CO OPERATIVE BANK INVESTMENT FUND
N-30D, 1999-04-05
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OFFERING CIRCULAR
- -----------------

                            Bank Investment Fund
                                  Fund One
                                75 Park Plaza
                      Boston, Massachusetts 02116-3934
                                617-695-0415
                      --------------------------------

      The Bank Investment Fund (the "Corporation") is an investment company 
which currently invests and manages two mutual funds derived from voluntary 
subscriptions made by eligible investors.

      Fund One (the "Fund") is a no-load, diversified, open-end investment 
fund whose objective is maximum current income consistent with liquidity 
and the maintenance of a portfolio of high quality investments in short and 
intermediate term marketable securities issued by the United States 
Government and its agencies, repurchase agreements and certain money market 
instruments. The Fund is designed solely for use by eligible investors as 
an economical and convenient way to make liquid investments. Fund shares 
are currently offered to the following eligible investors: Massachusetts 
Co-operative Banks, Massachusetts Savings Banks, Massachusetts Trust 
Companies, Federally Chartered Savings Banks and Savings and Loan 
Associations with their principal place of business in Massachusetts, The 
Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance 
Company of Massachusetts, the National Cooperative Bank, and directly or 
indirectly wholly-owned subsidiaries of such institutions (sometimes 
hereinafter called "Banks").

      Investors should read this Offering Circular and retain it for future 
reference.

      THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE 
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE 
CONTRARY IS A CRIMINAL OFFENSE.

      THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
COMMISSIONER OF BANKS OF THE COMMONWEALTH OF MASSACHUSETTS (the 
"Commissioner of Banks"), NOR HAS THE COMMISSIONER OF BANKS PASSED UPON THE 
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE 
CONTRARY IS UNLAWFUL.

      THE SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE 
NOT INSURED OR GUARANTEED. SUCH SHARES ARE BEING OFFERED PURSUANT TO AN 
EXEMPTION FROM THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES 
ACTS AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER SUCH ACTS.

                      --------------------------------

           The date of this Offering Circular is February 26, 1999

                              TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                             Page
                                                             ----

<S>                                                      <C>
Risk Return Summary                                           1
  Investment Objectives                                       1
  Principal Investment Strategies                             1
  Principal Investment Risk                                   1
  Bar Chart and Performance Table                             2
  Management Discussion                                       4
  Fee Table                                                   4
Investment Objectives and Restrictions                        5
Statutory Limitation on Investments                           6
Dividends                                                     7
Net Asset Value                                               7
Investors' Accounts                                           7
Taxes                                                         7
Auditors and Legal                                            8
Yield                                                         8
How Shares of Fund are Purchased                              8
How Shares of Fund are Redeemed                               9
Transfer Restrictions                                        10
Organization                                                 10
Description of Fund Shares                                   11
Supervision and Regulation                                   11
Investment Advisor                                           11
Transfer Agent                                               12
Operating and Distribution Expenses                          12
Exchange Privilege                                           13
Custodian                                                    13
Year 2000                                                    13
Management of the Fund                                       14
Financial Highlights                                         16
Independent Auditor's Report                                 18
Financial Statements                                         19
Investments                                                  22
Account Application Forms                                    30
Additional Information                                   Back Cover

</TABLE>

                            BANK INVESTMENT FUND
                                  FUND ONE
                                75 Park Plaza
                      Boston, Massachusetts 02116-3934

                             RISK RETURN SUMMARY

Investment Objectives

      The investment objective of Fund One is to maximize current income 
consistent with liquidity of assets and safety of principal.

      The Fund was formed to provide participating banks with a highly 
liquid, diversified, high-quality investment vehicle designed to assist 
liquidity management.

Principal Investment Strategies

      The Fund invests principally in short and intermediate term 
marketable debt securities issued by the United States Government or by 
agencies of the United States, repurchase agreements, reverse repurchase 
agreements and money market instruments.

      Asset investments for Fund One include principally those securities 
eligible to be included in legal liquidity for Massachusetts co-operative 
banks under Massachusetts General Laws, Chapter 170, Section 22.

      The categories of those securities include, but may not be limited to 
a) cash on hand and due from banks, b) certificates of deposit due from any 
trust company, national banking association or banking company, c) bonds 
and other direct obligations of the United States or such obligations as 
are unconditionally guaranteed as to principal and interest by the United 
States, d) federal agency obligations which have unexpired terms of five 
years or less, e) repurchase agreements, f) any other debt instrument 
deemed eligible for legal liquidity by the Commonwealth or its agent, and 
g) certain common money market instruments of temporary duration.

      The Fund may enter into reverse repurchase agreements to meet short-
term liquidity needs of the Fund. These agreements may not be in excess of 
three business days. Any such borrowing would be limited to borrowing 
allowable under Section 18 of the Investment Company Act of 1940 and 
applicable regulations promulgated thereunder.

Principal Investment Risk

      The main risk factor in the Fund's performance is interest rates. The 
yield and share price of the Fund change daily based on changes in interest 
rates and market conditions, and in response to other economic, political 
or financial events. The Fund's total return includes both income and price 
gains or losses. While income is the most important component of returns 
over time, the Fund's emphasis on income does not mean the Fund invests 
only in the highest-yielding bonds and notes available, or that it can 
avoid losses of principal. In general, bond and note prices rise when 
interest rates fall and fall when interest rates rise. Longer-term bonds 
and notes are usually more sensitive to interest rate changes. In other 
words, the longer the maturity of a bond or note, the greater the impact a 
change in interest rates is likely to have on the price.

      An additional risk factor in the Fund's performance is pre-payment 
risk. Many types of debt securities, including mortgage securities and 
callable bonds and notes may be subject to a prepayment risk. Prepayment 
risk occurs when the issuer of a security can prepay principal prior to the 
security's maturity. Securities subject to prepayment risk generally offer 
less potential for gains during a declining interest rate environment, and 
similar or greater potential for loss in a rising interest rate 
environment.

      These risk factors may adversely effect the Fund's net asset value, 
yield, total return and loss of money in an investment in the Fund may 
result.

Bar Chart and Performance Table

      The bar chart shows the changes of the Fund's total return 
performance from year to year over a ten year period.

      An investor bank may judge the Fund's portfolio performance by 
comparing it to that of similar mutual funds or to market indices. 
Performance may also be gauged by the total return of the portfolio over 
time.

                        BANK INVESTMENT FUND-FUND ONE
                             Annual Total Return

<TABLE>
<CAPTION>

           1991    1992    1993     1994     1995    1996    1997    1998
           ----    ----    ----     ----     ----    ----    ----    ----

          <S>      <C>     <C>     <C>      <C>       <C>    <C>     <C>
          12.11    6.03    6.01    -2.26    12.78     4.1    7.12    6.32

<FN>
- --------------------
During the ten-year period shown in the bar chart, the highest quarterly 
return was 23.4% (for the quarter ended June 30, 1989) and the lowest 
quarterly return was - 5.3% (for the quarter ended March 31, 1994).
</FN>

</TABLE>

      The table shows how the Fund's average annual return for one, five 
and ten years for the periods ended December 31, 1998 compared to those of 
the Lehman Government 1 - 3 year index. A widely recognized, unmanaged 
index of fixed income securities.

<TABLE>
<CAPTION>

                                      One      Five     Ten
                                      Year     Year     Year
                                      ----     ----     ----

<S>                                   <C>      <C>      <C>
Bank Investment Fund - Fund One       6.32%    5.50%    7.19%
Lehman Government 1 - 3 year index    6.97%    5.96%    7.35%

<FN>
- --------------------
Total returns are based on past results and are not a prediction of future 
performance.
</FN>

</TABLE>

                        BANK INVESTMENT FUND-FUND ONE
                            Investment Comparison

<TABLE>
<CAPTION>

                   1988      1989      1990      1991      1992      1993      1994      1995      1996      1997      1998
                   ----      ----      ----      ----      ----      ----      ----      ----      ----      ----      ----
<S>               <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Shearson Lehman
 1-3 Yr. Treas.   10,000    11,068    12,150    13,596    14,434    15,216    15,291    16,947    17,809    18,993    20,317
Fund One          10,000    11,102    12,157    13,629    14,451    15,319    14,973    16,887    17,578    18,830    20,021

<FN>
- --------------------
The line graph assumes an initial investment of $10,000, in Fund One and 
the Lehman Government 1-3 year index, at the beginning of the first year. 
The line graph compares this initial and subsequent account values at the 
end of the most recently completed ten years.
</FN>

</TABLE>

Management Discussion

      Fund One reflected a total return of 6.32% for the year ended 
December 31, 1998. During the same period, the Lehman 1-3 year index, which 
consists of government and agency securities of comparable maturities to 
the majority of the portfolio, had a total return of 6.97%. The Fund's 
portfolio performance in 1998 was slightly less favorable than the index. 
This difference is attributed to both the overall net asset decrease in 
1998 and the Fund's investment income stream, including reduction in 
interest income from higher yielding investment securities called in 1998 
and reinvested in then existing lower market rates. The Federal Reserve 
Bank lowered short-term interest rates by 25 basis points on September 29, 
1998, October 15, 1998, and November 17, 1998. During this period, the 
Federal funds rate moved from 5.50% to 4.75%. Financial unrest in 
international markets in Russia, Japan, other Pacific Rim countries and 
Latin America were factors which prompted this action by the Federal 
Reserve. These interest rate changes are expected to alleviate any domestic 
impact to the U.S. economy from those global economic problems. The 
portfolio turnover ratio was 50.00% in 1998 as compared to 25.93% in 1997. 
The increased portfolio turnover is primarily attributed to the 
reinvestment of maturing and called securities in light of the declining 
interest rate environment in 1998. While securities were called in the 
third and fourth quarters of 1997, investment securities were called 
throughout 1998. In 1997, the established portfolio positions allowed 
management to limit its investment activity, 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.

Fee Table

      This table describes the fees and expenses that you may pay if you 
buy and hold shares of the Fund.

<TABLE>
<CAPTION>

                                                         Year Ended
                                                      December 31, 1998
                                                      -----------------

      <S>                                             <C>          <C>
      Shareholder Transaction Expenses*                              0%
      Annual Fund Operating Expenses
       (as a percentage of average net assets)
        Management Fees                                              0%
        12b-1 Fees                                                 .08%
        Other Expenses
          Compensation, Payroll, Taxes, & Benefits    .24%
          Occupancy                                   .04%
          Remainder                                   .12%
                                                      ---
                                                                   .40%
                                                                   ---
      TOTAL FUND OPERATING EXPENSES                                .48%
                                                                   ---

<FN>
- --------------------
<F*>  The Fund charges no sales load or deferred sales load on any 
      purchase, reinvested dividend, exchange, or redemption transactions.
</FN>

</TABLE>

Example

      You would pay the following expenses on a $10,000 investment, 
assuming (1) 5% annual return and (2) with or without redemption at the end 
of each time period:

<TABLE>
<CAPTION>

                               1 Year    3 Years    5 Years    10 Years
                               ------    -------    -------    --------

      <S>                      <C>       <C>        <C>        <C>
      December 31, 1998        $49.12    $155.01    $272.02    $621.13

</TABLE>

      The purpose of the foregoing table, which is based upon the Fund's 
fiscal year ended December 31, 1998, is to assist you in understanding the 
various costs and expenses that an investor in the Fund will bear directly 
or indirectly. The Example provided is intended to show the dollar amount 
of expenses that would be incurred over the indicated periods on a 
hypothetical $10,000 investment in the Fund, assuming a 5% annual return 
and assuming that the Fund's expenses continue at the rates shown in the 
table. However, the actual return on an investment in the Fund may be 
greater or less than 5%. Furthermore, the Example should not be considered 
a representation of past or future expenses; actual expenses may be greater 
or less than those shown.

                   INVESTMENT OBJECTIVES AND RESTRICTIONS

      The investment objective of the Fund is to achieve as high a level of 
current income as is consistent with safety of principal.

      The Fund was formed to provide participating banks with a highly 
liquid, diversified, high-quality investment vehicle designed to assist 
liquidity management. By pooling the money of its investors, it is able to 
offer the economies of size and diversification of maturities normally 
available to a large corporate and institutional investors.

      Shares of the Bank Investment Fund are eligible investments to be 
included in legal liquidity under Massachusetts General Laws, Chapter 170, 
Section 22.

      The Board of Directors of the Corporation has investment discretion 
with regard to Fund One assets.

      The Corporation is authorized by statute to invest its assets in a 
variety of debt and equity securities. No more than 5% of the Corporation's 
assets, at the time of purchase, may be invested in the securities of any 
one issuer except for direct obligations of the United States or 
obligations guaranteed by the United States, and other obligations issued 
under certain Federal programs or by certain federal agencies or 
instrumentalities.

      The Fund is further restricted through the investment policy 
maintained by the Corporation's Officers and Directors. The investment 
policy for the Fund restricts the Corporation from a) making any investment 
in equity securities for the Fund, b) making any intermediate or long-term 
investment in corporate (non-governmental) debt securities for the Fund and 
c) investing more than 25% of the Fund's total assets in the securities of 
a particular industry other than U.S. Government or Federal agency 
securities.

               STATUTORY LIMITATION ON INVESTMENTS IN THE FUND
                           BY PARTICIPATING BANKS

      Under Massachusetts General Laws, Chapter 167F, Section 3(2) as 
amended, a participating or eligible savings bank or co-operative bank may 
invest an amount in excess of 100% of its capital and surplus in any 
distinct non-equity investment fund of the Corporation except to the extent 
that the Commissioner of Banks for the Commonwealth of Massachusetts may by 
regulation set limits and conditions. The participating bank will be 
responsible for monitoring and compliance with this limitation.

      Under Massachusetts General Laws, Acts of 1932, Chapter 45, Section 
7, as amended, The Co-operative Central Bank Reserve Fund may not invest or 
hold at any one time more than 20% of its assets with the Corporation.

      Investments in the Fund are affected by Section 303 of the FDIC 
Improvement Act of 1991 which limits investments by FDIC-insured state 
banks (including Massachusetts co-operative banks, savings banks and trust 
companies) in common or preferred stock or shares of mutual funds to the 
extent that such investments are permissible for national banks. 
Permissible national bank investments, as described in section 24(7) of the 
National Bank Act and 12 C.F.R. Part 1, include mutual funds which invest 
in securities and financial instruments eligible for direct investment by 
national banks. A state bank's investment in Fund One is subject to the 
quantitative limits, on a pass-through basis, as are applicable to national 
banks under 12 C.F.R. Part 1. The investment portfolio composition of Fund 
One is comprised of securities and other financial instruments in which 
national banks may invest without limitation (e.g., U.S. Government and 
federal agency obligations).

