of the
Registration Statement of which this Statement of Additional
Information is a part.
Item 21. Underwriters
This item is not applicable to the Registrant because
there are no underwriters currently distributing its securities
nor is such a method of distribution contemplated.
Item 22. Calculations of Yield Quotations
(a) Yield. The yield for the Liquidity Fund for the
seven-day period ended December 31, 1997 was 5.60%. Yield is
calculated based on the 7-day period ending on the date of the
most recent statement of Assets and Liabilities as included
herein, using the formula prescribed by Item 22(a)(I) of Form
N-lA. A schedule of the computation of yield is furnished as
part of Exhibit 16.
(b)(I) Total Return. The total return for Fund One for
the year ended December 31, 1997 was 7.12%. Total return for the
five years ended December 31, 1997 was 5.44%. Total return for
the ten years ended December 31, 1997 was 7.23%.
Fund One's total return for each of the foregoing
periods was computed by finding, through the use of the formula
prescribed by Item 22(b)(I) of Form N-lA, the average annual
compounded rates of return over the period that equates an
assumed $1,000 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 Fund
One are assumed to have been reinvested when received. A
schedule of the computation of total return is furnished as
part of Exhibit 16.
(ii) Yield. The yield for Fund One for the thirty-day
period ended December 31, 1997 was 5.99%. Yield is calculated
based on the 30-day period ending on the date of the most recent
statement of Assets and Liabilities as included herein, using
the formula prescribed by Item 22(b)(ii) of Form N-lA. A
schedule of the computation of yield is furnished as part of
Exhibit 16.
Item 23. Financial Statements
Financial Statements of Fund One of the Registrant for
the year ended December 31, 1997 and the report of the
Registrant's independent certified public accountants thereon for
the year ended December 31, 1997 are included herewith.
Financial Statements of the Liquidity Fund of the Registrant for
the year ended December 31, 1997 and the report of the
Registrant's independent certified public accountants thereon for
the year ended December 31, 1997 are also included herewith.<PAGE>
BANK INVESTMENT FUND - FUND ONE
FINANCIAL STATEMENTS
For the year ended December 31, 1997<PAGE>
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.
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
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
INVESTMENTS IN SECURITIES, at value (Identified cost $138,695,885) $ 139,029,654
REPURCHASE AGREEMENTS 2,770,000
INTEREST RECEIVABLE 2,450,787
CASH 19,831
-------------
TOTAL ASSETS 144,270,272
-------------
LIABILITIES:
DIVIDENDS PAYABLE 507,680
ACCRUED EXPENSES 154,094
-------------
TOTAL LIABILITIES 661,774
-------------
NET ASSETS: (Equivalent to $983.7517 per share based on 145,980.4309
shares of beneficial interest outstanding) $ 143,608,498
=============
REPRESENTED BY:
Paid-in Capital $ 160,539,166
Accumulated net losses on investments (17,264,431)
Unrealized appreciation of investments--net 333,763
-------------
TOTAL NET ASSETS $ 143,608,498
=============
</TABLE>
See notes to financial statements.
BANK INVESTMENT FUND--FUND ONE
STATEMENT OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME $ 9,508,140
EXPENSES:
Compensation, payroll taxes and benefits--officers $ 209,902
Compensation, payroll taxes and benefits--other 91,682
Distribution expenses 156,988
Occupancy 64,544
Professional fees 32,615
Other expenses 27,409
Equipment and data processing 24,900
Meetings and travel 22,550
Directors' fees 17,600
Postage and telephone 15,300
Insurance expense 5,600
---------
TOTAL EXPENSES 669,090
------------
INVESTMENT INCOME--NET 8,839,050
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 5,078
Change in net unrealized appreciation (depreciation) on
investment securities 1,330,580
------------
Net realized and unrealized gain on investments 1,335,658
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,174,708
============
</TABLE>
See notes to financial statements.
BANK INVESTMENT FUND--FUND ONE
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1997 1996
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Investment income--net $ 8,839,050 $ 9,572,248
Net realized gain on investments 5,078 119,293
Unrealized appreciation (depreciation)--net 1,330,580 (3,497,470)
-------------------------------
Net increase in net assets resulting from operations 10,174,708 6,194,071
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (8,839,050) (9,572,248)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST--NET INCREASE
(DECREASE) (9,318,402) 8,414,388
-------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (7,982,744) 5,036,211
NET ASSETS:
Beginning of year 151,591,242 146,555,031
-------------------------------
End of year $ 143,608,498 $ 151,591,242
===============================
</TABLE>
See notes to financial statements.
BANK INVESTMENT FUND--FUND ONE
PORTFOLIO OF INVESTMENTS
December 31, 1997
Obligations of Federal Agencies--96.8%
<TABLE>
<CAPTION>
Par Coupon Maturity Date Value
------------- ------ ----------------- -------------
<S> <C> <C> <C> <C>
Federal Farm Credit Banks $ 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
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, 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).
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) pursuant to this
Plan for the year ended December 31, 1997.
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 was $35,176.
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 capital paid-in
aggregated $160,539,166.
Transactions in shares of beneficial interest are summarized as
follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1997 December 31, 1996
----------------------------- ---------------------------
Shares Amount Shares Amount
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold 2,216.1487 $ 2,170,000 23,700.6936 $ 23,325,618
Issued in reinvestment of dividends 2,790.7661 2,724,117 3,244.8810 3,159,951
------------------------------------------------------------
5,006.9148 4,894,117 26,945.5746 26,485,569
Redeemed 14,536.5484 14,212,519 18,549.7702 18,071,181
------------------------------------------------------------
Net increase (decrease) (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 was .45% of average net assets. Operating expenses paid
to the Central Bank for the year ended December 31, 1997 was $36,800.
BANK INVESTMENT FUND - LIQUIDITY FUND
FINANCIAL STATEMENTS
For the year ended December 31, 1997<PAGE>
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 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.
Parent, McLaughlin & Nangle
Certified Public Accountants
Member of the SEC Practice Section, American Institute of Certified Public
Accountants
January 30, 1998
BANK INVESTMENT FUND--LIQUIDITY FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
INVESTMENTS, at cost which approximates value $ 234,252,515
INTEREST RECEIVABLE 1,281,073
CASH 188,563
-------------
TOTAL ASSETS 235,722,151
-------------
LIABILITIES:
DIVIDENDS PAYABLE 456,766
OTHER ACCRUED EXPENSES 60,921
-------------
TOTAL LIABILITIES 517,687
-------------
NET ASSETS: (Equivalent to $1,000 per share based on
235,204.4649 shares of beneficial interest outstanding) $ 235,204,464
=============
REPRESENTED BY:
Paid-in Capital $ 235,204,464
=============
</TABLE>
See notes to financial statements.
BANK INVESTMENT FUND--LIQUIDITY FUND
STATEMENT OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME $ 12,453,997
EXPENSES:
Compensation, payroll taxes and benefits--officers $ 103,426
Compensation, payroll taxes and benefits--other 45,174
Distribution expenses 85,890
Occupancy 31,800
Professional fees 24,793
Other expenses 15,588
Bank service fees 15,128
Equipment and data processing 12,245
Meetings and travel 11,140
Directors' fees 8,600
Printing and postage 5,715
Insurance expense 2,796
---------
TOTAL EXPENSES 362,295
------------
INVESTMENT INCOME--NET 12,091,702
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 12,091,702
============
</TABLE>
See notes to financial statements.
BANK INVESTMENT FUND--LIQUIDITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1997 1996
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Investment income--net $ 12,091,702 $ 12,774,375
DIVIDENDS TO SHAREHOLDERS FROM:
Investment income--net (12,091,702) (12,774,375)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST--NET
INCREASE (DECREASE) 24,996,908 (34,942,957)
------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 24,996,908 (34,942,957)
NET ASSETS:
Beginning of year 210,207,556 245,150,513
------------------------------
End of year $ 235,204,464 $ 210,207,556
==============================
</TABLE>
See notes to financial statements.
