<PAGE>
<PAGE> 1
As filed with the Securities and Exchange Commission March 30, 1995
Registration No. 2-99584
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 11
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 14
--------------------------------
P L A N I N V E S T M E N T F U N D, I N C.
(Exact Name of Registrant as Specified in Charter)
676 St. Clair Street
Chicago, Illinois 60611
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (312) 440-6372
Copy to:
PHILIP A. GOSS, PRESIDENT BURTON X. ROSENBERG, ESQ.
676 St. Clair Street Seyfarth, Shaw, Fairweather & Geraldson
Chicago, Illinois 60611 55 E. Monroe Street
(Name and Address of Agent Chicago, Illinois 60603
for Service)
It is proposed that this filing will become effective
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate check the following:
/ / This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has elected to maintain registration of an indefinite number of
Participation Certificates ("PC's") pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal
year ended December 31, 1994 was filed with the Securities and Exchange
Commission on February 28, 1995.
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<PAGE> 2
CROSS-REFERENCE SHEET
(as required by Rule 495)
N-1A Item No. Location
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PART A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary and
Introduction; Portfolio
Fee Tables
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description Cover Page; Investment
of Registrant Objectives and Policies;
Description of Participation
Certificates
Item 5. Management of the Fund Management of the Investment
Company
Item 5A. Management's Financial Highlights
Discussion of
Fund Performance
Item 6. Capital Stock and Dividends; Taxes;
Other Securities Management of the
Investment Company;
Description of Participation
Certificates; Performance
Information; General
Information
Item 7. Purchase of Securities Purchase and Redemption of
Being Offered Participation Certificates;
Management of the Investment
Company; Net Asset Value
Item 8. Redemption or Purchase and Redemption of
Repurchase Participation Certificates;
Net Asset Value
Item 9. Legal Proceedings Not Applicable
<PAGE>
<PAGE> 3
CROSS-REFERENCE SHEET (Continued)
N-1A Item No. Location
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PART B STATEMENT OF ADDITIONAL
INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information See Prospectus --
and History "Description of Participation
Certificates"
Item 13. Investment Objectives Investment Objectives and
and Policies Policies
Item 14. Management of the Management of the Investment
Fund Company
Item 15. Control Persons and Additional Description
Principal Holders of Concerning Investment
Securities Company Participation
Certificates
Item 16. Investment Advisory Management of the Investment
and Other Services Company; See Prospectus --
"Management of the Investment
Company"
Item 17. Broker Allocation Investment Objectives and
and Other Practices Policies
Item 18. Capital Stock and Additional Information
Other Securities Concerning Investment Company
Participation Certificates;
Miscellaneous; See Prospectus
-- "Dividends", "Taxes" and
"Description of Participation
Certificates"
Item 19. Purchase, Redemption Additional Purchase and
and Pricing of Redemption Information
Securities Being
Offered
Item 20. Tax Status Additional Information
Concerning Taxes; See
Prospectus -- "Dividends" and
"Taxes"
Item 21. Underwriters Not Applicable
Item 22. Calculation of Performance Information
Performance Data
Item 23. Report of Independent Report of Independent
Certified Public Accountants and
Accountants Financial Statements
<PAGE>
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CROSS-REFERENCE SHEET (Continued)
N-1A Item No. Location
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Item 24. Financial Statements Report of Independent
Accountants and
Financial Statements
PART C OTHER INFORMATION
Information required to be included in Part C is set forth under the
appropriate item, so numbered in Part C of this Registration Statement
<PAGE>
<PAGE> 5
Prospectus dated March 30, 1995
PLAN INVESTMENT FUND, INC.
Plan Investment Fund, Inc. (the "Investment Company") is a diversified
open-end management investment company available for members and licensees
of the Blue Cross and Blue Shield Association, an association of independent
Blue Cross and Blue Shield Plans, and certain related organizations. The
Investment Company was organized to offer portfolios designed to provide
liquidity and professional investment management and at present offers
Participation Certificates (individually, a "PC" and, collectively, "PCs")
in three (3) separate portfolios:
The Government/REPO Portfolio seeks a high level of current income
consistent with stability of principal by investing in U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements
relating to such obligations. The Government/REPO Portfolio may have
an average Portfolio maturity of up to seven (7) days and may buy
instruments with up to one (1) year remaining until maturity.
The Money Market Portfolio seeks a high level of current income
consistent with stability of principal by investing in high quality
money market instruments, including U.S. Government, bank and
commercial obligations. The Money Market Portfolio may have an average
Portfolio maturity of up to ninety (90) days and may buy instruments
with up to one (1) year remaining until maturity.
The Short-Term Portfolio also invests in high quality U.S.
Government, bank and commercial obligations, but typically with longer
maturities than the Money Market Portfolio, and seeks to maximize total
return, which includes interest income and capital gains and losses,
consistent with preservation of capital. The Short-Term Portfolio may
have an average Portfolio maturity of up to three hundred sixty (360)
days and may buy instruments with up to five and a quarter (5 1/4)
years, or its duration equivalent, remaining until maturity.
For information on new account applications, call Health Plans Capital
Services Corp ("CSC") at (312) 440-6372. To place purchase or redemption
orders, or to request yield information, call PFPC Inc. ("PFPC"), the
Transfer Agent for the Investment Company, at (800) 821-9771.
This Prospectus, which should be retained for future reference, sets forth
concisely the information about the Investment Company that a prospective
investor should review carefully before investing in the Investment Company.
Additional information about the Investment Company has been filed with the
Securities and Exchange Commission in a Statement of Additional Information,
dated March 30, 1995 . This information is incorporated herein by
reference and is available without charge upon request from CSC, 676 St. Clair
Street, Chicago, Illinois 60611.
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 PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
GOVERNMENT/REPO PORTFOLIO AND MONEY MARKET PORTFOLIO PARTICIPATION
CERTIFICATES ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
THERE IS NO ASSURANCE THAT THESE PORTFOLIOS WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER PARTICIPATION CERTIFICATE.
<PAGE>
<PAGE> 6
PROSPECTUS SUMMARY AND INTRODUCTION
(The information below should be read in conjunction with the detailed
information appearing elsewhere in this Prospectus.)
THE PORTFOLIOS AND THE INVESTMENT COMPANY'S INVESTMENT OBJECTIVES
The Government/REPO Portfolio , the Money Market Portfolio and the
Short-Term Portfolio (individually, a "Portfolio" and, collectively, the
"Portfolios") are portfolios of Plan Investment Fund, Inc., a diversified,
open-end management investment company. Each Portfolio is represented by a
class of Participation Certificates separate from those of the Investment
Company's other Portfolios. Unless otherwise indicated, all statements made
in this Prospectus refer to all three Portfolios.
The Government/REPO Portfolio seeks a high level of current income
consistent with stability of principal by investing in U.S. Treasury bills,
notes and other obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements relating to such
obligations . The Money Market Portfolio seeks a high level of current
income consistent with stability of principal by investing in high quality
money market instruments, including U.S. Government, bank and commercial
obligations. The Short-Term Portfolio also invests in high quality U. S.
Government, bank and commercial obligations, but typically with longer
maturities, and seeks to maximize total return, which includes interest
income and capital gains and losses, consistent with preservation of
capital.
IMVESTORS IN THE PORTFOLIOS
The Investment Company is designed for and permits investment exclusively
by entities within the Blue Cross and Blue Shield system of independent
Plans which include (i) Blue Cross Plans, Blue Shield Plans, and Blue Cross
and Blue Shield Plans (individually, a "Plan" and, collectively, the
"Plans"), the Blue Cross and Blue Shield Association and BCS Financial
Corporation, and (ii) CSC. Also eligible to use the Investment Company are
subsidiaries and affiliates of any of these entities. The above investors
may be referred to individually as a "BCBS Investor" and collectively as
"BCBS Investors".
ADVANTAGES OF THE PORTFOLIOS
The Portfolios offer investors professionally managed, convenient, highly
liquid, diversified, high quality investment vehicles designed to ease and
assist liquidity management. Investments in PCs of the Portfolios are
designed to relieve investors of such decisions and administrative tasks
involved in the direct purchase of liquidity investments as scheduling
maturities and reinvestments, safekeeping securities, and surveying the
market for the best price at which to buy or sell. In addition, the
Investment Company offers investors seeking a liquid investment a choice
between (i) PCs of the Government/REPO Portfolio, which normally will have a
constant net asset value per PC of $1.00 and which will have a
dollar-weighted average portfolio maturity of not more than seven (7) days,
(ii) PCs of the Money Market Portfolio, which normally will have a constant
net asset value per PC of $1.00 and which will have a dollar-weighted
average portfolio maturity of not more than ninety (90) days, and (iii)
PCs of the Short-Term Portfolio, which will be valued at the market value of
its investments and which will have a dollar-weighted average portfolio
maturity of not more than three hundred sixty (360) days. Securities whose
maturities are measured on an average life or duration basis are converted
to an average maturity for the purpose of calculating the Short-Term
Portfolio dollar-weighted average maturity. Investors may allocate their
investments between the Portfolios at their discretion and may change such
allocations at any time.
PURCHASE AND REDEMPTION OF PCS OF THE GOVERNMENT/REPO PORTFOLIO AND THE
MONEY MARKET PORTFOLIO
Purchase orders for the Government/REPO Portfolio and the Money Market
Portfolio which are received by 12 Noon (Eastern Time) will be executed at
the net asset value determined at 12 Noon (Eastern Time) that day if PNC
Bank, National Association ("PNC Bank") receives Federal funds by 4:00 P.M.
(Eastern Time). In addition, purchase orders for the Government/REPO
and the Money Market Portfolios which are received after 12 Noon (Eastern
Time) but before 1:00 P.M. (Eastern Time) from investors in the Mountain Time
Zone, or before 2:00 P.M. (Eastern Time) from investors in the Pacific Time
Zone, will be executed at the net asset value determined at 4:00 P.M.
(Eastern Time) that day if PNC Bank receives Federal funds by 4:00 P.M.
(Eastern Time) that day. Orders received after 12 Noon (Eastern Time) from
investors in the Eastern Time Zone or the Central Time Zone, after 1:00 P.M.
(Eastern Time) from investors in the Mountain Time Zone, or after 2:00 P.M.
(Eastern Time) from investors in the Pacific Time Zone, and orders for which
payment has not been received by 4:00 P.M. (Eastern Time), will not be
accepted and notice thereof will be given to the investor placing the order.
Redemption requests will be executed and proceeds will be paid to redeeming
PC holders on the same day of the redemption request if the redemption
request is received before 12 Noon (Eastern Time) from PC holders in the
Eastern and Central Time Zones, before 1:00 P.M. (Eastern Time) from PC
holders located in the Mountain Time Zone, and before 2:00 P.M. (Eastern
Time) from PC holders located in the Pacific Time Zone. Investors in the
Government/REPO Portfolio and the Money Market Portfolio may use purchase
and redemption procedures to effect inter-Plan transfers. (See "Purchase and
Redemption of Participation Certificates--Transfer Payments".)
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<PAGE> 7
PURCHASE AND REDEMPTION OF PCS OF THE SHORT-TERM PORTFOLIO
Purchase orders for the Short-Term Portfolio received before 4:00 P.M.
(Eastern Time) will be priced at the net asset value determined on that day
and will be executed as of the beginning of business on the following
Business Day if payment in Federal funds has been received by 4:00 P.M.
(Eastern Time) on the day the order is executed. Redemption orders received
before 4:00 P.M. (Eastern Time) will be priced at the net asset value
determined as of 4:00 P.M. (Eastern Time) on that day and will be executed
as of the beginning of business on the following Business Day. Proceeds
will be wired on the day the redemption order is executed.
INVESTMENT ADVISERS AND SERVICE AGENTS
PNC Institutional Management Corporation ("PIMC") is the investment
adviser of the Government/REPO Portfolio and the Money Market Portfolio
and the service agent of all three of the Investment Company's
Portfolios. Neuberger & Berman, a New York limited partnership ("N&B"), is the
investment adviser of the Short-Term Portfolio. (PIMC and N&B sometimes are
referred to herein collectively as the "Investment Advisers"; PIMC sometimes
is referred to herein as the "Service Agent".) (See "Management of the
Investment Company--Investment Advisers and Service Agent".)
CUSTODIAN, TRANSFER AGENT AND ADMINISTRATOR
PNC Bank is the Investment Company's custodian; PFPC is the Investment
Company's transfer agent; and CSC is the Investment Company's administrator.
(See "Management of the Investment Company--Custodian and Transfer Agent"
and "Management of the Investment Company--Administrator".)
PORTFOLIO FEE TABLES
PARTICIPATION CERTIFICATE HOLDER TRANSACTION EXPENSE
The Investment Company does not charge any form of sales load, redemption
fee or exchange fee.
The following tables summarize other costs and expenses that investors
bear directly or indirectly.
GOVERNMENT/REPO PORTFOLIO
-------------------------
ANTICIPATED GOVERNMENT/REPO PORTFOLIO ANNUAL OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (net of waivers).................. 0.09%
12b-1 Fees........................................ 0.00%
Other Expenses (net of waivers)................... 0.06%
-----
Total Portfolio Operating Expenses............. 0.15%
=====
Government/REPO Portfolio annual operating expenses are based on projections
of the expenses the Portfolio will incur and voluntary waivers of fees by
the investment advisor and the administrator.
GOVERNMENT/REPO PORTFOLIO EXAMPLE
Investors would pay the following expenses One Three Five Ten
on a $1,000 investment, assuming (1) 5% Year Years Years Years
annual return, (2) reinvestment of ---- ----- ----- -----
dividends and (3) redemption at the end
of each time period: $2 $5 $8 $19
MONEY MARKET PORTFOLIO
----------------------
MONEY MARKET PORTFOLIO ANNUAL OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER
31, 1994 (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees................................... 0.17%
12b-1 Fees........................................ 0.00%
Other Expenses.................................... 0.09%
-----
Total Portfolio Operating Expenses 0.26%
=====
MONEY MARKET PORTFOLIO EXAMPLE
Investors would pay the following expenses One Three Five Ten
on a $1,000 investment, assuming (1) 5% Year Years Years Years
annual return, (2) reinvestment of ---- ----- ----- -----
dividends and (3) redemption at the end
of each time period: $3 $8 $15 $33
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<PAGE> 8
SHORT-TERM PORTFOLIO
--------------------
SHORT-TERM PORTFOLIO ANNUAL OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER
31, 1994 (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (net of waivers).................. 0.15%
12b-1 Fees........................................ 0.00%
Other Expenses (net of waivers)................... 0.15%
-----
Total Portfolio Operating Expenses............. 0.30%
Without the waiver of advisory fees, the total operating expense would be
.37% based on actual costs through December 31, 1994.
SHORT-TERM PORTFOLIO EXAMPLE
Investors would pay the following expenses One Three Five Ten
on a $1,000 investment, assuming (1) 5% Year Years Years Years
annual return, (2) reinvestment of ---- ----- ----- -----
dividends and (3) redemption at the end
of each time period: $3 $10 $17 $38
The purpose of these fee tables is to assist the investor in understanding
the various costs and expenses that an investor in the Portfolios will bear
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Management of the Investment Company" and "Purchase and
Redemption of Participation Certificates" in this prospectus and the
financial statements and related notes contained in the Statement of
Additional Information. Coopers & Lybrand L.L.P., the Investment Company's
independent accountants, has not audited the above tables and examples.
THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE
GREATER OR LESSER THAN THOSE SHOWN.
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<PAGE> 9
FINANCIAL HIGHLIGHTS
The following information regarding per participation certificate income
and principal changes has been derived from the Investment Company's
financial statements which are included in the Statement of Additional
Information. The financial data below should be read in conjunction with
the financial statements and related notes. The Investment Company's
financial statements and financial highlights have been audited by Coopers &
Lybrand L.L.P., independent accountants, whose report thereon is contained in
the Statement of Additional Information along with the financial statements.
The Investment Company's annual report contains additional performance
information and will be made available upon request without charge.
Financial highlights are not presented for the Government/REPO Portfolio
because it did not commence operations prior to December 31, 1994 .
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
--------------------
(FOR A PARTICIPATION CERTIFICATE OUTSTANDING THROUGHOUT THE PERIOD)
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------------------
Year Ended December 31, 3/11/87(1)
-------------------------------------------------------------------------------- through
1994 1993 1992 1991 1990 1989 1988 12/31/87
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income. . . . . . .041 .030 .037 .060 .080 .090 .074 .053
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total From Investment Operations .041 .030 .037 .060 .080 .090 .074 .053
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends to PC holders from
Net Investment Income. . . . . (.041) (.030) (.037) (.060) (.080) (.090) (.074) (.053)
Distributions to PC holders from
Net Capital Gains. . . . . . . 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total Distributions. . . . . . . (.041) (.030) (.037) (.060) (.080) (.090) (.074) (.053)
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========
Total Return . . . . . . . . . . 4.21% 3.07% 3.73% 6.16% 8.29% 9.40% 7.64% 5.46%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000).. $451,367 $474,838 $390,581 $642,583 $460,402 $303,688 $127,480 $140,212
Ratio of Expenses to Average Net
Assets(3) .26% .24% .23% .25% .28% .30% .30% .30%(2)
Ratio of Net Investment Income
to Average Net Assets . . . . . 4.15% 3.02% 3.68% 5.97% 8.02% 8.94% 7.45% 6.78%(2)
--------------------------
<FN>
1 From March 11, 1987 commencement of operations.
2 Annualized.
3 Without the waiver of advisory, administration and service agent fees, the ratio of Money Market Portfolio expenses to
average daily net assets would have been .26%, .24%, .24%, .25%, .28%, .32%, .37% and .50% respectively, for the periods
ended December 31, 1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987.
