________________________________________________

                                 FORM 10-KSB405

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                ________________________________________________

               [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the Fiscal Year Ended March 31, 1998

               [___] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

              For the transition period from _________to ________.

                            Commission File No. 08117
                ________________________________________________

                        CHURCH LOANS & INVESTMENTS TRUST
                 (Name of small business issuer in its charter)

               Texas                                   75-6030254
    _______________________________                ___________________
    (State or other jurisdiction of                  (IRS Employer
    incorporation or organization)                 Identification No.)

         5305 I-40 West, Amarillo, Texas                  79106
    ________________________________________            __________
    (Address of principal executive offices)            (Zip Code)

                                 (806) 358-3666
                           ___________________________
                           (Issuer's telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities  registered  pursuant to Section 12(g) of the Exchange Act: Shares of
Beneficial Interest

                ________________________________________________

     Check whether the issuer (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                               Yes [ X ] No [___]

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained, to the best of registrant's
<PAGE>



knowledge,  in  definitive  proxy  or  information  statements  incorporated  by
reference of part III of this Form 10-KSB or any  amendment to this Form 10-KSB.
[ X ]

     Issuer's revenues for its most recent fiscal year: $3,988,713.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant is $15,110,625.10 as of June 8, 1998.

     The number of shares  outstanding of each of the issuer's classes of common
stock, as of March 31, 1998 is 7,007,402 shares of beneficial interest.

                      Documents Incorporated by Reference:

     Portions of the Annual Report to Shareholders  for the year ended March 31,
1998, are incorporated by reference into Parts II and III.

     Exhibits  3(a) and 3(b)  included  in Form S-11 under File No.  2-51235 are
incorporated by reference into Part III.

                                      -2-
<PAGE>




                                TABLE OF CONTENTS
                        FORM 10-KSB ANNUAL REPORT - 1998
                        CHURCH LOANS & INVESTMENTS TRUST

                                                                      Page
                                                                      ____
        PART I

             Item 1:  Description of Business ................          4
             Item 2:  Description of Properties ..............          6
             Item 3:  Legal Proceedings ......................          6
             Item 4:  Submission of Matters to a Vote of
                       Security Holders ......................          6


        PART II

             Item 5:  Market for Common Equity
                       and Related Stockholder Matters .......          7
             Item 6:  Management's Discussion and Analysis or
                       Plan of operation .....................          8
             Item 7:  Financial Statements ...................         13
             Item 8:  Changes in and Disagreements with
                       Accountants on Accounting and
                       Financial Disclosure ..................         14


        PART III

             Item 9:  Directors, Executive Officers, Promoters
                       and Control Persons; Compliance with
                       Section 16(a) of the Exchange Act .....         14
             Item 10: Executive Compensation .................         15
             Item 11: Security Ownership of Certain Beneficial
                       Owners and Management .................         16
             Item 12: Certain Relationships and Related
                       Transactions ..........................         16
             Item 13: Exhibits and Reports on Form 8-K .......         17

                                      -3-
<PAGE>

                                     PART I

Item 1: DESCRIPTION OF BUSINESS

Church Loans & Investments Trust ("the Trust") is a real estate investment trust
organized under the laws of the State of Texas in March 1963. Although the Trust
has the  authority to engage in the  business of buying,  selling and leasing of
real  estate,  the Trust  has  heretofore  restricted  its  business  activities
primarily  to making  loans to churches and other  nonprofit  organizations  and
assisted  living  centers  which are secured by a first  mortgage on real estate
owned by such borrowers.

The period of duration of the Trust, unless dissolved in accordance with law, or
by the consent of the owners of shares of beneficial  interest in the Trust,  is
perpetual.  The Trust may be dissolved by the affirmative  vote of not less than
two-thirds of the owners of outstanding  shares of the Trust.  Owners of Secured
Savings  Certificates,  a debt instrument  issued by the Trust,  have no vote in
regard to any activities of the Trust, including dissolution.

The control and management of the Trust properties,  and all powers necessary or
appropriate  to  effect  any and all of the  purposes  for  which  the  Trust is
organized, is vested in the Board of Trust Managers. All managers are members of
a congregation of the Church of Christ.

The  number of shares of  beneficial  interest  in the Trust  which the Trust is
authorized to issue is unlimited.

The Trust is  qualified  as a "real  estate  investment  trust"  under  Sections
856-858 of the Internal  Revenue Code of 1986 as amended (the "Internal  Revenue
Code" or "Code").  It is the  intention of the Trust to continue to qualify as a
real estate investment trust under the Code.