      Federally chartered savings banks and savings and loan associations 
(with their principal place of business in Massachusetts) may invest in an 
open-end mutual fund, such as Fund One, which invests in securities and 
financial instruments in which such institutions may invest directly. For 
purposes of determining compliance with quantitative investment limitations 
under the Home Owners Loan Act ("HOLA"), an investing bank's or 
association's proportionate share of a mutual fund's individual investments 
will, under 12 CFR,  560.32, be aggregated with such investments held 
directly. (The investments held by Fund One may also be held without 
limitation by federally chartered savings banks and savings and loan 
associations.) Apart from compliance with applicable investment 
limitations, a bank or association may invest, without prior notice to the 
Office of Thrift Supervision, an amount up to 15% of its total capital in 
any one mutual fund, or up to 50% of total capital in all such pass-through 
investment vehicles. Investments in excess of the 15% and 50% limits may 
only be made when thirty days' advance notice has been provided to the 
Office of Thrift Supervision.

      Certain federally chartered savings banks who converted from a 
Massachusetts savings bank charter may, under certain grandfather 
provisions of HOLA, retain broader investment authority than that described 
in the preceding paragraph. For example, section 5(i) of HOLA grandfathers 
state authorized investment powers of certain Federal savings banks in 
existence as of the date of enactment of Federal statutes (e.g., the 
Financial Institution Reform, Recovery, and Enforcement Act of 1989) which 
may have otherwise limited such investments.

                                  DIVIDENDS

      The Fund distributes all of its net income on a daily basis. 
Dividends are declared on each day that the Fund is open for business. 
Investors receive dividends in additional shares unless they elect to 
receive cash. Payment is made in additional shares at the net asset value 
on the payable date or in cash, on a monthly basis.

      Investors wishing to change the method of receiving dividends must 
notify the Fund in writing at least one week before payment is to be made.

      Net income of the Fund consists of all interest income accrued and 
earned, less estimated expenses of the Fund. Distributions of realized net 
capital gains, if any, are declared and paid once each year and are 
reinvested in additional shares at net asset value or, at each 
shareholder's option, paid in cash.

                               NET ASSET VALUE

      The Fund's net asset value per share is determined as of the close of 
the New York Stock Exchange on days when the Custodian Bank (State Street 
Bank) is open for business. The net asset value per share is determined by 
adding the appraised value of all securities and all other assets, 
deducting liabilities and dividing by the number of shares outstanding. 
U.S. debt securities are normally valued on the basis of valuations 
provided by market makers. Such prices are believed to reflect the fair 
value of such securities and to take into account appropriate factors such 
as institutional size trading in similar groups of securities, yield 
quality, coupon rate, maturity, type of issue, and other market data. 
Securities for which market quotations are not readily available will be 
valued at fair value using methods determined in good faith by or at the 
direction of the Board of Directors.

                             INVESTORS' ACCOUNTS

      The Fund maintains an account for each investor in full and 
fractional shares. All purchase and sale transactions are confirmed to the 
investor. Statements of account showing all transactions for the month, 
including dividends paid, are sent to participating banks on a monthly 
basis.

                                    TAXES

      The Fund has qualified as a regulated investment company under the 
Internal Revenue Code and will not be liable for federal income taxes to 
the extent its earnings are distributed. Dividends derived from interest, 
together with distributions of any short-term capital gains, are taxable as 
ordinary income, whether or not reinvested. Dividends of the Fund do not 
qualify for the dividends received exclusion for corporations.

      Distributions of net long-term capital gains, if any, realized by the 
Fund are made at least annually and are taxable to shareholders. In 
addition, an investing Bank may realize a capital gain or loss in any year 
in which it redeems shares. It should be noted that long-term capital gain 
distributions and/or capital gains or losses realized from redemptions on 
or after January 1, 1987 will be taxed at the same rates as ordinary income 
under the provisions of the Tax Reform Act of 1986.

      A statement setting forth the federal income tax status of all 
distributions made during each calendar year is sent to each shareholder 
promptly after the end of such year.

                             AUDITORS AND LEGAL

      Parent, McLaughlin and Nangle, Certified Public Accountants, Inc., 
are the auditors of the Fund. The law firm of Steptoe and Johnson has 
passed upon certain legal matters of the Fund in connection with the shares 
offered by this offering circular.

                                    YIELD

      The yield for the 30-day period ended December 31, 1998 was 5.69%. 
Yield is calculated based on the 30 days ending on the date of the most 
recent statement of Assets and Liabilities, (as presented elsewhere 
within). A standard formula as required by the Securities and Exchange 
Commission is utilized for the computation of this yield amount. Net 
Investment Income in the formula differs from actual Net Investment Income 
as included in the Statement of Operations (included elsewhere within). Net 
Investment Income as reflected in the formula includes yield based upon 
market valuation of the portfolio at the commencement of the 30 day period. 
This yield amount may differ from the ratio of Net Investment Income to 
Average Net Assets reflected in selected financial information (as 
presented elsewhere within). The Fund yield fluctuates as a result of 
numerous factors. Therefore, the yield stated here is not necessarily 
representative of the Fund's future yield. The 30 day yield, for the most 
recent calender month end, may be obtained by directly calling the Rate 
Line 617-695-0419 or by calling our main office telephone number 617-695-
0415 collect.

                    HOW SHARES OF THE FUND ARE PURCHASED-
                       TELEPHONE INVESTMENT PROCEDURE

      Shares of the Fund are offered for sale on days on which both the New 
York Stock Exchange and the custodian bank are open for business. There is 
no sales charge. The minimum initial investment is $50,000.00 (although in 
certain cases the Corporation may require a larger minimum investment in 
accordance with requirements of applicable securities laws). Additional 
investments may be made in any amount in excess of the minimum.

Bank Wire Transfers

      Call your correspondent bank and speak to your account officer. Tell 
him that you want to transfer funds to State Street Bank and Trust Company. 
Instruct him to wire transfer the money before 12:00 noon, Boston time, to:

                 State Street Bank and Trust Company
                 Boston, Massachusetts
                 Routing number: 0110-0002-8
                 For account of the Bank Investment
                 Fund, Fund One
                 Account number: 9006-930-3

Internal Money Transfers

      If your correspondent bank account is with the State Street Bank and 
Trust Company, contact your account officer and instruct him to transfer 
funds from your account to the account of the Bank Investment Fund, Fund 
One, Account number: 9006-930-3.

      AFTER INSTRUCTING YOUR BANK TO TRANSFER FUNDS, PLEASE CALL THE FUND 
AND TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE 
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER, IT IS 
IMPORTANT TO DO THIS BEFORE 12:00 NOON.

      The securities market, in which the Fund buys and sells securities, 
usually requires immediate settlement in Federal funds for all security 
transactions; therefore, payment for the purchase of Fund shares not 
received in the form of Federal funds will be recorded as share 
subscriptions, and not invested in Fund shares until such payments are 
converted into Federal funds. Payments received by bank wire can be 
converted immediately into Federal funds; any other form of payment will 
result in a delay. Orders received prior to 12:00 noon, Boston time, will 
be invested in shares of the Fund at the next determined net asset value.

                    HOW SHARES OF THE FUND ARE REDEEMED-
                       TELEPHONE REDEMPTION PROCEDURE

      An investor may withdraw all or any portion of his investment by 
redeeming shares on any day that the Fund is open for business at the next 
determined net asset value. The proceeds of redemptions will be wired 
directly to the investor's bank account within one business day. The Fund 
reserves the right to delay withdrawal requests up to 7 business days after 
any investment that has been made with uncollected funds.

      The right of redemption can be suspended and the payment of the 
redemption proceeds deferred during any period in which a) the New York 
Stock Exchange is closed or trading on such Exchange is restricted or b) 
the Securities and Exchange Commission deems an emergency to exist, or 
during any other period permitted by order of the Commission for the 
protection of investors.

Bank Wire Transfers

      Call the Fund by 12:00 noon (Call or Trade Date) to redeem shares the 
following day (Settlement Date). When the amount to be redeemed is at least 
$5,000.00, the Fund will automatically wire transfer the amount to your 
correspondent bank account at settlement.

Internal Money Transfers

      If your bank's account is with the State Street Bank and Trust 
Company, contact the Fund by 12:00 noon (Call or Trade Date) for redemption 
of shares the following day (Settlement Date). The Fund will transfer the 
amount from its account to your account at State Street Bank and Trust 
Company at settlement.

                            TRANSFER RESTRICTIONS

      Fund shares may not be transferred by banks holding such shares to 
any persons other than an eligible bank (except that the shares may be 
pledged to such other persons or they may be transferred to The Co-
operative Central Bank, hereinafter the "Central Bank"). If the Fund shares 
are acquired by any other persons by operation of law or by foreclosure 
upon the pledge of such shares (or through transfer, in the case of the 
Central Bank), the Corporation must offer to repurchase the shares from 
such person at net asset value of the shares. If such offer is refused, no 
dividend may be paid by the Corporation or Fund on such shares, and the 
redemption price which the holder of such shares may obtain in any 
subsequent repurchase of those shares by the Corporation or Fund is limited 
to the net asset value of the shares on the date of the Corporation's 
offer.

      In the event of any transfer, it is extremely important to notify the 
Corporation immediately of any purchase, sale or transfer of Fund shares 
not made through the Corporation or its transfer agent. Immediate 
notification should be furnished to the Corporation by telephone, with 
written notification as a follow-up thereto. Prompt notification is 
essential to avoid any delay in redemption offer and loss of earnings. 
Please remember that a statutory restriction exists on the Corporation and 
it would be unable to pay a dividend to an ineligible holder after expiry 
of the 30-day repurchase period which is statutorily available following 
such transfer.

                                ORGANIZATION

      The Corporation was organized effective April 7, 1985 pursuant to a 
Special Act of the Commonwealth [Acts of 1984, Chapter 482 as amended] of 
Massachusetts under its chartered name "Co-operative Bank Investment Fund" 
and does business under the name "Bank Investment Fund." The Special Act 
indicates that the purpose of the Corporation is to hold, invest, reinvest 
and manage one or more mutual investment funds, which shall include all 
property of the Corporation, to be derived from voluntary subscription 
thereto by the Banks.

      The Corporation is an open-end diversified management investment 
company authorized to invest its assets in certain real estate mortgages, 
and a variety of other investments, including direct obligations of the 
United States, obligations guaranteed by the United States, obligations 
guaranteed by the Federal National Mortgage Association, bonds and other 
evidences of indebtedness of corporations, shares of common or preferred 
stock registered on a national securities exchange or for which quotations 
are available through the National Quotation Bureau, Inc. or a comparable 
service, or through a national securities market established in conformance 
with Section 11A of the Securities Act of 1934, and other debt and equity 
securities. Fund One will only invest in those securities described under 
"Investment Policy" and "Investment Restrictions" elsewhere herein.

      The business of the Corporation is conducted by a Board of Directors 
elected by the Corporation's Incorporators and the Directors have 
investment discretion relative to Corporation assets. The Incorporators of 
the Corporation are the Directors of The Co-operative Central Bank, which 
is the statutory reserve bank and insurer of deposits in excess of Federal 
deposit insurance limitations for Massachusetts co-operative banks.

      The Corporation operates pursuant to an exemption from the sections 
of the Investment Company Act of 1940 which deal with (a) voting rights of 
security holders and (b) the manner of sale of redeemable shares.

      Only Massachusetts Co-operative Banks, Massachusetts Savings Banks, 
Massachusetts Trust Companies, Federally Chartered Savings Banks and 
Savings and Loan Associations with their principal place of business in 
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank 
Life Insurance Company of Massachusetts, The National Cooperative Bank and 
directly or indirectly wholly-owned subsidiaries of such institutions are 
currently offered shares in the Fund. Such investors may purchase shares of 
beneficial interest, which do not entitle the shareholders thereof to 
voting rights of any nature, including investment policy matters.

                         DESCRIPTION OF FUND SHARES

      The Corporation has no capital stock. Beneficial ownership in each of 
the Corporation's funds is represented by shares of beneficial ownership, 
as recorded in book entry form. Each share is equal in every respect to 
every other share, except that if the Directors of the Corporation 
establish distinct investment funds, shares will be issued in distinct 
classes and each share within each class will be equal in every respect to 
every other share of that class.

      The shares of beneficial ownership are no par, non-voting, with a 
stated value of $1,000, issued in book entry form only. Investment and 
redemption of shares is effected at the net asset value as described 
elsewhere herein. Shares are recorded in whole and/or fractional shares, as 
applicable. Physical certificates are not issued. Monthly statements are 
furnished to reflect share balance and activity.

      With regard to the absence of voting rights, management believes that 
eligible investors are adequately protected because of a) regulation by the 
Commissioner of Banks, b) the redeemable nature of the shares, c) 
representation of co-operative bank investors in the election of Directors 
of the Central Bank, who as Incorporators elect the Corporation's 
Directors, and d) representation of savings bank investors by an advisor at 
such corporate meetings of the Incorporators.

                         SUPERVISION AND REGULATION

      As provided by Massachusetts statute [Chapter 482, Acts of 1984 as 
amended] the Corporation is subject to the supervision of the Commissioner 
of Banks of the Commonwealth of Massachusetts. Periodic reporting to the 
Commissioner of Banks is also required by the same statute. The Corporation 
is registered as an open-end diversified management investment company 
under the Investment Company Act of 1940, as amended, and is subject to 
reporting requirements thereunder.

                             INVESTMENT ADVISOR

      The Corporation presently does not employ the services of any 
investment advisory or management services company. Investment decisions 
for the Fund are made by authorized officers of the Corporation, subject to 
approval or ratification by its Board of Directors. The Corporation 
reserves the right at any time in the future to appoint an investment 
advisor at any reasonable and customary fee as may be agreed when, in the 
opinion of the Corporation Directors, the use of such advisory or 
management services would improve Fund performance.

                               TRANSFER AGENT

      The Corporation maintains the records for the investment, redemption, 
and/or transfer of Fund shares. The Corporation reserves its right at any 
time in the future to appoint a separate transfer agent at any reasonable 
and customary fee as may be agreed when, in the opinion of the Corporation 
Directors, the use of such transfer service is necessary. The limited 
number of shareholders and nature of Fund operation does not, at this time, 
justify the use of a separate agent and would only be an extra or 
unnecessary expense.

                     OPERATING AND DISTRIBUTION EXPENSES

      Normal expenses which may be borne by the Fund include, but are not 
limited to: Director fees, salaries and wages, payroll taxes, employee 
benefits, taxes, corporate fees, occupancy, furniture and equipment, data 
processing, legal, auditing and accounting, telephone and postage, 
custodial and other bank fees, preparation, printing and distribution of 
reports, insurance, membership fees, organization, and other miscellaneous 
expenses.

      The Corporation has adopted a plan of distribution pursuant to Rule 
12b-1 of the Investment Company Act of 1940 (the "Plan") providing that the 
Fund will pay certain expenses incurred by the Corporation which may be 
considered to be primarily intended to result in the sale of shares in the 
Fund. The expenses which may be incurred pursuant to the Plan include, 
without limitation, those for the preparation, printing and distribution of 
written materials for other than existing investors, preparation and 
distribution of advertising material and sales literature, direct payments 
to sales personnel, and other similar activities. The maximum expenditures 
which may be made pursuant to the Plan in any year is .12 of 1% of the 
average daily net asset value of the Corporation for such year. The Board 
of Directors of the Corporation has concluded that there is a reasonable 
likelihood that the Plan will benefit the Fund and its shareholders.

