<PAGE> 1
--------------------------
PLAN INVESTMENT FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1998
ADMINISTRATOR:
---------------------------------------------------
Health Plans
===================================== ------------
CAPITAL SERVICES
CORP CSC
------------
225 N. Michigan * Chicago, IL 60601 * (312)297-6372
<PAGE> 2
_______________________________________________________________________________
PLAN INVESTMENT FUND, INC.
PRESIDENT'S LETTER
_______________________________________________________________________________
July 27, 1998
Fellow Investors:
On behalf of the Board of Trustees, I am pleased to submit the 1998 Semi-Annual
Report for Plan Investment Fund, Inc. As shown in the accompanying tables, the
Portfolios continued to maintain competitive returns and the highest quality
ratings. However, average assets declined during the first half of 1998. This
is most likely due to the reduced profitability some Blue Cross Blue Shield
Plans are experiencing, as well as Plans reducing their positions in very
short-term maturity securities.
Interest rates remained in a trading range for the first half of 1998, with the
yield of 30-year Treasury Bonds generally below 6%. Despite low unemployment
numbers and news about shortages of skilled workers and wage pressure, inflation
was well under control. Some analysts currently believe the economy is on an
even keel while others are concerned that problems in Asia could lead to a
domestic recession. Reports that the Federal Reserve could lower interest rates
may spur investors to reallocate their funds to a greater weighting in bonds.
Plan Investment Fund investors have been taking advantage of the Government/REPO
Portfolio yields with the 1998 average balance increasing by $40 million over
1997 to $238 million. This Portfolio provides very competitive rates, a one day
average maturity and the highest quality ratings. The Money Market Portfolio
also has a very high quality rating and same day availability of funds with an
average maturity in the 40 to 60 day range. There has been very little activity
in the Short-Term Portfolio; however, last year's extension of the target
maturity to nine months is having a positive impact on the total return of the
Portfolio.
The Plan Investment Fund Portfolios continue to provide Blue Cross Blue Shield
Plans with high quality, tobacco free investment opportunities. We look forward
to serving your investment needs.
Sincerely,
Philip A. Goss
President and Chief Executive Officer
<PAGE> 3
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
COMPARATIVE PERFORMANCE: ANNUALIZED TOTAL RETURN
- ------------------------------------------------------------------------------------------
Periods Ended Three Six One From
June 30, 1998 Months Months Year Inception*
- ------------- ------ ------ ---- ----------
<S> <C> <C> <C> <C>
GOVERNMENT/REPO PORTFOLIO 5.62% 5.63% 5.64% 5.60%
Donoghues Inst. Money Market Avg. 5.30% 5.33% 5.35% 5.31%
Repurchase Agreements 5.61% 5.61% 5.63% 5.59%
MONEY MARKET PORTFOLIO 5.50% 5.53% 5.56% 5.96%
Donoghues Inst. Money Market Avg. 5.30% 5.33% 5.35% 5.76%
Repurchase Agreements 5.61% 5.61% 5.63% 5.89%
SHORT-TERM PORTFOLIO 5.60% 5.66% 5.90% 6.11%
6 Month Treasury Bill 5.40% 5.41% 5.44% 5.85%
1 - 3 Year Treasury Note Index 6.28% 6.19% 6.81% 7.11%
</TABLE>
* Inception dates:
- ------------------
6/01/95 - Government/REPO Portfolio; 3/11/87 - Money Market and Short-Term
Portfolios
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS
- ------------------------------------------------------------------------------------------
Closing Closing
Average Closing Average Average
Portfolio/Month Yield Price Maturity Quality
- --------------- ------- ------- -------- -------
<S> <C> <C> <C> <C>
GOVERNMENT/REPO PORTFOLIO
April 5.47% $1.00 1 Day A1+
May 5.46% $1.00 1 Day A1+
June 5.52% $1.00 1 Day A1+
MONEY MARKET PORTFOLIO
April 5.36% $1.00 49 Days A1+
May 5.37% $1.00 60 Days A1+
June 5.38% $1.00 54 Days A1+
SHORT-TERM PORTFOLIO
April 5.50% $9.97 8.1 Months AAA
May 5.46% $9.97 8.5 Months AAA
June 5.44% $9.97 9.2 Months AAA
</TABLE>
<PAGE> 4
STATEMENT OF NET ASSETS
(Unaudited)
GOVERNMENT/REPO PORTFOLIO
June 30, 1998
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- -------- ------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY OBLIGATIONS 63.2%
- -----------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation
5.85% (7/01/98)
(Cost $175,000,000) $175,000 $175,000,000
------------
- -----------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 37.2%
- -----------------------------------------------------------------------------------------------------------
Hong Kong Shanghai Bank Securities, Inc.
