<PAGE>
As filed with the Securities and 1933 Act Registration No. 333-59221
Exchange Commission on November 30, 2000 1940 Act Registration No. 811-08885
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. __ [_]
Post-Effective Amendment No. 4 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 5 [X]
(Check appropriate box or boxes)
_____________________________
HEWITT SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
100 Half Day Road, Lincolnshire, IL 60069
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (847) 295-5000
Peter E. Ross, Esq.
100 Half Day Road
Lincolnshire, IL 60069
(Name and Address of Agent for Service)
Copy to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
(Name and Address of Agent for Process)
Approximate Date of Proposed Public Offering: As soon as practicable
after the Post Effective Amendment becomes effective.
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It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Hewitt Money Market Fund
Hewitt Institutional Money Market Fund
Series of Hewitt Series Trust
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Prospectus
November 30, 2000
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Hewitt Money Market Fund and Hewitt Institutional Money Market Fund are series
of Hewitt Series Trust, a diversified, open-end management investment company.
The Funds are money market funds. The investment objective of each Fund is to
provide a high level of income, while preserving capital and liquidity, by
investing in high quality, short-term securities. Unlike Hewitt Money Market
Fund and most other money market funds, Hewitt Institutional Money Market Fund
does not seek to maintain a stable net asset value of $1.00 per share.
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The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
About the Funds............................................................ 3
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Fund Performance........................................................... 4
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Investor Expenses.......................................................... 5
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Investment Objective and Policies.......................................... 6
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Management Arrangements.................................................... 8
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How to Buy Shares.......................................................... 9
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How to Redeem Shares....................................................... 10
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Net Asset Value............................................................ 11
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Dividends and Distributions................................................ 12
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Taxes...................................................................... 13
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Distribution and Servicing Arrangements.................................... 13
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Performance Information.................................................... 14
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Financial Highlights....................................................... 15
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Additional Information..................................................... 16
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</TABLE>
2
<PAGE>
ABOUT THE FUNDS
Investment Goals. The investment objective of Hewitt Money Market Fund and
Hewitt Institutional Money Market Fund is to provide a high level of income,
while preserving capital and liquidity, by investing in high quality, short-
term securities.
Principal Investment Strategies. Each Fund pursues its investment objective
by investing all of its investable assets in the Money Market Master
Portfolio, which is a series of Master Investment Portfolio. The Money Market
Master Portfolio has the same investment objective and substantially the same
investment policies as the Funds. The Money Market Master Portfolio is a
diversified portfolio that invests in the following types of money market
instruments:
. Government Obligations
. Bank Obligations
. Commercial Paper and Short-Term Corporate Debt Instruments
. Repurchase Agreements
. Letters of Credit
. Floating- and Variable-Rate Obligations
Principal Risks. Because the Money Market Master Portfolio invests in debt
securities, a decline in short-term interest rates will reduce the overall
yields of the Funds and the return on an investment. Strong equity markets or
a weak economy could cause a decline in short-term interest rates. Although
the Money Market Master Portfolio invests only in high quality obligations, if
an issuer fails to pay interest or to repay principal, the return on an
investment in a Fund would be adversely affected and the net asset value of
the Fund's shares could decline. Net asset value may also be adversely
affected by a substantial increase in short-term interest rates. The Money
Market Master Portfolio maintains a dollar-weighted average maturity of 90
days or less, and invests only in securities having remaining maturities of
397 days or less. All investments must be U.S. dollar denominated.
An investment in a Fund is not a deposit account of Barclays Global Fund
Advisors or any of its affiliates and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
Hewitt Money Market Fund seeks to maintain a net asset value of $1.00 per
share, it is possible to lose money on your investment in the Fund. It is also
possible to lose money on an investment in Hewitt Institutional Money Market
Fund.
Hewitt Money Market Fund is designed for use as an investment option by
investors who seek income and stability of capital. Hewitt Institutional Money
Market Fund is designed for use by employee benefit plans that seek income and
stability of capital.
3
<PAGE>
FUND PERFORMANCE
The return information provided below illustrates how the performance of
Hewitt Institutional Money Market Fund (previously known as the Institutional
Shares of Hewitt Money Market Fund) can vary, which is one indication of the
risks of investing in Hewitt Institutional Money Market Fund. Please keep in
mind that Hewitt Institutional Money Market Fund's past performance does not
represent how it will perform in the future.
HEWITT INSTITUTIONAL MONEY MARKET FUND
CALENDAR YEAR TOTAL RETURNS
[Graph Depicted Here]
Year Returns
---- -------
1999 4.96%
BEST AND WORST QUARTERLY PERFORMANCE
(During the Period Shown Above)
Best Quarter Return Worst Quarter Return
------------------- -------------------------
1.38% (4th Q 1999) 1.14% (1st and 2nd Q 1999)
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
1-Year Since Inception
(10/1/98)
------ ---------------
4.96% 4.95%
To obtain current 7-day yield information for Hewitt Institutional Money
Market Fund, call 1-800-221-4524.
HEWITT MONEY MARKET FUND
No performance information is included in this Prospectus for Hewitt Money
Market Fund because the Fund has not operated for a full calendar year.
To obtain current 7-day yield information for Hewitt Money Market Fund, call
1-800-890-3200.
4
<PAGE>
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund.
<TABLE>
<CAPTION>
Hewitt
Hewitt Institutional
Money Market Money Market
Fund Fund
------------ -------------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM
YOUR INVESTMENT):
Maximum Sales Charge (Load) Imposed on Pur-
chases...................................... None None
Maximum Deferred Sales Charge (Load)......... None None
Maximum Sales Charge (Load) Imposed or Rein-
vested Dividends............................ None None
Redemption Fee............................... None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM FUND ASSETS) (as a per-
centage of average net assets) (1)
Management Fees.............................. 0.40% (2) 0.10% (3)
Distribution (12b-1) Fees.................... 0.25% None
Other Expenses............................... 1.45% (4) 0.92% (5)
Total Annual Fund Operating Expenses (before
reimbursement).............................. 2.10% 1.02%
Reimbursement of Fund Expenses............... (1.15%)(6) (0.57%)(7)
Total Annual Fund Operating Expenses (after
reimbursement).............................. 0.95% 0.45%
</TABLE>
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(1) The fees and expenses described in this table and the Examples below
reflect the fees and expenses of each Fund and of the Money Market
Master Portfolio in which both Funds currently invest. Hewitt
Institutional Money Market Fund was formerly known as the Institutional
Shares of Hewitt Money Market Fund.
(2) Includes investment advisory fee payable by Hewitt Money Market Fund to
Hewitt Associates LLC, the Fund's manager. This management fee payable
to Hewitt Associates LLC is reduced by the full amount of the investment
advisory fee and ordinary operating expenses of the Money Market Master
Portfolio in which Hewitt Money Market Fund currently invests.
(3) Includes investment advisory fee and ordinary operating expenses of the
Money Market Master Portfolio in which Hewitt Institutional Money Market
Fund currently invests.
(4) This amount is based on estimated amounts for the current fiscal year
and includes a Shareholder Servicing Fee of 0.25%.
(5) This amount includes a Shareholder Servicing Fee of 0.20%.
(6) Hewitt Associates LLC has contractually agreed to waive fees and to
absorb expenses of Hewitt Money Market Fund (excluding interest,
brokerage commissions and extraordinary expenses) to the extent
necessary to assure that total ordinary operating expenses of the Fund
do not exceed annually 0.95% of the average daily net assets of the
Fund. The Fund has agreed to repay Hewitt Associates LLC in the amount
of the fees waived and the Fund expenses absorbed, subject to the
limitations that: (1) the reimbursement is made only for fees and
expenses incurred not more than three years prior to the date of
reimbursement; and (2) the reimbursement may not be made if it would
cause the annual expense limitation to be exceeded. The arrangement will
remain in effect unless and until the Board of Trustees of the Trust
approves its modification or termination.
(7) The administration agreement of Hewitt Institutional Money Market Fund
requires Hewitt Associates LLC to absorb expenses of the Fund (excluding
interest, brokerage commissions and extraordinary expenses) to the
extent necessary to assure that total ordinary operating expenses of the
Fund do not exceed annually 0.45% of the Fund's average daily net
assets. The initial term of this agreement expires on August 23, 2002,
but may be renewed for successive terms of one year subject to the
approval of the Board of Trustee of the Trust. For the Examples below,
it is assumed that this contract will remain in effect for the period
indicated.
The following Examples are intended to help you compare the cost of
investing in each Fund with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in a Fund for the time periods
indicated and then redeem all your shares at the end of those periods. They
also assume that your investment has a 5% return each year and that a Fund's
operating expenses are as estimated above (including any expense reimbursement
arrangement as described in the table above) and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your
costs would be:
<TABLE>
<CAPTION>
1 3 5 10
Example Year Years Years Years
------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Hewitt Money Market Fund $97 $303 NA NA
Hewitt Institutional Money Market Fund $46 $145 $252 $567
</TABLE>
5
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective. Hewitt Money Market Fund (the "Money Market Fund") and
Hewitt Institutional Money Market Fund (the "Institutional Fund") each seek to
provide a high level of income, while preserving capital and liquidity, by
investing in high quality, short-term securities.
Investment Policies. The Funds pursue their investment objectives by
investing all of their investable assets in the Money Market Master Portfolio
(the "Portfolio"). The Portfolio is a series of Master Investment Portfolio
("MIP"), which is an investment company, and has the same investment objective
and substantially the same investment policies as the Funds. It invests
exclusively in high quality, short-term debt securities (money market
instruments), including: U.S. Government obligations; certificates of deposit,
time deposits and other obligations issued by domestic banks; commercial paper
and other debt obligations of corporations; and repurchase agreements with
respect to these obligations.
Securities purchased by the Portfolio must be determined by Barclays Global
Fund Advisors ("BGFA"), the investment adviser of the Portfolio, to present
minimal credit risks pursuant to procedures adopted by the Board of Trustees
of MIP. Investments purchased by the Portfolio will at the time of purchase be
rated as high quality by at least two nationally recognized statistical rating
organizations ("NRSROs") (or by one NRSRO if the instrument is rated by only
one such organization). However, the Portfolio may purchase an unrated
investment if it is determined by BGFA to be of comparable quality to an
investment rated as high quality, in accordance with procedures established by
the Board of Trustees of MIP. Subsequent to its purchase by the Portfolio, an
issue of securities may cease to be rated or its rating may be reduced below
the minimum required rating. BGFA will consider any such event in determining
whether the Portfolio should continue to hold the securities. If the Portfolio
continues to hold the securities, it may be subject to additional risk of
default.
Types of Investments. Subject to applicable investment policies and
restrictions, BGFA purchases and sells securities for the Portfolio based on
its assessment of current market conditions and its expectations regarding
future changes in interest rates and economic conditions. The Portfolio may
invest in the following types of securities:
U.S. Government Obligations--These obligations include debt securities
issued or guaranteed as to principal and interest by the U.S. Government or
one of its agencies or instrumentalities. Payment of principal and interest
on U.S. Government obligations (i) may be backed by the full faith and
credit of the United States (as with U.S. Treasury obligations and GNMA
certificates) or (ii) may be backed solely by the issuing or guaranteeing
agency or instrumentality itself (as with FNMA notes). In the latter case,
the investor must look principally to the agency or instrumentality issuing
or guaranteeing the obligation for ultimate repayment. There can be no
assurance that the U.S. Government would provide financial support to its
agencies or instrumentalities where it is not obligated to do so. Certain
types of U.S. Government obligations are subject to fluctuations in yield
or value due to their structure or contract terms.
Bank Obligations--These obligations include, but are not limited to,
negotiable certificates of deposit, bankers' acceptances and fixed time
deposits of U.S. banks, foreign banks, foreign branches of U.S. banks, and
U.S. branches of foreign banks. The Portfolio may invest 25% or more of its
total assets in obligations of banks, to the extent that the SEC, by rule
or interpretation, permits funds to reserve freedom to concentrate their
investments in such obligations.
Fixed time deposits are bank obligations that are payable at stated
maturity dates and bear fixed rates of interest. They generally may be
withdrawn on demand, but may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity of the
obligation. Although fixed time deposits do not have an established market,
there are no contractual restrictions on the Portfolio's right to transfer
a beneficial interest in the deposit to a
6
<PAGE>
third party. The Portfolio will not invest in fixed time deposits subject
to withdrawal penalties, other than overnight deposits, if as a result more
than 10% of the value of its net assets would be invested in illiquid
securities.
Obligations of foreign banks and foreign branches of U.S. banks involve
somewhat different investment risks from those affecting domestic
obligations. Liquidity could be impaired because of political and economic
developments and the obligations may be less marketable than comparable
obligations of U.S. banks. A foreign jurisdiction might impose withholding
taxes on interest income payable on those obligations and there is a risk
that foreign deposits may be seized or nationalized. Foreign governmental
restrictions (such as foreign exchange controls) may be adopted which might
adversely affect the payment of principal and interest on those obligations
and the selection of those obligations may be more difficult because there
may be less publicly available information concerning foreign banks or the
accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign banks may differ from those applicable
to U.S. banks. Foreign banks are not subject to examination by any U.S.
Government agency.
Commercial Paper and Short-Term Corporate Debt Instruments--Commercial
paper is a short-term, unsecured promissory note issued by a corporation to
finance its short-term credit needs. It is usually sold on a discount basis
and has a maturity at the time of issuance not exceeding nine months.
Variable amount master demand notes are a type of commercial paper. These
notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements
between the issuer and a commercial bank acting as agent for the payee of
the notes. Both parties have the right to vary the amount of the
outstanding indebtedness on the notes.
Corporate debt securities include non-convertible bonds and debentures that
have not more than thirteen months remaining to maturity at the time of
their purchase by the Portfolio.
Repurchase Agreements--These agreements involve the purchase of a security
by the Portfolio coupled with the agreement of the seller of the security
to repurchase that security on a future date and at a specified price
together with interest. The maturities of repurchase agreements are
typically quite short, often overnight or a few days. The Portfolio may
enter into repurchase agreements with respect to securities that it may
purchase under its investment policies without regard to the maturity of
the securities underlying the agreements. All repurchase transactions are
fully collateralized. However, the Portfolio may incur a loss on a
repurchase transaction if the seller defaults and the value of the
underlying collateral declines or the Portfolio's ability to sell the
collateral is restricted or delayed. The Portfolio may participate in
pooled repurchase agreement transactions with other funds advised by BGFA.
Letters of Credit--Debt obligations which the Portfolio is permitted to
purchase may be backed by an unconditional and irrevocable letter of credit
of a bank, savings and loan association or insurance company which assumes
the obligation for payment of principal and interest in the event of
default by the issuer. Letter of credit-backed investments must, in the
opinion of BGFA, be of investment quality comparable to other permitted
investments.
Floating-Rate and Variable-Rate Obligations--Debt obligations purchased by
the Portfolio may have interest rates that are periodically adjusted at
specified intervals or whenever a benchmark rate or index changes. These
floating- and variable-rate instruments may include certificates of
participation in such instruments.
Investment Restrictions. The Funds and the Portfolio are subject to various
additional restrictions on their investments in addition to those described in
this Prospectus. Certain of those restrictions, as well as the restrictions on
concentration of investments described above and the investment objective of
the Funds and the Portfolio, are deemed fundamental policies. These
fundamental policies cannot be changed without the approval of the holders of
a majority of the applicable Fund's or the Portfolio's outstanding voting
securities, as defined in the Investment Company Act of 1940 (the "Investment
Company Act").
7
<PAGE>
MANAGEMENT ARRANGEMENTS
Board of Trustees. The business and affairs of the Funds are managed under
the direction and supervision of the Board of Trustees of Hewitt Series Trust
(the "Trust").
The Manager of the Money Market Fund. Hewitt Associates LLC ("Hewitt
Associates" or the "Manager"), which is located at 100 Half Day Road,
Lincolnshire, IL 60069, serves as the investment adviser of the Money Market
Fund. Hewitt Associates is responsible for managing the Money Market Fund's
investment portfolio and also provides various administrative services to that
Fund. For these services, the Money Market Fund pays a monthly fee to Hewitt
Associates which is computed at the annual rate of 0.40% of the Fund's average
daily net assets.
Hewitt Associates is a limited liability company which has 481 principals
and is engaged in providing a variety of consulting services, principally in
the areas of employee benefits, compensation and asset management. Since the
1960s, it has provided asset management, allocation and manager selection
consulting services to institutional investors.
Subject to the approval of the Board of Trustees of the Trust, Hewitt
Associates is authorized to pursue the investment objective of the Money
Market Fund by investing all of the Fund's investable assets in another pooled
investment fund, such as the Portfolio. When the Money Market Fund pursues its
objective in this manner, the investment advisory fee payable to Hewitt
Associates by the Fund is reduced by the full amount of the Portfolio's
advisory fee and other ordinary operating expenses that are borne by the Fund
as an investor in the Portfolio. The Board of Trustees of the Trust has
authorized Hewitt Associates to invest the Fund's assets in the Portfolio.
