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# FORM 10-KSB405

# SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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| | [ X ] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
| | ----- | ------------------------------------------------------------------------------------
|
| |       | For the Fiscal Year Ended March 31, 2001                                            
|
| | [   ] | 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
incorporation or organization)           |  | (IRS Employer
Identification No.)
| |                                                                          | 
| | 5305 I-40 West, Amarillo, Texas
(Address of principal executive offices) |  | 79106
(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

# -1-

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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   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: $4,914,251.

The aggregate market value of the voting stock held by  non-affiliates of the
registrant is $19,331,007 as of June 5, 2001.

The  number of shares  outstanding  of each of the  issuer's  classes  of common
stock,   as  of   March   31,   2001   is   7,000,806   shares   of   beneficial
interest.

Documents Incorporated by Reference:

Portions of the Annual Report to Shareholders for the year ended March 31, 2001,
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-

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# TABLE OF CONTENTS
INDEX
FORM 10-KSB ANNUAL REPORT - 2001
CHURCH LOANS & INVESTMENTS TRUST

|Part I.   |                                                                                                                 | Page
|--------- | --------------------------------------------------------------------------------------------------------------- | ----
|Item 1:   | Description of Business                                                                                         | 4   
|Item 2:   | Description of Property                                                                                         | 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                                                                  | 17  
|Item 13:  | Exhibits and Reports on Form 8-K                                                                                | 18  

# -3-

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# 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.

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.

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 church  buildings,  the  construction  of assisted  living
centers,   the  purchase  of  real  estate,   or  the  refinancing  of  existing
indebtedness. Most of the interim loans presently

# -4-

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being made by the Trust are associated  with bond offerings of
churches and other nonprofit  organizations  and assisted living centers.  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, 2001,  the Trust has 96 permanent  and interim
mortgage  loans and  investments  in church bonds having a principal  balance of
$43,150,219,  with the average  principal  amount  thereof being  $449,481.  The
interest  rates on these  loans vary from 8% to 13% per annum with the  weighted
average  interest rate of mortgage loans and church bonds being 10.28% per annum
at March 31,  2001.  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, 2001, the
net income of the Trust was  $2,628,232,  as  compared to  $3,059,815  in fiscal
2000,  a decrease of 14.10%.  The decrease in net income of the Trust was due to
several  factors,  including (a) a decrease in the Trust's net interest  income;
and (b) a decrease  in other  income of the Trust.  Net  interest  income of the
Trust  was lower in  fiscal  2001 as  compared  to  fiscal  2000 due to  several
reasons,  including: (a) extraordinary higher interest income in fiscal 2000 due
to the pay-off of a loan owing to the Trust that was previously characterized as
non-performing  resulting in the  recognition of additional  interest  income in
fiscal 2000 of approximately  $611,000,  and (b) an increase in interest expense
of the  Trust.  Other  income  for the  fiscal  year  ended  March 31,  2000 was
substantially  higher  than normal due to gains on the sale of other real estate
of $421,367 in fiscal 2000.

The net income of the Trust for each of the  quarters  during
fiscal 2001 was as follows:  first  quarter-$605,885;  second  quarter-$982,352;
third quarter-$562,262; and fourth quarter- $494,798.

The  operational  expense of the Trust decreased from $751,117
during fiscal 2000 to $731,524 in fiscal 2001.  The  operational  expense of the
Trust included general and  administrative  expenses and compensation to members
of the Board of Trust Managers.

During  fiscal  2001,  the Trust  advanced  loan  proceeds of
$30,618,186 on 39 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 2001, the Trust employed a total of 5 full time
employees and employed, as needed, two additional part-time employees.

# -5-

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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, 2001.

## 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,  net of  depreciation  and
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  (2/3rds)  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.  However,  at the  discretion of the
Board of Trust Managers, the Trust may make and has made loans in excess of such
limit.  All such  investment  in  mortgage  loans is for the  purpose of earning
income for the Trust.

