MASTER INVESTMENT PORTFOLIO, POS AMI, 1997-06-30

MASTER INVESTMENT PORTFOLIO
POS AMI, 1997-06-30

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As filed with the Securities and Exchange Commission
on June 30, 1997

Registration No. 811-8162

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_______________

FORM N-1A

AMENDMENT NO. 5 TO THE
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940

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 LLP
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006-1812
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EXPLANATORY NOTE
----------------

This Amendment is being filed to add audited financial statements and
certain related financial information for the fiscal year ended February 28,
1997 for the Asset Allocation, Bond Index, LifePath 2000, LifePath 2010,
LifePath 2020, LifePath 2030, LifePath 2040, S&P 500 Index and U.S. Treasury
Allocation Master Portfolios of Master Investment Portfolio, and to add certain
other non-material changes to the Registration Statement.

This Amendment has been filed by the Registrant pursuant to Section 8(b)
of the Investment Company Act of 1940. However, beneficial interests in the
Registrant are not being registered under the Securities Act of 1933 (the "1933
Act") because such interests will be issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in the Registrant may only be made by
registered broker/dealers or by investment companies, insurance company separate
accounts, common commingled trust funds, group trusts or similar organizations
or entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any beneficial interest in the
Registrant.
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Master Investment Portfolio
Cross Reference Sheet
---------------------

Form N-1A Item Number
- ---------------------

Part A Prospectus Caption
- ------ ------------------

4 General Description of Registrant
Investment Objectives
Investment Policies
Risk Considerations
5 Management of the Master Portfolios
Investment Adviser
Co-Administrators
Placement Agent
Custodian
Transfer Agent
Expenses
6 Capital Stock and Other Securities
Organization and Interests
Dividends and Distributions
Taxes
7 Purchase of Interests
8 Redemption or Repurchase
9 Not Applicable

Part B Statement of Additional Information
- ------ -----------------------------------

10 Cover Page
11 Table of Contents
12 General Information and History
13 Investment Objectives and Policies
Portfolio Securities
Management Policies
Investment Restrictions
14 Management of MIP
15 Control Persons and Principal Holders of Securities
16 Investment Advisory and Other Services
17 Brokerage Allocation and Other Practices
18 Capital Stock and Other Securities
19 Purchase, Redemption and Pricing of Securities
20 Tax Status
21 Underwriters
22 Calculation of Performance Data
23 Financial Information

Part C Other Information
- ------ -----------------

24-32 Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Document.
<PAGE>

MASTER INVESTMENT PORTFOLIO
ALLOCATION MASTER PORTFOLIOS

ASSET ALLOCATION MASTER PORTFOLIO
U.S. TREASURY ALLOCATION MASTER PORTFOLIO

PART A

JUNE 30, 1997

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 ("MIP") is an open-end, management
investment company, organized on October 21, 1993 as a business trust under the
laws of the State of Delaware. MIP is a "series fund," which is a mutual fund
divided into separate portfolios. By this offering document, MIP is offering
two diversified portfolios (each, a "Master Portfolio"). Each Master Portfolio
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 an
interestholder of one Master Portfolio is not deemed to be an interestholder of
the other Master Portfolio. As described below, for certain matters MIP
interestholders vote together as a group; as to others they vote separately by
Master Portfolio. MIP currently offers seven other portfolios pursuant to other
offering documents. From time to time, other portfolios may be established and
sold pursuant to other offering documents.

Beneficial interests in each Master Portfolio 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 Portfolio 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.

INVESTMENT OBJECTIVES.

. The ASSET ALLOCATION MASTER PORTFOLIO seeks to maximize total return,
consisting of capital appreciation and current income, without assuming
undue risk. This Master Portfolio 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.

. The U.S. TREASURY ALLOCATION MASTER PORTFOLIO seeks to maximize total
return, consisting of capital appreciation and current income, without
assuming undue risk. This Master Portfolio 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 Portfolio cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of such
Master Portfolio's outstanding voting securities. The differences in investment
objectives and policies between each Master Portfolio determines the types of
portfolio securities in which each Master Portfolio invests and can be expected
to affect the degree of risk to which each Master Portfolio is subject and the
performance of each Master Portfolio. There can be no assurance that the
investment objective of each Master Portfolio will be achieved.

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INVESTMENT POLICIES.

The Asset Allocation and U.S. Treasury Allocation Master Portfolios each
follow an asset allocation strategy. For each Master Portfolio, Barclays Global
Fund Advisors ("BGFA") uses proprietary investment models ("Asset Allocation
Models"), that analyze extensive financial and economic data, including risk,
correlation and expected return statistics, to recommend a portfolio allocation
as described below. BGFA may, from time to time, develop and refine the Asset
Allocation Models.

THE ASSET ALLOCATION MASTER PORTFOLIO will invest its assets among three asset
classes -- common stocks, U.S. Treasury bonds and money market instruments as
follows:

. COMMON STOCKS. The Asset Allocation Master Portfolio will invest in the
common stocks which compose the Standard & Poor's 500 Stock Index (the
"S&P 500 Index")./1/ The S&P 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 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. No attempt is made to
manage this portion of the Master Portfolio's investment portfolio in
the traditional sense using economic, financial and market analysis.
Instead, the Master Portfolio uses for this portion of its portfolio a
computer program to determine which securities are to be purchased or
sold to replicate the total return performance of the S&P 500 Index to
the extent feasible. The percentage of the Asset Allocation Master
Portfolio's assets invested in each stock will be approximately the
same as the percentage such stock represents in the S&P 500 Index.

. U.S. TREASURY BONDS. The Asset Allocation Master Portfolio 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 Portfolio's investment portfolio is expected
to range between 22 and 28 years. The Master Portfolio 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.

. MONEY MARKET INSTRUMENTS. The Master Portfolio will invest in money
market instruments.

The U.S. TREASURY ALLOCATION MASTER PORTFOLIO 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:

. LONG-TERM U.S. TREASURY BONDS. The U.S. Treasury Allocation Master
Portfolio 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 Portfolio's
investment portfolio is expected to range between 22 and 28 years.

. INTERMEDIATE-TERM U.S. TREASURY NOTES. The U.S. Treasury Allocation
Master Portfolio will invest in U.S. Treasury notes and other U.S.
Treasury securities with remaining

- --------------
/1/ S&P does not sponsor the Master Portfolio, nor is it affiliated in any way
with BGFA or the Master Portfolio. "Standard & Poor's," "S&P," "S&P 500," and
"Standard & Poor's 500" are trademarks of McGraw-Hill, Inc. The Master Portfolio
is not sponsored, endorsed, sold, or promoted by S&P and S&P makes no
representation or warranty, express or implied, regarding the advisability of
investing in the Master Portfolio.

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maturities ranging from one to 20 years. Under normal market
conditions, the dollar-weighted average maturity of this portion of the
Master Portfolio's investment portfolio is expected to range between
three and seven years.

. SHORT-TERM U.S. TREASURY BILLS. The U.S. Treasury Allocation Master
Portfolio 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 Portfolio's
investment portfolio is expected to range between 30 and 90 days.

It is a fundamental policy of the U.S. Treasury Allocation Master Portfolio
that it will invest at least 65% of the value of its total assets in U.S.
Treasury securities.

CERTAIN FUNDAMENTAL POLICIES. Each Master Portfolio may (i) borrow money to
the extent permitted under the 1940 Act, except that each Master Portfolio 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 Portfolio 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, 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 Portfolio without approval by the holders of a majority
(as defined in the 1940 Act) of such Master Portfolio's outstanding voting
securities. See Item 13, "Investment Objectives and Policies -- Investment
Restrictions," in Part B.

CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES. Each Master Portfolio may (i)
purchase securities of companies having less than three years' continuous
operation (including operations of any predecessors), provided that 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 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 after notice and in other illiquid securities. See Item 13,
"Investment Objectives and Policies -- Investment Restrictions," in Part B.

RISK CONSIDERATIONS.

GENERAL -- The net asset value per interest of each Master Portfolio is
neither insured nor guaranteed, is not fixed and should be expected to
fluctuate.

EQUITY SECURITIES -- The stock investments of the Asset Allocation Master
Portfolio are subject to equity market risk. Equity market risk is the
possibility that common stock prices will fluctuate or decline over short or
even extended periods. The U.S. stock market tends to be cyclical, with periods
when stock prices generally rise and periods when prices generally decline.
Throughout the first six months of 1997, the stock market, as measured by the
S&P 500 Index and other commonly used indices, was trading at or close to record
levels. There can be no guarantee that these performance levels will continue.

DEBT SECURITIES -- The debt instruments in which the Master Portfolios may
invest are subject to credit and interest rate risk. Credit risk is the risk
that issuers of the debt instruments in which the Master Portfolios invest may
default on the payment of principal and or interest. Interest-rate risk is the
risk that increases in market

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interest rates may adversely affect the value of the debt instruments in which
the Master Portfolios invest. The value of the debt instruments generally
changes inversely to market interest rates. Debt securities with longer
maturities, which tend to produce higher yields, are subject to potentially
greater capital appreciation and depreciation than obligations with shorter
maturities. Changes in the financial strength of an issuer or changes in the
ratings of any particular security may also affect the value of these
investments. Although some of the Master Portfolios' portfolio securities are
guaranteed by the U.S. Government, its agencies or instrumentalities, such
securities are subject to interest rate risk and the market value of these
securities, upon which the Master Portfolios' daily net asset value is based,
will fluctuate. No assurance can be given that the U.S. Government would provide
financial support to its agencies or instrumentalities where it is not obligated
to do so.

FOREIGN SECURITIES -- The Asset Allocation Master Portfolio may invest in the
securities of foreign issuers. Investing in the securities of issuers in any
foreign country, including American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs") and similar securities, involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards;
generally higher commission rates on foreign portfolio transactions; the
possibility of nationalization, expropriation or confiscatory taxation; adverse
changes in investment or exchange control regulations (which may include
suspension of the ability to transfer currency from a country); and political,
social and monetary or diplomatic developments that could affect U.S.
investments in foreign countries. Additionally, dispositions of foreign
securities and dividends and interest payable on those securities may be subject
to foreign taxes, including withholding taxes. Foreign securities often trade
with less frequency and volume than domestic securities and, therefore, may
exhibit greater price volatility. Additional costs associated with an
investment in foreign securities may include higher custodial fees than apply to
domestic custodial arrangements and transaction costs of foreign currency
conversions. Changes in foreign exchange rates also will affect the value of
securities denominated or quoted in currencies other than the U.S. dollar. The
Master Portfolio's performance may be affected either unfavorably or favorably
by fluctuations in the relative rates of exchange between the currencies of
different nations, by exchange control regulations and by indigenous economic
and political developments.

OTHER INVESTMENT CONSIDERATIONS -- Because the Master Portfolios may shift
investment allocations significantly from time to time, their performance may
differ from funds which invest in one asset class or from funds with a stable
mix of assets. Further, shifts among asset classes may result in relatively
high turnover and transaction (i.e., brokerage commission) costs. Portfolio
turnover also can generate short-term capital gains tax consequences. During
those periods in which a higher percentage of a Master Portfolio's assets are
invested in long-term bonds, the Master Portfolio's exposure to interest-rate
risk will be greater because the longer maturity of such securities means they
are generally more sensitive to changes in market interest rates than short-term
securities.

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 Master Portfolio 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 a
Master Portfolio or the price paid or received by such Master Portfolio.

The Master Portfolios may enter into futures transactions, each of which
involves risk. The futures contracts and options on futures contracts that the
Master Portfolios may purchase may be considered derivatives. Certain of the
floating- and variable-rate instruments that each Master Portfolio may purchase
may also be considered derivatives. Derivatives are financial instruments whose
values are derived, at least in part, from the prices of other securities or
specified assets, indices or rates. Each Master Portfolio may use some
derivatives as part of its short-term liquidity holdings and or as substitutes
for comparable market positions in the underlying securities. Some derivatives
may be more sensitive than direct securities to change in interest rates or
sudden market moves. Some derivatives also may be susceptible to fluctuations
in yield or value due to their structure or

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contract terms. Master Portfolio may not use derivatives to create leverage
without establishing adequate "cover" in compliance with SEC leverage rules.

ITEM 5. MANAGEMENT OF THE MASTER PORTFOLIOS.

INVESTMENT ADVISER -- BGFA serves as investment adviser to each Master
Portfolio. BGFA is an indirect subsidiary of Barclays Bank PLC ("Barclays") and
is located at 45 Fremont Street, San Francisco, CA 94105. As of April 30, 1997,
BGFA and its affiliates provided investment advisory services for over
approximately $429 billion of assets under management.

BGFA provides each Master Portfolio with investment guidance and policy
direction in connection with the daily portfolio management of such Master
Portfolio, subject to the supervision of MIP's Board of Trustees and in
conformity with Delaware law and the stated policies of each Master Portfolio.
BGFA furnishes to MIP's Board of Trustees periodic reports on the investment
strategy and performance of each Master Portfolio.

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 Master Portfolio
and U.S. Treasury Allocation Master Portfolio, respectively, as compensation for
its advisory services. From time to time, BGFA may waive such fees in whole or
in part. Any such waiver will reduce the expenses of a Master Portfolio and,
accordingly, have a favorable impact on its performance. For the year ended
February 28, 1997, BGFA received amounts equal to [0.35%] and [0.30%] of the
average daily net assets of the Asset Allocation and U.S. Treasury Allocation
Master Portfolios, respectively, as compensation for its advisory services.

Purchase and sale orders of the securities held by a Master Portfolio may
be combined with those of other accounts that BGFA manages or advises, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When BGFA, subject to the supervision of and the
overall authority of MIP's Board of Trustees, determines that a particular
security should be bought or sold for a Master Portfolio and other accounts
managed by BGFA, it undertakes to allocate those transactions among the
participants equitably.

BGFA may deal, trade and invest for its own account in the types of
securities in which the Master Portfolios may invest. BGFA has informed MIP
that in making its investment decisions it does not obtain or use material
inside information in its possession.

Morrison & Foerster LLP, counsel to MIP and special counsel to BGFA, has
advised MIP and BGFA that BGFA and its affiliates may perform the services
contemplated by the BGFA Advisory Contracts and this Part A without violation of
the Glass-Steagall Act. Such counsel has pointed out, however, that there are
no controlling judicial or administrative interpretations or decisions and that
future judicial or administrative interpretations of, or decisions relating to,
present federal or state statutes, including the Glass-Steagall Act, and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such statutes,
regulations and judicial or administrative decisions or interpretations, could
prevent such entities from continuing to perform, in whole or in part, such
services. If any such entity were prohibited from performing any such services,
it is expected that new agreements would be proposed or entered into with
another entity or entities qualified to perform such services.

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MIP's trustees, officers and employees who are affiliated with Stephens. In
addition, except as outlined below under "Expenses", Stephens and BGI will be
responsible for paying all expenses incurred by the Master Portfolios other than
the fees payable to BGFA. Stephens and BGI are not entitled to compensation for
providing administration services to a Master Portfolio.

BGI has delegated certain of its duties as co-administrator to Investors
Bank & Trust Company ("IBT"). IBT, as sub-administrator, is compensated by BGI
for performing certain administration services. Prior to October 21, 1996,
Stephens was the Master Portfolios' sole administrator and received fees for its
services as described in the Part B.

PLACEMENT AGENT -- Stephens is the placement agent for the Master Portfolios.
Stephens is a full service broker dealer and investment advisory firm located at
111 Center Street, Little Rock, Arkansas 72201. 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. Stephens does not receive compensation for acting as placement
agent.

CUSTODIAN -- IBT currently acts as the Master Portfolios' custodian. The
principal business address of IBT is 200 Clarendon Street, Boston, Massachusetts
02116. IBT is not entitled to receive compensation for its custodial services so
long as it is entitled to receive compensation for providing sub-administration
services to the Master Portfolios. Prior to October 21, 1996, BGI acted as the
Master Portfolios' custodian. The principal business address of BGI is 45
Fremont Street, San Francisco, California 94105. BGI did not receive
compensation for its custodial services.

TRANSFER AGENT -- Wells Fargo Bank is each Master Portfolio's Transfer and
Dividend Disbursing Agent (the "Transfer Agent"). The principle business
address of Wells Fargo Bank is 525 Market Street, San Francisco, California
94105.

EXPENSES -- Except for extraordinary expenses, brokerage and other expenses
connected to the execution of portfolio transactions and certain other expenses
which are borne by the Master Portfolios, Stephens and BGI have agreed to bear
all costs of the Master Portfolios' and MIP's operations.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

ORGANIZATION AND INTERESTS

MIP is organized as a trust under the laws of the State of Delaware.
Investors in MIP will each be liable for all obligations of MIP. 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 MIP
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 MIP for interests 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 MIP) 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.
MIP may create, from time to time, new series without interestholder approval.

As of June 1, 1997, the Asset Allocation Fund and U.S. Treasury Allocation
Fund of MasterWorks Funds Inc. (formerly, Stagecoach Inc.), 111 Center Street,
Little Rock, Arkansas 72201, owned approximately 99% of the outstanding voting
securities of the Asset Allocation Master Portfolio and approximately 99% of the
outstanding voting securities of the U.S. Treasury Allocation Master Portfolio,
and each Fund could be considered a "controlling person" of the corresponding
Master Portfolio for purposes of the 1940 Act.

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INTERESTS IN A MASTER PORTFOLIO 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. INVESTMENT IN A MASTER PORTFOLIO INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE SHARE PRICE AND INVESTMENT RETURN
OF EACH MASTER PORTFOLIO IS EXPECTED TO FLUCTUATE AND INVESTMENTS IN THE MASTER
PORTFOLIOS ARE NOT GUARANTEED.

Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for MIP 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 securities
outstanding and entitled to vote may require MIP to hold a special meeting of
interestholders for purposes of removing a Trustee from office. MIP
interestholders may remove a Trustee by the affirmative vote of a majority of
MIP's outstanding voting securities. 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 Portfolio may not be
transferred, but an investor may withdraw all or any portion of its investment
at any time at net asset value.

DIVIDENDS AND DISTRIBUTIONS

The net investment income of a Master Portfolio generally will be declared
and paid as a dividend daily to all investors of record as of 1:00 p.m. (Pacific
time) with respect to each Master Portfolio. Net investment income for a
Saturday, Sunday or Holiday (as defined below) will be declared as a dividend to
investors of record as of 1:00 p.m. (Pacific time) on the previous business day
with respect to each Master Portfolio. All the net investment income of a Master
Portfolio so determined is allocated pro rata among the investors in such Master
Portfolio at the time of such determination.

Dividends and capital gain distributions, if any, paid by a Master
Portfolio will be reinvested in the investor's interest in such Master Portfolio
at net asset value and credited to the investor's account on the payment date.

TAXES

Based upon the anticipated classification of each Master Portfolio for
federal income tax purposes, MIP believes that each Master Portfolio will
qualify as a partnership for such purposes. MIP therefore believes that each
Master Portfolio will not be subject to any federal income tax on its income and
net capital gains (if any). However, each investor in a Master Portfolio will be
taxable on its distributive share of such Master Portfolio's taxable income in
determining its federal income tax liability. The determination of such share
will be made in accordance with the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.

It is intended that each Master Portfolio's assets, income and
distributions will be managed in such a way that a regulated investment company
investing in such Master Portfolio may satisfy the requirements of Subchapter M
of the Code by investing substantially all of its assets in such Master
Portfolio.

Investor inquiries should be directed to Master Investment Portfolio, 111
Center Street, Little Rock, Arkansas 72201.

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ITEM 7. PURCHASE OF INTERESTS.

Beneficial interests in a Master Portfolio 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 a Master Portfolio 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 Portfolio 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 Portfolio is
determined as of the close of trading 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 Portfolio's net assets (i.e., the value of its
assets less liabilities) by the total number of shares of such Master Portfolio
outstanding. Each Master Portfolio's investments are valued each Business Day
generally by using available market quotations or at fair value determined in
good faith by MIP's Board of Trustees. For further information regarding the
methods employed in valuing each Master Portfolio's investments, see Item 19,
"Purchase, Redemption and Pricing of Securities" in Part B.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in MIP 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, MIP will redeem the shares at the next
determined net asset value.

Each 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 Portfolio may not be transferred.

The right of any investor to receive payment with respect to any withdrawal
may be suspended or the payment of the withdrawal proceeds postponed during any
period in which the 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.

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APPENDIX

PORTFOLIO SECURITIES.

To the extent set forth in this offering document, each Master Portfolio
may invest in the securities described below.

U.S. GOVERNMENT OBLIGATIONS -- The Master Portfolios may invest in various
types of U.S. Government obligations. U.S. Government obligations include
securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities. Payment of principal and interest
on U.S. Government obligations (i) may be backed by the full faith and credit of
the United States (as with U.S. Treasury obligations and GNMA certificates) or
(ii) may be backed solely by the issuing or guaranteeing agency or
instrumentality itself (as with FNMA notes). In the latter case, the investor
must look principally to the agency or instrumentality issuing or guaranteeing
the obligation for ultimate repayment, 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. 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.

SECURITIES OF NON-U.S. ISSUERS -- The Master Portfolios may invest in
certain securities of non-U.S. issuers as discussed below.

Obligations of Foreign Governments, Banks and Corporations -- Each
----------------------------------------------------------
Master Portfolio may invest in U.S. dollar-denominated short-term 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
Portfolio may invest. The Master Portfolios may also invest in 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 each Fund's assets invested in obligations of foreign
governments and supranational entities 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.

Each Master Portfolio may invest a portion of its total assets in high-
quality, short-term (one year or less) debt obligations of foreign branches of
U.S. banks or U.S. branches of foreign banks that are denominated in and pay
interest in U.S. dollars.

SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS -- The Master
Portfolios may invest in high-quality money market instruments on an ongoing
basis to provide liquidity, for temporary purposes when there is an unexpected
level of shareholder purchases or redemptions or when "defensive" strategies are
appropriate. The instruments in which the Master Portfolios may invest include:
(i) short-term obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities (including government-sponsored enterprises); (ii)
negotiable certificates of deposit ("CDs"), bankers' acceptances, fixed time
deposits and other obligations of domestic banks (including foreign branches)
that have more than $1 billion in total assets at the time of investment and
that are members of the Federal Reserve System or are examined by the
Comptroller of the Currency or whose deposits are insured by the FDIC; (iii)
commercial paper rated at the date of purchase "Prime-1" by Moody's or "A-1+" or
"A-1" by S&P, or, if unrated, of comparable quality as determined by BGFA or
Wells Fargo Bank; (iv) non-convertible corporate debt securities (e.g., bonds
and debentures) with remaining maturities at the date of purchase of not more
than one year that are rated at least "Aa" by Moody's

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or "AA" by S&P; (v) repurchase agreements; and (vi) short-term, U.S. dollar-
denominated obligations of foreign banks (including U.S. branches) that, at the
time of investment have more than $10 billion, or the equivalent in other
currencies, in total assets and in the opinion of BGFA or Wells Fargo Bank are
of comparable quality to obligations of U.S. banks which may be purchased by the
Master Portfolio.

Bank Obligations -- Each Master Portfolio 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.

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 Portfolio 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 Short-Term Corporate Debt Instruments -- Each
----------------------------------------------------------
Master Portfolio may invest in commercial paper (including variable amount
master demand notes), which consists of short-term, unsecured promissory notes
issued by corporations to finance short-term credit needs. Commercial paper is
usually sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes. The
investment adviser and or sub-adviser to each Master Portfolio monitors on an
ongoing basis the ability of an issuer of a demand instrument to pay principal
and interest on demand.

Each Master Portfolio also may invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than one year remaining to
maturity at the date of settlement. A Master Portfolio will invest only in such
corporate bonds and debentures that are rated at the time of purchase at least
"Aa" by Moody's or "AA" by S&P. Subsequent to its purchase by the Master
Portfolio, an issue of securities may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Master Portfolio.
The investment adviser and or sub-adviser to each Master Portfolio will consider
such an event in determining whether the Master Portfolio should continue to
hold the obligation. To the extent the Master Portfolio continues to hold such
obligations, it may be subject to additional risk of default.

Repurchase Agreements -- Each Master Portfolio may enter into
---------------------
repurchase agreements wherein the seller of a security to a Master Portfolio
agrees to repurchase that security from the Master Portfolio at a mutually-
agreed upon time and price. The period of maturity is usually quite short, often
overnight or a few days, although it may extend over a number of months. A
Master Portfolio may enter into repurchase agreements only with respect to
securities that could otherwise be purchased by the Master Portfolio, and all
repurchase transactions must be collateralized. A Master Portfolio may incur a
loss on a repurchase transaction if the seller defaults and the value of the
underlying collateral declines or is otherwise limited or if receipt of the
security or collateral is delayed. The Master Portfolios may participate in
pooled repurchase agreement transactions with other funds advised by BGFA. See
"Additional Permitted Investment Activities" in the SAI for additional
information.

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FLOATING- AND VARIABLE-RATE OBLIGATIONS -- The Master Portfolios may
purchase debt instruments with interest rates that are periodically adjusted at
specified intervals or whenever a benchmark rate or index changes. These
adjustments generally limit the increase or decrease in the amount of interest
received on the debt instruments. Floating- and variable-rate instruments are
subject to interest-rate risk and credit risk.

ILLIQUID SECURITIES -- Each Master Portfolio 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 privately issued securities and other securities that are
subject to legal or contractual restrictions on resale, floating- and variable-
rate demand obligations as to which the Master Portfolio cannot exercise a
demand feature 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.

INVESTMENT COMPANY SECURITIES -- Each Master Portfolio may invest in
securities issued by other open-end management investment companies which
principally invest in securities of the type in which such Master Portfolio
invests. Under the 1940 Act, a Master Portfolio's 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 the Master Portfolio's
net assets with respect to any one investment company and (iii) 10% of the
Master Portfolio's net assets in the aggregate. Investments in the securities
of other investment companies generally will involve duplication of advisory
fees and certain other expenses. The Master Portfolios may also purchase shares
of exchange-listed closed-end funds.

FUTURES CONTRACTS AND OPTIONS TRANSACTIONS -- Each Master Portfolio may
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 or financial statement at a specific
price on a specific date in the future. An option transaction generally involves
a right, which may or may not be exercised, to buy or sell a commodity or
financial instrument at a particular price on a specified future date. Futures
contracts and options are standardized and traded on exchanges, where the
exchange serves as the ultimate counterparty for all contracts. Consequently,
the primary credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are subject to market risk (i.e., exposure to
adverse price changes).

Although each Master Portfolio 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 a Master Portfolio to substantial losses. If it is not possible, or
if a Master Portfolio determines not to close a futures position in anticipation
of adverse price movements, the Master Portfolio will be required to make daily
cash payments on variation margin.

Stock Index Futures and Options on Stock Index Futures -- The Asset
------------------------------------------------------
Allocation Master Portfolio may invest in stock index futures and options on
stock index futures as a substitute for a comparable market position in the
underlying securities. 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

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are permitted investments, the Master Portfolio 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. There can be no assurance that a liquid
market will exist at the time when a Master Portfolio seeks to close out a
futures contract or a futures option position. Lack of a liquid market may
prevent liquidation of an unfavorable position.