(The Institutional Fund does not have any investment adviser and does not
pay an investment advisory fee except for the advisory fee it bears indirectly
as an investor in the Portfolio.)
The Portfolio's Adviser. BGFA serves as the investment adviser of the
Portfolio. BGFA is an indirect subsidiary of Barclays Bank PLC and is located
at 45 Fremont Street, San Francisco, California 94105. As of December 31,
1999, BGFA and its affiliates provided investment advisory services to
accounts with assets of approximately $783 billion. The Portfolio pays BGFA a
monthly fee which is computed at the annual rate of 0.10% of the Portfolio's
average daily net assets. In consideration of this fee, BGFA provides
investment advice and is obligated to bear all of the ordinary operating
expenses of the Portfolio.
BGFA manages the assets of the Portfolio in accordance with the Portfolio's
investment objective and policies. The primary responsibility of BGFA is to
formulate a continuing investment program and to make all decisions regarding
the purchase and sale of securities for the Portfolio.
Administrator of the Institutional Fund. Hewitt Associates provides
administration services to the Institutional Fund. Services provided in that
capacity include, but are not limited to: managing the daily operations and
business affairs of the Institutional Fund, subject to the supervision of the
Board of Trustees of the Trust; overseeing the preparation and maintenance of
all documents and records required to be maintained by the Institutional 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 with respect to the Institutional Fund for meetings of the Board of
Trustees of the Trust and meetings of shareholders of the Institutional Fund.
The Institutional Fund pays Hewitt Associates a monthly management fee
calculated at the annual rate of 0.10% of the Fund's average daily net assets
for these services.
8
<PAGE>
HOW TO BUY SHARES
The Money Market Fund. Shares of the Money Market Fund are available for
purchase by individuals and other investors through Hewitt Services LLC, which
serves as distributor of the Fund's shares (the "Distributor"), or through
securities dealers and other financial intermediaries which have entered into
dealer agreements with the Distributor. No sales commissions or other charges
are imposed by the Money Market Fund when shares are purchased or redeemed.
However, shares bear certain distribution related expenses. See "Distribution
and Servicing Arrangements".
You should contact your financial intermediary or the Distributor to
purchase shares of the Money Market Fund or call 1-800-890-3200. If you are
not purchasing shares through a financial intermediary, you will need to
submit a completed Account Application before purchasing shares.
For additional information on purchasing shares or to request an Account
Application, please call 1-800-890-3200.
The Institutional Fund. Shares of the Institutional Fund are offered for
sale exclusively to employee benefit plans which are recordkeeping clients of
Hewitt Associates. Employee benefit plans may include 401(k) plans and plans
qualified under Sections 401(a) or 403(b) of the Internal Revenue Code of
1986, as amended, health and welfare plans and executive deferred compensation
plans. Participants in any employee benefit plan that makes shares of the
Institutional Fund available as an investment option to participants should
contact their plan administrator if they wish to purchase shares of the
Institutional Fund for their plan accounts. The plan administrator will
provide information regarding the procedures to be followed to purchase
shares. No sales commissions or other charges are imposed by the Fund when
shares are purchased or redeemed.
For employee benefit plans seeking additional information on purchasing
shares of the Institutional Fund, please call Hewitt Associates at 1-800-221-
4524. The appropriate plan fiduciary must submit a completed Account
Application before the plan or its participants may purchase shares of the
Fund.
Minimum Initial and Subsequent Investment Amounts. Generally, no minimum
initial or subsequent investment requirements apply to the purchase of shares
of the Money Market Fund. However, if shares of the Money Market Fund are not
held with a financial intermediary that maintains record ownership of shares
on an omnibus basis for its customers: (i) the initial purchase of shares must
be in an amount of $10,000 or more; (ii) subsequent purchases of shares must
be $1,000 or more; and (iii) the Fund will have the right to effect a
mandatory redemption of those shares if, as a result of one or more
redemptions, a shareholder's account has an aggregate value of less than
$5,000. Before the Money Market Fund effects a mandatory redemption of shares,
you will be notified and given 60 days to increase the amount of your
investment in the Fund.
No minimum initial or subsequent investment requirements apply to the
purchase of shares of the Institutional Fund.
Shareholder Accounts. The Funds do not issue certificates for shares.
Instead, an account is maintained for each shareholder by Investors Bank &
Trust Company, as the transfer agent for the Funds (the "Transfer Agent"), or
by the Distributor as shareholder servicing agent for the Money Market Fund.
Your account will reflect the full and fractional shares that you own.
Shareholders are sent confirmations of each transaction in shares and monthly
statements showing account balances.
General Information. Shares of the Funds may be purchased on any Business
Day. A Business Day is any day that the New York Stock Exchange (NYSE) is open
and that is not a federal bank holiday. All purchases of shares are effected
at the net asset value per share of the applicable Fund next determined after
(i) an order with the necessary information is received
9
<PAGE>
by Hewitt Associates (in the case of the Institutional Fund) or by the
Distributor or your financial intermediary (in the case of the Money Market
Fund) and (ii) federal funds are received by the custodian for the Funds.
Purchase orders received prior to the close of regular trading on the NYSE
(normally, 4:00 p.m., Eastern time) are effected at the net asset value per
share determined as of the close of regular trading on the NYSE on that
Business Day. See "Net Asset Value." Orders received after the close of
regular trading on the NYSE are effected at the net asset value per share
determined on the next Business Day.
Purchase by Federal Funds Wire. The Funds do not impose any transaction
charges; however, wire charges may be imposed by the bank which transmits the
wire. Shares of the Money Market Fund may be purchased by wiring federal funds
to your financial intermediary. Please contact your financial intermediary for
the wiring instructions. The Institutional Fund shares may be purchased by
wiring federal funds to the Transfer Agent. Purchase payments of Institutional
Shares should be wired to:
Investors Bank & Trust Company
Boston, Massachusetts
Attn: Transfer Agent
ABA number: 011001
DDA number: 555555535
For further credit to: account name, fund and account info
HOW TO REDEEM SHARES
You may redeem all or a portion of your shares of a Fund on any Business Day
without any charge by the Fund. Shares are redeemed at their net asset value
per share next computed after the receipt of a redemption request in with the
required information as described below.
The Money Market Fund. Requests to redeem shares of the Money Market Fund
may be made in writing or by telephone as described below. Redemption proceeds
for shares will be paid by check or, if you request, by federal funds wire
(minimum wire amount $50,000) to a pre-designated bank account.
You may designate a bank account to receive redemption payments on your
Account Application for the Money Market Fund. You may change this designation
at any time, by providing written instructions to the Distributor. These
instructions must be signed by each person shown on the account registration
as an owner of the account, and the signatures must be guaranteed by an
eligible guarantor institution as described under "Written Redemption
Requests" below. Signature guarantees may also be required for you to change
your address on the Money Market Fund's records.
Telephone Redemption Procedures (the Money Market Fund Only). You may redeem
shares of the Money Market Fund through your financial intermediary or by
calling the Distributor at 1-800-890-3200. If you call the Distributor, you
will be asked to provide the account name and number, and the amount of the
redemption. Proceeds of the redemption will be paid by sending you a check,
unless you request payment by federal funds wire to a pre-designated bank
account (minimum wire amount $50,000). A telephone redemption request may be
made only if the telephone redemption procedure has been selected on the
Account Application or if written instructions authorizing telephone
redemption have been filed with the Distributor.
The Distributor uses certain reasonable procedures to confirm that telephone
redemption requests are genuine, such as recording telephone calls, providing
written confirmation of transactions, or requiring a form of personal
identification or other information prior to effecting a telephone redemption.
If these procedures are used, the Money Market Fund, the Distributor and the
Transfer Agent will not be liable to you for any loss due to fraudulent or
unauthorized telephone instructions.
10
<PAGE>
During periods of severe market or economic conditions, it may be difficult
to contact the Distributor by telephone. In that event, you should either
place your redemption request through your financial intermediary or follow
the procedures described below for written redemption requests, but send the
request by overnight delivery service to your financial intermediary or to the
Distributor.
Written Redemption Requests (the Money Market Fund Only). You may redeem
shares of the Money Market Fund by sending a written redemption request. The
request must include the complete account name and address and the amount of
the redemption, and must be signed by each person shown on the account
registration as an owner of the account. The signature of each person signing
the request must be guaranteed by an eligible guarantor institution if the
redemption is $5,000 or more. Organizations that may qualify as eligible
guarantor institutions include banks, brokers, dealers, national securities
exchanges, clearing agencies, credit unions, and savings associations. The
Money Market Fund reserves the right to request additional information from,
and to make reasonable inquiries of, any eligible guarantor institution.
Proceeds of the redemption will be paid by sending you a check, unless you
request payment by federal funds wire to a pre-designated bank account
(minimum wire amount $50,000). Written redemption requests should be sent to
your financial intermediary or to the Distributor.
For additional information on redeeming shares of the Money Market Fund,
please call 1-800-890-3200.
The Institutional Fund. Participants in any employee benefit plan that
allows participants to direct the investment of their plan accounts in the
Institutional Fund should contact their plan administrator for information and
instructions on redeeming shares of the Institutional Fund. Requests by
employee benefit plans to redeem shares may be transmitted to Hewitt
Associates, as shareholder servicing agent, in accordance with procedures
established by the plans with Hewitt Associates. Redemption proceeds will be
paid by federal funds wire to a bank account designated by the plan.
For additional information on redeeming shares of the Institutional Fund,
please call 1-800-221-4524 or your benefit plan administrator.
General Information. Redemption requests are effected at the net asset value
per share next computed after receipt of a redemption request with the
required information by the Distributor or its agent (in the case of the Money
Market Fund) or Hewitt Associates (in the case of the Institutional Fund).
Requests received prior to the close of regular trading on the NYSE (normally,
4:00 p.m., Eastern time) are effected at the net asset value per share
determined as of the close of regular trading on the NYSE on that Business
Day. See "Net Asset Value." Requests received after the close of regular
trading on the NYSE are effected at the net asset value per share of the
applicable Fund determined on the next Business Day. Redemption proceeds are
usually mailed or wired on the Business Day following the day a redemption is
effected. In unusual circumstances, a Fund may suspend the right of redemption
or postpone the payment of redemption proceeds for more than seven days as
permitted under the Investment Company Act.
The Funds may pay redemption proceeds by distributing in-kind securities
held by the Portfolio, but will do so only in the unlikely event that the
Board of Trustees of the Trust determines that payment of the proceeds in cash
would adversely affect other shareholders of the Funds. A shareholder who
redeems during any 90 day period shares having a value not exceeding the
lesser of (i) $250,000 or (ii) 1% of the net assets of a Fund, will not be
subject to this procedure.
NET ASSET VALUE
The net asset value per share of each Fund is computed on each Business Day.
Net asset value per share is determined as of the close of regular trading on
the NYSE (normally, 4:00 p.m. Eastern time). However, on any day the trading
markets
11
<PAGE>
for both U.S. Government securities and money market instruments close early,
net asset value will be computed as of the earlier closing time.
The net asset value per share of each Fund's shares is separately calculated
by dividing the value of the Fund's total assets, less its liabilities
(including accrued expenses), by the number of shares outstanding. Because the
Funds currently invest in the Portfolio, their assets consist primarily of an
interest in the Portfolio. The value of this interest will depend on the value
of the assets of the Portfolio and its liabilities and expenses.
In determining the value of the Portfolio's assets, securities held by the
Portfolio are valued using the "amortized cost" method of valuation. This
method involves valuing each investment at cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the
investment. Amortized cost valuation provides certainty in valuation, but may
result in periods during which the value of an investment, as determined by
amortized cost, is higher or lower than the price that would be received if
the investment were sold. BGFA monitors the deviation between the net asset
value of the Portfolio determined by using available market quotations or
market equivalents and its net asset value determined by using amortized cost.
If it is determined that use of amortized cost valuation will result in
material dilution or other unfair results, the assets of the Portfolio may be
valued based upon market quotations.
The use of amortized cost valuation by the Portfolio, together with the
Money Market Fund's policy of declaring daily dividends, is designed to permit
the Money Market Fund to maintain a net asset value per share of $1.00.
However, the Money Market Fund does not guarantee that a constant net asset
value of $1.00 per share can be maintained. Unlike the Money Market Fund and
most other money market funds, the Institutional Fund does not seek to
maintain a stable net asset value per share. Its net asset value per share can
be expected generally to increase during the course of each month to the
extent that it declares dividends at the end of each month, rather than daily.
DIVIDENDS AND DISTRIBUTIONS
Each Fund pays dividends from the its net investment income (after deduction
of expenses) and any realized short-term capital gains. In the case of the
Money Market Fund, these dividends are declared daily and paid monthly. The
Institutional Fund declares and pays dividends monthly. Distributions of net
realized long-term capital gains, if any, are declared and paid annually by
each Fund at the end of its fiscal year. All dividends and other distributions
are automatically reinvested in full and fractional shares of the applicable
Fund at the net asset value per share in effect on the payment date, unless
otherwise requested. Shareholders of the Money Market Fund may request that
dividends and other distributions be paid by check by sending a written
request to the Distributor. Shareholders of the Institutional Fund should send
their requests to Hewitt Associates. Any requests by shareholders of a Fund to
change their dividend reinvestment election must be received at least five
Business Days prior to a payment date in order to be effective on that date.
Dividends are payable to all shareholders of record as of the time of
declaration. Shares become entitled to any dividend declared beginning on the
day on which they are purchased and are entitled to receive any dividends
declared through the day before they are redeemed.
In order to satisfy certain distribution requirements of the Internal
Revenue Code of 1986, as amended, the Funds may declare special or regular
year-end dividend and capital gains distributions during October, November or
December. If received by shareholders by January 31, these distributions are
deemed to have been paid by a Fund and received by shareholders on December 31
of the prior year.
12
<PAGE>
TAXES
Taxation of the Funds. Each Fund has elected and intends to qualify each
year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. If so qualified, a Fund will not be subject
to federal income tax to the extent it distributes its net income to
shareholders.
Federal Taxation of Shareholders. Dividend distributions, whether received
in cash or reinvested in additional shares of a Fund, will be taxable as
ordinary income. Although the Funds do not expect to distribute any long-term
capital gains, shareholders of a Fund will also be subject to tax on any
capital gains distributions they receive. Since the Funds do not expect to
earn dividend income, the dividends and other distributions each Fund pays
will generally not qualify for the dividends-received deduction available to
corporate investors. In January of each year, each Fund sends its shareholder
a statement showing the tax status of distributions for the past calendar
year.
The redemption of shares of a Fund is a taxable event and may result in a
gain (or loss) for federal income tax purposes, depending on the amount you
receive and the cost of your shares.
The Funds are required to withhold 31% of all taxable distributions and
redemption proceeds paid to shareholders who either have not complied with IRS
taxpayer identification regulations or are otherwise subject to backup
withholding. Investors are asked to certify in their Account Applications that
their taxpayer identification numbers are correct and that they are not
subject to backup withholding. Failure to provide this certification will
result in backup withholding.
State and Local Taxes. Dividends and other distributions paid by a Fund and
received by an investor may be subject to state and local taxes. Although
shareholders of the Funds do not directly receive interest on U.S. Government
securities held by a Fund or the Portfolio, certain states and localities may
allow the character of the Funds' income to pass through to shareholders. If
so, the portion of dividends paid by a Fund that is derived from interest on
certain U.S. Government securities may be exempt from state and local taxes.
Applicable rules vary from state to state, and interest on certain securities
of U.S. Government agencies may not qualify for the exemption in some states.
The United States Supreme Court has ruled that income from certain types of
repurchase agreements involving U.S. Government securities does not constitute
interest on U.S. Government securities for this purpose. However, it is not
clear whether the Court's holding extends to all types of repurchase
agreements involving U.S. Government securities in which the Fund may invest.
Any exemption from state and local income taxes does not preclude states from
assessing other taxes (such as intangible property taxes) on the ownership of
U.S. Government securities.
The discussion set forth above regarding federal and state income taxation
is included for general information only. Prospective investors should consult
their own tax advisors concerning the federal and state tax consequences of an
investment in a Fund.
DISTRIBUTION AND SERVICING ARRANGEMENTS
Distributor. Hewitt Services LLC (the "Distributor"), a broker-dealer
affiliated with Hewitt Associates, serves as the distributor of each Fund's
shares. The Distributor is located at 100 Half Day Road, Lincolnshire, IL
60069.
