<PAGE>
THE STRONG
----------
INDEX 500 FUND
====================================
SEMI-ANNUAL REPORT o AUGUST 31, 1998
====================================
[PHOTO OF STRONG FUNDS BUILDING]
[STRONG LOGO]
STRONG FUNDS
<PAGE>
8
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
- -------------------------------------------------------------------------------
[PICTURE OF FOLDER LABELED INVESTMENTS]
1. HAVE A PLAN. Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances change.
- -------------------------------------------------------------------------------
[PICTURE OF CLOCK]
2. START INVESTING AS SOON AS POSSIBLE. Make time a valuable ally. Let it put
the power of compounding to work for you, while helping to reduce your
potential investment risk.
- -------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
3. DIVERSIFY YOUR PORTFOLIO. By investing in different asset classes - stocks,
bonds, and cash - you help protect against poor performance in one type of
investment while including investments most likely to help you achieve your
important goals.
- -------------------------------------------------------------------------------
[PICTURE OF MEMO REMINDER TO INVEST]
4. INVEST REGULARLY. Investing is a process, not a one-time event. By
investing regularly over the long term, you reduce the impact of short-term
market gyrations, and you attend to your long-term plan before you're tempted
to spend those assets on short-term needs.
- -------------------------------------------------------------------------------
[PICTURE OF GRAPH SLOPING UPWARD]
5. MAINTAIN A LONG-TERM PERSPECTIVE. For most individuals, the best discipline
is staying invested as market conditions change. Reactive, emotional investment
decisions are all too often a source of regret - and of principal loss.
- -------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
6. CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS. Over time, stocks
have provided the more powerful returns needed to help the value of your
investments stay well ahead of inflation.
- -------------------------------------------------------------------------------
[PICTURE OF DOLLAR SIGN]
7. KEEP A COMFORTABLE AMOUNT OF CASH IN YOUR PORTFOLIO. To meet current needs,
including emergencies, use a money market fund or a bank account - not your
long-term investment assets.
- -------------------------------------------------------------------------------
[PICTURE OF MAGNIFYING GLASS]
8. KNOW WHAT YOU'RE BUYING. Make sure you understand the potential risks and
rewards associated with each of your investments. Ask questions...request
information...make up your own mind. And choose a fund company that helps you
make informed investment decisions.
<PAGE>
THE STRONG
----------
INDEX 500 FUND
====================================
SEMI-ANNUAL REPORT o AUGUST 31, 1998
====================================
TABLE OF CONTENTS
INVESTMENT REVIEW
The Strong Index 500 Fund........................................2
FINANCIAL INFORMATION--STRONG INDEX 500 FUND
Statement of Assets and Liabilities..............................4
Statement of Operations..........................................5
Statement of Changes in Net Assets...............................6
Notes to Financial Statements....................................7
Financial Highlights.............................................8
FINANCIAL INFORMATION--MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER
PORTFOLIO
Portfolio of Investments.........................................9
Statement of Assets and Liabilities.............................15
Statement of Operations.........................................16
Statements of Changes in Net Assets.............................17
Notes to Financial Statements...................................18
<PAGE>
=========================
THE STRONG INDEX 500 FUND
=========================
AFTER A SOLID START IN EARLY 1998, THE EQUITY MARKET TUMBLED IN MIDSUMMER,
TRIGGERED IN LARGE PART BY THE JULY 21 COMMENTS OF ALAN GREENSPAN,CHAIRMAN OF
THE FEDERAL RESERVE.
The Strong Index 500 Fund is designed to provide investors with broad exposure
to the large-capitalization sector of the U.S. market by replicating, as
closely as practical (before fees and expenses), the market capitalization-
weighted total return of the Standard & Poor's 500 (S&P 500) Index.* The Fund
represents more than 70% of the overall U.S. stock market capitalization. This
allows investors wide diversification, and serves as a complement to actively
managed funds.
For the six-month period ending August 31, 1998, the Strong Index 500 Fund
returned -8.23%, while the corresponding S&P 500 Index returned-8.10%.
A DIFFICULT PERIOD FOR STOCKS
After a solid start in early 1998, the equity market tumbled in midsummer,
triggered in large part by the July 21 comments of Alan Greenspan, Chairman
of the Federal Reserve. In his testimony before the Senate Banking Committee,
Greenspan disappointed investors by expressing concern that stock prices were
too high, rather than hinting of a rate cut. Concerns about soft corporate
earnings and troubles in Asia took the front burner again, quickly cooling the
record-shattering market. Disappointing earnings reports from "nifty-fifty"
companies like Boeing, Merck, Disney and Hewlett-Packard also pushed the market
lower. This all contributed to the near-record point decline of the S&P 500
Index from 1186.75 on July 17, 1998 to 957.28 on August 31, 1998.
CORPORATE EARNINGS DRIVE STOCKS DOWN
Asia-related concerns over earnings contributed to the July-August decline in
stock prices. These concerns over Asia's continued malaise, along with new
issues about the viability of the Russian economy, came on top of growing fears
of lackluster earnings from corporate America.
Concerns about mediocre earnings performance were driven by rising labor costs,
lack of pricing power and the strong dollar. Much of the damage to corporate
earnings can be traced to the falling demand for oil and semiconductors. The
Asian impact on earnings has been highly concentrated, with sectors such as
financial services and pharmaceuticals experiencing little effect. In general,
retailers, airlines, and producers of consumer non-durables have been
positively impacted.
Thank you for your investment in the Strong Index 500 Fund. We look forward to
serving your investment needs in the future.
2
<PAGE>
ADDITIONS AND DELETIONS TO THE S&P 500 INDEX
Following are the list of additions and deletions to the Fund's holdings during
the reporting period March 1, 1998--August 31, 1998
ADDITIONS
NEXTEL Communications
Sealed Air
Grace (W.R.) & Co.
Marriott International, Inc.
Franklin Resources, Inc.
Gateway 2000, Inc.
Associates First
Sempra Energy
Bear Stearns Cos.
Dun & Bradstreet Corp.
IMS Health Inc.
SLM Holding Corp.
Capital One Financial
Procter & Gamble
Ascend Communications
Waste Management, Inc.
Dollar General
Meyer Inc.
Provident Insurance Companies Inc.
Regions Financial Corp.
Kohl's Corp.
Electronic Data Systems Services
DELETIONS
Safety-Kleen
Harland (J.H.)
Grace (W.R.) & Co.
Marriott Int'l, Inc.
CoreStates Financial
USF&G Corp.
Charming Shoppes
Inland Steel
Dun & Bradstreet
Cognizant Corp.
Beneficial Corp.
Green Tree Financial
Pacific Enterprises
Digital Equipment
Waste Management
Giant Foods Class A
Echlin Inc.
Bay Networks Computers
DSC Communications
Mercantile Stores
Western Atlas Oil & Gas
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 5-1-97 to 8-31-98
[GRAPH]
THE STRONG Lipper S&P 500
INDEX 500 S&P 500 Index Objective
FUND Stock Index(Reg.tm)*+ Funds Index*+
4-97 10,000 10,000 10,000
6-97 11,110 11,122 11,117
8-97 11,320 11,334 11,327
10-97 11,538 11,555 11,547
12-97 12,262 12,298 12,282
2-98 13,271 13,331 13,307
4-98 14,087 14,154 14,120
6-98 14,392 14,476 14,433
8-98 12,179 12,251 12,215
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Standard & Poor's 500 Stock Index(reg.tm) ("S&P 500") and the Lipper S&P 500
Index Objective Funds Index. Results include the reinvestment of all dividends
and capital gains distributions. Performance is historical and does not
represent future results. Investment returns and principal value vary, and you
may have a gain or loss when you sell shares.
