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As filed with the Securities and Exchange Commission
on June 28, 1996
Registration No. 811-8140
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
===============
FORM N-1A
AMENDMENT NO. 5 TO THE
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
MANAGED SERIES INVESTMENT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
111 Center Street, Little Rock, Arkansas 72201
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
=======================================
Registrant's Telephone Number, including Area Code:
(800) 643-9691
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(NAME AND ADDRESS OF AGENT FOR SERVICE)
WITH A COPY TO:
Robert M. Kurucza, Esq.
Marco E. Adelfio, Esq.
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006-1812
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EXPLANATORY NOTE
This amendment No. 4 to the Registration Statement of Managed
Series Investment Trust (the "Trust") relates only to the Growth Stock and
Short-Intermediate Term Master Portfolios (the "Master Portfolios") of the
Trust. This amendment is being filed to add to the Trust's Registration
Statement audited financial statements and certain related financial
information for the fiscal year ended February 29, 1996 for the Master
Portfolios, and to add certain other non-material changes to the Registration
Statement.
This amendment to the Registration Statement has been filed by the
Registrant pursuant to Section 8(b) of the Investment Company Act of 1940.
However, beneficial interests in the Registrant are not being registered under
the Securities Act of 1933 (the "1933 Act") because such interests will be
issued solely in private placement transactions that do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in
the Registrant may only be made by registered broker/dealers or by investment
companies, insurance company separate accounts, common commingled trust funds,
group trusts or similar organizations or entities that are "accredited
investors" within the meaning of Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interest in the Registrant.
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Managed Series Investment Trust
Cross Reference Sheet
Form N-1A Item Number
<TABLE>
<S> <C>
Part A Prospectus Caption
- ------ ------------------
4 General Description of Registrant; Investment Objectives; Introduction; Management
Policies; Fundamental Policies; Non-Fundamental Policies; Risk Factors
5 Management of the Trust; Investment Adviser and Sub-Investment Adviser;
Administrator and Placement Agent; Custodian and Transfer Agent; Expenses
6 Capital Stock and Other Securities
7 Purchase of Securities
8 Redemption or Repurchase
9 Not Applicable
Part B Statement of Additional Information
- ------ -----------------------------------
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Objectives and Policies; Portfolio Securities; Management Policies; Investment
Restrictions
14 Management of MSIT
15 Control Persons and Principal Holders of Securities
16 Investment Advisory and Other Services; Custodian, Transfer and Dividend Disbursing Agent;
Administrator; Distributor
17 Brokerage Allocation and Other Practices
18 Capital Stock and Other Securities
19 Purchase, Redemption and Pricing of Securities
20 Tax Status
21 Underwriters
22 Calculation of Performance Data
23 Financial Information
Part C Other Information
- ------ -----------------
24-32 Information required to be included in Part C is set forth under the appropriate Item, so
numbered, in Part C of this Document.
</TABLE>
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MANAGED SERIES INVESTMENT TRUST
GROWTH STOCK MASTER PORTFOLIO
SHORT-INTERMEDIATE TERM MASTER PORTFOLIO
PART A
JUNE 28, 1996
Responses to Items 1 through 3 have been omitted pursuant to paragraph F.4. of
the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Managed Series Investment Trust ("MSIT") is a no-load, open-end series
investment company which was organized as a business trust under the laws of
Delaware on October 28, 1993. MSIT currently offers two series: the Growth
Stock Master Portfolio and the Short-Intermediate Term Master Portfolio (each,
a "Master Portfolio" and together, the "Master Portfolios"). Beneficial
interests in each Master Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act").
Investments in each Master Portfolio may only be made by registered
broker/dealers or by investment companies, insurance company separate accounts,
common or commingled trust funds, group trusts or other "accredited investors"
within the meaning of Regulation D under the 1933 Act. This registration
statement does not constitute an offer to sell, or the solicitation of an offer
to buy, any security within the meaning of the 1933 Act.
The investment objective of the GROWTH STOCK MASTER PORTFOLIO is to
provide investors with above-average long-term total return, with a primary
focus on capital appreciation. Current income is a secondary consideration.
The Master Portfolio seeks to provide investors with a rate of total return
that, over a three to five year time horizon, exceeds that of the S&P 500 Index
(before fees and expenses) over comparable periods by investing in a
diversified portfolio consisting primarily of growth-oriented common stocks.
The investment objective of the SHORT-INTERMEDIATE TERM MASTER PORTFOLIO
is to provide investors with a total return, before fees and expenses,
exceeding that of the Lehman Brothers Intermediate Government/Corporate Bond
Index ("LB Intermediate Bond Index"). The Master Portfolio seeks to achieve
its investment objective by investing in a mix of the following types of
securities: U.S. Treasury and agency debt securities, corporate bonds,
collateralized mortgage obligations and mortgage-backed securities, other types
of asset-backed securities and money market instruments.
INVESTMENT POLICIES RELATING TO THE GROWTH STOCK MASTER PORTFOLIO:
The Master Portfolio invests primarily in the common stocks of those
growth-oriented, small- and medium-sized corporations that the Master
Portfolio's investment adviser believes
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have potential for above-average, long-term capital appreciation. These
growth-oriented stocks typically have some or all of the following
characteristics:
o Low or no dividends
o Relatively small market capitalizations
o Less market liquidity
o Relatively short operating histories
o High debt-to-equity ratios
o Involvement in rapidly growing/changing industries and/or new
technologies
The Master Portfolio invests in a diversified portfolio of
growth-oriented common stocks and does not concentrate its investments in a
particular industry. Under normal market conditions, the Master Portfolio's
investment portfolio contains common stocks of at least 20 corporations from
multiple industry groups, with the majority of these holdings consisting of
stocks of established growth companies, turnaround or acquisition candidates,
or larger capitalization companies that present one or more of the above
characteristics.
Additionally, the Master Portfolio may, from time to time, acquire
securities through initial public offerings, and may acquire and hold common
stocks of smaller and newer issuers, which are subject to the additional risks
described below. It is expected that no more than 40% of the Master
Portfolio's assets will be invested in these more aggressive securities at one
time.
Investments in smaller companies may offer greater opportunities for
capital appreciation than larger, more established companies, but they also may
involve greater risk. For example, smaller companies may have limited product
lines, markets or financial and management resources. From time to time, the
Master Portfolio's investment adviser or sub-adviser may determine that
conditions in the securities markets make pursuing the Master Portfolio's basic
investment strategy inconsistent with the best interests of the Master
Portfolio's investors. At such times, the adviser or sub-adviser may reduce
the Master Portfolio's exposure to the stock market in order to reduce
fluctuations in the value of the Master Portfolio's assets. The Master
Portfolio could invest up to 30% of its net assets in preferred stocks,
government obligations or in debt securities that are convertible into common
stock; it could also increase its investments in money market securities. At
most, 5% of the Master Portfolio's net assets are invested in convertible debt
securities that are either rated below the four highest rating categories by
one or more nationally recognized statistical rating organizations ("NRSROs"),
such as Moody's Investors Service, Inc. ("Moody's") or S&P, or unrated
securities determined by the Master Portfolio's investment adviser to be of
comparable quality. Securities rated in the fourth highest rating category
(i.e., rated BBB by S&P or Baa by Moody's) are regarded by S&P 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. Moody's considers such securities as having
speculative characteristics.
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The Master Portfolio pursues an active-trading investment strategy, and
the length of time the Master Portfolio has held a particular security is not
generally a consideration in investment decisions. Accordingly, the Master
Portfolio's portfolio turnover rate may be higher than that of other funds that
do not pursue an active-trading investment strategy. Portfolio turnover
generally involves some expense to the Master Portfolio, including brokerage
commissions or dealer mark-ups, and other transaction costs on the sale of
securities and the reinvestment in other securities. Portfolio turnover also
can generate short-term capital gains tax consequences. The Master Portfolio
does not expect to have a portfolio turnover rate exceeding 200%.
Although the Master Portfolio holds a number of larger capitalization
stocks, under normal market conditions more than 50% of the Master Portfolio's
total assets are invested in companies with smaller to medium capitalizations.
The Master Portfolio invests primarily in companies with a market
capitalization of $50 million or greater, but may invest in companies with a
market capitalization under $50 million if the investment adviser to the Master
Portfolio believes such investments to be in the best interests of the Master
Portfolio. The majority of the Master Portfolio's investments are currently in
companies with market capitalizations, at the time of acquisition, of up to
$750 million. As a matter of strategy, the larger capitalized issues in the
Master Portfolio are generally "core" positions that the Master Portfolio may
hold for relatively long periods of time.
Under ordinary market conditions, at least 65% of the value of the total
assets of the Master Portfolio will be invested in common stocks that are
expected by the Master Portfolio's adviser or sub-adviser to have
better-than-average prospects for capital appreciation.
The Master Portfolio may temporarily hold assets in cash or make
short-term investments to the extent appropriate to maintain adequate liquidity
for redemption requests or other cash management needs, or for temporary
defensive purposes. The short-term investments that the Master Portfolio may
purchase for liquidity purposes include U.S. Treasury bills, shares of other
mutual funds and repurchase agreements (as described below).
INVESTMENT POLICIES RELATING TO THE SHORT-INTERMEDIATE TERM MASTER PORTFOLIO:
The Master Portfolio seeks to maintain an overall average weighted
portfolio maturity generally in the 2-to-5 year range. Under normal market
conditions, the Master Portfolio will invest at least 65% of its total assets
in securities having an average weighted portfolio maturity in the 2-to-5 year
range. Under unusual market conditions, the Master Portfolio may shorten or
lengthen its average weighted portfolio maturity beyond the 2-to-5 year range.
The LB Intermediate Bond Index consists of government (Treasury and
agency) and corporate debt obligations with remaining maturities between one
and ten years. Each obligation is represented in the LB Intermediate Bond
Index in proportion to its outstanding market value. The exact composition of
the LB Intermediate Bond Index varies according to the characteristics of the
securities outstanding in the marketplace.
Only investment-grade securities are considered for investment. These
securities are identified by their ratings according to one of two major rating
services, S&P and Moody's
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Investors Service, Inc. ("Moody's"). The rating systems employed by each
service are described in the Appendix to this Prospectus. Each service
classifies securities into broad categories starting with "investment grade" at
the top and ranging downward through more speculative classes, including
so-called "junk bonds," to securities that are virtually worthless. The
"investment grade" category is subdivided into four rating groups by both
services. The four rating groups are called "AAA"/"Aaa," "AA"/"Aa," "A/A," and
"BBB"/"Baa" by S&P and Moody's, respectively. Obligations with the lowest
investment grade rating have speculative characteristics, and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than in the case of
higher grade debt obligations. The Master Portfolio may invest in securities
of all four rating groups; however, most of the Master Portfolio's assets are
invested in securities that, at the time of purchase, are rated in the third
group or higher, denoted "A" or better by both rating services. Asset-backed
securities are further restricted to the top two rating groups at time of
purchase. Mortgage-related securities which are issued or guaranteed by U.S.
Government agencies are all currently considered to be in the highest rating
category. Subsequent to its purchase by the Master 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 Master Portfolio. The adviser and
sub-adviser consider such an event in determining whether the Master Portfolio
should continue to hold the obligation. To the extent the Master Portfolio
continues to hold such obligations, it may be subject to additional risk of
default.
In the marketplace it is generally the case that higher-risk securities
carry higher yields-to-maturity. That is, investors tend to demand higher
returns for securities with longer maturities or lower credit quality rating
than for similar securities of shorter maturities or higher credit quality
ratings. The amount of increased return for increased risk, however, changes
from time to time. The Master Portfolio seeks to emphasize those maturity
segments or rating groups that appear to offer the most favorable returns
relative to their risks, within the maturity and quality ranges described
above.
The Master Portfolio may invest some of its assets (no more than 10% of
total assets under normal market conditions) in high quality money market
instruments, which include U.S. Government obligations, obligations of domestic
and foreign banks, repurchase agreements, commercial paper (including variable
amount master demand notes) and short- term corporate debt obligations. Such
investments are made on an ongoing basis to provide liquidity and, to a greater
extent on a temporary basis, when there is an unexpected or abnormal level of
investor purchases or redemptions of Master Portfolio shares or when
"defensive" strategies are appropriate.
The portfolio turnover rate for the Master Portfolio is not expected to
exceed 300%. Portfolio turnover generally involves some expense to the Master
Portfolio, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover also can generate short- term capital gains tax
consequences.
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ITEM 5. MANAGEMENT OF THE TRUST.
MSIT's Board of Trustees provides broad supervision over the affairs of
MSIT and the Master Portfolios.
MSIT has retained the services of BZW Barclays Global Fund Advisors
("BGFA") as investment adviser to each Master Portfolio. Wells Fargo Bank,
N.A. ("Wells Fargo Bank") serves as sub-investment adviser to each Master
Portfolio and, prior to January 1, 1996, served as investment adviser to each
Master Portfolio. Stephens Inc. ("Stephens") serves as sponsor, distributor
and administrator. MSIT's Board of Trustees is responsible for the general
management of MSIT and supervising the actions of BGFA, Wells Fargo Bank and
Stephens in these capacities.
INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER
BGFA, pursuant to separate advisory contracts with each Master Portfolio
(the "BGFA Advisory Contracts"), serves as investment adviser to each Master
Portfolio. BGFA was created by the reorganization of Wells Fargo Nikko
Investment Advisors ("WFNIA") with and into an affiliate of Wells Fargo
Institutional Trust Company ("WFITC"). BGFA is now a wholly owned subsidiary
of WFITC which, effective January 1, 1996, changed its name to BZW Barclays
Global Investors, N.A. ("BGI"). BGFA is an indirect subsidiary of Barclays
Bank PLC ("Barclays") and is located at 45 Fremont Street, San Francisco, CA
94105. As of March 31, 1996, BGFA and its affiliates provide investment
advisory services for over $284 billion of assets under management.
The BGFA Advisory Contracts provide that BGFA shall furnish to each
Master Portfolio investment guidance and policy direction in connection with
the daily portfolio management of such Master Portfolio. Pursuant to the BGFA
Advisory Contracts, BGFA furnishes to MSIT's Board of Trustees periodic reports
on the investment strategy and performance of each Master Portfolio.
BGFA has retained Wells Fargo Bank as sub-investment adviser to each
Master Portfolio. Prior to January 1, 1996, Wells Fargo Bank served as
investment adviser to each Master Portfolio. The BGFA Advisory Contracts are
identical in all material respects, other than the identity of the parties, to
the advisory contracts with Wells Fargo Bank. As sub- investment adviser,
Wells Fargo Bank is responsible for the day-to-day portfolio management of each
Master Portfolio. The same Wells Fargo Bank investment professionals that
previously managed the investment portfolio of each Master Portfolio continue
to manage, subject to the overall supervision of BGFA, each Master Portfolio's
investment portfolio. Currently, Wells Fargo Bank is the investment adviser or
sub-investment adviser to five other registered investment companies. Wells
Fargo Bank, a wholly owned subsidiary of Wells Fargo & Company, is located at
420 Montgomery Street, San Francisco, California 94105.
BGFA is entitled to receive monthly fees at the annual rate of 0.60% and
0.45% of the average daily net assets of the Growth Stock and
Short-Intermediate Term Master Portfolio, respectively, as compensation for its
advisory services. From time to time, BGFA may waive such fees in whole or in
part. Any such waiver will reduce the expenses of a Master Portfolio and,
accordingly, have a favorable impact on the return and yield of such Master
Portfolio. Wells
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Fargo Bank is entitled to receive from BGFA monthly fees at the annual rate of
0.15% and 0.10% of the average daily net assets of the Growth Stock and
Short-Intermediate Term Master Portfolio, respectively, as compensation for its
sub- advisory services. For its services as investment adviser prior to
January 1, 1996, Wells Fargo Bank was entitled to receive monthly fees at the
annual rate of 0.60% and 0.45% of the average daily net assets of the Growth
Stock and Short-Intermediate Term Master Portfolios, respectively.
For the period beginning March 1, 1995 and ended December 31, 1995, the
Growth Stock Master Portfolio and the Short-Intermediate Term Master Portfolio
paid fees at the annual rate of 0.60% and 0.45%, respectively, of their average
daily net assets to Wells Fargo Bank for its services as investment adviser.
For the period beginning January 1, 1996 and ended February 29, 1996, the
Growth Stock Master Portfolio and the Short-Intermediate Term Master Portfolio
paid fees at the annual rate of 0.60% and 0.45%, respectively, of their average
daily net assets to BGFA for its services as investment adviser. For the same
period, BGFA paid fees at the annual rate of 0.15% and 0.10% of the average
daily net assets of the Growth Stock Master Portfolio and Short-Intermediate
Term Master Portfolio, respectively, to Wells Fargo Bank as compensation for
its sub-advisory services.
Purchase and sale orders of the securities held by the Master Portfolio
may be combined with those of other accounts that Wells Fargo Bank manages or
advises, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank, subject
to the supervision of BGFA and the overall authority of MSIT's Board of
Trustees determines that a particular security should be bought or sold for the
Master Portfolio and other accounts managed by Wells Fargo Bank, it undertakes
to allocate those transactions among the participants equitably. From time to
time, a Master Portfolio, to the extent consistent with its investment
objective, policies and restrictions, may invest in securities of companies
with which Wells Fargo Bank has a lending relationship.
