<PAGE> 1
As filed with the Securities and Exchange Commission
on January 5, 1996
Registration No. 811-8162
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM N-1A
AMENDMENT NO. 3 TO
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
MASTER INVESTMENT PORTFOLIO
(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
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006-1812
================================================================================
<PAGE> 2
EXPLANATORY NOTE
This amendment relates to the LifePath 2000 Master Series, LifePath
2010 Master Series, LifePath 2020 Master Series, LifePath 2030 Master
Series, LifePath 2040 Master Series, Asset Allocation Master Series,
Bond Index Master Series, S&P 500 Index Master Series and U.S. Treasury
Allocation Master Series (the "Master Series"). This amendment is being filed
to reflect the addition of a new investment adviser and custodian for each
Master Series, to incorporate into the Part B each Master Series' unaudited
financial statements for the six month period ended August 31, 1995, to delete
the description of certain inactive Master Series from the registration
statement and to reflect other non-material changes.
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.
<PAGE> 3
MASTER INVESTMENT PORTFOLIO
STRUCTURED MASTER SERIES
ASSET ALLOCATION MASTER SERIES
U.S. TREASURY ALLOCATION MASTER SERIES
PART A
January 2, 1996
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
GENERAL. Master Investment Portfolio (the "Master Portfolio") is an open-end,
management investment company, organized on October 21, 1993 as a business
trust under the laws of the State of Delaware. The Master Portfolio is a
"series fund," which is a mutual fund divided into separate portfolios. By
this offering document, the Master Portfolio is offering two diversified
portfolios (each, a "Master Series"). Each Master Series is treated as a
separate entity for certain matters under the Investment Company Act of 1940,
as amended (the "1940 Act"), and for other purposes and a shareholder of one
Master Series is not deemed to be a shareholder of the other Master Series. As
described below, for certain matters Master Portfolio shareholders vote
together as a group; as to others they vote separately by Master Series. The
Master Portfolio has established nine other series which will be offered
pursuant to other offering documents. From time to time, other series may be
established and sold pursuant to other offering documents.
BZW Barclays Global Fund Advisors ("BGFA") serves as investment adviser
to each Master Series. Prior to January 1, 1996, Wells Fargo Bank, N.A.
("Wells Fargo Bank") served as each Master Series' investment adviser and Wells
Fargo Nikko Investment Advisors ("WFNIA") served as each Master Series'
sub-investment adviser. The Master Series do not currently retain a
sub-adviser. BGFA was created by the reorganization of WFNIA with and into an
affiliate of Wells Fargo Institutional Trust Company ("WFITC"). BGFA is now a
subsidiary of WFITC which, effective January 1, 1996, changed its name to BZW
Barclays Global Investors, N.A. ("BGI").
Beneficial interests in each Master Series are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"). Investments in a Master Series may be made only by investment companies
or certain other entities which 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.
<PAGE> 4
INVESTMENT OBJECTIVES.
o The ASSET ALLOCATION MASTER SERIES seeks to maximize total
return, consisting of capital appreciation and current income, without assuming
undue risk. This Master Series will follow an asset allocation strategy by
investing in a wide range of publicly traded common stocks, U.S. Treasury bonds
and money market instruments.
o The U.S. TREASURY ALLOCATION MASTER SERIES seeks to maximize
total return, consisting of capital appreciation and current income, without
assuming undue risk. This Master Series will follow an asset allocation
strategy by investing primarily among long-, intermediate- and short-term U.S.
Treasury securities.
The investment objective of each Master Series cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of such
Master Series' outstanding voting securities. The differences in objectives
and policies between the Master Series determine the types of portfolio
securities in which each Master Series invests and can be expected to affect
the degree of risk to which each Master Series is subject and the yield or
return of each Master Series. There can be no assurance that the investment
objective of each Master Series will be achieved.
MANAGEMENT POLICIES.
The Asset Allocation Master Series and U.S. Treasury Allocation Master Series
each follow an asset allocation strategy. For each Master Series, BGFA uses
proprietary investment models ("Asset Allocation Models"), developed by WFNIA
that analyze extensive financial and economic data, including risk, correlation
and expected return statistics, to recommend a portfolio allocation as
described below.
Asset Allocation Master Series will invest its assets among
three asset classes -- common stocks, U.S. Treasury bonds and money market
instruments -- as follows:
o COMMON STOCKS. The Master Series will invest in
the common stocks which compose the Standard & Poor's 500
Stock Index (*) (the "SAP 500 Index"). The SAP 500 Index is
composed of 500 common stocks, most of which are listed on
the New York Stock Exchange. The weightings of stocks in
the SAP 500 Index are based on each stock's relative total
market capitalization; that is, its market price per share
times the number of shares outstanding. No attempt is made
to manage this portion of the Master Series' portfolio in
the traditional sense using economic, financial and market
analysis. Instead, the Master Series uses for this portion
of its portfolio a computer program to determine which
securities are
__________________________________
**
S&P does not sponsor the Master Series, nor is it affiliated in any
way with Wells Fargo, WFNIA or the Master Series. "Standard & Poor's(R),"
"S&P(R)," "S&P 500(R)," and "Standard & Poor's 500(R)" are trademarks of
McGraw-Hill, Inc. The Master Series is not sponsored, endorsed, sold, or
promoted by S&P and S&P makes no representation or warranty, express or
implied, regarding theadvisability of investing in the Master Series.
2
<PAGE> 5
to be purchased or sold to replicate the total return
performance of the SAP 500 Index to the extent feasible.
The percentage of the Asset Allocation Master Series'
assets invested in each stock will be approximately the
same as the percentage such stock represents in the S&P 500
Index.
o U.S. Treasury Bonds. The Master Series will
invest in U.S. Treasury bonds with remaining maturities of
at least 20 years. Under normal market conditions, the
dollar-weighted average maturity of this portion of the
Master Series' portfolio is expected to range between 22
and 28 years. The Master Series will invest this portion
of its assets in an effort to replicate the total return
performance of the Lehman Brothers 20+ Year Treasury Index
which is composed of U.S. Treasury securities with 20 years
or more to maturity.
o Money Market Instruments. The Master Series will
invest in money market instruments.
U.S. Treasury Allocation Master Series will invest its
assets among three maturity classes -- long, intermediate and short-term -- of
U.S. Treasury debt securities and repurchase agreements in respect thereof as
follows:
o LONG-TERM U.S. TREASURY BONDS. The Master Series
will invest in U.S. Treasury bonds with remaining
maturities of at least 20 years. Under normal market
conditions, the dollar-weighted average maturity of this
portion of the Master Series' portfolio is expected to
range between 22 and 28 years.
o INTERMEDIATE-TERM U.S. TREASURY NOTES. The
Master Series will invest in U.S. Treasury notes and other
U.S. Treasury securities with remaining maturities ranging
from one to 20 years. Under normal market conditions, the
dollar-weighted average maturity of this portion of the
Master Series' portfolio is expected to range between three
and seven years.
o SHORT-TERM U.S. TREASURY BILLS. The Master Series
will invest in U.S. Treasury bills with remaining
maturities of one year or less. Under normal market
conditions, the dollar-weighted average maturity of this
portion of the Master Series' portfolio is expected to
range between 30 and 90 days.
It is a fundamental policy of the U.S. Treasury Allocation
Master Series that it will invest at least 65% of the value of its total assets
in U.S. Treasury securities.
CERTAIN FUNDAMENTAL POLICIES. Each Master Series may (i) borrow money to the
extent permitted under the 1940 Act except that each Master Series may borrow
up to 20% of the current value of its net assets for temporary purposes only in
order to meet redemptions; (ii) invest up to 5% of its total assets in the
obligations of any single issuer, except that up to 25% of the value of the
total assets of such Master Series may be invested and obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities may be
purchased, without regard to any such limitation; and (iii) invest up to 25% of
the value of its total assets in
3
<PAGE> 6
the securities of issuers in a particular industry or group of closely related
industries, subject to certain exceptions specified in Part B, including that
there is no limitation on the purchase of obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. This paragraph
describes fundamental policies that cannot be changed as to a Master Series
without approval by the holders of a majority (as defined in the 1940 Act) of
such Master Series' outstanding voting securities. See Item 13, "Investment
Objectives and Management Policies -- Investment Restrictions," in Part B.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES. Each Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors), 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 such purchase would cause the value of its investments
in all such companies to exceed 5% of the value of its total assets; (ii)
pledge, hypothecate, mortgage or otherwise encumber its assets, but only to
secure permitted borrowings; and (iii) invest up to 15% of the value of its net
assets in repurchase agreements providing for settlement in more than seven
days after notice and in other illiquid securities. See Item 13, "Investment
Objectives and Management Policies -- Investment Restrictions," in Part B.
RISK FACTORS.
GENERAL -- The net asset value per share of each Master Series is not fixed and
should be expected to fluctuate.
INVESTMENT TECHNIQUES -- Each Master Series may engage in various investment
techniques the use of which involves risk. See "Appendix--Investment
Techniques." Using these techniques may affect the degree to which a Master
Series' net asset value fluctuates.
EQUITY SECURITIES -- (Asset Allocation Master Series) Investors should be aware
that equity securities fluctuate in value, often based on factors unrelated to
the value of the issuer of the securities, and that fluctuations can be
pronounced. Changes in the value of a Master Series' portfolio securities will
result in changes in the value of such Master Series' shares and the Master
Series' yield and total return to investors.
FIXED-INCOME SECURITIES -- Investors should be aware that even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Thus, if interest rates have increased from the time a security
was purchased, such security, if sold, might be sold at a price less than its
cost. Similarly, if interest rates have declined from the time a security was
purchased, such security, if sold, might be sold at a price greater than its
cost. In either instance, if the security was purchased at face value and held
to maturity, no gain or loss would be realized. The value of U.S. Treasury
securities also will be affected by the supply and demand, as well as the
perceived supply and demand, for such securities. Long-term securities are
affected to a greater extent by interest rates than shorter-term securities.
4
<PAGE> 7
FOREIGN SECURITIES -- (Asset Allocation Master Series) Since the stocks of some
foreign issuers are included in the S&P 500 Index, the portfolios of the Asset
Allocation Master Series may contain securities of such foreign issuers which
may subject the Master Series to additional investment risks with respect to
those securities that are different in some respects from those incurred by a
fund which invests only in securities of domestic issuers. Such risks include
future political and economic developments, the possible imposition of
withholding taxes on income payable on the securities, the possible
establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect an investment in these
securities and the possible seizure or nationalization of foreign deposits.
See "Appendix -- Portfolio Securities -- Bank Obligations."
OTHER INVESTMENT CONSIDERATIONS -- Asset allocation and modeling strategies are
employed by BGFA for other investment companies and accounts advised or
sub-advised by BGFA. If these strategies indicate particular securities
should be purchased or sold, at the same time, by the Master Series and one or
more of these investment companies or accounts, available investments or
opportunities for sales are allocated equitably to each by the investment
advice. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Master Series or the price paid or
received by such Master Series.
Under normal market conditions, the portfolio turnover rate for
each Master Series is expected to be under 100%. A portfolio turnover rate of
100% would occur, for example, if all of a Master Series' securities were
replaced within one year. Higher portfolio turnover rates are likely to result
in comparatively greater brokerage commissions. In addition, short-term gains
realized from portfolio transactions are taxable to shareholders as ordinary
income. Portfolio turnover will not otherwise be a limiting factor in making
investment decisions.
Item 5. Management of the Master Portfolio.
INVESTMENT ADVISER -- Pursuant to separate investment advisory contracts (the
"BGFA Advisory Contracts") dated January 1, 1996, BGFA serves as investment
adviser to each Master Series. The BGFA Advisory Contracts are identical in
all material respects, other than the identity of the parties, to the
investment advisory contracts with Wells Fargo Bank, the prior investment
adviser to each Master Series. The investment advisory contracts with Wells
Fargo Bank and the sub-advisory contracts with WFNIA terminated as of January
1, 1996. BGFA is an indirect subsidiary of Barclays Bank PLC ("Barclays") and
is located at 45 Fremont Street, San Francisco, CA 94105. As of January 1,
1996, BGFA and its affiliates provide investment advisory services for over
$220 billion of assets under management.
The BGFA Advisory Contracts provide that BGFA shall furnish to
each Master Series investment guidance and policy direction in connection with
the daily portfolio management of such Master Series, subject to the
supervision of the Master Portfolios board of Trustees and in conformity with
Delaware law and the stated policies of each Master Series.
5
<PAGE> 8
Pursuant to the BGFA Advisory Contracts, BGFA furnishes to the Board of
Trustees of the Master Portfolio periodic reports on the investment strategy
and performance of each Master Series. BGFA will continue to employ
substantially the same WFNIA investment professionals that previously managed
the investment portfolio of each Master Series.
BGFA is entitled to receive monthly fees at the annual rate of
0.35% and 0.30% of the average daily net assets of the Asset Allocation and
U.S. Treasury Allocation Master Series, 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 Series and,
accordingly, have a favorable impact on the return and yield of such Master
Series.
BGFA may deal, trade and invest for its own account in the types
of securities in which the Master Series may invest. BGFA has informed the
Master Portfolio that in making its investment decisions it does not obtain or
use material inside information in its possession.
Prior to January 1, 1996, Wells Fargo Bank, a wholly owned
subsidiary of Wells Fargo & Company located at 420 Montgomery Street, San
Francisco, California 94105, served as each Master Series' investment adviser.
Wells Fargo Bank, one of the largest banks in the United States, was founded in
1852 and is the oldest bank in the western United States. As of January 1,
1996, Wells Fargo Bank provides investment advisory services for approximately
$33 billion of assets under management. Pursuant to an Investment Advisory
Agreement with the Master Portfolio, Wells Fargo Bank provided investment
guidance and policy direction in connection with the management of each Master
Series' assets, subject to the supervision of the Master Portfolio's Board of
Trustees and in conformity with Delaware law and the stated policies of such
Master Series.
Prior to January 1, 1996, Wells Fargo Bank engaged WFNIA, located
at 45 Fremont Street, San Francisco, California 94105, to provide
sub-investment advisory services to each Master Series. WFNIA was a general
partnership, which was dissolved on December 31, 1995, owned 50% by a wholly
owned subsidiary of Wells Fargo Bank and 50% by a subsidiary of The Nikko
Securities Co., Ltd. Pursuant to a Sub-Investment Advisory Agreement, WFNIA,
subject to the supervision and approval of Wells Fargo Bank, provided
investment advisory assistance and the day-to-day management of each Master
Series' assets, subject to the overall authority of the Master Portfolio's
Board of Trustees and in conformity with Delaware law and the stated policies
of such Master Series.
For the fiscal year ended February 28, 1995, Wells Fargo Bank was
paid monthly fees at the annual rate of 0.35% and 0.30% of the average acting
net assets of the Asset Allocation Master Series and U.S. Treasury Allocation
Master Series, respectively, for its services as investment adviser to such
Master Series. During the same period WFNIA was paid by Wells Fargo Bank
sub-advisory fees at the annual rate of 0.20% and 0.15%, of the average daily
net assets of the Asset Allocation Master Series and U.S. Treasury Allocation
Master Series, respectively.
6
<PAGE> 9
As investment adviser, Wells Fargo Bank was permitted to deal,
trade and invest for its own account in the types of securities in which the
Master Series invested and may have had deposit, loan and commercial banking
relationships with the issuers of securities purchased by a Master Series.
Wells Fargo Bank informed the Master Portfolio that in making its investment
decisions it does not obtain or use material inside information in its
possession.
Under the terms of the prior Investment Advisory Agreement, the
Master Portfolio was contractually obligated to pay a monthly fee on behalf of
each Master Series at the annual rate of 0.35% and 0.30% of the average daily
net assets of the Asset Allocation and U.S. Treasury Allocation Master Series,
respectively. Wells Fargo Bank was contractually obligated to pay WFNIA a
monthly fee at the annual rate of .20%, .15%, of the average daily net assets
of the Asset Allocation Master Series and U.S. Treasury Allocation Master
Series, respectively.
ADMINISTRATOR AND PLACEMENT AGENT -- Stephens Inc. ("Stephens"), located at 111
Center Street, Little Rock, Arkansas 72201, serves as the Master Portfolio's
administrator pursuant to an Administration Agreement with the Master
Portfolio. Under the Administration Agreement, Stephens provides general
supervision of the operation of the Master Portfolio and the Master Series,
other than the provision of investment advice, subject to the overall authority
of the Master Portfolio's Board of Trustees. The administrative services
provided to the Master Series also include coordination of the other services
provided to the Master Series, compilation of information for reports to the
Securities and Exchange Commission and state securities commissions,
preparation of proxy statements and interestholder reports, and general
supervision of data compilation in connection with preparing periodic reports
to the Master Portfolio's Board of Trustees and officers. Stephens also
furnishes office space and certain facilities to conduct the Master Portfolio's
business, and compensates the Master Portfolio's Trustees, officers and
employees who are affiliated with Stephens. Stephens is not entitled to
compensation for providing administrative services to a Master Series so long
as Stephens receives fees for providing similar services to a fund of another
registered investment company that invests all of its assets in the Master
Series. Stephens also serves as placement agent for each Master Series'
shares.
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 50 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.
CUSTODIAN AND TRANSFER AGENT. BGI serves as custodian to each Master Series
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 held 100% of WFITC's outstanding voting securities. Wells Fargo Bank
is the Master Portfolio's Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). Wells Fargo Bank performs transfer agency services at 525 Market
Street, San Francisco, California 94105.
7
<PAGE> 10
EXPENSES. All expenses incurred in the operation of the Master Portfolio are
borne by the Master Portfolio, except to the extent specifically assumed by
BGFA and Stephens (or, prior to January 1, 1996 by Wells Fargo Bank). Expenses
attributable to a particular Master Series are charged against the assets of
that Master Series; other expenses of the Master Portfolio are allocated among
the Master Series on the basis determined by the Board of Trustees, including,
but not limited to, proportionately in relation to the net assets of each
Master Series.
Item 6. Capital Stock and Other Securities.
The Master Portfolio is organized as a trust under the laws of the
State of Delaware. Investors in the Master Portfolio will each be liable for
all obligations of the Master Portfolio. However, the risk of an investor
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Master
Portfolio itself was unable to meet its obligations.
To date, the Board of Trustees has authorized the creation of
fourteen separate series. All consideration received by the Master Portfolio
for shares of one of the series and all assets in which such consideration is
invested will belong to that series (subject only to the rights of creditors of
the Master Portfolio) and will be subject to the liabilities related thereto.
The income attributable to, and the expenses of, one series are treated
separately from those of the other series. The Master Portfolio has the
ability to create, from time to time, new series without shareholder approval.
MASTER SERIES SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. MASTER SERIES SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. EACH MASTER SERIES' SHARE PRICE AND INVESTMENT
RETURN FLUCTUATE AND ARE NOT GUARANTEED.
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for the Master Portfolio to hold annual meetings of shareholders.
As a result, shareholders may not consider each year the election of Trustees
or the appointment of auditors. However, the holders of at least 10% of the
shares outstanding and entitled to vote may require the Master Portfolio to
hold a special meeting of shareholders for purposes of removing a Trustee from
office. Master Portfolio shareholders may remove a Trustee by the affirmative
vote of a majority of the Master Portfolio's outstanding voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders. Investments in
a Master Series may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value.
Under the Master Portfolio's anticipated method of operation as a
partnership, each Master Series will not be subject to any income tax.
However, each investor in a Master Series will be taxable on its share (as
determined in accordance with the governing instruments of the Master
Portfolio) of such Master Series' ordinary income and capital gain in
determining
8
<PAGE> 11
its 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 expected that each Master Series will be managed so that
each investment company that invests all of its assets in a Master Series will
qualify as a "regulated investment company" under the Code.
As of December 15, 1995, the Asset Allocation Fund and U.S.
Treasury Allocation Fund of Stagecoach Inc., 111 Center Street, Little Rock,
Arkansas 72201, owned approximately 100% of the voting securities of the Asset
Allocation Master Series and approximately 100% of the voting securities of the
U.S. Treasury Allocation Master Series, respectively, and each Fund could be
considered a controlling person of the corresponding Master Series for purposes
of the 1940 Act.
Item 7. Purchase of Securities.
Beneficial interests in the Master Series are issued solely in
private placement transactions which do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the Master
Series may be made only by investment companies or certain other entities which
are "accredited investors" within the meaning of Regulation D under the
Securities Act of 1933, as amended. 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 Securities Act of 1933, as amended.
Shares of each Master Series are sold on a continuous basis at the
net asset value per share next determined after an order in proper form is
received by the Transfer Agent. Net asset value per share for each Master
Series is determined as of the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York Time), on each day the New York
Stock Exchange is open for business (a "Business Day"). Net asset value per
share is computed by dividing the value of the Master Series' net assets (i.e.,
the value of its assets less liabilities) by the total number of shares of such
Master Series outstanding. The Master Series' investments are valued each
Business Day generally by using available market quotations or at fair value
determined in good faith by the Master Portfolio's Board of Trustees. For
further information regarding the methods employed in valuing each Master
Series' investments, see Item 19, "Purchase, Redemption and Pricing of
Securities," in Part B.
Item 8. Redemption or Repurchase.
An investor in the Master Portfolio may withdraw all or any
portion of its investment on any Business Day at the net asset value next
determined after a withdrawal request in proper form is furnished by the
investor to the Transfer Agent. When a request is received in proper form, the
Master Portfolio will redeem the shares at the next determined net asset value.
The Master Portfolio will make payment for all shares redeemed
within three days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by
9
<PAGE> 12
the rules of the Securities and Exchange Commission. Investments in a Master
Series 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 New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
Item 9. Pending Legal Proceedings.
Not applicable.
10
<PAGE> 13
APPENDIX
PORTFOLIO SECURITIES.
To the extent set forth in this offering document, each Master
Series may invest in the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- The Asset Allocation Master Series and the U.S.
Treasury Allocation Master Series may invest in various types of U.S.
Government obligations with remaining maturities of up to one year. 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 maturity. Treasury bills, the most frequently issued marketable
government securities, have a maturity 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 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- Each
Master Series, through its investment in money market instruments, may invest
in obligations issued or guaranteed by one or more foreign governments or any
of their political subdivisions, agencies or instrumentalities that are
determined by BGFA to be of comparable quality to the other obligations in
which such Master Series may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank. The percentage of a Master Series' assets
invested in securities issued by foreign governments will vary depending on the
relative yields of such securities, the economic and financial markets of the
countries in which the investments are made and the interest rate climate of
such countries.
A-2
<PAGE> 14
BANK OBLIGATIONS -- Each Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations of domestic banks, foreign subsidiaries of
domestic banks, foreign branches of domestic banks, and domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. With respect to such securities issued by foreign
branches of domestic banks, foreign subsidiaries of domestic banks, and
domestic and foreign branches of foreign banks, a Master Series may be subject
to additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay
the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations, bearing fixed, floating-
or variable-interest rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- Each Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the Master Series will consist only of direct obligations
which, at the time of their purchase, are (a) rated not lower than Prime-1 by
Moody's, A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies
having an outstanding unsecured debt issue currently rated not lower than Aa3
by Moody's or AA- by S&P, Fitch or Duff, or (c) if unrated, determined by WFNIA
to be of comparable quality to those rated obligations which may be purchased
by such Fund.
REPURCHASE AGREEMENTS -- Each Master Series may enter into repurchase
agreements, which involve the acquisition by a Master Series of an underlying
debt instrument, subject to the seller's obligation to repurchase, and such
Master Series' obligation to resell, the instrument at a fixed price usually
not more than one week after its purchase. The Master Portfolio's custodian or
sub-custodian has custody of, and holds in a segregated account, securities
acquired as collateral by a Master Series under a repurchase agreement.
Repurchase agreements are considered by the staff of the Securities and
Exchange Commission to be loans by the Master Series. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, each Master Series
enters into
A-3
<PAGE> 15
repurchase agreements only with federally regulated or insured banks or primary
government securities dealers reporting to the Federal Reserve Bank of New York
or, under certain circumstances, banks with total assets in excess of $5
billion or domestic broker/dealers with total equity capital in excess of $100
million. The Master Series enters into repurchase agreements only with respect
to securities of the type in which such Master Series may invest, including
government securities and mortgage-related securities, regardless of their
remaining maturities, and requires that additional securities be deposited with
the custodian or sub-custodian if the value of the securities purchased should
decrease below resale price. BGFA monitor on an ongoing basis the value of the
collateral to assure that it always equals or exceeds the repurchase price.
Certain costs may be incurred by a Master Series in connection with the sale of
the underlying securities if the seller does not repurchase them in accordance
with the repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on the
securities by a Master Series may be delayed or limited. Each Master Series
considers on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
UNREGISTERED NOTES -- Each Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the Securities Act of 1933, as amended, provided such investments are
consistent with such Master Series' investment objective.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- Each Master Series may purchase
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable rate demand notes include
master demand notes which are obligations that permit a Master Series to invest
fluctuating amounts, which may change daily without penalty, pursuant to direct
arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value. Accordingly, where these obligations are
not secured by letters of credit or other credit support arrangements, the
Master Series' right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Such obligations frequently are not
rated by credit rating agencies and each Master Series may invest in
obligations which are not so rated only if BGFA determines that at the time of
investment the obligations are of comparable quality to the other obligations
in which such Master Series may invest. BGFA, on behalf of each Master Series,
considers on an ongoing basis the creditworthiness of the issuers of the
floating-
A-4
<PAGE> 16
and variable-rate demand obligations in such Master Series' portfolio. No
Master Series will invest more than 15% of the value of its net assets in
floating- or variable-rate demand obligations as to which it cannot exercise
the demand feature on not more than seven days' notice if there is no secondary
market available for these obligations, and in other illiquid securities.
PARTICIPATION INTERESTS -- Each Master Series may purchase from financial
institutions participation interests in securities in which such Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series'
participation interest bears to the total principal amount of the security.
These instruments may have fixed, floating or variable-rates of interest. If
the participation interest is unrated, or has been given a rating below that
which is permissible for purchase by the Master Series, the participation
interest is backed by an irrevocable letter of credit or guarantee of a bank,
or the payment obligation otherwise will be collateralized by U.S. Government
obligations, or, in the case of unrated participation interests, BGFA must have
determined that the instrument is of comparable quality to those instruments in
which such Master Series may invest. Prior to a Master Series' purchase of any
such instrument backed by a letter of credit or guarantee of a bank, BGFA
evaluates the creditworthiness of the bank, considering all factors which it
deems relevant, which generally may include review of the bank's cash flow;
level of short-term debt; leverage; capitalization; the quality and depth of
management; profitability; return on assets; and economic factors relative to
the banking industry. For certain participation interests, the Master Series
has the right to demand payment, on not more than seven days' notice, for all
or any part of the Master Series' participation interest in the security, plus
accrued interest. As to these instruments, each Master Series intends to
exercise its right to demand payment only upon a default under the terms of the
security, as needed to provide liquidity to meet redemptions, or to maintain or
improve the quality of its investment portfolio.
MORTGAGE-RELATED SECURITIES -- Each Master Series may enter into repurchase
agreements with respect to mortgage-related securities ("MBSs"), representing
interests in a pool of loans secured by mortgages. The resulting cash flow
from these mortgages is used to pay principal and interest on the securities.
MBSs are assembled for sale to investors by various government-sponsored
enterprises such as the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC") or are guaranteed by such
governmental agencies as the Government National Mortgage Association ("GNMA").
Regardless of the type of guarantee, all MBSs are subject to interest rate risk
(i.e., exposure to loss due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also
known as "Ginnie Maes") which are guaranteed as to the full and timely payment
of principal and interest by GNMA and such guarantee is backed by the authority
of GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. As such, GNMA obligations are
general obligations of the United States and are backed by the full faith and
credit of the federal government. MBSs issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are neither backed by nor entitled to the
full faith and credit of the United States. FNMA is a government-sponsored
enterprise which is also a private corporation whose stock trades on the NYSE.
Fannie Maes are guaranteed as to timely payment of principal
A-5
<PAGE> 17
and interest by FNMA. FHLMC MBSs include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). FHLMC guarantees timely
payment of interest, but only ultimate payment of principal due under the
obligations it issues. Freddie Macs are not guaranteed by the United States or
by any Federal Home Loan Bank and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. FHLMC may, under certain
circumstances, remit the payment of principal at any time after default, but in
no event later than one year after the guarantee becomes payable.
ILLIQUID SECURITIES -- Each Master Series may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating- and variable-rate demand obligations as to which the
Master Series cannot exercise the related demand feature described above on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice. However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the Securities Act of 1933, as amended,
for certain of these securities held by a Master Series, such Master Series
intends to treat such securities as liquid securities in accordance with
procedures approved by the Master Portfolio's Board of Trustees. Because it is
not possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, the Master Portfolio's Board of Trustees
has directed WFNIA to monitor carefully each Master Series' investments in such
securities with particular regard to trading activity, availability of reliable
price information and other relevant information. To the extent that qualified
institutional buyers may periodically cease purchasing such restricted
securities pursuant to Rule 144A, a Master Series' investing in such securities
may have the effect of increasing the level of liquidity in such Master Series'
portfolio during such period.
INVESTMENT COMPANY SECURITIES -- Each Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which such Master Series invests. Under the 1940 Act, a Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of such Master Series' net assets with respect to any one
investment company and (iii) 10% of such Master Series' net assets in the
aggregate. Investments in the securities of other investment companies
generally will involve duplication of advisory fees and certain other expenses
and the investment adviser will waive its advisory fees for that portion of the
Master Series' assets so invested, except when such purchase is part of a plan
of merger, consolidation, reorganization or acquisition.
INVESTMENT TECHNIQUES.
FUTURES TRANSACTIONS -- IN GENERAL -- None of the Master Series will be a
commodity pool. To the extent permitted by applicable regulations, each Master
Series is permitted to use futures as a substitute for a comparable market
position in the underlying securities.
A-6
<PAGE> 18
A futures contract is an agreement between two parties, a buyer
and a seller, to exchange a particular commodity at a specific price on a
specific date in the future. Futures contracts are traded on exchanges, where
the exchange serves as the ultimate counterparty for all contracts.
Consequently, the only credit risk on futures contracts is the creditworthiness
of the exchange. Futures contracts are, however, subject to market risk (i.e.,
exposure to adverse price changes).
Each of the Master Series' futures transactions must constitute
permissible transactions pursuant to regulations promulgated by the Commodity
Futures Trading Commission ("CFTC"). In addition, a Master Series may not
engage in futures transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired options on futures contracts, other
than for bona fide hedging transactions, would exceed 5% of the liquidation
value of the Master Series' assets, after taking into account unrealized
profits and unrealized losses on such contracts it has entered into; provided,
however, that in the case of an option that is in-the-money at the time of
purchase, the in-the- money amount may be excluded in calculating the 5%.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, a Master Series may be required to segregate cash or high
quality money market instruments in connection with its futures transactions in
an amount generally equal to the entire value of the underlying security.
Initially, when purchasing or selling futures contracts a Master
Series will be required to deposit with the Master Portfolio's custodian in the
broker's name an amount of cash or cash equivalents up to approximately 10% of
the contract amount. This amount is subject to change by the exchange or board
of trade on which the contract is traded and members of such exchange or board
of trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Master Series upon termination
of the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments, known as "variation margin," to and from the
broker will be made daily as the price of the index or securities underlying
the futures contract fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking-to-market."
At any time prior to the expiration of a futures contract, the Master Series
may elect to close the position by taking an opposite position, at the then
prevailing price, which will operate to terminate its existing position in the
contract.
Although each of the Master Series intends to purchase or sell
futures contracts only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any particular
contract at any particular time. Many futures exchanges and boards of trade
limit the amount of fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond that limit or
trading may be suspended for specified periods during the trading day. Futures
contract prices could move to the limit for several consecutive trading days
with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the relevant Master Series to substantial
losses. If it is not possible, or a Master Series determines not, to close a
futures position in anticipation of adverse price
A-7
<PAGE> 19
movements, such Master Series will be required to make daily cash payments of
variation margin.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the option exercise period.
The writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the market
price of the futures contract, at exercise, exceeds, in the case of a call, or
is less than, in the case of a put, the exercise price of the option on the
futures contract.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- (Asset Allocation
Master Series) The Asset Allocation Master Series may purchase and sell stock
index futures contracts and options on stock index futures contracts.
A stock index future obligates the seller to deliver (and the
purchaser to take), effectively, an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the index
is made. With respect to stock indexes that are permitted investments, the
Asset Allocation Master Series intends to purchase and sell futures contracts
on the stock index for which it can obtain the best price with consideration
also given to liquidity.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES CONTRACTS
- -- Each Master Series may invest in interest rate futures contracts and options
on interest rate futures contracts as a substitute for a comparable market
position in the underlying securities.
Each Master Series also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate its options
positions. No assurance can be given that such closing transactions can be
effected or the degree of correlation between price movements in the options on
interest rate futures and price movements in the Master Series' portfolio
securities which are the subject of the transaction.
INTEREST RATE AND INDEX SWAPS -- Each Master Series may enter into interest
rate swaps and the Asset Allocation Master Series may enter into index swaps in
pursuit of its investment objective. Interest rate swaps involve the exchange
by a Master Series with another party of their respective commitments to pay or
receive interest (for example, an exchange of floating-rate payments for
fixed-rate payments). Index swaps involve the exchange by the Master Series
with another party of cash flows based upon the performance of an index or a
portion of an index which usually include dividends or income. In each case,
the exchange commitments can involve payments to be made in the same currency
or in different currencies.
A-8
<PAGE> 20
Each Master Series usually will enter into swaps on a net basis.
In so doing, the two payment streams are netted out, with the Master Series
receiving or paying, as the case may be, only the net amount of the two
payments. If a Master Series enters into a swap, it would maintain a
segregated account on a gross basis unless the contract provided otherwise. If
there is a default by the other party to such a transaction, the Master Series
will have contractual remedies pursuant to the agreements related to the
transaction.
The use of interest rate and index swaps is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. There is no limit,
except as provided below, on the amount of swap transactions that may be
entered into by a Master Series. These transactions generally do not involve
the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to swaps generally is limited to the
net amount of payments that a Master Series is contractually obligated to make.
If the other party to a swap defaults, the relevant Master Series' risk of loss
consists of the net amount of payments that such Master Series contractually is
entitled to receive. No Master Series will invest more than 15% of the value
of its net assets in swaps that are illiquid, and in other illiquid securities.
LENDING PORTFOLIO SECURITIES -- From time to time, each Master Series may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the relevant Master Series'
total assets. In connection with such loans, each Master Series will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to
at least 100% of the current market value of the loaned securities. Each
Master Series can increase its income through the investment of such
collateral. Each Master Series continues to be entitled to payments in amounts
equal to the dividends, interest and other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. A Master Series might experience
risk of loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with such Master Series.
FORWARD COMMITMENTS -- Each Master Series 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 Series will
make commitments to purchase such securities only with the intention of
actually acquiring the securities, but the Master Series may sell these
securities before the settlement date if it is deemed advisable. The Master
Series 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 Series' 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 Series to risk because they may
A-9
<PAGE> 21
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 Series consisting of cash or U.S. Government
securities or other high quality liquid debt securities at least equal at all
times to the amount of the when-issued or forward commitments will be
established and maintained at the Master Portfolio's custodian bank.
Purchasing securities on a forward commitment basis when a Master Series is
fully or almost fully invested may result in greater potential fluctuation in
the value of such Master Series' net assets and its net asset value per share.
BORROWING MONEY -- As a fundamental policy, the Asset Allocation Master Series
and the U.S. Treasury Allocation Master Series may borrow up to 20% 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 20% 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).
A-10
<PAGE> 22
MASTER INVESTMENT PORTFOLIO
INDEX MASTER SERIES
S&P 500 INDEX MASTER SERIES
BOND INDEX MASTER SERIES
PART A
January 2, 1996
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
GENERAL. Master Investment Portfolio (the "Master Portfolio") is an open-end,
management investment company, organized on October 21, 1993 as a business
trust under the laws of the State of Delaware. The Master Portfolio is a
"series fund," which is a mutual fund divided into separate portfolios. By
this offering document, the Master Portfolio is offering two diversified
portfolios (each, a "Master Series"). Each Master Series is treated as a
separate entity for certain matters under the Investment Company Act of 1940,
as amended (the "1940 Act"), and for other purposes and a shareholder of one
Master Series is not deemed to be a shareholder of the other Master Series. As
described below, for certain matters Master Portfolio shareholders vote
together as a group; as to others they vote separately by Master Series. The
Master Portfolio has established nine other series which will be offered
pursuant to other offering documents. From time to time, other series may be
established and sold pursuant to other offering documents.
BZW Barclays Global Fund Advisors ("BGFA") serves as investment adviser
to each Master Series. Prior to January 1, 1996, Wells Fargo Bank, N.A.
("Wells Fargo Bank") served as each Master Series' investment adviser and Wells
Fargo Nikko Investment Advisors ("WFNIA") served as each Master Series'
sub-investment adviser. The Master Series do not currently retain a
sub-adviser.
BGFA was created by the reorganization of WFNIA with and into an
affiliate of Wells Fargo Institutional Trust Company ("WFITC"). BGFA is now a
subsidiary of WFITC which, effective January 1, 1996, changed its name to BZW
Barclays Global Investors, N.A. ("BGI").
Beneficial interests in each Master Series are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"). Investments in a Master Series may be made only by investment companies
or certain other entities which 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.
1
<PAGE> 23
INVESTMENT OBJECTIVES.
o The S&P 500 INDEX MASTER SERIES seeks to provide investment
results that correspond to the total return performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Stock Index.
o The BOND INDEX MASTER SERIES seeks to provide investment results
that correspond to the total return performance of fixed-income securities in
the aggregate, as represented by the Lehman Brothers Government/Corporate Bond
Index.
Each Master Series' investment objective cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of such
Master Series' outstanding voting securities. The differences in objectives
and policies among the Master Series determine the types of portfolio
securities in which each Master Series invests and can be expected to affect
the degree of risk to which each Master Series is subject and the yield or
return of each Master Series. There can be no assurance that the investment
objective of each Master Series will be achieved.
MANAGEMENT POLICIES.
Each of the S&P 500 Index Master Series and Bond Index Master Series seeks to
replicate the investment results of its respective Index, as set forth below:
o The S&P 500 INDEX MASTER SERIES seeks to replicate the total
return performance of the S&P 500 Index, which is composed of 500
selected common stocks, most of which are listed on the New York Stock
Exchange. The weightings of stocks in the S&P 500 Index are based on
each stock's relative total market capitalization; that is, its market
price per share times the number of shares outstanding. The percentage
of the S&P 500 Index Master Series' assets invested in a given stock is
approximately the same as the percentage such stock represents in the S&P
500 Index.
o The BOND INDEX MASTER SERIES seeks to replicate the total
return performance of the Lehman Brothers Government/Corporate Bond
Index, which is composed of approximately 5,000 fixed-income securities,
including U.S. Government securities and investment grade corporate
bonds, each with an outstanding market value of at least $25 million and
remaining maturity of greater than one year. The Bond Index Master
Series invests in a sample of these securities. It invests at least 65%
of its total assets in bonds and debentures. Securities are selected for
investment by the Bond Index Master Series in accordance with their
relative proportion of the Lehman Brothers Government/Corporate Bond
Index as well as based on credit quality, issuer sector, maturity
structure, coupon rates and callability, among other factors, as
described below.
No attempt is made to manage the portfolio of each Master Series
using economic, financial and market analysis. Each Master Series is managed
by determining which securities are to be purchased or sold to replicate, to
the extent feasible, the investment
2
<PAGE> 24
characteristics of its respective benchmark Index. Under normal market
conditions, at least 90% of the value of a Master Series' total assets is
invested in securities comprising such Master Series' Index. Each Master
Series attempts to achieve, in both rising and falling markets, a correlation
of at least 95% between the total return of its net assets before expenses and
the total return of such Master Series' benchmark Index. Perfect (100%)
correlation would be achieved if the total return of a Master Series' net
assets increased or decreased exactly as the total return of such Master
Series' benchmark Index increased or decreased. A Master Series' ability to
match its investment performance to the investment performance of its
respective benchmark Index may be affected by: the Master Series' expenses; the
amount of cash and cash equivalents held in the Master Series' portfolio; the
manner in which the total return of the Master Series' benchmark Index is
calculated; the size of the Master Series' portfolio; and the timing, frequency
and size of shareholder purchases and redemptions. Each Master Series uses
cash flows from shareholder purchase and redemption activity to maintain, to
the extent feasible, the similarity of its portfolio to the securities
comprising such Master Series' benchmark Index. BGFA regularly monitors each
Master Series' correlation to its respective benchmark Index and adjusts the
portfolio of an Index Master Series to the extent necessary to enable such
Master Series to achieve a correlation of at least 95% with its respective
Index. Inclusion of a security in an Index in no way implies an opinion by the
sponsor of the Index as to its attractiveness as an investment. In the future,
subject to the approval of the relevant Master Series' shareholders, one or
more indices for an Index Master Series may be selected if such standard of
comparison is deemed to be more representative of the performance of the
securities such Master Series seeks to replicate. None of the Master Series is
sponsored, endorsed, sold or promoted by the sponsor of its respective Index.
The Bond Index Master Series will not hold all of the issues that
comprise its respective Index because of the costs involved and the illiquidity
of certain of the securities which comprise such Index. Instead, the Bond
Index Master Series attempts to hold a representative sample of the securities
in its respective Index so that, in the aggregate, the investment
characteristics of its portfolio resemble those of its respective Index. The
Bond Index Master Series uses a statistical process known as "sampling" to
construct a mix of assets in its portfolio. This process is used with respect
to the Bond Index Master Series initially to select issues to represent entire
"classes" or types of fixed-income securities in the Index. At the broadest
level, the Bond Index Master Series seeks to hold securities reflecting the two
major classes of fixed-income securities in the Lehman Brothers
Government/Corporate Bond Index -- U.S. Government securities and investment
grade corporate debt securities. Such classes are delineated further according
to credit quality, issuer sector, term to maturity, coupon rates and
callability. The sampling techniques utilized by these Master Series are
expected to be an effective means of substantially duplicating the investment
performance of the respective Index; however, no Master Series is expected to
track its benchmark Index with the same degree of accuracy that complete
replication of such Index would have provided. Over time, the portfolio
composition of this Master Series may be altered (or "rebalanced") to reflect
changes in the characteristics of the respective Index.
In seeking to replicate the performance of its respective Index,
each Master Series also may engage in futures and options transactions and
other derivative securities transactions and lend its portfolio securities,
each of which involves risk. See "Risk Factors" below, and
3
<PAGE> 25
"Appendix -- Investment Techniques." Each Master Series attempts to be fully
invested at all times in securities comprising such Master Series' Index and in
futures and options. When a Master Series has uninvested cash, it may invest
in money market instruments.
CERTAIN FUNDAMENTAL POLICIES. Each Master Series may (i) borrow money to the
extent permitted under the 1940 Act, except that the Bond Index Master Series
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 except that the S&P
500 Index Master Series may borrow up to 20% of the current value of its net
assets for temporary purposes only in order to meet redemptions. For purposes
of this investment restriction, a Master Series' entry into options, forward
contracts, futures contracts, including those relating to indexes, and options
on futures contracts or indexes, shall not constitute borrowing to the extent
certain segregated accounts are established and maintained by the Master
Series; (ii) invest up to 5% of its total assets in the obligations of any
single issuer, except that up to 25% of the value of the total assets of such
Master Series may be and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities may be purchased, without regard
to any such limitation; and (iii) invest up to 25% of the value of its total
assets in the securities of issuers in a particular industry or group of
closely related industries, subject to certain exceptions specified in Part B,
including that there is no limitation on the purchase of obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. This
paragraph describes fundamental policies that cannot be changed as to a Master
Series without approval by the holders of a majority (as defined in the 1940
Act) of such Master Series' outstanding voting securities. See Item 13,
"Investment Objectives and Management Policies -- Investment Restrictions," in
Part B.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES. Each Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors) if such purchase does not
cause the value of its investments in all such companies to exceed 5% of the
value of its total assets 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
such purchase would cause the value of its investments in all such companies to
exceed 5% of the value of its total assets; (ii) pledge, hypothecate, mortgage
or otherwise encumber its assets, but only to secure permitted borrowings; and
(iii) invest up to 15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice and in other
illiquid securities. See Item 13, "Investment Objectives and Management
Policies -- Investment Restrictions," in Part B.
RISK FACTORS.
GENERAL -- The net asset value per share of each Master Series is not fixed and
should be expected to fluctuate.
INVESTMENT TECHNIQUES -- Each Master Series may engage in various investment
techniques the use of which involves risk. See "Appendix--Investment
Techniques." Using these techniques may affect the degree to which a Master
Series' net asset value fluctuates.
4
<PAGE> 26
EQUITY SECURITIES -- (S&P 500 Index Master Series) Investors should be aware
that equity securities fluctuate in value, often based on factors unrelated to
the value of the issuer of the securities, and that fluctuations can be
pronounced. Changes in the value of a Master Series' portfolio securities will
result in changes in the value of such Master Series' shares and thus the
Master Series' yield and total return to investors.
FIXED-INCOME SECURITIES -- (Bond Index Master Series) Investors should be aware
that even though interest-bearing securities are investments which promise a
stable stream of income, the prices of such securities are inversely affected
by changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. Long-term securities are affected to a greater extent by
interest rates than shorter-term securities. The values of fixed-income
securities also may be affected by changes in the credit rating or financial
condition of the issuing entities. Certain securities that may be purchased by
the Bond Index Master Series, such as those rated "Baa" by Moody's and "BBB" by
S&P, Fitch and Duff, may be subject to such risk with respect to the issuing
entity and to greater market fluctuations than certain lower yielding, higher
rated fixed-income securities. Securities which are rated "Baa" by Moody's are
considered medium grade obligations; they are neither highly protected nor
poorly secured, and are considered by Moody's to have speculative
characteristics. Securities rated "BBB" by S&P are regarded as having adequate
capacity to pay interest and repay principal, and while such debt securities
ordinarily exhibit adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for securities in this category than in higher
rated categories. Securities rated "BBB" by Fitch are considered investment
grade and of satisfactory credit quality; however, adverse changes in economic
conditions and circumstances are more likely to have an adverse impact on these
securities and, therefore, impair timely payment. Securities rated "BBB" by
Duff have below average protection factors but nonetheless are considered
sufficient for prudent investment. If a security included in the Lehman
Brothers Government/Corporate Bond Index is downgraded to a rating below
investment grade, such security will be deleted from the Index at the end of
the calendar month in which the downgrading occurred and, accordingly, will be
sold by the Bond Index Master Series at that time or shortly thereafter. See
"Appendix" in Part B.
FOREIGN SECURITIES -- Foreign securities markets generally are not as developed
or efficient as those in the United States. Securities of some foreign issuers
are less liquid and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can be greater
than in the United States. In addition, there may be less publicly available
information about a non-U.S. issuer, and non-U.S. issuers generally are not
subject to uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers. See "Appendix --
Portfolio Securities -- Bank Obligations."
Because evidences of ownership of such securities usually are held
outside the United States, each Master Series may be subject to additional
risks which include possible adverse political and economic developments,
possible seizure or nationalization of foreign deposits and possible adoption
of governmental restrictions which might adversely affect the payment of
principal and interest on the foreign securities or might restrict the payment
of
5
<PAGE> 27
principal and interest to investors located outside the country of the issuers,
whether from currency blockage or otherwise. Custodial expenses for a
portfolio of non-U.S. securities generally are higher than for a portfolio of
U.S. securities.
Since foreign securities often are purchased by a Master Series
with, and payable in, currencies of foreign countries, the value of these
assets as measured in U.S. dollars may be affected favorably or unfavorably by
changes in currency rates and exchange control regulations. Some currency
exchange costs generally will be incurred when an Master Series changes
investments from one country to another.
Furthermore, some of these securities may be subject to brokerage
or stamp taxes levied by foreign governments, which have the effect of
increasing the cost of such investment and reducing the realized gain or
increasing the realized loss on such securities at the time of sale. Income
received by a Master Series from sources within foreign countries may be
reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may
reduce or eliminate such taxes. All such taxes paid by a Master Series will
reduce its net income available for distribution to its shareholders.
OTHER INVESTMENT CONSIDERATIONS -- Indexing strategies are
employed by BGFA and for other investment companies and accounts advised or
sub-advised by BGFA. If these strategies indicate particular securities should
be purchased or sold, at the same time, by the Master Series and one or more of
these investment companies or accounts, available investments or opportunities
for sales will be allocated equitably to each by the investment adviser. In
some cases, this procedure may adversely affect the size of the position
obtained for or disposed of by the Master Series or the price paid or received
by such Master Series.
Item 5. Management of the Master Portfolio.
INVESTMENT ADVISER -- Pursuant to separate investment advisory contracts (the
"BGFA Advisory Contracts") dated January 1, 1996, BGFA serves as investment
adviser to each Master Series. The BGFA Advisory contracts are identical in
all material respects, other than the identity of the parties, to the
investment advisory contracts with Wells Fargo Bank, the prior investment
adviser to each Master Series. The investment advisory contracts with Wells
Fargo Bank and the sub-advisory contracts with WFNIA terminated as of January
1, 1996. BGFA is an indirect subsidiary of Barclays Bank PLC ("Barclays") and
is located at 45 Fremont Street, San Francisco, CA 94105. As of January 1,
1996, BGFA and its affiliates provide investment advisory services for over
$220 billion of assets under management.
The BGFA Advisory Contracts provide that BGFA shall furnish to
each Master Series investment guidance and policy direction in connection with
the daily portfolio management of such Master Series, subject to the
supervision of the Master Portfolio's board of Trustees and in conformity with
Delaware law and the stated policies of each Master Series. Pursuant to the
BGFA Advisory Contracts, BGFA furnishes to the Board of Trustees of the Master
Portfolio periodic reports on the investment strategy and performance of each
Master Series.
6
<PAGE> 28
BGFA will continue to employ substantially the same WFNIA investment
professionals that previously managed the investment portfolio of each Master
Series.
BGFA is entitled to receive monthly fees at the annual rate of
0.08% and 0.05% of the average daily net assets of the Bond Index and S & P 500
Index Master Series, 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 Series and, accordingly, have a
favorable impact on the return and yield of such Master Series.