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The Money Market Portfolio seven day average current yield as of December 31, 1994 was 5.60%.
</TABLE>
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
--------------------
(FOR A PARTICIPATION CERTIFICATE OUTSTANDING THROUGHOUT THE PERIOD)
Short-Term Portfolio
--------------------------------------------------------------------------------------------
Year Ended December 31, 3/11/87(1)
-------------------------------------------------------------------------------- through
1994 1993 1992 1991 1990 1989 1988 12/31/87
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period . . . . . . . . . . . . $ 10.03 $ 10.05 $ 10.09 $ 9.96 $ 9.91 $ 9.85 $ 9.88 $ 10.00
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income. . . . . . .440 .377 .443 .637 .778 .832 .715 .532
Net Realized and Unrealized Gain
(Loss) on Investments. . . . . (.100) (.009) .034 .130 .050 .060 (.030) (.120)
-------- -------- -------- -------- -------- -------- -------- --------
Total From Investment Operations .340 .368 .409 .767 .828 .892 .685 .412
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends to PC holders from
Net Investment Income. . . . . (.440) (.377) ( .443) (.637) (.778) (.832) (.715) (.532)
Distributions to PC holders from
Net Capital Gains. . . . . . . 0 (.011) (.006) 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total Distributions. . . . . . . (.440) (.388) (.449) (.637) (.778) (.832) (.715) (.532)
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 9.93 $ 10.03 $ 10.05 $ 10.09 $ 9.96 $ 9.91 $ 9.85 $ 9.88
======== ======== ======== ======== ======== ======== ======== ========
Total Return . . . . . . . . . . 3.46% 3.72% 4.13% 7.95% 8.69% 9.42% 7.15% 4.13%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000).. $103,240 $186,808 $195,579 $94,050 $24,828 $15,473 $19,207 $20,269
Ratio of Expenses to Average Net
Assets(3) .30% .30% .30% .30% .30% .30% .30% .30%(2)
Ratio of Net Investment Income
to Average Net Assets . . . . . 4.29% 3.74% 4.29% 6.22% 7.89% 8.38% 7.22% 6.59%(2)
Portfolio Turnover Rate(4) . . . . 47.6% 34.1% 37.6% 63.8% 100.2% 45.4% 12.4% 162.0%(2)
--------------------------
<FN>
1 From March 11, 1987 commencement of operations.
2 Annualized.
3 Without the waiver of advisory, administration and service agent fees, the ratio of Short-Term Portfolio expenses to
average daily net assets would have been .37%, .32%, .37%, .56%, .85%, .91%, .99% and .76% respectively, for the periods
ended December 31, 1994, 1993, 1992, 1991, 1990, 1989, 1988 and 1987.
4 Excludes security purchases with a maturity of less than one year.
------------------------------------------------------------------------------
The Short-Term Portfolio thirty day average yield as of December 31, 1994 was 5.87%. The Short-Term Portfolio annualized
total return was 3.46% for the one year period ended December 31, 1994, 5.55% for the five year period ended December 31, 1994
and 6.20% for the March 11, 1987 (commencement of operations) to December 31, 1994 period.
</TABLE>
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<PAGE> 11
INVESTMENT OBJECTIVES AND POLICIES
The Government/REPO Portfolio invests in liquid, high quality U.S.
Government obligations and repurchase agreements and the Money Market
Portfolio and the Short-Term Portfolio invest in diversified selections of
liquid, high quality U.S. Government, bank and commercial debt obligations, as
determined by each Portfolio's investment adviser to meet the Portfolio's
respective quality standards as established by the investment Company's Board
of Trustees. However, as described below, the three (3) Portfolios have
different investment objectives and investors may allocate their investments in
the Investment Company between the three (3) Portfolios as best suits
their needs at any given time. The criteria discussed below serve to explain
the term "high quality" used herein and in the Statement of Additional
Information with respect to investments of the Investment Company.
CRITERIA APPLICABLE TO THE PORTFOLIOS
All three Portfolios may:
1. Purchase obligations issued by the U.S. Treasury. The Portfolios may
also purchase obligations issued or guaranteed by agencies or instrumentalities
of the U.S. Government; some of these are backed by the full faith and credit
of the United States, such as the obligations of the Government National
Mortgage Association. Others are backed by the right of the issuer to borrow
from the U.S. Treasury, such as the obligations of the Federal National
Mortgage Association, or are backed by the credit of the agency or
instrumentality issuing the obligation, such as Federal Home Loan Mortgage
Corporation Mortgage Participation Certificates.
2. Enter into repurchase agreements ("Repurchase Agreements")
pursuant to which a Portfolio may acquire an investment for a relatively short
period (usually not more than sixty (60) days), subject to an obligation of the
seller to repurchase and the Portfolio to resell the instrument at a fixed
price and time, thereby determining the yield during the Portfolio holding
period. This results in a fixed rate of return during such period. The
repurchase price generally equals the price paid plus interest negotiated on
the basis of current short-term rates (which may be more or less than the rate
on the securities underlying the Repurchase Agreement). Securities subject to
Repurchase Agreements will be held by PNC Bank or in the Federal
Reserve/Treasury book-entry system. Repurchase Agreements are considered to
be loans under the 1940 Act. The Repurchase Agreements are collateralized by
U.S. Government securities the market value of which, on a daily basis,
including accrued interest, if any, is at least equal to one hundred percent
(100%) of the purchase price plus accrued interest under the Repurchase
Agreements. The Investment Company will perfect its security interest in the
collateral securing the Repurchase Agreements in accordance with U.S. Treasury
Regulations and the applicable commercial transaction law of the state in which
such collateral is located. If the seller defaults in its obligation to
repurchase the underlying instrument, which in effect constitutes collateral
for the seller's obligation, at the price and time fixed in the Repurchase
Agreement, the Investment Company might incur a loss if the value of the
collateral declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller, realization upon the collateral by the
Investment Company may be delayed or limited. Each Portfolio will enter into
Repurchase Agreements only with those banks and dealers determined by the
Portfolio's respective investment adviser to meet the Portfolio's respective
quality standards as established by the Investment Company's Board of Trustees.
The investment advisers will monitor the creditworthiness of the seller during
the life of a Repurchase Agreement.
3. Enter into reverse repurchase agreements ("Reverse Repurchase
Agreements") to provide liquidity to meet redemption requests when the sale of
portfolio securities is considered to be disadvantageous. Reverse Repurchase
Agreements involve the sale of investments held by the Investment Company with
an agreement to repurchase the securities at a fixed date and price. Under the
1940 Act, Reverse Repurchase Agreements, the proceeds of which are utilized to
provide liquidity to meet redemption requests, are considered as borrowings.
Proceeds of Reverse Repurchase Agreements utilized to provide liquidity to meet
redemption requests may equal no more than five percent (5%) of the total
assets of the respective Portfolio. The use of Reverse Repurchase Agreements
is not expected to affect the net asset value of the Money Market Portfolio.
The Money Market Portfolio and the Short-Term Portfolio may:
1. Purchase bank obligations, such as certificates of deposit,
bankers' acceptances and time deposits issued or supported by the credit of
the U.S. branches of U.S. banks with assets of at least $1 billion, if such
obligations are first determined by the Portfolio's respective investment
adviser to meet the Portfolio's respective maturity limitations and quality
standards for corporate debt obligations.
2. Purchase commercial paper rated (at the time of purchase) at least
"A-1" by Standard & Poor's Corporation ("S&P") or "Prime-1" by Moody's
Investors Service, Inc. ("Moody's").
3. Purchase corporate bonds or notes. The Money Market Portfolio may
purchase corporate bonds or notes rated (at the time of purchase) at least "AA"
by S&P or at least "Aa" by Moody's. The Short-Term Portfolio may purchase
corporate bonds or notes rated (at the time of purchase) at least "A-" by S&P
or at least "A-3" by Moody's.
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4. Purchase variable amount master demand notes ("VAMD Notes") issued
by corporations, which are unsecured instruments that permit the indebtedness
thereunder to vary and provide for periodic adjustments in the interest rate.
Although the notes normally are considered illiquid and are not traded, the
Investment Company may demand at any time from the issuers of the VAMD Notes
payment, in less than seven (7) days, of principal and accrued interest. VAMD
Notes typically are not rated by credit rating agencies. If an issuer of VAMD
Notes were to default on its payment obligations, the Investment Company might
be unable to dispose of the illiquid VAMD Notes and might, for this or other
reasons, suffer a loss to the extent of the default.
The Portfolios do not purchase unrated instruments unless the
Portfolio's respective investment adviser has determined the instrument to be
of comparable quality to rated instruments which the respective Portfolio may
buy. The rating symbols used by S&P and Moody's which are referred to above
are described in the Appendix to the Statement of Additional Information.
The Investment Company will (i) seek to make investments in instruments
authorized by the New York State Insurance Department to the extent such
investments also comply with the Investment Company's Investment Guidelines and
the 1940 Act; (ii) seek to make investments which will be permitted investments
under the requirements of other applicable state insurance laws and
regulations, although each investor should determine for itself the suitability
with respect to such state insurance laws and regulations, of investing with
the Investment Company; and (iii) maintain a high degree of portfolio liquidity
at all times. Each investor in the Investment Company will have the right to
receive redemption proceeds from the Investment Company within one (1) Business
Day of the Investment Company's receipt of a proper redemption request order,
as the case may be. If an investor ceases to be a BCBS Investor, its PCs in
the Investment Company will be redeemed involuntarily.
THE GOVERNMENT/REPO PORTFOLIO
The Government/REPO Portfolio seeks a high level of current income
consistent with stability of principal by investing in U.S. Treasury bills,
notes and other obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and Repurchase Agreements relating to such
obligations having remaining maturities of one (1) year or less, except that
items of collateral securing Portfolio securities which are subject to
Repurchase Agreements may bear maturities exceeding one (1) year. The
dollar-weighted average portfolio maturity of the Government/REPO Portfolio
will not exceed seven (7) days. In pursuing its investment objective, the
Government/REPO Portfolio invests in a broad range of government obligations
and Repurchase Agreements that may be available in the money markets. In
addition to the specific quality and other investment criteria set forth above,
the Government/REPO Portfolio will purchase only those instruments judged by
PIMC to involve minimal credit risk and which either have a high quality rating
from a nationally recognized rating agency or, if unrated, to be of comparable
quality as determined by PIMC. The Government/REPO Portfolio attempts to
maintain a constant net asset value per PC of $1.00. There is no assurance,
however, that such constant net asset value will be maintained.
Government/REPO Portfolio PCs are neither insured nor guaranteed by the U.S.
Government.
THE MONEY MARKET PORTFOLIO
The Money Market Portfolio seeks a high level of current income consistent
with stability of principal by investing in high quality money market
instruments having remaining maturities of one (1) year or less, except that
items of collateral securing Portfolio securities which are subject to
Repurchase Agreements may bear maturities exceeding one (1) year. The
dollar-weighted average portfolio maturity of the Money Market Portfolio will
not exceed ninety (90) days. In pursuing its investment objective, the Money
Market Portfolio invests in a broad range of government, bank and commercial
obligations that may be available in the money markets. In addition to the
specific quality and other investment criteria set forth above, the Money
Market Portfolio will purchase only those instruments judged by PIMC to involve
minimal credit risk and which either have a high quality rating from a
nationally recognized rating agency or, if unrated, to be of comparable
quality as determined by PIMC. The Money Market Portfolio attempts to maintain
a constant net asset value per PC of $1.00. There is no assurance, however,
that such constant net asset value will be maintained. Money Market Portfolio
PCs are neither insured nor guaranteed by the U.S. Government.
THE SHORT-TERM PORTFOLIO
The Short-Term Portfolio seeks to maximize total return, which includes
interest income and capital gains and losses, consistent with the preservation
of capital by managing a portfolio of U.S. Government, bank and commercial
instruments having remaining maturities of five and a quarter (5 1/4) years or
less, except that items of collateral securing portfolio securities which are
subject to Repurchase Agreements may bear maturities exceeding five and a
quarter (5 1/4) years. As a matter of fundamental policy the dollar-weighted
average portfolio maturity of the Short-Term Portfolio will not exceed three
hundred sixty (360) days. The net asset value per PC in the Short-Term
Portfolio will be subject to some fluctuation. There is no assurance that the
goals of the Short-Term Portfolio will be achieved.
In the ordinary course of business, the Short-Term Portfolio may purchase
securities on a when-issued or delayed-delivery basis (i.e., delivery and
payment will take place after the date of the transaction). As such, the
securities are subject to market fluctuations and no interest accrues to the
purchaser during this
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<PAGE> 13
period. When-issued securities are recorded as an asset and are subject to
market fluctuations. In addition, the Portfolio will segregate an amount of
cash or securities at the time of commitment equal to or exceeding the purchase
price of the securities. The Short-Term Portfolio will not purchase securities
on a when-issued or delayed-delivery basis if, as a result, more than fifteen
percent (15%) of the total assets of the Portfolio would be so invested.
INVESTMENT AND BORROWING LIMITATIONS
The Portfolios of the Investment Company may not change the
investment or borrowing limitations summarized below without the affirmative
vote of the holders of a majority of the outstanding PCs of the respective
Portfolio. (A more detailed description of the following investment
limitations, together with other investment limitations that cannot be changed
without a vote of the holders of a majority of the outstanding PCs of the
respective Portfolio, is contained in the Statement of Additional Information
under "Investment Objectives and Policies".) The Portfolios may not:
1. Borrow money, except from commercial banks for temporary purposes, and
then in amounts not in excess of five percent (5%) of the total assets of the
respective Portfolio at the time of such borrowing; or pledge any assets except
in connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or five percent (5%) of the total assets
of the respective Portfolio at the time of such borrowing. This limitation
applies to proceeds of Reverse Repurchase Agreements to the extent such
proceeds are utilized to provide liquidity to meet redemption requests.
2. Purchase any securities which would cause twenty-five percent (25%) or
more of the total assets of the respective Portfolio at the time of purchase
to be invested in the securities of issuers conducting their principal business
activities in the same general industry, provided that there is no limitation
for the Portfolios with respect to investments in U.S. Government
obligations or in obligations of domestic branches of U.S. banks for the Money
Market Portfolio.
3. Purchase securities of any one (1) issuer, other than those of, or those
guaranteed by, the U.S. Government, Federal agencies and government-sponsored
corporations, if immediately after such purchase more than five percent (5%)
of the total assets of the respective Portfolio would be invested in such
issuer; except that up to one hundred percent (100%) of the total assets of
the Government/REPO Portfolio and up to twenty-five percent (25%) of the
total assets of the Money Market Portfolio and the Short-Term Portfolio
may be invested in Repurchase Agreements with maturities not greater than
seven (7) days without regard to this five percent (5%) limitation.
4. Purchase securities, if immediately after such purchase more than ten
percent (10%) of the total assets of the respective Portfolio would be invested
in securities which are illiquid, including Repurchase Agreements with
maturities greater than seven (7) days and VAMD Notes with greater than seven
(7) days' notice required for sale. Restricted securities issued under Rule
144A and commercial paper issued under Section 4(2) of the Securities Act of
1933 are not subject to this limitation if they are determined by the
Portfolio's adviser to be liquid under guidelines established by the Board of
Trustees.
5. Purchase securities issued by CSC.
PURCHASE AND REDEMPTION OF PARTICIPATION CERTIFICATES
PURCHASE PROCEDURES
PCs of each Portfolio are sold without a sales charge by the Investment
Company acting as its own distributor without the services of an underwriter
at the net asset value per PC next determined after receipt of a purchase order
by PFPC. BCBS Investors may open an account with the Investment Company by
completing, and submitting to CSC, an application form which may be obtained
by telephoning (312) 440-6372; the form requests all information from the
investor required to enable PFPC to open an account for such investor. After
the application form has been approved by CSC and forwarded to PFPC, an
investor may place purchase orders for PCs on any Business Day directly with
PFPC, the transfer agent for the Investment Company; such orders must be
transmitted by telephoning (800) 821-9771 and indicating the amount and the
Portfolio of the PCs desired. (See "Net Asset Value-- Government/REPO
Portfolio and Money Market Portfolio" for the definition of "Business
Day".)
GOVERNMENT/REPO PORTFOLIO AND MONEY MARKET PORTFOLIO . Purchase orders
for the Government/REPO Portfolio and the Money Market Portfolio which
are received by 12 Noon (Eastern Time) will be executed at the net asset value
determined at 12 Noon (Eastern Time) that day if PNC Bank receives Federal
funds by 4:00 P.M. Eastern Time. In addition, purchase orders for the
Government/REPO Portfolio and the Money Market Portfolio which are
received after 12 Noon (Eastern Time) but before 1:00 P.M. (Eastern Time) from
investors in the Mountain Time Zone, and before 2:00 P.M. (Eastern Time) from
investors in the Pacific Time Zone, will be executed at the net asset value
determined at 4:00 P.M. (Eastern Time) that day if PNC Bank receives Federal
funds by 4:00 P.M. (Eastern Time). Orders received after 12 Noon
(Eastern Time) from investors in the Eastern Time Zone or the Central Time
Zone, after 1:00 P.M. (Eastern Time) from investors in the Mountain Time Zone,
or after 2:00 P.M. (Eastern Time) from investors in the Pacific Time Zone, and
orders for which payment has not
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<PAGE> 14
been received by PNC Bank by 4:00 P.M. (Eastern Time), will not be accepted and
notice thereof will be given to the investor placing the order.
SHORT-TERM PORTFOLIO. Purchase orders for the Short-Term Portfolio received
before 4:00 P.M. (Eastern Time) will be priced at the net asset value
determined on that day and will be executed as of the beginning of business on
the following Business Day if payment has been received by PNC Bank by 4:00
P.M. (Eastern Time) on the day the order is executed. Orders received at other
times, and orders for which payment has not been received by PNC Bank by 4:00
P.M. (Eastern Time) on the day the order is to be executed, will not be
accepted and notice thereof will be given to the investor placing the order.