The Trust  maintains  an office  located at 5305 I-40 West,  Amarillo,  TX 79106
(telephone 806/358-3666).

As mentioned  above,  the Trust is  primarily  engaged in the business of making
mortgage loans to churches and other nonprofit organizations and assisted living
centers.  The  Declaration  of Trust  restricts the  investments of the Trust to
loans  secured by a first  mortgage,  deed of trust or other lien  covering real
property with the amount of such loans not to exceed 66 2/3% of the value of the
real  property  securing  such loan as  determined  by a  competent  independent
appraiser.  Although  the Trust has been  primarily  in the  business  of making
long-term  mortgage  loans,  during  the past  several  years  it has also  been
actively involved in making short-term  interim or construction loans to finance
the construction of

                                       -4-
<PAGE>

church  buildings,  the purchase of real estate,  or the refinancing of existing
indebtedness. Most, if not all, of the interim loans presently being made by the
Trust are  associated  with  bond  offerings  of  churches  and other  nonprofit
organizations.  These interim loans are scheduled to be repaid from the proceeds
of the bond offerings.

The Trust is not limited to the location of the  property  securing any loans in
which it may invest and seeks to spread its  investments  in areas of the United
States where favorable yields prevail.

As of March 31, 1998, the Trust has 129 permanent and interim mortgage loans and
investments in church bonds having a principal balance of $36,159,738,  with the
average principal amount thereof being $280,308.05.  The interest rates on these
loans vary from 7.5% to 17% per annum with the weighted average interest rate of
mortgage  loans and church bonds being  10.95% per annum at March 31, 1998.  The
original  terms of these  loans  vary  from one year to thirty  years,  with the
majority being for a term of twenty years.

During the fiscal year of the Trust ending March 31, 1998, the net income of the
Trust was  $2,226,533,  as compared to $2,126,758 in fiscal 1997, an increase of
4.69%.  The  increase  in net  income of the Trust was due to  several  factors,
including (a) an increase in net interest  income of the Trust;  (b) an increase
in income  realized  from loan  purchase  discounts;  and (c) an increase in the
average annual interest rate on loans and church bonds held by the Trust.

The net income of the Trust for each of the quarters  during  fiscal 1998 was as
follows:    first    quarter-$471,192;    second   quarter-   $569,632;    third
quarter-$588,876; and fourth quarter-$596,833.

The operational  expense of the Trust increased from $561,527 during fiscal 1997
to  $698,138  in  fiscal  1998.  The  operational  expenses  of the  Trust  were
approximately  17.50% of its gross  income for the year ended  March 31, 1998 as
compared to 14.62% for the year ended March 31, 1997. The operational expense of
the Trust  included  general and  administrative  expenses and  compensation  to
members of the Board of Trust Managers.

During  fiscal 1998,  the Trust  advanced  loan  proceeds of  $23,870,358  on 42
different  loans.  Most,  if not all, of such loans bear  interest at a variable
rate  varying  from 1.5% to 2% per annum in excess of the prime rate of interest
published  by the Wall  Street  Journal  and known as the "Wall  Street  Journal
Prime."

During  fiscal 1998,  the Trust  employed a total of 4 full time  employees  and
employed, as needed, one additional part-time employee.

                                       -5-
<PAGE>

The business  conditions in which the Trust operates has become more competitive
in the past fiscal year as more and more banks are  re-entering  the business of
making loans to churches,  especially  the more  desirable,  less risky,  church
loans.  If this trend  continues,  the rates and fees which the trust can charge
may decrease.  However,  loan demand  remains good as evidenced by the number of
loan  requests  received  by the  Trust  and  the  number  of  loan  commitments
outstanding as of March 31, 1998.

Item 2: DESCRIPTION OF PROPERTY

The Trust  maintains as its only place of business  its offices  located at 5305
I-40  West,  in  Amarillo,  Texas.  Such  building  is owned by the Trust and is
occupied  solely by the  Trust.  There is no debt owed by Trust in regard to its
real property.

The real  properties  of the  Trust,  excluding  real  estate  acquired  through
foreclosure,  are not a significant portion of the Trust's assets,  representing
less than 1% of the Trust's total assets.

As previously mentioned,  the Trust's primary business is the making of mortgage
loans to churches and other nonprofit organizations and assisted living centers.
The Declaration of Trust restricts the investments of the Trust to loans secured
by a first  mortgage,  deed of trust,  or other lien covering real property with
the amount of such loans not to exceed 66 2/3% of the value of the real property
securing  such loan.  The  Declaration  of Trust may not be amended  without the
affirmative  vote of  two-thirds  (2/3 rds) of the  Certificates  of  Beneficial
Interest  entitled to vote.  The Board of Trust  Managers'  general policy is to
limit  investment  of Trust  assets  in any one  mortgage  loan to not more than
$2,000,000.  All such investment in mortgage loans is for the purpose of earning
income for the Trust.

