<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission April 30, 1997
Registration No. 2-99584
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM N-lA
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 14
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 17
----------------------------------
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
X 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)
--- 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.
<PAGE>
<PAGE>
CALCULATION OF REGISTRATION FEE
UNDER THE SECURITIES ACT OF 19331
<TABLE>
<CAPTION>
Title of
Securities Amount Proposed Proposed Amount of
Being Being Maximum Offering Maximum Aggregate Registration
Registered Registered Price Per Unit2 Offering Price3 Fee
- ---------- ---------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Money Market
Portfolio, $.001
Par Value 108,193,243 $1.00
Short-Term
Portfolio, $.001
Par Value 2,399,113 $9.93
Total Shares of
of Beneficial
Interest in Plan
Investment Fund 110,592,356 $330,000
</TABLE>
- ------------------------------------------------------------------------------
(1) Registrant has elected to maintain registration of an indefinite number of
Participation Certificates ("PCs") 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, 1996 was filed with the Securities and Exchange Commission on
February 21, 1997.
(2) Estimated solely for the purpose of calculating the registration fees
pursuant to Rule 24e-2 under the Investment Company Act of 1940 and Rule 457(c)
under the Securities Act of 1933, based on an offering price of $9.93 with
respect to its Short-Term Portfolio PCs on April 23, 1997.
(3) The maximum aggregate offering price for Registrant's Portfolio PCs with
respect to its Money Market, Government/REPO and Short-Term Portfolios is
calculated pursuant to Rule 24e-2 under the 1940 Act. During the year ended
December 31, 1996, Registrant redeemed a total of 6,329,059,211 Money Market
Portfolio PCs, 1,381,988,958 Government/REPO Portfolio PCs and 3,330,380
Short-Term Portfolio PCs, respectively. Of these redeemed PCs, 6,190,574,668
Money Market Portfolio PCs plus 30,561,667 PCs allocated from the
Government/REPO Portfolio and 259,814 Short-Term Portfolio PCs plus 677,458 PCs
allocated from the Government/REPO Portfolio were used for reductions pursuant
to paragraph (c) of Rule 24f-2 in Registrant's 24f-2 Notice dated February 21,
1997 for the year ended December 31, 1996, and none of the redeemed PCs were
used for reductions pursuant to Rule 24e-2 in previous Post-Effective
Amendments filed during the current fiscal year. As a result, 107,922,876
redeemed Money Market Portfolio PCs and 2,393,108 Short-Term Portfolio PCs are
being used to reduce, pursuant to paragraph (a) of Rule 24e-2, the number of
shares for which the registration fee is payable with respect to this
Post-Effective Amendment.
<PAGE>
<PAGE>
CROSS-REFERENCE SHEET
(as required by Rule 495)
<TABLE>
<CAPTION>
N-1A Item No. Location
- ------------- --------
<S> <C>
PART A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
and Introduction;
PortfolioFee 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
</TABLE>
<PAGE>
<PAGE>
CROSS-REFERENCE SHEET (Continued)
<TABLE>
<CAPTION>
N-lA Item No. Location
- ------------- --------
PART B STATEMENT OF
ADDITIONAL
INFORMATION
<S> <C> <C>
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
</TABLE>
<PAGE>
<PAGE>
CROSS-REFERENCE SHEET (Continued)
<TABLE>
<CAPTION>
N-1A Item No. Location
- ------------- --------
<S> <C> <C>
Item 22. Calculation of Performance
Information
Performance Data
Item 23. Report of Independent Report of
Independent
Certified Public Accountants and
Accountants Financial Statements
Item 24. Financial Statements Report of
Independent
Accountants and
Financial Statements
PART C OTHER INFORMATION
</TABLE>
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>
PROSPECTUS DATED APRIL 23, 1997
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, having
remaining maturities of one (1) year or less. The dollar-weighted
average maturity of the Government/REPO Portfolio will not exceed
seven (7) days.
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 having remaining maturities of one (1)
year or less. The dollar-weighted average maturity of the Money
Market Portfolio will not exceed ninety (90) days.
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 buy instruments having remaining
maturities, or their duration equivalent, of five and a quarter (5
1/4) years or less. The dollar-weighted maturity of the Short-Term
Portfolio will not exceed three hundred sixty (360) days.
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 April 23, 1997. 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>
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.
INVESTORS 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.
2
<PAGE>
<PAGE>
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 3:00 P.M. (Eastern Time) 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 3:00 P.M. (Eastern Time) 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 3:00 P.M. (Eastern Time).
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".)
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 Delaware limited liability company
("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.
3
<PAGE>
<PAGE>
GOVERNMENT/REPO PORTFOLIO
GOVERNMENT/REPO PORTFOLIO ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
<TABLE>
<CAPTION>
<S> <C>
Management Fees (net of waivers)............................ 0.04%
12b-1 Fees.................................................. 0.00%
Other Expenses (net of waivers)............................. 0.06%
-----
Total Portfolio Operating Expenses (net of
waivers)................................... 0.10%
=====
</TABLE>
Without the waiver of advisory and administrator fees, the total operating
expense would be 0.29% based on actual costs for the period ended December 31,
1996.
GOVERNMENT/REPO PORTFOLIO EXAMPLE
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Investors would pay the following expenses
on a $1,000 investment, assuming (1) 5% annual
return, (2) reinvestment of dividends and (3)
redemption at the end of each time period:.......... $1 $3 $6 $13
</TABLE>
MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
<TABLE>
<CAPTION>
<S> <C>
Management Fees (net of waivers)............................ 0.15%
12b-1 Fees.................................................. 0.00%
Other Expenses (net of waivers)............................. 0.08%
-----
Total Portfolio Operating Expenses (net of
waivers)................................... 0.23%
=====
</TABLE>
Without the waiver of advisory and administrator fees, the total operating
expense would be 0.24% based on actual costs for the fiscal year ended December
31, 1996.
MONEY MARKET PORTFOLIO EXAMPLE
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Investors would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return, (2) reinvestment
of dividends and (3) redemption at the end of each time
period:..................................................... $2 $7 $13 $29
</TABLE>
4
<PAGE>
<PAGE>
SHORT-TERM PORTFOLIO
SHORT-TERM PORTFOLIO ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
<TABLE>
<S> <C>
Management Fees (net of waivers)............................ 0.14%
12b-1 Fees.................................................. 0.00%
Other Expenses (net of waivers)............................. 0.16%
-----
Total Portfolio Operating Expenses (net of
waivers)................................... 0.30%
=====
</TABLE>
Without the waiver of advisory, administrator and service agent fees, the total
operating expense would be .48% based on actual costs for the fiscal year ended
December 31, 1996.
SHORT-TERM PORTFOLIO EXAMPLE
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Investors would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return, (2) reinvestment
of dividends and (3) redemption at the end of each time
period:..................................................... $3 $10 $17 $38
</TABLE>
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.
5
<PAGE>
<PAGE>
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
(FOR A PARTICIPATION CERTIFICATE OUTSTANDING THROUGHOUT THE PERIOD)
GOVERNMENT/REPO PORTFOLIO
<TABLE>
<CAPTION>
YEAR 06/01/95(1)
ENDED THROUGH
12/31/96 12/31/95
-------- -----------
<S> <C> <C>
Net Asset Value, Beginning
of Period................ $ 1.00 $ 1.00
-------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income...... .053 .034
Net Realized and Unrealized
Gain (Loss) on
Investments.............. 0 0
-------- --------
Total From Investment
Operations............... .053 .034
-------- --------
LESS DISTRIBUTIONS:
Dividends to PC holders
from Net Investment
Income................... (.053) (.034)
Distributions to PC holders
from Net Capital Gains... 0 0
-------- --------
Total Distributions........ (.053) (.034)
-------- --------
Net Asset Value, End of
Period................... $ 1.00 $ 1.00
======== ========
Total Return............... 5.42% 5.99%(2)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(000).................... $156,382 $119,080
Ratio of Expenses to
Average Net Assets(3).... .10% .10%(2)
Ratio of Net Investment
Income to Average Net
Assets................... 5.29% 5.78%(2)
</TABLE>
- -------------------------
(1) From June 1, 1995 commencement of operations.