Payment for PCs of the Portfolios may be made only in Federal funds or
other funds immediately available to PNC Bank. The Government/REPO
Portfolio has a $1 million minimum initial and subsequent investment
requirement. The Money Market Portfolio and the Short-Term Portfolio do not
have minimum initial or subsequent investment requirements. Payment for
orders which are not received or accepted by PFPC will be returned after prompt
inquiry to the sending investor. Each Portfolio may in its discretion reject
any orders for purchase of PCs. Unless specifically designated as to a
specific Portfolio, all purchases automatically will be made in the Money
Market Portfolio. CSC will be responsible for the payment of any distribution
expenses.
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC by telephone in the manner
described under "Purchase Procedures". PCs are redeemed at the net asset value
per PC next determined after receipt of the redemption order. Investors should
note the differences between the Portfolios in terms of when net asset values
of the PCs are determined and when dividends are earned.
GOVERNMENT/REPO PORTFOLIO AND MONEY MARKET PORTFOLIO . Payment for
redeemed PCs for which a redemption order is received by PFPC on a Business Day
before 12 Noon (Eastern Time) from PC holders located in the Eastern and
Central Time Zones, before 1:00 P.M. (Eastern Time) from PC holders located in
the Mountain Time Zone, and before 2:00 P.M. (Eastern Time) from PC holders
located in the Pacific Time Zone is made in Federal funds wired to the
redeeming investor's account on the same Business Day. Payment for other
redemption orders which are received on a Business Day (or on a day when PNC
Bank is closed) is wired in Federal funds on the next Business Day following
redemption that PNC Bank is open for business. An investor receives no
dividend for the day on which PCs are redeemed; therefore, investors that do
not place redemption orders by the times indicated may wish to wait until the
morning of the following Business Day to do so.
SHORT-TERM PORTFOLIO. A redemption request with respect to the Short-Term
Portfolio which is received by PFPC prior to 4:00 P.M. (Eastern Time) on a
Business Day will be priced at the net asset value determined as of 4:00 P.M.
(Eastern Time) on that day and will be executed on the following Business Day.
Proceeds will be wired on the day the redemption order is executed. Investors
receive dividends through, and including, the day before the redemption order
is executed.
FURTHER INFORMATION REGARDING THE PORTFOLIOS . Investors may in effect
transfer all or part of their investments from one Portfolio to another by
placing simultaneous redemption and purchase orders. These orders will be
executed in sequence in accordance with the procedures discussed above.
The Investment Company will not issue certificates representing PCs unless
requested to do so by its investors. If such certificates have been issued
representing PCs to be redeemed, prior to effecting a redemption with respect
to such PCs, PFPC must have received such certificates properly endorsed (i.e.,
duly executed with signatures guaranteed by a commercial bank, a trust company
or a member firm of a domestic securities exchange). PFPC reserves the right
to request additional documentation in order to confirm that a transaction is
properly authorized. PC holders having questions regarding proper
documentation or desiring to request certificates representing PCs should
contact PFPC.
The Investment Company may suspend the right of redemption or postpone the
date of payment upon redemption (as well as suspend or postpone the recordation
of the transfer of its PCs) for such periods as are permitted under the 1940
Act. The Investment Company may also redeem PCs involuntarily under certain
special circumstances described in the Statement of Additional Information
under "Additional Purchase and Redemption Information". In addition, CSC will
cause PCs (i) owned by an investor who ceases to be a BCBS Investor or (ii)
pledged as collateral by an investor and subsequently called by a pledgee who
is not a BCBS Investor, to be redeemed involuntarily and automatically within
one (1) Business Day of the occurrence of the events set forth in (i) or (ii)
immediately preceding.
TRANSFER PAYMENTS
A BCBS Investor investing in the Government/REPO Portfolio or the
Money Market Portfolio may direct that payment upon redemption of PCs in the
Portfolio be used to purchase PCs of the Government/REPO
Portfolio or the Money Market Portfolio for another BCBS Investor by a
transfer (individually, a "Transfer" and, collectively, "Transfers") of the
redeemed PCs to the second BCBS Investor. Such a Transfer is made by a
redemption and simultaneous purchase in the name of the second BCBS Investor.
A BCBS Investor may not request a Transfer from his Government/REPO
Portfolio or his Money Market Portfolio account in a dollar amount greater
than the dollar amount held in such investor's account on the Business Day
prior to the date
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<PAGE> 15
of such request. Such Transfers may be effected at any time prior to 4:00 P.M
(Eastern Time). There is no limit to the number of Transfers which a BCBS
Investor can place in any one (1) day, nor to the total number of such
Transfers by all BCBS Investors per day.
PAYMENT IN KIND
Investors may request that redemption order proceeds be funded by securities
held by the Portfolio (a "Payment in Kind") in lieu of cash. Prior to placing
a payment in kind redemption order a BCBS investor must provide the Transfer
agent with written instructions identifying the custodial account to receive
the securities to be distributed. The securities to be distributed shall
represent a pro rata share of each security held in the portfolio, in
accordance with Rule 17a-5 of the Investment Company Act of 1940. Under
guidelines established by the Board of Trustees, the adviser shall have the
authority to make adjustments to the mix of securities to establish round lots
that are more easily traded; however, these adjustments may not materially
change the maturity, quality and liquidity characteristics of the remaining
portfolio.
NET ASSET VALUE
GOVERNMENT/REPO PORTFOLIO AND MONEY MARKET PORTFOLIO
The net asset value per PC of the Government/REPO Portfolio and the
Money Market Portfolio for purposes of pricing purchase and redemption orders
is determined by PIMC as of 12 Noon (Eastern Time) and as of 4:00 P.M. (Eastern
Time) on any Business Day (other than a day on which there are no purchase or
redemption orders) during which there is sufficient trading in instruments held
by such Portfolio that its net asset value per PC might be affected materially.
A Business Day of the Investment Company is any weekday other than the holidays
observed by the Investment Company, which currently are: New Year's Day,
Martin Luther King's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and
Christmas Day. In computing net asset value per PC, the Government/REPO
Portfolio and the Money Market Portfolio use the amortized cost
method of valuation and normally maintain a constant net asset value of
$1.00 per PC.
SHORT-TERM PORTFOLIO
The net asset value per PC of the Short-Term Portfolio for purposes of
pricing purchase and redemption orders is determined by PIMC as of 4:00 P.M.
(Eastern Time) on any Business Day (other than a day on which there are no
purchase or redemption orders) during which there is sufficient trading in
investments held by such Portfolio that its net asset value per PC might be
affected materially. The Short-Term Portfolio values assets based on their
market price or on their fair value as determined by the Investment Company's
Board of Trustees. (See the Statement of Additional Information under "Net
Asset Value" for a more complete description with respect to all three
Portfolios.)
MANAGEMENT OF THE INVESTMENT COMPANY
TRUSTEES AND OFFICERS
The Trustees, in addition to reviewing the actions of PIMC, N&B, PNC Bank,
PFPC and CSC, decide upon matters of general policy in accordance with the
General Corporation Law of the State of Maryland. Pursuant to the Investment
Company's Bylaws, the Trustees shall elect an Executive Trustee who shall
preside at all meetings of the PC holders and of the Board of Trustees. The
Investment Company's Officers conduct and supervise the daily business
operations of the Investment Company. (See the Statement of Additional
Information under "Management of the Investment Company" for a more complete
description.) The Trustees of the Investment Company are as follows:
Albert F. Antonini is President and Chief Executive Officer of Blue Cross and
Blue Shield of Central New York, Inc.;
*Philip A. Goss is President and Chief Executive Officer of both the
Investment Company and Health Plans Capital Services Corp.;
Steven L. Hooker is Senior Vice President, Finance and Treasurer of Blue
Cross and Blue Shield of Oregon;
William M. Lowry is President and Chief Executive Officer, Blue Cross of
Western Pennsylvania;
*David M. Murdoch is Senior Vice President, Licensing, Finance and Operations
and Treasurer of the Blue Cross and Blue Shield Association;
Ralph S. Rhoades is Vice Chairman and Chief Executive Officer of Blue Cross
and Blue Shield of Oklahoma;
Donald P. Sacco is President and Chief Executive Officer of Pierce County
Medical Bureau, Inc.;
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<PAGE> 16
Norman C. Storbakken is Group Vice President and Chief Financial Officer of
Blue Cross and Blue Shield of Minnesota;
Thomas J. Ward is President and Chief Executive Officer of Blue Cross of
Northeastern Pennsylvania; and
Sherman M. Wolff is Senior Vice President, Finance of Health Care Service
Corporation, a Mutual Legal Reserve Company (Blue Cross and Blue Shield of
Illinois).
*Such Trustees of the Investment Company are also members of the Board of
Directors of CSC and thus may be deemed "interested persons" as defined in the
1940 Act.
INVESTMENT ADVISERS AND SERVICE AGENT
PIMC is the investment adviser of the Government/REPO Portfolio and
the Money Market Portfolio and the Service Agent of all three of the
Investment Company's Portfolios. N&B is the investment adviser of the
Short-Term Portfolio. (PIMC and N&B sometimes are referred to herein
collectively as the "Investment Advisers"; PIMC sometimes is referred to
herein as the "Service Agent".)
PIMC, a wholly owned subsidiary of PNC Bank, was organized in 1977 by PNC
Bank to perform advisory services for investment companies, and has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.
PIMC currently renders advisory and sub-advisory services to investment
companies having assets of approximately $26 billion. PNC Bank and its
predecessors have been in the business of managing the investments of fiduciary
and other accounts in the Philadelphia area since 1847. PNC Bank is a
subsidiary of PNC Bank Corp, a multi-bank holding company ("PNC").
As Investment Adviser, PIMC manages the Government/REPO Portfolio and
the Money Market Portfolio and is responsible for all purchases and sales
of these portfolios' securities. PIMC also acts as a servicing agent,
maintains the financial accounts and records and computes the net asset value
and net income for all three Portfolios of the Investment Company. For
the services provided and expenses assumed by it with respect to the
Government/REPO Portfolio and the Money Market Portfolio, PIMC is
entitled to receive a fee, computed daily and payable monthly, at the following
annual rates:
ANNUAL FEE PORTFOLIO ANNUAL NET ASSETS
---------- ---------------------------
.20% ...................... of the first $250 million
.15% ...................... of the next $250 million
.12% ...................... of the next $250 million
.10% ...................... of the next $250 million
.08% ...................... of amounts in excess of $1 billion.
PIMC has agreed to voluntarily reduce the fees otherwise payable to it by
the Government/REPO Portfolio to the extent necessary to reduce the ordinary
operating expenses of the Government/REPO Portfolio so that they do not exceed
0.15 of one percent (.15%) of the Government/REPO Portfolio's average net
assets for each fiscal year. PIMC has agreed contractually to reduce the
fees otherwise payable to it by the Money Market Portfolio to the extent
necessary to reduce the ordinary operating expenses of the Money Market
Portfolio so that they do not exceed 0.30 of one percent (.30%) of the Money
Market Portfolio's average net assets for each fiscal year. (See "Management
of the Investment Company--Expenses".)
For the services provided and expenses assumed by PIMC with respect to its
role as servicing agent for the Short-Term Portfolio, PIMC is entitled to
receive a fee, computed daily and payable monthly, at the following annual
rates:
ANNUAL FEE PORTFOLIO AVERAGE DAILY NET ASSETS
---------- ----------------------------------
.03% ...................... of amounts up to and including $1 billion
.02% ...................... of amounts in excess of $1 billion and up
to and including $2 billion
.01% ...................... of amounts in excess of $2 billion
provided that the minimum annual fee payable shall be $100,000.
N&B, a New York limited Partnership, was founded in 1939 and its principal
offices are located at 605 Third Avenue, New York, New York 10158. The firm
together with its affiliates and subsidiaries currently manages approximately
$30 billion of equity and fixed-income investments.
As Investment Adviser, N&B manages the Short-Term Portfolio and is
responsible for all purchases and sales of its portfolio securities. Mmes.
Theresa A. Havell and Josephine P. Mahaney have primary responsibility for the
day-to-day management of the Short-Term Portfolio. Ms. Havell is a partner at
N&B and has been the Director of the Fixed Income group at N&B since 1984. Ms.
Mahaney is a Senior Portfolio Manager and has been responsible for managing
short maturity portfolios since joining N&B in 1985.
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<PAGE> 17
For the services provided and expenses assumed by it, N&B is entitled to
receive a fee, computed daily and payable monthly at the following annual
rates:
ANNUAL FEE PORTFOLIO ANNUAL NET ASSETS
---------- ---------------------------
.30% .................... of the first $50 million
.20% .................... of the next $50 million
.15% .................... of the next $150 million
.10% .................... of amounts in excess of $250 million.
N&B has agreed contractually to reduce the fees otherwise payable to it by the
Short-Term Portfolio to the extent necessary to reduce the ordinary operating
expenses of the Short-Term Portfolio so that they do not exceed 0.30 of one
percent (.30%) of the Short-Term Portfolio's average net assets for each fiscal
year. (See "Management of the Investment Company--Expenses".)
CUSTODIAN AND TRANSFER AGENT
PNC Bank, a subsidiary of PNC, 17th and Chestnut Streets, Philadelphia,
Pennsylvania 19103, has been retained to act as custodian of the Portfolios'
investments. As custodian, PNC Bank, among other things, collects income of
and payments to the Investment Company; executes and delivers proxies, consents
and other authorizations for the Investment Company; establishes and maintains
segregated accounts in its records for and on behalf of each Portfolio;
delivers, releases and exchanges securities held for the Investment Company
when necessary; makes payments of cash to, or for the account of, each
Portfolio for the purchase of securities for each Portfolio, for the redemption
of PCs, and for the payment of interest, dividends, taxes and management fees;
and furnishes the Investment Company with various confirmations, summaries and
reports. PNC Bank is authorized to select one or more banks or trust companies
to serve as sub-custodian on behalf of the Investment Company, provided that
PNC Bank shall remain responsible for the performance of its duties under the
Custodian Agreement and shall hold the Investment Company harmless for the acts
and omissions of any bank or trust company serving as sub-custodian. For the
services provided and expenses assumed by PNC Bank as custodian, PNC Bank is
entitled to receive a fee, computed daily and payable monthly, at the following
annual rates:
INVESTMENT COMPANY'S
ANNUAL FEE AVERAGE ANNUAL GROSS ASSETS*
---------- ---------------------------
.025% ................... of the first $5 million
.020% ................... of the next $5 million
.015% ................... of the next $10 million
.010% ................... of the next $10 million
.008% ................... of amounts in excess of $30 million
Plus $10 for each purchase, sale or maturity transaction with an annual minimum
of $5,000.
*Based on the average of the assets included in the Investment Company's net
asset value on each day in such month that such value is calculated.
PFPC, an indirectly wholly owned subsidiary of PNC, P.0. Box 8950,
Wilmington, Delaware 19899, has been retained to act as transfer agent for the
Investment Company. As transfer agent, PFPC, among other things, issues and
redeems PCs, processes dividends, prepares various communications to PC
holders, answers correspondence from PC holders, keeps records of the accounts
of each PC holder and prepares and submits various reports to the Investment
Company. For the services provided and expenses assumed by PFPC as transfer
agent, PFPC is entitled to receive a fee, computed daily and payable monthly,
equal to $15.00 per master account and sub-account per Portfolio per year,
prorated in the case of accounts maintained for only a portion of a full year,
plus $1.00 for each master account purchase or redemption transaction, plus
$5.00 for each outgoing wire of Federal funds, provided that the minimum annual
fee payable to PFPC shall be $5,000.
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares (PCs) of a registered, open-end investment company
continuously engaged in the issuance of its shares (PCs), and prohibit banks
generally from issuing, underwriting, selling or distributing securities, but
such banking laws and regulations do not prohibit such a holding company or
affiliate or banks generally from acting as investment adviser, transfer agent
or custodian to such an investment company. PNC Bank, PIMC and PFPC are
subject to such banking laws and regulations.
Ballard, Spahr, Andrews & Ingersoll, counsel to PIMC, PNC Bank and PFPC, have
advised the Investment Company, PIMC, PNC Bank and PFPC that PIMC, PNC Bank and
PFPC may perform the services for the Investment Company contemplated by their
agreements with the Investment Company, this prospectus and the Statement of
Additional Information, without violation of applicable banking laws or
regulations. Such counsel have pointed out, however, that future changes
relating to the permissible activities of banks and
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<PAGE> 18
their affiliates, as well as further interpretations of present requirements,
could prevent PIMC, PNC Bank or PFPC from continuing to perform such services
for the Investment Company. If PIMC, PNC Bank or PFPC were prohibited from
continuing to perform such services, it is expected that the Investment
Company's Board of Trustees would recommend that the Investment Company enter
into new agreements with other qualified firms. Any new investment advisory
agreement would be subject to PC holder approval.
ADMINISTRATOR
CSC, located at 676 St. Clair Street, Chicago, Illinois 60611, serves as the
Investment Company's administrator and acts generally in a supervisory capacity
with respect to the Investment Company's overall operations and PC holder
relations. CSC's administrative services include maintaining the Investment
Company's Chicago, Illinois office; maintaining financial and accounting
records other than those maintained by the Investment Advisers or their agents;
supervising the performance of administrative and professional services to the
Investment Company by others; monitoring, and notifying the Investment Company
of, the eligibility of the Investment Company's present and prospective
investors and certain requirements of various state insurance laws and
regulations; receiving and processing applications from present and prospective
investors in the Investment Company; and accumulating information for and
coordinating (but not paying for) the preparation of reports to the Investment
Company's PC holders and the SEC.