Due to several  foreclosures of nonperforming loans, the Trust holds title or an
interest in the title to four  properties  which are  presently  for sale by the
Trust.  These properties are located in San Antonio,  Texas,  Colorado  Springs,
Colorado, Sedona, Arizona and Decatur, Georgia.

Item 3: LEGAL PROCEEDINGS

None

Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

                                       -6-

<PAGE>

                                     PART II

Item 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market Information

There is no  established  public  trading  market for the  shares of  beneficial
interest of the Trust. During fiscal 1998 a total of 147,328 shares were sold in
the secondary  market at prices ranging from $2.20 to $2.75 per share.  The last
sale  during the fiscal year was at $2.25 per share.  During  fiscal year 1997 a
total of 126,800 shares were sold in the secondary market at prices ranging from
$2.20 to $3.00 per share.

The range of high and low bid information  for shares of beneficial  interest of
the Trust for each quarter within the last two fiscal years is as follows:


                  Quarter           Fiscal 1998   Fiscal 1997
                  -------            High    Low   High   Low
                                    _____   ____  ______ _____
                  April-June .....  $2.30  $2.25  $3.00  $2.25
                  July-September .   2.75   2.25   2.30   2.25
                  October-December   2.40   2.25   2.50   2.25
                  January-March ..   2.65   2.25   2.40   2.20

The source of the above information is the Trust's own records. The Trust serves
as the Transfer Agent for its own shares.

(b) Holders

At March 31, 1998 there were 2,720 shareholders of the Trust.

(c) Dividends

Cash dividends on all outstanding shares of beneficial interest in the Trust are
declared twice annually, for the 3 month period ending March 31, and the 9 month
period ending December 31. In fiscal 1997 the Trust paid a cash dividend of $.32
per  share.  In fiscal  1998 the Trust paid a total  cash  dividend  of $.31 per
share.

                                       -7-
<PAGE>

Item 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS--1998 COMPARED TO 1997

During the fiscal year ended  March 31,  1998,  interest  income and fees of the
Trust increased by $147,507 (3.84%) over the previous fiscal year. Such increase
was attributable to several factors,  including (a) a decrease in non-performing
loans; (b) an increase in income realized from loan purchase  discounts;  (c) an
increase in the average  annual  interest rate on loans and church bonds held by
the  Trust;  and (d) an  increase  in the  interest  earned  by the Trust on its
temporary  investments.  The  decrease  in  non-performing  loans  resulted in a
decrease in the interest income that would have been recorded under the original
terms of  nonperforming  loans and church bonds from $389,000 for the year ended
March 31, 1997 to  $339,000  for the year ended  March 31,  1998,  a decrease of
$50,000.  Income from the realization of loan discounts from loan purchases also
increased  from  $166,457  for the year ended March 31, 1997 to $236,512 for the
year ended March 31, 1998, an increase of $70,055.  The average annual  interest
rate on loans and church  bonds held by the Trust  increased  from  10.82% as of
March 31, 1997 to 10.95% as of March 31, 1998.  The increase in interest  income
caused by the increase in the average  annual  interest rate on loans and church
bonds held by the Trust was further stimulated by the net increase in the amount
of total performing  mortgage loans and interim  construction  loans held by the
Trust. Although,  there was a decrease in the amount of performing interim loans
held by the Trust from  $12,133,111  as of March 31, 1997 to  $10,732,915  as of
March 31, 1998,  there was an increase in performing  mortgage  loans during the
recent fiscal year from  $19,177,849  as of March 31, 1997 to  $22,165,629 as of
March 31, 1998. Therefore, the total performing mortgage loans, church bonds and
performing  interim   construction  loans  held  by  the  Trust  increased  from
$31,310,960  as of March 31, 1997 to $32,898,544 as of March 31, 1998. The Trust
also  experienced  an increase in its interest  earned on temporary  investments
from $52,595 as of March 31, 1997 to $62,705 as of March 31,  1998,  an increase
of 19.22%.

In fiscal  1998,  the average  aggregate  amount of total debt  outstanding  was
$274,559 less than in fiscal 1997.  Furthermore,  interest expense  decreased by
$15,623. Such decrease was primarily due to a decrease in the debt of the Trust.
Such  decrease was somewhat  offset by an increase in the Trust's cost of funds.
The  approximate  weighted  average  annual  interest  rate  upon the  aggregate
outstanding  debt increased from 7.12% during fiscal 1997 to 7.26% during fiscal
1998.

