<PAGE>
MANAGERS DISCUSSION AND ANALYSIS
Hewitt Money Market Fund
<TABLE>
<S> <C>
PERFORMANCE AS OF 8/31/99 Thirty-Day Yield
- -------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Administrative Shares 4.56%
Institutional Shares 4.86%
</TABLE>
The thirty-day yield is an annualized yield for the thirty-day period ended Au-
gust 31, 1999. "Annualized yield" refers to the interest you would earn if you
held a share of the Fund for one year; the yield is prorated if you hold a
share for a shorter period of time. The yield reflects fluctuations in interest
rates on the Fund's investments and expenses for the Fund's administration and
management.
A fund's "net asset value," or NAV, is the market value of one share of a fund.
The NAV of the Administrative Shares remained stable at $100.02 per share from
March 1, 1999 to August 31, 1999. The NAV of the Institutional Shares increased
from $100.30 on March 1, 1999 to $100.37 on August 31, 1999. "Net investment
income" includes income from dividends and interest on the Fund's investments
after management and administrative fees have been deducted. Cumulative
dividends on net investment income were approximately $2.18 per share for
Administrative Shares and $2.26 for Institutional Shares during this period. Of
course, past performance is no guarantee of future results.
The Master Portfolio (1) invests in high-quality, short-term government and
corporate debt. During the first two quarters of fiscal year 1999, the Master
Portfolio extended the average maturity of investments in its portfolio by
selectively buying higher-yielding six- and 12-month cash instruments. In
addition to these longer-term money market investments, the Fund purchased
floating-rate securities to take advantage of the changing interest-rate
environment. These investments are more attractive when interest rates are
rising: if rates increase, the investments pay more interest; if rates
decrease, they pay less interest.
The performance of the Master Portfolio for the first six months of the fiscal
year was driven by two factors: two interest-rate increases by the Federal
Reserve Board and investor concern over Year 2000 technology problems.
Between February 28, 1999, and August 31, 1999, the Federal Reserve Board
raised the short-term interest rate from 4.75% to 5.25%. There were many
indicators of a strong U.S. economy: low unemployment, record-breaking housing
sales, high consumer demand, and an extremely healthy automobile market. These
signs increased demand for the relative stability of money market investments
among investors anxious about the possibility of additional interest-rate
hikes.
Higher demand for the liquidity that money market securities offer also drove
prices up at the end of the second quarter of the fiscal year. Anticipating
Year 2000 technology problems, many banks and short-term-security issuers
started lining up their borrowing needs early.
The Master Portfolio's investment strategy worked well for the first half of
the fiscal year. Performance lagged only slightly behind the performance of its
benchmark--three-month U.S. Treasury bills--partially as a result of the
administrative and management fees that are deducted from the total return.
(1) Hewitt Money Market Fund is a "feeder" fund in a "master-feeder" structure.
Instead of investing directly in the individual securities in the
portfolio, the feeder fund, which is offered to the public, holds interests
in the net assets of the Master Portfolio. It is the Master Portfolio that
actually invests in the individual securities. Barclays Global Fund
Advisors advises the Master Portfolio. The Master Portfolio may accept
investments from other feeder funds. Certain events involving other feeder
funds, such as a substantial withdrawal, could affect the Master Portfolio.