Morrison & Foerster LLP, counsel to MSIT and special counsel to BGFA and
Wells Fargo Bank, has advised MSIT, BGFA and Wells Fargo Bank that BGFA, Wells
Fargo Bank and their affiliates may perform the services contemplated by the
advisory contracts, sub-advisory contracts and this Part A without violation of
the Glass-Steagall Act. Such counsel has pointed out, however, that there are
no controlling judicial or administrative interpretations or decisions and that
future judicial or administrative interpretations of, or decisions relating to,
present federal or state statutes, including the Glass-Steagall Act, and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such statutes,
regulations and judicial or administrative decisions or interpretations, could
prevent such entities from continuing to perform, in whole or in part, such
services. If any such entity were prohibited from performing any such
services, it is expected that new agreements would be proposed or entered into
with another entity or entities qualified to perform such services.
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PORTFOLIO MANAGERS
THE GROWTH STOCK MASTER PORTFOLIO
Jonathan Hickman has been primarily responsible for the day-to-day
management of the portfolio of the Master Portfolio since its inception. Mr.
Hickman manages several Wells Fargo Bank collective funds with the same
investment objective as the Master Portfolio, as well as equity and balanced
portfolios for individuals and employee benefit plans. He has approximately 10
years experience in the investment management field and is a member of Wells
Fargo's Equity Strategy Committee. He has a B.A. and an M.B.A. in finance from
Brigham Young University.
THE SHORT-INTERMEDIATE TERM MASTER PORTFOLIO
Mr. Scott Smith has been co-manager of the portfolio of the Master
Portfolio since June 28, 1995. He joined Wells Fargo Bank in 1988 as a taxable
money market portfolio specialist. His experience includes a position with a
private money management firm with mutual fund investment operations. Mr.
Smith holds a B.A. degree from the University of San Diego and is a chartered
financial analyst.
Ms. Tamyra Thomas, who co-manages the portfolio of the Master Portfolio
with Mr. Smith, has been both manager and co-manager of the portfolio of the
Master Portfolio since its inception. Prior to joining Wells Fargo Bank in
1988, Ms. Thomas was Vice President and Manager of the Investment Department
of Valley Bank and Trust in Utah. She holds a B.S. from the University of
Utah.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
BGI serves as custodian to each Master Portfolio and is located at 45
Fremont Street, San Francisco, California 94105. BGI is a wholly owned
subsidiary of BZW Barclays Global Investors Holdings Inc. (formerly, The Nikko
Building U.S.A., Inc.) and is also an indirect subsidiary of Barclays. Prior
to January 1, 1996, BGI was known as Wells Fargo Institutional Trust Company,
N.A. ("WFITC") and WFNIA and Wells Fargo & Company together owned 100% of
WFITC's outstanding voting securities. Wells Fargo Bank acts as each Master
Portfolio's Transfer and Dividend Disbursing Agent, and performs these agency
activities at 525 Market Street, San Francisco, California 94105.
SPONSOR, ADMINISTRATOR AND PLACEMENT AGENT
Stephens, located at 111 Center Street, Little Rock, Arkansas 72201, has
entered into an agreement with MSIT under which Stephens acts as administrator
for each Master Portfolio. Stephens does not receive a fee from MSIT for
providing administrative services to the Master Portfolio.
The Administration Agreement with MSIT states that Stephens shall provide
as administrative services, among other things: (i) general supervision of the
operation of each Master Portfolio, including coordination of the services
performed by the investment adviser, transfer agent, custodian, independent
accountants and legal counsel; regulatory compliance,
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including the compilation of information for documents such as reports to, and
filings with, the Securities and Exchange Commission ("SEC") and any state
securities commissions; and preparation of proxy statements and investor
reports for MSIT; and (ii) general supervision relative to the compilation of
data required for the preparation of periodic reports distributed to MSIT's
officers and Board of Trustees. Stephens also furnishes office space and
certain facilities required for conducting the business of MSIT and pays the
compensation of MSIT's trustees, officers and employees who are affiliated with
Stephens.
Subject to the overall supervision of MSIT's Board of Trustees, Stephens
also acts as Placement Agent for the sale of interests of the Master
Portfolios. Stephens is a full service broker/dealer and investment advisory
firm. Stephens and its predecessor have been providing securities and
investment services for more than 60 years, including discretionary portfolio
management services since 1983. Stephens currently manages investment
portfolios for pension and profit sharing plans, individual investors,
foundations, insurance companies and university endowments. MSIT will not
purchase securities from Stephens, BGFA, Wells Fargo Bank, or their respective
affiliates, as principal, without an exemptive order from the SEC.
MASTER PORTFOLIO EXPENSES
From time to time, BGFA and Stephens may waive their respective fees in
whole or in part and reimburse expenses payable to others. Any waivers or
reimbursements will reduce a Master Portfolio's expenses. Except for the
expenses borne by Stephens and BGFA each Master Portfolio bears all costs of
its operations.
The BGFA Advisory Contracts for each Master Portfolio provide that if, in
any fiscal year, the total aggregate expenses of a series incurred by, or
allocated to, such Master Portfolio and other investment companies investing in
the Master Portfolio (excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, expenditures that are capitalized in
accordance with generally accepted accounting principles, extraordinary
expenses and amounts accrued or paid under any distribution plan) exceed the
most restrictive expense limitation applicable to such investment companies
imposed by the securities laws or regulations of the states in which such
investment companies' shares are registered for sale, BGFA shall waive its fees
under the BGFA Advisory Contracts for the fiscal year to the extent of the
excess, or reimburse the excess, but only to the extent of their fees. The
BGFA Advisory Contracts further provide that the total expenses shall be
reviewed monthly so that, to the extent the annualized expenses for such month
exceed the most restrictive applicable annual expense limitation, the monthly
fees under the BGFA Advisory Contracts shall be reduced as necessary. The most
stringent applicable state restriction for investment companies limits these
expenses for any fiscal year to 2.50% of the first $30 million of an investment
company's average net assets, 2.0% of the next $70 million of average net
assets and 1.50% of the average net assets in excess of $100 million.
Except for the expenses borne by Stephens and BGFA, each Master Portfolio
bears all costs of its operations, including the compensation of its trustees
who are not officers or employees of Stephens or BGFA or any of their
affiliates; advisory and administration fees; interest charges; taxes; fees and
expenses of independent auditors, legal counsel, transfer agent and dividend
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disbursing agent; expenses of redeeming interests in the Trust; expenses of
preparing and printing any prospectuses; investor reports, notices, proxy
statements and reports to regulatory agencies; insurance premiums and certain
expenses relating to insurance coverage; trade association membership dues;
brokerage and other expenses connected with the execution of portfolio
transactions; fees and expenses of the custodian, including those for keeping
books and accounts and calculating the net asset value of investments in the
Trust; expenses of investor meetings; pricing services; organizational
expenses; and any extraordinary expenses. Extraordinary expenses of MSIT are
allocated among all the series of MSIT in a manner proportionate to the net
assets of each series on a transactional basis, or such other basis as MSIT's
Board of Trustees deems fair and equitable.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
ORGANIZATION AND INTERESTS
MSIT is organized as a trust under the laws of the State of Delaware.
Investors in MSIT are each liable for all of its obligations. However, the
risk of an investor incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance exists and MSIT
itself is unable to meet its obligations.
MSIT's Declaration of Trust permits the Board of Trustees to issue
beneficial interests in series of MSIT, and to permit investors to increase or
decrease their interest in such series. MSIT has no intention to hold annual
meetings of investors, but will hold special meetings of investors when, in the
judgment of the Trustees, it is necessary or desirable to submit matters for an
investor vote. Investors holding 10% or more of the shares outstanding and
entitled to vote are entitled to call a meeting of investors for purposes of
voting on removal of a Trustee or Trustees.
Each investor is entitled to a vote in proportion to the amount of the
investor's investment in MSIT. Interests in a Master Portfolio may not be
transferred, but an investor may withdraw all or any portion of its investment
at any time at net asset value. All interests in a Master Portfolio, when
issued, will be fully paid and nonassessable, and investors have no preemptive
rights. A more detailed statement of the rights of investors is contained in
the Part B.
As of June 1, 1996, the Growth Stock Fund and the Short-Intermediate Term
Fund of MasterWorks Funds Inc., 111 Center Street, Little Rock, Arkansas 72201,
owned approximately 99% of the voting securities of the Growth Stock Master
Portfolio and approximately 99% of the voting securities of the Short-
Intermediate Term Master Portfolio, respectively, and each Fund could be
considered a controlling person for purposes of the 1940 Act of the
corresponding Master Portfolio.
INTERESTS IN A MASTER PORTFOLIO ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF,
OR ISSUED, ENDORSED OR GUARANTEED BY, BGFA, WELLS FARGO BANK OR ANY OF THEIR
AFFILIATES. SUCH INTERESTS ARE NOT INSURED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN A MASTER PORTFOLIO INVOLVES CERTAIN RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE SHARE PRICE AND INVESTMENT
RETURN OF EACH MASTER PORTFOLIO IS EXPECTED TO FLUCTUATE AND INVESTMENTS IN THE
MASTER
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PORTFOLIOS ARE NOT GUARANTEED.
DIVIDENDS AND DISTRIBUTIONS
The net investment income of a Master Portfolio generally will be
declared and paid as a dividend daily to all investors of record as of 1:00
p.m. (Pacific time) with respect to each Master Portfolio. Net investment
income for a Saturday, Sunday or Holiday (as defined below) will be declared as
a dividend to investors of record as of 1:00 p.m. (Pacific time) on the
previous business day with respect to each Master Portfolio. All the net
investment income of a Master Portfolio so determined is allocated pro rata
among the investors in such Master Portfolio at the time of such determination.
Dividends and capital gain distributions, if any, paid by a Master
Portfolio will be reinvested in the investor's interest in such Master
Portfolio at net asset value and credited to the investor's account on the
payment date.
TAXES
Based upon the anticipated classification of each Master Portfolio for
federal income tax purposes, MSIT believes that each Master Portfolio will
qualify as a partnership. MSIT therefore believes that each Master Portfolio
will not be subject to any federal income tax on its income and net capital
gains (if any). However, each investor in a Master Portfolio will be taxable
on its distributive share of such Master Portfolio of MSIT's taxable income in
determining its federal income tax liability. The determination of such share
will be made in accordance with the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.
It is intended that each Master Portfolio's assets, income and
distributions will be managed in such a way that a regulated investment company
investing in such Master Portfolio may satisfy the requirements of Subchapter M
of the Code by investing substantially all of its assets in such Master
Portfolio.
Investor inquiries should be directed to Managed Series Investment Trust,
111 Center Street, Little Rock, Arkansas 72201.
ITEM 7. PURCHASE OF SECURITIES.
Interests in a Master Portfolio may be purchased on any day such Master
Portfolio is open. Each Master Portfolio is open for business each day the New
York Stock Exchange ("NYSE") is open for trading ("NYSE Business Day"). The
NYSE currently observes the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day (each, a "Holiday").
MSIT is a no-load open-end series investment company which was organized
as a business trust under the laws of Delaware on October 28, 1993. Beneficial
interests in a Master Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in a Master Portfolio may only be
made by registered broker/dealers or by investment companies, insurance company
separate accounts, common or commingled trust funds, group trusts or
"accredited investors" within the
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meaning of Regulation D under the 1933 Act. This registration statement does
not constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
There is no minimum initial or subsequent purchase amount in a Master
Portfolio. MSIT, on behalf of each Master Portfolio, reserves the right to
reject any purchase order. If accepted by a Master Portfolio, investments in
such Master Portfolio may be made in exchange for securities which are eligible
for acquisition by such Master Portfolio as described in this Part A. All
dividends, interest, subscription, or other rights pertaining to such
securities shall become the property of such Master Portfolio and must be
delivered to such Master Portfolio by the investor upon receipt from the
issuer.
A Master Portfolio will not accept securities in exchange for interests
unless: (1) such securities are, at the time of the exchange, eligible for
purchase by such Master Portfolio; (2) the investor represents and agrees that
all securities offered to be exchanged are not subject to any restrictions upon
their sale by such Master Portfolio under the 1933 Act or under the laws of the
country in which the principal market for such securities exists, or otherwise;
(3) the value of any such security (except U.S. Government securities) being
exchanged together with any other securities of the same issuer owned by a
Master Portfolio will not exceed 5% of the net assets of such Master Portfolio
immediately after the transaction; and (4) such securities are consistent with
the Master Portfolio's investment objective and policies, as applied by BGFA.
Interests in a Master Portfolio are offered continuously at the net asset
value next determined after a purchase order is effective without a sales load.
Purchase orders for interests in a Master Portfolio will be effected by 1:00
p.m. (Pacific time) on any NYSE Business Day.
Each investor in a Master Portfolio may add to or reduce its investment
in such Master Portfolio on any NYSE Business Day. The NAV of each Master
Portfolio is calculated at 1:00 p.m. on any NYSE Business Day. The value of
each investor's beneficial interest in a Master Portfolio will be determined by
multiplying the net asset value of such Master Portfolio by the percentage,
effective for that day, that represents that investor's share of the aggregate
beneficial interests in a Master Portfolio. Any additions or withdrawals,
which are to be effected on that day, will then be effected. The investor's
percentage of the aggregate beneficial interests in a Master Portfolio will
then be re-computed as the percentage equal to the fraction (i) the numerator
of which is the value of such investor's investment in a Master Portfolio as of
1:00 p.m. on such day plus or minus, as the case may be, the amount of any
additions to or withdrawals from the investor's investment in a Master
Portfolio effected on such day, and (ii) the denominator of which is the
aggregate net asset value of such Master Portfolio as of 1:00 p.m. on such day
plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in such Master Portfolio by all
investors in a Master Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in a Master Portfolio
as of 1:00 p.m. on the following NYSE Business Day.
By investing in MSIT, an investor appoints the Transfer Agent, as agent,
to establish an open account to which all investments will be credited,
together with any dividends and capital gain distributions that are paid in
additional interests in the Trust.
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DETERMINATION OF NET ASSET VALUE
The net asset value of each Master Portfolio is determined on any NYSE
Business Day.
Except for debt obligations with remaining maturities of 60 days or less,
which are valued at amortized cost, the other assets of each Master Portfolio
are valued at current market prices, or, if such prices are not readily
available, at fair value as determined in good faith in accordance with
guidelines approved by MSIT's Board of Trustees. Prices used for such
valuations may be provided by independent pricing services.
The exclusive placement agent for MSIT is Stephens. Stephens receives
no additional compensation for serving as placement agent for MSIT.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in a Master Portfolio may withdraw all or a portion of its
investment on any NYSE Business Day at the net asset value next determined
after a withdrawal request in proper form is furnished by the investor to such
Master Portfolio. The Master Portfolios make no charge for redemption
transactions. The proceeds of a withdrawal will be paid by the Master
Portfolios in federal funds normally on the day after the withdrawal is
effected, but in any event within seven days. At a Master Portfolio's option,
payment of redemption proceeds may be made in securities, subject to regulation
by some state securities commissions. Investments in a Master Portfolio may
not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the NYSE is closed (other than weekends or Holidays)
or trading on the NYSE is restricted, or, to the extent otherwise permitted by
the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
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APPENDIX -- ADDITIONAL INVESTMENT POLICIES
The following describes certain instruments in which the Master
Portfolios may invest.
U.S. GOVERNMENT OBLIGATIONS
Each Master Portfolio may invest in various types of U.S. Government
obligations with remaining maturities of up to thirteen months. U.S.
Government obligations include securities issued or guaranteed as to principal
and interest by the U.S. Government and supported by the full faith and credit
of the U.S. Treasury. U.S. Treasury obligations differ mainly in the length of
their maturities. Treasury bills, the most frequently issued marketable
government securities, have maturities of up to one year and are issued on a
discount basis. U.S. Government obligations also include securities issued or
guaranteed by federal agencies or instrumentalities, including
government-sponsored enterprises. Some obligations of such agencies or
instrumentalities of the
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U.S. Government are supported by the full faith and credit of the United States
or U.S. Treasury guarantees; others, by the right of the issuer or guarantor to
borrow from the U.S. Treasury; still others by the discretionary authority of
the U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, only by the credit of the agency or
instrumentality issuing the obligation. In the case of obligations not backed
by the full faith and credit of the United States, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government would
provide financial support to its agencies or instrumentalities (including
government-sponsored enterprises) where it is not obligated to do so. In
addition, U.S. Government obligations are subject to fluctuations in market
value due to fluctuations in market interest rates. As a general matter, the
value of debt instruments, including U.S. Government obligations, declines when
market interest rates increase and rises when market interest rates decrease.
Certain types of U.S. Government obligations are subject to fluctuations in
yield or value due to their structure or contract terms.
SHORT-TERM CORPORATE DEBT INSTRUMENTS
Each Master Portfolio may invest in commercial paper (including
variable-amount master demand notes), which is 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 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. Wells Fargo Bank, as sub-investment adviser, will monitor on an
ongoing basis the ability of an issuer of a demand instrument to pay principal
and interest on demand. Wells Fargo Bank, pursuant to the direction of the
Trust's Board of Trustees, will determine the liquidity of those instruments
which have a demand feature that is not exercisable within seven days, provided
an active secondary market exists.
The commercial paper investments of the Short-Intermediate Term Master
Portfolio at the time of the purchase must be rated "A-1" by S&P or "Prime-1"
by Moody's or, if not rated, must be of comparable quality as determined by
BGFA at its discretion.
The Master Portfolios also may invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than one year remaining
to maturity at the date of settlement. Corporate debt securities with a
remaining maturity of less than one year tend to become extremely liquid and
are traded as money market securities. The Growth Stock Master Portfolio will
invest only in such corporate bonds and debentures that are rated at the time
of purchase at least "Aa" by Moody's or "AA" by S&P.
Subsequent to its purchase by a Master 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 Master Portfolio. Wells Fargo Bank, as
sub-adviser, will consider such an event in determining whether a Master
Portfolio should continue to hold the obligation. To the extent a Master
Portfolio
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continues to hold such obligations, it may be subject to additional risk of
default.