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
Consolidated 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
=============
<FN>
- --------------------
<F*> Annualized yield on date of purchase.
<F**> Rate changes weekly.
</FN>
</TABLE>
See notes to financial statements.
BANK INVESTMENT FUND--LIQUIDITY FUND
NOTES TO FINANCIAL STATEMENTS
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, 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>
Year Ended Year Ended
December 31, 1997 December 31, 1996
----------------------------- -----------------------------
Shares Amount Shares Amount
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold 763,373.3134 $ 763,373,313 784,710.5650 $ 784,710,565
Issued in reinvestment of dividends 7,740.8565 7,740,856 7,679.4060 7,679,406
--------------------------------------------------------------
771,114.1699 771,114,169 792,389.9710 792,389,971
Redeemed 746,117.2619 746,117,261 827,332.9277 827,332,928
--------------------------------------------------------------
Net increase (decrease) 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) pursuant to the Plan
for the year ended December 31, 1997.
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 was $17,325.
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% of the Fund's net
assets for the year ended December 31, 1997. As reimbursement of allocated
expenses, the Fund paid or accrued $39,900 to the Bank Investment Fund--
Fund One, for the year ended December 31, 1997.
PART C
OTHER INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 24. Financial Statements and Exhibits
(a) Financial Statements of Fund One of the Registrant
for the year ended December 31, 1997 and the report of the
Registrant's independent certified public accountants for the
year ended December 31, 1997 are included in Part B above.
Financial Statements of the Liquidity Fund of the Registrant for
the year ended December 31, 1997 and the report of the
Registrant's independent certified public accountants thereon for
the year ended December 31, 1997 are also included in Part B
above.
(b) Exhibits:
1. Copy of the Registrant's charter, being
Chapter 482 of the Acts of 1984 of the
Commonwealth of Massachusetts, as amended by
Chapter 244 of the Acts of 1986 of the
Commonwealth of Massachusetts and Chapters
277 and 285 of the Acts of 1990 and 1991,
respectively, of the Commonwealth of
Massachusetts (filed as Exhibit 1 to
Amendment 11 of the Registrant's Registration
statement on Form N-lA, dated March 30, 1992,
and incorporated herein by reference) and as
further amended by Chapter 147 of the Acts of
1993 of the Commonwealth (filed as Exhibit 1
to Amendment 13 of the Registrant's
Registration Statement on Form N-lA, dated
March 25, 1994, and incorporated herein as
reference).
2. Copy of the By-Laws of the Registrant as
amended and restated as of March 20, 1997
3. None.
4. None.
5. None
6. None
7. Copy of the Sixth Amendment of the Defined
Contribution Plan dtd December 12, 1997 and
a copy of the Second Amendment of the
Defined Benefit Plan dtd September 23, 1997.
A copy of Defined Contribution Plan and Defined
Benefit Plan was filed as Exhibit 7 to
Amendment 16 of the Registrant's Registration
Statement on Form N1-A, dated March 27, 1997,
And incorporated herein by reference.
8. Copy of the safekeeping agreements
between the Registrant and the State
Street Bank and Trust Company dated
December 20, 1996. (filed as Exhibit 8 to
Amendment 16 of the Registrant's Registration
Statement on Form N-1A, dated March 27, 1997,
and incorporated herein by reference).
9. None.
10. Not applicable.
11. Not applicable.
12. Not applicable.
13. None.
14. None.
15. Plan of Distribution Pursuant to Rule
12b-1, as amended. (filed as Exhibit 15 to
Amendment 16 of the Registrant's Registration
statement in Form N-1A, dated March 27, 1996,
and incorporated herein by reference).
16. Computation of performance quotations
provided in Item 22.
17. Independent Auditor's Consent
18. None.
19. Specimen price make up sheet required by
Instruction 5 of Item 19(b).
<PAGE>
Item 25. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of February 28, 1998
Fund One Class 63
Liquidity Fund Class 117
Item 27. Indemnification
Section 1 of Article XII of the Registrant's By-Laws
provides that the Registrant shall indemnify each officer and
director of the corporation against all expenses incurred by
such officer or director in connection with any proceeding in
which he or she is involved as a result of (a) serving or having
served as an officer or director of the corporation; (b) serving
or having served as a director, officer or employee of any
wholly-owned subsidiary, or (c) serving or having served any
other corporation, organization, partnership, joint venture,
trust or other entity at the request or direction of the
corporation.
No indemnification shall be provided to an officer or
director with respect to a matter as to which such person
shall not have acted in good faith and with the reasonable
belief that his or her action was in the best interest of the
corporation. The registrant may purchase and maintain insurance
to protect itself and any officer or director against liability
of any character asserted against and incurred by the Registrant
or any such officer or director, or arising out of any
such status, whether or not the Registrant would have the power
to indemnify such person against such liability by law or under
the provisions of the By-laws, except such person shall not be
insured in the event of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in
the conduct of such person's office.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
provisions described above, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in said Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connection of Investment Advisor
Not applicable, as the Registrant does not currently
contemplate the utilization of the services of an investment
advisor.
Item 29. Principal Underwriters
Not applicable, as the Registrant does not use an
underwriter in connection with the distribution of its
securities.
Item 30. Location of Accounts and Records
The accounts, books, and other documents of the
Registrant are physically maintained at the principal offices of
the Registrant at 75 Park Plaza, Boston, Massachusetts
02116-3934.
Item 31. Management Services
There are no management-related service contracts under
which services are provided to the Registrant.
Item 32. Undertakings
Not applicable, as this Registration Statement does not
relate to the Securities Act of 1933.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company
Act of 1940, the Registrant has duly caused this Amended
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Boston and
Commonwealth of Massachusetts on the 31st day of March, 1998.
CO-OPERATIVE BANK INVESTMENT
FUND d/b/a BANK INVESTMENT FUND
By:
James L. Burns, Jr.
President
1940 ACT FILE NO. 811-4421
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS TO FORM N-lA
AMENDMENT NO. 17
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
CO-OPERATIVE BANK INVESTMENT FUND
d/b/a Bank Investment Fund
75 Park Plaza
Boston, Massachusetts 02116-3934
(617) 695-0415
Exhibit 2
COOPERATIVE BANK INVESTMENT FUND
d/b/a BANK INVESTMENT FUND
BY-LAWS
AMENDED AND RESTATED
AS OF MARCH 20, 1997
COOPERATIVE BANK INVESTMENT FUND
d/b/a BANK INVESTMENT FUND
BY-LAWS
ARTICLE I
Principal Office and Seal
Section 1. The principal office of the Cooperative Bank Investment Fund
d/b/a BANK INVESTMENT FUND (the "corporation") shall be in
the City of Boston, County of Suffolk, Commonwealth of Massachusetts.
Section 2. The corporation shall have a seal bearing its name,
year of organization and such other insignia or inscription as the
board of directors of the corporation may determine.
ARTICLE II
Purposes of the Corporation
The purposes of the corporation shall be to give effect to and
administer for the benefit of its participating investors the laws
governing the corporation, more particularly Chapter 482 of the Acts
of 1984, as amended (the "Act of Incorporation").
ARTICLE III
Members of the Corporation
Section 1. General. The members of the corporation shall be
the incorporators of the corporation, as designated in the Act of
Incorporation.
Section 2. Voting. Each member of the corporation shall be
entitled to one vote.