Interest-Rate Futures Contracts and Options on Interest-Rate Futures
--------------------------------------------------------------------
Contracts -- Each Master Portfolio 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 Master Portfolios
may also sell options on interest-rate futures contracts as part of closing
purchase transactions to terminate their 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 Portfolios' portfolio securities which are the
subject of the transaction.

Interest-Rate and Index Swaps -- Each Master Portfolio may enter into
-----------------------------
interest-rate and index swaps in pursuit of their investment objectives.
Interest-rate swaps involve the exchange by a Master Portfolio with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments on fixed-rate payments). Index swaps
involve the exchange by a Master Portfolio with another party of cash flows
based upon the performance of an index of securities or a portion of an index of
securities that 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 Master Portfolio will usually enter into swaps on a net basis. In
so doing, the two payment streams are netted out, with a Master Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. If a Master Portfolio enters into a swap, it will maintain a
segregated account on a gross basis, unless the contract provides for a
segregated account on a net basis. If there is a default by the other party to
such a transaction, a Master Portfolio 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 Portfolio. 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 Portfolio is contractually obligated to make. There is also a risk
of a default by the other party to a swap, in which case a Master Portfolio may
not receive net amount of payments that a Master Portfolio contractually is
entitled to receive.

LOANS OF PORTFOLIO SECURITIES -- Each Master Portfolio may lend
securities from their portfolios to brokers, dealers and financial institutions
(but not individuals) in order to increase the return on such Master Portfolio's
portfolio. The value of the loaned securities may not exceed one-third of a
Master Portfolio's total assets and loans of portfolio securities are fully
collateralized based on values that are market-to-market daily. The Master
Portfolios will not enter into any portfolio security lending arrangement having
a duration of longer than one year. The principal risk of portfolio lending is
potential default or insolvency of the borrower. In either of these cases, a
Master Portfolio could experience delays in recovering securities or collateral
or could lose all or part of the value of the loaned securities. The Master
Portfolios may pay reasonable administrative and custodial fees in connection
with loans of portfolio securities and may pay a portion of the interest or fee
earned thereon the borrower or a placing broker. See "Additional Permitted
Investment Activities" in the Part B for additional information.

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settlement date. Although a Master Portfolio will generally purchase securities
with the intention of acquiring them, a Master Portfolio may dispose of
securities purchased on a when-issued, delayed-delivery or a forward commitment
basis before settlement when deemed appropriate by the adviser.

BORROWING MONEY -- As a fundamental policy, each Master Portfolio is
permitted to borrow to the extent permitted under the 1940 Act. However, each
Master Portfolio currently intends to borrow money only for temporary or
emergency (not leveraging) purposes, and may borrow 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 Portfolio's total
assets, the Master Portfolio will not make any new investments.

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MASTER INVESTMENT PORTFOLIO
INDEX MASTER PORTFOLIOS

S&P 500 INDEX MASTER PORTFOLIO
BOND INDEX MASTER PORTFOLIO

PART A

JUNE 30, 1997

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 ("MIP") is an open-end, management
investment company, organized on October 21, 1993 as a business trust under the
laws of the State of Delaware. MIP is a "series fund," which is a mutual fund
divided into separate portfolios. By this offering document, MIP is offering
two diversified portfolios (each, a "Master Portfolio"). Each Master Portfolio
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 Master Portfolio is not deemed to be an interestholder of
the other Master Portfolio. As described below, for certain matters MIP
interestholders vote together as a group; as to others they vote separately by
Master Portfolio. MIP currently offers seven other portfolios pursuant to other
offering documents. From time to time, other portfolios may be established and
sold pursuant to other offering documents.

INVESTMENT OBJECTIVES.

. The S&P 500 INDEX MASTER PORTFOLIO/1/ 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.

. The BOND INDEX MASTER PORTFOLIO 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.

The investment objective of each Master Portfolio cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of such
Master Portfolio's outstanding voting securities. The differences in objectives
and policies among each Master determines the types of portfolio securities in
which each Master Portfolio invests and can be expected to affect the degree of
risk to which each Master Portfolio is subject and the performance of each
Master Portfolio. There can be no assurance that the investment objective of
each Master Portfolio will be achieved.

- ---------------------

/1/ S&P does not sponsor the Master Portfolio, nor is it affiliated in any
way with BGFA or the Master Portfolio. "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 Portfolio is not sponsored, endorsed, sold, or promoted by S&P and S&P
makes no representation or warranty, express or implied, regarding the
advisability of investing in the Master Portfolio.

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INVESTMENT POLICIES.

. The S&P 500 INDEX MASTER PORTFOLIO 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 Portfolio's assets invested in a given stock is approximately the
same as the percentage such stock represents in the S&P 500 Index.

. The BOND INDEX MASTER PORTFOLIO 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 Portfolio 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 Portfolio 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 Portfolio using
economic, financial and market analysis. Each Master Portfolio is managed by
determining which securities are to be purchased or sold to replicate, to the
extent feasible, the investment characteristics of its respective benchmark
Index. Under normal market conditions, at least 90% of the value of each Master
Portfolio's total assets is invested in securities comprising such Master
Portfolio's Index. Each Master Portfolio 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 Portfolio's
benchmark Index. Perfect (100%) correlation would be achieved if the total
return of a Master Portfolio's net assets increased or decreased exactly as the
total return of such Master Portfolio's benchmark Index increased or decreased.
A Master Portfolio's ability to match its investment performance to the
investment performance of its respective benchmark Index may be affected by,
among other things, the Master Portfolio's expenses, the amount of cash and cash
equivalents held by the Master Portfolio, the manner in which the total return
of the Master Portfolio's benchmark Index is calculated; the size of the Master
Portfolio's investment portfolio; and the timing, frequency and size of
shareholder purchases and redemptions. Each Master Portfolio 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 Portfolio's benchmark Index. Barclays Global Fund Advisors ("BGFA")
regularly monitors each Master Portfolio's correlation to its respective
benchmark Index and adjusts the portfolio of each Master Portfolio to the extent
necessary to enable such Master Portfolio 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
Portfolio's interestholders, one or more indices for a Master Portfolio may be
selected if such standard of comparison is deemed to be more representative of
the performance of the securities such Master Portfolio seeks to replicate. The
Master Portfolios are not sponsored, endorsed, sold or promoted by the sponsor
of their respective Indices.

The sampling techniques utilized by each Master Portfolio are expected to
be an effective means of substantially duplicating the investment performance of
their respective Indices. However, no Master Portfolio 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 each
Master Portfolio may be altered (or "rebalanced") to reflect changes in the
characteristics of its respective Index.

In seeking to replicate the performance of its respective Index, each
Master Portfolio 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 "Appendix -- Investment
Techniques." Each Master

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Portfolio attempts to be fully invested at all times in securities comprising
such Master Portfolio's Index and in futures and options. When a Master
Portfolio has uninvested cash, it may invest in money market instruments.

CERTAIN FUNDAMENTAL POLICIES. Each Master Portfolio may (i) borrow money to the
extent permitted under the 1940 Act, except that the Bond Index Master Portfolio
may borrow from banks up to 10% of the current value of its net assets for
temporary purposes only in order to meet redemptions, and except that the S&P
500 Index Master Portfolio 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 Portfolio's 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
Portfolio; (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 Portfolio 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, 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
Portfolio without approval by the holders of a majority (as defined in the 1940
Act) of such Master Portfolio's outstanding voting securities. See Item 13,
"Investment Objectives and Policies -- Investment Restrictions," in Part B.

RISK CONSIDERATIONS.

GENERAL -- The net asset value per interest of each Master Portfolio is neither
insured nor guaranteed, is not fixed and should be expected to fluctuate.

EQUITY SECURITIES -- The stock investments of the S&P 500 Index Master Portfolio
are subject to equity market risk. Equity market risk is the possibility that
common stock prices will fluctuate or decline over short or even extended
periods. The U.S. stock market tends to be cyclical, with periods when stock
prices generally rise and periods when prices generally decline. Throughout the
first six months of 1997, the stock market, as measured by the S&P 500 Index and
other commonly used indices, was trading at or close to record levels. There
can be no guarantee that these performance levels will continue.

DEBT SECURITIES -- The debt instruments in which the Bond Index Master Portfolio
may invest are subject to credit and interest rate risk. Credit risk is the risk
that issuers of the debt instruments in which the Master Portfolio invests may
default on the payment of principal and/or interest. Interest-rate risk is the
risk that increases in market interest rates may adversely affect the value of
the debt instruments in which the Master Portfolio invests. The value of the
debt instruments generally changes inversely to market interest rates. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular security may also affect the
value of these investments. Although some of the Master Portfolio's portfolio
securities are guaranteed by the U.S. Government, its agencies or
instrumentalities, such securities are subject to interest rate risk and the
market value of these securities, upon which the Master

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Portfolio's daily net asset value is based, will fluctuate. No assurance can be
given that the U.S. Government would provide financial support to its agencies
or instrumentalities where it is not obligated to do so.

FOREIGN SECURITIES -- The Master Portfolios may invest in the securities of
foreign issuers. Investing in the securities of issuers in any foreign country,
including American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs") and similar securities, involves special risks and considerations not
typically associated with investing in U.S. companies. These include
differences in accounting, auditing and financial reporting standards; generally
higher commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political, social and monetary
or diplomatic developments that could affect U.S. investments in foreign
countries. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and
volume than domestic securities and, therefore, may exhibit greater price
volatility. Additional costs associated with an investment in foreign
securities may include higher custodial fees than apply to domestic custodial
arrangements and transaction costs of foreign currency conversions. Changes in
foreign exchange rates also will affect the value of securities denominated or
quoted in currencies other than the U.S. dollar. A Master Portfolio's
performance may be affected either unfavorably or favorably by fluctuations in
the relative rates of exchange between the currencies of different nations, by
exchange control regulations and by indigenous economic and political
developments.

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 Master Portfolio and one or more of these investment companies
or accounts, available investments or opportunities for sales will be 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 Master Portfolio or
the price paid or received by such Master Portfolio.

ITEM 5. MANAGEMENT OF THE MASTER PORTFOLIOS.

INVESTMENT ADVISER -- BGFA serves as investment adviser to each Master
Portfolio. BGFA is an indirect subsidiary of Barclays Bank PLC ("Barclays") and
is located at 45 Fremont Street, San Francisco, CA 94105. As of April 30 1997,
BGFA and its affiliates provided investment advisory services for approximately
$429 billion of assets under management.

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 Master Portfolio and S&P
500 Index Master Portfolio, respectively, as compensation for its advisory
services. From time to time, BGFA may waive such fees in whole or in part. Any
such waiver will reduce the expenses of a Master Portfolio and, accordingly,
have a favorable impact on its performance. For the

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year ended February 28, 1997, BGFA received amounts equal to 0.05% and 0.08% of
the average daily net assets of the S&P 500 Index and Bond Index Master
Portfolios, respectively, as compensation for its advisory services.

Purchase and sale orders of the securities held by a Master Portfolio may
be combined with those of other accounts that BGFA manages or advises, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When BGFA, subject to the supervision of, and the
overall authority of MIP's Board of Trustees, determines that a particular
security should be bought or sold for the Master Portfolio and other accounts
managed by BGFA, it undertakes to allocate those transactions among the
participants equitably.

BGFA may deal, trade and invest for its own account in the types of
securities in which the Master Portfolios may invest. BGFA has informed MIP that
in making its investment decisions it does not obtain or use material inside
information in its possession.

CO-ADMINISTRATORS -- Stephens and Barclays Global Investors, N.A. ("BGI") are
the Master Portfolio's co-administrators. Stephens and BGI provide the Master
Portfolios with administration services, including general supervision of the
Master Portfolios' non-investment operations, coordination of the other services
provided to the Master Portfolios, compilation of information for reports to the
SEC and the state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the MIP's trustees and officers. Stephens
also furnishes office space and certain facilities to conduct the Master
Portfolios' business, and compensates the MIP's trustees, officers, and
employees who are affiliated with Stephens. In addition, except as outlined
below under "Master Portfolio Expenses", Stephens and BGI will be responsible
for paying all expenses incurred by the Master Portfolios other than the fees
payable to BGFA. Stephens and BGI are not entitled to compensation for providing
administration services to a Master Portfolio.

PLACEMENT AGENT -- Stephens is the placement agent for the Master Portfolios.
Stephens is a full service broker/dealer and investment advisory firm located at
111 Center Street, Little Rock, Arkansas 72201. 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. Stephens does not receive compensation for acting as placement
agent.

5
<PAGE>

business address of BGI is 45 Fremont Street, San Francisco, California 94105.
BGI did not receive compensation for its custodial services.

ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.

ORGANIZATION AND INTERESTS

MIP is organized as a trust under the laws of the State of Delaware.
Investors in MIP are each liable for all obligations of MIP. 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 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 MIP 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 MIP) 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. MIP may
create, from time to time, new series without shareholder approval.

As of June 1, 1997, the S&P 500 Stock Fund of MasterWorks Funds Inc.
("MasterWorks"), 111 Center Street, Little Rock, Arkansas 72201, owned
approximately 95% of the outstanding voting securities of the S&P 500 Index
Master Portfolio. As of June 1, 1997, the Bond Index Fund of MasterWorks and the
Bradley Trust, 1000 N. Water Street, 11th Floor, Milwaukee, WI 53202, owned
approximately 57% and 42% respectively, of the outstanding voting securities of
the Bond Index Master Portfolio. As such, each Fund and the Bradley Trust could
each be considered a "controlling person" of the corresponding Master Portfolio
for purposes of the 1940 Act.

Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for MIP 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 securities
outstanding and entitled to vote may require MIP to hold a special meeting of
shareholders for purposes of removing a Trustee from office. MIP interestholders
may remove a Trustee by the affirmative vote of a majority of MIP's outstanding
voting securities. 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 Portfolio may not be transferred, but
an investor may withdraw all or any portion of its investment at any time at net
asset value.

DIVIDENDS AND DISTRIBUTIONS

6
<PAGE>

The net investment income of a Master Portfolio generally will be declared
and paid as a dividend daily to all investors of record as of 1:00 p.m. (Pacific
time) with respect to each Master Portfolio. Net investment income for a
Saturday, Sunday or Holiday (as defined below) will be declared as a dividend to
investors of record as of 1:00 p.m. (Pacific time) on the previous business day
with respect to each Master Portfolio. All of the net investment income of a
Master Portfolio so determined is allocated pro rata among the investors in such
Master Portfolio at the time of such determination.

TAXES

Investor inquiries should be directed to Master Investment Portfolio, 111
Center Street, Little Rock, Arkansas 72201.

ITEM 7. PURCHASE OF INTERESTS.

ITEM 8. REDEMPTION OR REPURCHASE.

7
<PAGE>

ITEM 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

8
<PAGE>

APPENDIX

PORTFOLIO SECURITIES.

To the extent set forth in this offering document, each Master Portfolio
may invest in the securities described below.

SECURITIES OF NON-U.S. ISSUERS -- The Master Portfolios may invest in
certain securities of non-U.S. issuers as discussed below.

Obligations of Foreign Governments, Banks and Corporations -- Each Master
----------------------------------------------------------
Portfolio may invest in U.S. dollar-denominated short-term 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 Portfolio may
invest. The Master Portfolios may also invest in 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 each Master Portfolio's assets invested in obligations of
foreign governments and supranational entities 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.

SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS -- The Master Portfolios
may invest in high-quality money market instruments on an ongoing basis to
provide liquidity, for temporary purposes when there is an unexpected level of
shareholder purchases or redemptions or when "defensive" strategies are
appropriate. The instruments in which the Master Portfolios may invest include:
(i) short-term obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities (including government-sponsored enterprises); (ii)
negotiable certificates of deposit ("CDs"), bankers' acceptances, fixed time
deposits and other obligations of domestic banks (including foreign branches)
that have more than $1 billion in total assets at the time of investment and
that are members of the Federal Reserve System or are examined by the
Comptroller of the Currency or whose deposits are insured by the FDIC; (iii)
commercial paper rated at the date of purchase "Prime-1" by Moody's or "A-1+" or
"A-1" by S&P, or, if unrated, of comparable quality as determined by BGFA or
Wells Fargo Bank; (iv) non-convertible corporate debt securities (e.g., bonds
and debentures) with remaining maturities at the date of purchase of not more
than one year that are rated at least "Aa" by Moody's or "AA" by S&P; (v)
repurchase agreements; and (vi) short-term, U.S. dollar-denominated obligations
of foreign banks (including U.S. branches) that, at the time of investment have
more than $10 billion, or the

A-1
<PAGE>

equivalent in other currencies, in total assets and in the opinion of BGFA or
Wells Fargo Bank are of comparable quality to obligations of U.S. banks which
may be purchased by the Master Portfolio.

Bank Obligations -- Each Master Portfolio 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.

Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.

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 Short-Term Corporate Debt InstrumentS -- Each Master
----------------------------------------------------------
Portfolio may invest in commercial paper (including variable amount master
demand notes), which consists of short-term, unsecured promissory notes issued
by corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes. The
investment adviser and/or sub-adviser to each Master Portfolio monitors on an
ongoing basis the ability of an issuer of a demand instrument to pay principal
and interest on demand.

Each Master Portfolio also may invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than one year remaining to
maturity at the date of settlement. A Master Portfolio will invest only in such
corporate bonds and debentures that are rated at the time of purchase at least
"Aa" by Moody's or "AA" by S&P. Subsequent to its purchase by the Master
Portfolio, an issue of securities may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Master Portfolio.
The investment adviser and/or sub-adviser to each Master Portfolio will consider
such an event in determining whether the Master Portfolio should continue to
hold the obligation. To the extent the Master Portfolio continues to hold such
obligations, it may be subject to additional risk of default.

Repurchase Agreements -- Each Master Portfolio may enter into repurchase
---------------------
agreements wherein the seller of a security to a Master Portfolio agrees to
repurchase that security from the Master Portfolio at a mutually-agreed upon
time and price. The period of maturity is usually quite short, often overnight
or a few days, although it may extend over a number of months. A Master
Portfolio may enter into repurchase agreements only with respect to securities
that could otherwise be purchased by the Master Portfolio, and all repurchase
transactions must be collateralized. A Master Portfolio may incur a loss on a
repurchase transaction if the seller defaults and the value of the underlying
collateral declines or is otherwise limited or if receipt of the security or
collateral is delayed. The Master Portfolios may participate in pooled
repurchase agreement transactions with other funds advised by BGFA. See
"Additional Permitted Investment Activities" in the Part B for additional
information.

A-2
<PAGE>

changes. These adjustments generally limit the increase or decrease in the
amount of interest received on the debt instruments. Floating-and variable-rate
instruments are subject to interest-rate risk and credit risk.

ILLIQUID SECURITIES -- Each Master Portfolio 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 privately issued securities and other securities that are
subject to legal or contractual restrictions on resale, floating- and variable-
rate demand obligations as to which the Master Portfolio cannot exercise a
demand feature 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.

INVESTMENT COMPANY SECURITIES -- Each Master Portfolio may invest in
securities issued by open-end other investment companies which principally
invest in securities of the type in which the Master Portfolio invests. Under
the 1940 Act, a Master Portfolio's 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 the Master Portfolio's net assets with
respect to any one investment company and (iii) 10% of the Master Portfolio's
net assets in the aggregate. Investments in the securities of other investment
companies generally will involve duplication of advisory fees and certain other
expenses. The Master Portfolios may also purchase shares of exchange-listed
closed-end funds.

FUTURES CONTRACTS AND OPTIONS TRANSACTIONS -- Each Master Portfolio may use
futures as a substitute for a comparable market position in the underlying
securities.

Stock Index Futures and Options on Stock Index Futures -- The S&P 500 Stock
------------------------------------------------------
Master Portfolio may invest in stock index futures and options on stock index
futures as a substitute for a comparable market position in the underlying
securities. 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
Portfolio 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.
There can be no assurance that a liquid market will exist at the time when a
Master Portfolio seeks to close out a futures contract or a futures option
position. Lack of a liquid market may prevent liquidation of an unfavorable
position.

A-3
<PAGE>

Interest-Rate Futures Contracts and Options on Interest-Rate Futures
--------------------------------------------------------------------
Contracts -- The Bond Index Master Portfolio 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 Master Portfolios
may also sell options on interest-rate futures contracts as part of closing
purchase transactions to terminate their 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 Portfolio's portfolio securities which are the
subject of the transaction.

Interest-Rate and Index Swaps -- The Bond Index Master Portfolio may enter
-----------------------------
into interest-rate and index swaps in pursuit of its investment objectives.
Interest-rate swaps involve the exchange by the Master Portfolio with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments on fixed-rate payments). Index swaps
involve the exchange by the Master Portfolio with another party of cash flows
based upon the performance of an index of securities or a portion of an index of
securities that 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. The Master Portfolio will usually enter into swaps on a net basis.
In so doing, the two payment streams are netted out, with the Master Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. If the Master Portfolio enters into a swap, it will maintain a
segregated account on a gross basis, unless the contract provides for a
segregated account on a net basis. If there is a default by the other party to
such a transaction, the Master Portfolio 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
the Master Portfolio. 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 Portfolio is contractually obligated to make. There is also a
risk of a default by the other party to a swap, in which case the Master
Portfolio may not receive net amount of payments that a Master Portfolio
contractually is entitled to receive.

LOANS OF PORTFOLIO SECURITIES -- Each Master Portfolio may lend securities
from their portfolios to brokers, dealers and financial institutions (but not
individuals) in order to increase the return on such Master Portfolio's
portfolio. The value of the loaned securities may not exceed one-third of a
Master Portfolio's total assets and loans of portfolio securities are fully
collateralized based on values that are market-to-market daily. The Master
Portfolios will not enter into any portfolio security lending arrangement having
a duration of longer than one year. The principal risk of portfolio lending is
potential default or insolvency of the borrower. In either of these cases, a
Master Portfolio could experience delays in recovering securities or collateral
or could lose all or part of the value of the loaned securities. The Master
Portfolios may pay reasonable administrative and custodial fees in connection
with loans of portfolio securities and may pay a portion of the interest or fee
earned thereon the borrower or a placing broker. See "Additional Permitted
Investment Activities" in the Part B for additional information.

FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY
TRANSACTIONS -- Each Master Portfolio may purchase or sell securities on a when-
issued or delayed-delivery basis and make contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time.
Securities purchased or sold on a when-issued, delayed-delivery or forward
commitment basis involve a risk of loss if the value of the security to be
purchased declines, or the value of the security to be sold increases, before
the settlement date. Although a Master Portfolio will generally purchase
securities with the intention of acquiring them, a Master Portfolio may dispose
of securities purchased on a when-issued, delayed-delivery or a forward
commitment basis before settlement when deemed appropriate by the adviser.

A-4
<PAGE>

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 Portfolio's total assets, the
Master Portfolio will not make any new investments.

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. 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
Portfolio will rely on BGFA'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."

A-5
<PAGE>

MASTER INVESTMENT PORTFOLIO

LIFEPATH 2000 MASTER PORTFOLIO
LIFEPATH 2010 MASTER PORTFOLIO
LIFEPATH 2020 MASTER PORTFOLIO
LIFEPATH 2030 MASTER PORTFOLIO
LIFEPATH 2040 MASTER PORTFOLIO

PART A

JUNE 30, 1997

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 ("MIP") is an open-end, management
investment company, organized on October 21, 1993 as a business trust under the
laws of the State of Delaware. MIP is a "series fund," which is a mutual fund
divided into separate portfolios. By this offering document, MIP is offering
five asset allocation portfolios (each, a "Master Portfolio" or "LifePath Master
Portfolio"). Each LifePath Master Portfolio 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
Portfolio is not deemed to be an interestholder of any other LifePath Master
Portfolio. As described below, for certain matters MIP interestholders vote
together as a group; as to others they vote separately by Master Portfolio. MIP
currently offers four other series pursuant to other offering documents. From
time to time, other portfolios may be established and sold pursuant to other
offering documents.

INVESTMENT OBJECTIVES. Each Master Portfolio 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:

. LIFEPATH 2000 MASTER PORTFOLIO 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 PORTFOLIO 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 PORTFOLIO 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 PORTFOLIO 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.

1
<PAGE>

. LIFEPATH 2040 MASTER PORTFOLIO 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 Portfolio's investment objective cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
such Master Portfolio's outstanding voting securities. The differences in
objectives and policies among the Master Portfolios determine the types of
portfolio securities in which each Master Portfolio invests and can be expected
to affect the degree of risk to which each Master Portfolio is subject and the
performance of each Master Portfolio. There can be no assurance that the
investment objective of each Master Portfolio will be achieved.

INTRODUCTION. The LifePath 2000, LifePath 2010, LifePath 2020, LifePath 2030,
and LifePath 2040 Master Portfolios 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 Portfolio differs in the weighting assigned to each such
investment class, with the later-dated LifePath Master Portfolio generally
bearing more risk than the earlier-dated LifePath Master Portfolio, with the
expectation of greater total return. Thus, the investment class weightings of
the LifePath 2040 Master Portfolio initially might be 100%, 0% and 0% among
equity securities, debt securities and cash, respectively, while the weightings
of the LifePath 2000 Master Portfolio initially might be 25%, 50% and 25%,
respectively. These weightings will change periodically. The difference in the
investment class weightings is based on the statistically determined risk that
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. As each LifePath Master Portfolio approaches its designated time
horizon, it generally is managed more conservatively, on the premise that
individuals investing for retirement desire to reduce investment risk in their
retirement accounts as they age.

To manage the LifePath Master Portfolios, Barclays Global Fund Advisors
("BGFA") employs a proprietary investment model (the "Model"), 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 Portfolio based on each such LifePath Master Portfolio's
evolving risk profile. As a result, while each LifePath Master Portfolio
invests in substantially the same securities within an investment class, the
amount of each LifePath Master Portfolio's 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 June 1, 1997, the asset
allocations in the LifePath Master Portfolios were approximately as follows:

<TABLE>
<CAPTION>
LIFEPATH 2000 LIFEPATH 2010 LIFEPATH 2020 LIFEPATH 2030 LIFEPATH 2040
MASTER PORTFOLIO MASTER PORTFOLIO MASTER PORTFOLIO MASTER PORTFOLIO MASTER PORTFOLIO
----------------- ----------------- ----------------- ----------------- -----------------

<S> <C> <C> <C> <C> <C>
Equity Securities
Domestic 14% 35% 49% 58% 69%

International 7% 12% 15% 19% 20%

Debt Securities 79% 52% 35% 22% 10%

Cash 0% 1% 1% 1% 1%
</TABLE>

The relative weightings for each LifePath Master Portfolio of the various
investment classes are expected to change over time, with the LifePath 2040
Master Portfolio adopting in the 2030s characteristics similar to the LifePath
2000 Master Portfolio today. 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.

INVESTMENT 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

2
<PAGE>

thus determines the changing investment risk level of each LifePath Master
Portfolio 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 Master Portfolio
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 Portfolio 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 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.