BGFA may deal, trade and invest for its own account in the types
of securities in which the Master Series may invest. BGFA has informed the
Master Portfolio that in making its investment decisions it does not obtain or
use material inside information in its possession.
Prior to January 1, 1996, Wells Fargo Bank, N.A., a wholly owned
subsidiary of Wells Fargo & Company located at 420 Montgomery Street, San
Francisco, California 94105, served as each Master Series' investment adviser.
Wells Fargo Bank, one of the largest banks in the United States, was founded in
1852 and is the oldest bank in the western United States. As of January 1,
1996, Wells Fargo Bank provides investment advisory services for approximately
$33 billion of assets under management. Pursuant to an Investment Advisory
Agreement with the Master Portfolio, Wells Fargo Bank provided investment
guidance and policy direction in connection with the management of each Master
Series' assets, subject to the supervision of the Master Portfolio's Board of
Trustees and in conformity with Delaware law and the stated policies of such
Master Series.
Prior to January 1, 1996, Wells Fargo Bank engaged Wells Fargo
Nikko Investment Advisors, located at 45 Fremont Street, San Francisco,
California 94105, to provide sub-investment advisory services to each Master
Series. WFNIA was a general partnership, which was dissolved on December 31,
1995, owned 50% by a wholly owned subsidiary of Wells Fargo Bank and 50% by a
subsidiary of The Nikko Securities Co., Ltd. Pursuant to a Sub-Investment
Advisory Agreement, WFNIA, subject to the supervision and approval of Wells
Fargo Bank, provides investment advisory assistance and the day-to-day
management of each Master Series' assets, subject to the overall authority of
the Master Portfolio's Board of Trustees and in conformity with Delaware law
and the stated policies of such Master Series.
For the fiscal year ended February 28, 1995, Wells Fargo Bank was
paid monthly fees at the annual rate of 0.05% and 0.08% of the average daily
net assets of the S&P 500 Index Master Series and Bond Index Master Series,
respectively, for its services as investment adviser to such Master Series.
During the same period WFNIA was paid by Wells Fargo Bank sub-advisory fees at
the annual rate of 0.04% and 0.07% of the average daily net assets of the S&P
500 Index Master Series and Bond Index Master Series, respectively.
As Investment Adviser, Wells Fargo Bank was permitted to deal,
trade and invest for its own account in the types of securities in which the
Bond Index and S&P 500 Index Master Series invested and may have had deposit,
loan and commercial banking relationships with the issuers of securities
purchased by a Master Series. Wells Fargo Bank informed the Master
7
<PAGE> 29
Portfolio that in making its investment decisions it does not obtain or use
material inside information in its possession.
Under the terms of the prior Investment Advisory Agreement, the Master
Portfolio was contractually obligated to pay Wells Fargo Bank a monthly fee on
behalf of each Master Series at the annual rate of 0.08% and 0.05% of the
average daily net assets of the Bond Index and S&P 500 Index Master Series,
respectively. Wells Fargo Bank was contractually obligated to pay WFNIA a
monthly fee at the annual rate of 0.07% and 0.04% of the average daily net
assets of the Bond Index and S&P 500 Index Master Series, respectively.
ADMINISTRATOR AND PLACEMENT AGENT -- Stephens Inc. ("Stephens"), located at 111
Center Street, Little Rock, Arkansas 72201, serves as the Master Portfolio's
administrator pursuant to an Administration Agreement with the Master
Portfolio. Under the Administration Agreement, Stephens provides general
supervision of the operation of the Master Portfolio and the Master Series,
other than the provision of investment advice, subject to the overall authority
of the Master Portfolio's Board of Trustees. The administrative services
provided to the Master Series also include coordination of the other services
provided to the Master Series, compilation of information for reports to the
Securities and Exchange Commission and state securities commissions,
preparation of proxy statements and interestholder reports, and general
supervision of data compilation in connection with preparing periodic reports
to the Master Portfolio's Board of Trustees and officers. Stephens also
furnishes office space and certain facilities to conduct the Master Portfolio's
business, and compensates the Master Portfolio's Trustees, officers and
employees who are affiliated with Stephens. Stephens is not entitled to
compensation for providing administrative services to a Master Series so long
as Stephens receives fees for providing similar services to a fund of another
registered investment company that invests all of its assets in the Master
Series. Stephens also serves as placement agent for each Master Series'
shares.
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 50 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.
CUSTODIAN AND TRANSFER AGENT. BGI serves as custodian to each Master Series
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 held 100% of WFITC's outstanding voting securities. Wells Fargo Bank
is the Master Portfolio's Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). Wells Fargo Bank performs transfer agency services at 525 Market
Street, San Francisco, California 94105.
EXPENSES. All expenses incurred in the operation of the Master Portfolio are
borne by the Master Portfolio, except to the extent specifically assumed by
BGFA (or, prior to January 1,
8
<PAGE> 30
1996, by Wells Fargo Bank) and Stephens. Expenses attributable to a particular
Master Series are charged against the assets of that Master Series; other
expenses of the Master Portfolio are allocated among the Master Series on the
basis determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Master Series.
An investor in Master Series will bear such Master Series'
transaction costs incurred in buying and selling securities and engaging in
certain investment techniques to effect a purchase or redemption (including
through an exchange from another Master Series) of such Master Series' shares
by the investor. These transaction costs may include: (1) brokerage
commissions; (2) market impact costs (i.e., the increase in market prices which
may result if Master Series purchases thinly traded stocks); and (3) the effect
of any "bid-ask" spread in the relevant securities market.
Item 6. Capital Stock and Other Securities.
The Master Portfolio is organized as a trust under the laws of the
State of Delaware. Investors in the Master Portfolio are each liable for all
obligations of the Master Portfolio. However, the risk of an investor
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Master
Portfolio itself was unable to meet its obligations.
To date, the Board of Trustees has authorized the creation of
fourteen separate series. All consideration received by the Master Portfolio
for shares of one of the series and all assets in which such consideration is
invested will belong to that series (subject only to the rights of creditors of
the Master Portfolio) and will be subject to the liabilities related thereto.
The income attributable to, and the expenses of, one series are treated
separately from those of the other series. The Master Portfolio has the
ability to create, from time to time, new series without shareholder approval.
MASTER SERIES SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. MASTER
SERIES SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL. EACH MASTER SERIES' SHARE PRICE AND INVESTMENT RETURN FLUCTUATE AND
ARE NOT GUARANTEED.
Unless otherwise required by the 1940 Act, ordinarily it will not
be necessary for the Master Portfolio to hold annual meetings of shareholders.
As a result, shareholders may not consider each year the election of Trustees
or the appointment of auditors. However, the holders of at least 10% of the
shares outstanding and entitled to vote may require the Master Portfolio to
hold a special meeting of shareholders for purposes of removing a Trustee from
office. Master Portfolio shareholders may remove a Trustee by the affirmative
vote of a majority of the Master Portfolio's outstanding voting shares. In
addition, the Board of Trustees will call a meeting of shareholders for the
purpose of electing Trustees if, at any time, less than a majority of the
Trustees then holding office have been elected by shareholders. Investments in
a Master Series may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value.
9
<PAGE> 31
Under the Master Portfolio's anticipated method of operation as a
partnership, each Master Series will not be subject to any income tax.
However, each investor in a Master Series will be taxable on its share (as
determined in accordance with the governing instruments of the Master
Portfolio) of such Master Series' ordinary income and capital gain in
determining its 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 expected that each Master Series will be managed so that
each investment company that invests all of its assets in a Master Series will
qualify as a "regulated investment company" under the Code.
As of December 15, 1995, the S&P 500 Stock Fund of Stagecoach
Inc., 111 Center Street, Little Rock, Arkansas 72201, owned approximately 94.0%
of the voting securities of the S&P 500 Master Series. As of December 15,
1995, the Bond Index Fund of Stagecoach Inc., Bradley Trust and Bradley via
Partition Trust, 1000 N. Water Street, 11th Floor, Milwaukee, WI 53202, each
owned approximately 37.0%, 31.0% and 31.0%, respectively, of the voting
securities of the Bond Index Master Series. As such, the Fund, Bradley Trust
and Bradley via Partition Trust could each be considered a controlling person
of the corresponding Master Series for purposes of the 1940 Act.
Item 7. Purchase of Securities.
Beneficial interests in the Master Series are issued solely in
private placement transactions which do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the Master
Series may be made only by investment companies or certain other entities which
are "accredited investors" within the meaning of Regulation D under the
Securities Act of 1933, as amended. 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 Securities Act of 1933, as amended.
Shares of each Master Series are sold on a continuous basis at the
net asset value per share next determined after an order in proper form is
received by the Transfer Agent. Net asset value per share for each Master
Series is determined as of the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., Eastern Standard Time), on each day the
New York Stock Exchange is open for business (a "Business Day"). Net asset
value per share is computed by dividing the value of the Master Series' net
assets (i.e., the value of its assets less liabilities) by the total number of
shares of such Master Series outstanding. The Master Series' investments are
valued each Business Day generally by using available market quotations or at
fair value determined in good faith by the Master Portfolio's Board of
Trustees. For further information regarding the methods employed in valuing
each Master Series' investments, see Item 19, "Purchase, Redemption and Pricing
of Securities," in Part B.
Item 8. Redemption or Repurchase.
An investor in the Master Portfolio may withdraw all or any
portion of its investment on any Business Day at the net asset value next
determined after a withdrawal request
10
<PAGE> 32
in proper form is furnished by the investor to the Transfer Agent. When a
request is received in proper form, the Master Portfolio will redeem the shares
at the next determined net asset value.
The Master Portfolio will make payment for all shares redeemed
within three days after receipt by the Transfer Agent of a redemption request
in proper form, except as provided by the rules of the Securities and Exchange
Commission. Investments in a Master Series 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 New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
Item 9. Pending Legal Proceedings.
Not applicable.
11
<PAGE> 33
APPENDIX
PORTFOLIO SECURITIES.
To the extent set forth in this offering document, each Master
Series may invest in the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- Each Master Series may invest in various types
of U.S. Government obligations with remaining maturities of up to one year.
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 maturity. Treasury bills, the most frequently issued
marketable government securities, have a maturity 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 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- Each
Master Series, through its investment in money market instruments, may invest
in obligations issued or guaranteed by one or more foreign governments or any
of their political subdivisions, agencies or instrumentalities that are
determined by BGFA to be of comparable quality to the other obligations in
which such Master Series may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank. The percentage of a Master Series' assets
invested in securities issued by foreign governments will vary depending on the
relative yields of such securities, the economic and financial markets of the
countries in which the investments are made and the interest rate climate of
such countries.
A-1
<PAGE> 34
BANK OBLIGATIONS -- Each Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations of domestic banks, foreign subsidiaries of
domestic banks, foreign branches of domestic banks, and domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. With respect to such securities issued by foreign
branches of domestic banks, foreign subsidiaries of domestic banks, and
domestic and foreign branches of foreign banks, a Master Series may be subject
to additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay
the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations, bearing fixed, floating-
or variable-interest rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- Each Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by each Master Series will consist only of direct obligations
which, at the time of their purchase, are (a) rated not lower than Prime-1 by
Moody's, A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by companies
having an outstanding unsecured debt issue currently rated not lower than Aa3
by Moody's or AA- by S&P, Fitch or Duff, or (c) if unrated, determined by WFNIA
to be of comparable quality to those rated obligations which may be purchased
by such Fund.
REPURCHASE AGREEMENTS -- Each Master Series may enter into repurchase
agreements, which involve the acquisition by a Master Series of an underlying
debt instrument, subject to the seller's obligation to repurchase, and such
Master Series' obligation to resell, the instrument at a fixed price usually
not more than one week after its purchase. The Master Portfolio's custodian or
sub-custodian has custody of, and holds in a segregated account, securities
acquired as collateral by a Master Series under a repurchase agreement.
Repurchase agreements are considered by the staff of the Securities and
Exchange Commission to be loans by the Master Series. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, each Master Series
enters into
A-2
<PAGE> 35
repurchase agreements only with federally regulated or insured banks or primary
government securities dealers reporting to the Federal Reserve Bank of New York
or, under certain circumstances, banks with total assets in excess of $5
billion or domestic broker/dealers with total equity capital in excess of $100
million. The Master Series enters into repurchase agreements only with respect
to securities of the type in which such Master Series may invest, including
government securities and mortgage-related securities, regardless of their
remaining maturities, and requires that additional securities be deposited with
the custodian or sub-custodian if the value of the securities purchased should
decrease below resale price. BGFA monitors on an ongoing basis the value of
the collateral to assure that it always equals or exceeds the repurchase price.
Certain costs may be incurred by a Master Series in connection with the sale of
the underlying securities if the seller does not repurchase them in accordance
with the repurchase agreement. In addition, if bankruptcy proceedings are
commenced with respect to the seller of the securities, realization on the
securities by a Master Series may be delayed or limited. Each Master Series
considers on an ongoing basis the creditworthiness of the institutions with
which it enters into repurchase agreements.
UNREGISTERED NOTES -- Each Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the Securities Act of 1933, as amended, provided such investments are
consistent with such Master Series' investment objective.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- Each Master Series may purchase
floating and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of thirteen months, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding thirteen months. Variable- rate demand notes include
master demand notes which are obligations that permit a Master Series to invest
fluctuating amounts, which may change daily without penalty, pursuant to direct
arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded, and there
generally is no established secondary market for these obligations, although
they are redeemable at face value. Accordingly, where these obligations are
not secured by letters of credit or other credit support arrangements, the
Master Series' right to redeem is dependent on the ability of the borrower to
pay principal and interest on demand. Such obligations frequently are not
rated by credit rating agencies and each Master Series may invest in
obligations which are not so rated only if BGFA determines that at the time of
investment the obligations are of comparable quality to the other obligations
in which such Master Series may invest. BGFA, on behalf of each Master Series,
considers on an ongoing basis the creditworthiness of the issuers of the
floating-
A-3
<PAGE> 36
and variable-rate demand obligations in such Master Series' portfolio. No
Master Series will invest more than 15% of the value of its net assets in
floating- or variable-rate demand obligations as to which it cannot exercise
the demand feature on not more than seven days' notice if there is no secondary
market available for these obligations, and in other illiquid securities.
PARTICIPATION INTERESTS -- Each Master Series may purchase from financial
institutions participation interests in securities in which such Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series'
participation interest bears to the total principal amount of the security.
These instruments may have fixed, floating or variable-rates of interest. If
the participation interest is unrated, or has been given a rating below that
which is permissible for purchase by the Master Series, the participation
interest is backed by an irrevocable letter of credit or guarantee of a bank,
or the payment obligation otherwise will be collateralized by U.S. Government
securities, or, in the case of unrated participation interests, BGFA must have
determined that the instrument is of comparable quality to those instruments in
which such Master Series may invest. Prior to a Master Series' purchase of any
such instrument backed by a letter of credit or guarantee of a bank, BGFA
evaluates the creditworthiness of the bank, considering all factors which it
deems relevant, which generally may include review of the bank's cash flow;
level of short-term debt; leverage; capitalization; the quality and depth of
management; profitability; return on assets; and economic factors relative to
the banking industry. For certain participation interests, the Master Series
has the right to demand payment, on not more than seven days' notice, for all
or any part of the Master Series' participation interest in the security, plus
accrued interest. As to these instruments, each Master Series intends to
exercise its right to demand payment only upon a default under the terms of the
security, as needed to provide liquidity to meet redemptions, or to maintain or
improve the quality of its investment portfolio.
MORTGAGE-RELATED SECURITIES--Each Master Series may enter into repurchase
agreements with respect to mortgage-related securities ("MBSs"), representing
interests in a pool of loans secured by mortgages. The resulting cash flow
from these mortgages is used to pay principal and interest on the securities.
MBSs are assembled for sale to investors by various government-sponsored
enterprises such as the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC") or are guaranteed by such
governmental agencies as the Government National Mortgage Association ("GNMA").
Regardless of the type of guarantee, all MBSs are subject to interest rate risk
(i.e., exposure to loss due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also
known as "Ginnie Maes") which are guaranteed as to the full and timely payment
of principal and interest by GNMA and such guarantee is backed by the authority
of GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. As such, GNMA obligations are
general obligations of the United States and are backed by the full faith and
credit of the federal government. MBSs issued by FNMA include FNMA Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are
solely the obligations of FNMA and are neither backed by nor entitled to the
full faith and credit of the United States. FNMA is a government-sponsored
enterprise which is also a private corporation
A-4
<PAGE> 37
whose stock trades on the NYSE. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA. FHLMC MBSs include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or "PCs"). FHLMC
guarantees timely payment of interest, but only ultimate payment of principal
due under the obligations it issues. Freddie Macs are not guaranteed by the
United States or by any Federal Home Loan Bank and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. FHLMC may,
under certain circumstances, remit the payment of principal at any time after
default, but in no event later than one year after the guarantee becomes
payable.
ILLIQUID SECURITIES -- Each Master Series may invest up to 15% of the value of
its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating and variable-rate demand obligations as to which the
Master Series cannot exercise the related demand feature described above on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice. However, if a substantial market of qualified institutional buyers
develops pursuant to Rule 144A under the Securities Act of 1933, as amended,
for certain of these securities held by a Master Series, such Master Series
intends to treat such securities as liquid securities in accordance with
procedures approved by the Master Portfolio's Board of Trustees. Because it is
not possible to predict with assurance how the market for restricted securities
pursuant to Rule 144A will develop, the Master Portfolio's Board of Trustees
has directed BGFA to monitor carefully each Master Series' investments in such
securities with particular regard to trading activity, availability of reliable
price information and other relevant information. To the extent that for a
period of time, qualified institutional buyers cease purchasing such restricted
securities pursuant to Rule 144A, a Master Series' investing in such securities
may have the effect of increasing the level of illiquidity in such Master
Series' portfolio during such period.
INVESTMENT COMPANY SECURITIES -- Each Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which such Master Series invests. Under the 1940 Act, a Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of such Master Series' net assets with respect to any one
investment company and (iii) 10% of such Master Series' net assets in the
aggregate. Investments in the securities of other investment companies
generally will involve duplication of advisory fees and certain other expenses
and the investment adviser will waive its advisory fees for that portion of the
Master Series' assets so invested, except when such purchase is part of a plan
of merger, consolidation, reorganization or acquisition.
RATINGS -- The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. It should
be emphasized, however, that ratings are relative and subjective and, although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of such obligations.
A-5
<PAGE> 38
Therefore, although these ratings may be an initial criterion for selection of
portfolio investments, BGFA also will evaluate such obligations and the ability
of their issuers to pay interest and principal. Each Master Series will rely
on BZW Fund Advisor's judgment, analysis and experience in evaluating the
creditworthiness of an issuer. In this evaluation, BGFA will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, the quality of the issuer's
management and regulatory matters. It also is possible that a rating agency
might not timely change the rating on a particular issue to reflect subsequent
events. See Item 4, "Description of Registrant -- Risk Factors -- Fixed-Income
Securities."
INVESTMENT TECHNIQUES.
FUTURES TRANSACTIONS -- IN GENERAL -- None of the Master Series will be a
commodity pool. To the extent permitted by applicable regulations, each Master
Series is permitted to use futures as a substitute for a comparable market
position in the underlying securities.
A futures contract is an agreement between two parties, a buyer
and a seller, to exchange a particular commodity at a specific price on a
specific date in the future. Futures contracts are traded on exchanges, where
the exchange serves as the ultimate counterparty for all contracts.
Consequently, the only credit risk on futures contracts is the creditworthiness
of the exchange. Futures contracts are, however, subject to market risk (i.e.,
exposure to adverse price changes).
Each Master Series may trade futures contracts and options on
futures contracts in U.S. domestic markets, such as the Chicago Board of Trade
and the International Monetary Market of the Chicago Mercantile Exchange, or,
with respect to the International Stock Index Master Series, to the extent
permitted under applicable law, on exchanges located outside the United States,
such as the London International Financial Futures Exchange, the Deutscher
Aktienindex and the Sydney Futures Exchange Limited. See Item 4, "General
Description of Registrant -- Risk Factors -- Foreign Futures Transactions."
Each Master Series' futures transactions must constitute
permissible transactions pursuant to regulations promulgated by the CFTC. In
addition, a Master Series may not engage in such transactions if the sum of the
amount of initial margin deposits and premiums paid for unexpired options on
futures contracts, other than for bona fide hedging transactions, would exceed
5% of the liquidation value of the Master Series' assets, after taking into
account unrealized profits and unrealized losses on such contracts; provided,
however, that in the case of an option that is in- the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, an Master Series may be required to segregate cash or high
quality money market instruments in connection with its futures transactions in
an amount generally equal to the entire value of the underlying security.
Initially, when purchasing or selling futures contracts each
Master Series will be required to deposit with the Master Portfolio's custodian
in the broker's name an amount of cash or cash equivalents up to approximately
10% of the contract amount. This amount is subject to
A-6
<PAGE> 39
change by the exchange or board of trade on which the contract is traded and
members of such exchange or board of trade may impose their own higher
requirements. This amount is known as "initial margin" and is in the nature of
a performance bond or good faith deposit on the contract which is returned to
the Master Series upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index or securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Master Series may elect to close the position by taking
an opposite position, at the then prevailing price, thereby terminating its
existing position in the contract.
Although each Master Series intends to purchase or sell futures
contracts only if there is an active market for such contracts, no assurance
can be given that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the amount
of fluctuation permitted in futures contract prices during a single trading
day. Once the daily limit has been reached in a particular contract, no trades
may be made that day at a price beyond that limit or trading may be suspended
for specified periods during the trading day. Futures contract prices could
move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the relevant Master Series to substantial losses. If it
is not possible, or the Master Series determines not, to close a futures
position in anticipation of adverse price movements, it will be required to
make daily cash payments of variation margin.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the option exercise period.
The writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by the writer and holder of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account in the amount by which the market price of the
futures contract, at exercise, exceeds (in the case of a call) or is less than
(in the case of a put) the exercise price of the option on the futures
contract.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- (S&P 500 Index Master
Series) The S&P 500 Index Master Series may purchase and sell stock index
futures contracts and options on stock index futures contracts.
A stock index future obligates the seller to deliver (and the
purchaser to take), effectively, an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the index
is made. With respect to stock indexes that are permitted investments, the S&P
500 Index Master Series intends to purchase and sell futures contracts on the
stock index for which it can obtain the best price with consideration also
given to liquidity.
A-7
<PAGE> 40
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES CONTRACTS
- -- (Bond Index Master Series) The Bond Index Master Series may invest in
interest rate futures contracts and options on interest rate futures contracts
as a substitute for a comparable market position in the underlying securities.
The Bond Index Master Series also may sell options on interest
rate futures contracts as part of closing purchase transactions to terminate
its options positions. No assurance can be given that such closing
transactions can be effected or the degree of correlation between price
movements in the options on interest rate futures and price movements in the
Master Series' portfolio securities which are the subject of the transaction.
INTEREST RATE AND INDEX SWAPS -- Each Master Series may enter into index swaps,
and the Bond Index Master Series may enter into interest rate swaps, in pursuit
of its investment objective. Interest rate swaps involve the exchange by the
Bond Index Master Series with another party of their respective commitments to
pay or receive interest (for example, an exchange of floating-rate payments for
fixed-rate payments). Index swaps involve the exchange by a Master Series with
another party of cash flows based upon the performance of an index or a portion
of an index which usually includes dividends or income. In each case, the
exchange commitments can involve payments to be made in the same currency or in
different currencies.
Each Master Series usually will enter into swaps on a net basis.
In so doing, the two payment streams are netted out, with the Master Series
receiving or paying, as the case may be, only the net amount of the two
payments. If a Master Series enters into a swap, it would maintain a
segregated account on a gross basis unless the contract provided otherwise. If
there is a default by the other party to such a transaction, the Master Series
will have contractual remedies pursuant to the agreements related to the
transaction.
The use of interest rate and index swaps is a highly specialized
activity which involves investment techniques and risks different from those
associated with ordinary portfolio security transactions. There is no limit,
except as provided below, on the amount of swap transactions that may be
entered into by a Master Series. These transactions generally do not involve
the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to swaps generally is limited to the
net amount of payments that an Index Fund is contractually obligated to make.
If the other party to a swap defaults, the relevant Master Series' risk of loss
consists of the net amount of payments that such Master Series contractually is
entitled to receive. No Master Series will invest more than 15% of the value
of its net assets in swaps that are illiquid, and in other illiquid securities.
LENDING PORTFOLIO SECURITIES -- From time to time, each Master Series may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed 33-1/3% of the value of the relevant Master Series'
total assets. In connection with such loans, each Master Series will receive
collateral consisting of cash, U.S. Government securities or irrevocable
letters of credit which will be maintained at all times in an amount equal to
at least 100% of the current market value of the loaned securities. Each
Master Series can increase its income through the investment of such
A-8
<PAGE> 41
collateral. Each Master Series continues to be entitled to payments in amounts
equal to the dividends, interest and other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. A Master Series might experience
risk of loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with such Master Series.
FORWARD COMMITMENTS -- Each Master Series 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 Series will
make commitments to purchase such securities only with the intention of
actually acquiring the securities, but the Master Series may sell these
securities before the settlement date if it is deemed advisable. The Master
Series 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 Series' 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 Series 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 Series
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 the Master
Portfolio's custodian bank. Purchasing securities on a forward commitment
basis when a Master Series is fully or almost fully invested may result in
greater potential fluctuation in the value of such Master Series' net assets
and its net asset value per share.
BORROWING MONEY -- As a fundamental policy, the Bond Index Master Series 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 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). The S&P 500 Stock Master Series may
borrow up to 20% 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 20% 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).
A-9
<PAGE> 42
MASTER INVESTMENT PORTFOLIO
LIFEPATH(TM) MASTER SERIES
LIFEPATH 2000 MASTER SERIES
LIFEPATH 2010 MASTER SERIES
LIFEPATH 2020 MASTER SERIES
LIFEPATH 2030 MASTER SERIES
LIFEPATH 2040 MASTER SERIES
PART A
January 2, 1996
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
GENERAL. Master Investment Portfolio (the "Master Portfolio") is an open-end,
management investment company, organized on October 21, 1993 as a business
trust under the laws of the State of Delaware. The Master Portfolio is a
"series fund," which is a mutual fund divided into separate portfolios. By
this offering document, the Master Portfolio is offering five asset allocation
series (the "Master Series" or the "LifePath Master Series"). Each LifePath
Master Series is treated as a separate entity for certain matters under the
Investment Company Act of 1940, as amended (the "1940 Act"), and for other
purposes and an interestholder of one LifePath Master Series is not deemed to
be an interestholder of any other LifePath Master Series. As described below,
for certain matters Master Portfolio interestholders vote together as a group;
as to others they vote separately by Master Series. The Master Portfolio has
established eight other series which are offered pursuant to other offering
documents. From time to time, other series may be established and sold
pursuant to other offering documents.
BZW Barclays Global Fund Advisors ("BGFA") serves as investment
adviser to each LifePath Master Series. Prior to January 1, 1996, Wells Fargo
Bank, N.A. ("Wells Fargo Bank") served as each LifePath Master Series'
investment adviser and Wells Fargo Nikko Investment Advisors ("WFNIA") served
as each LifePath Master Series' sub-investment adviser. The LifePath Master
Series do not currently retain a sub-adviser. BGFA was created by the
reorganization of WFNIA with and into Wells Fargo Institutional Trust Company
("WFITC"). BGFA is now a subsidiary of WFITC which, effective January 1, 1996,
changed its name to BZW Barclays Global Investors, N.A. ("BGI").
Beneficial interests in each Master Series are issued solely in
private placement transactions which do not involve any "public offering"
within the meaning of Regulation D under the Securities Act of 1933, as amended
(the "1933 Act"). Investments in a Master Series may be made only by
investment companies or other accredited investors within the meaning of
1
<PAGE> 43
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. Organizations or other entities
that hold shares of beneficial interest of a Master Series may be referred to
herein as "feeder funds."
INVESTMENT OBJECTIVES. Each Master Series seeks to provide long-term investors
in a feeder fund with an asset allocation strategy designed to maximize assets
for retirement or for other purposes consistent with the quantitatively
measured risk such investors, on average, may be willing to accept given their
investment time horizons. Specifically:
o LIFEPATH 2000 MASTER SERIES is managed for investors in a feeder
fund planning to retire (or begin to withdraw substantial portions of their
investment) approximately in the year 2000.
o LIFEPATH 2010 MASTER SERIES is managed for investors in a feeder
fund planning to retire (or begin to withdraw substantial portions of their
investment) approximately in the year 2010.
o LIFEPATH 2020 MASTER SERIES is managed for investors in a feeder
fund planning to retire (or begin to withdraw substantial portions of their
investment) approximately in the year 2020.
o LIFEPATH 2030 MASTER SERIES is managed for investors in a feeder
fund planning to retire (or begin to withdraw substantial portions of their
investment) approximately in the year 2030.
o LIFEPATH 2040 MASTER SERIES is managed for investors in a feeder
fund planning to retire (or begin to withdraw substantial portions of their
investment) approximately in the year 2040.
Each LifePath Master Series' investment objective cannot be
changed without approval by the holders of a majority (as defined in the 1940
Act) of such Master Series' outstanding voting securities. The differences in
objectives and policies among the Master Series determine the types of
portfolio securities in which each Master Series invests and can be expected to
affect the degree of risk to which each Master Series is subject and the yield
or return of each Master Series. As with all mutual funds, there can be no
assurance that the investment objective of each Master Series will be achieved.
INTRODUCTION. The LifePath 2000 Master Series, LifePath 2010 Master Series,
LifePath 2020 Master Series, LifePath 2030 Master Series and LifePath 2040
Master Series follow an asset allocation strategy among three broad investment
classes: equity and debt securities of issuers located throughout the world and
cash in the form of money market instruments. Each LifePath Master Series
differs in the weighting assigned to each such investment class, with the
later-dated LifePath Master Series generally bearing more risk than the
earlier-dated LifePath Master Series, with the expectation of greater total
return. Thus, the investment class weightings of the
2
<PAGE> 44
LifePath 2040 Master Series initially might be 100%, 0% and 0% among equity
securities, debt securities and cash, respectively, while the weightings of the
LifePath 2000 Master Series initially might be 25%, 50% and 25%, respectively.
Over years, each LifePath Master Series is managed more conservatively, on the
premise that individuals investing for retirement desire to reduce investment
risk in their retirement accounts as they age. The difference in such
investment class weightings is based on the statistically determined risk that
such investors, on average, may be willing to accept given their investment
time horizons in an effort to maximize assets in anticipation of retirement or
for other purposes.
To manage the LifePath Master Series, BGFA employs a proprietary
investment model (the "Model"), developed and previously used by WFNIA, that
analyzes extensive financial and economic data, including risk, correlation and
expected return statistics, to recommend the portfolio allocation among the
investment classes described below. At its simplest, for each point in time,
the Model recommends a portfolio allocation designed to maximize total return
for each LifePath Master Series based on each such LifePath Master Series'
evolving risk profile. As a result, while each LifePath Master Series invests
in substantially the same securities within an investment class, the amount of
each LifePath Master Series' aggregate assets invested in a particular
investment class, and thus in particular securities, differs, but the relative
percentage that a particular security comprises within an investment class
ordinarily remains substantially the same. As of November 30, 1995, asset
allocations in the LifePath Master Series were approximately as follows:
<TABLE>
<CAPTION>
LifePath 2000 LifePath 2010 LifePath 2020 LifePath 2030 LifePath 2040
Master Series Master Series Master Series Master Series Master Series
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Equity 23% 50% 68% 80% 96%
------
Securities
----------
Debt 54% 40% 25% 15% 3%
----
Securities
----------
Cash 22% 10% 6% 4% 1%
----
</TABLE>
BGFA may in the future refine the Model, or the financial and
economic data analyzed by the Model, in ways that could result in changes to
recommended allocations.
The relative weightings for each LifePath Master Series of the
various investment classes are expected to change over time, with the LifePath
2040 Master Series adopting in the 2030s characteristics similar to the
LifePath 2000 Master Series today.
3
<PAGE> 45
MANAGEMENT POLICIES.
The LifePath Model contains both "strategic" and "tactical"
components, with the strategic component weighted more heavily than the
tactical component. The strategic component of the Model evaluates the risk
that investors, on average, may be willing to accept given their investment
time horizons. The strategic component thus determines the changing investment
risk level of each LifePath Fund as time passes. The tactical component of the
Model, on the other hand, addresses short-term market conditions. The tactical
component thus adjusts the amount of investment risk taken by each LifePath
Fund without regard to time horizon, but rather in consideration of the
relative risk-adjusted short-term attractiveness of various asset classes.
Through the strategic and tactical components the asset allocation
strategy contemplates shifts, that may be frequent, among a wide range of U.S.
and foreign investments and market sectors. Each LifePath Master Series may
invest up to approximately 20% of the value of its total assets in foreign
securities that are not publicly traded in the United States. Rather than
choosing specific securities, BGFA (and WFNIA before it) selects indices
representing segments of the global equity and debt markets and invests to
create market exposure to these market segments by purchasing representative
samples of securities comprising the indices in an attempt to replicate their
performance. From time to time, other indices may be selected in addition to,
or as a substitute for, any of the indices listed herein and market exposure
may be broadened. Investors will be notified of any such change.
BGFA has broad latitude in selecting the class of investments and
the particular securities within a class in which each LifePath Master Series
invests. No LifePath Master Series is managed as a balanced portfolio nor is
it required to maintain a portion of its investments in each of its permitted
investment categories at all times. Until a LifePath Master Series attains an
asset level of approximately $100 to $150 million, BGFA allocates assets across
fewer investment categories than it otherwise would. BGFA compares each
LifePath Master Series' investments from time to time to the Model's
recommended allocation. Recommended reallocations are implemented subject to
BGFA's assessment of current economic conditions and investment opportunities.
BGFA may change from time to time the criteria and methods it uses to implement
the recommendations of the Model. Any recommended reallocation is implemented
in accordance with trading policies designed to take advantage of market
opportunities and reduce transaction costs. The asset allocation mix selected
is a primary determinant in the respective LifePath Master Series' investment
performance.
BGFA manages other portfolios that also invest in accordance with
the Model. The performance of each of those other portfolios is likely to vary
among themselves and from the performance of each LifePath Master Series. Such
variation in performance is primarily due to different equilibrium asset mix
assumptions used for the various portfolios, timing differences in the
implementation of the Model's recommendations and differences in expenses and
liquidity requirements.
4
<PAGE> 46
The LifePath Master Series may invest in up to 17 asset classes,
including 10 stock classes, 6 bond classes and a money market class. Each
LifePath Master Series invests in the classes of investments described below in
the following manner:
EQUITY SECURITIES -- The LifePath Master Series seek U.S. equity market
exposure through the following indices of common stock:
o The S&P/BARRA Value Stock Index (consisting of primarily
large-capitalization U.S. stocks with lower-than- average
price/book ratios).
o The S&P/BARRA Growth Stock Index (consisting of primarily
large-capitalization U.S. stocks with higher- than-average
price/book ratios).
o The Intermediate Capitalization Value Stock Index (consisting of
primarily medium-capitalization U.S. stocks with
lower-than-average price/book ratios).
o The Intermediate Capitalization Growth Stock Index (consisting of
primarily medium-capitalization U.S. stocks with
higher-than-average price/book ratios).
o The Intermediate Capitalization Utility Stock Index (consisting of
primarily medium-capitalization U.S. utility stocks).
o The Micro Capitalization Market Index (consisting of primarily
small-capitalization U.S. stocks).
o The Small Capitalization Value Stock Index (consisting of
primarily small-capitalization U.S. stocks with lower-than-average
price/book ratios).
o The Small Capitalization Growth Stock Index (consisting of
primarily small-capitalization U.S. stocks with
higher-than-average price/book ratios).
The LifePath Master Series seek foreign equity market exposure
through the following indices of foreign equity securities:
o The Morgan Stanley Capital International (MSCI) Japan Index
(consisting of primarily large-capitalization Japanese stocks).
o The Morgan Stanley Capital International Europe, Australia, Far
East Index (MSCI EAFE) Ex-Japan Index (consisting of primarily
large-capitalization foreign stocks, excluding Japanese stocks).
In addition, each LifePath Master Series may invest in other
common stocks, preferred stocks and convertible securities, including those in
the form of American, European and Continental Depositary Receipts, as well as
warrants to purchase such securities, and investment company securities. See
"Appendix -- Portfolio Securities."
5
<PAGE> 47
DEBT SECURITIES -- The LifePath Master Series seek U.S. debt market exposure
through the following indices of U.S. debt securities:
o The Lehman Brothers Long-Term Government Bond Index (consisting of
all U.S. Government bonds with maturities of at least ten years).
o The Lehman Brothers Intermediate-Term Government Bond Index
(consisting of all U.S. Government bonds with maturities of less
than ten years and greater than one year).
o The Lehman Brothers Long-Term Corporate Bond Index (consisting of
all U.S. investment grade corporate bonds with maturities of at
least ten years).
o The Lehman Brothers Intermediate-Term Corporate Bond Index
(consisting of all U.S. investment-grade corporate bonds with
maturities of less than ten years and greater than one year).
o The Lehman Brothers Mortgage-Backed Securities Index (consisting
of all fixed-coupon mortgage pass-throughs (issued by the Federal
National Mortgage Association, Government National Mortgage
Association and Federal Home Loan Mortgage Corporation with
maturities greater than one year).
The LifePath Master Series seek foreign debt market exposure
through the following index of foreign debt securities:
o The Salomon Brothers Non-U.S. World Government Bond Index
(consisting of foreign government bonds with maturities of greater
than one year).
Each U.S. and foreign debt security is expected to be part of an
issuance with a minimum outstanding amount at the time of purchase of
approximately $50 million and $100 million, respectively. Each security in
which a LifePath Master Series invests must be rated at least Baa by Moody's
Investors Service, Inc. ("Moody's"), or BBB by Standard & Poor's Corporation
("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc.
("Duff") or, if unrated, deemed to be of comparable quality by WFNIA. See
"Risk Factors--Fixed-Income Securities" below, and "Appendix" in Part B.
MONEY MARKET INSTRUMENTS -- The money market instrument portion of each
LifePath Master Series' portfolio generally is invested in high-quality money
market instruments, including U.S. Government obligations, obligations of
domestic and foreign banks, short-term corporate debt instruments and
repurchase agreements. See "Appendix" below for a more complete description of
the money market instruments in which each Master Series may invest.
INVESTMENT TECHNIQUES -- Each LifePath Master Series also may lend its
portfolio securities and enter into transactions in certain derivatives, each
of which involves risk. Derivatives are financial instruments whose values are
derived, at least in part, from the prices of other securities
6
<PAGE> 48
or specified assets, indices or rates. The futures contracts and options on
futures contracts that each LifePath Master Series may purchase are considered
derivatives. Each LifePath Master Series may use some derivatives as part of
its short-term liquidity holdings and/or as substitutes for comparable market
positions in the underlying securities. Also, asset-backed securities issued
or guaranteed by U.S. Government agencies or instrumentalities and certain
floating- and variable-rate instruments can be considered derivatives. Some
derivatives may be more sensitive than direct securities to changes in interest
rates or sudden market moves. Some derivatives also may be susceptible to
fluctuations in yield or value due to their structure or contract terms.
BGFA (as investment adviser to each LifePath Master Series) uses a
variety of internal risk management procedures to ensure that derivatives use
is consistent with each LifePath Master Series' investment objective, does not
expose the LifePath Master Series to undue risks and is closely monitored,
including providing periodic reports to the Board of Trustees concerning the
use of derivatives. Wells Fargo Bank and WFNIA, the previous investment
adviser and sub-adviser, respectively, employed substantially similar internal
risk management procedures. Derivatives use also is subject to broadly
applicable investment policies. For example, in no case may a LifePath Master
Series invest more than 15% of the current value of its assets in "illiquid
securities," including derivatives without active secondary markets. Nor may a
LifePath Master Series use derivatives to create leverage without establishing
adequate "cover" in compliance with Securities and Exchange Commission leverage
rules. For more information, see "Risk Factors" below, and "Appendix --
Investment Techniques."
CERTAIN FUNDAMENTAL POLICIES. Each Master Series may (i) borrow money to the
extent permitted under the 1940 Act; (ii) invest up to 5% of its total assets
in the obligations of any single issuer, except that up to 25% of the value of
the total assets of such Master Series may be invested and obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities may be
purchased, without regard to any such limitation; and (iii) invest up to 25% of
the value of its total assets in the securities of issuers in a particular
industry or group of closely related industries, provided there is no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed as to a Master Series without
approval by the holders of a majority (as defined in the 1940 Act) of such
Master Series' outstanding voting securities. See Item 13, "Investment
Objectives and Management Policies -- Investment Restrictions," in Part B.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES. Each Master Series may (i)
purchase securities of any company having less than three years' continuous
operation (including operations of any predecessors) if such purchase does not
cause the value of its investments in all such companies to exceed 5% of the
value of its total assets; (ii) pledge, hypothecate, mortgage or otherwise
encumber its assets, but only to secure permitted borrowings; and (iii) invest
up to 15% of the value of its net assets in repurchase agreements providing for
settlement in more than seven days
7
<PAGE> 49
after notice and in other illiquid securities. Although each feeder fund and
LifePath Master Series reserves the right to invest up to 15% of the value of
its net assets in illiquid securities, including repurchase agreements
providing for settlement in more than seven days after notice, as long as such
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, such feeder
fund and LifePath Master Series will comply with the lower limit. Each feeder
fund currently is limited to investing up to 10% of the value of its net assets
in such securities due to limits applicable in several states. See Item 13,
"Investment Objectives and Management Policies -- Investment Restrictions," in
Part B.
RISK FACTORS.
GENERAL -- The net asset value per share of each LifePath Master Series is not
fixed and should be expected to fluctuate.
INVESTMENT TECHNIQUES -- Each LifePath Master Series may engage in various
investment techniques the use of which involves greater risk than that incurred
by other funds with similar investment objectives. See "Appendix -- Investment
Techniques." Using these techniques may affect the degree to which a LifePath
Master Series' net asset value fluctuates.
EQUITY SECURITIES -- Investors should be aware that equity securities fluctuate
in value, often based on factors unrelated to the value of the issuer of the
securities, and that fluctuations can be pronounced. Changes in the value of a
LifePath Master Series' portfolio securities result in changes in the value of
such LifePath Master Series' shares and thus the LifePath Master Series' total
returns to investors.
The securities of the smaller companies in which each LifePath
Master Series may invest may be subject to more abrupt or erratic market
movements than larger, more-established companies, both because the securities
typically are traded in lower volume and because the issuers typically are
subject to a greater degree to changes in earnings and prospects.
FIXED-INCOME SECURITIES -- Investors should be aware that even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Longer-term securities are affected to a greater extent by
interest rates than shorter-term securities. The values of fixed-income
securities also may be affected by changes in the credit rating or financial
condition of the issuing entities. Certain securities that may be purchased by
the LifePath Master Series, such as those rated Baa by Moody's and BBB by S&P,
Fitch and Duff, may be subject to such risk with respect to the issuing entity
and to greater market fluctuations than certain lower yielding, higher rated
fixed-income securities. Securities which are rated Baa by Moody's are
considered medium-grade obligations; they are neither highly protected nor
poorly secured, and are considered by Moody's to have speculative
characteristics. Securities rated BBB by S&P are regarded as having adequate
capacity to pay interest and repay principal, and while such debt securities
ordinarily exhibit adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for securities in this category than in higher
rated categories. Securities rated BBB by Fitch are considered investment
grade and of satisfactory credit quality; however, adverse changes in economic
conditions and circumstances
8
<PAGE> 50
are more likely to have an adverse impact on these securities and, therefore,
impair timely payment. Securities rated BBB by Duff have below average
protection factors but nonetheless are considered sufficient for prudent
investment. If a security held by a LifePath Master Series is downgraded to a
rating below investment grade, such Master Series may continue to hold the
security until such time as BGFA determines it advantageous for the LifePath
Master Series to sell the security. If such a policy would cause a LifePath
Master Series to have 5% or more of its net assets invested in securities that
have been downgraded below investment grade, the Master Series promptly would
seek to dispose of such securities in an orderly manner. See "Appendix --
Portfolio Securities -- Ratings" and "Appendix" in Part B.
FOREIGN SECURITIES -- Foreign securities markets generally are not as developed
or efficient as those in the United States. Securities of some foreign issuers
are less liquid and more volatile than securities of comparable U.S. issuers.
Similarly, volume and liquidity in most foreign securities markets are less
than in the United States and, at times, volatility of price can be greater
than in the United States. In addition, there may be less publicly available
information about a non-U.S. issuer, and non-U.S. issuers generally are not
subject to uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers. See "Appendix --
Portfolio Securities -- Bank Obligations."
Because evidences of ownership of such securities usually are held
outside the United States, each Master Series is subject to additional risks
which include possible adverse political and economic developments, possible
seizure or nationalization of foreign deposits and possible adoption of
governmental restrictions which might adversely affect the payment of principal
and interest on the foreign securities or might restrict the payment of
principal and interest to investors located outside the country of the issuers,
whether from currency blockage or otherwise. Custodial expenses for a
portfolio of non-U.S. securities generally are higher than for a portfolio of
U.S. securities.
Since the LifePath Master Series may purchase foreign securities
in currencies of foreign countries, the value of these assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and exchange control regulations. Some currency exchange costs generally
are incurred when a LifePath Master Series changes investments from one country
to another.
Furthermore, some of these securities may be subject to brokerage
or stamp taxes levied by foreign governments, which have the effect of
increasing the cost of such investment and reducing the realized gain or
increasing the realized loss on such securities at the time of sale. Income
received by a LifePath Master Series from sources within foreign countries may
be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may
reduce or eliminate such taxes. All such taxes paid by a Master Series reduce
its net income available for distribution to its interestholders.
FOREIGN CURRENCY EXCHANGE -- Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the
9
<PAGE> 51
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates
also can be affected unpredictably by the intervention of U.S. or foreign
governments or central banks, or by the failure to intervene, or by currency
controls or political developments in the United States or abroad. The
LifePath Master Series intend to engage in foreign currency transactions to
maintain the same foreign currency exposure as the relevant foreign securities
index through which the LifePath Master Series seek foreign equity market
exposure, but not as part of a defensive strategy to protect against
fluctuations in exchange rates.
Foreign currency transactions may occur on a spot (i.e., cash)
basis at the rate prevailing in the currency exchange market or on a forward
basis. A forward currency exchange contract involves an obligation to purchase
or sell a specific currency at a set price on a future date which must be more
than two days from the date of the contract. The forward foreign currency
market offers less protection against default than is available when trading
currencies on an exchange, since a forward currency contract is not guaranteed
by an exchange or clearinghouse. Therefore, a default on a forward currency
contract would deprive the LifePath Master Series of unrealized profits or
force such Master Series to cover its commitments for purchase or resale, if
any, at the current market price.
FOREIGN FUTURES TRANSACTIONS -- Unlike trading on domestic futures exchanges,
trading on foreign futures exchanges is not regulated by the Commodity Futures
Trading Commission (the "CFTC") and generally is subject to greater risks than
trading on domestic exchanges. For example, some foreign exchanges are
principal markets so that no common clearing facility exists and an investor
may look only to the broker for performance of the contract. BGFA, however,
considers on an ongoing basis the creditworthiness of such counterparties. In
addition, any profits that a LifePath Master Series might realize in trading
could be eliminated by adverse changes in the exchange rate; adverse exchange
rate changes also could cause a LifePath Master Series to incur losses.
Transactions on foreign exchanges may include both futures contracts which are
traded on domestic exchanges and those which are not.
OTHER INVESTMENT CONSIDERATIONS -- Asset allocation and modeling strategies are
employed by BGFA for other investment companies and accounts advised or
sub-advised by BGFA. If these strategies indicate particular securities should
be purchased or sold, at the same time, by a LifePath Master Series and one or
more of these investment companies or accounts, available investments or
opportunities for sales are allocated equitably to each by BGFA. In some
cases, this procedure may adversely affect the size of the position obtained
for or disposed of by a LifePath Master Series or the price paid or received by
such LifePath Master Series.
Under normal market conditions, the portfolio turnover rate for
each LifePath Master Series is not expected to exceed 100%. A portfolio
turnover rate of 100% would occur, for example, if all of a LifePath Master
Series' securities were replaced within one year. Higher portfolio turnover
rates are likely to result in comparatively greater brokerage commissions. In
addition, short-term gains realized from portfolio transactions are taxable to
interestholders as ordinary income. Portfolio turnover is not a limiting
factor in making investment decisions.
10
<PAGE> 52
Item 5. Management of the Portfolio.
INVESTMENT ADVISER AND SUB-INVESTMENT ADVISER --Pursuant to separate investment
advisory contracts dated January 1, 1996 (the "BGFA Advisory Contracts"), BGFA
serves as investment adviser to each of the LifePath Master Series. The BGFA
Advisory Contracts are identical in all material respects, other than the
identity of the parties, to the investment advisory contracts with Wells Fargo
Bank, the prior investment adviser to each Master Series. The investment
advisory contracts with Wells Fargo Bank and the sub-advisory contracts with
WFNIA terminated as of January 1, 1996. BGFA is an indirect subsidiary of
Barclays Bank PLC ("Barclays") and is located at 45 Fremont Street, San
Francisco, CA 94105. As of January 1, 1996, BGFA and its affiliates provide
investment advisory services for over $220 billion of assets under management.
The BGFA Advisory Contracts provide that BGFA shall furnish to
each LifePath Master Series investment guidance and policy direction in
connection with the daily portfolio management of such Master Series, subject
to the supervision of the Master Portfolio's Board of Trustees and in
conformity with Delaware law and the stated policies of each Master Series.
Pursuant to the BGFA Advisory Contracts, BGFA furnishes to the Board of
Trustees of the Master Portfolio periodic reports on the investment strategy
and performance of each LifePath Master Series. BGFA will continue to employ
substantially the same WFNIA investment professionals that previously managed
the investment portfolio of each Master Series.
BGFA is entitled to receive monthly fees at the annual rate of
0.55% of the average daily net assets of each LifePath Master Series 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
Series and, accordingly, have a favorably impact on the return and yield of
such Master Series.