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES
Each Master Portfolio may purchase securities on a when-issued or forward
commitment 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. A Master Portfolio will make
commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Master Portfolio may sell these securities
before the settlement date if it is deemed advisable. The Master 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 and
certain other securities held in the Master Portfolio's portfolio are subject
to changes in value (both generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a when-issued or forward commitment basis may expose the relevant
Master Portfolio to risk because they may experience such fluctuations prior to
their actual delivery. Purchasing securities on a when-issued or forward
commitment basis can involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. A segregated account of each Master
Portfolio consisting of cash or U.S. Government obligations or other high
quality liquid debt securities in an amount at least equal at all times to the
amount of the when-issued or forward commitments is established and maintained
at MIP's custodian bank. Purchasing securities on a forward commitment basis
when a Master Portfolio is fully or almost fully invested may result in greater
potential fluctuation in the value of such Master Portfolio's total net assets
and its net asset value per share.
FLOATING- AND VARIABLE-RATE INSTRUMENTS
Certain of the debt instruments that each Master Portfolio may purchase
bear interest at rates that are not fixed, but vary with, for example, changes
in specified market rates or indices or at specified intervals. These
instruments typically have maturities of more than thirteen months but may
carry a demand feature that would permit the holder to tender them back to the
issuer at par value prior to maturity. The floating- and variable-rate
instruments that each Master Portfolio may purchase include certificates of
participation in such obligations purchased from banks.
Wells Fargo Bank, as sub-investment adviser to each Master Portfolio,
monitors on an ongoing basis the ability of an issuer of a demand instrument to
pay principal and interest on demand. Events affecting the ability of the
issuer of a demand instrument to make payment when due may occur between the
time a Master Portfolio elects to demand payment and the time payment is due,
thereby affecting such Master Portfolio's ability to obtain payment at par.
Wells Fargo Bank, in accordance with the guidelines approved by MSIT's Board of
Trustees, and
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subject to the overall supervision of BGFA as investment adviser, determines
the liquidity of those instruments which have a demand feature that is not
exercisable within seven days. Demand instruments whose demand feature is not
exercisable within seven days may be treated as liquid, provided that an active
secondary market exists.
REPURCHASE AGREEMENTS
Each Master Portfolio may enter into repurchase agreements wherein the
seller of a security to a Master Portfolio agrees to repurchase that security
from such Master Portfolio at a mutually agreed-upon time and price. This
results in a fixed rate of return insulated from market fluctuations during
this period. The period of maturity is usually quite short, often overnight or
a few days, although it may extend over a number of months. Each Master
Portfolio may enter into repurchase agreements only with respect to obligations
that could otherwise be purchased by such Master Portfolio. All repurchase
agreements are fully collateralized based on values that are marked to market
daily. While the maturities of the underlying securities in a repurchase
agreement transaction may be greater than one year, the term of any repurchase
agreement on behalf of a Master Portfolio will always be less than one year.
If the seller defaults and the value of the underlying securities declines, the
participating Master Portfolio may incur a loss. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the
participating Master Portfolio's disposition of the security may be delayed or
limited. Each Master Portfolio enters into repurchase agreements only with
registered broker/dealers and commercial banks and other financial institutions
that meet guidelines established by the Board of Trustees of the Trust and that
are not affiliated with BGFA, the Master Portfolio's investment adviser, or
Wells Fargo Bank, the Master Portfolio's sub-investment adviser. The Master
Portfolio may enter into pooled repurchase agreement transactions with other
funds advised by Wells Fargo Bank.
FOREIGN OBLIGATIONS
The Growth Stock Master Portfolio may invest up to 25% of its total
assets in high-quality, short-term (thirteen months or less) debt obligations
of foreign branches of U.S. banks or U.S. branches of foreign banks that are
denominated in and pay interest in U.S. dollars. 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 the same uniform accounting, auditing
and financial reporting standards or governmental supervision as domestic
issuers. In addition, with respect to certain foreign countries, interest 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.
LOANS OF PORTFOLIO SECURITIES
Each Master Portfolio may lend securities from its portfolio to domestic
brokers, dealers and financial institutions (but not individuals) if cash, U.S.
Government obligations or other liquid
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high-quality debt obligations equal to at least 100% of the current market
value of the securities loaned (including accrued interest thereon) plus the
interest payable to the Master Portfolio with respect to the loan, is
maintained with such Master Portfolio. In determining whether to lend a
security to the particular broker, dealer or financial institution, the Master
Portfolio's investment adviser or sub-adviser considers all relevant facts and
circumstances, including the size, creditworthiness and reputation of the
broker, dealer or financial institution. Any loans of portfolio securities are
fully collateralized based on values that are marked to market daily. Any
securities that a Master Portfolio receives as collateral do not become part of
such Master Portfolio's investment portfolio at the time of the loan and, in
the event of a default by the borrower, the Master Portfolio, if permitted by
law, will dispose of such collateral except for such part thereof that is a
security in which such Master Portfolio is permitted to invest. During the
time securities are on loan, the borrower pays the Master Portfolio any accrued
income on those securities, and the Master Portfolio may invest the cash
collateral in high-quality money market instruments and earn additional income
or receive an agreed-upon fee from a borrower that has delivered
cash-equivalent collateral. The securities acquired with such collateral will
be segregated as discussed above.
In the event that the borrower defaults on its obligation to return
borrowed securities, because of insolvency or otherwise, the Master Portfolio
could experience delays and costs in gaining access to the collateral and could
suffer a loss to the extent that the value of the collateral falls below the
market value of the securities borrowed. However, loans are made only to
borrowers deemed by Wells Fargo Bank, as sub-investment adviser, to be of good
standing and when, in its judgment, the income to be earned from the loan
justifies the attendant risks. The Master Portfolios do not lend securities
having a value that exceeds 50% of the current value of their respective total
assets. Loans of securities by the Master Portfolio are subject to termination
at the Master Portfolio's or the borrower's option. The Master Portfolio may
pay reasonable administrative and custodial fees in connection with a
securities loan and may pay a negotiated portion of the interest or fee earned
with respect to the collateral to the borrower or the placing broker.
Borrowers and placing brokers may not be affiliated, directly or indirectly,
with MSIT, the investment adviser, sub- investment adviser or the distributor.
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENTS
The Growth Stock Master Portfolio may have temporary cash balances on
account of new purchases, dividends, interest and reserves for redemptions,
which the Master Portfolio may invest in the following high-quality money
market instruments: (i) short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; (ii) negotiable certificates of
deposit ("CDs"), bankers' acceptances, fixed time deposits and other
obligations of domestic banks (including foreign branches) that have more than
$1 billion in total assets at the time of investment and that are members of
the Federal Reserve System or are examined by the Comptroller of the Currency
or whose deposits are insured by the FDIC; (iii) commercial paper rated at the
date of purchase "Prime-1" by Moody's or "A-1+" or "A-1" by S&P, or, if
unrated, of comparable quality as determined by Wells Fargo Bank in its
discretion as sub-investment adviser; (iv) non-convertible corporate debt
securities (e.g., bonds and debentures) with remaining maturities at the date
of purchase of no more than one year that are rated at least "Aa" by Moody's or
"AA" by S&P; (v) repurchase agreements; and (vi) short-term, U.S. dollar-
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denominated obligations of foreign banks (including U.S. branches) that, at the
time of investment: (a) have more than $10 billion, or the equivalent in other
currencies, in total assets; (b) are among the 75 largest foreign banks in the
world as determined on the basis of assets; and (c) in the opinion of Wells
Fargo Bank, as sub-investment adviser, are of comparable quality to obligations
of U.S. banks which may be purchased by the Master Portfolio.
OBLIGATIONS OF CORPORATIONS AND FOREIGN ENTITIES
The Short-Intermediate Term Master Portfolio may invest in debt
securities issued by domestic corporations, U.S. dollar-denominated debt
securities issued by Canadian corporations, Yankee bonds and supra-national
obligations. Yankee bonds are U.S. dollar-denominated obligations issued by
foreign governments or companies. Supra-national obligations are U.S.
dollar-denominated obligations issued by international entities such as the
World Bank and the Inter-American Development Bank.
SECURITIES BACKED BY MORTGAGES
The Short-Intermediate Term Master Portfolio may purchase Mortgage-Backed
Securities ("MBSs"), which are pass- through certificates representing
interests in a pool of loans secured by mortgages. The resulting cash flow
from those mortgages is used to pay principal and interest on the certificates.
The MBSs in which the Master Portfolio may invest are issued or guaranteed by
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC"). MBS investors receive monthly payments based on a pro-rata share of
interest and principal payments (and prepayments) on the underlying mortgage
pool, less GNMA's, FNMA's or FHLMC's fees and any applicable loan servicing
fees.
GNMA guarantees the full and timely payment of principal and interest on
GNMA certificates. The GNMA guarantee is backed by the authority of GNMA to
borrow funds from the U.S. Treasury to meet payment obligations arising from
its guarantee. Since GNMA is a wholly-owned U.S. Government corporation within
the Department of Housing and Urban Development, GNMA securities, are backed by
the full faith and credit of the federal government. In contrast, MBSs issued
by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates ("Fannie
Maes") which are solely the obligations of FNMA and are neither backed by, nor
entitled to, the full faith and credit of the federal government. FHLMC also
is a government-sponsored enterprise whose MBSs are solely obligations of
FHLMC. Therefore, FHLMC MBSs are not guaranteed by the United States or by a
Federal Home Loan Bank and do not constitute a general obligation of the United
States or any Federal Home Loan Bank. FHLMC guarantees timely payment of
interest and ultimate payment of principal due under the obligations it issues.
However, because FNMA and FHLMC are government-sponsored enterprises, their
securities are considered to be high quality investments that present minimal
credit risks.
The mortgages underlying MBSs guaranteed by GNMA are fully insured or
guaranteed by the Federal Housing Administration, the Veterans Administration
or the Farmers Home Administration. Mortgages underlying MBSs issued by FNMA
or FHLMC are typically conventional residential mortgages which are not so
insured or guaranteed, but which conform to
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specific underwriting, size and maturity standards.
The Master Portfolio also may invest up to 25% of its total assets in
collateralized mortgage obligations ("CMOs") issued or guaranteed by U.S.
Government agencies of instrumentalities (including government-sponsored
enterprises) or collateralized by U.S. Government obligations. In a CMO, a
series of bonds or certificates is issued in multiple classes. Each class is
issued at a specified coupon rate with a stated maturity or final distribution
date. The principal and interest payments in the collateral pool may be
allocated among the classes of CMOs in several ways. Typically, payments of
principal, including any prepayments, on the underlying mortgages are applied
to the classes in the order of their respective stated maturities or final
distribution dates, so that no payment of principal will be made on CMOs of one
class until all CMOs of other classes having earlier stated maturities or final
distribution dates have been paid in full.
The Master Portfolios may purchase CMOs that are:
(1) collateralized by fixed rate or adjustable rate mortgages that are
guaranteed, as to payment of principal and interest, by a U.S. Government
agency or instrumentality (including a government-sponsored enterprise);
(2) directly guaranteed, as to payment of principal and interest, by the
issuer, which guarantee is collateralized by U.S. Government securities; or
(3) collateralized by MBSs which are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises).
The coupon rate of one or more CMO classes may reset periodically based
on an index, such as the London Interbank Offered Rate ("LIBOR"). The interest
rates on the mortgages underlying the MBSs and the CMOs in which the Master
Portfolio may invest may be readjusted at intervals of one year or less in
response to changes in a predetermined interest rate index. There are two main
categories of indices: those based on U.S. Treasury securities and those
derived from a calculated measure, such as a cost-of-funds index or a moving
average of mortgage rates. Commonly utilized indices include the one-year and
five-year constant maturity U.S. Treasury note rates, the three- month U.S.
Treasury bill rate, the 180-day U.S. Treasury bill rate, rates on longer-term
Treasury securities, the National Median Cost of Funds, the one-month,
three-month, six-month or one-year LIBOR, a published prime rate, or commercial
paper rates. Certain of these indices follow overall market interest rates
more closely than others.
The range of fluctuation of interest rates on certain adjustable rate
mortgages ("ARMs") may be limited by "caps" or "floors." A "cap" is a ceiling
or maximum interest rate under a mortgage note. A "floor" is a minimum
interest rate under a mortgage note. To the extent that the interest rates on
the ARMs underlying MBSs or CMOs cannot be adjusted in response to interest
rate changes due to the existence of "caps" or "floors" on interest rate
movements, the MBSs or CMOs are likely to respond to changes in market interest
rates more like fixed rate securities. In other words, interest rate increases
in excess of such caps can be expected to cause the CMOs or MBSs backed by
mortgages that have such caps to decline in value to a greater extent than
would be the case in the absence of such caps. Conversely, interest rate
decreases below such floors can
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be expected to cause the CMOs or MBSs backed by mortgages that have such floors
to increase in value to a greater extent than would be the case in the absence
of such floors. The value of MBSs, CMOs and ARMs may fluctuate to the extent
interest rates on the underlying ARMs differ from prevailing market interest
rates during interim periods between interest rate reset dates. Accordingly,
holders of MBSs, CMOs or ARMs could experience some loss (or less gain than
otherwise might be achieved) if they sell these investments before the interest
rates on the underlying mortgages are adjusted to reflect prevailing market
interest rates.
The holders of CMOs and MBSs receive not only scheduled payments of
principal interest, but also may receive unscheduled principal payments
representing prepayments on the underlying mortgages. A certain level of
prepayments is factored into the price of most CMOs, since historical
experience shows that a certain percentage of mortgages will be repaid or
refinanced before maturity. When market interest rates change, however,
prepayment behavior changes. When market interest rates are high, homeowners
tend to refinance less, which slows the rate of prepayments. When market
interest rates are low, the rate of prepayments tends to accelerate. Lower
market interest rates are a positive influence on the value of a CMO, as they
are on any fixed-rate investments. At the same time, however, the risk that an
investor will receive more prepayments than anticipated and must therefore
reinvest at lower prevailing market rates is a negative influence on the CMO's
value. The net effect of falling interest rates on a CMO's price depends on
the relationship between interest rates and CMO prices which, in turn, depends
on a number of factors including whether the CMO was trading at a discount or a
premium before rates fell. Thus, it is possible for a move in interest rates
to impact different classes of the same CMO series differently. (See the
discussion of multiple classes, above.)
As a non-fundamental policy, the Master Portfolios will not invest in
"interest only" or "principal only" securities.
OTHER ASSET-BACKED SECURITIES
The Short-Intermediate Term Master Portfolio may invest in Asset-Backed
Securities ("ABSs"), which are pass- through securities representing ownership
interests in a pool of loans, leases, or installment contracts on personal
property such as computers and automobiles (but not real estate). They are
similar to MBSs in that they represent an undivided interest in a trust
established to hold the assets. Investors receive their pro rata share of
payments of interest and principal on the assets of the trust, less any
servicing fees or interest margin paid to the sponsor of the trust. ABS
issuers include finance companies, equipment leasing companies and banks. The
life span of an ABS depends on the rate at which the underlying obligations are
paid down by the borrowers. Faster prepayments of the underlying obligations
will shorten the life of an ABS.
All ABSs in which the Master Portfolio may invest have one or more forms
of credit enhancement, such as over collateralization, recourse to issuer,
third party guaranty, a reserve fund, or a senior/subordinated security
structure. The Master Portfolio is protected against default risk, but not
market risk, to the extent of such credit enhancements.
The Master Portfolio invests only in ABSs rated "AA" or higher by S&P, or
"Aa" or higher by Moody's at the time of purchase. The Master Portfolio does
not purchase subordinated ABSs.
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BANK OBLIGATIONS
The Short-Intermediate Term Master Portfolio may invest in bank
obligations, including, but not limited to, negotiable certificates of deposits
("CDs"), bankers' acceptances and fixed time deposits, subject to its
fundamental policy of not investing 25% or more of its total assets in any
particular industry. The Master Portfolio also may invest in other obligations
of domestic banks (including foreign branches) which have more than $1 billion
in total assets at the time of investment and are members of the Federal
Reserve System or are examined by the Comptroller of the Currency or whose
deposits are insured by the Federal Deposit Insurance Corporation ("FDIC").
The Master Portfolio also may invest in U.S. dollar denominated obligations of
foreign banks (including U.S. branches) which at the time of investment (i)
have more than $10 billion, or the equivalent in other currencies, in total
assets; (ii) are among the 75 largest banks in the world as determined on the
basis of assets and (iii) in the opinion of the Master Portfolio's investment
manager, are of an investment quality comparable with obligations of U.S. banks
which may be purchased by the Master Portfolio.
Fixed time deposits are obligations of foreign branches of U.S. banks or
foreign banks which are payable at a stated maturity date and bear a fixed rate
of interest. Generally fixed time deposits may be withdrawn on demand by the
investor, but they 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 a market, there are no contractual
restrictions on the Master Portfolio's right to transfer a beneficial interest
in the deposit to a third party.
Obligations of foreign banks and foreign branches of U.S. banks involve
somewhat different investment risks from those affecting domestic obligations,
including the possibilities that liquidity could be impaired because of future
political and economic developments, that the obligations may be less
marketable than comparable obligations of U.S. banks, that a foreign
jurisdiction might impose withholding taxes on interest income payable on those
obligations, that foreign deposits may be seized or nationalized, that 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 that 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. In that connection, foreign banks are not subject to
examination by any U.S. Government agency or instrumentality. To the extent
such securities of foreign issuers are not listed on recognized domestic or
foreign securities exchanges, they will be deemed illiquid investments.