(2) Annualized.
(3) Without the waiver of advisory and administration fees, the ratio of
Government/REPO Portfolio expenses to average daily net assets would have
been .29% and .30% for the fiscal periods ended December 31, 1996 and 1995,
respectively.
- --------------------------------------------------------------------------------
The Government/REPO Portfolio seven day average current yield as of
December 31, 1996 was 5.45%.
6
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A PARTICIPATION CERTIFICATE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income..... .052 .058 .041 .030 .037 .060
Net Realized and
Unrealized Gain (Loss)
on Investments.......... 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Total From Investment
Operations.............. .052 0.58 .041 .030 .037 .060
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends to PC holders
from Net Investment
Income.................. (.052) (.058) (.041) (.030) (.037) (.060)
Distributions to PC
holders from Net Capital
Gains................... 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Total Distributions....... (.052) (.058) (.041) (.030) (.037) (.060)
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return.............. 5.38% 5.97% 4.21% 3.07% 3.73% 6.16%
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000)..... $524,872 $584,976 $451,367 $474,838 $390,581 $642,583
Ratio of Expenses to
Average Net Assets(3)... .23% .24% .26% .24% .23% .25%
Ratio of Net Investment
Income to Average Net
Assets.................. 5.24% 5.82% 4.15% 3.02% 3.68% 5.97%
<CAPTION>
MONEY MARKET PORTFOLIO
-------------------------------------------
YEAR ENDED DECEMBER 31, 3/11/87(1)
------------------------------ THROUGH
1991 1990 1989 1988 12/31/87
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income..... .060 .080 .090 .074 .053
Net Realized and
Unrealized Gain (Loss)
on Investments.......... 0 0 0 0 0
-------- -------- -------- -------- --------
Total From Investment
Operations.............. .060 .080 .090 .074 .053
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends to PC holders
from Net Investment
Income.................. (.060) (.080) (.090) (.074) (.053)
Distributions to PC
holders from Net Capital
Gains................... 0 0 0 0 0
-------- -------- -------- -------- --------
Total Distributions....... (.060) (.080) (.090) (.074) (.053)
-------- -------- -------- -------- --------
Net Asset Value,
End of Period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return.............. 6.16% 8.29% 9.40% 7.64% 5.46%
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000)..... $642,583 $460,402 $303,688 $127,480 $140,212
Ratio of Expenses to
Average Net Assets(3)... .25% .28% .30% .30% .30%(2)
Ratio of Net Investment
Income to Average Net
Assets.................. 5.97% 8.02% 8.94% 7.45% 6.78%(2)
</TABLE>
- -------------------------
(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 .24%, .25%, .26%, .24%, .24%, .25%, .28%, .32%, .37% and .50%
respectively, for the periods ended December 31, 1996, 1995, 1994, 1993,
1992, 1991, 1990, 1989, 1988 and 1987.
- -------------------------------------------------------------------------------
The Money Market Portfolio seven day average current yield as of December
31, 1996 was 5.29%.
7
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
(FOR A PARTICIPATION CERTIFICATE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
SHORT-TERM PORTFOLIO
-----------------------------
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period........................ $ 10.00 $ 9.93 $ 10.03
------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. .542 .599 .440
Net Realized and Unrealized Gain
(Loss) on Investments............ (.050) .070 (.100)
------- ------- --------
Total From Investment Operations... .492 .669 .340
------- ------- --------
LESS DISTRIBUTIONS:
Dividends to PC holders from Net
Investment Income................ (.542) (.599) (.440)
Distributions to PC holders from
Net Capital Gains................ 0 0 0
------- ------- --------
Total Distributions................ (.542) (.599) (.440)
------- ------- --------
Net Asset Value, End of Period..... $ 9.95 $ 10.00 $ 9.93
======= ======= ========
Total Return....................... 5.08% 6.92% 3.46%
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000).............. $69,940 $63,922 $103,240
Ratio of Expenses to Average Net
Assets(3)........................ .30% .30% .30%
Ratio of Net Investment Income to
Average Net Assets............... 5.43% 6.00% 4.29%
Portfolio Turnover Rate(4)......... 119.0% 64.8% 47.6%
SHORT-TERM PORTFOLIO
-----------------------------
YEAR ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
-------- -------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning
of Period........................ $ 10.05 $ 10.09 $ 9.96
-------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. .377 .443 .637
Net Realized and Unrealized Gain
(Loss) on Investments............ (.009) (.034) .130
-------- -------- -------
Total From Investment Operations... .368 .409 .767
-------- -------- -------
LESS DISTRIBUTIONS:
Dividends to PC holders from Net
Investment Income................ (.377) (.443) (.637)
Distributions to PC holders from
Net Capital Gains................ (.011) (.006) 0
-------- -------- -------
Total Distributions................ (.388) (.449) (.637)
-------- -------- -------
Net Asset Value, End of Period..... $ 10.03 $ 10.05 $ 10.09
======== ======== =======
Total Return....................... 3.72% 4.13% 7.95%
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000).............. $186,808 $195,579 $94,050
Ratio of Expenses to Average Net
Assets(3)........................ .30% .30% .30%
Ratio of Net Investment Income to
Average Net Assets............... 3.74% 4.29% 6.22%
Portfolio Turnover Rate(4)......... 34.1% 37.6% 63.8%
<CAPTION>
SHORT-TERM PORTFOLIO
----------------------------------------
YEAR ENDED DECEMBER 31, 3/11/87(1)
--------------------------- THROUGH
1990 1989 1988 12/31/87
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period........................ $ 9.91 $ 9.85 $ 9.88 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. .778 .832 .715 .532
Net Realized and Unrealized Gain
(Loss) on Investments............ .050 .060 (.030) (.120)
------- ------- ------- -------
Total From Investment Operations... .828 .892 .685 .412
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to PC holders from Net
Investment Income................ (.778) (.832) (.715) (.532)
Distributions to PC holders from
Net Capital Gains................ 0 0 0 0
------- ------- ------- -------
Total Distributions................ (.778) (.832) (.715) (.532)
------- ------- ------- -------
Net Asset Value, End of Period..... $ 9.96 $ 9.91 $ 9.85 $ 9.88
======= ======= ======= =======
Total Return....................... 8.69% 9.42% 7.15% 4.13%
RATIOS/SUPPLEMENTAL DATA:
Net Assets,
End of Period (000).............. $24,828 $15,473 $19,207 $20,269
Ratio of Expenses to Average Net
Assets(3)........................ .30% .30% .30% .30%(2)
Ratio of Net Investment Income to
Average Net Assets............... 7.89% 8.38% 7.22% 6.59%(2)
Portfolio Turnover Rate(4)......... 100.2% 45.4% 12.4% 162.0%(2)
</TABLE>
- ---------------
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 .48%, .43%, .37%, .32%, .37%, .56%, .85%, .91%, .99% and .76%
respectively, for the periods ended December 31, 1996, 1995, 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, 1996
was 5.26%. The Short-Term Portfolio annualized total return was 5.08% for the
one year period ended December 31, 1996, 4.64% for the five year period ended
December 31, 1996 and 6.16% for the March 11, 1987 (commencement of operations)
to December 31, 1996 period.
8
<PAGE>
<PAGE>
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 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. These standards require an independent review by
the Portfolio's investment adviser of the operating history and financial
condition of the seller to evaluate their creditworthiness and the risk of
their becoming involved in bankruptcy proceedings or otherwise impairing the
quality of the repurchase agreement during its contemplated term. 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
9
<PAGE>
<PAGE>
(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
Government/REPO Portfolio or 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.
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
10
<PAGE>
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. At least
sixty-five percent (65%) of the Government/REPO Portfolio's net assets will be
invested 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 at all times. 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.