For its administrative services, CSC is entitled to receive a fee from the
Investment Company calculated daily and paid monthly at an annual rate not to
exceed one-twentieth of one percent (.05%) of the average daily net assets of
the Investment Company's Portfolios. (See the Statement of Additional
Information under "Management of the Investment Company--Administrator".)
EXPENSES
The Investment Company's ordinary operating expenses generally consist of
fees for legal, accounting and other professional services, fees of PIMC, N&B,
PNC Bank, PFPC and CSC, costs of Federal and state registrations and related
distributions to PC holders, certain insurance premiums as well as the costs
associated with maintaining corporate existence. Other costs include taxes,
brokerage fees, interest and extraordinary expenses. For the year ending
December 31, 1994 the expense ratio for the Money Market Portfolio was 0.26%
and for the Short-Term Portfolio was 0.30%. Without the waiver of advisory
fees, the ratio of expenses to average daily net assets would have been 0.37%
for the Short-Term Portfolio for the year ending December 31, 1994.
DIVIDENDS
Investors in the Portfolios are entitled to dividends and
distributions arising only from the net income and capital gains, if any,
earned on investments held by that Portfolio. Each Portfolio declares net
income daily as a dividend to PC holders of record at the close of business on
the date of declaration. Dividends are paid monthly and will be reinvested in
additional PCs or, if the investor so elects by checking the appropriate box on
the application form, will be transmitted to such investor by wire within
five (5) Business Days after the end of the month (or within five (5) Business
Days after a redemption of all of the investor's PCs). Distributions of
realized net capital gains of the Short-Term Portfolio, if any, are declared
and paid once each year and may be reinvested in additional PCs or, at the
option of the investor, paid in cash. The Government/REPO Portfolio and
the Money Market Portfolio do not expect to realize net long-term
capital gains.
TAXES
Under applicable provisions of the Internal Revenue Code (the "Code"), as
amended, each particular Portfolio established within the Investment Company
is to be treated for tax purposes as an entirely separate corporation.
Therefore, each particular Portfolio intends to elect to be taxed as a
"regulated investment company" ("RIC"), within the meaning of Subchapter M of
the Code and each Particular Portfolio intends to continue to satisfy the
requirements for RIC classification for the current fiscal year and for each
future fiscal year, so long as such qualification is considered to be in the
best interest of the PC holders of that Portfolio. As a RIC, the Portfolio
will not have to pay any Federal income tax on net investment income and net
capital gains distributed to its PC holders, provided that, among other things,
at least ninety percent (90%) of its investment company taxable income earned
during each fiscal year (computed without regard to any deduction for dividends
paid) is so distributed. The policy of each particular Portfolio established
within the Investment Company will be to distribute substantially all its
investment company taxable income each year.
Insofar as PC holders of any particular Portfolio may themselves be subject
to Federal income tax, dividends paid by the particular Portfolio in question
from its net investment income and distribution of net short-term capital gains
will be taxable to PC holders of the particular Portfolio in question as
ordinary income, and dividends derived from net long-term capital gains will
be taxable to PC holders of the particular Portfolio in question as long-term
capital gains, whether received in cash or reinvested in additional PCs of that
Portfolio or of PCs of any other Portfolio. PC holders of any particular
Portfolio which are exempt from taxation will treat such income similarly to
their other income items. Statements as to the tax status of dividends and
capital gain distributions made to the PC holders of each Portfolio will be
mailed annually. It is anticipated that none of the Portfolios' distributions
will be eligible for the
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<PAGE>
<PAGE> 19
dividends-received deduction.
Under the provisions of the Code, RICs such as each Portfolio established
within the Investment Company may be subject to a four percent (4%)
nondeductible Federal excise tax, if and to the extent that the RIC fails to
distribute to its shareholders a sufficient amount of its annual income. In
general, the required distribution amount is the sum of (i) ninety-eight
percent (98%) of the RIC's ordinary income, and (ii) ninety-eight percent (98%)
of the RIC's net capital gain income. The required distribution also includes
the cumulative amount of distribution shortfalls from the tax years during
which the four percent (4%) Federal excise tax is applicable. It is
anticipated that each Portfolio shall be operated in a manner calculated to
avoid the imposition, against the particular Portfolio in question, of this
four percent (4%) Federal excise tax.
Under the provisions of Code Section 514, a PC holder which is otherwise
exempt from Federal income tax may subject certain of its income to Federal
income tax, to the extent that the PC holder borrows funds and uses the
borrowed funds, directly or indirectly, to acquire PCs of any particular
Portfolio. The amount of income of the PC holder which would be subject to
Federal income tax would be, in general, the net income (gross income less
applicable deductions) derived by the PC holder from the investment, multiplied
by a fraction, the numerator of which is the amount borrowed, and the
denominator of which is the amount invested by the PC holder in the particular
Portfolio in question. Certain expenses of the Investment Company will be
passed through to its PC holders. Such amounts may or may not be deductible
by the PC holders.
Dividends and distributions from any of the Portfolios may be subject to
additional state and local taxes and PC holders should consult their tax
advisers with respect to such matters. No attempt is made here or in the
Statement of Additional Information to present a detailed explanation of the
tax treatment of any particular Portfolio established within the Investment
Company or of its PC holders. Any discussion here or in the Statement of
Additional Information is not intended as a substitute for careful tax
planning.
DESCRIPTION OF PARTICIPATION CERTIFICATES
The Investment Company was incorporated under the laws of the State of
Maryland on August 6, 1985.
The authorized capital stock of the Investment Company consists of five
billion (5,000,000,000) PCs, par value $.001 per PC. The Investment Company
presently offers investors three (3) classes of PCs as follows:
(i) the Government/REPO Portfolio -- one billion (1,000,000,000) PCs,
(ii) the Money Market Portfolio -- two billion (2,000,000,000) PCs and
(iii) the Short-Term Portfolio -- one billion (1,000,000,000) PCs. The
PCs of each class represent interests only in the corresponding Portfolio.
When issued and paid for in accordance with the terms of the offering, each PC
is fully paid and nonassessable. All PCs of the same class have equal
dividend, distribution, liquidation and voting rights and are redeemable at net
asset value at the option of the PC holder. In addition, the PCs have no
preemptive, subscription, conversion or cumulative voting rights. PC holders
are entitled to one (1) vote for each full PC held and fractional votes for
fractional PCs held.
PERFORMANCE INFORMATION
From time to time, the Investment Company may quote the yield of each of its
Portfolios in reports and other communications to PC holders. For this
purpose, the yield of the Government/REPO Portfolio and the Money Market
Portfolio is calculated by dividing the Portfolio's average daily net
investment income per PC for a specified seven (7) day period by the
Portfolio's average net asset value per PC for the same period and annualizing
the result on a three hundred sixty-five-day basis. In the case of the
Short-Term Portfolio, quoted yield is calculated by dividing the net investment
income per PC during a thirty (30) day (or one month) period by the price per
PC on the last day of that period. The result of this calculation is annualized
assuming semi-annual reinvestment of dividend income.
From time to time, the Investment Company may also quote the total return of
its Short-Term Portfolio in reports and other communications to PC holders.
For this purpose the total return of the Portfolio is an average annual
compound rate of return over the periods cited that will equate a hypothetical
$1,000 investment made at the beginning of the periods to the redeemable value
at the end of the periods cited.
Each Portfolio's performance will fluctuate. All statements of yield and
total return are based on historical performance and are not intended to
indicate future performance. Portfolio performance is affected by factors that
include Portfolio quality and maturity, operating expenses, changes in interest
rates and general market conditions. (See the Statement of Additional
Information under "Performance Information" for a more complete description of
yield and total return calculations.)
GENERAL INFORMATION
The Investment Company sends to all of its PC holders of each Portfolio
quarterly reports and annual reports, including a list of investment securities
held by each Portfolio, and audited financial statements of each Portfolio.
Coopers & Lybrand L.L.P. has been selected as the Investment Company's
independent accountants.
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<PAGE>
<PAGE> 20
Seyfarth, Shaw, Fairweather & Geraldson, 55 East Monroe Street, Chicago,
Illinois 60603, will pass upon the legality of the PCs offered hereby.
Burton X. Rosenberg, a Partner of Seyfarth, Shaw, Fairweather & Geraldson, acts
as General Counsel and Secretary to CSC and is also a member of its Board of
Directors.
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<PAGE>
<PAGE> 21
-------------------------------- --------------------------------
No person has been authorized to
give any information or make any PLAN INVESTMENT FUND, INC.
representations not contained in
this Prospectus in connection
with the offering made by this
Prospectus and, if given or made,
such information or representa-
tions must not be relied upon as
having been authorized by the
Investment Company. This
Prospectus does not constitute
an offering by the Investment
Company in any jurisdiction
in which such offering may
not be made lawfully.
------------------------
PROSPECTUS
TABLE OF CONTENTS
Page
Prospectus Summary and ----
Introduction................... 2
Portfolio Fee Tables........... 3
Financial Highlights........... 5
Investment Objectives and
Policies....................... 7
Purchase and Redemption of
Participation Certificates..... 9
Net Asset Value................ 11
Management of the Investment
Company... .................... 11
Dividends...................... 14
Taxes.......................... 14
Description of Participation
Certificates................... 15
March 30, 1995
Performance Information........ 15
General Information............ 15
-------------------------------- --------------------------------
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<PAGE>
<PAGE> 22
PLAN INVESTMENT FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
March 30, 1995
Table of Contents
-----------------
Page
----
The Investment Company . . . . . . . . . . . . . . . . . . . . . . B-2
Investment Objectives and Policies . . . . . . . . . . . . . . . . B-2
Additional Purchase and Redemption Information . . . . . . . . . . B-6
Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . B-6
Management of the Investment Company . . . . . . . . . . . . . . . B-8
Additional Information Concerning Taxes . . . . . . . . . . . . . . B-12
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
Performance Information . . . . . . . . . . . . . . . . . . . . . . B-14
Additional Description Concerning Investment Company
Participation Certificates . . . . . . . . . . . . . . . . . . B-15
Independent Accountants . . . . . . . . . . . . . . . . . . . . . . B-17
Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
Report of Independent Accountants
and Financial Statements . . . . . . . . . . . . . . . . . . . B-20
This Statement of Additional Information should be read in conjunction
with the Prospectus for Plan Investment Fund, Inc. dated March 30, 1995
and is incorporated by reference in its entirety into that Prospectus.
Because this Statement of Additional Information is not itself a
prospectus, no investment in PCs of Plan Investment Fund, Inc. should be
made solely upon the information contained herein. Copies of the
Prospectus for Plan Investment Fund, Inc. may be obtained by calling Health
Plans Capital Services Corp. at (312) 440-6372. Capitalized terms used but
not defined herein have the same meanings as in the Prospectus.
B-1
<PAGE>
<PAGE> 23
THE INVESTMENT COMPANY
The Government/REPO Portfolio , Money Market Portfolio and
Short-Term Portfolio (individually, a "Portfolio" and, collectively, the
"Portfolios") are portfolios of Plan Investment Fund, Inc. (the "Investment
Company"), a diversified, open-end management investment company. Each
Portfolio is represented by a class of PCs separate from those of the
Investment Company's other Portfolios. Unless otherwise indicated, all
statements made in this Statement of Additional Information refer to all
three Portfolios.
Each of the Portfolios invests in diversified selections of liquid,
high-quality securities . However, as described in the Prospectus, the
three (3) Portfolios have different investment objectives and policies
and investors may allocate their investment in the Investment Company between
the three (3) Portfolios as best suits their needs at any given time.
INVESTMENT OBJECTIVES AND POLICIES
See the Prospectus for a description of the investment objectives and
policies of the Investment Company. The following policy discussion
supplements such description.
Portfolio Transactions
----------------------
Purchases and sales of securities for each Portfolio usually are
principal transactions. Portfolio securities normally are purchased
directly from the issuer or from an underwriter or market maker of the
securities. There usually are no brokerage commissions paid by the
Investment Company for such purchases. Purchases from dealers serving as
market makers may include the spread between the bid and asked prices.
While the Investment Advisers intend to seek the best price and execution
for portfolio transactions on an overall basis, the Investment Company may
not necessarily pay the lowest spread or commission available on each
transaction.
Allocation of transactions, including their frequency, to various
dealers is determined by the Investment Adviser of each Portfolio in its
best judgment under the general supervision of the Board of Trustees of the
Investment Company and in a manner deemed fair and reasonable to PC
holders.
Investment decisions for each Portfolio of the Investment Company are
made independently from those for the other investment companies advised by
the Investment Adviser. It may happen, on occasion, that the same security
is held in one or more of such other investment companies. Simultaneous
transactions are likely when several investment companies are advised by
the same investment adviser, particularly when a security is suitable for
the investment objectives of more than one (1) of such investment
companies. When two (2) or more investment companies advised by the
Investment Adviser are simultaneously engaged in the purchase or sale of
the same security, the transactions are allocated to the respective
investment companies, both as to amount and price, in accordance with a
B-2
<PAGE>
<PAGE> 24
method deemed equitable to each investment company. In some cases this
system may adversely affect the price paid or received by a Portfolio of
the Investment Company or the size of the security position obtainable or
sold for such Portfolio.
The Investment Company will not execute portfolio transactions through,
acquire portfolio securities issued by, make savings deposits in, or enter
into Repurchase Agreements or Reverse Repurchase Agreements with, PIMC and
N&B (the Investment Advisers) or any affiliates, officers or employees of
either of them.
Additional Information on Portfolio Instruments
-----------------------------------------------
With respect to the variable amount master demand notes ("VAMD Notes")
described in the Prospectus, the Investment Advisers to the respective
Portfolios will consider the earning power, cash flows and other liquidity
ratios of the issuers of such notes and will continuously monitor their
financial status to meet payment on demand. In determining average
weighted portfolio maturity, VAMD Notes will be deemed to have a maturity
equal to the longer of the period remaining to the next interest rate
adjustment or the demand notice period.
Examples of the types of U.S. Government obligations that may be held by
the Investment Company include, in addition to U.S. Treasury bills, notes
and bonds, the obligations of Federal Home Loan Banks, Federal Farm Credit
Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Maritime Administration and International Bank for
Reconstruction and Development.
The Investment Company may also invest in collateralized mortgage
obligations ("CMO"s) which are obligations fully collateralized by a
portfolio of mortgages or mortgage-related securities. Payments of
principal and interest on the mortgages are passed through to the holders
of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the types of CMOs in
which the Investment Company invests, the investment may be subject to a
greater or lesser risk of prepayment than other types of mortgage-related
securities. The Investment Company may also invest in other asset-backed
securities that represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a
pool or pools of similar assets (e.g., trade receivables). The credit
quality of these securities depends primarily upon the quality of the
underlying assets and the level of credit support and/or enhancement
provided. The underlying assets are subject to prepayments which shorten
the securities' weighted average life and may lower their return. If the
credit support or enhancement is exhausted, losses or delays in payment may
result if the required payments of principal and interest are not made.
The maturity of the instruments in which the Investment Company invests
B-3
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<PAGE> 25
normally shall be deemed to be a period remaining until the date noted on
the face of the instrument is the date on which the principal amount must
be paid, or in the case of an instrument called for redemption, the date on
which the redemption payment must be made. An instrument issued or
guaranteed by the U.S. Government or any agency thereof which has a
variable rate of interest readjusted no less frequently than annually may
be deemed to have a maturity equal to the period remaining until the next
readjustment date. An instrument which has a demand feature that entitles
the holder to receive the principal amount of such instrument from the
issuer upon no more than seven (7) days' notice and which has a variable
rate of interest may be deemed to have a maturity equal to the longer of
the period remaining until the interest rate will be readjusted or the
period remaining until the principal amount owed can be received through
demand. An instrument which has a variable rate of interest may be deemed
to have a maturity equal to the period remaining until the next
readjustment of the interest rate. An instrument which has a demand
feature that entitles the holder to receive the principal amount of such
instrument from the issuer upon no more than seven (7) days' notice and
which has a floating rate of interest may be deemed to have a maturity
equal to the period of time remaining until the principal amount owed can
be received from the issuer through demand.
An investment owned by the Short-Term Portfolio which may have payments
of principal prior to its final maturity date may be deemed to have a
maturity equal to the average maturity of its principal balances. This
average, called an average life, may include both scheduled payments of
principal and estimates of the timing of principal payments. The
Short-Term Portfolio may use an instrument's duration, the dollar weighted
present value of all future cash flows, as a measure of final maturity. An
instrument with a duration equivalent to that of an instrument with five
and a quarter (5 1/4) years remaining until maturity may be deemed to
comply with the five and a quarter (5 1/4) year maximum maturity investment
limitation.
The portfolio turnover for the Short-Term Portfolio may be expected to
exceed one hundred percent (100%) per year. Because the Short-Term
Portfolio invests in securities with short maturities, there is a
relatively high portfolio turnover rate. However, the turnover rate does
not have an adverse effect upon the net yield and net asset value of the
PCs of the Short-Term Portfolio since transactions occur primarily with
issuers, underwriters or major dealers and usually do not include the
expense of brokerage commissions.
Appendix A attached hereto contains a description of the relevant rating
symbols used by Standard & Poor's Corporation and Moody's Investors
Service, Inc. for bonds and commercial paper in which the Portfolios
invest.
Investment and Borrowing Limitations
------------------------------------
The Investment Company's Prospectus summarized certain of the
Portfolios' investment and borrowing limitations that may not be changed
without the affirmative vote of the holders of a "majority" of the
outstanding PCs of the respective Portfolios (as defined herein under
B-4
<PAGE>
<PAGE> 26
"Miscellaneous"). Below is a complete list of the Portfolios' investment
limitations that may not be changed without such a vote of PC holders.