      Expenditures of $101,919 (.08% of average net assets) pursuant to the 
12b-1 plan were incurred in and for the year ended December 31, 1998: 
$5,200 for advertising in trade journals and similar publications; $4,919 
for printing and mailing of offering circulars; $41,800 for compensation, 
payroll taxes and benefits for personnel in sales and customer service; 
$36,300 for sponsorship of annual subscriptions and other promotional 
materials; and $13,700 for other plan expenses.

      Because more than one fund will be operated by the Corporation, 
operating expenses and expenses incurred pursuant to the Plan related 
directly to a single fund operation will be charged directly to that fund. 
Common or indirect expenses will be allocated among funds in accordance 
with the annual budget as determined by the Board of Directors of the 
Corporation to be fair and equitable or on such other basis as the Board of 
Directors of the Corporation may determine from time to time to be fair and 
equitable.

      The Corporation reimbursed the Central Bank for expenses paid on 
behalf of the Corporation and for its proportionate share of expense items 
used in common by both the Corporation and the Central Bank. All fees and 
expenses for the Fund are estimated and accrued daily. Actual operating 
expenses for the year ended December 31, 1998 was .48% of average net 
assets. Operating expenses paid to the Central Bank for the year ended 
December 31, 1998 was $40,800.

                             EXCHANGE PRIVILEGE

      Shares of the Fund may be exchanged for shares of another fund on the 
basis of the respective net asset value of the shares involved, to the 
extent that additional funds are established by the Corporation.

                                  CUSTODIAN

      The Corporation is required by statute to at all times employ a 
national banking association located in the Commonwealth of Massachusetts, 
or a Massachusetts state-chartered bank authorized to exercise trust 
powers, as the Corporation's or Fund's custodian, to hold the securities 
owned by the Corporation and any monies delivered by the Corporation's or 
Fund's shareholders or due to the Corporation or Fund. Purchase and sale 
transactions are effected through or by the custodian bank upon the 
instructions of the Corporation.

      The State Street Bank and Trust Company, 225 Franklin Street, Boston, 
MA 02110 serves as custodian of the Fund's cash and investments.

                                  YEAR 2000

      All software provided and maintained by Bankware, Inc. in use by the 
Bank Investment Fund is currently year 2000 compliant. Software review, 
evaluation, update, implementation and testing validation were completed 
prior to December 31, 1998. We fully expect to process participating banks' 
investments, redemptions and monthly interest payments in Fund One without 
disruption in the year 2000. Cost related to this year 2000 systems issue 
were not material. The Fund recorded expense of $6,108 in 1998 in this 
regard. Little, if any, further expense is expected.

      Like other mutual funds and other financial and business 
organizations around the world, the Fund could be adversely affected if the 
computer systems used by its third party transaction processors, such as 
custodians, banks, broker dealers or others that the Fund does business 
with, do not properly process the date from and after January 1, 2000. The 
Fund continues to seek assurances that comparable steps are being taken by 
these third party processors. However, there can be no assurance that these 
steps will be sufficient to prevent any adverse impact on the Fund.

                           MANAGEMENT OF THE FUND

      The Incorporators of the Corporation are the Directors of The Co-
operative Central Bank which is the statutory reserve bank and insurer of 
deposits in excess of Federal deposit insurance limitations for 
Massachusetts co-operative banks. The Board of Directors of the Corporation 
is elected by the Incorporators.

      The Fund's primary investment officer is James L. Burns, Jr., 
President. He has held this position since inception of the Fund in 1985. 
For more than 15 years prior to the inception of the Fund, he managed 
investment portfolios for the Co-operative Central Bank and the State 
Street Bank and Trust Company.

      Directors and Officers of the Corporation, together with information 
as to their principal business occupations during the past five years, are 
shown below:

James L. Burns, Jr., President      President of The Co-operative Central Bank,
 and Chief Executive Officer         75 Park Plaza, Boston, MA 02116-3934

William F. Casey, Jr.,              Executive Vice President and Treasurer 
 Executive Vice President            of The Co-operative Central Bank,
                                     75 Park Plaza, Boston, MA 02116-3934

Susan L. Ellis, Vice President      Vice President of The Co-operative Central
 and Treasurer Bank,                 75 Park Plaza, Boston, MA 02116-3934

Jeremiah J. Foley, Vice President   Vice President of The Co-operative Central
 and Clerk of the Corporation        Bank, 75 Park Plaza, Boston, MA 02116-3934

Robert E. Haley, Vice President     Vice President of Bank Investment Fund,
                                     75 Park Plaza, Boston, MA 02116-3934

Annemarie Lee, Vice President       Assistant Vice President of The
                                     Co-operative Central Bank,
                                     75 Park Plaza, Boston, MA 02116-3934

Claire R. Bothwell, Director        Chairman of the Board of the Ware
                                     Co-operative Bank, Main Street,
                                     Ware, MA 01082

Robert F. Day, Director             President of The Needham Co-operative Bank,
                                     1063 Great Plain Ave., Needham, MA 02192

Charles P. Hooker, Director         Chairman of the Board of The Pittsfield
                                     Co-operative Bank, 70 South Street,
                                     Pittsfield, MA 01202

Ronald E. Lestan, Director          President of The Walpole Co-operative Bank,
                                     982 Main Street, Walpole, MA 02081

Walter A. Murphy, Director and      Chairman of the Board of the Falmouth
 Clerk of the Board                  Co-operative Bank, P.O. Box 567,
                                     Falmouth, MA 02541

John H. Pearson, Jr., Director      President of Butler Bank-A Co-operative
                                     Bank, 10 George Street, Lowell, MA 01852

                            --------------------

                                 IN MEMORIUM

      The Directors, Officers and Staff of the Bank Investment Fund note 
with great sorrow the passing of Mr. John T. Day on January 28, 1999. Mr. 
Day served as a member of the Board of Directors since 1985 and as Chairman 
of the Board since 1990. Mr. Day was the Chairman and Chief Executive 
Officer of the Mt. Washington Co-operative Bank. His intelligence, humor, 
friendship and guidance will be sadly missed.

                            FINANCIAL HIGHLIGHTS
               (For a share outstanding throughout each year)

      The financial highlights table is intended to help you understand the 
Fund's financial performance for the past 10 years. Certain information 
reflects financial results for a single fund share. The total returns in 
the table represent the rate that an investor would have earned (or lost) 
on an investment in the Fund (assuming reinvestment of all dividends and 
distributions). This information has been audited by Parent, McLaughlin & 
Nangle, whose report, along with the Fund's financial statements, are 
included elsewhere herein.

<TABLE>
<CAPTION>

                                             Year Ended  December 31,
                                         --------------------------------
                                           1998        1997        1996
                                         --------    --------    --------

<S>                                      <C>         <C>         <C>
Net asset value, beginning of period     $ 983.75    $ 974.80    $ 996.20
                                         --------    --------    --------
Income from investment operations:
  Net investment income                     56.88       58.35       60.41
  Net realized and unrealized gain 
   (loss) on investment transactions         3.75        8.95      (21.40)
                                         --------    --------    --------
    Total from investment operations        60.63       67.30       39.01
                                         --------    --------    --------

Less distributions:
  Dividends from net investment income     (56.88)     (58.35)     (60.41)
  Distributions from capital gains           0.00        0.00        0.00
                                         --------    --------    --------
    Total distributions                    (56.88)     (58.35)     (60.41)
                                         --------    --------    --------
Net asset value, end of period           $ 987.50    $ 983.75     $974.80
                                         ================================
    Total return                             6.32%       7.12%       4.10%

Ratios/Supplemental data:
  Net assets, end of year (in 000's)     $128,475    $143,608    $151,591
  Ratio of expenses to average 
   net assets                                0.48%       0.45%       0.43%
  Ratio of net investment income 
   to average net assets                     5.74%       5.98%       6.21%
  Portfolio turnover rate                   50.00%      25.93%      49.26%

</TABLE>

      Portfolio turnover was computed including U.S. Governments and U.S. 
Government Agency obligations with maturities in excess of one year.

                     See notes to financial statements.

<TABLE>
<CAPTION>

                                                                        Year Ended December 31,
                                         --------------------------------------------------------------------------------------
                                           1995        1994         1993         1992         1991         1990         1989
                                         --------    ---------    ---------    ---------    ---------    ---------    ---------

<S>                                      <C>         <C>          <C>          <C>          <C>          <C>          <C>
Net asset value, beginning of period     $ 944.75    $1,029.85    $1,042.13    $1,061.56    $1,028.78    $1,022.17    $1,001.04
                                         --------    ---------    ---------    ---------    ---------    ---------    ---------
Income from investment operations:
  Net investment income                     66.14        62.34        73.54        80.89        84.63        86.58        84.76
  Net realized and unrealized gain 
   (loss) on investment transactions        51.45       (85.10)      (12.28)      (19.43)       32.78         6.61        21.13
                                         --------    ---------    ---------    ---------    ---------    ---------    ---------
    Total from investment operations       117.59       (22.76)       61.26        61.46       117.41        93.19       105.89
                                         --------    ---------    ---------    ---------    ---------    ---------    ---------

Less distributions:
  Dividends from net investment income     (66.14)      (62.34)      (73.54)      (80.89)      (84.63)      (86.58)      (84.76)
  Distributions from capital gains           0.00         0.00         0.00         0.00         0.00         0.00         0.00
                                         --------    ---------    ---------    ---------    ---------    ---------    ---------
    Total distributions                    (66.14)      (62.34)      (73.54)      (80.89)      (84.63)      (86.58)      (84.76)
                                         --------    ---------    ---------    ---------    ---------    ---------    ---------
Net asset value, end of period           $ 996.20    $  944.75    $1,029.85    $1,042.13    $1,061.56    $1,028.78    $1,022.17
                                         ========    =========    =========    =========    =========    =========    =========
    Total return                            12.78%       -2.26%        6.01%        6.03%       12.11%        9.59%        1.02%

Ratios/Supplemental data:
  Net assets, end of year (in 000's)     $146,555    $ 129,330    $ 146,767    $ 163,972    $ 196,201    $ 210,439    $ 233,920
  Ratio of expenses to average 
   net assets                                0.45%        0.50%        0.39%        0.33%        0.28%        0.37%        0.37%
  Ratio of net investment income 
   to average net assets                     6.75%        6.37%        7.01%        7.79%        8.29%        8.54%        8.36%
  Portfolio turnover rate                   84.45%       43.43%       30.04%       44.93%       23.24%       50.30%      110.10%

</TABLE>

                     See notes to financial statements.

                        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, 1998 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 financial 
highlights for each of the ten years in the period then ended. These 
financial statements and financial highlights are the responsibility of the 
Fund's management. Our responsibility is to express an opinion on these 
financial statements and financial highlights based on our audits.

      We conducted our audits in accordance with generally accepted 
auditing standards. Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial statements 
and financial highlights are free of material misstatement. An audit 
includes examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements and financial highlights. Our 
procedures included confirmation of securities owned as of December 31, 
1998, by correspondence with the custodians and broker. An audit also 
includes assessing the accounting principles used and significant estimates 
made by management, as well as evaluating the overall financial statement 
presentation. We believe that our audits provide a reasonable basis for our 
opinion.

      In our opinion, the financial statements and financial highlights 
referred to above present fairly, in all material respects, the financial 
position of Bank Investment Fund-Fund One as of December 31, 1998, 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 
financial highlights for each of the ten years in the period then ended, in 
conformity with generally accepted accounting principles.


                                       /s/ Parent, McLaughlin & Nangle
                                       Certified Public Accountants

                                       LOGO FOR Parent, McLaughlin & Nangle

           Member of the SEC Practice Section, American Institute
                       of Certified Public Accountants


January 28, 1999


                        BANK INVESTMENT FUND-FUND ONE

                     STATEMENT OF ASSETS AND LIABILITIES
                              December 31, 1998


<TABLE>

<S>                                                                                <C>
ASSETS:
  INVESTMENTS IN SECURITIES, at value
   (Identified cost $121,737,234)                                                  $122,659,962

  REPURCHASE AGREEMENTS                                                               6,330,000

  INTEREST RECEIVABLE                                                                 1,971,031

  CASH                                                                                   50,649
                                                                                   ------------

      TOTAL ASSETS                                                                  131,011,642
                                                                                   ------------

LIABILITIES:
  ACCOUNTS PAYABLE-BROKER                                                             2,000,000

  DIVIDENDS PAYABLE                                                                     410,103

  ACCRUED EXPENSES                                                                      126,210
                                                                                   ------------

      TOTAL LIABILITIES                                                               2,536,313

NET ASSETS: (Equivalent to $987.5026 per share based on 130,101.2565 shares of
 beneficial interest outstanding)                                                  $128,475,329
                                                                                   ============

REPRESENTED BY:
  Paid-in Capital                                                                  $144,814,662
  Accumulated net losses on investments                                             (17,262,056)
  Unrealized appreciation of investments-net                                            922,723
                                                                                   ------------

      TOTAL NET ASSETS                                                             $128,475,329
                                                                                   ============
</TABLE>


                     See notes to financial statements.



                        BANK INVESTMENT FUND-FUND ONE

                           STATEMENT OF OPERATIONS
                        Year Ended December 31, 1998

<TABLE>

<S>                                                                  <C>          <C>
INVESTMENT INCOME:
  Interest income, net of interest expense of $11,583                             $8,294,216

EXPENSES:
  Compensation, payroll taxes and benefits-officers                  $233,305
  Compensation, payroll taxes and benefits-other                       84,983
  Distribution expenses                                               101,919
  Occupancy                                                            59,539
  Meetings and travel                                                  36,400
  Professional fees                                                    32,635
  Equipment and data processing                                        28,600
  Directors' fees                                                      16,800
  Postage and telephone                                                14,100
  Stationary and supplies                                               7,300
  Shareholder reports                                                   4,919
  Insurance expense                                                     4,800
  Custodian and other bank service fees                                 3,300
  Other expenses                                                       15,150
                                                                     --------
      TOTAL EXPENSES                                                                 643,750
                                                                                  ----------
       INVESTMENT INCOME-NET                                                       7,650,466
                                                                                  ----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
  Net realized gain on investments                                                     2,375
  Change in net unrealized appreciation on investment securities                     588,959
                                                                                  ----------
      Net realized and unrealized gain on investments                                591,334
                                                                                  ----------
      NET INCREASE IN NET ASSETS RESULTING FROM
       OPERATIONS                                                                 $8,241,800
                                                                                  ==========
</TABLE>


                     See notes to financial statements.


                        BANK INVESTMENT FUND-FUND ONE

                     STATEMENT OF CHANGES IN NET ASSETS



<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                               -----------------------------
                                                                   1998             1997
                                                                   ----             ----

<S>                                                            <C>              <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
  Investment income-net                                        $  7,650,466     $  8,839,050
  Net realized gain on investments                                    2,375            5,078
  Unrealized appreciation-net                                       588,959        1,330,580
                                                               -----------------------------

      Net increase in net assets resulting from operations        8,241,800       10,174,708

DIVIDENDS TO SHAREHOLDERS FROM:
  Investment income-net                                          (7,650,466)      (8,839,050)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST-NET
 DECREASE                                                       (15,724,503)      (9,318,402)
                                                               -----------------------------

      TOTAL DECREASE IN NET ASSETS                              (15,133,169)      (7,982,744)

NET ASSETS:
  Beginning of year                                             143,608,498      151,591,242
                                                               -----------------------------

  End of year                                                  $128,475,329     $143,608,498
                                                               =============================
</TABLE>


                     See notes to financial statements.