BGFA may deal, trade and invest for its own account in the types
of securities in which the Master Series may invest. BGFA has informed the
Master Portfolio that in making its investment decisions it does not obtain or
use material inside information in its possession.
Prior to January 1, 1996, Wells Fargo Bank, a wholly owned
subsidiary of Wells Fargo & Company located at 420 Montgomery Street, San
Francisco, California 94105, was each Master Series' investment adviser. Wells
Fargo Bank, one of the largest banks in the United States, was founded in 1852
and is the oldest bank in the western United States. As of January 1, 1996,
Wells Fargo Bank provides investment advisory services for approximately $33
billion of assets under management. Pursuant to an Investment Advisory
Agreement with the Master Portfolio, Wells Fargo Bank provided investment
guidance and policy direction in connection with the management of each Master
Series' assets, subject to the supervision of the Master Portfolio's Board of
Trustees and in conformity with Delaware law and the stated policies of such
Master Series.
Prior to January 1, 1996, Wells Fargo Bank engaged WFNIA, located
at 45 Fremont Street, San Francisco, California 94105, to provide
sub-investment advisory services to each
11
<PAGE> 53
Master Series. WFNIA was a general partnership, which was dissolved on
December 31, 1995, owned 50% by a wholly owned subsidiary of Wells Fargo Bank
and 50% by a subsidiary of The Nikko Securities Co., Ltd.
Pursuant to a Sub-Investment Advisory Agreement, WFNIA, subject to
the supervision and approval of Wells Fargo Bank, provided investment advisory
assistance and the day-to-day management of each Master Series' assets, subject
to the overall authority of the Master Portfolio's Board of Trustees and in
conformity with Delaware law and the stated policies of such Master Series.
Under the terms of the prior Investment Advisory Agreement with
Wells Fargo Bank, the Master Portfolio was contractually obligated to pay a
monthly fee at the annual rate of 0.55% of each LifePath Master Series' average
daily net assets. Wells Fargo Bank was contractually obligated to pay WFNIA a
monthly fee at the annual rate of 0.40% of each LifePath Master Series' average
daily net assets. For the fiscal year ended February 28, 1995, the Master
Portfolio paid to Wells Fargo Bank fees of 0.55% of the average daily net
assets of each LifePath Master Series as compensation for advisory services to
such Master Series. For the same period, Wells Fargo Bank paid fees of 0.40%
of the average daily nets assets of each Master Series to WFNIA for its
sub-investment advisory services to such Master Series.
ADMINISTRATOR AND PLACEMENT AGENT -- Stephens Inc. ("Stephens"), located at 111
Center Street, Little Rock, Arkansas 72201, serves as the Master Portfolio's
administrator pursuant to an Administration Agreement with the Master
Portfolio. Under the Administration Agreement, Stephens provides general
supervision of the operation of the Master Portfolio and the Master Series,
other than the provision of investment advice, subject to the overall authority
of the Master Portfolio's Board of Trustees and in accordance with Delaware
law. The administrative services provided to the Master Series also include
coordination of the other services provided to the Master Series, compilation
of information for reports to the Securities and Exchange Commission and state
securities commissions, preparation of proxy statements and interestholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the Master Portfolio's Board of Trustees and
officers. Stephens also furnishes office space and certain facilities to
conduct the Master Portfolio's business, and compensates the Master Portfolio's
Trustees, officers and employees who are affiliated with Stephens. Stephens is
not entitled to compensation for providing administrative services to a Master
Series so long as Stephens receives fees for providing similar services to a
fund of another registered investment company that invests all of its assets in
the Master Series.
Stephens also serves as placement agent for each Master Series'
shares.
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.
12
<PAGE> 54
CUSTODIAN AND TRANSFER AGENT. BGI serves as custodian to each Master Series
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 held 100% of WFITC's outstanding voting securities. Wells
Fargo Bank is the Master Portfolio's Transfer and Dividend Disbursing Agent
(the "Transfer Agent"). Wells Fargo Bank performs transfer agency services at
525 Market Street, San Francisco, California 94105-1308.
EXPENSES. All expenses incurred in the operation of the Master Portfolio are
borne by the Master Portfolio, except to the extent specifically assumed by
BGFA and Stephens (or, prior to January 1, 1996, by Wells Fargo Bank). The
expenses borne by the Master Portfolio include: organizational costs;
brokerage fees and commissions, if any; advisory fees; the compensation of
Trustees who are not affiliated with Stephens or BGFA or any of their
affiliates; interest charges; fees and expenses of independent accountants and
legal counsel; expenses of preparing offering documents for regulatory purposes
and for distribution to existing interestholders, interestholders' reports,
notices, proxy statements and reports to regulatory agencies; taxes; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; expenses of interestholders' meetings; expenses relating to
the issuance, registration and qualification of shares; costs of independent
pricing services; and any extraordinary expenses. Expenses attributable to a
particular Master Series are charged against the assets of that Master Series;
other expenses of the Master Portfolio are allocated among the Master Series on
the basis determined by the Board of Trustees, including, but not limited to,
proportionately in relation to the net assets of each Master Series.
Item 6. Capital Stock and Other Securities.
The Master Portfolio is organized as a trust under the laws of the
State of Delaware. Investors in the Master Portfolio are each liable for all
obligations of the Master Portfolio. 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 the Master
Portfolio itself is unable to meet its obligations.
To date, the Board of Trustees has authorized the creation of 14
separate series. All consideration received by the Master Portfolio for shares
of one of the series and all assets in which such consideration is invested
belong to that series (subject only to the rights of creditors of the Master
Portfolio) and is subject to the liabilities related thereto. The income
attributable to, and the expenses of, one series are treated separately from
those of the other series. The Master Portfolio has the ability to create,
from time to time, new series without interestholder approval.
Master Series shares are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and are not federally insured by the
Federal Deposit Insurance Corporation (the "FDIC"), the Federal Reserve Board
or any other agency. Master Series shares involve certain
13
<PAGE> 55
investment risks, including the possible loss of principal. Each LifePath
Master Series' share price and investment return fluctuate and are not
guaranteed.
Unless otherwise required by the 1940 Act, ordinarily it is not
necessary for the Master Portfolio to hold annual meetings of interestholders.
As a result, interestholders may not consider each year the election of
Trustees or the appointment of auditors. However, the holders of at least 10%
of the shares outstanding and entitled to vote may require the Master Portfolio
to hold a special meeting of interestholders for purposes of removing a Trustee
from office. Master Portfolio interestholders may remove a Trustee by the
affirmative vote of a majority of the Master Portfolio's outstanding voting
shares. In addition, the Board of Trustees will call a meeting of
interestholders for the purpose of electing Trustees if, at any time, less than
a majority of the Trustees then holding office have been elected by
interestholders. Investments in a Master Series may not be transferred, but an
investor may withdraw all or any portion of its investment at any time at net
asset value.
Under the Master Portfolio's anticipated method of operation as a
partnership, each Master Series is not subject to any income tax. However,
each investor in a Master Series is taxable on its share (as determined in
accordance with the governing instruments of the Master Portfolio) of such
Master Series' ordinary income and capital gain in determining its income tax
liability. The determination of such share is made in accordance with the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
Each Master Series is managed so that each investment company that
invests all of its assets in a Master Series qualifies as a "regulated
investment company" under the Code.
As of December 15, 1995 each LifePath Fund owned approximately
100% of the outstanding interests in the corresponding LifePath Master Series
and therefore could be considered to be a controlling person of the
corresponding LifePath Master Series for purposes of the 1940 Act.
Item 7. Purchase of Securities.
Beneficial interests in the Master Series are issued solely in
private placement transactions which do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the Master
Series may be made only by investment companies or certain other entities which
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.
Shares of each Master Series are sold on a continuous basis at the
net asset value per share next determined after an order in proper form is
received by the Transfer Agent. Net asset value per share for each LifePath
Master Series is determined as of the close of trading on the New York Stock
Exchange ("NYSE") (currently 4:00 p.m., New York time) on each day the NYSE is
open for business (a "Business Day"). Net asset value per share is computed by
14
<PAGE> 56
dividing the value of the Master Series' net assets (i.e., the value of its
assets less liabilities) by the total number of shares of such Master Series
outstanding. The Master Series' investments are valued each Business Day
generally by using available market quotations or at fair value determined in
good faith by the investment adviser or sub-adviser pursuant to guidelines
approved by the Master Portfolio's Board of Trustees. For further information
regarding the methods employed in valuing each Master Series' investments, see
Item 19, "Purchase, Redemption and Pricing of Securities," in Part B.
Item 8. Redemption or Repurchase.
An investor in the Master Portfolio may withdraw all or any
portion of its investment on any Business Day at the net asset value next
determined after a withdrawal request in proper form is furnished by the
investor to the Transfer Agent. When a request is received in proper form, the
Master Portfolio redeems the shares at the next determined net asset value.
The Master Portfolio makes payment for all shares redeemed within
five days after receipt by the Transfer Agent of a redemption request in proper
form, except as provided by the rules of the Securities and Exchange
Commission. Investments in a Master Series 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 New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
Item 9. Pending Legal Proceedings.
Not applicable.
15
<PAGE> 57
APPENDIX
PORTFOLIO SECURITIES.
To the extent set forth in this offering document, each Master
Series may invest in the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- 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 maturity. Treasury bills, the
most frequently issued marketable government securities, have a maturity 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 agencies or instrumentalities of the 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 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.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES -- Each
Master Series, through its investment in money market instruments, may invest
in obligations issued or guaranteed by one or more foreign governments or any
of their political subdivisions, agencies or instrumentalities that are
determined by BGFA to be of comparable quality to the other obligations in
which such Master Series may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank. The percentage of a Master Series' assets
invested in securities issued by foreign governments varies depending on the
relative yields of such securities, the economic and financial markets of the
countries in which the investments are made and the interest rate climate of
such countries.
A-1
<PAGE> 58
BANK OBLIGATIONS -- Each Master Series may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations of domestic banks, foreign subsidiaries of
domestic banks, foreign branches of domestic banks, and domestic and foreign
branches of foreign banks, domestic savings and loan associations and other
banking institutions. With respect to such securities issued by foreign
branches of domestic banks, foreign subsidiaries of domestic banks, and
domestic and foreign branches of foreign banks, a Master Series may be subject
to additional investment risks that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible future political and economic
developments, the possible imposition of foreign withholding taxes on interest
income payable on the securities, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities and
the possible seizure or nationalization of foreign deposits.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a Master Series will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to pay a draft drawn on it by a customer. These
instruments reflect the obligation both of the bank and of the drawer to pay
the face amount of the instrument upon maturity. The other short-term
obligations may include uninsured, direct obligations, bearing fixed, floating
or variable interest rates.
COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS -- Each Master
Series may invest in commercial paper, which consists of short-term, unsecured
promissory notes issued to finance short-term credit needs. The commercial
paper purchased by the LifePath Master Series consists only of direct
obligations which, at the time of their purchase, are (a) rated not lower than
Prime-1 by Moody's, A-1 by S&P, F-1 by Fitch or Duff-1 by Duff, (b) issued by
companies having an outstanding unsecured debt issue currently rated not lower
than Aa3 by Moody's or AA- by S&P, Fitch or Duff, or (c) if unrated, determined
by WFNIA to be of comparable quality to those rated obligations which may be
purchased by such Master Series.
REPURCHASE AGREEMENTS -- Each Master Series may enter into repurchase
agreements, which involve the acquisition by a Master Series of an underlying
debt instrument, subject to an obligation of the seller to repurchase, and such
Master Series to resell, the instrument at a fixed price usually not more than
one week after its purchase. The Master Portfolio's custodian or sub-custodian
will have custody of, and will hold in a segregated account, securities
acquired by a Master Series under a repurchase agreement. Repurchase
agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Master Series entering into them. In an attempt
to reduce the risk of incurring a loss on a repurchase agreement, each Master
Series
A-2
<PAGE> 59
enters into repurchase agreements only with federally regulated or insured
banks or primary government securities dealers reporting to the Federal Reserve
Bank of New York or their affiliates, or, under certain circumstances, banks
with total assets in excess of $5 billion or domestic broker/dealers with total
equity capital in excess of $100 million, with respect to securities of the
type in which such Master Series may invest or government securities regardless
of their remaining maturities, and requires that additional securities be
deposited with it if the value of the securities purchased should decrease
below the repurchase price. BGFA monitors on an ongoing basis the value of the
collateral to assure that it always equals or exceeds the repurchase price.
Certain costs may be incurred by a Master Series in connection with the sale of
the securities if the seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
a Master Series may be delayed or limited. Each Master Series considers on an
ongoing basis the creditworthiness of the institutions with which it enters
into repurchase agreements.
UNREGISTERED NOTES -- Each Master Series may purchase unsecured promissory
notes ("Notes") which are not readily marketable and have not been registered
under the 1933 Act, provided such investments are consistent with such Master
Series' goal. No Master Series invests more than 15% (10% in the case of the
Money Market Master Series) of the value of its net assets in Notes and in
other illiquid securities.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- Each Master Series may purchase
floating- and variable-rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 13 months, but which permit
the holder to demand payment of principal at any time, or at specified
intervals not exceeding 13 months. Variable-rate demand notes include master
demand notes which are obligations that permit a Master Series to invest
fluctuating amounts, which may change daily without penalty, pursuant to direct
arrangements between the Master Series, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations ordinarily has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a
variable-rate demand obligation is adjusted automatically at specified
intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded. There generally
is no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master Series'
right to redeem is dependent on the ability of the borrower to pay principal
and interest on demand. Such obligations frequently are not rated by credit
rating agencies, and each Master Series may invest in obligations which are not
so rated only if BGFA determines that at the time of investment the obligations
are of comparable quality to the other obligations in which such Master Series
may invest. BGFA, on behalf of each Master Series, considers on an ongoing
basis the creditworthiness of the issuers of illiquid securities including
A-3
<PAGE> 60
floating- and variable-rate demand obligations in such Master Series'
portfolio. No Master Series will invest more than 15% of the value of its net
assets in illiquid securities, including floating- or variable-rate demand
obligations as to which it cannot exercise the demand feature on not more than
seven days' notice if there is no secondary market available for these
obligations.
PARTICIPATION INTERESTS -- Each Master Series may purchase from financial
institutions participation interests in securities in which such Master Series
may invest. A participation interest gives the Master Series an undivided
interest in the security in the proportion that the Master Series'
participation interest bears to the total principal amount of the security.
These instruments may have fixed, floating or variable rates of interest. If
the participation interest is unrated, or has been given a rating below that
which is permissible for purchase by the Master Series, the participation
interest must be backed by an irrevocable letter of credit or guarantee of a
bank, or the payment obligation otherwise must be collateralized by U.S.
Government obligations, or, in the case of unrated participation interests,
BGFA must have determined that the instrument is of comparable quality to those
instruments in which such Master Series may invest. Prior to a Master Series'
purchase of any such instrument backed by a letter of credit or guarantee of a
bank, BGFA evaluates the creditworthiness of the bank, considering all factors
which it deems relevant, which generally may include review of the bank's cash
flow, level of short-term debt, leverage, capitalization, the quality and depth
of management, profitability, return on assets, and economic factors relative
to the banking industry. For certain participation interests, the Master
Series has the right to demand payment, on not more than seven days' notice,
for all or any part of the Master Series' participation interest in the
security, plus accrued interest. As to these instruments, each Master Series
intends to exercise its right to demand payment only upon a default under the
terms of the security, as needed to provide liquidity to meet redemptions, or
to maintain or improve the quality of its investment portfolio.
MORTGAGE-RELATED SECURITIES -- Each Master Series may invest in
mortgage-related securities ("MBSs"), which are securities representing
interests in a pool of loans secured by mortgages. The resulting cash flow
from these mortgages is used to pay principal and interest on the securities.
MBSs are assembled for sale to investors by various government-sponsored
enterprises such as the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC") or are guaranteed by such
government agencies as the Government National Mortgage Association ("GNMA").
Regardless of the type of guarantee, all MBSs are subject to interest rate risk
(i.e., exposure to loss due to changes in interest rates).
GNMA MBSs include GNMA Mortgage Pass-Through Certificates (also
known as "Ginnie Maes") which are guaranteed as to the full and timely payment
of principal and interest by GNMA and such guarantee is backed by the authority
of GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. government corporation within the
Department of Housing and Urban Development and, as such, GNMA obligations are
obligations of the United States and 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 (also known as "Fannie Maes")
which are solely the obligations of FNMA and are neither backed by nor entitled
to the full faith and credit of the United States. FNMA is a
government-sponsored enterprise which is a private corporation
A-4
<PAGE> 61
whose stock trades on the NYSE. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA. MBSs issued by FHLMC include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
FHLMC is a government-sponsored enterprise whose MBSs are solely the
obligations of FHLMC. Therefore, Freddie Macs are not guaranteed by the United
States or by any Federal Home Loan Bank and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. FHLMC
guarantees timely payment of interest, but only the ultimate payment of
principal under the obligations it issues. FHLMC may, under certain
circumstances, remit the guaranteed payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after
the guarantee becomes payable.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS -- Each Master Series'
assets may be invested in the securities of foreign issuers in the form of
American Depositary Receipts ("ADRs") and European Depositary Receipts
("EDRs"). These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a United States bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs,
which are sometimes referred to as Continental Depositary Receipts ("CDRs"),
are receipts issued in Europe typically by non-United States banks and trust
companies that evidence ownership of either foreign or domestic securities.
Generally, ADRs in registered form are designed for use in the U. S.
securities markets and EDRs and CDRs in bearer form are designed for use in
Europe. Each Master Series may invest in ADRs, EDRs and CDRs through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a depositary, whereas a
depositary may establish an unsponsored facility without participation by the
issuer of the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute
interestholder communications received from the issuer of the deposited
security or to pass through voting rights to the holders of such receipts in
respect of the deposited securities.
CONVERTIBLE SECURITIES -- Each Master Series may purchase fixed-income
convertible securities, such as bonds or preferred stock, which may be
converted at a stated price within a specified period of time into a specified
number of shares of common stock of the same or a different issuer.
Convertible securities are senior to common stock in a corporation's capital
structure, but usually are subordinated to non-convertible debt securities.
While providing a fixed-income stream (generally higher in yield than the
income from a common stock but lower than that afforded by a non-convertible
debt security), a convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of the common stock into which it is convertible.
In general, the market value of a convertible security is the
higher of its "investment value" (i.e., its value as a fixed-income security)
or its "conversion value" (i.e., the value of the underlying shares of common
stock if the security is converted). As a fixed-income security, the market
value of a convertible security generally increases when interest rates decline
and generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a
A-5
<PAGE> 62
convertible security generally increases as the market value of the underlying
stock increases and generally decreases as the market value of the underlying
stock declines. Investments in convertible securities generally entail less
risk than investments in the common stock of the same issuer.
WARRANTS -- Each Master Series may invest generally up to 5% of its net assets
in warrants, except that this limitation does not apply to warrants acquired in
units or attached to securities. A warrant is an instrument issued by a
corporation which gives the holder the right to subscribe to a specified amount
of the corporation's capital stock at a set price for a specified period of
time.
ILLIQUID SECURITIES -- Each Master Series may invest up to 15% (10% with
respect to the Money Market Master Series) of the value of its net assets in
securities as to which a liquid trading market does not exist, provided such
investments are consistent with its investment objective. Such securities may
include securities that are not readily marketable, such as certain securities
that are subject to legal or contractual restrictions on resale, participation
interests that are not subject to the demand feature described above, floating-
and variable-rate demand obligations as to which the Master Series cannot
exercise the related demand feature described above on not more than seven
days' notice and as to which there is no secondary market and repurchase
agreements providing for settlement in more than seven days after notice.
Disposing of illiquid securities may involve additional costs and require
additional time. However, if a substantial market of qualified institutional
buyers develops pursuant to Rule 144A under the 1933 Act, for certain of these
securities held by a Master Series, such Master Series intends to treat such
securities as liquid securities in accordance with procedures approved by the
Master Portfolio's Board of Trustees. Because it is not possible to predict
with assurance how the market for restricted securities pursuant to Rule 144A
will develop, the Master Portfolio's Board of Trustees has directed WFNIA to
monitor carefully each Master Series' investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. To the extent that for a period of
time, qualified institutional buyers cease purchasing such restricted
securities pursuant to Rule 144A, a Master Series' investing in such securities
may have the effect of increasing the level of illiquidity in such Master
Series' portfolio during such period.
INVESTMENT COMPANY SECURITIES -- Each Master Series may invest in securities
issued by other investment companies which principally invest in securities of
the type in which such Master Series invests. Under the 1940 Act, a Master
Series' investment in such securities currently is limited to, subject to
certain exceptions, (i) 3% of the total voting stock of any one investment
company, (ii) 5% of such Master Series' net assets with respect to any one
investment company and (iii) 10% of such Master Series' net assets in the
aggregate. Investments in the securities of other investment companies involve
duplication of advisory fees and certain other expenses.
RATINGS -- The ratings of Moody's, S&P, Fitch and Duff represent their opinions
as to the quality of the obligations which they undertake to rate. It should
be emphasized, however, that ratings are relative and subjective and, although
ratings may be useful in evaluating the safety of interest and principal
payments, they do not evaluate the market value risk of such obligations.
A-6
<PAGE> 63
Therefore, although these ratings may be an initial criterion for selection of
portfolio investments, BGFA also evaluates such obligations and the ability of
their issuers to pay interest and principal. Each Master Series relies on
BGFA' judgment, analysis and experience in evaluating the creditworthiness of
an issuer. In this evaluation, BGFA takes into consideration, among other
things, the issuer's financial resources, its sensitivity to economic
conditions and trends, the quality of the issuer's management and regulatory
matters. It also is possible that a rating agency might not timely change the
rating on a particular issue to reflect subsequent events. See Item 4,
"General Description of Registrant -- Risk Factors -- Fixed-Income Securities."
INVESTMENT TECHNIQUES.
STOCK INDEX OPTIONS -- Each Master Series may purchase and write (i.e., sell)
put and call options on stock indices as a substitute for comparable market
positions in the underlying securities. A stock index fluctuates with changes
in the market values of the stocks included in the index. The aggregate
premiums paid on all options purchased may not exceed 20% of a Master Series'
total assets and the value of options written or purchased may not exceed 10%
of the value of a Master Series' total assets.
The effectiveness of purchasing or writing stock index options
depends upon the extent to which price movements in the Master Series'
portfolio correlate with price movements of the stock index selected. Because
the value of an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether a Master Series realizes a
gain or loss from purchasing or writing stock options on an index depends upon
movements in the level of stock prices in the stock market generally or, in the
case of certain indices, in an industry or market segment, rather than
movements in the price of a particular stock.
When a Master Series writes an option on a stock index, such
LifePath Master Series places in a segregated account with the Master
Portfolio's custodian cash or liquid securities in an amount at least equal to
the market value of the underlying stock index and maintains the account while
the option is open or otherwise covers the transaction.
FUTURES TRANSACTIONS -- IN GENERAL -- None of the Master Series is a commodity
pool. To the extent permitted by applicable regulations, each Master Series is
permitted to use futures as a substitute for a comparable market position in
the underlying securities.
A futures contract is an agreement between two parties, a buyer
and a seller, to exchange a particular commodity at a specific price on a
specific date in the future. Futures contracts are traded on exchanges, where
the exchange serves as the ultimate counterparty for all contracts.
Consequently, the only credit risk on futures contracts is the creditworthiness
of the exchange. Futures contracts are, however, subject to market risk (i.e.,
exposure to adverse price changes).
Each Master Series may trade futures contracts and may purchase
and write options on futures contracts in U.S. domestic markets, such as the
Chicago Board of Trade and the
A-7
<PAGE> 64
International Monetary Market of the Chicago Mercantile Exchange, or, to the
extent permitted under applicable law, on exchanges located outside the United
States, such as the London International Financial Futures Exchange, the
Deutscher Aktienindex and the Sydney Futures Exchange Limited. See Item 4,
"General Description of Registrant -- Risk Factors -- Foreign Futures
Transactions."
Each Master Series' futures transactions must constitute
permissible transactions pursuant to regulations promulgated by the CFTC. In
addition, a Master Series may not engage in futures transactions if the sum of
the amount of initial margin deposits and premiums paid for unexpired options
on futures contracts other than those contracts entered into for bona fide
hedging purposes, would exceed 5% of the liquidation value of the Master
Series' assets, after taking into account unrealized profits and unrealized
losses on such contracts it has entered into; provided, however, that in the
case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating this 5% liquidation limit.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, a LifePath Master Series may be required to segregate cash
or high quality money market instruments in connection with its futures
transactions in an amount generally equal to the entire value of the underlying
security.
Initially, when purchasing or selling futures contracts a Master
Series is required to deposit with the Portfolio's custodian in the broker's
name an amount of cash or cash equivalents up to approximately 10% of the
contract amount. This amount is subject to change by the exchange or board of
trade on which the contract is traded. Members of such exchange or board of
trade may impose their own higher requirements. This amount is known as
"initial margin" and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Master Series upon termination
of the futures position, assuming all contractual obligations have been
satisfied. Subsequent payments to and from the broker, known as "variation
margin," are made daily as the price of the index or securities underlying the
futures contract fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking-to-market." At any
time prior to the expiration of a futures contract, the LifePath Master Series
may elect to close the position by taking an opposite position, at the
then-prevailing price, thereby terminating its existing position in the
contract.
Although each Master Series may purchase or sell futures contracts
only if there is an active market for such contracts, no assurance can be given
that a liquid market exists for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for specified
periods during the trading day. Futures contract prices could move to the
limit for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and potentially subjecting
the relevant Master Series to substantial losses. If it is not possible, or
the Master Series determines not to close a futures position in anticipation of
adverse price movements, it will be required to make daily cash payments of
variation margin.
A-8
<PAGE> 65
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
at a specified exercise price at any time during the option exercise period.
The writer (i.e., seller) of the option is required upon exercise to assume an
offsetting futures position (a short position if the option is a call and a
long position if the option is a put). Upon exercise of the option, the
assumption of offsetting futures positions by both the writer and the holder of
the option is accompanied by delivery of the accumulated cash balance in the
writer's futures margin account in the amount by which the market price of the
futures contract, at exercise, exceeds (in the case of a call) or is less than
(in the case of a put) the exercise price of the option on the futures
contract.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES -- Each Master Series
may purchase and sell stock index futures contracts and options on stock index
futures contracts.
A stock index future obligates the seller to deliver (and the
purchaser to take), effectively, an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks in the index
is made. With respect to stock indices that are permitted investments, each
Master Series intends to purchase and sell futures contracts on the stock index
for which it can obtain the best price with consideration also given to
liquidity.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES CONTRACTS
- -- Each Master Series may invest in interest rate futures contracts and options
on interest rate futures contracts as a substitute for a comparable market
position in the underlying securities.
Each Master Series also may write options on interest rate futures
contracts as part of closing purchase transactions to terminate its options
positions. No assurance can be given that such closing transactions can be
effected or concerning the degree of correlation between price movements in the
options on interest rate futures and price movements in the LifePath Master
Series' portfolio securities which are the subject of the transaction.
INTEREST RATE AND INDEX SWAPS -- Each Master Series may enter into interest
rate and index swaps in pursuit of its investment objective. Interest rate
swaps involve the exchange by a Master Series with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating-rate payments for fixed-rate payments). Index swaps involve the
exchange by a Master Series with another party of cash flows based upon the
performance of an index or a portion of an index (usually including dividends
or income). In each case, the exchange commitments can involve payments to be
made in the same currency or in different currencies.
Each Master Series usually enters into swaps on a net basis. In
so doing, only the net difference of the payment obligations is exchanged
between the counterparties. If a Master Series enters into a swap, it
maintains a segregated account in an amount equivalent to the gross value of
its payment obligations unless the contract provides otherwise. If the party
to such a
A-9
<PAGE> 66
transaction defaults on a swap, the Master Series has contractual remedies
pursuant to the agreements related to the transaction. In such a case, the
Master Series' risk of loss consists of the net amount of payments that the
Master Series contractually is entitled to receive.
The use of interest rate and index swaps is a highly specialized
activity which involves investment techniques different from those associated
with ordinary portfolio security transactions. There is no limit, except as
provided below, on the amount of swap transactions that may be entered into by
a Master Series. These transactions generally do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps generally is limited to the net amount of payments
that the Master Series is contractually obligated to receive. No Master Series
invests more than 15% of the value of its net assets in swaps that are
illiquid, and in other illiquid securities.
FOREIGN CURRENCY TRANSACTIONS -- Each Master Series may engage in currency
exchange transactions either on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market, or by entering into forward
contracts to purchase or sell currencies. A forward currency exchange contract
involves an obligation between two parties to exchange a specific currency at a
set price on a future date, which must be more than two days from the date of
the contract. These contracts are entered into in the interbank market
conducted directly between currency traders (typically commercial banks or
other financial institutions) and their customers.
Each Master Series may combine forward currency exchange contracts
with investments in securities denominated in other currencies.
Each Master Series also may maintain short positions in forward
currency exchange transactions, which would involve the Master Series agreeing
to exchange an amount of a currency it did not currently own for another
currency at a future date in anticipation of a decline in the value of the
currency sold relative to the currency such Master Series contracted to receive
in the exchange.
LENDING PORTFOLIO SECURITIES -- From time to time, each Master Series may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions.
Such loans may not exceed one-third of the value of the relevant Master Series'
total assets. In connection with such loans, each Master Series receives
collateral consisting of cash, U.S. Government obligations or other
high-quality debt instruments. which are maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities.
Each Master Series can increase its income through the investment of such
collateral. Each Master Series continues to be entitled to payments in amounts
equal to the dividends, interest and other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans are
terminable at any time upon specified notice. A Master Series might experience
risk of loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with such Master Series.
FORWARD COMMITMENTS -- Each Master Series may purchase securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment but
A-10
<PAGE> 67
delivery and payment ordinarily take place a number of days after the date of
the commitment to purchase. A Master Series makes commitments to purchase such
securities only with the intention of actually acquiring the securities, but
the Master Series may sell these securities before the settlement date if it is
deemed advisable. The Master Series 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 Series' 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 Series 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 Series
consisting of cash, U.S. Government obligations or other high-quality liquid
debt securities at least equal at all times to the amount of the when-issued or
forward commitments is established and maintained at the Master Portfolio's
custodian bank. Purchasing securities on a forward commitment basis when a
Master Series is fully or almost fully invested may result in greater potential
fluctuation in the value of such Master Series' net assets and its net asset
value per share.
BORROWING MONEY -- As a fundamental policy, each Master Series is permitted to
borrow to the extent permitted under the 1940 Act. However, each Master Series
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, in an amount up to one-third of the value of its total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exceed 5% of a Master Series' total assets, such
Master Series will not make any investments.
A-11
<PAGE> 68
- --------------------------------------------------------------------------------
MASTER INVESTMENT PORTFOLIO
STRUCTURED MASTER SERIES
ASSET ALLOCATION MASTER SERIES
U.S. TREASURY ALLOCATION MASTER SERIES
PART B -- STATEMENT OF ADDITIONAL INFORMATION
January 2, 1996
- --------------------------------------------------------------------------------
Item 10. Cover Page.
Master Investment Portfolio ("Master Portfolio") is a registered,
open-end, management investment company. The Master Portfolio is a "series
fund," which is a mutual fund divided into separate portfolios. This Part B is
not a Prospectus and should be read in conjunction with the Master Portfolio's
Part A, also dated January 2,1996. 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"), the Master
Portfolio's sponsor, administrator and placement agent, at 111 Center Street,
Little Rock, Arkansas 72201, or by calling Stephens at (800) 643-9691. The
Master Portfolio's Registration Statement 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>
General Information and History.............. 2
Investment Objectives and Policies........... 2
Management of the Master Portfolio........... 8
Control Persons and Principal Holders of
Securities .................................. 11
Investment Advisory and Other Services....... 11
Brokerage Allocation and Other Practices..... 13
Capital Stock and Other Securities........... 14
Purchase, Redemption and Pricing of
Securities .................................. 15
Tax Status .................................. 17
Underwriters................................. 18
Calculations of Performance Data............. 18
Financial Information........................ 18
Appendix .................................... A-1
Financial Statements......................... F-1
</TABLE>
<PAGE> 69
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objectives and Policies.
The following information supplements and should be
read in conjunction with Item 4 in Part A.
Investment Objectives. Master Investment Portfolio (the "Master
Portfolio") is an open-end, management investment company known
as a mutual fund. By this offering document, the Master
Portfolio is offering two diversified funds -- the Asset
Allocation Master Series and the U.S. Treasury Allocation Master
Series (the "Master Series").
Each Master Series' investment objective is set forth
in Item 4, "General Description of Registrant -- Investment
Objective," of Part A. There can be no assurance that the
investment objectives of each Master Series will be achieved.
Each Master Series' investment objective cannot be changed
without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of such
Master Series' outstanding voting shares.
BZW Barclays Global Fund Advisors ("BGFA") serves as
investment advisor to each Master Series. Prior to January 1,
1996, Wells Fargo Bank, N.A. ("Wells Fargo Bank") served as each
Master Series' investment adviser and Wells Fargo Nikko
Investment Advisors ("WFNIA") served as each Master Series'
sub-investment adviser. BGFA was created by the reorganization of
WFNIA with and into an affiliate of Wells Fargo Institutional
Trust Company ("WFITC"). BGFA is subsidiary of WFITC which,
effective January 1, 1996, changed its name to BZW Barclays
Global Investors, N.A. ("BGI"). Stephens Inc. ("Stephens") serves
as placement agent of each Master Series' shares.
Portfolio Securities.
Bank Obligations. Domestic commercial banks organized
under Federal law are supervised and examined by the Comptroller
of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state
banking authorities but are members of the Federal Reserve System
only if they elect to join. In addition, state banks whose
certificates of deposit ("CDs") may be purchased by each Master
Series are insured by the FDIC (although such insurance may not
be of material benefit to the Master Series, depending on the
principal amount of the CDs of each bank held by the Master
Series) and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of
Federal or state laws and regulations, domestic branches of
domestic banks whose CDs may be purchased by each Master Series
generally are required, among
- 2 -
<PAGE> 70
other things, to maintain specified levels of reserves, are
limited in the amounts which they can loan to a single borrower
and are subject to other regulation designed to promote
financial soundness. However, not all of such laws and
regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks,
foreign subsidiaries of domestic banks and domestic and foreign
branches of foreign banks, such as CDs and time deposits
("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms
of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of
domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that
may adversely affect payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding
and other taxes on interest income. These foreign branches and
subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and
accounting, auditing and financial record keeping requirements.
In addition, less information may be publicly available about a
foreign branch of a domestic bank or about a foreign bank than
about a domestic bank.
Obligations of United States branches of foreign banks
may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific
obligation or by Federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve
requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed
in that state.
In addition, Federal branches licensed by the
Comptroller of the Currency and branches licensed by certain
states ("State Branches") may be required to: (1) pledge to the
regulator, by depositing assets with a designated bank within
the state, a certain percentage of their assets as fixed from
time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a
specified percentage of the aggregate amount of liabilities of
the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State
Branches generally must be insured by the FDIC if such branches
take deposits of less than $100,000.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of domestic
banks, by foreign subsidiaries of domestic banks, by foreign
branches of foreign banks or by domestic branches of foreign
- 3 -
<PAGE> 71
banks, BGFA carefully evaluates such investments on a case-by-
case basis.
Each Master Series may purchase CDs issued by banks,
savings and loan associations and similar thrift institutions
with less than $1 billion in assets, which are members of the
FDIC, provided such Master Series purchases any such CD in a
principal amount of not more than $100,000, which amount would
be fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC. Interest
payments on such a CD are not insured by the FDIC. No Master
Series will own more than one such CD per such issuer.
Management Policies.
Futures Contracts and Options on Futures Contracts.
The Master Series may enter into futures contracts and may
purchase and write options thereon. Upon exercise of an option
on a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated
balance in the writer's futures margin account, which represents
the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of options on futures
contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at
the time of sale, there are no daily cash payments to reflect
changes in the value of the underlying contract; however, the
value of the option does change daily and that change would be
reflected in the net asset value of the relevant Master Series.
Future Developments. Each Master Series may take
advantage of opportunities in the area of options and futures
contracts and options on futures contracts and any other
derivative investments which are not presently contemplated for
use by such Master Series or which are not currently available
but which may be developed, to the extent such opportunities are
both consistent with a Master Series' investment objective and
legally permissible for the Master Series. Before entering into
such transactions or making any such investment, the Master
Series will provide appropriate disclosure in its prospectus.
Lending Portfolio Securities. To a limited extent, each
Master Series may lend its portfolio securities to brokers,
dealers and other financial institutions, provided it receives
cash collateral which at all times is maintained in an amount
equal to at least 100% of the current market value of the
securities loaned. By lending its portfolio securities, a Master
Series can increase its income through the investment of the cash
collateral. For purposes of this policy, each Master Series
considers collateral consisting of U.S.
- 4 -
<PAGE> 72
Government securities or irrevocable letters of credit issued by
banks whose securities meet the standards for investment by such
Master Series to be the equivalent of cash. From time to time,
a Master Series may return to the borrower or a third party
which is unaffiliated with the Master Portfolio, and which is
acting as a "placing broker," a part of the interest earned from
the investment of collateral received for securities loaned.
The SEC currently requires that the following conditions
must be met whenever portfolio securities are loaned: (1) the
Master Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever
the market value of the securities rises above the level of such
collateral; (3) the Master Series must be able to terminate the
loan at any time; (4) the Master Series must receive reasonable
interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase
in market value; (5) the Master Series may pay only reasonable
custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the
Master Portfolio's Board of Trustees must terminate the loan and
regain the right to vote the securities if a material event
adversely affecting the investment occurs. These conditions may
be subject to future modification.
Investment Restrictions. Each Master Series has
adopted investment restrictions numbered 1 through 10 as
fundamental policies. These restrictions cannot be changed, as
to a Master Series, without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of such Master Series' outstanding
voting securities. Investment restrictions numbered 11 through
17 are not fundamental policies and may be changed by vote of a
majority of the Trustees of the Master Portfolio at any time.
No Master Series may:
1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up to 25% of the
value of its total assets may be invested, and securities issued
or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
2. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of its total assets.
3. Invest in commodities, except that each Master
Series may purchase and sell (i.e., write) options, forward
contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
- 5 -
<PAGE> 73
4. Purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but each Master Series may purchase and sell securities that are
secured by real estate or issued by companies that invest or
deal in real estate.
5. Borrow money, except to the extent permitted under
the 1940 Act, provided that each Master Series may borrow up to
20% 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 20% 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).
For purposes of this investment restriction, a Master Series'
entry into options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes shall not constitute borrowing to the extent
certain segregated accounts are established and maintained by the
Master Series.
6. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
However, each Master Series may lend its portfolio securities in
an amount not to exceed 33-1/3% of the value of its total
assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and
Exchange Commission and the Master Portfolio's Board of
Trustees.
7. Act as an underwriter of securities of other
issuers, except to the extent the Master Series may be deemed an
underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
8. Invest 25% or more of its total assets in the
securities of issuers in any particular industry or group of
closely related industries, except that there shall be no
limitation with respect to investments in (i) obligations of the
U.S. Government, its agencies or instrumentalities; (ii) in the
case of the stock portion of the Asset Allocation Master Series,
any industry in which the S&P 500 Index becomes concentrated to
the same degree during the same period (provided that, with
respect to the stock and money market portions of the Asset
Allocation Master Series), the Master Series will be concentrated
as specified above only to the extent the percentage of its
assets invested in those categories of investments is
sufficiently large that 25% or more of its total assets would be
invested in a single industry); and (iii) in the case of the
money market portion of the Asset Allocation Master Series, its
money market instruments may be concentrated in the banking
industry (but it
- 6 -
<PAGE> 74
will not do so unless the SEC staff confirms that it does not
object to the Master Series reserving freedom of action to
concentrate investments in the banking industry).
9. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act), except to the extent the
activities permitted in Investment Restriction Nos. 3, 5, 12 and
13 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but each Master
Series may make margin deposits in connection with transactions
in options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts or
indexes.
11. Invest in the securities of a company for the
purpose of exercising management or control, but each Master
Series will vote the securities it owns in its portfolio as a
shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to
the extent related to the purchase of securities on a when-
issued or forward commitment basis and the deposit of assets in
escrow in connection with writing covered put and call options
and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes.
13. Purchase, sell or write puts, calls or combinations
thereof, except as may be described in the Master Series'
offering documents.
14. Purchase securities of any company having less than
three years' continuous operations (including operations of any
predecessors) 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 such
purchase would cause the value of its investments in all such
companies to exceed 5% of the value of its total assets.
15. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than
15%, in the case of a Structured Master Series, of the value of
its net assets would be so invested.
16. Purchase securities of other investment companies,
except to the extent permitted under the 1940 Act.
- 7 -
<PAGE> 75
17. Purchase or retain securities of any issuer if the
officers or Directors of the Company, the Trusts 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.
If a percentage restriction is adhered to at the time
of investment, a later change in percentage resulting from a
change in values or assets, except with respect to compliance
with Investment Restriction No. 5, will not constitute a
violation of such restriction.
Item 14. Management of the Master Portfolio.
Trustees and officers of the Master Portfolio, together
with information as to their principal business occupations
during at least the last five years, are shown 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 the Master Portfolio, 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, 73 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 44 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.
Thomas S. Goho, 53 Trustee T.B. Rose Faculty
321 Beechcliff Court Fellow-Business
Winston-Salem, NC 27104 Wake Forest
University, Calloway
School of Business
and Accountency;
Associate Professor
School of Business
and Accounting at
Wake Forest University
Since 1983.
</TABLE>
- 8 -
<PAGE> 76
<TABLE>
<S> <C> <C>
*Zoe Ann Hines, 46 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.
*W. Rodney Hughes, 69 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 51 Trustee Private Investor;
10 Legrae Street Real Estate
Charleston, SC 29401 Developer; Chairman
of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>
- 9 -
<PAGE> 77
COMPENSATION TABLE
For the Fiscal Year Ended February 28, 1995
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $0 $34,188
Trustee
*R. Greg Feltus 0 0
Trustee
Thomas S. Goho 0 34,188
Trustee
*Zoe Ann Hines 0 0
Trustee
*W. Rodney Hughes 0 32,188
Trustee
Robert M. Joses 0 34,188
Trustee
*J. Tucker Morse 0 32,188
Trustee
</TABLE>
Trustees of the Master Portfolio who are not officers
or employees of Stephens or Wells Fargo Bank are not compensated
by the Master Portfolio for their services but are reimbursed
for all out-of-pocket expenses relating to attendance at board
meetings. Trustees who are affiliated with Stephens or Wells
Fargo Bank also do not receive compensation from the Master
Portfolio and also are reimbursed for all out-of-pocket expenses
relating to attendance at board meetings. Each of the officers
and Trustees of the Master Portfolio serves in the identical
capacity as officers and Directors of Overland Express Funds,
Inc., Stagecoach Funds, Inc. and Stagecoach Inc., and as
- 10 -
<PAGE> 78
Trustees and/or Officers of Stagecoach Trust, Life & Annuity
Trust, Master Investment Trust and Managed Series Investment
Trust, each of which are registered open-end management
investment companies and each of which is considered to be in
the same "fund complex", as such term is defined in Form N-1A
under the 1940 Act, as the Master Portfolio. 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 compensation from the Master Portfolio (although they are
reimbursed for out-of-pocket expenses) and do not receive any
retirement benefits or deferred compensation from the Master
Portfolio or fund complex.
There ordinarily will be no meetings of shareholders
for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of
Trustees. Under the 1940 Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Master
Portfolio may remove a Trustee through a declaration in writing
or by vote cast in person or by proxy at a meeting called for
that purpose. Under the Master Portfolio's Declaration of
Trust, the Trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so
by the shareholders of record of not less than 10% of the Master
Portfolio's outstanding shares.
Item 15. Control Persons and Principal Holders of Securities.
As of December 15, 1995, the Asset Allocation Fund and
U.S. Treasury Allocation Fund of Stagecoach Inc., 111 Center
Street, Little Rock, Arkansas 72201, owned approximately 100% of
the voting securities of the Asset Allocation Master Series and
approximately 100% of the voting securities of the U.S. Treasury
Allocation Master Series, respectively, and each Fund could be
considered a controlling person of the corresponding Master
Series for purposes of the 1940 Act.
Item 16. Investment Advisory and Other Services.
The following information supplements and should be
read in conjunction with Item 5 in Part A.
- 11 -
<PAGE> 79
Investment Advisory Agreement. BGFA provides investment
advisory services to each Master Series pursuant to separate
Investment Advisory Agreements (each, a "BGFA Advisory Agreement")
dated January 1, 1996 with the Master Portfolio. As to each
Master Series, the applicable BGFA Advisory Agreement is subject
to annual approval by (i) the Master Portfolio's Board of
Trustees or (ii) vote of a majority (as defined in the 1940 Act)
of the outstanding voting securities of such Master Series,
provided that in either event the continuance also is approved by
a majority of the Master Portfolio's Board of Trustees who are
not "interested persons" (as defined in the 1940 Act) of the
Master Portfolio or BGFA, by vote cast in person at a meeting
called for the purpose of voting on such approval. As to each
Master Series, the applicable BGFA Advisory Agreement is terminable
without penalty, on 60 days' written notice, by either party. The
BGFA Advisory Agreements will terminate automatically, as to the
relevant Master Series, in the event of its assignment (as defined
in the 1940 Act).
Prior to January 1, 1996, Wells Fargo Bank provided
investment advisory services to each Master Series pursuant to an
Investment Advisory Agreement (the "Advisory Agreement") dated
February 25, 1994 with the Master Portfolio.
For the period from May 26, 1994 (commencement of
operations) to February 28, 1995, the Master Series paid the
following advisory fees to Wells Fargo Bank, and Wells Fargo Bank
waived the amounts shown:
<TABLE>
<CAPTION>
Fees
Fees Paid Waived/Reimbursed
--------- -----------------
<S> <C> <C>
Asset Allocation Master Series $666,053 $0
U.S. Treasury Allocation
Master Series $128,994 $0
</TABLE>
Sub-Investment Advisory Agreement. Prior to January 1,
1996 WFNIA provided sub-investment advisory services to each
Master Series pursuant to the Sub-Investment Advisory Agreement
(the "Sub-Advisory Agreement") dated February 28, 1994 with Wells
Fargo Bank.
- 12 -
<PAGE> 80
For the period from May 26, 1994 (commencement of
operations) to February 28, 1995, Wells Fargo Bank paid the
following sub-advisory fees to WFNIA for services provided on
behalf of the Master Series, and WFNIA waived the amounts shown:
<TABLE>
<CAPTION>
Fees
Fees Paid Waived/Reimbursed
--------- -----------------
<S> <C> <C>
Asset Allocation Master Series $375,907 $0
U.S. Treasury Allocation
Master Series $ 64,439 $0
</TABLE>
Administration Agreement. Stephens provides administrative
services to the Master Portfolio pursuant to an Administration
Agreement dated February 25, 1994 (the "Administration Agreement").
Under the Administration Agreement, Stephens provides as
administrative services, among other things: (i) general
supervision of the operation of the Master Portfolio and the Master
Series, including coordination of the services performed by the
investment adviser, transfer and dividend disbursing agent,
custodians, interestholder servicing agent(s), independent auditors
and legal counsel; (ii) regulatory compliance, including the
compilation of information for documents such as reports to, and
filings with, the SEC and state securities commissions, and
preparation of proxy statements and interestholder reports for the
Master Series; and (iii) general supervision relative to the
compilation of data required for the preparation of periodic
reports distributed to the Master Portfolio's officers and Board of
Trustees. Stephens also furnishes office space and certain
facilities required for conducting the business of the Master
Portfolio together with those ordinary clerical and bookkeeping
services that are not being furnished by the Master Series'
investment adviser. Stephens also pays the compensation of the
Master Portfolio's Trustees, officers and employees who are
affiliated with Stephens.
Stephens is not entitled to compensation for providing
administrative services to a Master Series so 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
Series.
Custody Agreement. BZW Barclays Global Investors, N.A., ("BGI"), a
wholly-owned subsidiary of BZW Barclays Global Investors Holdings Inc.
(formerly, The Nikko Building U.S.A., Inc), acts as custodian to the Master
Portfolio. The custodian, among other things, maintains a custody account or
accounts in the name of the Master Portfolio; receives and delivers all assets
for the Master Portfolio upon purchase and upon sale or maturity; collects and
receives all income and other payments and distributions on account of the
assets of the Master Portfolio and pays all expenses of the Master Portfolio.
Item 17. Brokerage Allocation and Other Practices.
General. BGFA assumes general supervision over placing
orders on behalf of each Master Series for the purchase or sale
of portfolio securities. Allocation of brokerage transactions,
including their frequency, is made in the best judgment of BGFA
and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders at the most
favorable net price.
Asset Allocation Master Series. Brokers also are selected
because of their ability to handle special executions such as are
involved in large block trades or broad distributions, provided the
primary consideration is met. Portfolio turnover may vary from
year to year, as well as within a year. High turnover rates over
100% are likely to result in comparatively greater brokerage
expenses. The overall reasonableness of brokerage commissions paid
is evaluated by BGFA based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
U.S. Treasury Allocation Master Series. Purchases and sales
of portfolio securities for each of these Master Series usually are
principal transactions. Portfolio securities ordinarily are
purchased directly from the issuer or from an underwriter or market
maker. Usually no brokerage commissions are paid by these Master
Series for such purchases and sales. The prices paid to the
underwriters of newly-issued securities usually include a
concession paid by the issuer to the underwriter, and purchases of
securities from market makers may include the spread between the
bid and asked price.
- 13 -
<PAGE> 81
On February 28, 1995, the Master Series owned
securities of their "regular brokers or dealers" or their
parents, as defined in the 1940 Act, as follows:
<TABLE>
<S> <C> <C>
Asset Allocation Master
Series Merrill Lynch & Co $256,742
Salomon Inc. $125,568
</TABLE>
Prior to January 1, 1996, WFNIA exercised general
supervision over placing orders on behalf of each Master Series
for the purchase or sale of portfolio securities and the
brokerage allocation practices described above are applicable to
WFNIA and the Master Series prior to January 1, 1996.