Section 3. Annual Meetings. The annual meeting of the members
of the corporation for the election by ballot of directors and the
transaction of such other business as may properly come before the
meeting shall be held each year at the office of the corporation in
the City of Boston, or at such other place as may be stated in the
notice of the meeting, on such date within 90 days of the end of the
corporation's fiscal year as may be determined by the Chief Executive
Officer. In case the annual meeting is not held on the date specified,
the Chief Executive Officer or any three members of the corporation may
direct the Clerk of the Corporation to call a special meeting in lieu of
and for the purpose of such annual meeting and all proceedings at such
special meeting shall have the same force and effect as at an annual meeting.
Section 4. Special Meetings. Special meetings of the members
shall be called by the Clerk of the Corporation whenever the board of
directors or the Chief Executive Officer shall so order, or upon
written request of three or more members, and such request shall
state the purpose of such meeting.
Section 5. Notice. Notice of the annual meeting and of all
special meetings of the members shall be given by the Clerk of the
Corporation by mailing or delivering to each member at least seven
days before the day fixed for the meeting a notice stating the place,
day, hour and purpose of the meeting.
Section 6. Quorum. At every meeting shall be present in person
at least ten of the members in order to constitute a quorum, but a
smaller number may adjourn from time to time.
Section 7. Waiver of Notice; Action By Consent. Members may
waive notice of a meeting by a writing signed before or after such
meeting and if present at any meeting shall be conclusively presumed
to have received due notice thereof. Any action required or permitted
to be taken at any meeting of the members, directors or any committee
thereof may be taken without a meeting if all members, directors or
committee members entitled to vote on the matter consent to the action
in writing.
Section 8. Savings Bank Representative. In the event that one
or more Massachusetts savings banks shall invest in the corporation,
such banks shall be entitled to appoint a representative who may
attend all meetings of the members on an advisory basis and he shall
be given notice of all such meetings in the same manner as required
to be given to members.
ARTICLE IV
Board of Directors
Section 1. Management of the Corporation. The affairs, property
and business of the corporation shall be managed by a board of not less
than five, nor more than seven directors. The board of directors may
exercise all such powers of the corporation as are not by the Act of
Incorporation or other law or by these by-laws required to be otherwise
exercised.
Section 2. Composition. The directors shall at all times be
persons who are officers or directors of a member bank of The
Co-operative Central Bank, but not more than seven directors shall at
any one time be then directors of The Cooperative Central Bank.
Section 2(a). Term. No Director may serve more than two full
three-year terms consecutively. Directors sitting on the board on
June 30, 1997 may not be renominated if they have already served two
full consecutive terms. This section shall take effect on July 1,
1997.
Section 3. Nominations and Elections. The Directors shall be
divided into three groups as equal in number as possible. At the
1991 annual meeting of the corporation, one group shall be elected
for a term of three years, one group shall be elected for a term of
two years, and one group shall be elected for a term of one year. At
the ensuing annual meeting following the conclusion of such terms,
each group shall be elected for a three-year term, subject to
Section 4 of this Article IV. All Directors shall hold office until
their successors are elected and qualified or until their earlier
resignation or removal.
On or before the third Monday in December prior to each such
annual meeting, the President shall appoint a Nominating Committee of
three Directors, who shall be subject to confirmation by the Board of
Directors. It shall be the duty of the Nominating Committee to
nominate eligible persons for election as Directors at the next
annual meeting of the corporation. The Nominating Committee shall
file its list of nominees with the Clerk of the Corporation at or
before 4:00 P.M. on the third Monday in January following their
appointment. Within one week of said filing, the list of nominees
shall be mailed or delivered by the Clerk of the Corporation, or any
other officer designated by the President, to each of the members of
the corporation. In the event that the Committee fails to make a
nomination for the position of a Director whose term is expiring as
of the date of said annual meeting, the Board of Directors shall make
such nominations so that at least one person is nominated for each
such office. Any member may nominate, in addition to such nominees,
not more than one eligible person for each Director's position with
respect to which the current Director's term is expiring as of the
date of said annual meeting by filing the same with the Clerk of the
Corporation not later than 35 days after the third Monday in January.
The Board of Directors may also nominate an eligible person in place
of any nominee who shall have deceased or withdrawn at any time prior
to the annual meeting of the corporation.
Any person validly nominated pursuant to the foregoing paragraph
shall be a nominee for election to Director at said annual meeting of
the corporation. If more candidates are nominated than there are
positions to be filled, the election of Directors shall be decided by
a plurality of the votes cast by the members.
Section 4. Removal. Any director may be removed from office by
a majority of the members of the corporation by a vote passed at a
meeting of the members.
Section 5. Vacancies. Vacancies on the board of directors
shall be filled by a majority vote of those members of the corporation
present at a meeting duly called for such purpose.
Section 6. Disqualification. Any director whose bank ceases to
be a member of The Cooperative Central Bank shall cease to be an
officer or director of the corporation and his office(s) shall be
deemed vacant as of the date his bank ceases to be a member. Said
disqualification shall not apply to a director whose bank ceases to
be a member of The Cooperative Central Bank by virtue of its consolidation
or merger with another member bank. For purposes of this section, a member
bank shall mean a cooperative bank organized and chartered pursuant to
chapter one hundred seventy of the General Laws.
Section 7. Quorum; Majority Vote. A majority of the directors
in office shall constitute a quorum for the transaction of business,
but a smaller number may adjourn any meeting of the board of directors
from time to time. Any or all powers, duties and responsibilities conferred
upon the board of directors may be exercised by vote of a majority of its
members in attendance at any meeting of the board at which a quorum is
present, except in cases where under applicable provisions of law action by
a higher percentage of the directors is required.
Section 8. Meetings; Chairman and Clerk. An annual meeting of
the directors shall be held as soon after the annual meeting of the
corporation as is feasible. Regular meetings of the directors shall
be held at such times and places as the directors may determine.
Special meetings may be held in like manner and shall be called by
the Clerk of the Corporation whenever the Chief Executive Officer or
any three directors shall so request in writing, and three days'
notice of such meetings shall be given to each director not joining
in the request for such meetings. Directors may waive notice of a
meeting by a writing signed before or after such meeting, and if
present at any meeting shall be conclusively presumed to have received
due notice thereof. The board of directors may provide for a Chairman
of said board and, if so provided, the Chairman shall be elected by and
from the directors, and shall at all times be a director. The Chairman
shall preside at all meetings of the board of directors and the members,
but shall not have other duties in such capacity and shall not be an
officer of the corporation. The board of directors may provide for a
clerk of said board and, if so provided, the clerk of the board of
directors shall be elected by and from the directors, and shall at all
times be a director. The clerk of the board of directors shall keep a
record of the proceedings at all meetings of the directors and shall
give certifications relating to the same, but shall not have other
duties in such capacity and shall not be an officer of the corporation.