The net  income of the  Trust  for 1998 was  $2,226,533  ($.32  per  share),  an
increase of $99,775  (4.69%) from the previous  fiscal year.  Such  increase was
primarily  attributable  to an increase in net interest income in fiscal 1998 as
compared  to fiscal  1997 as  discussed  above.  Dividends  related to 1998 were
$2,242,369 or $.32

                                       -8-
<PAGE>

per share.  Dividends  are based on taxable  income which varies from net income
reported  in  the  financial   statements   because  of  temporary   differences
(differences  between the tax basis of an asset or  liability  and its  reported
amount in the  financial  statements  that will result in taxable or  deductible
amounts in future years).  Future dividends may be less than net income reported
in the financial statements because of variances in these temporary differences.

During fiscal 1998,  the prime  interest rate remained at 8.50%  throughout  the
year.  Should the prime interest rate decrease  during fiscal 1999, the interest
expense of the Trust  will  generally  decrease  and the net income of the Trust
will in turn generally increase.  Should the prime interest rate increase during
fiscal 1999, the interest  expense of the Trust will generally  increase and the
net income of the Trust will in turn generally decrease.

Payments  received on the interim and  permanent  loan  portfolio and the church
bonds  held by the  Trust  increased  from  $14,921,586  during  fiscal  1997 to
$31,194,006  during  fiscal  1998,  an increase of 109.05%.  This  increase  was
attributable  to: (a) an increase in interim  loans made by the Trust during the
year ended  March 31,  1998;  and (b) the  pay-off  prior to maturity of several
significant mortgage loans.

During fiscal 1998, the Trust foreclosed on three nonperforming loans with total
principal   balances  of   approximately   $1,360,000.   One  loan   constituted
approximately $976,000 of the total and was secured by an assisted living center
located in Sedona,  Arizona. The Trust leased this property to a third party and
recognized  approximately  $77,000  in  other  income  from the  rental  of such
property.  The recorded loan balance of all these loans  approximated fair value
of the properties securing such loans. Presently,  the Trust is actively seeking
disposition of the properties.

LIQUIDITY AND CAPITAL RESOURCES

The Trust is engaged  primarily in the business of making  permanent and interim
loans to churches and other  non-profit  organizations,  and to other borrowers,
including  businesses  engaged in the building and operation of assisted  living
centers.  At March 31, 1998, the Trust had five loans to assisted living centers
which totaled approximately $8,063,000.  Three of these loans were to affiliated
borrowers totaling  approximately  $7,230,000.  In addition,  the Trust had four
loan  commitments  outstanding  as of March 31,  1998 for the  construction  and
financing  of  assisted  living  centers  in the  total  approximate  amount  of
$7,845,000.  The assets of the Trust primarily consist of its loan portfolio and
its office building and facilities. The operational expense of the

                                       -9-
<PAGE>

Trust is comprised of the maintenance of its office building, the payment of the
salaries  of its  management  and  clerical  staff and the payment for legal and
accounting  services.  Substantially all of the Trust assets are invested in the
permanent  and interim  loans made by the Trust.  The only  potential  liquidity
problems  of the Trust are  related to the timely  and proper  repayment  by the
Trust of the  leveraged  funds it has  borrowed  to make  loans in excess of its
capital and the ability to fund loan commitments  which totalled  $14,275,000 at
March 31, 1998. All of the indebtedness of the Trust is generally  classified as
short term having  maturities  ranging from "on demand" to maturities  repayable
over various periods extending through 2000.

The annual  maturities upon all debt obligations of the Trust  outstanding as of
March  31,  1998  for  the  next  three  fiscal  years  are:   1999-$11,360,157;
2000--$2,085,377;  and 2001-$1,329,000. These debt obligations primarily consist
of the Trust's bank line of credit,  Master Note  Agreements and Secured Savings
Certificates  ("Certificates")  which have been previously  issued by the Trust.
Certificates  outstanding  as of March 31, 1998 that will mature during the next
three fiscal years are: 1999--$3,649,446; 2000- $2,085,377; and 2001-$1,329,000.

At March 31, 1998 loans to the Trust under Master Note  Agreements  which are in
effect demand notes total  $4,910,711.  In the past,  the Trust has utilized its
bank line of  credit,  principal  paid to the Trust  upon its  outstanding  loan
portfolio,  and the proceeds  received from the sale of Certificates in order to
meet its maturing obligations.