================================================================================
===========================
AVERAGE ANNUAL
TOTAL RETURN(1)
===========================
As of 8-31-98
1-YEAR 7.58%
SINCE INCEPTION 15.91%
(on 5-1-97)
===========================
+ The S&P 500 Index figure tracks the Strong Index 500 Fund and the Lipper S&P
500 Index figure so closely that its results are not discernible on the graph.
- -------------------------------------------------------------------------------
* The S&P 500 Stock Index(reg.tm) is an unmanaged index generally
representative of the U.S. stock market, without regard to company size.
The Lipper S&P 500 Index Objective Funds Index is an equally-weighted
performance index of the largest qualifying funds in this Lipper category.
Source of the S&P index data is Standard & Poor's Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change, while
total return reflects aggregate change. Strong Capital Management, Inc. has
voluntarily waived portions of its fees or has reimbursed expenses to the
Fund, which has reduced operating expenses for shareholders. Without this
reduction, the Fund's return would have been lower.
3
<PAGE>
STRONG INDEX 500 FUND
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998 (Unaudited)
ASSETS:
Investment in S&P 500 Index Master Portfolio, at Value (Note 1) $62,995,826
Other Assets 135,636
-----------
Total Assets 63,131,462
LIABILITIES:
Payable for Fund Shares Redeemed 8,664
Accrued Operating Expenses and Other Liabilities 116,910
-----------
Total Liabilities 125,574
-----------
NET ASSETS $63,005,888
===========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in surplus) $67,472,339
Undistributed Net Investment Income 304,946
Undistributed Net Realized Gain 86,029
Net Unrealized Depreciation (4,857,426)
-----------
Net Assets $63,005,888
===========
Capital Shares Outstanding (Unlimited Number Authorized) 5,229,707
NET ASSET VALUE PER SHARE $12.05
======
4
See notes to financial statements.
<PAGE>
STRONG INDEX 500 FUND
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended August 31, 1998 (Unaudited)
NET INVESTMENT INCOME ALLOCATED FROM MASTER PORTFOLIO:
Dividend Income $ 371,197
Interest Income 83,934
Expenses (13,622)
----------
Total Income Allocated from Master Portfolio 441,509
EXPENSES:
Shareholder Servicing Costs 139,958
Reports to Shareholders 21,288
Federal and State Registration Fees 44,819
Other 26,855
----------
Total Expenses before Waivers 232,920
Voluntary Expense Waivers by SCMI (128,452)
----------
Expenses, Net 104,468
----------
NET INVESTMENT INCOME 337,041
REALIZED AND UNREALIZED GAIN (LOSS) ALLOCATED FROM MASTER PORTFOLIO:
Net Realized Gain on Investments 17,900
Change in Unrealized Appreciation/Depreciation on:
Investments (7,724,911)
Futures Contracts (472,268)
----------
Net Change in Unrealized Appreciation/Depreciation (8,197,179)
----------
NET LOSS ALLOCATED FROM MASTER PORTFOLIO (8,179,279)
----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($7,842,238)
==========
5
See notes to financial statements.
PAGE>
<TABLE>
STRONG INDEX 500 FUND
- ------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1998 FEBRUARY 28, 1998
----------------- -----------------
(UNAUDITED) (NOTE 1)
OPERATIONS:
<S> <C> <C>
Net Investment Income $ 337,041 $ 164,843
Net Realized Gain 17,900 88,899
Net Change in Unrealized Appreciation/Depreciation (8,197,179) 3,339,753
------------ -----------
Net Increase (Decrease) in Net Assets Resulting from Operations (7,842,238) 3,593,495
DISTRIBUTIONS:
From Net Investment Income (82,885) (114,053)
From Net Realized Gains (7,666) (13,104)
------------ -----------
Total Distributions (90,551) (127,157)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Proceeds from Shares Sold 48,741,000 32,320,505
Proceeds from Reinvestment of Distributions 89,017 123,613
Payment for Shares Redeemed (9,987,287) (3,814,509)
----------- -----------
Net Increase in Net Assets from Beneficial Interest Transactions 38,842,730 28,629,609
----------- -----------
TOTAL INCREASE IN NET ASSETS 30,909,941 32,095,947
NET ASSETS:
Beginning of Period 32,095,947 ---
----------- -----------
End of Period $63,005,888 $32,095,947
=========== ===========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 3,507,739 2,745,317
Issued in Reinvestment of Distributions 6,488 10,372
Redeemed (722,629) (317,580)
--------- ---------
Net Increase in Shares of the Fund 2,791,598 2,438,109
========= =========
</TABLE>
6
See notes to financial statements.
<PAGE>
STRONG INDEX 500 FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 1998 (Unaudited)
1. ORGANIZATION
The Strong Index 500 Fund (the "Fund") commenced operations on May 1, 1997
and is a diversified series of the Strong Equity Funds, Inc., an open-end
management investment company registered under the Investment Company Act of
1940. The Fund invests all of its assets in the S&P 500 Index Master
Portfolio (the "Master Portfolio") of Master Investment Portfolio ("MIP"),
an open-end management investment company registered under the Investment
Company Act of 1940, rather than in a portfolio of securities. The Master
Portfolio has substantially the same investment objective as the Fund.
Barclays Global Fund Advisors serves as Investment Advisor for the Master
Portfolio. The financial statements of the Master Portfolio, including the
schedule of investments in securities, are contained elsewhere in this
report and should be read in conjunction with the Fund's financial
statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
(A) Security Valuation -- The value of the Fund's investment in the Master
Portfolio reflects the Fund's interest of 2.72% in the net assets of the
Master Portfolio. Valuation of securities by the Master Portfolio is
discussed in Note 1 of the Master Portfolio's Notes to Financial
Statements, which are included elsewhere in this report.
(B) Federal Income and Excise Taxes and Distributions to Shareholders -- The
Fund intends to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders in a manner
which results in no tax cost to the Fund. Therefore, no federal income
or excise tax provision is required.
The character of distributions made during the period from net
investment income or net realized gains may differ from the
characterization for federal income tax purposes due to differences in
the recognition of income and expense items for financial statement and
tax purposes. Where appropriate, reclassifications between net asset
accounts are made for such differences that are permanent in nature.
(C) Accounting for Investments -- The Fund earns income, net of Master
Portfolio expenses, daily based on its investment in the Master
Portfolio All the net investment income, realized and unrealized gain
or loss of the Master Portfolio is allocated pro rata, based on
respective ownership interests, among the Fund and the other investors
in the Master Portfolio at the time of such determination. Dividend
income and other distributions from portfolio securities are recorded on
the ex-dividend date. Interest income is accrued daily.
(D) Expenses -- The Fund bears all costs of its operations other than
expenses specifically assumed by Strong Capital Management, Inc.
("SCMI"), the Fund's shareholder servicing agent, transfer agent and
dividend-disbursing agent. Expenses incurred by the Master Portfolio
are allocated pro rata to the Fund.
(E) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
3. RELATED PARTY TRANSACTIONS
SCMI provides shareholder recordkeeping and related services to the Fund.
Fees for these services are based on contractually established rates for
each open and closed shareholder account. Certain fees have been waived or
reimbursed by SCMI for the six months ended August 31, 1998. Waived or
reimbursed fees continue at the discretion of SCMI. In addition, SCMI is
compensated for certain other services related to costs incurred for reports
to shareholders. The amount receivable from SCMI at August 31, 1998, other
shareholder expenses paid to SCMI and unaffiliated directors' fees for the
period then ended were $47, $986, and $750, respectively.