Item 18. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are
authorized to issue shares of beneficial interests in each
Master Series. Investors in a Master Series are entitled to
participate pro rata in distributions of taxable income, loss,
gain and credit of such Master Series. Upon liquidation or
dissolution of a Master Series, investors are entitled to share
pro rata in such Master Series' net assets available for
distribution to its investors. Investments in the Master Series
have no preference, pre-exemptive, conversion or similar rights
and are fully paid and non-assessable, except as set forth
below. Investments in the Master Series may not be transferred.
No certificates are issued.
Each investor is entitled to a vote, with respect to
matters affecting each of the Master Portfolio's series, in
proportion to the amount of its investment in the Master
Portfolio. Investors in the Master Portfolio do not have
cumulative voting rights, and investors holding more than 50% of
the aggregate beneficial interest in the Master Portfolio may
elect all of the Trustees of the Master Portfolio if they choose
to do so and in such event the other investors in the Master
Portfolio would not be able to elect any Trustee. The Master
Portfolio is not required to hold annual meetings of investors
but the Master Portfolio will hold special meetings of investors
when in the judgment of the Master Portfolio's Trustees it is
necessary or desirable to submit matters for an investor vote.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Master Portfolio, will not be deemed to have been
effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each Master Series
affected by such matter. Rule 18f-2 further provides that a
Master Series shall be deemed to be affected by a matter unless
- 14 -
<PAGE> 82
it is clear that the interests of such Master Series in the
matter are identical or that the matter does not affect any
interest of such Master Series. However, the Rule exempts the
selection of independent accountants and the election of
Trustees from the separate voting requirements of the Rule.
Item 19. Purchase, Redemption and Pricing of Securities.
The following information supplements and should be read in
conjunction with Items 7 and 8 in Part A.
Purchase of Securities. Beneficial interests in each
Master Series are issued solely in private placement
transactions which 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 the Master Series may
only be made by investment companies or certain other entities
which 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.
Suspension of Redemptions. The right of redemption of
Master Series shares may be suspended or the date of payment
postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings),
(b) when trading in the markets the Master Series ordinarily
utilizes is restricted, or when an emergency exists as
determined by the Securities and Exchange Commission so that
disposal of the Master Series' investments or determination of
its net asset value is not reasonably practicable, or (c) for
such other periods as the Securities and Exchange Commission by
order may permit to protect the Master Series' shareholders.
Pricing of Securities.
Asset Allocation Master Series. The securities of
the Asset Allocation Master Series, including covered call
options written by the Master Series, are valued as follows:
domestic securities are valued at the last sale price on the
domestic securities or commodities exchange or national
securities market on which such securities primarily are traded.
Securities not listed on a domestic exchange or national
securities market, or securities in which there were no
transactions, are valued at the most recent bid prices.
Short-term investments are carried at amortized cost, which
approximates value. Any securities or other assets for which
recent market quotations are not readily available are valued at
fair value as determined in good faith by BGFA pursuant to
guidelines approved by the Master Portfolio's Board of Trustees.
Expenses and fees, including advisory fees, are accrued daily and
taken into account for the purpose of determining the net asset
value of the Master Series' shares.
- 15 -
<PAGE> 83
Restricted securities, as well as securities or other
assets for which market quotations are not readily available, or
are not valued by a pricing service approved by the Master
Portfolio's Board of Trustees, are valued at fair value as
determined in good faith by BGFA in accordance with guidelines
approved by the Master Portfolio's Board of Trustees. BGFA and
the Master Portfolio's Board of Trustees periodically review the
method of valuation. In making its good faith valuation of
restricted securities, BGFA generally takes the following factors
into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for
which a public market exists usually are valued at market value
less the same percentage discount at which purchased. This
discount is revised periodically if it is believed that the
discount no longer reflects the value of the restricted
securities. Restricted securities not of the same class as
securities for which a public market exists usually will be
valued initially at cost. Any subsequent adjustments from cost
are made in accordance with guidelines approved by the Master
Portfolio's Board of Trustees.
U.S. Treasury Allocation Master Series. The investments
of the U.S. Treasury Allocation Master Series are valued each
business day using available market quotations or at fair value
as determined by one or more independent pricing services
(collectively, the "Service") approved by the Master Portfolio's
Board of Trustees. The Service may use available market
quotations, employ electronic data processing techniques and/or a
matrix system to determine valuations. The Service's procedures
are reviewed by the Master Portfolio's officers in accordance
with guidelines approved by the Master Portfolio's Board of
Trustees. Expenses and fees, including advisory fees, are
accrued daily and are taken into account for the purpose of
determining the net asset value of the Master Series' shares.
- 16 -
<PAGE> 84
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Item 20. Tax Status.
The Master Portfolio is organized as a business trust
under Delaware law. Under the Master Portfolio's current method
of operation as a partnership, no Master Series will be subject
to any income tax. However, each investor in a Master Series
will be taxable on its share (as determined in accordance with
the governing instruments of the Master Portfolio) of such
Master Series' ordinary income and capital gain in determining
its 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.
The Master Portfolio's taxable year-end is the last day
or February. Although the Master Portfolio will not be subject to
Federal income tax, it will file appropriate Federal income tax
returns.
- 17 -
<PAGE> 85
Each Master Series' assets, income and distributions
will be managed in such a way that an investor in the Master
Series will be able to satisfy the requirements of Subchapter M
of the Code, assuming that the investor invested all of its
investable assets in the Master Series. Investors are advised
to consult their own tax advisors as to the tax consequences of
an investment in the Master Series.
Item 21. Underwriters.
The exclusive placement agent for the Master Portfolio
is Stephens, which receives no compensation for serving in this
capacity. Registered broker/dealers and investment companies,
insurance company separate accounts, common and commingled trust
funds, group trust and similar organizations and entities which
constitute accredited investors as defined in the regulations
adopted under the 1933 Act, may continuously invest in a Master
Series of the Master Portfolio.
Item 22. Calculations of Performance Data.
Not applicable.
Item 23. Financial Information.
For the fiscal yearended February 28, 1995, Coopers &
Lybrand L.L.P. served as the Master Portfolio's independent
auditors and expressed an unqualified opinion on the financial
statements of the Master Portfolio. For the fiscal year ending
on the last day of February, 1996, and pursuant to the
recommendation of the Master Portfolio's audit committee, the
Board of Trustees selected KPMG Peat Marwick LLP as the
independent auditors for the Master Portfolio. KPMG Peat Marwick
LLP provides audit services, tax return preparation and
assistance and consultation in connection with review of certain
SEC filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.
The audited financial statements for the Master Series
are incorporated in this Part B by reference to Amendment No. 2
to the Master Portfolio's Registration Statement on Form N-1A
filed with the SEC on June 28, 1995. The unaudited financial
statements for the Master Series are incorporated in this
Part B by reference to Amendment No. 3 to the Master Portfolio's
Registration Statement on Form N-1A filed with the SEC on or
about January 5, 1996.
- 18 -
<PAGE> 86
APPENDIX
Description of certain ratings assigned by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff &
Phelps, Inc. ("Duff") and IBCA Inc. and IBCA Limited ("IBCA"):
S&P
Bond Ratings
AAA
Bonds rated "AAA" have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely
strong.
AA
Bonds rated "AA" have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A
Bonds rated "A" have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
BBB
Bonds rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated
categories.
S&P's letter ratings may be modified by the addition of
a plus (+) or minus (-) sign designation, which is used to show
relative standing within the major rating categories, except in
the AAA (Prime Grade) category.
Commercial Paper Rating
The designation "A-1" by S&P indicates that the degree
of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an
"A-2" designation is strong. However, the relative degree of
safety is not as high as for issues designated "A-1".
A-1
<PAGE> 87
Moody's
Bond Ratings
Aaa
Bonds which are rated "Aaa" are judged to be of the
best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group they
comprise what generally are known as high grade bonds. They are
rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated "Baa" are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. 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 lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Moody's applies the numerical modifiers "1", "2" and
"3" to show relative standing within the major rating
categories, except in the "Aaa" category. The modifier "1"
indicates a ranking for the security in the higher end of a
rating category; the modifier "2" indicates a mid-range ranking;
and the modifier "3" indicates a ranking in the lower end of a
rating category.
A-2
<PAGE> 88
Commercial Paper Rating
The rating "Prime-1 (P-1)" is the highest commercial
paper rating assigned by Moody's. Issuers of "P-1" paper must
have a superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
Issuers (or relating supporting institutions) rated
"Prime-2 (P-2)" have a strong capacity for repayment of short-
term promissory obligations. This ordinarily will be evidenced
by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt
issue or class of debt. The ratings take into consideration
special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect
the issuer's future financial strength and credit quality.
AAA
Bonds rated "AAA" are considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated "AA" are considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and repay principal is very strong, although not quite
as strong as bonds rated "AAA". Because bonds rated in the
"AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
A-3
<PAGE> 89
A
Bonds rated "A" are considered to be investment grade
and of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB
Bonds rated "BBB" are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations
that are payable on demand or have original maturities of up to
three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes.
Although the credit analysis is similar to Fitch's bond
rating analysis, the short-term rating places greater emphasis
than bond ratings on the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less
in degree than issues rated F-1+.
F-2
Good Credit Quality. Issues carrying this rating have
a satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the F-1+ and F-1 categories.
A-4
<PAGE> 90
Duff
Bond Ratings
AAA
Bonds rated "AAA" are considered highest credit
quality. The risk factors are negligible, being only slightly
more than for risk-free U.S. Treasury debt.
AA
Bonds rated "AA" are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
A
Bonds rated "A" have protection factors which are
average but adequate. However, risk factors are more variable
and greater in periods of economic stress.
BBB
Bonds rated "BBB" are considered to have below average
protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic
cycles.
Plus (+) and minus (-) signs are used with a rating
symbol (except "AAA") to indicate the relative position of a
credit within the rating category.
Commercial Paper Rating
The rating "Duff-1" is the highest commercial paper
rating assigned by Duff. Paper rated "Duff-1" is regarded as
having very high certainty of timely payment with excellent
liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated "Duff-2" is regarded as
having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals.
Risk factors are small.
IBCA
Bond and Long-Term Ratings
Obligations rated "AAA" by IBCA have the lowest
expectation of investment risk. Capacity for timely repayment
of principal and interest is substantial, such that adverse
changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations
for which there is a very low expectation of investment risk are
A-5
<PAGE> 91
rated "AA" by IBCA. Capacity for timely repayment of principal
and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk
albeit not very significantly.
Commercial Paper and Short-Term Ratings
The designation "A1" by IBCA indicates that the
obligation is supported by a very strong capacity for timely
repayment. Those obligations rated "A1+" are supported by the
highest capacity for timely repayment. Obligations rated "A2"
are supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
International and U.S. Bank Ratings
An IBCA bank rating represents IBCA's current
assessment of the strength of the bank and whether such bank
would receive support should it experience difficulties. In its
assessment of a bank, IBCA uses a dual rating system comprised
of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks Long- and Short-Term Ratings as used in the
corporate ratings discussed above. Legal Ratings, which range
in gradation from 1 through 5, address the question of whether
the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of
credit risk. Individual Ratings, which range in gradations from
A through E, represent IBCA's assessment of a bank's economic
merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support
from state authorities or its owners.
A-6
<PAGE> 92
- ----------------------------------------------------------------
MASTER INVESTMENT PORTFOLIO
INDEX MASTER SERIES
S&P 500 INDEX MASTER SERIES
BOND INDEX MASTER SERIES
PART B -- STATEMENT OF ADDITIONAL INFORMATION
January 2, 1996
- ----------------------------------------------------------------
Item 10. Cover Page.
Master Investment Portfolio ("Master Portfolio") is a
registered, open-end, management investment company. The Master
Portfolio is a "series fund," which is a mutual fund divided
into separate portfolios. This Part B is not a Prospectus and
should be read in conjunction with the Master Portfolio's Part
A, also dated January 2, 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"), the Master Portfolio's sponsor,
administrator and placement agent, at 111 Center Street, Little
Rock, Arkansas 72201, or by calling Stephens at (800) 643-9691.
The Master Portfolio's Registration Statement 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>
General Information and History............. 2
Investment Objectives and Policies.......... 2
Management of the Master Portfolio.......... 9
Control Persons and Principal Holders of
Securities................................. 13
Investment Advisory and Other Services...... 14
Brokerage Allocation and Other Practices.... 15
Capital Stock and Other Securities.......... 16
Purchase, Redemption and Pricing of
Securities................................. 17
Tax Status.................................. 20
Underwriters................................ 20
Calculations of Performance Data............ 21
Financial Information....................... 21
Appendix.................................... A-1
Financial Statements........................ F-1
</TABLE>
<PAGE> 93
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objectives and Policies.
The following information supplements and should be
read in conjunction with Item 4 in Part A.
Investment Objectives. Master Investment Portfolio (the "Master
Portfolio"), is an open-end, management investment company known
as a mutual fund. By this offering document, the Master
Portfolio is offering two diversified funds, the Bond
Index and S&P 500 Index Master Series (the "Master Series").
Each Master Series' investment objective is set forth
in Item 4, "General Description of Registrant -- Investment
Objective," of Part A. There can be no assurance that the
investment objectives of each Master Series will be achieved.
Each Master Series' investment objective cannot be changed
without approval by the holders of a majority (as defined in the
Investment Company Act of 1940, as amended (the "Act")) of such
Master Series' outstanding voting shares.
BZW Barclays Global Fund Advisors ("BGFA") serves as
investment advisor to each Master Series. Prior to January 1,
1996, Wells Fargo Bank, N.A. ("Wells Fargo Bank") served as each
Master Series' investment adviser and Wells Fargo Nikko
Investment Advisors ("WFNIA") served as each Master Series'
sub-investment adviser. BGFA was created by the reorganization
of WFNIA with and into an affiliate of Wells Fargo Institutional
Trust Company ("WFITC"). BGFA is a subsidiary of WFITC which,
effective January 1, 1996, changed its name to BZW Barclays
Global Investors, N.A. ("BGI"). Stephens Inc. ("Stephens")
serves as placement agent of each Master Series' shares.
Portfolio Securities.
Bank Obligations. Domestic commercial banks organized
under Federal law are supervised and examined by the Comptroller
of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state
banking authorities but are members of the Federal Reserve System
only if they elect to join. In addition, state banks whose
certificates of deposit ("CDs") may be purchased by each Master
Series are insured by the FDIC (although such insurance may not
be of material benefit to the Master Series, depending on the
principal amount of the CDs of each bank held by the Master
Series) and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of
Federal or state laws and regulations, domestic branches of
domestic banks whose CDs may be purchased by each Master Series
generally are required, among
2
<PAGE> 94
other things, to maintain specified levels of reserves, are
limited in the amounts which they can loan to a single borrower
and are subject to other regulation designed to promote
financial soundness. However, not all of such laws and
regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks,
foreign subsidiaries of domestic banks and domestic and foreign
branches of foreign banks, such as CDs and time deposits
("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms
of a specific obligation and governmental regulation. Such
obligations are subject to different risks than are those of
domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that
may adversely affect payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding
and other taxes on interest income. These foreign branches and
subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and
accounting, auditing and financial record keeping requirements.
In addition, less information may be publicly available about a
foreign branch of a domestic bank or about a foreign bank than
about a domestic bank.
Obligations of United States branches of foreign banks
may be general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific
obligation or by Federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve
requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed
in that state.
In addition, Federal branches licensed by the
Comptroller of the Currency and branches licensed by certain
states ("State Branches") may be required to: (1) pledge to the
regulator, by depositing assets with a designated bank within
the state, a certain percentage of their assets as fixed from
time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a
specified percentage of the aggregate amount of liabilities of
the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State
Branches generally must be insured by the FDIC if such branches
take deposits of less than $100,000.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of domestic
banks, by foreign subsidiaries of domestic banks, by foreign
branches of foreign banks or by domestic branches of foreign
3
<PAGE> 95
banks, BGFA carefully evaluates such investments on a case-by-
case basis.
Each Master Series may purchase CDs issued by banks,
savings and loan associations and similar thrift institutions
with less than $1 billion in assets, which are members of the
FDIC, provided such Master Series purchases any such CD in a
principal amount of not more than $100,000, which amount would
be fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the FDIC. Interest
payments on such a CD are not insured by the FDIC. No Master
Series will own more than one such CD per such issuer.
Management Policies.
Futures Contracts and Options on Futures Contracts.
Each Master Series may enter into futures contracts and may
purchase and write options thereon. Upon exercise of an option on
a futures contract, the writer of the option delivers to the
holder of the option the futures position and the accumulated
balance in the writer's futures margin account, which represents
the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of options on futures
contracts is limited to the premium paid for the option (plus
transaction costs). Because
4
<PAGE> 96
the value of the option is fixed at the time of sale, there are
no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does
change daily and that change would be reflected in the net asset
value of the relevant Master Series.
Future Developments. Each Master Series may take
advantage of opportunities in the area of options and futures
contracts and options on futures contracts and any other
derivative investments which are not presently contemplated for
use by such Master Series or which are not currently available
but which may be developed, to the extent such opportunities are
both consistent with a Master Series' investment objective and
legally permissible for the Master Series. Before entering into
such transactions or making any such investment, each Index
Master Series will provide appropriate disclosure in its
prospectus.
5
<PAGE> 97
Lending Portfolio Securities. To a limited extent,
each Master Series may lend its portfolio securities to brokers,
dealers and other financial institutions, provided it receives
cash collateral which at all times is maintained in an amount
equal to at least 100% of the current market value of the
securities loaned. By lending its portfolio securities, a Master
Series can increase its income through the investment of the cash
collateral. For purposes of this policy, each Master Series
considers collateral consisting of U.S. Government securities or
irrevocable letters of credit issued by banks whose securities
meet the standards for investment by such Master Series to be the
equivalent of cash. From time to time, a Master Series may
return to the borrower or a third party which is unaffiliated
with the Master Portfolio, and which is acting as a "placing
broker," a part of the interest earned from the investment of
collateral received for securities loaned.
The SEC currently requires that the following conditions
must be met whenever portfolio securities are loaned: (1) the
Master Series must receive at least 100% cash collateral from the
borrower; (2) the borrower must increase such collateral whenever
the market value of the securities rises above the level of such
collateral; (3) the Master Series must be able to terminate the
loan at any time; (4) the Master Series must receive reasonable
interest on the loan, as well as any dividends, interest or other
distributions payable on the loaned securities, and any increase
in market value; (5) the Master Series may pay only reasonable
custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the
Master Portfolio's Board of Trustees must terminate the loan and
regain the right to vote the securities if a material event
6
<PAGE> 98
adversely affecting the investment occurs. These conditions may
be subject to future modification.
Investment Restrictions. Each Master Series has
adopted investment restrictions numbered 1 through 10 as
fundamental policies. These restrictions cannot be changed, as
to a Master Series, without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of such Master Series' outstanding
voting securities. Investment restrictions numbered 11 through
17 are not fundamental policies and may be changed by vote of a
majority of the Trustees of the Master Portfolio at any time.
No Master Series may:
1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up to 25% of the
value of its total assets may be invested, and securities issued
or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
2. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of its total assets.
3. Invest in commodities, except that each Master
Series may purchase and sell (i.e., write) options, forward
contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
4. Purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but each Master Series may purchase and sell securities that are
secured by real estate or issued by companies that invest or
deal in real estate.
5. Borrow money, except to the extent permitted under
the 1940 Act, provided that the Bond Index Master Series 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 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), and except that the S&P 500 Stock
Master Series may borrow up to 20% 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 20% 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). For
purposes of this investment restriction, a Master Series' entry
into options, forward contracts, futures contracts, including
those relating to indexes, and options on futures contracts or
7
<PAGE> 99
indexes shall not constitute borrowing to the extent certain
segregated accounts are established and maintained by the Master
Series.
6. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
However, each Master Series may lend its portfolio securities in
an amount not to exceed 33-1/3% of the value of its total
assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and
Exchange Commission and the Master Portfolio's Board of
Trustees.
7. Act as an underwriter of securities of other
issuers, except to the extent the Master Series may be deemed an
underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
8. Invest 25% or more of its total assets in the
securities of issuers in any particular industry or group of
closely related industries, and except that, in the case of each
Master Series, there shall be no limitation with respect to
investments in (i) obligations of the U.S. Government, its
agencies or instrumentalities; (ii) in the case of the S&P 500
Stock Master Series, any industry in which the S&P 500 Index
becomes concentrated to the same degree during the same period,
the Master Series will be concentrated as specified above only to
the extent the percentage of its assets invested in those
categories of investments is sufficiently large that 25% or more
of its total assets would be invested in a single industry);
(iii) in the case of the Bond Index Master Series, any industry
in which the Lehman Brothers Government/Corporate Bond Index (the
"LB Bond Index") becomes concentrated to the same degree during
the same period.
9. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act), except to the extent the
activities permitted in Investment Restriction Nos. 3, 5, 12 and
13 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but each Master
Series may make margin deposits in connection with transactions
in options, forward contracts, futures contracts, including
those related to indexes, and options on futures contracts or
indexes.
11. Invest in the securities of a company for the
purpose of exercising management or control, but each Master
Series will vote the securities it owns in its portfolio as a
shareholder in accordance with its views.
8
<PAGE> 100
12. Pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to
the extent related to the purchase of securities on a when-
issued or forward commitment basis and the deposit of assets in
escrow in connection with writing covered put and call options
and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indexes, and options on futures
contracts or indexes.
13. Purchase, sell or write puts, calls or
combinations thereof, except as may be described in the Master
Series' offering documents.
14. Purchase securities of any company having less
than three years' continuous operations (including operations of
any predecessors) 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 such
purchase would cause the value of its investments in all such
companies to exceed 5% of the value of its total assets.
15. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than
15% of the value of each Master Series' net assets would be so
invested.
16. Purchase securities of other investment companies,
except to the extent permitted under the 1940 Act.
17. Purchase or retain securities of any issuer if the
officers or Directors of the Company, the Trusts 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.
If a percentage restriction is adhered to at the time
of investment, a later change in percentage resulting from a
change in values or assets, except with respect to compliance
with Investment Restriction No. 5, will not constitute a
violation of such restriction.
Item 14. Management of the Master Portfolio.
Trustees and officers of the Master Portfolio, together
with information as to their principal business occupations
during at least the last five years, are shown below. The
address of each, unless otherwise indicated, is 111 Center
Street, Little Rock, Arkansas 72201. Each Trustee who is deemed
9
<PAGE> 101
to be an "interested person" of the Master Portfolio, 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, 73 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 44 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.
Thomas S. Goho, 53 Trustee T. B. Rose Faculty
321 Beechcliff Court Fellow - Business,
Winston-Salem, NC 27104 Wake Forest University,
Calloway School of
Business and Accountancy;
Associate Professor
School of Business
and Accounting at
Wake Forest
University since
1983.
*Zoe Ann Hines, 46 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.
*W. Rodney Hughes, 69 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
</TABLE>
10
<PAGE> 102
<TABLE>
<S> <C> <C>
*J. Tucker Morse, 51 Trustee Private Investor;
10 Legrae Street Real Estate
Charleston, SC 29401 Developer; Chairman
of Renaissance
Properties Ltd.;
President of Morse
Investment
Corporation; and Co-
Managing Partner of
Main Street Ventures.
Richard H. Blank, Jr., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>
11
<PAGE> 103
COMPENSATION TABLE
For the Fiscal Year Ended February 28, 1995
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $0 $34,188
Trustee
*R. Greg Feltus 0 0
Trustee
Thomas S. Goho 0 34,188
Trustee
*Zoe Ann Hines 0 0
Trustee
*W. Rodney Hughes 0 32,188
Trustee
Robert M. Joses 0 34,188
Trustee
*J. Tucker Morse 0 32,188
Trustee
</TABLE>
Trustees of the Master Portfolio who are not officers
or employees of Stephens or Wells Fargo Bank are not compensated
by the Master Portfolio for their services but are reimbursed
for all out-of-pocket expenses relating to attendance at board
meetings. Trustees who are affiliated with Stephens or Wells
Fargo Bank also do not receive compensation from the Master
Portfolio and also are reimbursed for all out-of-pocket expenses
relating to attendance at board meetings. Each of the officers
and Trustees of the Master Portfolio serves in the identical
capacity as officers and Directors of Overland Express Funds,
Inc., Stagecoach Funds, Inc. and Stagecoach Inc., and as
Trustees and/or Officers of Stagecoach Trust, Life & Annuity
Trust, Master Investment Trust and Managed Series Investment
Trust, each of which are registered open-end management
investment companies and each of which is considered to be in
the same "fund complex", as such term is defined in Form N-1A
under the 1940 Act, as the Master Portfolio. 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 compensation from the Master Portfolio (although they are
reimbursed for out-of-pocket expenses) and do not receive any
12
<PAGE> 104
retirement benefits or deferred compensation from the Master
Portfolio or fund complex.
There ordinarily will be no meetings of shareholders
for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees holding office have been
elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of
Trustees. Under the 1940 Act, shareholders of record of not
less than two-thirds of the outstanding shares of the Master
Portfolio may remove a Trustee through a declaration in writing
or by vote cast in person or by proxy at a meeting called for
that purpose. Under the Master Portfolio's Declaration of
Trust, the Trustees are required to call a meeting of
shareholders for the purpose of voting upon the question of
removal of any such Trustee when requested in writing to do so
by the shareholders of record of not less than 10% of the Master
Portfolio's outstanding shares.
Item 15. Control Persons and Principal Holders of Securities.
As of December 15, 1995, the S&P 500 Stock Fund of
Stagecoach Inc., 111 Center Street, Little Rock, Arkansas 72201,
owned 93.0% of the voting securities of the S&P 500 Master
Series. As of December 15, 1995, Bradley Trust and Bradley via
Partition Trust, 1000 N. Water Street, 11th Floor, Milwaukee, WI
53202, each owned 41.66% of the voting securities of the Bond
Index Master Series. As such, the Fund, Bradley Trust and
Bradley via Partition Trust could each be considered a
controlling person of the corresponding Master Series for
purposes of the 1940 Act.
13
<PAGE> 105
Item 16. Investment Advisory and Other Services.
The following information supplements and should be
read in conjunction with Item 5 in Part A.
Investment Advisory Agreement. BGFA provides investment
advisory services to each Master Series pursuant to separate
Investment Advisory Agreements (each, a "BGFA Advisory
Agreement") dated January 1, 1996 with the Master Portfolio. As
to each Master Series, the applicable BGFA Advisory Agreement is
subject to annual approval by (i) the Master Portfolio's Board of
Trustees or (ii) vote of a majority (as defined in the 1940 Act)
of the outstanding voting securities of such Master Series,
provided that in either event the continuance also is approved by
a majority of the Master Portfolio's Board of Trustees who are
not "interested persons" (as defined in the 1940 Act) of the
Master Portfolio or BGFA, by vote cast in person at a meeting
called for the purpose of voting on such approval. As to each
Master Series, the applicable BGFA Advisory Agreement is
terminable without penalty, on 60 days' written notice, by either
party. The applicable BGFA Advisory Agreement will terminate
automatically, as to the relevant Master Series, in the event
of its assignment (as defined in the 1940 Act).
Prior to January 1, 1996, Wells Fargo Bank provided
investment advisory services to each Master Series pursuant to an
Investment Advisory Agreement (the "Advisory Agreement") dated
February 25, 1994 with the Master Portfolio.
For the period from May 26, 1994 (commencement of
operations) to February 28, 1995, the Master Series paid the
following advisory fees to Wells Fargo Bank, and Wells Fargo
Bank waived the amounts shown:
<TABLE>
<CAPTION>
Fees
Fees Paid Waived/Reimbursed
--------- -----------------
<S> <C> <C>
Bond Index Master Series $ 34,581 $ 8,713
S&P 500 Index Master Series $138,830 $17,864
</TABLE>
Sub-Investment Advisory Agreement. Prior to January 1,
1996, WFNIA provided sub-investment advisory services to each
Master Series pursuant to the Sub-Investment Advisory Agreement
(the "Sub-Advisory Agreement") dated February 25, 1994 with Wells
Fargo Bank.
14
<PAGE> 106
For the period from May 26, 1994 (commencement of
operations) to February 28, 1995, Wells Fargo Bank paid the
following sub-advisory fees to WFNIA for services provided on
behalf of the Master Series, and WFNIA waived the amounts shown:
<TABLE>
<CAPTION>
Fees
Fees Paid Waived/Reimbursed
--------- -----------------
<S> <C> <C>
Bond Index Master Series $39,197 $0
S&P 500 Index Master Series $117,651 $0
</TABLE>
Administration Agreement. Stephens provides administrative
services to the Master Portfolio pursuant to an Administration
Agreement dated February 25, 1994 (the "Administration
Agreement"). Under the Administration Agreement, Stephens
provides as administrative services, among other things: (i)
general supervision of the operation of the Master Portfolio and
the Master Series, including coordination of the services
performed by the investment adviser, transfer and dividend
disbursing agent, custodians, interestholder servicing agent(s),
independent auditors and legal counsel; (ii) regulatory
compliance, including the compilation of information for
documents such as reports to, and filings with, the SEC and state
securities commissions, and preparation of proxy statements and
interestholder reports for the Master Series; and (iii) general
supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Master
Portfolio's officers and Board of Trustees. Stephens also
furnishes office space and certain facilities required for
conducting the business of the Master Portfolio together with
those ordinary clerical and bookkeeping services that are not
being furnished by the Master Series' investment adviser.
Stephens also pays the compensation of the Master Portfolio's
Trustees, officers and employees who are affiliated with
Stephens.
Stephens is not entitled to compensation for providing
administrative services to a Master Series so 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
Series.
Custody Agreement. BZW Barclays Global Investors, N.A., ("BGI"), a
wholly-owned subsidiary of BZW Barclays Global Investors Holdings Inc.
(formerly, The Nikko Building U.S.A., Inc.), acts as custodian to the Master
Portfolio. The custodian, among other things, maintains a custody account or
accounts in the name of the Master Portfolio; receives and delivers all assets
for the Master Portfolio upon purchase and upon sale or maturity; collects and
receives all income and other payments and distributions on account of the
assets of the Master Portfolio and pays all expenses of the Master Portfolio.
Item 17. Brokerage Allocation and Other Practices.
General. BGFA assumes general supervision over
placing orders on behalf of each Master Series for the
purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in
the best judgment of BGFA and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt
execution of orders at the most favorable net price.
On February 28, 1995, the Master Series owned
securities of their "regular brokers or dealers" or their
parents, as defined in the 1940 Act, as follows:
<TABLE>
<S> <C> <C>
S&P 500 Index Master Series Merrill Lynch & Co. $1,003,270
Salomon Inc. $490,068
</TABLE>
S&P 500 Index Master Series. Brokers also are selected
because of their ability to handle special executions such as are
involved in large block trades or broad distributions, provided
the primary consideration is met. Portfolio turnover may vary
from year to year, as well as within a year. High turnover rates
over 100% are likely to result in comparatively greater brokerage
expenses. The overall reasonableness of brokerage commissions
paid is evaluated by BGFA based upon its knowledge of available
information as to the general level of commissions paid by other
institutional investors for comparable services.
Bond Index Master Series. Purchases and sales of
portfolio securities for the Bond Index Master Series usually
are principal transactions. Portfolio securities ordinarily are
purchased directly from the issuer or from an underwriter or
market maker. Usually no brokerage commissions are paid by the
Master Series for such purchases and sales. The prices paid to
the underwriters of newly-issued securities usually include a
concession paid by the issuer to the underwriter, and purchases
15
<PAGE> 107
of securities from market makers may include the spread between
the bid and asked price.
Prior to January 1, 1996, WFNIA exercised general
supervision over placing orders on behalf of each Master Series
for the purchase or sale of portfolio securities and the
brokerage allocation practices described above are applicable to
WFNIA and the Master Series prior to January 1, 1996.
Item 18. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are
authorized to issue shares of beneficial interests in each
Master Series. Investors in a Master Series are entitled to
participate pro rata in distributions of taxable income, loss,
gain and credit of such Master Series. Upon liquidation or
dissolution of a Master Series, investors are entitled to share
pro rata in such Master Series' net assets available for
distribution to its investors. Investments in the Master Series
have no preference, pre-exemptive, conversion or similar rights
and are fully paid and non-assessable, except as set forth
below. Investments in the Master Series may not be transferred.
No certificates are issued.
Each investor is entitled to a vote, with respect to
matters affecting each of the Master Portfolio's series, in
proportion to the amount of its investment in the Master
Portfolio. Investors in the Master Portfolio do not have
cumulative voting rights, and investors holding more than 50% of
the aggregate beneficial interest in the Master Portfolio may
elect all of the Trustees of the Master Portfolio if they choose
to do so and in such event the other investors in the Master
Portfolio would not be able to elect any Trustee. The Master
Portfolio is not required to hold annual meetings of investors
but the Master Portfolio will hold special meetings of investors
when in the judgment of the Master Portfolio's Trustees it is
necessary or desirable to submit matters for an investor vote.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Master Portfolio, will not be deemed to have been
16
<PAGE> 108
effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each Master Series
affected by such matter. Rule 18f-2 further provides that a
Master Series shall be deemed to be affected by a matter unless
it is clear that the interests of such Master Series in the
matter are identical or that the matter does not affect any
interest of such Master Series. However, the Rule exempts the
selection of independent accountants and the election of
Trustees from the separate voting requirements of the Rule.
Item 19. Purchase, Redemption and Pricing of Securities.
The following information supplements and should be
read in conjunction with Items 7 and 8 in Part A.
Purchase of Securities. Beneficial interests in each
Master Series are issued solely in private placement
transactions which 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 the Master Series may
only be made by investment companies or certain other entities
which 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.
Suspension of Redemptions. The right of redemption of
Master Series shares may be suspended or the date of payment
postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closings),
(b) when trading in the markets the Master Series ordinarily
utilizes is restricted, or when an emergency exists as
determined by the Securities and Exchange Commission so that
disposal of the Master Series' investments or determination of
its net asset value is not reasonably practicable, or (c) for
such other periods as the Securities and Exchange Commission by
order may permit to protect the Master Series' shareholders.
Pricing of Securities.
S&P 500 Index Master Series. The securities of the
S&P 500 Index Master Series, including covered call options
written by the Master Series, are valued as follows: domestic
securities are valued at the last sale price on the domestic
securities or commodities exchange or national securities market
on which such securities primarily are traded. Securities not
listed on a domestic exchange or national securities market, or
securities in which there were no transactions, are valued at the
most recent bid prices. Portfolio securities which are traded
primarily on foreign securities or commodities exchanges
generally are valued at the preceding closing values of such
securities on their
17
<PAGE> 109
respective exchanges, except that when an occurrence subsequent
to the time a value was so established is likely to have changed
such value, then the fair value of those securities is
determined by Wells Fargo in accordance with guidelines approved
by the Master Portfolio's Board of Trustees. Short-term
investments are carried at amortized cost, which approximates
value. Any securities or other assets for which recent market
quotations are not readily available are valued at fair value as
determined in good faith by BGFA in accordance with such
guidelines.
Restricted securities, as well as securities or other
assets for which market quotations are not readily available, or
are not valued by a pricing service approved by the Master
Portfolio's Board of Trustees, are valued at fair value as
determined in good faith by BGFA in accordance with guidelines
approved by the Master Portfolio's Board of Trustees. BGFA and
the Master Portfolio's Board of Trustees periodically review the
method of valuation. In making its good faith valuation of
restricted securities, BGFA generally takes the following factors
into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for
which a public market exists usually will be valued at market
value less the same percentage discount at which purchased. This
discount is revised periodically if it is believed that the
discount no longer reflects the value of the restricted
securities. Restricted securities not of the same class as
securities for which a public market exists usually are valued
initially at cost. Any subsequent adjustment from cost is based
upon considerations deemed relevant by the Master Portfolio's
Board of Trustees.
18
<PAGE> 110
Expenses and fees, including advisory fees, are accrued
daily and are taken into account for the purpose of determining
the net asset value of a Master Series' shares.
Bond Index Master Series. The investments of the Bond
Index Master Series are valued each business day using available
market quotations or at fair value as determined by one or more
independent pricing services (collectively, the "Service")
approved by the Master Portfolio's Board of Trustees. The
Service may use available market quotations, employ electronic
data processing techniques and/or a matrix system to determine
valuations. The Service's procedures are reviewed by the Master
Portfolio's officers under the general supervision of the Master
Portfolio's Board of Trustees. Expenses and fees, including
advisory fees, are accrued daily and are taken into account for
the purpose of determining the net asset value of a Master
Series' shares.
19
<PAGE> 111
New York Stock Exchange Closings. The holidays (as
observed) on which the New York Stock Exchange is closed
currently are: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Item 20. Tax Status.
The Master Portfolio is organized as a business trust
under Delaware law. Under the Master Portfolio's current method
of operation as a partnership, no Master Series will be subject
to any income tax. However, each investor in a Master Series
will be taxable on its share (as determined in accordance with
the governing instruments of the Master Portfolio) of such
Master Series' ordinary income and capital gain in determining
its 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.
The Master Portfolio's taxable year-end is the last day
of February. Although the Master Portfolio will not be subject
to Federal income tax, it will file appropriate Federal income
tax returns.
Each Master Series' assets, income and distributions
will be managed in such a way that an investor in the Master
Series will be able to satisfy the requirements of Subchapter M
of the Code, assuming that the investor invested all of its
investable assets in the Master Series. Investors are advised
to consult their own tax advisors as to the tax consequences of
an investment in the Master Series.
Item 21. Underwriters.
The exclusive placement agent for the Master Portfolio
is Stephens, which receives no compensation for serving in this
capacity. Registered broker/dealers and investment companies,
insurance company separate accounts, common and commingled trust
funds, group trust and similar organizations and entities which
constitute accredited investors, as defined in the regulations
20
<PAGE> 112
adopted under the 1933 Act, may continuously invest in a Master
Series of the Master Portfolio.
Item 22. Calculations of Performance Data.
Not applicable.
Item 23. Financial Information.
For the fiscal year ended February 28, 1995, Coopers &
Lybrand L.L.P. served as the Master Portfolio's independent
auditors and expressed an unqualified opinion on the financial
statements of the Master Portfolio. For the fiscal year ending
on the last day of February, 1996, and pursuant to the
recommendation of the Master Portfolio's audit committee, the
Board of Trustees selected KPMG Peat Marwick LLP as the
independent auditors for the Master Portfolio. KPMG Peat
Marwick LLP provides audit services, tax return preparation and
assistance and consultation in connection with review of certain
SEC filings. KPMG Peat Marwick LLP's address is Three
Embaradero Center, San Francisco, California 94111.
The audited financial statements for the Master Series
are incorporated in this Part B by reference to Amendment No. 2
to the Master Portfolio's Registration Statement on Form N-1A
filed with the SEC on June 28, 1995. The unaudited financial
statements for the Master Series are incorporated in this Part B
by reference to amendment No. 3 to the Master Portfolio's
Registration Statement on Form N-1A filed with the SEC on or
about January 5, 1996.
21
<PAGE> 113
APPENDIX
Description of certain ratings assigned by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff &
Phelps, Inc. ("Duff") and IBCA Inc. and IBCA Limited ("IBCA"):
S&P
Bond Ratings
AAA
Bonds rated "AAA" have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely
strong.
AA
Bonds rated "AA" have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A
Bonds rated "A" have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
BBB
Bonds rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated
categories.
S&P's letter ratings may be modified by the addition of
a plus (+) or minus (-) sign designation, which is used to show
relative standing within the major rating categories, except in
the AAA (Prime Grade) category.
Commercial Paper Rating
The designation "A-1" by S&P indicates that the degree
of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an
"A-2" designation is strong. However, the relative degree of
safety is not as high as for issues designated "A-1".
A-1
<PAGE> 114
Moody's
Bond Ratings
Aaa
Bonds which are rated "Aaa" are judged to be of the
best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated "Aa" are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what generally are known as high grade bonds. They are
rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated "Baa" are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. 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 lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Moody's applies the numerical modifiers "1," "2" and
"3" to show relative standing within the major rating
categories, except in the "Aaa" category. The modifier "1"
indicates a ranking for the security in the higher end of a
rating category; the modifier "2" indicates a mid-range ranking;
and the modifier "3" indicates a ranking in the lower end of a
rating category.
A-2
<PAGE> 115
Commercial Paper Rating
The rating "Prime-1" (P-1) is the highest commercial
paper rating assigned by Moody's. Issuers of "P-1" paper must
have a superior capacity for repayment of short-term promissory
obligations, and ordinarily will be evidenced by leading market
positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
Issuers (or relating supporting institutions) rated
"Prime-2" (P-2) have a strong capacity for repayment of short-
term promissory obligations. This ordinarily will be evidenced
by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt
issue or class of debt. The ratings take into consideration
special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect
the issuer's future financial strength and credit quality.
AAA
Bonds rated "AAA" are considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated "AA" are considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and repay principal is very strong, although not quite
as strong as bonds rated "AAA". Because bonds rated in the
"AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
A-3
<PAGE> 116
A
Bonds rated "A" are considered to be investment grade
and of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB
Bonds rated "BBB" are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations
that are payable on demand or have original maturities of up to
three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes.
Although the credit analysis is similar to Fitch's bond
rating analysis, the short-term rating places greater emphasis
than bond ratings on the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
F-2
Good Credit Quality. Issues carrying this rating have
a satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the "F-1+" and "F-1"
categories.
A-4
<PAGE> 117
Duff
Bond Ratings
AAA
Bonds rated "AAA" are considered highest credit
quality. The risk factors are negligible, being only slightly
more than for risk-free U.S. Treasury debt.
AA
Bonds rated "AA" are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
A
Bonds rated "A" have protection factors which are
average but adequate. However, risk factors are more variable
and greater in periods of economic stress.
BBB
Bonds rated "BBB" are considered to have below average
protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic
cycles.
Plus (+) and minus (-) signs are used with a rating
symbol (except "AAA") to indicate the relative position of a
credit within the rating category.
Commercial Paper Rating
The rating "Duff-1" is the highest commercial paper
rating assigned by Duff. Paper rated "Duff-1" is regarded as
having very high certainty of timely payment with excellent
liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated "Duff-2" is regarded as
having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals.
Risk factors are small.
IBCA
Bond and Long-Term Ratings
Obligations rated "AAA" by IBCA have the lowest
expectation of investment risk. Capacity for timely repayment
of principal and interest is substantial, such that adverse
changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations
for which there is a very low expectation of investment risk are
A-5
<PAGE> 118
rated AA by IBCA. Capacity for timely repayment of principal
and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk
albeit not very significantly.
Commercial Paper and Short-Term Ratings
The designation "A1" by IBCA indicates that the
obligation is supported by a very strong capacity for timely
repayment. Those obligations rated "A1+" are supported by the
highest capacity for timely repayment. Obligations rated "A2"
are supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
International and U.S. Bank Ratings
An IBCA bank rating represents IBCA's current
assessment of the strength of the bank and whether such bank
would receive support should it experience difficulties. In its
assessment of a bank, IBCA uses a dual rating system comprised
of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks Long- and Short-Term Ratings as used in the
corporate ratings discussed above. Legal Ratings, which range
in gradation from 1 through 5, address the question of whether
the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of
credit risk. Individual Ratings, which range in gradations from
A through E, represent IBCA's assessment of a bank's economic
merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support
from state authorities or its owners.
A-6
<PAGE> 119
- ----------------------------------------------------------------
MASTER INVESTMENT PORTFOLIO
LIFEPATH(TM) MASTER SERIES
LIFEPATH 2000 MASTER SERIES
LIFEPATH 2010 MASTER SERIES
LIFEPATH 2020 MASTER SERIES
LIFEPATH 2030 MASTER SERIES
LIFEPATH 2040 MASTER SERIES
PART B
January 2, 1996
- ----------------------------------------------------------------
Item 10. Cover Page.
Master Investment Portfolio ("Master Portfolio") is a
registered, open-end, management investment company. The Master
Portfolio is "series fund," which is a mutual fund divided into
separate portfolios. This Part B is not a prospectus and should
be read in conjunction with the Master Portfolio's Part A, also
dated January 2, 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"), the Master Portfolio's sponsor, administrator
and placement agent, at 111 Center Street, Little Rock, Arkansas
72201, or by calling Stephens at 1-800-643-9691. The Master
Portfolio's Registration Statement 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>
General Information and History......... 2
Investment Objectives and Management
Policies............................... 2
Management of the Portfolio............. 9
Control Persons and Principal Holders of
Securities............................. 12
Investment Advisory and Other Services.. 13
Brokerage Allocation and Other Practices 14
Capital Stock and Other Securities...... 16
Purchase, Redemption and Pricing of
Securities............................. 16
Tax Status.............................. 19
Underwriters............................ 19
Calculations of Performance Data........ 20
Financial Information................... 20
Appendix................................ A-1
Financial Statements.................... F-1
</TABLE>
1
<PAGE> 120
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objectives and Management Policies.
Investment Objectives. The LifePath Master Series consists of
five asset allocation funds (the "LifePath Master Series")
offered by the Master Portfolio, an open-end, management
investment company. By this offering document, the Master
Portfolio is offering the five LifePath Master Series (the
"LifePath Master Series" or the "Master Series"), each of which
is a diversified fund. Organizations and other entities that
hold shares of beneficial interest of a Master Series may be
referred to herein as "feeder funds."
The LifePath Master Series seek to provide long-term
investors in a feeder fund with an asset allocation strategy
designed to maximize assets consistent with the quantitatively
measured risk such investors, on average, may be willing to
accept given their investment time horizons. The LifePath Master
Series invest in a wide range of U.S. and foreign equity and debt
securities and money market instruments.
- LIFEPATH 2000 MASTER SERIES is managed for
investors in a feeder fund planning to retire (or begin to
withdraw substantial portions of their investment) approximately
in the year 2000.
- LIFEPATH 2010 MASTER SERIES is managed for
investors in a feeder fund planning to retire (or begin to
withdraw substantial portions of their investment) approximately
in the year 2010.
- LifePath 2020 Master Series is managed for
investors in a feeder fund planning to retire (or begin to
withdraw substantial portions of their investment) approximately
in the year 2020.
- LIFEPATH 2030 MASTER SERIES is managed for
investors in a feeder fund planning to retire (or begin to
withdraw substantial portions of their investment) approximately
in the year 2030.
- LIFEPATH 2040 MASTER SERIES is managed for
investors in a feeder fund planning to retire (or begin to
withdraw substantial portions of their investment) approximately
in the year 2040.
2
<PAGE> 121
As with all mutual funds, there can be no assurance
that the investment objective of each Master Series will be
achieved. Each Master Series' investment objective cannot be
changed without approval by the holders of a majority (as
defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of such Master Series' outstanding voting shares.
BZW Barclays Global Fund Advisors ("BGFA") serves as
investment advisor to each Master Series. Prior to January 1,
1996, Wells Fargo Bank, N.A. ("Wells Fargo Bank") served as each
Master Series' investment adviser and Wells Fargo Nikko
Investment Advisors ("WFNIA") served as each Master Series'
sub-investment adviser. BGFA was created by the reorganization
of WFNIA with and into an affiliate of Wells Fargo Institutional
Trust Company ("WFITC"), the Master Series' custodian. BGFA is
now a subsidiary of WFITC which, effective January 1, 1996,
changed its name to BZW Barclays Global Investors, N.A. ("BGI").
Stephens serves the Master Portfolio's administrator and as
placement agent of each Master Series' shares.
Portfolio Securities.
Bank Obligations. Domestic commercial banks organized
under federal law are supervised and examined by the Comptroller
of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by state
banking authorities but are members of the Federal Reserve System
only if they elect to join. In addition, state banks whose
certificates of deposit ("CDs") may be purchased by each Master
Series are insured by the FDIC (although such insurance may not
be of material benefit to the Master Series, depending on the
principal amount of the CDs of each bank held by the Master
Series) and are subject to federal examination and to a
substantial body of federal law and regulation. As a result of
federal or state laws and regulations, domestic branches of
domestic banks whose CDs may be purchased by each Master Series
generally are required, among other things, to maintain specified
levels of reserves, are limited in the amounts which they can
loan to a single borrower and are subject to other regulations
designed to promote financial soundness. However, not all of
such laws and regulations apply to the foreign branches of
domestic banks.
Obligations of foreign branches of domestic banks,
foreign subsidiaries of domestic banks and domestic and foreign
branches of foreign banks, such as CDs and time deposits
("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms
of a specific obligation and/or governmental regulation. Such
obligations are subject to different risks than are those of
domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that
may adversely affect payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding
and other taxes on interest income. These foreign branches and
subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and
accounting, auditing and financial record keeping requirements.
In addition, less information may be publicly available about a
foreign branch of a domestic bank or about a foreign bank than
about a domestic bank.
3
<PAGE> 122
Obligations of U.S. branches of foreign banks may be
general obligations of the parent bank in addition to the
issuing branch, or may be limited by the terms of a specific
obligation or by federal or state regulation as well as
governmental action in the country in which the foreign bank has
its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may be subject to reserve
requirements imposed by the Federal Reserve System or by the
state in which the branch is located if the branch is licensed
in that state.
In addition, federal branches licensed by the
Comptroller of the Currency and branches licensed by certain
states ("State Branches") may be required to: (1) pledge to the
appropriate regulatory authority, by depositing assets with a
designated bank within the relevant state, a certain percentage
of their assets as fixed from time to time by such regulatory
authority; and (2) maintain assets within the relevant state in
an amount equal to a specified percentage of the aggregate
amount of liabilities of the foreign bank payable at or through
all of its agencies or branches within the state. The deposits
of federal and State Branches generally must be insured by the
FDIC if such branches take deposits of less than $100,000.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of domestic
banks, by foreign subsidiaries of domestic banks, by foreign
branches of foreign banks or by domestic branches of foreign
banks, BGFA carefully evaluates such investments on a case-by-
case basis.
Each Master Series may purchase CDs issued by banks,
savings and loan associations and similar thrift institutions
with less than $1 billion in assets, provided that such
institutions are members of the FDIC, and further provided such
Master Series purchases any such CD in a principal amount of not
more than $100,000, which amount would be fully insured by the
Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC. Interest payments on such a CD are
not insured by the FDIC. No Master Series will own more than
one such CD per such issuer.