5.60% (7/01/98)
To be repurchased at $10,001,555.56
(Collateralized by $10,000,000 U.S.
Treasury Note, 5.375%; due 1/31/00;
Market Value $10,213,260) 10,000 10,000,000
Morgan Stanley & Co.
6.25%-6.45% (7/01/98)
To be repurchased at $38,106,814.02
(Collateralized by $38,994,070 Federal
National Mortgage Association Bonds
and U.S. Treasury Notes, 3.625% to 8.875%;
due from 9/30/98 to 4/01/37;
Market Value $38,981,264) 38,100 38,100,000
SBC Warburg Dillon Read, Inc.
5.70%-5.90% (7/01/98)
To be repurchased at $55,008,930.56
(Collateralized by $70,134,265 Federal Home
Loan Mortgage Corporation Bonds, Federal
National Mortgage Association Bonds,
Government National Mortgage Association
Bonds and U.S. Treasury Notes, 5.625% to
7.169%; due from 12/31/99 to 1/01/35;
Market Value $56,713,761) 55,000 55,000,000
------------
TOTAL REPURCHASE AGREEMENTS 103,100,000
(Cost $103,100,000) ------------
</TABLE>
<PAGE> 5
STATEMENT OF NET ASSETS
GOVERNMENT/REPO PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF
NET ASSETS VALUE
---------- ------------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES 100.4% $278,100,000
(Cost $278,100,000*)
LIABILITIES IN EXCESS OF OTHER ASSETS (0.4%) (1,081,476)
---------- ------------
NET ASSETS (Applicable to 277,018,524
PCs outstanding) 100.0% $277,018,524
========== ============
NET ASSET VALUE, offering and
redemption price per PC
($277,018,524/277,018,524 PCs) $ 1.00
============
</TABLE>
* Aggregate cost for Federal tax purposes.
See accompanying notes to financial statements.
<PAGE> 6
STATEMENT OF NET ASSETS
(Unaudited)
MONEY MARKET PORTFOLIO
June 30, 1998
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------- ------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT 4.1%
- ----------------------------------------------------------------------------------------------------------
DOMESTIC CERTIFICATES OF DEPOSIT
Chase Manhattan Corp.
5.73% (5/17/99) $ 7,000 $ 6,996,341
First Tennessee Bank
5.65% (3/02/99) 10,000 9,995,982
------------
TOTAL CERTIFICATES OF DEPOSIT 16,992,323
(Cost $16,992,323) ------------
- ----------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 66.5%
- ----------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES 7.3%
Corporate Asset Funding, Inc.
5.50% (8/12/98) 15,000 14,903,750
Corporate Receivables Corp.
5.52% (8/17/98) 15,000 14,891,900
------------
29,795,650
------------
COMMERCIAL PRINTING 3.1%
R.R. Donnelley & Sons
6.10% (7/01/98) 12,700 12,700,000
------------
FINANCE LESSORS 4.3%
IBM Credit Corp.
5.46% (9/28/98) 18,000 17,757,030
------------
HOUSEHOLD AUDIO & VIDEO EQUIPMENT 3.6%
Panasonic Finance Inc.
5.51% (11/03/98) 15,000 14,713,021
------------
</TABLE>
<PAGE> 7
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------- ------------
<S> <C> <C> <C>
LIFE INSURANCE 13.2%
American General Corp.
5.49% (9/18/98) $15,000 $ 14,819,288
Prudential Funding Corp.
5.40% (7/23/98) 20,000 19,934,000
USAA Capital Corp.
5.46% (8/26/98) 19,500 19,334,380
------------
54,087,668
------------
MISCELLANEOUS BUSINESS CREDIT 3.6%
National Rural Utilities Corp.
5.49% (7/09/98) 14,600 14,582,187
------------
PERSONAL CREDIT INSTITUTIONS 4.9%
Ford Motor Credit Corp.
5.45% (8/04/98) 20,000 19,897,055
------------
PETROLEUM REFINING 2.4%
Koch Industries, Inc.
6.25% (7/01/98) 10,000 10,000,000
------------
PIPE LINES 1.7%
Colonial Pipeline Co.
5.52% (10/27/98) 7,000 6,873,346
------------
SECURITY BROKERS & DEALERS 3.6%
Merrill Lynch & Co.
5.51% (10/29/98) 15,000 14,724,500
------------
SERVICES - EQUIPMENT RENT & LEASE 4.3%
International Lease & Finance Corp.