11
<PAGE>
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 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
12
<PAGE>
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 net assets of the respective Portfolio would be invested in
restricted securities and 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 3:00 P.M. (Eastern Time) 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 3:00 P.M. (Eastern
Time) and orders for which payment has not 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
13
<PAGE>
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
3:00 P.M. (Eastern Time) 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.
14
<PAGE>
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 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
15
<PAGE>
Trustees. (See the Statement of Additional Information under "Net Asset Value"
for a more complete description with respect to both 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.;
Gene Holcomb is President of Blue Cross and Blue Shield of
Tennessee--Memphis;
Steven L. Hooker is Chief Financial Officer and Treasurer of The Regence
Group;
Ronald F. King is President and Chief Executive Officer of Blue Cross and
Blue Shield of Oklahoma;
Charles R. Long is Senior Vice President, Chief Financial Officer and
Treasurer of Highmark, Inc.;
*David M. Murdoch is Executive Vice President, Franchise Operations, Chief
Financial Officer and Treasurer of the Blue Cross and Blue Shield Association;
Thomas J. Ward is President and Chief Executive Officer of Blue Cross of
Northeastern Pennsylvania; and
Sherman M. Wolff is Senior Vice President, Corporate Resources and Chief
Financial Officer 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, an indirectly 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,
16
<PAGE>
Delaware 19809. PIMC currently renders advisory and sub-advisory services to
investment companies having assets of approximately $31 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:
<TABLE>
<CAPTION>
ANNUAL FEE PORTFOLIO ANNUAL NET ASSETS
- ---------- ---------------------------
<C> <S> <C>
.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.
</TABLE>
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:
<TABLE>
<CAPTION>
ANNUAL FEE PORTFOLIO AVERAGE DAILY NET ASSETS
- ---------- ----------------------------------
<C> <S> <C>
.03% ..................... of amounts up to and including $1 billion
of amounts in excess of $1 billion and up to
.02% ..................... and including $2 billion
.01% ..................... of amounts in excess of $2 billion
</TABLE>
provided that the minimum annual fee payable shall be $100,000.
N&B, a Delaware limited liability company, 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 $43 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. Mr.
Theodore P. Guiliano and Ms. Josephine P. Mahaney have primary responsibility
for the day-to-day management of the Short-Term Portfolio. Mr. Guiliano is a
principal at N&B and has been Co-Director of the Fixed Income group at N&B since
1996. Mr. Guiliano joined N&B in 1983.
17
<PAGE>
Ms. Mahaney is a Senior Portfolio Manager and has been responsible for managing
short maturity portfolios since joining N&B in 1985.
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:
<TABLE>
<CAPTION>
ANNUAL FEE PORTFOLIO ANNUAL NET ASSETS
- ---------- ---------------------------
<C> <S> <C>
.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.
</TABLE>
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:
<TABLE>
<CAPTION>
INVESTMENT COMPANY'S
ANNUAL FEE AVERAGE ANNUAL GROSS ASSETS*
- ---------- ----------------------------
<C> <S> <C>
.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
</TABLE>
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.
18
<PAGE>
PFPC, an indirectly wholly owned subsidiary of PNC, P.O. 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 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
19
<PAGE>
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 period ending
December 31, 1996, the ratio of expenses to average daily net assets was 0.10%
for the Government/REPO Portfolio, 0.23% for the Money Market Portfolio and
0.30% for the Short-Term Portfolio. Without the waiver of advisory,
administrator and service agent fees, this expense ratio would have been 0.29%
for the Government/REPO Portfolio, 0.24% for the Money Market Portfolio and
0.48% for the Short-Term Portfolio for the period ending December 31, 1996.
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
20
<PAGE>
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 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
21
<PAGE>
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, for annual reports, audited financial statements of
each Portfolio.
Coopers & Lybrand L.L.P. has been selected as the Investment Company's
independent accountants.
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.
22
<PAGE>
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS 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.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary and Introduction.... 2
Portfolio Fee Tables................... 3
Financial Highlights................... 6
Investment Objectives and Policies..... 9
Purchase and Redemption of
Participation Certificates........... 13
Net Asset Value........................ 15
Management of the Investment Company... 16
Dividends.............................. 20
Taxes.................................. 20
Description of Participation
Certificates......................... 21
Performance Information................ 22
General Information.................... 22
</TABLE>
======================================================
======================================================
PLAN INVESTMENT FUND, INC.
PROSPECTUS
APRIL 23, 1997
PLAN INVESTMENT FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
April 23, 1997
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
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-13
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
Performance Information . . . . . . . . . . . . . . . . . . . . . B-16
Additional Description Concerning Investment Company
Participation Certificates . . . . . . . . . . . . . . . . . B-17
Independent Accountants . . . . . . . . . . . . . . . . . . . . . B-19
Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . B-21
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-22
Report of Independent Accountants
and Financial Statements . . . . . . . . . . . . . . . . . . B-24
</TABLE>
This Statement of Additional Information should be read in conjunction
with the Prospectus for Plan Investment Fund, Inc. dated April 23, 1997 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>
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 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.
B-2
<PAGE>
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
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
B-3
<PAGE>
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 "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
B-4
<PAGE>
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.
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.)
B-5
<PAGE>
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.
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
B-6
<PAGE>
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 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.
B-7
<PAGE>
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:
<TABLE>
<CAPTION>
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
- ---------------- ------------------ ----------------------
<S> <C> <C>
Albert F. Antonini Executive 1992 to Present,
President
344 South Warren St. Trustee and Chief Executive
Officer,
Syracuse, NY 13202 Blue Cross and Blue
Shield of Central New
York, Inc. Mr.
Antonini also serves
as a director of
Chase Manhattan Bank-
Central New York advisory
Board, HMO-CNY Inc.,
BC&S Associates and the
Caring Program for
Children Foundation.
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 to
60611 December 1993, Vice
President and Chief
Operating Officer,
CSC; prior to February
1992, Controller, CSC.
</TABLE>
B-8
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
- ---------------- ------------------ ----------------------
<S> <C> <C>
Gene Holcomb Trustee January 1996 to Present,
85 North Danny President, Blue Cross and Blue
Thomas Boulevard Shield of Tennessee-Memphis;
Memphis, TN 38103 April 1994 to January 1996,
President and Chief Executive
Officer, Blue Cross and Blue
Shield of Memphis; 1992 to
April 1994, Executive Vice
President, Administration and Chief
Financial Officer, Blue Cross and
Blue Shield of Memphis. Mr. Holcomb
also serves as a Director of First
American Bank.
Steven L. Hooker Trustee April 1996 to Present, Chief
100 S.W. Market Street Financial Officer and Treasurer,
Portland, OR 97201 The Regence Group; April 1993 to
August 1996, Senior Vice President,
Finance and Treasurer, Blue Cross
and Blue Shield of Oregon; April
1993 to January 1997, President,
Oregon Pacific States Insurance
Company; 1992 to March 1993, Vice
President, Finance and Treasurer,
Blue Cross and Blue Shield of
Oregon. Mr. Hooker also serves as
a director of Oregon Pacific States
Insurance Company and Associated
Administrators, Inc.
Ronald F. King Trustee January 1997 to Present,
1215 S. Boulder Avenue President and Chief Executive
Tulsa, OK 74119-2800 Officer, Blue Cross and Blue
Shield of Oklahoma; February
1995 to January 1997, President
and Chief Operating Officer, Blue
Cross and Blue Shield of Oklahoma;
March 1994 to January 1995,
Executive Vice President,
Operations, Blue Cross and Blue
Shield of Oklahoma; September 1993
to February 1994, Senior Vice
President, Finance and Corporate
Treasurer, Blue Cross and Blue
Shield of Oklahoma;
</TABLE>
B-9
<PAGE>
<TABLE>
<S> <C>
September 1991 to September 1993,
Senior Vice President, Information
Services, Planning & Development,
Blue Cross and Blue Shield of
Oklahoma.