Management Policies.
Stock Index Options. Each LifePath Master Series may
purchase and write put and call options on stock indices.
Options on stock indices are similar to options on stock except
that (a) the expiration cycles of stock index options are
monthly, while those of stock options are currently quarterly,
and (b) the delivery requirements are different. Instead of
giving the right to take or make delivery of stock at a specified
price, an option on a stock index gives the holder the right to
receive a cash "exercise settlement amount" equal to (i) the
amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of
exercise, multiplied by (ii) a fixed "index multiplier." Receipt
of this cash amount depends upon the closing level of the stock
index upon which the option is based being greater than (in the
case of a call) or less than
4
<PAGE> 123
(in the case of a put) the exercise price of the option. The
amount of cash received is equal to such difference between the
closing price of the index and the exercise price of the option
expressed in dollars multiplied by a specified multiplier. The
writer of the option is obligated, in return for the premium
received, to make delivery of this amount. The writer may
offset a position in stock index options prior to expiration by
entering into a closing transaction on an exchange or the writer
may let the option expire unexercised.
Futures Contracts and Options on Futures Contracts. The
LifePath Master Series may enter into futures contracts and may
purchase and write (i.e., sell) options thereon. Upon the
exercise of an option on a futures contract, the writer of the
option delivers to the holder of the option the futures position
and the accumulated balance in the writer's futures margin
account, which represents the amount by which the market price of
the futures contract exceeds (in the case of a call) or is less
than (in the case of a put) the exercise price of the option on
the futures contract. The potential loss related to the purchase
of options on futures contracts is limited to the premium paid
for the option (plus transaction costs). Because the value of
the option is fixed at the time of sale, there are no daily cash
payments to reflect changes in the value of the underlying
contract; however, the value of the option may change daily and
that change would be reflected in the net asset value of the
relevant LifePath Master Series.
Foreign Currency Transactions. If a LifePath Master
Series enters into a foreign currency transaction or forward
contract, such Master Series deposits, if required by applicable
regulations, with the Master Portfolio's custodian cash or
high-grade debt securities in a segregated account of the
LifePath Master Series in an amount at least equal to the value
of the LifePath Master Series' total assets committed to the
consummation of the forward contract. If the value of the
securities placed in the segregated account declines, additional
cash or securities is placed in the account so that the value of
the account equals the amount of the LifePath Master Series'
commitment with respect to the contract.
At or before the maturity of a forward contract, a
LifePath Master Series either may sell a portfolio security and
make delivery of the currency, or may retain the security and
offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which such Master
Series obtains, on the same maturity date, the same amount of
the currency which it is obligated to deliver. If the LifePath
Master Series retains the portfolio security and engages in an
offsetting transaction, such Master Series, at the time of
execution of the offsetting transaction, incurs a gain or a loss
to the extent that movement has occurred in forward contract
prices. Should forward prices decline during the period between
the LifePath Master Series' entering into a forward contract for
the sale of a currency and the date it enters into an offsetting
contract for the purchase of the currency, the Master Series
realizes a gain to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it has agreed
to purchase. Should forward prices increase, the Master Series
5
<PAGE> 124
suffers a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has
agreed to sell.
The cost to the LifePath Master Series of engaging in
currency transactions varies with factors such as the currency
involved, the length of the contract period and the market
conditions then prevailing. Because transactions in currency
exchange usually are conducted on a principal basis, no fees or
commissions are involved. BGFA considers on an ongoing basis
the creditworthiness of the institutions with which a LifePath
Master Series enters into foreign currency transactions. The
use of forward currency exchange contracts does not eliminate
fluctuations in the underlying prices of the securities, but it
does establish a rate of exchange that can be achieved in the
future. If a devaluation generally is anticipated, the LifePath
Master Series may not be able to contract to sell the currency
at a price above the devaluation level it anticipates.
The purchase of options on currency futures allows a
LifePath Master Series, for the price of the premium it must pay
for the option, to decide whether or not to buy (in the case of
a call option) or to sell (in the case of a put option) a
futures contract at a specified price at any time during the
period before the option expires.
Future Developments. Each LifePath Master Series may
take advantage of opportunities in the areas of options and
futures contracts and options on futures contracts and any other
derivative investments which are not presently contemplated for
use by such Master Series or which are not currently available
but which may be developed, to the extent such opportunities are
both consistent with a LifePath Master Series' investment
objective and legally permissible for the Master Series. Before
entering into such transactions or making any such investment, a
LifePath Master Series would provide appropriate disclosure in
its Part A or this Part B.
Lending Portfolio Securities. To a limited extent, each
Master Series may lend its portfolio securities to brokers,
dealers and other financial institutions, provided it receives
cash collateral which is maintained at all times in an amount
equal to at least 100% of the current market value of the
securities loaned. By lending its portfolio securities, a Master
Series can increase its income through the investment of the cash
collateral or by receipt of a loan premium from the borrower.
For purposes of this policy, each Master Series considers
collateral consisting of U.S. Government obligations or
irrevocable letters of credit issued by banks whose securities
meet the standards for investment by such Master Series to be the
equivalent of cash. From time to time, a Master Series may
return to the borrower, or to a third party unaffiliated with the
Master Portfolio which is acting as a "placing broker," a part of
the interest earned from the investment of collateral received in
exchange for securities loaned.
The SEC currently requires that the following
conditions must be met whenever portfolio securities are loaned:
6
<PAGE> 125
(1) the Master Series must receive at least 100% cash collateral
from the borrower; (2) the borrower must increase such
collateral whenever the market value of the securities loaned
rises above the level of such collateral; (3) the Master Series
must be able to terminate the loan at any time; (4) the Master
Series must receive reasonable interest on the loan, as well as
any dividends, interest or other distributions payable on the
loaned securities, and any increase in market value; (5) the
Master Series may pay only reasonable custodian fees in
connection with the loan; and (6) while voting rights on the
loaned securities may pass to the borrower, the Master
Portfolio's Board of Trustees must terminate the loan and regain
the right to vote the securities if a material event adversely
affecting the investment occurs. These conditions may be
subject to future modification.
Investment Restrictions. Each Master Series has
adopted investment restrictions numbered 1 through 10 as
fundamental policies. These restrictions cannot be changed, as
to a Master Series, without approval by the holders of a
majority as defined in the 1940 Act of such Master Series'
outstanding voting securities. Investment restrictions numbered
11 through 20 are not fundamental policies and may be changed by
vote of a majority of the Trustees of the Master Portfolio at
any time. No Master Series may:
1. Invest more than 5% of its assets in the
obligations of any single issuer, except that up to 25% of the
value of its total assets may be invested, and securities issued
or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such
limitation.
2. Hold more than 10% of the outstanding voting
securities of any single issuer. This Investment Restriction
applies only with respect to 75% of its total assets.
3. Invest in commodities, except that each Master
Series may purchase and sell (i.e., write) options, forward
contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
4. Purchase, hold or deal in real estate, or oil, gas
or other mineral leases or exploration or development programs,
but each Master Series may purchase and sell securities that are
secured by real estate or issued by companies that invest or
deal in real estate.
5. Borrow money, except to the extent permitted under
the 1940 Act. For purposes of this investment restriction, a
Master Series' entry into options, forward contracts, futures
contracts, including those relating to indices, and options on
futures contracts or indices shall not constitute borrowing to
the extent certain segregated accounts are established and
maintained by the Master Series as described in Part A.
6. Make loans to others, except through the purchase
of debt obligations and the entry into repurchase agreements.
7
<PAGE> 126
However, each Master Series may lend its portfolio securities in
an amount not to exceed 33-1/3% of the value of its total
assets. Any loans of portfolio securities will be made
according to guidelines established by the Securities and
Exchange Commission and the Master Portfolio's Board of
Trustees.
7. Act as an underwriter of securities of other
issuers, except to the extent the Master Series may be deemed an
underwriter under the Securities Act of 1933, as amended, by
virtue of disposing of portfolio securities.
8. Invest 25% or more of its total assets in the
securities of issuers in any particular industry or group of
closely related industries, except that, in the case of each
Master Series, there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
9. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act), except to the extent the
activities permitted in Investment Restriction Nos. 3, 5, 12 and
13 may be deemed to give rise to a senior security.
10. Purchase securities on margin, but each Master
Series may make margin deposits in connection with transactions
in options, forward contracts, futures contracts, including
those relating to indices, and options on futures contracts or
indices.
11. Invest in the securities of a company for the
purpose of exercising management or control, but each Master
Series will vote the securities it owns in its portfolio as a
shareholder in accordance with its views.
12. Pledge, mortgage or hypothecate its assets, except
to the extent necessary to secure permitted borrowings and to
the extent related to the purchase of securities on a when-
issued or forward commitment basis and the deposit of assets in
escrow in connection with writing covered put and call options
and collateral and initial or variation margin arrangements with
respect to options, forward contracts, futures contracts,
including those relating to indices, and options on futures
contracts or indices.
13. Purchase, sell or write puts, calls or
combinations thereof, except as may be described in the Master
Series' offering documents.
14. Purchase securities of any company having less
than three years' continuous operations (including operations of
any predecessors) if such purchase would cause the value of its
investments in all such companies to exceed 5% of the value of
its total assets.
15. Enter into repurchase agreements providing for
settlement in more than seven days after notice or purchase
8
<PAGE> 127
securities which are illiquid, if, in the aggregate, more than
15% of the value of its net assets would be so invested.
Although each feeder fund and LifePath Master Series reserves the
right to invest up to 15% of the value of its net assets in
repurchase agreements providing for settlement in more than seven
days after notice and in other illiquid securities, as long as
such 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, such feeder fund and LifePath Master Series
will comply with the lower limit. Each feeder fund currently is
limited to investing up to 10% of the value of its net assets in
such securities due to limits applicable in several states.
16. Purchase securities of other investment companies,
except to the extent permitted under the 1940 Act.
17. Purchase, hold or deal in real estate limited
partnerships.
18. Purchase warrants that exceed 2% of the value of
Master Series' net assets, if those warrants are not listed on
the New York or American Stock Exchanges.
19. Purchase or retain securities of any issuer if the
officers, trustees of the Trust, its advisers or managers owing
beneficially more than one-half of one percent of the securities
of an issuer together own beneficially more than five percent of
the securities of that issuer.
20. Engage in any short sales other than short sales
against the box.
If a percentage restriction is adhered to at the time
of investment, a later change in percentage resulting from a
change in values or assets, except with respect to compliance
with Investment Restriction No. 5, will not constitute a
violation of such restriction.
Item 14. Management of the Portfolio.
Trustees and officers of the Master Portfolio, together
with information as to their principal business occupations
during at least the last five years, are shown 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 the Master Portfolio, 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, 73 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.
*R. Greg Feltus, 44 Trustee, Senior Vice President
</TABLE>
9
<PAGE> 128
<TABLE>
<S> <C> <C>
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.
Thomas S. Goho, 53 Trustee T.B. Rose Faculty Fellow-Business,
321 Beechcliff Court Wake Forest University, Calloway
Winston-Salem, NC 27104 School of Business
and Accountancy; Associate
Professor School of Business
at Wake Forest University
since 1983.
*Zoe Ann Hines, 46 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; and
Secretary of Stephens
Resource Management.
*W. Rodney Hughes, 69 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Robert M. Joses, 77 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901
*J. Tucker Morse, 51 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., 39 Chief Associate of
Operating Financial Services
Officer, Group of Stephens;
Secretary and Director of Stephens
Treasurer Sports Management
Inc.; and Director of
Capo Inc.
</TABLE>
10
<PAGE> 129
COMPENSATION TABLE
For the Fiscal Year Ended February 28, 1995
<TABLE>
<CAPTION>
Total Compensation
Aggregate Compensation from Registrant
Name and Position from Registrant and Fund Complex
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $0 $34,188
Trustee
*R. Greg Feltus 0 0
Trustee
Thomas S. Goho 0 34,188
Trustee
*Zoe Ann Hines 0 0
Trustee
*W. Rodney Hughes 0 32,188
Trustee
Robert M. Joses 0 34,188
Trustee
*J. Tucker Morse 0 32,188
Trustee
</TABLE>
11
<PAGE> 130
Trustees of the Master Portfolio who are not officers
or employees of Stephens or Wells Fargo Bank are not compensated
by the Master Portfolio for their services but are reimbursed
for all out-of-pocket expenses relating to attendance at board
meetings. Trustees who are affiliated with Stephens or Wells
Fargo Bank also do not receive compensation from the Master
Portfolio and also are reimbursed for all out-of-pocket expenses
relating to attendance at board meetings. Each of the officers
and Trustees of the Master Portfolio serves in the identical
capacity as officers and Directors of Overland Express Funds,
Inc., Stagecoach Funds, Inc. and Stagecoach Inc., and as
Trustees and/or Officers of Master Investment Trust, Stagecoach
Trust, Life & Annuity Trust and Managed Series Investment Trust,
each of which are registered open-end management investment
companies and each of which is considered to be in the same
"fund complex", as such term is defined in Form N-1A under the
1940 Act, as the Master Portfolio. 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 compensation from the
Master Portfolio (although they are reimbursed for out-of-pocket
expenses) and do not receive any retirement benefits or deferred
compensation from the Master Portfolio or fund complex.
There ordinarily will be no meetings of interestholders
for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees holding office have been
elected by interestholders, at which time the Trustees then in
office will call a interestholders' meeting for the election of
Trustees. Under the Master Portfolio's Amended and Restated
Declaration of Trust (the "Declaration of Trust"),
interestholders of record of not less than two-thirds of the
outstanding shares of the Master Portfolio may remove a Trustee
through a declaration in writing or by vote cast in person or by
proxy at a meeting called for that purpose. Under the Master
Portfolio's Declaration of Trust, the Trustees are required to
call a meeting of interestholders for the purpose of voting upon
the question of removal of any such Trustee when requested in
writing to do so by the interestholders of record of not less
than 10% of the Master Portfolio's outstanding shares.
Item 15. Control Persons and Principal Holders of Securities.
As of December 15, 1995 each LifePath Fund owned
approximately 100% of the outstanding interests in the
corresponding LifePath Master Series and therefore could be
considered to be a controlling person of each of the
corresponding LifePath Master Series for purposes of the 1940
Act.
12
<PAGE> 131
Item 16. Investment Advisory and Other Services.
Investment Advisory Agreement. BGFA provides
investment advisory services to each Master Series pursuant to
separate Investment Advisory Contracts (each, a "BGFA Advisory
Contract") dated January 1, 1996 with the Master Portfolio. As to
each Master Series, the applicable BGFA Advisory Contract is
subject to annual approval by (i) the Master Portfolio's Board of
Trustees or (ii) vote of a majority (as defined in the 1940 Act)
of the outstanding voting securities of such Master Series,
provided that in either event the continuance also is approved by
a majority of the Master Portfolio's Board of Trustees who are
not "interested persons" (as defined in the 1940 Act) of the
Master Portfolio or BGFA, by vote cast in person at a meeting
called for the purpose of voting on such approval. As to each
Master Series, the BGFA Advisory Contract is terminable without
penalty, on 60 days' written notice, by the Master Portfolio's
Board of Trustees or by vote of the holders of a majority of such
Master Series' shares, or, after the Reapproval Date, on not less
than 60 days' written notice, by BGFA. The applicable BGFA
Advisory Contract terminates automatically, as to the relevant
Master Series, in the event of its assignment (as defined in the
1940 Act).
Prior to January 1, 1996, Wells Fargo Bank provided
investment advisory services to each Master Series pursuant to an
Investment Advisory Agreement (the "Advisory Agreement") dated
February 25, 1994 with the Master Portfolio.
For the fiscal year ended February 28, 1995, the Master
Series paid the following advisory fees to Wells Fargo Bank,
with no fee waivers:
<TABLE>
<CAPTION>
Fees Paid
---------
<S> <C>
LifePath 2000 Master Series $217,676
LifePath 2010 Master Series $158,218
LifePath 2020 Master Series $252,413
LifePath 2030 Master Series $156,397
LifePath 2040 Master Series $189,121
</TABLE>
Sub-Investment Advisory Agreement. Prior to January 1,
1996, WFNIA provided sub-investment advisory services to each
Master Series pursuant to the Sub-Investment Advisory Agreement
(the "Sub-Advisory Agreement") dated February 25, 1994 with Wells
Fargo Bank.
13
<PAGE> 132
For the fiscal year ended February 28, 1995, Wells
Fargo Bank paid the following sub-advisory fees to WFNIA, with
no fee waivers:
<TABLE>
<CAPTION>
Fees Paid
---------
<S> <C>
Lifepath 2000 Master Series $159,494
LifePath 2010 Master Series $115,647
LifePath 2020 Master Series $184,341
LifePath 2030 Master Series $114,426
LifePath 2040 Master Series $138,511
</TABLE>
Administration Agreement. Stephens provides administrative
services to the Master Portfolio pursuant to an Administration
Agreement dated February 25, 1994 (the "Administration
Agreement"). Under the Administration Agreement, Stephens
provides as administrative services, among other things:
(i) general supervision of the operation of the Master Portfolio
and the Master Series, including coordination of the services
performed by the investment adviser, transfer and dividend
disbursing agent, custodians, interestholder servicing agent(s),
independent auditors and legal counsel; (ii) regulatory
compliance, including the compilation of information for
documents such as reports to, and filings with, the SEC and
state securities commissions, and preparation of proxy
statements and interestholder reports for the Master Series; and
(iii) general supervision relative to the compilation of data
required for the preparation of periodic reports distributed to
the Master Portfolio's officers and Board of Trustees. Stephens
also furnishes office space and certain facilities required for
conducting the business of the Master Portfolio together with
those ordinary clerical and bookkeeping services that are not
being furnished by Wells Fargo. Stephens also pays the
compensation of the Master Portfolio's Trustees, officers and
employees who are affiliated with Stephens.
Stephens is not entitled to compensation for providing
administrative services to a Master Series so 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 Series.
Distribution Plan. The Master Portfolio's Board of Trustees has adopted,
on behalf of each Master Series, a "defensive" distribution plan under Section
12(b) of the 1940 Act and Rule 12b-1 thereunder (the "Plan"). The Plan was
adopted by a majority of the Master Portfolio's Board of Trustees (including a
majority of those Trustees who are not "interested persons" as defined in the
1940 Act of the Master Portfolio) on October 10, 1995. The Plan was intended
as a precaution designed to address the possibility that certain ongoing
payments by Barclays to Wells Fargo Bank in connection with the sale of WFNIA
may be characterized as indirect payments by each Master Series to finance
activities primarily intended to result in the sale of interests in such master
Series. The Plan provides that if any portion of a Master Series' advisory
fees (up to 0.25% of the average daily net assets of each Master Series on an
annual basis) were deemed to constitute an indirect payment for activities that
are primarily intended to result in the sale of interests in a Master Series
such payment would be authorized pursuant to the Plan. The Master Series do
not currently pay any amounts pursuant to the Plan.
Custody Agreement. BZW Barclays Global Investors, N.A., ("BGI"), a
wholly-owned subsidiary of BZW Barclays Global Investors Holdings Inc.
(formerly, The Nikko Building U.S.A., Inc.), acts as custodian to the Master
Portfolio. The custodian, among other things, maintains a custody account or
accounts in the name of the Master Portfolio; receives and delivers all assets
for the Master Portfolio upon purchase and upon sale or maturity; collects and
receives all income and other payments and distributions on account of the
assets of the Master Portfolio and pays all expenses of the Master Portfolio.
Item 17. Brokerage Allocation and Other Practices.
General. BGFA assumes general supervision over
placing orders on behalf of the Master Portfolio for the
purchase or sale of portfolio securities. Allocation of
brokerage transactions, including their frequency, is made in
the best judgment of BGFA and in a manner deemed fair and
reasonable to interestholders. The primary consideration is
prompt execution of orders at the most favorable net price.
Brokers also are selected because of their ability to
handle special executions such as are involved in large block
trades or broad distributions, provided the primary consideration
is met. Portfolio turnover may vary from year to year, as well
as within a year. High turnover rates over 100% are likely to
result in comparatively
14
<PAGE> 133
greater brokerage expenses. The overall reasonableness of
brokerage commissions paid is evaluated by BGFA based upon its
knowledge of available information as to the general level of
commissions paid by other institutional investors for comparable
services.
Purchases and sales of fixed-income securities usually
are principal transactions. Portfolio securities ordinarily are
purchased directly from the issuer or from an underwriter or
market maker. Usually no brokerage commissions are paid by the
LifePath Master Series for such purchases and sales. The prices
paid to the underwriters of newly-issued securities usually
include a concession paid by the issuer to the underwriter, and
purchases of securities from market makers may include the
spread between the bid and asked price.
On February 28, 1995, the LifePath Master Series owned
securities of their "regular brokers or dealers" or their
parents, as defined in the 1940 Act, as follows:
<TABLE>
<S> <C> <C>
LifePath 2000 MERRILL LYNCH & CO. 16,728
SALOMON INC. 9,684
BEAR STEARNS & CO., INC. 24,300
MORGAN STANLEY GROUP 58,886
LifePath 2010 MERRILL LYNCH & CO. 37,761
SALOMON INC. 18,396
BEAR STEARNS & C0., INC. 18,375
LEHMAN BROTHERS HOLDINGS 14,500
MORGAN STANLEY 24,929
LifePath 2020 MERRILL LYNCH & CO. 97,170
SALOMON INC. 45,468
BEAR STEARNS & CO., INC 33,188
MORGAN STANLEY GROUP 80,244
LifePath 2030 MERRILL LYNCH & CO. 72,857
SALOMON INC. 36,036
BEAR STEARNS & CO., INC. 24,938
MORGAN STANLEY GROUP 60,031
LifePath 2040 MERRILL LYNCH & CO. 102,828
SALOMON INC. 50,760
BEAR STEARNS & CO., INC. 13,875
LEHMAN BROTHERS HOLDINGS 12,688
MORGAN STANLEY GROUP 36,719
</TABLE>
15
<PAGE> 134
Prior to January 1, 1996, WFNIA exercised general
supervision over placing orders on behalf of each Master Series
for the purchase or sale of portfolio securities and the
brokerage allocation practices described above are applicable to
WFNIA and the Master Series prior to January 1, 1996.
Item 18. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are
authorized to issue beneficial interests in each Master Series.
Investors in a Master Series are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit
of such Master Series. Upon liquidation or dissolution of a
Master Series, investors are entitled to share pro rata in such
Master Series' net assets available for distribution to its
investors. Investments in the Master Series have no preference,
pre-exemptive, conversion or similar rights and are fully paid
and non-assessable, except as set forth below. Investments in
the Master Series may not be transferred. No certificates are
issued.
Each investor is entitled to a vote, with respect to
matters effecting each of the Master Portfolio's series, in
proportion to the amount of its investment in the Master
Portfolio. Investors in the Master Portfolio do not have
cumulative voting rights, and investors holding more than 50% of
the aggregate beneficial interest in the Master Portfolio may
elect all of the Trustees of the Master Portfolio if they choose
to do so and in such event the other investors in the Master
Portfolio would not be able to elect any Trustee. The Master
Portfolio is not required to hold annual meetings of investors
but the Master Portfolio will hold special meetings of investors
when in the judgment of the Master Portfolio's Trustees it is
necessary or desirable to submit matters for an investor vote.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted under the provisions of the 1940 Act or
applicable state law or otherwise to the holders of the
outstanding voting securities of an investment company, such as
the Master Portfolio, will not be deemed to have been
effectively acted upon unless approved by the holders of a
majority of the outstanding interests of each Master Series
affected by such matter. Rule 18f-2 further provides that a
Master Series shall be deemed to be affected by a matter unless
it is clear that the interests of such Master Series in the
matter are identical or that the matter does not affect any
interest of such Master Series. However, the Rule exempts the
selection of independent auditors and the election of Trustees
from the separate voting requirements of the Rule.
Item 19. Purchase, Redemption and Pricing of Securities.
Purchase of Securities. Beneficial interests in each
Master Series are issued solely in private placement
transactions which 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 the Master Series may
only be made by investment companies or certain other entities
which 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.
16
<PAGE> 135
Suspension of Redemptions. The right of redemption of
interests in the Master Series may be suspended or the date of
payment postponed (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday
closings), (b) when trading in the markets the Master Series
ordinarily utilizes is restricted, or when an emergency exists
as determined by the SEC so that disposal of the Master Series'
investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the SEC
by order may permit to protect the Master Series'
interestholders.
Pricing of Securities.
The securities of the LifePath Master Series, including
covered call options written by a LifePath Master Series, are
valued at the last sale price on the securities exchange or
national securities market on which such securities primarily are
traded. Securities not listed on an exchange or national
securities market, or securities in which there were no
transactions, are valued at the most recent bid prices.
Portfolio securities which are traded primarily on foreign
securities exchanges generally are valued at the preceding
closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time a value was
so established is likely to have changed such value, then the
fair value of those securities are determined by consideration of
other factors by or under the direction of the Master Portfolio's
Board of Trustees or its delegates. Short- term investments are
carried at amortized cost, which approximates market value. Any
securities or other assets for which recent market quotations are
not readily available are valued at fair value as determined in
good faith by the Master Portfolio's Board of Trustees.
Restricted securities, as well as securities or other
assets for which market quotations are not readily available or
which are not valued by a pricing service approved by the Master
Portfolio's Board of Trustees, are valued at fair value as
determined in good faith by or under the direction of the Master
Portfolio's Board of Trustees or its delegates. The Master
Portfolio's Board of Trustees reviews the method of valuation on
a current basis. In making a good faith valuation of restricted
securities, the following are generally considered: restricted
securities that are, or are convertible into, securities of the
same class of securities for which a public market exists
usually are valued at market value less the same percentage
discount at which such securities were purchased. This discount
may be revised periodically if BGFA believes that the discount no
longer reflects the value of the restricted securities.
Restricted securities not of the same class as securities for
which a public market exists usually are valued initially at
cost. Any subsequent adjustment from cost is based upon
considerations deemed relevant by or under the direction of the
Master Portfolio's Board of Trustees or its delegates.
Any assets or liabilities initially expressed in terms
of foreign currency are translated into dollars using
information provided by pricing entities, such as Morgan Stanley
17
<PAGE> 136
Capital International or Gelderman Data Service, or at a quoted
market exchange rate as may be determined to be appropriate by
BGFA. Forward currency contracts are valued at the current
cost of offsetting the contract. Because of the need to obtain
prices as of the close of trading on various exchanges
throughout the world, the calculation of net asset value does
not take place contemporaneously with the determination of
prices of the foreign securities held by the LifePath Master
Series. In addition, foreign securities held by a LifePath
Master Series may be traded actively in securities markets which
are open for trading on days when the LifePath Master Series
does not determine its net asset value. Accordingly, there may
be occasions when a LifePath Master Series does not calculate
its net asset value but when the value of such Master Series'
portfolio securities is affected by such trading activity.
Fixed-income securities are valued each business day
using available market quotations or at fair value as determined
by one or more independent pricing services (collectively, the
"Service") approved by the Master Portfolio's Board of Trustees.
The Service may use available market quotations, employ
electronic data processing techniques and/or a matrix system to
determine valuations. The Service's procedures are reviewed by
the Master Portfolio's officers under the general supervision of
the Master Portfolio's Board of Trustees.
Expenses and fees, including advisory fees, are accrued
daily and are taken into account for the purpose of determining
the net asset value of a LifePath Master Series' shares.
18
<PAGE> 137
New York Stock Exchange Closings. The holidays on
which the New York Stock Exchange is closed currently are: New
Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Item 20. Tax Status.
The Master Portfolio is organized as a business trust
under Delaware law. Under the Master Portfolio's current method
of operation as a partnership, no Master Series is subject to
any income tax. However, each investor in a Master Series will
be taxable on its share (as determined in accordance with the
governing instruments of the Master Portfolio) of such Master
Series' ordinary income and capital gain in determining its
income tax liability. The determination of such share is made
in accordance with the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.
The Master Portfolio's taxable year-end is the last day
of February. Although the Master Portfolio is not subject to
federal income tax, it files appropriate federal income tax
returns.
Each Master Series' assets, income and distributions
are managed in such a way that an investor in the Master Series
is able to satisfy the requirements of Subchapter M of the Code,
assuming that the investor invested all of its investable assets
in the Master Series. Investors are advised to consult their
own tax advisors as to the tax consequences of an investment in
the Master Series.
Item 21. Underwriters.
The exclusive placement agent for the Master Portfolio
is Stephens, which receives no 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
19
<PAGE> 138
adopted under the 1933 Act, may continuously invest in a Master
Series of the Master Portfolio.
Item 22. Calculations of Performance Data.
Not applicable.
Item 23. Financial Information.
For the fiscal year ended February 28, 1995, Cooper &
Lybrand L.L.P. served as the Master Portfolio's independent
auditors and expressed an unqualified opinion on the financial
statements of the Master Portfolio. For the fiscal year ending
on the last day of February, 1996, and pursuant to the
recommendation of the Master Portfolio's Audit Committee, the
Board of Trustees selected KPMG Peat Marwick LLP as the
independent auditors for the Master Portfolio. KPMG Peat
Marwick LLP provides audit services, tax return preparation and
assistance and consultation in connection with review of certain
SEC filings. KPMG Peat Marwick LLP's address is Three
Embarcadero Center, San Francisco, California 94111.
The audited financial statements for the LifePath Master
Series are incorporated in this Part B by reference to the
financial statements contained in Amendment No. 2 to the Master
Portfolio's Registration Statement on Form N-1A as filed with the
SEC on June 28, 1995. The unaudited financial statements for the
six-month period ended August 31, 1995 for the LifePath Master
Series are incorporated in this Part B by reference to the
financial statements contained in Amendment No. 3 to the Master
Portfolio's Registration Statement on Form N-1A as filed with the
SEC on or about January 5, 1996.
20
<PAGE> 139
APPENDIX
Description of certain ratings assigned by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff &
Phelps, Inc. ("Duff") and IBCA Inc. and IBCA Limited ("IBCA"):
S&P
Bond Ratings
AAA
Bonds rated "AAA" have the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely
strong.
AA
Bonds rated "AA" have a very strong capacity to pay
interest and repay principal and differ from the highest rated
issues only in small degree.
A
Bonds rated "A" have a strong capacity to pay interest
and repay principal although they are somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rated categories.
BBB
Bonds rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated
categories.
S&P's letter ratings may be modified by the addition of
a plus (+) or minus (-) sign designation, which is used to show
relative standing within the major rating categories, except in
the "AAA" (Prime Grade) category.
Commercial Paper Rating
The designation "A-1" by S&P indicates that the degree
of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an "A-
2" designation is strong. However, the relative degree of
safety is not as high as for issues designated "A-1".
A-1
<PAGE> 140
Moody's
Bond Ratings
Aaa
Bonds which are rated "Aaa" are judged to be of the
best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated "Aa" are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what generally are known as high grade bonds. They are
rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A
Bonds which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the
future.
Baa
Bonds which are rated "Baa" are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. 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 lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Moody's applies the numerical modifiers "1", "2" and
"3" to show relative standing within the major rating
categories, except in the "Aaa" category. The modifier "1"
indicates a ranking for the security in the higher end of a
rating category; the modifier "2" indicates a mid-range ranking;
and the modifier "3" indicates a ranking in the lower end of a
rating category.
Commercial Paper Rating
The rating Prime-1 ("P-1") is the highest commercial
paper rating assigned by Moody's. Issuers of "P-1" paper must
have a superior capacity for repayment of short-term promissory
obligations, and this ordinarily is evidenced by leading market
A-2
<PAGE> 141
positions in well established industries, high rates of return
on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well established access to a range
of financial markets and assured sources of alternate liquidity.
Issuers (or relating supporting institutions) rated
Prime-2 ("P-2") have a strong capacity for repayment of short-
term promissory obligations. This ordinarily is evidenced by
many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, are more
subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions.
Ample alternate liquidity is maintained.
Fitch
Bond Ratings
The ratings represent Fitch's assessment of the
issuer's ability to meet the obligations of a specific debt
issue or class of debt. The ratings take into consideration
special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and
operative performance of the issuer and of any guarantor, as
well as the political and economic environment that might affect
the issuer's future financial strength and credit quality.
AAA
Bonds rated "AAA" are considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably
foreseeable events.
AA
Bonds rated "AA" are considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and repay principal is very strong, although not quite
as strong as bonds rated "AAA". Because bonds rated in the
"AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
A
Bonds rated "A" are considered to be investment grade
and of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB
Bonds rated "BBB" are considered to be investment grade
and of satisfactory credit quality. The obligor's ability to
pay interest and repay principal is considered to be adequate.
A-3
<PAGE> 142
Adverse changes in economic conditions and circumstances,
however, are more likely to have an adverse impact on these
bonds and, therefore, impair timely payment. The likelihood
that the ratings of these bonds will fall below investment grade
is higher than for bonds with higher ratings.
Plus (+) and minus (-) signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category.
Short-Term Ratings
Fitch's short-term ratings apply to debt obligations
that are payable on demand or have original maturities of up to
three years, including commercial paper, certificates of
deposit, medium-term notes, and municipal and investment notes.
Although the credit analysis is similar to Fitch's bond
rating analysis, the short-term rating places greater emphasis
than bond ratings on the existence of liquidity necessary to
meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+".
F-2
Good Credit Quality. Issues carrying this rating have
a satisfactory degree of assurance for timely payments, but the
margin of safety is not as great as the "F-1+" and "F-1"
categories.
Duff
Bond Ratings
AAA
Bonds rated "AAA" are considered highest credit
quality. The risk factors are negligible, being only slightly
more than for risk-free U.S. Treasury debt.
AA
Bonds rated "AA" are considered high credit quality.
Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.
A-4
<PAGE> 143
A
Bonds rated "A" have protection factors which are
average but adequate. However, risk factors are more variable
and greater in periods of economic stress.
BBB
Bonds rated "BBB" are considered to have below average
protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic
cycles.
Plus (+) and minus (-) signs are used with a rating
symbol (except "AAA") to indicate the relative position of a
credit within the rating category.
Commercial Paper Rating
The rating "Duff-1" is the highest commercial paper
rating assigned by Duff. Paper rated "Duff-1" is regarded as
having very high certainty of timely payment with excellent
liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated "Duff-2" is regarded as
having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals.
Risk factors are small.
IBCA
Bond and Long-Term Ratings
Obligations rated "AAA" by IBCA have the lowest
expectation of investment risk. Capacity for timely repayment
of principal and interest is substantial, such that adverse
changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations
for which there is a very low expectation of investment risk are
rated "AA" by IBCA. Capacity for timely repayment of principal
and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk
albeit not very significantly.
Commercial Paper and Short-Term Ratings
The designation "A1" by IBCA indicates that the
obligation is supported by a very strong capacity for timely
repayment. Those obligations rated "A1+" are supported by the
highest capacity for timely repayment. Obligations rated "A2"
are supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
International and U.S. Bank Ratings
An IBCA bank rating represents IBCA's current
assessment of the strength of the bank and whether such bank
would receive support should it experience difficulties. In its
assessment of a bank, IBCA uses a dual rating system comprised
of Legal Ratings and Individual Ratings. In addition, IBCA
A-5
<PAGE> 144
assigns banks Long- and Short-Term Ratings as used in the
corporate ratings discussed above. Legal Ratings, which range
in gradation from 1 through 5, address the question of whether
the bank would receive support provided by central banks or
interestholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of
credit risk. Individual Ratings, which range in gradations from
A through E, represent IBCA's assessment of a bank's economic
merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support
from state authorities or its owners.