INVESTMENT POLICIES
As a matter of fundamental policy, each Master Portfolio may: (i) not
purchase securities of any issuer (except U.S. Government obligations) if as a
result, with respect to 75% of its total assets, more than 5% of the value of
the Master Portfolio's total assets would be invested in the
A-21
<PAGE> 25
securities of such issuer or, with respect to 100% of its total assets, the
Master Portfolio would own more than 10% of the outstanding voting securities
of such issuer; (ii) 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 its net assets exists); (iii) make loans of
portfolio securities in accordance with its investment policies; and (iv) not
invest 25% or more of its total assets (i.e., concentrate) in any particular
industry, except that the Master Portfolio may invest 25% or more of its assets
in U.S. Government obligations. With respect to paragraph (i), it may be
possible that MSIT would own more than 10% of the outstanding voting securities
of an issuer.
A-22
<PAGE> 26
MANAGED SERIES INVESTMENT TRUST
GROWTH STOCK MASTER PORTFOLIO
SHORT-INTERMEDIATE TERM MASTER PORTFOLIO
PART B
JUNE 28, 1996
--------------------------------
ITEM 10. COVER PAGE.
Managed Series Investment Trust ("MSIT") is an open-end,
management investment company. This Part B is not a prospectus and should be
read in conjunction with MSIT's Part A, also dated June 28, 1996. All terms
used in this Part B that are defined in Part A have the meanings assigned in
Part A. A copy of Part A may be obtained without charge by writing Stephens
Inc. ("Stephens"), MSIT's sponsor, administrator and distributor, at 111 Center
Street, Little Rock, Arkansas 72201, or by calling Stephens at 1-800-643-9691.
MSIT's Registration Statement, including Parts A and B and any
exhibits filed therewith, may be examined at the office of the Securities and
Exchange Commission ("SEC") in Washington, D.C.
ITEM 11. TABLE OF CONTENTS.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 12. General Information and History . . . . . . . . . . . . . . . . . . . 2
Item 13. Investment Objective and Policies . . . . . . . . . . . . . . . . . . 2
Item 14. Management of MSIT . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 15. Control Persons and Principal Holders of Securities . . . . . . . . . 12
Item 16. Investment Advisory and Other Services . . . . . . . . . . . . . . . . 12
Item 17. Brokerage Allocation and Other Practices . . . . . . . . . . . . . . 14
Item 18. Capital Stock and Other Securities . . . . . . . . . . . . . . . . . . 16
Item 19. Purchase, Redemption and Pricing of Securities . . . . . . . . . . . . 17
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 22. Calculation of Performance Data . . . . . . . . . . . . . . . . . . . 18
Item 23. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 19
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
1
<PAGE> 27
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES.
The Growth Stock Master Portfolio and the Short-Intermediate
Term Master Portfolio are sometimes referred to hereafter as the "Master
Portfolios." The Master Portfolios are subject to the following investment
restrictions, all of which are fundamental policies.
INVESTMENT RESTRICTIONS
Each Master Portfolio may not:
(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 such Master Portfolio's
investments in that industry would be 25% or more of the current value of the
Master Portfolio's total assets, provided that there is no limitation with
respect to investments in obligations of the U.S. Government, its agencies or
instrumentalities;
(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 each Master 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 the Master Portfolio's investment program may be
deemed to be an underwriting;
(7) make investments for the purpose of exercising control or
management;
(8) borrow money or issue senior securities as defined in the
1940 Act, except that each Master Portfolio may 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
2
<PAGE> 28
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 its net assets exists);
(9) write, purchase or sell puts, calls, straddles, spreads,
warrants, options or any combination thereof, except that the Growth Stock
Master Portfolio may purchase securities with put rights in order to maintain
liquidity, and except that the Short-Intermediate Term Master Portfolio and
Growth Stock Master Portfolio may invest up to 5% of their net assets in
warrants in accordance with their investment policies stated below;
(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 its total assets,
more than 5% of the value of the Master Portfolio's total assets would be
invested in the securities of any one issuer or, with respect to 100% of its
total assets the Master Portfolio's ownership would be more than 10% of the
outstanding voting securities of such issuer; or
(11) make loans, except that each Master Portfolio may
purchase or hold debt instruments or lend its portfolio securities in
accordance with its investment policies, and may enter into repurchase
agreements.
Each Master Portfolio is subject to the following
non-fundamental policies.
(1) Neither the Short-Intermediate Term Master Portfolio nor
the Growth Stock Master Portfolio may:
(a) purchase or retain securities of any issuer if
the officers or trustees of MSIT or the investment adviser owning beneficially
more than one-half of one percent (0.5%) of the securities of the issuer
together owned beneficially more than 5% of such securities;
(b) purchase securities of issuers who, with their
predecessors, have been in existence less than three years, unless the
securities are fully guaranteed or insured by the U.S. Government, a state,
commonwealth, possession, territory, the District of Columbia or by an entity
in existence at least three years, or the securities are backed by the assets
and revenues of any of the foregoing if, by reason thereof, the value of its
aggregate investments in such securities will exceed 5% of its total assets;
(2) The Short-Intermediate Term Master Portfolio and Growth
Stock Master Portfolio reserve the right to invest up to 15% of the current
value of their net assets in fixed time deposits that are subject to withdrawal
penalties and that have maturities of more than seven days, repurchase
agreements maturing in more than seven days or other illiquid securities.
However, as long as a feeder Fund's shares are registered for sale in a state
that imposes a lower limit on the percentage of a fund's assets that may be so
invested, the Short-Intermediate Term Master Portfolio and Growth Stock Master
Portfolio will comply with such lower limit. The Short-Intermediate Term
Master Portfolio and Growth Stock Master Portfolio presently are limited to
investing 10% of their net asset in such securities due to limits applicable in
several states; and
3
<PAGE> 29
(3) The Short-Intermediate Term Master Portfolio and Growth
Stock Master Portfolio may invest in shares of other open-end, management
investment companies, subject to the limitations of Section 12(d)(1) of the
1940 Act, provided that any such purchases will be limited to temporary
investments in shares of unaffiliated investment companies and the investment
adviser will waive its advisory fees for that portion of the Short-Intermediate
Term Master Portfolio's or the Growth Stock Master Portfolio's assets so
invested, except when such purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
Unrated, Downgraded and Below Investment Grade Investments.
Each Master Portfolio may purchase instruments that are not rated if, in the
opinion of Wells Fargo Bank, as sub-investment adviser, such obligations are of
investment quality comparable to other rated investments that are permitted to
be purchased by such Master Portfolio. Each Master Portfolio may purchase
unrated instruments only if they are purchased in accordance with the
procedures adopted by MSIT's Board of Trustees in accordance with Rule 2a-7
under the 1940 Act. After purchase by a Master Portfolio, a security may cease
to be rated or its rating may be reduced below the minimum required for
purchase by such Master Portfolio. Neither event will require a sale of such
security by such Master Portfolio. However, in no event will such securities
exceed 5% of the Master Portfolio's net assets. To the extent the ratings
given by Moody's or S&P may change as a result of changes in such organizations
or their rating systems, each Master Portfolio will attempt to use comparable
ratings as standards for investments in accordance with the investment policies
contained in its Part A and in this Part B. The ratings of Moody's and S&P are
more fully described in the Appendix.
Because each Master Portfolio is not required to sell
downgraded securities, and because the Growth Stock Master Portfolio is
permitted to purchase securities that are rated below investment grade or if
unrated are of comparable quality, each Master Portfolio could hold up to 5% of
its net assets in debt securities rated below "Baa" by Moody's or below "BBB"
by S&P or if unrated, low credit quality (below investment grade) securities.
The Master Portfolios may hold such securities even though only the Growth
Stock Master Portfolio is permitted to purchase such securities.
Although they may offer higher yields than do higher rated
securities, low rated and unrated low credit quality debt securities generally
involve greater volatility of price and risk of principal and income, including
the possibility of default by, or bankruptcy of, the issuers of the securities.
In addition, the markets in which low rated and unrated low credit quality debt
securities are traded are more limited than those in which higher rated
securities are traded. The existence of limited markets for particular
securities may diminish a Master Portfolio's ability to sell the securities at
fair value either to meet redemption requests or to respond to changes in the
economy or in the financial markets and could adversely affect and cause
fluctuations in the daily net asset value of a Master Portfolio's shares.
4
<PAGE> 30
Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and liquidity of low
rated or unrated low quality debt securities, especially in a thinly traded
market. Analysis of the creditworthiness of issuers of low rated or unrated
low quality debt securities may be more complex than for issuers of higher
rated securities, and the ability of a Master Portfolio to achieve its
investment objective may, to the extent it holds low rated or unrated low
quality debt securities, be more dependent upon such creditworthiness analysis
than would be the case if the Master Portfolio held exclusively higher rated or
higher quality debt securities.
Low rated or unrated low quality debt securities may be more
susceptible to real or perceived adverse economic and competitive industry
conditions than investment grade securities. The prices of such debt
securities have been found to be less sensitive to interest rate changes than
higher rated or higher quality investments, but more sensitive to adverse
economic downturns or individual corporate developments. A projection of an
economic downturn or of a period of rising interest rates, for example, could
cause a decline in low rated or unrated low quality debt securities prices
because the advent of a recession could dramatically lessen the ability of a
highly leveraged company to make principal and interest payments on its debt
securities. If the issuer of the debt securities defaults, a Master Portfolio
may incur additional expenses to seek recovery.
Letters of Credit. Certain of the debt obligations (including
municipal securities, certificates of participation, commercial paper and other
short-term obligations) which the Master Portfolios may 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. Only banks,
savings and loan associations and insurance companies which, in the opinion of
Wells Fargo Bank, as sub-investment adviser, are of comparable quality to
issuers of other permitted investments of each such Master Portfolio may be
used for letter of credit-backed investments.
Pass-Through Obligations. Certain of the debt obligations
which each Master Portfolio may purchase 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 the Master Portfolio investing in such obligation.
Furthermore, as with any debt obligation, fluctuations in interest rates will
inversely affect the market value of pass- through obligations. Each Master
Portfolio may invest in pass-through obligations that are supported by the full
faith and credit of the U.S. Government (such as those issued by the Government
National Mortgage Association) or those that are guaranteed by an agency or
instrumentality of the U.S. Government or government sponsored enterprise (such
as the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation) or bonds collateralized by any of the foregoing.
5
<PAGE> 31
When-Issued Securities. Certain of the securities in which
each Master Portfolio may invest are purchased on a when-issued basis, in which
case delivery and payment normally take place within 45 days after the date of
the commitment to purchase. Each Master Portfolio makes commitments to
purchase securities on a when-issued basis only with the intention of actually
acquiring the securities, but may sell them before the settlement date if it is
deemed advisable. When-issued securities are subject to market fluctuation,
and no income accrues to the purchaser during the period prior to issuance.
The purchase price and the interest rate received on debt securities are fixed
at the time the purchaser enters into the commitment. Purchasing a security on
a when-issued basis can involve a risk that the market price at the time of
delivery may be lower than the agreed-upon purchase price, in which case there
could be an unrealized loss at the time of delivery. Each Master Portfolio
does not currently intend to invest more than 5% of its assets in when-issued
securities during the coming year. Each Master Portfolio establishes a
segregated account in which it maintains cash or liquid, high-grade debt
securities in an amount at least equal in value to such Master Portfolio's
commitments to purchase when-issued securities. If the value of these assets
declines, the Master Portfolios will place additional liquid assets in the
account on a daily basis so that the value of the assets in the account is
equal to the amount of such commitments.
Loans of Portfolio Securities. Each Master Portfolio may lend
securities from its portfolio to brokers, dealers and financial institutions
(but not individuals) if cash, U.S. Government securities or other high-
quality debt obligations equal to at least 100% of the current market value of
the securities loaned (including accrued interest thereon) plus the interest
payable to such Master Portfolio with respect to the loan is maintained with
the Master Portfolio. In determining whether or not to lend a security to a
particular broker, dealer or financial institution, each Master Portfolio's
investment adviser or such-adviser considers all relevant facts and
circumstances, including the size, creditworthiness and reputation of the
broker, dealer, or financial institution. Any loans of portfolio securities
are fully collateralized based on values that are marked to market daily. The
Master Portfolios do not enter into any portfolio security lending arrangements
having a duration longer than one year. Any securities that a Master Portfolio
receives as collateral do not become part of its portfolio at the time of the
loan and, in the event of a default by the borrower, such Master Portfolio
will, if permitted by law, dispose of such collateral except for such part
thereof that is a security in which the Master Portfolio is permitted to
invest. During the time securities are on loan, the borrower will pay the
Master Portfolio any accrued income on those securities, and the Master
Portfolio may invest the cash collateral and earn income or receive an
agreed-upon fee from a borrower that has delivered cash- equivalent collateral.
The Master Portfolios will not lend securities having a value that exceeds
one-third of the current value of their respective total assets. Loans of
securities by a Master Portfolio are subject to termination at such Master
Portfolio's or the borrower's option. Each Master Portfolio may pay reasonable
administrative and custodial fees in connection with a securities loan and may
pay a negotiated portion of the interest or fee earned with respect to the
collateral to the borrower or the placing broker. Borrowers and placing
brokers are not permitted to be affiliated, directly or indirectly, with the
Master Portfolios, BGFA, Wells Fargo Bank or Stephens.
6
<PAGE> 32
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 of 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. None of the
Master Portfolios may invest 25% or more of its assets in foreign obligations.
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, that the
obligations may be less marketable than comparable obligations of U.S. banks,
that a foreign jurisdiction might impose withholding taxes on interest income
payable on those obligations, that foreign deposits may be seized or
nationalized, that 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 that 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. In that connection, foreign banks are not
subject to examination by any U.S. Government agency or instrumentality.
Privately Issued Securities (Rule 144A). The Growth Stock
Master Portfolio may invest in privately issued securities which may be resold
only in accordance with Rule 144A under the Securities Act of 1933 ("Rule 144A
Securities"). Rule 144A Securities are restricted securities that are not
publicly traded. Accordingly, the liquidity of the market for specific Rule
144A Securities may vary. Wells Fargo Bank, as sub-adviser pursuant to
guidelines established by the MSIT's Board of Trustees and subject to the
overall supervision of BGFA as investment adviser, evaluates the liquidity
characteristics of each Rule 144A Security proposed for purchase by the Master
Portfolio on a case-by-case basis and considers the following factors, among
others, in its evaluation: (1) the frequency of trades and quotes for the Rule
144A Security; (2) the number of dealers willing to purchase or sell the Rule
144A Security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the Rule 144A Security; and (4) the nature of
the Rule 144A Security and the nature of the marketplace trades (e.g., the time
needed to dispose of the Rule 144A Security, the method of soliciting offers
and the mechanics of transfer). The Growth Stock Master Portfolio does not
intend to invest more than 5% of its net assets in Rule 144A Securities during
the coming year.
Municipal Bonds. The Master Portfolios may invest in
municipal bonds. The two principal classifications of municipal bonds are
"general obligation" and "revenue" bonds. Municipal bonds are debt obligations
issued to obtain funds for various public purposes, including the construction
of a wide range of public facilities such as bridges, highways, housing,
7
<PAGE> 33
hospitals, mass transportation, schools, streets, and water and sewer works.
Other purposes for which municipal bonds may be issued include the refunding of
outstanding obligations and obtaining funds for general operating expenses or
to loan to other public institutions and facilities. Industrial development
bonds are a specific type of revenue bond backed by the credit and security of
a private user. Certain types of industrial development bonds are issued by or
on behalf of public authorities to obtain funds to provide privately-operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal. Each Master Portfolio may not
invest 25% or more of its assets in industrial development bonds. Assessment
bonds, wherein a specially created district or project area levies a tax
(generally on its taxable property) to pay for an improvement or project may be
considered a variant of either category. There are, of course, other
variations in the types of municipal bonds, both within a particular
classification and between classifications, depending on numerous factors.
Municipal Notes. Municipal notes include, but are not limited
to, tax anticipation notes ("TANs"), bond anticipation notes ("BANs"), revenue
anticipation notes ("RANs") and construction loan notes. Notes sold as interim
financing in anticipation of collection of taxes, a bond sale or receipt of
other revenues are usually general obligations of the issuer.
TANs. An uncertainty in a municipal issuer's capacity to
raise taxes as a result of a decline in its tax base or a rise in delinquencies
could adversely affect the issuer's ability to meet its obligations on
outstanding TANs. Furthermore, some municipal issuers mix various tax proceeds
into a general fund that is used to meet obligations other than those of the
outstanding TANs. Use of such a general fund to meet various obligations could
affect the likelihood of making payments on TANs.
BANs. The ability of a municipal issuer to meet its
obligations on its BANs is primarily dependent on the issuer's adequate access
to the longer term municipal bond market and the likelihood that the proceeds
of such bond sales will be used to pay the principal of, and interest on, BANs.
RANs. A decline in the receipt of certain revenues, such as
anticipated revenues from another level of government, could adversely affect
an issuer's ability to meet its obligations on outstanding RANs. In addition,
the possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.
The values of outstanding municipal securities will vary as a
result of changing market evaluations of the ability of their issuers to meet
the interest and principal payments (i.e., credit risk). Such values also will
change in response to changes in the interest rates payable on new issues of
municipal securities (i.e., market risk). Should such interest rates rise, the
value of outstanding securities, including those held by a Master Portfolio,
will decline and (if purchased at par value) they would sell at a discount. If
interests rates fall, the value of outstanding securities will generally
increase and (if purchased at par value) they would sell at a premium.
8
<PAGE> 34
Changes in the value of municipal securities held by a Master Portfolio arising
from these or other factors will cause changes in the net asset value per share
of such Master Portfolio.