The Portfolios may not:
1. Borrow money,except from commercial banks for temporary purposes, and
then in amounts not in excess of five percent (5%) of the total assets of
the respective Portfolio at the time of such borrowing; or mortgage, pledge
or hypothecate any assets except in connection with any such borrowing and
in amounts not in excess of the lesser of the dollar amount borrowed or
five percent (5%) of the total assets of the respective Portfolio at the
time of such borrowing. This borrowing provision applies to Reverse
Repurchase Agreements whose proceeds are utilized to provide liquidity to
meet redemption requests when liquidation of portfolio securities is
considered disadvantageous. At no time shall the level of funds borrowed
to meet redemption requests exceed five percent (5%) of the total assets of
the respective Portfolio; the interest expenses associated with such credit
arrangements will be charged to the income of the respective Portfolio; and
any new cash flows must be applied to retiring such Portfolio borrowings.
2. Purchase any securities which would cause twenty-five percent (25%)
or more of the total assets of the respective Portfolio at the time of such
purchase to be invested in the securities of issuers conducting their
principal business activities in the same general industry. There is no
limitation for the Portfolios with respect to investments in U.S.
Government obligations or for the Money Market Portfolio in obligations of
domestic branches of U.S. banks.
3. Purchase securities of any issuer, other than those issued or
guaranteed by the U.S. Government, Federal agencies and
government-sponsored corporations, if immediately after such purchase more
than five percent (5%) of the total assets of the respective Portfolio
would be invested in such issuer; except that up to one hundred percent
(100%) of the total assets of the Government/REPO Portfolio and up to
twenty-five percent (25%) of the total assets of the Money Market Portfolio
and the Short-Term Portfolio may be invested in Repurchase Agreements with
maturities not greater than seven (7) days without regard to this five
percent (5%) limitation.
4. Purchase securities, if immediately after such purchase more than ten
percent (10%) of the total assets of the respective Portfolio would be
invested in securities which are illiquid, including Repurchase Agreements
with maturities greater than seven (7) days and VAMD Notes with greater
than seven (7) days' notice required for sale.
5. Make loans, except that each Portfolio may purchase or hold debt
instruments, and may enter into Repurchase Agreements, in accordance with
its investment objectives and policies.
6. Purchase securities issued by CSC.
7. Purchase or sell commodities or commodity contracts, including
futures contracts, or invest in oil, gas or mineral exploration or
development programs.
B-5
<PAGE>
<PAGE> 27
8. Acquire voting securities of any issuer or acquire securities of
other investment companies.
9. Purchase or sell real estate. (However, each Portfolio may purchase
bonds and commercial paper issued by companies which invest in real estate
or interest therein.)
10. Purchase securities on margin, make short sales of securities or
maintain a short position.
11. Act as an underwriter of securities.
12. Issue senior securities, except to the extent that certain
investment policies related to Reverse Repurchase Agreements discussed
herein and in the Prospectus may be deemed to involve the issuance of
senior securities within the meaning of the 1940 Act.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Under the 1940 Act, the Investment Company may suspend the right of
redemption or postpone the date of payment upon redemption (i) for any
period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or during which trading on said
Exchange is restricted, or (ii) for any period during which (as determined
by the SEC by rule or regulation) an emergency exists as a result of which
disposal or valuation of portfolio securities is not reasonably practical,
or for such other periods as the SEC, or any successor governmental
authority, may by order permit for the protection of PC holders of the
Portfolios. (The Investment Company may also suspend or postpone the
recordation of the transfer of its PCs upon the occurrence of any of the
foregoing conditions.)
If the Board of Trustees determines that conditions exist which make
payment of redemption proceeds wholly in cash unwise or undesirable, the
Investment Company may make payment wholly or partly in securities or other
property; investors will incur expenses in disposing of redemption proceeds
which are paid in this manner. The Investment Company has elected to
commit itself to pay all redemption proceeds in cash up to the lesser of
$250,000 or one percent (1.0%) of the respective Portfolio's net asset
value for any Participation Certificate holder within a ninety (90) day
period pursuant to a notification of election filed with the SEC under, and
in accordance with the guidelines set forth in, Rule 18f-1 under the 1940
Act. (See "Net Asset Value" below for an example of when such redemption
or form of payment might be appropriate.)
NET ASSET VALUE
The net asset value per PC of each Portfolio is calculated by dividing
the total value of the assets belonging to each Portfolio, less the value
of any liabilities charged to each Portfolio, by the total number of PCs of
the Portfolio outstanding.
B-6
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<PAGE> 28
Government/REPO Portfolio and Money Market Portfolio
----------------------------------------------------
As stated in the Investment Company's Prospectus, the Government/REPO
Portfolio and Money Market Portfolio securities are valued on the basis of
amortized cost. In connection with their use of amortized cost
valuation, the Portfolios limit the dollar-weighted average maturity of
their investments to not more than seven (7) and ninety (90) days
respectively and do not purchase any instrument with a remaining
maturity of more than one (1) year at the time of purchase, except that items
of collateral securing securities subject to Repurchase Agreements may bear
longer maturities. The Investment Company's Board of Trustees also has
established procedures that are intended to stabilize the Portfolios'
net asset value per PC for purposes of sales and redemptions at $1.00. Such
procedures include review by the Board of Trustees, at such intervals as it
deems appropriate, to determine the extent, if any, to which the
Portfolios' net asset value per PC calculated by using available market
quotations deviates from $1.00 per PC. In the event such deviation exceeds
one-half of one percent (0.5%), the Board of Trustees will promptly
consider what action, if any, should be initiated. If the Board of
Trustees believes that the amount of any deviation from a Portfolio's
$1.00 amortized cost price per PC may result in material dilution or other
unfair results to investors or existing PC holders of the respective
Portfolio, it will take such steps as it considers appropriate to eliminate
or reduce to the extent reasonably practicable any such dilution or unfair
results. These steps may include selling portfolio instruments prior to
maturity; shortening the Portfolio's average maturity; withholding or
reducing dividends; redeeming PCs in kind; reducing the number of the
Portfolio's outstanding PCs without monetary consideration; or utilizing a
net asset value per PC determined by using available market quotations.
Investors should also be aware that although procedures exist which are
intended to stabilize the net asset value of the Government/REPO Portfolio
and the Money Market Portfolio at $1.00 per PC, the value of the underlying
assets of the Portfolios will be affected by general changes in interest
rates which will result in increases or decreases in the value of the
obligations held by the Portfolios . The market value of the obligations
in the Portfolios can be expected to vary inversely to changes in
prevailing interest rates. Investors should also recognize that, in
periods of declining interest rates, the Portfolios' yields may tend to
be somewhat higher than prevailing market rates, and in periods of rising
interest rates, the Portfolios' yields may tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to the
Portfolios from the continuous sale of its PCs will likely be invested
in portfolio instruments producing lower yields than the balance of the
Portfolios , thereby reducing the Portfolios' current yield. In
periods of rising interest rates, the opposite can be expected to occur.
Short-Term Portfolio
--------------------
As stated in the Investment Company's Prospectus, the Short-Term
Portfolio's securities (i) for which market quotations are readily
available, are valued at the most recent quoted bid prices provided by
investment dealers, or (ii) for which such quotations are not readily
available, are valued at their fair value in the best judgment of N&B under
B-7
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<PAGE> 29
procedures established by, and under the supervision of, the Investment
Company's Board of Trustees. In connection with these methods of
valuation, the Short-Term Portfolio limits the dollar-weighted average
maturity of its investments to not more than three hundred sixty (360) days
and does not purchase any instrument with a remaining maturity of more than
five and a quarter (5 1/4) years, or its duration equivalent, at the time
of purchase, except that items of collateral securing securities subject to
Repurchase Agreements may bear longer maturities.
MANAGEMENT OF THE INVESTMENT COMPANY
Trustees and Officers
---------------------
The Investment Company's Trustees and Executive Officers, their
addresses, principal occupations during the past five (5) years and other
affiliations are as follows:
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
---------------- ------------------ ----------------------
Albert F. Antonini Executive 1990 - Present, President
344 South Warren St. Trustee and Chief Executive Officer,
Syracuse, NY Blue Cross and Blue Shield
13202 of Central New York, Inc.
Philip A. Goss* Trustee, President January 1994 to Present,
676 St. Clair Street and Chief President and Chief Executive
Chicago, IL Executive Officer Officer, CSC; February 1992
60611 to December 1993, Vice
President and Chief Operating
Officer, CSC; prior to
February 1992, Controller,
CSC
Steven L. Hooker Trustee April 1993 to Present, Senior
100 S.W. Market Street Vice President, Finance and
Portland, OR 97201 Treasurer, Blue Cross and
Blue Shield of Oregon; April
1993 to Present, President,
Oregon Pacific States
Insurance Company; January
1991 to March 1993, Vice
President, Finance and
Treasurer, Blue Cross and
Blue Shield of Oregon; prior
to January 1991, Vice
President, Finance, Blue
Cross and Blue Shield of
Oregon
William M. Lowry Trustee May 1994 to Present,
Fifth Avenue Place President and Chief Executive
Pittsburgh, PA 15222 Officer, Blue Cross of
Western Pennsylvania; June
1993 to April 1994, President
and Chief Operating Officer,
Blue Cross of Western
Pennsylvania; July 1992 to
B-8
<PAGE>
<PAGE> 30
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
---------------- ------------------ ----------------------
May 1993, Executive Vice
President, Blue Cross
Business Group, Blue Cross of
Western Pennsylvania; April
1990 to June 1992, Executive
Vice President and Treasurer,
Blue Cross of Western
Pennsylvania; prior to April
1990, Corporate Vice
President, Business and
Financial Services, Blue
Cross of Western Pennsylvania
David M. Murdoch* Trustee and July 1993 to Present, Senior
676 St. Clair Street Treasurer Vice President, Licensing,
Chicago, IL 60611 Finance Operations and
Treasurer, Blue Cross and
Blue Shield Association;
February 1992 to June 1993,
Senior Vice President,
Business Support and
Strategy, Blue Cross and
Blue Shield Association;
prior to January 1994,
President and Chief Executive
Officer of the Investment
Company; prior to December
1993, President and Chief
Executive Officer of CSC
Ralph S. Rhoades Trustee January 1995 to Present, Vice
1215 South Boulder Chairman and Chief Executive
Tulsa, OK Officer, Blue Cross and Blue
74119 Shield of Oklahoma; prior to
January 1995, President and
Chief Executive Officer,
Blue Cross and Blue Shield of
Oklahoma
Donald P. Sacco Trustee 1990 to Present, President
1501 Market Street and Chief Executive Officer,
Tacoma, WA Pierce County Medical Bureau,
98402 Inc.
Norman C. Storbakken Trustee 1990 to Present, Group Vice
3535 Blue Cross Road President and Chief Financial
St. Paul, MN 55122 Officer, Blue Cross and Blue
Shield of Minnesota
B-9
<PAGE>
<PAGE> 31
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
---------------- ------------------ ----------------------
Thomas J. Ward Trustee January 1992 to Present,
70 North Main Street President, and Chief
Wilkes-Barre, PA Executive Officer, Blue Cross
18711 of Northeastern Pennsylvania;
October 1990 to December
1991, President, Blue Cross
of Northeastern Pennsylvania;
prior to October 1990,
Executive Vice President,
Blue Cross of Northeastern
Pennsylvania
Sherman M. Wolff Trustee November 1991 to Present,
233 N. Michigan Ave. Senior Vice President,
Chicago, IL Finance, Health Care Service
60601 Corporation; prior to
November 1991, Principal,
William M. Mercer
Incorporated
Peter Norton Assistant February 1992 to Present,
676 St. Clair Street Secretary Director, Investment
Chicago, IL Programs, CSC; prior to
60611 February 1992, Manager,
Investment Programs, CSC
Burton X. Rosenberg Secretary 1990 to Present, Partner,
55 East Monroe Street Seyfarth, Shaw, Fairweather &
Chicago, IL 60603 Geraldson
-------------------------------------------------------------------------
* Such Trustees of the Investment Company are also members of the Board of
Directors of CSC and thus may be deemed "interested persons" as defined
in the 1940 Act.
B-10
<PAGE>
<PAGE> 32
The Investment Company reimburses its Trustees for out-of-pocket
expenses related to attending meetings. Trustees who are not employed by
Blue Cross and/or Blue Shield Plans, or any subsidiaries or affiliates
thereof, are paid $500 for participation in each regular meeting and $150
for participation in each telephonic meeting. The Investment Company does
not pay any compensation to its other Trustees or to its Officers for
acting in such capacities. Seyfarth, Shaw, Fairweather & Geraldson, of
which Mr. Rosenberg is a partner, receives legal fees as counsel to the
Investment Company. No director, officer or employee of PIMC, N&B, PNC
Bank or PFPC is eligible to serve as a Trustee or Officer of the Investment
Company. The Trustees and Officers of the Investment Company in their
individual capacities own none, and cannot own any, of the Investment
Company's PCs. For the period ended December 31, 1994, a total of $14,998
was paid by the Investment Company for Trustee meeting expenses and $0 was
paid to the Trustees for participation in meetings.
Investment Advisers and Service Agent
-------------------------------------
The services PIMC and N&B provide as Investment Advisers, as well as the
annual fees, calculated as percentages of each Portfolio's annual net
assets, payable to them and expenses assumed by them, are described briefly
in the Investment Company's Prospectus. More specifically, PIMC and N&B
supervise the sales of securities; and place orders for such transactions.
As Service Agent for all three Portfolios of the Investment Company,
PIMC maintains, financial and other books and records, including appropriate
journals and ledgers; verifies trade tickets; calculates weighted average
maturity, dividends and yields; prepares unaudited financial statements;
prepares or assists in the preparation of regulatory filings; computes net
asset value and the market value of assets of the Investment Company;
prepares reports to the Board of Trustees of the Investment Company; and
performs related administrative services. PIMC agrees to abide by
applicable legal requirements in providing these services.
In addition, PIMC and N&B have agreed that if, in any fiscal year, the
expenses borne by the Government/REPO Portfolio, the Money Market
Portfolio or the Short-Term Portfolio, respectively, exceed the applicable
expense limitations imposed by the securities regulations in any state in which
PCs of the Portfolios are registered or qualified for sale to the public, they
will reimburse the respective Portfolio for any excess to the extent
required by such regulations. Unless otherwise required by law, such
reimbursement would be accrued and paid by the Portfolios. To the
knowledge of the Investment Company, the expense limitations in effect on
the date of this Statement of Additional Information, are no more
restrictive than one and one-half percent (1.5%) of the respective
Portfolios' average net assets up to $30 million and one percent (1%) of
their respective average annual net assets in excess of $30 million. For
the fiscal periods ended December 31, 1992, 1993 and 1994, PIMC was paid
fees of $100,000, $100,000 and $99,291 net of $0, $0 and $709 waived fees,
as service agent for the Short-Term Portfolio. For the same periods PIMC
was paid fees of $1,048,977, $937,715 and $894,209 respectively, net of
$43,617, $21,935 and $10,984 waived fees, as investment advisor and service
agent for the Money Market Portfolio. For the same periods N&B was paid
B-11
<PAGE>
<PAGE> 33
fees of $226,402, $372,933 and $230,349 respectively, net of $111,395,
$49,858 and $100,985 waived fees, as investment advisor for the Short-Term
Portfolio. The Government/REPO Portfolio did not commence operations prior
to December 31, 1994.
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the PCs of a registered, open-end investment company
continuously engaged in the issuance of its PCs, and prohibits banks
generally from issuing, underwriting, selling or distributing securities,
but such banking laws and regulations do not prohibit such a holding
company or affiliate or banks generally from acting as investment adviser,
transfer agent or custodian to such an investment company. PNC Bank, PIMC
and PFPC are subject to such banking laws and regulations.
Administrator
-------------
As the Investment Company's administrator, CSC administers the
Investment Company's operations, including acting as liaison with its PC
holders, and has agreed to: (i) furnish the Investment Company with
adequate office facilities, utilities, office equipment and related
services; (ii) be responsible for the financial and accounting records
required to be maintained by the Investment Company (including those being
maintained by the Investment Company's custodian and transfer agent, both
of which CSC supervises) other than those being maintained by the
Investment Advisers; (iii) supervise the Investment Company's activities
with respect to accounting, clerical, bookkeeping, recordkeeping and
statistical services at such office facilities; (iv) arrange, but not pay
for, the preparation for the Investment Company and holders of its PCs of
all required tax returns and reports to the Investment Company's PCs
holders and the SEC, as necessary, and, as appropriate, the periodic
updating of the Registration Statement and Prospectus; (v) oversee the
performance of administrative and professional services to the Investment
Company by others, including the Investment Company's custodian, transfer
agent and service agent; (vi) monitor, and notify the Investment Company
of, the eligibility of the Investment Company's present and prospective
investors and certain requirements of various state insurance laws and
regulations; (vii) receive and process applications from present and
prospective investors in the Investment Company; and (viii) authorize and
permit any of its directors, officers and employees who may be elected as
Trustees or Officers of the Investment Company to serve in the capacities
in which they are elected. The administrator may engage sub-administrators
or servicing agents to perform its obligations under its agreement with the
Investment Company. For the fiscal periods ended December 31, 1992, 1993
and 1994, CSC was paid fees of $326,282, $278,219 and $260,066
respectively, net of $14,539, $7,311 and $3,661 waived fees, as
administrator for the Money Market Portfolio and $79,200, $107,597 and
$75,055 net of $0, $0 and $2,016 waived fees, as administrator for the
Short-Term Portfolio.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional tax considerations
B-12
<PAGE>
<PAGE> 34
generally affecting the Investment Company, the Portfolios established
within the Investment Company, and the PC holders of each Portfolio
established within the Investment Company which are not described in the
Investment Company's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Investment Company, the Portfolios
established within the Investment Company, and the discussion here and in
the Investment Company's Prospectus is not intended as a substitute for
careful tax planning.