A-6
<PAGE> 145
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS - 49.60%
32,791 Abbott Laboratories $ 991,989 $ 1,270,651
4,449 Advanced Micro Devices+ 123,461 150,154
4,629 Aetna Life & Casualty Co 266,937 315,929
4,775 Ahmanson (H F) & Co 89,381 113,406
4,581 Air Products & Chemicals Inc 203,319 245,656
20,240 Airtouch Communications+ 491,451 657,800
1,151 Alberto-Culver Co Class B 27,273 32,804
10,330 Albertson's Inc 288,545 329,269
9,132 Alcan Aluminium Ltd 206,145 297,932
2,249 Alco Standard Corp 125,196 181,045
1,801 Alexander & Alexander Services 38,778 41,648
2,591 Allergan Inc 64,338 78,702
11,609 Allied Signal Inc 428,352 515,149
18,483 Allstate Corp 508,485 626,112
7,690 Alltel Corp 233,421 217,243
7,336 Aluminum Co of America 274,579 419,069
3,356 ALZA Corp+ 77,767 79,705
4,648 Amdahl Corp+ 32,723 42,413
3,807 Amerada Hess Corp 192,129 180,357
7,755 American Brands Inc 266,065 325,710
7,520 American Electric Power Inc 268,596 256,620
20,312 American Express Corp 601,875 820,097
8,312 American General Corp 260,015 292,998
3,044 American Greetings Corp Class A 91,403 93,603
12,637 American Home Products Corp 818,926 973,049
19,422 American International Group Inc 1,244,507 1,565,899
6,071 American Stores Co 141,456 178,336
22,758 Ameritech Corp 945,833 1,166,348
10,868 Amgen Inc+ 260,780 520,306
20,399 Amoco Corp 1,186,176 1,300,436
8,848 AMP Inc 298,327 359,450
3,132 AMR Corp+ 200,351 220,806
1,524 Andrew Corp+ 38,968 88,773
10,624 Anheuser-Busch Inc 536,165 606,896
4,984 Apple Computer Inc 156,530 214,312
</TABLE>
45
<PAGE> 146
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
3,436 Applied Materials Inc+ $ 182,543 $ 357,344
22,198 Archer-Daniels-Midland Co 341,942 369,043
4,192 Armco Inc+ 27,182 26,200
1,546 Armstrong World Industries Inc 66,277 88,702
1,663 ASARCO Inc 37,487 53,840
2,495 Ashland Inc 84,192 81,711
65,005 AT & T Corp 3,637,160 3,672,783
6,573 Atlantic Richfield Corp 730,385 717,279
1,970 Autodesk Inc 55,527 90,866
5,928 Automatic Data Processing 324,725 385,320
2,207 Avery Dennison Corp 67,368 90,487
2,806 Avon Products Inc 156,400 198,174
5,739 Baker Hughes Inc 130,335 129,128
1,258 Ball Corp 37,874 42,772
1,940 Bally Entertainment Corp+ 16,863 23,523
5,998 Baltimore Gas & Electric Co 148,786 157,448
16,633 Banc One Corp 561,620 559,285
4,558 Bank of Boston Corp 121,521 200,552
7,873 Bank of New York Inc 264,725 342,476
15,362 BankAmerica Corp 700,743 867,953
3,176 Bankers Trust N Y Corp 224,605 218,747
2,073 Bard (C R) Inc 51,814 64,263
3,992 Barnett Banks Inc 176,134 228,043
14,458 Barrick Gold Corp 390,820 366,872
576 Bassett Furniture Industries 17,721 14,256
2,473 Bausch & Lomb Inc 106,940 98,302
11,494 Baxter International Inc 312,447 448,266
2,817 Becton Dickenson & Co 118,012 158,808
17,883 Bell Atlantic Corp 1,037,773 1,068,509
20,365 BellSouth Corp 1,198,807 1,400,094
2,095 Bemis Co Inc 49,722 60,755
2,181 Beneficial Corp 84,208 107,142
4,392 Bethlehem Steel Corp+ 76,158 64,233
4,015 Beverly Enterprises+ 48,665 53,199
4,727 Biomet Inc+ 54,745 76,223
</TABLE>
46
<PAGE> 147
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
3,450 Black & Decker Corp $ 76,763 $ 111,694
4,240 Block (H & R) Inc 172,090 165,360
5,255 Boatmen's Bancshares Inc 160,603 194,435
13,979 Boeing Co 600,857 891,161
1,866 Boise Cascade Corp 48,671 80,005
6,079 Boston Scientific Corp+ 130,245 241,640
1,170 Briggs & Stratton Corp 42,504 44,314
20,913 Bristol-Myers Squibb Co 1,220,230 1,435,155
707 Brown Group Inc 23,219 12,903
2,862 Brown-Forman Corp Class B 81,258 105,894
8,719 Browning-Ferris Industries Inc 247,848 293,176
88 Bruno's Inc 821 902
3,851 Brunswick Corp 68,841 77,501
3,689 Burlington Northern Inc 203,111 255,463
5,210 Burlington Resources Inc 222,189 212,959
2,926 Cabletron Systems Inc+ 155,068 154,712
10,197 Campbell Soup Co 426,773 466,513
6,299 Capital Cities/ABC Inc 431,323 724,385
6,380 Carolina Power & Light Co 192,870 195,388
8,219 Caterpillar Inc 388,933 551,700
2,460 CBS Inc 146,283 196,185
1,222 Centex Corp 42,534 35,744
7,739 Central & South West Corp 221,871 189,606
1,848 Ceridian Corp+ 42,693 80,850
3,821 Champion International Corp 130,745 216,364
4,109 Charming Shoppes Inc 43,096 21,572
7,316 Chase Manhattan Corp 256,750 420,670
9,956 Chemical Banking Corp Class A 399,697 579,937
26,752 Chevron Corp 1,247,218 1,294,128
15,116 Chrysler Corp 712,633 814,375
3,600 Chubb Corp 298,235 328,500
2,938 CIGNA Corp 197,143 284,252
1,446 Cincinnati Milacron Inc 33,289 47,899
6,333 Cinergy Corp 151,109 162,283
3,883 Circuit City Stores Inc 97,604 133,964
</TABLE>
47
<PAGE> 148
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
10,942 Cisco Systems Inc+ $ 359,780 $ 718,069
16,276 Citicorp 632,543 1,080,320
2,118 Clorox Co 115,415 143,230
4,226 Coastal Corp 118,576 138,402
52,014 Coca-Cola Co 2,432,365 3,341,900
5,934 Colgate-Palmolive Co 343,838 403,512
2,037 Columbia Gas System Inc+ 52,798 71,804
18,202 Columbia HCA Healthcare Corp 754,015 855,494
9,796 Comcast Corp Class A 192,606 209,390
1,756 Community Psychiatric Centers+ 22,336 20,633
10,723 Compaq Computer Corp+ 293,062 512,023
6,559 Computer Associates International Inc 273,704 455,851
2,283 Computer Sciences Corp+ 90,795 137,551
10,091 ConAgra Inc 285,273 382,197
3,215 Conrail Inc 180,108 216,209
9,608 Consolidated Edison Co 308,179 271,426
1,704 Consolidated Freightways 35,862 44,091
3,829 Consolidated Natural Gas Co 176,002 147,895
4,739 Cooper Industries Inc 215,842 180,082
3,438 Cooper Tire & Rubber Co 87,634 89,388
1,572 Coors (Adolph) Co Class B 28,950 26,724
5,917 CoreStates Financial Corp 166,252 218,929
9,330 Corning Inc 294,315 304,391
5,959 CPC International Inc 290,987 374,672
1,251 Crane Co 35,451 45,036
1,039 Cray Research Inc+ 23,244 24,157
3,652 Crown Cork & Seal Co+ 141,269 164,362
4,309 CSX Corp 335,106 355,493
6,994 CUC International Inc+ 184,175 238,670
1,677 Cummins Engine Co Inc 74,103 65,822
3,778 Cyprus Amax Minerals 102,564 105,784
4,049 Dana Corp 108,740 120,964
6,423 Darden Restaurants Inc+ 69,363 65,836
1,472 Data General Corp+ 13,147 14,352
2,913 Dayton-Hudson Corp 205,007 213,013
</TABLE>
48
<PAGE> 149
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
6,923 Dean Witter Discover & Co $ 274,335 $ 353,073
3,503 Deere & Co 259,096 299,507
2,071 Delta Air Lines Inc 111,942 154,031
3,412 Deluxe Corp 112,333 106,625
5,860 Detroit Edison Co 183,555 179,463
3,781 Dial Corp 80,754 90,744
5,959 Digital Equipment Corp+ 206,623 248,788
4,622 Dillard Department Stores Inc Class A 153,154 142,704
21,370 Disney (Walt) Co 951,608 1,199,391
7,013 Dominion Resources Inc 300,507 253,345
6,249 Donnelley (R R) & Sons Co 192,584 237,462
2,319 Dover Corp 130,932 184,940
11,373 Dow Chemical Co 717,717 841,602
3,986 Dow Jones & Co Inc 136,445 145,987
7,372 Dresser Industries Inc 160,298 176,928
4,634 DSC Communications Corp+ 146,815 243,285
8,331 Duke Power Co 339,555 338,447
6,893 Dun & Bradstreet Corp 412,099 398,932
22,672 DuPont (E I) de Nemours 1,233,122 1,482,182
896 Eastern Enterprises 23,664 27,440
3,401 Eastman Chemical Co 176,064 219,790
13,973 Eastman Kodak Co 681,496 805,194
3,178 Eaton Corp 162,464 172,009
2,449 Echlin Inc 77,815 84,491
4,523 Echo Bay Mines Ltd 51,152 46,926
2,767 Ecolab Inc 61,458 75,747
2,194 EG & G Inc 37,715 41,686
9,559 Emerson Electric Co 583,069 682,274
5,908 Engelhard Corp 105,778 166,901
10,361 Enron Corp 345,620 348,389
2,616 Enserch Corp 46,556 42,837
9,308 Entergy Corp 292,169 223,392
51,015 Exxon Corp 3,297,084 3,507,281
2,254 Federal Express Corp+ 143,671 161,725
7,421 Federal Home Loan Mortgage Corp 399,909 476,799
</TABLE>
49
<PAGE> 150
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
11,241 Federal National Mortgage Assoc $ 889,859 $ 1,072,110
1,758 Federal Paper Board Co 42,422 69,661
3,758 First Chicago Corp 178,760 238,163
4,863 First Data Corp 244,089 283,878
3,355 First Fidelity Bancorp 155,645 219,333
3,195 First Interstate Bancorp 221,941 305,123
866 First Mississippi Corp 14,179 28,686
7,182 First Union Corp 315,570 359,998
5,745 Fleet Financial Group Inc 189,046 212,565
1,902 Fleetwood Enterprises Inc 42,032 37,327
1,528 Fleming Co Inc 43,323 44,503
3,391 Fluor Corp 153,219 198,374
1,511 FMC Corp+ 79,376 116,347
42,158 Ford Motor Co 1,188,217 1,291,089
1,504 Foster Wheeler Corp 50,514 55,460
7,588 FPL Group Inc 283,021 294,984
8,421 Freeport McMoRan Copper & Gold Inc Class B 229,255 196,841
3,096 Fruit of the Loom Inc Class A+ 83,650 72,756
5,738 Gannett Co Inc 296,780 306,983
5,878 Gap Inc 192,090 188,831
2,586 General Dynamics Corp 113,887 136,088
69,578 General Electric Co 3,501,314 4,096,405
6,423 General Mills Inc 321,854 331,587
30,842 General Motors Corp 1,437,483 1,449,574
4,663 General Public Utilities 138,541 133,478
3,373 General Re Corp 417,316 501,312
1,927 General Signal Corp 65,925 68,409
4,987 Genuine Parts Co 186,362 196,363
3,698 Georgia-Pacific Corp 253,013 332,820
2,485 Giant Food Inc Class A 57,060 77,346
1,440 Giddings & Lewis Inc 29,573 23,580
18,170 Gillette Co 595,411 758,598
2,490 Golden West Financial 101,381 118,898
1,034 Goodrich (B F) Co 46,876 61,523
</TABLE>
50
<PAGE> 151
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
6,233 Goodyear Tire & Rubber Co $ 248,777 $ 249,320
3,847 Grace (W R) & Co 158,425 256,306
2,084 Grainger (W W) Inc 122,978 123,998
1,572 Great Atlantic & Pacific Tea Co 39,036 44,606
2,789 Great Lakes Chemical Corp 187,178 184,423
5,435 Great Western Financial Corp 98,847 127,043
39,806 GTE Corp 1,405,021 1,457,895
4,664 Halliburton Co 169,515 197,637
1,433 Handleman Co 15,882 13,614
3,170 Harcourt General Inc 121,818 131,951
1,201 Harland (John H) Co 29,312 26,572
1,942 Harnischfeger Industries Inc 47,673 71,369
4,193 Harrah's Entertainment Inc+ 125,645 133,652
1,609 Harris Corp 70,482 92,719
3,562 Hasbro Inc 124,208 115,320
9,954 Heinz (H J) Co 371,417 421,801
996 Helmerich & Payne Inc 30,214 28,511
4,774 Hercules Inc 170,292 265,554
3,191 Hershey Foods Corp 158,971 191,061
20,938 Hewlett Packard Co 914,822 1,675,040
1,964 Hilton Hotels Corp 108,592 130,606
19,518 Home Depot Inc 824,458 778,280
5,645 Homestake Mining Co 104,598 93,143
5,284 Honeywell Inc 188,547 231,175
3,972 Household International Inc 152,161 222,929
5,339 Houston Industries Inc 228,010 226,240
4,672 Illinois Tool Works Inc 189,547 286,160
4,755 Inco Ltd 114,607 166,425
4,325 Ingersoll-Rand Co 152,563 163,809
1,847 Inland Steel Industries Inc 56,692 50,562
34,006 Intel Corp 1,158,904 2,087,118
1,779 Intergraph Corp+ 19,377 22,015
23,883 International Business Machines Corp 1,402,069 2,468,905
4,601 International Flavors & Fragrances 190,500 220,273
5,206 International Paper Co 357,643 426,241
</TABLE>
51
<PAGE> 152
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
3,098 Interpublic Group Cos Inc $ 99,068 $ 120,435
4,372 ITT Corp 386,054 523,001
3,279 James River Corp 65,316 113,945
1,967 Jefferson-Pilot Corp 103,683 123,675
26,498 Johnson & Johnson 1,250,784 1,828,362
1,641 Johnson Controls Inc 87,536 99,896
1,802 Jostens Inc 34,891 43,248
18,655 K Mart Corp 359,395 254,174
1,304 Kaufman & Broad Home Corp 23,074 17,441
9,049 Kellogg Co 499,744 610,808
2,146 Kerr-McGee Corp 107,754 118,030
9,914 KeyCorp 302,445 307,334
6,588 Kimberly-Clark Corp 337,973 420,809
1,551 King World Productions+ 59,288 58,938
2,231 Knight-Ridder Inc 122,026 125,494
4,730 Kroger Co+ 107,894 154,316
11,160 Laidlaw Inc Class B 98,169 100,440
12,039 Lilly (Eli) & Co 683,977 985,693
14,624 Limited Inc 301,233 270,544
3,931 Lincoln National Corp 167,795 169,033
3,141 Liz Claiborne Inc 63,750 71,458
8,182 Lockheed Martin Corp 380,633 498,079
2,407 Loews Corp 266,328 316,220
885 Longs Drug Stores Corp 29,396 32,745
3,435 Loral Corp 123,685 188,066
1,423 Louisiana Land & Exploration Co 60,605 54,430
4,597 Louisiana-Pacific Corp 152,282 109,179
6,494 Lowe's Co Inc 183,426 215,926
1,017 Luby's Cafeterias Inc 23,355 20,213
3,133 Mallinckrodt Group Inc 100,709 117,879
2,522 Manor Care Inc 63,444 81,650
5,022 Marriott International 140,732 178,281
2,970 Marsh & McLennan Companies Inc 251,989 244,654
6,484 Masco Corp 190,342 181,552
9,058 Mattel Inc 185,301 262,682
</TABLE>
52
<PAGE> 153
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
10,127 May Co Department Stores Co $ 405,084 $ 429,132
4,377 Maytag Corp 73,340 67,844
6,029 MBNA Corp 146,556 214,030
2,235 McDermott International Inc 62,235 50,846
28,546 McDonald's Corp 841,053 1,041,929
4,867 McDonnell Douglas Corp 184,651 390,577
2,003 McGraw-Hill Inc 139,948 157,736
27,764 MCI Communications 676,758 668,071
2,465 Mead Corp 115,732 151,289
4,676 Medtronic Inc 208,147 441,298
6,061 Mellon Bank Corp 226,379 287,140
4,357 Melville Corp 177,397 145,415
1,529 Mercantile Stores Co Inc 55,163 70,143
50,753 Merck & Co Inc 1,816,330 2,531,306
1,192 Meredith Corp 25,086 46,786
7,208 Merrill Lynch & Co Inc 317,694 415,361
8,440 Micron Technology Inc 190,544 648,825
23,867 Microsoft Corp+ 1,388,610 2,207,698
2,102 Millipore Corp 42,892 73,307
17,183 Minnesota Mining & Manufacturing Co 925,785 938,621
16,284 Mobil Corp 1,340,034 1,551,051
4,795 Monsanto Co 342,640 454,926
4,095 Moore Corp Ltd 77,799 85,483
7,731 Morgan (J P) & Co Inc 529,883 563,397
1,399 Morrison Knudsen Corp 26,034 10,842
5,998 Morton International Inc 174,276 194,935
24,178 Motorola Inc 1,243,274 1,807,306
433 NACCO Industries Inc Class A 21,021 24,898
2,819 Nalco Chemical Co 96,912 98,665
5,996 National City Corp 164,519 178,381
5,076 National Semiconductor+ 90,512 143,397
1,968 National Service Industries Inc 50,900 57,072
11,261 NationsBank 561,187 691,144
3,072 Navistar International Corp+ 61,910 39,936
6,579 NBD Bancorp Inc 208,478 235,199
</TABLE>
53
<PAGE> 154
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
4,062 New York Times Co Class A $ 98,822 $ 101,042
6,417 Newell Co 132,765 160,425
3,499 Newmont Mining Corp 140,650 152,207
5,854 Niagara Mohawk Power Corp 114,667 70,248
2,078 NICOR Inc 56,753 53,249
3,034 Nike Inc Class B 179,511 281,024
4,867 NorAm Energy Corp 36,449 34,677
3,394 Nordstrom Inc 123,807 140,003
5,504 Norfolk Southern Corp 369,182 389,408
2,741 Northern States Power Co 121,903 116,835
10,337 Northern Telecom Ltd 313,537 379,885
2,062 Northrop Grumman Corp 82,504 125,524
13,270 Norwest Corp 343,487 399,759
14,970 Novell Inc+ 288,523 269,460
3,579 Nucor Corp 194,631 175,371
17,463 NYNEX Corp 733,553 785,835
13,029 Occidental Petroleum Corp 263,337 283,381
1,965 Ogden Corp 43,814 45,686
6,238 Ohio Edison Co 139,705 134,897
1,106 ONEOK Inc 21,649 24,194
17,674 Oracle Systems Corp+ 419,076 709,169
4,017 Oryx Energy Co+ 75,105 54,230
863 Outboard Marine Corp 16,845 18,447
2,024 Owens Corning Fiberglass+ 79,914 79,442
1,590 PACCAR Inc 80,922 78,705
3,354 Pacific Enterprises 82,992 80,496
17,719 Pacific Gas & Electric Co 554,974 509,421
17,323 Pacific Telesis Group 540,336 491,540
11,582 PacifiCorp 221,024 209,924
4,671 Pall Corp 89,177 102,178
6,116 Panhandle Eastern Corp 138,902 152,900
2,989 Parker Hannifin Corp 75,222 118,439
8,993 PECO Energy Co 262,634 239,439
9,475 Penney (J C) Co Inc 448,720 428,744
1,895 Pennzoil Co 107,468 83,380
</TABLE>
54
<PAGE> 155
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
1,470 Peoples Energy Corp $ 42,619 $ 40,058
2,495 Pep Boys-Manny Moe & Jack 69,616 68,613
32,339 Pepsico Inc 1,241,983 1,463,340
1,708 Perkin-Elmer Corp 54,607 58,286
25,924 Pfizer Inc 900,451 1,279,998
2,862 Phelps Dodge Corp 141,472 181,379
34,702 Philip Morris Co Inc 1,902,551 2,589,637
10,674 Phillips Petroleum Co 353,030 350,908
3,506 Pioneer Hi Bred International Inc 126,603 150,758
6,383 Pitney Bowes Inc 246,767 259,309
1,662 Pittston Services Group 40,640 42,173
9,791 Placer Dome Inc 216,445 255,790
9,562 PNC Bank Corp 269,277 251,003
1,948 Polaroid Corp 68,757 84,982
1,217 Potlatch Corp 51,063 48,224
8,532 PPG Industries Inc 307,809 364,743
5,564 Praxair Inc 101,532 144,664
2,604 Premark International Inc 96,920 136,385
7,844 Price/Costco Inc+ 136,636 132,368
28,202 Procter & Gamble Co 1,592,188 1,956,514
3,939 Providian Corp 150,000 151,159
10,024 Public Services Enterprise Group 316,741 275,660
1,067 Pulte Corp 33,476 28,809
5,432 Quaker Oats Co 186,391 188,762
4,097 Ralston-Purina Group 161,171 213,044
1,795 Raychem Corp 70,105 78,756
5,036 Raytheon Co 327,297 407,287
3,315 Reebok International Ltd 98,056 117,683
2,137 Republic New York Corp 125,130 120,206
2,593 Reynolds Metals Co 124,877 154,932
3,433 Rite Aid Corp 67,786 96,124
1,603 Roadway Services Inc 93,079 88,165
8,836 Rockwell International Corp 325,942 395,411
2,788 Rohm & Haas Co 153,931 166,583
3,320 Rowan Co Inc+ 28,384 26,975
</TABLE>
55
<PAGE> 156
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
22,030 Royal Dutch Petroleum Co $ 2,357,183 $ 2,627,078
6,567 Rubbermaid Inc 212,579 195,368
1,586 Russell Corp 45,343 43,615
2,198 Ryan's Family Steak House+ 17,596 16,485
3,161 Ryder System Inc 78,172 76,654
2,569 SAFECO Corp 149,102 166,022
2,320 Safety-Kleen Corp 36,184 31,320
4,288 Salomon Inc 189,041 164,552
3,571 Santa Fe Energy Resources Inc+ 34,823 33,925
6,139 Santa Fe Pacific Corp 110,960 174,194
5,343 Santa Fe Pacific Gold Corp 76,224 64,784
19,536 Sara Lee Corp 503,479 542,124
24,947 SBC Communication Inc 1,072,239 1,262,942
18,201 SCEcorp 364,029 302,592
15,534 Schering-Plough Corp 527,979 724,273
9,897 Schlumberger Ltd 605,816 638,357
3,070 Scientific-Atlanta Inc 57,463 61,400
6,116 Scott Paper Co 157,919 283,630
15,180 Seagram Co Ltd 438,117 561,660
15,862 Sears Roebuck & Co 446,660 513,532
3,895 Service Corp International 102,848 136,325
949 Shared Medical System Corp 25,548 34,994
5,314 Shawmut National Corp 124,407 172,041
3,543 Sherwin Williams Co 120,887 127,105
1,688 Shoney's Inc+ 30,692 19,623
2,081 Sigma Aldrich Corp 77,330 99,888
6,489 Silicon Graphics Inc+ 221,934 274,160
1,773 Snap-On Inc 68,191 72,693
3,537 Sonat Inc 112,544 112,300
27,276 Southern Co 583,502 576,206
5,776 Southwest Airlines Co 145,529 149,454
709 Springs Industries Inc Class A 25,883 30,576
14,293 Sprint Corp 485,181 507,402
1,897 St Jude Medical Inc+ 64,223 113,109
3,482 St Paul Co Inc 158,902 188,899
</TABLE>
56
<PAGE> 157
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
1,850 Stanley Works $ 76,188 $ 81,863
3,669 Stone Container Corp+ 52,493 79,801
2,010 Stride Rite Corp 28,716 22,613
3,094 Sun Co Inc 90,443 82,378
3,909 Sun Microsystems Inc+ 109,235 226,233
4,839 SunTrust Banks Inc 227,612 296,994
2,902 Super Value Inc 92,712 85,972
7,473 Sysco Corp 205,537 214,849
4,677 Tandem Computers Inc+ 60,368 57,293
3,005 Tandy Corp 123,452 186,686
1,249 Tektronix Inc 36,426 56,986
26,737 Tele-Communication Inc Class A+ 484,531 494,635
2,276 Teledyne Inc 53,874 54,391
3,584 Tellabs Inc+ 171,989 167,552
2,263 Temple-Inland Inc 100,848 117,110
8,197 Tenet Healthcare Corp+ 112,493 130,127
7,677 Tenneco Inc 380,533 372,335
10,638 Texaco Inc 692,746 688,811
7,696 Texas Instruments Inc 296,035 576,238
9,267 Texas Utilities Co 377,787 322,028
3,569 Textron Inc 199,118 244,477
824 Thomas & Betts Corp 52,540 55,620
15,550 Time Warner Inc 618,654 655,044
5,126 Times Mirror Co Class A 110,730 156,984
1,266 Timken Co 42,561 57,128
2,952 TJX Companies Inc 70,430 36,900
2,914 Torchmark Corp 139,930 116,560
11,501 Toys R Us Inc+ 396,403 299,026
2,887 Transamerica Corp 164,378 196,316
13,110 Travelers Inc 528,881 629,280
2,688 Tribune Co 146,909 180,096
1,163 Trinova Corp 34,620 42,740
2,615 TRW Inc 174,766 203,643
3,140 Tyco International Inc 152,942 185,653
3,976 U.S. Bancorp 102,011 113,813
</TABLE>
57
<PAGE> 158
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
6,552 U.S. Healthcare Inc $ 296,202 $ 209,664
951 U.S. Life Corp 37,139 41,012
19,276 U.S. West Inc 851,392 838,506
8,746 Unicom Corp 242,316 245,981
6,545 Unilever NV 741,204 809,126
2,850 Union Camp Corp 132,158 162,094
6,111 Union Carbide Corp 145,909 216,941
4,156 Union Electric Co 165,260 148,058
8,441 Union Pacific Corp 500,970 552,886
6,978 Unisys Corp+ 74,477 55,824
7,097 United Healthcare Corp 327,917 299,848
2,271 United States Surgical 51,194 57,627
5,117 United Technologies Corp 315,461 426,630
9,910 Unocal Corp 283,802 288,629
3,014 UNUM Corp 158,409 144,672
7,095 Upjohn Co 218,776 300,651
2,461 USAir Group Inc+ 26,527 19,996
4,507 USF & G Corp 68,301 81,689
8,230 UST Inc 231,333 224,268
12,104 USX - Marathon Group 223,069 249,645
3,330 USX - US Steel Group 115,397 109,058
1,728 Varity Corp+ 67,190 78,624
2,627 VF Corp 121,839 143,828
14,789 Viacom Inc Class B+ 603,504 719,115
6,978 Wachovia Corp 256,665 277,376
94,304 Wal Mart Stores Inc 2,371,527 2,322,236
10,122 Walgreen Co 211,605 247,989
5,493 Warner Lambert Co 395,295 496,430
2,176 Wells Fargo & Co 296,573 405,552
4,139 Wendy's International Inc 65,289 81,228
2,114 Western Atlas Inc+ 84,819 95,923
14,528 Westinghouse Electric Corp 207,069 197,944
2,764 Westvaco Corp 99,950 121,962
8,431 Weyerhaeuser Co 344,223 387,826
3,076 Whirlpool Corp 181,851 167,642
</TABLE>
58
<PAGE> 159
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
4,252 Whitman Corp $ 68,335 $ 85,040
2,258 Willamette Industries Inc 154,592 155,238
4,154 Williams Co Inc 126,405 152,140
3,075 Winn-Dixie Stores Inc 172,956 182,963
19,794 WMX Technologies Inc 557,193 581,449
5,336 Woolworth Corp 113,480 71,369
3,673 Worthington Industries Inc 72,715 73,460
4,768 Wrigley (Wm) Jr Co 212,312 215,104
4,407 Xerox Corp 402,527 532,145
1,092 Yellow Corp 23,599 15,425
1,782 Zenith Electronic Corp+ 15,611 15,147
528 Zurn Industries Inc 13,253 11,550
------------ ------------
TOTAL COMMON STOCKS $142,811,635 $169,747,960
</TABLE>
59
<PAGE> 160
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES - 20.22%
$ 3,300,000 U.S. Treasury Bonds 6.25 % 08/15/23 $ 3,093,750
2,250,000 U.S. Treasury Bonds 7.13 02/15/23 2,351,950
6,200,000 U.S. Treasury Bonds 7.25 05/15/16 6,535,178
1,900,000 U.S. Treasury Bonds 7.25 08/15/22 2,009,843
2,050,000 U.S. Treasury Bonds 7.50 11/15/24 2,247,313
1,750,000 U.S. Treasury Bonds 7.63 11/15/22 1,937,031
2,700,000 U.S. Treasury Bonds 7.63 02/15/25 3,011,340
2,500,000 U.S. Treasury Bonds 7.88 02/15/21 2,822,653
5,600,000 U.S. Treasury Bonds 8.00 11/15/21 6,424,242
3,100,000 U.S. Treasury Bonds 8.13 08/15/19 3,582,438
3,450,000 U.S. Treasury Bonds 8.13 05/15/21 4,000,917
1,500,000 U.S. Treasury Bonds 8.13 08/15/21 1,742,813
2,300,000 U.S. Treasury Bonds 8.50 02/15/20 2,762,875
5,200,000 U.S. Treasury Bonds 8.75 05/15/17 6,353,750
6,300,000 U.S. Treasury Bonds 8.75 08/15/20 7,764,750
3,400,000 U.S. Treasury Bonds 8.88 02/15/19 4,221,307
1,500,000 U.S. Treasury Bonds 9.00 11/15/18 1,884,375
1,700,000 U.S. Treasury Bonds 9.13 05/15/18 2,155,813
1,800,000 U.S. Treasury Bonds 9.25 02/15/16 2,292,750
1,500,000 U.S. Treasury Bonds 9.88 11/15/15 2,012,342
------------
TOTAL U.S. TREASURY SECURITIES $ 69,207,430
(Cost $61,940,998)
</TABLE>
60
<PAGE> 161
MASTER INVESTMENT PORTFOLIO -- ASSET ALLOCATION MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 30.02%
$ 1,157,000 U.S. Treasury Bills 5.20 % 09/28/95 $ 1,152,308
876,000 U.S. Treasury Bills 5.34 09/07/95 875,125
24,463,000 U.S. Treasury Bills 5.37 10/05/95 24,338,764
1,661,000 U.S. Treasury Bills 5.38 10/12/95 1,650,877
2,470,000 U.S. Treasury Bills 5.39 10/19/95 2,452,439
3,950,000 U.S. Treasury Bills 5.40 11/02/95 3,913,940
1,570,000 U.S. Treasury Bills 5.41 11/09/95 1,554,050
6,559,000 U.S. Treasury Bills 5.41 11/16/95 6,485,467
60,612,000 U.S. Treasury Bills 5.42 11/24/95 59,863,805
455,000 U.S. Treasury Bills 5.54 09/21/95 453,629
------------
TOTAL SHORT-TERM INSTRUMENTS $102,740,404
(Cost $102,736,329)
TOTAL INVESTMENTS IN SECURITIES
(Cost $307,488,962)*
(Notes 1 and 3) 99.84% $341,695,794
Other Assets and Liabilities, Net 0.16 561,195
------ ------------
TOTAL NET ASSETS 100.00% $342,256,989
------ ------------
------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 37,399,052
Gross Unrealized Depreciation (3,192,220)
-------------
NET UNREALIZED APPRECIATION $ 34,206,832
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
61
<PAGE> 162
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
CORPORATE BONDS & NOTES - 23.80%
BANK & FINANCE - 5.78%
$ 500,000 American Express Co 8.63 % 05/15/22 $ 538,997
500,000 BankAmerica Corp 7.20 04/15/06 504,375
750,000 Chrysler Financial Corp 5.38 10/15/98 727,175
1,500,000 CIT Group Holdings 6.63 06/15/05 1,468,437
1,000,000 Commercial Credit Corp 8.70 06/15/10 1,170,053
500,000 First Union Corp 6.63 07/15/05 486,215
500,000 General Electric Capital Corp 8.75 05/21/07 577,319
500,000 International Lease Finance 7.90 10/01/96 508,484
500,000 Lehman Brothers Inc 9.88 10/15/00 553,790
500,000 NationsBank Corp 6.88 02/15/05 493,124
------------
$ 7,027,969
INDUSTRIALS - 8.78%
$ 500,000 Anheuser Busch Co 8.75 % 12/01/99 $ 543,549
500,000 Archer-Daniels-Midland Co 8.38 04/15/17 555,400
500,000 Caterpillar Inc 8.00 02/15/23 523,199
500,000 Dow Chemical Co 8.63 04/01/06 565,555
500,000 DuPont (El) De Nemours 6.00 12/01/01 483,165
1,000,000 Eastman Chemicals Co 6.38 01/15/04 967,022
500,000 Ford Capital BV 9.00 08/15/98 533,477
500,000 Ford Motor Co 8.88 04/01/06 569,219
750,000 Ford Motor Credit Corp 7.75 10/01/99 780,989
750,000 General Motors Corp 8.13 04/15/16 754,955
500,000 Hertz Corp 6.38 10/15/05 478,494
500,000 Hertz Corp 6.50 04/01/00 494,733
500,000 International Business Machines 6.38 06/15/00 497,558
500,000 Kmart Corp 12.50 03/01/05 660,099
500,000 PepsiCo Inc 7.00 11/15/96 504,701
500,000 Philip Morris Co 7.13 10/01/04 499,575
500,000 Seagram (J) & Sons 9.75 06/15/00 514,988
750,000 Weyerhaeuser Co 7.50 03/01/13 766,308
------------
$ 10,692,986
</TABLE>
62
<PAGE> 163
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
CORPORATE BONDS & NOTES (CONTINUED)
INTERNATIONAL AGENCIES - 0.38%
$ 500,000 International Bank of Reconstruction &
Development 5.25 % 09/16/03 $ 466,358
TELECOMMUNICATIONS - 1.37%
$ 750,000 GTE North Inc 6.00 % 01/15/04 $ 714,229
500,000 New York Telephone Co 5.88 09/01/03 468,990
500,000 Southwestern Bell Telephone Co 6.75 06/01/08 486,348
------------
$ 1,669,567
UTILITIES - 3.65%
$ 500,000 Alabama Power Co 8.50 % 05/01/22 $ 516,543
500,000 Hydro-Quebec 8.50 12/01/29 539,055
500,000 Pennsylvania Power & Light Co 7.75 05/01/02 519,571
750,000 Philadelphia Electric Co 8.75 04/01/22 802,142
500,000 Public Service Electric & Gas Co 6.13 08/01/02 480,443
500,000 Public Service Electric & Gas Co 8.75 11/01/21 525,440
500,000 Victoria (Province of) Public Authority 8.45 10/01/01 544,829
500,000 Virginia Electric & Power Co 7.38 07/01/02 518,024
------------
$ 4,446,047
YANKEE BONDS - 3.84%
$ 500,000 African Development Bank 7.75 % 12/15/01 $ 528,029
500,000 Finland (Republic of) 7.88 07/28/04 538,492
500,000 Hanson Overseas BV 7.38 01/15/03 511,728
500,000 Italy (Republic of) 6.00 09/27/03 468,988
500,000 Matsushita Electric Industry Co 7.25 08/01/02 515,511
750,000 Ontario (Province of) 7.63 06/22/04 788,804
500,000 Quebec (Province of) 11.00 06/15/15 587,355
750,000 Sweden (Kingdom of) 6.50 03/04/03 739,107
------------
$ 4,678,014
TOTAL CORPORATE BONDS & NOTES $ 28,980,941
(Cost $27,706,349)
</TABLE>
63
<PAGE> 164
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 8.87%
FEDERAL AGENCY - OTHER - 4.11%
$ 800,000 Federal Home Loan Mortgage Corp 7.13 % 07/21/99 $ 825,986
300,000 Resolution Funding Corp 8.88 04/15/30 379,549
500,000 Resolution Funding Corp 9.38 10/15/20 647,374
500,000 Tennessee Valley Authority 4.60 12/15/96 489,935
1,000,000 Tennessee Valley Authority 6.13 07/15/03 960,496
200,000 Tennessee Valley Authority 7.75 12/15/22 200,189
100,000 Tennessee Valley Authority 8.25 04/15/42 108,138
1,000,000 Tennessee Valley Authority 8.38 10/01/99 1,072,657
300,000 Tennessee Valley Authority 8.63 11/15/29 321,032
------------
$ 5,005,356
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.76%
$ 300,000 Federal National Mortgage Assoc 5.25 % 05/13/98 $ 292,332
400,000 Federal National Mortgage Assoc 5.30 12/10/98 388,172
500,000 Federal National Mortgage Assoc 6.30 12/11/97 500,568
1,000,000 Federal National Mortgage Assoc 6.95 09/10/02 1,000,519
500,000 Federal National Mortgage Assoc 7.55 04/22/02 528,446
200,000 Federal National Mortgage Assoc 7.55 06/10/04 204,424
1,000,000 Federal National Mortgage Assoc 7.60 01/10/97 1,021,245
500,000 Federal National Mortgage Assoc 7.90 04/10/02 511,545
1,000,000 Federal National Mortgage Assoc 8.25 12/18/00 1,092,160
1,000,000 Federal National Mortgage Assoc 8.54 (F) 07/15/14 261,349
------------
$ 5,800,760
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 10,806,116
(Cost $10,373,181)
</TABLE>
64
<PAGE> 165
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES - 65.83%
U.S. TREASURY BONDS - 18.90%
$ 1,800,000 U.S. Treasury Bonds 6.25 % 05/31/00 $ 1,812,375
1,000,000 U.S. Treasury Bonds 7.25 08/15/22 1,057,812
2,000,000 U.S. Treasury Bonds 7.50 11/15/16 2,162,500
1,500,000 U.S. Treasury Bonds 7.63 11/15/22 1,660,313
400,000 U.S. Treasury Bonds 7.63 02/15/25 446,124
2,000,000 U.S. Treasury Bonds 7.88 02/15/21 2,258,122
1,450,000 U.S. Treasury Bonds 8.13 08/15/19 1,675,656
2,100,000 U.S. Treasury Bonds 8.13 08/15/21 2,439,938
375,000 U.S. Treasury Bonds 8.75 11/15/08 428,672
1,900,000 U.S. Treasury Bonds 8.75 08/15/20 2,341,750
500,000 U.S. Treasury Bonds 9.13 05/15/09 586,406
250,000 U.S. Treasury Bonds 10.63 08/15/15 356,015
1,290,000 U.S. Treasury Bonds 11.13 08/15/03 1,673,775
2,600,000 U.S. Treasury Bonds 12.00 08/15/13 3,800,875
190,000 U.S. Treasury Bonds 13.88 05/15/11 296,400
------------
$ 22,996,733
U.S. TREASURY NOTES - 46.93%
$ 1,000,000 U.S. Treasury Notes 4.38 % 08/15/96 $ 988,125
2,000,000 U.S. Treasury Notes 4.75 09/30/98 1,932,500
2,500,000 U.S. Treasury Notes 4.75 10/31/98 2,410,938
500,000 U.S. Treasury Notes 5.00 01/31/99 484,375
3,500,000 U.S. Treasury Notes 5.50 07/31/97 3,479,214
300,000 U.S. Treasury Notes 5.75 08/15/03 289,781
2,000,000 U.S. Treasury Notes 5.88 02/15/04 1,942,500
3,000,000 U.S. Treasury Notes 6.00 12/31/97 3,008,433
1,000,000 U.S. Treasury Notes 6.00 10/15/99 999,061
1,600,000 U.S. Treasury Notes 6.25 08/31/96 1,607,498
1,400,000 U.S. Treasury Notes 6.25 02/15/03 1,398,250
2,600,000 U.S. Treasury Notes 6.38 06/30/97 2,626,000
2,950,000 U.S. Treasury Notes 6.38 01/15/99 2,984,105
2,300,000 U.S. Treasury Notes 6.38 08/15/02 2,320,125
1,700,000 U.S. Treasury Notes 6.50 09/30/96 1,713,813
</TABLE>
65
<PAGE> 166
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (CONTINUED)
$ 1,000,000 U.S. Treasury Notes 6.50 % 08/15/97 $ 1,011,875
1,000,000 U.S. Treasury Notes 6.50 05/15/05 1,012,811
3,700,000 U.S. Treasury Notes 6.75 02/28/97 3,752,026
2,800,000 U.S. Treasury Notes 6.88 10/31/96 2,835,000
600,000 U.S. Treasury Notes 6.88 02/28/97 609,187
1,200,000 U.S. Treasury Notes 6.88 08/31/99 1,233,750
400,000 U.S. Treasury Notes 7.13 09/30/99 415,125
2,500,000 U.S. Treasury Notes 7.13 02/29/00 2,601,563
1,600,000 U.S. Treasury Notes 7.25 11/15/96 1,627,498
600,000 U.S. Treasury Notes 7.25 02/15/98 618,000
800,000 U.S. Treasury Notes 7.25 08/15/04 848,500
1,300,000 U.S. Treasury Notes 7.38 11/15/97 1,339,404
1,800,000 U.S. Treasury Notes 7.50 11/15/01 1,921,500
500,000 U.S. Treasury Notes 7.50 02/15/05 540,313
1,400,000 U.S. Treasury Notes 7.75 11/30/99 1,486,625
900,000 U.S. Treasury Notes 8.75 08/15/00 1,000,967
2,200,000 U.S. Treasury Notes 9.00 05/15/98 2,365,684
3,400,000 U.S. Treasury Notes 9.13 05/15/99 3,743,182
------------
$ 57,147,728
TOTAL U.S. TREASURY SECURITIES $ 80,144,461
(Cost $78,368,403)
SHORT-TERM INSTRUMENTS - 0.73%
U.S. TREASURY BILLS - 0.73%
$ 198,000 U.S. Treasury Bills 5.38 %(F) 10/12/95 $ 196,793
196,000 U.S. Treasury Bills 5.41 (F) 11/09/95 194,009
205,000 U.S. Treasury Bills 5.41 (F) 11/16/95 202,702
298,000 U.S. Treasury Bills 5.42 (F) 11/24/95 294,307
------------
TOTAL SHORT-TERM INSTRUMENTS $ 887,811
(Cost $887,738)
</TABLE>
66
<PAGE> 167
MASTER INVESTMENT PORTFOLIO -- BOND INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $117,335,671)*
(Notes 1 and 3) 99.23% $120,819,329
Other Assets and Liabilities, Net 0.77 940,688
------ ------------
TOTAL NET ASSETS 100.00% $121,760,017
------ ------------
------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 4,025,279
Gross Unrealized Depreciation (541,621)
-------------
NET UNREALIZED APPRECIATION $ 3,483,658
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
67
<PAGE> 168
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS - 84.14%
AUTOMOBILE & RELATED - 0.30%
11,900 Wabash National Corp $ 400,613 $ 434,350
BASIC INDUSTRIES - 1.13%
28,500 Minerals Technologies Inc $ 906,587 $ 1,033,125
20,000 N-Viro International Corp+ 27,500 17,500
15,000 OM Group Inc 382,875 450,000
70,000 Quadrax Corp+ 257,751 126,875
------------ ------------
$ 1,574,713 $ 1,627,500
BIOTECHNOLOGY - 0.50%
6,500 Cell Genesys Inc+ $ 33,513 $ 43,875
10,000 Immunex Corp+ 163,125 155,000
15,000 Lifecore Biomedical Inc+ 131,375 191,250
22,000 Liposome Co Inc 234,532 327,250
------------ ------------
$ 562,545 $ 717,375
BUILDING MATERIALS & SERVICES - 0.65%
40,000 J Ray McDermott SA+ $ 835,592 $ 940,000
COMPUTER SOFTWARE - 13.48%
57,000 Acclaim Entertainment Inc+ $ 1,379,842 $ 1,439,250
13,500 ArcSys Inc+ 327,750 540,000
5,000 BDM International Inc 92,500 125,625
18,716 First Data Corp 1,257,311 1,092,547
4,000 Harbinger Corp+ 48,000 58,000
10,000 HCIA Inc+ 285,000 280,000
48,200 IKOS Systems Inc+ 420,450 548,275
55,000 Imnet Systems Inc+ 856,125 1,017,500
16,000 Mercury Interactive Corp+ 380,000 362,000
37,700 Metatec Corp Class A+ 362,088 523,088
11,000 Microsoft Corp+ 666,750 1,017,500
44,500 NETCOM On-Line Communication Services Inc+ 1,100,531 1,663,188
</TABLE>
68
<PAGE> 169
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
30,000 Open Environment Corp+ $ 587,500 $ 570,000
40,000 Oracle Systems Corp+ 1,364,938 1,605,000
75,000 Rational Software Corp+ 921,875 1,153,125
112,500 Sanctuary Woods Multimedia+ 651,623 745,313
16,500 Seventh Level Inc+ 82,500 292,875
10,000 Sierra On-Line Inc+ 197,500 390,000
18,000 Summit Medical System Inc+ 170,625 279,000
25,000 Syncronys Softcorp+ 337,500 656,250
29,000 Synopsys Inc+ 1,373,689 1,682,000
85,000 Veritas Software Corp+ 1,695,415 2,167,500
57,500 Viasoft Inc+ 648,987 603,750
20,000 VideoServer Inc+ 781,950 702,500
------------ ------------
$ 15,990,449 $ 19,514,286
COMPUTER SYSTEMS - 9.17%
20,000 3Com Corp+ $ 750,516 $ 780,000
70,000 Adaptec Inc+ 1,667,397 2,975,000
59,500 Cisco Systems Inc+ 1,706,625 3,904,688
48,000 Komag Inc+ 1,327,875 2,988,000
20,000 Quantum Corp+ 522,876 480,000
60,000 Solectron Corp+ 1,466,178 2,130,000
------------ ------------
$ 7,441,467 $ 13,257,688
ELECTRICAL EQUIPMENT - 3.91%
6,500 Belden Inc $ 156,332 $ 180,375
9,500 Computational Systems Inc+ 128,125 147,250
3,000 Innovex Inc 66,803 69,375
57,000 Integrated Device Technology Inc+ 2,111,188 3,284,625
75,000 Interlink Electronics Inc+ 375,000 759,375
35,000 Power (R F) Products Inc 233,780 266,875
30,000 Uniphase Corp+ 532,500 948,750
------------ ------------
$ 3,603,728 $ 5,656,625
</TABLE>
69
<PAGE> 170
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONIC SEMICONDUCTORS - 4.73%
5,500 Clare (C P) Corp+ $ 88,000 $ 132,000
105,000 Genus Inc+ 1,469,111 1,443,750
34,000 Intel Corp 1,245,375 2,086,750
40,000 Lattice Semiconductor Corp+ 1,246,710 1,315,000
20,000 Microsemi Corp+ 251,250 255,000
32,000 OnTrak Systems Inc+ 881,554 860,000
30,000 Semtech Corp+ 516,250 750,000
------------ ------------
$ 5,698,250 $ 6,842,500
ENERGY & RELATED - 3.25%
30,000 Anadarko Petroleum Corp $ 1,395,765 $ 1,432,500
35,000 Ensco International Inc+ 582,801 630,000
50,000 Global Marine Inc+ 246,750 337,500
35,000 KCS Energy 714,087 507,500
20,000 Sonat Offshore Drilling Co 657,600 685,000
20,000 Tosco Corp 723,139 642,500
22,500 Trigen Energy Corp 395,548 469,688
------------ ------------
$ 4,715,690 $ 4,704,688
ENTERTAINMENT - 5.49%
44,500 Anchor Gaming+ $ 757,390 $ 1,168,125
72,000 Children's Discovery Centers of America Inc+ 1,075,166 972,000
48,000 Circus Circus Entertainment Inc+ 1,625,881 1,572,000
35,000 Mirage Resorts Inc+ 751,190 1,203,125
44,000 Regal Cinemas Inc+ 1,060,178 1,496,000
80,800 Sports Club Inc+ 622,853 368,650
60,000 Station Casino Inc+ 997,110 1,162,500
------------ ------------
$ 6,889,768 $ 7,942,400
</TABLE>
70
<PAGE> 171
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
ENVIRONMENTAL CONTROL - 2.53%
100,000 Molten Metal Technology Inc+ $ 1,944,916 $ 2,225,000
45,000 Sanifill Inc+ 1,248,096 1,434,375
------------ ------------
$ 3,193,012 $ 3,659,375
FINANCE & RELATED - 3.62%
35,000 Cole Taylor Financial Group Inc $ 723,235 $ 805,000
45,000 Countrywide Credit Industries Inc 895,700 990,000
129,500 Envoy (New) Corp+ 633,367 1,359,750
9,000 FelCor Suite Hotels Inc 226,000 247,500
2,500 First Financial Management Corp+ 179,833 225,313
20,000 NHP Inc+ 252,500 260,000
25,000 Student Loan Marketing Assoc 947,210 1,353,125
------------ ------------
$ 3,857,845 $ 5,240,688
FOOD & RELATED - 2.74%
40,000 Coca-Cola Femsa SA ADR $ 1,013,683 $ 925,000
29,000 General Nutrition Co Inc+ 764,250 1,210,750
20,000 Heinz (H J) Co 864,076 847,500
80,000 Whole Foods Market Inc+ 1,210,630 975,000
------------ ------------
$ 3,852,639 $ 3,958,250
GENERAL BUSINESS & RELATED - 0.85%
20,000 Action Performance Co Inc+ $ 281,250 $ 322,500
30,000 La Quinta Inns Inc 863,948 900,000
------------ ------------
$ 1,145,198 $ 1,222,500
HEALTHCARE - 9.59%
10,000 American Oncology Resources Inc+ $ 210,000 $ 377,500
52,500 Coram Healthcare+ 911,861 255,938
75,000 Genesis Health Ventures Inc+ 1,905,675 2,371,875
115,000 Healthsouth Corp+ 2,241,055 2,716,875
</TABLE>
71
<PAGE> 172
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
57,500 Mid Atlantic Medical Services+ $ 1,164,770 $ 1,070,938
65,000 Physician Corp of America+ 1,082,640 1,040,000
60,000 Renal Treatment Centers+ 1,178,875 1,950,000
65,000 Value Health Inc+ 2,409,123 2,250,625
49,000 Vencor Inc+ 1,532,047 1,451,625
120,000 Work Recovery Inc+ 452,036 382,500
------------ ------------
$ 13,088,082 $ 13,867,876
HOSPITAL & MEDICAL SUPPLIES - 2.88%
50,000 Angeion Corp+ $ 118,750 $ 387,500
80,000 Bioject Medical Technologies+ 306,665 170,000
65,000 Endosonics Corp+ 578,190 739,375
63,500 Heart Technology Inc+ 1,424,381 1,730,375
50,000 Sola International Inc+ 997,890 1,143,750
------------ ------------
$ 3,425,876 $ 4,171,000
MANUFACTURING PROCESSING - 2.15%
80,000 Lydall Inc+ $ 1,246,357 $ 1,910,000
54,500 Pall Corp 1,260,075 1,192,188
------------ ------------
$ 2,506,432 $ 3,102,188
PHARMACEUTICALS - 1.69%
25,000 Astra AB ADR Class A+ $ 834,375 $ 828,750
20,000 Genzyme Corp - General Division+ 850,000 1,117,500
75,000 Seragen Inc+ 514,332 496,875
------------ ------------
$ 2,198,707 $ 2,443,125
PUBLISHING & MEDIA - 0.28%
10,000 Edmark Corp+ $ 377,500 $ 400,000
</TABLE>
72
<PAGE> 173
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL STORES - 2.22%
45,000 Barnes & Noble+ $ 1,279,194 $ 1,760,625
15,000 Claire's Stores Inc 277,334 324,375
32,000 Pacific Sunwear of California+ 442,375 208,000
30,000 PetSmart Inc+ 812,230 911,250
------------ ------------
$ 2,811,133 $ 3,204,250
TELECOMMUNICATIONS - 10.56%
55,000 California Microwave Inc+ $ 1,634,563 $ 1,443,750
45,000 DSC Communications Corp+ 1,846,563 2,362,500
46,000 DSP Communications Inc+ 610,290 1,173,000
60,000 Geotek Communications Inc+ 524,695 468,750
45,000 Harmonic Lightwaves Inc+ 827,657 680,625
60,000 LCI International Inc+ 1,285,963 2,392,500
38,000 Natural Microsystems Corp+ 849,551 940,500
50,000 Nokia Corp ADR Class A 1,829,750 3,468,750
46,500 Paging Network Inc+ 1,320,007 1,836,750
15,000 WorldCom Inc+ 453,750 505,313
------------ ------------
$ 11,182,789 $ 15,272,438
TRANSPORTATION - 2.42%
30,000 Atlantic Coast Airlines Inc+ $ 167,813 $ 228,750
30,000 Greenbrier Companies Inc 475,638 390,000
77,500 Landair Services Inc+ 1,403,448 1,065,625
70,000 Southwest Airlines Co 1,769,155 1,811,250
------------ ------------
$ 3,816,054 $ 3,495,625
TOTAL COMMON STOCKS $ 99,168,082 $121,674,727
</TABLE>
73
<PAGE> 174
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
PREFERRED STOCKS - 0.73%
TELECOMMUNICATIONS - 0.73%
20,000 LCI International Inc Convertible $ 500,000 $ 1,052,500
MUTUAL FUNDS - 0.38%
CLOSED-END MUTUAL FUNDS - 0.38%
15,000 Emerging Markets Infrastructure Fund $ 151,875 $ 148,125
25,000 Morgan Stanley India Investment Fund 345,910 259,375
15,000 The India Fund Inc 213,750 146,250
------------ ------------
TOTAL MUTUAL FUNDS $ 711,535 $ 553,750
WARRANTS - 3.21%
50,000 Angeion Corp Expires 03/12/1996 $ 0 $ 81,250
115,000 Intel Corp Expires 03/14/1998 830,719 3,838,125
5,000 Interlink Electronics Inc Expires 06/07/1996 0 16,875
100,000 Viacom Inc Class E Expires 07/07/1999 729,738 700,000
------------ ------------
TOTAL WARRANTS $ 1,560,457 $ 4,636,250
</TABLE>
74
<PAGE> 175
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
CORPORATE BONDS & NOTES - 1.94%
CONVERTIBLE CORPORATE BONDS - 1.94%
$ 600,000 Careline Inc 8.00 % 05/01/01 $ 591,000
500,000 First Financial Management 5.00 12/15/99 699,375
595,000 LDDS Communications Inc 5.00 08/15/03 627,725
227,200 Oryx Energy Co 7.50 05/15/14 193,688
500,000 Scholastic Co 5.00 08/15/05 505,000
150,000 Vencor Inc 6.00 10/01/02 186,370
------------
TOTAL CORPORATE BONDS & NOTES $ 2,803,158
(Cost $2,531,064)
SHORT-TERM INSTRUMENTS - 9.97%
U.S. TREASURY BILLS - 7.59%
$ 8,000,000 U.S. Treasury Bills 5.34 %(F) 09/07/95 $ 7,991,834
3,000,000 U.S. Treasury Bills 5.54 (F) 09/21/95 2,990,532
------------
$ 10,982,366
REPURCHASE AGREEMENTS - 2.38%
$ 3,440,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.80 % 09/03/95 $ 3,440,000
------------
TOTAL SHORT-TERM INSTRUMENTS $ 14,422,366
(Cost $14,423,673)
</TABLE>
75
<PAGE> 176
MANAGED SERIES INVESTMENT TRUST -- GROWTH STOCK MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $118,894,811)*
(Notes 1 and 3) 100.37% $145,142,751
Other Assets and Liabilities, Net (0.37) (533,996)
------ ------------
TOTAL NET ASSETS 100.00% $144,608,755
------ ------------
------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
(F) YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 31,735,022
Gross Unrealized Depreciation (5,487,082)
-------------
NET UNREALIZED APPRECIATION $ 26,247,940
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
76
<PAGE> 177
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS - 90.26%
123,275 Abbott Laboratories $ 3,750,611 $ 4,776,906
15,936 Advanced Micro Devices+ 444,054 537,840
17,441 Aetna Life & Casualty Co 963,253 1,190,348
18,018 Ahmanson (H F) & Co 345,688 427,928
17,219 Air Products & Chemicals Inc 774,672 923,369
76,301 Airtouch Communications+ 1,920,374 2,479,783
4,247 Alberto-Culver Co Class B 102,160 121,040
39,228 Albertson's Inc 1,111,058 1,250,393
34,671 Alcan Aluminium Ltd 836,618 1,131,141
8,465 Alco Standard Corp 501,748 681,433
6,823 Alexander & Alexander Services 138,495 157,782
9,914 Allergan Inc 244,896 301,138
43,924 Allied Signal Inc 1,594,028 1,949,128
69,224 Allstate Corp 1,824,130 2,344,963
29,145 Alltel Corp 878,125 823,346
27,536 Aluminum Co of America 1,090,426 1,572,994
12,641 ALZA Corp+ 292,978 300,224
18,161 Amdahl Corp+ 135,639 165,719
14,348 Amerada Hess Corp 707,685 679,737
29,179 American Brands Inc 996,812 1,225,518
28,689 American Electric Power Inc 931,019 979,012
76,608 American Express Corp 2,212,971 3,093,048
31,606 American General Corp 936,637 1,114,112
11,502 American Greetings Corp Class A 333,169 353,687
47,630 American Home Products Corp 2,990,772 3,667,510
73,236 American International Group Inc 4,575,045 5,904,653
22,914 American Stores Co 575,193 673,099
85,429 Ameritech Corp 3,471,900 4,378,236
40,896 Amgen Inc+ 1,014,479 1,957,896
76,666 Amoco Corp 4,529,885 4,887,458
32,404 AMP Inc 1,122,895 1,316,413
11,780 AMR Corp+ 728,981 830,490
5,926 Andrew Corp+ 171,343 345,190
39,601 Anheuser-Busch Inc 2,058,702 2,262,207
18,676 Apple Computer Inc 643,125 803,068
</TABLE>
77
<PAGE> 178
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
13,010 Applied Materials Inc+ $ 741,823 $ 1,353,040
83,657 Archer-Daniels-Midland Co 1,273,775 1,390,792
16,345 Armco Inc+ 102,835 102,156
5,736 Armstrong World Industries Inc 262,729 329,103
6,525 ASARCO Inc 175,262 211,247
9,581 Ashland Inc 331,928 313,778
244,401 AT & T Corp 13,343,572 13,808,657
24,863 Atlantic Richfield Corp 2,670,591 2,713,175
7,373 Autodesk Inc 221,620 340,080
22,232 Automatic Data Processing 1,221,821 1,445,080
8,187 Avery Dennison Corp 257,417 335,667
10,571 Avon Products Inc 630,513 746,577
21,764 Baker Hughes Inc 466,202 489,690
4,665 Ball Corp 135,830 158,610
7,204 Bally Entertainment Corp+ 57,957 87,349
22,768 Baltimore Gas & Electric Co 533,701 597,660
60,975 Banc One Corp 2,069,497 2,050,284
17,197 Bank of Boston Corp 481,411 756,668
29,538 Bank of New York Inc 1,016,092 1,284,903
57,771 BankAmerica Corp 2,706,184 3,264,062
12,137 Bankers Trust N Y Corp 830,658 835,936
8,078 Bard (C R) Inc 203,838 250,418
14,969 Barnett Banks Inc 684,383 855,104
54,542 Barrick Gold Corp 1,394,570 1,384,003
2,197 Bassett Furniture Industries 62,447 54,376
9,032 Bausch & Lomb Inc 374,738 359,022
43,142 Baxter International Inc 1,193,821 1,682,538
10,391 Becton Dickenson & Co 452,311 585,793
67,407 Bell Atlantic Corp 3,736,652 4,027,568
76,631 BellSouth Corp 4,555,350 5,268,381
7,898 Bemis Co Inc 189,108 229,042
8,140 Beneficial Corp 315,241 399,878
16,968 Bethlehem Steel Corp+ 316,206 248,157
15,095 Beverly Enterprises+ 194,856 200,009
17,879 Biomet Inc+ 200,094 288,299
</TABLE>
78
<PAGE> 179
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
13,116 Black & Decker Corp $ 288,187 $ 424,631
16,139 Block (H & R) Inc 646,950 629,421
19,418 Boatmen's Bancshares Inc 617,126 718,466
52,752 Boeing Co 2,474,146 3,362,940
7,269 Boise Cascade Corp 191,310 311,658
23,173 Boston Scientific Corp+ 517,612 921,127
4,581 Briggs & Stratton Corp 154,471 173,505
78,331 Bristol-Myers Squibb Co 4,487,536 5,375,465
2,813 Brown Group Inc 94,722 51,337
10,611 Brown-Forman Corp Class B 312,842 392,607
32,852 Browning-Ferris Industries Inc 1,010,172 1,104,649
339 Bruno's Inc 4,030 3,475
14,749 Brunswick Corp 298,974 296,824
13,838 Burlington Northern Inc 766,184 958,282
19,578 Burlington Resources Inc 821,172 800,251
11,069 Cabletron Systems Inc+ 587,819 585,273
38,529 Campbell Soup Co 1,522,945 1,762,702