Investments in Warrants. Each Master Portfolio may invest up
to 5% of its net assets at the time of purchase in warrants (other than those
that have been acquired in units or attached to other securities), and not more
than 2% of its net assets in warrants which are not listed on the New York or
American Stock Exchange. Warrants represent rights to purchase securities at a
specific price valid for a specific period of time. The prices of warrants do
not necessarily correlate with the prices of the underlying securities. Each
Master Portfolio may purchase warrants only on securities in which such Master
Portfolio may invest directly.
ITEM 14. MANAGEMENT OF MSIT.
The following information supplements and should be read in
conjunction with the Part A section entitled "Management of the Trust."
Trustees and Officers of MSIT, together with information as to their
principal occupations during at least the past five years, are below. The
address of each, unless otherwise indicated, is 111 Center Street, Little
Rock, Arkansas 72201. Each Trustee who is deemed to be an "interested person"
of MSIT, as defined in the 1940 Act, is indicated by an asterisk.
<TABLE>
<CAPTION>
Principal Occupations
Name, Address and Age Position During Past 5 Years
- --------------------- -------- ---------------------
<S> <C> <C>
Jack S. Euphrat, 74 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 45 Trustee, Senior Vice President
Chairman and of Stephens; Manager
President of Financial Services
Group; President of
Stephens Insurance
Services Inc.; Senior
Vice President of
Stephens Sports
Management Inc.; and
President of
Investors Brokerage
Insurance Inc.
</TABLE>
9
<PAGE> 35
<TABLE>
<S> <C> <C>
Thomas S. Goho, 54 Trustee T. B. Rose Faculty
321 Beechcliff Court Fellow-Business,
Winston-Salem, NC 27104 Wake Forest University
Calloway School of
Business and Accounting;
Associate Professor of
Finance of the School of
Business and Accounting
at Wake Forest University
since 1983.
*Zoe Ann Hines, 47 Trustee Senior Vice President of
Stephens and Director of
Brokerage Accounting; and
Secretary of Stephens Resource
Management.
*W. Rodney Hughes, 70 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 78 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 52 Trustee Private Investor; Real Estate
10 Legrae Street Developer; Chairman
Charleston, SC 29401 of Renaissance
Properties Ltd.;
President of Morse
Investment Corporation;
and Co-Managing Partner
of Main Street Ventures.
Richard H. Blank, Jr., 40 Chief Associate of Financial
Operating Services Group of
Officer, Stephens Sports Management
Secretary and Inc.; and Director of Capo Inc.
Treasurer
</TABLE>
10
<PAGE> 36
COMPENSATION TABLE
For the Fiscal Year Ended February 29, 1996
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ------------------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $0 $39,000
Trustee
*R. Greg Feltus 0 0
Trustee
Thomas S. Goho 0 39,000
Trustee
*Zoe Ann Hines 0 0
Trustee
*W. Rodney Hughes 0 36,250
Trustee
Robert M. Joses 0 38,250
Trustee
*J. Tucker Morse 0 33,000
Trustee
</TABLE>
Trustees of MSIT are compensated annually by MSIT and by all the
registrants in the fund complex for their services as indicated above and also
are reimbursed for all out-of-pocket expenses relating to attendance at board
meetings. Each of the Trustees and the Principal Officer of MSIT serves in the
identical capacity as Directors/Trustees and Principal Officer of MasterWorks
Funds Inc. ("MasterWorks", formerly, Stagecoach Inc.), Master Investment
Portfolio ("MIP"), Stagecoach Funds, Inc., Overland Express Funds, Inc.,
Stagecoach Trust, Life & Annuity Trust and Master Investment Trust, each of
which is a registered open-end management investment company and each of which,
prior to January 1, 1996 and the reorganization of WFNIA, was considered to be
in the same "fund complex," as such term is defined in Form N-1A under the 1940
Act, as the Company. Effective January 1, 1996, MIP, MasterWorks and MSIT are
considered to be members of the same fund complex and are no longer part of the
same fund complex as Stagecoach Funds, Inc., Overland Express Funds, Inc.,
Stagecoach Trust, Life & Annuity Trust and Master Investment Trust. The
Trustees are compensated by other Companies and Trusts within the fund complex
for their services as Directors/Trustees to such Companies and Trusts.
Currently the Trustees do not receive any retirement benefits or deferred
compensation from the Company or any other member of the fund complex.
11
<PAGE> 37
As of the date of this Part B, Trustees and Officers of MSIT as
a group beneficially owned less than 1% of the outstanding shares of MSIT.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of June 1, 1996, the Growth Stock Fund and Short-Intermediate
Term Fund of MasterWorks, 111 Center Street, Little Rock, Arkansas 72201, owned
approximately 99% of the outstanding voting securities of the Growth Stock
Master Portfolio and approximately 99% of the outstanding voting securities of
the Short-Intermediate Master Portfolio, respectively, and each Fund could be
considered a "controlling person" for purposes of the 1940 Act of the
corresponding Master Portfolio.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
Investment Adviser. The Master Portfolios of MSIT are advised
by BGFA pursuant to separate investment advisory contracts (the "BGFA Advisory
Contracts") each dated January 1, 1996. The BGFA Advisory Contracts provide
that BGFA shall furnish to each Master Portfolio investment guidance and policy
direction in connection with the daily portfolio management of such Master
Portfolio. Pursuant to the BGFA Advisory Contracts, BGFA furnishes to the
Board of Trustees of MSIT periodic reports on the investment strategy and
performance of the Master Portfolios. BGFA has agreed to provide to the Master
Portfolios, among other things, money market security and fixed-income
research, analysis and statistical and economic data and information concerning
interest rate and security market trends, portfolio composition and credit
conditions.
Each BGFA Advisory Contract will continue in effect for more
than two years from the date of execution provided the continuance is approved
annually (i) by the holders of a majority of the respective Master Portfolio's
outstanding voting securities or by the Board of Trustees of MSIT and (ii) by a
majority of the Trustees of MSIT who are not parties to the Advisory Contract
or "interested persons" (as defined in the 1940 Act) of any such party. The
Advisory Contracts may be terminated on 60 days' written notice by either party
and will terminate automatically upon assignment (as defined in the 1940 Act).
BGFA has engaged Wells Fargo Bank to provide sub-investment
advisory services to each Master Portfolio pursuant to separate sub-advisory
contracts between each Master Portfolio, BGFA and Wells Fargo Bank (each, a
"Sub- Advisory Contract"). As to each Master Portfolio, the applicable
Sub-Advisory Contract is subject to annual approval by (i) MSIT's Board of
Trustees or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding securities of such Master Portfolio, provided that in either event
the continuance also is approved by a majority of MSIT's Board of Trustees who
are not interested persons (as defined in the 1940 Act) of the Master Portfolio
or Wells Fargo Bank, by vote cast in person at a meeting called for the purpose
of voting on such approval. As to each Master Portfolio, the Sub-
12
<PAGE> 38
Advisory Contract is terminable without penalty, on 60 days' written notice, by
MSIT's Board of Trustees or by vote of the holders of a majority of such Master
Portfolio's interests. Each Sub-Advisory Contract terminates automatically
upon assignment (as defined in the 1940 Act).
Prior to January 1, 1996, Wells Fargo Bank served as investment
adviser to each Master Portfolio pursuant to an Investment Advisory Agreement
dated March 1, 1994 with MSIT. The terms of the Advisory Agreement were
identical in all material respects, other than the identity of the parties, to
each BGFA Advisory Agreement.
Advisory Fees Paid. For the period beginning May 26, 1994
(commencement of operations) and ended February 28, 1995 and the period
beginning March 1, 1995 and ended December 31, 1995, the Master Portfolios paid
to Wells Fargo Bank the advisory fees indicated below and Wells Fargo Bank
waived the indicated amounts. For the period beginning January 1, 1996 and
ended February 29, 1996, the Master Portfolios paid to BGFA the advisory fees
indicated below and BGFA waived the indicated amounts:
<TABLE>
<CAPTION>
May 26, 1994 - March 1, 1995 - January 1, 1996 -
February 28, 1995 December 31, 1995 February 29, 1996
----------------- ----------------- -----------------
Paid Waived Paid Waived Paid Waived
---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Growth Stock Master $283,463 $16,451 $662,204 $0 $164,817 $0
Portfolio
Short-Intermediate Term $ 10,673 $16,510 $ 47,460 $0 $ 9,923 $0
Master Portfolio
</TABLE>
Sub-Advisory Fees Paid. For the period beginning January 1,
1996 and ended February 29, 1996, BGFA paid to Wells Fargo Bank the
sub-advisory fees indicated below and Wells Fargo Bank waived the indicated
amounts:
<TABLE>
<CAPTION>
Fees Paid Fees Waived
--------- -----------
<S> <C> <C>
Growth Stock Master Portfolio $ 41,297 $0
Short-Intermediate Term Master Portfolio $ 2,208 $0
</TABLE>
Administrator. MSIT has retained Stephens as administrator.
Under the Administration Agreement with MSIT, Stephens, in connection
therewith, furnishes MSIT with office facilities, together with those ordinary
clerical and bookkeeping services that are not being furnished by BGFA or Wells
Fargo Bank. Stephens is not entitled to compensation for providing
administrative services to a Master Portfolio as long as Stephens receives fees
for providing similar services to a fund of another investment company which
invests all of its assets in such Master Portfolio. For the period from
commencement of operations until February 28, 1995 and for the fiscal year
ended February 29, 1996, the Master Portfolios did not pay any administrative
fees to Stephens.
13
<PAGE> 39
Custodian and Transfer and Dividend Disbursing Agent. BZW
Barclays Global Investors, N.A., ("BGI"), a wholly-owned subsidiary of BZW
Barclays Global Investors Holdings Inc., acts as custodian for MSIT. The
custodian, among other things, maintains a custody account or accounts in the
name of MSIT; receives and delivers all assets for MSIT upon purchase and upon
sale or maturity; collects and receives all income and other payments and
distributions on account of the assets of MSIT and pays all expenses of MSIT.
BGI is compensated for its services as custodian under the Advisory Contracts
for the Master Portfolios. BGI is not entitled to receive a fee for its
services as Custodian. For the fiscal year ended February 29, 1996, the Master
Portfolios did not pay any custody fees. Wells Fargo Bank acts as Transfer and
Dividend Disbursing Agent for MSIT and is not entitled to receive a fee for
such services.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Subject to policies established by MSIT's Board of Trustees and
subject to the overall supervision of BGFA, as investment adviser, Wells Fargo
Bank, as sub-investment adviser, is responsible for the Master Portfolio's
portfolio decisions and the placing of portfolio transactions. In placing
orders, it is the policy of MSIT to obtain the best overall terms available for
each Master Portfolio 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 Wells Fargo
Bank generally seeks reasonably competitive spreads or commissions, the Master
Portfolios will not necessarily be paying the lowest spread or commission
available. MSIT has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities.
Purchase and sale orders of the securities held by the Master
Portfolios may be combined with those of other accounts that Wells Fargo Bank
manages, and for which it has brokerage placement authority, in the interest of
seeking the most favorable overall net results. When Wells Fargo Bank
determines that a particular security should be bought or sold for a Master
Portfolio and other accounts managed by Wells Fargo Bank, Wells Fargo Bank
undertakes to allocate those transactions among the participants equitably.
Purchases and sales of securities by the Short-Intermediate Term
Master Portfolio usually will be principal transactions. Portfolio securities
normally will be purchased or sold from or to dealers serving as market makers
for the securities at a net price. The Master Portfolios also will purchase
portfolio securities in underwritten offerings and may purchase securities
directly from the issuer. Generally, municipal obligations, taxable money
market securities, adjustable rate mortgage securities ("ARMS") and
collateralized mortgage obligations ("CMOs") are traded on a net basis and do
not involve brokerage commissions. The cost of executing a Master Portfolio's
portfolio securities transactions consists primarily of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with MSIT are
prohibited from dealing with the MSIT 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.
14
<PAGE> 40
The Master Portfolios may purchase municipal obligations from
underwriting syndicates of which Stephens, BGFA or Wells Fargo Bank 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 MSIT's Board of
Trustees.
In assessing the best overall terms available for any
transaction, Wells Fargo Bank 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 the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. Wells Fargo Bank may cause a Master Portfolio to pay a
broker/dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker/deler for
effecting the same transaction or may give preference in executing portfolio
transaction to dealers that have provided statistical or other research
services to Wells Fargo Bank, provided that Wells Fargo Bank determines in good
faith that the overall commission is reasonable in relation to the value of the
brokerage and research services provided by such broker/dealer; viewed in terms
of either the particular transaction or the overall responsibilities of Wells
Fargo Bank. 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 Wells Fargo Bank
and does not reduce the advisory fees payable by the Master Portfolios. The
Board of Trustees will periodically review the commissions paid by the Master
Portfolios to consider whether the commissions paid over representative periods
of time appear to be reasonable in relation to the benefits inuring to the
Master Portfolios to consider whether the commissions paid over representative
periods of time appear to be reasonable in relation to the benefits inuring to
the Master Portfolios. 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 investment discetion is
exercised. Conversely, a Master Portfolio may be primary beneficiary of the
research or services received as a result of portfolio transactions effected
for such other account or investment company.
Broker/dealers utilized by Wells Fargo Bank may furnish
statistical, research and other information or services which are deemed by
Wells Fargo Bank to be beneficial to the Master Portfolios' investment
programs. Research services received from brokers supplement Wells Fargo
Bank'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
economies, securities, markets, specific industry groups and individual
companies, information on political developments; portfolio management
strategie; performance information on securities and information concerning
prices of securities; and information supplied by specialized services to Wells
Fargo Bank and to the Trust's Trustees 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.
The outside research assistance is useful to Wells Fargo Bank
since the brokers utilized by Wells Fargo Bank as a group tend to follow a
broader universe of securities and other matters than the staff of Wells Fargo
Bank can follow. In addition, this research provides Wells Fargo Bank with a
diverse perspective on financial markets. Research services which are provided
to Wells Fargo Bank by brokers are available for the benefit of all accounts
managed or advised by Wells Fargo Bank. In some cases, the research services
are available only from the broker providing such services. In other cases,
the research services may be obtainable from alternative sources in return for
cash payments. It is the opinion of Wells Fargo Bank that because the broker
research supplements rather than replaces their research, the receipt of such
research does not tend to decrease their expenses, but tends to improve the
quality of their investment advice. However, to the extent that Wells Fargo
Bank would have purchased any such research services had such services not been
provided by brokers, the expenses of such services to Wells Fargo Bank could be
considered to have been reduced accordingly. Certain research services
furnished could be considered to have been reduced accordingly. Certain
research services furnish by broker/dealers may be useful to Wells Fargo Bank
with clients other than the Master Portfolios. Similarly, any research
services received by Wells Fargo Bank through the placement of portfolio
transactions of other clients may be of value to Wells Fargo Bank in fulfilling
its obligations to the Master Portfolios. It is the opinion of Wells Fargo
Bank that this material is beneficial in supplementing their research and
analysis; and therefore, it may benefit the Master Portfolios by improving the
quality of Wells Fargo Bank's investment advice. The advisory fees paid by the
Master Portfolios are not reduced because Wells Fargo Bank receives such
services.
Some broker/dealers may indicate that the provision of research
services is dependent upon the generation of certain specified levels of
commissions and underwriting concessions by Wells Fargo Bank's clients,
including the Master Portfolios.
Brokerage Commissions. For the period from May 26, 1994
(commencement of operations) until February 28, 1995 and for the fiscal year
ended February 29, 1996 the Master Portfolios paid brokerage commissions in the
dollar amounts shown below. For the period ended February 28, 1995 and the
fiscal year ended February 29, 1996, none of the commissions were paid to
affiliated brokers.
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Growth Stock Master Portfolio $207,258 $355,046
Short-Intermediate Term Master Portfolio $ 0 $ 0
</TABLE>
Securities of Regular Broker/Dealers. On February 29, 1996, the
Master Portfolios owned securities of their "regular brokers or dealers" or
their parents, as defined in the 1940 Act, as follows:
<TABLE>
<CAPTION>
Master Portfolio Regular Broker Dealer Amount
- ---------------- --------------------- ------
<S> <C> <C>
Growth Stock Master Portfolio Goldman Sachs & Co. $3,734,000
Short-Intermediate Term Master Portfolio Goldman Sachs & Co. $ 280,000
</TABLE>
Portfolio Turnover. The portfolio turnover rates for the
Short-Intermediate Term Master Portfolio and the Growth Stock Master Portfolio
are generally not expected to exceed 300% and 200%, respectively. The
portfolio turnover rates for the Short-Intermediate Term Master Portfolio and
the Growth Stock Master Portfolio may result in higher transaction (i.e.
principal markup/markdown, brokerage and other transaction) costs than
comparable funds with
15
<PAGE> 41
lower portfolio turnover rates. The portfolio turnover rate of a Master
Portfolio will not be a limiting factor when BGFA deems portfolio changes
appropriate.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
MSIT is a business trust organized under the laws of Delaware on
October 28, 1993. In accordance with Delaware law and in connection with the
tax treatment sought by MSIT, MSIT's Declaration of Trust provides that its
investors would be personally responsible for MSIT's liabilities and
obligations, but only to the extent MSIT's property is insufficient to satisfy
such liabilities and obligations. The Declaration of Trust also provides that
MSIT shall maintain appropriate insurance (for example, fidelity bonding and
errors and omissions insurance) for the protection of MSIT, its investors,
Trustees, Officers, employees and agents covering possible tort and other
liabilities, and that investors will be indemnified to the extent they are held
liable for a disproportionate share of MSIT obligations. Thus, the risk of an
investor incurring financial loss on account of investor liability is limited
to circumstances in which both inadequate insurance exists and MSIT itself is
unable to meet its obligations.