5.47% (10/08/98) 18,000 17,729,235
------------
</TABLE>
<PAGE> 8
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------- ------------
<S> <C> <C> <C>
SHORT-TERM BUSINESS CREDIT 14.5%
American Express Credit Corp.
5.45% (7/29/98) $15,000 $ 14,936,417
Block Financial Corp.
5.56% (9/11/98) 15,000 14,833,200
C.I.T. Group Holdings, Inc.
5.50% (9/29/98) 10,000 9,862,500
Ciesco LP
5.47% (7/24/98) 20,000 19,930,106
------------
59,562,223
------------
TOTAL COMMERCIAL PAPER 272,421,915
(Cost $272,421,915) ------------
- ----------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 18.3%
- ----------------------------------------------------------------------------------------------------------
Goldman Sachs & Co.
5.60% (7/01/98)
To be repurchased at $15,002,333.33
(Collateralized by $23,982,488 Federal
Home Loan Mortgage Corporation Bonds,
6.1875%; due 11/15/23;
Market Value $15,450,000) 15,000 15,000,000
Morgan Stanley & Co.
6.45% (7/01/98)
To be repurchased at $24,804,443.33
(Collateralized by $23,650,000 U.S.
Treasury Note, 8.875%; due on 5/15/00;
Market Value $25,304,554) 24,800 24,800,000
SBC Warburg Dillon Read, Inc.
5.70%-6.00% (7/01/98)
To be repurchased at $35,005,708.33
(Collateralized by $35,215,300 Federal
Home Loan Mortgage Corporation Bonds
and Federal National Mortgage Association
Bonds, 6.00% to 7.00%; due from 3/01/13
to 6/01/28;
Market Value $36,081,319) 35,000 35,000,000
------------
TOTAL REPURCHASE AGREEMENTS 74,800,000
(Cost $74,800,000) ------------
</TABLE>
<PAGE> 9
STATEMENT OF NET ASSETS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------- ------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
VARIABLE RATE OBLIGATIONS 11.4%
- ----------------------------------------------------------------------------------------------------------
BANK NOTES 2.3%
Key Bank National Association
5.64% (7/01/98) $ 9,500 $ 9,500,428
BANKS 3.0%
Banc One Corp.
5.6275% (9/18/98) 12,000 11,999,692
SECURITY BROKERS & DEALERS 6.1%
Bear Stearns Companies, Inc.
5.6687% (8/05/98) 25,000 25,000,000
------------
TOTAL VARIABLE RATE OBLIGATIONS 46,500,120
(Cost $46,500,120) ------------
TOTAL INVESTMENTS IN SECURITIES 100.3% 410,714,358
(Cost $410,714,358*)
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%) (1,328,824)
---------- ------------
NET ASSETS (Applicable to 409,384,824
PCs outstanding) 100.0% $409,385,534
========== ============
NET ASSET VALUE, offering and
redemption price per PC
($409,385,534/409,384,824 PCs) $ 1.00
============
</TABLE>
* Aggregate cost for Federal tax purposes.
See accompanying notes to financial statements.
<PAGE> 10
STATEMENT OF NET ASSETS
(Unaudited)
SHORT-TERM PORTFOLIO
June 30, 1998
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------- ------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS 16.2%
- ------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
6.375% (5/15/99) $ 3,600 $ 3,625,309
6.25% (5/31/99) 1,000 1,006,411
5.375% (2/15/01) 2,380 2,370,694
------------
TOTAL U.S. TREASURY OBLIGATIONS 7,002,414
(Cost $6,970,445) ------------
- ------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY OBLIGATIONS 10.1%
- ------------------------------------------------------------------------------------------------------
Federal Home Loan Bank Bonds
5.58% (3/11/99) 2,000 2,000,320
Federal Home Loan Mortgage Corp.
Gold Balloon
6.50% (7/01/01) 2,336 2,354,379
------------
TOTAL AGENCY OBLIGATIONS 4,354,699
(Cost $4,339,597) ------------
- ------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES 2.3%
- ------------------------------------------------------------------------------------------------------
Ford Credit Motor Trust 95-A
5.90% (10/31/98) 108 107,726
Honda Auto Receivables Grantor Trust 1997-A
5.85% (5/31/99) 897 896,943
------------
TOTAL ASSET BACKED SECURITIES 1,004,669
(Cost $1,001,370) ------------
- ------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT 4.6%
- ------------------------------------------------------------------------------------------------------
Chase Manhattan Bank
5.745% (5/10/99) 2,000 2,001,320
(Cost $1,999,097) ------------
</TABLE>
<PAGE> 11
STATEMENT OF NET ASSETS
SHORT-TERM PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------ ------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 40.6%
- ------------------------------------------------------------------------------------------------------
CHEMICALS 1.5%
Merck & Co., Inc.