23,789 Capital Cities/ABC Inc 1,788,728 2,735,735
24,191 Carolina Power & Light Co 661,436 740,849
30,901 Caterpillar Inc 1,621,244 2,074,230
10,014 CBS Inc 625,450 798,617
4,367 Centex Corp 124,156 127,735
29,555 Central & South West Corp 741,093 724,098
7,069 Ceridian Corp+ 177,063 309,269
14,419 Champion International Corp 521,663 816,476
15,789 Charming Shoppes Inc 151,874 82,892
27,390 Chase Manhattan Corp 1,041,497 1,574,925
37,238 Chemical Banking Corp Class A 1,490,773 2,169,114
100,731 Chevron Corp 4,493,675 4,872,862
56,975 Chrysler Corp 2,725,607 3,069,528
13,480 Chubb Corp 1,077,715 1,230,050
11,181 CIGNA Corp 771,353 1,081,762
5,182 Cincinnati Milacron Inc 120,894 171,654
23,996 Cinergy Corp 557,310 614,898
14,942 Circuit City Stores Inc 370,019 515,499
</TABLE>
79
<PAGE> 180
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
41,451 Cisco Systems Inc+ $ 1,324,910 $ 2,720,222
61,401 Citicorp 2,576,213 4,075,491
8,192 Clorox Co 434,201 553,984
16,195 Coastal Corp 468,106 530,386
195,825 Coca-Cola Co 9,077,114 12,581,756
22,349 Colgate-Palmolive Co 1,308,213 1,519,732
7,760 Columbia Gas System Inc+ 217,815 273,540
68,457 Columbia HCA Healthcare Corp 2,782,100 3,217,479
37,022 Comcast Corp Class A 680,979 791,345
6,693 Community Psychiatric Centers+ 83,592 78,643
40,426 Compaq Computer Corp+ 1,338,915 1,930,342
24,765 Computer Associates International Inc 1,076,356 1,721,168
8,473 Computer Sciences Corp+ 358,912 510,498
37,877 ConAgra Inc 1,128,609 1,434,591
12,141 Conrail Inc 674,714 816,482
36,289 Consolidated Edison Co 1,067,584 1,025,164
6,661 Consolidated Freightways 153,370 172,353
14,415 Consolidated Natural Gas Co 589,056 556,779
17,098 Cooper Industries Inc 680,197 649,724
12,951 Cooper Tire & Rubber Co 322,059 336,726
5,879 Coors (Adolph) Co Class B 106,864 99,943
22,309 CoreStates Financial Corp 631,331 825,433
35,413 Corning Inc 1,159,962 1,155,349
22,579 CPC International Inc 1,124,549 1,419,655
4,699 Crane Co 133,785 169,164
3,872 Cray Research Inc+ 87,962 90,024
13,887 Crown Cork & Seal Co+ 540,682 624,925
16,284 CSX Corp 1,239,285 1,343,430
26,726 CUC International Inc+ 709,937 912,025
6,270 Cummins Engine Co Inc 272,852 246,098
14,238 Cyprus Amax Minerals 404,653 398,664
15,610 Dana Corp 428,908 466,349
24,365 Darden Restaurants Inc+ 250,719 249,741
5,684 Data General Corp+ 48,046 55,419
11,113 Dayton-Hudson Corp 837,888 812,638
</TABLE>
80
<PAGE> 181
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
26,081 Dean Witter Discover & Co $ 1,025,940 $ 1,330,131
13,377 Deere & Co 983,720 1,143,734
7,838 Delta Air Lines Inc 409,526 582,951
12,746 Deluxe Corp 386,256 398,313
22,319 Detroit Edison Co 633,753 683,519
14,295 Dial Corp 311,487 343,080
22,682 Digital Equipment Corp+ 692,850 946,974
17,417 Dillard Department Stores Inc Class A 550,480 537,750
80,418 Disney (Walt) Co 3,577,609 4,513,460
26,680 Dominion Resources Inc 1,043,883 963,815
23,471 Donnelley (R R) & Sons Co 703,953 891,898
8,722 Dover Corp 505,407 695,580
42,528 Dow Chemical Co 2,816,213 3,147,072
14,970 Dow Jones & Co Inc 492,538 548,276
28,114 Dresser Industries Inc 614,414 674,736
17,649 DSC Communications Corp+ 497,668 926,573
31,642 Duke Power Co 1,216,415 1,285,456
26,150 Dun & Bradstreet Corp 1,498,267 1,513,431
85,408 DuPont (E I) de Nemours 5,156,230 5,583,548
3,067 Eastern Enterprises 77,991 93,927
12,875 Eastman Chemical Co 638,246 832,047
52,605 Eastman Kodak Co 2,541,631 3,031,363
11,982 Eaton Corp 631,120 648,526
9,226 Echlin Inc 284,163 318,297
17,401 Echo Bay Mines Ltd 196,833 180,535
9,960 Ecolab Inc 218,567 272,655
8,169 EG & G Inc 133,264 155,211
36,099 Emerson Electric Co 2,209,882 2,576,566
21,977 Engelhard Corp 408,790 620,850
38,901 Enron Corp 1,265,552 1,308,046
10,291 Enserch Corp 160,615 168,515
35,191 Entergy Corp 992,624 844,584
191,889 Exxon Corp 12,024,680 13,192,369
8,679 Federal Express Corp+ 577,008 622,718
27,892 Federal Home Loan Mortgage Corp 1,632,581 1,792,061
</TABLE>
81
<PAGE> 182
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
42,103 Federal National Mortgage Assoc $ 3,527,083 $ 4,015,574
7,048 Federal Paper Board Co 189,644 279,277
13,956 First Chicago Corp 692,893 884,462
18,517 First Data Corp 942,130 1,080,930
12,503 First Fidelity Bancorp 599,480 817,384
11,714 First Interstate Bancorp 904,038 1,118,687
3,108 First Mississippi Corp 56,010 102,953
26,589 First Union Corp 1,213,160 1,332,774
21,764 Fleet Financial Group Inc 782,718 805,268
7,047 Fleetwood Enterprises Inc 147,484 138,297
5,813 Fleming Co Inc 161,522 169,304
12,737 Fluor Corp 633,625 745,115
5,663 FMC Corp+ 310,899 436,051
158,643 Ford Motor Co 4,584,258 4,858,442
5,494 Foster Wheeler Corp 196,274 202,591
28,636 FPL Group Inc 979,118 1,113,225
31,765 Freeport McMoRan Copper & Gold Inc Class B 863,013 742,507
11,721 Fruit of the Loom Inc Class A+ 311,376 275,444
21,616 Gannett Co Inc 1,109,135 1,156,456
22,254 Gap Inc 839,199 714,910
9,767 General Dynamics Corp 416,083 513,988
261,623 General Electric Co 13,090,754 15,403,054
24,377 General Mills Inc 1,169,602 1,258,463
115,408 General Motors Corp 5,648,714 5,424,176
17,805 General Public Utilities 531,923 509,668
12,694 General Re Corp 1,490,526 1,886,646
7,325 General Signal Corp 250,209 260,038
18,965 Genuine Parts Co 689,006 746,747
13,954 Georgia-Pacific Corp 940,425 1,255,860
9,098 Giant Food Inc Class A 208,238 283,175
5,271 Giddings & Lewis Inc 99,976 86,313
68,486 Gillette Co 2,344,338 2,859,291
9,024 Golden West Financial 364,204 430,896
4,044 Goodrich (B F) Co 184,335 240,618
</TABLE>
82
<PAGE> 183
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
23,446 Goodyear Tire & Rubber Co $ 901,122 $ 937,840
14,593 Grace (W R) & Co 636,840 972,259
7,872 Grainger (W W) Inc 487,675 468,384
5,878 Great Atlantic & Pacific Tea Co 148,138 166,788
10,269 Great Lakes Chemical Corp 625,285 679,038
20,831 Great Western Financial Corp 382,466 486,925
149,790 GTE Corp 4,909,416 5,486,059
17,638 Halliburton Co 620,889 747,410
5,182 Handleman Co 56,566 49,229
11,242 Harcourt General Inc 407,721 467,948
4,667 Harland (John H) Co 107,270 103,257
7,061 Harnischfeger Industries Inc 178,008 259,492
15,876 Harrah's Entertainment Inc+ 398,089 506,048
6,007 Harris Corp 268,489 346,153
13,587 Hasbro Inc 440,209 439,879
37,581 Heinz (H J) Co 1,343,115 1,592,495
3,857 Helmerich & Payne Inc 110,661 110,407
18,032 Hercules Inc 669,781 1,003,030
12,075 Hershey Foods Corp 562,908 722,991
78,796 Hewlett Packard Co 3,605,951 6,303,680
7,470 Hilton Hotels Corp 433,736 496,755
73,536 Home Depot Inc 3,185,018 2,932,248
21,276 Homestake Mining Co 400,133 351,054
19,693 Honeywell Inc 681,271 861,569
14,969 Household International Inc 557,770 840,135
20,322 Houston Industries Inc 767,084 861,145
17,652 Illinois Tool Works Inc 746,897 1,081,185
18,079 Inco Ltd 472,893 632,765
16,354 Ingersoll-Rand Co 586,680 619,408
7,499 Inland Steel Industries Inc 244,773 205,285
127,906 Intel Corp 4,469,651 7,850,231
7,021 Intergraph Corp+ 68,521 86,885
89,645 International Business Machines Corp 5,870,513 9,267,052
17,213 International Flavors & Fragrances 718,544 824,072
19,618 International Paper Co 1,391,619 1,606,224
</TABLE>
83
<PAGE> 184
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
12,130 Interpublic Group Cos Inc $ 388,508 $ 471,554
16,331 ITT Corp 1,447,942 1,953,596
12,654 James River Corp 242,733 439,727
7,526 Jefferson-Pilot Corp 384,983 473,197
99,670 Johnson & Johnson 4,781,971 6,877,230
6,303 Johnson Controls Inc 323,691 383,695
7,018 Jostens Inc 126,628 168,432
70,525 K Mart Corp 1,193,251 960,903
4,974 Kaufman & Broad Home Corp 78,827 66,527
33,910 Kellogg Co 1,899,524 2,288,925
7,964 Kerr-McGee Corp 388,838 438,020
36,726 KeyCorp 1,145,360 1,138,506
24,726 Kimberly-Clark Corp 1,333,287 1,579,373
5,689 King World Productions+ 219,210 216,182
7,719 Knight-Ridder Inc 417,242 434,194
17,165 Kroger Co+ 405,030 560,008
42,701 Laidlaw Inc Class B 379,271 384,309
45,134 Lilly (Eli) & Co 2,615,003 3,695,346
55,084 Limited Inc 1,068,843 1,019,054
14,653 Lincoln National Corp 593,165 630,079
11,563 Liz Claiborne Inc 266,623 263,058
30,871 Lockheed Martin Corp 1,432,331 1,879,272
9,057 Loews Corp 1,012,337 1,189,863
3,229 Longs Drug Stores Corp 111,026 119,473
13,095 Loral Corp 493,789 716,951
5,161 Louisiana Land & Exploration Co 213,646 197,408
16,655 Louisiana-Pacific Corp 523,315 395,556
24,650 Lowe's Co Inc 793,046 819,613
3,674 Luby's Cafeterias Inc 82,769 73,021
11,845 Mallinckrodt Group Inc 380,339 445,668
9,663 Manor Care Inc 251,919 312,840
18,952 Marriott International 536,618 672,796
11,280 Marsh & McLennan Companies Inc 943,863 929,190
24,216 Masco Corp 672,827 678,048
34,103 Mattel Inc 729,373 988,987
</TABLE>
84
<PAGE> 185
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
38,371 May Co Department Stores Co $ 1,510,275 $ 1,625,971
16,607 Maytag Corp 288,566 257,409
22,968 MBNA Corp 575,013 815,364
8,319 McDermott International Inc 210,052 189,257
107,169 McDonald's Corp 3,195,603 3,911,669
17,636 McDonnell Douglas Corp 773,153 1,415,289
7,707 McGraw-Hill Inc 526,892 606,926
104,965 MCI Communications 2,474,004 2,525,720
8,711 Mead Corp 406,001 534,638
17,844 Medtronic Inc 837,646 1,684,028
22,656 Mellon Bank Corp 866,973 1,073,328
16,238 Melville Corp 633,121 541,943
5,713 Mercantile Stores Co Inc 213,023 262,084
191,005 Merck & Co Inc 6,634,323 9,526,374
4,245 Meredith Corp 93,900 166,616
27,160 Merrill Lynch & Co Inc 1,097,293 1,565,095
31,745 Micron Technology Inc 758,036 2,440,397
89,751 Microsoft Corp+ 5,360,502 8,301,968
7,012 Millipore Corp 178,231 244,544
64,847 Minnesota Mining & Manufacturing Co 3,443,957 3,542,267
61,142 Mobil Corp 5,093,144 5,823,776
17,653 Monsanto Co 1,336,267 1,674,828
15,370 Moore Corp Ltd 282,951 320,849
28,936 Morgan (J P) & Co Inc 1,888,159 2,108,711
5,084 Morrison Knudsen Corp 95,423 39,401
22,878 Morton International Inc 642,361 743,535
90,872 Motorola Inc 4,693,843 6,792,682
1,348 NACCO Industries Inc Class A 71,686 77,510
10,442 Nalco Chemical Co 347,784 365,470
22,645 National City Corp 633,697 673,689
19,166 National Semiconductor+ 370,374 541,440
7,446 National Service Industries Inc 197,894 215,934
41,926 NationsBank 2,178,258 2,573,208
11,577 Navistar International Corp+ 198,332 150,501
24,705 NBD Bancorp Inc 778,501 883,204
</TABLE>
85
<PAGE> 186
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
14,993 New York Times Co Class A $ 368,782 $ 372,951
24,402 Newell Co 523,600 610,050
13,355 Newmont Mining Corp 558,851 580,943
22,222 Niagara Mohawk Power Corp 381,914 266,664
7,858 NICOR Inc 206,968 201,361
11,157 Nike Inc Class B 696,859 1,033,417
19,055 NorAm Energy Corp 129,945 135,767
12,734 Nordstrom Inc 508,909 525,278
20,349 Norfolk Southern Corp 1,318,590 1,439,692
10,438 Northern States Power Co 449,544 444,920
39,111 Northern Telecom Ltd 1,215,873 1,437,329
7,670 Northrop Grumman Corp 320,532 466,911
50,004 Norwest Corp 1,316,662 1,506,371
56,506 Novell Inc+ 1,072,437 1,017,108
13,505 Nucor Corp 803,252 661,745
65,767 NYNEX Corp 2,632,983 2,959,515
48,982 Occidental Petroleum Corp 982,762 1,065,359
7,542 Ogden Corp 170,557 175,352
23,519 Ohio Edison Co 474,703 508,598
4,152 ONEOK Inc 81,566 90,825
66,636 Oracle Systems Corp+ 1,726,607 2,673,770
15,936 Oryx Energy Co+ 255,038 215,136
3,068 Outboard Marine Corp 62,287 65,579
7,820 Owens Corning Fiberglass+ 278,616 306,935
5,962 PACCAR Inc 292,690 295,119
12,632 Pacific Enterprises 278,775 303,168
66,462 Pacific Gas & Electric Co 1,813,866 1,910,783
65,486 Pacific Telesis Group 1,981,455 1,858,165
43,914 PacifiCorp 791,255 795,941
17,917 Pall Corp 313,439 391,934
23,046 Panhandle Eastern Corp 506,007 576,150
11,395 Parker Hannifin Corp 325,497 451,527
34,203 PECO Energy Co 948,881 910,655
35,868 Penney (J C) Co Inc 1,778,365 1,623,027
7,150 Pennzoil Co 374,397 314,600
</TABLE>
86
<PAGE> 187
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
5,392 Peoples Energy Corp $ 147,510 $ 146,932
9,522 Pep Boys-Manny Moe & Jack 280,774 261,855
121,626 Pepsico Inc 4,376,518 5,503,577
6,437 Perkin-Elmer Corp 200,332 219,663
97,540 Pfizer Inc 3,367,452 4,816,038
10,793 Phelps Dodge Corp 603,471 684,006
130,466 Philip Morris Co Inc 7,283,707 9,736,025
40,422 Phillips Petroleum Co 1,307,844 1,328,873
13,108 Pioneer Hi Bred International Inc 467,188 563,644
23,334 Pitney Bowes Inc 893,813 947,944
6,406 Pittston Services Group 162,278 162,552
36,853 Placer Dome Inc 821,564 962,785
35,330 PNC Bank Corp 1,004,700 927,413
6,959 Polaroid Corp 239,660 303,586
4,548 Potlatch Corp 184,329 180,215
31,853 PPG Industries Inc 1,214,360 1,361,716
21,329 Praxair Inc 437,775 554,554
9,453 Premark International Inc 368,001 495,101
30,032 Price/Costco Inc+ 480,368 506,790
106,171 Procter & Gamble Co 6,140,576 7,365,613
14,859 Providian Corp 497,010 570,214
37,812 Public Services Enterprise Group 1,079,674 1,039,830
4,146 Pulte Corp 108,375 111,942
20,614 Quaker Oats Co 730,280 716,337
15,533 Ralston-Purina Group 612,973 807,716
6,737 Raychem Corp 252,120 295,586
19,027 Raytheon Co 1,260,170 1,538,809
12,348 Reebok International Ltd 397,329 438,354
8,056 Republic New York Corp 470,412 453,150
9,689 Reynolds Metals Co 485,015 578,918
12,984 Rite Aid Corp 273,919 363,552
6,031 Roadway Services Inc 364,508 331,705
33,488 Rockwell International Corp 1,254,735 1,498,588
10,500 Rohm & Haas Co 618,851 627,375
13,011 Rowan Co Inc+ 105,717 105,714
</TABLE>
87
<PAGE> 188
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
82,824 Royal Dutch Petroleum Co $ 8,959,408 $ 9,876,762
24,798 Rubbermaid Inc 696,179 737,741
6,070 Russell Corp 177,177 166,925
8,151 Ryan's Family Steak House+ 60,994 61,133
12,200 Ryder System Inc 306,783 295,850
9,737 SAFECO Corp 548,935 629,254
8,901 Safety-Kleen Corp 144,699 120,164
16,378 Salomon Inc 718,149 628,506
13,930 Santa Fe Energy Resources Inc+ 130,217 132,335
23,435 Santa Fe Pacific Corp 420,860 664,968
20,288 Santa Fe Pacific Gold Corp 306,618 245,992
74,067 Sara Lee Corp 1,746,062 2,055,359
93,916 SBC Communication Inc 3,982,383 4,754,498
68,993 SCEcorp 1,141,392 1,147,009
57,480 Schering-Plough Corp 1,955,536 2,680,005
37,446 Schlumberger Ltd 2,251,079 2,415,267
11,805 Scientific-Atlanta Inc 216,377 236,100
23,417 Scott Paper Co 661,930 1,085,963
57,558 Seagram Co Ltd 1,719,238 2,129,646
59,945 Sears Roebuck & Co 1,600,562 1,940,719
14,875 Service Corp International 391,969 520,625
3,581 Shared Medical System Corp 99,358 132,049
19,857 Shawmut National Corp 470,726 642,870
13,186 Sherwin Williams Co 432,300 473,048
6,360 Shoney's Inc+ 101,254 73,935
7,683 Sigma Aldrich Corp 293,371 368,784
24,506 Silicon Graphics Inc+ 847,951 1,035,379
6,297 Snap-On Inc 233,907 258,177
13,352 Sonat Inc 417,401 423,926
102,708 Southern Co 2,068,549 2,169,707
22,195 Southwest Airlines Co 595,540 574,296
3,123 Springs Industries Inc Class A 109,292 134,679
53,842 Sprint Corp 1,877,289 1,911,391
7,190 St Jude Medical Inc+ 256,919 428,704
13,062 St Paul Co Inc 555,386 708,614
</TABLE>
88
<PAGE> 189
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
6,838 Stanley Works $ 273,072 $ 302,582
14,752 Stone Container Corp+ 233,158 320,856
7,677 Stride Rite Corp 102,077 86,366
11,644 Sun Co Inc 332,754 310,022
14,764 Sun Microsystems Inc+ 424,937 854,467
17,754 SunTrust Banks Inc 873,301 1,089,652
10,773 Super Value Inc 326,554 319,150
28,163 Sysco Corp 712,428 809,686
17,931 Tandem Computers Inc+ 237,150 219,655
11,385 Tandy Corp 461,097 707,293
5,059 Tektronix Inc 168,411 230,817
100,797 Tele-Communication Inc Class A+ 1,689,575 1,864,745
8,528 Teledyne Inc 165,720 203,798
13,552 Tellabs Inc+ 648,260 633,556
8,664 Temple-Inland Inc 412,074 448,362
30,806 Tenet Healthcare Corp+ 462,308 489,045
27,982 Tenneco Inc 1,334,624 1,357,127
40,079 Texaco Inc 2,552,408 2,595,115
28,832 Texas Instruments Inc 1,233,467 2,158,796
34,844 Texas Utilities Co 1,250,080 1,210,829
13,137 Textron Inc 721,363 899,885
3,077 Thomas & Betts Corp 198,592 207,698
58,646 Time Warner Inc 2,205,815 2,470,463
17,285 Times Mirror Co Class A 380,632 529,353
4,775 Timken Co 167,071 215,472
11,208 TJX Companies Inc 247,036 140,100
11,054 Torchmark Corp 467,495 442,160
42,828 Toys R Us Inc+ 1,455,454 1,113,528
10,666 Transamerica Corp 571,915 725,288
49,407 Travelers Inc 1,804,891 2,371,536
10,149 Tribune Co 565,419 679,983
4,446 Trinova Corp 152,149 163,391
10,006 TRW Inc 678,982 779,217
11,747 Tyco International Inc 570,699 694,541
15,136 U.S. Bancorp 391,295 433,268
</TABLE>
89
<PAGE> 190
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
24,712 U.S. Healthcare Inc $ 1,010,879 $ 790,784
3,591 U.S. Life Corp 133,251 154,862
72,750 U.S. West Inc 3,050,630 3,164,625
33,116 Unicom Corp 829,816 931,388
24,749 Unilever NV 2,745,497 3,059,595
10,850 Union Camp Corp 511,425 617,094
21,151 Union Carbide Corp 583,128 750,861
15,816 Union Electric Co 567,604 563,445
31,684 Union Pacific Corp 1,823,704 2,075,302
26,398 Unisys Corp+ 276,072 211,184
26,705 United Healthcare Corp 1,221,762 1,128,286
8,823 United States Surgical 203,350 223,884
19,023 United Technologies Corp 1,237,175 1,586,043
37,730 Unocal Corp 1,076,668 1,098,886
11,183 UNUM Corp 549,483 536,784
26,722 Upjohn Co 835,394 1,132,345
9,528 USAir Group Inc+ 87,002 77,415
17,105 USF & G Corp 251,755 310,028
30,184 UST Inc 838,679 822,514
45,888 USX - Marathon Group 812,895 946,440
12,592 USX - US Steel Group 446,346 412,388
6,428 Varity Corp+ 242,903 292,474
9,817 VF Corp 482,786 537,481
55,560 Viacom Inc Class B+ 2,232,861 2,701,605
26,489 Wachovia Corp 924,712 1,052,938
354,915 Wal Mart Stores Inc 8,887,407 8,739,782
37,960 Walgreen Co 779,045 930,020
20,802 Warner Lambert Co 1,479,637 1,879,981
7,568 Wells Fargo & Co 1,133,974 1,410,486
15,723 Wendy's International Inc 252,496 308,564
8,192 Western Atlas Inc+ 356,239 371,712
55,177 Westinghouse Electric Corp 744,211 751,787
10,442 Westvaco Corp 367,966 460,753
31,805 Weyerhaeuser Co 1,342,571 1,463,030
11,395 Whirlpool Corp 627,993 621,028
</TABLE>
90
<PAGE> 191
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
16,178 Whitman Corp $ 260,336 $ 323,560
8,479 Willamette Industries Inc 580,516 582,931
15,691 Williams Co Inc 468,072 574,683
11,748 Winn-Dixie Stores Inc 596,955 699,006
74,693 WMX Technologies Inc 2,129,915 2,194,107
20,433 Woolworth Corp 374,614 273,291
14,028 Worthington Industries Inc 280,311 280,560
17,958 Wrigley (Wm) Jr Co 803,959 810,355
16,532 Xerox Corp 1,642,245 1,996,239
4,332 Yellow Corp 82,219 61,190
7,252 Zenith Electronic Corp+ 66,196 61,642
1,920 Zurn Industries Inc 44,187 42,000
------------ ------------
TOTAL COMMON STOCKS $536,013,067 $638,613,538
</TABLE>
91
<PAGE> 192
MASTER INVESTMENT PORTFOLIO -- S&P 500 INDEX MASTER SERIES -- AUGUST 31, 1995
(UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 9.95%
$ 471,000 U.S. Treasury Bills* 5.20 % 09/28/95 $ 469,090
2,348,000 U.S. Treasury Bills* 5.38 10/12/95 2,333,691
19,152,000 U.S. Treasury Bills* 5.39 10/19/95 19,015,831
16,991,000 U.S. Treasury Bills* 5.40 11/02/95 16,835,889
2,149,000 U.S. Treasury Bills* 5.41 11/09/95 2,127,168
26,969,000 U.S. Treasury Bills* 5.41 11/16/95 26,666,651
2,367,000 U.S. Treasury Bills* 5.42 11/24/95 2,337,746
626,000 U.S. Treasury Bills* 5.54 09/21/95 624,114
------------
TOTAL SHORT-TERM INSTRUMENTS $ 70,410,180
(Cost $70,399,099)
TOTAL INVESTMENTS IN SECURITIES
(Cost $606,412,166)** (Notes 1 and 3) 100.21 % $709,023,718
Other Assets and Liabilities, Net (0.21) (1,507,025)
------ ------------
TOTAL NET ASSETS 100.00 % $707,516,693
------ ------------
------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* THESE U.S. TREASURY BILLS ARE PLEDGED AS COLLATERAL FOR SECURITY CONTRACTS.
SEE NOTE 1.
** COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 111,360,315
Gross Unrealized Depreciation (8,748,763)
-------------
NET UNREALIZED APPRECIATION $ 102,611,552
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
92
<PAGE> 193
MANAGED SERIES INVESTMENT TRUST -- SHORT-INTERMEDIATE TERM MASTER
SERIES -- AUGUST 31, 1995 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
CORPORATE BONDS & NOTES - 27.48%
CORPORATE NOTES - 23.14%
$ 500,000 Associates Corp of North America 7.80 % 03/13/00 $ 524,725
250,000 BankAmerica Corp 8.38 03/15/02 269,870
500,000 Comdisco Inc 7.25 04/15/98 509,330
250,000 First Union Bank 6.75 11/15/98 251,530
250,000 Ford Holdings 9.25 07/15/97 262,723
250,000 NBD Bancorp Inc 6.55 06/02/97 252,138
500,000 Norwest Financial Inc 7.88 02/15/02 531,390
198,000 Sears Roebuck & Co 9.25 08/01/97 208,292
------------
$ 2,809,998
YANKEE BONDS - 4.34%
$ 500,000 Westpac Banking (Australia) 7.88 % 10/15/02 $ 527,495
------------
TOTAL CORPORATE BONDS & NOTES $ 3,337,493
(Cost $3,289,502)
U.S. GOVERNMENT AGENCY SECURITIES - 15.43%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 15.43%
$ 900,784 Federal National Mortgage Assoc 7.00 % 06/01/09 $ 902,188
967,960 Federal National Mortgage Assoc 7.50 05/01/25 970,980
------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 1,873,168
(Cost $1,830,983)
U.S. TREASURY SECURITIES - 51.83%
U.S. TREASURY BONDS - 21.68%
$ 2,000,000 U.S. Treasury Bonds 10.75 % 08/15/05 $ 2,632,180
</TABLE>
93
<PAGE> 194
MANAGED SERIES INVESTMENT TRUST -- SHORT-INTERMEDIATE TERM MASTER
SERIES -- AUGUST 31, 1995 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES (CONTINUED)
U.S. TREASURY NOTES - 30.15%
$ 3,500,000 U.S. Treasury Notes 8.50 % 07/15/97 $ 3,661,315
------------
TOTAL U.S. TREASURY SECURITIES $ 6,293,495
(Cost $6,075,974)
SHORT-TERM INSTRUMENTS - 4.84%
REPURCHASE AGREEMENTS - 4.84%
$ 588,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.80 % 09/03/95 $ 588,000
(Cost $588,000)
TOTAL INVESTMENTS IN SECURITIES
(Cost $11,784,459)* (Notes 1 and 3) 99.58% $ 12,092,156
Other Assets and Liabilities, Net 0.42 50,861
------ ------------
TOTAL NET ASSETS 100.00% $ 12,143,017
------ ------------
------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 338,072
Gross Unrealized Depreciation (30,375)
-------------
NET UNREALIZED APPRECIATION $ 307,697
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
94
<PAGE> 195
MASTER INVESTMENT PORTFOLIO -- U.S. TREASURY ALLOCATION MASTER SERIES -- AUGUST
31, 1995 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C>
U.S. TREASURY SECURITIES - 39.56%
U.S. TREASURY BONDS - 19.37%
$ 1,000,000 U.S. Treasury Bonds 7.13 % 02/15/23 $ 1,045,311
1,000,000 U.S. Treasury Bonds 7.25 05/15/16 1,054,061
500,000 U.S. Treasury Bonds 7.50 11/15/24 548,125
600,000 U.S. Treasury Bonds 7.63 11/15/22 664,125
3,100,000 U.S. Treasury Bonds 7.88 02/15/21 3,500,089
100,000 U.S. Treasury Bonds 8.00 08/15/01 101,906
800,000 U.S. Treasury Bonds 8.13 08/15/19 924,500
1,000,000 U.S. Treasury Bonds 8.13 08/15/21 1,161,875
800,000 U.S. Treasury Bonds 8.75 05/15/17 977,500
1,000,000 U.S. Treasury Bonds 9.00 11/15/18 1,256,250
700,000 U.S. Treasury Bonds 9.88 11/15/15 939,093
------------
$ 12,172,835
U.S. TREASURY NOTES - 20.19%
$ 2,900,000 U.S. Treasury Notes 7.50 % 11/15/01 $ 3,095,750
800,000 U.S. Treasury Notes 7.50 05/15/02 857,500
1,800,000 U.S. Treasury Notes 7.75 02/15/01 1,934,435
1,500,000 U.S. Treasury Notes 7.88 08/15/01 1,626,563
1,400,000 U.S. Treasury Notes 8.00 05/15/01 1,524,250
3,300,000 U.S. Treasury Notes 8.50 11/15/00 3,648,563
------------
$ 12,687,061
TOTAL U.S. TREASURY SECURITIES $ 24,859,896
(Cost $24,511,593)
</TABLE>
95
<PAGE> 196
MASTER INVESTMENT PORTFOLIO -- U.S. TREASURY ALLOCATION MASTER SERIES -- AUGUST
31, 1995 (UNAUDITED)
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
YIELD TO MATURITY
PRINCIPAL SECURITY NAME MATURITY DATE VALUE
<C> <S> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 50.48%
U.S. TREASURY BILLS - 50.48%
$ 685,000 U.S. Treasury Bills 5.37 % 10/05/95 $ 681,521
61,000 U.S. Treasury Bills 5.38 10/12/95 60,628
422,000 U.S. Treasury Bills 5.39 10/19/95 419,000
5,921,000 U.S. Treasury Bills 5.40 11/02/95 5,866,947
632,000 U.S. Treasury Bills 5.41 11/09/95 625,580
12,344,000 U.S. Treasury Bills 5.41 11/16/95 12,205,611
91,000 U.S. Treasury Bills 5.42 11/24/95 89,877
11,803,000 U.S. Treasury Bills 5.54 09/21/95 11,767,431
------------
TOTAL SHORT-TERM INSTRUMENTS $ 31,716,595
(Cost $31,714,959)
TOTAL INVESTMENTS IN SECURITIES
(Cost $56,226,553)* 90.04% $ 56,576,491
(Notes 1 and 3)
Other Assets and Liabilities, Net 9.96 6,256,727
------ ------------
TOTAL NET ASSETS 100.00% $ 62,833,218
------ ------------
------ ------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL STATEMENT
PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 350,353
Gross Unrealized Depreciation (415)
-------------
NET UNREALIZED APPRECIATION $ 349,938
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
96
<PAGE> 197
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
AUGUST 31, 1995
<TABLE>
<CAPTION>
MASTER MASTER
INVESTMENT INVESTMENT MANAGED SERIES
PORTFOLIO PORTFOLIO INVESTMENT TRUST
ASSET ALLOCATION BOND INDEX GROWTH STOCK
MASTER SERIES MASTER SERIES MASTER SERIES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market
value (see cost below)
(Note 1) $341,695,794 $120,819,329 $145,142,751
Cash 759,535 3,976 1,609
Receivables:
Dividends and interest 1,283,224 1,683,355 44,745
Investment securities sold 0 0 0
Variation margin on
futures contracts 0 0 0
Prepaid expenses 0 0 1,715
Organizational costs (Note
2) 0 0 8,615
TOTAL ASSETS 343,738,553 122,506,660 145,199,435
LIABILITIES
PAYABLES:
Investment securities
purchased 0 0 318,928
Allocation to beneficial
interest holders 1,280,805 707,858 33,449
Due to sponsor and
distributor 0 0 8,615
Due to WFB (Note 2) 200,759 22,602 225,482
Other 0 16,183 4,206
TOTAL LIABILITIES 1,481,564 746,643 590,680
TOTAL NET ASSETS $342,256,989 $121,760,017 $144,608,755
INVESTMENTS AT COST $307,488,962 $117,335,671 $118,894,811
- ----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
97
<PAGE> 198
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
MASTER
MANAGED SERIES INVESTMENT
MASTER INVESTMENT TRUST PORTFOLIO
INVESTMENT SHORT- U.S.
PORTFOLIO INTERMEDIATE TREASURY
S&P 500 INDEX TERM ALLOCATION
MASTER SERIES MASTER SERIES MASTER SERIES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market
value (see cost below)
(Note 1) $709,023,718 $12,092,156 $56,576,491
Cash 27,981 1,390 1,130
Receivables:
Dividends and interest 1,753,979 122,510 481,198
Investment securities sold 0 0 11,753,406
Variation margin on
futures contracts 216,525 0 0
Prepaid expenses 0 0 0
Organizational costs (Note
2) 0 8,615 0
TOTAL ASSETS 711,022,203 12,224,671 68,812,225
LIABILITIES
PAYABLES:
Investment securities
purchased 400,289 0 5,637,219
Allocation to beneficial
interest holders 3,009,501 72,058 310,023
Due to sponsor and
distributor 0 8,615 0
Due to WFB (Note 2) 82,269 0 31,765
Other 13,451 981 0
TOTAL LIABILITIES 3,505,510 81,654 5,979,007
TOTAL NET ASSETS $707,516,693 $12,143,017 $62,833,218
INVESTMENTS AT COST $606,412,166 $11,784,459 $56,226,553
- ----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
98
<PAGE> 199
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
MASTER MASTER
INVESTMENT INVESTMENT MANAGED SERIES
PORTFOLIO PORTFOLIO INVESTMENT TRUST
ASSET ALLOCATION BOND INDEX GROWTH STOCK
MASTER SERIES MASTER SERIES MASTER SERIES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 2,031,277 $ 0 $ 166,342
Interest 5,641,150 4,140,373 314,028
TOTAL INVESTMENT INCOME 7,672,427 4,140,373 480,370
EXPENSES (NOTE 2)
Advisory fees 565,631 53,526 353,864
Legal and audit 0 10,083 10,889
Directors fees 0 3,277 736
TOTAL EXPENSES 565,631 66,886 365,489
Less:
Waived fees by WFB (Note
2) 0 (7,652) (10,890)
NET EXPENSES 565,631 59,234 354,599
NET INVESTMENT INCOME 7,106,796 4,081,139 125,771
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
on sale of investments (1,616,609) (180,711) 12,646,130
Net realized gain (loss)
on sale of futures
contracts 0 0 0
Net change in unrealized
appreciation of
investments 34,586,900 4,731,944 20,874,380
Net change in unrealized
appreciation of futures
contracts 0 0 0
NET GAIN ON INVESTMENTS 32,970,291 4,551,233 33,520,510
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $40,077,087 $8,632,372 $33,646,281
- ----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
99
<PAGE> 200
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
MASTER
MANAGED SERIES INVESTMENT
MASTER INVESTMENT TRUST PORTFOLIO
INVESTMENT SHORT- U.S.
PORTFOLIO INTERMEDIATE TREASURY
S&P 500 INDEX TERM ALLOCATION
MASTER SERIES MASTER SERIES MASTER SERIES
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 7,142,129 $ 0 $ 0
Interest 1,364,006 482,096 2,017,329
TOTAL INVESTMENT INCOME 8,506,135 482,096 2,017,329
EXPENSES (NOTE 2)
Advisory fees 148,062 28,386 90,916
Legal and audit 10,939 10,889 0
Directors fees 3,291 125 0
TOTAL EXPENSES 162,292 39,400 90,916
Less:
Waived fees by WFB (Note
2) (14,230) (11,015) 0
NET EXPENSES 148,062 28,385 90,916
NET INVESTMENT INCOME 8,358,073 453,711 1,926,413
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
on sale of investments 1,112,985 13,758 1,225,869
Net realized gain (loss)
on sale of futures
contracts 5,024,364 0 0
Net change in unrealized
appreciation of
investments 74,002,262 300,619 795,344
Net change in unrealized
appreciation of futures
contracts 323,700 0 0
NET GAIN ON INVESTMENTS 80,463,311 314,377 2,021,213
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $88,821,384 $768,088 $3,947,626
- ----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
100
<PAGE> 201
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MASTER INVESTMENT PORTFOLIO ASSET
ALLOCATION MASTER SERIES
----------------------------------
(UNAUDITED) FOR THE
FOR THE YEAR ENDED
SIX MONTHS ENDED FEBRUARY 28,
AUGUST 31, 1995 1995
<S> <C> <C>
- ----------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 7,106,796 $ 9,844,287
Net realized gain (loss)
on sale of investments (1,616,609) 292,999
Net realized gain on sale
of futures contracts 0 0
Net change in unrealized
appreciation
(depreciation) of
investments 34,586,900 (380,068)
Net change in unrealized
appreciation of futures
contracts 0 0
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 40,077,087 9,757,218
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
BENEFICIAL INTERESTS
TRANSACTIONS 8,435,809 283,986,875
INCREASE (DECREASE) IN NET
ASSETS 48,512,896 293,744,093
NET ASSETS:
Beginning net assets 293,744,093 0
ENDING NET ASSETS $342,256,989 $293,744,093
- ----------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
101
<PAGE> 202
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MASTER INVESTMENT PORTFOLIO BOND
INDEX MASTER SERIES
----------------------------------
(UNAUDITED) FOR THE
FOR THE YEAR ENDED
SIX MONTHS ENDED FEBRUARY 28,
AUGUST 31, 1995 1995
<S> <C> <C>
- ----------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 4,081,139 $ 4,037,719
Net realized gain (loss)
on sale of investments (180,711) (498,410)
Net realized gain on sale
of futures contracts 0 0
Net change in unrealized
appreciation
(depreciation) of
investments 4,731,944 (1,248,285)
Net change in unrealized
appreciation of futures
contracts 0 0
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 8,632,372 2,291,024
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
BENEFICIAL INTERESTS
TRANSACTIONS 5,119,165 105,717,456
INCREASE (DECREASE) IN NET
ASSETS 13,751,537 108,008,480
NET ASSETS:
Beginning net assets 108,008,480 0
ENDING NET ASSETS $121,760,017 $108,008,480
- ----------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
102
<PAGE> 203
<TABLE>
<CAPTION>
MANAGED SERIES INVESTMENT TRUST MASTER INVESTMENT PORTFOLIO S&P
GROWTH STOCK MASTER SERIES 500 INDEX MASTER SERIES
---------------------------------- ----------------------------------
(UNAUDITED) FOR THE (UNAUDITED) FOR THE
FOR THE YEAR ENDED FOR THE YEAR ENDED
SIX MONTHS ENDED FEBRUARY 28, SIX MONTHS ENDED FEBRUARY 28,
AUGUST 31, 1995 1995 AUGUST 31, 1995 1995
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 125,771 $ 89,980 $ 8,358,073 $ 8,827,173
Net realized gain (loss)
on sale of investments 12,646,130 2,269,409 1,112,985 2,143,795
Net realized gain on sale
of futures contracts 0 0 5,024,364 158,998
Net change in unrealized
appreciation
(depreciation) of
investments 20,874,380 5,373,560 74,002,262 28,609,290
Net change in unrealized
appreciation of futures
contracts 0 0 323,700 1,217,675
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 33,646,281 7,732,949 88,821,384 40,956,931
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
BENEFICIAL INTERESTS
TRANSACTIONS 14,079,220 89,150,305 133,089,935 444,648,443
INCREASE (DECREASE) IN NET
ASSETS 47,725,501 96,883,254 221,911,319 485,605,374
NET ASSETS:
Beginning net assets 96,883,254 0 485,605,374 0
ENDING NET ASSETS $144,608,755 $96,883,254 $707,516,693 $485,605,374
- ----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
103
<PAGE> 204
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MANAGED SERIES INVESTMENT TRUST
SHORT-INTERMEDIATE TERM MASTER SERIES
-------------------------------------
(UNAUDITED) FOR THE
FOR THE YEAR ENDED
SIX MONTHS ENDED FEBRUARY 28,
AUGUST 31, 1995 1995
<S> <C> <C>
- ----------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 453,711 $ 434,074
Net realized gain (loss)
on sale of investments 13,758 (267,700)
Net realized gain on sale
of futures contracts 0 0
Net change in unrealized
appreciation
(depreciation) of
investments 300,619 7,078
Net change in unrealized
appreciation of futures
contracts 0 0
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 768,088 173,452
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
BENEFICIAL INTERESTS
TRANSACTIONS (2,915,084) 14,116,561
INCREASE (DECREASE) IN NET
ASSETS (2,146,996) 14,290,013
NET ASSETS:
Beginning net assets 14,290,013 0
ENDING NET ASSETS $12,143,017 $14,290,013
- ----------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
104
<PAGE> 205
<TABLE>
<CAPTION>
MASTER INVESTMENT PORTFOLIO U.S.
TREASURY ALLOCATION MASTER SERIES
----------------------------------
(UNAUDITED) FOR THE
FOR THE YEAR ENDED
SIX MONTHS ENDED FEBRUARY 28,
AUGUST 31, 1995 1995
<S> <C> <C>
- ----------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 1,926,413 $ 2,996,075
Net realized gain (loss)
on sale of investments 1,225,869 (2,077,444)
Net realized gain on sale
of futures contracts 0 0
Net change in unrealized
appreciation
(depreciation) of
investments 795,344 (445,406)
Net change in unrealized
appreciation of futures
contracts 0 0
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,947,626 $ 473,225
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
BENEFICIAL INTERESTS
TRANSACTIONS 2,024,078 56,388,289
INCREASE (DECREASE) IN NET
ASSETS 5,971,704 56,861,514
NET ASSETS:
Beginning net assets 56,861,514 0
ENDING NET ASSETS $62,833,218 $56,861,514
- ----------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
105
<PAGE> 206
(THIS PAGE INTENTIONALLY LEFT BLANK)
106
<PAGE> 207
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Master Investment Portfolio ("Master Portfolio") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Master Portfolio was organized on October 21,
1993 as a Delaware business trust pursuant to an Agreement and Declaration of
Trust dated May 14, 1993 and had no operations prior to May 26, 1994. Master
Portfolio is currently authorized to issue fourteen separate diversified
portfolios (the "Master Series"), of which the following have commenced
operations: LifePath 2000 Master Series, LifePath 2010 Master Series, LifePath
2020 Master Series, LifePath 2030 Master Series, LifePath 2040 Master Series,
Asset Allocation Master Series, Bond Index Master Series, S&P 500 Index Master
Series and U.S. Treasury Allocation Master Series. The following significant
accounting policies are consistently followed by Master Portfolio in the
preparation of its financial statements, and such policies are in conformity
with generally accepted accounting principles for investment companies. The
financial statements for each of the LifePath Master Series are presented
separately.
SECURITY VALUATION
The securities of each Master Series (except debt securities) are valued at
the last sale price on the primary securities exchange or national securities
market on which such securities are traded. Securities not listed on an exchange
or national securities market, or securities in which there were no
transactions, are valued at the most recent bid prices. Debt securities maturing
in 60 days or less are valued at amortized cost, which approximates market
value. Debt securities, other than those maturing in 60 days or less, are valued
at the latest quoted bid price. Any securities, restricted securities or other
assets for which recent market quotations are not readily available, are valued
at fair value as determined in good faith in accordance with policies approved
by Master Portfolio's Board of Trustees.
SECURITY TRANSACTIONS AND REVENUE RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the ex-
107
<PAGE> 208
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
dividend date, and interest income is recognized on a daily accrual basis.
Realized gains or losses are reported on the basis of identified cost of
securities delivered. Bond discounts and premiums are amortized as required by
the Internal Revenue Code of 1986 (the "Code").
FEDERAL INCOME TAXES
Each Master Series of Master Portfolio intends to qualify as a partnership
for federal income tax purposes. Each Master Series therefore believes that it
will not be subject to any federal income tax on its income and any net capital
gains. However, each investor in a Master Series will be taxable on its
allocable share of the partnership's income and capital gains. The determination
of such share will be made in accordance with the applicable sections of the
Code.
It is intended that each Master Series' assets, income and allocations will
be managed in such a way that a regulated investment company investing in a
Master Series will be able to satisfy the requirements of Subchapter M of the
Code, assuming that the investment company invests all of its assets in the
respective Master Series.
FUTURES CONTRACTS
The S&P 500 Index Master Series may purchase futures contracts to gain
exposure to market changes as this may be more efficient or cost effective than
actually buying the securities. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date and is
exchange traded. Upon entering into such a contract, a Master Series is required
to pledge to the broker an amount of cash, U.S. government securities or other
high-quality debt securities equal to the minimum "initial margin" requirements
of the exchange. Pursuant to the contract, the Master Series agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the Master Series as unrealized gains or losses.
When the contract is closed, the Master Series records a realized gain or loss
equal to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Pursuant to regulations and/or
published positions of the
108
<PAGE> 209
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
Securities and Exchange Commission, the S&P 500 Index Master Series is required
to segregate cash or high quality, liquid debt instruments in connection with
futures transactions in an amount generally equal to the entire value of the
underlying contracts. Risks of entering into futures contracts include the
possibility that there may be an illiquid market and that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. As of August 31, 1995, the S&P 500 Index Master Series had the
following open futures contracts:
<TABLE>
<CAPTION>
NOTIONAL NET
CONTRACT UNREALIZED
NUMBER OF CONTRACTS TYPE EXPIRATION DATE VALUE APPRECIATION
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
127 S&P 500 Index December 1995 $ 36,033,075 $ 204,825
124 S&P 500 Index September 1995 34,896,700 1,336,550
</TABLE>
The S&P 500 Index Master Series has pledged to brokers U.S. Treasury Bills
for initial margin requirements with a par value of $2,810,000.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Master Portfolio has entered into an investment advisory agreement on behalf
of the Master Series with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the
agreement, WFB has agreed to provide investment guidance and policy direction in
connection with daily portfolio management of each Master Series. For the Asset
Allocation Master Series, the Bond Index Master Series, the S&P 500 Index Master
Series, and the U.S. Treasury Allocation Master Series, WFB is entitled to be
compensated monthly, at annual rates of 0.35%, 0.08%, 0.05% and 0.30% of the
respective average daily net assets of each of these Master Series.
In connection with the Asset Allocation Master Series, the Bond Index Master
Series, the S&P 500 Index Master Series and the U.S. Treasury Allocation Master
Series, the Master Portfolio and WFB have entered into sub-advisory agreements
with Wells Fargo Nikko Investment Advisors ("WFNIA"). WFNIA is an affiliate of
Wells Fargo & Company. Pursuant to Sub-Advisory Agreements, WFNIA, subject to
the supervision and approval of WFB, provides investment advisory assistance and
the day-to-day management of each Master Series' assets, subject to the overall
109
<PAGE> 210
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
authority of the Master Portfolio's Board of Trustees. For providing these
services, WFNIA is entitled to be compensated by WFB monthly at the annual rate
of 0.20%, 0.07%, 0.04% and 0.15% of the average daily net assets of the Asset
Allocation, Bond Index, S&P 500 Index and U.S. Treasury Allocation Master
Series, respectively.
In addition, Wells Fargo Institutional Trust Company N.A. ("WFITC"), a
subsidiary of WFNIA, acts as custodian for these Master Series. Custody fees are
paid to WFITC from the subadvisory fee paid to WFNIA.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their partnership interests in WFNIA to
Barclays Bank PLC ("Barclays") of the U.K.. The sale, which is subject to the
approval of appropriate regulatory authorities, is expected to close in the
fourth quarter of 1995.
Barclays is one of the oldest and largest financial institutions in the
world, with approximately $264 billion in total assets at June 30, 1995.
Barclays has indicated an intention to reorganize WFNIA into one of WFNIA's two
current partners, which would be renamed BZW Global Investors. Barclays and its
affiliates have considerable experience in managing fund assets and had
approximately $35 billion of quantitative fund assets under management, as of
June 30, 1995. The BZW Division of Barclays offers a full range of investment
banking, capital markets and asset management services.
Under the Investment Company Act of 1940, this proposed change in control of
WFNIA would result in an assignment and termination of the current Sub-
Investment Advisory Agreements among WFNIA, Wells Fargo Bank and the Master
Series. Subject to approval of the Company's Board of Directors, it is
contemplated that a special meeting of shareholders of the Master Series will be
convened to consider a new Advisory Agreement with WFNIA's successor as the
primary adviser to each Master Series, which will become effective only upon the
change in control of WFNIA. It is not anticipated that the proposed change in
control will change the investment objective or overall investment strategy of
the Master Series.
110
<PAGE> 211
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION EXPENSES
Stephens Inc. ("Stephens"), the administrator, sponsor and distributor for
the Master Series, has paid all expenses in connection with the Master Series'
organization and initial registration. Pursuant to the Administration Agreement,
Stephens has agreed to assume all operating expenses of the Asset Allocation
Master Series and the U.S. Treasury Allocation Master Series, except for
advisory fees, interest, brokerage fees and commissions, if any, costs of
independent pricing services and any extraordinary expenses.
Certain fees have been waived by WFB for the Bond Index Master Series and
S&P 500 Index Master Series for the six months ended August 31, 1995. Waived
fees continue at the discretion of WFB.
Certain officers and directors of Master Portfolio are also officers of
Stephens. As of August 31, 1995, these officers of Stephens collectively owned
less than 1% of the Master Series' outstanding beneficial interests.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities, for
each Master Series for the six months ended August 31, 1995 are as follows:
<TABLE>
<CAPTION>
ASSET U.S. TREASURY
AGGREGATE PURCHASES ALLOCATION BOND INDEX S&P 500 INDEX ALLOCATION
AND SALES OF: MASTER SERIES MASTER SERIES MASTER SERIES MASTER SERIES
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $ 13,722,922 $ 11,207,608 $ 0 $ 61,371,002
Sales proceeds 128,239,049 4,634,035 0 93,318,139
OTHER SECURITIES:
Purchases at cost 33,060,483 6,332,759 111,485,607 0
Sales proceeds 1,418,072 3,527,605 5,671,401 0
</TABLE>
111
<PAGE> 212
MASTER INVESTMENT PORTFOLIO
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, excluding short-term securities, for the
Master Series are as follows:
<TABLE>
<CAPTION>
U.S.
S&P 500 TREASURY
ASSET BOND INDEX INDEX ALLOCATION
ALLOCATION MASTER MASTER MASTER
PORTFOLIO TURNOVER MASTER SERIES SERIES SERIES SERIES
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
For the Period from May 26, 1994
(commencement of operations) to
February 28, 1995 23% 37% 5% 87%
For the Six Months Ended August 31,
1995 (Unaudited) 19% 7% 1% 178%
</TABLE>
5. ORGANIZATION OF THE MASTER SERIES
At a special meeting held January 31, 1994, the shareholders of the Asset
Allocation Fund, Bond Index Fund, S&P 500 Stock Fund and U.S. Treasury
Allocation Fund (the "Funds") approved the reorganization of certain Funds into
a "master-feeder" structure, whereby the existing funds invest all of their
assets in a corresponding series of the Master Portfolio. As of May 25, 1994,
the Funds transferred their investments to the corresponding Master Series of
Master Portfolio in exchange for shares in the corresponding Master Series. The
transfer of assets was accomplished as a tax-free exchange. The investments
transferred had costs of $221,581,217, $16,556,893, $157,312,274 and
$51,537,523, and unrealized appreciation (depreciation) of $(9,431,883),
$(939,294), $1,692,082 and $(1,788,579), respectively.