The Declaration of Trust further provides that obligations of
MSIT are not binding upon the trustees individually but only upon the property
of MSIT and that the trustees will not be liable for any action or failure to
act, but nothing in the Declaration of Trust protects a trustee against any
liability to which the trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the trustee's office.
All interests of MSIT have equal voting rights and will be voted
in the aggregate, and not by Portfolio, except where voting by Portfolio is
required by law or where the matter involved only affects one Master Portfolio.
For example, a change in a Master Portfolio's fundamental investment policy
would be voted upon only by interestholders of the Master Portfolios involved.
Additionally, approval of an advisory contract is a matter to be determined
separately by a Master Portfolio. Approval by the interestholders of one
Master Portfolio is effective as to that Master Portfolio whether or not
sufficient votes are received from the interestholders of the other investment
portfolios to approve the proposal as to those investment portfolios. As used
in Part A and in this Part B, the term "majority," when referring to approvals
to be obtained from interestholders of a Master Portfolio, means the vote of
the lesser of (i) 67% of the interests of the Master Portfolio represented at a
meeting if the holders of more than 50% of the outstanding interests of the
Master Portfolio are present in person or by proxy, or (ii) more than 50% of
the outstanding interests of the Master Portfolio. The term "majority," when
referring to the approvals to be obtained from interestholders of MSIT as a
whole, means the vote of the lesser of (i) 67% of MSIT's outstanding interests
represented at a meeting if the holders of more than 50% of MSIT's outstanding
interests are present in person or by proxy, or (ii) more than 50% of MSIT's
outstanding interests. Interestholders are entitled to one vote for each full
interest held and fractional votes for fractional interests held. MSIT may
dispense with an annual meeting of interestholders in any year in which it is
not required to elect trustees under the 1940 Act.
16
<PAGE> 42
MSIT may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of its
investors (with the vote of each being in proportion to their respective
percentages of the beneficial interests in MSIT), except that if the trustees
of MSIT recommend such sale of assets, the approval by vote of a majority of
the investors (with the vote of each being in proportion to their respective
percentages of the beneficial interests in MSIT) will be sufficient. MSIT may
also be terminated (i) upon liquidation and distribution of its assets, if
approved by the vote of two-thirds of its investors (with the vote of each
being in proportion to the amount of their investment) or (ii) by the trustees
of MSIT by written notice to its investors. In the event of the liquidation or
dissolution of the MSIT, investors are entitled to receive their pro rata share
of all assets available for distribution.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in MSIT are issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in MSIT may only be made by registered broker/dealers or by
investment companies, insurance company separate accounts, common or commingled
trust funds, group trusts or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This registration statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
The net asset value of each Master Portfolio is determined by
the custodian on each day the relevant Master Portfolio is open.
Securities held by a Master Portfolio for which market
quotations are available are valued at latest prices. Securities for which the
primary market is a national securities exchange or the National Association of
Securities Dealers Automated Quotations National Market System are valued at
last sale prices. In the absence of any sale of such securities on the
valuation date and in the case of other securities, including U.S. Government
securities but excluding money market instruments maturing in 60 days or less,
the valuations are based on latest quoted bid prices. Money market instruments
maturing in 60 days or less are valued at amortized cost, with cost being the
value of the security on the preceding day (61st day). Futures contracts will
be marked to market daily at their respective settlement prices determined by
the relevant exchange. Options listed on a national exchange are valued at the
last sale price on the exchange on which they are traded at the close of the
NYSE, or, in the absence of any sale on the valuation date, at latest quoted
bid prices. Options not listed on a national exchange are valued at latest
quoted bid prices. Debt securities maturing in 60 days or less are valued at
amortized cost. In all cases, bid prices will be furnished by an independent
pricing service approved by the Board of Trustees. Prices provided by an
independent pricing service may be determined without exclusive reliance on
quoted prices and may take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Securities held under a repurchase agreement will be valued at a price
equal to the amount of the cash investment at
17
<PAGE> 43
the time of valuation on the valuation date. The market value of the
underlying securities shall be determined in accordance with the applicable
procedures, as described above, for the purpose of determining the adequacy of
collateral. All other securities and other assets of the Master Portfolios for
which current market quotations are not readily available are valued at fair
value as determined in good faith by Wells Fargo Bank, as sub-adviser, subject
to the overall supervision and review of BGFA, as adviser, and in accordance
with procedures approved by MSIT's Board of Trustees.
ITEM 20. TAX STATUS.
MSIT intends to qualify as a partnership under the Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, each investor in
MSIT will be taxable on its allocable share (as determined in accordance with
the governing instruments of MSIT) of MSIT's taxable income in determining the
investor's federal income tax liability. The determination of such share will
be made in accordance with the Code and regulations promulgated thereunder.
MSIT's taxable year-end is the last day of February.
Each Master Portfolio's assets, income and distributions are
managed in such a way that a regulated investment company investing in a Master
Portfolio will be able to satisfy the requirements of Subchapter M of the Code,
assuming that the investment company invests substantially all of its assets in
such Master Portfolio. Each Master Portfolio is treated as a non-publicly
traded partnership rather than a regulated investment company or a corporation
under the Code. As a non-publicly traded partnership under the Code, any
interest, dividends and gains or losses of a Master Portfolio will be deemed to
have been "passed through" to investors in such Master Portfolio. If a Master
Portfolio were to accrue but not distribute any interest, dividends or gains,
an investor would be deemed to have realized and recognized its proportionate
share of interest, dividends or gains without receipt of any corresponding
distribution. However, a Master Portfolio seeks to minimize recognition by
investors of interest, dividends and gains without a corresponding
distribution.
Investors' capital accounts will be adjusted on a daily basis to
reflect additional investments or withdrawals and any increase or decrease in
net asset value.
ITEM 21. UNDERWRITERS.
The distributor and exclusive placement agent for MSIT is
Stephens, which receives no additional compensation for serving in this
capacity. Registered broker/dealers and investment companies, insurance
company separate accounts, common and commingled trust funds, group trusts and
similar organizations and entities which constitute accredited investors, as
defined in the regulations adopted under the 1933 Act, may continuously invest
in MSIT.
ITEM 22. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
18
<PAGE> 44
ITEM 23. FINANCIAL INFORMATION.
KPMG Peat Marwick LLP has been selected as the independent
auditors for MSIT. KPMG Peat Marwick LLP provides audit services, tax return
preparation and assistance and consultation in connection with the review of
certain SEC filings. KPMG Peat Marwick LLP's address is Three Embarcadero
Center, San Francisco, California 94111.
The portfolio of investments, audited financial statements and
independent auditors' report for each of the Master Portfolios for the fiscal
year ended February 29, 1996, are hereby incorporated by reference to the
MasterWorks Funds Inc. Annual Report, as filed with the SEC on May 28, 1996.
The portfolio of investments, audited financial statements and independent
auditors report for each of the Master Portfolios are attached to all Part Bs
delivered to interestholders and prospective interestholders.
19
<PAGE> 45
APPENDIX
The following is a description of the ratings given by Moody's
and S&P to corporate and municipal bonds, municipal notes, and corporate and
municipal commercial paper.
Corporate and Municipal Bonds
Moody's: The four highest ratings for corporate and municipal
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. 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 and municipal 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.
Municipal Notes
Moody's: The highest ratings for state and municipal short-term
obligations are "MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG
3" in the case of an issue having a variable rate demand feature). Notes rated
"MIG 1" or "VMIG 1" are judged to be of the "best quality." Notes rated "MIG
2" or "VMIG 2" are of "high quality," with margins of protections "ample
although not as large as in the preceding group." Notes rated "MIG 3" or "VMIG
3" are of "favorable quality," with all security elements accounted for, but
lacking the strength of the preceding grades.
A-1
<PAGE> 46
S&P: The "SP-1" rating reflects a "very strong or strong
capacity to pay principal and interest." Notes issued with "overwhelming
safety characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
Corporate and Municipal Commercial Paper
Moody's: The highest rating for corporate and municipal
commercial paper is "P-1" (Prime-1). Issuers rated "P-1" have a "superior
capacity for repayment of short-term promissory obligations." Issuers rated
"P-2" (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 and municipal 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."
Corporate Notes
S&P: The two highest ratings for corporate notes are "SP-1" and
"SP-2." The "SP-1" rating reflects a "very strong or strong capacity to pay
principal and interest." Notes issued with "overwhelming safety
characteristics" will be rated "SP-1+." The "SP-2" rating reflects a
"satisfactory capacity" to pay principal and interest.
A-2
<PAGE> 47
MANAGED SERIES INVESTMENT TRUST
FILE NO. 811-8140
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The portfolio of investments, audited financial statements and
independent auditors' report for the fiscal year ended February 29, 1996 for
the Growth Stock and Short-Intermediate Term Master Portfolios are hereby
incorporated by reference to the MasterWorks Funds Inc. Annual Report, as filed
with the SEC on May 28, 1996.
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C><C>
1 - Declaration of Trust, incorporated by reference to the Registration Statement on Form N-
1A filed November 8, 1993.
2 - By-Laws, incorporated by reference to the Registration Statement on Form N-1A filed
November 8, 1993.
3 - Not Applicable
4 - Not Applicable.
5(a)(i) - Investment Advisory Contract between BZW Barclays Global Fund Advisors and the Trust on
behalf of the Growth Stock Master Portfolio, incorporated by reference to Amendment No.
4 to the Registration Statement, filed January 5, 1996.
(a)(ii) - Investment Advisory Contract between BZW Barclays Global Fund Advisors and the Trust on
behalf of the Short-Intermediate Term Master Portfolio, incorporated by reference to
Amendment No. 4 to the Registration Statement, filed January 5, 1996.
(a)(iii) - Sub-Advisory Contract by and among BZW Barclays Global Fund Advisors, Wells Fargo Bank,
N.A. and the Trust on behalf of the Growth Stock Master Portfolio, incorporated by
reference to Amendment No. 4 to the Registration Statement, filed January 5, 1996.
</TABLE>
C-1
<PAGE> 48
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C><C>
(a)(iv) - Sub- Advisory Contract by and among BZW Barclays Global Fund Advisors, Wells Fargo Bank,
N.A. and the Trust on behalf of the Short-Intermediate Term Master Portfolio,
incorporated by reference to Amendment No. 4 to the Registration Statement, filed
January 5, 1996.
5(b) - Administration Agreement with Stephens Inc., filed herewith.
6 - Placement Agent Agreement with Stephens Inc., filed herewith.
7 - Not Applicable
8 - Custody Agreement with BZW Barclays Global Investors, N.A., incorporated by reference to
Amendment No. 4 to the Registration, filed January 5, 1996.
9 - Agency Agreement with Wells Fargo Bank, N.A., filed herewith.
10 - Not Applicable
11 - Not Applicable
12 - Not Applicable
13(a) - Investment Letter, incorporated by reference to Amendment No. 2 to the Registration
Statement, filed June 27, 1995.
(b) - Investment Letter executed by Stephens Inc., incorporated by reference to Amendment No.
3 to the Registration Statement on Form N-1A filed July 19, 1995.
(c) - Investment Letter executed by Stagecoach Inc. on behalf of the National Tax-Free Money
Market Mutual Fund, incorporated by reference to Amendment No. 3 to the Registration
Statement on Form N-1A filed July 19, 1995.
(d) - Investment Letter executed by Stagecoach Inc. on behalf of the Overland National Tax-
Free Institutional Money Market Fund, incorporated by reference to Amendment No. 3 to
the Registration Statement on Form N-1A filed July 19, 1995.
14 - Not Applicable
</TABLE>
C-2
<PAGE> 49
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C><C>
15 - Not Applicable
16 - Not Applicable
27 - Financial Data Schedules for the Growth Stock and Short-Intermediate Term Master
Portfolios, incorporated by reference to the Form N-SAR, filed April 29, 1996.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant.
No person is controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities.
As of May 15, 1996, the number of record holders of the Registrant
were as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Growth Stock Master Portfolio 2
Short-Intermediate Term Master Portfolio 2
</TABLE>
Item 27. Indemnification.
Article V of the Registrant's Declaration of Trust limits the
liability and, in certain instances, provides for mandatory indemnification of
the Registrant's trustees, officers, employees, agents and holders of
beneficial interests in the Trust. In addition, the Trustees are empowered
under Section 3.9 of the Registrant's Declaration of Trust to obtain such
insurance policies as they deem necessary.
Item 28. Business and Other Connections of Investment Adviser.
BZW Barclays Global Fund Advisors ("BGFA") is a wholly owned
subsidiary of BZW Barclays Global Investors, N.A. ("BGI"; formerly, Wells Fargo
Institutional Trust Company). BGFA serves as investment adviser to the Trust's
Growth Stock and Short-Intermediate Term Master Portfolios, and to certain
other registered open-end management investment companies and various other
institutional investors.
The directors and officers of BGFA consist primarily of persons
who during the past two years have been active in the investment management
business of the former sub-adviser to the Trust, Wells Fargo Nikko Investment
Advisers ("WFNIA"), and, in some cases, the service business of BGI, the
custodian of the Trust's Master Portfolios. With the exception of Irving
C-3
<PAGE> 50
Cohen, each of the directors and executive officers of BGFA will also have
substantial responsibilities as directors and/or officers of BGI. To the
knowledge of the Trust, except as set forth below, none of the proposed
directors or executive officers of BGFA is or has been at any time during the
past two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- --------------------- --------------------------------
<S> <C>
Frederick L.A. Grauer Chairman and Director of WFNIA and WFITC
Chairman, Director 45 Fremont Street, San Francisco, CA 94105
Donald L. Luskin Chief Executive Officer of WFNIA's Defined Contribution Group
Vice Chairman & Director 45 Fremont Street, San Francisco, CA 94105
Irving Cohen Chief Financial Officer and Chief Operating Officer of Barclays Bank
Director PLC, New York Branch and Chief Operating Officer of Barclays Group, Inc.
(USA)*: previously Chief Financial Officer of Barclays de Zoete Wedd
Securities Inc. (1994)
222 Broadway, New York, NY 10038
Andrea M. Zolberti Chief Financial Officer of WFNIA and WFITC
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Chief Administrative Officer
Vincent J. Bencivenga Previously Vice President at State Street Bank & Trust Company
Chief Fiduciary Officer One Financial Center, Boston, MA 02111
</TABLE>
Wells Fargo Bank, N.A. ("Wells Fargo Bank"), a wholly owned
subsidiary of Wells Fargo & Company, serves as sub-investment adviser to the
Trust and, prior to January 1, 1996, served as investment adviser to the Trust.
Wells Fargo Bank currently serves as investment adviser or sub-investment
adviser to several other registered open-end management investment companies.
Wells Fargo Bank's business is that of a national banking association with
respect to which it conducts a variety of commercial banking and trust
activities.
To the knowledge of Registrant, none of the directors or executive
officers of Wells Fargo Bank, except those set forth below, is or has been at
any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
executive officers also hold various positions with and engage in business for
Wells Fargo & Company. Set forth below are the names and principal businesses
of the directors and executive officers of Wells Fargo Bank who are or during
the past two fiscal years have been engaged in any other business, profession,
vocation or employment of a substantial nature for their own account or in the
capacity of director, officer, employee, partner or trustee. All the directors
of Wells Fargo Bank also serve as directors of Wells Fargo & Company.
C-4
<PAGE> 51
<TABLE>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ------------------- ------------------------------------------
<S> <C>
H. Jesse Arnelle Senior Partner of Arnelle & Hastie
Director 455 Market Street
San Francisco, CA 94105
Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408
William R. Breuner General Partner in Breuner Associates, Breuner Properties and
Director Breuner-Pavarnick Real Estate Developers. Retired Chairman of
the Board of Directors of John Breuner Co.
2300 Clayton Road, Suite 1570
Concord, CA 94520
Vice Chairman of the California State Railroad
Museum Foundation
111 I Street
Old Sacramento, CA 95814
William S. Davila President and Director of The Vons Companies, Inc.
Director 618 Michillinda Avenue
Arcadia, CA 91007
Officer of Western Association of Food Chains
825 Colorado Blvd. #203
Los Angeles, CA 90041
Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065
Director of Tejon Ranch Co.
P.O. Box 1000
Lebec, CA 93243
Director of Turner Casting Corp.
P.O. Box 1099
Cudahy, CA 90201
Director of The Bakersfield Californian
P.O. Box 440
1707 I Street
Bakersfield, CA 93302
Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301
</TABLE>
C-5
<PAGE> 52
<TABLE>
<S> <C>
Chairman of the Board of Trustees of Whittier College
13406 East Philadelphia Avenue
P.O. Box 634
Whittier, CA 90608
Paul Hazen Chairman of the Board of Directors of
Chairman of the Wells Fargo & Company
Board of Directors 420 Montgomery Street
San Francisco, CA 94105
Director of Pacific Telesis Group
130 Kearny Street
San Francisco, CA 94108
Director of Phelps Dodge Corp.
2600 North Central Avenue
Phoenix, AZ 85004
Director of Safeway Inc.
Fourth and Jackson Streets
Oakland, CA 94660
Robert K. Jaedicke Accounting Professor and Dean Emeritus of
Director Graduate School of Business, Stanford University
MBA Admissions Office
Stanford, CA 94305
Director of Homestake Mining Co.
650 California Street
San Francisco, CA 94108
Director of California Water Service Company
1720 North First Street
San Jose, CA 95112
Director of Boise Cascade Corp.
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728
Director of Enron Corp.