</TABLE>
B-10
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
- ---------------- ------------------ ----------------------
<S> <C> <C>
Charles R. Long Trustee December 1996 to Present, Senior
1800 Center Street Vice President, Chief Financial
Camp Hill, PA 17089 Officer and Treasurer, Highmark,
Inc.; September 1995 to December
1996 Senior Vice President,
Finance, Pennsylvania Blue
Shield; 1992 to August 1995
Partner, Arthur Andersen, LLP.
Mr. Long also serves as a
director of numerous wholly
owned subsidiaries of Highmark,
Inc.
David M. Murdoch* Trustee and June 1995 to Present, Executive
Vice President,
676 St. Clair Street Treasurer Franchise Operations, Chief
Financial Officer
Chicago, IL 60611 and Treasurer, Blue Cross and Blue
Shield Association; July 1993 to
June 1995, Senior Vice President, Licensing,
Finance and Operations, Blue Cross
and Blue Shield Association;
February 1992 to June 1993, Senior
Vice President, Business Support
and Strategy, Blue Cross and Blue
Shield Association; 1992 through
December 1993, President and Chief
Executive Officer, CSC. Mr.
Murdoch also serves as a director
of CSC and Ravenswood Health Care
Medical Center and certain
affiliated entities.
Thomas J. Ward Trustee 1992 to Present, President, and
70 North Main Street Chief Executive Officer, Blue
Wilkes-Barre, PA 18711 Cross of Northeastern
Pennsylvania.
</TABLE>
B-11
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Position with the During Past 5 Years
Name and Address Investment Company and Other Affiliations
- ---------------- ------------------ ----------------------
<S> <C> <C>
Sherman M. Wolff Trustee January 1996 to Present, Senior
233 N. Michigan Ave. Vice President, Corporate
Chicago, IL 60601 Resources and Chief Financial
Officer, Health Care Service
Corporation; November 1991 to
January 1996, Senior Vice
President, Finance and Sales,
Health Care Service Corporation.
Mr. Wolff also serves as a
director of Metropolitan Chicago
Leadership Council, Green Spring
Mental Health Service, Fort
Dearborn Life Insurance Company,
American Heart Association of
Metropolitan Chicago and chairman
of Riscorp Board of Directors.
Dale E. Palka Assistant December 1996 to Present,
676 St. Clair Street Secretary Executive Director, Investment
Chicago, IL 60611 Programs, CSC; 1992 to December
1996, Director of Investments,
Blue Cross and Blue Shield of
Michigan.
Burton X. Rosenberg Secretary 1992 to Present, Partner,
55 East Monroe Street Seyfarth, Shaw, Fairweather &
Geraldson.
Chicago, IL 60603
</TABLE>
_______________________________________________________________________
* 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.
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, 1996, a total of
$19,998 was paid by the Investment Company for Trustee meeting expenses.
B-12
<PAGE>
Pension or Estimated
Capacities in Retirement Annual
Which Benefits Accrued Benefits
Name of Remuneration Aggregate During Registrant's Upon
Person Was Received Remuneration Last Fiscal Year Retirement
- ------- ------------- ------------ ------------------- ----------
For the fiscal year ended December 31, 1996, the Investment Company did
not pay any remuneration to, or accrue any retirement benefits for, any of
its Trustees or Officers.
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, 1994, 1995 and 1996, PIMC
was paid fees of $99,291, $88,730 and $69,444, respectively, net of
$709,$11,270 and $30,556 waived fees, as service agent for the Short-Term
Portfolio. For the same periods PIMC was paid fees of $894,209, $968,558 and
$1,017,246, respectively, net of $10,984, $31,425 and $47,621 waived fees, as
investment advisor and service agent for the Money Market Portfolio. For the
same periods N&B was paid fees of $230,349, $136,295 and $99,207, respectively,
net of $100,985, $107,922 and $92,413 waived fees, as investment advisor for
the Short-Term Portfolio. For the June 1, inception of operations, through
December 31, 1995 period and the fiscal period ended December 31,1996, PIMC was
paid $4,436 and $38,169, respectively, net of $54,651 and $172,944 waived fees,
as investment advisor and service agent for the Government/REPO Portfolio.
B-13
<PAGE>
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, 1994, 1995 and 1996, CSC was paid fees of $260,066, $291,670 and $313,494,
respectively, net of $3,661, $10,476 and $15,874 waived fees, as administrator
for the Money Market Portfolio and $75,055, $42,618 and $29,762 net of $2,016,
$7,011 and $5,642 waived fees, as administrator for the Short-Term Portfolio.
For the June 1, inception of operations, through December 31, 1995 period and
the fiscal period ended December 31, 1996, CSC was paid $10,860 and $27,853,
respectively, net of $3,912 and $24,925 waived fees, as administrator for the
Government/REPO Portfolio.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional tax considerations
generally affecting the Investment Company, the Portfolios established within
the Investment Company, and the PC holders of each Portfolio established
B-14
<PAGE>
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.
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
B-15
<PAGE>
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, 1996 the
Money Market Portfolio average yield was 5.29% and the effective yield was
5.43%. For the same period the Government/REPO Portfolio average yield was
5.45% and the effective yield was 5.60%.
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 Government/REPO Portfolio and the Money Market
Portfolio yield calculations. 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, 1996 the Short-Term Portfolio 30 day yield was 5.26%.
The yields of the Government/REPO Portfolio, 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 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.
B-16
<PAGE>
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
5.08% for the one year ended December 31, 1996, 4.64% for the five years ended
December 31, 1996 and 6.16% for the March 11, 1987 (commencement of operations)
to December 31, 1996 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 a Portfolio
as of February 28, 1997.
<TABLE>
<CAPTION>
Percent of PCs Percent of PCs Percent of PCs
Owned of Owned of Owned of
Government/REPO Money Market Short-Term
PC Holder Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<S> <C> <C> <C>
Blue Cross and Blue Shield 9.2% 0.7% 0.0%
</TABLE>
B-17
<PAGE>
<TABLE>
<S> <C> <C> <C>
of Connecticut
370 Bassett Road
North Haven, CT 06473
Blue Cross and Blue Shield 6.8% 14.7% 11.0%
Association
676 N. St. Clair Street
Chicago, IL 60611
Health Care Service Corporation 0.0% 13.0% 24.8%
a Mutual Legal Reserve Company
233 North Michigan Avenue
Chicago, IL 60601
Health Plans Capital 13.4% 1.0% 3.1%
Services Corp.
676 N. St. Clair Street
Chicago, IL 60611
Green Spring Health 0.0% 6.8% 0.0%
Services, Inc.
5565 Sterrett Place
Columbia, MD 21044
Blue Cross and Blue Shield 6.0% 0.9% 0.0%
of Massachusetts
100 Summer Street
Boston, MA 02110
</TABLE>
B-18
<PAGE>
<TABLE>
<CAPTION>
Percent of PCs Percent of PCs Percent of PCs
Owned of Owned of Owned of
Government/REPO Money Market Short-Term
PC Holder Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<S> <C> <C> <C>
Blue Cross and Blue Shield 0.0% 9.7% 0.0%
of New Jersey
3 Penn Plaza East
Newark, NJ 07105
Blue Cross and Blue Shield 0.0% 1.7% 18.3%
of Oklahoma, Inc.
1215 South Boulder Avenue
Tulsa, OK 74119
Capital Blue Cross 39.0% 0.1% 1.1%
2500 Elmerton Avenue
Harrisburg, PA 17110
Independence Blue Cross 0.0% 0.0% 30.9%
1901 Market Street
Philadelphia, PA 19103
Highmark, Inc. 0.0% 14.2% 3.8%
120 Fifth Avenue
Pittsburgh, PA 15222
Blue Cross and Blue Shield 17.3% 0.1% 0.0%
of South Carolina
I-29 East at Alpine Road
Columbia, SC 29212
</TABLE>
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, 1996 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 January 31, 1997, 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 &
B-19
<PAGE>
Ingersoll act as counsel to PNC Bank, PIMC and PFPC. Levitt, Greenberg,
Kaufman & Goldstein act as counsel to N&B.