At March 31,  1998,  the  balance  which could be borrowed by the Trust upon its
bank line of credit was  $12,200,000.  The  principal  payments  scheduled to be
received by the Trust upon its loan  portfolio  for the years  ending  March 31,
1999, 2000 and 2001 are $13,630,826,  $1,655,727, and $1,574,204,  respectively.
Assuming all of these scheduled principal payments are received, these payments,
together with the balance  available to Church Loans on its bank line of credit,
would  allow  Church  Loans  to  have  sufficient  funds  to meet  its  maturing
obligation  and fund loan  commitments  without the  necessity  for Church Loans
having to sell any additional Certificates or borrow funds from other sources.

During fiscal 1998 and 1997 the Trust sold Certificates in the principal amounts
of $3,314,121 and $2,648,579,  respectively. Due to the cost of registration and
of sales of such Certificates,  the cost of these funds are normally higher than
the cost of borrowing  from bank sources or master notes.  Therefore,  the Trust
discontinued   the   registration  of  Certificates  and  ceased  the  sales  of
Certificates  as of July 16,  1997.  The Trust also  obtained an increase in its
bank line of credit from $10,000,000 to $15,000,000 effective September 1, 1997.
Based upon the success of the Trust to obtain  borrowings in the past, the Trust
is confident that,

                                      -10-
<PAGE>

should it be  necessary,  it will be able to register and sell  Certificates  or
obtain  additional  bank  financing in the future in sufficient  amounts for the
Trust to timely meet all of its obligations.

Should all the scheduled  principal payments upon loans made by the Trust not be
received,  and should the Trust be unable to borrow  against its line of credit,
and should  borrowings from other sources not be available it would be necessary
for the Trust to sell a portion of its mortgage  loan  portfolio in order for it
to meet all of its  financial  obligations.  At March 31,  1998,  the  principal
balance of the loan and church bond portfolio of the Trust was $35,390,639.  The
weighted  average  interest rate on loans and church bonds was 10.95% per annum.
In view of the normal  marketability  of  conventional  loans,  the Trust  would
probably be required to discount the great  majority of these loans in order for
them to be  attractive  for  purchase.  The  principal  amount of these loans if
discounted to yield a weighted  average  interest rate of 12%, 14% and 16% would
be  $32,293,958,  $27,680,536,  and  $24,220,469,   respectively.  There  is  no
assurance  that the  Trust  would be able to sell  all,  or a  portion  of,  its
portfolio  of loans,  in which  event,  it would be  necessary  for the Trust to
secure a loan,  or  loans,  from a lender  in  order  for the  Trust to meet its
financial  obligations.  There is no  assurance  that the Trust would be able to
secure a loan in such instance.  The Trust has sold only one of the loans in its
mortgage loan portfolio and therefore has limited experience in this area.

Principal payments scheduled to be received by the Trust upon its permanent loan
portfolio  during the years ending March 31, 1999, 2000 and 2001, if not used to
fund new loan commitments,  would be used to reduce the outstanding indebtedness
of the Trust.  Should the Trust use the  payments  of  principal  which shall be
received upon its loan  portfolio to reduce its  outstanding  indebtedness,  the
interest  expense of the Trust will  decrease.  In such  instance,  whether  the
decrease in the interest  income will exceed,  or be less than,  the decrease in
the interest  expense will largely be dependent  upon the prime rate of interest
prevailing  at such time due to the fact that the  interest  to be earned by the
Trust upon its mortgage loan  portfolio is generally  based upon a fixed rate of
interest or a variable rate of interest that  periodically  reprices,  while the
interest  to be paid by the Trust upon its  outstanding  debts is  directly,  or
indirectly, tied to the prime rate of interest charged by major domestic banks.

As of March 31, 1998, a substantial  portion of the promissory  notes evidencing
the  loans  made by the Trust  have  been  pledged  to  secure  its  outstanding
indebtedness.  At March 31, 1998  promissory  notes in the  principal  amount of
$7,085,080  had been pledged to secure  Certificates  which had been  previously
sold by the Trust. The required  collateral for these Certificates (based on the
ratio of 1.0 to 1 for Certificates in Series O) was $7,063,823, leaving an