The Model has broad latitude to allocate the Master Portfolios' investments
among equity securities, debt securities and money market instruments. The
LifePath Master Portfolios are not managed as balanced portfolios and are not
required to maintain a portion of their investments in each of the permitted
investment categories at all times. Until a LifePath Master Portfolio attains an
asset level of approximately $100 to $150 million, the Model will allocate
assets across fewer of the investment categories identified below than it
otherwise would. As a Master Portfolio approaches this minimum asset level, the
Model will add investment categories from among those identified below, thereby
approaching the desired investment mix over time. The portfolio of investments
of each Master Portfolio is compared 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. Recommended reallocations are implemented in
accordance with trading policies designed to take advantage of market
opportunities and reduce transaction costs. The asset allocation mix selected by
the Model is a primary determinant in the respective LifePath Master Portfolio's
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 Portfolio. 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. The overall management of each Master Portfolio is based
on the recommendation of the Model, and no person is primarily responsible for
recommending the mix of asset classes in each Master Portfolio or the mix of
securities within the asset classes. Decisions relating to the Model are made by
BGFA's investment committee.

EQUITY SECURITIES -- The LifePath Master Portfolios seek U.S. equity market
exposure through investment in securities representative of the following
indices of common stock:

. The S&P/BARRA Value Stock Index (consisting of primarily large-
capitalization U.S. stocks with lower-than- average price/book ratios).

. The S&P/BARRA Growth Stock Index (consisting of primarily large-
capitalization U.S. stocks with higher-than- average price/book ratios).

. The Intermediate Capitalization Value Stock Index (consisting of primarily
medium-capitalization U.S. stocks with lower-than-average price/book
ratios).

. The Intermediate Capitalization Growth Stock Index (consisting of primarily
medium-capitalization U.S. stocks with higher-than-average price/book
ratios).

3
<PAGE>

. The Intermediate Capitalization Utility Stock Index (consisting of
primarily medium-capitalization U.S. utility stocks).

. The Micro Capitalization Market Index (consisting of primarily small-
capitalization U.S. stocks).

. The Small Capitalization Value Stock Index (consisting of primarily small-
capitalization U.S. stocks with lower-than-average price/book ratios).

. The Small Capitalization Growth Stock Index (consisting of primarily small-
capitalization U.S. stocks with higher-than-average price/book ratios).

The LifePath Master Portfolios seek foreign equity market exposure through
investment in foreign equity securities, American Depositary Receipts or
European Depositary Receipts of issuers whose securities are representative of
the following indices of foreign equity securities:

. The Morgan Stanley Capital International (MSCI) Japan Index (consisting of
primarily large-capitalization Japanese stocks).

. 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).

The LifePath Master Portfolios also may seek U.S. and foreign equity market
exposure through investment in equity securities of U.S. and foreign issuers
that are not included in the indices listed above.

DEBT SECURITIES -- The LifePath Master Portfolios seek U.S. debt market exposure
through investment in securities representative of the following indices of U.S.
debt securities:

. The Lehman Brothers Long-Term Government Bond Index (consisting of all U.S.
Government bonds with maturities of at least ten years).

. 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).

. The Lehman Brothers Long-Term Corporate Bond Index (consisting of all U.S.
investment grade corporate bonds with maturities of at least ten years).

. 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).

. 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 Portfolios seek foreign debt market exposure through
investment in securities representative of the following index of foreign debt
securities:

. 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
Portfolio 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

4
<PAGE>

& Phelps, Inc. ("Duff") or, if unrated, deemed to be of comparable quality by
BGFA. See "Risk Factors--Fixed- Income Securities" below, and "Appendix" in Part
B.

MONEY MARKET INSTRUMENTS -- The money market instrument portion of each LifePath
Master Portfolio's investment 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 Portfolio may invest.

CERTAIN FUNDAMENTAL POLICIES. Each Master Portfolio 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 Portfolio 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 Portfolio without approval by the holders
of a majority (as defined in the 1940 Act) of such Master Portfolio's
outstanding voting securities. See Item 13, "Investment Objectives and
Policies--Investment Restrictions," in Part B.

CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES. Each Master Portfolio may (i)
purchase securities of companies 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 after notice and in other illiquid
securities.

RISK CONSIDERATIONS.

GENERAL -- The net asset value per interest of each LifePath Master Portfolio is
neither insured nor guaranteed, is not fixed and should be expected to
fluctuate.

EQUITY SECURITIES -- The stock investments of the LifePath Master Portfolios are
subject to equity market risk. Equity market risk is the possibility that common
stock prices will fluctuate or decline over short or even extended periods. The
U.S. stock market tends to be cyclical, with periods when stock prices generally
rise and periods when prices generally decline. Throughout the first six months
of 1997, the stock market, as measured by the S&P 500 Index and other commonly
used indices, was trading at or close to record levels. There can be no
guarantee that these performance levels will continue.

DEBT SECURITIES -- The debt instruments in which the LifePath Master Portfolios
invest are subject to credit and interest rate risk. Credit risk is the risk
that issuers of the debt instruments in which the Master Portfolios invest may
default on the payment of principal and/or interest. Interest-rate risk is the
risk that increases in market interest rates may adversely affect the value of
the debt instruments in which the Master Portfolios invest. The value of the
debt instruments generally changes inversely to market interest rates. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular security may also affect the
value of these investments. Although some of the Master Portfolios' portfolio
securities are guaranteed by the U.S. Government, its agencies or
instrumentalities, such securities are subject to interest rate risk and the
market value of these securities, upon which the Master Portfolios' daily net
asset value is based, will fluctuate. No assurance can be given that the U.S.
Government would provide financial support to its agencies or instrumentalities
where it is not obligated to do so.

FOREIGN SECURITIES -- The LifePath Master Portfolios may invest in debt
obligations and equity securities of foreign issuers and may invest in American
Depositary Receipts ("ADRs") and European Depositary Receipts

5
<PAGE>

("EDRs") of such issuers. Investing in the securities of issuers in any foreign
country, ADRs and EDRs, involves special risks and considerations not typically
associated with investing in U.S. companies. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political, social and monetary
or diplomatic developments that could affect U.S. investments in foreign
countries. Additionally, dispositions of foreign securities and dividends and
interest payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and volume
than domestic securities and, therefore, may exhibit greater price volatility.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custodial arrangements and
transaction costs of foreign currency conversions. Changes in foreign exchange
rates also will affect the value of securities denominated or quoted in
currencies other than the U.S. dollar. A Master Portfolio's performance may be
affected either unfavorably or favorably by fluctuations in the relative rates
of exchange between the currencies of different nations, by exchange control
regulations and by indigenous economic and political developments.

OTHER INVESTMENT CONSIDERATIONS -- Because the Master Portfolios may shift
investment allocations significantly from time to time, their performance may
differ from funds which invest in one asset class or from funds with a stable
mix of assets. Further, shifts among asset classes may result in relatively high
turnover and transaction (i.e., brokerage commission) costs. Portfolio turnover
also can generate short-term capital gains tax consequences. During those
periods in which a high percentage of a Master Portfolio's assets are invested
in long-term bonds, the Master Portfolio's exposure to interest-rate risk will
be greater because the longer maturity of such securities means they are
generally more sensitive to changes in market interest rates than short-term
securities.

Each LifePath Master Portfolio also may lend its portfolio securities and
enter into futures transactions, each of which involves risk. The futures
contracts and options on futures contracts that each Master Portfolio may
purchase may be considered derivatives. Derivatives are financial instruments
whose values are derived, at least in part, from the prices of other securities
or specified assets, indices or rates. Each Master Portfolio may use some
derivatives as part of its short-term liquidity holdings and/or as substitutes
for comparable market positions in the underlying securities. 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.

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 Portfolio 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
Portfolio or the price paid or received by such LifePath Master Portfolio.

Under normal market conditions, the portfolio turnover rate for each
LifePath Master Portfolio is not expected to exceed 100%. A portfolio turnover
rate of 100% would occur, for example, if all of a LifePath Master Portfolio's
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
for the investment adviser in making investment decisions.

ITEM 5. MANAGEMENT OF THE MASTER PORTFOLIOS.

INVESTMENT ADVISER -- BGFA serves as investment adviser to each LifePath Master
Portfolio. BGFA is an indirect subsidiary of Barclays Bank PLC ("Barclays") and
is located at 45 Fremont Street, San Francisco, CA 94105. As of April 30, 1997,
BGFA and its affiliates provided investment advisory services for approximately
$429 billion of assets under management.

6
<PAGE>

BGFA provides each LifePath Master Portfolio with investment guidance and
policy direction in connection with the daily portfolio management of such
Master Portfolio, subject to the supervision of MIP's Board of Trustees and in
conformity with Delaware law and the stated policies of each Master Portfolio.
BGFA furnishes to MIP's Board of Trustees periodic reports on the investment
strategy and performance of each LifePath Master Portfolio.

BGFA is entitled to receive monthly fees at the annual rate of 0.55% of the
average daily net assets of each LifePath Master Portfolio as compensation for
its advisory services. From time to time, BGFA may waive such fees in whole or
in part. Any such waiver will reduce the expenses of a Master Portfolio and,
accordingly, have a favorable impact on its performance. For the year ended
February 28, 1997, BGFA received amounts equal to 0.55% of the average daily net
assets of each of the LifePath Master Portfolios as compensation for its
advisory services.

In connection with payments made by BGFA in certain business transactions,
MIP's Board of Trustees adopted, on behalf of each Master Portfolio, a
"defensive" distribution plan under Section 12(b) of the 1940 Act and Rule 12b-1
thereunder (the "Plan"). The Master Portfolios currently do not pay any amounts
pursuant to the Plan. See "Item 16. Distribution Plan" in Part B.

Purchase and sale orders of the securities held by a Master Portfolio may
be combined with those of other accounts that BGFA manages or advises, and for
which it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When BGFA, subject to the supervision of, and the
overall authority of MIP's Board of Trustees, determines that a particular
security should be bought or sold for a Master Portfolio and other accounts
managed by BGFA, it undertakes to allocate those transactions among the
participants equitably.

BGFA may deal, trade and invest for its own account in the types of
securities in which the Master Portfolios may invest. BGFA has informed MIP that
in making its investment decisions it does not obtain or use material inside
information in its possession.

CO-ADMINISTRATORS -- Stephens and Barclays Global Investors, N.A. ("BGI") are
the Master Portfolio's co-administrators. Stephens and BGI provide the Master
Portfolios with administrative services, including general supervision of the
Master Portfolios' non-investment operations, coordination of the other services
provided to the Master Portfolios, compilation of information for reports to the
SEC and the state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to MIP's trustees and officers. Stephens also
furnishes office space and certain facilities to conduct the Master Portfolios'
business, and compensates MIP's trustees, officers and employees who are
affiliated with Stephens. In addition, except as outlined below under
"Expenses", Stephens and BGI will be responsible for paying all expenses
incurred by the Master Portfolios other than the fees payable to BGFA. Stephens
and BGI are not entitled to compensation for providing administration services
to a Master Portfolio. Prior to October 21, 1996, Stephens was the Master
Portfolios' sole administrator and received fees for its services us described
in the Part B.

7
<PAGE>

BGI has delegated certain of its duties as co-administrator to Investors
Bank & Trust Company ("IBT"). IBT, as sub-administrator, is compensated by BGI
for performing certain administration services.

ITEM 6. CAPITAL STOCK AND OTHER INTERESTS.

To date, the Board of Trustees has authorized the creation of fourteen
separate series. All consideration received by MIP for interests 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 MIP) 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. MIP has the
ability to create, from time to time, new series without interestholder
approval.

Unless otherwise required by the 1940 Act, ordinarily it is not necessary
for MIP 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 MIP to hold a special meeting of interestholders
for purposes of removing a Trustee from office. MIP interestholders may remove a
Trustee by the affirmative vote of a majority of MIP's outstanding voting
securities. 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 Portfolio may not be transferred, but
an investor may withdraw all or any portion of its investment at any time at net
asset value.

8
<PAGE>

Each Master Portfolio of MIP will be considered a non-publicly traded
partnership for federal income tax purposes, and as such, it will not be subject
to federal income tax. However, each investor in a Master Portfolio is taxable
on its share (as determined in accordance with the governing instruments of MIP)
of such Master Portfolio's taxable income 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.

It is expected that each Master Portfolio is managed so that each
investment company that invests all of its assets in a Master Portfolio
qualifies as a "regulated investment company" under the Code.

As of May 30, 1997, the following funds of MasterWorks Funds Inc.
("MasterWorks") and Stagecoach Trust ("Stagecoach") held the following
percentages of the outstanding voting securities of the indicated LifePath
Master Portfolio and, as such, could be considered controlling persons for
purposes of the 1940 Act of the corresponding Master Portfolio:

% OUTSTANDING
LIFEPATH MASTER PORTFOLIO FUND SECURITIES HELD
- ------------------------- ----- ---------------
<S> <C> <C>
LifePath 2000 Master Portfolio MasterWorks LifePath 2000 36%

Stagecoach LifePath 2000 64%

LifePath 2010 Master Portfolio MasterWorks LifePath 2010 51%

Stagecoach LifePath 2010 49%

LifePath 2020 Master Portfolio MasterWorks LifePath 2020 43%

Stagecoach LifePath 2020 57%

LifePath 2030 Master Portfolio MasterWorks LifePath 2030 37%

Stagecoach LifePath 2030 63%

LifePath 2040 Master Portfolio MasterWorks LifePath 2040 27%

Stagecoach LifePath 2040 73%
</TABLE>

For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that an
interestholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a Master Portfolio, or is identified as the holder of
record of more than 25% of a Master Portfolio and has voting and/or investment
powers, such interestholder may be presumed to control such Master Portfolio.

ITEM 7. PURCHASE OF INTERESTS.

Beneficial interests in the Master Portfolios 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 Portfolios
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.

9
<PAGE>

assets less liabilities) by the total number of shares of such Master Portfolio
outstanding. A Master Portfolio's 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 MIP's Board of Trustees. For further information regarding the
methods employed in valuing each Master Portfolio's investments, see Item 19,
"Purchase, Redemption and Pricing of Securities" in Part B.

ITEM 8. REDEMPTION OR REPURCHASE.

An investor in MIP 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, MIP redeems the shares at the next
determined net asset value.

Each 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 Portfolio may not be transferred.

ITEM 9. PENDING LEGAL PROCEEDINGS.

Not applicable.

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<PAGE>

APPENDIX

PORTFOLIO SECURITIES.

To the extent set forth in this offering document, each Master Portfolio
may invest in the securities described below.

SECURITIES OF NON-U.S. ISSUERS -- The Master Portfolios may invest in
certain securities of non-U.S. issuers as discussed below.

Obligations of Foreign Governments, Supranational Entities and Banks --
--------------------------------------------------------------------
Each Master Portfolio may invest in U.S. dollar-denominated short-term
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 Portfolio may invest. The Master Portfolios may also invest in 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 each Fund's assets invested in obligations of foreign
governments and supranational entities 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.

Foreign Equity Securities and Depositary Receipts -- Each Master
-------------------------------------------------
Portfolio's assets may be invested in the securities of foreign issuers and
American Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs")
of such issuers.

ADRs and EDRs 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 Portfolio
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

A-1
<PAGE>

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.

SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS -- The Master Portfolios
may invest in high-quality money market instruments on an ongoing basis to
provide liquidity, for temporary purposes when there is an unexpected level of
shareholder purchases or redemptions or when "defensive" strategies are
appropriate. The instruments in which the Master Portfolios may invest include:
(i) short-term obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities (including government-sponsored enterprises); (ii)
negotiable certificates of deposit ("CDs"), bankers' acceptances, fixed time
deposits and other obligations of domestic banks (including foreign branches)
that have more than $1 billion in total assets at the time of investment and
that are members of the Federal Reserve System or are examined by the
Comptroller of the Currency or whose deposits are insured by the FDIC; (iii)
commercial paper rated at the date of purchase "Prime-1" by Moody's or "A-1+" or
"A-1" by S&P, or, if unrated, of comparable quality as determined by BGFA or
Wells Fargo Bank; (iv) non-convertible corporate debt securities (e.g., bonds
and debentures) with remaining maturities at the date of purchase of not more
than one year that are rated at least "Aa" by Moody's or "AA" by S&P; (v)
repurchase agreements; and (vi) short-term, U.S. dollar-denominated obligations
of foreign banks (including U.S. branches) that, at the time of investment have
more than $10 billion, or the equivalent in other currencies, in total assets
and in the opinion of BGFA or Wells Fargo Bank are of comparable quality to
obligations of U.S. banks which may be purchased by the Master Portfolio.

Bank Obligations -- Each Master Portfolio 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.

Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.

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 Short-Term Corporate Debt Instruments -- Each Master
----------------------------------------------------------
Portfolio may invest in commercial paper (including variable amount master
demand notes), which consists of short-term, unsecured promissory notes issued
by corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes. The
investment adviser and/or sub-adviser to each Master Portfolio monitors on an
ongoing basis the ability of an issuer of a demand instrument to pay principal
and interest on demand.

A-2
<PAGE>

Portfolio. The investment adviser and/or sub-adviser to each Master Portfolio
will consider such an event in determining whether the Master Portfolio should
continue to hold the obligation. To the extent the Master Portfolio continues to
hold such obligations, it may be subject to additional risk of default.

Repurchase Agreements -- Each Master Portfolio may enter into repurchase
----------------------
agreements wherein the seller of a security to a Master Portfolio agrees to
repurchase that security from the Master Portfolio at a mutually-agreed upon
time and price. The period of maturity is usually quite short, often overnight
or a few days, although it may extend over a number of months. A Master
Portfolio may enter into repurchase agreements only with respect to securities
that could otherwise be purchased by the Master Portfolio, and all repurchase
transactions must be collateralized. A Master Portfolio may incur a loss on a
repurchase transaction if the seller defaults and the value of the underlying
collateral declines or is otherwise limited or if receipt of the security or
collateral is delayed. The Master Portfolios may participate in pooled
repurchase agreement transactions with other funds advised by BGFA. See
"Additional Permitted Investment Activities" in the Part B for additional
information.

MORTGAGE-RELATED SECURITIES -- Each Master Portfolio 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 ("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 ("Fannie Maes") which are solely the obligations of FNMA and are
neither backed by nor entitled to the full faith and credit of the federal
government. FNMA is a government- sponsored enterprise which is a private
corporation 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 ("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.

CONVERTIBLE SECURITIES -- Each Master Portfolio 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.

A-3
<PAGE>

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 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.

ILLIQUID SECURITIES -- Each Master Portfolio may invest up to 15% of the
value of its total 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, floating- and variable-rate demand obligations as to
which the Master Portfolio cannot exercise a demand feature 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.

INVESTMENT COMPANY SECURITIES -- Each Master Portfolio may invest in
securities issued by open-end other management investment companies which
principally invest in securities of the type in which such Master Portfolio
invests. Under the 1940 Act, a Master Portfolio's 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 the Master Portfolio's
total net assets with respect to any one investment company and (iii) 10% of the
Master Portfolio's total net assets in the aggregate. Investments in the
securities of other investment companies involve duplication of advisory fees
and certain other expenses. A Master Portfolio may also purchase shares of
exchange listed closed-end funds.

FUTURES CONTRACTS AND OPTIONS TRANSACTIONS -- Each LifePath Master
Portfolio may use futures as a substitute for a comparable market position in
the underlying securities.

Stock Index Futures and Options on Stock Index Futures -- Each LifePath
------------------------------------------------------
Master Portfolio may invest in stock index futures and options on stock index
futures as a substitute for a comparable market position in the underlying
securities. 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

A-4
<PAGE>

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
Portfolio 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.
There can be no assurance that a liquid market will exist at the time when a
Master Portfolio seeks to close out a futures contract or a futures option
position. Lack of a liquid market may prevent liquidation of an unfavorable
position.

Interest-Rate Futures Contracts and Options on Interest-Rate Futures
--------------------------------------------------------------------
Contracts -- Each LifePath Master Portfolio 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 Master Portfolios
may also sell options on interest-rate futures contracts as part of closing
purchase transactions to terminate their 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 Portfolios' portfolio securities which are the
subject of the transaction.

Interest-Rate and Index Swaps -- Each LifePath Master Portfolio may enter
-----------------------------
into interest-rate and index swaps in pursuit of their investment objectives.
Interest-rate swaps involve the exchange by a Master Portfolio with another
party of their respective commitments to pay or receive interest (for example,
an exchange of floating-rate payments on fixed-rate payments). Index swaps
involve the exchange by a Master Portfolio with another party of cash flows
based upon the performance of an index of securities or a portion of an index of
securities that 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 Master Portfolio will usually enter into swaps on a net basis. In
so doing, the two payment streams are netted out, with a Master Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. If a Master Portfolio enters into a swap, it will maintain a
segregated account on a gross basis, unless the contract provides for a
segregated account on a net basis. If there is a default by the other party to
such a transaction, a Master Portfolio will have contractual remedies pursuant
to the agreements related to the transaction.

Foreign Currency and Futures Transactions -- 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 a LifePath Master Portfolio of
unrealized profits or force such Master Portfolio to cover its commitments for
purchase or resale, if any, at the current market price.

Each LifePath Master Portfolio may combine forward currency exchange
contracts with investments in securities denominated in other currencies.

Each LifePath Master Portfolio also may maintain short positions in forward
currency exchange transactions, which would involve the Master Portfolio
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 Portfolio contracted to
receive in the exchange.

A-5
<PAGE>

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 Portfolio might realize in trading could be eliminated by
adverse changes in the exchange rate; adverse exchange rate changes also could
cause a Master Portfolio to incur losses. Transactions on foreign exchanges may
include both futures contracts which are traded on domestic exchanges and those
which are not. Such transactions may also be subject to withholding and other
taxes imposed by foreign governments.

LOANS OF PORTFOLIO SECURITIES -- Each Master Portfolio may lend securities
from their portfolios to brokers, dealers and financial institutions (but not
individuals) in order to increase the return on such Master Portfolio's
portfolio. The value of the loaned securities may not exceed one-third of a
Master Portfolio's total assets and loans of portfolio securities are fully
collateralized based on values that are market-to-market daily. The Master
Portfolios will not enter into any portfolio security lending arrangement having
a duration of longer than one year. The principal risk of portfolio lending is
potential default or insolvency of the borrower. In either of these cases, a
Master Portfolio could experience delays in recovering securities or collateral
or could lose all or part of the value of the loaned securities. The Master
Portfolios may pay reasonable administrative and custodial fees in connection
with loans of portfolio securities and may pay a portion of the interest or fee
earned thereon the borrower or a placing broker. See "Additional Permitted
Investment Activities" in the Part B for additional information.

FORWARD COMMITMENT WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- Each
Master Portfolio may purchase or sell securities on a when-issued or delayed-
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. Securities purchased or
sold on a when-issued, delayed-delivery or forward commitment basis involve a
risk of loss if the value of the security to be purchased declines, or the value
of the security to be sold increases, before the settlement date. Although a
Master Portfolio will generally purchase securities with the intention of
acquiring them, a Master Portfolio may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the adviser.

BORROWING MONEY -- As a fundamental policy, each Master Portfolio is
permitted to borrow to the extent permitted under the 1940 Act. However, each
Master Portfolio 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 Portfolio's total
assets, such Master Portfolio will not make any investments.

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. 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 Portfolio
relies on BGFA's 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 Considerations
- -- Fixed-Income Securities."

A-6
<PAGE>

MASTER INVESTMENT PORTFOLIO
ALLOCATION MASTER PORTFOLIOS

ASSET ALLOCATION MASTER PORTFOLIO
U.S. TREASURY ALLOCATION MASTER PORTFOLIO

PART B -- STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 1997

ITEM 10. COVER PAGE.

Master Investment Portfolio ("MIP") is an open-end, management investment
company. MIP 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 MIP's Part A, also dated June 30, 1997. 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"), MIP's co-
sponsor, administrator and placement agent, at 111 Center Street, Little Rock,
Arkansas 72201, or by calling Stephens at (800) 643-9691. MIP'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 MIP........................................ 7
Control Persons and Principal Holders of Securities...... 10
Investment Advisory and Other Services................... 10
Brokerage Allocation and Other Practices................. 12
Capital Stock and Other Securities....................... 13
Purchase, Redemption and Pricing of Securities........... 14
Tax Status............................................... 15
Underwriters............................................. 16
Calculations of Performance Data......................... 16
Financial Information.................................... 16
Appendix................................................. A-1
Financial Statements..................................... F-1
</TABLE>

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

Investment Objectives. Master Investment Portfolio ("MIP") is an open-end,
management investment company. By this offering document, MIP is offering two
diversified portfolios - the Asset Allocation Master Portfolio and U.S. Treasury
Allocation Master Portfolio (each, a "Master Portfolio" and together, the
"Master Portfolios").

Each Master Portfolio's 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 Portfolio will be
achieved. Each Master Portfolio's investment objective is fundamental, and
therefore 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 Portfolio's outstanding voting interests.

1
<PAGE>

Barclays Global Fund Advisors ("BGFA") serves as investment adviser to each
Master Portfolio. Prior to January 1, 1996, Wells Fargo Bank, N.A. ("Wells
Fargo Bank") served as each Master Portfolio's investment adviser and Wells
Fargo Nikko Investment Advisors ("WFNIA") served as each Master Portfolio's 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
now a subsidiary of WFITC which, effective January 1, 1996, changed its name to
Barclays Global Investors, N.A. ("BGI"). Stephens Inc. ("Stephens") serves as
placement agent of each Master Portfolio's interests.

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 Portfolio are insured by the FDIC (although such insurance may not be of
material benefit to the Master Portfolio, depending on the principal amount of
the CDs of each bank held by the Master Portfolio) 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 Portfolio 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 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 banks, BGFA carefully evaluates such investments on a case-by-case
basis.

2
<PAGE>

Each Master Portfolio 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 Portfolio 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 Portfolio will own more than one such CD per such
issuer.

MANAGEMENT POLICIES.

Repurchase Agreements. Each Master Portfolio may engage in a repurchase
agreement with respect to any security in which it is authorized to invest,
although the underlying security may mature in more than thirteen months. The
Master Portfolio may enter into repurchase agreements wherein the seller of a
security to the Master Portfolio agrees to repurchase that security from the
Master Portfolio at a mutually agreed-upon time and price that involves the
acquisition by the Master Portfolio of an underlying debt instrument, subject to
the seller's obligation to repurchase, and the Master Portfolio's obligation to
resell, the instrument at a fixed price usually not more than one week after its
purchase. The Master Portfolio's custodian has custody of, and holds in a
segregated account, securities acquired as collateral by the Master Portfolio
under a repurchase agreement. Repurchase agreements are considered by the staff
of the SEC to be loans by the Master Portfolio. The Master Portfolio may enter
into repurchase agreements only with respect to securities of the type in which
it may invest, including government securities and mortgage-related securities,
regardless of their remaining maturities, and requires that additional
securities be deposited with the custodian if the value of the securities
purchased should decrease below resale price. Wells Fargo Bank 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 the Master
Portfolio 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, disposition of the securities by the Master Portfolio may be
delayed or limited. While it does not presently appear possible to eliminate
all risks from these transactions (particularly the possibility of a decline in
the market value of the underlying securities, as well as delay and costs to the
Master Portfolio in connection with insolvency proceedings), it is the policy of
the Master Portfolio to limit repurchase agreements to selected creditworthy
securities dealers or domestic banks or other recognized financial institutions.
The Master Portfolio considers on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements. Repurchase
agreements are considered to be loans by a Master Portfolio under the Investment
Company Act of 1940 (the "1940 Act").