B-20
<PAGE>
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 each of the Portfolios are accepted by the
Investment Company's Transfer Agent which is located in Wilmington, Delaware.
B-21
<PAGE>
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:
<TABLE>
<CAPTION>
Type of
Security Rating Agency Rating Summary of Rating
- -------- ------------- ------ -----------------
<S> <C> <C> <C>
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.
</TABLE>
B-22
<PAGE>
<TABLE>
<S> <C> <C> <C>
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.
<CAPTION>
Type of
Security Rating Agency Rating Summary of Rating
- -------- ------------- ------ -----------------
<S> <C> <C> <C>
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.
</TABLE>
B-23
<PAGE>
REPORT OF
INDEPENDENT ACCOUNTANTS AND
FINANCIAL STATEMENTS
B-24
<PAGE>
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 Government/REPO
Portfolio, Money Market Portfolio and
Short-Term Portfolio as of December 31, 1996;
Statements of Operations for the
Government/REPO Portfolio, Money Market
Portfolio and Short-Term Portfolio for the
period ended December 31, 1996; Statements of
Changes in Net Assets for the Government/REPO
Portfolio for the year ended December 31,
1996 and the period ended December 31, 1995
and for the Money Market Portfolio and the
Short-Term Portfolio for the years ended
December 31, 1996 and December 31, 1995;
Financial Highlights for the Government/REPO
Portfolio (for a Participation Certificate
outstanding throughout the period) for the
year ended December 31, 1996 and the period
ended December 31, 1995 and for the Money
Market Portfolio and Short-Term Portfolio
(for a Participation Certificate outstanding
throughout the period) for the years ended
December 31, 1996, December 31, 1995,
December 31, 1994, December 31, 1993 and
December 31, 1992; Notes to Financial
Statements which was filed with, and accepted
by, the U.S. Securities and Exchange
Commission via EDGAR on Form Type N-30D
(with accession number: 0000774412-97-000004)
on March 20, 1997).
(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**
C-1
<PAGE>
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 *
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
27.3 Financial Data Schedule for the Government/REPO
Portfolio
____________________________________________________________________________
* Incorporated by reference from Registration Statement on Form N-1A
No. 2-99584 as filed with the SEC by the Registrant on March 30, 1995.
** Incorporated by reference from Registration Statement on Form N-1A
No. 2-99584 as filed with the SEC by the Registrant on April 19, 1996.
Item 25. Persons Controlled by or Under Common
Control with Registrant
None
Item 26. Number of Holders of Securities
C-2
<PAGE>
As of February 28, 1997, the number of record holders of
Investment Company PCs were as follows:
<TABLE>
<CAPTION>
Number of
Portfolio Record Holders
--------- --------------
<S> <C>
Government/REPO 13
Money Market 104
Short-Term 21
</TABLE>
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 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
C-3
<PAGE>
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")
<TABLE>
<CAPTION>
Position Other Business Type of
with Bank Name Connections Business
- --------- -------- -------------- --------
<S> <C> <C> <C>
Director B.R. Brown President and Chief Coal
Executive Officer
Consol, Inc.
Pittsburgh, PA
Director Constance E. Assiociate Dean, Medical
Clayton School of Health and
Professor of Pediatrics
Medical College of PA
Hahnemann Unviersity
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
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
</TABLE>
C-4
<PAGE>
PNC BANK, NATIONAL ASSOCIATION ("PNC Bank")
<TABLE>
<CAPTION>
Position Other Business Type of
with Bank Name Connections Business
- --------- -------- -------------- --------
<S> <C> <C> <C>
Director Thomas H. O'Brien Chairman Banking
PNC Bank, NA
Pittsburgh, PA
Director Dr. J. Dennis Provost Education
O'Connor The Smithsonian Institution
Washington, DC
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
</TABLE>
C-5
<PAGE>
PNC BANK, NATIONAL ASSOCIATION ("PNC Bank")
<TABLE>
<S> <C> <C> <C>
Director Richard C. Caldwell Chairman and Director Investment
PNC Asset Management Advisory
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 Fiduciary
PNC Trust Company Activities
of New York
Director Investment
Provident Capital Advisory
Management
Director Equipment
Hayden Bolts, Inc.
Director Real Estate
Parkway Real Estate Co.
</TABLE>
C-6
<PAGE>
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
<TABLE>
<CAPTION>
Position Other Business Type of
with PIMC Name Connections Business
- --------- ---- -------------- --------
<S> <C> <C> <C>
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 Lynn C. Evans None
President
Director Laurence D. Fink Chairman and Chief Investment
Executive Officer Advisory
BlackRock Financial
Management Inc.
Vice President and Investment
Director Advisory
PNC Asset Management
Senior
Vice Patrick J. Ford None
President
Controller Pauline M. Vice President Financial
Heintz PFPC, Inc. Processing
Vice Richard Hoerner None
President
Vice Michael S. None
President Hutchinson
Director Nicholas M. Senior Vice President Banking
and Chief Marsini, Jr. PNC Bank, NA
Financial
Officer Director Financial
PFPC Inc. Processing
Director Banking
PNC Trust Company
of New York
</TABLE>
C-7
<PAGE>
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
<TABLE>
<CAPTION>
Position Other Business Type of
with PIMC Name Connections Business
- --------- ---- -------------- --------
<S> <C> <C> <C>
Vice Michael J. Milligan None
President
Vice Robert J. Morgan None
President
President Thomas H. Nevin None
and Chief
Investment
Officer
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 G. Keith Robertshaw None
President
Vice Brenda Rogers None
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 Robert F. Strong None
President
</TABLE>
C-8
<PAGE>
PNC INSTITUTIONAL MANAGEMENT CORPORATION ("PIMC")
<TABLE>
<CAPTION>
Position Other Business Type of
with PIMC Name Connections Business
- --------- ---- -------------- --------
<S> <C> <C> <C>
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
</TABLE>
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.
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Herbert W. Ackerman Managing Director,
Principal, Chief Operating Neuberger & Berman Management, Inc.
Officer
Robert J. Appel None
Principal
Howard R. Berlin Vice President and Director,
Principal, Executive Neuberger & Berman Partners Fund, Inc.
Committee Member
Jeffrey Bolton None
Principal
Richard A. Cantor Chairman and Director,
Principal, Executive Neuberger & Berman Management, Inc.
Committee Member
President,
Neuberger & Berman Global Asset Management, Inc.
</TABLE>
C-9
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Vincent T. Cavallo Managing Director
Principal, Chief Financial Neuberger & Berman Management, Inc.
Officer
Salvatore D'Elia None
Principal
Stanley Egener President and Director
Principal Neuberger & Berman Management, Inc.
Chairman of the Board,
Neuberger & Berman Equity Trust
Chairman of the Board,
Neuberger & Berman Equity Assets
Chairman of the Board,
Neuberger & Berman Equity Funds
Chairman of the Board,
Neuberger & Berman Income Funds
Michael N. Emmerman None
Principal
Robert D. English None
Principal
Jack M. Ferraro None
Principal
Gregory P. Francfort None
Principal
Howard L. Ganek Director,
Principal, Executive Neuberger & Berman Trust Company
Committee Member
Robert I. Gendelman None
Principal
Theodore P. Guiliano President
Principal Neuberger & Berman Income Managers Trust
President
Neuberger & Berman Income Fund
President
Neuberger & Berman Income Trust
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Managing Director
Neuberger & Berman Management, Inc.
Arthur A. Goldberg None
Principal
Mark R. Goldstein Managing Director
Principal Neuberger & Berman Management, Inc.
Vice President
Neuberger & Berman Management, Inc.
Lee H. Idleman None
Principal
Alan L. Jacobs None
Principal
Michael W. Kamen None
Principal
Michael M. Kassen Director
Principal, Executive Neuberger & Berman Management, Inc.