Shareholder Servicing Arrangements for the Money Market Fund. The Money
Market Fund has retained the Distributor to serve as shareholder servicing
agent. In such capacity, the Distributor is responsible for maintaining
records showing the number of shares of the Money Market Fund owned by
investors who have purchased shares through the
13
<PAGE>
Distributor. As shareholder servicing agent, the Distributor is also
responsible for sending shareholder communications relating to the Money
Market Fund to shareholders or to arrange for these materials to be sent. For
these services, the Money Market Fund pays the Distributor a monthly fee
calculated at an annual rate of 0.25% of its average daily net assets. The
Money Market Fund also reimburses the Distributor for certain out-of-pocket
expenses incurred in providing shareholder services.
Shareholder Servicing Arrangements for the Institutional Fund. The
Institutional Fund has retained Hewitt Associates to serve as shareholder
servicing agent. In such capacity, Hewitt Associates is responsible for
receiving on behalf of the Transfer Agent orders by employee benefit plans to
purchase and redeem shares of the Institutional Fund and for maintaining
records showing the number of shares allocable to individual participant
accounts in those plans. In addition, as shareholder servicing agent, Hewitt
Associates sends all shareholder communications relating to the Institutional
Fund to shareholders and to plan participants or arranges for these materials
to be sent. For these services, the Institutional Fund pays Hewitt Associates
a monthly fee calculated at the annual rate of 0.20% of the average daily net
assets of the Fund.
Distribution Fee (the Money Market Fund Only). The Money Market Fund has
adopted a plan pursuant to Rule 12b-1 under the Investment Company Act that
allows the Fund to pay expenses relating to the distribution of its shares.
Under the plan, the Money Market Fund pays a fee to the Distributor,
calculated at an annual rate of 0.25% of the Fund's average daily net assets,
as compensation for services rendered in connection with the sale and
distribution of shares. Because these fees are paid out of the Fund's assets
on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
The Distributor may pay all or a portion of this fee to securities dealers
and other financial intermediaries that provide on-going shareholder services
to their customers who own shares of the Money Market Fund. In addition, the
Distributor and the Manager may make additional payments to those
organizations to compensate them for Fund-related services they provide.
PERFORMANCE INFORMATION
Each Fund may publish its "current yield" and "effective yield" in
advertisements, sales materials and shareholder reports. Current yield refers
to the income generated by an investment in the applicable Fund over a seven-
day period; the income is then annualized. In annualizing income, the amount
of income generated by the investment during the period is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated in the same manner, but when
annualized, the income earned by an investment in a Fund is assumed to be
reinvested. The effective yield will be slightly higher than the current yield
because of the compounding effect of the assumed reinvestment. All quotations
of investment performance are based upon historical investment results and are
not intended to predict future performance.
In addition, comparative performance information may be used from time to
time by each Fund in advertisements, sales literature and shareholder reports.
This information may include data, ratings and rankings from Lipper Analytical
Services, Inc., iMoney Net's Money Fund Report, The Bank Rate Monitor,
Morningstar and other industry publications, business periodicals and
services. Comparisons to recognized market indices and to the returns on
specific money market securities or types of securities or investments may
also be used. The Funds may disseminate yields for periods longer than seven
days, and may report their total returns. The "total return" of a Fund refers
to the average annual compounded rate of return over a specified period (as
stated in the advertisement) that would equate an initial amount invested at
the beginning of the period to the end of period redeemable value of the
investment, assuming the reinvestment of all dividends and distributions.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The following table presents the financial highlights for a share
outstanding throughout the periods indicated. The information in the table has
been audited by KPMG LLP, the Fund's independent auditors. It should be read
in conjunction with the financial statements and related notes contained in
the annual report to shareholders of the Institutional Fund. The annual report
to shareholders may be obtained without charge. Information is included for
the Institutional Fund only. The Institutional Fund was previously known as
the Institutional Shares of Hewitt Money Market Fund. Information is not
included for periods subsequent to the date of this Prospectus. Therefore,
there are no financial highlights for the Money Market Fund which did not
commence operations until the date of this Prospectus.
Hewitt Institutional Money Market Fund
<TABLE>
<CAPTION>
1/1/00 to
6/30/00 3/1/99 to 10/1/98 to
(Unaudited) 12/31/99* 2/28/99**
----------- --------- ----------
<S> <C> <C> <C>
Net Asset Value, beginning of period....... $100.52 $100.30 $100.00
Income from investment operations:
Net investment income.................... 2.76 3.90 1.97
Net realized gain on investments......... 0.12 0.22 0.00
------- ------- -------
Total from investment operations........... 2.88 4.12 1.97
Less distributions:
From net investment income............... (2.76) (3.90) (1.67)
From net realized gains.................. 0.00 0.00*** 0.00
Total distributions:....................... (2.76) (3.90) (1.67)
Net Asset Value, end of period............. $100.64 $100.52 $100.30
======= ======= =======
Total Return (not annualized).............. 2.90% 4.18% 1.98%
Ratios/Supplemental data:
Net assets, end of period (000).......... $82,031 $43,068 $10,949
Number of shares outstanding, end of pe-
riod (000).............................. 815 428 109
Ratios to average net assets(****):
Ratio of expenses to average net as-
sets(1)................................. 0.45% 0.44% 0.45%
Ratio of net investment income to average
net assets(2)........................... 5.83% 5.03% 4.86%
------------
(1) Ratio of expenses to average net assets
prior to reimbursement of fees and
expenses(****)......................... 0.58% 0.72% 1.62%
(2) Ratio of net investment income to
average net assets prior to
reimbursement of fees and
expenses(****)......................... 5.32% 4.75% 3.69%
</TABLE>
(*) For ten months ended December 31, 1999. The Institutional Fund changed
its fiscal year end from February 28 to December 31.
(**) For the period from October 1, 1998 (commencement of operations) to
February 28, 1999.
(***) Rounds to less than $0.01.
(****) Annualized.
15
<PAGE>
ADDITIONAL INFORMATION
Organization. The Trust is a Delaware business trust that was organized on
July 7, 1998. It is authorized to issue an unlimited number of shares of
beneficial interest, $.001 par value. As of the date of this Prospectus, the
Trust has two series of its shares outstanding. One of these series represents
interests in the Money Market Fund and the other series represents interests
in the Institutional Fund. The Money Market Fund was organized on August 23,
2000 and commenced operations as of the date of this Prospectus. The
Institutional Fund (which previously was known as the Institutional Shares of
Hewitt Money Market Fund) was the initial series of the Trust and commenced
operations on October 1, 1998. The Board of Trustees of the Trust has the
power to establish additional series of shares, representing interests in
additional investment portfolios and, subject to applicable laws and
regulations, to issue two or more classes of shares of each series. Shares are
fully paid and non-assessable, and have no preemptive or conversion rights.
Shareholders of each Fund are entitled to vote, together with the holders of
any other series of the Trust's shares, on the election of Trustees and the
ratification of the Trust's independent auditors when those matters are voted
upon at a meeting of shareholders. Shareholders will also be entitled to vote
on certain other matters as required by the Investment Company Act or the
Trust's Declaration of Trust. On these other matters, shares of each Fund will
generally be voted as a separate class from other series of the Trust's
shares. Each share (and fractional share) is entitled to one vote (or fraction
thereof). However, if shares of more than one class or series vote together on
a matter, each share will have that number of votes which equals the net asset
value of such share (or fraction thereof). All shares have non-cumulative
voting rights, meaning that shareholders entitled to cast more than 50% of the
votes for the election of Trustees can elect all of the Trustees standing for
election if they choose to do so. As discussed below, each Fund will pass
through to its shareholders the right to vote on Portfolio matters requiring
shareholder approval.
Information Concerning Investment Structure. The Funds do not invest
directly in securities. Instead, each Fund invests all of its investable
assets in the Portfolio, a separate series of MIP. The Portfolio has the same
investment objective and substantially the same investment policies as the
Funds. The Portfolio, in turn, purchases, holds and sells investments in
accordance with that objective and those policies. The Board of Trustees of
the Trust believes that the per share expenses of each Fund (including its
share of the Portfolio's expenses) will be less than or approximately equal to
the expenses that a Fund would incur if its assets were invested directly in
securities and other investments.
A Fund may withdraw its assets from the Portfolio at any time, and will do
so if the Board of Trustees of the Trust believes it to be in the best
interest of a Fund's shareholders. If a Fund withdraws its investment in the
Portfolio, it will either invest directly in securities in accordance with the
investment policies described in this Prospectus (which in the case of the
Institutional Fund will require the retention of an investment adviser, and
the approval of an investment advisory agreement by the Board of Trustees and
that Fund's shareholders) or will invest in another pooled investment vehicle
that has the same investment objective and substantially the same policies as
the Fund. In connection with the withdrawal of its interest in the Portfolio,
a Fund could receive securities and other investments from the Portfolio
instead of cash. This could cause a Fund to incur certain expenses.
A change in the investment objective, policies or restrictions of the
Portfolio may cause the Funds to withdraw their investments in the Portfolio.
Alternatively, a Fund could seek to change its objective, policies or
restrictions to conform to those of the Portfolio. The investment objective
and certain of the investment restrictions of the Portfolio may not be changed
without the approval of investors in the Portfolio. When a Fund is asked to
vote on such a change or on other matters concerning the Portfolio, the Fund
will hold a shareholders meeting and vote its interest in the Portfolio in the
same manner as shares of that Fund are voted.
16
<PAGE>
Shares of the Portfolio are held by investors other than the Funds. These
investors may include other series of the Trust, other mutual funds and other
types of pooled investment vehicles. When investors in the Portfolio vote on
matters affecting the Portfolio, the Funds could be outvoted by other
investors. The Funds may also otherwise be adversely affected by other
investors in the Portfolio. These other investors offer shares (or interests)
to their investors which have costs and expenses that differ from those of the
Funds. Thus, the investment returns for investors in other funds that invest
in the Portfolio may differ the investment return of shares of the Funds.
These differences in returns are also present in other fund structures.
Information about other holders of shares of the Portfolio is available from
Hewitt Associates or the Distributor.
Custodian. Investors Bank & Trust Company (the "Custodian") is the custodian
for the Funds. The Custodian maintains custody of all securities and cash
assets of each Fund and the Portfolio and is authorized to hold these assets
in securities depositories and to use subcustodians.
Transfer Agent. Investors Bank & Trust Company (the "Transfer Agent") is the
transfer agent and dividend disbursing agent for the Funds. The Transfer Agent
has entered into arrangements with Hewitt Associates under which Hewitt
Associates, as shareholder servicing agent, is authorized to receive and is
responsible to transmit to the Transfer Agent orders to purchase and redeem
shares of the Institutional Fund that are received from employee benefit
plans. Pursuant to these arrangements, Hewitt Associates also maintains
records showing the number of shares of the Institutional Fund allocable to
individual participant accounts in employee benefit plans.
17
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus. If given or
made, such other information and representations should not be relied upon as
having been authorized by the Funds or the Trust.
This Prospectus does not constitute an offer in any state in which, or to
any person, to whom, such offer may not lawfully be made.
INVESTMENT ADVISER (Hewitt Money Market Fund)
ADMINISTRATOR (Hewitt Institutional Money Market Fund)
Hewitt Associates LLC
100 Half Day Road
Lincolnshire, Illinois 60069
DISTRIBUTOR
Hewitt Services LLC
100 Half Day Road
Lincolnshire, Illinois 60069
TRANSFER AGENT
Investors Bank & Trust Company
200 Clarendon Street 16th Floor
Boston, Massachusetts 02116
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street 16th Floor
Boston, Massachusetts 02116
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
The Funds send annual and semi-annual reports to their shareholders. These
reports contain information regarding the investments of the Portfolio and the
investment performance of the Funds and are available without charge from the
Distributor (for the Money Market Fund) and Hewitt Associates (for the
Institutional Fund). If you have questions regarding the Funds, shareholder
accounts, dividends or share purchase and redemption procedures, or if you
wish to receive a Fund's most recent annual or semi-annual reports, please
call 1-800 890-3200 (for Hewitt Money Market Fund) or 1-800-221-4524 (for
Hewitt Institutional Money Market Fund).
18
<PAGE>
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this prospectus, in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Funds or the Distributor. The Prospectus does not
constitute an offer by the Funds or by the Distributor to sell or a solicitation
of any offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
This Prospectus sets forth concisely the information about the Funds and the
Trust that you should know before investing. Additional information about the
Funds and the Trust has been filed with the Securities and Exchange Commission
(SEC) in a statement of Additional Information (SAI) dated November 30, 2000,
which is incorporated herein by reference. The SAI for Hewitt Money Market Fund
is available without charge by writing to the Distributor or by calling 1-800-
890-3200. The SAI for Hewitt Institutional Money Market Fund is available
without charge by writing to Hewitt Associates or by calling 1-800-221-4524.
Information about the Funds (including the SAI) can be reviewed and copied at
the SFC's Public Reference Room in Washington D.C. Information on the operation
of the Public Reference Room may be obtained by calling the SEC at 1-202-8090.
Reports and other information about the Funds is also available on the EDGAR
database on the SEC's Internet site at http://www.sec.gov and copies of this
information may be obtained, upon payment of a duplicating fee by writing the
Public Reference Section of the SEC, Washington D.C. 20549-0102, or at the
following E-mail address: [email protected].
SEC File No. 811-8887
[PICTURE OF TREES]
Hewitt
Money Market
Fund
Hewitt Institutional
Money Market Fund
Prospectus
November 30, 2000
<PAGE>
HEWITT MONEY MARKET FUND
HEWITT INSTITUTIONAL MONEY MARKET FUND
SERIES OF HEWITT SERIES TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 30, 2000
_________________
Hewitt Money Market Fund (the "Money Market Fund") and Hewitt
Institutional Money Market Fund (the "Institutional Money Market
Fund")(individually, a "Fund", collectively, the "Funds") are series of Hewitt
Series Trust (the "Trust"), a diversified, open-end, management investment
company. This Statement of Additional Information ("SAI") contains information
about the Funds which supplements the information contained in the Funds'
Prospectus. The investment objective and policies of the Funds are described
in the Prospectus.
The Institutional Money Market Fund's and the Money Market Master
Portfolio's audited financial statements appearing in the Annual Report to the
shareholders of those funds, dated December 31, 1999, and the independent
auditor's report thereon are incorporated by reference in this SAI. The
Institutional Money Market Fund's and the Money Market Master Portfolio's
financial statements appearing in the Institutional Money Market Fund's Semi-
Annual Report to shareholders, dated June 30, 2000 are also incorporated by
reference in this SAI.
This SAI is not a prospectus and should be read in conjunction with
the Funds' current Prospectus, dated November 30, 2000. A copy of the Prospectus
and the Annual Reports and Semi-Annual Reports of the Funds which contain the
referenced statements. may be obtained without charge by writing Hewitt
Services LLC at 100 Half Day Road, Lincolnshire, Illinois 60069 or by calling
1-800-890-3200.
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION.............................................................. 1
INVESTMENT RESTRICTIONS................................................... 1
INVESTMENT POLICIES AND PRACTICES......................................... 3
MANAGEMENT................................................................ 7
DISTRIBUTION ARRANGEMENTS................................................. 11
EXPENSES.................................................................. 13
DETERMINATION OF NET ASSET VALUE.......................................... 14
PURCHASE AND REDEMPTION OF SHARES......................................... 15
PORTFOLIO TRANSACTIONS.................................................... 16
TAXES..................................................................... 17
PERFORMANCE INFORMATION................................................... 18
ADDITIONAL INFORMATION.................................................... 19
SAI APPENDIX.............................................................. 23
i
<PAGE>
INTRODUCTION
The Trust is registered under the Investment Company Act of 1940 (the
"1940 Act") as an open-end, management investment company. Each of the Funds
pursue its investment objective by investing all of its investable assets in the
Money Market Master Portfolio (the "Portfolio"). The Portfolio is a series of
Master Investment Portfolio ("MIP") and has the same investment objective and
investment restrictions as the Funds. MIP, like the Trust, is registered under
the 1940 Act as an open-end management investment company.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions. The Funds and the Portfolio are
-----------------------------------
subject to certain investment restrictions which are fundamental policies. These
restrictions may not be changed without the approval of a majority of the
outstanding voting securities of a Fund or the Portfolio, as defined by the 1940
Act. A "majority of the outstanding voting securities" of a Fund or of the
Portfolio means the lesser of (i) 67% of the shares of that Fund or of the
Portfolio represented at a meeting at which holders of more than 50% of the
outstanding shares are present in person or represented by proxy or (ii) more
than 50% of the outstanding shares of that Fund or the Portfolio.