Floating- and Variable-Rate Obligations. Each Master Portfolio may purchase
floating- and variable-rate obligations as described in the Prospectus. The
Master Portfolio 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 that are obligations that permit
the Master Portfolio to invest fluctuating amounts, which may change daily
without penalty, pursuant to direct arrangements between the Master Portfolio,
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 Portfolio's right to redeem is dependent on the ability
of the borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies

3
<PAGE>

and the Master Portfolio may invest in obligations which are not so rated only
if Wells Fargo Bank determines that at the time of investment the obligations
are of comparable quality to the other obligations in which the Master Portfolio
may invest. Wells Fargo Bank, on behalf of the Master Portfolio, considers on an
ongoing basis the creditworthiness of the issuers of the floating- and variable-
rate demand obligations in the Master Portfolio's portfolio. The Master
Portfolio will not invest more than 10% of the value of its total net assets in
floating- or variable-rate demand obligations whose demand feature is not
exercisable within seven days. Such obligations may be treated as liquid,
provided that an active secondary market exists.

Futures Contracts and Options on Futures Contracts. The Master Portfolio 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 Portfolio.

Future Developments. Each Master Portfolio 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 Portfolio or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with a Master Portfolio's investment objective and legally
permissible for the Master Portfolio. Before entering into such transactions or
making any such investment, the Master Portfolio will provide appropriate
disclosure in its prospectus.

Loans of Portfolio Securities. Each Master Portfolio may lend securities from
its portfolio to brokers, dealers and financial institutions (but not
individuals) if cash, U.S. Government securities or other high quality debt
obligations equal to at least 100% of the current market value of the securities
loaned (including accrued interest thereon) plus the interest payable to such
Master Portfolio with respect to the loan is maintained with the Master
Portfolio. In determining whether or not to lend a security to a particular
broker, dealer or financial institution, each Master Portfolio's investment
adviser or such-adviser considers all relevant facts and circumstances,
including the size, creditworthiness and reputation of the broker, dealer, or
financial institution. Any loans of portfolio securities are fully
collateralized based on values that are marked to market daily. The Master
Portfolios do not enter into any portfolio security lending arrangements having
a duration longer than one year. Any securities that a Master Portfolio receives
as collateral do not become part of its portfolio at the time of the loan and,
in the event of a default by the borrower, such Master Portfolio will, if
permitted by law, dispose of such collateral except for such part thereof that
is a security in which the Master Portfolio is permitted to invest. During the
time securities are on loan, the borrower will pay the Master Portfolio any
accrued income on those securities, and the Master Portfolio may invest the cash
collateral and earn income or receive an agreed-upon fee from a borrower that
has delivered cash- equivalent collateral. The Master Portfolios will not lend
securities having a value that exceeds one-third of the current value of their
respective total assets. Loans of securities by a Master Portfolio are subject
to termination at such Master Portfolio's or the borrower's option. Each Master
Portfolio may pay reasonable administrative and custodial fees in connection
with a securities loan and may pay a negotiated portion of the interest or fee
earned with respect to the collateral to the borrower or the placing broker.
Borrowers and placing brokers are not permitted to be affiliated, directly or
indirectly, with the Master Portfolios, BGFA, Wells Fargo Bank or Stephens.

Investment Restrictions. Each Master Portfolio has adopted investment
restrictions numbered 1 through 10 as fundamental policies. These restrictions
cannot be changed, as to a Master Portfolio, without approval by the holders of
a majority (as defined in the 1940 Act) of such Master Portfolio's 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
MIP at any time. The Master Portfolios may not:

4
<PAGE>

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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio's 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
Portfolio.

6. Make loans to others, except through the purchase of debt obligations and
the entry into repurchase agreements. However, each Master Portfolio may lend
its portfolio securities in an amount not to exceed one-third 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 MIP's Board
of Trustees.

7. Act as an underwriter of securities of other issuers, except to the extent
the Master Portfolio 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 Portfolio, 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 Portfolio, the Master Portfolio 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 Portfolio, its money
market instruments may be concentrated in the banking industry (but it will not
do so unless the SEC staff confirms that it does not object to the Master
Portfolio 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 Portfolio 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 Portfolio will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.

5
<PAGE>

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 Portfolio's 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 its 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 MIP.

6
<PAGE>

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- -------------------
<S> <C> <C>
Jack S. Euphrat, 75 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 46 Trustee, Executive Vice President of
Chairman and President Stephens; Manager 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, 55 Trustee Associate Professor of Finance, Calloway School
P.O. Box 7285 of Business and Accounting, Wake Forest
Reynolda Station University, since 1982.
Winston-Salem, NC 27104

*Zoe Ann Hines, 48 Trustee Senior Vice President of Stephens and Director of
Brokerage Accounting; Secretary of Stephens
Resource Management; and Senior Vice President of
Link Investments Inc.

*W. Rodney Hughes, 70 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 79 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

*J. Tucker Morse, 52 Trustee Chairman of Home Account Network, Inc.; Real
4 Beaufain Street Estate Developer; Chairman of Renaissance
Charleston, SC 29401 Properties Ltd; President of Morse Investment
Corporation; and Co-Managing Partner of Main
Street Ventures.

Richard H. Blank, Jr., 40 Chief Operating Officer, Associate of Financial Services Group of
Secretary and Treasurer Stephens; Director of Stephens Sports Management
Inc.; and Director of Capo Inc.
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEX
----------------- --------------- ----------------

<S> <C> <C>
Jack S. Euphrat $0 $9,250
Trustee

*R. Greg Feltus 0 0
Trustee

Thomas S. Goho 0 9,250
Trustee

*Zoe Ann Hines 0 0
Trustee

*W. Rodney Hughes 0 8,250
Trustee

Robert M. Joses 0 9,250
Trustee

*J. Tucker Morse 0 8,250
Trustee
</TABLE>

Trustees of MIP are compensated annually by all the registrants in the fund
complex for their services as indicated above and also are reimbursed for all
out-of-pocket expenses relating to attendance at board meetings. MIP,
MasterWorks Funds Inc. and Managed Series Investment Trust are considered to be
members of the same fund complex as such term is defined in Form N-1A under the
1940 Act (the "BGFA Fund Complex"). Stagecoach Funds, Inc., Overland Express
Funds, Inc., Stagecoach Trust, Life & Annuity Trust and Master Investment Trust
together form a separate fund complex (the "Wells Fargo Fund Complex"). Each of
the Trustees and the principal officer of MIP serves in the identical capacity
as directors/trustees and/or officer of each registered open-end management
investment company in both the BGFA and Wells Fargo Fund Complexes, except for
Zoe Ann Hines who, after September 6, 1996, only serves the aforementioned
members of the BGFA Fund Complex. The Trustees are compensated by other
Companies and Trusts within the fund complexes for their services as
Directors/Trustees to such Companies and Trusts. Currently the Trustees do not
receive any retirement benefits or deferred compensation from MIP or any other
member of each fund complex.

As of the date of this SAI, the Trustees and Principal Officer of MIP as a
group beneficially owned less than 1% of the outstanding shares of MIP.

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of May 30, 1997, the Asset Allocation Fund and U.S. Treasury Allocation
Fund of MasterWorks Funds Inc., 111 Center Street, Little Rock, Arkansas 72201,
owned approximately 99% of the outstanding voting securities of the Asset
Allocation Master Portfolio and approximately 99% of the outstanding voting
securities of the U.S. Treasury Allocation Master Portfolio, respectively, and
each Fund may be presumed to control its corresponding Master Portfolio for
purposes of the 1940 Act.

8
<PAGE>

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

The following information supplements and should be read in conjunction with
Item 5 in Part A.

Investment Adviser. BGFA provides investment advisory services to each Master
Portfolio pursuant to separate Investment Advisory Contracts (each, a "BGFA
Advisory Contract") dated January 1, 1996 with MIP. As to each Master
Portfolio, the applicable BGFA Advisory Contract is subject to annual approval
by (i) MIP's Board of Trustees or (ii) vote of a majority (as defined in the
1940 Act) of the outstanding voting securities of such Master Portfolio,
provided that in either event the continuance also is approved by a majority of
MIP's Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of MIP or BGFA, by vote cast in person at a meeting called for the purpose
of voting on such approval. As to each Master Portfolio, the applicable BGFA
Advisory Contract is terminable without penalty on 60 days' written notice by
either party. The BGFA Advisory Contracts terminate automatically in the event
of assignment (as defined in the 1940 Act).

Prior to January 1, 1996, Wells Fargo Bank provided investment advisory
services to each Master Portfolio pursuant to an Investment Advisory Agreement
(the "Advisory Agreement") dated February 25, 1994 with MIP. The terms of the
Advisory Agreement were identical in all material respects, other than the
identity of the parties, to each BGFA Advisory Contract.

Advisory Fees Paid. For the period beginning May 26, 1994 (commencement of
operations) and ended February 28, 1995 and the period beginning March 1, 1995
and ended December 31, 1995, the Master Portfolios paid to Wells Fargo Bank the
following advisory fees, without waiver. For the period beginning January 1,
1996 and ended February 29, 1996, and for the year ended February 28, 1997, the
Master Portfolios paid to BGFA the following advisory fees, without waivers.

<TABLE>
<CAPTION>
FISCAL
5/26/94- 3/1/95- 1/1/96 YEAR ENDED
2/28/95 12/31/95 2/29/96 2/28/97
FEES PAID FEES PAID FEES PAID FEES PAID
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Asset Allocation Master $666,053 $997,003 $225,669 $1,531,951
Portfolio
U.S. Treasury Allocation $128,994 $152,657 $ 25,863 $ 148,606
Master Portfolio
</TABLE>

Sub-Investment Adviser. The Master Portfolios do not currently engage a sub-
adviser. However, prior to January 1, 1996, WFNIA provided sub-investment
advisory services to each Master Portfolio pursuant to a Sub-Investment Advisory
Agreement (the "Sub-Advisory Agreement") dated February 28, 1994 with Wells
Fargo Bank and MIP.

Sub-Advisory Fees Paid. For the period beginning May 26, 1994 (commencement
of operations) and ended February 28, 1995, and the period beginning March 1,
1995 and ended December 31, 1995, Wells Fargo Bank paid the following sub-
advisory fees to WFNIA for services provided on behalf of each Master Portfolio,
without waivers:

<TABLE>
<CAPTION>
5/26/94- 3/1/95-
2/28/95 12/31/95
FEES PAID FEES PAID
--------- ---------
<S> <C> <C>
Asset Allocation Master Portfolio $375,907 $567,009
U.S. Treasury Allocation Master Portfolio $ 64,439 $ 75,895
</TABLE>

9
<PAGE>

Co-Administrators. Stephens and BGI are the Master Portfolio's co-
administrators. Stephens and BGI provide the Master Portfolios with
administrative services, including general supervision of the Master Portfolios'
non-investment operations, coordination of the other services provided to the
Master Portfolios, compilation of information for reports to the SEC and the
state securities commissions, preparation of proxy statements and shareholder
reports, and general supervision of data compilation in connection with
preparing periodic reports to the MIP's trustees and officers. Stephens also
furnishes office space and certain facilities to conduct the Master Portfolios'
business, and compensates the MIP's trustees, officers and employees who are
affiliated with Stephens. In addition, except as outlined below under "
Expenses", Stephens and BGI will be responsible for paying all expenses incurred
by the Master Portfolios other than the fees payable to BGFA. Stephens and BGI
are not entitled to compensation for providing administration services to a
Master Portfolio. BGI has delegated certain of its duties as co-administrator to
Investors Bank & Trust Company ("IBT"). IBT, as sub-administrator, is
compensated by BGI for performing certain administration services.

Prior to October 21, 1996, Stephens alone provided administration services to
MIP pursuant to an Administration Agreement dated February 25, 1994 (the
"Administration Agreement"). Stephens was not entitled to compensation for
providing administration services to the Master Portfolios so long as Stephens
received fees for providing similar services to a feeder fund of another
investment company investing all of its assets in a Master Portfolio. The
Master Portfolios did not pay any administration fees to Stephens.

Placement Agent. Stephens is the placement agent for the Master Portfolios.
Stephens is a full service broker/dealer and investment advisory firm located at
111 Center Street, Little Rock, Arkansas 72201. 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. Stephens does not receive compensation for acting as placement
agent.

Custodian. IBT currently acts as the Master Portfolios' custodian. The
principal business address of IBT is 200 Clarendon Street, Boston, Massachusetts
02116. IBT is not entitled to receive compensation for its custodial services so
long as it is entitled to receive compensation for providing sub-administration
services to the Master Portfolios. Prior to October 21, 1996, Barclays Global
Investors, N.A. ("BGI") acted as the Master Portfolios' custodian. The principal
business address of BGI is 45 Fremont Street, San Francisco, California 94105.
BGI did not receive compensation for its custodial services.

Transfer and Dividend Disbursing Agent. Wells Fargo Bank is each Master
Portfolio's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). The
principle business address of Wells Fargo Bank is 525 Market Street, San
Francisco, California 94105. Wells Fargo Bank is not entitled to receive
compensation for providing such services to MIP so long as it receives fees for
providing similar services to the funds which invest substantially all of their
assets in the Master Portfolios. To date, the Master Portfolios have not paid
any transfer and dividend disbursing agency fees.

Distribution Plan. MIP's Board of Trustees has adopted, on behalf of each
Master Portfolio, 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 MIP's Board of Trustees (including a majority of those Trustees who
are not "interested persons" as defined in the 1940 Act of MIP) 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
Portfolio to finance activities primarily intended to result in the sale of
interests in such Master Portfolio. The Plan provides that if any portion of a
Master Portfolio's advisory fees (up to 0.25% of the average daily net assets of
each Master Portfolio 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 Portfolio such payment would be authorized pursuant to the
Plan. The Master Portfolios do not currently pay any amounts pursuant to the
Plan.

10
<PAGE>

Expenses. Except for extraordinary expenses, brokerage and other expenses
connected with to the execution of portfolio transactions and certain other
expenses which are borne by the Master Portfolios, Stephens and BGI have agreed
to bear all costs of the Master Portfolios' and MIP's operations.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

General. BGFA assumes general supervision over placing orders on behalf of
each 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
shareholders. In executing portfolio transactions and selecting brokers or
dealers, BGFA seeks to obtain the best overall terms available for each Master
Portfolio. In assessing the best overall terms available for any transaction,
BGFA considers factors deemed relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. The primary
consideration is prompt execution of orders at the most favorable net price.
Certain of the brokers or dealers with whom the Master Portfolios may transact
business offer commission rebates to the Master Portfolios. BGFA considers such
rebates in assessing the best overall terms available for any transaction. The
overall reasonableness of brokerage commissions paid is evaluated by BGFA based
upon its knowledge of available information as to the general level of
commission paid by other institutional investors for comparable services. Prior
to January 1, 1996, WFNIA exercised general supervision over placing orders on
behalf of each Master Portfolio for the purchase or sale of portfolio securities
and the brokerage allocation practices described herein are applicable to WFNIA
and the Master Portfolios prior to January 1, 1996.

Asset Allocation Master Portfolio. 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.

U.S. Treasury Allocation Master Portfolio. Purchases and sales of portfolio
securities for the U.S. Treasury Allocation Master Portfolio 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 U.S. Treasury Allocation Master Portfolio 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.

Brokerage Commissions. For the period from commencement of operations until
February 28, 1995 and for the years ended February 29, 1996 and February 28,
1997, the Master Portfolios paid brokerage commissions in the dollar amounts
shown below. None of the brokerage commissions were paid to affiliated brokers.

<TABLE>
<CAPTION>
MASTER PORTFOLIO 1995 1996 1997
- ---------------- ---- ---- ----
<S> <C> <C> <C>
Asset Allocation Master Portfolio $14,321 $9,782 $28,606
U.S. Treasury Allocation Master Portfolio $ 0 $ 0 $ 0
</TABLE>

Securities of Regular Broker/Dealers. On February 28, 1997, the Master
Portfolios owned securities of their "regular brokers or dealers" or their
parents, as defined in the 1940 Act, as follows:

<TABLE>
<CAPTION>
MASTER PORTFOLIO REGULAR BROKER/DEALER AMOUNT
- ---------------- --------------------- ------
<S> <C> <C>
Asset Allocation Master Portfolio Goldman Sachs & Co. $26,000,000
U.S. Treasury Allocation Master Portfolio Goldman Sachs & Co. $ 760,000
</TABLE>

11
<PAGE>

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Pursuant to MIP's Declaration of Trust, the Trustees are authorized to issue
shares of beneficial interests in each Master Portfolio. Investors in a Master
Portfolio are entitled to participate pro rata in distributions of taxable
income, loss, gain and credit of such Master Portfolio. Upon liquidation or
dissolution of a Master Portfolio, investors are entitled to share pro rata in
such Master Portfolio's net assets available for distribution to its investors.
Investments in a Master Portfolio 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 Portfolio may not be transferred. No
certificates are issued.

Each investor is entitled to vote, with respect to matters affecting each of
MIP's series, in proportion to the amount of its investment in MIP. Investors
in MIP do not have cumulative voting rights, and investors holding more than 50%
of the aggregate beneficial interest in MIP may elect all of the Trustees of MIP
if they choose to do so and in such event the other investors in MIP would not
be able to elect any Trustee. MIP is not required to hold annual meetings of
investors but MIP may hold special meetings of investors when in the judgment of
MIP'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 MIP, 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 Portfolio affected by such matter. Rule 18f-2 further provides that a
Master Portfolio shall be deemed to be affected by a matter unless it is clear
that the interests of such Master Portfolio in the matter are identical or that
the matter does not affect any interest of such Master Portfolio. 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 Portfolio 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 Portfolio 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.

Payment for shares of a Master Portfolio may, at the discretion of the
adviser, be made in the form of securities that are permissible investments for
the Master Portfolio and must meet the investment objective, policies and
limitations of the Master Portfolio as described in the Part A. In connection
with an in-kind securities payment, a Master Portfolio may require, among other
things, that the securities (i) be valued on the day of purchase in accordance
with the pricing methods used by the Master Portfolio; (ii) are accompanied by
satisfactory assurance that the Master Portfolio will have good and marketable
title to such securities received by it; (iii) are not subject to any
restrictions upon resale by the Master Portfolio; (iv) be in proper form for
transfer to the Master Portfolio; and (v) are accompanied by adequate
information concerning the basis and other tax matters relating to the
securities. All dividends, interest, subscription or other rights pertaining to
such securities shall become the property of the Master Portfolio engaged in the
in-kind purchase transaction and must be delivered to such Master Portfolio by
the investor upon receipt from the issuer. Securities acquired through an in-
kind purchase will be acquired for investment and not for immediate resale.
Shares purchased in exchange for securities generally cannot be redeemed until
the transfer has settled.

PRICING OF SECURITIES.

Asset Allocation Master Portfolio. The securities of the Asset Allocation
Master Portfolio, including covered call options written by the Master
Portfolio, are valued as discussed below. 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 MIP'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 Portfolio's shares.

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 MIP's Board of Trustees, are valued at fair value as determined in
good faith by BGFA in accordance with guidelines approved by MIP's Board of
Trustees. BGFA and MIP'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,

12
<PAGE>

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 MIP's
Board of Trustees.

U.S. Treasury Allocation Master Portfolio. The investments of the U.S.
Treasury Allocation Master Portfolio are valued each business day using
available market quotations or at fair value as determined by one or more
independent pricing services (collectively, the "Services") approved by MIP's
Board of Trustees. The Services may use available market quotations, employ
electronic data processing techniques and/or a matrix system to determine
valuations. Each Service's procedures are reviewed by MIP's officers in
accordance with guidelines approved by MIP'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 Portfolio's shares.

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.

MIP is organized as a business trust under Delaware law. Under MIP's current
classification for federal income tax purposes, it is intended that each Master
Portfolio will be treated as a partnership for such purposes and, therefore,
such Master Portfolio will not be subject to any federal income tax. However,
each investor in a Master Portfolio will be taxable on its share (as determined
in accordance with the governing instruments of MIP) of such Master Portfolio's
ordinary income and capital gain in determining its federal income tax
liability. The determination of such share will be made in accordance with the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.

MIP's taxable year-end is the last day of December. Although MIP will not be
subject to Federal income tax, it will file appropriate Federal income tax
returns.

Each Master Portfolio's assets, income and distributions will be managed in
such a way that an investor in such Master Portfolio may satisfy the
requirements of Subchapter M of the Code, by investing substantially all of its
investable assets in the Master Portfolio. Investors are advised to consult
their own tax advisors as to the tax consequences of an investment in a Master
Portfolio.

ITEM 21. UNDERWRITERS.

The exclusive placement agent for MIP 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 Portfolio of MIP.

ITEM 22. CALCULATIONS OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL INFORMATION.

KPMG Peat Marwick LLP provides audit services, tax return preparation and
assistance and consultation in connection with the review of certain SEC
filings. KPMG Peat Marwick LLP's address is Three Embarcadero Center, San
Francisco, California 94111. For the fiscal year ended February 28, 1995,
MIP's financial statements

13
<PAGE>

were audited by other independent auditors. Such auditors expressed an
unqualified opinion on the financial statements of MIP.

The portfolio of investments, audited financial statements and independent
auditors report for the Master Portfolios for the fiscal year ended February 28,
1997 are hereby incorporated by reference to the MasterWorks Funds Inc. (SEC
File Nos. 33-54126; 811-7322) Annual Report, as filed with the SEC on May 2,
1997. The portfolio of investments, audited financial statements and
independent auditors report for the Master Portfolios are attached to all Part
Bs delivered to interestholders or prospective interestholders.

14
<PAGE>

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.

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.

A-1
<PAGE>

"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 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.

A-2
<PAGE>

"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. 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-3
<PAGE>

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 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.

A-4
<PAGE>

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-5
<PAGE>

MASTER INVESTMENT PORTFOLIO
INDEX MASTER PORTFOLIOS

S&P 500 INDEX MASTER PORTFOLIO
BOND INDEX MASTER PORTFOLIO

PART B -- STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 1997

ITEM 10. COVER PAGE.

Master Investment Portfolio ("MIP") is an open-end, management
investment company. MIP 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 MIP's Part A, also dated June 30, 1997. 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"),
MIP's sponsor, co-administrator and placement agent, at 111 Center Street,
Little Rock, Arkansas 72201, or by calling Stephens at (800) 643-9691. MIP'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........................ 1
Investment Objectives and Policies..................... 1
Management of MIP...................................... 7
Control Persons and Principal Holders
of Securities......................................... 10
Investment Advisory and Other Services................. 10
Brokerage Allocation and Other Practices............... 12
Capital Stock and Other Securities..................... 13
Purchase, Redemption and Pricing of
Securities............................................ 14
Tax Status............................................. 15
Underwriters........................................... 16
Calculations of Performance Data....................... 16
Financial Information.................................. 16
Appendix............................................... A-1
Financial Statements................................... F-1
</TABLE>

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. By this offering document, MIP is offering two
diversified portfolios, the Bond Index Master Portfolio and S&P 500 Index Master
Portfolio (each, a "Master Portfolio" and together, the "Master Portfolios").
Organizations and other entities that hold shares of beneficial interest of a
Master Portfolio may be referred to herein as "feeder funds."

1
<PAGE>

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
Portfolios' outstanding voting interests.

Barclays Global Fund Advisors ("BGFA") serves as investment adviser to
each Master Portfolio. Prior to January 1, 1996, Wells Fargo Bank, N.A. ("Wells
Fargo Bank") served as each Master Portfolio's investment adviser and Wells
Fargo Nikko Investment Advisors ("WFNIA") served as each Master Portfolio's 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
now a subsidiary of WFITC which, effective January 1, 1996, changed its name to
Barclays Global Investors, N.A. ("BGI"). Stephens Inc. ("Stephens") serves as
placement agent of each Master Portfolio's interests.

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 Portfolio are insured by the FDIC (although such
insurance may not be of material benefit to the Master Portfolio, depending on
the principal amount of the CDs of each bank held by the Master Portfolio) 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 Portfolio
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 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.

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.

2
<PAGE>

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 Portfolio 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 Portfolio 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 Portfolio will own more than one such CD per such
issuer.

MANAGEMENT POLICIES.

Repurchase Agreements. Each Master Portfolio may engage in a
repurchase agreement with respect to any security in which it is authorized to
invest, although the underlying security may mature in more than thirteen
months. The Master Portfolio may enter into repurchase agreements wherein the
seller of a security to the Master Portfolio agrees to repurchase that security
from the Master Portfolio at a mutually agreed-upon time and price that involves
the acquisition by the Master Portfolio of an underlying debt instrument,
subject to the seller's obligation to repurchase, and the Master Portfolio's
obligation to resell, the instrument at a fixed price usually not more than one
week after its purchase. The Master Portfolio's custodian has custody of, and
holds in a segregated account, securities acquired as collateral by the Master
Portfolio under a repurchase agreement. Repurchase agreements are considered by
the staff of the SEC to be loans by the Master Portfolio. The Master Portfolio
may enter into repurchase agreements only with respect to securities of the type
in which it may invest, including government securities and mortgage-related
securities, regardless of their remaining maturities, and requires that
additional securities be deposited with the custodian if the value of the
securities purchased should decrease below resale price. Wells Fargo Bank
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
the Master Portfolio 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, disposition of the securities by the Master Portfolio may be
delayed or limited. While it does not presently appear possible to eliminate all
risks from these transactions (particularly the possibility of a decline in the
market value of the underlying securities, as well as delay and costs to the
Master Portfolio in connection with insolvency proceedings), it is the policy of
the Master Portfolio to limit repurchase agreements to selected creditworthy
securities dealers or domestic banks or other recognized financial institutions.
The Master Portfolio considers on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements. Repurchase
agreements are considered to be loans by a Master Portfolio under the Investment
Company Act of 1940 (the "1940 Act").

3
<PAGE>

redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master
Portfolio's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated by
credit rating agencies and the Master Portfolio may invest in obligations which
are not so rated only if Wells Fargo Bank determines that at the time of
investment the obligations are of comparable quality to the other obligations in
which the Master Portfolio may invest. Wells Fargo Bank, on behalf of the Master
Portfolio, considers on an ongoing basis the creditworthiness of the issuers of
the floating- and variable-rate demand obligations in the Master Portfolio's
portfolio. The Master Portfolio will not invest more than 10% of the value of
its total net assets in floating- or variable-rate demand obligations whose
demand feature is not exercisable within seven days. Such obligations may be
treated as liquid, provided that an active secondary market exists.

Futures Contracts and Options on Futures Contracts. Each Master
Portfolio 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
Portfolio.

Future Developments. Each Master Portfolio 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 Portfolio or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with a Master Portfolio's investment objective and legally
permissible for the Master Portfolio. Before entering into such transactions or
making any such investment, each Master Portfolio will provide appropriate
disclosure in its prospectus.