## Item 3 - LEGAL PROCEEDINGS

None

## Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

# -6-

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# 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 2001 a total of 79,901 shares
were sold in the  secondary  market at prices  ranging  from  $2.80 to $3.00 per
share.  The last sale  during  the fiscal  year was at $3.00 per  share.  During
fiscal year 2000 a total of 94,649 shares were sold in the  secondary  market at
prices ranging from $2.35 to $2.85 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:

`Fiscal 2001                Fiscal 2000
       Quarter                            High   Low                 High   Low
       ---------------                    ----   ----                ----   ----
       April-June                         2.85     2.80              2.50   2.40

       July-September                     2.87     2.80              2.85   2.35

       October-December                   3.00     2.85              2.75   2.50

       January-March                      3.00     2.85              2.85   2.70`

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,  2001  there  were  2,384  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 2000 the Trust paid a
cash  dividend  of $.39 per  share.  In fiscal  2001 the Trust paid a total cash
dividend of $.45 per share.

# -7-

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(d) Sales of Unregistered Securities.

None.

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

Results of Operations - 2001 compared to 2000

During the fiscal year ended March 31, 2001, interest income and
fees of the Trust  increased by $197,451  (4.19%) over the previous fiscal year.
Such increase was primarily  attributable  to several  factors,  including (a) a
slight  increase in the average  interest  yield on the Trust's  loan and church
bond portfolio;  and (b) an increase in performing  mortgage loans, church bonds
and interim loans.

The average interest rate on loans and church bonds held by the
Trust increased from 10.14% as of March 31, 2000 to 10.28% as of March 31, 2001.

There was an increase in the amount of performing interim loans
held by the Trust from  $8,827,383  as of March 31,  2000 to  $11,537,684  as of
March 31, 2001 and there was an increase in performing mortgage loans during the
recent fiscal year from  $22,141,873  as of March 31, 2000 to  $25,537,346 as of
March 31, 2001. Therefore, the total performing mortgage loans, church bonds and
performing  interim loans held by the Trust  increased  from  $30,969,256  as of
March 31, 2000 to $37,075,030  as of March 31, 2001.  This increase is partially
the result of an increase in the  investment  in mortgage and interim loans made
by the Trust during fiscal 2001 of $30,618,186 as compared to $26,748,968 during
fiscal 2000. This  represents an increase of $3,869,218 or 14.46%.  The increase
in the investment by the Trust in mortgage loans also contributed to an increase
of $36,285 in commitment  fees earned by the Trust in fiscal 2001 as compared to
fiscal 2000. The increase in performing mortgage loans, church bonds and interim
loans was also caused by a decrease  in the  payments  received on mortgage  and
interim construction loans and church bonds from $26,342,866 for the fiscal year
ended March 31, 2000 to $24,866,228 during the fiscal year ended March 31, 2001.

The net  income of the Trust for fiscal  2001 was  $2,628,232
($.38 per share), a decrease of $431,583 (14.10%) from the previous fiscal year.
Such decrease was primarily  attributable  to various  factors,  including (a) a
decrease in the Trust's net interest income;  and (b) a decrease in other income
of the Trust.  Net interest  income  decreased from $3,594,736 in fiscal 2000 to
$3,344,074 in fiscal 2001, a decrease of $250,662 (7.0%) from fiscal 2000. Other
income for the fiscal year ended March 31,  2000 was  substantially  higher than
normal due to gains on the sale of other real estate of $421,367 in fiscal 2000.

The  interest  income of the Trust for the fiscal  year ended
March 31, 2000 was  significantly  influenced  by the payment of a loan owing to
the Trust that was previously characterized

# -8-

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as  non-performing.  The  pay-off of this loan  resulted in an
additional  recognition of interest income of  approximately  $611,000 in fiscal
2000.

The decrease in the net income of the Trust for fiscal 2001 was
also attributable to an increase in the interest expense of the Trust. In fiscal
2001, the average aggregate amount of total debt outstanding was $4,120,873 more
than in fiscal 2000. The interest expense of the Trust increased from $1,110,202
for the fiscal year ended March 31, 2000 to $1,568,994 for the fiscal year ended
March 31, 2001, an increase of $458,792 or 41.33%. The average month-end balance
of the indebtedness owing by the Trust increased from $14,733,497 for the fiscal
year ended  March 31,  2000 to  $18,854,370  for the fiscal year ended March 31,
2001.  Such  increase was due to an increase in the debt of the Trust  resulting
from the increase in the Trust's investment in mortgages and interim loans. Such
increase  was somewhat  offset by a decrease in the Trust's  cost of funds.  The
approximate weighted average annual interest rate upon the aggregate outstanding
debt  decreased  from  8.00%  at the end of  fiscal  2000 to 7.00% at the end of
fiscal 2001.