<PAGE>
HEWITT MONEY MARKET FUND
STATEMENT OF ASSETS & LIABILITIES
AUGUST 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investment:
Interest in Master Portfolio, at market value (Note 1)............. $80,545,753
Receivables:
Due from Hewitt Associates LLC (Note 2).......................... 59,780
-----------
Total Assets....................................................... 80,605,533
-----------
LIABILITIES
Payables:
Other accrued expenses........................................... 147,924
Distribution to shareholders..................................... 292,507
-----------
Total Liabilities.................................................. 440,431
-----------
TOTAL NET ASSETS $80,165,102
===========
Net assets consist of:
Paid-in capital.................................................. 80,165,102
-----------
TOTAL NET ASSETS................................................... $80,165,102
===========
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
Administrative Shares
Net Assets......................................................... $48,660,580
Shares outstanding................................................. 486,501
Net asset value and offering price per share....................... $ 100.02
Institutional Shares
Net Assets......................................................... $31,504,522
Shares outstanding................................................. 313,873
Net asset value and offering price per share....................... $ 100.37
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
HEWITT MONEY MARKET FUND
STATEMENT OF OPERATIONS
For the Period From March 1, 1999 to August 31, 1999 (Unaudited)
<TABLE>
<S> <C>
NET INVESTMENT INCOME
ALLOCATED FROM MASTER PORTFOLIO
Interest.......................................................... $1,656,842
Expenses (Note 2)................................................. (32,983)
----------
Net Investment Income Allocated from Master Portfolio............. 1,623,859
EXPENSES (NOTE 2)
Administration fees--Administrative Shares........................ 23,737
Administration fees--Institutional Shares......................... 9,084
Shareholder servicing fees--Administrative Shares................. 59,344
Shareholder servicing fees--Institutional Shares.................. 18,167
Distribution costs--Administrative Shares......................... 59,344
Legal fees........................................................ 37,808
Fund accounting and transfer agent fees........................... 35,288
Printing cost..................................................... 20,165
Registration fees................................................. 20,037
Audit fees........................................................ 16,449
Other............................................................. 8,319
----------
Total Expenses...................................................... 307,742
Less:
Fees reimbursed by Hewitt Associates LLC (Note 2)................. (122,796)
----------
Total Net Expenses.................................................. 184,946
----------
NET INVESTMENT INCOME............................................... 1,438,913
----------
REALIZED GAIN ON INVESTMENTS
Net realized gain on sale of investments.......................... 190
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $1,439,103
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
HEWITT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Period From
For the Six Months October 1, 1998
Ended (commencement of
August 31, 1999 operations) to
(Unaudited) February 28, 1999
------------------ -------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income................. $ 1,438,913 $ 540,646
Net realized gain on sale of
investments.......................... 190 0
------------ ------------
Net increase in net assets resulting
from operations........................ 1,439,103 540,646
------------ ------------
Distributions to shareholders:
From net investment income
Administrative Shares............... (1,016,647) (423,411)
Institutional Shares................ (422,266) (117,235)
From net realized gain on sale of
investments
Administrative Shares............... (128) 0
Institutional Shares................ (62) 0
Capital share transactions:
Administrative Shares
Proceeds from shares sold............. 46,246,915 59,583,039
Reinvestment of dividends............. 838,382 423,168
Reinvestment of capital gains......... 16 0
Cost of shares redeemed............... (44,340,512) (14,090,428)
------------ ------------
Net increase resulting from capital
share transactions..................... 2,744,801 45,915,779
------------ ------------
Institutional Shares
Proceeds from shares sold............. 47,188,591 19,171,866
Reinvestment of dividends............. 308,193 117,140
Reinvestment of capital gains......... 5 0
Cost of shares redeemed............... (26,941,653) (8,339,620)
------------ ------------
Net increase resulting from capital
share transactions..................... 20,555,136 10,949,386
------------ ------------
Increase in Net Assets.................. 23,299,937 56,865,165
NET ASSETS:
Beginning net assets.................... 56,865,165 0
------------ ------------
Ending net assets....................... $ 80,165,102 $ 56,865,165
============ ============
SHARES ISSUED AND REDEEMED:
Administrative Shares
Shares sold........................... 461,600 595,438
Shares issued in reinvestment of