Loans of Portfolio Securities. Each Master Portfolio may lend
securities from its portfolio to brokers, dealers and financial institutions
(but not individuals) if cash, U.S. Government securities or other high quality
debt obligations equal to at least 100% of the current market value of the
securities loaned (including accrued interest thereon) plus the interest payable
to such Master Portfolio with respect to the loan is maintained with the Master
Portfolio. In determining whether or not to lend a security to a particular
broker, dealer or financial institution, each Master Portfolio's investment
adviser or such-adviser considers all relevant facts and circumstances,
including the size, creditworthiness and reputation of the broker, dealer, or
financial institution. Any loans of portfolio securities are fully
collateralized based on values that are marked to market daily. The Master
Portfolios do not enter into any portfolio security lending arrangements having
a duration longer than one year. Any securities that a Master Portfolio receives
as collateral do not become part of its portfolio at the time of the loan and,
in the event of a default by the borrower, such Master Portfolio will, if
permitted by law, dispose of such collateral except for such part thereof that
is a security in which the Master Portfolio is permitted to invest. During the
time securities are on loan, the borrower will pay the Master Portfolio any
accrued income on those securities, and the Master Portfolio may invest the cash
collateral and earn income or receive an agreed-upon fee from a borrower that
has delivered cash- equivalent collateral. The Master Portfolios will not lend
securities having a value that exceeds one-third of the current value of their
respective total assets. Loans of securities by a Master Portfolio are subject
to termination at such Master Portfolio's or the borrower's option. Each Master
Portfolio may pay reasonable administrative and custodial fees in connection
with a securities loan and may pay a negotiated portion of the interest or fee
earned with respect to the collateral to the borrower or the placing broker.
Borrowers and placing brokers are not permitted to be affiliated, directly or
indirectly, with the Master Portfolios, BGFA, Wells Fargo Bank or Stephens.

4
<PAGE>

Investment restrictions numbered 11 through 17 are not fundamental policies and
may be changed by vote of a majority of the Trustees of MIP at any time. The
Master Portfolios may not:

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 Portfolio 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 Portfolio
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 Portfolio may borrow from banks up to 10% of
the current value of its net assets for temporary purposes only in order to meet
redemptions, and these borrowings may be 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 Portfolio 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 Portfolio's 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 Portfolio.

6. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, each Master
Portfolio may lend its portfolio securities in an amount not to exceed one-third
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 MIP's Board of Trustees.

7. Act as an underwriter of securities of other issuers, except to
the extent the Master Portfolio 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 Portfolio, 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
Portfolio, any industry in which the S&P 500 Index becomes concentrated to the
same degree during the same period, the Master Portfolio 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 Portfolio, 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.

5
<PAGE>

10. Purchase securities on margin, but each Master Portfolio 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 Portfolio will vote the
securities it owns in its portfolio as a shareholder in accordance with its
views.

13. Purchase, sell or write puts, calls or combinations thereof,
except as may be described in the Master Portfolio's offering documents.

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 Portfolio's 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
Trustees 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 MIP.

The following information supplements and should be read in
conjunction with the Part A section entitled "Management of the Master
Portfolio." The Trustees and Principal Officer of MIP, 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 MIP, 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, 75 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- ---------------------
<S> <C> <C>
*R. Greg Feltus, 46 Trustee, Senior Vice President
President of Stephens; Manager
and Trustee, 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, 55 Trustee Associate Professor of
P.O. Box 7285 Finance, Calloway
Reynolda Station School of Business and
Winston-Salem, NC 27104 Accounting, Wake
Forest University,
since 1982.

*Zoe Ann Hines, 48 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; Secretary
of Stephens Resource
Management; and Senior
Vice President of Link
Investments Inc.

*W. Rodney Hughes, 70 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 79 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

*J. Tucker Morse, 52 Trustee Chairman of Home
4 Beaufain Street Account Networks,
Charleston, SC 29401 Inc.; Real Estate
Developer; Chairman of
Renaissance Properties
Ltd; President of
Morse Investment
Corporation; and
Co-Managing Partner of
Main Street Ventures.

Richard H. Blank, Jr., 40 Chief Operating Associate of Financial
Officer, Secretary and Services Group of
Treasurer Stephens; Director of
Stephens Sports
Management Inc.; and
Director of Capo Inc.
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEX
----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $0 $9,250
Trustee

*R. Greg Feltus 0 0
Trustee

Thomas S. Goho 0 9,250
Trustee

*Zoe Ann Hines 0 0
Trustee

*W. Rodney Hughes 0 8,250
Trustee

Robert M. Joses 0 9,250
Trustee

*J. Tucker Morse 0 8,250
Trustee
</TABLE>

Trustees of MIP are compensated annually by all the registrants in the
fund complex for their services as indicated above and also are reimbursed for
all out-of-pocket expenses relating to attendance at board meetings. MIP,
MasterWorks Funds Inc. and Managed Series Investment Trust are considered to be
members of the same fund complex as such term is defined in Form N-1A under the
1940 Act (the "BGFA Fund Complex"). Stagecoach Funds, Inc., Overland Express
Funds, Inc., Stagecoach Trust, Life & Annuity Trust and Master Investment Trust
together form a separate fund complex (the "Wells Fargo Fund Complex"). Each of
the Trustees and the principal officer of MIP serves in the identical capacity
as directors/trustees and/or officer of each registered open-end management
investment company in both the BGFA and Wells Fargo Fund Complexes, except for
Zoe Ann Hines who, after September 6, 1996, only serves the aforementioned
members of the BGFA Fund Complex. The Trustees are compensated by other
Companies and Trusts within the fund complexes for their services as
Directors/Trustees to such Companies and Trusts. Currently the Trustees do not
receive any retirement benefits or deferred compensation from MIP or any other
member of each fund complex.

As of the date of this SAI, the Trustees and Principal Officer of MIP
as a group beneficially owned less than 1% of the outstanding shares of MIP.

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of May 30, 1997, the S&P 500 Stock Fund of MasterWorks Funds Inc.
("MasterWorks"), 111 Center Street, Little Rock, Arkansas 72201, owned
approximately 95% of the outstanding voting securities of the S&P 500 Index
Master Portfolio and could be considered a "controlling person" of the S&P 500
Index Master Portfolio for purposes of the 1940 Act. As of May 30, 1997, the
Bond Index Fund of MasterWorks and the Bradley Trust, 1000 N. Water Street, 11th
Floor, Milwaukee, WI 53202, owned approximately 57% and 43%, respectively, of
the outstanding voting securities of the Bond Index Master Portfolio. As such,
the Fund and Bradley Trust could each be considered a "controlling person" of
the Bond Index Master Portfolio for purposes of the 1940 Act.

8
<PAGE>

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

The following information supplements and should be read in
conjunction with Item 5 in Part A.

Investment Adviser. BGFA provides investment advisory services to
each Master Portfolio pursuant to separate Investment Advisory Contracts (each,
a "BGFA Advisory Contract") with MIP, dated January 1, 1996. As to each Master
Portfolio, the applicable BGFA Advisory Contract is subject to annual approval
by (i) MIP's Board of Trustees or (ii) vote of a majority (as defined in the
1940 Act) of the outstanding voting securities of such Master Portfolio,
provided that in either event the continuance also is approved by a majority of
MIP's Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of MIP or BGFA, by vote cast in person at a meeting called for the purpose
of voting on such approval. As to each Master Portfolios, the applicable BGFA
Advisory Contract is terminable without penalty, on 60 days' written notice, by
either party. The applicable BGFA Advisory Contract will terminate
automatically, as to the relevant Master Portfolio, 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 Portfolio pursuant to an Investment Advisory
Agreement (the "Advisory Agreement") dated February 25, 1994 with MIP. The
terms of the Advisory Agreement were identical in all material respects, other
than the identity of the parties, to each BGFA Advisory Contract.

Advisory Fees Paid. For the period beginning May 26, 1994
(commencement of operations) and ended February 28, 1995 and the period
beginning March 1, 1995 and ended December 31, 1995, the Master Portfolios paid
the following advisory fees to Wells Fargo Bank and Wells Fargo Bank waived the
indicated amounts. For the period beginning January 1, 1996 and ended February
29, 1996, and the year ended February 28, 1997, the Master Portfolios paid the
following advisory fees to BGFA, without waivers:

<TABLE>
<CAPTION>
MAY 26, 1994- MARCH 1, 1995- JANUARY 1, 1996- YEAR ENDED
FEBRUARY 28, 1995 DECEMBER 31, 1995 FEBRUARY 29, 1996 FEBRUARY 28, 1997
FEES PAID FEES WAIVED FEES PAID FEES WAIVED FEES PAID FEES PAID
--------- ----------- --------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Bond Index Master Portfolio $ 34,581 $ 8,713 $ 91,365 $0 $20,123 $147,204
S&P 500 Index Master Portfolio $138,830 $17,864 $279,843 $0 $73,598 $577,637
</TABLE>

Sub-Investment Adviser. The Master Portfolios do not currently engage
a sub-adviser. However, prior to January 1, 1996, WFNIA provided sub-investment
advisory services to each Master Portfolio pursuant to a Sub-Investment Advisory
Agreement (the "Sub-Advisory Agreement") dated February 25, 1994 with Wells
Fargo Bank and MIP.

Sub-Advisory Fees Paid. For the period from May 26, 1994
(commencement of operations) to February 28, 1995, and the period beginning
March 1, 1995 and ended December 31, 1995, Wells Fargo Bank paid the following
sub-advisory fees to WFNIA for services provided on behalf of each Master
Portfolio, without waivers:

MAY 26, 1994- MARCH 1, 1995-
FEBRUARY 28, 1995 DECEMBER 31, 1995
FEES PAID FEES PAID
--------- ---------
<S> <C> <C>
Bond Index Master Portfolio $ 39,197 $ 72,919
S&P 500 Index Master Portfolio $117,651 $224,069
</TABLE>

9
<PAGE>

Portfolios' non-investment operations, coordination of the other services
provided to the Master Portfolios, compilation of information for reports to the
SEC and the state securities commissions, preparation of proxy statements and
shareholder reports, and general supervision of data compilation in connection
with preparing periodic reports to the MIP's trustees and officers. Stephens
also furnishes office space and certain facilities to conduct the Master
Portfolios' business, and compensates the MIP's trustees, officers and employees
who are affiliated with Stephens. In addition, except as outlined below under "
Expenses", Stephens and BGI will be responsible for paying all expenses incurred
by the Master Portfolios other than the fees payable to BGFA. Stephens and BGI
are not entitled to compensation for providing administration services to a
Master Portfolio. BGI has delegated certain of its duties as co-administrator to
Investors Bank & Trust Company ("IBT"). IBT, as sub-administrator, is
compensated by BGI for performing certain administration services.

Prior to October 21, 1996, Stephens alone provided administration
services to MIP pursuant to an Administration Agreement dated February 25, 1994
(the "Administration Agreement"). Stephens was not entitled to compensation for
providing administration services to the Master Portfolios so long as Stephens
received fees for providing similar services to a feeder fund of another
investment company investing all of its assets in a Master Portfolio. The
Master Portfolios did not pay any administration fees to Stephens.

Placement Agent. Stephens is the placement agent for the Master
Portfolios. Stephens is a full service broker/dealer and investment advisory
firm located at 111 Center Street, Little Rock, Arkansas 72201. 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. Stephens does not receive compensation for acting as placement
agent.

Custodian. Investors Bank & Trust Company ("IBT") currently acts as
the Master Portfolios' custodian. The principal business address of IBT is 200
Clarendon Street, Boston, Massachusetts 02116. IBT is not entitled to receive
compensation for its custodial services so long as it is entitled to receive
compensation for providing sub-administration services to the Master Portfolios.
Prior to October 21, 1996, Barclays Global Investors, N.A. ("BGI") acted as the
Master Portfolios' custodian. The principal business address of BGI is 45
Fremont Street, San Francisco, California 94105. BGI did not receive
compensation for its custodial services.

Transfer and Dividend Disbursing Agent. Wells Fargo Bank is each
Master Portfolio's Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). The principle business address of Wells Fargo Bank is 525 Market
Street, San Francisco, California 94105. Wells Fargo Bank is not entitled to
receive compensation for providing such services to MIP so long as it receives
fees for providing similar services to the funds which invest substantially all
of their assets in the Master Portfolios. To date, the Master Portfolios have
not paid any transfer and dividend disbursing agency fees.

Distribution Plan. MIP's Board of Trustees has adopted, on behalf of
each Master Portfolio, 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 MIP's Board of Trustees (including a majority of those Trustees who
are not "interested persons" as defined in the 1940 Act of MIP) 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
Portfolio to finance activities primarily intended to result in the sale of
interests in such Master Portfolio. The Plan provides that if any portion of a
Master Portfolio's advisory fees (up to 0.25% of the average daily net assets of
each Master Portfolio 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 Portfolio such payment would be authorized pursuant to the
Plan. The Master Portfolios do not currently pay any amounts pursuant to the
Plan.

Expenses. Except for extraordinary expenses, brokerage and other
expenses connected with to the execution of portfolio transactions and certain
other expenses which are borne by the Master Portfolios, Stephens and BGI have
agreed to bear all costs of the Master Portfolios' and MIP's operations.

10
<PAGE>

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

General. BGFA assumes general supervision over placing orders on
behalf of each 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
shareholders. In executing portfolio transactions and selecting brokers or
dealers, BGFA seeks to obtain the best overall terms available for each Master
Portfolio. In assessing the best overall terms available for any transaction,
BGFA considers factors deemed relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. The primary
consideration is prompt execution of orders at the most favorable net price.
Certain of the brokers or dealers with whom the Master Portfolios may transact
business offer commission rebates to the Master Portfolios. BGFA considers such
rebates in assessing the best overall terms available for any transaction. 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.
Prior to January 1, 1996, WFNIA exercised general supervision over placing
orders on behalf of each Master Portfolio for the purchase or sale of portfolio
securities and the brokerage allocation practices described herein are
applicable to WFNIA and the Master Portfolios prior to January 1, 1996.

S&P 500 Index Master Portfolio. 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.

Bond Index Master Portfolio. Purchases and sales of portfolio
securities for the Bond Index Master Portfolio 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 Portfolio 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.

Brokerage Commissions. For the period from commencement of operations
until February 28, 1995 and for the years ended February 29, 1996 and February
28, 1997, the Master Portfolios paid brokerage commissions in the dollar amounts
shown below. None of the brokerage commissions were paid to affiliated brokers.

MASTER PORTFOLIO 1995 1996 1997
- ---------------- ---- ---- ----
<S> <C> <C> <C>
S&P 500 Index Master Portfolio $244,742 $80,902 $69,826
Bond Index Master Portfolio $ 0 $ 0 $ 0
</TABLE>

Securities of Regular Broker/Dealers. On February 28, 1997, the
Master Portfolios did not own securities of their "regular brokers or dealers"
or their parents, as defined in the 1940 Act.

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Pursuant to MIP's Declaration of Trust, the Trustees are authorized to
issue shares of beneficial interests in each Master Portfolio. Investors in a
Master Portfolios are entitled to participate pro rata in distributions of
taxable income, loss, gain and credit of such Master Portfolios. Upon
liquidation or dissolution of a Master Portfolios, investors are entitled to
share pro rata in such Master Portfolios' net assets available for distribution
to its investors. Investments in a Master Portfolio 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 Portfolios may not be
transferred. No certificates are issued.

Each investor is entitled to vote, with respect to matters affecting
each of MIP's portfolios, in proportion to the amount of its investment in the
MIP. Investors in the MIP do not have cumulative voting rights, and investors

11
<PAGE>

holding more than 50% of the aggregate beneficial interest in MIP may elect all
of the Trustees of MIP if they choose to do so and in such event the other
investors in MIP would not be able to elect any Trustee. MIP is not required to
hold annual meetings of investors but MIP may hold special meetings of investors
when in the judgment of MIP's Trustees it is necessary or desirable to submit
matters for an investor vote.

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 Portfolio
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 Portfolios 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
Portfolio 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
Portfolios ordinarily utilizes is restricted, or when an emergency exists as
determined by the Securities and Exchange Commission so that disposal of the
Master Portfolios' 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 Portfolios'
shareholders.

PRICING OF SECURITIES.

S&P 500 Index Master Portfolio. The securities of the S&P 500 Index
Master Portfolio, including covered call options written by the Master
Portfolios, are valued as discussed below. 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 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 BGFA in accordance with guidelines approved by MIP'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 MIP's Board of Trustees, are valued at fair value as
determined in good faith by BGFA in accordance with guidelines approved by MIP's
Board of Trustees. BFGA and MIP'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

12
<PAGE>

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 MIP's Board of Trustees.

Bond Index Master Portfolio. The investments of the Bond Index Master
Portfolio are valued each business day using available market quotations or at
fair value as determined by one or more independent pricing services
(collectively, the "Services") approved by MIP's Board of Trustees. Services
may use available market quotations, employ electronic data processing
techniques and/or a matrix system to determine valuations. Each Service's
procedures are reviewed by MIP's officers under the general supervision of MIP'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 Portfolio's shares. 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 Portfolio's shares.

New York Stock Exchange Closings. The holidays on which the New York
Stock Exchange is closed currently are: New Year's Day, Martin Luther King,
Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

ITEM 20. TAX STATUS.

MIP is organized as a business trust under Delaware law. Under MIP's
current classification for federal income tax purposes, it is intended that each
Master Portfolio will be treated as a partnership for such purposes and,
therefore, such Master Portfolio will not be subject to any federal income tax.
However, each investor in a Master Portfolio will be taxable on its share (as
determined in accordance with the governing instruments of MIP) of such Master
Portfolio's ordinary income and capital gain in determining its federal income
tax liability. The determination of such share will be made in accordance with
the Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.

MIP's taxable year-end is the last day of December. Although MIP will
not be subject to Federal income tax, it will file appropriate Federal income
tax returns.

Each Master Portfolio's assets, income and distributions will be
managed in such a way that an investor in such Master Portfolio may satisfy the
requirements of Subchapter M of the Code, by investing substantially all of its
investable assets in the Master Portfolio. Investors are advised to consult
their own tax advisors as to the tax consequences of an investment in a Master
Portfolio.

ITEM 21. UNDERWRITERS.

The exclusive placement agent for MIP 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 Portfolio of MIP.

ITEM 22. CALCULATIONS OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL INFORMATION.

KPMG Peat Marwick LLP provides audit services, tax return preparation
and assistance and consultation in connection with the review of certain SEC
filings. KPMG Peat Marwick LLP's address is Three Embarcadero Center, San
Francisco, California 94111. For the fiscal year ended February 28, 1995,
MIP's financial statements

13
<PAGE>

were audited by other independent auditors. Such auditors expressed an
unqualified opinion on the financial statements of the MIP.

The portfolio of investments, audited financial statements and
independent auditors' report for the Master Portfolios for the fiscal year ended
February 28, 1997 are hereby incorporated by reference to the MasterWorks Funds
Inc. (SEC File Nos. 33-54126; 811-7322) Annual Report, as filed with the SEC on
May 2, 1997. The portfolio of investments, audited financial statements and
independent auditors' report for the Master Portfolios are attached to all Part
Bs delivered to interestholders or prospective interestholders.

14
<PAGE>

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.

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.

A-1
<PAGE>

"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 ("P-1") Prime-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 ("P-2") Prime-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.

A-2
<PAGE>

"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. 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-3
<PAGE>

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 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.

A-4
<PAGE>

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-5
<PAGE>

MASTER INVESTMENT PORTFOLIO
LIFEPATH(TM) MASTER PORTFOLIOS

LIFEPATH 2000 MASTER PORTFOLIO
LIFEPATH 2010 MASTER PORTFOLIO
LIFEPATH 2020 MASTER PORTFOLIO
LIFEPATH 2030 MASTER PORTFOLIO
LIFEPATH 2040 MASTER PORTFOLIO

PART B -- STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 1997

ITEM 10. COVER PAGE.

Master Investment Portfolio ("MIP") is an open-end, management
investment company. MIP 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 MIP's Part A, also dated June 30, 1997. 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"),
MIP's sponsor, co-administrator and placement agent, at 111 Center Street,
Little Rock, Arkansas 72201, or by calling Stephens at 1-800-643-9691. MIP'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......................... 1
Investment Objectives and Policies...................... 1
Management of MIP....................................... 9
Control Persons and Principal Holders
of Securities.......................................... 12
Investment Advisory and Other Services.................. 12
Brokerage Allocation and Other Practices................ 15
Capital Stock and Other Securities...................... 16
Purchase, Redemption and Pricing of
Securities............................................. 17
Tax Status.............................................. 19
Underwriters............................................ 19
Calculations of Performance Data........................ 19
Financial Information................................... 19
Appendix................................................ A-1
Financial Statements.................................... F-1
</TABLE>

ITEM 12. GENERAL INFORMATION AND HISTORY.

Not applicable.

ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.

Investment Objectives. The LifePath Master Portfolios consists of five asset
allocation funds (the "LifePath Master Portfolios" or the "Master Portfolios"),
each of which is a diversified portfolio. Organizations and other entities that
hold shares of beneficial interest of a Master Portfolio may be referred to
herein as "feeder funds."

The LifePath Master Portfolios 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
Portfolios invest in a wide range of U.S. and foreign equity and debt securities
and money market instruments.

1
<PAGE>

. LIFEPATH 2000 MASTER PORTFOLIO 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 PORTFOLIO 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 PORTFOLIO 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 PORTFOLIO 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 PORTFOLIO 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.

As with all mutual funds, there can be no assurance that the
investment objective of each Master Portfolio will be achieved. Each Master
Portfolio's 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 Portfolio's outstanding voting
interests.

Barclays Global Fund Advisors ("BGFA") serves as investment adviser to
each Master Portfolio. Prior to January 1, 1996, Wells Fargo Bank, N.A. ("Wells
Fargo Bank") served as each Master Portfolio's investment adviser and Wells
Fargo Nikko Investment Advisors ("WFNIA") served as each Master Portfolio's 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 Portfolios' custodian. BGFA is now a subsidiary of WFITC which,
effective January 1, 1996, changed its name to Barclays Global Investors, N.A.
("BGI"). Stephens serves as MIP's administrator and as placement agent of each
Master Portfolio's interests.

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 Portfolio are insured by the FDIC (although such
insurance may not be of material benefit to the Master Portfolio, depending on
the principal amount of the CDs of each bank held by the Master Portfolio) 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 Portfolio
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

2
<PAGE>

may be publicly available about a foreign branch of a domestic bank or about a
foreign bank than about a domestic bank.

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 Portfolio 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 Portfolio 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
Portfolio will own more than one such CD per such issuer.

MANAGEMENT POLICIES.

Repurchase Agreements. Each Master Portfolio may engage in a
repurchase agreement with respect to any security in which it is authorized to
invest, although the underlying security may mature in more than thirteen
months. The Master Portfolio may enter into repurchase agreements wherein the
seller of a security to the Master Portfolio agrees to repurchase that security
from the Master Portfolio at a mutually agreed-upon time and price that involves
the acquisition by the Master Portfolio of an underlying debt instrument,
subject to the seller's obligation to repurchase, and the Master Portfolio's
obligation to resell, the instrument at a fixed price usually not more than one
week after its purchase. The Master Portfolio's custodian has custody of, and
holds in a segregated account, securities acquired as collateral by the Master
Portfolio under a repurchase agreement. Repurchase agreements are considered by
the staff of the SEC to be loans by the Master Portfolio. The Master Portfolio
may enter into repurchase agreements only with respect to securities of the type
in which it may invest, including government securities and mortgage-related
securities, regardless of their remaining maturities, and requires that
additional securities be deposited with the custodian if the value of the
securities purchased should decrease below resale price. Wells Fargo Bank
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
the Master Portfolio 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, disposition of the securities by the Master Portfolio may be
delayed or limited. While it does not presently appear possible to eliminate
all risks from these transactions (particularly the possibility of a decline in
the market value of the underlying securities, as well as delay and costs to the
Master Portfolio in connection with insolvency proceedings), it is the policy of
the Master Portfolio to limit repurchase agreements to selected creditworthy
securities dealers or domestic banks or other recognized financial institutions.
The Master Portfolio considers on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements. Repurchase
agreements are considered to be loans by a Master Portfolio under the Investment
Company Act of 1940 (the "1940 Act").

3
<PAGE>

Floating- and Variable-Rate Obligations. Each Master Portfolio may
purchase floating- and variable-rate obligations as described in the
Prospectus. The Master Portfolio 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 that
are obligations that permit the Master Portfolio to invest fluctuating amounts,
which may change daily without penalty, pursuant to direct arrangements between
the Master Portfolio , 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 Portfolio's right to redeem is dependent on the ability
of the borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies and the Fund may invest in
obligations which are not so rated only if Wells Fargo Bank determines that at
the time of investment the obligations are of comparable quality to the other
obligations in which the Master Portfolio may invest. Wells Fargo Bank, on
behalf of the Master Portfolio, considers on an ongoing basis the
creditworthiness of the issuers of the floating- and variable-rate demand
obligations in the Master Portfolio 's portfolio. The Master Portfolio will
not invest more than 10% of the value of its total net assets in floating- or
variable-rate demand obligations whose demand feature is not exercisable within
seven days. Such obligations may be treated as liquid, provided that an active
secondary market exists.

Stock Index Options. Each LifePath Master Portfolio 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. 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 (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 Portfolios 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 Portfolio.

4
<PAGE>

Foreign Currency Transactions. Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the 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 Portfolios intend to engage in foreign
currency transactions to maintain the same foreign currency exposure as the
relevant foreign securities index through which the Master Portfolios seek
foreign equity market exposure, but not as part of a defensive strategy to
protect against fluctuations in exchange rates. If a LifePath Master Portfolio
enters into a foreign currency transaction or forward contract, such Master
Portfolio deposits, if required by applicable regulations, with MIP's custodian,
cash or high-grade debt securities in a segregated account of the LifePath
Master Portfolios in an amount at least equal to the value of the LifePath
Master Portfolio's 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 Portfolio's
commitment with respect to the contract.

At or before the maturity of a forward contract, a LifePath Master
Portfolio 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 Portfolio obtains, on the same maturity date, the same amount of the
currency which it is obligated to deliver. If the LifePath Master Portfolio
retains the portfolio security and engages in an offsetting transaction, such
Master Portfolio, 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 Portfolio's 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 Portfolio 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 Portfolio 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 Portfolios 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 Portfolio
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
Portfolios 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
Portfolio, 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.

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 a LifePath Master Portfolio of unrealized profits or force such Master
Portfolio 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

5
<PAGE>

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 Portfolio might realize in trading could be eliminated by
adverse changes in the exchange rate; adverse exchange rate changes also could
cause a LifePath Master Portfolio to incur losses. Transactions on foreign
exchanges may include both futures contracts which are traded on domestic
exchanges and those which are not.

Future Developments. Each LifePath Master Portfolio 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 Portfolio or which are not
currently available but which may be developed, to the extent such opportunities
are both consistent with a LifePath Master Portfolio's investment objective and
legally permissible for the Master Portfolio. Before entering into such
transactions or making any such investment, a LifePath Master Portfolio would
provide appropriate disclosure in its Part A or this Part B.