1400 Smith Street
Houston, TX 77002
Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333
Paul A. Miller Chairman of the Executive Committee and Director of
Director Pacific Enterprises
633 West Fifth Street
Los Angeles, CA 90071
</TABLE>
C-6
<PAGE> 53
<TABLE>
<S> <C>
Trustee of Mutual Life Insurance Company of New York
1740 Broadway
New York, NY 10019
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Trustee of University of Southern California
University Park TGF 200
665 Exposition Blvd.
Los Angeles, CA 90089
Ellen M. Newman President of Ellen Newman Associates
Director 323 Geary Street, Suite 507
San Francisco, CA 94102
Chair of Board of Trustees of
University of California at San Francisco Foundation
250 Executive Park Blvd., Suite 2000
San Francisco, CA 94143
Director of American Conservatory Theater
30 Grant Avenue
San Francisco, CA 94108
Director of California Chamber of Commerce
1201 K Street, 12th Floor
Sacramento, CA 95814
Philip J. Quigley Chairman, Chief Executive Officer and
Director Director of Pacific Telesis Group
130 Kearney Street, Rm. 3700
San Francisco, CA 94108
Director of Varian Associates
3050 Hansen Way
P.O. Box 10800
Palo Alto, CA 94303
Carl E. Reichardt Chairman and Chief Executive Officer of the
Director Board of Directors of Wells Fargo & Company
420 Montgomery Street
San Francisco, CA 94105
Director of Ford Motor Company
The American Road
Dearborn, MI 48121
Director of Hospital Corporation of America,
HCA-Hospital Corp. of America
One Park Plaza
Nashville, TN 37203
</TABLE>
C-7
<PAGE> 54
<TABLE>
<S> <C>
Director of Pacific Gas and Elextric Company
77 Beale Street
San Francisco, CA 94105
Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355
Donald B. Rice President, Chief Operating Officer and Director of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067
Director of Vulcan Materials Company
One Metroplex Drive
Birmingham, AL 35209
Retired Secretary of the Air Force
Susan G. Swenson President and Chief Executive Officer of Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
Chang-Lin Tien Chancellor of University of California at Berkeley
Director UC at Berkeley
Berkeley, CA 94720
John A. Young President, Director and Chief Executive Officer of
Director Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104
William F. Zuendt Director of 3Com Corp.
President 5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052
Director of MasterCard International
888 Seventh Avenue
New York, NY 10106
Trustee of Golden Gate University
536 Mission Street
San Francisco, CA 94163
</TABLE>
C-8
<PAGE> 55
Item 29. Principal Underwriters.
(a) Stephens Inc., distributor for the Trust, does not
presently act as investment adviser for any other registered investment
companies, but does act as principal underwriter for Overland Express Funds,
Inc., Stagecoach Funds, Inc., MasterWorks Funds Inc., (formerly, Stagecoach
Inc.), Stagecoach Trust, Life & Annuity Trust, Nations Fund, Inc. and Nations
Fund Trust, Nations Fund Portfolios, Inc. and Nations Institutional Reserves
(formerly, The Capitol Mutual Funds), and is the exclusive placement agent for
Master Investment Trust, Master Investment Portfolio and Managed Series
Investment Trust, all of which are registered open-end management investment
companies, and has acted as principal underwriter for the Liberty Term Trust,
Inc. and the Nations Government Income Term Trust 2003, Inc., the Nations
Government Income Term Trust 2004, Inc. and the Managed Balance Target Maturity
Fund, Inc., which are closed-end management investment companies.
(b) Information with respect to each director and officer
of the principal underwriter is incorporated by reference to Form ADV and
Schedules A and D filed by Stephens Inc. with the Securities and Exchange
Commission pursuant to The Investment Advisers Act of 1940 (SEC File No.
501-15510).
(c) Not applicable.
Item 30. Location of Accounts and Records.
(a) The Registrant maintains accounts, books and other
documents required by Section 31(a) of the 1940 Act and the Rules thereunder
(collectively, "Records") at the offices of Stephens Inc., 111 Center Street,
Little Rock, Arkansas 72201.
(b) BGFA maintains all Records relating to its services as
investment adviser at 45 Fremont Street, San Francisco California 94105. BGI
maintains all Records relating to its services as custodian at the same
address.
(c) Wells Fargo Bank maintains all Records relating to its
services as sub-investment adviser beginning January 1, 1996, its services as
investment adviser and custodian for the period prior to January 1, 1996, and
its services as transfer and dividend disbursing agent at 525 Market Street,
San Francisco California 94105.
(d) Stephens maintains all Records relating to its services
as sponsor, administrator and placement agent at 111 Center Street, Little
Rock, Arkansas 72201.
Item 31. Management Services.
Other than as set forth under the captions "Item 5. Management of
the Trust" in the Prospectus constituting Part A of this Registration Statement
and "Item 16. Investment Advisory and Other Services" in the Statement of
Additional Information constituting
C-9
<PAGE> 56
Part B of this Registration Statement, Registrant is not a party to any
management-related service contract.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to hold a special meeting of its
shareholders for the purpose of voting on the question of
removal of a trustee or trustees if requested in writing by
the holders of at least 10% of each Master Portfolio, the
outstanding voting securities of Master Investment Trust
and to assist in communicating with other shareholders as
required by Section 16(c) of the Investment Company Act of
1940.
C-10
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Little Rock, State of Arkansas, on the 26th day
of June, 1996.
MANAGED SERIES INVESTMENT TRUST
By: /s/ Richard H. Blank, Jr.
-----------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer,
Secretary and Treasurer
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
* Chairman, President
- --------------------------------------- (Principal Executive
(R. Greg Feltus) Officer) and Trustee
/s/ Richard H. Blank, Jr. Chief Operating Officer,
- ---------------------------- Secretary and Treasurer
(Richard H. Blank, Jr.) (Principal Financial
Officer)
* Trustee
- ---------------------------------------
(Jack S. Euphrat)
* Trustee
- ---------------------------------------
(Thomas S. Goho)
* Trustee
- ---------------------------------------
(Zoe Ann Hines)
* Trustee
- ---------------------------------------
(W. Rodney Hughes)
* Trustee
- ---------------------------------------
(Robert M. Joses)
* Trustee
- ---------------------------------------
(J. Tucker Morse)
</TABLE>
June 26, 1996
*By: /s/ Richard H. Blank, Jr.
--------------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
<PAGE> 58
MANAGED SERIES INVESTMENT TRUST -- FILE NO.
811-8140 REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
EX-99.B5(b) Administration Agreement with Stephens Inc.
EX-99.B6 Placement Agent Agreement with Stephens Inc.
EX-99.B9 Agency Agreement with Wells Fargo Bank, N.A.
</TABLE>
1
<PAGE> 1
EXHIBIT 99.B5(b)
ADMINISTRATION AGREEMENT
MANAGED SERIES INVESTMENT TRUST
111 Center Street
Little Rock, Arkansas 72201
March 1, 1994
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Dear Sirs:
This will confirm the agreement between Managed Series Investment
Trust (the "Trust") on behalf of the Master Series listed on the attached
Appendix A (each a "Master Series") and Stephens Inc. (the "Administrator") as
follows:
1. The Trust is a registered open-end management investment
company currently consisting of eight investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios
(the "Master Series"). The Trust proposes to engage in the business of
investing and reinvesting the assets of the Master Series in the manner and in
accordance with the investment objective and restrictions specified in the
Trust's Registration Statement, as amended from time to time (the "Registration
Statement"), filed by the Trust under the Investment Company Act of 1940 (the
"1940 Act"). Copies of the documents referred to in the preceding sentence
have been furnished to the Administrator. Any amendments to those documents
shall be furnished to the Administrator promptly.
2. The Trust is engaging the Administrator to provide the
administrative services specified elsewhere in this agreement, subject to the
overall supervision of the Board of Trustees of the Trust. Pursuant to an
advisory contract between the Trust and Wells Fargo Bank, N.A. (the "Adviser")
on behalf of each Master Series, the Trust has engaged the Adviser to manage
the investing and reinvesting of the assets of the Master Series and to provide
advisory services.
3. The Administrator shall, at its expense, provide the
following administrative services in connection with the operations of the
Trust and the Master Series: (a) furnishing office space and certain
facilities required for conducting the business of the Master Series; (b)
general supervision of the operation of the Master Series, including
coordination of the services performed by the Trust's investment adviser,
transfer and dividend disbursing agent, shareholder servicing agents,
custodians, independent accountants and legal counsel; regulatory compliance,
including the compilation of information for documents such as reports to, and
filings with, the Securities and Exchange Commission and state securities
commissions; and preparation of proxy statements and reports for the holders of
beneficial interests ("Interests") of the Master Series ("Holders"); (c) the
compensation of the Trust's trustees, officers and employees who are affiliated
with the Administrator; (d) general supervision relating to the compilation of
data required for the preparation of periodic reports on the performance of its
obligations under this agreement and statements of the Master Series that are
distributed to the Trust's officers and Board of Trustees and the preparation
of
<PAGE> 2
such additional reports and information as the Trust's Board of Trustees or
officers shall reasonably request; and (e) all other administrative services
reasonably necessary for the operation of the Master Series, other than those
services that are to be provided by the Adviser pursuant to the Advisory
Contracts and by the Trust's transfer and dividend disbursing agent.
4. Except as provided in the Trust's advisory contracts and
administration agreement, the Trust shall bear all costs of its operations,
including the compensation of its trustees who are not affiliated with the
Adviser, the Administrator or any of their affiliates; advisory and
administration fees; governmental fees; interest charges; taxes; fees and
expenses of its independent accountants, legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Interests; expenses of
preparing and printing any certificates, prospectuses (except the expense of
printing and mailing prospectuses used for promotional purposes), Holders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of trustees, officers and employees; office supplies; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio securities transactions; fees and expenses of any custodian,
including those for keeping books and accounts and calculating the net asset
value per Interest of each Master Series; expenses of Holders' meetings;
expenses relating to the issuance, registration and qualification of Interests
of the Master Series; pricing services, if any; organizational expenses; and
any extraordinary expenses. Expenses attributable to one or more, but not all,
of the Master Series are charged against the assets of the Master Series.
General expenses of the Trust are allocated among the Master Series in a manner
proportionate to the net assets of each Master Series, on a transactional basis
or on such other basis as the Board of Trustees deems equitable.
5. The Administrator shall give the Trust the benefit of the
Administrator's best judgment and efforts in rendering services under this
agreement. As an inducement to the Administrator's undertaking to render these
services, the Trust agrees that the Administrator shall not be liable under
this agreement for any mistake in judgment or in any other event whatsoever
except for lack of good faith, provided that nothing in this agreement shall be
deemed to protect or purport to protect the Administrator against any liability
to the Trust or its Holders to which the Administrator would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Administrator's duties under this agreement or by reason of
reckless disregard of its obligations and duties hereunder.
6. The Administrator shall not be entitled to compensation for
providing administrative services to a Master Series so long as the
Administrator receives fees for providing similar services to a fund of another
registered investment company which invests all of its assets in the Master
Series.
7. This agreement shall become effective on its execution date
and shall thereafter continue in effect for a period of no less than three
years. Thereafter, this agreement may be terminated with respect to a Master
Series at any time, without the payment of any penalty, by a vote of a majority
of the Master Series' outstanding voting securities (as defined in the 1940
Act) and by a vote of a majority of the Trust's entire Board of Trustees on 60
days' written notice to the Administrator or by the Administrator on 60 days'
written notice to the Trust.
8. Except to the extent necessary to perform the
Administrator's obligations under this agreement, nothing herein shall be
deemed to limit or restrict the right of the Administrator, or any affiliate of
the Administrator, or any employee of the Administrator to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, firm, individual or association.
2
<PAGE> 3
9. This agreement shall be governed by and construed in
accordance with the laws of the State of Arkansas.
If the foregoing correctly sets forth the agreement between the
Trust and the Administrator, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MANAGED SERIES INVESTMENT TRUST
By: /s/RICHARD H. BLANK, JR.
---------------------------------------
Name: Richard H. Blank, Jr.
-------------------------------------
Title: Chief Operating Officer
-------------------------------------
ACCEPTED as of the date set forth above:
STEPHENS INC.
By: /s/RICHARD H. BLANK, JR.
-----------------------------------
Name: Richard H. Blank, Jr.
---------------------------------
Title: Vice President
--------------------------------
3
<PAGE> 4
Appendix A
Managed Series Investment Trust
California Tax-Free Intermediate Income Master Series
California Tax-Free Money Market Master Series
California Tax-Free Short-Term Income Master Series
Growth and Income Master Series
Growth Stock Master Series
Short-Intermediate Term Master Series
Tax-Free Intermediate Income Master Series
Tax-Free Money Market Master Series
4
<PAGE> 1
EXHIBIT 99.B6
MANAGED SERIES INVESTMENT TRUST
PLACEMENT AGENT AGREEMENT
March 1, 1994
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, MANAGED SERIES INVESTMENT TRUST (the
"Trust"), an open-end, diversified management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
organized as a Delaware business trust and consisting of the Master Series
named on Schedule 1, has agreed that Stephens Inc. ("Stephens") shall be the
exclusive placement agent (the "Placement Agent") for shares of beneficial
interests of the Trust ("Interests").
1. Services as Placement Agent.
1.1 Stephens will act as Placement Agent of the Interests
covered by the registration statement then in effect under the 1940 Act. In
acting as Placement Agent under this Placement Agent Agreement ("Agreement"),
neither Stephens nor its employees or agents shall make any offer or sale of
Interests in a manner which would require the Interests to be registered under
the Securities Act of 1933, as amended (the "1933 Act").
1.2 All activities by Stephens (and its employees and agents)
as Placement Agent of Interests shall comply with all applicable laws, rules
and regulations, including, without limitation, all rules and regulations
adopted pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission").
1.3 The Trust shall sell Interests through Stephens, as the
Trust's Placement Agent, and deliver, upon the terms set forth herein,
Interests that the Placement Agent orders from the Trust and for which the
Placement Agent has received and confirmed unconditional purchase orders. All
orders from the Placement Agent shall be subject to acceptance and confirmation
by the Trust. The Trust reserves the right to sell Interests to investors to
the extent that it or the Placement Agent receives purchase applications
therefor. The Placement Agent's right to accept purchase orders for Interests
or to make sales thereof shall not apply to Interests that may be offered by
the Trust to its Interest holders in connection with the reinvestment of cash
distributed to its Interest holders by the Trust, unless the Placement Agent is
otherwise notified by the Trust.
1.4 The Trust shall furnish from time to time for use in
connection with the sale of Interests such information with respect to the
Trust and Interests as Stephens may reasonably request. The Trust shall also
furnish Stephens upon request with: (a) unaudited semiannual statements of the
Trust's books and accounts prepared by the Trust, and (b) from time to time
such additional information regarding the Trust's financial or regulatory
condition as Stephens may reasonably request.
1
<PAGE> 2
1.5 The Trust represents to Stephens that all registration
statements filed by the Trust with the Commission under the 1940 Act with
respect to Interests have been prepared in conformity with the requirements of
such statute and the rules and regulations of the Commission thereunder. As
used in this Agreement, the term "registration statement" shall mean any
registration statement filed with the Commission, as modified by any amendments
thereto that at any time shall have been filed with the Commission by or on
behalf of the Trust. The Trust represents and warrants to Stephens that any
registration statement will contain all statements required to be stated
therein in conformity with such statute and the rules and regulations of the
Commission; that all statements of fact contained in any registration statement
will be true and correct in all material respects at the time of filing of such
registration statement or amendment thereto; and that no registration statement
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Interests. The Trust may, but shall not be
obligated to, prepare and file from time to time such amendment and/or
supplement to any registration statement as in the light of future developments
may, in the opinion of the Trust's counsel, be necessary or advisable. If the
Trust does not prepare and file such amendment and/or supplement within fifteen
days after receipt by the Trust of a written request from Stephens to do so,
Stephens may, at its option, terminate this Agreement. The Trust shall not
file any amendment and/or supplement to any registration statement without
giving Stephens reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendment and/or supplement to any registration statement
as the Trust may deem necessary, such right being in all respects absolute and
unconditional.
1.6 The Trust agrees to indemnify, defend and hold Stephens,
its several officers and directors, and any person who controls Stephens within
the meaning of Section 15 of the 1933 Act or Section 20 of the Securities and
Exchange Act of 1934, as amended (the "1934 Act") (for purposes of this
paragraph 1.6, collectively, "Covered Persons"), free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which any Covered Person may
incur under the 1933 Act, the 1934 Act, or otherwise, arising out of or based
on any untrue statement of a material fact contained in any registration
statement, private placement memorandum or other offering material ("Offering
Material") or arising out of or based on any omission to state a material fact
required to be stated in any Offering Material or necessary to make the
statements contained in any Offering Material not misleading; provided,
however, that the Trust's agreement to indemnify Covered Persons shall not be
deemed to cover any claims, demands, liabilities or expenses arising out of any
financial and other statements as are furnished in writing to the Trust by
Stephens in its capacity as Placement Agent for use in the answers to any items
of any registration statement or in any statements made in any Offering
Material, or arising out of or based on any omission or alleged omission to
state a material fact in connection with the giving of such information
required to be stated in such answers or necessary to make the answers not
misleading; and further provided that the Trust's agreement to indemnify
Stephens and the Trust's representations and warranties hereinbefore set forth
in paragraph 1.5 shall not be deemed to cover any liability to the Trust or its
investors to which a Covered Person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of a Covered Person's reckless disregard of its
obligations and duties under this Agreement. The Trust should be notified of
any action brought against a Covered Person, such notification to be given by
letter or by telegram addressed to the Trust at its principal office promptly
after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. The failure to so notify the Trust
of any such action shall not relieve the Trust from any liability, except to
the extent the Trust shall have been prejudiced by such failure, or from any
liability that the Trust may have to the Covered Person against whom such
action is brought by reason of any such untrue statement or omission, otherwise
than on
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account of the Trust's indemnity agreement contained in this paragraph. The
Trust will be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but in such case such defense shall be
conducted by counsel of good standing chosen by the Trust and approved by
Stephens, which approval shall not be unreasonably withheld. In the event the
Trust elects to assume the defense of any such suit and retain counsel of good
standing approved by Stephens, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them;
but in case the Trust does not elect to assume the defense of any such suit, or
in case Stephens reasonably does not approve of counsel chosen by the Trust,
the Trust will reimburse the Covered Person named as defendant in such suit,
for the fees and expenses of any counsel retained by Stephens or the Covered
Persons. The Trust's indemnification agreement contained in this paragraph and
the Trust's representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of Covered Persons, and shall survive the delivery of any
Interests. This agreement of indemnity will inure exclusively to Covered
Persons and their successors. The Trust agrees to notify Stephens promptly of
the commencement of any litigation or proceedings against the Trust or any of
its officers or Trustees in connection with the issue and sale of any
Interests.