dividends and distributions.......... 8,382 4,231
Shares redeemed....................... (442,542) (140,608)
------------ ------------
Net increase in shares outstanding...... 27,440 459,061
============ ============
Institutional Shares
Shares sold........................... 469,627 191,080
Shares issued in reinvestment of
dividends and distributions.......... 3,072 1,169
Shares redeemed....................... (267,995) (83,080)
------------ ------------
Net increase in shares outstanding...... 204,704 109,169
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
HEWITT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Period From
For the Six Months October 31, 1998
Ended (commencement of
August 31, 1999 operations) to
(Unaudited) February 28, 1999
---------------------------- ----------------------------
Administrative Institutional Administrative Institutional
Shares Shares Shares Shares
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net Assets Value,
beginning of period.... $100.02 $100.30 $100.00 $100.00
Income from investment
operations:
Net investment
income............... 2.18 2.33 1.83 1.97
Net realized gain on
investments.......... 0.00** 0.00** 0.00 0.00
------- ------- ------- -------
Total from investment
operations............. 2.18 2.33 1.83 1.97
Less distributions:
From net investment
income............... (2.18) (2.26) (1.81) (1.67)
From net realized
gains................ (0.00)** (0.00)** 0.00 (0.00)
------- ------- ------- -------
Total distributions..... (2.18) (2.26) (1.81) (1.67)
------- ------- ------- -------
Net Asset Value, end of
period................. $100.02 $100.37 $100.02 $100.30
======= ======= ======= =======
Total Return (not
annualized)............ 2.20% 2.35% 1.84% 1.98%
Ratios/Supplemental
data:
Net assets, end of
period (000)......... $48,661 $31,505 $45,916 $10,949
Ratios to average net
assets*:
Ratio of expenses to
average net assets
(1).................. 0.75% 0.45% 0.75% 0.45%
Ratio of net
investment income to
average net assets
(2).................. 4.32% 4.64% 4.52% 4.86%
- -----------------------------------------------------------------------------------
(1) Ratio of expenses to
average net assets
prior to
reimbursement of
fees and expenses*.. 1.13% 0.83% 1.32% 1.62%
(2) Ratio of net
investment income to
average net assets
prior to
reimbursement of
fees and expenses*.. 3.94% 4.26% 3.95% 3.69%
- -----------------------------------------------------------------------------------
</TABLE>
* Annualized
** Rounds to less than $0.01.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
HEWITT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Summary of Significant Accounting Policies
Hewitt Money Market Fund (the "Fund") is a series of Hewitt Series Trust
(the "Trust"), a diversified open-end management investment company registered
under the Investment Company Act of 1940, as amended. The Trust was
established as a Delaware business trust organized pursuant to a Declaration
of Trust on July 7, 1998. The investment objective of the Fund is to provide a
high level of income while preserving capital and liquidity by investing in
high quality, short-term investments. The Fund pursues its investment
objective by investing all of its assets in the Money Market Master Portfolio
(the "Master Portfolio"), a series of Master Investment Portfolio ("MIP"). The
Master Portfolio has the same investment objective and substantially the same
investment policies as the Fund. The performance of the Fund is directly
affected by the performance of the Master Portfolio. The financial statements
of the Master Portfolio, including the Portfolio of Investments, are included
elsewhere in this report and should be read in conjunction with the Fund's
financial statements. The Fund presently offers two classes of shares,
Administrative Shares and Institutional Shares. Shares of each class have
identical interests in the Master Portfolio and have the same rights, however,
differ principally in their respective distribution fees and shareholder
servicing fees.
The following significant accounting policies are consistently followed by
the Fund in the preparation of its financial statements, and such policies are
in conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Policy and Security Valuation
The value of the Fund's investment in the Master Portfolio reflects the
Fund's interest in the net assets of the Master Portfolio. As of August 31,
1999, the value of the Fund's investment in the Master Portfolio was 39.97% of
the outstanding interests of the Master Portfolio. The Master Portfolio uses
the amortized cost method of valuation to determine the value of its portfolio
securities in accordance with Rule 2a-7 under the 1940 Act. The amortized cost
method, which involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, approximates market value.
Security Transactions and Income Recognition
Security transactions are accounted for by the Master Portfolio on the date
the securities are purchased or sold (trade date). Revenue is recognized by
the Master Portfolio as follows: Interest income is recognized on a daily
accrual basis. Realized gains and losses are reported on the basis of
identified cost of securities delivered. All net investment income and
realized capital gains and losses of the Master Portfolio are allocated as
required by the Internal Revenue Code of 1986, as amended (the "Code").