Committee Member
Mark P. Kleiman None
Principal
Lee P. Klingenstein None
Principal
Irwin Lainoff Director
Principal Neuberger & Berman Management, Inc.
Joseph R. Lasser None
Principal
Richard S. Levine None
Principal
Christopher J. None
Lockwood
Principal
Lawrence Marx, III Managing Director
Principal Neuberger & Berman Management, Inc.
Robert R. McComsey Executive Vice President
Principal NBA Partners, L.P.
</TABLE>
C-11
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Eecutive Vice
President
N&B Convertible Arbitrage Partners, LP
Executive Vice President and Director
NBA G.P. Corp.
Martin McKerrow General Manager and Director
Principal BNP-N&B Global Asset Management, L.P.
Managing Director
Neuberger & Berman Management, Inc.
Martin E. Messinger None
Principal
Beth W. Nelson None
Principal
Roy R. Neuberger None
Principal
Harold J. Newman None
Principal
William P. Overman None
Principal
Daniel P. Paduano Vice President
Principal Neuberger & Berman Partners Fund
Chairman and Director
Neuberger & Berman Trust Company
Norman H. Pessin None
Principal
William A. Potter None
Principal
Janet W. Prindle Vice President
Principal Neuberger & Berman Management, Inc.
C. Carl Randolph Managing Director
Principal, Chief Legal Neuberger & Berman Management, Inc.
Officer
Vice President and Director
Neuberger & Berman Trust Company
Kevin L. Risen None
Principal
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
Jack C. Schnackenberg, Jr. Managing Director
Principal Neuberger & Berman Management, Inc.
Marvin C. Schwartz Director
Principal, Executive Neuberger & Berman Management, Inc.
Committee Member
Kent C. Simons Vice President and Managing Director
Principal Neuberger & Berman Management, Inc.
Robert E. Spilka Managing Director
Principal Neuberger & Berman Management, Inc.
Gloria H. Spivak None
Principal
Heidi S. Steiger Managing Director
Principal Neuberger & Berman Management, Inc.
Vice President
Neuberger & Berman Agency, Inc.
Director
Neuberger & Berman Trust Company
Bernard Z. Stein None
Principal
Fred Stein None
Principal
Eleanor M. Sterne Managing Director
Principal Neuberger & Berman management, Inc.
Philip A. Straus None
Principal
Peter Strauss None
Principal
Peter E. Sundman Senior Vice President
Principal Neuberger & Berman Management, Inc.
Allan D. Sutton None
Principal
Richard J. Sweetnam, Jr. None
Principal
Judith M. Vale Vice President
Pincipal Neuberger & Berman Management, Inc.
</TABLE>
C-13
<PAGE>
<TABLE>
<CAPTION>
NEUBERGER & BERMAN
Name Business and Other Connections
- ---- ------------------------------
<S> <C>
David I. Weiner None
Principal
Dietrich Weismann None
Principal, Executive
Committee Member
Lawrence Zicklin Director
Principal, Chief Executive Neuberger & Berman Management, Inc.
Officer, Executive
Committee Member President
Global Managers Trust
President and Trustee
Neuberger & Berman Advisors Management
Trust
President and Trustee
Neuberger & Berman Equity Assets
President and Trustee
Neuberger & Berman Managers Trust
President and Trustee
Neuberger & Berman Equity Funds
President and Trustee
Neuberger & Berman Equity Trust
</TABLE>
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
<TABLE>
<CAPTION>
Location
(To the extent known) Types of Records
---------------------- -----------------
<S> <C>
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.
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
Location
(To the extent known) Types of Records
---------------------- -----------------
<S> <C>
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 Investment
P.O. Box 8950 Company's dividends and distributions; proxy
Wilmington, DE 19899 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, (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 Government/REPO,
Management Corp. Money Market and Short-Term Portfolios'
400 Bellevue Parkway investments, PCs, income and expenses,
Wilmington, DE 19809 books and records relating to their securities
transactions and books of account; the
Investment Company's semi-annual reports to
the SEC on Form N-SAR, federal, state and
other
</TABLE>
C-15
<PAGE>
<TABLE>
<CAPTION>
Location
(To the extent known) Types of Records
--------------------- -----------------
<S> <C>
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
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
</TABLE>
Item 31. Management Services
Not applicable
C-16
<PAGE>
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.
C-17
<PAGE>
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. 14 to the Registration Statement pursuant to Rule
485_(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 14 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 23rd day of April, 1997.
PLAN INVESTMENT FUND, INC.
By: BURTON X. ROSENBERG
----------------------------
Burton X. Rosenberg
Secretary
ATTEST:
DALE E. PALKA
- --------------------
Dale E. Palka
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 14 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*ALBERT F. ANTONINI Executive Trustee April 23, 1997
- ----------------------------
Albert F. Antonini
Trustee,
President and
*PHILIP A. GOSS Chief Executive April 23, 1997
- ----------------------------
Philip A. Goss Officer
*GENE HOLCOMB Trustee April 23, 1997
- ----------------------------
Gene Holcomb
*STEVEN L. HOOKER Trustee April 23, 1997
- ----------------------------
Steven L. Hooker
*RONALD F. KING Trustee April 23, 1997
- ----------------------------
Ronald F. King
Trustee
- ----------------------------
Charles R. Long
*DAVID M. MURDOCH Trustee and April 23, 1997
- ---------------------------- Treasurer
David M. Murdoch
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C> <C>
Trustee
- ----------------------------
Thomas J. Ward
Trustee
- -----------------------------
Sherman M. Wolff
</TABLE>
*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
S-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- --------------------------
<S> <C>
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
27.3 Financial Data Schedule for the Government/REPO
Portfolio
</TABLE>
______________________________________________________________________________
* Incorporated by reference from Post-Effective Amendment No. 11 to
Registration Statement on Form N-1A No. 2-99584 as filed with the
SEC by the Registrant on March 30, 1995
** Incorporated by reference from Post-Effective Admendment No. 13 to
Registration Statement on Form N-1A No. 2-99584 as filed with the
SEC by the Registrant on April 19, 1996
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the following with respect to Post-Effective Amendments
Nos. 14 and 17 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 Government/REPO, Money Market and Short-Term
Portfolios of Plan Investment Fund, Inc.:
1. The inclusion of our report dated January 31, 1997 accompanying the
financial statements and financial highlights of Plan Investment Fund,
Inc. in the Statement of Additional Information.