112
<PAGE> 213
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Managed Series Investment Trust ("Master Trust") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Master Trust was organized as a Delaware business trust pursuant to
an Agreement and Declaration of Trust dated October 28, 1993. The Master Trust
consists of eight separate portfolios (the "Master Series"): Growth Stock Master
Series, Short-Intermediate Term Master Series, Growth and Income Master Series,
California Tax-Free Intermediate Income Master Series, California Tax-Free Money
Market Master Series, California Tax-Free Short-Term Income Master Series,
Tax-Free Intermediate Income Master Series and the Tax-Free Money Market Master
Series. At August 31, 1995 the Growth and Income Master Series, California
Tax-Free Intermediate Income Master Series, California Tax-Free Money Market
Master Series, California Tax-Free Short-Term Income Master Series, Tax-Free
Intermediate Income Master Series and the Tax-Free Money Market Master Series
had not yet commenced operations. The following significant accounting policies
are consistently followed by the Master Trust in the preparation of its
financial statements, and such policies are in conformity with generally
accepted accounting principles for investment companies.
SECURITY VALUATION
The securities of each Master Series are valued at the last sale price on
the securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the most recent bid prices. Debt securities maturing in 60 days or less are
valued at amortized cost, which approximates market value. Any securities,
restricted securities or other assets for which recent market quotations are not
readily available are valued at fair value as determined in good faith in
accordance with policies approved by Master Trust's Board of Trustees.
113
<PAGE> 214
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
SECURITY TRANSACTIONS AND REVENUE RECOGNITION
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Dividend income is recognized on the ex-dividend
date, and interest income is recognized on a daily accrual basis. Realized gains
or losses are reported on the basis of identified cost of securities delivered.
Bond discounts and premiums are amortized as required by the Internal Revenue
Code of 1986 (the "Code").
FEDERAL INCOME TAXES
Each Master Series of the Master Trust intends to qualify for federal income
tax purposes as a partnership. Each Master Series therefore believes that it
will not be subject to any federal income tax on its income and net capital
gains (if any). However, each investor in a Master Series will be taxable on its
allocable share of the partnership's income. The determination of such share
will be made in accordance with the Code. It is intended that each Master
Series' assets, income and allocations will be managed in such a way that a
regulated investment company investing in a Master Series will be able to
satisfy the requirements of Subchapter M of the Code, assuming that an
investment company invested all of its assets in a Master Series.
ORGANIZATION EXPENSES
Stephens has charged the Master Series for expenses incurred in connection
with organization and registration as investment companies under the Investment
Company Act of 1940. Such expenses are being amortized on a straight-line basis
over 60 months from the date the Master Series commenced operations. In the
event any of the initial beneficial interests are redeemed during the 60 month
amortization period, Stephens will reimburse the Series for the unamortized
balance of such organizational costs in the same proportion as the number of
beneficial interests reduced bears to the number of initial beneficial interests
outstanding at the time of redemption.
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell
("repurchase agreements") are treated as collateralized financing transactions
and are recorded at their contracted resale amounts. These repurchase
agreements, if
114
<PAGE> 215
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
any, are detailed in each Master Series' Portfolio of Investments. The adviser
to the Master Series pools the Master Series' cash and invests in repurchase
agreements entered into by the Master Series. The Master Series' prospectus
requires that the cash investments be fully collateralized based on values that
are marked to market daily. The collateral is held by an agent bank under a
tri-party agreement. It is the adviser's responsibility to value collateral
daily and to obtain additional collateral as necessary to maintain the value at
equal to or greater than 102% of market value. The repurchase agreements held in
the Master Series as of August 31, 1995 are collateralized by U.S. government
securities. The repurchase agreements were entered into on August 31, 1995.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Master Trust has entered into an advisory contract on behalf of the
Growth Stock Master Series and the Short-Intermediate Term Master Series with
Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contract, WFB has agreed to
furnish each Master Series with investment guidance and policy direction in
connection with daily portfolio management. The advisory contracts for the
Growth Stock Master Series and the Short-Intermediate Term Master Series provide
for advisory fees, which are accrued daily and paid monthly, at annual rates of
0.60% and 0.45% of the average daily net assets of each of these Master Series,
respectively.
On June 21, 1995, Wells Fargo & Co. and The Nikko Securities Co., Ltd.
signed a definitive agreement to sell their partnership interests in Wells Fargo
Nikko Investment Advisors to Barclays Bank PLC of the United Kingdom. The sale,
which is subject to the approval of appropriate regulatory authorities, is
expected to close in the fourth quarter of 1995. In connection with the sale,
each of the interestholders of the Growth Stock and Short-Intermediate Term
Master Portfolios will be asked to approve a proposed investment advisory
contract appointing BZW Global Investors as the respective Master Portfolio's
investment adviser and a proposed sub-advisory contract appointing Wells Fargo
Bank as the respective Master Portfolio's sub-adviser. Interestholders will be
mailed additional information regarding the sale and the proposed advisory
arrangements later this year.
115
<PAGE> 216
MANAGED SERIES INVESTMENT TRUST
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for
each series for the six months ended were as follows:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
AGGREGATE PURCHASES GROWTH STOCK TERM
AND SALES OF: MASTER SERIES MASTER SERIES
<S> <C> <C>
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
Purchases at cost $ 0 $ 930,421
Sales proceeds 0 4,972,249
OTHER SECURITIES:
Purchases at cost 91,990,762 2,498,284
Sales proceeds 84,265,417 62,418
</TABLE>
4. FINANCIAL HIGHLIGHTS
The portfolio turnover rates, excluding short-term securities, for the
Master Series are as follows:
<TABLE>
<CAPTION>
SHORT-INTERMEDIATE
GROWTH STOCK TERM
PORTFOLIO TURNOVER MASTER SERIES MASTER SERIES
<S> <C> <C>
- --------------------------------------------------------------------------------------
For the Period from May 26, 1994 (commence-
ment of operations) to February 28, 1995 93% 96%
For the Six Months Ended August 31, 1995 (Unaudited) 78% 31%
</TABLE>
5. ORGANIZATION OF THE MASTER SERIES
At a special meeting held January 31, 1994, the shareholders of the Growth
Stock Fund and the Short-Intermediate Term Fund approved the reorganization of
the Funds into a "master-feeder" structure, whereby the existing funds invest
all of their assets in a corresponding series of the Managed Series Investment
Trust. As of May 25, 1994, the Funds transferred their investments to the
corresponding Master Series of Managed Series Investment Trust in exchange for
shares in the corresponding Master Series. The investments transferred had costs
of $48,121,213 and $7,401,856 and unrealized depreciation of $899,189 and
$285,454, respectively.
116
<PAGE> 217
MASTER INVESTMENT PORTFOLIO
FILE NO. 811-8162
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) The following audited Financial Statements for the
LifePath 2000 Master Series, LifePath 2010 Master
Series, LifePath 2020 Master Series, LifePath 2030
Master Series, LifePath 2040 Master Series, Asset
Allocation Master Series, U.S. Treasury Allocation
Master Series, Bond Index Master Series and S&P
500 Index Master Series are incorporated by reference
to the Registration Statement on Form N-1A of Stagecoach
Inc. filed on June 27, 1995:
Portfolio of Investments -- February 28, 1995
Statement of Assets and Liabilities -- February 28, 1995
Statement of Operations for the period ended February 28, 1995
Statement of Changes in Net Assets for the period ended
February 28, 1995
Notes to Financial Statements -- February 28, 1995
(2) The following unaudited Financial Statements for the
LifePath 2000 Master Series, LifePath 2010 Master
Series, LifePath 2020 Master Series, LifePath
2030 Master Series and LifePath 2040 Master Series
are filed herewith:
Portfolio of Investments -- August 31, 1995
Statement of Assets and Liabilities -- August 31, 1995
Statement of Operations for the period ended August 31, 1995
Statement of Changes in Net Assets for the period ended
August 31, 1995
Notes to Financial Statements -- August 31, 1995
(3) The following unaudited Financial Statements for the
Asset Allocation Master Series, U.S. Treasury
Allocation Master Series, Bond Index Master Series
and S&P 500 Index Master Series are filed herewith:
Portfolio of Investments -- August 31, 1995
Statement of Assets and Liabilities -- August 31, 1995
Statement of Operations for the period ended August 31, 1995
Statement of Changes in Net Assets for the period ended
August 31, 1995
Notes to Financial Statements -- August 31, 1995
C-1
<PAGE> 218
(b) Exhibits:
1 (a) Amended and Restated Declaration of Trust,
incorporated by reference to the Registration
Statement on Form N-1A, filed November 15, 1993.
1 (b) Certificate of Trust, incorporated by reference
to the Registration Statement on Form N-1A, filed
November 15, 1993.
2 By-Laws, incorporated by reference to the
Registration Statement on Form N1-A filed
November 15, 1993.
3 Not Applicable.
4 Not Applicable.
5 (a) Investment Advisory Agreement by and among
Master Investment Portfolio and Wells Fargo
Bank, N.A., dated February 25, 1994, incorporated
by reference to Amendment No. 2 to the Registration
Statement, filed June 28, 1995.
5 (b) Sub-Investment Advisory Agreement by and
among Master Investment Portfolio, Wells
Fargo Bank, N.A. and Wells Fargo Nikko
Investment Advisors, dated February 25, 1994,
incorporated by reference to Amendment No. 2
to the Registration Statement, filed June 28, 1995.
5 (c) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the LifePath 2000 Master Series, filed herewith.
5 (d) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the LifePath 2010 Master Series, filed
herewith.
5 (e) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the LifePath 2020 Master Series, filed
herewith.
5 (f) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the LifePath 2030 Master Series, filed
herewith.
5 (g) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the LifePath 2040 Master Series, filed
herewith.
5 (h) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the Bond Index Master Series, filed herewith.
5 (i) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the Asset Allocation Master Series, filed
herewith.
5 (j) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the S&P 500 Index Master Series, filed
herewith.
5 (k) Investment Advisory Contract by and among BZW Barclays
Global Fund Advisors and Master Investment Portfolio on
behalf of the U.S. Treasury Allocation Master Series,
filed herewith.
<PAGE> 219
6 Form of Placement Agency Agreement,
incorporated by reference to the Registration
Statement on Form N-1A filed November 15,
1993.
7 Not Applicable.
8 (a) Form of Custody Agreement, incorporated by
reference to the Registration Statement on
Form N-1A filed November 15, 1993.
8 (b) Custody Agreement with BZW Barclays Global
Investors, N.A., filed herewith.
9 Not Applicable.
10 Not Applicable.
11 Not Applicable.
12 Not Applicable.
13 Not Applicable.
14 Not Applicable.
15 Distribution Plan on behalf of the LifePath
Master Series filed herewith.
27 (a) Financial Data Schedule for the Asset
Allocation Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(b) Financial Data Schedule for the U.S. Treasury
Allocation Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(c) Financial Data Schedule for the Bond Index
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(d) Financial Data Schedule for the S&P 500 Index
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(e) Financial Data Schedule for the LifePath 2000
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(f) Financial Data Schedule for the LifePath 2010
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(g) Financial Data Schedule for the LifePath 2020
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(h) Financial Data Schedule for the LifePath 2030
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
(i) Financial Data Schedule for the LifePath 2040
Master Series, incorporated by
reference to Amendment No. 2 to the
Registration Statement, filed June 28, 1995.
Item 25. Persons Controlled by or Under Common Control with
Registrant
No person is controlled by or under common control with
the Registrant.
Item 26. Number of Holders of Securities
As of December 15, 1995, the number of record holders of
each class of securities of the Registrant was as follows:
C-2
<PAGE> 220
<TABLE>
<CAPTION>
(1) (2)
Number of Record
Title of Class Holders
-------------- ----------------
<S> <C>
Shares of beneficial
interest, $.001 per share,
of the following
series:
LifePath 2000 Master Series 2
LifePath 2010 Master Series 2
LifePath 2020 Master Series 2
LifePath 2030 Master Series 2
LifePath 2040 Master Series 2
S&P 500 Index Master Series 3
Bond Index Master Series 3
Asset Allocation Master Series 2
U.S. Treasury Allocation Master Series 2
</TABLE>
Item 27. Indemnification
Reference is made to Article IX of the Registrant's
Declaration of Trust. The application of these provisions is
limited by Article 10 of the Registrant's By-Laws and by the
following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may
be permitted to trustees, officers and
controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the
registrant has been advised that in the
opinion of the Securities and Exchange
Commission such indemnification is against
public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a
claim for indemnification against such
liabilities (other than the payment by the
registrant of expenses incurred or paid by a
trustee, officer or controlling person of the
registrant in the successful defense of any
action, suit or proceeding) is asserted by
such trustee, officer or controlling person in
connection with the securities being
registered, the registrant will, unless in the
opinion of its counsel the matter has been
settled by controlling precedent, submit to a
C-3
<PAGE> 221
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in such Act and
will be governed by the final adjudication of
such issue.
Item 28. (a) 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 Registrant's Master Series
and to certain other open-end management investment companies.
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
Registrant, Wells Fargo Nikko Investment Advisors ("WFNIA"), and,
in some cases, the service business of BGI, the custodian of the
Registrant's Master Series. With the exception of Irving 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 Registrant, except as set forth below,
none of the 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
Donald L. Luskin Chief Executive Officer of WFNIA's Defined Contribution Group+
Vice Chairman & Director
Irving Cohen Chief Financial Officer and Chief Operating
Director Officer of Barclays Bank 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)*
Andrea M. Zolberti Chief Financial Officer of WFNIA and WFITC+
Chief Financial Officer
Chief Administrative
Officer
Vincent J. Bencivenga Previously Vice President at State Street Bank &
Chief Fiduciary Officer Trust Company++
</TABLE>
* 222 Broadway, New York, New York, 10038.
+ 45 Fremont Street, San Francisco, California 94105
++ One Financial Center, Boston, Massachusetts 02111.
Prior to January 1, 1996, Wells Fargo Bank, N.A.
("Wells Fargo Bank"), a wholly owned subsidiary of Wells Fargo &
Company, served as investment adviser to all of the Registrant's
investment portfolios, and to certain 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.
C-4
<PAGE> 222
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.
<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
Director Properties and 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 93301
Director of Kern County Economic Development Corp.
P.O. Box 1229
2700 M Street, Suite 225
Bakersfield, CA 93301
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. Jacdicke 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 Executive Committee and Director of
Director Pacific Enterprises
633 West Fifth Street
Los Angeles, CA 90071
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
</TABLE>
C-5
<PAGE> 223
<TABLE>
<S> <C>
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
Director of Pacific Gas and Electric 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-6
<PAGE> 224
Prior to January 1, 1996, WFNIA served as the
sub-adviser to the Asset Allocation Master Series, U.S. Treasury
Allocation Master Series, Bond Index Master Series and S&P 500
Stock Master Series, and as adviser or sub-adviser to various
other open-end management investment companies. For additional
information, see "Management of the Master Portfolio" in the Part
A and Part B. For information as to the business, profession,
vocation or employment of a substantial nature of each of the
officers and management committees of WFNIA, reference is made to
WFNIA's Form ADV and Schedules A and D filed under the Investment
Advisers Act of 1940, SEC File No. 801-36479, incorporated herein
by reference.
Item 29. Principal Underwriters
(a) Stephens Inc., placement agent for the Registrant,
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., Stagecoach Trust, Stagecoach Inc., Nations Fund Trust,
Nations Funds, Inc., Nations Fund Portfolio, Inc. and Nations
Institutional Reserves (formerly known as The Capitol Mutual
Funds), and is the exclusive placement agent for Master
Investment Trust, Managed Series Investment Trust and Life & Annuity
Trust, all of which are registered open-end management investment
companies and has acted as principal underwriter for the Liberty
Term Trust, Inc., Nations Government Income Term Trust 2003, Inc.,
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 Advisors Act of 1940 (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 for the period beginning January 1, 1996 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 maintains all Records relating to its
services as investment adviser for the period prior to January 1,
1996 and for 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 Master Portfolio" in each Part A to this
Registration Statement and "Item 16 Investment Advisory and
Other Services" in each Part B of this Registration Statement,
Registrant is not a party to any management-related service
contract.
Item 32. Undertakings
(c) Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting upon the questions of
removal of a trustee or trustees when requested in writing to do
so by the holders of at least 10% of the Registrant's outstanding
shares of beneficial interest and in connection with such meeting
to comply with the provisions of Section 16(c) of the Investment
Company Act of 1940 relating to shareholder communications.
C-7
<PAGE> 225
SIGNATURES
Pursuant to the requirements of the Investment
Company Act of 1940, the Registrant has duly caused this
Amendment No. 3 to the Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Little Rock, State of
Arkansas on the 2nd day of January, 1996.
MASTER INVESTMENT PORTFOLIO
By: /s/ Richard H. Blank, Jr.
------------------------------
Name: Richard H. Blank, Jr.
Title: Secretary and Treasurer
(Chief Operating Officer)
<PAGE> 226
MASTER INVESTMENT PORTFOLIO
File No. 811-8162
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
EX-99.B5(c) Investment Advisory
Contract on behalf of the
Lifepath 2000 Master Portfolio
EX-99.B5(d) Investment Advisory
Contract on behalf of the
LifePath 2010 Master Portfolio
EX-99.B5(e) Investment Advisory
Contract on behalf of the
LifePath 2020 Master Portfolio
EX-99.B5(f) Investment Advisory
Contract on behalf of the
LifePath 2030 Master Portfolio
EX-99.B5(g) Investment Advisory
Contract on behalf of the
LifePath 2040 Master Portfolio
EX-99.B5(h) Investment Advisory
Contract on behalf of the
Bond Index Master Portfolio
EX-99.B5(i) Investment Advisory
Contract on behalf of
the Asset Allocation
Master Portfolio
EX-99.B5(j) Investment Advisory
Contract on behalf of
the S&P 500 Index
Master Portfolio
EX-99.B5(k) Investment Advisory
Contract on behalf of
the U.S. Treasury Allocation
Master Portfolio
EX-99.B8(b) Custody Agreement with BZW
Barclays Global Investors,
N.A.
EX-99.B15 Distribution Plan
on behalf of the
Lifepath Master Portfolios
</TABLE>
<PAGE> 1
EX-99.B5(c)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
on behalf of the LifePath 2000 Master Portfolio (the "Master Portfolio") and
BZW Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment
company currently consisting of fourteen investment portfolios, but which may
from time to time consist of a greater or lesser number of investment
portfolios (the "Master Portfolios"). The Master Portfolio is one of the
fourteen Master Portfolios. The Trust proposes to engage in the business of
investing and reinvesting the assets of the Master Portfolio 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
"Act"). Copies of the Registration Statement have been furnished to the
Adviser. Any amendments to the Registration Statement shall be furnished to
the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance
and policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Master Portfolio prepared by it, or
prepared at its request, other than such costs relating to proxy statements,
Part As, reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its
services to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.55% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trust's trustees who are not
parties to this contract or "interested persons" (as defined in the Act) of any
such party. This contract may be terminated at any time by the Trust without
the payment of any penalty, by a vote of a majority of the Master Portfolio's
outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Trust's entire Board of Trustee's on 60 days' written notice to
the Adviser or by the Adviser on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
<PAGE> 3
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the LifePath 2000 Master
Portfolio
By: /s/ RICHARD H. BLANK, JR.
------------------------------
Name: Richard H. Blank, Jr.
-----------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
---------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ JUDITH M. NOLTE
----------------------------
Name: Judith M. Nolte
---------------------------
Title: Senior Counsel,
Assistant Secretary
---------------------------
By: /s/ ANDREA M. ZOLBERTI
----------------------------
Name: Andrea M. Zolberti
--------------------------
Title: Chief Financial Officer
-------------------------
<PAGE> 1
EX-99.B5(d)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the LifePath 2010 Master Portfolio (the "Master Portfolio") and BZW
Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of fourteen investment portfolios, but which may from time
to time consist of a greater or lesser number of investment portfolios (the
"Master Portfolios"). The Master Portfolio is one of the fourteen Master
Portfolios. The Trust proposes to engage in the business of investing and
reinvesting the assets of the Master Portfolio 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
"Act"). Copies of the Registration Statement have been furnished to the
Adviser. Any amendments to the Registration Statement shall be furnished to
the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Master Portfolio prepared by it, or
prepared at its request, other than such costs relating to proxy statements,
Part As, reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services
to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.55% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trust's trustees who are not
parties to this contract or "interested persons" (as defined in the Act) of any
such party. This contract may be terminated at any time by the Trust without
the payment of any penalty, by a vote of a majority of the Master Portfolio's
outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Trust's entire Board of Trustee's on 60 days' written notice to
the Adviser or by the Adviser on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
<PAGE> 3
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the LifePath 2000 Master
Portfolio
By: /s/ RICHARD H. BLANK, JR.
------------------------------
Name: Richard H. Blank, Jr.
-----------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
---------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ JUDITH M. NOLTE
----------------------------
Name: Judith M. Nolte
---------------------------
Title: Senior Counsel,
Assistant Secretary
---------------------------
By: /s/ ANDREA M. ZOLBERTI
----------------------------
Name: Andrea M. Zolberti
--------------------------
Title: Chief Financial Officer
-------------------------
<PAGE> 1
EX-99.B5(e)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the LifePath 2020 Master Portfolio (the "Master Portfolio") and BZW
Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of fourteen investment portfolios, but which may from time
to time consist of a greater or lesser number of investment portfolios (the
"Master Portfolios"). The Master Portfolio is one of the fourteen Master
Portfolios. The Trust proposes to engage in the business of investing and
reinvesting the assets of the Master Portfolio 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
"Act"). Copies of the Registration Statement have been furnished to the
Adviser. Any amendments to the Registration Statement shall be furnished to
the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and distributing
all materials relating to the Master Portfolio prepared by it, or prepared at
its request, other than such costs relating to proxy statements, Part As,
reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services
to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.55% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trust's trustees who are not
parties to this contract or "interested persons" (as defined in the Act) of any
such party. This contract may be terminated at any time by the Trust without
the payment of any penalty, by a vote of a majority of the Master Portfolio's
outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Trust's entire Board of Trustee's on 60 days' written notice to
the Adviser or by the Adviser on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
<PAGE> 3
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the LifePath 2000 Master
Portfolio
By: /s/ RICHARD H. BLANK, JR.
------------------------------
Name: Richard H. Blank, Jr.
-----------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
---------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ JUDITH M. NOLTE
----------------------------
Name: Judith M. Nolte
---------------------------
Title: Senior Counsel,
Assistant Secretary
---------------------------
By: /s/ ANDREA M. ZOLBERTI
----------------------------
Name: Andrea M. Zolberti
--------------------------
Title: Chief Financial Officer
-------------------------
<PAGE> 1
EX-99.B5(f)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the LifePath 2030 Master Portfolio (the "Master Portfolio") and BZW
Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of fourteen investment portfolios, but which may from time
to time consist of a greater or lesser number of investment portfolios (the
"Master Portfolios"). The Master Portfolio is one of the fourteen Master
Portfolios. The Trust proposes to engage in the business of investing and
reinvesting the assets of the Master Portfolio 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
"Act"). Copies of the Registration Statement have been furnished to the
Adviser. Any amendments to the Registration Statement shall be furnished to
the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and distributing
all materials relating to the Master Portfolio prepared by it, or prepared at
its request, other than such costs relating to proxy statements, Part As,
reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services
to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.55% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trust's trustees who are not
parties to this contract or "interested persons" (as defined in the Act) of any
such party. This contract may be terminated at any time by the Trust without
the payment of any penalty, by a vote of a majority of the Master Portfolio's
outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Trust's entire Board of Trustee's on 60 days' written notice to
the Adviser or by the Adviser on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
<PAGE> 3
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the LifePath 2000 Master
Portfolio
By: /s/ RICHARD H. BLANK, JR.
------------------------------
Name: Richard H. Blank, Jr.
-----------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
---------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ JUDITH M. NOLTE
----------------------------
Name: Judith M. Nolte
---------------------------
Title: Senior Counsel,
Assistant Secretary
---------------------------
By: /s/ ANDREA M. ZOLBERTI
----------------------------
Name: Andrea M. Zolberti
--------------------------
Title: Chief Financial Officer
-------------------------
<PAGE> 1
EX-99.B5(g)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the LifePath 2040 Master Portfolio (the "Master Portfolio") and BZW
Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of fourteen investment portfolios, but which may from time
to time consist of a greater or lesser number of investment portfolios (the
"Master Portfolios"). The Master Portfolio is one of the fourteen Master
Portfolios. The Trust proposes to engage in the business of investing and
reinvesting the assets of the Master Portfolio 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
"Act"). Copies of the Registration Statement have been furnished to the
Adviser. Any amendments to the Registration Statement shall be furnished to
the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and distributing
all materials relating to the Master Portfolio prepared by it, or prepared at
its request, other than such costs relating to proxy statements, Part As,
reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services
to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.55% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trust's trustees who are not
parties to this contract or "interested persons" (as defined in the Act) of any
such party. This contract may be terminated at any time by the Trust without
the payment of any penalty, by a vote of a majority of the Master Portfolio's
outstanding voting securities (as defined in the Act) or by a vote of a
majority of the Trust's entire Board of Trustee's on 60 days' written notice to
the Adviser or by the Adviser on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
<PAGE> 3
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the LifePath 2000 Master
Portfolio
By: /s/ RICHARD H. BLANK, JR.
------------------------------
Name: Richard H. Blank, Jr.
-----------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
---------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ JUDITH M. NOLTE
----------------------------
Name: Judith M. Nolte
---------------------------
Title: Senior Counsel,
Assistant Secretary
---------------------------
By: /s/ ANDREA M. ZOLBERTI
----------------------------
Name: Andrea M. Zolberti
--------------------------
Title: Chief Financial Officer
-------------------------
<PAGE> 1
EX-99.B5(h)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
on behalf of the Bond Index Master Portfolio (the "Master Portfolio") and BZW
Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment
company currently consisting of fourteen investment portfolios, but which may
from time to time consist of a greater or lesser number of investment
portfolios (the "Master Portfolios"). The Bond Index Master Portfolio is one
of the fourteen Master Portfolios. The Trust proposes to engage in the
business of investing and reinvesting the assets of the Master Portfolio 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 "Act"). Copies of the Registration Statement have been
furnished to the Adviser. Any amendments to the Registration Statement shall
be furnished to the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance
and policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Master Portfolio prepared by it, or
prepared at its request, other than such costs relating to proxy statements,
Part As, reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its
services to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
1
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.08% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose, of a
majority of the Trust's trustees who are not parties to this contract or
"interested persons" (as defined in the Act) of any such party. This contract
may be terminated at any time by the Trust without the payment of any penalty,
by a vote of a majority of the Master Portfolio's outstanding voting securities
(as defined in the Act) or by a vote of a majority of the Trust's entire Board
of Trustee's on 60 days' written notice to the Adviser or by the Adviser on 60
days' written notice to the Trust. This contract shall terminate automatically
in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
2
<PAGE> 3
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the LifePath 2000 Master
Portfolio
By: /s/ RICHARD H. BLANK, JR.
------------------------------
Name: Richard H. Blank, Jr.
-----------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
---------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ JUDITH M. NOLTE
----------------------------
Name: Judith M. Nolte
---------------------------
Title: Senior Counsel,
Assistant Secretary
---------------------------
By: /s/ ANDREA M. ZOLBERTI
----------------------------
Name: Andrea M. Zolberti
--------------------------
Title: Chief Financial Officer
-------------------------
<PAGE> 1
EX-99.B5(i)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
on behalf of the Asset Allocation Master Portfolio (the "Master Portfolio") and
BZW Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment
company currently consisting of fourteen investment portfolios, but which may
from time to time consist of a greater or lesser number of investment
portfolios (the "Master Portfolios"). The Asset Allocation Master Portfolio is
one of the fourteen Master Portfolios. The Trust proposes to engage in the
business of investing and reinvesting the assets of the Master Portfolio 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 "Act"). Copies of the Registration Statement have been
furnished to the Adviser. Any amendments to the Registration Statement shall
be furnished to the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance
and policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Master Portfolio prepared by it, or
prepared at its request, other than such costs relating to proxy statements,
Part As, reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its
services to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.35% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose, of a
majority of the Trust's trustees who are not parties to this contract or
"interested persons" (as defined in the Act) of any such party. This contract
may be terminated at any time by the Trust without the payment of any penalty,
by a vote of a majority of the Master Portfolio's outstanding voting securities
(as defined in the Act) or by a vote of a majority of the Trust's entire Board
of Trustee's on 60 days' written notice to the Adviser or by the Adviser on 60
days' written notice to the Trust. This contract shall terminate automatically
in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
<PAGE> 3
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the Asset Allocation
Master Portfolio
By: /s/ Richard H. Blank, Jr.
---------------------------
Name: Richard H. Blank, Jr.
-------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ Judith M. Nolte
--------------------------
Name: Judith M. Nolte
------------------------
Title: Senior Counsel,
Assistant Secretary
-----------------------
By: /s/ Andrea M. Zolberti
--------------------------
Name: Andrea M. Zolberti
------------------------
Title: Chief Financial Officer
-----------------------
<PAGE> 1
EX-99.B5(j)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
on behalf of the S&P 500 Index Master Portfolio (the "Master Portfolio") and
BZW Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment
company currently consisting of fourteen investment portfolios, but which may
from time to time consist of a greater or lesser number of investment
portfolios (the "Master Portfolios"). The S&P 500 Index Master Portfolio is
one of the fourteen Master Portfolios. The Trust proposes to engage in the
business of investing and reinvesting the assets of the Master Portfolio 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 "Act"). Copies of the Registration Statement have been
furnished to the Adviser. Any amendments to the Registration Statement shall
be furnished to the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance
and policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Master Portfolio prepared by it, or
prepared at its request, other than such costs relating to proxy statements,
Part As, reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its
services to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
1
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.05% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose, of a
majority of the Trust's trustees who are not parties to this contract or
"interested persons" (as defined in the Act) of any such party. This contract
may be terminated at any time by the Trust without the payment of any penalty,
by a vote of a majority of the Master Portfolio's outstanding voting securities
(as defined in the Act) or by a vote of a majority of the Trust's entire Board
of Trustee's on 60 days' written notice to the Adviser or by the Adviser on 60
days' written notice to the Trust. This contract shall terminate automatically
in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
2
<PAGE> 3
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the S&P 500 Index Master
Portfolio
By: /s/ Richard H. Blank, Jr.
---------------------------
Name: Richard H. Blank, Jr.
-------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ Judith M. Nolte
--------------------------
Name: Judith M. Nolte
------------------------
Title: Senior Counsel,
Assistant Secretary
-----------------------
By: /s/ Andrea M. Zolberti
--------------------------
Name: Andrea M. Zolberti
------------------------
Title: Chief Financial Officer
-----------------------
3
<PAGE> 1
EX-99.B5(k)
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
January 1, 1996
BZW Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
on behalf of the U.S. Treasury Allocation Master Portfolio (the "Master
Portfolio") and BZW Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment
company currently consisting of fourteen investment portfolios, but which may
from time to time consist of a greater or lesser number of investment
portfolios (the "Master Portfolios"). The U.S. Treasury Allocation Master
Portfolio is one of the fourteen Master Portfolios. The Trust proposes to
engage in the business of investing and reinvesting the assets of the Master
Portfolio 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 "Act"). Copies of the Registration
Statement have been furnished to the Adviser. Any amendments to the
Registration Statement shall be furnished to the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the
Master Portfolio in accordance with the Adviser's best judgment and consistent
with the investment objective and restrictions set forth in the Trust's
Registration Statement, the Act and the provisions of the Internal Revenue Code
of 1986 relating to regulated investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. The Adviser shall advise the Trust's
officers and Board of Trustees, at such times as the Trust's Board of Trustees
may specify, of investments made for the Master Portfolio and shall, when
requested by the Trust's officers or Board of Trustees, supply the reasons for
making particular investments.
(b) The Adviser shall provide to the Trust investment guidance
and policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy
and performance of the Master Portfolio and such additional reports and
information as the Trust's Board of Trustees and officers shall reasonably
request.
(c) The Adviser shall pay the costs of printing and
distributing all materials relating to the Master Portfolio prepared by it, or
prepared at its request, other than such costs relating to proxy statements,
Part As, reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate
with itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Trust understands that the Adviser, in rendering its
services to the Master Portfolio hereunder, may delegate certain advisory
responsibilities hereunder to a sub-adviser (the "Sub-Adviser"), provided that
the Adviser shall continue to supervise and monitor the performance of the
duties delegated to the Sub-Adviser and provided that any such delegation will
not relieve the Adviser of its duties and obligations under this contract. The
Adviser will not seek to amend any such Sub-Advisory Contract to materially
alter the obligations of the parties unless the Adviser gives the Trust at
least 60 days' prior written notice thereof.
<PAGE> 2
5. The Adviser shall give the Trust and the Master Portfolio the
benefit of the Adviser's best judgment and efforts in rendering services under
this contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except
for lack of good faith, provided that nothing in this contract shall be deemed
to protect or purport to protect the Adviser against any liability to the Trust
or its Interestholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of the Adviser's duties under this contract or by reason of reckless disregard
of its obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser
under this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.30% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph
6 begins to accrue after the beginning of any month or if this contract
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the Registration Statement and the Trust's Agreement and
Declaration of Trust for the computation of the value of the Master Portfolio's
net assets in connection with the determination of the net asset value of
Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master
Portfolio (including fees pursuant to this contract, but excluding interest,
taxes, brokerage and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Master Portfolio, the Trust may
deduct from the fees to be paid hereunder, or the Adviser will bear, such
excess expense to the extent required by state law. The Adviser's obligation
pursuant hereto will be limited to the amount of the Adviser's fees hereunder.
For purposes of computing the excess, if any, over the most restrictive
applicable expense limitation, the value of the Master Portfolio's net assets
shall be computed in the manner specified in the last sentence of paragraph 6,
and any reimbursements required to be made by the Adviser shall be made once a
year promptly after the end of the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and
shall thereafter continue in effect for a period of more than two years from
the date hereof only so long as the continuance is specifically approved at
least annually (a) by the vote a majority of the Master Portfolio's outstanding
voting securities (as defined in the Act) or by the Trust's Board of Trustees
and (b) by the vote, cast in person at a meeting called for the purpose, of a
majority of the Trust's trustees who are not parties to this contract or
"interested persons" (as defined in the Act) of any such party. This contract
may be terminated at any time by the Trust without the payment of any penalty,
by a vote of a majority of the Master Portfolio's outstanding voting securities
(as defined in the Act) or by a vote of a majority of the Trust's entire Board
of Trustee's on 60 days' written notice to the Adviser or by the Adviser on 60
days' written notice to the Trust. This contract shall terminate automatically
in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Adviser, or any affiliate of the Adviser, or any
employee of the Adviser, 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.
10. This contract shall be governed by and construed in accordance
with the laws of the State of California.
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this contract shall only be binding upon the assets and
property of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
2
<PAGE> 3
If the foregoing correctly sets forth the agreement between
the Trust and the Adviser, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the U.S. Treasury Allocation
Master Portfolio
By: /s/ Richard H. Blank, Jr.
---------------------------
Name: Richard H. Blank, Jr.
-------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
------------------------
ACCEPTED as of the date
set forth above:
BZW BARCLAYS GLOBAL FUND ADVISORS
By: /s/ Judith M. Nolte
--------------------------
Name: Judith M. Nolte
------------------------
Title: Senior Counsel,
Assistant Secretary
-----------------------
By: /s/ Andrea M. Zolberti
--------------------------
Name: Andrea M. Zolberti
------------------------
Title: Chief Financial Officer
-----------------------
3
<PAGE> 1
EX-99.B8(b)
CUSTODY AGREEMENT
This Agreement is made as of the 1st day of January, 1996 (the "Agreement"), by
and between MASTER INVESTMENT PORTFOLIO (the "Trust") on behalf of those Master
Portfolios named in the Appendix, as amended from time to time, (hereinafter
called the "Master Portfolios"), and BZW BARCLAYS GLOBAL INVESTORS, N.A., a
special purpose trust company (hereinafter called the "Custodian").
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set forth the
Trust and the Custodian agree as follows:
1. Definitions
The word "securities" as used herein include stocks, shares, bonds,
debentures, notes, mortgages, or other obligations and any certificates,
receipts, warrants, options or other instruments representing rights to
receive, purchase, or subscribe for the same or evidencing or
representing any other rights or interests therein, or in any property or
assets.
The words "officers' certificate" shall mean a certification in writing
signed in the name of the Trust by those persons who are officers of the
Trust who are duly authorized to sign by the Board of Trustees of the
Trust (the "Board of Trustees").
The word "depository" shall mean The Depository Trust Company ("DTC"),
Participants Trust Company ("PTC"), and any other clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, its successor(s) and its
nominee(s), provided the Custodian has received a certified copy of a
resolution of the Board of Trustees specifically approving deposits in
DTC, PTC or such other clearing agency. The Term "Depository" shall
further mean and include any person authorized to act as a depository
pursuant to Section 17, Rule 17f-4 or Rule 17f-5 thereunder, under the
Investment Company Act of 1940, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board
of Trustees specifically approving deposits therein by the Custodian.
2. Names, Titles and Signatures of Trust's Officers
An officer of the Trust will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board
of Trustees, together with any charges which may occur from time to time.
1
<PAGE> 2
3. Appointment and Authority of Custodian: Accounts, Receipt and
Disbursement of Money
A. The Trust hereby appoints Custodian as custodian of all
securities and moneys at any time owned by the Master
Portfolios during the term of this Agreement. Custodian
hereby accepts appointment as such custodian and agrees to
perform the duties thereof as hereinafter set forth.
B. Custodian shall open and maintain a separate account or
accounts in the name of the Master Portfolios. Custodian
shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the
account of the Master Portfolios. Custodian shall make
payments of cash to, or for the account of, the Master
Portfolios from such cash only (a) for the purchase of
securities for the portfolios of the Master Portfolios upon
the delivery of such securities to Custodian, registered in
the name of the Master Portfolios or in the name of the
nominee of Custodian referred to in Section 7 hereof or in
the proper form for transfer, (b) for the purchase or
redemption of shares of beneficial ownership of the Master
Portfolios, (c) for the payment of interest, dividends,
taxes, Director's fees or operating expenses (including,
without limitation, fees for legal, accounting and auditing
services and expense for printing and postage), (d) for
payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the
Master Portfolios held by or to be delivered to Custodian,
or (e) for other purposes certified by resolution of the
Trust's Board of Trustees. Before making any such payment
Custodian shall receive instructions from the Trust
requesting such payment.
C. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received by Custodian for the account of the Master
Portfolios.
D. Subject to the requirements of the Investment Company Act of
1940 and subject to the approval of the Trust's Board of
Trustees, the Custodian shall have the authority to keep and
maintain the Master Portfolios' securities with certain
sub-custodians, including, but not limited to, Bankers Trust
Company, the Federal Reserve Book-Entry System DTC, PTC and
other depositories as defined above.
4. Receipt of Securities
Custodian shall hold in a separate account, pursuant to the
provisions hereof, all securities received by it from or for the account of the
Master Portfolios. All such securities are to be held or disposed of by
Custodian for, and subject at all times to the instructions of, the Master
Portfolios pursuant to the terms of this Agreement. Custodian shall have no
power or authority to assign, hypothecate, pledge or otherwise dispose of any
such securities and investments, except pursuant to the direction of the Master
Portfolios and only for the account of such Master Portfolios as set forth in
Section 5 of this Agreement.
2
<PAGE> 3
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have power to release or deliver any securities of
the Master Portfolios held by it pursuant to this Agreement on the direction of
the Master Portfolios. Custodian agrees to transfer, exchange or deliver
securities held by it hereunder only (a) for sales of such securities for the
account of such Master Portfolios upon receipt by Custodian of payment
therefor, (b) when such securities are called, redeemed or retired or otherwise
become payable, (c) for examination by a broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for, or upon
conversion into, other securities alone or other securities and cash, whether
pursuant to any plan or merger, consolidation, reorganization, recapitalization
or readjustment, or otherwise, (e) upon conversion of such securities pursuant
to their terms into other securities, (f) upon exercise of subscription,
purchase or other similar rights represented by such securities, (g) for the
purpose of exchanging interim receipts or temporary securities for definitive
securities, (h) for other proper purposes. As to any deliveries made by
Custodian pursuant to items (a), (b), (d), (e), (f), or (g), securities or cash
receivable in exchange therefor shall be deliverable to Custodian. Before
making any such transfer, exchange or delivery, Custodian shall receive (and
may rely upon) an officers' certificate requesting such transfer, exchange or
delivery, and stating that it is for a purpose permitted under the terms of
items (a) through (g) inclusive of this Section 5 and also, in respect of item
(h), upon receipt of an officers' certificate specifying the securities to be
delivered, setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper purpose, and naming the person or persons
to whom delivery of such securities shall be made; provided, however, that an
officers' certificate need not precede any such transfer, exchange or delivery
of a money market instrument if an authorized officer of the Trust issues
appropriate oral instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate or
other written instructions to the contrary, Custodian shall: (a) present for
payment all coupons and other income items held by it for the account of the
Master Portfolios which call for payment upon presentation and hold the cash
received by it upon such payment for the account of the Master Portfolios; (b)
collect interest and cash dividends received, with notice to the Master
Portfolios, for the account of the Master Portfolios; (c) hold for the account
of the Master Portfolios hereunder all stock dividends, rights and similar
securities issued with respect to any securities held by it hereunder; and (d)
execute as agent on behalf of the Master Portfolios all necessary ownership
certificates required by the Internal Revenue Code or the Income Tax
Regulations of the United States Treasury Department or under the laws of any
state now or hereafter in effect, inserting the Master Portfolios' name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so.
3
<PAGE> 4
7. Registration of Securities
Except as otherwise directed by an officers' certificate Custodian
shall register all securities, except such as are in bearer form, in nominee
form, and shall execute and deliver all such certificates in connection
therewith as may be required by such laws or regulations or under the laws of
any state. Custodian shall use its best efforts to insure that the specific
securities held by it hereunder shall be at all times identifiable in its
records.
The Trust shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of a nominee, any securities which it may hold for
the account of the Master Portfolios and which from time to time may be
registered in the name of the Master Portfolios.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Master Portfolios,
except in accordance with the guidelines approved by the Trust.
9. Transfer Tax and Other Disbursements
The Trust shall pay or reimburse Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder, and for
all other necessary, reasonable and proper disbursements and expenses made or
incurred by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as may
be required, under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exemptable transfers and/or deliveries
of any such securities.
10. Concerning Custodian
The Custodian shall not be entitled to compensation for providing
custody services to the Master Portfolios pursuant to this Agreement so long as
Custodian or BZW Barclays Global Fund Advisors receives fees for providing
investment advisory (or sub-advisory) services to the Master Portfolios. If it
or BZW Barclays Global Fund Advisors no longer receives compensation for
providing such services, Custodian shall be entitled to such compensation as it
may from time negotiate with the Trust.
Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of
the Board of Trustees, and may rely on the
4
<PAGE> 5
genuineness of any such document which it may in good faith believe to have
been validly executed.
The Trust agrees to reimburse and make Custodian and its nominee
whole from all taxes, charges, expenses, assessments, claims, and liabilities
(including reasonable attorney's fees) incurred or assessed against it or by
its nominee in connection with the performance of this Agreement, except such
as may arise from Custodian's or its nominee's own negligent action, negligent
failure to act or willful misconduct. In the event of any advance of cash for
any purpose made by Custodian resulting from orders or instructions of the
Master Portfolios, or in the event that Custodian or its nominee shall incur or
be assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement (except such as may arise
from Custodian or its nominee's own negligent action, negligent failure to act
or willful misconduct, and excluding any compensation payable by the Master
Portfolios to Custodian hereunder), any property at any time held for the
account of the Master Portfolios shall be security therefor.
Custodian shall reimburse, indemnify and make the Master
Portfolios whole for any actual loss or damages, including reasonable fees and
expenses of counsel, arising from Custodian's negligent action, negligent
failure to act or its willful misconduct.
11. Reports by Custodian
Custodian shall furnish the Master Portfolios from time to time
with a statement summarizing all transactions and entries for the account of
the Master Portfolios. Custodian shall furnish the Master Portfolios at the
end of every month with a list of the portfolio securities held for the Master
Portfolios showing the aggregate cost of each issue. Custodian shall furnish
the Master Portfolios, at the close of each quarter of the Master Portfolios'
fiscal year, with a list showing the cost of the securities held by it for the
Master Portfolios hereunder, adjusted for all commitments confirmed by the
Master Portfolios as of such close, certified by a duly authorized officer of
Custodian. The books and records of Custodian pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times by
officers of, and auditors employed by, the Trust.
12. Termination of Agreement
This Agreement may be terminated by the Master Portfolios on
ninety (90) days notice, given in writing and sent by registered mail, to
Custodian at 45 Fremont Street, San Francisco, California 94105, or to the
Trust at 525 Market Street, Suite 1200, San Francisco, California 94163. Upon
termination of this Agreement, pending appointment of a successor to Custodian,
Custodian shall deliver cash, securities or other property of the Master
Portfolios only to a bank (as defined in the Investment Company Act of 1940, as
amended; the "1940 Act") located in San Francisco, California of its own
selection, having an aggregate capital, surplus and undivided profits, as shown
by its last published report of condition of not less than Two Million Dollars
($2,000,000) as custodian for the Master Portfolios to be held under terms
similar to those of this Agreement provided, however, that Custodian shall not
be required to make any
5
<PAGE> 6
such delivery or payment until full payment shall have been made by the Master
Portfolios of all liabilities constituting a charge on or against Custodian,
and until full payment shall have been made to Custodian of all its fees,
compensation, costs and expenses, subject to the provisions of Section 10 of
this Agreement. This Agreement may not be assigned by Custodian without the
consent of the Trust, authorized or approved by a resolution of its Board of
Trustees.
13. Deposits of Securities in Securities Depositories
No provision of the Agreement shall be deemed to prevent the use
by Custodian of a central securities clearing agency or securities depository;
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations (including all applicable requirements of the 1940 Act and the
rules and regulations promulgated thereunder) and the Board of Trustees
approves by resolution the use of such central securities clearing agency or
securities depository.
14. Records
To the extent that Custodian in any capacity prepares or maintains
any records required to be maintained and preserved by the Trust pursuant to
the provisions of the 1940 Act or the rules and regulations promulgated
thereunder, Custodian agrees to make any such records available to the Trust
upon request and to preserve such records for the periods prescribed in Rule
31a-2 under the 1940 Act.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date above- written by their respective
representatives thereunto duly authorized.
MASTER INVESTMENT PORTFOLIO
By: /s/ Richard H. Blank, Jr.
-------------------------------
Name: Richard H. Blank, Jr.
------------------------------
Title: Secretary, Treasurer and
Chief Operating Officer
-----------------------------
BZW BARCLAYS GLOBAL INVESTORS, N.A.
By: /s/ Judith M. Nolte
-------------------------------
Name: Judith M. Nolte
-----------------------------
Title: Senior Counsel,
Assistant Secretary
----------------------------
By: /s/ Andrea M. Zolberti
-----------------------------
Name: Andrea M. Zolberti
-----------------------------
Title: Chief Financial Officer
----------------------------
7
<PAGE> 8
APPENDIX
Asset Allocation Master Portfolio
Bond Index Master Portfolio
S&P 500 Index Master Portfolio
U.S. Treasury Allocation Master Portfolio
LifePath 2000 Master Portfolio
LifePath 2010 Master Portfolio
LifePath 2020 Master Portfolio
LifePath 2030 Master Portfolio
LifePath 2040 Master Portfolio
8
<PAGE> 1
EX-99.B15
MASTER INVESTMENT PORTFOLIO
LIFEPATH MASTER PORTFOLIOS
DISTRIBUTION PLAN
Section 1. If and to the extent any portion of the fees paid by any
of the LifePath Master Portfolios of Master Investment Portfolio (the "Trust")
under its Investment Advisory Contracts are considered an indirect payment to
finance activities or services that are primarily intended to result in the
sale of Interests in the LifePath Master Portfolios, such fees are deemed
approved and may be paid pursuant to this Distribution Plan and in accordance
with Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act"). The
portion of such fees that is deemed approved pursuant to this Distribution Plan
shall not exceed 0.25% of the average daily net assets of any LifePath Master
Portfolio on an annual basis.
Section 2. Any person authorized to direct the disposition of monies
paid or payable pursuant to this Distribution Plan or any related agreement
shall provide to the Trust's Board of Trustees, and the Trustees shall review,
at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made. All expenses incurred by a
LifePath Master Portfolio in connection with this Distribution Plan shall be
borne entirely by the holders of the Interests of the particular LifePath
Master Portfolio involved. If more than one LifePath Master Portfolio is
involved and these expenses are not directly attributable to Interests of a
particular LifePath Master Portfolio, then the expenses may be allocated
between or among the Interests of the LifePath Master Portfolios in a fair and
equitable manner.
Section 3. This Distribution Plan will become effective immediately,
as to any LifePath Master Portfolio, upon its approval by (a) a majority of the
outstanding Interests of such LifePath Master Portfolio, and (b) a majority of
the Board of Trustees, including a majority of the 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 the operation of this Distribution
Plan or in any agreements entered into in connection with this Distribution
Plan, pursuant to a vote cast in person at a meeting called for the purpose of
voting on the approval of this Distribution Plan.
Section 4. This Distribution Plan shall continue in effect for so
long as its continuance is specifically approved at least annually by the
Trust's Board of Trustees in the manner described in Section 3(b).
Section 5. This Distribution Plan may be amended at any time by the
Trust's Board of Trustees, provided that (a) any amendment to increase
materially the amount to be spent by a LifePath Master Portfolio for
distribution pursuant to this Distribution Plan shall be effective only upon
approval by a vote of a majority of the outstanding Interests of such LifePath
Master Portfolio, and (b) any material amendments of the terms of this
Distribution Plan shall become effective only upon approval by the Board of
Trustees as provided in Section 3(b) hereof.
Section 6. This Distribution Plan is terminable, as to a LifePath
Master Portfolio's Interests, without penalty at any time by (a) a vote of a
majority of the 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
the operation of this Distribution Plan or in any agreements entered into in
connection with this Distribution Plan, or (b) a vote of a majority of the
outstanding Interests of such LifePath Master Portfolio.
<PAGE> 2
Section 7. While this Distribution Plan is in effect, the selection
and nomination of those Trustees who are not "interested persons" (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of such non-
interested Trustees.
Section 8. The Trust will preserve copies of this Distribution Plan,
any written reports regarding this Distribution Plan presented to the Board of
Trustees, and any agreements related to this Distribution Plan for a period of
not less than six years.
Adopted by Board of Trustees: October 10, 1995
Effective: January 1, 1996
2