6
<PAGE>
HEWITT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)--Continued
Federal Income Taxes
The Fund is treated as a separate entity for federal income tax purposes. It
is the policy of the Trust that the Fund continue to qualify as a regulated
investment company by complying with the provisions of the Code applicable to
regulated investment companies, as defined by the Code, and to make
distributions of substantially all of its investment company taxable income
and any net realized capital gains (after reduction for capital loss
carryforwards) sufficient to relieve it from all, or substantially all,
federal income and excise taxes. Accordingly, no provision for federal taxes
was required at August 31, 1999.
Dividends and Distributions to Shareholders
Dividends to shareholders from net investment income of the Fund are
declared and distributed monthly. Distributions to shareholders from any
capital gains are declared and distributed annually, generally in December.
2 Agreements and Other Transactions with Affiliates
Hewitt Associates LLC (the "Administrator") provides administrative services
to the Fund. Services provided by the Administrator include, but are not
limited to: managing the daily operations and business affairs of the Fund,
subject to the supervision of the Board of Trustees; overseeing the
preparation and maintenance of all documents and records required to be
maintained by the Fund; preparing or assisting in the preparation of
regulatory filings, prospectuses and shareholder reports; providing, at its
own expense, the services of its personnel to serve as officers of the Trust;
and preparing and disseminating material for meetings of the Board of Trustees
and shareholders. The Fund pays the Administrator a monthly fee calculated at
an annual rate of 0.10% of the Fund's average daily net assets. The
Administrator has agreed to waive its fees or absorb expenses of the Fund to
the extent necessary to assure that total ordinary operating expenses on an
annual basis does not exceed 0.45% and 0.75% of the average daily net assets
of the Fund attributable to Institutional and Administrative Shares,
respectively. The Administrator may not modify or terminate this waiver
agreement without approval of the Board of Trustees of the Trust. For the
period ended August 31, 1999, the Administrator reimbursed the Fund $89,398
and $33,398 for expenses related to Administrative Shares and Institutional
Shares, respectively.
Barclays Global Fund Advisors, Inc. ("BGFA") serves as the Master
Portfolio's investment advisor. For its services, BGFA is paid by the Master
Portfolio a fee calculated at an annual rate of 0.10% of the Master
Portfolio's average daily net assets. BGFA is an indirect subsidiary of
Barclays Bank PLC.
Hewitt Services LLC (the "Distributor") serves as the Distributor of the
Fund's shares. The Trust has adopted a plan pursuant to Rule 12b-1 under the
Investment Company Act which allows the Fund to Pay expenses relating to the
distribution of Administrative Shares. Under the plan, the Fund pays a fee to
the Distributor, calculated at an annual rate of 0.25% of the average daily
net assets of the Fund attributable to Administrative Shares, as compensation
for services rendered in connection with the sale and distribution of
Administrative Shares. This fee is an expense of Administrative Shares only
and is not borne by Institutional Shares.
7
<PAGE>
HEWITT MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)--Continued
Hewitt Associates LLC also serves as the shareholder servicing agent (the
"Shareholder Servicing Agent") for Institutional Shares. The Shareholder
Servicing Agent is responsible for receiving on behalf of the Fund's Transfer
Agent orders by employee benefit plans to purchase and redeem Institutional
Shares. The Shareholder Servicing Agent is also responsible for maintaining
records showing the number of Institutional Shares allocable to individual
participant accounts in those plans. In addition, the Shareholder Servicing
Agent sends all shareholder communications relating to the Fund to
shareholders and to plan participants or arranges for these materials to be
sent. For these services, the Fund pays Hewitt Associates LLC a monthly fee
calculated at an annual rate of 0.20% of the average daily net assets of the
Fund attributable to Institutional Shares. This fee is an expense of
Institutional Shares only and is not borne by Administrative Shares.