6.05% (7/01/98) $ 625 $ 625,000
------------
ENTERTAINMENT 2.4%
Walt Disney
5.42% (7/28/98) 1,045 1,040,681
------------
FINANCE LESSORS 4.5%
General Electric Capital Corp.
5.45% (11/24/98) 2,000 1,955,492
------------
FINANCIAL SERVICES 4.6%
USAA Capital Corp.
5.35% (7/13/98) 1,995 1,991,383
------------
FINANCIAL 4.6%
Cafco C.P.
5.52% (7/14/98) 2,010 2,005,993
------------
FOODS 4.6%
Hershey Foods Corp.
5.60% (7/09/98) 2,000 1,997,511
------------
NATURAL GAS 4.6%
Amoco Corp.
5.40% (7/17/98) 2,000 1,994,960
------------
TELECOMMUNICATIONS 13.8%
Ameritech Corp.
5.46% (7/06/98) 2,000 1,998,483
Bell South Telecommunications
5.70% (7/08/98) 2,000 1,997,783
Lucent Technologies
5.50% (7/15/98) 2,000 1,995,722
------------
5,991,988
------------
TOTAL COMMERCIAL PAPER 17,603,008
(Cost $17,603,680) ------------
</TABLE>
<PAGE> 12
STATEMENT OF NET ASSETS
SHORT-TERM PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF PAR
NET ASSETS (000) VALUE
---------- ------- ------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
MEDIUM TERM NOTES 25.9%
- ------------------------------------------------------------------------------------------------------
AUTOMOBILES 4.6%
General Motors Acceptance Corp.
5.6875% (9/09/98) $ 1,000 $ 999,670
6.20% (12/07/98) 1,000 1,001,810
------------
2,001,480
------------
BANKS 9.3%
FCC National Bank Wilmington, Delaware
6.05% (11/04/98) 2,000 2,000,800
Morgan Guaranty Trust Co.
5.93% (8/31/98) 2,000 1,999,700
------------
4,000,500
------------
FINANCIAL SERVICES 2.8%
Citicorp
6.70% (4/30/01) 1,170 1,192,300
------------
PERSONAL CREDIT INSTITUTIONS 4.6%
Associates Corp. North America
6.125% (11/12/99) 500 501,395
6.375% (6/15/00) 1,500 1,512,150
------------
2,013,545
------------
SECURITIES BROKERS AND DEALERS 4.6%
Merrill Lynch & Co.
6.64% (4/09/99) 2,000 2,011,940
------------
TOTAL MEDIUM TERM NOTES 11,219,765
(Cost $11,203,340) ------------
</TABLE>
<PAGE> 13
STATEMENT OF NET ASSETS
SHORT-TERM PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF
NET ASSETS VALUE
---------- ------------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES 99.7% $ 43,185,875
(Cost $43,117,529*)
OTHER ASSETS IN EXCESS OF LIABILITIES 0.3% 121,683
---------- ------------
NET ASSETS (Applicable to 4,342,485
PCs outstanding) 100.0% $ 43,307,558
========== ============
NET ASSET VALUE, offering and
redemption price per PC
($43,307,558/4,342,485 PCs) $ 9.97
============
* Aggregate cost for Federal tax purposes.
The aggregate gross unrealized appreciation
or depreciation for all securities is as
follows: excess of value over tax cost
$70,063; excess of tax cost over value
$1,717.
</TABLE>
See accompanying notes to financial statements.