7
PAGE>
<TABLE>
STRONG INDEX 500 FUND
- -----------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
--------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- ------------------------------------
<CAPTION>
Net Asset Net Realized Total Net Asset
Value, Net and Unrealized from From Net From Net Value,
Beginning Investment Gains (Losses) Investment Investment Realized Total End of
of Period Income on Investments Operations Income Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aug. 31, 1998(b) $13.16 $0.07 ($1.15) ($1.08) ($0.03) -- ($0.03) $12.05
Feb. 28, 1998(c) 10.00 0.11 3.15 3.26 (0.09) ($0.01) (0.10) 13.16
</TABLE>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------
Net Ratio of Ratio of Net
Assets, Ratio of Expenses to Investment
End of Expenses Average Net Income
Total Period (In to Average Assets Without to Average
Return Thousands) Net Assets Waivers Net Assets
Aug. 31, 1998(b) - 8.2% $63,006 0.43%* 0.90%* 1.23%*
Feb. 28, 1998(c) +32.7% 32,096 0.44%* 1.53%* 1.43%*
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended August 31, 1998 (Unaudited). Total return is not
annualized.
(c) For the period from May 1, 1997 (inception) to February 28, 1998. Total
return is not annualized.
8
<PAGE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1998 (Unaudited)
SECURITY NAME SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS-97.23%
ADVERTISING-0.10%
Omnicom Group 47,683 $ 2,270,903
-----------
TOTAL ADVERTISING
- VALUE $ 2,270,903
- COST $ 1,915,517
AEROSPACE & DEFENSE-1.44%
Allied Signal Inc 165,531 $ 5,679,748
Boeing Co 293,540 9,081,394
Briggs & Stratton Corp 7,318 269,394
General Dynamics Corp 36,926 1,756,293
Lockheed Martin Corp 57,061 4,989,271
Northrop Grumman Corp 19,543 1,238,538
Rockwell International Corp 58,867 2,133,929
Textron Inc 48,199 3,024,487
United Technologies Corp 68,350 4,959,647
-----------
TOTAL AEROSPACE & DEFENSE
- VALUE $33,132,701
- COST $29,281,270
AIRLINES-0.47%
AMR Corp 53,554 $ 2,918,693
Delta Air Lines Inc 21,958 2,239,716
FDX Corp^ 43,035 2,154,440
Southwest Airlines Co 97,032 1,728,383
USAirways Group Inc^ 29,636 1,726,297
-----------
TOTAL AIRLINES
- VALUE $10,767,529
- COST $ 8,364,122
APPAREL-0.43%
CVS Corp 112,230 $ 4,082,366
Fruit of the Loom Inc Class A^ 21,551 483,551
Liz Claiborne Inc 19,491 555,494
Nike Inc Class B 85,234 2,956,554
Reebok International Ltd^ 16,540 267,741
Russell Corp 10,649 336,775
VF Corp 35,770 1,354,789
-----------
TOTAL APPAREL
- VALUE $10,037,270
- COST $ 8,778,811
AUTO PARTS & EQUIPMENT-0.67%
Cooper Tire & Rubber Co 23,034 $ 368,544
Dana Corp 48,018 1,881,710
Deluxe Corp 23,823 690,867
Eaton Corp 22,471 1,315,958
Genuine Parts Co 52,513 1,644,314
Goodyear Tire & Rubber Co 45,834 2,245,866
Illinois Tool Works Inc 73,157 3,543,542
ITT Industries Inc 34,697 1,045,247
Navistar International Corp^ 21,104 443,184
PACCAR Inc 22,817 935,497
Pep Boys-Manny Moe & Jack 18,510 271,866
TRW Inc 36,031 1,544,829
-----------
TOTAL AUTO PARTS & EQUIPMENT
- VALUE $15,931,424
- COST $14,443,066
AUTOMOBILES-1.53%
Chrysler Corp 190,202 $ 8,487,764
Ford Motor Co 355,722 15,651,768
General Motors Corp Class A 195,827 11,309,009
-----------
TOTAL AUTOMOBILES
- VALUE $35,448,541
- COST $25,251,369
BANK & FINANCE-11.42%
Ahmanson (H F) & Co 32,104 $ 1,711,545
American Express Corp 136,251 10,627,578
Associates First Capital Corp 101,625 6,008,578
Banc One Corp 205,778 7,819,564
Bank of New York Inc 220,984 5,345,051
BankAmerica Corp 199,870 12,804,172
BankBoston Corp 85,324 3,045,000
Bankers Trust Corp 28,701 2,132,843
BB&T Corp 83,436 2,351,852
Bear Stearns Co Inc 33,209 1,226,657
Capital One Financial Corp 19,141 1,674,838
Chase Manhattan Bank 250,048 13,252,544
Citicorp 132,197 14,293,801
Comerica Inc 46,131 2,410,345
Countrywide Credit Industries Inc 31,790 1,190,138
Equifax Inc 44,097 1,570,956
Federal Home Loan Mortgage Corp 198,600 7,844,700
Federal National Mortgage Assoc 303,801 17,259,694
Fifth Third Bancorp 77,071 4,099,214
First Chicago NBD Corp 85,318 5,407,028
First Union Corp 283,860 13,767,210
Fleet Financial Group Inc 83,240 5,457,423
Franklin Resources Inc 74,154 2,391,467
Golden West Financial 16,720 1,272,810
Household International Inc 142,170 5,251,404
Huntington Bancshares Inc 61,550 1,400,263
Keycorp 128,908 3,287,154
Lehman Brothers Holdings 34,790 1,369,856
MBNA Corp 147,057 3,455,840
Mellon Bank Corp 74,787 3,888,924
Mercantile Bancorp 44,439 1,952,539
Merrill Lynch & Co Inc 101,301 6,685,866
MGIC Investment Corp 33,371 1,384,897
Morgan (J P) & Co Inc 52,106 4,845,858
Morgan Stanley Dean Witter 175,983 10,218,013
National City Corp 96,358 5,661,033
NationsBank Corp 280,620 15,995,326
Northern Trust Corp 32,706 1,823,360
Norwest Corp 221,507 6,589,833
PNC Bank Corp 89,504 3,848,672
Regions Financial Corp 96,740 3,349,623
Republic New York Corp 32,088 1,323,630
Ryder System Inc 22,592 532,324
Schwab (Charles) Corp 77,888 2,326,904
SLM Holding Corp 49,687 1,782,521
State Street Boston Corp 47,194 2,457,038
Summit Bancorp 51,628 1,761,806
SunTrust Banks Inc 61,918 3,467,408
Synovus Financial Corp 77,022 1,400,838
U.S. Bancorp 216,120 7,375,095
Wachovia Corp 60,330 4,422,943
Washington Mutual Inc 113,372 3,627,904
Wells Fargo & Co 25,408 7,161,880
------------
TOTAL BANK & FINANCE
- VALUE $263,613,760
- COST $202,484,993
BASIC INDUSTRIES-1.23%
ASARCO Inc 12,263 $ 195,442
Avery-Dennison Corp 34,425 1,848,192
Baker Hughes Inc 93,016 1,697,542
Bemis Co 15,479 555,309
Boise Cascade Corp 16,428 401,459
Champion International Corp 28,193 930,369
Cyprus Amax Minerals 27,269 250,534
Dover Corp 65,118 1,774,466
Fort James Corp 61,431 1,789,178
Georgia-Pacific Corp 27,137 1,163,499
Harnischfeger Industries Inc 14,128 226,931
Homestake Mining Co 59,567 528,657
Ikon Office Solutions Inc 39,452 219,452
9
<PAGE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1998 (Unaudited)
SECURITY NAME SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Inco Ltd 48,906 $ 409,588