1.7 Stephens agrees to indemnify, defend and hold the Trust,
its several officers and trustees, and any person who controls the Trust within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (for
purposes of this paragraph 1.7, collectively, "Covered Persons") free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands,
liabilities and any counsel fees incurred in connection therewith) that Covered
Persons may incur under the 1933 Act, the 1934 Act or common law or otherwise,
but only to the extent that such liability or expense incurred by a Covered
Person resulting from such claims or demands shall arise out of or be based on
any untrue statement of a material fact contained in information furnished in
writing by Stephens in its capacity as Placement Agent to the Trust for use in
the answers to any of the items of any registration statement or in any
statements in any other Offering Material or shall arise out of or be based on
any omission to state a material fact in connection with such information
furnished in writing by Stephens to the Trust required to be stated in such
answers or necessary to make such information not misleading. Stephens shall
be notified of any action brought against a Covered Person, such notification
to be given by letter or telegram addressed to Stephens at its principal office
promptly after the summons or other first legal process shall have been duly
and completely served upon such Covered Person. Stephens shall have the right
of first control of the defense of the action with counsel of its own choosing
satisfactory to the Trust if such action is based solely on such alleged
misstatement or omission on Stephens' part, and in any other event each Covered
Person shall have the right to participate in the defense or preparation of the
defense of any such action. The failure to so notify Stephens of any such
action shall not relieve Stephens from any liability, except to the extent the
Trust shall have been prejudiced by such failure, or from any liability that
Stephens may have to Covered Persons by reason of any such untrue or alleged
untrue statement, or omission or alleged omission, otherwise than on account of
Stephens' indemnity agreement contained in this paragraph.
1.8 No Interests shall be offered by either Stephens or the
Trust under any of the provisions of this Agreement and no orders for the
purchase or sale of Interests hereunder shall be accepted by the Trust if and
so long as the effectiveness of the registration statement or any necessary
amendments thereto shall be suspended under any of the provisions of the 1940
Act; provided, however, that nothing contained in this paragraph shall in any
way restrict or have an application to or bearing on the Trust's obligation to
redeem Interests from any investor in accordance with the provisions of the
Trust's registration statement or Declaration of Trust, as amended from time to
time.
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1.9 The Trust agrees to advise Stephens as soon as reasonably
practical by a notice in writing delivered to Stephens or its counsel:
(a) of any request by the Commission for amendments to
the registration statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of
any stop order suspending the effectiveness of the registration statement then
in effect or the initiation by service of process on the Trust of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement then in effect
or that requires the making of a change in such registration statement in order
to make the statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement that may from time to time be filed
with the Commission.
For purposes of this paragraph 1.9, informal requests by or acts
of the Staff of the Commission shall not be deemed actions of or requests by
the Commission.
1.10 Stephens agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Trust, all records
and other information not otherwise publicly available relative to the Trust
and its prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where Stephens may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested by the Trust.
1.11 In addition to Stephens' duties as Placement Agent, the
Trust understands that Stephens may, in its discretion, perform additional
functions in connection with transactions in Interests.
The processing of Interest transactions may include, but is not
limited to, compilation of all transactions from Stephens' various offices;
creation of a transaction tape and timely delivery of it to the Trust's
transfer agent for processing; reconciliation of all transactions delivered to
the Trust's transfer agent; the recording and reporting of these transactions
executed by the Trust's transfer agent in customer statements; rendering of
periodic customer statements; and the reporting of IRS Form 1099 information at
year end, if required.
Stephens may also provide other investor services, such as
communicating with Trust investors and other functions in administering
customer accounts for Trust investors.
Stephens understands that these services may result in cost
savings to the Trust or to the Trust's investment adviser and neither the Trust
nor the Trust's investment adviser will compensate Stephens for all or a
portion of the costs incurred in performing functions in connection with
transactions in Interests. Nothing herein is intended, nor shall be construed,
as requiring Stephens to perform any of the foregoing functions.
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2. Term.
This Agreement shall become effective on the date first above
written and, unless sooner terminated as provided herein, shall continue until
its second anniversary and thereafter shall continue automatically for
successive annual periods, provided such continuance is specifically approved
at least annually by (i) the Trust's Board of Trustees or (ii) by a vote of a
majority (as defined in the 1940 Act) of the Trust's outstanding voting
securities, provided that in either event the continuance is also approved by
the majority of the Trust's Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust and who have no direct or indirect financial
interest in this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without
penalty, on not less than 60 days' notice, by the Board, by vote of a majority
(as defined in the 1940 Act) of the Trust's outstanding voting securities, or
by Stephens. This Agreement also will terminate automatically in the event of
its assignment (as defined in the 1940 Act and the rules thereunder).
3. Representations and Warranties.
Stephens and the Trust each hereby represents and warrants to the
other that it has all requisite authority to enter into, execute, deliver and
perform its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
4. Concerning Applicable Provisions of Law, etc.
This Agreement shall be subject to all applicable provisions of
law, including the applicable provisions of the 1940 Act, and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control.
This Agreement is executed and delivered in Little Rock, Arkansas
and the laws of the State of Arkansas shall, except to the extent that any
applicable provisions of federal law shall be controlling, govern the
construction, validity and effect of this Agreement, without reference to
principles of conflicts of law.
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If the contract set forth herein is acceptable to you, please so
indicate by executing the enclosed copy of this Agreement and returning the
same to the undersigned, whereupon this Agreement shall constitute a binding
contract between the parties hereto effective at the closing of business on the
date hereof.
Yours very truly,
MANAGED SERIES INVESTMENT
TRUST
BY: /s/Richard H. Blank, Jr.
---------------------------------------
Name: Richard H. Blank, Jr.
-------------------------------------
Title: Chief Operating Officer
-------------------------------------
Accepted:
STEPHENS INC.
BY: /s/Richard H. Blank, Jr.
--------------------------------
Name: Richard H. Blank, Jr.
------------------------------
Title: Vice President
----------------------------
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SCHEDULE 1
Name of Master Series
California Tax-Free Intermediate Income Master Series
California Tax-Free Money Market Master Series
California Tax-Free Short-Term Income Master Series
Growth and Income Master Series
Growth Stock Master Series
Short-Intermediate Term Master Series
Tax-Free Intermediate Income Master Series
Tax-Free Money Market Master Series
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EXHIBIT 99.B9
AGENCY AGREEMENT
This agreement is made and entered into as of this 1st day of March, 1994
(the "Agreement"), by and between MANAGED SERIES INVESTMENT TRUST, a registered
diversified management investment company established in the State of Delaware
(the "Trust"), and Wells Fargo Bank, N.A., a national association ("Agent"),
for transfer agency and dividend disbursing services as follows:
I. SERVICES.
A. Appointment of Agent. The Trust hereby appoints Agent as
its transfer and dividend disbursing agent for the California Tax-Free
Intermediate Income Master Series, California Tax-Free Money Market Master
Series, California Tax-Free Short-Intermediate Term Income Master Series,
Growth and Income Master Series, Growth Stock Master Series, Short-Intermediate
Term Master Series, Tax-Free Intermediate Income Master Series, and Tax-Free
Money Market Master Series (individually and collectively, the "Master Series")
and Agent accepts such appointment.
B. Description of Services. Agent agrees to provide the Trust
with the facilities and services described and set forth on Schedule A attached
hereto and incorporated herein by reference.
C. Compensation. Agent shall not be entitled to compensation
for providing services under this Agreement so long as it receives fees for
providing similar services to funds of another registered investment company
which invest all of their assets in the series of the Trust.
II. EXPENSES. The Trust shall promptly reimburse Agent for all
reasonable out-of-pocket expenses incurred by Agent in connection with the
performance of services under this Agreement, including, without limitation,
the following:
A. Postage, including first class mail insurance in connection
with mailing share certificates, express delivery, etc.;
B. Envelopes, check forms, continuous forms, forms for reports
and statements, stationery and other similar supplies;
C. Fees and costs of outside legal counsel employed by Agent;
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D. Banking services, fees, and costs for wire transfers,
deposit accounts, etc.;
E. Expenses of fidelity and liability insurance and bonding;
F. Fees and costs relating to the use, licensing, development
or implementation of data processing software used by or for the Trust;
G. Data transmission expenses;
H. Costs and microfilm/microfiche; and
I. Costs for telephone lines and equipment.
III. TERM. This Agreement shall become effective as of the date first
above written and shall continue until terminated pursuant to its provisions.
IV. INSURANCE. Agent agrees to procure and maintain such fidelity
bond coverage as may be required by the Investment Company Act of 1940 (the
"1940 Act"), in the amounts and with such deductibles as are required by or
permitted under the 1940 Act, as it may be amended from time to time.
V. REGISTRATION AND COMPLIANCE.
A. Agent represents that it is registered as a transfer agent
with the Securities and Exchange Commission ("SEC") pursuant to Section 17A of
the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations promulgated thereunder, and Agent agrees to maintain said
registration current and comply with all of the requirements of the Exchange
Act, rules and regulations during the term of this Agreement.
B. The Trust represents that it is a diversified management
investment company registered with the SEC in accordance with the 1940 Act and
the rules and regulations promulgated thereunder. The Trust is authorized to
offer and sell its shares pursuant to the 1940 Act and the rules and
regulations promulgated thereunder. The Trust will furnish Agent with a list
of those jurisdictions in the United States and elsewhere in which it is
authorized to offer and sell its shares to the general public and will maintain
the currency of such list by amendment. The Trust agrees promptly to advise
Agent of any change in or limitation upon its authority to carry on business as
an investment company pursuant to the 1940 Act, the Exchange Act and the
statutes, rules and regulations of each and every jurisdiction to which it is
subject.
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VI. DOCUMENTATION. The Trust and Agent shall each supply to the other
upon request such documentation as is required by them to carry out their
respective obligations under this Agreement including, but not limited to,
articles of incorporation, declarations of trust, bylaws, codes of ethics,
registration statements, permits, financial reports, third party audits,
certificates of authority, computer tapes and related items.
VII. PROPRIETARY INFORMATION. It is agreed that all records and
documents, excepting computer data processing programs and any related
documentation used or prepared by, or on behalf of Agent for the performance of
its services hereunder, are the property of the Trust and shall be open to
audit or inspection by the Trust or its agents during the normal business hours
of Agent, shall be maintained in a manner designed to preserve the
confidentiality thereof and to comply with applicable federal and state laws
and regulations, and shall, in whole or any specified part, be surrendered to
the Trust or its duly authorized agents upon receipt by Agent of reasonable
notice of and request therefor.
VIII. INDEMNITY. The Trust shall indemnify and hold Agent harmless
against any losses, claims, damages, liabilities or expenses (including
reasonable attorney's fees and expenses) resulting from any claim, demand,
action or suit brought by any person other than the Trust (including an
interestholder naming the Trust as a party) and not resulting from Agent's bad
faith, willful misfeasance, reckless disregard of its obligations and duties,
gross negligence or breach of this Agreement, and arising out of, or in
connection with:
A. Agent's performance hereunder;
B. Any error or omission in any record (including but not
limited to magnetic tapes, computer printouts, hard copies and microfilm or
microfiche copies) delivered, or caused to be delivered, by the Trust to Agent
in connection with this Agreement;
C. Bad faith, willful misfeasance, reckless disregard of its
obligations and duties or negligence of the Trust, or Agent's acting upon any
instructions reasonably believed by it to have been properly executed or
communicated by any person duly authorized by the Trust;
D. Agent's acting in reliance upon advice given by counsel for
Agent or upon advice reasonably believed by it to have been given by counsel
for the Trust; or
E. Agent's acting in reliance upon any instrument reasonably
believed by it to have been genuine and signed, countersigned or executed by
the proper person(s) in accordance with the currently effective certificate(s)
of authority delivered to Agent by the Trust.
In the event that Agent requests the Trust to indemnify or
hold it harmless hereunder, agent shall use its best efforts to inform the
Trust of the relevant facts concerning the matter in question. Agent shall
use reasonable care to identify and promptly notify the Trust
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concerning any matter which presents, or appears likely to present, a claim for
indemnification against the Trust.
The Trust shall have the election of defending Agent
against any claim which may be the subject of indemnification hereunder. In the
event the Trust so elects, it will so notify Agent and thereupon the Trust
shall take over defense of the claim, and (if so requested by the Trust) Agent
shall incur no further legal limit or other expenses related thereto for which
it would be entitled to indemnify hereunder; provided, however, that nothing
herein contained shall prevent Agent from retaining, at its own expense,
counsel to defend any claim. Except with the Trust's prior consent, Agent
shall in no event confess any claim or make any compromise in any matter in
which the Trust will be asked to indemnify or hold harmless hereunder.
IX. LIABILITY
A. Damages. Agent shall not be liable to the Trust, or any
third party, for punitive, exemplary, indirect, special or consequential
damages (even if Agent has been advised of the possibility of such damages)
arising from its obligations and the services provided under this Agreement,
including but not limited to loss of profits, loss of use of the interestholder
accounting system, cost of capital and expenses of substitute facilities,
programs or services.
B. Force Majeure. Anything in this Agreement to the contrary
notwithstanding, Agent shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts
of civil or military authority, national emergencies, work stoppage, fire,
flood, catastrophe, earthquake, acts of God, insurrection, war, riot, data
processing and communications downtime (where such downtime occurs for reasons
other than Agent's gross negligence or willful misconduct) or interruption of
power supply.
X. AMENDMENT. This Agreement and the Schedules attached hereto and
made a part hereof may be amended at any time, with or without interestholder
approval (except as otherwise required by law), in writing signed by each of
the parties hereto. Any change in the Trust's registration statements or other
documents of compliance or in the forms relating to any plan, program or
service offered by its current prospectuses which would require a change in
Agent's obligations hereunder shall be subject to Agent's approval, which
approval shall not be unreasonably withheld.
XI. TERMINATION. This Agreement may be terminated by either party
without cause upon one hundred twenty (120) days prior written notice to the
other, and at any time for cause in the event that such cause remains
unremedied for more than thirty (30) days after receipt by the other party of
written specification of such cause.
In the event the Trust designates a successor to any of Agent's
obligations hereunder, Agent shall, at the expense of and pursuant to the
direction of the Trust, transfer promptly to such
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successor all relevant books, records and other data of the Trust in the
possession or under the control of Agent.
XII. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then such clause or provision shall be
considered severed herefrom and the remainder of this Agreement shall continue
in full force and effect.
XIII. APPLICABLE LAW. This Agreement shall be subject to and construed
in accordance with the laws of the State of California.
XIV. ENTIRE AGREEMENT. Except as otherwise provided herein, this
Agreement constitutes the entire and complete agreement of the parties hereto
relating to the subject matter hereof and supersedes and merges all prior
contracts and discussions between the parties.
XV. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same Agreement and
each of which shall be deemed an original.
MANAGED SERIES INVESTMENT WELLS FARGO BANK, N.A.
TRUST
By: /s/ Richard H. Blank, Jr. By: /s/Robert Chebowski
-------------------------- ------------------------
Name: Richard H. Blank, Jr. Name: Robert Chebowski
------------------------ ----------------------
Title: Chief Operating Officer Title: Senior Vice President
----------------------- ---------------------
By: /s/ Henry J. Cavigli
-----------------------
Name: Henry J. Cavigli
---------------------
Title: Vice President
---------------------
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SCHEDULE A
SCHEDULE OF SERVICES
1. Share Transfer and Dividend Disbursing Services
2. Maintaining interestholder accounts, including processing new
accounts.
3. Posting address changes and other file maintenance for
interestholder accounts.
4. Posting all transactions to the interestholder file, including:
- Direct purchase
- Wire order purchases
- Direct redemptions
- Telephone redemption
- Wire order redemption
- Direct exchanges
- Dividend payments
- Dividend reinvestments
- Transfers
5. Preparing daily reconciliations of interestholder processing to
money movement instructions.
6. Issuing all checks and stopping and replacing checks.
7. Performing certain of the Trust's other mailings, including:
- Dividend and capital gain distributions
- 1099/year-end interestholder reporting
- Daily confirmations
- Furnishing certified list of interestholders (hard copy of
microfilm)
8. Maintaining and retrieving all required past history for
interestholders and providing research capabilities as follows:
- Daily monitoring of all processing activity to verify
back-up documentation
- Providing exception reports
- Microfilming
- Storing, retrieving and archiving records in accordance
with Rules 31a-1, 31a-2, and 31a-3 under the 1940 Act.
9. Reporting and remitting as necessary for state escheat requirements.
6