<PAGE> 14
STATEMENTS OF OPERATIONS
(Unaudited)
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
GOVERNMENT/REPO MONEY MARKET SHORT-TERM
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------ ----------
<S> <C> <C> <C>
INTEREST INCOME $ 6,602,664 $ 12,489,009 $1,399,217
EXPENSES
Investment advisory fee 234,679 393,461 71,914
Administration fee 59,075 110,604 12,030
Custodian 16,549 23,631 4,897
Audit 5,547 11,359 1,410
Insurance 5,807 10,947 1,190
Legal 4,212 7,143 834
Transfer agent 3,179 3,880 523
Trustee expenses 1,234 2,314 295
Professional services 5,940 2,007 -
Printing 2,111 2,762 431
Service agent - - 50,000
Miscellaneous 505 379 54
Fees waived (220,687) (449) (71,400)
--------------- ------------ ----------
Total Expenses 118,151 568,038 72,178
NET INVESTMENT INCOME 6,484,513 11,920,971 1,327,039
NET REALIZED GAIN ON SECURITIES SOLD - 710 16,077
UNREALIZED APPRECIATION OF SECURITIES - - 4,612
--------------- ------------ ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 6,484,513 $ 11,921,681 $1,347,728
=============== ============ ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT/REPO PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 6,484,513 $ 10,736,237
Net realized gain (loss) on securities sold - -
--------------- ----------------
Net increase in net assets
resulting from operations 6,484,513 10,736,237
--------------- ----------------
DIVIDENDS TO PARTICIPATION
CERTIFICATE HOLDERS:
From net investment income $.027
and $.054 per PC (6,484,513) (10,736,237)
--------------- ----------------
CAPITAL TRANSACTIONS:
Proceeds from sale of 1,521,344,810
and 2,398,408,529 PCs 1,521,344,810 2,398,408,529
Value of 3,051,812 and 2,783,503 PCs
issued in reinvestment of dividends 3,051,812 2,783,503
Cost of 1,446,616,036 and 2,358,336,068
PCs repurchased (1,446,616,036) (2,358,336,068)
--------------- ----------------
Increase (decrease) in net assets derived
from capital transactions 77,780,586 42,855,964
--------------- ----------------
Total increase (decrease) in net assets 77,780,586 42,855,964
NET ASSETS:
Beginning of period 199,237,938 156,381,974
--------------- ----------------
End of period $ 277,018,524 $ 199,237,938
=============== ================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 16
STATEMENT OF CHANGES IN NET ASSETS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 11,920,971 $ 27,767,147
Net realized gain (loss) on securities sold 710 2,417
--------------- ----------------
Net increase in net assets
resulting from operations 11,921,681 27,769,564
--------------- ----------------
DIVIDENDS TO PARTICIPATION
CERTIFICATE HOLDERS:
From net investment income $.027
and $.054 per PC (11,920,971) (27,767,147)
Net capital gains - (502)
Total distributions (11,920,971) (27,767,649)
--------------- ----------------
CAPITAL TRANSACTIONS:
Proceeds from sale of 1,958,710,456
and 4,217,170,475 PCs 1,958,710,456 4,217,170,475
Value of 9,050,969 and 19,203,139 PCs
issued in reinvestment of dividends 9,050,969 19,203,139
Cost of 1,973,001,831 and 4,346,622,164
PCs repurchased (1,973,001,831) (4,346,622,164)
--------------- ----------------
Increase (decrease) in net assets derived
from capital transactions (5,240,406) (110,248,550)
--------------- ----------------
Total increase (decrease) in net assets (5,239,696) (110,246,635)
NET ASSETS:
Beginning of period 414,625,230 524,871,865
--------------- ----------------
End of period $ 409,385,534 $ 414,625,230
=============== ================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 17
STATEMENT OF CHANGES IN NET ASSETS
SHORT-TERM PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,327,039 $ 2,855,386
Net realized gain (loss) on securities sold 16,077 (40,211)
Unrealized appreciation (depreciation)
of securities 4,612 116,061
--------------- -----------------
Net increase in net assets
resulting from operations 1,347,728 2,931,236
--------------- -----------------
DIVIDENDS TO PARTICIPATION
CERTIFICATE HOLDERS:
From net investment income $.273
and $.547 per PC (1,327,039) (2,855,386)
--------------- -----------------
CAPITAL TRANSACTIONS:
Proceeds from sale of 1,323,298
and 924,097 PCs 13,194,097 9,215,049
Value of 100,874 and 233,412 PCs
issued in reinvestment of dividends 1,005,889 2,322,245
Cost of 1,737,015 and 3,533,885
PCs repurchased (17,318,042) (35,148,367)
--------------- -----------------
Increase (decrease) in net assets derived
from capital transactions (3,118,056) (23,611,073)
--------------- -----------------
Total increase (decrease) in net assets (3,097,367) (23,535,223)
NET ASSETS:
Beginning of period 46,404,925 69,940,148
--------------- -----------------
End of period $ 43,307,558 $ 46,404,925
=============== =================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 18
FINANCIAL HIGHLIGHTS
GOVERNMENT/REPO PORTFOLIO
For a Participation Certificate (PC) Outstanding Throughout the Period
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR 6/1/95(1)
ENDED ENDED ENDED THROUGH
6/30/98 12/31/97 12/31/96 12/31/95
---------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income From Investment Operations:
- ---------------------------------
Net Investment Income 0.027 0.054 0.053 0.034
Net Realized Gain (Loss) on Investments 0 0 0 0
-------- -------- -------- --------
Total From Investment Operations 0.027 0.054 0.053 0.034
-------- -------- -------- --------
Less Distributions:
- ------------------
Dividends to PC holders from
Net Investment Income (0.027) (0.054) (0.053) (0.034)
Distributions to PC holders from
Net Capital Gains 0 0 0 0
-------- -------- -------- --------
Total Distributions (0.027) (0.054) (0.053) (0.034)
-------- -------- -------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Return 5.63% (3) 5.57% 5.42% 5.99% (3)
Ratios/Supplemental Data:
- ------------------------
Net Assets, End of Period (000) $277,019 $199,238 $156,382 $119,080
Ratio of Expenses to Average
Net Assets(2) 0.10% (3) 0.10% 0.10% 0.10% (3)
Ratio of Net Investment Income
to Average Net Assets 5.49% (3) 5.44% 5.29% 5.78% (3)
- ---------------------------------------
</TABLE>
(1) Commencement of operations
(2) Without the waiver of advisory and administration fees (see Note C), the
ratio of expenses to average daily net assets would have been .29% for the
six months ended June 30, 1998 and .29%, .29% and .30% for the fiscal
periods ended December 31, 1997, 1996 and 1995, respectively.