Income  from the  realization  of loan  discounts  from  loan
purchases  also  decreased  from  $125,022  for the year ended March 31, 2000 to
$42,033 for the year ended March 31, 2001, a decrease of $82,989.

General and  administrative  expenses  of the Trust  slightly
decreased from $695,719 for the fiscal year ended March 31, 2000 to $676,149 for
the fiscal year ended March 31, 2001, a decrease of $19,570 or 2.81%.

Dividends  related to fiscal 2001 were $2,870,331 or $.41 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 more or less than the net
income  reported  in the  financial  statements  because of  variances  in these
temporary differences.

During fiscal 2001,  the prime  interest rate  decreased from
9.00% to 8.00%.  Should the prime interest rate decrease during fiscal 2002, 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 2002, 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 decreased from $26,342,866  during fiscal
2000 to $24,866,228  during fiscal 2001, a decrease of 5.61%.  This decrease was
primarily attributable to the decrease in interim loans made by the Trust during
the  year  ended  March  31,  2000.  If the  Trust  had made  additional  loans,
especially interim loans during the year ended March 31, 2000, then

# -9-

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the normal  maturity  of those  loans  would have  resulted in
additional  payments on such loans being received in the fiscal year ended March
31, 2001.

During  fiscal  2001 the  Trust  sold  properties  which it had
previously  received through  foreclosure.  Gain on the sale of these properties
was  $180,662  for fiscal 2001 as  compared  to gain of the sales of  foreclosed
properties in fiscal 2000 of $421,367.

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, 2001, the Trust had six loans to two
different  borrowers  which are secured by assisted living centers which totaled
approximately  $13,105,000.  Three of these loans were to  affiliated  borrowers
totaling approximately  $4,268,875 and with the remaining three loans to another
borrower totaling $8,836,125.

The  assets  of the  Trust  primarily  consist  of  its  loan
portfolio,  real estate acquired through foreclosure and its office building and
facilities. The operational expense of the Trust is comprised of the maintenance
of its office  building,  the  payment of the  salaries  of its  management  and
support staff,  office expenses,  fees paid to the Board of Trust Managers,  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
totaled  $4,803,990 at March 31, 2001. 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 fiscal 2002.

All of the debt  obligations  of the Trust  outstanding  as of
March 31, 2001 in the amount of $20,675,801  shall mature in fiscal 2002.  These
debt obligations primarily consist of the Trust's bank line of credit and Master
Note  Agreements.  Although  the Trust's  bank line of credit  matures in fiscal
2002, it is anticipated that the line of credit will be renewed annually. In the
event that the bank elects not to renew the line of credit,  the Trust may under
the terms of the loan agreement retire the line of credit over a period of time,
not to exceed five years,  equal to the weighted  average  remaining term of all
real estate lien notes of the Trust which are pledged to secure the bank line of
credit.

Previously,  the Trust issued  Secured  Savings  Certificates
('Certificates').  However, all of the Certificates  outstanding as of March 31,
2000 in the amount of  $726,000  were paid as and when  matured  during the 2001
fiscal year.

# -10-

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At March  31,  2001  loans to the  Trust  under  Master  Note
Agreements,  which are in effect demand notes, total  $13,015,801.  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, 2001,  the balance which could be borrowed by the
Trust  upon its bank line of credit  was $  7,340,000.  The  principal  payments
scheduled  to be  received  by the Trust upon its loan  portfolio  for the years
ending March 31, 2002 and 2003 are  $16,814,534  and  $1,266,320,  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
obligations  and fund loan  commitments  without the  necessity for Church Loans
having to sell any additional Certificates or borrow funds from other sources.

Due to the cost of registration and the other costs of sales of
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,
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,
2001,  the principal  balance of the loan and church bond portfolio of the Trust
was  $42,730,905.  The weighted  average interest rate on loans and church bonds
was 10.28% 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 $36,606,142, $31,376,693, and $27,454,606,  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, 2002 and 2003, if
not used to fund new loan  commitments,  would be used to reduce the outstanding
indebtedness of the Trust. Should