The Trust has retained the Distributor to serve as Shareholder Servicing
Agent for Administrative Shares. As Shareholder Servicing Agent, the
Distributor is responsible for maintaining records showing the number of
Administrative Shares owned by IRAs established through the Distributor and by
other investors who have purchased Administrative Shares through the
Distributor. In addition, the Distributor sends all shareholder communications
relating to the Fund to holders of Administrative Shares or arranges for these
materials to be sent. For these services, the Fund pays the Distributor a
monthly fee calculated at an annual rate of 0.25% of average daily net assets
of the Fund attributable only to Administrative Shares. This fee is an expense
of Administrative Shares only and is not borne by Institutional Shares. The
Fund also reimburses each Shareholder Servicing Agent for certain out-of-
pocket expenses.
8
<PAGE>
MASTER INVESTMENT PORTFOLIO--MONEY MARKET MASTER PORTFOLIO
AUGUST 31, 1999 (Unaudited)
Portfolio of Investments
<TABLE>
<CAPTION>
Yield to Maturity
Principal Security Name Maturity Date Value
----------- -------------------------------- -------- -------- ------------
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT--23.32%
$ 5,000,000 Abbey National Treasury Service 5.04% 02/08/00 $ 4,999,154
5,000,000 ABN Amro Bank NV 5.14% 02/22/00 4,999,081
10,000,000 Bank of Montreal 5.09% 04/14/00 9,997,614
3,000,000 Bayerische Hypo-Und Vereinsbank
AG 5.23% 03/01/00 3,000,144
5,000,000 Chase Manhattan Bank 5.18% 03/15/00 4,998,449
3,000,000 Credit Suisse First Boston 5.60% 06/04/00 3,000,000
7,000,000 Morgan Guaranty Trust Co 5.36% 04/05/00 7,000,000
5,000,000 SNB Key Bank 5.60% 06/16/00 4,997,343
4,000,000 Toronto-Dominion Bank 5.08% 12/29/99 4,000,746
------------
TOTAL CERTIFICATES OF DEPOSIT $ 46,992,531
COMMERCIAL PAPER--54.22%
5,000,000 Alpine Securitization Corp 5.13% 09/02/99 4,999,287
7,000,000 Banco Mercantile Del Norte 4.82% 09/27/99 6,975,632
1,483,000 Barton Capital Corp 5.22% 10/06/99 1,475,474
1,505,000 BTR Dunlop Finance Inc 5.20% 09/08/99 1,503,478
3,476,000 Enterprise Funding Corp 5.15% 09/20/99 3,466,552
9,000,000 General Electric Capital Corp 5.60% 09/01/99 9,000,000
5,000,000 General Electric Financial
Assurance Holding 5.04% 09/22/99 4,985,300
10,000,000 GMAC Mortgage Corp 5.20% 09/01/99 10,000,000
5,000,000 International Securitization 5.32% 09/15/99 4,989,655
3,000,000 Monte Rosa Capital Corp 5.30% 09/15/99 2,993,817
5,000,000 Monte Rosa Capital Corp 5.37% 10/13/99 4,968,675
5,000,000 Nationsbank NA 4.95% 10/06/99 5,000,000
8,000,000 Park Avenue Receivables Corp 5.33% 09/22/99 7,975,127
5,000,000 Pemex Capital Inc 5.27% 09/27/99 4,980,969
9,000,000 Prudential Funding Corp 5.61% 09/01/99 9,000,000
7,000,000 Special Purpose Accounts
Receivable Cooperative Corp 5.34% 02/07/00 7,000,000
10,000,000 WCP Funding Corp 5.15% 09/16/99 9,978,542
5,000,000 Windmill Funding Corp 5.14% 09/27/99 4,981,439
5,000,000 Windmill Funding Corp 5.15% 09/16/99 4,989,271
------------
TOTAL COMMERCIAL PAPER $109,263,218
U.S. GOVERNMENT AGENCY SECURITIES--2.48%
5,000,000 Federal Home Loan Bank 4.95% 02/17/00 4,998,890
------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES $ 4,998,890
VARIABLE & FLOATING RATE NOTES--
7.44%
7,000,000 Ford Motor Credit Co 5.49% 08/18/00 6,993,311
8,000,000 Lexington Parker 5.37% 02/07/00 8,000,000
------------
TOTAL VARIABLE & FLOATING RATE
NOTES $ 14,993,311
</TABLE>
9
<PAGE>
MASTER INVESTMENT PORTFOLIO--MONEY MARKET MASTER PORTFOLIO
AUGUST 31, 1999 (Unaudited)
Portfolio of Investments
<TABLE>
<CAPTION>
Principal Security Name Value
----------- --------------------------------------- ------------
<C> <S> <C>
REPURCHASE AGREEMENTS--11.88%
$23,932,000 Merrill Lynch Repurchase Agreement
dated 08/31/99, due 09/01/99 with a
maturity value of $23,935,670 and an
effective yield of 5.14%,
Collateralized by Federal National
Mortgage Association ARM Obligations
with rates ranging from 5.78% to 7.00%,
maturity dates ranging from 07/01/01 to
08/01/38 and an aggregate market value