Louisiana-Pacific Corp 32,011 604,208
Mead Corp 30,680 839,865
Minnesota Mining & Manufacturing Co 119,852 8,209,862
NACCO Industries Inc Class A 2,426 231,077
Newmont Mining Corp 45,722 625,820
Potlatch Corp 8,446 277,662
Sealed Air Corp^ 24,187 870,732
Stone Container Corp^ 28,996 302,646
Union Camp Corp 20,381 755,371
Westvaco Corp 29,899 627,879
Weyerhauser Co 58,599 2,201,125
Willamette Industries Inc 32,534 801,150
-----------
TOTAL BASIC INDUSTRIES
- VALUE $28,338,015
- COST $34,496,891
BEVERAGES-3.01%
Anheuser-Busch Inc 143,659 $ 6,626,271
Coca-Cola Co 722,817 47,073,457
Coors (Adolph) Co Class B 10,757 443,726
Diageo PLC ADR (UK) 17 643
Pepsico Inc 436,973 12,098,690
Seagrams Co Ltd 104,377 3,222,640
-----------
TOTAL BEVERAGES
- VALUE $69,465,427
- COST $49,006,513
BROADCASTING-1.01%
Clear Channel Communications Inc 72,442 $ 3,259,890
Kingworld Productions 21,594 453,474
MediaOne Group Inc^ 178,050 7,300,050
Tele-Communications Inc Class A^ 148,679 4,906,407
Tribune Co 36,041 2,322,392
Viacom Inc Class B^ 103,615 5,141,894
-----------
TOTAL BROADCASTING
- VALUE $23,384,107
- COST $15,105,005
BUILDING MATERIALS & SERVICES-0.40%
Cooper Industries Inc 35,499 $ 1,510,926
Corning Inc 67,759 1,668,565
Owens Corning Fiberglass Corp 15,591 546,659
Owens Illinois Inc^ 45,257 1,411,453
PPG Industries Inc 52,260 2,655,461
Snap-On Inc 17,744 465,780
Stanley Works 26,204 1,031,783
-----------
TOTAL BUILDING MATERIALS & SERVICES
- VALUE $ 9,290,627
- COST $ 9,867,902
BUSINESS SERVICES-0.22%
Cendant Corp^ 249,382 $ 2,883,479
Dun & Bradstreet Corp 49,942 1,173,637
Ecolab Inc 37,764 1,050,311
-----------
TOTAL BUSINESS SERVICES
- VALUE $ 5,107,427
- COST $ 7,947,131
CHEMICALS-2.27%
Air Products & Chemicals Inc 69,090 $ 2,111,563
Clorox Co 30,311 2,923,117
Dow Chemical Co 66,606 5,195,268
Du Pont (E I) De Nemours 331,932 19,148,327
Eastman Chemical Co 23,000 1,185,938
FMC Corp^ 10,719 554,708
Goodrich (B F) Co 21,055 569,801
Great Lakes Chemical Corp 17,512 685,157
Hercules Inc 28,154 719,687
International Flavor & Fragrances 31,977 1,239,109
Monsanto Co 174,041 9,517,867
Morton International Inc 38,062 846,880
Nalco Chemical Co 19,418 561,908
Praxair Inc 46,198 1,657,353
Rohm & Haas Co 18,017 1,555,092
Rubbermaid Inc 43,816 1,114,570
Sigma-Aldrich Corp 29,422 816,461
Union Carbide Corp 39,916 1,604,124
W.R. Grace Co^ 21,646 278,692
-----------
TOTAL CHEMICALS
- VALUE $ 52,285,622
- COST $ 41,564,909
COMPUTER SOFTWARE-4.88%
3Com Corp^ 104,053 $ 2,464,755
Adobe Systems Inc 19,936 523,320
Autodesk Inc 13,622 318,414
Automatic Data Processing 87,809 5,597,824
Bay Networks Inc^ 64,338 1,930,140
Ceridian Corp^ 21,204 1,028,394
Computer Associates International Inc 160,145 4,323,915
Computer Sciences Corp 45,694 2,584,567
Electronic Data Systems Corp 143,773 4,816,396
First Data Corp 125,931 2,605,198
HBO & Co 123,852 2,631,855
IMS Health Inc 47,642 2,620,310
Microsoft Corp 722,064 69,273,015
Novell Inc^ 102,925 977,788
Oracle Systems Corp^ 288,337 5,748,719
Parametric Technology Corp 75,622 775,126
Sun Microsystems Inc^ 110,761 4,388,905
-----------
TOTAL COMPUTER SOFTWARE
- VALUE $112,608,641
- COST $ 70,577,710
COMPUTER SYSTEMS-5.09%
Apple Computer Inc^ 38,905 $ 1,213,350
Cabletron Systems Inc^ 46,284 323,988
Cisco Systems Inc 300,012 24,563,483
Compaq Computer Corp 484,925 13,547,592
Data General Corp^ 14,271 107,033
Dell Computer Corp 188,542 18,854,200
EMC Corp 145,447 6,572,386
Gateway 2000 Inc^ 45,481 2,151,820
Harris Corp 23,429 746,799
Hewlett-Packard Co 305,138 14,818,264
International Business Machine Corp 276,292 31,117,387
Seagate Technology Inc^ 71,372 1,249,010
Shared Medical System Corp 7,773 414,884
Silicon Graphics Inc^ 54,959 498,066
Unisys Corp^ 73,162 1,312,343
-----------
TOTAL COMPUTER SYSTEMS
- VALUE $117,490,605
- COST $ 62,768,592
------------
CONTAINER & PACKAGING-0.33%
Ball Corp 8,790 $ 328,526
Crown Cork & Seal Co 37,617 1,231,957
International Paper Co 88,752 3,283,824
Temple-Inland Inc 16,610 744,336
Tenneco Inc 50,027 1,585,231
Tupperware Corp 17,809 336,145
------------
TOTAL CONTAINER & PACKAGING
------------
- VALUE $ 7,510,019
- COST $ 9,159,695
ELECTRICAL EQUIPMENT-3.87%
Aeroquip-Vickers Inc 8,236 $ 332,014
General Electric Co 954,607 76,368,560
Grainger (W W) Inc 29,090 1,139,964
Masco Corp 97,098 2,233,254
10
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1998 (Unaudited)
SECURITY NAME SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Motorola Inc 175,136 $ 7,541,794
National Service Industries Inc 12,574 468,382
Raychem Corp 25,057 726,653
Thomas & Betts Corp 16,132 549,496
-----------
TOTAL ELECTRICAL EQUIPMENT
- VALUE $89,360,117
- COST $54,454,921
ELECTRONICS-3.69%
Advanced Micro Devices^ 41,500 $ 547,281
AMP Inc 64,530 2,302,914
Applied Materials Inc 107,367 2,637,202
CBS Corp 208,684 5,425,784
Commscope Inc^ 2 27
EG&G Inc 13,229 310,055
Emerson Electric Co 130,049 7,412,793
General Instrument Corp^ 43,305 860,687
General Signal Corp 14,530 533,978
Honeywell Inc 37,301 2,331,313
Intel Corp 496,963 35,377,554
Johnson Controls Inc 24,613 1,053,744
KLA Instruments Corp^ 24,802 527,043
LSI Logic Corp^ 41,348 506,513
Micron Technology Inc^ 61,946 1,409,263
National Semiconductor^ 48,114 439,040
Perkin-Elmer Corp 14,183 820,841
Pitney Bowes Inc 80,056 3,972,779
Raytheon Co Class B 99,355 4,533,072
Tektronix Inc 14,817 225,033
Texas Instruments Inc 114,506 5,460,505
Xerox Corp 95,646 8,398,914
-----------
TOTAL ELECTRONICS
- VALUE $85,086,335
- COST $62,522,153
ENERGY & RELATED-7.40%
Amerada Hess Corp 26,842 $ 1,318,613
Amoco Corp 285,414 12,932,822
Anadarko Petroleum Corp 35,204 1,012,115
Apache Corp 28,122 643,291
Ashland Inc 21,979 1,001,418
Atlantic Richfield Corp 94,109 5,458,322
Burlington Resources Inc 51,614 1,525,839
Chevron Corp 192,534 14,259,549
Coastal Corp 62,330 1,620,580
Columbia Gas System Inc 24,338 1,210,816
Consolidated Natural Gas Co 27,952 1,224,647