Under these fundamental restrictions, none of the Funds nor the
Portfolio may:
(1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of a Fund's or the Portfolio's investments in that
industry would be 25% or more of the current value of such Fund's or the
Portfolio's total assets, provided that there is no limitation with respect to
investments in (i) obligations of the U.S. Government, its agencies or
instrumentalities; (ii) obligations of domestic banks; and provided further,
that a Fund may invest all its assets in a diversified, open-end management
investment company, or a series thereof, having substantially the same
investment objective, policies and restrictions as such Fund;
(2) purchase or sell real estate or real estate limited partnerships
(other than securities secured by real estate or interests therein or securities
issued by companies that invest in real estate or interests therein);
(3) purchase commodities or commodity contracts (including futures
contracts), except that the Funds and the Portfolio may purchase securities of
an issuer which invests or deals in commodities or commodity contracts;
(4) purchase interests, leases, or limited partnership interests in
oil, gas, or other mineral exploration or development programs;
(5) purchase securities on margin (except for short-term credits
necessary for the clearance of transactions and except for margin payments in
connection with options, futures and options on futures) or make short sales of
securities;
(6) underwrite securities of other issuers, except to the extent that
the purchase of permitted investments directly from the issuer thereof or from
an underwriter for an issuer and the later disposition of such securities in
accordance with a Fund's or the Portfolio's investment program may be deemed to
be an underwriting; and provided further, that the purchase by a Fund of
securities issued by a diversified, open-end management investment company, or a
series thereof, having substantially the same investment objective, policies and
restrictions as such Fund shall not constitute an underwriting for this purpose;
-1-
<PAGE>
(7) make investments for the purpose of exercising control or
management; provided that a Fund may invest all its assets in a diversified,
open-end management investment company, or a series thereof, having
substantially the same investment objective, policies and restrictions as the
Fund;
(8) borrow money or issue senior securities as defined in the
Investment Company Act of 1940, except that the Funds and the Portfolio may each
borrow from banks up to 10% of the current value of its net assets for temporary
purposes only in order to meet redemptions, and these borrowings may be secured
by the pledge of up to 10% of the current value of its net assets (but
investments may not be purchased while any such outstanding borrowing in excess
of 5% of net assets exists);
(9) write, purchase or sell puts, calls, straddles, spreads,
warrants, options or any combination thereof, except that the Funds and the
Portfolio may purchase securities with put rights in order to maintain
liquidity;
(10) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of total assets, more than 5% of the value of a
Fund's or the Portfolio's total assets would be invested in the securities of
any one issuer or, with respect to 100% of total assets, a Fund's or the
Portfolio's ownership would be more than 10% of the outstanding voting
securities of any issuer, provided that a Fund may invest all its assets in a
diversified, open-end management investment company, or a series thereof, having
substantially the same investment objective, policies and restrictions as such
Fund; or
(11) make loans, except that the Funds and the Portfolio may purchase
or hold debt instruments or lend their portfolio securities in accordance with
their respective investment policies, and may enter into repurchase agreements.
Non-Fundamental Investment Restrictions. The Funds and the Portfolio
---------------------------------------
are also subject to the following additional investment restrictions which are
non-fundamental policies. These restrictions may be changed by the Board of
Trustees of the Trust or the Board of Trustees of MIP, as the case may be.
(1) The Funds and the Portfolio may each invest in shares of other
open-end, management investment companies, subject to the limitations of Section
12(d)(1) of the 1940 Act. Under the 1940 Act, the Fund's and the Portfolio's
investment in such securities currently is limited, subject to certain
exceptions, to (i) 3% of the total voting stock of any one investment company,
(ii) 5% of the Portfolio's or the Fund's net assets with respect to any one
investment company, and (iii) 10% of the Portfolio's or the Fund's net assets in
the aggregate. Other investment companies in which the Portfolio or the Fund
invest can be expected to charge fees for operating expenses, such as investment
advisory and administration fees, that would be in addition to those charged by
the Portfolio and the Fund.
(2) The Funds and the Portfolio may not invest more than 10% of the
current value of their respective net assets in illiquid securities. For this
purpose, illiquid securities include, among others, (i) securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale, (ii) fixed time deposits that are subject to
withdrawal penalties and that have maturities of more than seven days, and (iii)
repurchase agreements not terminable within seven days.
(3) The Portfolio and the Funds may each lend securities from their
portfolios to brokers, dealers and financial institutions, in amounts not to
exceed (in the aggregate) one third of their respective total assets. Any such
loans of portfolio securities will be fully collateralized based on values that
are marked to market daily. The Portfolio or the Funds will not enter into any
portfolio security lending arrangement having a duration of longer than one
year.
-2-
<PAGE>
General. Unless otherwise specified, all percentage and other
-------
restrictions, requirements and limitations on investments set forth in this SAI,
as well as those set forth in the Funds' Prospectus, apply immediately after
the purchase of an investment, and subsequent changes and events do not
constitute a violation or require the sale of any investment by the Portfolio or
the Funds.
INVESTMENT POLICIES AND PRACTICES
General. The following information supplements the description of the
-------
investment policies and practices of the Portfolio as described in the Funds'
Prospectus.
Each Fund pursues its investment objective by investing all of its
investable assets in the Portfolio. A Fund may withdraw its investment from the
Portfolio at any time if the Board of Trustees of the Trust (the "Board of
Trustees") determines that it is in the best interest of such Fund to do so.
Upon any such withdrawal, a Fund's assets would be invested in accordance with
the investment policies described below with respect to the Portfolio.
The assets of the Portfolio consist only of obligations maturing
within thirteen months from the date of acquisition, as determined in accordance
with applicable rules of the regulations of the Securities and Exchange
Commission (the "SEC"), and the dollar-weighted average maturity of the
investments of the Portfolio may not exceed 90 days. The securities in which the
Portfolio may invest will not yield as high a level of current income as could
be achieved by investing in securities having longer maturities, less liquidity
and less safety. There can be no assurance that the investment objective of the
Portfolio or the Funds, as described in the Prospectus, will be achieved.
Asset-Backed Securities. The Portfolio may purchase asset-backed
-----------------------
securities, which are securities backed by installment contracts, credit-card
receivables or other assets. Asset-backed securities represent interests in
"pools" of assets in which payments of both interest and principal on the
securities are made monthly, thus in effect ''passing through'' monthly payments
made by the individual borrowers on the assets that underlie the securities, net
of any fees paid to the issuer or guarantor of the securities. The average life
of asset- backed securities varies with the maturities of the underlying
instruments and is likely to be substantially less than the original maturity of
the assets underlying the securities as a result of prepayments. For this and
other reasons, an asset-backed security's stated maturity may be shortened, and
the security's total return may be difficult to predict precisely. The Portfolio
may invest in such securities up to the limits prescribed by Rule 2a-7 and other
provisions of the 1940 Act.
Treasury, Government and Agency Securities. The Portfolio invests in
------------------------------------------
short-term debt securities that are issued or guaranteed by the U.S. government
or an agency or instrumentality of the U.S. government ("Government
Securities"). These securities include obligations issued by the U.S. Treasury
("Treasury Securities"), including Treasury bills, notes and bonds. These are
direct obligations of the U.S. government and differ primarily in their rates of
interest and the length of their original maturities. Treasury Securities are
backed by the full faith and credit of the U.S. government. Government
Securities include Treasury Securities as well as securities issued or
guaranteed by the U.S. government or its agencies and instrumentalities ("Agency
Securities"). Agency Securities are in some cases backed by the full faith and
credit of the U.S. government. In other cases, Agency Securities are backed
solely by the credit of the governmental issuer. Certain issuers of Agency
Securities have the right to borrow from the U.S. Treasury, subject to certain
conditions. Government Securities purchased by the Portfolio may include
variable and floating rate securities.
Bank Obligations. Domestic commercial banks organized under federal
----------------
law are supervised and examined by the Comptroller of the Currency and are
required to be members of the Federal Reserve System. Domestic banks organized
under state law are supervised and examined by state banking authorities but are
members of the Federal Reserve System only if they elect to join. As a result of
federal or state laws and regulations, domestic banks, among other things,
generally are required to maintain specified levels of reserves, limited in the
amounts which they can loan to a single borrower and subject to other
regulations designed to promote financial soundness.
-3-
<PAGE>
Investments in obligations of foreign banks involve various risks that
are not generally associated with investments in the obligations of domestic
banks.
Unrated Investments and Changes in Ratings. The Portfolio may purchase
------------------------------------------
securities that are not rated if, in the opinion of Barclays Global Fund
Advisors (the "Portfolio Adviser"), the investment adviser of the Portfolio,
such obligations are of a quality comparable to that of the rated investments in
which the Portfolio may invest, if they are purchased in accordance with
procedures adopted by MIP's Board of Trustees in accordance with Rule 2a-7 under
the 1940 Act. These procedures require approval or ratification by the MIP
Trustees of the purchase of unrated securities.
After purchase by the Portfolio, a security may cease to be rated or
its rating may be reduced below the minimum required for purchase by the Funds
and the Portfolio. Neither event will require an immediate sale of such security
by the Portfolio provided that, when a security ceases to be rated, the MIP
Board of Trustees determines that such security presents minimal credit risks
and, provided further that, when a security rating is downgraded below the
eligible quality for investment or no longer presents minimal credit risks, the
MIP Board finds that the sale of such security would not be in the Portfolio's
shareholder's best interest. To the extent the ratings given by Moody's
Investors Service ("Moody's") or Standard & Poors ("S&P") may change as a result
of changes in such organizations or their rating systems, the Funds will attempt
to use comparable ratings as standards for investments in accordance with the
investment policies contained in the Prospectus and in this SAI.
The ratings categories used by Moody's and S&P are more fully
described in the Appendix to this SAI.
Pass-Through Obligations. Certain of the debt obligations in which the
------------------------
Portfolio may invest may be pass-through obligations that represent an ownership
interest in a pool of mortgages and the resultant cash flow from those
mortgages. Payments by homeowners on the loans in the pool flow through to
certificate holders in amounts sufficient to repay principal and to pay interest
at the pass-through rate. The stated maturities of pass-through obligations may
be shortened by unscheduled prepayments of principal on the underlying
mortgages. Therefore, it is not possible to predict accurately the average
maturity of a particular pass-through obligation. Variations in the maturities
of pass-through obligations will affect the yield of any fund investing in such
obligations. Furthermore, as with any debt obligation, fluctuations in interest
rates will inversely affect the market value of pass-through obligations.
Loans of Portfolio Securities. The Portfolio may lend its securities
-----------------------------
to brokers, dealers and financial institutions, provided the loan is secured
continuously by collateral consisting of cash, Government Securities or a letter
of credit. This collateral is marked to market daily to ensure that the loan is
fully collateralized at all times. Under procedures adhered to by the Portfolio,
the loan must be callable by the Portfolio at any time and the Portfolio must
have the right to obtain the return of the securities loaned. The Portfolio also
has the right to receive any interest paid on the securities loaned. The
Portfolio will not lend securities having an aggregate market value exceeding
one-third of its total assets.
Loans of securities will only be made to firms deemed by the Board of
Trustees of MIP to be creditworthy (such creditworthiness will be monitored on
an ongoing basis by the Portfolio Adviser) and when the income expected to be
earned from such loans justifies the attendant risks. There may be delays in the
recovery of the loaned securities or a loss of rights in the collateral supplied
should the borrower fail financially, in which case the Portfolio could suffer a
loss. In addition, securities lending involves a form of leverage, and the
Portfolio may incur a loss if securities purchased with the collateral from
securities loans decline in value or if the income earned does not cover
transaction costs. The Portfolio may pay reasonable finder's, administrative and
custodial fees in connection with loans of securities.
Loans of securities provides a way for the Portfolio to earn either
through the reinvestment of the cash collateral or the payment of fees by the
borrower of the securities. The Portfolio does not intend to lend securities
during the coming year.
-4-
<PAGE>
Repurchase Agreements. The Portfolio may enter into repurchase
---------------------
agreements with respect to any security in which it is authorized to invest,
although the underlying security may mature in more than thirteen months. In a
repurchase agreement the Portfolio purchases a security and the seller of the
security to the Portfolio agrees to repurchase that security from the Portfolio
at a mutually agreed-upon time and price. The maturity of its repurchase
agreements are generally not more than seven days. Any repurchase agreements
having longer maturities are deemed to be illiquid and are subject to the
limitation on the purchase of illiquid securities by the Portfolio.
The custodian of the Portfolio's assets or a subcustodian approved by
MIP maintains custody of securities acquired through repurchase agreements.
These securities serve as collateral to secure the obligation of the seller to
repurchase the underlying security and the seller is required to post additional
collateral if the value of the securities should decrease below the resale price
including accrued interest under the repurchase agreement. Repurchase agreements
are considered by the staff of the SEC to be loans by the Portfolio. The
Portfolio Adviser monitors on an ongoing basis the value of the collateral.
Certain costs may be incurred by the Portfolio in connection with the sale of
the underlying securities if the seller does not repurchase them in accordance
with the terms of the repurchase agreement. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the securities,
disposition of the securities by the Portfolio may be delayed or limited. This
could cause the Portfolio to suffer a loss if the value of the securities
declines in value.
Although it is not possible to eliminate all risks from these
transactions (particularly the possibility of a decline in the market value of
the underlying securities, as well as delay and costs to the Portfolio in
connection with insolvency proceedings), it is the policy of the Portfolio to
effect repurchase agreements only with securities dealers, domestic banks or
other financial institutions determined by the Portfolio Adviser to meet certain
requirements as to creditworthiness.
Municipal Obligations. The Portfolio may invest in municipal
---------------------
obligations. Municipal bonds generally have a maturity at the time of issuance
of up to 40 years. Medium-term municipal notes are generally issued in
anticipation of the receipt of tax funds, of the proceeds of bond placements, or
of other revenues. The ability of an issuer to make payments on notes is
therefore especially dependent on such tax receipts, proceeds from bond sales or
other revenues, as the case may be. Municipal commercial paper is a debt
obligation with a stated maturity of 270 days or less that is issued to finance
seasonal working capital needs or as short-term financing in anticipation of
longer-term debt.
The Portfolio will invest in high-quality long-term municipal banks,
municipal banks, municipal notes and short-term commercial paper, with remaining
maturities not exceeding 13 months.
Floating- and Variable-Rate Obligations. The Portfolio may purchase
---------------------------------------
floating- and variable-rate obligations as described in the Prospectus. These
obligations may include floating- and variable-rate demand notes and bonds,
which are obligations ordinarily having stated maturities in excess of thirteen
months, but which permit the holder to demand payment of principal at any time,
or at specified intervals not exceeding thirteen months. Variable rate demand
notes include master demand notes that are obligations that permit the Portfolio
to invest fluctuating amounts, which may change daily without penalty, pursuant
to direct arrangements between the Portfolio, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of these
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
the obligations. The interest rate on a floating-rate demand obligation is based
on a specified lending rate, such as a bank's prime rate, and is adjusted
automatically each time that rate is adjusted. The interest rate on a variable-
rate demand obligation is adjusted automatically at specified intervals.
Frequently, these obligations are secured by letters of credit or other credit
support arrangements provided by banks. Because these obligations are direct
lending arrangements between the lender and borrower, it is not contemplated
that the obligations generally will be traded, and there generally is no
established secondary market for these obligations, although they are
-5-
<PAGE>
redeemable at face value. Where these obligations are not secured by letters of
credit or other credit support arrangements, the Portfolio's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies and
the Portfolio may invest in obligations which are not so rated only if the
Portfolio Adviser determines that at the time of investment the obligations are
of comparable quality to the other obligations in which the Portfolio may
invest. The Portfolio Adviser considers on an ongoing basis the creditworthiness
of the issuers of the floating- and variable-rate demand obligations in which
the Portfolio invests. The Portfolio will not invest more than 10% of the value
of its total net assets in floating or variable-rate demand obligations whose
demand feature is not exercisable within seven days. Such obligations may be
treated as liquid if an active secondary market exists.
Commercial Paper and Short-Term Corporate Debt Instruments.
----------------------------------------------------------
The Portfolio may invest in commercial paper (including variable
amount master demand notes), which consists of short-term, unsecured promissory
notes issued by corporations to finance short-term credit needs. Commercial
paper is usually sold on a discount basis and has a maturity at the time of
issuance not exceeding nine months. Variable amount master demand notes are
demand notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a commercial bank acting as agent for the payee of such notes whereby
both parties have the right to vary the amount of the outstanding indebtedness
on the notes. The investment adviser to the Portfolio monitors on an ongoing
basis the ability of an issuer of a demand instrument to pay principal and
interest on demand.
The Portfolio also may invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than thirteen months
remaining to maturity at the date of settlement. Subsequent to its purchase by
the Portfolio, an issue of securities may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Portfolio. The
investment adviser to the Portfolio will consider such an event in determining
whether the Portfolio should continue to hold the obligation. To the extent the
Portfolio continues to hold such obligations, it may be subject to additional
risk of default.