In order for any particular Portfolio established within the Investment
Company to qualify for tax treatment as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"), the
Portfolio in question must derive at least ninety percent (90%) of its
gross income in each taxable year from dividends, interest, payments with
respect to security loans (as defined in Code Section 512(a)(5)), and gains
from the sale or other disposition of stock or securities, and derive less
than thirty percent (30%) of its gross income in each taxable year from the
sale or other disposition of securities held for less than three (3)
months. Interest (including original issue discount and certain accrued
market discount) received by the particular Portfolio in question at
maturity or disposition of a security held for less than three (3) months
will not be treated as gross income derived from the sale or other
disposition of a security within the meaning of this requirement. In
addition, at the close of each quarter of its taxable year, at least fifty
percent (50%) of the value of the assets of the particular Portfolio in
question must consist of (1) cash and cash items, Government securities and
securities of other regulated investment companies and (2) securities of
other issuers as to which the particular Portfolio in question has not
invested more than five percent (5%) of its total assets in securities of
such issuer and as to which the particular Portfolio in question does not
hold more than ten percent (10%) of the outstanding voting securities of
such issuer. The particular Portfolio in question must not have more than
twenty-five percent (25%) of the value of its total assets invested in the
securities of any one industry (other than U.S. Government obligations or,
in the case of the Money Market Portfolio, certain bank obligations).
Dividends paid out of the interest income and the net short-term capital
gain income of any particular Portfolio are taxable to the PC holders of
that Portfolio as ordinary income, regardless of whether PC holders
reinvest such dividends in PCs of that Portfolio or any other Portfolio or
are paid in cash. Dividends designated as paid out of that particular
Portfolio's net capital gain ("Capital Gain Dividends"), i.e. the excess
of net long-term capital gains over net short-term capital losses, are
taxable to PC holders of the Portfolio as long-term capital gain. Any
Capital Gain Dividends paid by the particular Portfolio in question will be
taxable to PC holders of that Portfolio as long-term capital gains,
regardless of how long PCs of that Portfolio have been held and whether
reinvested in PCs or paid in cash. Under the provisions of the Code,
starting with 1987, any long-term capital gains will be taxed at ordinary
income tax rates, but with special transitional relief being provided, so
that the maximum rate of Federal income tax imposed upon the receipt of any
such long-term capital gains will be thirty-four percent (34%) in the case
of a corporation.
B-13
<PAGE>
<PAGE> 35
PC holders which are exempt from taxation will treat income resulting
from investments in any particular Portfolio similarly to their other
dividend and long-term capital gain income.
DIVIDENDS
Net income of each Portfolio for dividend purposes (from the time of the
immediately preceding determination thereof) will consist of (i) interest
accrued and dividend earned (including both original issue and market
discount) less amortization of any premium, (ii) plus or minus, in the case
of the Government/REPO Portfolio and the Money Market Portfolio , all
realized short-term gains and losses, if any, attributable to such
Portfolio including such Portfolio's pro rata share of the fees payable to,
and the general expenses (e.g. legal, accounting and Trustee's fees) of,
the Investment Company prorated on the basis of relative net asset value of
the Investment Company's other Portfolios applicable to that period.
PERFORMANCE INFORMATION
Determination of Yield
----------------------
From time to time, the Investment Company may quote the
Government/REPO Portfolio and the Money Market Portfolio "yield" and
"effective yield" in communications to PC holders that are deemed to be
advertising. Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "yield" of the
Government/REPO Portfolio and the Money Market Portfolio refers to the
income generated by an investment in the Portfolios over a seven-day period
as identified in the communication. This income is then annualized. That
is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by the investment is
assumed to be reinvested weekly. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment. For the seven day period ending December 31, 1994 the Money
Market Portfolio average "yield" was 5.60% and the "effective yield" was
5.76%. The Government/REPO Portfolio did not commence operations prior to
December 31, 1994.
From time to time, the Investment Company may also quote the
Short-Term Portfolio "yield" in communications to PC holders that are
deemed to be advertising. The standardized method used to calculate the
Short-Term Portfolio yield differs from the Money Market Portfolio yield
calculation. Short-Term Portfolio yield is calculated by dividing the net
investment income per Participation Certificate during a 30-day (or one
month) period by the price per Participation Certificate on the last day of
that period. The result of this calculation is then annualized assuming
semi-annual reinvestment of dividend income. For the 30 day period ending
December 31, 1994 the Short-Term Portfolio 30 day yield was 5.72%.
The yields of the Money Market Portfolio and the Short-Term
Portfolio were positively affected by fee waivers. (See "Investment
Advisors and Service Agent" and "Administrator" under "Management of the
B-14
<PAGE>
<PAGE> 36
Investment Company".)
Total Return
------------
From time to time, the Investment Company may quote the total return
of its Short-Term Portfolio in reports and other communications to PC
holders. For this purpose the total return of the Portfolio is an average
annual compound rate of return over the periods cited that will equate a
hypothetical $1,000 investment made at the beginning of the periods to the
redeemable value at the end of the periods cited. The Short-Term Portfolio
total return fluctuates in response to fluctuations in interest rates and
the expenses of the Portfolio. Consequently, any given total return
quotation should not be considered as representative of the Portfolio's
total return in any specified period in the future. The annualized
Short-Term Portfolio total returns were 3.46% for the one year ended
December 31, 1994, 5.55% for the five years ended December 31, 1994 and
6.20% for the March 11, 1987 (commencement of operations) to December 31,
1994 period.
The total return of the Short-Term Portfolio was positively affected by
fee waivers. (See "Investment Advisors and Service Agent" and
"Administrator" under "Management of the Investment Company".)
ADDITIONAL DESCRIPTION CONCERNING
INVESTMENT COMPANY PARTICIPATION CERTIFICATES
The Investment Company's Amended and Restated Articles of Incorporation
provide that on any manner submitted to a vote of PC holders, all PCs,
irrespective of class, shall be voted in the aggregate and not by class
except that (i) as to the matter with respect to which a separate vote of
any class is required by the 1940 Act or the General Corporation Law of the
State of Maryland, such requirements as to a separate vote by that class
shall apply in lieu of the aggregate voting as described above, and (ii) as
to the matter which does not affect the interest of a particular class,
only PC holders of the affected class shall be entitled to vote thereon.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of such 1940 Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an
investment company such as the Investment Company shall not be deemed to
have been effectively acted upon unless approved by the holders of a
"majority" of the outstanding PCs (as defined herein under "Miscellaneous")
of each class affected by such matter. Rule 18f-2 further provides that a
class shall be deemed to be affected by a matter unless it is clear that
the interests of each class in the matter are identical or that the matter
does not affect any interest of such class. However, Rule 18f-2 exempts
the selection of independent public accountants and the election of
trustees from the separate voting requirements of Rule 18f-2.
The chart below sets forth those PC holders each of which owned of
record or beneficially five percent (5%) or more of the outstanding PCs of
either or both Portfolios in existence as of March 8, 1995.
B-15
<PAGE>
<PAGE> 37
Percent of PCs Percent of PCs
Owned of Owned of
Money Market Short-Term
PC Holder Portfolio Portfolio
--------- -------------- --------------
Blue Cross and Blue Shield 0.4% 7.2%
of Georgia, Inc.
3350 Peachtree Road, N.E.
Atlanta, GA 30326
Blue Cross and Blue Shield 8.7% 5.3%
Association
676 N. St. Clair Street
Chicago, IL 60611
Blue Cross and Blue Shield 7.6% 10.8%
of Illinois
233 North Michigan Avenue
Chicago, IL 60601
Blue Cross and Blue Shield 0.0% 12.5%
of Mississippi
3545 Lakeland Drive East
Jackson, MS 39208
Blue Cross and Blue Shield 6.8% 8.9%
of New Jersey, Inc.
3 Penn Plaza East
Newark, NJ 07102
Blue Cross and Blue Shield 5.5% 0.0%
of the Rochester Area
150 East Main Street
Rochester, NY 14647
Blue Cross and Blue Shield 0.1% 9.5%
of Oklahoma, Inc.
1215 South Boulder Avenue
Tulsa, OK 74119
Capital Blue Cross 5.4% 0.0%
2500 Elmerton Avenue
Harrisburg, PA 17110
Blue Cross of Western 10.1% 1.9%
Pennsylvania
120 Fifth Avenue
Pittsburgh, PA 15222
B-16
<PAGE>
<PAGE> 38
Blue Cross and Blue Shield 0.2% 6.9%
of Memphis
85 North Danny Thomas Blvd.
Memphis, TN 38103
Pierce County Medical 0.0% 13.7%
1501 Market Street
Tacoma, WA 98402
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., independent accountants, with offices at 2400
Eleven Penn Center, Philadelphia, Pennsylvania 19103, serve as independent
accountants of the Investment Company. The financial statements dated
December 31, 1994 which appear in this Statement of Additional Information
and the financial highlights which appear in the Prospectus have been
audited by Coopers & Lybrand L.L.P. whose report thereon dated February 2,
1995, appears elsewhere herein and have been included herein and therein in
reliance upon the report of such firm of independent accountants given upon
their authority as experts in accounting and auditing.
COUNSEL
Seyfarth, Shaw, Fairweather & Geraldson, 55 East Monroe Street,
Chicago, Illinois 60603, will pass upon the legality of the PCs offered
hereby. Burton X. Rosenberg, a Partner at Seyfarth, Shaw, Fairweather &
Geraldson, acts as General Counsel and Secretary to the Investment Company
and CSC and is also a member of the CSC Board of Directors. Ballard, Spahr,
Andrews & Ingersoll act as counsel to PNC Bank, PIMC and PFPC. Levitt,
Greenberg, Kaufman & Goldstein act as counsel to N&B.
MISCELLANEOUS
As used in the Prospectus and in this Statement of Additional
Information, the term "majority," when referring to the approvals to be
obtained from PC holders, means the vote of the holders of more than fifty
percent (50%) of the Investment Company's outstanding PCs of each class
affected by the matter with respect to which the vote is being taken.
The Investment Company has chosen a calendar fiscal year.
Purchase orders for PCs of both Portfolios are accepted by the
Investment Company's Transfer Agent which is located in Wilmington,
Delaware.
B-17
<PAGE>
<PAGE> 39
APPENDIX
DESCRIPTION OF BOND AND COMMERCIAL PAPER RATINGS
-------------------------------------------------------------------------------
The Investment Company may invest in securities which at time of purchase
have ratings not lower than the following:
Type of
Security Rating Agency Rating Summary of Rating
-------- ------------- ------ -----------------
Bond Moody's Investors A-3 Bonds which are rated "A"
Service, Inc. possess many favorable
("Moody's") investment attributes
and are to be considered as
upper medium grade
obligations. Factors
giving security to
principal and interest are
considered adequate but
elements may be present
which suggest a
susceptibility to
impairment sometime in the
future. The modifier "3"
indicates that the
issue ranks in the lower
end of its generic rating
category.
Bond Moody's Aa Bonds which are rated "Aa"
are judged to be of high
quality by all standards.
Together with the "Aaa"
group they comprise what
are generally known as high
grade bonds. They are
rated lower than the best
bonds because margins of
protection may not be as
large as in "Aaa"
securities or fluctuation
of protective elements may
be of greater amplitude or
there may be other elements
present which make the long
term risks appear somewhat
larger then in the "Aaa"
securities.
Bond Standard & Poor's A- Debt rated "A" has a strong
Corporation capacity to pay interest
("S & P") and repay principal
although it is somewhat
more susceptible to the
adverse effects of changes
in circumstances and
economic conditions than
debt in higher rated
categories. The "minus"
shows a relative lower
standing within the major
"A" category.
B-18
<PAGE>
<PAGE> 40
Type of
Security Rating Agency Rating Summary of Rating
-------- ------------- ------ -----------------
Bond S & P AA Debt rated "AA" has a very
strong capacity to pay
interest and repay
principal and differs from
the higher rated issues
only in small degree.
Commercial Moody's Prime-1 Commercial Paper rated
Paper "Prime-1" has a superior
capacity for repayment of
short-term promissory
obligations evidenced by
leading market positions in
well-established
industries, high rates of
return on funds employed,
conservative capitalization
structure with moderate
reliance on debt and ample
asset protection, broad
margins in earnings
coverage of fixed financial
charges and high internal
cash generation and well
established access to a
range of financial markets
and assured sources of
alternate liquidity.
Commercial S & P A-1 This designation indicates
Paper that the degree of safety
regarding timely payment is
either overwhelming or very
strong.
B-19
<PAGE>
<PAGE> 41
REPORT OF
INDEPENDENT ACCOUNTANTS AND
FINANCIAL STATEMENTS
B-20
<PAGE>
<SEGEMENTS> AUDITFS
</SEGEMENTS>
<PAGE>
<PAGE> 59
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a)Financial Statements
(1)Included in Part A:
Financial Highlights
(2)Included in Part B:
Report of Independent Accountants; Statements of Net
Assets of the Money Market Portfolio and the
Short-Term Portfolio as of December 31, 1994;
Statements of Operations for the Money Market
Portfolio and the Short-Term Portfolio for the year
ended December 31, 1994; Statements of Changes in Net
Assets for the Money Market Portfolio and the
Short-Term Portfolio for the years ended December 31,
1994 and December 31, 1993; Financial Highlights for
the Money Market Portfolio and the Short-Term
Portfolio (for a Participation Certificate outstanding
throughout the period) for the years ended December
31, 1994, December 31, 1993, December 31, 1992,
December 31, 1991 and December 31, 1990; Notes to
Financial Statements
(b)Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
1 Form of Amended and Restated Articles of Incorporation of
Registrant *
1 (a) Articles of Amendment to Amended and Restated Articles of
Incorporation of Registrant *****
1 (b) Articles of Amendment to Amended and Restated Articles of
Incorporation of Registrant ******
2 Bylaws of Registrant as Amended *******
3 Not applicable
4 Specimen copy of Participation Certificate issued by
Registrant *
5 Form of Investment Advisory and Service Agreement for the
Money Market Portfolio *
5 (a) Form of Investment Advisory Agreement for the Short-Term
Portfolio **
C-1
<PAGE>
<PAGE> 60
5 (b) Form of Investment Advisory Agreement for the
Government/REPO Portfolio
6 Not applicable
7 Not applicable
8 Form of Custodian Agreement ****
8 (a) Form of Transfer Agency Agreement ****
9 Form of Administration Agreement ****
9 (a) Form of Service Agreement for the Short-Term Portfolio *
10 Opinion of Counsel **
11 Consent of Coopers & Lybrand L.L.P.
12 Not applicable
13 Subscription Agreement ***
14 Not applicable
15 Not applicable
16 Computation of performance quotation********
27.1 Financial Data Schedule for the Money Market Portfolio
27.2 Financial Data Schedule for the Short-Term Portfolio
------------------------
* Incorporated by reference from Registration Statement on Form N-1A No.
2-99584 as filed with the SEC by the Registrant on August 12, 1985
** Incorporated by reference from Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on October 25, 1985
*** Incorporated by reference from Pre-Effective Amendment No. 3 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on January 8, 1987
**** Incorporated by reference from Pre-Effective Amendment No. 4 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on March 5, 1987
***** Incorporated by reference from Post-Effective Amendment No. 2 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on April 28, 1988
****** Incorporated by reference from Post-Effective Amendment No. 3 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on April 3, 1989
C-2
<PAGE>
<PAGE> 61
******* Incorporated by reference from Post-Effective Amendment No. 7 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on April 16, 1992
******** Incorporated by reference from Post-Effective Amendment No. 10 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on March 29, 1995
Item 25. Persons Controlled by or Under Common
Control with Registrant
-------------------------------------
None
Item 26. Number of Holders of Securities
-------------------------------
As of March 8, 1995, the number of record holders of Investment
Company PCs were as follows:
Number of
Portfolio Record Holders
--------- --------------
Money Market 135
Short-Term 31
Item 27. Indemnification
---------------
Under Article IX of the Registrant's Articles of Incorporation,
any Trustee, Officer, employee or agent of the Registrant is indemnified to
the fullest extent permitted by the General Corporation Law of the State of
Maryland from and against any and all of the expenses and liabilities
reasonably incurred by him in connection with any action, suit or proceeding
to which he may be a party or otherwise involved by reason of his being or
having been a Trustee, Officer, employee or agent of the Registrant. This
provision does not authorize indemnification when it is determined that such
Trustee, Officer, employee or agent would otherwise be liable to Registrant or
its PC holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of his duties (collectively, "Disabling Conduct").
The Registrant shall use reasonable and fair means to determine whether
such indemnification shall be made. The determination that a person to be
indemnified is not liable to the Registrant or its PC holders by reason of
Disabling Conduct, and therefore eligible for indemnification, shall be
determined by (i) a final decision on the merits by a court or other body
before whom such proceeding is brought or (ii) after their review of the
facts, by vote of a majority of a quorum of Trustees who are neither
"interested persons" (as defined in the 1940 Act) nor parties to the
proceeding (a "Disinterested Majority") or by independent counsel in a written
opinion to the Registrant. The Registrant's indemnification policy permits
the Registrant to advance attorneys' fees or other expenses incurred by its
Trustees, Officers, employees or agents in defending such a proceeding, upon
the undertaking by or on behalf of the indemnitee to repay the advance unless
it is determined ultimately that he is entitled to indemnification. As a
condition to such advance (i) the indemnitee shall provide a security for his
undertaking, (ii) the Registrant shall be insured against losses arising by
reason of any lawful advances, or (iii) a Disinterested Majority, or an
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<PAGE>
<PAGE> 62
independent legal counsel in a written opinion to the Investment Company,
shall determine, based on a review of readily available facts to the
Investment Company, that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 (the "1933 Act") may be permitted to Trustees, Officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, Officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such Trustee, Officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of
Investment Adviser
---------------------------------
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of the Registrant's Investment Advisers is, or at any time
during the past two (2) years have been, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee.