# -11-

---

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, 2001, a substantial  portion of the promissory
notes  evidencing  the loans made by the Trust  have been  pledged to secure the
Trust's bank line of credit.  Promissory notes totaling $14,737,863 were pledged
against  the bank  line of  credit  which  had a total  outstanding  balance  of
$7,660,000.  The required collateral for this bank loan was $8,426,000,  leaving
an excess of promissory  notes which have been pledged to secure said bank notes
of $6,311,863.  These excess  promissory  notes may be reassigned by the 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 $6,311,863  and other  additional
promissory notes in the approximate amount of $27,674,742 (for a total amount of
$33,986,605)  would be available  to be sold by the Trust to meet its  financial
obligations.  Should the excess  promissory notes be assigned by the bank to the
Trust as  heretofore  described,  the bank line of credit  would  continue to be
secured by the required  ratio of notes pledged to the principal  balance of 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. In fact,  there was a decrease
in the amount of non-performing loans as of March 31, 2001 compared to March 31,
2000.  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
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

# -12-

---

Certificates in the future,  it would have similar success in
selling the Certificates as it has had in the past.

Inflation

At March 31, 2001, the weighted  average  interest rate on the
mortgage loan and church bond  portfolio of the Trust was 10.28% per annum while
the weighted  average  interest rate upon all  borrowings of the Trust was 7.00%
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 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  21.25% per annum, the interest income and the interest expense of
the Trust would be substantially equal.

New Accounting Standards

In June 1998, the Financial  Accounting  Standards Board (FASB)
issued  Statement No. 133,  Accounting  for Derivative  Instruments  and Hedging
Activities,  which  addresses the  accounting for  derivative  transactions  and
hedging   activities.   Subsequently,   FASB  issued  statement  No.  137  which
effectively  delayed  adoption of No. 133 by one year.  The Trust will adopt the
new  standard  beginning  with its 2002  fiscal  year,  when  adoption  is first
required.  Management  has evaluated the reporting  requirements  under this new
standard  and  believes  it will  not  have a  material  impact  on the  Trust's
financial results.

## Item 7: FINANCIAL STATEMENTS

Financial Statements at March 31, 2001, and 2000 and for each of
the years in the two-year  period ended  March 31,  2001,  are  incorporated  by
reference   from   Pages  17   through   33  of  the  2001   Annual   Report  to
Shareholders.

# -13-

---

The  report  of  independent  auditors  with  respect  to the
financial  statements  at March 31, 2001,  and 2000 and for each of the years in
the two-year period ended March 31,  2001 is incorporated by reference from Page
16 of the 2001 Annual Report to Shareholders.

## 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 74, is a  consulting  engineer.  He has
served as a Trust  Manager  since  1963.  He serves as  Chairman of the Board of
Trust Managers.

Larry Brown, age 58, 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 Vice-Chairman of the Board of Trust Managers.

Alfred J. Smith,  age 66, is in the  independent  oil and gas
production  business.  Mr. Smith has served as a Trust  Manager  since 1999.  He
serves as Secretary of the Board of Trust Managers.

Jack R.  Vincent,  age 71, is engaged in farming and ranching
operations. He has served as a Trust Manager since 1989.

Steve Rogers,  age 53, is the President of Steve Rogers Co., a
real estate appraisal firm. He has served as a Trust Manager since 1990.

Mike Bahn, age 57, is the President of Amarillo  Blueprint Co.,
an office equipment and supply and reproduction services business. He has served
as a Trust Manager since 1997.

Terry Hays, age 50, is the Information  Systems Manager for the
law firm of Perdue, Brandon, Fielder, Collins and Mott. Mr. Hays has served as a
Trust Manager since 1998.

# -14-

---

(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 49,  serves as  President,  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 served in this
capacity for 19 years.

Robert  E.   Martin,   age  51,   serves   as  the   Senior
Vice-President-Lending  for the Trust.  Mr.  Martin has served in such  capacity
since  1999.  Prior to  serving  in such  capacity,  Mr.  Martin  served  as the
President/CEO  of Santa Fe Federal  Credit  Union.  Mr.  Martin also served as a
member of the Board of Trust Managers of the Trust prior to becoming an employee
of the Trust.

Robert  E.   Fowler,   age  48,   serves   as  the   Senior
Vice-President-Accounting  and Information Systems for the Trust. Mr. Fowler has
served in such capacity for 19 years.

(c) Compliance  with Section 16(a) of the Securities  Exchange
Act of 1934.  Based upon  information  provided to the Trust by individual Trust
Managers and Executive  Officers,  the Trust  believes that during the preceding
fiscal year the Trust  Managers and  Executive  Officers  have complied with all
such applicable filing requirements.