Forward Commitments, When-Issued Purchases and Delayed-Delivery
---------------------------------------------------------------
Transactions. The Portfolio may purchase securities on a when-issued or forward
------------
commitment (sometimes called a delayed-delivery) basis, which means that the
price is fixed at the time of commitment, but delivery and payment ordinarily
take place a number of days after the date of the commitment to purchase. The
Portfolio will make commitments to purchase such securities only with the
intention of actually acquiring the securities, but the Portfolio may sell these
securities before the settlement date if it is deemed advisable. The Portfolio
will not accrue income in respect of a security purchased on a forward
commitment basis prior to its stated delivery date.
Securities purchased on a when-issued or forward commitment basis are
subject to changes in value and the Portfolio is subject to the risk that such
fluctuations may occur prior to the actual delivery of the securities.
Purchasing securities on a when-issued or forward commitment basis also involves
the risk that the yield available in the market when the delivery takes place
may be higher than that obtained by the Portfolio. When the Portfolio purchases
a security on a when-issued or forward commitment basis, it will establish a
segregated account consisting of cash or high quality liquid debt securities at
least equal at all times to the amount of the when-issued or forward commitment.
Purchasing securities on a forward commitment basis when the Portfolio
is fully or almost fully invested may result in greater potential fluctuation in
the value of the Portfolio's net assets. In addition, because the Portfolio will
set aside cash and other high quality liquid debt securities as described above,
the liquidity of the Portfolio's investment portfolio may decrease as the
proportion of securities purchased on a when-issued or forward commitment basis
increases.
The value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their value, is taken into account when determining the Portfolio's net asset
value starting on the day the Portfolio agrees to purchase the securities. The
Fund does not earn interest on the securities it has committed to purchase until
the securities are paid for and delivered on the settlement date. When the
Portfolio makes a forward commitment to sell securities it owns, the proceeds to
be received upon settlement are included in the Portfolio's assets, and
fluctuations in the value of the underlying securities are not reflected in the
Portfolio's net asset value as long as the commitment remains in effect.
Illiquid Securities. The Portfolio may invest in securities not
-------------------
registered under 1933 Act and other securities subject to legal or other
restrictions on resale. Because such securities may be less liquid than other
investments, they may be difficult to sell promptly at an acceptable price.
Foreign Obligations. Investments in foreign obligations involve
-------------------
certain considerations that are not typically associated with investing in
domestic obligations. There may be less publicly available information about a
foreign issuer than about a domestic issuer. Foreign issuers also are not
generally subject to uniform accounting, auditing and financial reporting
standards or governmental supervision comparable to those applicable to domestic
issuers. In addition, with respect to certain foreign countries, taxes may be
withheld at the source under foreign income tax laws, and there is a possibility
of expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect investments in, the
liquidity of, and the ability to enforce contractual obligations with respect
to, securities of issuers located in those countries.
-6-
<PAGE>
Obligations of foreign banks and foreign branches of U.S. banks
involve somewhat different investment risks from those affecting obligations of
U.S. banks, including the possibilities that liquidity could be impaired because
of future political and economic developments; the obligations may be less
marketable than comparable obligations of U.S. banks; a foreign jurisdiction
might impose withholding taxes on interest income payable on those obligations;
foreign deposits may be seized or nationalized; foreign governmental
restrictions (such as foreign exchange controls) may be adopted which might
adversely affect the payment of principal and interest on those obligations; and
the selection of those obligations may be more difficult because there may be
less publicly available information concerning foreign banks. In addition, the
accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign banks differ from those applicable to U.S.
banks. In that connection, foreign banks are not subject to examination by any
U.S. Government agency or instrumentality.
Funding Agreements. The Portfolio may invest in short-term funding
------------------
agreements. A funding agreement is a contract between an issuer and a purchaser
that obligates the issuer to pay a guaranteed rate of interest on a principal
sum deposited by the purchaser. Funding agreements will also guarantee the
return of principal and may guarantee a stream of payments over time. A funding
agreement has a fixed maturity and may have either a fixed, variable or floating
interest rate that is based on an index and guaranteed for a fixed time period.
The Portfolio will purchase short-term funding agreements only from banks and
insurance companies that, at the time of purchase, are rated in one of the three
highest rating categories and have assets of $1 billion or more. The secondary
market, if any, for these funding agreements is limited; thus, such investments
purchased by the Portfolio may be treated as illiquid. If a funding agreement is
determined to be illiquid it will be valued at its fair market value as
determined by procedures approved by the Board of Trustees. Valuation of
illiquid indebtedness involves a greater degree of judgment in determining the
Portfolio's net asset value than if the value were based on available market
quotations.
Loan Participation Agreements. The Portfolio may purchase interests in
-----------------------------
loan participations that typically represent direct participation in a loan to a
corporate borrower, and generally are offered by an intermediary bank or other
financial institution or lending syndicate. Under these loan participation
arrangements, the Portfolio will have the right to receive payments of
principal, interest and any fees to which it is entitled from the bank selling
the loan participation upon receipt by the bank of the payments from the
borrower. The borrower in the underlying loan will be deemed to be the issuer of
the participation interest except to the extent the Portfolio derives its rights
from the intermediary bank that sold the loan participation. Such loans must be
to issuers in whose obligations the Portfolio may invest. Any participation
purchased by the Portfolio must be sold by an intermediary bank in the United
States with assets exceeding $1 billion. Because the bank issuing the loan
participation does not guarantee the participation in any way, the participation
is subject to the credit risks associated with the underlying corporate
borrower. In addition, it may be necessary, under the terms of the loan
participation, for the Portfolio to assert its rights against the underlying
corporate borrower, in the event that the underlying corporate borrower should
fail to pay principal and interest when due. Thus, the Portfolio could be
subject to delays, expenses, and risks that are greater than those that would
have been involved if the Portfolio had purchased a direct obligation of the
borrower. Moreover, under the terms of the loan participation, the Portfolio may
be regarded as a creditor of the issuing bank (rather than of the underlying
corporate borrower), so that the Portfolio also may be subject to the risk that
the issuing bank may become insolvent. Further, in the event of the bankruptcy
or insolvency of the corporate borrower, the loan participation might be subject
to certain defenses that can be asserted by the borrower as a result of improper
conduct by the issuing bank. The secondary market, if any, for these loan
participation interests is limited; thus, such participations purchased by the
Portfolio may be treated as illiquid. If a loan participation is determined to
be illiquid, it will be valued at its fair market value as determined by
procedures approved by the Board of Trustees. Valuation of illiquid indebtedness
involves a greater degree of judgment in determining the Portfolio's net asset
value than if the value were based on available market quotations.
Rule 144A.
-----------
It is possible that unregistered securities, purchased by the
Portfolio in reliance upon Rule 144A under the 1933 Act, could have the effect
of increasing the level of the Portfolio's illiquidity to the extent that
qualified institutional buyers become, for a period, uninterested in purchasing
these securities.
Letters of Credit
-----------------
Certain of the debt obligations, certificates of participation,
commercial paper and other short-term obligations which the Portfolio is
permitted to purchase may be backed by an unconditional and irrevocable letter
of credit of a bank, savings and loan association or insurance company which
assumes the obligation for payment of principal and interest in the event of
default by the issuer. Letter of credit-backed investments must, in the opinion
of BGFA, be of investment quality comparable to other permitted investments of
the Portfolio.
MANAGEMENT
Directors and Officers. The Board of Trustees of the Trust has the
----------------------
overall responsibility for monitoring and supervising the operations of the
Trust and the Funds. The officers of the Trust are responsible for
-7-
<PAGE>
managing the day-to-day operations of the Trust and the Funds. MIP's Board of
Trustees has similar responsibilities with respect to the operations of the
Portfolio.
Set forth below is information with respect to each of the Trustees
and officers of the Trust, including their principal occupations during the past
five years.
<TABLE>
<CAPTION>
Name, Position with Trust, Age and Address Principal Occupations During Last Five Years
------------------------------------------ --------------------------------------------
<S> <C>
* E. Scott Peterson, 46 Consultant, Hewitt Associates LLC
Trustee
Donald S. Hunt, 61 Director and President, ADA Financial Services;
Trustee Director ADA Holding Co.: Director, Vision III;
860 N. Lakeshore Drive Director and Chief Executive Officer, Global
Chicago, IL 60611 Training Inc.; Director and President, Harris
Bank Corp. and Harris Trust & Savings Bank
John D. Oliverio, 46 Executive Vice President and Chief Operating
Trustee Officer, Wheaton Franciscan Services, Inc.;
26 West 171 Roosevelt Road Director, AHA Investment Funds, Inc.
Wheaton, IL 60189
</TABLE>
Except as otherwise indicated above, the address of each Trustee and
officer of the Trust is 100 Half Day Road, Lincolnshire, Illinois 60069.
Trustees who are not employed by Hewitt Associates LLC or one of its
affiliates are paid an attendance fee of $1000 for each meeting of the Board of
Trustees they attend. Officers of the Trust receive no compensation from the
Trust. Trustees who are not employees of Hewitt Associates LLC or one of its
affiliates are reimbursed for reasonable out-of-pocket expenses incurred in
connection with the performance of their responsibilities, including travel
related expenses. As of the date of this Statement of Additional Information,
the Trustees and officers of the Trust, as a group, owned less than 1% of the
outstanding shares of the Trust and the Funds.
Trustee compensation for the calendar year ended December 31, 1999,
was as follows:
Compensation Table*
<TABLE>
<CAPTION>
Pension or Retirement Total Compensation
Name of Person Aggregate Compensation Benefits Accrued as Part from Trust and Fund
from Trust of Fund Expenses Complex Paid to
Trustees
<S> <C> <C> <C>
E. Scott Peterson $ 0 $0 0
Donald S. Hunt $4000 $0 $4000
</TABLE>
_______________________
* Trustee who is an "interested person" of the Trust, as defined in the 1940
Act, because of his affiliation with Hewitt Associates LLC, an affiliate of the
distributor of the Fund's shares.
-8-
<PAGE>
<TABLE>
<S> <C> <C> <C>
John D. Oliverio $4000 $0 $4000
</TABLE>
The Portfolio Adviser. The Portfolio Adviser, Barclays Global Fund
---------------------
Advisors, located at 45 Fremont Street, San Francisco, California 94105, is a
subsidiary of Barclays Global Investors, N.A., which in turn is an indirect
subsidiary of Barclays Bank PLC. It provides investment advisory services to the
Portfolio pursuant to an investment advisory agreement with MIP (the "Advisory
Agreement"). Pursuant to the Advisory Agreement, the Portfolio Adviser is
responsible for the management of the investments of the Portfolio and makes all
decisions regarding, and places all orders for, the purchase and sale of
securities for the Portfolio.
As compensation for services rendered and expenses assumed by the
Portfolio Adviser, the Portfolio pays the Portfolio Adviser a monthly fee which
is computed at the annual rate of 0.10% of the net assets of the Portfolio.
Because the Funds are investors in the Portfolio, shareholders of the Funds
indirectly bear this fee. Under the Advisory Agreement, the Portfolio Adviser is
obligated to bear all of the ordinary operating expenses of the Portfolio other
than the advisory fee.
The Advisory Agreement was approved by the Board of Trustees of MIP,
including a majority of the Trustees of MIP who are not "interested persons," as
defined by the 1940 Act of MIP or the Portfolio Adviser. It continues in effect
from year to year thereafter if approved annually by either (i) MIP's Board of
Trustees or (ii) vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act); provided that the continuance also is
approved by a majority of the members of MIP's Board of Trustees who are not
"interested persons" (as defined in the 1940 Act) of MIP or the Portfolio
Adviser, by vote cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement is terminable without penalty, on 60 days'
written notice by the Board of Trustees of MIP or by vote of the holders of a
majority of the outstanding voting securities of the Portfolio. As required by
the 1940 Act, the Advisory Agreement provides for its automatic termination in
the event of its assignment (as defined by the 1940 Act).
Manager for the Money Market Fund. Hewitt Associates LLC ("Hewitt
---------------------------------
Associates") serves as the investment adviser of the Money Market Fund and also
provides administrative services to the Money Market Fund pursuant to the terms
of an management agreement dated August 23, 2000 (the "Fund Management
Agreement"), entered into by the Trust on behalf of the Money Market Fund and
Hewitt Associates. Pursuant to the Fund Management Agreement, Hewitt Associates
is responsible for the management of the investments of the Money Market Fund.
Hewitt Associates is also required to furnish the following administrative
services to the Fund: (i) maintaining such office facilities as necessary to
provide the services the Fund (which may be in the offices of Hewitt Associates
or a corporate affiliate); (ii) furnishing non-investment related statistical
and research data, data processing services, clerical services, executive and
administrative services, and stationery and office supplies in connection with
its services; (iii) furnishing corporate secretarial services including
preparation and distribution of materials for Board of Trustees meetings with
respect to matters concerning the Money Market Fund; (iv) assisting in the
preparation of the Trust's Registration Statement registering the shares of the
Fund and any Pre-Effective and Post-Effective Amendments to the Trust's
Registration Statement, Notices of Annual or Special Meetings of Shareholders
and Proxy materials relating to such Meetings; (v) assisting in the preparation
of periodic reports to shareholders of the Money Market Fund and its regulatory
filings; (vi) assisting in the determination of the jurisdictions in which the
Money Market Fund's shares will be registered or qualified for sale; (vii)
providing the services of persons employed by Hewitt Associates or its
affiliates who may be appointed as officers of the Trust by the Trust's Board of
Trustees; (viii) assisting the Money Market Fund in routine regulatory
examinations, and working closely with outside counsel to the Money Market Fund
in response to any litigation, investigations or regulatory matters; and (ix)
assisting in the preparation of the financial statements of the Money Market
Fund and in coordinating the annual audit of such financial statements by the
independent auditors of the Trust. In performing its duties as administrator of
the Trust, the Adviser will act in accordance with the Declaration of Trust, By-
Laws, Prospectus of the Money Market Fund and with the instructions and
directions of the Board of Trustees of the Trust and will conform to and comply
with the requirements of the 1940 Act and the rules thereunder and all other
applicable federal or state laws and regulations.
-9-
<PAGE>
Subject to the approval of the Board of Trustees of the Trust, Hewitt
Associates is authorized to pursue the investment objective of the Money Market
Fund by investing all of the Money Market Fund's investable assets in another
pooled investment fund, such as the Portfolio. When the Money Market Fund
pursues its objective in this manner, the fee payable to Hewitt Associates,
pursuant to the Fund Advisory Agreement, is reduced by the full amount of the
Portfolio's advisory fee and other ordinary operating expenses that are borne by
the Money Market Fund as an investor in the Portfolio. The Trust's Board of
Trustees has authorized Hewitt Associates to invest the Money Market Fund's
assets in the Portfolio.
As compensation for services rendered and expenses assumed by Hewitt
Associates, the Money Market Fund pays Hewitt Associates a monthly fee which is
computed at the annual rate of 0.40% of the average daily net assets of the
Money Market Fund.
The Fund Management Agreement was approved for an initial term of two
years by the Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons," as defined by the 1940 Act of the
Trust or of Hewitt Associates at a meeting held in person on August 23, 2000.
It continues in effect from year to year thereafter if approved annually by
either (i) the Board of Trustees of the Trust or (ii) a vote of a majority of
the outstanding voting securities of the Money Market Fund (as defined in the
1940 Act); provided that the continuance also is approved by a majority of Board
of Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) of the Trust or Hewitt Associates, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Fund Management Agreement
is terminable without penalty, on 60 days' written notice by the Board of
Trustees of the Trust or by vote of the holders of a majority of the outstanding
voting securities of the Money Market Fund. As required by the 1940 Act, the
Fund Management Agreement provides for its automatic termination in the event of
its assignment (as defined by the 1940 Act).
Administrator for the Institutional Money Market Fund. Hewitt
-----------------------------------------------------
Associates provides administrative services to the Institutional Money Market
Fund pursuant to the terms of an administration agreement dated September 1,
1998, as amended August 23, 2000 (the "Administration Agreement"). Services
provided by Hewitt Associates pursuant to this agreement include, but are not
limited to: managing the daily operations and business affairs of the
Institutional Money Market 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 Institutional Money Market Fund;
preparing or assisting in the preparation of the Institutional Money Market
Fund's 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 relating to the Institutional Money Market Fund and meeting of its
shareholders. For these services, the Institutional Money Market Fund pays
Hewitt Associates a monthly fee calculated at the annual rate of 0.10% of the
Institutional Money Market Fund's average daily net assets.