PNC BANK, NATIONAL ASSOCIATION ("PNC Bank")
Position Other Business Type of
with Bank Name Connections Business
--------- ---------- -------------- --------
Director B.R. Brown President and Chief Coal
Executive Officer
Consol, Inc.
Pittsburgh, PA
Director Constance E. Chief, Division of Medical
Clayton Community Health Care
Medical College of
Pennsylvania
Philadelphia, PA
Director Eberhard Chairman and Chief Manufacturing
Faber, IV Executive Officer
E.F.L. Inc.
Bearcreek, PA
Director Dr. Stuart Heydt President and Chief Medical
Executive Officer
Geisinger Foundation
Danville, PA
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PNC BANK, NATIONAL ASSOCIATION ("PNC Bank")
Position Other Business Type of
with Bank Name Connections Business
--------- ---------- -------------- --------
Director Edward P. Vice Chairman Banking
Junker, III PNC Bank, NA
Erie, PA
Director Thomas A. McConomy Chairman, President & Manufacturing
Chief Executive Officer
Calgon Carbon Corp.
Pittsburgh, PA
Director Robert C. Milsom Retired
Pittsburgh, PA
Director Thomas H. O'Brien Chairman Banking
PNC Bank, NA
Pittsburgh, PA
Director Dr. J. Dennis Chancellor Education
O'Connor University of Pittsburgh
Pittsburgh, PA
Director Rocco A. Ortenzio Chairman and Chief Medical
Executive Officer
Continental Medical
Systems, Inc.
Mechanicsburg, PA
Director Jane G. Pepper President Horticulture
Pennsylvania
Horticultural Society
Philadelphia, PA
Director Robert C. Robb, Jr. President Financial
Lewis, Eckert, Robb & and
Company Management
Plymouth Meeting, PA Consultants
Director James E. Rohr President and Chief Banking
Executive Officer
PNC Bank, NA
Pittsburgh, PA
Director Daniel M. Rooney President Football
Pittsburgh Steelers
Football Club of the
National Football League
Pittsburgh, PA
Director Seth E. Schofield Chairman, President and Airline
Chief Executive Officer
USAir Group and USAir, Inc.
Arlington, VA
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<PAGE> 64
PNC BANK, NATIONAL ASSOCIATION ("PNC Bank")
Position Other Business Type of
with Bank Name Connections Business
--------- ---------- -------------- --------
Director Robert M. Valentini President and Chief Communi-
Executive Officer cations
Bell of Pennsylvania
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
Position Other Business Type of
with PIMC Name Connections Business
--------- ---------- -------------- --------
Vice John R. Antczak None
President
Director Richard C. Caldwell Executive Vice Bank
President Holding
PNC Bank Corp.
Executive Vice Banking
President
PNC Bank, NA
Director Banking
PNC National Bank
Director Banking
PNC Trust Company
of New York
Director Investment
Provident Capital Advisory
Management
Director Financial
PFPC Inc. Processing
Chairman J. Richard Carnall Executive Vice Banking
and President
Director PNC Bank, NA
Chairman and Director Financial
PFPC Inc. Processing
Director Banking
PNC National Bank
Director Banking
PNC Trust Company
of New York
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<PAGE> 65
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
Position Other Business Type of
with PIMC Name Connections Business
--------- ---------- -------------- --------
Director Investment
Provident Capital Advisory
Management
Director Equipment
Hayden Bolts, Inc.
Director Real Estate
Parkway Real Estate Co.
Vice Jeffrey W. Carson None
President
Vice Katherine A. Chuppe None
President
Senior Vincent Ciavardini President and Chief Financial
Vice Financial Officer Processing
President PFPC Inc.
Vice Mary J. Coldren None
President
Vice Michele C. Dillon None
President
Vice Patrick J. Ford None
President
Controller Pauline M. Vice President Financial
Heintz Processing
Vice Richard Hoerner None
President
Vice Michael S. None
President Hutchinson
Executive Charles B. Landreth Vice President Banking
Vice PNC Bank, NA
President
Chief Nicholas M. Senior Vice President Banking
Financial Marsini, Jr. PNC Bank, NA
Officer
Director Financial
PFPC Inc. Processing
Director Banking
PNC Trust Company
of New York
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<PAGE> 66
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
Position Other Business Type of
with PIMC Name Connections Business
--------- ---------- -------------- --------
Vice Michael J. Milligan None
President
Senior Scott Moss None
Vice
President
President Thomas H. Nevin None
and Chief
Investment
Officer
Senior Dushyant Pandit None
Vice
President
Senior John N. Parthemore None
Vice
President
Secretary Michelle L. Petrilli Chief Counsel Banking
PNC Bank, DE
Secretary
PFPC Inc.
Vice Allyn Plambeck None
President
Vice W. Donald Simmons None
President
Senior James R. Smith None
Vice
President
Director Richard L. Smoot President and Chief Banking
Executive Officer
PNC Bank, NA
Director Financial
PFPC Inc. Processing
Director Banking
PNC Trust Company
of New York
Vice Charles A. None
President Stiteler
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<PAGE> 67
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
Position Other Business Type of
with PIMC Name Connections Business
--------- ---------- -------------- --------
Group Vice William F. Walsh None
President
Vice Stephen M. Wynne Executive Vice Financial
President President and Chief Processing
Chief Accounting Officer
Accounting PFPC Inc.
Officer and
Assistant
Secretary
The principal address of PNC Bank Corp. is 5th Avenue and Wood Street,
Pittsburgh, PA.
The principal address of PNC Bank, National Association is 17th and
Chestnut Streets, Philadelphia, PA.
The principal address of PFPC Inc. is 103 Bellevue Parkway, Wilmington,
DE.
NEUBERGER & BERMAN
Name Business and Other Connections
---- ------------------------------
Herbert W. Ackerman Managing Director,
Partner, Adviser Neuberger & Berman Management, Inc.
Robert J. Appel None
Partner, Adviser
Howard Richard Berlin Managing Director,
Partner, Adviser Neuberger & Berman Management, Inc.
Vice President and Director,
Neuberger & Berman Partners Fund, Inc.
Jeffrey Bolton None
Partner, Adviser
Richard A. Cantor Chairman and Director,
Partner, Adviser Neuberger & Berman Management, Inc.
Vincent T. Cavallo Managing Director
Partner, Adviser and Neuberger & Berman Management, Inc.
Chief Financial Officer
Stanley Egener President and Director
Partner, Advisor Neuberger & Berman Management, Inc.
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NEUBERGER & BERMAN
Name Business and Other Connections
---- ------------------------------
Chairman of the Board,
Neuberger & Berman Advisers Management Trust
Chairman of the Board,
Neuberger & Berman Partners Fund, Inc.
Chairman of the Board,
Neuberger & Berman Guardian Fund, Inc.
Chairman of the Board,
Neuberger & Berman Genesis Fund, Inc.
Michael N. Emmerman None
Partner, Adviser
Robert D. English None
Partner, Adviser
Jack M. Ferraro None
Partner, Adviser
Howard L. Ganek None
Partner, Adviser
Theodore P. Giuliano Executive Vice President
Partner, Adviser Neuberger & Berman Limited Maturity Bond Fund
Executive Vice President
Neuberger & Berman Ultra Short Bond Fund
Executive Vice President
Neuberger & Berman Cash Reserves
Managing Director
Neuberger & Berman Management, Inc.
Vice President
Advisers Management Trust
Executive Vice President
Neuberger & Berman Multi Series Fund, Inc.
Executive Vice President
Neuberger & Berman Municipal Money Fund
Executive Vice President
Neuberger & Berman Municipal Securities Trust
Arthur A. Goldberg None
Partner, Adviser
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<PAGE> 69
NEUBERGER & BERMAN
Name Business and Other Connections
---- ------------------------------
Mark R. Goldstein Managing Director
Partner, Adviser Neuberger & Berman Management, Inc.
Theresa A. Havell President and Director
Partner, Adviser Neuberger & Berman Multi Series Fund, Inc.
President and Trustee
Neuberger & Berman Cash Reserves
President and Trustee
Neuberger & Berman Municipal Money Fund
President and Trustee, Neuberger & Berman
Municipal Securities Trust
President and Trustee
Neuberger & Berman Limited Maturity Bond Fund
President and Trustee
Neuberger & Berman Ultra Short Bond Fund
Vice President and Managing Director
Neuberger & Berman Management, Inc.
Vice President
Advisers Management Trust
Lee H. Idleman None
Partner, Adviser
Alan L. Jacobs None
Partner, Advisor
Michael M. Kassen Managing Director
Partner, Advisor Neuberger & Berman Management, Inc.
President and Director
Neuberger & Berman Partners Fund
Lee P. Klingenstein None
Partner, Adviser
Irwin Lainoff Vice President
Partner, Adviser Neuberger & Berman Management, Inc.
Joseph R. Lasser None
Partner, Adviser
Christopher J. Managing Director
Lockwood Neuberger & Berman Management, Inc.
Partner, Adviser
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NEUBERGER & BERMAN
Name Business and Other Connections
---- ------------------------------
Lawrence Marx, III Senior Vice President and Director
Partner, Adviser Neuberger & Berman Selected Sectors Fund, Inc.
Vice President
Neuberger & Berman Focus Fund, Inc.
Vice President and Managing Director
Neuberger & Berman Management, Inc.
Robert R.McComsey None
Partner, Adviser
Martin McKerrow Managing Director
Partner, Adviser Neuberger & Berman Management, Inc.
Martin Messinger None
Partner, Adviser
Stephen E. Milman President and Director
Partner, Adviser Neuberger & Berman Genesis Fund, Inc.
Managing Director
Neuberger & Berman Management, Inc.
Keith M. Moore Managing Director
Partner, Adviser Neuberger & Berman Management, Inc.
Beth W. Nelson None
Partner, Advisor
Marie S. Neuberger None
Limited Partner
Roy R. Neuberger None
Partner, Adviser
Harold J. Newman None
Partner, Adviser
William P. Overman None
Partner, Adviser
Daniel P. Paduano Vice President
Partner, Adviser Neuberger & Berman Partners Fund, Inc.
Norman H. Pessin None
Partner, Adviser
Leslie M. Pollack None
Partner, Adviser
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NEUBERGER & BERMAN
Name Business and Other Connections
---- ------------------------------
William A. Potter None
Partner, Adviser
Janet W. Prindle None
Partner, Adviser
C. Carl Randolph Managing Director
Partner, General Counsel Neuberger & Berman Management, Inc.
Jack C. Schnackenberg, Jr. None
Partner, Adviser
Marvin C. Schwartz Director
Partner, Adviser Neuberger & Berman Management, Inc.
Kent C. Simons President and Director
Partner, Adviser Neuberger & Berman Guardian Fund, Inc.
President
Neuberger & Berman Focus Fund, Inc.
Vice President and Managing Director
Neuberger & Berman Management, Inc.
Robert E. Spilka None
Partner, Adviser
Gloria H. Spivak None
Partner, Adviser
Heidi S. Steiger Managing Director
Partner, Adviser Neuberger & Berman Management, Inc.
Bernard Z. Stein None
Partner, Adviser
Fred Stein None
Partner, Adviser
Eleanor M. Sterne None
Partner, Adviser
Philip A. Straus None
Partner, Adviser
Peter Strauss None
Partner, Adviser
Allan D. Sutton None
Partner, Adviser
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NEUBERGER & BERMAN
Name Business and Other Connections
---- ------------------------------
Dietrich Weismann None
Partner, Adviser
Lawrence Zicklin Director
Partner, Adviser Neuberger & Berman Management, Inc.
The principal address of Neuberger & Berman and of Neuberger & Berman
Management Incorporated is 605 Third Avenue, New York, New York.
Item 29. Principal Underwriter
---------------------
Not applicable
Item 30. Location of Account and Records
-------------------------------
Location
--------
(To the extent known) Types of Records
----------------------- ----------------
1. Health Plans Capital Copies of the Minute Book, Bylaws,
Services Corp. Amended and Restated Articles of
676 St. Clair Street Incorporation, annual audited financial
Chicago, IL 60611 statements, and those records maintained
by the Investment Company's Custodian and
Transfer Agent.
2. Neuberger & Berman Records of the Short-Term Portfolio's
605 Third Avenue investment activities and all periodic
New York, NY 10158 financial and statistical reports and
returns required to be filed with the SEC
and other regulatory agency, including
statements, confirmations, monthly
purchase and sale ledgers, statements of
investment income, calculations of the
weighted average maturity and the yield
of the Short-Term Portfolio.
3. PFPC Inc. Returns and reports relating to the
P.O. Box 8950 Investment Company's dividends and
Wilmington, DE 19899 distributions; proxy cards for meetings
of the Investment Company's PC holders;
correspondence from PC holders,
securities brokers and others; state by
state registration reports; periodic and
special reports required or requested by
state insurance commissions and the
Investment Company; various types of
statistical information relating to the
PC holder accounts; and for each PC
holder (i) his name, address, and United
States Tax Identification or Social
Security number,
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<PAGE>
<PAGE> 73
Location (To the extent known) Types of Records
------------------------------ ----------------
(ii) number of PCs held and number of PCs
for which certificates, if any, have been
issued, including certificate numbers and
denominations, (iii) historical
information regarding the account of each
PC holder, including dividends and
distributions paid and the date and price
paid for all transactions in a PC
holder's account, (iv) any stop or
restraining order placed against a PC
holder's account, (v) any correspondence
relating to the current maintenance of a
PC holder's account, information with
respect to withholdings and (vi) any
information required by PFPC to perform
any calculations contemplated or required
by the 1940 Act.
4. PNC Institutional Daily journals of the Money Market
Management Corp. Portfolio's ("MMP's") investments, PCs,
400 Bellevue Parkway income and expenses, books and records
Wilmington, DE 19809 relating to the MMP's securities
transactions; the MMP's books of account;
the Investment Company's semi-annual
reports to the SEC on Form N-SAR,
federal, state and other tax records,
reports to PC holders and notices to the
SEC required pursuant to Rule 24f-2 under
the 1940 Act; and for each Portfolio (i)
unaudited financial statements, including
Schedules of Investments, Statements of
Assets and Liabilities, Statements of
Operations, Statements of Changes in Net
Assets, Cash Statements and Schedules of
Capital Gains and Losses, (ii) fiscal
year summaries and (iii) quarterly broker
security transaction summaries and
monthly security transaction listings.
5. PNC Bank, National Separate custodian accounts for each
Association Portfolio; records of securities and non-
17th and Chestnut Sts. cash property of each Portfolio; daily
Philadelphia, PA 19103 confirmations and summaries of transfers
to or from the account of each Portfolio;
monthly statements of each Portfolio's
property held by PNC Bank; books and
records relating to the Investment
Company's participation in the Book-Entry
System or use of the Depository; reports
on PNC Bank's own system of internal
control; periodic and special reports as
the Investment Company requests; monthly
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<PAGE> 74
Location (To the extent known) Types of Records
------------------------------ ----------------
statements summarizing all transactions
and entries for the account of each
Portfolio; monthly reports of portfolio
securities belonging to each Portfolio;
monthly reports of the cash account of
each Portfolio showing disbursements;
reports required pursuant to Rule 17f-4
under the 1940 Act; and reports and data
requested or required by state insurance
commissioners.
6. Burton X. Rosenberg Minute Book, Bylaws and Amended and
Seyfarth, Shaw, Restated Articles of Incorporation.
Fairweather & Geraldson
55 East Monroe Street
Suite 4200
Chicago, Illinois 60603
Item 31. Management Services
-------------------
Not applicable
Item 32. Undertakings
------------
The Investment Company undertakes to furnish each person to whom a
prospectus has been delivered with a copy of its latest annual
report to Participation Certificate holders, upon request and
without charge.
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<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Plan Investment Fund, Inc.,
certifies that it meets all of the requirements for effectiveness of this
Post-Effective Amendment No. 11 to the Registration Statement pursuant to
Rule 485 (a) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 11 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Chicago, State of Illinois, on the 30th day of March, 1995.
PLAN INVESTMENT FUND, INC.
By: BURTON X. ROSENBERG
-------------------------------
Burton X. Rosenberg
Secretary
ATTEST:
PETER NORTON
--------------------------------
Peter Norton
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 11 to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
Signature Title Date
--------- ----- ----
*ALBERT F. ANTONINI Executive Trustee March 30, 1995
-----------------------------
Albert F. Antonini
Trustee,
*PHILIP A. GOSS President and March 30, 1995
----------------------------- Chief Exeutive
Philip A. Goss Officer
*STEVEN L. HOOKER Trustee March 30, 1995
-----------------------------
Steven L. Hooker
*RALPH S. RHOADES Trustee March 30, 1995
-----------------------------
Ralph S. Rhoades
*NORMAN C. STORBAKKEN Trustee March 30, 1995
-----------------------------
Norman C. Storbakken
*THOMAS J. WARD Trustee March 30, 1995
-----------------------------
Thomas J. Ward
S-1
<PAGE>
<PAGE> 76
*Executed on behalf of the indicated Officers and Trustees by
Burton X. Rosenberg, duly appointed attorney-in-fact.