## 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 2001 exceeded
$100,000 for services rendered in all capacities.

`Annual Compensation
                                          --------------------------------------------
                                Fiscal                                    Other Annual
Name and Principal Position      Year      Salary          Bonus          Compensation
---------------------------     ------    --------       ---------        ------------
  CEO-M. Kelly Archer            2001     $108,510               0           $14,490
         Manager of Operations   2000      109,667               0            7,653
                                 1999      102,997               0            6,613`

# -15-

---

(b)  Trust Managers' Compensation:

The  Board of Trust  Managers of the Trust were paid $53,400 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 $400 per day for their services when out of
town on trust business.

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

## 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
     ----------------------------      -----------------------      --------
     Kim E. McMorries                      384,681 shares            5.495%
     48 Waterford Court
     Nacogdoches, TX 75961-8720`

# -16-

---

(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                     269,006                3.843%

             Larry Brown                        50,989                0.738%

           Jack R. Vincent                       9,576                0.137%

            Steve Rogers                         1,300                0.019%

              Mike Bahn                          1,650                0.024%

             Terry Hays                          2,566                0.037%

           Alfred J. Smith                      24,925                0.356%

           M. Kelly Archer                     125,368                1.791%

          Robert E. Fowler                      68,345                0.976%

          Robert E. Martin                       3,412                0.049%

       All Trust Managers and                  557,137                7.958%
         Executive Officers
             as a Group

     * The nature of beneficial  ownership of such shares is either  directly by
     such named  person,  indirectly  through  such  person's  spouse or through
     Individual Retirement Accounts directed by such person or their spouse.`

## 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,  2001,  the  Trust  had  entered  into  Master  Note  Agreements  with B. R.
McMorries,  Chairman of the Board of Trust Managers, and related persons, in the
amount  of  $1,366,362;  with  Larry  Brown,  Secretary  of the  Board  of Trust
Managers, and related

# -17-

---

persons, in the amount of $213,000; and First State Bank, Happy,
Texas, of which Jack R. Vincent,  member of the Board of Trust  Managers,  owns,
either  directly or indirectly,  10% or more of the  outstanding  stock,  in the
amount of $750,000.  The terms of such Master Notes are the same as Master Notes
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

# -18-

---

# 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 33 of the 2001 Annual Report to Shareholders
| | ---- | -------------------------------------------------------------

| | (16) | None
| | ---- | ----

| | (18) | None
| | ---- | ----

| | (21) | None
| | ---- | ----

| | (22) | None
| | ---- | ----

| | (23) | None
| | ---- | ----

| | (24) | None
| | ---- | ----

# -19-

---

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

|By | /s/ B. R. McMorries
         ______________________________
                 B. R. McMorries
                 Chairman of the Board of
                 Trust Managers | Dated: June 20, 2001 | 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | 

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
         ______________________________
                 B. R. McMorries | Chairman of the Board ofTrust Managers | June 20, 2001
|-------------------------------------------------------------------------------------------- | -------------------------------------- | -------------

|/s/ Larry Brown
         ______________________________
                 Larry Brown | Vice-Chairman of the Boardof Trust Managers | June 20, 2001
|------------------------------------------------------------------------------------ | ------------------------------------------- | -------------

|/s/ Alfred J. Smith
         ______________________________
                 Alfred J. Smith | Secretary of the Boardof Trust Managers | June 20, 2001
|-------------------------------------------------------------------------------------------- | --------------------------------------- | -------------

# -20-

---

|/s/ M. Kelly Archer
         ______________________________
                 M. Kelly Archer | President, Principal Financialand Accounting Officer | June 20, 2001
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------

|/s/ Jack R. Vincent
         ______________________________
                 Jack R. Vincent | Trust Manager | June 20, 2001
|-------------------------------------------------------------------------------------------- | ------------- | -------------

|/s/ Steve Rogers
         ______________________________
                 Steve Rogers | Trust Manager | June 20, 2001
|-------------------------------------------------------------------------------------- | ------------- | -------------

|/s/ Mike Bahn
         ______________________________
                 Mike Bahn | Trust Manager | June 20, 2001
|-------------------------------------------------------------------------------- | ------------- | -------------

|/s/ Terry Hays
         ______________________________
                 Terry Hays | Trust Manager | June 20, 2001
|---------------------------------------------------------------------------------- | ------------- | -------------

# -21-

---