The Administration Agreement was approved by the Board of Trustees of
the Trust, including a majority of the Trustees who are not "interested persons"
of the Trust or of Portfolio Adviser or the Distributor, as defined by the 1940
Act (the "Independent Trustees"), at a meeting held in person on August 23,
2000. It has an initial term expiring August 23, 2002, and may be continued in
effect from year to year thereafter if such continuance is approved annually by
the Board of Trustees, including the vote of a majority of the Independent
Trustees. The Administration Agreement terminates automatically in the event of
its "assignment" (as defined by the 1940 Act), and may be terminated by either
party without penalty on not less than 60 days' written notice.
Pursuant to the Administration Agreement, the Trust has acknowledged
that the name "Hewitt" is a property right of the Administrator and its
affiliates and has agreed that the Administrator and its affiliated companies
may use and permit others to use that name. If the Administration Agreement is
terminated, the Trust may be required to cease using the name Hewitt as part of
its name or the name of the Institutional Money Market Fund, unless otherwise
permitted by the Administrator or any successor to its interest in such name.
The Administrator also serves as the shareholder servicing agent for
the Institutional Money Market Fund and is paid compensation by the
Institutional Money Market Fund for furnishing various shareholder related
services. See "Shareholder Servicing Arrangements for the Institutional Money
Market Fund," below.
-10-
<PAGE>
Shareholder Servicing Arrangements for the Institutional Money Market
---------------------------------------------------------------------
Fund. The Institutional Money Market Fund has retained Hewitt Associates to
----
serve as the shareholder servicing agent pursuant to the terms of a shareholder
servicing agreement dated August 23, 2000 (the "Institutional Shareholder
Servicing Agreement"). Pursuant to the Institutional Shareholder Servicing
Agreement, the Institutional Money Market Fund pays Hewitt Associates a monthly
fee calculated at an annual rate of 0.20% of the Institutional Money Market
Fund's average daily net assets.
The Institutional Shareholder Servicing Agreement was approved by the
Board of Trustees of the Trust, including a majority of the Independent
Trustees, at a meeting held in person on August 23, 2000. It has an initial
term expiring August 23, 2002, and may be continued in effect from year to
year thereafter if such continuance is approved annually by the Board of
Trustees of the Trust, including the vote of a majority of the Independent
Trustees. The Institutional Shareholder Servicing Agreement terminates
automatically in the event of its "assignment" (as defined by the 1940 Act), and
may be terminated by either party to the agreement without penalty on not less
than 60 days' written notice.
Shareholder Servicing Arrangements for the Money Market Fund. The
------------------------------------------------------------
Money Market Fund has retained Hewitt Services LLC to serve as the shareholder
servicing agent pursuant to the terms of a shareholder servicing agreement dated
August 23, 2000 (the "Shareholder Servicing Agreement"). Pursuant to the
Shareholder Servicing Agreement, the Money Market Fund pays Hewitt Services LLC
a monthly fee calculated at an annual rate of 0.25% of the Money Market Fund's
average daily net assets.
The Shareholder Servicing Agreement was approved by the Board of
Trustees of the Trust, including a majority of the Independent Trustees, at a
meeting held in person on August 23, 2000. It has an initial term expiring
August 23, 2002, and may be continued in effect from year to year thereafter if
such continuance is approved annually by the Board of Trustees of the Trust,
including the vote of a majority of the Independent Trustees. The Shareholder
Servicing Agreement terminates automatically in the event of its "assignment"
(as defined by the 1940 Act), and may be terminated by either party to the
agreement without penalty on not less than 60 days' written notice.
DISTRIBUTION ARRANGEMENTS
Hewitt Services LLC, an affiliate of Hewitt Associates, serves as the
distributor of shares of the Funds (the "Distributor"). The Distributor also
serves as the Shareholder Servicing Agent for the Money Market Fund and is paid
compensation by the Money Market Fund for furnishing various shareholder related
services. See "Shareholder Servicing Arrangements for the Money Market Fund,"
above. The Distributor also receives payments from the Funds in connection with
the distribution of Funds' shares, as described below.
Distribution Agreement. The Distributor serves as the exclusive
-----------------------
distributor of shares of the Funds pursuant to two distribution agreements with
the Trust on behalf of the Funds, dated as of August 23, 2000 (the "Distribution
Agreements"). Pursuant to the Distribution Agreements, the Distributor is
authorized to enter into selling agreements with securities dealers and other
financial institutions for the distribution of shares. Shares of the Funds are
available for purchase on a continuous basis from the Distributor, as agent,
although the Distributor is not obligated to sell any particular amount of
shares. The Institutional Money Market Fund has appointed Hewitt Associates, the
shareholder servicing agent, as its agent for purposes of accepting orders to
purchase and redeem shares of the Institutional Money Market Fund on behalf of
the Distributor and transmitting those orders to the Institutional Money Market
Fund's transfer agent.
The Distribution Agreements were approved by the Board of Trustees of
the Trust, including a majority of the Independent Trustees, at a meeting held
in person on August 23, 2000. The Distribution Agreements have initial terms
expiring August 23, 2002, and may be continued in effect from year to year
thereafter if such continuance is approved annually by the Board of Trustees,
including the vote of a majority of the Independent Trustees. The Distribution
Agreements may be terminated at any time, without penalty, by either party upon
60 days written notice and terminates automatically in the event of an
"assignment" as defined by the 1940 Act.
-11-
<PAGE>
Under the Distribution Agreements, the Distributor is required to bear
all of the costs associated with distribution of shares of the Funds, including
the incremental cost of printing prospectuses, annual reports and other periodic
reports for distribution to prospective investors and the costs of preparing,
distributing and publishing sales literature and advertising materials. As
described below, the Money Market Fund pays a fee to the Distributor for
services it renders in connection with the distribution its shares.
Distribution Plan (Shares of the Money Market Fund Only). The Trust
--------------------------------------------------------
has adopted a plan and agreement of distribution pursuant to Rule 12b-1 under
the Investment Company Act which allows the Money Market Fund to pay expenses
relating to the distribution of its shares (the "Distribution Plan"). Under the
Distribution Plan, the Money Market Fund pays a fee to the Distributor,
calculated at an annual rate of 0.25% of the average daily net assets of the
Money Market Fund, as compensation for the services the Distributor renders and
the expenses it bears in connection with the sale and distribution of shares of
the Money Market Fund. This fee is an expense of the Money Market Fund only and
is not borne by Institutional Money Market Fund. All or a portion of the
amounts received by the Distributor pursuant to the Distribution Plan may be
used to compensate securities dealers and other financial intermediaries for
services they provide to their customers who purchase shares of the Money Market
Fund. Additional payments may be made by the Distributor or Hewitt Associates
to such organizations at their own expense.
The Distribution Plan was approved by the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested persons" (as
defined by the 1940 Act) of the Trust and who have no direct or indirect
financial interest in the operation of the Distribution Plan or in any agreement
related to the Plan ("Qualified Trustees"), at a meeting held in person on
August 23, 2000. It provides that it will continue in effect for a period of one
year from the date of its execution, and may be continued in effect from year to
year thereafter, provided that each such continuance is approved annually by a
vote of both a majority of the Board of Trustees and a majority of the Qualified
Trustees. The Distribution Plan requires that the Trust provide the Board of
Trustees of the Trust, and that the Board review, at least quarterly, a written
report of the amounts expended (and the purposes therefor) under the
Distribution Plan. In addition, the Distribution Plan provides that the
selection and nomination of Qualified Trustees shall be committed to the
discretion of those Trustees, who are not "interested persons" (as defined by
the 1940 Act) of the Distributor, then in office. The Distribution Plan may be
terminated at any time by a vote of a majority of the Qualified Trustees or by
vote of a majority of the outstanding voting shares of the Money Market Fund (as
defined by the 1940 Act). It may not be amended to increase materially the
amount of permitted expenses thereunder without the approval of the shareholders
of the Money Market Fund and may not be materially amended in any other respect
without a vote of the majority of both the Trustees and the Qualified Trustees.
Since payments made pursuant to the Distribution Plan are not directly
tied to actual expenses, the amount of payments by the Money Market Fund to the
Distributor during any year may be more or less than actual expenses incurred by
the Distributor in providing services. For this reason, this type of
distribution fee arrangement is characterized by the staff of the Securities and
Exchange Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements under which payments by a fund are made only to
reimburse specific expenses). However, the Money Market Fund is not liable to
pay any distribution related expenses incurred by the Distributor in excess of
the amounts paid pursuant the Distribution Plan.
The Distribution Plan was adopted by the Board of Trustees of the
Trust to foster the distribution of shares of the Money Market Fund. The
Trustees believe that the Distribution Plan will provide an incentive for the
Distributor to promote the sale of shares of the Money Market Fund. In
addition, the Trustees believe that the Distribution Plan may help assure that
assets of the Money Market Fund reach a level that will enable the per share
expenses of its shares to be competitive with the per share expenses of other
money market funds. For these reasons, the Board of Trustees determined that
adoption of the Distribution Plan will benefit the Money Market Fund and
shareholders who own its shares.
The Trustees and officers of the Trust who are members or employees of
the Distributor, or of any company affiliated with or controlling the
Distributor, may be deemed to have a direct or indirect interest in the
operation of the Distribution Plan.
-12-
<PAGE>
EXPENSES
All expenses of the Trust and the Funds not expressly assumed by
Hewitt Associates as investment adviser of the Money Market Fund or as the
administrator of the Institutional Money Market Fund are paid by the respective
Funds. In addition, as investors in the Portfolio, the Funds each bear a pro
rata portion of the expenses of the Portfolio. Expenses borne by the Funds and
the Portfolio include, but are not limited to: fees for investment advisory and
administration services; fees paid to the shareholder servicing agents; in the
case of the Money Market Fund, the distribution fee payable by the Fund; the
fees and expenses of any registrar, custodian, accounting agent, transfer agent
or dividend disbursing agent; brokerage commissions; taxes; registration costs;
the cost and expense of printing, including typesetting, and distributing
prospectuses and supplements thereto to shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing of
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
Hewitt Associates or the Distributor; all expenses incident to any dividend,
withdrawal or redemption options; charges and expenses of any outside service
used for pricing shares of the Fund; fees and expenses of legal counsel; fees
and expenses of independent auditors; membership dues of industry associations;
interest on borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Trust which inure to its benefit; and
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto).
The Institutional Money Market Fund's administration agreement
requires Hewitt Associates to absorb expenses of that Fund (excluding interest,
brokerage commissions and extraordinary expenses) to the extent necessary to
assure that total ordinary operating expenses of the Institutional Money Market
Fund do not exceed annually 0.45% of its average daily net assets. The Money
Market Fund and Hewitt Associates have entered into an expense limitation
agreement under which Hewitt Associates has agreed to waive its fees or to
absorb expenses of that Fund (excluding interest, brokerage commissions and
extraordinary expenses) to the extent necessary to assure that total ordinary
operating expenses of the Money Market Fund do not exceed annually 0.95% of its
average daily net assets. Under that agreement, the Money Market Fund will be
obligated to reimburse Hewitt Associates for any fees waived and expenses
absorbed, but only if the reimbursement is made within three years from the date
waived or absorbed and only to the extent that the reimbursement does not cause
the total ordinary operating expenses of the Money Market Fund to exceed the
expense limitations. The expense limitations of the Funds may not be modified or
terminated with the approval of the Board of Trustees.
For the periods October 1, 1998 (commencement of operations) to
February 28, 1999, and March 1, 1999 to December 31, 1999, fees payable to the
Investment Adviser, Administrator and Distributor were as follows:
<TABLE>
<CAPTION>
10/1/98 (commencement of
3/1/99 to 12/31/99 operations) to 2/28/99
------------------------- -------------------------
<S> <C> <C>
The portion of the advisory fee payable by the
Portfolio to Barclays Global Fund Advisors and
the share of the ordinary operating expenses of
the Portfolio attributable to the Fund.......... $ 65,000 $11,934
Administration fee payable to Hewitt Associates
LLC............................................. $ 61,792 $11,629
Shareholder servicing fee payable to Hewitt
Associates LLC and Hewitt Services LLC.......... $144,210 $27,879
----------------------------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE>
<TABLE>
<S> <C> <C>
Distribution fees payable to Hewitt Services LLC
with respect to Administrative Shares........... $103,133 $23,108
----------------------------------------------------------------------------------------------------------------
</TABLE>
Portions of the fees payable by the Funds were waived and certain Fund
Expenses were reimbursed during the fiscal year to satisfy the limitations on
the Funds' operating expenses described above.
DETERMINATION OF NET ASSET VALUE
Days and Times Net Asset Value Per Share is Computed. The Prospectus
----------------------------------------------------
describes the days on which the net asset values per share of the Funds are
computed for purposes of purchases and redemptions of shares by investors, and
also sets forth the times as of which such computations are made.
Shares of the Funds may be purchased on any that the New York Stock
Exchange (NYSE) is open and that is not a federal bank holiday. The following
days are either days on which the NYSE is closed or which are federal bank
holidays: New Year's Day; Martin Luther King's Birthday (third Monday in
January); Presidents' Day (third Monday in February); Good Friday (Friday before
Easter); Memorial Day (last Monday in May); Independence Day; Labor Day (first
Monday in September); Columbus Day (second Monday in October); Veterans Day;
Thanksgiving Day (fourth Thursday in November); and Christmas Day.
Net asset value is computed as of the closing time of the U.S.
government securities markets on days when the Public Securities Association
recommends an early closing of such markets. Early closings may occur the
Fridays preceding the following holidays: Martin Luther King's Birthday;
Presidents' Day; Memorial Day; Labor Day; and Columbus Day. Early closings may
also occur on the business days preceding the following holidays: Independence
Day; Veterans Day; Thanksgiving Day; Christmas Day; New Year's Day, and the
Friday following Thanksgiving Day.
The net asset values per share of the Institutional Money Market Fund
and the Money Market Fund are computed separately. The net asset value of a
Fund's shares is calculated by dividing the value of such Fund's total assets,
less its liabilities (including accrued expenses), by the number of shares of
the Fund outstanding. The value of the Portfolio's net assets (its securities
and other assets, less its liabilities, including expenses payable or accrued)
is determined at the same time and on the same days as the net asset values per
share of the Funds are determined. Unlike most other money market funds, the
Institutional Money Market Fund does not seek to maintain a stable net asset
value per share. The Money Market Fund seeks to maintain a net asset value of
$1.00 per share. However, no assurance can be given that the Money Market Fund
will be able to maintain a stable net asset value.
Amortized Cost Valuation. The Funds and the Portfolio use the
------------------------
amortized cost method of valuation to determine the value of their portfolio
securities in accordance with the provisions of 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. This method
of valuation does not take into account unrealized capital gains and losses
resulting from changes in the market values of the securities due to changes in
prevailing interest rate levels or other factors.
While this method provides certainty in valuation, it may result in
periods during which the value, as determined by amortized cost, is higher or
lower than the price that a Fund or the Portfolio would receive if the security
were sold. During these periods the yield to a shareholder may differ somewhat
from that which could be obtained from a similar fund that used a method of
valuation based upon market prices. Thus, during periods of declining interest
rates, if the use of the amortized cost method resulted in a lower net asset
value of a Fund's portfolio on a particular day, a prospective investor in the
Funds would be able to obtain a somewhat higher yield than would result from
investment in a fund that used market quotations to value its portfolio of
investments, and existing shareholders of the Funds would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.
-14-
<PAGE>
Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, the Funds (or to the extent the Funds invest in the
Portfolio, the Portfolio) must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase securities having remaining maturities (as
defined in Rule 2a-7) of thirteen months or less and invest only in those high-
quality securities that are determined by the Board of Trustees of the Trust (or
MIP) to present minimal credit risks. The maturity of an instrument is generally
deemed to be a shorter period remaining until the date when the principal amount
thereof is due or the date on which the instrument may be redeemed. However,
Rule 2a-7 provides that the maturity of an instrument may be deemed shorter in
the case of certain instruments, including certain variable- and floating-rate
instruments subject to demand features. In addition, Rule 2a-7 requires that the
Portfolio invest only in securities which have been determined by the Portfolio
Adviser, under procedures adopted by the Board of Trustees of MIP, to present
minimal credit risks and to be of eligible credit quality under applicable
regulations.
PURCHASE AND REDEMPTION OF SHARES
The procedures to be used in purchasing and redeeming shares of the
Institutional Money Market Fund and the Money Market Fund are set forth in the
Prospectus under "How To Buy Shares" and "How To Redeem Shares". Each Fund
reserves the right to reject any purchase order and to change the amount of the
minimum investment and subsequent purchases in the Funds.
Purchases by Check (the Money Market Fund Only). Shares of the Money
-----------------------------------------------
Market Fund may be purchased by check as described in the Prospectus. If a check
to purchase shares of the Money Market Fund does not clear, the shares purchased
may be redeemed by the Distributor and the investor will be responsible for any
loss or expenses incurred by the Fund or the Distributor as a result of the
redemption or non-clearance.