(3) Annualized
See accompanying notes to financial statements.
<PAGE> 19
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
For a Participation Certificate (PC) Outstanding Throughout the Period
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
---------- -------- -------- -------- -------- --------
(Unaudited)
<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 0.027 0.054 0.052 0.058 0.041 0.030
Net Realized Gain (Loss) on Investments 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Total From Investment Operations 0.027 0.054 0.052 0.058 0.041 0.030
-------- -------- -------- -------- -------- --------
Less Distributions:
- ------------------
Dividends to PC holders from
Net Investment Income (0.027) (0.054) (0.052) (0.058) (0.041) (0.030)
Distributions to PC holders from
Net Capital Gains 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
Total Distributions (0.027) (0.054) (0.052) (0.058) (0.041) (0.030)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return 5.53% (2) 5.51% 5.38% 5.97% 4.21% 3.07%
Ratios/Supplemental Data:
- ------------------------
Net Assets, End of Period (000) $409,386 $414,625 $524,872 $584,976 $451,367 $474,838
Ratio of Expenses to Average
Net Assets(1) 0.26% (2) 0.25% 0.23% 0.24% 0.26% 0.24%
Ratio of Net Investment Income
to Average Net Assets 5.39% (2) 5.38% 5.24% 5.82% 4.15% 3.02%
- ---------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees (see Note C), the
ratios of expenses to average daily net assets would have been .24% and
.25% for the fiscal periods ended December 31, 1996 and 1995,
respectively.
(2) Annualized
See accompanying notes to financial statements.
<PAGE> 20
FINANCIAL HIGHLIGHTS
SHORT-TERM PORTFOLIO
For a Participation Certificate (PC) Outstanding Throughout the Period
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
---------- -------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.97 $ 9.95 $ 10.00 $ 9.93 $ 10.03 $ 10.05
Income From Investment Operations:
- ---------------------------------
Net Investment Income 0.273 0.547 0.542 0.599 0.440 0.377
Net Realized and Unrealized
Gain (Loss) on Investments - 0.020 (0.050) 0.070 (0.100) (0.009)
--------- -------- -------- -------- -------- --------
Total From Investment Operations 0.273 0.567 0.492 0.669 0.340 0.368
--------- -------- -------- -------- -------- --------
Less Distributions:
- ------------------
Dividends to PC holders from
Net Investment Income (0.273) (0.547) (0.542) (0.599) (0.440) (0.377)
Distributions to PC holders from
Net Capital Gains - - - - - (0.011)
--------- -------- -------- -------- -------- --------
Total Distributions (0.273) (0.547) (0.542) (0.599) (0.440) (0.388)
--------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 9.97 $ 9.97 $ 9.95 $ 10.00 $ 9.93 $ 10.03
========= ======== ======== ======== ======== ========
Total Return 5.66% (3) 5.85% 5.08% 6.92% 3.46% 3.72%
Ratios/Supplemental Data:
- ------------------------
Net Assets, End of Period (000) $ 43,308 $ 46,405 $ 69,940 $ 63,922 $103,240 $186,808
Ratio of Expenses to Average
Net Assets(1) 0.30% (3) 0.30% 0.30% 0.30% 0.30% 0.30%
Ratio of Net Investment Income
to Average Net Assets 5.52% (3) 5.47% 5.43% 6.00% 4.29% 3.74%
Portfolio Turnover Rate(2) 22.4% (3) 79.2% 119.0% 64.8% 47.6% 34.1%
- -----------------------------------------
</TABLE>
(1) Without the waiver of a portion of advisory, service agent and
administration fees (see Note C), the ratios of expenses to average daily
net assets would have been .60% for the six months ended June 30, 1998 and
.57%, .48%, .43%, .37% and .32% for the fiscal periods ended December 31,
1997, 1996, 1995, 1994 and 1993.