2. The incorporation by reference of our report dated January 31, 1997
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.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 22, 1997
<PAGE>
EXHIBIT 16
COMPUTATION OF PERFORMANCE QUOTATION
Money Market Portfolio
(A) Average yield for the 7 day period ending December 31, 1996
Daily dividend per PC (Net of expenses)
December 25 0.000143785
26 0.000143908
27 0.000144069
28 0.000144069
29 0.000144069
30 0.000145321
31 0.000148889
-----------
0.001014110
Base period return = 0.001014110/1 = 0.001014110
Formula
Average yield = Base period return * (365/7)
= 0.001014110 * (365/7)
= 0.0529
= 5.29%
(B) Effective yield for the 7 day period ending December 31, 1996
Formula
Effective yield = ((Base period return + 1) @ (365/7)) - 1
= (1.001014110 @ (365/7)) - 1
= 0.0543
= 5.43%
<PAGE>
Government/REPO Portfolio
(A) Average yield for the 7 day period ending December 31, 1996
Daily dividend per PC (Net of expenses)
December 25 0.000143543
26 0.000143983
27 0.000145135
28 0.000145135
29 0.000145135
30 0.000153808
31 0.000169325
-----------
0.001046064
Base period return = 0.001046064/1 = 0.001046064
Formula
Average yield = Base period return * (365/7)
= 0.001046064 * (365/7)
= 0.0545
= 5.45%
(B) Effective yield for the 7 day period ending December 31, 1996
Formula
Effective yield = ((Base period return + 1) @ (365/7)) - 1
= (1.001046064 @ (365/7)) - 1
= 0.0560
= 5.60%
<PAGE>
Short-Term Portfolio
(A) 30 day yield for period ending December 31, 1996
A = Interest earned during the period 321,275
B = Expenses accrued during the period 17,326
C = Average PCs outstanding during the period 7,050,116
D = Maximum offering price on last day of period = 9.95
Formula
30 day yield = 2 (((((A-B)/(C*D))+1)@6)-1)
= 2 (((303,949/70,148,654)+1)@6)-1)
= .0526
= 5.26%
<PAGE>
(B) Total return calculation for period ending December 31, 1996
$9.95 Ending Net Asset Value
$1,000
Invest From December 31, 1995
Begin NAV # Years 1
$10.00
Share
Shares Factor NAV $ Div Div
------- ----------- ---- ----- -----
1996 Jan 100.705 0.049284736 10.01 4.33 0.493
Feb 101.493 0.044869470 9.99 4.51 0.451
Mar 101.944 0.045891242 9.96 4.63 0.465
Apr 101.409 0.044191954 9.95 4.48 0.450
May 101.859 0.045127720 9.94 4.60 0.463
June 102.322 0.043898073 9.94 4.49 0.452
Jul 102.774 0.045215148 9.94 4.65 0.468
Aug 103.242 0.045318134 9.94 4.68 0.471
Sep 103.713 0.044110226 9.94 4.57 0.460
Oct 104.173 0.045371563 9.95 4.73 0.475
Nov 104.648 0.043586785 9.96 4.56 0.458
Dec 105.106 0.044731266 9.95 4.70 0.472
End 105.578 9.95
Ending NAV $9.95
Ending Value $1,050.81
Formula
-------
T = Average annual total return
1/N
T = ((ERV/P) ) - 1 P = Initial investment
ERV = Ending value
N = Number of years
1/1
T = ((1050.81/1000) ) - 1
T = 5.08%
<PAGE>
$1,000
Invest From December 31, 1991
Begin NAV # Years 5.00
$10.09
Share
Shares Factor NAV $ Div Div
------ ----------- ---- ---- -----
1992 Jan 99.108 0.045093187 10.06 4.47 0.444
Feb 99.552 0.040648396 10.04 4.05 0.403
Mar 99.955 0.039938018 10.03 3.99 0.398
Apr 100.353 0.039066315 10.05 3.92 0.390
May 100.743 0.038027554 10.05 3.83 0.381
Jun 101.124 0.037210258 10.07 3.76 0.373
Jul 101.497 0.036261406 10.08 3.68 0.365
Aug 101.862 0.034326793 10.09 3.50 0.347
Sep 102.209 0.033625262 10.11 3.44 0.340
Oct 102.549 0.033468981 10.05 3.43 0.341
Nov 102.890 0.032357726 10.04 3.33 0.332
Dec 103.222 0.032162399 10.04 3.32 0.331
1993 Jan 103.553 0.032919385 10.05 3.41 0.339
Feb 103.892 0.030766351 10.07 3.20 0.318
Mar 104.210 0.033596382 10.07 3.50 0.348
Apr 104.558 0.032200821 10.07 3.37 0.335
May 104.893 0.033164935 10.06 3.48 0.346
Jun 105.239 0.031367384 10.07 3.30 0.328
Jul 105.567 0.032791549 10.05 3.46 0.344
Aug 105.911 0.030790066 10.07 3.26 0.324
Sep 106.235 0.028916896 10.07 3.07 0.305
Oct 106.540 0.029251528 10.06 3.12 0.310
Nov 106.850 0.029603019 10.04 3.16 0.315
Dec 107.165 0.042465678 10.03 4.55 0.454
1994 Jan 107.619 0.031398528 10.04 3.38 0.337
Feb 107.956 0.027818792 10.01 3.00 0.300
Mar 108.256 0.031034972 9.98 3.36 0.337
Apr 108.593 0.032568616 9.97 3.54 0.355
May 108.948 0.034692916 9.97 3.78 0.379
Jun 109.327 0.034858157 9.97 3.81 0.382
Jul 109.709 0.036863406 9.95 4.04 0.406
Aug 110.115 0.038885975 9.97 4.28 0.429
Sep 110.544 0.039443739 9.95 4.36 0.438
Oct 110.982 0.042608173 9.94 4.73 0.476
Nov 111.458 0.042615906 9.93 4.75 0.478
Dec 111.936 0.047054057 9.93 5.27 0.531
1995 Jan 112.467 0.049480333 9.94 5.56 0.559
Feb 113.026 0.046128402 9.96 5.21 0.523
Mar 113.549 0.051404573 9.96 5.84 0.586
Apr 114.135 0.049666330 9.97 5.67 0.569
May 114.704 0.051232284 9.99 5.88 0.589
Jun 115.293 0.049518881 9.98 5.71 0.572
Jul 115.865 0.050099413 9.98 5.80 0.581
Aug 116.446 0.050378200 9.99 5.87 0.588
Sep 117.034 0.049663401 9.99 5.81 0.582
Oct 117.616 0.051678273 9.98 6.08 0.609
Nov 118.225 0.049360269 9.99 5.84 0.585
Dec 118.810 0.050061990 10.00 5.95 0.595
<PAGE>
1996 Jan 119.405 0.049284736 10.01 5.88 0.587
Feb 119.992 0.044869470 9.99 5.38 0.539
Mar 120.531 0.045891242 9.96 5.53 0.555
Apr 121.086 0.044191954 9.95 5.35 0.538
May 121.624 0.045127720 9.94 5.49 0.552
June 122.176 0.043898073 9.94 5.36 0.539
Jul 122.715 0.045215148 9.94 5.55 0.558
Aug 123.273 0.045318134 9.94 5.59 0.562
Sep 123.835 0.044110226 9.94 5.46 0.549
Oct 124.384 0.045371563 9.95 5.64 0.567
Nov 124.951 0.043586785 9.96 5.45 0.547
Dec 125.498 0.044731266 9.95 5.61 0.564
END 126.062
End NAV $9.95
End Value $1,254.68
T = Average annual total return
(1/5)
T = (1,254.68/1,000 ) - 1
T = 4.64%
<PAGE>
$1,000 From March 11, 1987
Invest # Years 9.81
Begin NAV
$10.00
Share
Shares Factor NAV $ Div Div
------- ----------- ---- ----- -----
1987 Mar 100.000 0.033969164 9.98 3.40 0.341
Apr 100.341 0.049320369 9.89 4.95 0.501
May 100.842 0.052762194 9.89 5.32 0.538
Jun 101.380 0.051981490 9.90 5.27 0.532
Jul 101.912 0.053123940 9.90 5.41 0.546
Aug 102.458 0.053216360 9.89 5.45 0.551
Sep 103.009 0.054351136 9.85 5.60 0.569
Oct 103.578 0.058628852 9.88 6.07 0.614
Nov 104.192 0.054963879 9.88 5.73 0.580
Dec 104.772 0.059029747 9.88 6.18 0.626
1988 Jan 105.398 0.057954511 9.91 6.11 0.617
Feb 106.015 0.052038256 9.93 5.52 0.556
Mar 106.571 0.054831346 9.92 5.84 0.589
Apr 107.160 0.054257436 9.91 5.81 0.586
May 107.746 0.057427618 9.88 6.19 0.627
Jun 108.373 0.057207355 9.89 6.20 0.627