Dresser Industries Inc 51,403 1,313,989
Eastern Enterprises 5,890 233,023
Enron Corp 96,317 4,075,413
Exxon Corp 717,008 46,919,211
Halliburton Co 76,912 2,042,975
Helmerich & Payne Inc 14,742 239,558
Kerr-McGee Corp 13,879 536,076
Mobil Corp 230,117 15,906,838
NICOR Inc 14,079 546,441
Occidental Petroleum Corp 107,663 1,991,766
ONEOK Inc 9,034 271,585
Oryx Energy Co^ 30,997 385,525
Pennzoil Co 13,915 497,461
Peoples Energy Corp 10,313 341,618
Phillips Petroleum Co 77,111 3,147,093
Rowan Co Inc^ 25,369 234,663
Royal Dutch Petroleum Corp 629,234 25,012,052
Schlumberger Ltd 145,942 6,394,084
Sonat Offshore Drilling Co 32,199 871,385
Sun Co Inc 27,598 912,459
Texaco Inc 160,615 8,924,171
Union Pacific Resources Group 74,129 634,730
Unocal Corp 72,190 2,260,449
USX-Marathon Group 84,704 2,202,304
Williams Co Inc 120,820 2,778,860
------------
TOTAL ENERGY & RELATED
- VALUE $170,881,741
- COST $142,657,892
ENGINEERING & CONSTRUCTION-0.14%
Armstrong World Industries Inc 11,921 $ 572,208
Centex Corp 17,434 616,728
Fleetwood Enterprises Inc 10,605 354,605
Fluor Corp 24,453 967,422
Foster Wheeler Corp 11,932 146,913
Kaufman & Broad Home Corp 11,355 242,713
Pulte Corp 12,854 371,159
------------
TOTAL ENGINEERING & CONSTRUCTION
- VALUE $ 3,271,748
- COST $ 3,486,520
ENTERTAINMENT & LEISURE-1.58%
Brunswick Corp 29,173 $ 435,772
Disney (Walt) Co 599,824 16,457,671
Harrah's Entertainment Inc^ 29,564 426,830
Hasbro Inc 39,176 1,226,699
Mattel Inc 85,265 2,760,455
Mirage Resorts Inc^ 52,654 783,228
Polaroid Corp 13,184 370,800
Time Warner Inc 173,049 13,908,813
------------
TOTAL ENTERTAINMENT & LEISURE
- VALUE $ 36,370,268
- COST $ 27,895,425
ENVIRONMENTAL CONTROL-0.40%
Browning-Ferris Industries Inc 56,767 $ 1,844,928
Waste Management Inc^ 165,395 7,298,070
------------
TOTAL ENVIRONMENTAL CONTROL
- VALUE $ 9,142,998
- COST $ 9,704,534
FOOD & RELATED-4.00%
Albertson's Inc 72,025 $ 3,641,764
American Stores Co 80,278 2,328,062
Archer-Daniels-Midland Co 176,028 2,640,425
Bestfoods 84,400 4,235,825
Brown-Forman Corp Class B 20,228 1,213,680
Campbell Soup Co 133,824 6,741,364
ConAgra Inc 139,476 3,452,031
Darden Restaurants Inc 44,329 687,100
General Mills Inc 46,322 3,031,196
Great Atlantic & Pacific Tea Co 11,060 263,366
Harcourt General Inc 20,804 1,010,294
Heinz (H J) Co 107,202 5,715,207
Hershey Foods Corp 41,941 2,935,870
Kellogg Co 120,553 3,676,867
Kroger Co^ 74,781 3,365,145
McDonald's Corp 202,127 11,331,745
Pioneer Hi Bred International Inc 71,664 2,418,660
Quaker Oats Co 40,598 2,156,769
Ralston-Purina Group 94,566 2,488,268
Sara Lee Corp 138,675 6,275,044
Super Value Inc 35,338 717,803
Sysco Corp 99,756 2,013,824
Tricon Global Restaurants^ 44,559 1,651,468
Unilever NV (Netherlands) 187,912 11,908,923
UST Inc 53,937 1,409,104
11
<PAGE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1998 (Unaudited)
SECURITY NAME SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Wendy's International Inc 38,543 $ 773,269
Winn-Dixie Stores Inc 43,593 1,623,839
Wrigley (W M) Jr Co 34,143 2,646,083
-----------
TOTAL FOOD & RELATED
- VALUE $92,352,995
- COST $66,025,946
FURNITURE & APPLIANCES-0.10%
Maytag Corp 27,768 $ 1,197,495
Whirlpool Corp 22,028 1,093,140
-----------
TOTAL FURNITURE & APPLIANCES
- VALUE $ 2,290,635
- COST $ 1,865,140
HEALTHCARE-0.36%
Cardinal Health Inc 39,084 $ 3,419,850
Healthsouth Corp^ 123,311 2,335,202
St Jude Medical Inc^ 24,427 538,921
United Healthcare Corp 55,260 1,996,268
-----------
TOTAL HEALTHCARE
- VALUE $ 8,290,241
- COST $ 9,078,261
HOSPITAL & MEDICAL SUPPLIES-2.56%
ALZA Corp 24,983 $ 899,388
Bard (C R) Inc 16,650 545,288
Bausch & Lomb Inc 16,191 685,082
Baxter International Inc 82,170 4,375,553
Becton Dickinson & Co 71,534 2,382,976
Biomet Inc 32,730 879,619
Boston Scientific Corp^ 57,090 3,953,483
Columbia/HCA Healthcare Corp 189,830 4,283,040
Guidant Corp 44,232 2,731,326
Johnson & Johnson 394,650 27,230,850
Mallinckrodt Group Inc 21,361 488,633
Manor Care Inc 18,556 445,344
Medtronic Inc 137,459 7,061,956
Tenet Healthcare Corp^ 89,910 2,320,802
United States Surgical 22,101 882,659
-----------
TOTAL HOSPITAL & MEDICAL SUPPLIES
- VALUE $59,165,999
- COST $40,659,343
HOUSEHOLD PRODUCTS-2.55%
Alberto-Culver Co Class B 16,644 $ 332,880
Avon Products Inc 38,683 2,432,194
Colgate-Palmolive Co 86,723 6,254,896
Gillette Co 328,710 13,518,199
Kimberly-Clark Corp 163,075 6,217,234
Procter & Gamble Co 393,837 30,128,531
-----------
TOTAL HOUSEHOLD PRODUCTS
- VALUE $58,883,934
- COST $39,663,317
INSURANCE-4.68%
Aetna Inc 43,500 $ 2,618,156
Allstate Corp 245,668 9,212,550
American General Corp 74,435 4,782,449
American International Group Inc 308,540 23,853,960
Aon Corp 49,190 3,077,449
Chubb Corp 49,888 3,118,000
CIGNA Corp 64,990 3,781,606
Cincinnati Financial Corp 48,341 1,625,466
Conseco Inc 91,761 2,534,898
General Re Corp 22,930 4,757,975
Hartford Financial Services Group 69,428 3,106,903
Humana Inc^ 48,136 625,768
Jefferson-Pilot Corp 31,198 1,770,487
Lincoln National Corp 29,977 2,578,022
Loews Corp 33,713 2,844,534
Marsh & McLennan Companies Inc 74,808 3,628,188
MBIA Inc 28,714 1,611,573
Progressive Corp Ohio 21,272 2,072,691
Provident Co Inc 36,542 1,315,512
Providian Financial Corp 27,812 1,785,183
SAFECO Corp 41,265 1,676,391
St Paul Co 67,801 2,072,168
Sunamerica Inc 57,254 3,546,170
Torchmark Corp 40,942 1,463,677
Transamerica Corp 18,422 1,889,406
Travelers Inc 336,508 14,932,524
UNUM Corp 40,683 1,790,052
------------
TOTAL INSURANCE
- VALUE $108,071,758
- COST $ 77,221,721
LODGING-0.16%
Hilton Hotels Corp 73,345 $ 1,521,909
Marriott International Inc Class A 74,840 2,100,197
------------
TOTAL LODGING
- VALUE $ 3,622,106
- COST $ 3,011,315
MACHINERY-0.61%
Black & Decker Corp 27,766 $ 1,155,760
Case Corp 21,998 593,946
Caterpillar Inc 109,135 4,604,133
Cincinnati Milacron Inc 11,713 226,939
Cummins Engine Co Inc 11,080 450,818
Deere & Co 73,204 2,411,157
Ingersoll-Rand Co 48,600 1,931,850
McDermott International Inc 17,786 356,832