(2) Excludes security purchases with a maturity of less than one year.
(3) Annualized
See accompanying notes to financial statements.
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
A. Plan Investment Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end
regulated investment company. The Fund consists of three separate
portfolios, the Government/REPO Portfolio, the Money Market Portfolio and
the Short-Term Portfolio (the "Portfolio(s)"). The Fund is authorized to
issue five billion Participation Certificates ("PCs"), par value $.001
per PC. The Fund presently offers three classes of PCs as follows: the
Government/REPO Portfolio - one billion PCs authorized, the Money Market
Portfolio - two billion PCs authorized and the Short-Term Portfolio - one
billion PCs authorized.
B. Significant accounting policies relating to the Fund are as follows:
Security Valuation - Government/REPO Portfolio and Money Market Portfolio:
Securities are valued under the amortized cost method, which approximates
current market value. Under this method, securities are valued at cost
when purchased and thereafter a constant proportionate amortization of any
discount or premium is recorded until maturity or sale of the security.
Security Valuation - Short-Term Portfolio: Securities for which market
quotations are readily available (other than debt securities with remaining
maturities of 60 days or less) are valued at the most recent quoted bid
price provided by investment dealers. Debt securities with remaining
maturities of 60 days or less are valued on an amortized cost basis (unless
the Board determines that such basis does not represent fair value at that
time).
Securities Transactions and Investment Income - Securities transactions are
recorded on the trade date. Realized gains and losses on investments sold
are recorded on the identified cost basis. Interest income is recorded on
the accrual basis.
Dividends to Participation Certificate Holders - Dividends of net
investment income of the Portfolios are declared daily and paid monthly.
Dividends payable are recorded on the dividend record date. The Portfolios
intend, subject to the use of offsetting capital loss carry-forwards, to
distribute net realized short- and long-term capital gains, if any, once
each year.
Federal Income Taxes - No provision is made for federal taxes as it is each
Portfolio's intention to continue to qualify as a regulated investment
company and to make the requisite distributions to Participation
Certificate Holders which will be sufficient to relieve each Portfolio from
all, or substantially all, federal income and excise taxes. At June 30,
1998, the Short-Term Portfolio had capital loss carry-forwards amounting to
$871,994, $114,232 and $40,211 that expire in 2002, 2004 and 2005
respectively. These loss carry-forwards are available to offset possible
future capital gains of the Short-Term Portfolio.
Repurchase Agreements - Each Portfolio may agree to purchase money market
instruments from financial institutions such as banks and broker-dealers
subject to the seller's agreement to repurchase them at an agreed upon date
and price ("repurchase agreements"). Collateral for repurchase agreements
may have longer maturities than the maximum permissible remaining maturity
of portfolio investments. The seller under a repurchase agreement is
required on a daily basis to maintain the value of the securities subject
to the agreement at not less than the repurchase price. The agreement is
conditioned upon the collateral being deposited under the Federal Reserve
book entry system or held in a separate account by the Fund's custodian or
an authorized securities depository. All repurchase agreements were
entered in on June 30, 1998.
Estimated Maturities - The maturity of collateralized mortgage obligations
and other asset backed securities may vary due to prepayments of principal.
The maturity dates for these securities are estimates based on historic
prepayment factors.
Variable Rate Obligations - For variable rate obligations, the interest
rate presented is as of June 30, 1998 and the maturity shown is the date of
the next interest readjustment.
<PAGE> 22
Management Estimates - The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates.
C. The Fund has entered into agreements for advisory, administrative,
service agent, custodian and transfer agent services as follows:
Government/REPO Portfolio and Money Market Portfolio - BlackRock
Institutional Management Corporation ("BIMC"), formerly known as PNC
Institutional Management Corporation ("PIMC"), an indirectly owned
subsidiary of PNC Bank, serves as the Portfolios' investment advisor and
service agent. As compensation for its services the Portfolios pay BIMC a
fee, computed daily and paid monthly, at the following rate: .20% of the
first $250 million, .15% of the next $250 million, .12% of the next $250
million, .10% of the next $250 million, and .08% of amounts in excess of $1
billion.
Short-Term Portfolio - Neuberger & Berman ("N&B"), a New York limited
partnership, serves as the Portfolio's investment advisor. As compensation
for its services, the Portfolio pays N&B a fee, computed daily and paid
monthly, at the following rate: .30% of the first $50 million, .20% of the
next $50 million, .15% of the next $150 million, and .10% of amounts in
excess of $250 million.