Section 9. Powers. Without any limitation of the powers
granted to the board of directors by Section 1 of this Article IV,
the board of directors, subject to the provisions of the Act of
Incorporation and other applicable provisions of law, shall have
power:
(a) To purchase any property or rights and to enter into
any contracts which it deems advantageous to the corporation;
(b) To buy or sell bonds, debentures or other securities
for such sums and at such prices as it may deem expedient;
To invest and reinvest cash and other property, and to
hold cash or other property uninvested;
(d) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments
or property; and to execute and deliver proxies or powers of attorney
to such person or persons as the board of directors shall deem proper,
granting to such person or persons such power and discretion with
relation to securities, debt instruments or property as the board of
directors shall deem proper;
(e) To exercise powers and rights of subscription or other
rights which in any manner arise out of ownership of securities or
debt instruments;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer,
relating to any security or debt instrument which is or was held by
the corporation; to consent to any contract, lease, mortgage, purchase
or sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security or debt instrument held by
the corporation;
(g) To join with other holders of any securities or debt
instruments in acting through a committee, depository, voting trustee
or otherwise, and in that connection to deposit any security or debt
instrument with, or transfer any security or debt instrument to, any
such committee, depository or trustee, and to delegate to any of the
foregoing such power and authority with relation to any security or
debt instrument (whether or not so deposited or transferred) as the
board of directors shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depository or trustee as the board of directors shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims in
favor of or against the corporation or any matter in controversy,
including but not limited to claims for taxes;
(I) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) To purchase and pay for entirely out of the corporation's
property such insurance as the board of directors may deem necessary or
appropriate for the conduct of the corporation's business, including,
without limitation, insurance policies insuring the assets of the
corporation and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the members, directors,
officers, employees, agents, consultants, investment advisers, managers,
and administrators and any person connected therewith, and the corporation
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person in any such capacity, including any action taken or omitted
that may be determined to constitute negligence, whether or not the
corporation would have the power to indemnify such person against
such liability; and
(k) To pay pensions for faithful service, as deemed
appropriate by the board of directors, and to adopt, establish
and carry out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit plans,
trusts and provisions, including the purchase of life insurance and
annuity contracts as a means of providing such retirement and other
benefits, for any or all of the officers, employees and agents of the
corporation; and
(l) To take or cause to be taken all action determined by
said board at any time or from time to time to be necessary or
advisable to give effect to the purposes of the corporation and the
provisions of law applicable thereto.
Section 10. Compensation. Directors as such shall not receive
any salary for their services, but by resolution of the board a
reasonable fixed sum and expenses of attendance may be allowed for
attendance at board meetings.
Section 11. Delegation. The board of directors may from time to
time delegate any of its powers to committees or officers, attorneys or
agents of the corporation, subject to such regulations as may be
adopted by the board; provided, however, that no such delegation of its
powers by the board of directors shall relieve the directors of the
duties and obligations imposed upon them by law or by these by-laws.
Section 12. Certain Contracts. The board of directors may, at
any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one
or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations,
or individuals (a "Contracting Party") to provide for the performance
and assumption of some or all of the following services, duties and
responsibilities to or for the corporation, and to provide for the
performance and assumption of such other services, duties and
responsibilities in addition to those set forth below, as the board of
directors may determine appropriate:
(a) Subject to the general supervision of the board of
directors and in conformity with the stated policy of the corporation
with respect to the investments of the corporation, to manage such
investments and assets, make investment decisions with respect thereto,
and to place purchase and sale orders for portfolio transactions relating
to such investments and assets;
(b) Subject to the general supervision of the board of
directors and in conformity with any policies of the board of directors
with respect to the operations of the corporation, to supervise all or
any part of the operations of the corporation, and to provide all or any
part of the administrative and clerical personnel, office space and
office equipment and services appropriate for the efficient administration
and operation of the corporation;
To maintain records of the ownership of outstanding
shares, the issuance and redemption and the transfer thereof, and to
disburse any dividends declared by the board of directors and, in
accordance with the policies of the board of directors and/or the
instructions of any particular shareholder, to reinvest any such
dividends;
(d) To provide service with respect to the relationship of
the corporation and its shareholders, records with respect to shareholders
and their shares, and similar matters; and
(e) To handle all or any part of the accounting responsibilities,
whether with respect to the corporation's properties, shareholders or
otherwise.
The same person may be the Contracting Party for some or all of
the services, duties and responsibilities to, for and of the corporation.
ARTICLE V
Committees
Section 1. General. There may be appointed such committees as
the board of directors deems necessary, including an Executive
Committee.
Section 2. Executive Committee. Any such Executive Committee
may have delegated to it the powers to conduct the current and
ordinary business of the corporation while the board of directors is
not in session.
ARTICLE VI
Officers
Section 1. General. The officers of the corporation shall be a
Chief Executive Officer, a President, one or more Vice Presidents, a
Clerk of the Corporation, a Treasurer, and an Assistant Treasurer,
and such other officers as the board of directors may designate. The
directors at their annual meeting in each year shall elect the
aforesaid officers, provided, however, that the incorporators at
their first meeting shall elect officers to hold office until the
first meeting of the board of directors, and the board of directors
at its first meeting shall elect officers to hold office until the
first annual meeting of the board. All said officers shall hold
their respective offices until the next following annual meeting of
the board of directors and thereafter until their successors are
elected and qualified, unless a different term is specified above or
shall be designated by the directors, subject, however, to removal at
any time by vote of a majority of the board of directors. Vacancies
in any of said offices shall be filled by the board of directors for
the unexpired portion of the term thereof. Officers may be paid such
salary or compensation as the board of directors shall determine.
Unless otherwise prohibited by law or these by-laws, any two or more
offices may be held by the same person, but the office of director
and any office other than director shall not be held by the same
person.
Section 2. Chief Executive Officer. The Chief Executive
Officer shall have general supervision and control of the corporation's
business, including the authority to appoint any agents or employees,
other than those provided by law or by these bylaws to be elected or
appointed by the members or the board of directors, and to prescribe
their authority and duties, which may include the authority to appoint
subordinate agents or employees. In addition to said authority, in the
absence of any Chairman provided for pursuant to Article IV, Section 8,
the Chief Executive Officer shall preside at all meetings of the members
and of the board of directors and have such other powers, authority and
duties as from time to time may be provided by law or by action of the
board of directors. The President shall be the Chief Executive Officer,
unless otherwise determined by the board of directors.
Section 3. President. The President shall be the Chief Executive
Officer of the corporation, unless otherwise determined by the Board of
Directors, and shall have such powers and perform such duties as are
provided by law and as the board of directors may from time to time
designate.
Section 4. Vice Presidents. Each Vice President shall have
such powers and perform such duties as from time to time the Chief
Executive Officer may delegate to him or as the board of directors
may prescribe.
Section 5. Treasurer and Assistant Treasurer. The Treasurer
shall have the control of the money, securities and other property
belonging to the corporation (except his own bond which shall be kept
by the President), and shall cause the same to be held or deposited
for safekeeping subject to the authority of the board of directors,
and shall perform such other duties as are usually required of
treasurers of corporations, or as may be prescribed by law, by the
board of directors or by the Chief Executive Officer. The Assistant
Treasurer may perform any or all of the duties of the Treasurer.
Section 6. Clerk of the Corporation. The Clerk of the Corporation
shall be sworn and shall keep a record of the proceedings at all meetings
of the members in a book or books to be kept therefor, and shall give
notice of all meetings required by these By-laws. In case of the absence
or disability of the Clerk of the Corporation, the Chief Executive Officer
may designate a person who shall send required notices of meetings during
such absence or disability; and the Chief Executive Officer may appoint a
person to serve as Clerk pro tem. The Clerk of the Corporation shall be a
resident of the Commonwealth of Massachusetts.
Section 7. Other Officers. Any other officer not specifically
referred to above, who may be elected by the board of directors,
shall have such powers and duties as the board of directors or the
Chief Executive Officer may from time to time prescribe.
Section 8. General Powers. Subject to these bylaws, each
officer shall have in addition to the duties and powers specifically
set forth herein, such duties and powers as are customarily incident
to his or her office, and such duties and powers as may be designated
from time to time by the board of directors or the Chief Executive
Officer.
Section 9. Bonds and Sureties. The Treasurer, the Assistant
Treasurer and such other officers as the board of directors may
determine shall be bonded for the faithful performance of their
duties in such amounts and with such sureties, if any, as the board
of directors shall determine.
ARTICLE VII
Shares of Beneficial Interest
Section 1. Definitions. As used in this Article VII, the term
"Share" and any derivative thereof shall mean a Share of any class of
Shares of beneficial interest of the corporation authorized by the
board of directors, and the term "eligible investor" shall include
any entity eligible to purchase Shares of the corporation pursuant to
the Act of Incorporation, as amended from time to time.