Pall Corp 36,837 755,159
Parker Hannifin Corp 32,620 945,980
Thermo Electron Corp^ 46,592 757,120
------------
TOTAL MACHINERY
- VALUE $ 14,189,694
- COST $ 14,606,791
------------
MANUFACTURING-0.41%
Tyco International Ltd 170,953 $ 9,487,892
------------
TOTAL MANUFACTURING
- VALUE $ 9,487,892
- COST $ 7,027,843
METAL FABRICATORS-0.61%
Alcan Aluminum Ltd 66,723 $ 1,267,737
Allegheny Teledyne Inc 57,357 863,940
Aluminum Co of America 54,874 3,285,581
Armco Inc^ 31,439 129,686
Barrick Gold Corp 109,378 1,421,914
Battle Mountain Gold Co 67,386 206,370
Bethlehem Steel Corp^ 37,437 269,078
Crane Co 13,436 540,799
Engelhard Corp 42,237 776,105
Freeport McMoRan Inc 56,333 654,871
Nucor Corp 25,808 927,475
Phelps Dodge Corp 17,172 768,447
Placer Dome Inc 72,356 583,370
Reynolds Metals Co 21,673 1,038,949
Timken Co 18,440 335,378
USX-U.S. Steel Group 25,225 528,148
Worthington Industries Inc 28,346 368,498
------------
TOTAL METAL FABRICATORS
- VALUE $ 13,966,346
- COST $ 19,809,487
PHARMACEUTICALS-9.06%
Abbott Laboratories 452,662 $ 17,427,487
Allergan Inc 19,048 900,018
American Home Products Corp 384,444 19,270,256
Amgen Inc^ 77,021 4,688,653
12
<PAGE>
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1998 (Unaudited)
SECURITY NAME SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Bristol-Myers Squibb Co 291,798 $ 28,559,729
Lilly (Eli) & Co 325,535 21,322,543
Merck & Co Inc 351,327 40,731,974
Millipore Corp 12,823 278,099
Pfizer Inc 382,567 35,578,731
Pharmacia and Upjohn Inc 148,774 6,183,419
Schering-Plough Corp 214,896 18,481,056
Warner Lambert Co 239,707 15,640,882
------------
TOTAL PHARMACEUTICALS
- VALUE $209,062,847
- COST $103,110,618
PUBLISHING-0.96%
American Greetings Corp Class A 21,355 $ 805,818
Comcast Corp Class A 108,055 4,038,556
Donnelley (R R) & Sons Co 42,569 1,543,126
Dow Jones & Co Inc 28,163 1,402,869
Gannett Co Inc 83,214 4,909,626
Interpublic Group Co Inc 39,978 2,278,718
Knight-Ridder Inc 23,290 1,109,186
McGraw-Hill Inc 28,963 2,208,429
Meredith Corp 15,407 517,097
Moore Corp Ltd 25,970 248,338
New York Times Co Class A 56,162 1,628,698
Times Mirror Co Class A 25,996 1,486,646
------------
TOTAL PUBLISHING
- VALUE $ 22,177,107
- COST $ 14,770,160
RETAIL & RELATED-5.50%
AutoZone Inc^ 44,582 $ 1,156,335
Circuit City Stores Inc 28,858 890,991
Consolidated Stores Corp^ 31,524 993,006
Costco Co Inc^ 62,941 2,962,161
Dayton-Hudson Corp 128,192 4,614,912
Dillards Inc Class A 32,516 938,900
Dollar General Corp 42,795 1,150,116
Eastman Kodak Co 95,256 7,441,875
Federated Department Stores Inc^ 61,534 2,680,575
Fred Myer Inc 43,771 1,720,747
Gap Inc 116,077 5,927,182
Home Depot Inc 429,496 16,535,596
Jostens Inc 11,308 224,747
K Mart Corp^ 143,097 1,824,487
Kohls Corp 46,219 2,100,076
Limited Inc 72,491 1,513,250
Longs Drug Stores Corp 11,262 384,316
Lowe's Co Inc 102,626 3,598,324
May Department Stores Co 67,826 3,815,213
Newell Co 46,564 2,223,431
Nordstrom Inc 45,306 1,356,348
Penney (J C) Co Inc 73,245 3,630,205
Rite Aid Corp 75,624 2,736,644
Sears Roebuck & Co 114,972 5,224,040
Sherwin Williams Co 50,700 1,210,463
Tandy Corp 30,305 1,653,517
TJX Companies Inc 94,504 2,108,621
Toys R Us Inc^ 83,145 1,543,379
Venator Group Inc^ 39,479 357,779
Walgreen Co 145,262 5,592,587
WalMart Stores Inc 659,020 38,717,425
------------
TOTAL RETAIL & RELATED
- VALUE $ 126,827,248
- COST $ 83,396,990
SERVICES-0.27%
Block (H R) Inc 30,680 $ 1,200,355
Public Service Enterprise Group 68,041 2,492,002
Service Corp International 73,995 2,506,581
------------
TOTAL SERVICES
- VALUE $ 6,198,938
- COST $ 4,946,527
TELECOMMUNICATIONS-9.14%
Airtouch Communications^ 167,903 $ 9,444,544
Alltel Corp 80,519 3,633,420
Ameritech Corp 321,187 15,135,937
Andrew Corp^ 26,084 386,369
Ascend Communications Inc^ 56,580 1,980,300
AT & T Corp 531,112 26,622,004
Bell Atlantic Corp 455,830 20,113,499
BellSouth Corp 290,918 19,946,065
Frontier Corp 48,204 1,464,197
GTE Corp 281,026 14,051,300
Lucent Technologies Inc 384,524 27,253,138
MCI Communications Corp 212,259 10,612,950
NEXTEL Communications Class A^ 77,162 1,393,739
Northern Telecom Ltd 152,769 7,294,720
SBC Communication Inc 537,890 20,439,820
Scientific-Atlanta Inc 23,111 408,776
Sprint Corp 126,150 8,459,934
Tellabs Inc^ 56,685 2,394,941
U.S. West Inc 146,695 7,628,140
WorldCom Inc^ 302,448 12,381,465
-----------
TOTAL TELECOMMUNICATIONS
- VALUE $211,045,258
- COST $142,231,327
TEXTILES-0.01%
Springs Industries Inc Class A 5,838 $ 193,019
------------
TOTAL TEXTILES
- VALUE $ 193,019
- COST $ 239,539
TOBACCO-1.34%
Fortune Brands Inc 50,394 $ 1,388,985
Philip Morris Co Inc 711,525 29,572,758
------------
TOTAL TOBACCO
- VALUE $ 30,961,743
- COST $ 21,678,583
------------
TRANSPORTATION-0.59%
Burlington Northern Santa Fe 45,856 $ 4,267,474
CSX Corp 63,960 2,414,490
Laidlaw Inc Class B 96,132 829,139
Norfolk Southern Corp 110,585 3,117,115
Union Pacific Corp 72,452 2,884,495
------------
TOTAL TRANSPORTATION
- VALUE $ 13,512,713
- COST $ 13,503,436
UTILITIES-2.74%
Ameren Corp 40,237 $ 1,591,876
American Electric Power Inc 55,646 2,517,982
Baltimore Gas & Electric Co 43,400 1,337,263
Carolina Power & Light Co 44,097 1,898,927
Central & South West Corp 62,265 1,626,673
Cinergy Corp 46,233 1,606,597
Consolidated Edison Inc 68,915 3,260,541
Dominion Resources Inc 56,755 2,365,974
DTE Energy Co 42,600 1,794,525
Duke Power Co 105,510 6,581,186
13
<PAGE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS August 31, 1998 (Unaudited)
SECURITY NAME SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
Edison International 111,530 $ 3,171,634
Entergy Corp 71,471 2,059,258
FirstEnergy Corp 67,527 1,949,842
FPL Group Inc 53,398 3,554,304
GPU Inc 37,253 1,399,316
Houston Industries Inc 83,294 2,399,908
Niagara Mohawk Power Corp^ 54,895 850,873
Northern States Power Co 43,582 1,154,923
Pacificorp 86,963 1,962,103
PECO Energy Co 65,066 2,228,511
PG & E Corp 111,632 3,586,178
PP & L Resources Inc 48,620 1,145,609