Health Plans Capital Services Corp. ("CSC") serves as the Fund's
administrator and acts generally in a supervisory capacity with respect to
the Fund's overall operations and relations with holders of PCs. As
compensation for its services each Portfolio pays CSC a fee, computed daily
and payable monthly at an annual rate not to exceed .05% of the average
daily net assets of each of the Fund's Portfolios.
PNC Bank acts as custodian of the Fund's assets and PFPC Inc. ("PFPC"), an
affiliate of PNC Bank, acts as the Fund's transfer agent and dividend
disbursing agent. In addition, BIMC serves as the Short-Term Portfolio
service agent. PNC Bank, BIMC and PFPC receive fees from the Fund for
serving in these capacities.
BIMC and N&B have agreed contractually to reduce their advisory fees
otherwise payable to them in 1998 to the extent necessary to reduce the
ordinary operating expenses of the Portfolios individually so that they do
not exceed 0.30 of one percent (0.30%) of each Portfolio's average net
assets for the year. Under these contractual agreements, N&B waived
$40,642 of such fees payable by the Short-Term Portfolio for the period
ended June 30, 1998. BIMC voluntarily waived $28,110 of service agent fees
and CSC voluntarily waived $2,648 of administrator fees payable by the
Short-Term Portfolio during this period. In addition, BIMC voluntarily
waived $337 and $182,801 of advisory fees and CSC voluntarily waived $112
and $37,886 of administrator fees payable by the Money Market Portfolio and
Government/REPO Portfolio, respectively, during this period.
D. At June 30,1998, net assets consisted of:
<TABLE>
<CAPTION>
Government/REPO Money Market Short-Term
Portfolio Portfolio Portfolio
--------------- --------------- -------------
<S> <C> <C> <C>
Capital paid in.................... $ 277,018,524 $ 409,384,824 $ 44,249,572
Accumulated realized gain (loss) on
security transactions............ - 710 (1,010,360)
Net unrealized appreciation of
investments...................... - - 68,346
--------------- --------------- -------------
$ 277,018,524 $ 409,385,534 $ 43,307,558
=============== =============== =============
</TABLE>
E. Short-Term Portfolio purchases and sales of investment securities, other
than short-term investments, were $7,687,300 and $2,739,568,
respectively, and purchases and sales of U.S. Government securities were
$2,992,142 and $1,739,078 respectively, for the period ended June 30,
1998.
<PAGE> 23
ANNUAL MEETING OF PARTICIPATION CERTIFICATE HOLDERS
(Unaudited)
The 1998 Plan Investment Fund, Inc. Annual Meeting of Participation Certificate
holders was held on April 21,1998. At this meeting the Participation
Certificate holders elected the slate of Trustee nominees recommended by the
Board of Trustees and ratified the selection of PricewaterhouseCoopers LLP,
formerly Coopers & Lybrand LLP, as the independent certified public accountants
for the fiscal year ending December 31, 1998. A total of 476,543,200.567
Participation Certificates, representing 74.8% of the Participation Certificates
eligible to be voted at the meeting, were voted as follows:
For Against Abstain
___ _______ _______
<TABLE>
<S> <C> <C> <C>
Election of Trustee nominees 476,543,200.567 0 0
Ratification of independent
certified public accountants 476,543,200.567 0 0
</TABLE>
<PAGE> 24
- --------------------------------------------------------------------------------
PLAN INVESTMENT FUND, INC.
225 Michigan
Chicago, Illinois 60601
(312) 297-6372
TRUSTEES
--------
HOWARD F. BEACHAM III DAVID M. MURDOCH
President and Executive Vice President
Chief Operating Officer Blue Cross and Blue Shield
Blue Cross and Blue Shield Association
of Central New York, Inc.
M. EDWARD SELLERS
PHILIP A. GOSS President and
President and Chief Executive Officer
Chief Executive Officer Blue Cross and Blue Shield
Plan Investment Fund, Inc. of South Carolina
Health Plans Capital
Services Corp. THOMAS J. WARD
President and
STEVEN L. HOOKER Chief Executive Officer
Chief Financial Officer and Blue Cross of Northeastern
Treasurer Pennsylvania
The Regence Group
SHERMAN M. WOLFF
RONALD F. KING Senior Vice President, Corporate
President and Resources and
Chief Executive Officer Chief Financial Officer
Blue Cross and Blue Shield Health Care Service Corporation
of Oklahoma
INVESTMENT ADVISORS
-------------------
GOVERNMENT/REPO PORTFOLIO SHORT-TERM PORTFOLIO
AND MONEY MARKET PORTFOLIO --------------------
-------------------------- Neuberger & Berman
BlackRock Institutional Management Corporation New York, New York
Wilmington, Delaware