                        BANK INVESTMENT FUND-FUND ONE

                          PORTFOLIO OF INVESTMENTS
                              December 31, 1998

<TABLE>
<CAPTION>
Obligations of Federal Agencies-95.4%

                                     Par        Coupon        Maturity Date           Value
                                     ---        ------        -------------           -----

<S>                              <C>            <C>        <C>                     <C>
Federal Farm Credit Bank         $ 2,500,000    6.19%           03/19/01           $  2,560,937
                                   2,000,000    6.20            04/09/01              2,050,000
                                   2,500,000    6.78            01/15/02              2,502,344
                                 -----------                                       ------------
                                 $ 7,000,000               (Cost $  7,000,000)     $  7,113,281
                                 -----------                                       ------------

Federal Home Loan Bank           $ 3,000,000    7.88%           02/09/00           $  3,093,750
                                   1,000,000    6.00            12/14/00              1,019,375
                                   1,985,000    5.745           01/25/01              1,982,519
                                   2,000,000    5.735           02/13/01              1,996,250
                                   2,000,000    6.04            02/14/01              1,998,125
                                   5,000,000    6.09            03/21/01              5,118,750
                                   5,000,000    6.48            01/08/02              5,045,312
                                   3,000,000    6.60            09/03/02              3,028,125
                                   2,000,000    6.015           02/05/03              2,000,000
                                   2,000,000    5.73            11/24/03              1,981,875
                                   2,000,000    6.08            12/01/03              2,004,375
                                 -----------                                       ------------
                                 $28,985,000               (Cost $ 28,985,000)     $ 29,268,456
                                 -----------                                       ------------

Federal Home Loan Mortgage
 Corporation                     $ 2,000,000    7.98%           01/19/00           $  2,061,250
                                   4,000,000    6.125           03/03/03              4,003,750
                                   2,000,000    6.15            03/06/03              2,016,250
                                   2,000,000    5.48            10/08/03              1,985,625
                                   1,500,000    5.85            11/19/03              1,487,344
                                 -----------                                       ------------
                                 $11,500,000               (Cost $ 11,488,639)     $ 11,554,219
                                 -----------                                       ------------

Federal National Mortgage
 Association                     $ 2,000,000    5.91%           01/12/01           $  1,996,250
                                   2,000,000    5.84            01/19/01              2,000,000
                                   2,500,000    6.37            03/22/01              2,503,906
                                   3,000,000    6.45            04/12/01              3,007,500
                                 $ 4,500,000    6.40%           05/02/01           $  4,651,875
                                   1,500,000    5.35            12/17/01              1,498,594
                                   2,500,000    6.375           01/16/02              2,600,000
                                   5,000,000    6.45            12/16/02              5,059,375
                                   2,000,000    6.15            12/26/02              2,013,125
                                   2,000,000    5.96            02/07/03              2,004,375
                                   2,500,000    6.16            02/19/03              2,501,562
                                   4,000,000    5.96            03/05/03              4,060,000
                                   2,000,000    6.08            06/23/03              2,004,375
                                   2,000,000    6.01            08/18/03              2,005,625
                                   4,000,000    5.91            08/25/03              4,037,500
                                   3,000,000    6.07            09/02/03              2,993,438
                                   2,000,000    5.75            09/23/03              1,983,750
                                   2,000,000    5.52            10/06/03              1,983,750
                                   2,000,000    5.27            10/14/03              1,982,500
                                   2,000,000    5.62            10/14/03              1,981,875
                                   2,000,000    5.80            11/17/03              1,989,375
                                   1,500,000    5.64            11/19/03              1,486,406
                                   2,000,000    5.66            01/05/04              2,000,000
                                 -----------                                       ------------
                                 $58,000,000               (Cost $ 57,994,020)     $ 58,345,156
                                 -----------                                       ------------

Government National Mortgage
 Association                     $   441,999    6.50%           11/15/07           $    450,287
                                   2,480,040    6.50            07/15/08              2,526,540
                                   2,405,358    6.50            11/15/08              2,450,459
                                     358,157    6.50            12/15/08                364,873
                                     645,027    5.50            12/15/08                637,771
                                   1,927,868    7.50            03/15/22              1,987,511
                                   2,893,077    7.00            10/15/22              2,961,787
                                   2,828,690    7.00            05/15/23              2,895,872
                                 -----------                                       ------------
                                 $13,980,216               (Cost $ 14,175,825)     $ 14,275,100
                                 -----------                                       ------------

Student Loan Marketing
 Association                     $ 2,000,000    7.723%          01/25/99           $  2,003,750
                                 -----------                                       ------------
                                                           (Cost $  1,993,755)

Certificates of Deposit-0.1%

NCB Savings Bank, FSB            $   100,000    5.75%           01/19/99           $    100,000
                                                           (Cost $    100,000)
                                                                                   ------------

                                                           (Cost $121,737,239)     $122,659,962
                                                                                   ------------

Repurchase Agreement-4.9%

<C>                             <S>
$6,330,000                      Repurchase Agreement dated December 31, 1998 with
                                PaineWebber, Inc. due January 4, 1999 with respect to
                                various Federal Agencies ranging from:
                                  Par Value         $1,000-$3,100,000
                                  Rate Range             2.00%-12.50%
                                  Maturity Range    07/14/99-09/01/26
                                Maturity value of $6,333,341 for an effective yield of
                                4.75%.
<S>                                                        <C>                     <C>
                                                           (Cost $  6,330,000)     $  6,330,000
                                                                                   ------------

Total Investments-100.4%                                   (Cost $128,067,239)     $128,989,962
                                                                                   ------------
Liabilities in excess of other assets-(0.4)%                                           (514,633)
                                                                                   ------------
Net assets-100%                                                                    $128,475,329
                                                                                   ============
</TABLE>


                     See notes to financial statements.


                        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, Federally Chartered Savings Banks and 
Savings and Loan Associations with their principal place of business in 
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank 
Life Insurance Company of Massachusetts, the National Cooperative Bank, and 
directly or indirectly wholly-owned subsidiaries of such institutions.

      Because more than one fund will be operated by the Corporation, 
operating expenses related directly to a single fund operation will be 
charged directly to that fund. Common or indirect expenses will be 
allocated among funds in proportion to the ratio of the net assets of each 
fund to total net assets of the Corporation or on such other basis as the 
Board of Directors of the Corporation may determine from time to time to be 
fair and equitable.

NOTE 2. Significant Accounting Policies:

      The Fund's financial statements are prepared in accordance with 
generally accepted accounting principles which require the use of 
management estimates. The policies described below are followed 
consistently by the Fund in the preparation of its financial statements.

Investment security valuation:

      U.S. debt securities are normally valued on the basis of valuations 
provided by market makers. Such prices are believed to reflect the fair 
value of such securities and to take into account appropriate factors such 
as institutional size trading in similar groups of securities, yield 
quality, coupon rate, maturity, type of issue, and other market data. 
Securities for which market quotations are not readily available will be 
valued at fair value using methods determined in good faith by or at the 
direction of the Board of Directors.

Accounting for investments:

      Security transactions are accounted for on the trade date (date the 
order to buy or sell is executed). In computing net investment income prior 
to January 1, 1997, the Fund did not amortize premiums or accrete discounts 
on fixed income securities in the portfolio, except those original issue 
discounts for which amortization is required for federal income tax 
purposes. Since January 1, 1997, the Fund amortizes premiums or accretes 
discounts on related fixed income securities, which change had an 
immaterial effect on investment income. Premiums, if any, and discounts are 
amortized or accreted on a straight line basis, which approximates the 
income method. 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 $2,375 during 1998, which was offset by the available capital loss 
carryforward, resulting in a remaining capital loss carryforward of 
($3,906,419) at December 31, 1998. 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, 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 $64,588,735 and $78,099,219, 
respectively for the year ended December 31, 1998. As of December 31, 1998, 
unrealized appreciation of investments was $922,723; accumulated net 
realized loss on investment transactions totaled ($17,262,056).

NOTE 4. Borrowed Funds:

      The average balance of borrowed funds was $202,055 for the year ended 
December 31, 1998. The average interest rate on these borrowings was 5.49%. 
Total expense of $11,583 was netted against investment income for the year 
ended December 31, 1998.

NOTE 5. 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 $101,919 (.08% of average net assets) pursuant to this Plan for the 
year ended December 31, 1998.

NOTE 6. 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, 1998 was $32,970.

NOTE 7. 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, 1998 capital paid-in 
aggregated $144,814,662.

      Transactions in shares of beneficial interest are summarized as 
follows:

<TABLE>
<CAPTION>
                                                 Year Ended                       Year Ended
                                              December 31, 1998                December 31, 1997
                                        -----------------------------     ---------------------------
                                           Shares           Amount          Shares          Amount
                                           ------           ------          ------          ------

<S>                                     <C>              <C>              <C>             <C>
Sold                                      1,696.8609     $  1,674,618      2,216.1487     $ 2,170,000
Issued in reinvestment of dividends       2,750.3006        2,716,925      2,790.7661       2,724,117
                                        -------------------------------------------------------------
                                          4,447.1615        4,391,543      5,006.9148       4,894,117
Redeemed                                 20,326.3359       20,116,046     14,536.5484      14,212,519
                                        -------------------------------------------------------------
Net decrease                            (15,879.1744)    $(15,724,503)    (9,529.6336)    $(9,318,402)
                                        =============================================================
</TABLE>

NOTE 8. 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, 1998 was .48% of average net assets. Operating expenses paid 
to the Central Bank for the year ended December 31, 1998 was $40,800.



            The following sheets are perforated for your removal
          and use in the establishment or updating of your account.


                     CERTIFICATE OF CORPORATE RESOLUTION

      For Massachusetts Co-operative Banks, Massachusetts Savings Banks, 
Massachusetts Trust Companies, Federally Chartered Savings Banks and 
Savings and Loan Associations with their principal place of business in 
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank 
Life Insurance Company of Massachusetts, the National Cooperative Bank and 
directly or indirectly wholly-owned subsidiaries of such institutions only. 
This form authorizes the individuals below to redeem shares by telephone or 
exchange.

      The undersigned is Secretary or Clerk of ______________________ and 
hereby
certifies that the following individuals:       (name of corporation)

              Name                          Title
              ----                          -----

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

are duly authorized by corporate resolution or otherwise to act on behalf 
of the eligible bank in connection with its ownership of shares in the Bank 
Investment Fund, Fund One and in particular to give instructions for the 
purchase, sale or exchange of any said shares and to execute any necessary 
forms in connection therewith.

      The Bank Investment Fund will consider this authorization to be in 
full force and in effect until otherwise notified in writing.

      IN WITNESS WHEREOF, the undersigned has executed this Certificate the 
_______________ day of ___________________ 19__________.

___________________________________________________________________________
Secretary or Clerk


                            BANK INVESTMENT FUND
                                  FUND ONE
                          ACCOUNT APPLICATION FORM

REGISTRATION. The account should be registered as follows:
                                                         DATE: ____________
NAME:  
___________________________________________________________________________
POST OFFICE BOX:  
___________________________________________________________________________
STREET ADDRESS:  
___________________________________________________________________________
CITY/TOWN:  _______________________________ STATE:  _______________________
ZIP CODE:  ____________________ TELEPHONE NUMBER:  ________________________
TAX ID NUMBER  ____________________________________________________________
INITIAL INVESTMENT: $____________________________________ (Minimum $50,000)

                           MONTHLY CASH DIVIDENDS

[ ]   Check if dividends are to be paid monthly in cash. Otherwise 
dividends 
      will be AUTOMATICALLY REINVESTED in additional shares of the Fund.

                         TELEPHONE REDEMPTION ORDERS

      Redemption proceeds will be sent ONLY to the bank or trust company 
listed below, for credit to the investor's account. The investor hereby 
authorizes the BANK INVESTMENT FUND to honor telephone or written 
instructions, without a signature guarantee, for redemption of Fund shares. 
THE FUND and its Agents will not be liable for any loss, expense or cost 
arising out of such transactions.

      Enclose a specimen copy of your check or deposit slip (marked VOID) 
for the bank account listed below. To facilitate the wiring of your 
redemption proceeds the indicated bank should be a commercial bank.

Name of Bank:  ____________________________________________________________

Bank Account No. __________________________________________________________

Bank Address: _____________________________________________________________
               street
               ___________________________________________ MA _____________
               city                                                   zip
Name on Account:  _________________________________________________________

Bank Routing/Transit No.:  ________________________________________________

          AUTHORIZED PERSONS-TELEPHONE INVESTMENTS AND REDEMPTIONS

           Authorized person         Title                  Initials
           -----------------         -----                  --------

1. ________________________________________________________________________

2. ________________________________________________________________________

3. ________________________________________________________________________

4. ________________________________________________________________________

5. ________________________________________________________________________

                            CORPORATE RESOLUTIONS

      We have enclosed with this application form the necessary corporate 
resolutions to authorize corporate officers to make wire or cash payment 
transfers to the Bank Investment Fund and to purchase, sell or exchange 
shares of beneficial ownership in the Bank Investment Fund, Fund One.

                         SIGNATURE AND CERTIFICATION

      We have received and read the Offering Circular, and agree to its 
terms and conditions by signing below. By the execution of this 
Application, the undersigned represent and warrant that they are duly 
authorized to sign this Application and to purchase or redeem shares of the 
Fund on behalf of the investor.

      The undersigned hereby certify under penalty of perjury that the 
above Taxpayer Identification Number is correct and that the investor is 
not subject to backup withholding.

      We further certify and agree that the certifications, authorizations 
and appointments in this document will continue until the Bank Investment 
Fund receives actual written notice of any change thereof.

Signature _____________________________ Title _____________________________

Signature _____________________________ Title _____________________________

Two signatures are required, one of which should be the Secretary or Clerk 
of the corporation.

                             SIGNATURE GUARANTEE

      In order to facilitate telephone redemptions, you must have your 
signature(s) on this application guaranteed by a commercial bank or stock 
exchange member firm.

___________________________________________________________________________
Name of Bank or Investment Dealer

___________________________________________________________________________
By (signature of authorized person)

___________________________________________________________________________
Title (authorized person)

                            FINANCIAL STATEMENTS

      As required by applicable statutes, semi-annual financial statements 
are furnished to the shareholder, the Commissioner of Banks and the 
Securities and Exchange Commission.