By: BURTON X. ROSENBERG
-----------------------------------------
Burton X. Rosenberg, Attorney-in-fact
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<PAGE> 77
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
----------- ----------------------
1 Form of Amended and Restated Articles of Incorporation of
Registrant*
1 (a) Articles of Amendment to Amended and Restated Articles of
Incorporation of Registrant*****
1 (b) Articles of Amendment to Amended and Restated Articles of
Incorporation of Registrant******
2 Bylaws of Registrant as Amended*******
4 Specimen copy of Participation Certificate issued by Registrant*
5 Form of Investment Advisory and Service Agreement for the Money
Market Portfolio*
5 (a) Form of Investment Advisory Agreement for the Short-Term
Portfolio**
5 (b) Form of Investment Advisory Agreement for the Government/REPO
Portfolio
8 Form of Custodian Agreement****
8 (a) Form of Transfer Agency Agreement****
9 Form of Administration Agreement****
9 (a) Form of Service Agreement for the Short-Term Portfolio*
10 Opinion of Counsel**
11 Consent of Coopers & Lybrand L.L.P.
13 Subscription Agreement***
16 Computation of performance quotation********
27.1 Financial Data Schedule for the Money Market Portfolio
27.2 Financial Data Schedule for the Short-Term Portfolio
------------------------
* Incorporated by reference from Registration Statement on Form N-1A No.
2-99584 as filed with the SEC by the Registrant on August 12, 1985
** Incorporated by reference from Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on October 25, 1985
*** Incorporated by reference from Pre-Effective Amendment No. 3 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on January 8, 1987
**** Incorporated by reference from Pre-Effective Amendment No. 4 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on March 5, 1987
***** Incorporated by reference from Post-Effective Amendment
No. 2 to Registration Statement on Form N-1A No. 2-99584 as filed with
the SEC by the Registrant on April 28, 1988
****** Incorporated by reference from Post-Effective Amendment No. 3 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on April 3, 1989
******* Incorporated by reference from Post-Effective Amendment No. 7 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on April 16, 1993
******** Incorporated by reference from Post-Effective Amendment No. 10 to
Registration Statement on Form N-1A No. 2-99584 as filed with the SEC by
the Registrant on March 29, 1995
<PAGE>
<PAGE> 78
EXHIBIT 5 (b)
FORM OF INVESTMENT ADVISORY AGREEMENT FOR THE GOVERNMENT/REPO PORTFOLIO
AGREEMENT, made as of _______________________, 1995, between PLAN INVESTMENT
FUND, INC., a Maryland corporation (herein called the "Investment Company"),
and PNC INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation (herein
called "PIMC"), registered as an investment adviser under the Investment
Advisers Act of 1940, as amended.
WHEREAS, the Investment Company is registered as an open-end diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Investment Company desires to retain PIMC to furnish investment
advisory and administrative services to the Government/REPO Portfolio of the
Investment Company (the "Portfolio"), and PIMC is willing to so furnish such
services;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Company hereby appoints PIMC to act as
investment adviser and service agent to the Portfolio for the period and on the
terms set forth in this Agreement. PIMC accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
PIMC may delegate those of its duties set forth in Paragraph 4 hereof to any
wholly-owned direct or indirect subsidiary of PNC Bank, National Association or
PNC Bank Corp., provided that PIMC and such delegate shall promptly provided
such information as the Investment Company may reasonably request, and respond
to such questions as the Investment Company may reasonably ask, relative to
such delegation, including the capabilities of the delegate. Any delegation
pursuant to the preceding sentence shall not be deemed an assignment for
purposes of Paragraph 10 hereof. Notwithstanding such delegation, PIMC shall
remain responsible for the performance of its duties set forth herein pursuant
to the standards of care provided for herein. Except as specifically set forth
herein, compliance with any applicable laws, rules or other requirements will
be the responsibility of the Investment Company.
2. Delivery of Documents. The Investment Company has furnished PIMC with
copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Investment Company, as filed with
the Secretary of State of Maryland on August 6, 1985, and as amended and
restated on August 12, 1985 (such Articles of Incorporation, as presently in
effect and as they shall from time to time be amended, herein called the
"Articles of Incorporation");
(b) Bylaws of the Investment Company (such Bylaws, as presently in
effect and as they shall from time to time be amended, herein called the
"Bylaws");
(c) Resolutions of the Investment Company's Board of Trustees
authorizing the appointment of PIMC and resolutions of the Investment
Company's Board of Trustees and Participation Certificate holders of the
Portfolio approving this Agreement;
(d) Resolutions of the Investment Company's Board of Trustees
authorizing the appointment of Health Plans Capital Services Corp. ("CSC") as
the Portfolio's administrator pursuant to the Administration Agreement between
CSC and the Investment Company dated as of February 28, 1987;
<PAGE>
<PAGE> 79
(e) The Investment Company's Registration Statement on Form N-1A under
the 1940 Act and the Securities Act of 1933, as filed with the Securities and
Exchange Commission ("SEC") (File No. 2-99584) relating to the Investment
Company's Participation Certificates and all amendments thereto;
(f) The Investment Company's Notification of registration filed
pursuant to Section 8(a) of the 1940 Act on Form N-8A with the SEC and all
amendments thereto; and
(g) The Investment Company's most recent prospectus and statement of
additional information with respect to the Portfolio (such prospectus and
statement of additional information, as presently in effect and all amendments
and supplements thereto are herein called the "Prospectus").
The Investment Company will furnish PIMC from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing.
3. Investment Advice. Subject to the supervision of the Investment
Company's Board of Trustees, PIMC will provide a continuous investment program
for the Portfolio, including investment research and management with respect to
all securities and investments and cash equivalents in the Portfolio. PIMC
will determine from time to time what securities and other investments will be
purchased, retained or sold by the Portfolio and will place the daily orders
for the purchase or sale of securities. PIMC will provide the services under
this Agreement in accordance with the Portfolio's investment objectives,
policies and restrictions as stated in the Prospectus and resolutions of the
Investment Company's Board of Trustees. PIMC further agrees that it:
(a) will conform with all applicable Rules and Regulations of the SEC
and will in addition conduct its activities under this Agreement in accordance
with other applicable law; PIMC will comply with policies of the Investment
Company that may be designed to limit portfolio instruments to those which
certain investors could make directly but shall not be responsible for
monitoring which investments may from time to time be so permitted or limited
but shall be entitled to rely on instructions from the Investment Company or
its agent;
(b) will not make loans to any person to purchase or carry Investment
Company Participation Certificates or make loans to the Investment Company;
(c) will place orders pursuant to its investment determinations for the
Portfolio wither directly with the issuer or with any broker or dealer.
Subject to the other provisions of this sub-paragraph, in placing orders with
brokers and dealers PIMC will attempt to obtain the best net price and the most
favorable execution of its orders. In placing orders, PIMC will consider the
experience and skill of the firm's securities traders as well as the firm's
financial responsibility and administrative efficiency. Consistent with this
obligation, when the execution and price offered by two or more brokers or
dealers are comparable, PIMC may, in its discretion, purchase and sell
portfolio securities to and from brokers and dealers who provide the Portfolio
with research advice and other services. In no instance will portfolio
securities be purchased from or sold to CSC, PIMC, or any affiliated person
thereof; and
(d) will treat confidentially and as proprietary information of the
Investment Company all records and other information relative to the Portfolio
and prior, present or potential Participation Certificate holders, and will not
use such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Investment Company, which approval shall not be
unreasonably withheld and may not be withheld where PIMC may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge
<PAGE>
<PAGE> 80
such information by duly constituted authorities, or when so requested by the
Investment Company.
4. Administration. Subject to the supervision of the Investment Company's
Board of Trustees, PIMC will provide the Portfolio with the following
administrative services in accordance with the resolutions of the Investment
Company's Board of Trustees;
(a) Reconcile the Portfolio's daily cash and investment balances with
its custodian and determine the beginning cash balance available each day for
investment;
(b) Update the Portfolio's cash availability throughout the day as
required;
(c) Verify investment buy-sell trade tickets, maintain individual
ledgers for investment securities and historical tax lots for each investment
security, calculate capital gains and losses and transmit trades to the
custodian for proper settlement;
(d) Maintain daily journals with respect to the Portfolio's
investments, Participation Certificates, income and expenses;
(e) Otherwise maintain all books and records with respect to the
Portfolio's securities transactions, keep the Portfolio's books of account and
compute the net asset value, net income and capital gains (losses) of the
Portfolio;
(f) Monitor the expense accruals and calculate the various contractual
expenses of the Portfolio;
(g) Calculate daily the Portfolio's average dollar weighted maturity,
the dividend per Participation Certificate available to be declared to
Participation Certificate holders, and the yield of the Portfolio;
(h) Supply the Investment Company and its Board of Trustees with
various normal and customary reports and statistical data concerning the
Portfolio as reasonably requested by it, state insurance commissioners or their
counterparts;
(i) Prepare a monthly unaudited financial statement of the Portfolio,
which will include the following items:
(1) Schedule of Investments;
(2) Statement of Assets and Liabilities;
(3) Statement of Operations;
(4) Statement of Changes in Net Assets;
(5) Cash Statement; and a
(6) Schedule of Capital Gains and Losses;
(j) Act as liaison between the Investment Company and its independent
certified public accountants and provide them with detailed account analyses,
fiscal year summaries and other audit-related schedules as reasonably requested
in connection with the Portfolio;
(k) Pursuant to security market quotes from independent pricing
services or as otherwise permitted by the Investment Company's Board of
Trustees, calculate the amortized cost and the market values of the investments
of the Portfolio;
(l) Prepare a quarterly broker security transaction summary and monthly
security transaction listing;
<PAGE>
<PAGE> 81
(m) Prepare and file the Investment Company's semi-annual reports to
the SEC on Form N-SAR;
(n) Prepare for execution by the Investment Company and file all of the
Investment Company's Federal and state tax returns and other required tax
filings as agreed to by PIMC;
(o) Assist with the preparation of the Investment Company's annual and
semi-annual reports to Participation Certificate holders, its registration
statement on Form N-1A and other filings relating to the registration of
Participation Certificates;
(p) Monitor the Investment Company's status as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended;
(q) Arrange to maintain the Investment Company's fidelity bond required
by the 1940 Act;
(r) Monitor the Portfolio's compliance with the amounts and conditions
of each state qualification with respect to those states in which the
Portfolio's Participation Certificates have been qualified for sale; and
(s) Have its officers available, upon reasonable notice and at
reasonable frequencies, for consultation with Trustees, offices and employees
of the Investment Company.
The Investment Company will use its best efforts to provide PIMC such
information or other assistance as PIMC may reasonably require in order to
perform these services, including, but not limited to, information in the
possession of any other Investment Company service provider.
5. Services Not Exclusive. The services rendered by PIMC hereunder are not
to be deemed exclusive, and PIMC shall be free to render similar services to
others so long as its services under this Agreement are not impaired thereby.
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, PIMC hereby agrees that all records which it maintains for
the Portfolio are the property of the Investment Company and further agrees to
surrender promptly to the Investment Company any of such records upon the
Investment Company's request. PIMC further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act with respect to the services
provided hereunder.
7. Expenses. During the term of this Agreement, PIMC will pay all expenses
incurred by it in connection with its activities under this Agreement (other
than the cost of securities, commodities and other investments (including
brokerage commissions and other transactions charges, if any) purchased or sold
for the Portfolio and fees and expenses related to qualifying or registering
Participation Certificates for sale) and the Investment Company will pay
expenses properly incurred by it or on its behalf. In addition if, in any
fiscal year, the expenses (as defined under the securities regulations of an
applicable state) borne by the Portfolio exceed the applicable expense
limitations imposed by the securities regulations in any state in which
Participation Certificates of the portfolio are registered or qualified for
sale to the public, PIMC will reimburse the Portfolio for any excess to the
extent required by such regulations. Unless otherwise required by law, such
reimbursement would be accrued and paid on the same basis that the advisory and
service fees are accrued and paid by the Portfolio. To the knowledge of the
Investment Company, the expense limitations in effect on the date of this
Agreement are no more restrictive than one and one-half percent 1.5%) of the
Portfolio's average net assets up to $30 million and one percent (1%) of its
respective average annual net assets in excess of $30
<PAGE>
<PAGE> 82
million.
8. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date hereof, the Investment
Company will pay and PIMC will accept as full compensation therefor a fee,
computed daily at an annual rate of .20% of the first $250 million of the
Portfolio's average net assets, plus .15% of the next $250 million of its
average net assets, plus .12% of the next $250 million of its average net
assets, plus .10% of the next $250 million of its average net assets, plus
.08% of its average net assets over $1 billion. The fee will be paid monthly
and will be reduced by the amount necessary to reduce the Portfolio's ordinary
operating expenses so that the Portfolio's ordinary operating expenses do not
exceed 0.30 of one percent (.30%) of the Portfolio's average net assets for
each fiscal year during the term of this Agreement.
9. Limitation of Liability. PIMC and its delegates shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the
Investment Company in connection with the performance of this Agreement, or in
connection with any action or inaction by PIMC or its delegates in reliance on
instructions received by PIMC or its delegates from the Investment Company
(including but not limited to instructions pursuant to Paragraph 3(a) hereof)
or from a person reasonably believed by PIMC or its delegates to be authorized
to act on behalf of the Investment Company, except a liability resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or negligence
on the part of PIMC in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. PIMC and its
delegates may assume that instructions provided to it are consistent with the
Investment Company's organizational documents and resolutions or proceedings of
the Investment Company's Board of Trustees and Participation Certificate
holders. Notwithstanding anything else in this Agreement to the contrary, with
respect to administrative services neither PIMC not its affiliates will be
liable to the Investment Company or the Portfolio for any consequential,
special or indirect losses or damages which the Investment Company or the
Portfolio may insure or suffer by or as a consequence of PIMC's or any
affiliate's performance of such services, whether or not the likelihood of such
losses or damages was known by PIMC or its affiliates.
10. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall continue in effect until one year from the date hereof.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive annual periods each ending on the anniversary date hereof, provided
such continuance is specifically approved at least annually (a) by the vote of
a majority of those members of the investment Company's Board of Trustees who
are not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Investment Company's Board of Trustees or by a vote of majority of the
outstanding voting securities of the Portfolio. Notwithstanding the foregoing,
this Agreement may be terminated at any time, without the payment of any
penalty, by the Investment Company (by vote of the Investment Company's Board
of Trustees or by vote of a majority of the outstanding voting securities of
the Portfolio) or by PIMC, on sixty (60) days' written notice. This Agreement
will immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "Majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the outstanding voting
<PAGE>
<PAGE> 83
securities of the Portfolio.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
Attest: PLAN INVESTMENT FUND, INC.,
on behalf of its Government/REPO
Portfolio
--------------------- By:-----------------------------
Title:
Attest: PNC INSTITUTIONAL
MANAGEMENT CORPORATION
---------------------- By:-----------------------------
Title:
<PAGE>
<PAGE> 84
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the following with respect to Post-Effective Amendments
Nos. 11 and 14 to the Registration Statement (No. 2-99584) on Form N-1A under
the Securities Act of 1933 and the Investment Company Act of 1940,
respectively, as amended, for the Money Market and Short-Term Portfolios of
Plan Investment Fund, Inc.:
1. The inclusion of our report dated February 2, 1995 accompanying the
financial statements of Plan Investment Fund, Inc. in the Statement of
Additional Information.
2. The incorporation by reference of our report dated February 2, 1995 into
the Prospectus.
3. The reference to our firm under the headings "Portfolio Fee Tables",
"Financial Highlights", and "General Information" in the Prospectus, and
under the heading "Independent Accountants" in the Statement of
Additional Information.
COOPERS & LYBRAND L.L.P.
------------------------
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION FOR THE MONEY MARKET PORTFOLIO
EXTRACTED FROM THE DECEMBER 31, 1994
ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 454,290,356
<INVESTMENTS-AT-VALUE> 454,290,356
<RECEIVABLES> 1,385,414
<ASSETS-OTHER> (1,499,762)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 454,176,008
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,809,374
<TOTAL-LIABILITIES> 2,809,374
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 451,366,634
<SHARES-COMMON-STOCK> 451,366,634
<SHARES-COMMON-PRIOR> 474,838,404
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 451,366,634
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23,252,120
<OTHER-INCOME> 0
<EXPENSES-NET> 1,376,579
<NET-INVESTMENT-INCOME> 21,875,541
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 21,875,541
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,875,541
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,086,561,540
<NUMBER-OF-SHARES-REDEEMED> 6,121,061,465
<SHARES-REINVESTED> 11,028,155
<NET-CHANGE-IN-ASSETS> (23,471,770)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 905,193
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,376,579
<AVERAGE-NET-ASSETS> 527,469,126
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .041
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .041
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION FOR THE SHORT-TERM PORTFOLIO
EXTRACTED FROM THE DECEMBER 31, 1994
ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<SERIES>
<NUMBER> 2
<NAME> SHORT-TERM PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 103,623,046
<INVESTMENTS-AT-VALUE> 103,193,677
<RECEIVABLES> 621,493
<ASSETS-OTHER> 4,494
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103,819,664
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 579,964
<TOTAL-LIABILITIES> 579,964
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104,577,016
<SHARES-COMMON-STOCK> 10,394,368
<SHARES-COMMON-PRIOR> 18,620,114
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (907,947)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (429,369)
<NET-ASSETS> 103,239,700
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,081,179
<OTHER-INCOME> 0
<EXPENSES-NET> 462,669
<NET-INVESTMENT-INCOME> 6,618,510
<REALIZED-GAINS-CURRENT> (907,947)
<APPREC-INCREASE-CURRENT> (701,778)
<NET-CHANGE-FROM-OPS> 5,008,785
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,618,510
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,713,036
<NUMBER-OF-SHARES-REDEEMED> 18,429,870
<SHARES-REINVESTED> 491,088
<NET-CHANGE-IN-ASSETS> (83,568,750)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 331,334
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 462,669
<AVERAGE-NET-ASSETS> 153,352,887
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> .440
<PER-SHARE-GAIN-APPREC> (.100)
<PER-SHARE-DIVIDEND> .440
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> .30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>