Sempra Energy^ 70,084 1,782,764
Southern Co 202,478 5,694,694
Texas Utilities Co 81,856 3,478,880
Unicom Corp 63,541 2,263,648
--------------
TOTAL UTILITIES
- VALUE $ 63,263,989
- COST $ 50,052,177
TOTAL COMMON STOCKS
- VALUE $2,244,360,287
- COST $1,604,633,462
INTEREST MATURITY PRINCIPAL/
SECURITY NAME RATE DATE SHARES VALUE
- -------------------------------------------------------------------------------
SHORT TERM INSTRUMENTS-6.68%
CASH EQUIVALENTS-2.86%
Dreyfus Institutional Money
Market Fund^^ 1,842,547 $ 1,842,547
Janus Institutional Money
Market Fund^^ 16,600,000 16,600,000
Merrimac Cash Fund-
Premium Class^^ 47,600,000 47,600,000
--------------
$ 66,042,547
REPURCHASE AGREEMENTS-0.83%
Goldman Sachs Repurchase Agreements,
dated 8/31/98, due 9/02/98, with a
maturity value of $19,009,168 and an
effective yield of 5.79%, collateralized
by a Federal Home Loan Mortgage
Corporation obligation and a Federal
National Mortgage Association
obligation with rates ranging from
6.00% to 6.60%, with maturity dates
ranging from 7/01/06 to 6/01/36 and
with an aggregate market value of
$19,380,000.^^ $19,000,000 $ 19,000,000
--------------
U.S. TREASURY BILLS-2.99%
U.S. Treasury Bills 4.37%* 09/10/98 $ 7,708,000 $ 7,698,488
U.S. Treasury Bills 4.80%* 10/08/98 4,462,000 4,440,127
U.S. Treasury Bills 4.80%* 10/22/98 9,740,000 9,674,323
U.S. Treasury Bills 4.86%* 10/15/98 15,577,000 15,485,236
U.S. Treasury Bills 5.23%* 09/17/98 26,274,000 26,217,012
U.S. Treasury Bills 5.28%* 09/03/98 5,553,000 5,551,478
--------------
$ 69,066,664
--------------
TOTAL SHORT TERM INSTRUMENTS
- VALUE $ 154,109,211
- COST $ 154,105,840
TOTAL INVESTMENTS IN SECURITIES
(Cost $1,758,739,302)** (Notes 1 and 3) 103.91% $2,398,469,498
--------------
Other Assets and Liabilities, Net (3.91%) (90,244,207)
------- --------------
TOTAL NET ASSETS 100.00% $2,308,225,291
======= ==============
^ Non-income earning securities.
^^ Represents collateral received from securities lending transactions. See
Note 4.
* Yield to Maturity.
** Cost for federal income tax purposes is the same as for financial statement
purposes and net unrealized appreciation consists of:
Gross Unrealized Appreciation $716,470,198
Gross Unrealized Depreciation (76,740,002)
------------
NET UNREALIZED APPRECIATION $639,730,196
============
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
August 31, 1998 (Unaudited)
ASSETS
INVESTMENTS:
In securities, at market value (see cost below) (Note 1) $2,398,469,498
Cash 180,356
RECEIVABLES:
Investment sold 811,564
Dividends and interest 4,022,757
--------------
TOTAL ASSETS 2,403,484,175
LIABILITIES
PAYABLES:
Variation margin on futures contracts 5,030,126
Investment securities purchased 4,859,056
Collateral for securities loaned (Note 4) 85,042,547
Due to BGI (Note 2) 327,155
--------------
TOTAL LIABILITIES 95,258,884
--------------
TOTAL NET ASSETS $2,308,225,291
==============
INVESTMENTS AT COST $1,758,739,302
==============
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended August 31, 1998 (Unaudited)
INVESTMENT INCOME
Dividends $ 17,796,896
Interest* 4,246,787
------------
TOTAL INVESTMENT INCOME 22,043,683
EXPENSES (NOTE 2)
Advisory fees 661,201
------------
TOTAL EXPENSES 661,201
------------
NET EXPENSES 661,201
------------
NET INVESTMENT INCOME (LOSS) 21,382,482
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on sale of investments 7,494,643
Net realized gain (loss) on sale of futures contracts 13,913,003
Net change in unrealized appreciation (depreciation) of
investments (237,590,838)
Net change in unrealized appreciation (depreciation) of
futures contracts (22,277,925)
------------
NET GAIN (LOSS) ON INVESTMENTS (238,461,117)
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($217,078,635)
============
*Interest income includes security lending income of: $31,974
=======
The accompanying notes are an integral part of these financial statements.
16
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<TABLE>
MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the For the
Six Months Ended Year Ended
August 31, 1998 February 28,1998
---------------- -----------------
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C>
Net investment income $ 21,382,482 $ 35,530,147
Net realized gain (loss) on sale of investments 7,494,643 52,551,777
Net realized gain on sale of futures contracts 13,913,003 18,816,662
Net change in unrealized appreciation (depreciation) of investments (237,590,838) 452,651,075
Net change in unrealized appreciation (depreciation) of futures contracts (22,277,925) 10,434,575
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (217,078,635) 569,984,236
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM BENEFICIAL
INTEREST TRANSACTIONS 171,240,712 299,742,532
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS (45,837,923) 869,726,768
NET ASSETS:
Beginning net assets $2,354,063,214 $1,484,336,446
-------------- --------------
ENDING NET ASSETS $2,308,225,291 $2,354,063,214
============== ==============
The accompanying notes are an integral part of these financial statements.
17
</TABLE>
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MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
August 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Master Investment Portfolio ("MIP") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. MIP was organized on October 20, 1993 as a Delaware
business trust pursuant to an Agreement and Declaration of Trust dated May
14, 1993, and had no operations prior to May 26, 1994. MIP currently issues,
the following separate portfolios (the "Master Portfolios"), the Asset
Allocation, Bond Index, LifePath 2000, LifePath 2010, LifePath 2020, LifePath
2030, LifePath 2040, S&P 500 Index and U.S. Treasury Allocation Master
Portfolios. These financial statements present the operations of only one of
the Master Portfolios, the S&P 500 Index Master Portfolio.