Jul 109.000 0.060517166 9.88 6.60 0.668
Aug 109.668 0.062797415 9.87 6.89 0.698
Sep 110.366 0.062213367 9.88 6.87 0.695
Oct 111.061 0.064926200 9.89 7.21 0.729
Nov 111.790 0.063580000 9.87 7.11 0.720
Dec 112.510 0.067527771 9.85 7.60 0.772
1989 Jan 113.282 0.068462039 9.85 7.76 0.788
Feb 114.070 0.062283949 9.84 7.10 0.722
Mar 114.792 0.073303605 9.84 8.41 0.855
Apr 115.647 0.071661014 9.85 8.29 0.842
May 116.489 0.073973924 9.87 8.62 0.873
Jun 117.362 0.070233867 9.90 8.24 0.832
Jul 118.194 0.071261069 9.94 8.42 0.847
Aug 119.041 0.070574755 9.89 8.40 0.849
Sep 119.890 0.067587691 9.88 8.10 0.820
Oct 120.710 0.069507056 9.92 8.39 0.846
Nov 121.556 0.065948268 9.92 8.02 0.808
Dec 122.364 0.067718919 9.91 8.29 0.837
1990 Jan 123.201 0.066526408 9.90 8.20 0.828
Feb 124.029 0.060189846 9.89 7.47 0.755
Mar 124.784 0.066963287 9.88 8.36 0.846
Apr 125.630 0.064850441 9.86 8.15 0.827
May 126.457 0.067291864 9.88 8.51 0.861
Jun 127.318 0.064847950 9.89 8.26 0.835
Jul 128.153 0.066720975 9.91 8.55 0.863
Aug 129.016 0.066082175 9.90 8.53 0.862
Sep 129.878 0.063492297 9.91 8.25 0.832
Oct 130.710 0.064926332 9.92 8.49 0.856
Nov 131.566 0.062295378 9.93 8.20 0.826
Dec 132.392 0.063928804 9.96 8.46 0.849
<PAGE>
1991 Jan 133.241 0.062269513 9.98 8.30 0.832
Feb 134.073 0.054861582 9.97 7.36 0.738
Mar 134.811 0.058455505 9.97 7.88 0.790
Apr 135.601 0.054480897 9.97 7.39 0.741
May 136.342 0.054010936 9.97 7.36 0.738
Jun 137.080 0.051107214 9.96 7.01 0.704
Jul 137.784 0.052982515 9.97 7.30 0.732
Aug 138.516 0.052604696 9.99 7.29 0.730
Sep 139.246 0.049697140 10.01 6.92 0.691
Oct 139.937 0.050185457 10.04 7.02 0.699
Nov 140.636 0.048259718 10.06 6.79 0.675
Dec 141.311 0.047631956 10.09 6.73 0.667
1992 Jan 141.978 0.045093187 10.06 6.40 0.636
Feb 142.614 0.040648396 10.04 5.80 0.578
Mar 143.192 0.039938018 10.03 5.72 0.570
Apr 143.762 0.039066315 10.05 5.62 0.559
May 144.321 0.038027554 10.05 5.49 0.546
Jun 144.867 0.037210258 10.07 5.39 0.535
Jul 145.402 0.036261406 10.08 5.27 0.523
Aug 145.925 0.034326793 10.09 5.01 0.497
Sep 146.422 0.033625262 10.11 4.92 0.487
Oct 146.909 0.033468981 10.05 4.92 0.490
Nov 147.399 0.032357726 10.04 4.77 0.475
Dec 147.874 0.032162399 10.04 4.76 0.474
1993 Jan 148.348 0.032919385 10.05 4.88 0.486
Feb 148.834 0.030766351 10.07 4.58 0.455
Mar 149.289 0.033596382 10.07 5.02 0.499
Apr 149.788 0.032200821 10.07 4.82 0.479
May 150.267 0.033164935 10.06 4.98 0.495
Jun 150.762 0.031367384 10.07 4.73 0.470
Jul 151.232 0.032791549 10.05 4.96 0.494
Aug 151.726 0.030790066 10.07 4.67 0.464
Sep 152.190 0.028916896 10.07 4.40 0.437
Oct 152.627 0.029251528 10.06 4.46 0.443
Nov 153.070 0.029603019 10.04 4.53 0.451
Dec 153.521 0.042465678 10.03 6.52 0.650
1994 Jan 154.171 0.031398528 10.04 4.84 0.482
Feb 154.653 0.027818792 10.01 4.30 0.430
Mar 155.083 0.031034972 9.98 4.81 0.482
Apr 155.565 0.032568616 9.97 5.07 0.509
May 156.074 0.034692916 9.97 5.41 0.543
Jun 156.617 0.034858157 9.97 5.46 0.548
Jul 157.165 0.036863406 9.95 5.79 0.582
Aug 157.747 0.038885975 9.97 6.13 0.615
Sep 158.362 0.039443739 9.95 6.25 0.628
Oct 158.990 0.042608173 9.94 6.77 0.681
Nov 159.671 0.042615906 9.93 6.80 0.685
Dec 160.356 0.047054057 9.93 7.55 0.760
<PAGE>
1995 Jan 161.116 0.049480333 9.94 7.97 0.802
Feb 161.918 0.046128402 9.96 7.47 0.750
Mar 162.668 0.051404573 9.96 8.36 0.839
Apr 163.507 0.049666330 9.97 8.12 0.814
May 164.321 0.051232284 9.99 8.42 0.843
June 165.164 0.049518881 9.98 8.18 0.820
Jul 165.984 0.050099413 9.98 8.32 0.834
Aug 166.818 0.050378200 9.99 8.40 0.841
Sep 167.659 0.049663401 9.99 8.33 0.834
Oct 168.493 0.051678273 9.98 8.71 0.873
Nov 169.366 0.049360269 9.99 8.36 0.837
Dec 170.203 0.050061990 10.00 8.52 0.852
1996 Jan 171.055 0.049284736 10.01 8.43 0.842
Feb 171.897 0.044869470 9.99 7.71 0.772
Mar 172.669 0.045891242 9.96 7.92 0.795
Apr 173.464 0.044191954 9.95 7.67 0.771
May 174.235 0.045127720 9.94 7.86 0.791
June 175.026 0.043898073 9.94 7.68 0.773
Jul 175.799 0.045215148 9.94 7.95 0.800
Aug 176.599 0.045318134 9.94 8.00 0.805
Sep 177.404 0.044110226 9.94 7.83 0.788
Oct 178.192 0.045371563 9.95 8.08 0.812
Nov 179.004 0.043586785 9.96 7.80 0.783
Dec 179.787 0.044731266 9.95 8.04 0.808
END 180.595
End NAV $9.95
End Value $1,797.44
T = Average annual total return
(1/9.81)
T = (1,797.44/1,000 ) - 1
T = 6.16%
EXHIBIT 27
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION FOR THE MONEY MARKET PORTFOLIO
EXTRACTED FROM THE DECEMBER 31, 1996
ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 527125533
<INVESTMENTS-AT-VALUE> 527125533
<RECEIVABLES> 596955
<ASSETS-OTHER> 66574
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 527789062
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2917197
<TOTAL-LIABILITIES> 2917197
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 524873780
<SHARES-COMMON-STOCK> 524873780
<SHARES-COMMON-PRIOR> 584976096
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1915)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 524871865
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 36081207
<OTHER-INCOME> 0
<EXPENSES-NET> 1535604
<NET-INVESTMENT-INCOME> 34545603
<REALIZED-GAINS-CURRENT> (1915)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 34543688
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 34545603
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6250634450
<NUMBER-OF-SHARES-REDEEMED> 6329059211
<SHARES-REINVESTED> 18322446
<NET-CHANGE-IN-ASSETS> 60104230
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1064867
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1599099
<AVERAGE-NET-ASSETS> 658737135
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .052
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .052
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION FOR THE SHORT-TERM PORTFOLIO
EXTRACTED FROM THE DECEMBER 31, 1996
ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<SERIES>
<NUMBER> 02
<NAME> SHORT TERM PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 69898509
<INVESTMENTS-AT-VALUE> 69846183
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION FOR THE GOVERNMENT/REPO PORTFOLIO
EXTRACTED FROM THE DECEMBER 31, 1996
ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<SERIES>
<NUMBER> 03
<NAME> GOVERNMENT/REPO PORTFOLIO
<S> <C>
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