                                      -11-
<PAGE>

excess of  promissory  notes which have been pledged by the Trust to secure said
Certificates of $21,257.  Additionally,  promissory  notes totalling  $5,025,556
were  pledged  against  the bank  line of credit  which had a total  outstanding
balance  of  $2,800,000.   The  required  collateral  for  this  bank  loan  was
$3,080,000,  leaving an excess of  promissory  notes which have been  pledged to
secure  said bank notes of  $1,945,556.  These  excess  promissory  notes may be
reassigned by the Indenture Trustee or bank to the Trust to be sold in order for
the Trust to meet its financial obligations. Should it be necessary in order for
the Trust to meet its  financial  obligations,  these excess notes  amounting to
$1,966,813 and other additional  promissory  notes in the approximate  amount of
$23,280,003 (for a total amount of $25,246,816) would be available to be sold by
the Trust to meet its financial obligations.  Should the excess promissory notes
be  assigned  by the  Indenture  Trustee  or bank  to the  Trust  as  heretofore
described,  all outstanding  Certificates sold by the Trust and the bank line of
credit would  continue to be secured by the required  ratio of notes  pledged to
the principal balance of these  Certificates and the bank line of credit.  There
is no  assurance  that the Trust  would be able to sell all,  or any  portion of
these notes.

Cash flows from  operating  activities  consists  primarily  of net income.  The
primary  components  of net income are  interest  income and  expense.  Interest
income  should  continue  to be the main source of cash  provided  by  operating
activities;  however,  the  availability of this cash flow is dependent upon the
ability of the  borrowers to repay loans.  Although  there was a decrease in the
amount of non-performing  loans as of March 31, 1998 compared to March 31, 1997,
management  does not  expect  material  changes  in such loans in the near term.
Accordingly,  cash provided by operating  activities has been and is expected to
be a relatively stable source of cash flow.

Cash flows from investing  activities  results  primarily from investment in and
payments received on mortgage and interim construction loans and church bonds.

Cash flows  from  financing  activities  relate  primarily  to the  payments  on
Certificates  and  borrowings  and  payments  on notes  payable  and the line of
credit.  Borrowings  are made as funds are  needed to make  loans or as  current
obligations become due. Based upon the success of the Trust to obtain borrowings
in the past, the Trust is confident that it will be able to obtain borrowings in
the future in sufficient  amounts,  along with payments to be received on loans,
to timely meet its obligations.  Furthermore,  the Trust is confident that if it
decides to register additional  Certificates in the future it would have similar
success in selling the Certificates as it has had in the past.

                                      -12-
<PAGE>

INFLATION

At March 31, 1998, the weighted  average  interest rate on the mortgage loan and
church  bond  portfolio  of the Trust was  10.95% per annum  while the  weighted
average  interest  rate upon all  borrowings  of the Trust was 7.44% per  annum.
Although a majority of the loans  constituting  the loan  portfolio of the Trust
have been made at  variable  rates of interest  that  generally  reprice  either
daily, annually, or otherwise periodically,  a portion of the loans constituting
the  Trust's  loan  portfolio  have been  made at fixed  rates of  interest  and
therefore are not subject to being increased or decreased during the term of the
loan.  All  of  the   indebtedness  of  the  Trust,   other  than  the  existing
Certificates,  is  either  directly  or  indirectly  tied to the  prime  rate of
interest  charged by major  banking  institutions  and  therefore  is subject to
fluctuation.  During periods of inflation, the prime rate of interest charged by
major  banking  institutions,  as well as the interest rate or cost of borrowing
money from any lender, generally increases. Consequently, during an inflationary
period the  interest  expense of the Trust would  increase.  Since the  interest
income of the Trust would not  increase as rapidly,  an increase in the interest
expense  of the Trust  would  decrease  the net  income of the  Trust.  However,
interest  income should  subsequently  increase as variable rate loans  reprice.
Should the amount of the loans and the amount of the  indebtedness  of the Trust
remain  constant,  and  should  the  weighted  average  interest  rate  upon the
indebtedness increase to approximately 27.00% per annum, the interest income and
the interest expense of the Trust would be substantially equal.

YEAR 2000 ISSUES

The Trust is in the process of addressing the possible  exposures related to the
impact of the Year 2000. Management does not believe that the cost of making the
Trust's  hardware  and  software  Year 2000  compliant  will be  material to the
Trust's financial condition in any single year.

Item 7: FINANCIAL STATEMENTS

Financial  Statements  at March 31, 1998,  and 1997 and for each of the years in
the two-year  period ended March 31, 1998,  are  incorporated  by reference from
Pages 17 through 32 of the 1998 Annual Report to Shareholders.

The report of independent  auditors with respect to the financial  statements at
March 31, 1998, and 1997 and for each of the years in the two-year  period ended
March 31,  1998 is  incorporated  by  reference  from Page 16 of the 1998 Annual
Report to Shareholders.