The following significant accounting policies are consistently followed
by MIP in the preparation of its financial statements, and such policies are
in conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
SECURITY VALUATION
The equity securities of the Master Portfolio are valued at the last
reported sale price on the primary securities exchange or national securities
market on which such securities are traded. Securities not listed on an
exchange or national securities market, or securities in which there was no
last reported sales price, are valued at the most recent bid prices. Debt
securities are generally traded in the over-the-counter market and are valued
at a price deemed best to reflect fair value as quoted by dealers who make
markets in those securities or by an independent pricing source. U.S.
Government obligations are valued at the last reported bid price. Debt
securities maturing in 60 days or less are valued at amortized cost, which
approximates market value. Any securities, restricted securities or other
assets for which market quotations are not readily available, are valued at
fair value as determined in good faith in accordance with policies approved by
MIP's Board of Trustees.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the
ex-dividend date, and interest income is recognized on a daily accrual basis.
Realized gains or losses are reported on the basis of identified cost of
securities delivered. Bond discounts and premiums are amortized under
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
FEDERAL INCOME TAXES
The Master Portfolio intends to qualify as a partnership for federal
income tax purposes. The Master Portfolio therefore believes that it will not
be subject to any federal income tax on its income and net realized capital
gains (if any). However, each investor in the Master Portfolio will be taxed
on its allocable share of the partnership's income and capital gains for
purposes of determining its federal income tax liability. The determination
of such share will be made in accordance with the applicable sections of the
Code.
It is intended that the Master Portfolio's assets, income and allocations
will be managed in such a way that a regulated investment company investing
in the Master Portfolio will be able to satisfy the requirements of Subchapter
M of the Code, assuming that the investment company invested all of its assets
in the corresponding Master Portfolio.
FUTURES CONTRACTS
The S&P 500 Index Master Portfolio may purchase futures contracts to gain
exposure to market changes as this may be more efficient or cost effective
than actually buying the securities. A futures contract is an agreement
between two parties to buy and sell a security at a set price on a future date
and is exchange traded. Upon entering into a futures contract, the S&P 500
Index Master Portfolio is required to pledge to the broker an amount of cash,
U.S. Government securities or other high-quality debt securities equal to the
minimum "initial margin" requirements of the exchange. Pursuant to the
contract, the Master Portfolio agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in the value of the contract.
Such receipts or payments are known as "variation margin" and are recorded
by the Master Portfolio as unrealized gains or losses. When the contract is
closed, the Master Portfolio records a gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed. Pursuant to regulations and/or published positions of
the Securities and Exchange Commission, the Master Portfolio is required to
segregate cash, U.S. Government obligations or high quality, liquid debt
instruments in connection with futures transactions in an amount generally
equal to the entire futures contract amount.
18
<PAGE>
Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the
value of the contracts may not correlate with changes in the value of the
underlying securities. As of August 31, 1998, the S&P 500 Index Master
Portfolio had open long futures contracts outstanding:
S&P 500 Index Master Portfolio
Number of Expiration Notional Net Unrealized
Contracts Type Date Contract Value Depreciation
264 S&P 500 Index September 1998 $62,964,000 $11,028,950
The S&P 500 Index Master Portfolio has pledged to brokers U.S. Treasury
Bills for initial margin requirements with a par value of $2,653,200.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell
such securities at a specified price and time ("repurchase agreements") are
treated as collateralized financing transactions and are recorded at their
contracted resale amounts. These repurchase agreements, if any, are detailed
in the Master Portfolio's Portfolio of Investments. The adviser to the Master
Portfolio may pool its cash and invest in repurchase agreements entered into
by the other Master Portfolios. The Master Portfolio's prospectus requires
that the cash investments be fully collateralized based on values that are
marked to market daily. The collateral is generally held by an agent bank
under a tri-party agreement. It is the adviser's responsibility to value
collateral daily and to obtain additional collateral as necessary to maintain
the value at equal to or greater than 102% of market value. The repurchase
agreements entered into on August 31, 1998 by the Master Portfolio is
collateralized by U.S. Government Securities.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to an Investment Advisory Contract with each Master Portfolio,
Barclays Global Fund Advisors ("BGFA") provides investment guidance and
policy direction in connection with the management of each Master Portfolio's
assets. BGFA is entitled to receive 0.05% of the average daily net assets of
the S&P 500 Index Master Portfolio as compensation for advisory services. BFGA
is an indirect subsidiary of Barclays Bank PLC.
Investors Bank & Trust Company ("IBT") serves as the custodian to each
Master Portfolio. IBT will not be entitled to receive fees for its custodial
services so long as it is entitled to receive a separate fee from Barclays
Global Investors, N.A. ("BGI") for its services as Sub-Administrator of each
Master Portfolio.
Stephens Inc. ("Stephens") is the Funds' co-administrator, sponsor and
placement agent for the Master Portfolios. Certain officers and directors of
MIP are also officers of Stephens. As of February 28, 1998, these officers of
Stephens indirectly collectively owned less than 1% of the Master Portfolio's
outstanding beneficial interest.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities,
for the S&P 500 Index Master Portfolio for the six months ended August 31,
1998 is as follows:
Aggregate Purchases S&P 500 Index
and Sales of: Master Portfolio
U.S. GOVERNMENT
OBLIGATIONS:
Purchases at cost $ 0
Sales proceeds 0
OTHER SECURITIES:
Purchases at cost $339,932,272
Sales proceeds 25,863,942
19
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MASTER INVESTMENT PORTFOLIO - S&P 500 INDEX MASTER PORTFOLIO
- -------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
August 31, 1998 (Unaudited)
4. PORTFOLIO SECURITIES LOANED
As of August 31, 1998, the S&P 500 Index Master Portfolio had loaned
securities which were collateralized by cash. Each Master Portfolio receives
transaction fees for providing services in connection with the securities
lending program. The value of the securities on loan and the value of the
related collateral were as follows:
Securities Collateral
S&P 500 Index Master Portfolio $82,461,683 $85,042,547
5. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, excluding short-term securities, for the S&P
500 Index Master Portfolio is as follows:
<TABLE>
<CAPTION>
For the
For the Period from
Six Months Ended For the For the For the May 26, 1994
August 31, Year Ended Year Ended Year Ended (commencement
1998 February 28, February 29, February 29, of operations) to
(Unaudited) 1998 1997 1996 February 28, 1995
<S> <C> <C> <C> <C> <C>
S&P 500 Index Master Portfolio 1% 6% 4% 2% 5%
</TABLE>
20
PAGE>
DIRECTORS
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
Mary F. Hoppa, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
John A. Flanagan, Treasurer
INVESTMENT ADVISOR
Barclays Global Fund Advisors
45 Fremont Street, San Francisco, California 94105
CUSTODIAN
Investors Bank & Trust Company
89 South Street, Boston, Massachusettes 02111
AUDITOR
KPMG Peat Marwick LLP
Three Embarcadero Center, San Francisco, California 94111
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
For a prospectus containing more complete information, including management
fees and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This report does not constitute an offer for the
sale of securities. Strong Funds are offered for sale by prospectus only.
[PICTURE OF TELEPHONE]
To order a free prospectus kit,
CALL 1-800-368-1030
To learn more about our funds,
discuss an existing account,
or conduct a transaction,
CALL 1-800-368-3863
-------------------
If you are a
Financial Professional,
CALL 1-800-368-1683
[PICTURE OF STRONG WEB SITE ON COMPUTER]
Strong On-line
www.strong-funds.com
[STRONG LOGO]
STRONG FUNDS
P.O. Box 2936 o Milwaukee, Wisconsin 53201
Strong Funds Distributors, Inc. 9305J98 98SIND