                           ADDITIONAL INFORMATION

      The Bank Investment Fund (the "Corporation") has filed with the 
Securities and Exchange Commission in Washington, D.C., under the chartered 
name the "Co-operative Bank Investment Fund" a registration statement on 
Form N-1A (together with all amendments and exhibits thereto, hereinafter 
referred to as the "Registration Statement") under the Investment Company 
Act of 1940. This Offering Circular does not contain all of the information 
in the Registration Statement. The Registration Statement may be reviewed 
and copied at the Public Reference Room of the Securities and Exchange 
Commission; or:

         By Phone:   1-800-Sec-0330
         By mail:    Public Reference Section
                     Securities and Exchange Commission
                     Washington, D.C. 20549-6009
                     (duplicating fee required)
         On the Internet: www.sec.gov
         (Investment Company Act File No. 811-4421)

      The Corporation will provide, without charge to any person to whom 
this Offering Circular is delivered on the written or oral request of any 
such person, a copy of the Registration Statement and the additional 
information contained therein and documents relating to certain exemptions 
from the Investment Company Act of 1940 (see ORGANIZATION). Written 
requests should be directed to the Bank Investment Fund, 75 Park Plaza, 
Boston, MA 02116-3934. Telephone requests may be directed collect to 617-
695-0415.

                       ==============================
                            BANK INVESTMENT FUND

                                  FUND ONE




                                75 Park Plaza
                            Boston, MA 02116-3934
                                617-695-0415
                       ==============================








OFFERING CIRCULAR
- -----------------

                            Bank Investment Fund
                               Liquidity Fund
                                75 Park Plaza
                      Boston, Massachusetts 02116-3934
                                617-695-0415
                      --------------------------------

      The Bank Investment Fund (the "Corporation") is an investment company 
which currently invests and manages two mutual funds derived from voluntary 
subscriptions made by eligible investors.

      Liquidity Fund (the "Fund") is a no-load, diversified, open-end money 
market investment fund whose objective is maximum current income consistent 
with liquidity and the preservation of capital. The Fund is designed solely 
for use by eligible investors as an economical and convenient way to make 
liquid investments. Fund shares are currently offered to the following 
eligible investors: Massachusetts Co-operative Banks, Massachusetts Savings 
Banks, Massachusetts Trust Companies, Federally Chartered Savings Banks and 
Savings and Loan Associations with their principal place of business in 
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank 
Life Insurance Company of Massachusetts and the National Cooperative Bank 
(sometimes hereinafter called "Banks").

      Investors should read this Offering Circular and retain it for future 
reference.

      THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE 
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE 
CONTRARY IS A CRIMINAL OFFENSE.

      THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
COMMISSIONER OF BANKS OF THE COMMONWEALTH OF MASSACHUSETTS (the 
"Commissioner of Banks"), NOR HAS THE COMMISSIONER OF BANKS PASSED UPON THE 
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE 
CONTRARY IS UNLAWFUL.

      THE SHARES BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE 
NOT INSURED BY ANY GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND IS NOT 
GUARANTEED OR INSURED BY THE U.S. GOVERNMENT AND THERE IS NO ASSURANCE THAT 
THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. SUCH SHARES ARE 
BEING OFFERED PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT OF 1933 AND 
APPLICABLE STATE SECURITIES ACTS AND HAVE NOT BEEN REGISTERED OR QUALIFIED 
UNDER SUCH ACTS.

                      --------------------------------

           The date of this Offering Circular is February 26, 1999

                              TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                             Page
                                                             ----

<S>                                                      <C>
Risk Return Summary                                           1
  Investment Objectives                                       1
  Principal Investment Strategies                             1
  Principal Investment Risk                                   2
  Bar Chart and 7 Day Yield                                   2
  Fee Table                                                   3
Investment Objectives and Restrictions                        4
Statutory Limitation on Investments                           5
Dividends                                                     6
Net Asset Value                                               6
Investors' Accounts                                           6
Taxes                                                         6
Auditors and Legal                                            7
Capital Gains                                                 7
How Shares of Fund are Purchased                              7
How Shares of Fund are Redeemed                               8
Transfer Restrictions                                         8
Organization                                                  9
Description of Fund Shares                                   10
Supervision and Regulation                                   10
Investment Advisor                                           10
Transfer Agent                                               10
Operating and Distribution Expenses                          11
Exchange Privilege                                           11
Custodian                                                    11
Year 2000                                                    12
Management of the Fund                                       12
Financial Highlights                                         14
Independent Auditor's Report                                 16
Financial Statements                                         17
Investments                                                  20
Account Application Forms                                    29
Additional Information                                   Back Cover

</TABLE>

                            BANK INVESTMENT FUND
                               LIQUIDITY FUND
                                75 Park Plaza
                      Boston, Massachusetts 02116-3934

                             RISK RETURN SUMMARY

Investment Objectives

      The investment objectives of Liquidity Fund is to maximize current 
income consistent with liquidity of assets and safety of principal.

      The Fund was formed to provide participating banks with a highly 
liquid, diversified, high-quality investment vehicle designed to assist 
liquidity management, while seeking preservation of capital.

Principal Investment Strategies

      The Fund invests principally in short-term marketable debt securities 
issued by the United States Government or by agencies of the United States, 
bank money instruments, repurchase agreements, short-term corporate debt 
instruments, commercial paper, and reverse repurchase agreements.

      Asset investments for Liquidity Fund include principally those 
securities eligible to be included in legal liquidity for Massachusetts co-
operative banks under Massachusetts General Laws, Chapter 170, Section 22.

      The categories of those securities include, but may not be limited to 
a) cash on hand and due from banks, b) certificates of deposit due from any 
trust company, national banking association or banking company, or any 
federally insured savings banks, co-operative bank or savings & loan 
association, c) Federal Funds sold, d) bonds and other direct obligations 
of the Untied States which are unconditionally guaranteed as to principal 
and interest by the United States, and issues of U.S. Government agencies 
and instrumentalities, e) repurchase agreements, f) commercial paper which, 
when purchased, is rated A-1 by Standard & Poor's Corporation ("Standard & 
Poor's") and/or Prime-1 by Moody's Investors Service, Inc. ("Moody's") or, 
if not rated, has been determined under procedures adopted and supervised 
by the Fund's Board of Directors to be of comparable high quality. 
Commercial paper obligations may include variable amount of master demand 
notes; short-term obligations of corporations; g) Second Tier securities to 
the extent permissible by Rule 2a-7 of the Investment Company Act of 1940 
(see investment restrictions) including commercial paper which when 
purchased is rated A-2 by Standard & Poor's or Prime-2 by Moody's or if not 
rated, has been determined under procedures adopted, supervised and 
approved by the Fund's Board of Directors to be of comparable quality, h) 
any other debt instrument deemed eligible for legal liquidity by the 
Commonwealth or its agent, and i) certain common money market instruments 
of temporary duration.

      All the above investment must have original maturities or remaining 
maturities of 397 days or less. In addition, the Fund will maintain a 
dollar weighted average maturity of 90 days or less.

      The Fund may invest more than 25% of its assets in the banking 
industry through Certificates of Deposit and Federal Funds sold in the 
ordinary course of its business.

      The Fund may enter into reverse repurchase agreements to meet short-
term liquidity needs of the Fund. These agreements may not be in excess of 
three business days. Any such borrowing would be limited to borrowing 
allowable under Section 18 of the Investment Company Act of 1940 and 
applicable regulations promulgated thereunder.

Principal Investment Risk

      The main risk factor in the Fund's performance is interest rates, the 
fluctuation of which will cause the income of the Fund to correspondently 
change. The average portfolio duration may cause a delayed effect before 
the market interest rate change is fully reflected in the Fund's income 
performance.

      An additional risk factor in the Fund's performance, to a limited 
extent, is credit risk. Credit risk is the chance that the issuer of the 
security will be unable to pay interest and principal in a timely manner. 
While the credit quality of the Fund's investment portfolio is extremely 
high based on the principal investment strategies discussed above, the Fund 
is subject to some degree of credit risk.

      While the Fund seeks to maintain, it does not guaranty a stable net 
asset value of $1,000 per share. In addition, the shares being offered are 
not savings accounts or deposits and are not insured or guaranteed by the 
Federal Deposit Insurance Corporation, U.S. Government or its agencies.

Bar Chart and 7 Day Yield

      The bar chart shows the changes of the Fund's total return 
performance from year to year over a ten year period.

                     BANK INVESTMENT FUND-LIQUIDITY FUND
                             Annual Total Return

<TABLE>
<CAPTION>

1989    1990    1991    1992    1993    1994    1995    1996    1997    1998
- ----    ----    ----    ----    ----    ----    ----    ----    ----    ----

<S>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
9.23    8.37    6.32    4.07    3.15    3.87    5.86    5.38    5.52    5.44

<FN>
- --------------------
During the ten-year period shown in the bar chart, the highest quarterly 
return was 10.1% (for the quarter ended June 30, 1989) and the lowest 
quarterly return was 3.0% (for the quarter ended June 30,1993).
</FN>

</TABLE>

      The table shows how the Fund's average annual return for one, five 
and ten years for the period ended December 31, 1998 compared to the 3 
month U.S. Treasury Bill.

<TABLE>
<CAPTION>

                                                  One      Five     Ten
                                                  Year     Year     Year
                                                  ----     ----     ----

          <S>                                     <C>      <C>      <C>
          Bank Investment Fund-Liquidity Fund     5.44%    5.21%    5.71%
          U.S. Treasury Bill-3 month              5.00%    5.18%    5.46%

<FN>
- --------------------
Total returns are based on past results and are not a prediction of future 
performance.
</FN>

</TABLE>

      The annualized average net yield of the seven-day period ending 
December 31, 1998 was 5.09%. Yield is calculated based on the last 7 days 
ending on the date of the most recent statement of Assets and Liabilities, 
(as presented elsewhere within). The Fund's yield fluctuates as a result of 
numerous factors. Therefore, the yield stated here is not necessarily 
representative of the Fund's future yield. The most recent daily yield, 
together with the 7 day yield for the most recent calender month end may be 
obtained by directly calling the rate line 617-695-0419 or by calling our 
main office telephone number 617-695-0415 collect.

Fee Table

      This table describes the fees and expenses that you may pay if you 
buy and hold shares of the Fund.

<TABLE>
<CAPTION>

                                                         Year Ended
                                                      December 31, 1998
                                                      -----------------

      <S>                                             <C>          <C>
      Shareholder Transaction Expenses*                              0%
      Annual Fund Operating Expenses
       (as a percentage of average net assets)
        Management Fees                                              0%
        12b-1 Fees                                                 .02%
        Other Expenses
          Compensation, Payroll, Taxes, & Benefits    .06%
          Occupancy                                   .01%
          Remainder                                   .06%
                                                      ---
                                                                   .13%
                                                                   ---
      TOTAL FUND OPERATING EXPENSES                                .15%
                                                                   ===
<FN>
- --------------------
<F*>  The Fund charges no sales load or deferred sales load on any 
      purchase, reinvested dividend, exchange, or redemption transactions.
</FN>

</TABLE>

Example

      You would pay the following expenses on a $10,000 investment, 
assuming (1) 5% annual return and (2) with or without redemption at the end 
of each time period:

<TABLE>
<CAPTION>
                               1 Year    3 Years    5 Years    10 Years
                               ------    -------    -------    --------

      <S>                      <C>       <C>        <C>        <C>
      December 31, 1998        $15.35    $48.44     $85.01     $194.10
</TABLE>

      The purpose of the foregoing table, which is based upon the Fund's 
fiscal year ended December 31, 1998, is to assist you in understanding the 
various costs and expenses that an investor in the Fund will bear directly 
or indirectly. The Example provided is intended to show the dollar amount 
of expenses that would be incurred over the indicated periods on a 
hypothetical $10,000 investment in the Fund, assuming a 5% annual return 
and assuming that the Fund's expenses continue at the rates shown in the 
table. However, the actual return on an investment in the Fund may be 
greater or less than 5%. Furthermore, the Example should not be considered 
a representation of past or future expenses; actual expenses may be greater 
or less than those shown.

                   INVESTMENT OBJECTIVES AND RESTRICTIONS

      The investment objective of the Liquidity Fund is to maximize current 
income consistent with liquidity of assets and safety of principal.

      The Fund was formed to provide participating banks with a highly 
liquid, diversified high-quality investment vehicle designed to assist 
liquidity management while seeking preservation of capital. The Fund 
pursues this objective by investing principally in short-term marketable 
debt securities issued by the United States Government or by agencies of 
the United States, bank money instruments, short-term corporate debt 
instruments including commercial paper, repurchase agreements and reverse 
repurchase agreements.

      Shares of the Bank Investment Fund are eligible investments to be 
included in legal liquidity under Massachusetts General Laws, Chapter 170, 
Section 22.

      The Board of Directors of the Corporation has investment discretion 
with regard to Liquidity Fund assets.

      No more than 5% of the Fund's assets at the time of purchase may be 
invested in the securities of any one issuer except for direct obligations 
of the United States or obligations guaranteed by the United States, and 
other obligations issued under federal programs or by certain federal 
agencies.

      In accordance with amendments, effective June 1, 1991 to Rule 2a-7 of 
the Investment Company Acts of 1940, no more than 5% of the Fund's assets, 
in the aggregate, may be invested in "second tier" securities, with no more 
than 1% of the Fund's assets or one million dollars, whichever is greater, 
invested in the second tier securities of any one issuer.

      The Fund is further restricted through the investment policy 
maintained by the Corporation's Officers and Directors. The investment 
policy restricts the Fund from a) purchasing any securities other than 
money market and other securities described under "Investment Policy", and 
b) investing more than 25% of its total assets in the securities of a 
particular industry other than U.S. Government securities, Government 
Agency securities or bank money instruments.

               STATUTORY LIMITATION ON INVESTMENTS IN THE FUND
                           BY PARTICIPATING BANKS

      Under Massachusetts General Laws, Chapter 167F, Section 3(2) as 
amended, a participating or eligible savings bank or co-operative bank may 
invest an amount in excess of 100% of its capital and surplus in any 
distinct non-equity investment fund of the Corporation except to the extent 
that the Commissioner of Banks for the Commonwealth of Massachusetts may by 
regulation set limits and conditions. The participating bank will be 
responsible for monitoring and compliance with this limitation.

      Under Massachusetts General Laws, Acts of 1932, Chapter 45, Section 
7, as amended, The Co-operative Central Bank Reserve Fund may not invest or 
hold at any one time more than 20% of its assets with the Corporation.

      Investments in the Fund are affected by Section 303 of the FDIC 
Improvement Act of 1991 which limits investments by FDIC-insured state 
banks (including Massachusetts co-operative banks, savings banks and trust 
companies) in common or preferred stock or shares of mutual funds to the 
extent that such investments are permissible for national banks. However, 
that Act and FDIC implementing regulations (12 C.F.R. Part 362) generally 
permit a qualifying institution which is well capitalized or, absent 
mitigating factors, adequately capitalized to invest in common and 
preferred stock and mutual fund shares in an aggregate maximum amount equal 
to 100% of the institution's Tier I capital. Investment limits for 
institutions which are not well or adequately capitalized are determined by 
the FDIC on an individual basis. To qualify for this partial exemption, a 
state bank must (a) have owned qualifying stocks or mutual funds during the 
period from September 30, 1990 through November 26, 1991, (b) be from a 
state which authorized such investments and (c) file a one-time notice with 
the FDIC of the bank's intention to retain or acquire stock or mutual fund 
shares and receive the FDIC's approval. Banks should consult the FDIC's 
regulation (Part 362) and the FDIC's notice, FIL-80-92, issued November 13, 
1992, for more detailed information regarding these statutory and 
regulatory standards.