Mandatory Redemption of Shares. Under the Declaration of Trust, the
------------------------------
Trust has the right to redeem all shares held by a shareholder if as a result of
one or more redemptions the aggregate value of shares held in the shareholder's
account is less than such dollar amount of $1 million or such lesser amount as
may be specified by the Trustees, which amount may be no greater than the then
applicable minimum initial investment amount. There is currently no minimum
required investment for shares of the Institutional Money Market Fund. There is
also currently no minimum required initial investment for shares of the Money
Market Fund, if those shares are held in an account with a financial
intermediary (including the Distributor) that holds shares for its customers on
an omnibus basis. Thus, shares of the Institutional Money Market Fund, and
shares of the Money Market Fund held as described above, are not subject to the
mandatory redemption procedure described above. As described in the Prospectus,
shares of the Money Market Fund not held on an omnibus basis may be subject to
mandatory redemption if the value of the shares held by a shareholder is less
than $5,000. The Trust is under no obligation to compel the redemption of any
account.
Suspension of Redemptions. Redemption proceeds are normally paid as
-------------------------
described in the Prospectus. The payment of redemption proceeds by a Fund may
be postponed for more than seven days or the right of redemption suspended at
times (a) when the New York Stock Exchange is closed for other than customary
weekends and holidays, (b) when trading on the New York Stock Exchange is
restricted, (c) when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund to determine fairly the value of its net
assets, or (d) during any other period when the Securities and Exchange
Commission (the "SEC"), by order, so permits for the protection of shareholders.
Applicable rules and regulations of the SEC will govern as to whether the
conditions described in (b) or (c) exist.
Redemption in Kind. In the event that the Board of Trustees determines
------------------
that it would be detrimental to the best interests of remaining shareholders of
a Fund to pay any redemption or redemptions in cash, a redemption payment by the
Fund may be made in whole or in part by a distribution in kind securities,
subject to applicable rules of the SEC. Any securities distributed in kind will
be readily marketable and will be valued, for purposes of the redemption, in the
same manner as such securities are normally valued by the Fund in computing net
asset value per share. In the unlikely event that shares are redeemed in kind,
the redeeming shareholder would incur transaction costs in converting the
distributed securities to cash. The Trust has elected to be governed by Rule
-15-
<PAGE>
18f-1 under the 1940 Act and is therefore obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net asset value of a Fund during
any 90 day period for any one shareholder.
PORTFOLIO TRANSACTIONS
Purchases and sales of debt securities generally are principal
transactions. Debt securities acquired for the Portfolio normally are purchased
or sold from or to dealers serving as market makers for the securities at a net
price. Debt securities also may be purchased in underwritten offerings or may be
purchased directly from the issuer. Generally, Government Securities and other
money market securities are traded on a net basis and do not involve brokerage
commissions. The cost of executing transactions in debt securities consists
primarily of dealer spreads and underwriting commissions. Under the 1940 Act,
persons affiliated with the MIP are prohibited from dealing with the Portfolio
as a principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the SEC or an exemption is otherwise
available. However, the Portfolio may purchase securities from underwriting
syndicates in which the Portfolio Adviser or an affiliate of the Portfolio
Adviser is a member under certain conditions in accordance with the provisions
of a rule adopted under the 1940 Act and in compliance with procedures adopted
by the MIP Board of Trustees.
MIP has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the MIP Board of Trustees, the Portfolio Adviser is responsible
for the Portfolio's investment decisions and the placing of orders to purchase
and sell securities. In placing orders, it is the policy of the Portfolio to
obtain the best overall terms taking into account the dealer's general execution
and operational facilities, the type of transaction involved and other factors
such as the dealer's risk in positioning the securities involved. While the
Portfolio Adviser generally seeks reasonably competitive spreads or commissions,
the Portfolio will not necessarily be paying the lowest spread or commission
available.
In assessing the best overall terms available for any transaction, the
Portfolio Adviser considers factors deemed relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and, in the case of agency
trades, the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. The Portfolio Adviser may cause the
Portfolio to pay a broker which furnishes brokerage and research services a
higher commission than that which might be charged by another broker for
effecting the same transaction, provided that the Portfolio Adviser determines
in good faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by that broker, viewed in terms of
either the particular transaction or the overall responsibilities of the
Portfolio Adviser. Such brokerage and research services might consist of reports
and statistics relating to specific companies or industries, general summaries
of groups of stocks or bonds and their comparative earnings and yields, or broad
overviews of the stock, bond, and government securities markets and the economy.
Supplementary research information so received is in addition to, and
not in lieu of, services required to be performed by the Portfolio Adviser and
does not reduce the advisory fees payable by the Portfolio. The MIP Board of
Trustees will periodically review the commissions paid by the Portfolio to
consider whether commissions paid over representative periods of time appear to
be reasonable in relation to the benefits inuring to the Portfolio. It is
possible that certain of the supplementary research or other services received
will primarily benefit one or more other investment companies or other accounts
for which the Portfolio Adviser exercises investment discretion. Conversely, the
Portfolio may be the primary beneficiary of the research or services received as
a result of portfolio transactions effected for such other accounts or
investment companies.
Under Section 28(e) of the Securities Exchange Act of 1934, an adviser
shall not be "deemed to have acted unlawfully or to have breached its fiduciary
duty" solely because under certain circumstances it has caused the account to
pay a higher commission than the lowest available. To obtain the benefit of
Section 28(e), an adviser must make a good faith determination that the
commissions paid are "reasonable in relation to the value of the brokerage and
research services provided...viewed in terms of either that particular
transaction or its overall responsibilities with respect to the accounts as to
which it exercises investment discretion and that the services provided by a
broker provide an adviser with lawful and appropriate assistance in the
performance of its investment decision-making responsibilities." Accordingly,
the price to the Portfolio in any brokerage transaction may be less
-16-
<PAGE>
favorable than that available from another broker if the difference is
reasonably justified by other aspects of the portfolio execution services
offered.
Broker-dealers utilized by the Portfolio Adviser may furnish
statistical, research and other information or services which are deemed by the
Investment adviser to be beneficial to the Portfolio's investment program.
Research services received from brokers supplement the Portfolio Adviser's own
research and may include the following types of information: statistical and
background information on industry groups and individual companies; forecasts
and interpretations with respect to U.S. and foreign economics, securities,
markets, specific industry groups and individual companies; information on
political developments; portfolio management strategies; performance information
on securities and information concerning prices of securities; and information
supplied by specialized services to the Portfolio Adviser and to the Portfolio
with respect to the performance, investment activities and fees and expenses of
other mutual funds. Such information may be communicated electronically, orally
or in written form. Research services may also include the providing of
equipment used to communicate research information, the arranging of meetings
with management of companies and the providing of access to consultants who
supply research information.
The outside research assistance is useful to the Portfolio Adviser
since the brokers utilized by the Portfolio Adviser as a group tend to follow a
broader universe of securities and other matters than the staff of the Portfolio
Adviser can follow. In addition, this research provides the Portfolio Adviser
with a diverse perspective on financial markets. Research services which are
provided to the Portfolio Adviser by brokers are available for the benefit of
all accounts managed or advised by the Portfolio Adviser. It is the opinion of
the Portfolio Adviser that this material is beneficial in supplementing their
research and analysis; and, therefore, it may benefit the Portfolio by improving
the quality of the Portfolio Adviser's investment advice.
TAXES
It is the policy of the Trust to distribute each fiscal year
substantially all each of the Fund's net investment income and net realized
capital gains, if any, to shareholders. The Trust intends that the Funds will
qualify as regulated investment companies under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). If so qualified, the Funds will
not be subject to federal income tax on that part of their net investment income
and net realized capital gains which they distributes to their shareholders. To
qualify for such tax treatment, a Fund must generally, among other things: (a)
derive at least 90% of its gross income from dividends, interest, payments
received with respect to loans of stock and securities, and gains from the sale
or other disposition of stock or securities and certain related income; and (b)
diversify its holdings so that at the end of each fiscal quarter (i) 50% of the
market value of such Fund's assets is represented by cash, Government
Securities, securities of other regulated investment companies, and other
securities limited, in respect of any one issuer, to an amount not greater than
5% of such Fund's assets or 10% of the voting securities of any issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than Government Securities).
The Portfolio has elected to be treated as a partnership for federal
income tax purposes and therefore believes that it will not be required to pay
any federal or state income or excise taxes. Any interest, dividends, gains and
losses of the Portfolio will be deemed to pass through to each of the Funds in
proportion to the Funds' respective ownership interests in the Portfolio. Thus,
to the extent that the Portfolio accrues but does not distribute income or
gains, each Fund will be deemed to have realized and recognized its
proportionate share of interest, dividends and gains, regardless of whether
there has been a distribution of such items to the Fund. The Portfolio will seek
to minimize recognition by its investors, including the Funds, of interest,
dividends and gains without a distribution.
The Code requires regulated investment companies to pay a
nondeductible 4% excise tax to the extent they do not distribute 98% of their
ordinary income, determined on a calendar year basis, and 98% of their capital
gains, determined on an October 31 year end. The Trust intends to distribute the
income and capital gains of each Fund in the manner necessary to avoid
imposition of the 4% excise tax by the end of each calendar year.
-17-
<PAGE>
Dividends of the Funds declared in October, November or December and
paid the following January will be taxable to shareholders as if received on
December 31 of the year in which they are declared.
PERFORMANCE INFORMATION
Calculation of Yield. Quotations of the "current yield" and "effective
--------------------
yield" of shares of the Institutional Money Market Fund and the Money Market
Fund may be used in advertisements, sales materials and shareholder reports.
Current yield is the simple annualized yield for an identified seven calendar
day period. This yield calculation is based on a hypothetical account having a
balance of exactly one share of a Fund at the beginning of the seven-day period.
The base period return is the net change in the value of the hypothetical
account during the seven-day period, including dividends declared on any shares
purchased with dividends on the shares but excluding any capital changes. Yield
will vary as interest rates and other conditions change. Yields also depend on
the quality, length of maturity and type of instruments held and operating
expenses of a Fund. Although both Funds invest in the Portfolio, because the
expenses of the Institutional Money Market Fund and the Money Market Fund
differ, the yield of each Fund's shares will differ.
Effective yield is computed by compounding the unannualized seven-day
period return as follows: by adding 1 to the unannualized seven-day base period
return, raising the sum to a power equal to 365 divided by 7, and subtracting 1
from the result.
365/7
Effective yield = [(base period return + 1) ]-1
Calculation of Total Return. Quotations of average annual total return
---------------------------
and other total return data relating to the Institutional Money Market Fund and
the Money Market Fund may also be used in advertisements, sales materials and
shareholder reports. Average annual total return quotations for the specified
periods are computed by finding the average annual compounded rates of return
(based on net investment income and any realized and unrealized capital gains or
losses on investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
In making these computations, all dividends and distributions are assumed to be
reinvested and all applicable recurring and non-recurring expenses are taken
into account. The Funds also may quote annual, average annual and annualized
total return and aggregate total return performance data, both as a percentage
and as a dollar amount based on a hypothetical investment amount, for various
periods. Although both Funds invest in the Portfolio, the total return of the
Institutional Money Market Fund and the Money Market Fund will differ because
their expenses differ.
Total return quotations will be computed in accordance with the
following formula, except that as required by the periods of the quotations,
actual annual, annualized or aggregate data, rather than average annual data,
may be quoted:
P (1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000
payment made at the beginning of the period.
-18-
<PAGE>
For the period October 1, 1998 (commencement of operations) to
February 28, 1999, the total return (unannualized) was 1.98% for the
Institutional Money Market Fund (previously known as the Institutional Shares of
Hewitt Money Market Fund)(after waiver of fees and expense reimbursement).
Actual annual or annualized total return data generally will be lower
than average annual total return data because the average rates of return
reflect compounding of return. Aggregate total return data, which is calculated
according to the following formula, generally will be higher than average annual
total return data because the aggregate rates of return reflect compounding over
longer periods of time:
ERV - P
___________
P
Where: P = a hypothetical initial payment of $1,000.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period.
For the period March 1, 1999 to December 31, 1999, the Institutional
Money Market Fund's average annual total return was 4.96% (previously known as
the Institutional Shares of Hewitt Money Market Fund)(after waiver of fees and
absorption of Fund expense). Absent such waiver and absorption of expenses, the
yield of the Institutional Money Market Fund would have been lower.
Yield and total return quotations are based upon historical investment
performance and is not intended to indicate future performance. Yield and total
return will fluctuate and will depend upon not only changes in prevailing
interest rates, but also upon any realized gains and losses and changes in
expenses.
Performance Comparisons. From time to time and only to the extent the
-----------------------
comparison is appropriate, the performance of the Funds may be compared to the
performance of various indices and investments for which reliable performance
data is available. Performance of the Funds may also be compared to averages,
performance rankings and other information prepared by recognized mutual fund
statistical services.
Quotations of performance used in advertising and other types of
literature may be compared to the 91-Day Treasury Bill Average (Federal
Reserve), Lipper Money Market Fund Average, iMoneyNet Taxable Money Market Fund
Average, Salomon Three-Month Treasury Bill Index, or Bank Averages, which are
calculated from figures supplied by the U.S. League of Savings Institutions
based on effective annual rates of interest on both passbook and certificate
accounts. Savings accounts offer a guaranteed return of principal and a fixed
rate of interest. The performance of the Funds also may be compared to the
Consumer Price Index, as published by the U.S. Bureau of Labor Statistics, which
is an established measure of change over time in the prices of goods and
services in major expenditure groups.
Performance comparisons to other mutual funds having investment
objectives similar to those of the Funds may also be used. This comparative
performance could be expressed as a ranking prepared by Lipper Analytical
Services, Inc., iMoneyNet's Money Fund Report, including Donoghue's Taxable
Money Market Fund Average or Morningstar, Inc., independent services which
monitor the performance of mutual funds.
Of course, past performance is no guarantee of future investment
results.
ADDITIONAL INFORMATION
Description of the Trust and its Shares. The Trust was organized on
---------------------------------------
July 7, 1998, as a business trust under the laws of the State of Delaware.
Interests in the Funds are represented by shares of beneficial
interest, $.001 par value. The Trust is authorized to issue an unlimited number
of shares, and may issue shares in series, with each series representing
-19-
<PAGE>
interests in a separate portfolio of investments (a "series"). As of the date of
this Statement of Additional Information, shares representing interests in the
Funds constitute the only two series of the Trust's shares outstanding.
Each share of a Fund represents an equal proportionate interest in
that Fund with each other share, without any priority or preference over other
shares. All consideration received for the sales of a Fund's shares, all assets
in which such consideration is invested, and all income, earnings and profits
derived therefrom are allocated to and belong to that Fund. As such, the
interest of shareholders in each Fund will be separate and distinct from the
interest of shareholders of the other Fund and any other funds which may be
represented by other series of shares of the Trust. Shares of each Fund will be
entitled to dividends and distributions only out of the net income and gains, if
any, of that Fund as declared by the Board of Trustees of the Trust. The assets
of each Fund and those of each other series of the Trust that may be authorized
will be segregated on the Trust's books and will be charged with the expenses
and liabilities of that series and a pro rata share of the general expenses and
liabilities of the Trust not attributable solely to any particular series. The
Board of Trustees determines those expenses and liabilities deemed to be general
expenses and liabilities of the Trust, and these items will be allocated among
the Funds and other series of the Trust in a manner deemed fair and equitable by
the Board of Trustees in its sole discretion.
The Board of Trustees may create additional classes of shares of the
Funds. Except for the different distribution related and other specific costs
borne by each class of shares, shares of each class have the same voting and
other rights. These varying costs will result in different dividends for each
class.
Annual meetings of shareholders of the Trust will not be held except
as required by the 1940 Act or other applicable law. A meeting will be held on
the removal of a Trustee or Trustees of the Trust if requested in writing by
shareholders representing not less than 10% of the outstanding shares of the
Trust. The Trust will assist in communications among shareholders as required by
Section 16(c) of the 1940 Act.
The Portfolio and MIP. The Funds pursue their investment objective by
---------------------
investing all of their investable assets in the Portfolio. The Portfolio is a
series of MIP, an open-end management investment company that is organized as a
Delaware business trust. MIP was formed on October 20, 1993. In accordance with
Delaware law and in connection with the tax treatment sought by MIP, the
Declaration of Trust of MIP provides that investors in MIP are personally
responsible for Trust liabilities and obligations, but only to the extent that
MIP's property is insufficient to satisfy such liabilities and obligations. The
MIP Declaration of Trust also provides that MIP shall maintain appropriate
insurance (for example, fidelity bonding and errors and ommissions insurance)
for the protection of the MIP, its investors, Trustees of MIP, officers,
employees and agents, covering possible tort and other liabilities, and that
investors will be indemnified to the extent that they are held liable for a
disproportionate share of MIP's obligations.