                                      -13-
<PAGE>

Item  8:  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

None

                                    PART III

Item 9:  DIRECTORS  AND  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

(a) Board of Trust Managers.  The following  information is furnished as to each
individual  who now  serves as a member of the  Board of Trust  Managers  of the
Trust:

B. R.  McMorries,  age 71, is a  consulting  engineer.  He has served as a Trust
Manager since 1963. He serves as Chairman of the Board of Trust Managers.

Foy W.  Shackelford,  age 83, is a  retired  dentist.  He has  served as a Trust
Manager  since 1963.  Mr.  Shackelford  has resigned as a member of the Board of
Trust Managers effective with the convening of the Trust's annual  shareholder's
meeting on July 17, 1998. To the knowledge of the Trust, Mr.  Shackelford has no
disagreements  with the Trust on any matter relating to the Trust's  operations,
policies or practices.

Larry Brown,  age 55, is the  President of Larry Brown  Realtors,  Inc. and is a
licensed  realtor.  He has served as a Trust  Manager  since 1981.  He serves as
Secretary of the Board of Trust Managers.

Jack R. Vincent, age 68, is engaged in farming and ranching  operations.  He has
served as a Trust Manager since 1989.

Robert E. Martin, age 48, is the President/CEO of Santa Fe Federal Credit Union.
He has served as a Trust Manager since 1990. He serves as  Vice-Chairman  of the
Board of Trust Managers.

Steve  Rogers,  age 50, is the  President  of Steve  Rogers  Co., a real  estate
appraisal firm. He has served as a Trust Manager since 1990.

Mike  Bahn,  age 54, is the  President  of  Amarillo  Blueprint  Co.,  an office
equipment  and supply and  reproduction  services  business.  He has served as a
Trust Manager since May, 1997.

Terry  Hays,  age 47,  is the  Information  System  Manager  for the law firm of
Perdue,  Brandon,  Fielder,  Collins  and Mott.  Pursuant  to the By-Laws of the
Trust,  the Board of Trust  Managers  appointed  Mr.  Hays to the Board of Trust
managers at its February 1998 meeting.

                                      -14-
<PAGE>

(b)  Executive  Officers.  The  following  information  is  furnished as to each
individual  who now  serves  as an  executive  officer  of the  Trust who is not
mentioned under "Board of Trust Managers" above:

M. Kelly Archer,  age 46, serves as Manager of  Operations  and Chief  Financial
Officer of the Trust. As such Mr. Archer  functions as the Executive  Officer of
the Trust. Mr. Archer has held this position for 16 years.

Item 10: EXECUTIVE COMPENSATION

(a) Executive Officers:

The following table sets forth certain information  regarding  compensation paid
during each of the Trust's  last three  fiscal  years to the Trust's  Manager of
Operations  (CEO).  The  Trust has no other  executive  officers  whose  salary,
bonuses and other  compensation  earned during fiscal 1998 exceeded $100,000 for
services rendered in all capacities.

                                         Annual Compensation
                                _____________________________________
         Name and Principal     Fiscal                   Other Annual
              Position           Year  Salary    Bonus   Compensation
         _____________________  _____  _______   _____   ____________

         CEO-M. Kelly Archer     1998 $107,133     0        $6,036
         Manager of              1997  101,267     0         6,520
         Operations              1996  110,337     0         6,665

(b) Trust Managers' Compensation:

The Board of Trust  Managers  of the Trust were paid  $46,700 in cash as a group
during the last fiscal year for services as Trust Managers.  The Chairman of the
Board of Trust Managers, B. R. McMorries,  is paid $500 per month for serving in
such  capacity.  The remaining  members of the Board of Trust  Managers are paid
$300 per month for serving as a member of the board. All Trust Managers are paid
an additional $100 per board or committee meeting attended. In addition, a Trust
Manager  receives  $200.00 per day for their  services when out of town on trust
business.  This is done on a very  limited  basis to inspect the  collateral  to
secure a prospective loan.

The  members  of the Board of Trust  Managers  of the  Trust  are not  otherwise
employed or compensated by the Trust.