      Federally chartered savings banks and savings and loan associations 
(with their principal place of business in Massachusetts) may invest in an 
open-end mutual fund, such as the Liquidity Fund, which invests in 
securities and financial instruments in which such institutions may invest 
directly (e.g., Federal agency obligations and high quality commercial 
paper and corporate debt). For purposes of determining compliance with 
quantitative investment limitations under the Home Owners Loan Act 
("HOLA"), an investing bank's or association's proportionate share of a 
mutual fund's individual investments will, under 12 CFR,  560.32, be 
aggregated with such investments held directly by the bank or association. 
Apart from this requirement, a bank or association may invest, without 
prior notice to the Office of Thrift Supervision, an amount up to 15% of 
its total capital in any one mutual fund or up to 50% of total capital in 
all such pass-through investment vehicles. Investments in excess of the 15% 
and 50% limits may only be made when thirty days' advance notice has been 
provided to the Office of Thrift Supervision.

      Certain federally chartered savings banks which converted from a 
Massachusetts savings bank charter may, under certain grandfather 
provisions of HOLA, retain broader investment authority than that described 
in the preceding paragraph. For example, section 5(i) of HOLA grandfathers 
state authorized investment powers of certain Federal savings banks in 
existence as of the date of enactment of Federal statutes (e.g., the 
Financial Institution Reform, Recovery and Enforcement Act of 1989) which 
may have otherwise limited such investments.

                                  DIVIDENDS

      The Fund distributes all of its net income on a daily basis. 
Dividends are declared on each day that the Fund is open for business. 
Investors receive dividends in additional shares unless they elect to 
receive cash. Payment is made in additional shares at the net asset value 
on the payable date or in cash, on a monthly basis.

      Investors wishing to change the method of receiving dividends must 
notify the Fund in writing at least one week before payment is to be made. 
Net income for dividend purposes consists of interest accrued and discount 
earned, less amortization of any premium and accrued expenses, plus or 
minus all realized short-term gains or losses, if any.

                               NET ASSET VALUE

      The Fund's net asset value per share is determined by dividing the 
value of all investment securities and all other assets, less liabilities, 
by the number of shares outstanding. The Fund's investment securities are 
valued based on their amortized cost, which does not take into account 
unrealized appreciation or depreciation. The Corporation's Board of 
Directors has established procedures reasonably designed to stabilize the 
net asset value per share at $1,000.00.

                             INVESTORS' ACCOUNTS

      The Fund maintains an account for each investor in full and 
fractional shares. All purchase and sale transactions are confirmed to the 
investor. Statements of account showing all transactions for the month, 
including dividends paid, are sent to participating banks on a monthly 
basis.

                                    TAXES

      The Fund has qualified as a regulated investment company under the 
Internal Revenue Code and will not be liable for federal income taxes to 
the extent its earnings are distributed. Dividends derived from interest, 
together with distributions of any short-term capital gains, are taxable as 
ordinary income, whether or not reinvested. Dividends of the Fund do not 
qualify for the dividends received exclusion for corporations.

      A statement setting forth the federal income tax status of all 
distributions made during each calendar year is sent to each shareholder 
promptly after the end of such year.

                             AUDITORS AND LEGAL

      Parent, McLaughlin and Nangle, Certified Public Accountants, Inc., 
are the auditors of the Fund. The law firm of Steptoe & Johnson has passed 
upon certain legal matters of the Fund in connection with the shares 
offered by this offering circular.

                                CAPITAL GAINS

      The Fund does not expect to experience long-term capital gains or 
losses due to the short-term nature of the portfolio, and therefore the 
Fund does not expect to pay capital gain dividends.

                    HOW SHARES OF THE FUND ARE PURCHASED-
                       TELEPHONE INVESTMENT PROCEDURE

      Shares of the Fund are offered for sale on days on which both the New 
York Stock Exchange and the custodian bank are open for business. There is 
no sales charge. The minimum initial investment is $50,000.00 (although in 
certain cases the Corporation may require a larger minimum investment in 
accordance with requirements of applicable securities laws). Additional 
investments may be made in any amount in excess of the minimum.

Bank Wire Transfers

      Call your correspondent bank and speak to your account officer. Tell 
him that you want to transfer funds to State Street Bank and Trust Company. 
Instruct him to wire transfer the money before 12:00 noon, Boston time, to:

                 State Street Bank and Trust Company
                 Boston, Massachusetts
                 Routing number: 0110-0002-8
                 For account of the Bank Investment
                  Fund, Liquidity Fund
                 Account number: 9006-884-2

Internal Money Transfers

      If your correspondent bank account is with the State Street Bank and 
Trust Company, contact your account officer and instruct him to transfer 
funds from your account to the account of the Bank Investment Fund, 
Liquidity Fund, Account number: 9006-884-2.

      AFTER INSTRUCTING YOUR BANK TO TRANSFER FUNDS, PLEASE CALL THE FUND 
AND TELL US THE AMOUNT YOU TRANSFERRED AND THE NAME OF THE BANK SENDING THE 
TRANSFER. YOUR BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER, IT IS 
IMPORTANT TO DO THIS BEFORE 12:00 NOON.

      The securities market, in which the Fund buys and sells securities, 
usually requires immediate settlement in Federal funds for all security 
transactions; therefore, payment for the purchase of Fund shares not 
received in the form of Federal funds will be recorded as share 
subscriptions, and not invested in Fund shares until such payments are 
converted into Federal funds. Payments received by bank wire can be 
converted immediately into Federal funds; any other form of payment will 
result in a delay. Orders received prior to 12:00 noon, Boston time, will 
be invested in shares of the Fund at the next determined net asset value.

                    HOW SHARES OF THE FUND ARE REDEEMED-
                       TELEPHONE REDEMPTION PROCEDURE

      An investor may withdraw all or any portion of his investment by 
redeeming shares on any day that the Fund is open for business at the next 
determined net asset value. The proceeds of redemptions will be wired 
directly to the investor's bank account within one business day. The Fund 
reserves the right to delay withdrawal requests up to 7 business days after 
any investment that has been made with uncollected funds.

      The right of redemption can be suspended and the payment of the 
redemption proceeds deferred during any period in which a) the New York 
Stock Exchange is closed or trading on such Exchange is restricted or b) 
the Securities and Exchange Commission deems an emergency to exist, or 
during any other period permitted by order of the Commission for the 
protection of investors.

Bank Wire Transfers

      Call the Fund by 12:00 noon (Call or Trade Date) to redeem shares the 
following day (Settlement Date). When the amount to be redeemed is at least 
$5,000.00, the Fund will automatically wire transfer the amount to your 
correspondent bank account at settlement.

Internal Money Transfers

      If your bank's account is with the State Street Bank and Trust 
Company, contact the Fund by 12:00 noon (Call or Trade Date) for redemption 
of shares the following day (Settlement Date). The Fund will transfer the 
amount from its account to your account at State Street Bank and Trust 
Company at settlement.

                            TRANSFER RESTRICTIONS

      Fund shares may not be transferred by banks holding such shares to 
any persons other than an eligible bank (except that the shares may be 
pledged to such other persons or they may be transferred to the Central 
Bank). If the Fund shares are acquired by any other persons by operation of 
law or by foreclosure upon the pledge of such shares (or through transfer, 
in the case of the Central Bank), the Corporation must offer to repurchase 
the shares from such person at net asset value of the shares. If such offer 
is refused, no dividend may be paid by the Corporation or Fund on such 
shares, and the redemption price which the holder of such shares may obtain 
in any subsequent repurchase of those shares by the Corporation or Fund is 
limited to the net asset value of the shares on the date of the 
Corporation's offer.

      In the event of any transfer, it is extremely important to notify the 
Corporation immediately of any purchase, sale or transfer of Fund shares 
not made through the Corporation or its transfer agent. Immediate 
notification should be furnished to the Corporation by telephone, with 
written notification as a follow-up thereto. Prompt notification is 
essential to avoid any delay in redemption offer and loss of earnings. 
Please remember that a statutory restriction exists on the Corporation and 
it would be unable to pay a dividend to an ineligible holder after 
expiration of the 30-day repurchase period which is statutorily available 
following such transfer.

                                ORGANIZATION

      The Corporation was organized effective April 7, 1985 pursuant to a 
Special Act of the Commonwealth [Acts of 1984, Chapter 482 as amended] of 
Massachusetts under its chartered name "Co-operative Bank Investment Fund" 
and does business under the name "Bank Investment Fund." The Special Act 
indicates that the purpose of the Corporation is to hold, invest, reinvest 
and manage one or more mutual investment funds, which shall include all 
property of the Corporation, to be derived from voluntary subscription 
thereto by the Banks.

      The Liquidity Fund commenced operations on October 12, 1988.

      The Corporation is an open-end diversified management investment 
company authorized to invest its assets in certain real estate mortgages, 
and a variety of other investments, including direct obligations of the 
United States, obligations guaranteed by the United States, obligations 
guaranteed by the Federal National Mortgage Association, bonds and other 
evidences of indebtedness of corporations, shares of common or preferred 
stock registered on a national securities exchange or for which quotations 
are available through the National Quotation Bureau, Inc. or a comparable 
service, or through a national securities market established in conformance 
with Section 11A of the Securities Act of 1934, and other debt and equity 
securities. The Liquidity Fund will only invest in those securities 
described under "Investment Policy" and "Investment Restrictions" elsewhere 
herein.

      The business of the Corporation is conducted by a Board of Directors 
elected by the Corporation's Incorporators and the Directors have 
investment discretion relative to Corporation assets. The Incorporators of 
the Corporation are the Directors of The Co-operative Central Bank, which 
is the statutory reserve bank and insurer of deposits in excess of Federal 
deposit insurance limitations for Massachusetts co-operative banks.

      The Corporation operates pursuant to an exemption from the sections 
of the Investment Company Act of 1940 which deal with a) voting rights of 
security holders and b) the manner of sale of redeemable securities.

      Only Massachusetts Co-operative Banks, Massachusetts Savings Banks, 
Massachusetts Trust Companies, Federally Chartered Savings Banks and 
Savings and Loan Associations with their principal place of business in 
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank 
Life Insurance Company of Massachusetts and the National Cooperative Bank 
are currently offered shares in the Fund. Such investors may purchase 
shares of beneficial interest, which do not entitle the shareholders 
thereof to voting rights of any nature, including investment policy 
matters.

                         DESCRIPTION OF FUND SHARES

      The Corporation has no capital stock. Beneficial ownership in each of 
the Corporation's funds is represented by shares of beneficial ownership in 
such fund, as recorded in book entry form. Each share of beneficial 
interest in each fund is equal in every respect to every other share of 
that fund. As the Directors of the Corporation establish distinct 
investment funds, shares will be issued in distinct classes and each share 
within each class will be equal in every respect to every other share of 
that class.

      The shares of beneficial ownership are no par, non-voting, with a 
stated value of $1,000, issued in book entry form only. Investment and 
redemption of shares is effected at the net asset value as described 
elsewhere herein. Shares are recorded in whole and/or fractional shares, as 
applicable. Physical certificates are not issued. Monthly statements are 
furnished to reflect share balance and activity.

      With regard to the absence of voting rights, management believes that 
eligible investors are adequately protected because of a) regulation by the 
Commissioner of Banks, b) the redeemable nature of the shares, c) 
representation of co-operative bank investors in the election of Directors 
of the Central Bank, who as Incorporators elect the Corporation's 
Directors, and d) representation of savings bank investors by an advisor at 
such corporate meetings of the Incorporators.

                         SUPERVISION AND REGULATION

      As provided by Massachusetts statute [Chapter 482, Acts of 1984 as 
amended] the Corporation is subject to the supervision of the Commissioner 
of Banks of the Commonwealth of Massachusetts. Periodic reporting to the 
Commissioner of Banks is also required by the same statute. The Corporation 
is registered as an open-end diversified management investment company 
under the Investment Company Act of 1940, as amended, and is subject to 
reporting requirements thereunder.

                             INVESTMENT ADVISOR

      The Corporation presently does not employ the services of any 
investment advisory or management services company. Investment decisions 
for the Fund are made by authorized officers of the Corporation, subject to 
approval or ratification by its Board of Directors. The Corporation 
reserves the right at any time in the future to appoint an investment 
advisor at any reasonable and customary fee as may be agreed when, in the 
opinion of the Corporation Directors, the use of such advisory or 
management services would improve Fund performance.

                               TRANSFER AGENT

      The Corporation maintains the records for the investment, redemption, 
and/or transfer of Fund shares. The Corporation reserves its right at any 
time in the future to appoint a separate transfer agent at any reasonable 
and customary fee as may be agreed when, in the opinion of the Corporation 
Directors, the use of such transfer service is necessary. The limited 
number of shareholders and nature of Fund operation does not, at this time, 
justify the use of a separate agent and would only be an extra or 
unnecessary expense.

                     OPERATING AND DISTRIBUTION EXPENSES

      Normal expenses which may be borne by the Fund include, but are not 
limited to: Director fees, salaries and wages, payroll taxes, employee 
benefits, taxes, corporate fees, occupancy, furniture and equipment, data 
processing, legal, auditing and accounting, telephone and postage, 
custodial and other bank fees, preparation, printing and distribution of 
reports, insurance, membership fees, organization, and other miscellaneous 
expenses.

      The Corporation has adopted a plan of distribution pursuant to Rule 
12b-1 of the Investment Company Act of 1940 (the "Plan") providing that the 
Fund will pay certain expenses incurred by the Corporation which may be 
considered to be primarily intended to result in the sale of shares in the 
Fund. The expenses which may be incurred pursuant to the Plan include, 
without limitation, those for the preparation, printing and distribution of 
written materials for other than existing investors, preparation and 
distribution of advertising material and sales literature, direct payments 
to sales personnel, and other similar activities. The maximum expenditures 
which may be made pursuant to the Plan in any year is .12 of 1% of the 
average daily net asset value of the Corporation for such year. The Board 
of Directors of the Corporation has concluded that there is a reasonable 
likelihood that the Plan will benefit the Fund and its shareholders.

      Expenditures of $71,549 (.02% of average net assets) pursuant to the 
12b-1 plan were incurred in and for the year ended December 31, 1998: 
$3,119 for advertising in trade journals and similar publications; $4,919 
for printing and mailing of offering circulars; $25,700 for compensation, 
payroll taxes and benefits for personnel in sales and customer service; 
$22,296 for sponsorship of annual subscriptions and other promotional 
materials; and $15,515 for other plan expenses.

      Because more than one fund will be operated by the Corporation, 
operating expenses and expenses incurred pursuant to the Plan related 
directly to a single fund operation will be charged directly to that fund. 
Common or indirect expenses will be allocated among funds in accordance 
with the annual budget as determined by the Board of Directors of the 
Corporation to be fair and equitable or on such other basis as the Board of 
Directors of the Corporation may determine from time to time to be fair and 
equitable. Operating expenses paid or accrued to Bank Investment Fund-Fund 
One for the year ended December 31, 1998 was $24,200.