Lending Portfolio Securities. To a limited extent, each Master
Portfolio 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 Portfolio
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 Portfolio 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 Portfolio to be the equivalent of cash.
From time to time, a Master Portfolio may return to the borrower, or to a third
party unaffiliated with MIP 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: (1) the Master Portfolio 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 Portfolio must be able to terminate
the loan at any time; (4) the Master Portfolio 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
Portfolio 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,
MIP'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.

Warrants. Each Master Portfolio may invest generally up to 5% of its
total net assets at the time of purchase 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. The prices of warrants do
not necessarily correlate with the prices of the underlying securities.

Investment Restrictions. Each Master Portfolio has adopted investment
restrictions numbered 1 through 10 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of such Master Portfolio's 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 MIP at any time. The
Master Portfolios may not:

1. Invest more than 5% of their assets in the obligations of any
single issuer, except that up to 25% of the value of their 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
their total assets.

6
<PAGE>

3. Invest in commodities, except that each Master Portfolio 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 Portfolio
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 Portfolio's 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 Portfolios as described in Part A.

6. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, each Master
Portfolio may lend its portfolio securities in an amount not to exceed one-third
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 MIP's Board of Trustees.

7. Act as an underwriter of securities of other issuers, except to
the extent the Master Portfolios 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 their total assets, respectively, in the
securities of issuers in any particular industry or group of closely-related
industries, except that, in the case of each Master Portfolio, 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 Portfolio 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 Portfolio will vote the
securities it owns in its portfolio as a shareholder in accordance with its
views.

12. Pledge, mortgage or hypothecate their 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 Portfolios' 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 securities which are illiquid, if, in
the aggregate, more than 15% of the value of a Master Portfolio's net assets
would be so invested.

7
<PAGE>

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 the Master
Portfolio's 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, and
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.

As a matter of general operating policy, each Master Portfolio may
invest up to 20% of the value of its total assets in foreign securities that are
not publicly traded in the United States.

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 MIP

The following information supplements and should be read in
conjunction with the Part A section entitled "Management of the Master
Portfolio". The Trustees and Principal Officer of MIP, 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 MIP, 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, 75 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027.

*R. Greg Feltus, 46 Trustee, Executive Vice President of
Chairman and President Stephens; Manager 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, 55 Trustee Associate Professor of
P.O. Box 7285 Finance, Calloway
Reynolds Station School of Business and
Winston-Salem, NC 27104 Accounting, Wake Forest
University, since 1982.
</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
- --------------------- -------- ---------------------
<S> <C> <C>
*Zoe Ann Hines, 48 Trustee Senior Vice President
of Stephens and
Director of Brokerage
Accounting; Secretary
of Stephens Resource
Management; and Senior
Vice President of Link
Investments Inc.

*W. Rodney Hughes, 70 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901

Robert M. Joses, 79 Trustee Private Investor.
47 Dowitcher Way
San Rafael, CA 94901

*J. Tucker Morse, 52 Trustee Chairman of Home
4 Beaufain Street Account Network, Inc.;
Charleston, SC 29401 Real Estate Developer;
Chairman of Renaissance
Properties Ltd;
President of Morse
Investment Corporation;
and Co-Managing Partner
of Main Street Ventures.

Richard H. Blank, Jr., 40 Chief Operating Associate of Financial
Officer, Secretary Services Group of
and Treasurer Stephens; Director of
Stephens Sports
Management Inc.; and
Director of Capo Inc.
</TABLE>

9
<PAGE>

COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>

TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEX
- ----------------- ---------------------- ------------------
<S> <C> <C>
Jack S. Euphrat $0 $9,250
Trustee

*R. Greg Feltus 0 0
Trustee

Thomas S. Goho 0 9,250
Trustee

*Zoe Ann Hines 0 0
Trustee

*W. Rodney Hughes 0 8,250
Trustee

Robert M. Joses 0 9,250
Trustee

*J. Tucker Morse 0 8,250
Trustee
</TABLE>

Trustees of MIP are compensated annually by all the registrants in the
fund complex for their services as indicated above and also are reimbursed for
all out-of-pocket expenses relating to attendance at board meetings. MIP,
MasterWorks Funds Inc. and Managed Series Investment Trust are considered to be
members of the same fund complex as such term is defined in Form N-1A under the
1940 Act (the "BGFA Fund Complex"). Stagecoach Funds, Inc., Overland Express
Funds, Inc., Stagecoach Trust, Life & Annuity Trust and Master Investment Trust
together form a separate fund complex (the "Wells Fargo Fund Complex"). Each of
the Directors and the principal officer of MIP serves in the identical capacity
as directors/trustees and/or officer of each registered open-end management
investment company in both the BGFA and Wells Fargo Fund Complexes, except for
Zoe Ann Hines who, after September 6, 1996, only serves the aforementioned
members of the BGFA Fund Complex. The Trustees are compensated by other
Companies and Trusts within the fund complexes for their services as
Directors/Trustees to such Companies and Trusts. Currently the Trustees do not
receive any retirement benefits or deferred compensation from MIP or any other
member of each fund complex.

As of the date of this SAI, the Trustees and Principal Officer of MIP
as a group beneficially owned less than 1% of the outstanding beneficial
interest of MIP.

ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.

As of May 30, 1997, the following funds of MasterWorks Funds Inc. and
Stagecoach Trust each held more than 5% of the outstanding voting securities of
the indicated LifePath Master Portfolio and, as such, could be considered
controlling persons for purposes of the 1940 Act of the corresponding Master
Portfolio.

10
<PAGE>

% OUTSTANDING
MASTER PORTFOLIO FUND SECURITIES HELD
---------------- ---- ---------------
<S> <C> <C>
LifePath 2000 Master Portfolio MasterWorks LifePath 2000 36%
Stagecoach LifePath 2000 64%

LifePath 2010 Master Portfolio MasterWorks LifePath 2010 51%
Stagecoach LifePath 2010 49%

LifePath 2020 Master Portfolio MasterWorks LifePath 2020 43%
Stagecoach LifePath 2020 57%

LifePath 2030 Master Portfolio MasterWorks LifePath 2030 37%
Stagecoach LifePath 2030 63%

LifePath 2040 Master Portfolio MasterWorks LifePath 2040 27%
Stagecoach LifePath 2040 73%
</TABLE>

For purposes of the 1940 Act, any person who owns directly or through
one or more controlled companies more than 25% of the voting securities of a
company is presumed to "control" such company. Accordingly, to the extent that
an interestholder identified in the foregoing table is identified as the
beneficial holder of more than 25% of a Master Portfolio, or is identified as
the holder of record of more than 25% of a Master Portfolio and has voting
and/or investment powers, such interestholder may be presumed to control such
Master Portfolio.

ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.

The following information supplements and should be read in conjunction with
Item 5 in Part A.

Investment Adviser. BGFA provides investment advisory services to
each Master Portfolio pursuant to separate Investment Advisory Contracts (each,
a "BGFA Advisory Contract") with MIP, each dated January 1, 1996. As to each
Master Portfolio, the applicable BGFA Advisory Contract is subject to annual
approval by (i) MIP's Board of Trustees or (ii) vote of a majority (as defined
in the 1940 Act) of the outstanding voting securities of such Master Portfolio,
provided that in either event the continuance also is approved by a majority of
MIP's Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of MIP or BGFA, by vote cast in person at a meeting called for the purpose
of voting on such approval. As to each Master Portfolio, the applicable BGFA
Advisory Contract is terminable without penalty, on 60 days' written notice, by
MIP's Board of Trustees or by vote of the holders of a majority of such Master
Portfolio's interests, or, on not less than 60 days' written notice by BGFA.
The applicable BGFA Advisory Contract terminates automatically, as to the
relevant Master Portfolio, 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 Portfolio pursuant to the Investment Advisory
Agreement (the "Advisory Agreement") dated February 25, 1994 with MIP. The
terms of the Advisory Agreement were identical in all material respects, other
than the identity of the parties, to each BGFA Advisory Contract.

Advisory Fees Paid. For the fiscal year ended February 28, 1995 and
the period from March 1, 1995 to December 31, 1995, the Master Portfolios paid
to Wells Fargo Bank the advisory fees indicated below and Wells Fargo Bank
waived the indicated amounts. For the period beginning January 1, 1996 and
ended February 29, 1996, and for the year ended February 28, 1997, the Master
Portfolios paid to BGFA the advisory fees indicated below. BGFA did not waive
any portion of the advisory fees paid.

11
<PAGE>

FISCAL YEAR ENDED MARCH 1, 1995 JANUARY 1, 1996 FISCAL YEAR ENDED
FEBRUARY 28, 1995 DECEMBER 31, 1995 FEBRUARY 29, 1996 FEBRUARY 28, 1997
MASTER PORTFOLIO FEES PAID FEES PAID FEES PAID FEES PAID
---------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
LifePath 2000 Master Portfolio $217,676 $363,599 $ 99,511 $ 689,347
LifePath 2010 Master Portfolio $158,218 $312,512 $ 86,919 $ 757,505
LifePath 2020 Master Portfolio $252,413 $520,362 $141,075 $1,149,160
LifePath 2030 Master Portfolio $156,397 $343,916 $ 93,240 $ 714,647
LifePath 2040 Master Portfolio $189,121 $503,384 $148,324 $1,154,330
</TABLE>

Sub-Adviser. The Master Portfolios do not currently engage a sub-
adviser. However, prior to January 1, 1996, WFNIA provided sub-investment
advisory services to each Master Portfolio pursuant to a Sub-Investment Advisory
Agreement (the "Sub-Advisory Agreement") dated February 25, 1994 with Wells
Fargo Bank and MIP.

Sub-Advisory Fees Paid. For the fiscal year ended February 28, 1995
and the period beginning March 1, 1995 and ended December 31, 1995, Wells Fargo
Bank paid the following sub-advisory fees to WFNIA, without waivers.
<TABLE>
<CAPTION>

FISCAL YEAR ENDED PERIOD ENDED
FEBRUARY 28, 1995 DECEMBER 31, 1995
FEES PAID FEES PAID
--------- ---------
<S> <C> <C>
LifePath 2000 Master Portfolio $159,494 $261,344
LifePath 2010 Master Portfolio $115,647 $224,903
LifePath 2020 Master Portfolio $184,341 $374,802
LifePath 2030 Master Portfolio $114,426 $247,703
LifePath 2040 Master Portfolio $138,511 $361,673
</TABLE>

Prior to October 21, 1996, Stephens alone provided administration
services to MIP pursuant to an Administration Agreement dated February 25, 1994
(the "Administration Agreement"). Stephens was not entitled to compensation for
providing administration services to the Master Portfolios so long as Stephens
received fees for providing similar services to a feeder fund of another
investment company investing all of its assets in a Master Portfolio. The
Master Portfolios did not pay any administration fees to Stephens.

Placement Agent. Stephens is the placement agent for the Master
Portfolios. Stephens is a full service broker/dealer and investment advisory
firm located at 111 Center Street, Little Rock, Arkansas 72201. 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. Stephens does not receive compensation for acting as placement
agent.

12
<PAGE>

Custodian. Investors Bank & Trust Company ("IBT") currently acts as
the Master Portfolios' custodian. The principal business address of IBT is 89
South Street, Boston, Massachusetts 02111. IBT is not entitled to receive
compensation for its custodial services so long as it is entitled to receive
compensation for providing sub-administration services to the Master Portfolios.
Prior to October 21, 1996, Barclays Global Investors, N.A. ("BGI") acted as the
Master Portfolios' custodian. The principal business address of BGI is 45
Fremont Street, San Francisco, California 94105. BGI did not receive
compensation for its custodial services.

Transfer and Dividend Disbursing Agent. Wells Fargo Bank is each
Master Portfolio's Transfer and Dividend Disbursing Agent (the "Transfer
Agent"). The principle business address of Wells Fargo Bank is 525 Market
Street, San Francisco, California 94105. Wells Fargo Bank is not entitled to
receive compensation for providing such services to MIP so long as it receives
fees for providing similar services to the funds which invest substantially all
of their assets in the Master Portfolios. To date, the Master Portfolios have
not paid any transfer and dividend disbursing agency fees.

Distribution Plan. MIP's Board of Trustees has adopted, on behalf of
each Master Portfolio, 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 MIP's Board of Trustees (including a majority of those Trustees who
are not "interested persons" as defined in the 1940 Act of MIP) 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
Portfolio to finance activities primarily intended to result in the sale of
interests in such Master Portfolio. The Plan provides that if any portion of a
Master Portfolio's advisory fees (up to 0.25% of the average daily net assets of
each Master Portfolio 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 Portfolio such payment would be authorized pursuant to the
Plan. The Master Portfolios do not currently pay any amounts pursuant to the
Plan.

Expenses. Except for extraordinary expenses, brokerage and other
expenses connected with to the execution of portfolio transactions and certain
other expenses which are borne by the Master Portfolios, Stephens and BGI have
agreed to bear all costs of the Master Portfolios' and MIP's operations.

ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.

General. BGFA assumes general supervision over placing orders on
behalf of each 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. In executing portfolio transactions and selecting brokers or
dealers, BGFA seeks to obtain the best overall terms available for each Master
Portfolio. In assessing the best overall terms available for any transaction,
BGFA considers factors deemed relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. A primary
consideration is prompt execution of orders at the most favorable net price.
Certain of the brokers or dealers with whom the Master Portfolios may transact
business offer commission rebates to the Master Portfolios. BGFA considers such
rebates in assessing the best overall terms available for any transaction. The
overall reasonableness of brokerage commissions paid is evaluated by BGFA based
upon its knowledge of available information as to the general level of
commission paid by other institutional investors for comparable services. Prior
to January 1, 1996, WFNIA exercised general supervision over placing orders on
behalf of each Master Portfolio for the purchase or sale of portfolio securities
and the brokerage allocation practices described herein are applicable to WFNIA
and the Master Portfolios prior to January 1, 1996.

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. Portfolio turnover rates over 100%
(although unexpected) may result in comparatively greater brokerage expenses.

13
<PAGE>

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 Portfolios 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.

Brokerage Commissions. For the fiscal years ended February 28, 1995,
February 29, 1996 and FEBRUARY 28, 1997 the Master Portfolios paid brokerage
commissions in the dollar amounts shown below. None of the brokerage
commissions were paid to affiliated brokers.
<TABLE>
<CAPTION>

MASTER PORTFOLIO 1995 1996 1997
- ---------------- ---- ---- ----
<S> <C> <C> <C>
LifePath 2000 Master Portfolio $24,231 $ 8,311 $ 3,639
LifePath 2010 Master Portfolio $28,830 $12,053 $ 8,837
LifePath 2020 Master Portfolio $56,540 $29,666 $12,383
LifePath 2030 Master Portfolio $37,890 $33,786 $ 6,927
LifePath 2040 Master Portfolio $56,183 $71,608 $28,047
</TABLE>

Securities of Regular Broker/Dealers. As of February 28, 1997, the
LifePath Master Portfolios owned securities of their "regular brokers or
dealers" or their parents, as defined in the 1940 Act, as follows:
<TABLE>
<CAPTION>

MASTER PORTFOLIO BROKER/DEALER AMOUNT
- ---------------- ------------- ------
<S> <C> <C>
LifePath 2000 Master Portfolio Salomon Inc. $ 6,619
Goldman Sachs $15,000,000
Morgan Stanley $ 12,499

LifePath 2010 Master Portfolio Salomon Inc. $ 52,065
Goldman Sachs $13,000,000
Morgan Stanley $ 81,431

LifePath 2020 Master Portfolio Salomon Inc. $ 101,238
Goldman Sachs $27,000,000
Morgan Stanley $ 164,756

LifePath 2030 Master Portfolio Salomon Inc. $ 78,209
Goldman Sachs $15,000,000
Morgan Stanley $ 126,124

LifePath 2040 Master Portfolio Salomon Inc. $ 144,347
Goldman Sachs $19,000,000
Morgan Stanley $ 227,313

</TABLE>

ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.

Pursuant to MIP's Declaration of Trust, the Trustees are authorized to
issue beneficial interests in each Master Portfolio. Investors in a Master
Portfolio are entitled to participate pro rata in distributions of taxable
income, loss, gain and credit of such Master Portfolio. Upon liquidation or
dissolution of a Master Portfolio, investors are entitled to share pro rata in
such Master Portfolio's net assets available for distribution to its investors.
Investments in a Master Portfolio have no preference, pre-exemptive, conversion
or similar rights and are fully paid and non-assessable, except as set forth
below. Investments in a Master Portfolio may not be transferred. No
certificates are issued.

14
<PAGE>

Each investor is entitled to vote, with respect to matters effecting
each of MIP's portfolios, in proportion to the amount of its investment in MIP.
Investors in MIP do not have cumulative voting rights, and investors holding
more than 50% of the aggregate beneficial interest in MIP may elect all of the
Trustees of MIP if they choose to do so and in such event the other investors in
MIP would not be able to elect any Trustee. MIP is not required to hold annual
meetings of investors but MIP may hold special meetings of investors when in the
judgment of MIP'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 MIP, 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 Portfolio affected by such matter. Rule 18f-2 further provides that
a Master Portfolio shall be deemed to be affected by a matter unless it is clear
that the interests of such Master Portfolio in the matter are identical or that
the matter does not affect any interest of such Master Portfolio. 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 Portfolio
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 Portfolios 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 interests in
the Master Portfolios 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 Portfolios ordinarily utilize is restricted, or when an emergency exists
as determined by the SEC so that disposal of the Master Portfolios' 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
Portfolios' interestholders.

Pricing of Securities. The securities of each of the LifePath Master
Portfolios, including covered call options written by a LifePath Master
Portfolio, 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 BGFA in
accordance with guidelines approved by MIP's Board of Trustees. 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 BGFA in
accordance with guidelines approved by MIP'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 MIP's Board of Trustees, are valued at fair value as
determined in good faith by or under the direction of MIP's Board of Trustees or
its delegates. MIP'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

15
<PAGE>

adjustment from cost is based upon considerations deemed relevant by or under
the direction of MIP'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 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 Portfolios. In
addition, foreign securities held by a LifePath Master Portfolio may be traded
actively in securities markets which are open for trading on days when the
LifePath Master Portfolio does not determine its net asset value. Accordingly,
there may be occasions when a LifePath Master Portfolio does not calculate its
net asset value but when the value of such Master Portfolio's 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 "Services") approved by MIP's Board of
Trustees. Each Service may use available market quotations, employ electronic
data processing techniques and/or a matrix system to determine valuations. The
Services' procedures are reviewed by MIP's officers under the general
supervision of MIP'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 Portfolio's shares.

ITEM 20. TAX STATUS.

MIP is organized as a business trust under Delaware law. In
accordance with MIP's classification for federal income tax purposes, each
Master Portfolio will be considered a partnership for such purposes, and as
such, the Master Portfolios will not be subject to federal income tax. However,
each investor in a Master Portfolio will be taxable on its share (as determined
in accordance with the governing instruments of MIP) of such Master Portfolio's
taxable income in determining its federal 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.

MIP's taxable year-end is the last day of December. Although MIP is
not subject to federal income tax, it files appropriate federal income tax
returns.

Each Master Portfolio's assets, income and distributions are managed
in such a way that an investor in the Master Portfolio may satisfy the
requirements of Subchapter M of the Code, assuming that the investor invested
substantially all of its investable assets in the Master Portfolio. Investors
are advised to consult their own tax advisors as to the tax consequences of an
investment in the Master Portfolios.

ITEM 21. UNDERWRITERS.

The exclusive placement agent for MIP 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 adopted under the
1933 Act, may continuously invest in a Master Portfolio of MIP.

16
<PAGE>

ITEM 22. CALCULATIONS OF PERFORMANCE DATA.

Not applicable.

ITEM 23. FINANCIAL INFORMATION.

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. For the fiscal year ended February 28, 1995,
MIP's financial statements were audited by other independent auditors. Such
auditors expressed an unqualified opinion on the financial statements of MIP.

The portfolio of investments, audited financial statements and
independent auditors' report for the LifePath Master Portfolios for the fiscal
year ended February 28, 1997 are hereby incorporated by reference into the
MasterWorks Funds Inc. (SEC File Nos. 33-54126; 811-7322) Annual Report, as
filed with the SEC on May 2, 1997. The portfolio of investments, audited
financial statements and independent auditors' report for the LifePath Master
Portfolios are attached to all Part Bs delivered to interestholders or
prospective interestholders.

17
<PAGE>

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 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
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

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.

A-1
<PAGE>

"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 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 in a timely
manner. 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.

A-2
<PAGE>

"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"

"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-3
<PAGE>

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 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.

A-4
<PAGE>

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 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-5
<PAGE>

MASTER INVESTMENT PORTFOLIO

FILE NO. 811-8162

PART C. OTHER INFORMATION
--------------------------

Item 24. Financial Statements and Exhibits
- ------- ---------------------------------

(a) Financial Statements

The portfolio of investments, audited financial statements and
independent auditors' report for the Asset Allocation, Bond Index, LifePath
2000, LifePath 2010, LifePath 2020, LifePath 2030, LifePath 2040, S&P 500
Index and U.S. Treasury Allocation Master Portfolios for the fiscal year ended
February 28, 1997, are hereby incorporated by reference to the MasterWorks Funds
Inc. Annual Report, as filed with the SEC on May 2, 1997.

(b) Exhibits:

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>

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 N-1A filed November 15, 1993.

3 - Not Applicable.

4 - Not Applicable.

5(a) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the LifePath 2000 Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(b) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the LifePath 2010 Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(c) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the LifePath 2020 Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.
</TABLE>

C-1
<PAGE>

<TABLE>

<S> <C>

5(d) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the LifePath 2030 Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(e) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the LifePath 2040 Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(f) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the Bond Index Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(g) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the Asset Allocation Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(h) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the S&P 500 Index Master Portfolio,
incorporated by reference to Amendment No. 3 to the
Registration Statement, filed January 5, 1996.

5(i) - Investment Advisory Contract by and among BZW Barclays Global
Fund Advisors and Master Investment Portfolio dated January
1, 1996, on behalf of the U.S. Treasury Allocation Master
Portfolio, incorporated by reference to Amendment No. 3 to
the Registration Statement, filed January 5, 1996.

6 - Placement Agency Agreement with Stephens Inc. on behalf of
each Master Portfolio, incorporated by reference to Amendment
No. 4 to the Registration Statement, filed on June 28, 1996.

7 - Not Applicable.

8 - Custody Agreement with Investors Bank & Trust, N.A. dated
October 21, 1996 on behalf of each Master Portfolio, filed
herewith.

9(a) - Co-Administration Agreement with Stephens Inc. and Barclays
Global Investors, N.A. dated October 21, 1996 on behalf of
each Master Portfolio, filed herewith.

9(b) - Sub-Administration Agreement with Investors Bank & Trust and
Barclays Global Investors, N.A. dated October 21, 1996 on
behalf of each Master Portfolio, filed herewith.

10 - Not Applicable.

11 - Not Applicable.

12 - Not Applicable.

13 - Not Applicable.

</TABLE>

C-2
<PAGE>

14 - Not Applicable.

15 - Distribution Plan on behalf of the LifePath Master
Portfolios, incorporated by reference to Amendment No. 3 to
the Registration Statement, filed January 5, 1996.

16 - Not Applicable.

17 - See Exhibit 27

18 - Not Applicable

19 - Powers of Attorney for Jack S. Euphrat, R. Greg Feltus,
Thomas S. Goho, Zoe Ann Hines, W. Rodney Hughes, Robert M.
Joses and J. Tucker Morse, filed herewith

27.1 - Financial Data Schedule for the LifePath 2000 Master
Portfolio, filed herewith.

27.2 - Financial Data Schedule for the LifePath 2010 Master
Portfolio, filed herewith.

27.3 - Financial Data Schedule for the LifePath 2020 Master
Portfolio, filed herewith.

27.4 - Financial Data Schedule for the LifePath 2030 Master
Portfolio, filed herewith.

27.5 - Financial Data Schedule for the LifePath 2040 Master
Portfolio, filed herewith.

27.11 - Financial Data Schedule for the U.S. Treasury Allocation
Master Portfolio, filed herewith.

27.12 - Financial Data Schedule for the Bond Index Master
Portfolio, filed herewith.

27.13 - Financial Data Schedule for the S&P 500 Stock Master
Portfolio, filed herewith.

27.14 - Financial Data Schedules for the Asset Allocation Master
Portfolio, filed herewith.
</TABLE>

Item 25. Persons Controlled by or Under Common Control with Registrant
- ------- -------------------------------------------------------------

No person is controlled by or under common control with the Registrant.

C-3
<PAGE>

Item 26. Number of Holders of Securities
- ------- -------------------------------

As of May 30, 1997, the number of record holders of each class of
securities of the Registrant was as follows:
<TABLE>
<CAPTION>
Number of Record
Title of Class Holders
-------------- ----------------
<S> <C>

Shares of beneficial interest, $.001 per share, of the following series:

LifePath 2000 Master Portfolio 3
LifePath 2010 Master Portfolio 3
LifePath 2020 Master Portfolio 3
LifePath 2030 Master Portfolio 3
LifePath 2040 Master Portfolio 3
S&P 500 Index Master Portfolio 5
Bond Index Master Portfolio 3
Asset Allocation Master Portfolio 2
U.S. Treasury Allocation Master Portfolio 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 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.

C-4
<PAGE>

Item 28. (a) Business and Other Connections of Investment Adviser
- ------- ----------------------------------------------------

The LifePath 2000, LifePath 2010, LifePath 2020, LifePath 2030, LifePath
2040, Asset Allocation, Bond Index, S&P 500 Index and U.S. Treasury Allocation
Master Portfolios are advised by Barclays Global Fund Advisors ("BGFA"), a
wholly-owned subsidiary of Barclays Global Investors, N.A. ("BGI", formerly,
Wells Fargo Institutional Trust Company).

BGFA's business is that of a registered investment adviser to certain
open-end, management investment companies and various other institutional
investors. 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, including acting as investment adviser and/or sub-adviser
to certain open-end management investment companies and various other
institutional investors.

The directors and officers of BGFA consist primarily of persons who
during the past two years have been active in the investment management business
of the former sub-adviser to the Registrant, Wells Fargo Nikko Investment
Advisors ("WFNIA") and, in some cases, the service business of BGI. 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.

Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ----------------- --------------------------------
<S> <C>

Frederick L.A. Grauer Director of BGFA and Co-Chairman and
Director Director of BGI 45 Fremont Street, San
Francisco, CA 94105

Patricia Dunn Director of BGFA and Co-Chairman and
Director Director of BGI 45 Fremont Street, San
Francisco, CA 94105

Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI 45 Fremont
Street, San Francisco, CA 94105

Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting
Officers at Bankers Trust Company from 1988-1997
505 Montgomery Street, San Francisco, CA 94111
</TABLE>

C-5
<PAGE>

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.