of $24,285,069. $ 23,932,000
644 Morgan Stanley Triparty Repurchase
Agreement dated 8/31/99, due 9/1/99
with a maturity value of $644 and an
effective yield of 5.14%,
Collateralized by a U.S Treasury Bill
with a rate of 5.28%, a maturity of
9/15/99 and a market value of $9,978 644
------------
TOTAL REPURCHASE AGREEMENTS $ 23,932,644
TOTAL INVESTMENTS IN SECURITIES
(Cost $200,180,594) ** (Notes 1 and 3) 99.34% $200,180,594
Other Assets and Liabilities 0.66% 1,354,939
------- ------------
TOTAL NET ASSETS 100.00% $201,535,533
======= ============
</TABLE>
- --------
** Cost for income tax purposes is the same as for financial statement
purposes.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
MASTER INVESTMENT PORTFOLIO--MONEY MARKET MASTER PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investments:
In securities, at market value (see cost below) (Note 1).......... $200,180,594
Receivables:
Interest........................................................ 1,389,863
------------
Total Assets...................................................... 201,570,457
------------
LIABILITIES
Payables:
Due to BGI (Note 2)............................................. 34,924
------------
Total Liabilities................................................. 34,924
------------
TOTAL NET ASSETS.................................................. $201,535,533
============
INVESTMENTS AT COST............................................... $200,180,594
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
MASTER INVESTMENT PORTFOLIO--MONEY MARKET MASTER PORTFOLIO
STATEMENT OF OPERATIONS
For the Six Months Ended August 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest.......................................................... $5,851,012
----------
Total Investment Income........................................... 5,851,012
EXPENSES (NOTE 2)
Advisory Fees..................................................... 117,060
----------
Total expenses...................................................... 117,060
----------
NET INVESTMENT INCOME............................................... 5,733,952
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on sale of investments.......................... 4,128
----------
Net Gain on Investments............................................. 4,128
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $5,738,080
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
MASTER INVESTMENT PORTFOLIO--MONEY MARKET MASTER PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six Months Ended
August 31, 1999 For the Year Ended
(Unaudited) February 28, 1999
------------------------ ------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income............ $ 5,733,952 $ 5,411,548
Net realized gain on sales of
investments..................... 4,128 0
------------ ------------
Net increase in net assets
resulting from operations......... 5,738,080 5,411,548
------------ ------------
Net increase (decrease) in net
assets resulting from beneficial
interest transactions............. (66,848,868) 257,234,773
------------ ------------
Increase (decrease) in Net Assets.. (61,110,788) 262,646,321
------------ ------------
NET ASSETS:
Beginning net assets............... 262,646,321 0
Ending net assets.................. $201,535,533 $262,646,321
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
1. Significant Accounting Policies
Master Investment Portfolio ("MIP") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. MIP was organized on October 20, 1993 as a Delaware
business trust pursuant to an Agreement and Declaration of Trust dated May 14,
1993, and had no operations prior to May 26, 1994. MIP currently issues, the
following separate portfolios (the "Master Portfolios"), the Asset Allocation,
Bond Index, Extended Index, U.S. Equity Index, LifePath 2000, LifePath 2010,
LifePath 2020, LifePath 2030, LifePath 2040, S&P 500 Index and U.S. Treasury
Allocation Master Portfolios. These financial statements contain the Money
Market Master Portfolio (the "Master Portfolio").