Section 2. Description of Shares; Establishment of Classes. The
beneficial interest of the corporation shall be divided into Shares,
without par value. The board of directors shall have the authority
from time to time to divide the Shares into two or more classes of
Shares to represent Shares in two or more distinct investment funds
as provided in Section 4 of the Act of Incorporation, to establish
and designate such classes, and to fix and determine the relative
rights and preferences as between the different classes of Shares as
to right of repurchase and the price, terms and manner of repurchase,
special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, and conversion
rights. Except as aforesaid or as otherwise provided herein, all Shares
of the different classes shall be identical.
The number of authorized Shares and the number of Shares of each
class that may be issued is unlimited. The board of directors may
classify or reclassify any unissued Shares or any Shares previously
issued and reacquired of any class into one or more classes that may
be established and designated from time to time.
The board of directors may issue Shares of any class for such
consideration and on such terms as it may determine (or for no
consideration if pursuant to a Share dividend or split). All Shares
when so issued on the terms determined by the board of directors shall
be fully paid and non-assessable.
The board of directors may from time to time close the transfer
books or establish record dates and times for the purposes of determining
the holders of Shares entitled to be treated as such.
The establishment and designation of any class of Shares shall
be effective upon a vote for such establishment and designation of
the relative rights and preferences of such class. At any time that
there are no Shares outstanding of any particular class previously
established and designated, the board of directors may abolish that
class and the establishment and designation thereof.
Section 3. Assets, Liabilities, Etc. of Classes. The Shares of
any class that may from time to time be established and designated by
the board of directors shall have the following relative rights and
preferences:
(a) Assets Belonging to a Class. All consideration
received by the corporation for the issue or sale of Shares of a
particular class, together with all assets in which such consideration
is invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account
of the corporation. Such consideration, assets, income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds, in whatever form the same may be,
together with any general items allocated to that class as provided in the
following sentence, are herein referred to as "assets belonging to" that
class. In the event that there are any assets, income, earnings, profits,
and proceeds thereof, funds, or payments which are not readily iden-
tifiable as belonging to any particular class (collectively "General
Items"), the board of directors shall allocate such General Items to
and among any one or more of the classes established and designated
from time to time in such manner and on such basis as it, in its sole
discretion, deems fair and equitable; and any General Items so
allocated to a particular class shall belong to that class. Each
such allocation by the board of directors shall be conclusive and
binding upon the Shareholders of all classes for all purposes.
(b) Liabilities Belonging to a Class. The assets belonging to
the corporation in respect of a particular class shall be charged with the
liabilities of the corporation in respect of such class, and all expenses,
costs, charges and reserves attributable to that class, and any general
liabilities, expenses, costs, charges or reserves of the corporation which
are not readily identifiable as belonging to any particular class shall be
allocated and charged by the corporation to and among any one or more of the
classes established and designated from time to time in such manner and on
such basis as the board of directors in its sole discretion deems fair and
equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a class are herein referred to as "liabilities
belonging to" that class. Each allocation of liabilities, expenses, costs,
charges and reserves by the board of directors shall be conclusive and
binding upon the holders of all classes for all purposes.
Income Belonging to a Class. The board of directors
shall have full discretion to determine which items shall be treated
as income and which items as capital, and each such determination and
allocation shall be conclusive and binding.
Income belonging to a class includes all income, earnings
and profits derived from assets belonging to that class, less any
expenses, costs, charges or reserves belonging to that class, for the
relevant time period, all determined in accordance with generally
accepted accounting principles.
(d) Dividends and Distributions. Dividends and distributions
on Shares of a particular class may be paid to the holders of Shares of
that class with such frequency as the board of directors may determine,
which may be daily or otherwise pursuant to a standing resolution or
resolutions adopted by the board of directors, from such of the income
and capital gains, accrued or realized, from the assets belonging to that
class, as the board of directors may determine, after providing for actual
and accrued liabilities belonging to that class.
Except as hereinafter provided, all dividends on Shares of
a particular class shall be paid only out of the income belonging to
that class and capital gains distributions on Shares of a particular
class shall be paid only out of the capital gains belonging to that
class. All dividends and distributions on Shares of a particular
class shall be distributed pro rata to the holders of that class in
proportion to the number of Shares of that class held by such holders
at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any
dividend or distribution program or procedure the board of directors
may determine that no dividend or distribution shall be payable on
Shares as to which the Shareholder's purchase order and/or payment
have not been received by the time or times established by the board
of directors under such program or procedure.
The corporation intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1954, as amended, or any
successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for
federal income tax purposes may vary from the computation thereof on the
books of the corporation, the board of directors shall have the power, in
its sole discretion, to distribute in any fiscal year as dividends,
including dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the board of
directors, to enable the corporation to qualify as a regulated investment
company and to avoid liability of the corporation for federal income tax
in respect of that year. However, nothing in the foregoing shall limit
the authority of the board of directors to make distributions greater
than or less than the amount necessary to qualify as a regulated
investment company and to avoid liability of the corporation for such tax.
Dividends and distributions may be made in cash or Shares
or a combination thereof as determined by the board of directors or
pursuant to any program that the board of directors may have in
effect at the time for the election by each Shareholder of the mode
of the making of such dividend or distribution to that Shareholder.
Any such dividend or distribution paid in Shares will be paid at the
net asset value thereof.
(e) Liquidation. In the event of the liquidation or
dissolution of the corporation, the Shareholders of each class that
has been established and designated shall be entitled to receive, as
a class, when and as declared by the board of directors, the excess
of the assets belonging to that class over the liabilities belonging
to that class. The assets so distributable to the Shareholders of
any particular class shall be distributed among such Shareholders in
proportion to the number of Shares of that class held by them and
recorded on the books of the corporation. The liquidation of any
particular class with Shares then outstanding may be authorized by
vote of a majority of the board of directors.
(f) Repurchase by Shareholder. Each holder of Shares
shall have the right at such times as may be permitted by the
corporation, but no less frequently than once each week, to require the
corporation to repurchase all or any part of its Shares of that class
at a redemption price equal to the net asset value per Share of that
class next determined in accordance with Article VIII after the
Shares are properly tendered for repurchase. Payment of the redemption
price shall be in cash; provided, however, that if the board of directors
determine, which determination shall be conclusive, that conditions exist
which make payment wholly in cash unwise or undesirable, the corporation
may make payment wholly or partly in securities or other assets belonging
to the class of which the Shares being redeemed are part at the value of
such securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the corporation may postpone
payment of the repurchase price and may suspend the right of the
holders of Shares of any class to require the corporation to redeem
Shares of that class during any period or at any time when and to the
extent permissible under Section 8 of this Article VII.
(g) Equality. All Shares of each class shall represent an
equal proportionate interest in the assets belonging to that class
(subject to the liabilities belonging to that class), and each Share
of any particular class shall be equal to each other Share of that
class. The board of directors may from time to time divide or
combine the Shares of any particular class into a greater or lesser
number of Shares of that class without thereby changing the proportionate
beneficial interest in the assets belonging to that class or in any way
affecting the rights of Shares of any other class.
(h) Fractions. Any fractional Share of any class, if any
such fractional Share is outstanding, shall carry proportionately all
the rights and obligations of a whole Share of that Class, including
with respect to receipt of dividends and distributions, redemption of
Shares, and liquidation of the corporation.
(I) Conversion Rights. The board of directors shall have
the authority to provide the holders of Shares of any class with the
right to convert said Shares into Shares of one or more other classes
in accordance with such requirements and procedures as may be established
by the board of directors.