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, McGee, Willis
Director & Greene
455 Market Street
San Francisco, CA 94105

Director of Armstrong World Industries, Inc.
5037 Patata Street
South Gate, CA 90280

Director of Eastman Chemical Corporation
12805 Busch Place
Santa Fe Springs, CA 90670

Director of FPL Group, Inc.
700 Universe Blvd.
P.O. Box 14000
North Palm Beach, FL 33408

Michael R. Bowlin Chairman of the Board of Directors, Chief
Director Executive Officer,
Chief Operating Officer and President of
Atlantic Richfield Co. (ARCO)
Highway 150
Santa Paula, CA 93060

Edward Carson Chairman of the Board and Chief Executive
Director Officer of
First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Director of Aztar Corporation
2390 East Camelback Road Suite 400
Phoenix, AZ 85016

</TABLE>

C-6
<PAGE>

<TABLE>

<S> <C>

Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024

Director of Terra Industries, Inc.
1321 Mount Pisgah Road
Walnut Creek, CA 94596

William S. Davilla President (Emeritus) and a Director of
Director The Vons Companies, Inc.
618 Michillinda Ave
Arcadia, CA 91007

Director of Pacific Gas & Electric Company
788 Taylorville Road
Grass Valley, CA 95949

Rayburn S. Dezember Director of CalMat Co.
Director 3200 San Fernando Road
Los Angeles, CA 90065

Director of Tejon Ranch Company
P.O. Box 1000
Lebec, CA 93243

Director of The Bakersfield Californian
1707 I Street
P.O. Box 440
Bakersfield, CA 93302

Trustee of Whittier College
13406 East Philadelphia Ave.
P.O. Box 634
Whittier, CA 90608

Paul Hazen Chairman of the Board of Directors of
Chairman of the Board of Wells Fargo & Company
Directors 420 Montgomery Street
San Francisco, CA 94105

Director of Phelps Dodge Corporation
2600 North Central Ave.
Phoenix, AZ 85004

Director of Safeway, Inc.
4th and Jackson Streets
Oakland, CA 94660

Robert K. Jaedicke Professor (Emeritus) of Accounting
Director Graduate School of Business at Stanford
University
MBA Admissions Office
Stanford, CA 94305
</TABLE>

C-7
<PAGE>

<TABLE>

<S> <C>

Director of Bailard Biehl & Kaiser
Real Estate Investment Trust, Inc.
2755 Campus Dr.
San Mateo, CA 94403

Director of Boise Cascade Corporation
1111 West Jefferson Street
P.O. Box 50
Boise, ID 83728

Director of California Water Service Company
1720 North First Street
San Jose, CA 95112

Director of Enron Corporation
1400 Smith Street
Houston, TX 77002

Director of GenCorp, Inc.
175 Ghent Road
Fairlawn, OH 44333

Director of Homestake Mining Company
650 California Street
San Francisco, CA 94108

Thomas L. Lee Chairman and Chief Executive Officer of
Director The Newhall Land and Farming Company
10302 Avenue 7 1-2
Firebaugh, CA 93622

Director of Calmat Co.
501 El Charro Road
Pleasanton, CA 94588

Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Ellen Newman President of Ellen Newman Associates
Director 323 Geary Street
Suite 507
San Francisco, CA 94102

Chair (Emeritus) of the Board of Trustees
University of California at San Francisco
Foundation
250 Executive Park Blvd.
Suite 2000
San Francisco, CA 94143

Director of the California Chamber of Commerce
1201 K Street 12th Floor
Sacremento, CA 95814
</TABLE>

C-8
<PAGE>

<TABLE>

<S> <C>

Philip J. Quigley Chairman, President and Chief Executive Officer
Director of Pacific Telesis Group
130 Kearney Street Rm. 3700
San Francisco, CA 94108

Carl E. Reichardt Director of Columbia/HCA Healthcare Corporation
Director One Park Plaza
Nashville, TN 37203

Director of Ford Motor Company
The American Road
Dearborn, MI 48121

Director of Newhall Management Corporation
23823 Valencia Blvd.
Valencia, CA 91355

Director of Pacific Gas and Electric Company
77 Beale Street
San Francisco, CA 94105

Retired Chairman of the Board of Directors
and Chief Executive Officer of Wells Fargo &
Company
420 Montgomery Street
San Francisco, CA 94105

Donald B. Rice President and Chief Executive Officer of
Director Teledyne, Inc.
2049 Century Park East
Los Angeles, CA 90067

Retired Secretary of the Air Force

Director of Vulcan Materials Company
One MetroPlex Drive
Birmingham, AL 35209

Richard J. Stegemeier Chairman (Emeritus) of Unocal Corp
Director 44141 Yucca Avenue
Lancaster, CA 93534

Director of Foundation Health Corporation
166 4th
Fort Irwin, CA 92310

Director of Halliburton Company
3600 Lincoln Plaza
500 North Alcard Street
Dallas, TX 75201

Director of Northrop Grumman Corp.
1840 Century Park East
Los Angeles, CA 90067
</TABLE>

C-9
<PAGE>

<TABLE>

<S> <C>

Director of Outboard Marine Corporation
100 SeaHorse Drive
Waukegan, IL 60085

Director of Pacific Enterprises
555 West Fifth Street
Suite 2900
Los Angeles, CA 90031

Director of First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071

Susan G. Swenson President and Chief Executive Officer of
Director Cellular One
651 Gateway Blvd.
San Francisco, CA 94080

David M. Tellep Retired Chairman of the Board and Chief
Director Executive Officer of
Martin Lockheed Corp
6801 Rockledge Drive
Bethesda, MD 20817

Director of Edison International
and Southern California Edison Company
2244 Walnut Grove Ave.
Rosemead, CA 91770

Director of First Interstate
633 West Fifth Street
Los Angeles, CA 90071

Chang-Lin Tien Chancellor of the University of California at
Director Berkeley
Berkeley, CA 94720

Director of Raychem Corporation
300 Constitution Drive
Menlo Park, CA 94025

John A. Young President, Chief Executive Officer and Director
Director of Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 9434

Director of Chevron Corporation
225 Bush Street
San Francisco, CA 94104

Director of Lucent Technologies
25 John Glenn Drive
Amherst, NY 14228

Director of Novell, Inc.
11300 West Olympic Blvd.
Los Angeles, CA 90064
</TABLE>

C-10
<PAGE>

<TABLE>

<S> <C>

Director of Shaman Pharmaceuticals Inc.
213 East Grand Ave. South
San Francisco, CA 94080

William F. Zuendt President of Wells Fargo & Company
President 420 Montgomery Street
San Francisco, CA 94105

Director of 3Com Corporation
5400 Bayfront Plaza
P.O. Box 58145
Santa Clara, CA 95052

Director of the California Chamber of Commerce
</TABLE>

Prior to January 1, 1996, WFNIA served as the sub-adviser to the Asset
Allocation, U.S. Treasury Allocation, Bond Index and S&P 500 Index Master
Portfolios, and as adviser or sub-adviser to various other open-end management
investment companies. For additional information, see "Management" in the 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, MasterWorks Funds Inc.
(formerly, Stagecoach Inc.), Nations Fund Trust, Nations Funds, Inc., Nations
Fund Portfolios, Inc., Nations LifeGoal Funds, 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 Balanced 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-11
<PAGE>

Item 30. Location of Accounts and Records
- ------- --------------------------------

(a) The Registrant maintains accounts, books and other documents required
by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder
(collectively, "Records") at the offices of Stephens Inc., 111 Center Street,
Little Rock, Arkansas 72201.

(b) BGFA and BGI maintain all Records relating to their services as
adviser and co-administrator, respectively, at 45 Fremont Street, San Francisco,
California 94105.

(c) Wells Fargo Bank maintains all Records relating to its services as
investment adviser for the periods prior to January 1, 1996, at 525 Market
Street, San Francisco, California 94105.

(d) Stephens maintains all Records relating to its services as sponsor,
co- administrator and distributor at 111 Center Street, Little Rock, Arkansas
72201.

(e) IBT maintains all Records relating to its services as sub-
administrator and custodian at 89 South Street, Boston, Massachusetts 02111.

Item 31. Management Services
- ------- -------------------

Other than as set forth under the captions "Item 5 Management of the
Master Portfolios" in Part A of this Registration Statement and "Item 16
Investment Advisory and Other Services" in Part B of this Registration
Statement, Registrant is not a party to any management-related service contract.

Item 32. Undertakings
- ------- ------------

(a) Not applicable.

(b) Not applicable.

(c) Registrant 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-12
<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereto duly authorized, in
the City of Little Rock, State of Arkansas on the 27th day of June, 1997.

MASTER INVESTMENT PORTFOLIO

By: /s/ Richard H. Blank, Jr.
------------------------------------
(Richard H. Blank, Jr.)
Secretary and Treasurer
(Principal Financial Officer)

Signature Title
--------- -----

* Trustee, Chairman and President
-------------------------- (Principal Executive Officer)
(R. Greg Feltus)

/s/ Richard H. Blank, Jr. Secretary and Treasurer
-------------------------- (Principal Financial Officer)
(Richard H. Blank, Jr.)

* Trustee
--------------------------
(Jack S. Euphrat)

* Trustee
--------------------------
(Thomas S. Goho)

* Trustee
--------------------------
(Zoe Ann Hines)

* Trustee
--------------------------
(W. Rodney Hughes)

* Trustee
--------------------------
(Robert M. Joses)

* Trustee
--------------------------
(J. Tucker Morse)

*By: /s/Richard H. Blank, Jr.
------------------------
(Richard H. Blank, Jr.)
As Attorney-in-Fact
June 27, 1997
<PAGE>

MASTER INVESTMENT PORTFOLIO

FILE NO. 811-8162

EXHIBIT INDEX

Exhibit
Number Description
- ------ -----------
<C> <S>
EX-27.1 . Financial Data Schedule - LifePath 2000 Master Portfolio
EX-27.2 . Financial Data Schedule - LifePath 2010 Master Portfolio
EX-27.3 . Financial Data Schedule - LifePath 2020 Master Portfolio
EX-27.4 . Financial Data Schedule - LifePath 2030 Master Portfolio
EX-27.5 . Financial Data Schedule - LifePath 2040 Master Portfolio
EX-27.11 . Financial Data Schedule - U.S. Treasury Allocation
Master Portfolio
EX-27.12 . Financial Data Schedule - Bond Index Master Portfolio
EX-27.13 . Financial Data Schedule - S&P 500 Stock Master Portfolio
EX-27.14 . Financial Data Schedule - Asset Allocation Master Portfolio
EX-99.B8 . Custody Agreement with Investors Bank & Trust Company
EX-99.B9(a) . Co-Administration Agreement with Stephens Inc. and
Barclays Global Investors, N.A.
EX-99.B9(b) . Sub-Administration Agreement with Investors Bank & Trust
Company and Barclays Global Investors, N.A.
</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> LIFEPATH 2000 MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 144,431,820
<INVESTMENTS-AT-VALUE> 148,886,031
<RECEIVABLES> 1,601,543
<ASSETS-OTHER> 21
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 150,487,595
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,214,597
<TOTAL-LIABILITIES> 19,214,597
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 131,272,998
<DIVIDEND-INCOME> 532,807
<INTEREST-INCOME> 5,925,997
<OTHER-INCOME> 0
<EXPENSES-NET> 689,347
<NET-INVESTMENT-INCOME> 5,769,457
<REALIZED-GAINS-CURRENT> 2,894,777
<APPREC-INCREASE-CURRENT> (273,099)
<NET-CHANGE-FROM-OPS> 8,391,135
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,595,172
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 689,347
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 689,347
<AVERAGE-NET-ASSETS> 125,567,019
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> LIFEPATH 2010 MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 177,480,530
<INVESTMENTS-AT-VALUE> 191,993,185
<RECEIVABLES> 1,222,902
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 193,216,087
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,705,167
<TOTAL-LIABILITIES> 23,705,167
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 169,510,920
<DIVIDEND-INCOME> 1,373,301
<INTEREST-INCOME> 4,566,510
<OTHER-INCOME> 0
<EXPENSES-NET> 757,505
<NET-INVESTMENT-INCOME> 5,182,306
<REALIZED-GAINS-CURRENT> 3,439,818
<APPREC-INCREASE-CURRENT> 5,149,907
<NET-CHANGE-FROM-OPS> 13,772,031
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 68,289,720
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 757,505
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 757,505
<AVERAGE-NET-ASSETS> 138,168,909
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> LIFEPATH 2020 MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 255,466,083
<INVESTMENTS-AT-VALUE> 287,198,457
<RECEIVABLES> 1,392,868
<ASSETS-OTHER> 774
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 288,592,099
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37,149,466
<TOTAL-LIABILITIES> 37,149,466
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 251,442,633
<DIVIDEND-INCOME> 2,898,947
<INTEREST-INCOME> 4,521,846
<OTHER-INCOME> 0
<EXPENSES-NET> 1,149,160
<NET-INVESTMENT-INCOME> 6,271,633
<REALIZED-GAINS-CURRENT> 9,487,619
<APPREC-INCREASE-CURRENT> 11,374,656
<NET-CHANGE-FROM-OPS> 27,133,908
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 88,884,640
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,149,160
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,149,160
<AVERAGE-NET-ASSETS> 210,851,747
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> LIFEPATH 2030 MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 155,092,029
<INVESTMENTS-AT-VALUE> 180,787,263
<RECEIVABLES> 818,805
<ASSETS-OTHER> 776
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 181,606,844
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,802,011
<TOTAL-LIABILITIES> 22,802,011
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 158,804,833
<DIVIDEND-INCOME> 2,192,763
<INTEREST-INCOME> 1,732,644
<OTHER-INCOME> 0
<EXPENSES-NET> 714,647
<NET-INVESTMENT-INCOME> 3,210,760
<REALIZED-GAINS-CURRENT> 5,108,662
<APPREC-INCREASE-CURRENT> 10,036,726
<NET-CHANGE-FROM-OPS> 18,356,148
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 50,566,494
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 714,647
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 714,647
<AVERAGE-NET-ASSETS> 131,055,391
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> LIFEPATH 2040 MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 246,866,873
<INVESTMENTS-AT-VALUE> 289,926,521
<RECEIVABLES> 1,034,597
<ASSETS-OTHER> 671
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,961,789
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32,877,061
<TOTAL-LIABILITIES> 32,877,061
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 258,084,728
<DIVIDEND-INCOME> 3,958,762
<INTEREST-INCOME> 1,149,012
<OTHER-INCOME> 0
<EXPENSES-NET> 1,154,330
<NET-INVESTMENT-INCOME> 3,953,444
<REALIZED-GAINS-CURRENT> 14,732,810
<APPREC-INCREASE-CURRENT> 17,593,797
<NET-CHANGE-FROM-OPS> 36,280,051
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 82,063,822
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,154,330
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,154,330
<AVERAGE-NET-ASSETS> 212,295,623
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> U.S. TREASURY ALLOCATION MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 57,210,642
<INVESTMENTS-AT-VALUE> 56,949,483
<RECEIVABLES> 300,170
<ASSETS-OTHER> 530
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57,250,183
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,717,906
<TOTAL-LIABILITIES> 9,717,906
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 47,532,277
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,348,831
<OTHER-INCOME> 0
<EXPENSES-NET> 152,879
<NET-INVESTMENT-INCOME> 3,195,952
<REALIZED-GAINS-CURRENT> (142,718)
<APPREC-INCREASE-CURRENT> (507,610)
<NET-CHANGE-FROM-OPS> 2,545,624
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,123,370)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 148,606
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 155,884
<AVERAGE-NET-ASSETS> 49,745,298
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> BOND INDEX MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 242,027,480
<INVESTMENTS-AT-VALUE> 241,714,305
<RECEIVABLES> 2,426,576
<ASSETS-OTHER> 664
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 244,141,545
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,812,041
<TOTAL-LIABILITIES> 22,812,041
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 221,329,504
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,736,172
<OTHER-INCOME> 0
<EXPENSES-NET> 159,712
<NET-INVESTMENT-INCOME> 12,576,460
<REALIZED-GAINS-CURRENT> 152,739
<APPREC-INCREASE-CURRENT> (3,966,118)
<NET-CHANGE-FROM-OPS> 8,763,081
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 69,505,036
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 147,204
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 166,620
<AVERAGE-NET-ASSETS> 184,257,205
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> S&P 500 STOCK MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 1,096,445,070
<INVESTMENTS-AT-VALUE> 1,521,114,967
<RECEIVABLES> 2,826,281
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,523,941,248
<PAYABLE-FOR-SECURITIES> 392,188
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,212,614
<TOTAL-LIABILITIES> 39,604,802
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,484,336,446
<DIVIDEND-INCOME> 22,903,026
<INTEREST-INCOME> 4,394,053
<OTHER-INCOME> 0
<EXPENSES-NET> 587,424
<NET-INVESTMENT-INCOME> 26,709,655
<REALIZED-GAINS-CURRENT> 22,866,448
<APPREC-INCREASE-CURRENT> 229,698,630
<NET-CHANGE-FROM-OPS> 279,274,733
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 554,003,384
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 577,637
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 597,046
<AVERAGE-NET-ASSETS> 1,159,086,733
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> ASSET ALLOCATION MASTER PORTFOLIO

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 409,511,486
<INVESTMENTS-AT-VALUE> 466,475,782
<RECEIVABLES> 4,232,480
<ASSETS-OTHER> 140
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 470,708,402
<PAYABLE-FOR-SECURITIES> 51,667
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,696,896
<TOTAL-LIABILITIES> 38,748,563
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 431,959,839
<DIVIDEND-INCOME> 4,369,957
<INTEREST-INCOME> 16,181,201
<OTHER-INCOME> 0
<EXPENSES-NET> 1,532,060
<NET-INVESTMENT-INCOME> 19,019,098
<REALIZED-GAINS-CURRENT> 38,140,198
<APPREC-INCREASE-CURRENT> (1,289,497)
<NET-CHANGE-FROM-OPS> 55,869,799
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 33,865,609
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,531,951
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,538,394
<AVERAGE-NET-ASSETS> 437,381,094
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE>

EXHIBIT 99.B8

CUSTODY AGREEMENT

BETWEEN

MASTER INVESTMENT PORTFOLIO

AND

INVESTORS BANK & TRUST COMPANY
<PAGE>

TABLE OF CONTENTS
-----------------
<TABLE>

<S> <C>
1. Bank Appointed Custodian...............................................

2. Definitions............................................................
2.1 Authorized Person...............................................
2.2 Board...........................................................
2.3 Security........................................................
2.4 Portfolio Security..............................................
2.5 Officer's Certificate...........................................
2.6 Book-Entry System...............................................
2.7 Depository......................................................
2.8 Proper Instructions.............................................
2.9 Foreign Securities..............................................
2.8 Performance Calculations........................................

3. Separate Accounts......................................................

4. Certification as to Authorized Persons.................................

5. Custody of Cash........................................................
5.1 Purchase of Securities..........................................
5.2 Redemptions.....................................................
5.3 Distributions and Expenses of the Master Portfolios.............
5.4 Payment in Respect of Securities................................
5.5 Repayment of Loans..............................................
5.6 Repayment of Cash...............................................
5.7 Foreign Exchange Transactions...................................
5.8 Other Authorized Payments.......................................
5.9 Termination.....................................................

6. Securities.............................................................
6.1 Segregation and Registration....................................
6.2 Voting and Proxies..............................................
6.3 Corporate Action................................................
6.4 Book-Entry System...............................................
6.5 Use of a Depository.............................................
6.6 Use of Book-Entry System for Commercial Paper...................
6.7 Use of Immobilization Programs..................................
6.8 Eurodollar CDs..................................................
6.9 Options and Futures Transactions................................
6.10 Segregated Account.............................................
6.11 Interest Bearing Call or Time Deposits.........................
6.12 Transfer of Securities.........................................
</TABLE>

i
<PAGE>

<TABLE>

<S> <C>
7. Redemptions............................................................

8. Merger, Dissolution, etc. of the Trust or a Master Portfolio...........

9. Actions of the Bank Without Prior Authorization........................

10. Collections and Defaults.............................................

11. Maintenance of Records and Accounting Services......................

12. Master Portfolio Evaluation and Performance Calculation..............
12.1 Master Portfolio Evaluation....................................
12.2 Performance Calculation........................................

13. Concerning the Bank..................................................
13.1 Bank Warranty..................................................
13.2 Standards of Care and Performance of Duties....................
13.3 Agents and Sub-custodians with Respect to Property of the
Master Portfolios Held in the United States....................
13.4 Duties of the Bank with Respect to Property Held Outside of
the United States..............................................
13.5 Insurance......................................................
13.6 Fees and Expenses of Bank......................................
13.7 Advances by Bank...............................................

14. Termination..........................................................

15. Confidentiality......................................................

16. Notices..............................................................

17. Amendments...........................................................

18. Parties..............................................................

19. Governing Law........................................................

20. Counterparts.........................................................

21. Limitations of Liability.............................................

22. Single Agreement.....................................................
</TABLE>
<PAGE>

CUSTODY AGREEMENT

AGREEMENT made as of this 21st day of October, 1996, between MASTER
INVESTMENT PORTFOLIO, a Delaware business trust (the "Trust"), and INVESTORS
BANK & TRUST COMPANY (the "Bank" or, at times, "IBT").

The Trust, an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of the
individual Master Portfolios listed on Schedule A hereto, as such Schedule may
be amended from time to time, desires to place and maintain all of the Master
Portfolios' portfolio securities and other assets including cash in the custody
of the Bank, and the Bank has indicated its willingness to so act, subject to
the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:

1. Bank Appointed Custodian. The Trust hereby appoints the Bank as
------------------------
custodian of the Master Portfolios' portfolio securities and cash delivered to
the Bank as hereinafter described, and the Bank agrees to act as such upon the
terms and conditions hereinafter set forth.

2. Definitions. Whenever used herein, the terms listed below will have
-----------
the following meaning:

2.1 Authorized Person. Authorized Person will mean any of the persons
-----------------
duly authorized to give Proper Instructions or otherwise act on behalf of the
Trust and its Master Portfolios by appropriate resolution of the Board of
Trustees of the Trust, and set forth in a certificate as required by Section 4
hereof.

2.2 Board. Board will mean the Trust's Board of Trustees .
-----

2.3 Security. The term security as used herein will have the same
--------
meaning as when such term is used in the Securities Act of 1933, as amended (the
"1933 Act"), including, without limitation, any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security, certificate of deposit, or
group or index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or privilege entered into on
a national securities exchange relating to a foreign currency, or, in general,
any interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing, and futures, forward contracts and
options thereon.

1
<PAGE>

2.4 Portfolio Security. Portfolio Security will mean any security
------------------
owned by a Master Portfolio of the Trust.

2.5 Officer's Certificate. Officer's Certificate will mean, unless
---------------------
otherwise indicated, any request, direction, instruction, or certification in
writing signed by an Authorized Person of the Trust.

2.6 Book-Entry System. Book-Entry System shall mean the Federal
-----------------
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor(s) and its nominee(s).

2.7 Depository. Depository shall mean The Depository Trust Company
----------
("DTC") and any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and its successor(s) and its nominee(s). The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board.

2.8 Proper Instructions. Proper Instructions shall mean (i)
-------------------
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Trust
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Trust shall cause all oral instructions to be promptly confirmed in writing
or by facsimile. The Bank shall act upon and comply with any subsequent Proper
Instruction which modifies a prior instruction, and the sole obligation of the
Bank with respect to any follow-up or confirmatory instruction shall be to make
reasonable efforts to detect any discrepancy between the original instruction
and such confirmation and to report such discrepancy to the Trust. The Trust
shall be responsible, at the expense of the applicable Master Portfolio, for
taking any action, including any reprocessing, necessary to correct any such
discrepancy or error, and, to the extent such action requires the Bank to act,
the Trust shall give the Bank specific Proper Instructions as to the action
required. Upon receipt by the Bank of an Officer's Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Trust, Proper Instructions may include communication effected
directly between electromechanical or electronic devices provided that the Trust
and the Bank are satisfied that such procedures afford adequate safeguards for a
Master Portfolio's assets.

2.9 Foreign Securities. The term Foreign Securities as used herein
------------------
will have the same meaning as when such term is used in Rule 17f-5 of the 1940
Act.

2.10 Performance Calculations. Performance Calculations as used
------------------------
herein shall include standard performance calculations required pursuant to the
1933 Act, the 1940 Act, and any applicable rules and interpretations of the
staff of the Securities and Exchange Commission , and shall also include other
non-standard performance calculations as shall be agreed upon by both parties to
this Agreement from time to time.

2
<PAGE>

3. Separate Accounts. The Bank will segregate the assets of each Master
-----------------
Portfolio to which this Agreement relates into a separate account for each such
Master Portfolio containing the assets of such Master Portfolio (and all
investment earnings thereon). Unless the context otherwise requires, any
reference in this Agreement to any actions to be taken by the Trust shall be
deemed to refer to the Trust acting on behalf of one or more of its Master
Portfolios, any reference in this Agreement to any assets of the Trust,
including, without limitation, any Portfolio Securities and other assets
including cash and any earnings thereon, shall be deemed to refer only to assets
of the applicable Master Portfolio, any duty or obligation of the Bank hereunder
to the Trust shall be deemed to refer to duties and obligations with respect to
the individual Master Portfolios, and any obligation or liability of the Trust
hereunder shall be binding only with respect to the individual Master Portfolio
and shall be discharged only out of the assets of such Master Portfolio.

4. Certification as to Authorized Persons. The Secretary or an Assistant
--------------------------------------
Secretary of the Trust will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or an
Assistant Secretary of the Trust, will sign a new or amended certification
setting forth the change of the new, additional or omitted names or signatures.
The Bank will be entitled to rely and act upon any Officer's Certificate given
to it by the Trust that has been signed by Authorized Persons named in the most
recent certification received by the Bank.

5. Custody of Cash. As custodian, the Bank will open and maintain a
---------------
separate account or accounts in the name of each Master Portfolio or in the name
of the Bank, as custodian of the Master Portfolios, and will deposit to the
account of a Master Portfolio all of the cash of the Master Portfolio, except
for cash held by a sub-custodian appointed pursuant to subsections 13.3 or 13.4
hereof, including borrowed funds, delivered to the Bank, subject only to draft
or order by the Bank acting pursuant to the terms of this Agreement. Upon
receipt by the Bank of Proper Instructions (which may be continuing
instructions) or in the case of payments for redemptions and repurchases of
outstanding interests of a Master Portfolio, notification from the Master
Portfolio's transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank will release
funds for deposit, and stating that it is for a purpose permitted under the
terms of this Section 5, specifying the applicable subsection, the Bank will
make payments of cash held for the accounts of the Master Portfolio, insofar as
funds are available for that purpose, only as permitted in subsections 5.1-5.9
below.

5.1 Purchase of Securities. Upon the purchase of securities for a
----------------------
Master Portfolio, against contemporaneous receipt of such securities by the
Bank, or against delivery of such securities to the Bank, in accordance with
generally accepted settlement practices or customs in the jurisdiction or market
in which the transaction occurs, such securities to be registered in the name of
the Master Portfolio or in the name of, or properly endorsed and in form for
transfer to, the Bank, or a nominee of the Bank, or receipt for the account of
the Bank pursuant to the provisions of Section 6 below, each such payment to be
made at the purchase price shown on a

3
<PAGE>

broker's confirmation (or transaction report in the case of Book Entry Paper) of
purchase of the securities that is received by the Bank before such payment is
made and that has been confirmed in the Proper Instructions also received by the
Bank before such payment is made.