                                      -15-
<PAGE>



Item 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) The  following  table  indicates  the  persons  known  by the  Trust  to own
beneficially  more than 5 percent of the shares of  beneficial  interest  in the
Trust:

              Name and Address of       Amount of and Nature            Percent
                Beneficial Owner       of Beneficial Ownership          of Class
              ___________________      _______________________          ________

                    None                       None                       None

(b) The following table  indicates the number of shares of beneficial  ownership
interest  in the  Trust  owned  by the  Board of Trust  Managers  and  Executive
Officers, individually and as a group:

              Name and Address of       Amount of and Nature            Percent
                Beneficial Owner       of Beneficial Ownership          of Class
         _______________________________________________________________________

                B. R. McMorries                299,477                    4.273%

                Foy W. Shackelford              22,909                    0.327%

                Larry Brown                     35,327                    0.504%

                Jack R. Vincent                  9,576                    0.137%

                Robert E. Martin                 3,012                    0.043%

                Steve Rogers                     1,300                    0.019%

                Mike Bahn                        1,650                    0.023%

                Terry Hays                         304                    0.004%

                M. Kelly Archer                 86,919                    1.240%
                                               _______                    ______
             All Trust Managers and
               Executive Officers              460,474                    6.571%
               as a Group

Item 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Trust issues a limited  number of "Master  Notes" which are  unsecured  debt
instruments  of the Trust.  The Trust pays the obligee of such notes interest at
the rate of one  percent  per annum  (1%) less  than the prime  lending  rate of
Amarillo  National Bank, the Trust's primary  lender.  As of March 31, 1998, the
Trust had entered into Master Note Agreements with B. R. McMorries, Chairman

                                      -16-
<PAGE>

of  the  Board  of  Trust  Managers,  and  related  persons,  in the  amount  of
$1,126,119;  with Foy W. Shackelford,  Member of the Board of Trust Managers, in
the amount of $331,656;  and with Larry  Brown,  Secretary of the Board of Trust
Managers,  and related persons,  in the amount of $209,705.  Furthermore,  as of
March 31, 1998, the Trust had issued and outstanding  Certificates  issued to B.
R. McMorries,  Chairman of the Board of Trust Managers,  and related persons, in
the amount of $225,000.  The terms of such Master Notes and Certificates are the
same as Master Notes and Certificates entered into with other unrelated persons,
except as to the amounts thereof.

Item 13: EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The Exhibits listed on the accompanying Index to Exhibits are filed as a part of
this Annual Report.

(b) Reports on Form 8-K

None

                                      -17-
<PAGE>
                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.

                                  CHURCH LOANS & INVESTMENTS TRUST


DATE:  June 29, 1998              By: /S/ B.R. McMorries
                                      __________________
                                      B.R. McMorries,
                                      Chairman of the Board of
                                      Trust Managers

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.

          Signature                 Capacity                  Date
         _____________________  _______________________      _______

         /s/ B.R. McMorries     Chairman of the Board        6-29-98
         __________________      of Trust Managers
         B.R. McMorries          (Principal executive
                                  officer)

                                Trust Manager                ___/___/___
         __________________
         Foy W. Shackelford


         /s/ Larry Brown        Secretary of the Board       6-29-98
         __________________      of Trust Managers
         Larry Brown


         /s/ M. Kelly Archer    Principal financial and      6-29-98
         __________________      accounting officer
         M. Kelly Archer


         /s/ Jack R. Vincent    Trust Manager                6-29-98
         __________________
         Jack R. Vincent

                                      -18-
<PAGE>


         __________________     Vice-Chairman of the         ___/___/___
         Robert E. Martin        Board of Trust Managers


         /s/ Steve Rogers       Trust Manager                6-29-98
         __________________
         Steve Rogers


         /s/ Mike Bahn          Trust Manager                6-29-98
         __________________
         Mike Bahn


         /s/ Terry Hays         Trust Manager                6-26-98
         __________________
         Terry Hays
                                      -19-
<PAGE>
                        CHURCH LOANS & INVESTMENTS TRUST

                               INDEX TO EXHIBITS

                                   Item 13(a)

         (2)      None

         (3)  -   Declaration of Trust of Church Loans & Investments Trust,
                  as amended, has been previously filed under File No. 2-
                  51235 and is incorporated herein by reference.

                  Bylaws  of  Church  Loans  &  Investments  Trust,  as
                  amended,  has been  previously  filed  under File No.
                  2-51235 and is incorporated herein by reference.

         (4)  -   None other than those listed in (3) above.

         (9)  -   None

         (10) -   None

         (11) -   Statement regarding computation of per share earnings  -
                  omitted since information necessary to make the
                  computation is included in the Financial Statements and
                  Note 4 thereto.

         (13) -   Pages 16 through 32 of the 1998 Annual Report to
                  Shareholders

         (16) -   None

         (18) -   None

         (21) -   None

         (22) -   None

         (23) -   None

         (24) -   None

         (27) -   Financial Data Schedule

         (28) -   None




                                      -20-