The following significant accounting policies are consistently followed by
MIP in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Security Valuation
The Master Portfolio uses the amortized cost method of valuation to
determine the value of its portfolio securities in accordance with Rule 2a-7
under the 1940 Act. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period until
maturity, regardless of the impact of fluctuating interest rates on the market
value of the security.
Security Transactions and Income Recognition
Interest income is recognized on a daily accrual basis. Realized gains or
losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized under provisions of the Internal
Revenue Code of 1986, as amended (the "Code").
Federal Income Taxes
The Master Portfolio intends to qualify as a partnership for federal income
tax purposes. The Master Portfolio therefore believes that it will not be
subject to any federal income tax on its income and net realized capital gains
(if any). However, the investor in a Master Portfolio will be taxed on its
allocable share of the partnership's income and capital gains for purposes of
determining its federal income tax liability. The determination of such share
will be made in accordance with the applicable sections of the Code.
It is intended that the Master Portfolio's assets, income and allocations
will be managed in such a way that a regulated investment company investing in
a Master Portfolio will be able to satisfy the requirements of Subchapter M of
the Code, assuming that the investment company invested all of its assets in
the corresponding Master Portfolio.
Repurchase Agreements
Transactions involving purchases of securities under agreements to resell
such securities at a specified price and time ("repurchase agreements") are
treated as collateralized financing transactions and are recorded at their
14
<PAGE>
MASTER INVESTMENT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)--Continued
contracted resale amounts. These repurchase agreements, if any, are detailed
in each Master Portfolio's Portfolio of Investments. The adviser to the Master
Portfolios may pool each Master Portfolio's cash and invest in repurchase
agreements entered into by the other Master Portfolios. Each Master
Portfolio's prospectus requires that the cash investments be fully
collateralized based on values that are marked to market daily. The collateral
is generally held by an agent bank under a tri-party agreement. It is the
adviser's responsibility to value collateral daily and to obtain additional
collateral as necessary to maintain the value at equal to or greater than 102%
of market value. The repurchase agreements entered into on August 31, 1999 by
the Master Portfolio are collateralized by U.S. Government Securities.
2. Agreements and Other Transactions with Affiliates
Pursuant to an Investment Advisory Contract with the Master Portfolio,
Barclays Global Fund Advisors ("BGFA") provides investment guidance and policy
direction in connection with the management of the Master Portfolio's assets.
BGFA is entitled to receive 0.10% of the average daily net assets of the
Master Portfolio as compensation for its advisory services.
Investors Bank & Trust Company ("IBT") serves as the custodian to each
Master Portfolio. IBT will not be entitled to receive fees for its custodial
services so long as it is entitled to receive a separate fee from Barclays
Global Investors, N.A. ("BGI") for its services as Sub-Administrator of each
Master Portfolio.
Stephens Inc. ("Stephens") is the sponsor and placement agent for the Master
Portfolio. Certain officers and directors of MIP are also officers of
Stephens. As of August 31, 1999, these officers of Stephens indirectly
collectively owned less than 1% of the Master Portfolios' outstanding
beneficial interest.
15
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TABLE OF CONTENTS
Page
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HEWITT MONEY MARKET FUND
Manager's Discussion and Analysis............... 1
Statement of Assets and Liabilities............. 2
Statement of Operations......................... 3
Statement of Changes in Net Assets.............. 4
Financial Highlights............................ 5
Notes to Financial Statements................... 6
MASTER INVESTMENT PORTFOLIO
Portfolio of Investments........................ 9
Statement of Assets and Liabilities............. 11
Statement of Operations......................... 12
Statement of Changes in Net Assets.............. 13
Notes to the Financial Statements............... 14
[GRAPHIC APPEARS HERE]
Hewitt
Money Market Fund
Semi-Annual Report
August 31, 1999