                             EXCHANGE PRIVILEGE

      Shares of the Fund may be exchanged for shares of another fund of the 
Corporation on the basis of the respective net asset value of the shares 
involved.

                                  CUSTODIAN

      The Corporation is required by statute to at all times employ a 
national banking association located in the Commonwealth of Massachusetts, 
or a Massachusetts state-chartered bank authorized to exercise trust 
powers, as the Corporation's or Fund's custodian, to hold the securities 
owned by the Corporation and any monies delivered by the Corporation's or 
Fund's shareholders or due to the Corporation or Fund. Purchase and sale 
transactions are effected through or by the custodian bank upon the 
instructions of the Corporation.

      The State Street Bank and Trust Company, 225 Franklin Street, Boston, 
MA 02110, serves as custodian of the Fund's cash and investments, other 
than cash and Federal funds sold. Investments held under custody include 
certificates of deposit. The Fund also maintains cash and Federal fund 
balances with a number of qualified national banks (located in 
Massachusetts) or Massachusetts state chartered banks. The banks utilized 
have been determined by the officers and directors of the Fund to have been 
qualified to be custodian banks themselves. State Street Bank and Trust 
Company, the Fund's custodian, and other qualified banks, as discussed 
above, may be used by the Fund for the placement of short-term, usually 
overnight, funds in Federal funds sold.

                                  YEAR 2000

      All software provided and maintained by Bankware, Inc. in use by the 
Bank Investment Fund is currently year 2000 compliant. Software review, 
evaluation, update, implementation and testing validation were completed 
prior to December 31, 1998. We fully expect to process participating banks' 
investments, redemptions and monthly interest payments in Liquidity Fund 
without disruption in the year 2000. Cost related to this year 2000 systems 
issue were  not material. The Fund recorded expense of $3,744 in 1998 in 
this regard. Little, if any, further expense is expected.

      Like other mutual funds and other financial and business 
organizations around the world, the Fund could be adversely affected if the 
computer systems used by its third party transaction processors, such as 
custodians, banks, broker dealers or others that the Fund does business 
with, do not properly process the date from and after January 1, 2000. The 
Fund continues to seek assurances that comparable steps are being taken by 
these third party processors. However, there can be no assurance that these 
steps will be sufficient to prevent any adverse impact on the Fund.

      The Fund plans to be more liquid at year end 1999 in the contingent 
event that increased redemption activity is received prior to the century 
date change.

                           MANAGEMENT OF THE FUND

      The Incorporators of the Corporation are the Directors of The Co-
operative Central Bank which is the statutory reserve bank and insurer of 
deposits in excess of Federal deposit insurance limitations for 
Massachusetts co-operative banks. The Board of Directors of the Corporation 
is elected by the Incorporators.

      The Fund's primary investment officer is James L. Burns, Jr., 
President. He has held this position since inception of the Fund in 1988. 
For more than 15 years prior to the inception of the Fund, he managed 
investment portfolios for The Co-operative Central Bank and the State 
Street Bank and Trust Company.

      Directors and Officers of the Corporation, together with information 
as to their principal business occupations during the past five years, are 
shown below:

<TABLE>

<S>                                 <S>
James L. Burns, Jr., President      President of The Co-operative Central Bank
 and Chief Executive Officer         75 Park Plaza, Boston, MA 02116-3934

William F. Casey, Jr.,              Executive Vice President and Treasurer of The Co-operative
 Executive Vice President            Central Bank, 75 Park Plaza, Boston, MA 02116-3934

Susan L. Ellis, Vice President      Vice President of The Co-operative Central Bank, 75 Park Plaza,
 and Treasurer                       Boston, MA 02116-3934

Jeremiah J. Foley, Vice President   Vice President of The Co-operative Central Bank, 75 Park Plaza,
 and Clerk of the Corporation        Boston, MA 02116-3934

Robert E. Haley, Vice President     Vice President of Bank Investment Fund, 75 Park Plaza,
                                     Boston, MA 02116-3934

Annemarie Lee, Vice President       Assistant Vice President of The Co-operative Central Bank,
                                     75 Park Plaza, Boston, MA 02116-3934

Claire R. Bothwell, Director        Chairman of the Board of the Ware Co-operative Bank,
                                     Main Street, Ware, MA 01082

Robert F. Day, Director             President of The Needham Co-operative Bank,
                                     1063 Great Plain Ave., Needham, MA 02192

Charles P. Hooker, Director         Chairman of the Board of The Pittsfield Co-operative Bank,
                                     70 South St., Pittsfield, MA 01202

Ronald E. Lestan, Director          President of The Walpole Co-operative Bank, 
                                     982 Main Street, Walpole, MA 02081

Walter A. Murphy, Director and      Chairman of the Board of the Falmouth Co-operative Bank,
 Clerk of the Board                  P.O. Box 567, Falmouth, MA 02541

John H. Pearson, Jr., Director      President of Butler Bank-A Co-operative Bank,
                                     10 George Street, Lowell, MA 01852
</TABLE>

                            --------------------

                                 IN MEMORIUM

      The Directors, Officers and Staff of the Bank Investment Fund note 
with great sorrow the passing of Mr. John T. Day on January 28, 1999. Mr. 
Day served as a member of the Board of Directors since 1985 and as Chairman 
of the Board since 1990. Mr. Day was the Chairman and Chief Executive 
Officer of the Mt. Washington Co-operative Bank. His intelligence, humor, 
friendship and guidance will be sadly missed.

                            FINANCIAL HIGHLIGHTS
               (For a share outstanding throughout each year)

      The financial highlights table is intended to help you understand the 
Fund's financial performance for the past 10 years. Certain information 
reflects financial results for a single fund share. The total returns in 
the table represent the rate that an investor would have earned (or lost) 
on an investment in the Fund (assuming reinvestment of all dividends and 
distributions). This information has been audited by Parent, McLaughlin & 
Nangle, whose report, along with the Fund's financial statements, are 
included elsewhere herein.

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                           ------------------------------------------------
                                                             1998         1997         1996         1995
                                                             ----         ----         ----         ----

<S>                                                        <C>          <C>          <C>          <C>
Net asset value, beginning of period                       $1,000.00    $1,000.00    $1,000.00    $1,000.00
                                                           ------------------------------------------------

Income from investment operations:
  Net investment income                                        53.07        53.83        52.53        57.12
                                                           ------------------------------------------------
      Total from investment operations                         53.07        53.83        52.53        57.12
                                                           ------------------------------------------------

Less distributions:
  Dividends from net investment income                        (53.07)      (53.83)      (52.53)      (57.12)
                                                           ------------------------------------------------
      Total distributions                                     (53.07)      (53.83)      (52.53)      (57.12)
                                                           ------------------------------------------------
  Net asset value, end of period                           $1,000.00    $1,000.00    $1,000.00    $1,000.00
                                                           ================================================
      Total return                                              5.44%        5.52%        5.38%        5.86%

Ratios/Supplemental data:
  Net assets, end of period (in 000's)                     $ 286,629    $ 235,204    $ 210,208    $ 245,151
  Ratio of expenses to average net assets                       0.15%        0.16%        0.15%        0.13%
  Ratio of net investment income to average net assets          5.30%        5.22%        5.26%        5.75%


<CAPTION>
                                                                                 Year Ended December 31,
                                                          ---------------------------------------------------------------------
                                                            1994        1993        1992        1991        1990        1989
                                                            ----        ----        ----        ----        ----        ----


<S>                                                       <C>         <C>         <C>         <C>         <C>         <C>
Net asset value, beginning of period                      $1,000.00   $1,000.00   $1,000.00   $1,000.00   $1,000.00   $1,000.00

Income from investment operations:
  Net investment income                                       38.00       31.18       39.95       61.44       82.74       91.14
                                                          ---------------------------------------------------------------------
      Total from investment operations                        38.00       31.18       39.95       61.44       82.74       91.14
                                                          ---------------------------------------------------------------------

Less distributions:
  Dividends from net investment income                       (38.00)     (31.18)     (39.95)     (61.44)     (82.74)     (91.14)
                                                          ---------------------------------------------------------------------
      Total distributions                                    (38.00)     (31.18)     (39.95)     (61.44)     (82.74)     (91.14)
                                                          ---------------------------------------------------------------------
  Net asset value, end of period                          $1,000.00   $1,000.00   $1,000.00   $1,000.00   $1,000.00   $1,000.00
                                                          =====================================================================
      Total return                                             3.87%       3.15%       4.07%       6.32%       8.37%       9.23%

Ratios/Supplemental data:
  Net assets, end of period (in 000's)                    $  91,623   $ 266,821   $ 364,171   $ 383,771   $  64,115   $  19,782
  Ratio of expenses to average net assets                      0.30%       0.28%       0.20%       0.19%       0.25%       0.25%
  Ratio of net investment income to average net assets         3.63%       3.12%       3.99%       5.98%       7.99%       8.77%
</TABLE>


                        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, 1998, 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 financial 
highlights for each of the ten years in the period then ended. These 
financial statements and financial highlights are the responsibility of the 
Fund's management. Our responsibility is to express an opinion on these 
financial statements and financial highlights based on our audits.

      We conducted our audits in accordance with generally accepted 
auditing standards. Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial statements 
and financial highlights are free of material misstatement. An audit 
includes examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements and financial highlights. Our 
procedures included confirmation of securities owned as of December 31, 
1998, 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 financial highlights 
referred to above present fairly, in all material respects, the financial 
position of Bank Investment Fund-Liquidity Fund as of December 31, 1998, 
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 
financial highlights for each of the ten years in the period then ended, in 
conformity with generally accepted accounting principles.



                                       /s/ Parent, McLaughlin & Nangle
                                       Certified Public Accountants

                                       LOGO FOR Parent, McLaughlin & Nangle

           Member of the SEC Practice Section, American Institute
                       of Certified Public Accountants


January 28, 1999


                     BANK INVESTMENT FUND-LIQUIDITY FUND

                     STATEMENT OF ASSETS AND LIABILITIES
                              December 31, 1998

<TABLE>

<S>                                                                             <C>
ASSETS:
  INVESTMENTS, at cost which approximates value                                 $286,109,400

  INTEREST RECEIVABLE                                                              1,003,438

  CASH                                                                               236,835
                                                                                ------------

      TOTAL ASSETS                                                               287,349,673
                                                                                ------------

LIABILITIES:
  DIVIDENDS PAYABLE                                                                  639,503

  OTHER ACCRUED EXPENSES                                                              81,536
                                                                                ------------

      TOTAL LIABILITIES                                                              721,039
                                                                                ------------

NET ASSETS: (Equivalent to $1,000 per share based on 286,628.6340 shares of
 beneficial interest outstanding)                                               $286,628,634
                                                                                ============

REPRESENTED BY:
  Paid-in Capital                                                               $286,628,634
                                                                                ============

</TABLE>

                     See notes to financial statements.



                     BANK INVESTMENT FUND-LIQUIDITY FUND

                           STATEMENT OF OPERATIONS
                        Year Ended December 31, 1998


<TABLE>

<S>                                                     <C>          <C>
INVESTMENT INCOME:                                                   $16,804,967

EXPENSES:
  Compensation, payroll taxes and benefits-officers     $143,008
  Compensation, payroll taxes and benefits-other          52,092
  Distribution expenses                                   71,549
  Occupancy                                               36,400
  Professional fees                                       51,393
  Other expenses                                          23,077
  Custodian and other bank service fees                   29,708
  Equipment and data processing                           17,464
  Meetings and travel                                     21,973
  Directors' fees                                         10,300
  Printing and postage                                     6,622
  Stationary and supplies                                  4,470
  Insurance expense                                        3,025
  Shareholder reports                                      4,919
                                                        --------
      TOTAL EXPENSES                                                     476,000
                                                                     -----------
       INVESTMENT INCOME-NET                                          16,328,967
                                                                     -----------

      NET INCREASE IN NET ASSETS RESULTING FROM
       OPERATIONS                                                    $16,328,967
                                                                     ===========

</TABLE>

                     See notes to financial statements.


                     BANK INVESTMENT FUND-LIQUIDITY FUND

                     STATEMENT OF CHANGES IN NET ASSETS


<TABLE>
<CAPTION>

                                                     Year Ended December 31,
                                                  ----------------------------
                                                      1998            1997
                                                      ----            ----


<S>                                               <C>             <C>
INCREASE IN NET ASSETS RESULTING FROM 
 OPERATIONS:
  Investment income-net                           $ 16,328,967    $ 12,091,702

DIVIDENDS TO SHAREHOLDERS FROM:
  Investment income-net                            (16,328,967)    (12,091,702)

TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST-
 NET INCREASE                                       51,424,170      24,996,908
                                                  ----------------------------

      TOTAL INCREASE IN NET ASSETS                  51,424,170      24,996,908

NET ASSETS:
  Beginning of year                                235,204,464     210,207,556
                                                  ----------------------------

  End of year                                     $286,628,634    $235,204,464
                                                  ============================

</TABLE>

                     See notes to financial statements.