Section 4. Ownership of Shares. The ownership of Shares shall
be recorded on the books of the corporation or of a transfer or
similar agent for the corporation, which books shall be maintained
separately for the Shares of each class that has been established and
designated. No certificates certifying the ownership of Shares need
be issued except as the board of directors may otherwise determine
from time to time. The board of directors may make such rules as
they consider appropriate for the issuance of any such Share certificates,
the use of facsimile signatures, the transfer of Shares and similar matters.
The record books of the corporation as kept by the corporation or any
transfer or similar agent, as the case may be, shall be conclusive as to who
are the Shareholders and as to the number of Shares of each class held from
time to time by each such Shareholder.
Section 5. Status of Shares. Shares shall be deemed to be
personal property giving only the rights provided in this instrument.
Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to
have become a party hereto.
Section 6. Transfer of Shares. Shares may be transferred,
subject to the restrictions set forth in Section 3 of the Act of
Incorporation, by delivery of a written power of attorney to sell,
assign and transfer the same, signed by the owner of the Shares. No
transfer of any Share or Shares shall be of any effect as regards the
corporation nor shall it be in any way bound to recognize the same
until such transfer has been recorded on the books of the corporation.
It shall be the duty of every Shareholder to notify the corporation of
its mailing address.
Section 7. Sale of Shares.
A. Offering of a Limited Number of Shares; Initial Offering.
Whenever a limited number of Shares of any class of the corporation
are issued for sale (except so many Shares first sold out of the
initial issue of Shares as will be sufficient to net a total of not
more than One Million Two Hundred Fifty Thousand Dollars
($1,250,000), which Shares may be sold at private sale free from any
requirement as to offering) the board of directors shall set a date
when subscriptions shall close, and notice of such date shall be
given to each eligible investor at the same time and in the same
manner that Shares of that issue are offered to each eligible investor
for sale. Subscriptions for Shares shall be received up to and
including that date, subject to the right of the board of directors
to reject subscriptions as hereinafter described, but no Shares shall
be sold until after that date. After that date, if there is an
undersubscription, Shares already subscribed for may be sold to the
subscribers, and the remainder shall be retired unless the board of
directors shall make, or shall have made, some other provision. The
board of directors may at any time before notice of acceptance of any
subscription has been given by the corporation withdraw all or part
of the offering of an issue or reject all subscriptions, or both,
provided that such withdrawal or rejection applies impartially to all
subscribers or prospective subscribers and includes all subscriptions
then outstanding. If, on the date set for the closing of subscriptions,
there is an oversubscription, the Chief Executive Officer (including,
for the purposes of this Section any other officer designated by the board
of directors) shall cause to be determined the ratio between the total
number of Shares subscribed for and the total number of Shares available
for distribution in that issue, and shall then, subject to the right
of the board of directors to reject subscriptions as heretofore described,
ballot from that issue to each applicant a proportionate part of that
applicant's total subscription, which proportion shall be based upon that
ratio. In making allotments after determination of the proportion for each
applicant, the Chief Executive Officer shall make such adjustments as he may
elect in his sole discretion so that the allotments shall be in full
Share amounts. Except in the case of the initial issue, the price
for which shall be fixed in advance of the offering thereof by the
board of directors subject to the limitation contained in Section 3
of the Act of Incorporation, the price of Shares sold shall be fixed
as follows. The issue shall be sold at a price per Share based on
the current net asset value of the Shares sold, i.e., the net asset
value calculated pursuant to Section 5 of the Act of Incorporation
and Article VIII of these By-Laws, which is next computed after
receipt and acceptance of the subscription therefor. In case a
subscription on which an allotment has been made is not taken up
within ten (10) days after such allotment, the board of directors
shall have power in its discretion to cancel the subscription and
dispose of the Shares as if there had been an undersubscription to
that extent. In case of an undersubscription, unless there is
another offering of the unsubscribed portion to all eligible in-
vestors or the whole or the balance is withdrawn from sale, the
Shares sold after the closing date shall be sold at a price per Share
equal to the net asset value per Share of the outstanding Shares next
determined following receipt and acceptance of the subscription.
In any offering of a limited number of Shares of any class of
the corporation to eligible investors subsequent to the initial
issue, the substance of this Section 7 shall be stated as well as the
number of Shares offered, and, for the information of subscribers,
the net asset value per Share as last determined prior to the offering.
B. Offering of an Unlimited Number of Shares. If the board of
directors shall have determined to offer an unlimited number of
Shares of any class of the corporation to eligible investors, an
order to purchase Shares of a class shall be effected at the net
asset value of Shares of that class calculated pursuant to Section 5
of the Act of Incorporation and Article VIII of these By-laws and
determined as of the next following business day after the receipt of
such order and payment therefor in collected funds.
Section 8. Repurchase of Shares. Any Shareholder which desires
to sell to the corporation any Shares of any class of the corporation
of which it is the record owner may do so in accordance with the
provisions of the Investment Company Act of 1940 as that Act may be
amended from time to time, and regulations issued thereunder, and
pursuant to procedures established by the board of directors consistent
with such Act.
The repurchase price so to be paid in each instance shall be the
net asset value of the Shares next determined in the manner provided
in Section 5 of the Act of Incorporation and Article VIII of these
Bylaws after such Shares are properly offered for repurchase.
ARTICLE VIII
Determination of Net Asset Value of Shares
"Asset value" as referred to in Section 5 of the Act of Incorporation
shall be referred to in these By-laws as "net asset value." In addition to
any determination of net asset value of Shares of any class of the
corporation made upon request of a shareholder as provided by Section 5 of
the Act of Incorporation, the net asset value of each Share of any class of
the corporation outstanding shall be determined by the board of directors,
or any two or more of the officers or directors of the corporation as the
board may designate, as of the close of business of the New York Stock
Exchange (or as of such other time as the corporation lawfully determines the
net asset value of Shares of any class) on the last business day of each month,
unless such day is a legal holiday for the New York Stock Exchange (with the
exception of Good Friday), in which case it shall be determined on the next
preceding day which is not such a legal holiday. The net asset value of
Shares of any class of the corporation may be determined at such other times
as the board of directors shall prescribe.
For whatever purposes or under whatever requirement determined,
the net asset value of each Share of a class of the corporation as of
any particular time shall be the quotient obtained by dividing the
value, as at such time, of the net assets attributable to such class
(i.e., the value of assets attributable to such class less the
liabilities of such class) by the total number of Shares of such
class outstanding at such time, all determined and computed as
follows:
(1) Securities for which market quotations are readily
available shall be valued at their current market value; and
(2) Other securities and assets shall be valued at fair
value as determined in good faith by the board of directors.
For the purposes of this Article VIII:
(1) Shares of any class of Shares sold shall be deemed to
be outstanding as of the time of acceptance of the subscription or
order, as the case may be, and the sale price thereof to the corporation
(less any stamp or other tax payable by the corporation in connection
with the issuance thereof) shall be deemed to be an asset attributable
to such class.
(2) Shares of any class offered to the corporation for
repurchase by the corporation under Section 8 of Article VII of these
By-laws shall be deemed to be outstanding until the time as of which
the repurchase price of such Shares is determined. After such time,
such Shares shall be deemed to be no longer outstanding and the
repurchase price therefor shall be deemed to be a liability attributable
to such class until paid.
ARTICLE IX
Custodian
The Custodian employed by the corporation pursuant to Section 6
of the Act of Incorporation shall be required to enter into a written
contract with the corporation which shall contain provisions:
(a) Authorizing and directing the Custodian to make all
securities in its possession available for inspection by the Office
of the Commissioner of Banks of Massachusetts;
(b) If there shall be a Custodian having custody of the
assets of more than one class of Shares, requiring such Custodian to
segregate the assets of each class from the assets of each other
class, and to keep separate accounts and records with respect
thereto; and
Any other provisions not inconsistent with the provisions
of Section 6 of the Act of Incorporation or with this By-law as the board
of directors may approve.