Interests in the Portfolio have substantially identical voting and
other rights as those right discussed above with respect to the Trust. Whenever
the Funds have the right to vote on any matter relating to MIP or the Portfolio
by virtue of its investment in the Portfolio, the Funds will hold a meeting of
their shareholders and will cast its vote as an investor in the Portfolio in the
same proportion as shares of the Funds are voted.
Set forth below is information with respect to each person who, to the
Trust's knowledge, owned beneficially or of record more than 5% of any class of
the Institutional Money Market Fund's total outstanding shares and their
aggregate ownership of the Institutional Money Market Fund's total outstanding
shares as of August 31, 2000.
<TABLE>
<CAPTION>
Name and Address Number of Shares % of Fund Shares
---------------- ---------------- ----------------
<S> <C> <C>
State Street Bank & Trust Co. 737,987 85%
as trustee f/b/o Xerox Corp.
Retirement Plans Master Trust
</TABLE>
-20-
<PAGE>
<TABLE>
<S> <C> <C>
1 Enterprise Drive
Quincy, MA 02170
State Street Bank & Trust Co. 95,897 11%
as trustee f/b/o Southern California
Edison Stock Savings plan
1 Enterprise Drive
Quincy, MA 02170
</TABLE>
As a result of its direct and beneficial ownership of 85% of the
outstanding shares of the Institutional Money Market Fund as shown above, the
Xerox Corp. Retirement Plans Master Trust may be deemed to "control" the
Institutional Money Market Fund and the Trust, as that term is defined in the
1940 Act. Through the exercise of voting rights with respect to those shares,
the persons voting such shares may be able to determine the outcome of
shareholder voting as matters requiring the approval of shareholders. As of
November 30, 2000, no shares of the Money Market Fund were outstanding.
Except as set forth above, no person, to the Trust's knowledge, owns
beneficially or of record more than 5% of the shares of a Fund or the Trust
Trustee and Officer Liability. Under the Trust's Declaration of Trust
-----------------------------
and its By-Laws, and under Delaware law, the Trustees, officers, employees and
agents of the Trust are entitled to indemnification under certain circumstances
against liabilities, claims and expenses arising from any threatened, pending or
completed action, suit or proceeding to which they are made parties by reason of
the fact that they are or were such Trustees, officers, employees or agents of
the Trust, subject to the limitations of the 1940 Act which prohibit
indemnification which would protect such persons against liabilities to the
Trust or its shareholders to which they would otherwise be subject by reason of
their own bad faith, willful misfeasance, gross negligence or reckless disregard
of duties. Similar provisions are contained in the Declaration of Trust of MIP.
Independent Auditors. KPMG LLP, 99 High Street, Boston, Massachusetts,
--------------------
02110, are the independent auditors of the Trust. The independent auditors are
responsible for auditing the financial statements of the Funds annually and
reviews the tax returns of the Funds. KPMG LLP also serve as the independent
auditors of MIP and audits the financial statements of the Portfolio. The
selection of the independent auditors for the Trust and MIP is approved annually
by their respective Boards of Trustees.
Custodian. Investors Bank & Trust Company, 200 Clarendon Street, 16th
---------
Floor, Boston, Massachusetts, 02116, serves as custodian of the Funds and the
Portfolio and maintains custody of the securities and similar assets of the
Funds and the Portfolio. Cash held by the custodian, which may at times be
substantial, is insured by the Federal Deposit Insurance Corporation up to the
amount of available insurance coverage limits (presently, $100,000). Investors
Bank & Trust Company also maintains the accounting books and records of the
Funds and provides sub-administrative services.
Transfer Agent. Investors Bank & Trust Company, 200 Clarendon Street,
--------------
16th Floor, Boston, Massachusetts, 02116,(the "Transfer Agent") serves as the
transfer agent and dividend disbursing agent for the Funds.
Shareholder Reports. Shareholders of the Fund are kept fully informed
-------------------
through annual and semi-annual reports showing diversification of investments,
securities owned and other information regarding the activities of the Funds.
Legal Counsel. Schulte Roth & Zabel LLP, New York, New York, serves as
-------------
counsel to the Trust.
Registration Statement. This Statement of Additional Information and
----------------------
the Prospectus do not contain all of the information set forth in the
Registration Statement the Trust has filed with the SEC. The complete
-21-
<PAGE>
Registration Statement may be obtained from the SEC upon payment of the fee
prescribed by the rules and regulations of the SEC.
Financial Statements. The Institutional Money Market Fund's and the
--------------------
Portfolio's audited financial statements appearing in the Annual Report to
shareholders of that Fund, dated December 31, 1999, and the independent
auditor's report thereon are incorporated by reference in this Statement of
Additional Information. The Institutional Money Market Fund's and the
Portfolio's financial statements appearing in the Institutional Money Market
Fund's Semi-Annual Report to shareholders, dated June 30, 2000 are also
incorporated by reference in this Statement of Additional Information. The
Annual Reports and Semi-Annual Reports of the Funds, which contain the
referenced statements, are available upon request and without charge. The fist
available report for the Money Market Fund will be available on or shortly prior
to February 28, 2001.
-22-
<PAGE>
SAI APPENDIX
The following is a description of the ratings given by Moody's and S&P
to corporate bonds and commercial paper.
Corporate Bonds
Moody's: The four highest ratings for corporate bonds are "Aaa," "Aa,"
-------
"A" and "Baa." Bonds rated "Aaa" are judged to be of the "best quality" and
carry the smallest amount of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure. Bonds
rated "Aa" are of "high quality by all standards," but margins of protection or
other elements make long-term risks appear somewhat greater than "Aaa" rated
bonds. Bonds rated "A" possess many favorable investment attributes and are
considered to be upper medium grade obligations. Bonds rated "Baa" are
considered to be medium grade obligations; interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds have speculative characteristics as well. Moody's applies numerical
modifiers "1," "2" and "3" in each rating category from "Aa" through "Baa" in
its rating system. The modifier "1" indicates that the security ranks in the
higher end of its category; the modifier "2" indicates a mid-range ranking; and
the modifier "3" indicates that the issue ranks in the lower end.
S&P: The four highest ratings for corporate bonds are "AAA," "AA," "A"
---
and "BBB." Bonds rated "AAA" have the highest ratings assigned by S&P and have
an extremely strong capacity to pay interest and repay principal. Bonds rated
"AA" have a "very strong capacity to pay interest and repay principal" and
differ "from the highest rated issued only in small degree." Bonds rated "A"
have a "strong capacity" to pay interest and repay principal, but are "somewhat
more susceptible" to adverse effects of changes in economic conditions or other
circumstances than bonds in higher rated categories. Bonds rated "BBB" are
regarded as having an "adequate capacity" to pay interest and repay principal,
but changes in economic conditions or other circumstances are more likely to
lead to a "weakened capacity" to make such repayments. The ratings from "AA" to
"BBB" may be modified by the addition of a plus or minus sign to show relative
standing within the category.
Corporate Commercial Paper
Moody's: Moody's employs the designations of "Prime-1," "Prime-2" and
-------
"Prime-3" to indicate the relative capacity of the rated issuers or borrowers to
repay punctually. The highest rating for corporate commercial paper is "Prime-
1." Issuers rated "Prime-1" have a "superior capacity for repayment of short-
term promissory obligations," and will normally be evidenced by leading market
positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and highinternal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated "Prime-2" "have a strong capacity for repayment of short-term
promissory obligations," but earnings trends, while sound, will be subject to
more variation.
S&P: The "A-1" rating for corporate commercial paper indicates that --
---
- the "degree of safety regarding timely payment is either overwhelming or very
strong." Commercial paper with "overwhelming safety characteristics" will be
rated "A-1+." Commercial paper with a strong capacity for timely payments on
issues will be rated "A-2."
-23-
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits.
Exhibit
Number Description
------ -----------
(a)(1) Certificate of Designation, dated August 23, 2000.*
(a)(2) Declaration of Trust, dated July 6, 1998.**
(b) By-Laws of Registrant.**
(c) Certificate of Trust, dated July 6, 1998.**
(d) Investment Advisory Agreement (Hewitt Money Market Fund),
dated August 23, 2000.*
(e)(1) Distribution Agreement (Hewitt Money Market Fund), dated
August 23, 2000.*
(e)(2) Distribution Agreement (Hewitt Institutional Money Market
Fund), dated August 23, 2000.*
(f) Not Applicable.
(g) Custodian Agreement, dated September 1, 1998.***
(h)(1) Administration Agreement, dated August 23, 2000.*
(h)(2) Transfer Agency and Service Agreement, dated September 1,
1998.***
(h)(3) Sub-Administration Agreement, dated September 1, 1998.***
(h)(4) Shareholder Services Agreement (Hewitt Money Market Fund),
dated August 23, 2000.*
____________________
* Incorporated by reference to Registrant's previous filing on Form N-1A,
Post Effective Amendment No. 3, filed August 31, 2000.
** Incorporated by reference to Registrant's initial filing on Form N-1A,
filed July 16, 1998.
*** Incorporated by reference to Registrant's previous filing on Form N-1A,
Pre-Effective Amendment No. 1, filed September 4, 1998.
C-1
<PAGE>
(h)(5) Shareholder Services Agreement (Hewitt Institutional Money
Market Fund), dated August 23, 2000.*
(h)(6) Third Party Feeder Fund Agreement, dated August 23, 2000.*
(h)(7) Hewitt Money Market Fund Expense Limitation and Reimbursement
Agreement, dated August 23, 2000.
(i) Legal Opinion.*
(j)(1) Consent of Independent Auditors.
(j)(2) Power of Attorney.***
(k) Not Applicable.
(l) Not Applicable.
(m) Rule 12b-1 Plan, dated August 23, 2000.**
(n) Rule 18f-3 Plan.****
(o) Reserved.
(p) Not Applicable (the Funds are Money Market Funds).
Item 24. Persons Controlled by or Under Common Control with Registrant.
No persons are controlled by Registrant. As noted in the SAI, Xerox
Corp. Retirement Plans Master Trust may be deemed to "control" Hewitt
Institutional Money Market Fund, as that term is defined in the 1940 Act. With
respect to the Hewitt Money Market Fund no shares have yet been issued,
therefore no person may be deemed to "control" Hewitt Money Market Fund.
Item 25. Indemnification.
As permitted by Section 17(h) and (i) of the Investment Company Act of
1940, as amended (the "Investment Company Act"), and pursuant to Article VI of
Registrant's By-Laws, officers, trustees, employees and agents of Registrant may
be indemnified against certain liabilities in connection with Registrant, and
pursuant to Section 9 of the Distribution Agreements with Hewitt Services LLC,
as principal underwriter of Hewitt Money Market Fund and the Hewitt
Institutional Money Market Fund, may be indemnified against certain liabilities
which it may incur. Such Article VI of the By-Laws and Section 9 of the
Distribution Agreements are hereby incorporated by reference in their entirety.
Registrant maintains an insurance policy insuring its officers and
trustees against certain liabilities, and certain costs of defending claims
against such officers and trustees, and to
__________________________
**** Incorporated by reference to Registrant's previous filing on Form N-1A,
Pre-Effective Amendment No. 1, filed September 4, 1998. The Multiple Class
(Rule 18f-3) Plan for Hewitt Series Trust will no longer be applicable upon the
effectiveness of this Post-Effective Amendment No. 4, dated November 29, 2000.
C-2
<PAGE>
bear the costs of such policy except for such costs as is determined to be
attributable to coverage protecting such persons against liabilities to which
they may become subject as a consequence of their own willful misfeasance, bad
faith, gross negligence or reckless disregard in the performance of their
duties. The insurance policy also insures Registrant against the cost of
indemnification payments to officers and trustees under certain circumstances.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
trustees, officers and controlling persons of Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer, or controlling person of Registrant and the
principal underwriter in connection with the successful defense of any action,
suit or proceeding) is asserted against Registrant by such trustee, officer or
controlling person or the principal underwriter in connection with the shares
being registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws in a manner consistent with Release No. 11330 of the
Securities and Exchange Commission under the Investment Company Act so long as
the interpretations of Sections 17(h) and 17(i) of the Investment Company Act
remain in effect and are consistently applied.
Item 26. Business and Other Connections of Investment Adviser.
Hewitt Institutional Money Market Fund does not have an investment
adviser. It pursues its investment objective by investing its assets in the
Money Market Master Portfolio, a series of Master Investment Portfolio, a
registered open-end management company. The investment adviser of Money Market
Master Portfolio is Barclays Global Fund Advisors. The information required by
this Item 26 with respect to Barclays Global Fund Advisors is incorporated by
reference to Form N-1A of Masterworks Fund Inc., filed July 2, 1998, accession
number 0000929624- 98-00127.
Hewitt Associates LLC serves as the investment adviser of the Hewitt
Money Market Fund and also provides administrative services to that fund
pursuant to the terms of an investment advisory agreement dated August 23,
2000. Hewitt Associates LLC is an international firm of consultants in
investment services, compensation, employee benefits, communication and related
financial and human resource functions.
Reference is made to the most recent Form ADV and Schedules thereto on
file with the Commission of Hewitt Associates LLC (801-3153) for a description
of the names and employments of its directors, officers and members, and other
required information.
C-3
<PAGE>
Item 27. Principal Underwriters.
(a) Not Applicable.
(b)
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Distributor with Funds
---- ---------------- ----------
<S> <C> <C>
John M. Ryan Chief Executive Officer
Peter E. Ross Chief Compliance Secretary
Officer/Assistant Secretary
C. Lawrence Connolly, III General Counsel/Secretary
Stacy L. Schaus Marketing Director/Chief President
Operating Officer
</TABLE>
The principal business address of each of the above persons is 100 Half Day
Road, Lincolnshire, Illinois 60069.
(c) The Distributor does not receive compensation for its services as
principal underwriter, except that it is paid a fee for services
rendered in connection with the distribution of shares of the Hewitt
Money Market Fund. See "Distribution and Servicing Arrangements" in
Part A and "Distribution Arrangements" in Part B.
Item 28. Location of Accounts and Records.
All accounts books and other documents required to be maintained by
Registrant by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained by Investors Bank & Trust Company, 200 Clarendon
Street, 16th Floor, Boston Massachusetts, 02116, which serves as Registrant's
custodian and transfer agent, except for records required by paragraph (b)(4) of
Rule 31a-1 which will be maintained at the offices of Hewitt Associates LLC, 100
Half Day Road, Lincolnshire, Illinois 60069.
Item 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Registrant, Hewitt Series Trust, certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act and has duly caused this Post-Effective
Amendment No. 4 to the Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Lincolnshire, and state of
Illinois, on the day of November 30, 2000.
Hewitt Series Trust
By:/s/ Stacy L. Schaus
-----------------------------
Stacy L. Schaus
President
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment No. 4 to the Registration Statement of Registrant has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Donald Hunt Trustee November 30, 2000
------------------------------
Donald Hunt
/s/ John D. Oliverio Trustee November 30, 2000
------------------------------
John D. Oliverio
/s/ E. Scott Peterson Trustee November 30, 2000
------------------------------
E. Scott Peterson
/s/ Stacy L. Schaus President November 30, 2000
------------------------------ (Principal Executive Officer)
Stacy L. Schaus
/s/ Anthony P. Santori Treasurer and November 30, 2000
------------------------------ Chief Financial Officer
Anthony P. Santori (Principal Financial Officer)
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Registrant, Hewitt Series Trust, certifies that it meets all
of the requirements for effectiveness of this registration statement under Rule
485(b) under the Securities Act and has duly caused this post-effective
amendment No. 4 to the Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Little Rock, and state of Arkansas,
on the day of November 30, 2000.
Master Investment Portfolio
Money Market Master Portfolio
By: /s/ Richard H. Blank
--------------------
Richard H. Blank
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act, this post-effective
amendment No. 4 to the Registration Statement of Registrant has been signed
below by the following persons in the capacities and on the dates indicated.
Signature Title
--------- -----
*
-------------------- Chairman, President
R. Greg Feltus (Principal Executive Officer) and Trustee
/s/ Richard H. Blank, Jr.
------------------------- Secretary and Treasurer
Richard H. Blank, Jr. (Principal Financial Officer)
*
------------------------- Trustee
Jack S. Euphrat
*
------------------------- Trustee
W. Rodney Hughes
*
------------------------- Trustee
Leo Soong
November 30, 2000
* By: /s/ Richard H. Blank
--------------------
Richard H. Blank
As Attorney-in-Fact
November 30, 2000
<PAGE>
INDEX TO EXHIBITS
(h)(7) Hewitt Money Market Fund Expense Limitation and Reimbursement Agreement,
dated August 23, 2000.
(j)(1) Consent of Independent Auditors.
(j)(2) Power of Attorney for Leo Soong
C-6