                     BANK INVESTMENT FUND-LIQUIDITY FUND

                          PORTFOLIO OF INVESTMENTS
                              December 31, 1998

<TABLE>
<CAPTION>

Obligations of Federal Agencies-10.1%


                                     Par        Coupon        Maturity Date           Cost
                                     ---        ------        -------------           ----

<S>                              <C>            <C>        <C>                     <C>
Federal Home Loan Mortgage
 Corporation                     $  5,000,000   5.04%*          01/06/99           $  4,995,800
Federal National Mortgage
 Association                        5,000,000   5.06*           01/04/99              4,997,200
Federal National Mortgage
 Association                        5,000,000   6.45            07/01/99              5,033,794
Student Loan Marketing
 Association-Floater               14,000,000   4.858**         08/02/99             14,000,000
                                 ------------                                      ------------
                                 $ 29,000,000              (Value $ 29,006,944)    $ 29,026,794
                                 ------------                                      ------------

Certificates of Deposit-3.2%

Avon Cooperative Bank            $    250,000   5.00%           05/03/99           $    250,000
Ben Franklin Savings Bank           1,000,000   5.50            01/29/99              1,000,000
Ben Franklin Savings Bank             300,000   5.10            06/28/99                300,000
Bank of Fall River,
 a Cooperative Bank                   500,000   5.50            01/20/99                500,000
Fidelity Cooperative Bank             500,000   5.50            01/27/99                500,000
First Trade Union                      90,000   5.50            11/10/99                 90,000
Foxborough Savings Bank               250,000   5.50            01/14/99                250,000
Foxborough Savings Bank               200,000   5.25            03/31/99                200,000
Foxborough Savings Bank               300,000   5.00            06/01/99                300,000
Hyde Park Cooperative Bank            250,000   5.50            02/02/99                250,000
Lowell Cooperative Bank               200,000   5.50            02/04/99                200,000
Marlborough Cooperative Bank          500,000   5.60            01/27/99                500,000
Marlborough Cooperative Bank          250,000   5.65            07/01/99                250,000
Marlborough Cooperative Bank          250,000   5.60            09/30/99                250,000
Mechanics Cooperative Bank            500,000   5.00            06/28/99                500,000
Mt. Washington Cooperative
 Bank                                 600,000   5.55            01/11/99                600,000
Mt. Washington Cooperative
 Bank                                 300,000   5.55%           02/25/99                300,000
Mt. Washington Cooperative Bank       450,000   5.00            06/17/99                450,000
NCB Savings Bank, FSB                 100,000   5.00            04/05/99                100,000
South Shore Cooperative Bank        1,000,000   5.55            02/25/99              1,000,000
South Shore Savings Bank              500,000   5.50            02/09/99                500,000
South Shore Savings Bank            1,000,000   5.50            02/24/99              1,000,000
                                 ------------                                      ------------
                                 $  9,290,000              (Value $  9,290,000)    $  9,290,000
                                 ------------                                      ------------

Commercial Paper-62.0%

Anheuser Busch Corp.             $  5,000,000   5.05%*          01/07/99           $  4,995,090
Anheuser Busch Corp.                5,000,000   5.05*           01/20/99              4,985,972
Anheuser Busch Corp.                7,000,000   5.00*           01/26/99              6,974,722
Bank One Funding Corp.              4,717,000   5.43*           01/13/99              4,707,751
Bank One Funding Corp.              7,000,000   5.45*           01/21/99              6,977,746
Carolina Power & Light Co.          5,000,000   5.15*           02/11/99              4,969,958
Carolina Power & Light Co.          5,000,000   5.10*           02/26/99              4,959,625
Coca Cola & Co.                     3,000,000   5.00*           01/14/99              2,994,167
Coca Cola & Co.                     5,000,000   5.09*           02/01/99              4,977,378
Coca Cola & Co.                     3,000,000   5.05*           02/12/99              2,981,904
Consolidated Natural Gas Co.        5,475,000   5.05*           01/22/99              5,458,104
Consolidated Natural Gas Co.        3,000,000   5.12*           01/28/99              2,988,053
Consolidated Natural Gas Co.        3,000,000   5.05*           02/02/99              2,985,920
Duke Energy Corp.                   5,000,000   5.17*           01/13/99              4,990,665
Duke Energy Corp.                   5,000,000   5.15*           02/04/99              4,974,965
Duke Energy Corp.                   3,000,000   5.20*           02/08/99              2,983,100
Fleet Funding Corp.                 5,000,000   5.30*           01/11/99              4,991,903
Fleet Funding Corp.                 5,000,000   5.45*           01/14/99              4,989,403
Ford Motor Credit Co.               4,000,000   5.02%*          01/22/99              3,987,729
General Electric Capital Corp.      5,000,000   5.01*           01/25/99              4,982,604
Gillette Inc.                       5,000,000   5.12*           01/07/99              4,995,022
Gillette Inc.                       5,000,000   5.12*           01/08/99              4,994,311
Gillette Inc.                       7,000,000   5.12*           01/12/99              6,988,053
GTE Funding Inc.                    5,000,000   5.16*           02/16/99              4,966,317
Lucent Technologies Inc.            5,000,000   5.15*           01/29/99              4,979,257
Lucent Technologies Inc.            8,000,000   5.10*           02/03/99              7,961,467
Merrill Lynch & Co. Inc.            5,000,000   5.23*           01/19/99              4,986,199
Merrill Lynch & Co. Inc.            5,000,000   5.30*           01/27/99              4,980,125
Merrill Lynch & Co. Inc.            5,000,000   5.20*           02/23/99              4,961,000
National Rural Utilities Inc.       5,000,000   5.00*           01/11/99              4,992,361
National Rural Utilities Inc.       5,000,000   5.12*           02/19/99              4,964,444
National Rural Utilities Inc.       3,000,000   5.04*           03/23/99              2,965,560
Receivables Captial Corp.           2,159,000   5.22*           01/14/99              2,154,584
USAA Capital Corp.                  5,000,000   5.16*           01/12/99              4,991,400
USAA Capital Corp.                  3,000,000   5.15*           01/20/99              2,991,417
USAA Capital Corp.                  4,000,000   5.11*           01/28/99              3,984,102
USAA Capital Corp.                  3,000,000   5.00*           03/31/99              2,962,500
Winn-Dixie, Inc.                    5,000,000   5.03*           01/05/99              4,996,507
                                 ------------                                      ------------
                                 $178,351,000              (Value $ 177,703,887)   $177,671,385
                                 ------------                                      ------------

Short-Term Corporate Bonds and Notes-10.7%

Asssociates Corp. of N.A.        $  5,500,000   6.75%           10/15/99           $  5,581,958
Avco Financial Corp.                2,000,000   7.25            07/15/99              2,015,366
Ford Motor Corp.                      530,000   5.625           01/15/99                530,027
GMAC Corp.                          5,594,000   7.75            01/15/99              5,599,099
GMAC Corp.                          1,000,000   8.50            01/15/99              1,001,101
GMAC Corp.                            750,000   6.04            03/19/99                751,164
GMAC Corp.                          1,500,000   7.50            07/22/99              1,519,939
Household Finance Corp.             2,500,000   7.28%           07/22/99              2,530,170
Household Finance Corp.             1,600,000   8.86            12/15/99              1,657,661
IBM Corp.                           1,500,000   5.40            01/27/99              1,499,969
Morgan Stanley Dean Witter 
 Corp.                              4,000,000   6.125           01/05/99              4,000,153
Morgan Stanley Dean Witter
 Corp.                              1,000,000   7.44            06/08/99              1,007,182
Pepsico                               500,000   6.25            09/01/99                503,204
Transamerica Financial Corp.        2,500,000   6.80            03/15/99              2,505,716
                                 ------------                                      ------------
                                 $ 30,474,000              (Value $ 30,727,466)    $ 30,702,709
                                 ------------                                      ------------

Federal Funds Sold-13.8%

<CAPTION>

                                     Par        Coupon        Maturity Date           Cost
                                     ---        ------        -------------           ----

<S>                              <C>            <C>         <C>                    <C>
BankBoston                       $ 13,811,096   4.875%          01/04/99           $ 13,811,096
Fleet Bank, N.A.                   11,765,000   4.75            01/04/99             11,765,000
U. S. Trust Co.                    13,842,416   4.938           01/04/99             13,842,416
                                 ------------                                      ------------
                                 $ 39,418,512              (Value $ 39,418,512)    $ 39,418,512
                                 ------------                                      ------------

Total Investments-99.8%                                    (Value $286,146,809)    $286,109,400
                                                                                   ------------

Other assets in excess of liabilities-0.2%                                              519,234
                                                                                   ------------

Net assets-100%                                                                    $286,628,634
                                                                                   ============

<FN>
- --------------------
*     Annualized yield on date of purchase.
**    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, Federally Chartered Savings Banks and Savings and Loan 
Associations with their principal place of business in Massachusetts, The 
Co-operative Central Bank Reserve Fund, The Savings Bank Life Insurance 
Company of Massachusetts and the National Cooperative Bank.

      Because more than one fund will be operated by the Corporation, 
operating expenses related directly to a single fund operation will be 
charged directly to that fund. Common or indirect expenses will be 
allocated among funds in proportion to the ratio of the net assets of each 
fund to total net assets of the Corporation or on such other basis as the 
Board of Directors of the Corporation may determine from time to time to be 
fair and equitable.

NOTE 2. Significant Accounting Policies:

      The Fund's financial statements are prepared in accordance with 
generally accepted accounting principles which require the use of 
management estimates. The policies described below are followed 
consistently by the Fund in the preparation of its financial statements.

Accounting for investments:

      Security transactions are accounted for on the trade date (date the 
order to buy or sell is executed). The Fund's investment securities are 
carried at their amortized cost, which does not take into account 
unrealized appreciation or depreciation. Interest income is accrued on all 
debt securities on a daily basis and includes accretion of original issue 
discount. Premiums, if any, and discounts are amortized or accreted on a 
straight line basis, which approximates the income 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.

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, 1998                December 31, 1997
                                        -----------------------------     ---------------------------
                                           Shares           Amount          Shares          Amount
                                           ------           ------          ------          ------

<S>                                     <C>              <C>              <C>            <C>
Sold                                    1,468,133.7242   $1,468,133,724   763,373.3134   $763,373,313
Issued in reinvestement
 of dividends                               9,254.9275        9,254,927     7,740.8565      7,740,856
                                        -------------------------------------------------------------
                                        1,477,388.6517    1,477,388,651   771,114.1699    771,114,169
Redeemed                                1,425,964.4817    1,425,964,481   746,117.2619    746,117,261
                                        -------------------------------------------------------------
Net increase                               51,424.1700   $   51,424,170    24,996.9080   $ 24,996,908
                                        =============================================================

</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 $71,549 (.02% of average net assets) pursuant to the Plan for the 
year ended December 31, 1998.

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, 1998 was $20,207.

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 .15% of the Fund's net assets for the 
year ended December 31, 1998. As reimbursement of allocated expenses, the 
Fund paid or accrued $24,200 to the Bank Investment Fund-Fund One, for the 
year ended December 31, 1998.



            The following sheets are perforated for your removal
          and use in the establishment or updating of your account.


                            BANK INVESTMENT FUND
                               LIQUIDITY FUND
                          ACCOUNT APPLICATION FORM

REGISTRATION. The account should be registered as follows:
                                                         DATE: ____________

NAME: _____________________________________________________________________
POST OFFICE BOX: __________________________________________________________
STREET ADDRESS: ___________________________________________________________
CITY/TOWN: ________________________________ STATE: ________________________
ZIP CODE: ______________________ TELEPHONE NUMBER: ________________________
TAX ID NUMBER _____________________________________________________________
INITIAL INVESTMENT: $ __________________________________  (Minimum $50,000)

                           MONTHLY CASH DIVIDENDS

[ ]   Check if dividends are to be paid monthly in cash. Otherwise 
      dividends will be AUTOMATICALLY REINVESTED in additional shares of 
      the Fund.

                         TELEPHONE REDEMPTION ORDERS

      Redemption proceeds will be sent ONLY to the bank or trust company 
listed below, for credit to the investor's account. The investor hereby 
authorizes the BANK INVESTMENT FUND to honor telephone or written 
instructions, without a signature guarantee, for redemption of Fund shares. 
THE FUND and its Agents will not be liable for any loss, expense or cost 
arising out of such transactions.

      Enclose a specimen copy of your check or deposit slip (marked VOID) 
for the bank account listed below. To facilitate the wiring of your 
redemption proceeds the indicated bank should be a commercial bank.

Name of Bank: _____________________________________________________________

Bank Account No. __________________________________________________________

Bank Address: _____________________________________________________________
              street
              ____________________________________________ MA _____________
              city                                                    zip

Name on Account: __________________________________________________________

Bank Routing/Transit No.: _________________________________________________

          AUTHORIZED PERSONS-TELEPHONE INVESTMENTS AND REDEMPTIONS

           Authorized person         Title                  Initials
           -----------------         -----                  --------
1. ________________________________________________________________________

2. ________________________________________________________________________

3. ________________________________________________________________________

4. ________________________________________________________________________

5. ________________________________________________________________________

                            CORPORATE RESOLUTIONS

      We have enclosed with this application form the necessary corporate 
resolutions to authorize corporate officers to make wire or cash payment 
transfers to the Bank Investment Fund and to purchase, sell or exchange 
shares of beneficial ownership in the Bank Investment Fund.

                         SIGNATURE AND CERTIFICATION

      We have received and read the Offering Circular, and agree to its 
terms and conditions by signing below. By the execution of this 
Application, the undersigned represent and warrant that they are duly 
authorized to sign this Application and to purchase or redeem shares of the 
Fund on behalf of the investor.

      The undersigned hereby certify under penalty of perjury that the 
above Taxpayer Identification Number is correct and that the investor is 
not subject to backup withholding.

      We further certify and agree that the certifications, authorizations 
and appointments in this document will continue until the Bank Investment 
Fund receives actual written notice of any change thereof.

Signature _____________________________ Title _____________________________

Signature _____________________________ Title _____________________________

Two signatures are required, one of which should be the Secretary or Clerk 
of the corporation.

                             SIGNATURE GUARANTEE

      In order to facilitate telephone redemptions, you must have your 
signature(s) on this application guaranteed by a commercial bank or stock 
exchange member firm.

___________________________________________________________________________
Name of Bank or Investment Dealer

___________________________________________________________________________
By (signature of authorized person)

___________________________________________________________________________
Title (authorized person)

                     CERTIFICATE OF CORPORATE RESOLUTION

      For Massachusetts Co-operative Banks, Massachusetts Savings Banks, 
Massachusetts Trust Companies, Federally Chartered Savings Banks and 
Savings and Loan Associations with their principal place of business in 
Massachusetts, The Co-operative Central Bank Reserve Fund, The Savings Bank 
Life Insurance Company of Massachusetts and the National Cooperative Bank 
only. This form authorizes the individuals below to redeem shares by 
telephone or exchange.

      The undersigned is Secretary or Clerk of ________________________ and 
Hereby certifies that the following individuals:  (name of corporation)

              Name                          Title
              ----                          -----

__________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

are duly authorized by corporate resolution or otherwise to act on behalf 
of the eligible bank in connection with its ownership of shares in the Bank 
Investment Fund, Liquidity Fund and in particular to give instructions for 
the purchase, sale or exchange of any said shares and to execute any 
necessary forms in connection therewith.

      The Bank Investment Fund will consider this authorization to be in 
full force and in effect until otherwise notified in writing.

      IN WITNESS WHEREOF, the undersigned has executed this Certificate the 
_______________ day of ___________________ 19__________.

___________________________________________________________________________
Secretary or Clerk


                            FINANCIAL STATEMENTS

      As required by applicable statutes, semi-annual financial statements 
are furnished to the shareholder, the Commissioner of Banks and the 
Securities and Exchange Commission.

                           ADDITIONAL INFORMATION

      The Bank Investment Fund (the "Corporation") has filed with the 
Securities and Exchange Commission in Washington, D.C., under the chartered 
name the "Co-operative Bank Investment Fund" a registration statement on 
Form N-1A (together with all amendments and exhibits thereto, hereinafter 
referred to as the "Registration Statement") under the Investment Company 
Act of 1940. This Offering Circular does not contain all of the information 
in the Registration Statement. The Registration Statement may be reviewed 
and copied at the Public Reference Room of the Securities and Exchange 
Commission; or:

         By Phone:   1-800-Sec-0330
         By mail:    Public Reference Section
                     Securities and Exchange Commission
                     Washington, D.C. 20549-6009
                     (duplicating fee required)
         On the Internet: www.sec.gov
         (Investment Company Act File No. 811-4421)

      The Corporation will provide, without charge to any person to whom 
this Offering Circular is delivered on the written or oral request of any 
such person, a copy of the Registration Statement and the additional 
information contained therein and documents relating to certain exemptions 
from the Investment Company Act of 1940 (see ORGANIZATION). Written 
requests should be directed to the Bank Investment Fund, 75 Park Plaza, 
Boston, MA 02116-3934. Telephone requests may be directed collect to 617-
695-0415.

                       ==============================

                            BANK INVESTMENT FUND

                               LIQUIDITY FUND




                                75 Park Plaza
                            Boston, MA 02116-3934
                                617-695-0415

                       ==============================






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