ARTICLE X
Fiscal Year
The fiscal year shall begin on the first day of January in each
year and shall end on the thirty-first day of December in each year.
ARTICLE XI
Amendments, Etc.
Adoption of these By-laws and amendments or repeal in whole or
in part may be voted upon by the board of directors at any meeting.
The By-laws, or the amendment or other action as the case may be, may
be voted upon by the members at any meeting. The submission of the
Bylaws to the members and the board of directors may be in any order,
or simultaneously. The By-laws, or any amendment or other action in
regard to the By-laws, shall be submitted to the Commissioner of
Banks for approval and shall take effect at the time specified by the
members and board of directors after approval by the Commissioner of
Banks, and if no time is specified shall take effect immediately upon
such approval.
ARTICLE XII
Indemnification
Section 1. General. To the extent permitted by law and except
as provided in Sections 2 and 3 of this Article XII, each officer and
director of the corporation (and his or her heirs and personal
representatives) shall be indemnified by the corporation against all
expenses incurred by such officer or director in connection with any
proceeding in which he or she is involved as a result of (a) serving
or having served as a officer or director of the corporation, (b)
serving or having served as a director, officer or employee of any
wholly-owned subsidiary of the corporation, or serving or having
served any other corporation, organization, partnership, joint
venture, trust or other entity at the request or direction of the
corporation.
Section 2. Good Faith Requirement. No indemnification shall be
provided to an officer or director with respect to a matter as to
which such person shall have been adjudicated in any proceeding not
to have acted in good faith in the reasonable belief that his or her
action was in the best interests of the corporation. In the event
that a proceeding is compromised or settled so as to impose any
liability or obligation upon an officer or director, no indemnification
shall be provided to such person with respect to a matter if the
corporation has obtained an opinion of its counsel that with respect
to said matter such officer or director did not act in good faith in
the reasonable belief that his or her action was in the best interests
of the corporation. Without any limitation of the foregoing, no
indemnification shall be made with respect to any liability to the
corporation or its Shareholders to which any person would otherwise
be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
such person's office.
Section 3. Expenses. To the extent authorized by the board of
directors, such indemnification may include payment by the corporation of
expenses incurred in defending a civil or criminal proceeding in advance
of the final disposition of such proceeding upon receipt of an undertaking
by the officer or director indemnified to repay such payment if he or she
shall be adjudicated or determined to be not entitled to indemnification
under Section 3 of this Article XII.
Section 4. Insurance. The corporation may purchase and maintain
insurance to protect itself and any officer or director against any
liability of any character asserted against and incurred by the
corporation or any such officer or director, or arising out of any
such status, whether or not the corporation would have the power to
indemnify such person against such liability by law or under the
provisions of this Article XII.
Section 5. For the purposes of this Article XII:
(a) "officer" means any person who serves or has served as
an officer of the corporation;
(b) "director" means any person who serves or has served
as a member of the board of directors;
"proceeding" means any action, suit or proceeding,
civil or criminal, brought or threatened in or before any court,
tribunal, administrative or legislative body or agency; and
(d) "expenses" mean any liability fixed by a judgment,
order, decree or award in a proceeding, any amount actually and
reasonably paid in settlement of a proceeding and any legal fees and
other disbursements reasonably incurred in a proceeding.
Section 6. Nothing in this Article XII shall limit any lawful
rights to indemnification existing independently of this Article.
14075-0:175599 v3
Exhibit 7
SECOND AMENDMENT
of the Defined Benefit Pension Plan (Plan C)
of the Cooperative Banks Employees Retirement Program
(1994 Restatement)
Pursuant to the provisions of Section 13.1 of the aforesaid Plan,
Cooperative Banks Employees Retirement Association hereby amends said Plan,
effective as of January 1, 1996 as follows:
(1) Section 3.3 is hereby amended by inserting at the end thereof
the following new subsection (e):
"(e) any Period of Service during which he or she was not employed by a
Participating Employer; provided, however, a Participating Employer may
elect to included such Period of Service in accordance with rules and
procedures prescribed by the Association."
(2) A new section 6.5 is hereby inserted:
"6.5 Non-duplication of benefits. Notwithstanding any provision
of the Plan to the contrary, in the case of a Participant whose
Credited Service included a Period of Service with an employer
which maintains a tax qualified defined benefit pension
plan (other than the Plan) in which such Participant
participates, such Participant's Accrued Pension shall be
reduced by any benefits accrued by such Participant during such
Period of Service under such other pension plan."
IN WITNESS WHEREOF, the Cooperative Banks Employees Retirement
Association has caused this instrument of amendment to be executed in its name
and on its behalf by its officer
thereunto duly authorized on this 23 day of September, 1997.
COOPERATIVE BANKS EMPLOYEES
RETIREMENT ASSOCIATION
By:________________________
Title:_____________________
Exhibit 7
SIXTH AMENDMENT
of the Defined Contribution Plan (Plan A)
of the Cooperative Banks Employees
Retirement Program (1994 Restatement)
Pursuant to the provisions of Section 13.1 of the aforesaid Plan, the
Cooperative Banks Employees Retirement Association hereby amends said Plan
by inserting a new paragraph at the end of Section 14.7 to read as follows:
"(c) Merger of Mercantile Bank and Trust Company 401(k) Plan.
Effectives of January 1, 1998, the Mercantile Bank and Trust Company 401(k) Plan
and its related trust (the Mercantile plan and trust')are merged with and into
the Plan and Trust. In connection with the merger, all of the provisions of the
Plan and Trust are substituted for and completely replace the provisions of the
Mercantile plan and trust except as follows:
(I) Solely for purposes of determining vesting in amounts attributable
to contributions under the Mercantile plan and trust prior to January 1, 1998,
all of the applicable provisions of the Mercantile plan and trust in effect on
December 31, 1997 relating to the determination of vesting will continue to
apply (which provisions are incorporated herein by reference for such purpose
only).
(ii) Solely for purposes of determining in-service withdrawal rights in
amount attributable to contributions made prior to January 1, 1998, all of the
applicable provisions of the Mercantile plan and trust in effect on December 31,
1997 relating to in-service withdrawals will continue to apply (which
provisions are incorporated herein by reference for such purpose only)."
IN WITNESS WHEREOF, the Cooperative Banks Employees Retirement
Association has caused this instrument to be executed in its name and on its
behalf by its officer thereunto duly authorized at Norwood, Massachusetts on
this 17th day of December, 1997.
COOPERATIVE BANKS EMPLOYEES
RETIREMENT ASSOCIATION
By:________________________
Title:_____________________
<PAGE>
Exhibit 16
BANK INVESTMENT FUND
Yield worksheet
FUND ONE DATE 12/31/97
Yield = 2[( a - b 6
____ + 1) -1]
[( cd )
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of
the period.
a = 744,929.79 b = 33,500.00
c = 146,642.6517 d = 983.7517
a - b = 711,429.79
cd = 144,259,957.90
Yield in accordance with the above formula is 5.99%.
<PAGE>
Exhibit 16
BANK INVESTMENT FUND
Total Return Worksheet
FUND ONE DATE 1 year
Ended 12/31/97
n 1
Total Return: P(l + T) = ERV or [(ERV) /n}
------- -1
[(P ) }
p = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1, 5, or 10
year periods to the end of the 1, 5, or 10 year
periods (or fractional portion thereof).
P = 1000.00 T = 7.12%
n = 1 ERV = 1,071.1795
Total return in accordance with the above formula is 7.12%.
<PAGE>
Exhibit 16
BANK INVESTMENT FUND
Total Return Worksheet
FUND ONE DATE 5 years
Ended 12/31/97
n 1
Total Return: P(l + T) = ERV or [( ERV) /n}
-------- -1
(P ) }
p = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1, 5, or 10
year periods to the end of the 1, 5, or 10 year
periods (or fractional portion thereof).
P = 1000.00 T = 5.44%
n = 5 years ERV = 1302.9883
Total return in accordance with the above formula is 5.44%.
Exhibit 16
BANK INVESTMENT FUND
Total Return Worksheet
FUND ONE DATE 10 years
Ended 12/31/97
n 1
Total Return: P(l + T) ERV or [( ERV ) /n}
----- -1
[( P ) }
p = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1, 5, or 10
year periods to the end of the 1, 5, or 10 year
periods (or fractional portion thereof).
P = 1000.00 T = 7.23%
n = 10 years ERV = 2010.0599
Total return in accordance with the above formula is 7.23%.
Exhibit 16
BANK INVESTMENT FUND
Yield worksheet
LIQUIDITY FUND DATE 12/31/97
Yield = c * 365
----
7
c = a
----
b
a net investment income (per share) or net change
b beginning value = 1000.00
c base period return = net investment income
---------------------
beginning value
a = 1.0733 b= 1000.00
c = .0010733
Yield in accordance with the above formula is 5.60%.
Exhibit 17
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Form N-1A of our
report dated January 30, 1998, and appearing on Page 12 of the Offering
Circular on the financial statements of Bank Investment Fund -
Fund One, appearing on Pages 13 through 22 of the Offering Circular
for the year ended December 31, 1997.
Parent McLaughlin & Nangle
Certified Public Accountants
Boston, Massachusetts
January 30, 1998
Exhibit 17
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in Form N-1A of our
report dated January 30, 1998, and appearing on Page 12 of the Offering
Circular on the financial statements of Bank Investment Fund -
Liquidity Fund, appearing on Pages 13 through 23 of the Offering
Circular for the year ended December 31, 1997.
Parent McLaughlin & Nangle
Certified Public Accountants
Boston, Massachusetts
January 30, 1998
Exhibit 19
BANK INVESTMENT FUND
FUND ONE
PRICE MAKE UP SHEET
Date: 12/31/97
Net Asset Value - January 1
$ 151,591,242
Cash Invested:
YTD-Yesterday $2,170,000
INV-Today -0- 2,170,000
Dividends Reinvested:
YTD-Yesterday 2,487,512
DR-Today 236,605 2,724,117
Cash Redeemed:
YTD-Yesterday (14,212,519)
RED-Today -0- (14,212,519)
Realized Gains (Losses):
YTD-Yesterday 5,078
G/L-Today -0- 5,078
Unrealized Depreciation:
YTD-Yesterday (1,330,580)
Appreciation/
(Depreciation) Today -0- (1,330,580)
TOTAL NET ASSETS - TODAY $143,608,498
Exhibit 19
PRE-NET ASSET VALUE COMPUTATION:
Total Net Assets - Yesterday
(Adjusted - see below) $143,371,893
Today's Appreciation/
Depreciation in Inv. Sec.* 0
Number of Shares Outstanding-
Yesterday (Adjusted - see below) 145,739.9176
Pre-NAV per share $983.7517
POST-NET ASSET VALUE COMPUTATION:
Total Net Assets - Today $143,608,498
Shares Outstanding:
Today 145,980.4309
Current
Redemptions - 0 -
Current
Investments (Dividend Reinvestment) 240.5133
Number of
shares out-
standing today 145,980.4309
NET ASSET VALUE PER SHARE 983.7517
*INVESTMENT SECURITIES PORTFOLIO
Yesterday Today
Market $139,029,654 $139,029,654
Cost 138,695,885 138,695,885
Appreciation/
Depreciation $ -0- $ -0-
TODAY'S CHANGE $ -0-
Exhibit 19
BANK INVESTMENT FUND
Liquidity Fund
PRICE MAKE UP SHEET
Date: 12/31/97
Net Asset Value - January 1
$210,207,556
Cash Invested:
YTD-Yesterday $763,373,313
INV-Today -0- 763,373,313
Dividends Reinvested:
YTD-Yesterday $ 7,052,027
DR-Today 688,829 7,740,856
Cash Redeemed:
YTD-Yesterday ($746,117,261)
RED-Today -0- ($746,117,261)
Realized Gains (Losses):
YTD-Yesterday -0-
G/L-Today -0- -0-
Unrealized Appreciation:
YTD-Yesterday -0-
Appreciation/
(Depreciation) Today -0- -0-
TOTAL NET ASSETS - TODAY $235,204,464
Exhibit 19
PRE-NET ASSET VALUE COMPUTATION:
Total Net Assets - Yesterday $235,204,464
Today's Appreciation/
Depreciation in Inv. Sec. 0
Number of Shares Outstanding-
Yesterday 235,204.4649
Pre-NAV per share $1000.00
POST-NET ASSET VALUE COMPUTATION:
Total Net Assets - Today $235,204,464
Shares Outstanding:
Today 234,515.6357
Current
Redemptions - 0 -
Current
Investments (Dividend Reinvestment) 688.8292
Number of
shares out-standing today 235,204.4649
NET ASSET VALUE PER SHARE $1000.00
INVESTMENT SECURITIES PORTFOLIO*
Yesterday Today
Market $
Cost
Appreciation/
Depreciation $
TODAY'S CHANGE $
This Section is Not Applicable - Amortized Cost Method used.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000773154
<NAME> CO OPERATIVE BANK INVESTMENT FUND
<SERIES>
<NUMBER> 1
<NAME> FUND ONE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 141,465,885
<INVESTMENTS-AT-VALUE> 141,799,654
<RECEIVABLES> 2,450,787
<ASSETS-OTHER> 19,831
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 144,270,272
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 661,774
<TOTAL-LIABILITIES> 661,774
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 160,539,166
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (17,264,431)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 333,763
<NET-ASSETS> 143,608,498
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,508,140
<OTHER-INCOME> 0
<EXPENSES-NET> 669,090
<NET-INVESTMENT-INCOME> 8,839,050
<REALIZED-GAINS-CURRENT> 5,078
<APPREC-INCREASE-CURRENT> 1,330,580
<NET-CHANGE-FROM-OPS> 10,174,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (8,839,050)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,216
<NUMBER-OF-SHARES-REDEEMED> 14,537
<SHARES-REINVESTED> 2,791
<NET-CHANGE-IN-ASSETS> (7,982,744)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 669,090
<AVERAGE-NET-ASSETS> 147,812,706
<PER-SHARE-NAV-BEGIN> 974.800
<PER-SHARE-NII> 58.350
<PER-SHARE-GAIN-APPREC> 8.950
<PER-SHARE-DIVIDEND> (58.350)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 983.750
<EXPENSE-RATIO> .450
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000773154
<NAME> CO OPERATIVE BANK INVESTMENT FUND
<SERIES>
<NUMBER> 2
<NAME> LIQUIDITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 234,252,515
<INVESTMENTS-AT-VALUE> 234,234,441
<RECEIVABLES> 1,281,073
<ASSETS-OTHER> 188,563
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 235,204,464
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 517,687
<TOTAL-LIABILITIES> 517,687
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 235,204,464
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 235,204,464
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,453,997
<OTHER-INCOME> 0
<EXPENSES-NET> 362,295
<NET-INVESTMENT-INCOME> 12,091,702
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,091,702
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,091,703)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 763,373
<NUMBER-OF-SHARES-REDEEMED> 746,117
<SHARES-REINVESTED> 7,741
<NET-CHANGE-IN-ASSETS> 24,996,908
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 362,295
<AVERAGE-NET-ASSETS> 224,568,526
<PER-SHARE-NAV-BEGIN> 1000.000
<PER-SHARE-NII> 53.830
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (53.830)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1000.000
<EXPENSE-RATIO> .160
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