5.2 Redemptions. In such amount as may be necessary for the repurchase
-----------
or redemption of interests of a Master Portfolio offered for repurchase or
redemption in accordance with Section 7 of this Agreement.

5.3 Distributions and Expenses of the Master Portfolios. For the
---------------------------------------------------
payment on the account of a Master Portfolio of dividends or other distributions
to interestholders as may from time to time be declared by the Board, interest,
taxes, investment advisory or administration fees, and, as and to the extent
provided on Schedule B hereto, any fees of the Bank for its services hereunder
and any reimbursement of the expenses and liabilities of the Bank related to
such services with respect to a Master Portfolio of the Trust as provided
pursuant to subsection 13.6 hereunder and on Schedule B hereto.

5.4 Payment in Respect of Securities. For payments in connection with
--------------------------------
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by a Master Portfolio held by or to be delivered to the Bank.

5.5 Repayment of Loans. To repay loans of money made to a Master
------------------
Portfolio, but, in the case of final payment, only upon redelivery to the Bank
of any Portfolio Securities pledged or hypothecated therefor and upon surrender
of documents evidencing the loan.

5.6 Repayment of Cash. To repay the cash delivered to a Master
-----------------
Portfolio for the purpose of collateralizing the obligation to return to a
Master Portfolio certificates borrowed from the Master Portfolio representing
Portfolio Securities, but only upon redelivery to the Bank of such borrowed
certificates.

5.7 Foreign Exchange Transactions. For payments in connection with
-----------------------------
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery ("Foreign Exchange Agreements") that may be entered
into by the Bank on behalf of a Master Portfolio upon the receipt of Proper
Instructions, such Proper Instructions to specify the currency broker or banking
institution (which may be the Bank, or any other sub-custodian or agent
hereunder, acting as principal) with which the contract or option is made, and
the Bank shall have no duty with respect to the selection of such currency
brokers or banking institutions with which a Master Portfolio deals or for their
failure to comply with the terms of any contract or option.

5.8 Other Authorized Payments. For other authorized transactions of a
-------------------------
Master Portfolio, or other obligations of a Master Portfolio incurred for proper
purposes with respect to a Master Portfolio; provided that before making any
such payment, the Bank also will receive Proper Instructions or a certified copy
of a resolution of the Board signed by an Authorized Person (other than the
Person certifying such resolution) and certified by its Secretary or Assistant
Secretary, naming the person or persons to whom such payment is to be made, and
either describing the transaction for which payment is to be made and declaring
it to be an authorized transaction of a Master Portfolio, or specifying the
amount of the obligation for which payment is

4
<PAGE>

to be made, setting forth the purpose for which such obligation was incurred and
declaring such purpose to be a proper corporate purpose.

5.9 Termination. Upon the termination of this Agreement as hereinafter
-----------
set forth pursuant to Section 8 and Section 14 of this Agreement.

6. Securities.
----------

6.1 Segregation and Registration. Except as otherwise provided herein,
----------------------------
and except for Portfolio Securities to be delivered to any sub-custodian
appointed pursuant to subsections 13.2 or 13.3 hereof, the Bank as custodian,
will receive and hold pursuant to the provisions hereof, in a separate account
or accounts and physically segregated at all times from those of other persons,
any and all Portfolio Securities which may now or hereafter be delivered to it
by or for the account of a Master Portfolio. All such Portfolio Securities will
be held or disposed of by the Bank for, and subject at all times to, the
instructions of the Trust pursuant to the terms of this Agreement. Subject to
the specific provisions herein relating to Portfolio Securities that are not
physically held by the Bank, the Bank will register all Portfolio Securities
(unless otherwise directed by Proper Instructions or an Officer's Certificate),
in the name of a registered nominee of the Bank as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued thereunder,
and will 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. The
Bank will use its best efforts to the end that the specific Portfolio Securities
held by it hereunder will be at all times identifiable.

The Trust, on behalf of a Master Portfolio, will from time to time
furnish to the Bank appropriate instruments to enable it to hold or deliver in
proper form for transfer, or to register in the name of its registered nominee,
any Portfolio Securities which may from time to time be registered in the name
of a Master Portfolio

6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
------------------
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an officers' Certificate. The Bank will execute and
deliver, or will cause to be executed and delivered, to the Trust or its
designated agent all notices, proxies and proxy soliciting materials with
respect to such Portfolio Securities, but without indicating the manner in which
such proxies are to be voted, such proxy to be executed by the registered holder
of such Portfolio Securities (if registered otherwise than in the name of a
Master Portfolio), in accordance with the Proper Instructions or an Officer's
Certificate.

6.3 Corporate Action. If at any time the Bank is notified that an
----------------
issuer of a Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of the Portfolio Security, including, without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Trust's designee, Barclays Global Fund Advisors ("BGFA"), promptly of
the Corporate Action, the Response required in

5
<PAGE>

connection with the Corporate Action, and the Bank's deadline for receipt from
the Trust's designee, BGFA, of Proper Instructions regarding the Response (the
"Response Deadline"). Except as provided in subsection 6.3(c) below, the date
specified as the Response Deadline shall not be more than 24 hours prior to the
Response expiration day set by the depository processing such Corporate Action.
The Bank shall forward to the Trust's designee, BGFA, via facsimile and/or
overnight courier all notices, information statements or other materials
relating to the Corporate Action within twenty-four (24) hours of receipt of
such materials by the Bank.

(a) The Bank shall act upon a required Response only after receipt by
the Bank of Proper Instructions from the Trust's designee, BGFA, no later than
4:00 p.m. (Pacific time) on the date specified as the Response Deadline and only
if the Bank (or its agent or sub-custodian hereunder) has actual possession of
all Portfolio Securities (but only if such Portfolio Securities are necessary
for the consummation of the Corporate Action ("Necessary Portfolio
Securities")), consents and other materials no later than 4:00 p.m. (Pacific
time) on the date specified as the Response Deadline. Portfolio Securities in
the possession of a broker or other borrower pursuant to the Bank's securities
lending program shall be deemed to be in the possession of the Bank for the
purposes of this subsection 6.3.

(b) The Bank shall have no duty to act upon a required Response if
Proper Instructions relating to such Response and all Necessary Portfolio
Securities, consents and other materials are not received by and in the
possession of the Bank no later than 4:00 p.m. (Pacific time) on the date
specified as the Response Deadline. Notwithstanding, the Bank may, in its sole
discretion, use its best efforts to act upon a Response for which Proper
Instructions and/or Necessary Portfolio Securities, consents or other materials
are received by the Bank after 4:00 p.m. (Pacific time) on the date specified as
the Response Deadline, it being acknowledged and agreed by the parties that any
undertaking by the Bank to use its best efforts in such circumstances shall in
no way create any duty upon the Bank to complete such Response prior to its
expiration.

(c) In the event that the Trust's designee, BGFA, notifies the Bank
of a Corporate Action requiring a Response and the Bank has received no other
notice of such Corporate Action, the Response Deadline shall be 48 hours prior
to the Response expiration time set by the depository processing such Corporate
Action.

(d) Subsection 13.4(g) of this Agreement shall govern any Corporate
Action involving Foreign Portfolio Securities held by a Selected Foreign Sub-
custodian.

6.4 Book-Entry System. Provided (i) the Bank has received a certified
-----------------
copy of a resolution of the Board specifically approving deposits of a Master
Portfolio assets in the Book-Entry System, and (ii) for any subsequent changes
to such arrangements following such approval, the Board has reviewed and
approved the arrangement and has not delivered an Officers Certificate to the
Bank indicating that the Board has withdrawn its approval:

(a) The Bank may keep Portfolio Securities in the Book-Entry System
provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or

6
<PAGE>

its agent) in such System that shall not include any assets of the Bank (or such
agent) other than assets held as a fiduciary, custodian, or otherwise for
customers:

(b) The records of the Bank (and any such agent) with respect to a
Master Portfolio's participation in the Book-Entry System through the Bank (or
any such agent) will identify by book entry Portfolio Securities that are
included with other securities deposited in the Account and shall at all times
during the regular business hours of the Bank (or such agent) be open for
inspection by duly authorized officers, employees or agents of the Trust. Where
securities are transferred to a Master Portfolio's account, the Bank shall also,
by book entry or otherwise, identify as belonging to the Master Portfolio a
quantity of Portfolio Securities in a fungible bulk of securities (i) registered
in the name of the Bank or its nominee, or (ii) shown on the Bank's account on
the books of the Federal Reserve Bank;

(c) The Bank (or its agent) shall pay for securities purchased for
the account of a Master Portfolio or shall pay cash collateral against the
return of Portfolio Securities loaned by a Master Portfolio upon (i) receipt of
advice from the Book-Entry System that such Securities have been transferred to
the Account, and (ii) the making of an entry on the records of the Bank (or its
agent) to reflect such payment and transfer for the account of the Master
Portfolio. The Bank (or its agent) shall transfer Portfolio Securities sold or
loaned for the account of a Master Portfolio upon:

(i) receipt of advice from the Book-Entry System that payment for
securities sold or payment of the initial cash collateral against the delivery
of Portfolio Securities loaned by the Master Portfolio has been transferred to
the Account: and

(ii) the making of an entry on the records of the Bank (or its agent)
to reflect such transfer and payment for the account of a Master Portfolio.
Copies of all advices from the Book-Entry System of transfers of Portfolio
Securities for the account of a Master Portfolio shall identify the Master
Portfolio, be maintained for the Master Portfolio by the Bank and shall be
provided to the Master Portfolio at its request. The Bank shall send a Master
Portfolio a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any
transfers to or from the account of the Master Portfolio;

(d) The Bank will promptly provide the Trust with any report obtained
by the Bank or its agent on the Book-Entry System's accounting system, internal
accounting control and procedures for safeguarding securities deposited in the
Book-Entry System;

(e) The Bank shall be liable to the Trust and a Master Portfolio for
any loss or damage to the Master Portfolio resulting from use of the Book-Entry
System by reason of any negligent actions or inactions of the Bank or any of its
agents or of any of its or their employees, or from any failure by the Bank or
any such agent to use its best efforts to enforce such rights as it may have
against the Book-Entry System; at the election of the Master Portfolio, it shall
be entitled to be subrogated for the Bank in any claim against the Book-Entry
System or any other person that the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Master Portfolio has
not been made whole for any loss or damage;

7
<PAGE>

6.5 Use of a Depository. Provided (i) the Bank has received a
-------------------
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:

(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of a Master Portfolio all income and other payments
thereon and to take all steps necessary and proper in connection with the
collection thereof;

(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;

(c) Payment for securities purchased and sold may be made through the
clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of a Master
Portfolio and the Master Portfolio shall pay cash collateral against the return
of Portfolio Securities loaned by the Master Portfolio only upon delivery of the
Securities to or for the account of the Master Portfolio; and upon any sale of
Portfolio Securities, delivery of the Securities will be made only against
payment thereof or, in the event Portfolio Securities are loaned, delivery of
Securities will be made only against receipt of the initial cash collateral to
or for the account of the Master Portfolio: and

(d) The Bank shall be liable to a Master Portfolio for any loss or
damage to a Master Portfolio resulting from use of a Depository by reason of any
negligent actions or inactions of the Bank or its employees or from any failure
by the Bank to use its best efforts to enforce such rights as it may have
against a Depository. In this connection, the Bank shall use its best efforts
to ensure that:

(i) The Depository obtains replacement of any certificated Portfolio
Security deposited with it in the event such Security is lost, destroyed,
wrongfully taken or otherwise not available to be returned to the Bank upon its
request;

(ii) Any proxy materials received by a Depository with respect to
Portfolio Securities deposited with such Depository are forwarded immediately to
the Bank for voting in accordance with subsection 6.2 above;

(iii) Such Depository immediately forwards to the Bank confirmation
of any purchase or sale of Portfolio Securities and of the appropriate book
entry made by such Depository to a Master Portfolio's account;

(iv) Such Depository prepares and delivers to the Bank such records
with respect to the performance of the Bank's obligations and duties hereunder
as may be

8
<PAGE>

necessary for a Master Portfolio to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule 31(a) thereunder; and

(v) Such Depository delivers to the Bank and the Trust all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Trust may reasonably request in
order to verify the Portfolio Securities held by such Depository.

6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
---------------------------------------------
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that a Master Portfolio has purchased such Issuer's
Book-Entry Paper, the Bank shall issue and hold in book-entry form, on behalf of
the Master Portfolio, commercial paper issued by issuers with whom the Bank has
entered into a book-entry agreement (the "Issuers"). In maintaining its
procedures for Book-Entry Paper, the Bank agrees that:

(a) The Bank will maintain all Book-Entry Paper held by a Master
Portfolio in an account of the Bank that includes only assets held by it for
customers;

(b) The records of the Bank with respect to a Master Portfolio's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to the Master Portfolio that is included in the Book-
Entry Paper System and shall at all times during the regular business hours of
the Bank be open for inspection by duly authorized officers, employees or agents
of the Trust;

(c) The Bank shall pay for Book-Entry Paper purchased for the account
of a Master Portfolio upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Master Portfolio;

(d) The Bank shall cancel such Book-Entry Paper obligation upon the
maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Master Portfolio, and (ii) the
making of an entry on the records of the Bank to reflect such payment for the
account of the Master Portfolio;

(e) The Bank shall transmit to the Trust a transaction journal
confirming each transaction in Book-Entry Paper for the account of a Master
Portfolio on the next business day following the transaction: and

(f) The Bank will send to the Trust such reports on its system of
internal accounting control with respect to Book-Entry Paper as the Trust may
reasonably request from time to time.

6.7 Use of Immobilization Programs. Provided (i) the Bank has received
------------------------------
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio

9
<PAGE>

Securities in an immobilization program operated by a bank which meets the
requirements of Section 26(a)(1) of the 1940 Act, and (ii) for each year
following such approval the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval, the Bank shall enter into such immobilization
program with such bank acting as a sub-custodian hereunder.

6.8 Eurodollar CDs. Any Portfolio Securities that are Eurodollar CDs
--------------
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Portfolio Securities are identified on the books of the Bank as belonging
to a Master Portfolio and that the books of the Bank identify the European
Branch holding such Portfolio Securities. Notwithstanding any other provision
of this Agreement to the contrary, except as stated in the first sentence of
this subsection 6.8, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to a Master Portfolio, and the Bank shall have no
liability to the Master Portfolio or its interestholders with respect to the
actions, inactions, whether negligent or otherwise of such European Branch in
connection with such Eurodollar CDs, except for any loss or damage to the Master
Portfolio resulting from the Bank's own negligent actions or inactions or lack
of reasonable care in the performance of its duties hereunder.

6.9 Options and Futures Transactions.
--------------------------------

(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or Over-
the Counter.

(i) The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by a Master Portfolio
regarding escrow or other arrangements in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Trust, on behalf of the Master Portfolio, relating to the compliance with the
rules of the Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations.

(ii) Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that a Master Portfolio has
deposited or is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Bank be under duty or obligation to
present such option to the broker for exercise unless it receives Proper
Instructions from the Trust. The Bank shall have no responsibility for the
legality of any put or call purchased or sold on behalf of a Master Portfolio,
the propriety of any such purchase or sale, or the adequacy of any collateral
delivered to a broker in connection with an option or deposited to or withdrawn
from a Segregated Account (as defined in subsection 6.10 below). The Bank
specifically, but not by way of limitation, shall not be under any duty or
obligation to: (1) periodically check or notify a Master Portfolio that the
amount of such collateral held by a broker or held in a Segregated Account is
sufficient to protect such broker or the Master Portfolio against any loss; (2)
effect the return of any collateral delivered to a broker; or (3) advise the

10
<PAGE>

Master Portfolio that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of a Trust.

(b) Puts, Calls and Futures Traded on Commodities Exchanges

(i) The Bank shall take action, upon receipt of Proper
Instructions, as to puts, calls and futures contracts ("futures") purchased or
sold by a Master Portfolio in accordance with the provisions of any agreement
among the Trust, on behalf of a Master Portfolio, the Bank and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization(s), regarding account deposits in
connection with transactions by the Master Portfolio.

(ii) The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subparagraph (a)(ii) of this subsection 6.9 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and futures and puts and calls
thereon instead of options.

6.10 Segregated Account. The Bank shall upon receipt of Proper
------------------
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of a Master Portfolio, into which Account or Accounts may be transferred
upon receipt of Proper Instructions, cash and/or Portfolio Securities.

(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account in the following circumstances, upon receipt of Proper
Instructions:

(i) in accordance with the provisions of any agreement among
the Trust, on behalf of a Master Portfolio, the Bank and a broker-dealer
registered under the Exchange Act and a member of the NASD or any Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange or the Commodity Futures Trading
Commission or any registered Contract Market, or of any similar organizations
regarding escrow or other arrangements in connection with transactions by a
Master Portfolio;

(ii) for the purpose of segregating cash or Securities in
connection with options purchased or written by a Master Portfolio or commodity
futures purchased or written by a Master Portfolio;

(iii) for the deposit of liquid assets, such as cash, U.S.
Government obligations or other high-grade debt obligations, having a market
value (marked-to-market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all a Master
Portfolio's then outstanding forward commitment or "when-issued agreements
relating to the purchase of Portfolio Securities and all a Master Portfolio's
then outstanding commitments under any reverse repurchase agreements entered
into with broker-dealer firms;

11
<PAGE>

(iv) for the purposes of compliance by a Master Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;

(v) for other proper corporate purposes, but only, in the
case of this clause (v), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee,
signed by an officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose(s) of such Segregated Account and declaring
such purpose(s) to be a proper corporate purpose(s).

(b) assets may be withdrawn from the Segregated Account pursuant
to Proper Instructions only:

(i) with respect to assets deposited in accordance with the
provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;

(ii) with respect to assets deposited pursuant to (a)(iii)
or (a)(iv) above, for sale or delivery to meet a Master Portfolio's obligations
under outstanding forward-commitment, delayed-settlement or when-issued
agreements for the purchase of Portfolio Securities and under reverse repurchase
agreements;

(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;

(iv) to the extent that a Master Portfolio's outstanding
forward-commitment or when-issued agreements for the purchase of portfolio
securities or any reverse repurchase agreements are sold to other parties or the
Master Portfolio's obligations thereunder are met from assets of the Master
Portfolio other than those in the Segregated Account;

(v) for delivery upon settlement of a forward-commitment,
delayed-settlement or when-issued agreement for the sale of Portfolio
Securities: or

(vi) with respect to assets deposited pursuant to (a)(v)
above, in accordance with the purposes of such account as set forth in Proper
Instructions.

6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
--------------------------------------
receipt of Proper Instructions relating to the purchase by a Master Portfolio of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank(s) as shall be indicated in such
Proper Instructions. The Bank shall include in its records with respect to the
assets of a Master Portfolio appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits
shall be deemed Portfolio Securities of a Master Portfolio and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the Master
Portfolio.

12
<PAGE>

6.12 Transfer of Securities. The Bank will transfer, exchange,
----------------------
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section, the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this subsection
6.12, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:

(a) upon sales of Portfolio Securities for the account of a Master
Portfolio, against contemporaneous receipt by the Bank of payment therefor in
full, or against payment to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, each such payment to be in the amount of the sale price
shown in a broker's confirmation of sale of the Portfolio Securities received by
the Bank before such payment is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made;

(b) in exchange for, or upon conversion into, other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or sub-custodian hereunder) has actual possession
of such Portfolio Security at least two business days prior to the date of
tender;

(d) for the purpose of redeeming in kind interests of a Master
Portfolio upon authorization from the Master Portfolio;

(e) in the case of option contracts owned by a Master Portfolio,
for presentation to the endorsing broker;

(f) when such Portfolio Securities are called, redeemed or retired
or otherwise become payable;

(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to a Master
Portfolio by any bank, including the Bank; provided, however, that such
Securities will be released only upon payment to the Bank for the account of the
Master Portfolio of the moneys borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, and such fact is made
to appear in the Proper Instructions, further Portfolio Securities may be
released for that purpose

13
<PAGE>

without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Master Portfolio from the lender in accordance
with the normal procedures of the lender, that an event of deficiency or default
on the loan has occurred, the Bank may deliver such pledged Portfolio Securities
to or for the account of the lender,

(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;

(i) for the purpose of delivering Portfolio Securities lent by a
Master Portfolio to a bank or broker dealer, but only against receipt in
accordance with street delivery custom except as otherwise provided herein, of
adequate collateral as agreed upon from time to time by the Master Portfolio and
the Bank, and upon receipt of payment in connection with any repurchase
agreement relating to such Securities entered into by the Master Portfolio;

(j) for other authorized transactions of a Master Portfolio or for
other proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed by
an authorized officer of the Trust (other than the officer certifying such
resolution) and certified by its Secretary or an Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Master Portfolio or such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
Securities shall be made; and

(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.

As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.

7. Redemptions. In the case of payment of assets of a Master Portfolio
-----------
held by the Bank in connection with redemptions and repurchases by the Master
Portfolio of outstanding interests, the Bank will rely on notification by the
Trust's transfer agent of receipt of a request for redemption before such
payment is made. Payment shall be made in accordance with the Amended and
Restated Declaration of Trust (the "Trust Declaration") and By-Laws of the
Trust, from assets available for said purpose.

8. Merger, Dissolution. etc. of the Trust or a Master Portfolio. In the
------------------------------------------------------------
case of the following transactions, not in the ordinary course of business,
namely, the merger of a Master Portfolio into or the consolidation of the Trust
with another investment company, the sale by the Trust of all, or substantially
all, of the assets of one or more Master Portfolios to another investment
company, or the liquidation or dissolution of a Master Portfolio and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Trust,
on behalf of such Master Portfolio(s) set forth in an Officer's Certificate,
accompanied by a certified copy of a resolution of the Board authorizing any

14
<PAGE>

of the foregoing transactions. Upon completion of such delivery and disbursement
and the payment of the fees, disbursements and expenses of the Bank, this
Agreement will terminate with respect to such Master Portfolio or Trust, as
applicable.

9. Actions of the Bank Without Prior Authorization. Notwithstanding
-----------------------------------------------
anything herein to the contrary, unless and until the Bank receives an Officer's
Certificate to the contrary, it will without prior authorization or instruction
of the Trust or the transfer agent:

(a) Endorse for collection and collect on behalf of and in the
name of a Master Portfolio all checks, drafts, or other negotiable or
transferable instruments or other orders for the payment of money received by it
for the account of the Master Portfolio and hold for the account of the Master
Portfolio all income, dividends, interest and other payments or distributions of
cash with respect to the Portfolio Securities held thereunder;

(b) Present for payment all coupons and other income items held by
it for the account of a Master Portfolio that call for payment upon presentation
and hold the cash received by it upon such payment for the account of the Master
Portfolio;

(c) Receive and hold for the account of a Master Portfolio all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.

(d) execute as agent on behalf of a Master Portfolio all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting a Master Portfolio's
name on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in respect
thereof. The Bank will execute and deliver such certificates in connection with
Portfolio 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;

(e) present for payment all Portfolio Securities that are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of a Master Portfolio; and

(f) exchange interim receipts or temporary securities for
definitive securities.

10. Collections and Defaults. The Bank will use all reasonable efforts to
------------------------
collect any funds that may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Trust, on behalf of a Master Portfolio, notice actually received
by the Bank of any call for redemption, offer of exchange, right of
subscription, reorganization or other proceedings affecting such Portfolio
Securities. If Portfolio Securities upon which such income is payable are in
default or payment is refused after due demand or presentation, the Bank will
notify the Trust, on behalf of a Master Portfolio, in writing

15
<PAGE>

of any default or refusal to pay within two business days from the day on which
it receives knowledge of such default or refusal. In addition, the Bank will
send the Trust a written report once each month showing any income on any
Portfolio Security held by Bank on behalf of a Master Portfolio that is more
than ten days overdue on the date of such report.

11. Maintenance of Records and Accounting Services. The Bank will maintain
----------------------------------------------
records with respect to transactions for which the Bank is responsible pursuant
to the terns and conditions of this Agreement, and in compliance with the
applicable rules and regulations of the 1940 Act and will furnish the Trust
daily with a statement of condition of each Master Portfolio. The Bank will
furnish to the Trust at the end of every month, and at the close of each quarter
of the Trust's fiscal year, a list of the Portfolio Securities and the aggregate
amount of cash held by Bank on behalf of each Master Portfolio. The books and
records of the Bank pertaining to its actions under this Agreement and reports
by the Bank or its independent accountants concerning its accounting system,
procedures for safeguarding securities and internal accounting controls will be
open to inspection and audit at reasonable times by officers of or auditors
employed by the Trust and will be preserved by the Bank in the manner and in
accordance with the applicable rules and regulations under the 1940 Act.

The Bank shall perform the fund accounting services listed on Schedule C
hereto and shall keep the books of account and render statements or copies from
time to time as reasonably requested by the Treasurer or any executive officer
of the Trust.

The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.

12. Master Portfolio Evaluation and Performance Calculations.
--------------------------------------------------------

12.1 Master Portfolio Evaluation. The Bank shall compute and, unless
---------------------------
otherwise directed by the Board, determine as of the close of regular trading on
the New York Stock Exchange on each day on which said Exchange is open for
unrestricted trading and as of such other days, or hours, if any, as may be
authorized by the Board, the net asset value and the offering price of an
interest of each Master Portfolio, such determination to be made in accordance
with the provisions of the Trust Declaration and By-Laws and Registration
Statement of the Trust relating to the Master Portfolios, as it may from time to
time be amended, and any applicable resolutions of the Board at the time in
force and applicable; and promptly to notify the Trust, any applicable exchange,
the NASD or such other persons as the Trust may request of the results of such
computation and determination. In computing the net asset value hereunder, the
Bank may rely in good faith upon information that the Bank reasonably believes
to be accurate and reliable furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of each Master Portfolio and in
respect of liabilities of a Master Portfolio not appearing on its books of
account kept by the Bank, (ii) reserves, if any, authorized by the Board or that
no such reserves have been authorized, (iii) the source of the quotations to be
used in computing the net asset value, (iv) the value to be assigned to any
security for which no price quotations are available, and (v) the method of
computation of the offering price on the basis of the net asset value of the
interests, and the Bank shall not be responsible for any loss occasioned by its

16
<PAGE>

reasonable and good faith reliance on any quotations received from a source
pursuant to (iii) above.

12.2. Performance Calculations. The Bank will compute the performance
------------------------
results of each Master Portfolio (the "Performance Calculations") in accordance
with applicable provisions of the 1933 Act and 1940 Act and the rules under such
Acts related to the computations to be undertaken by the Bank pursuant to this
Agreement, as promulgated by the Securities and Exchange Commission, as such
provisions and or rules may be amended from time to time, and any published
interpretations of or general conventions accepted by the staff of the
Securities and Exchange Commission with respect to such rules or the subject
matter thereof ("Subsequent Staff Positions"), subject to the Registration
Statement, as amended from time to time, and the terms set forth below:

(a) The Bank shall compute the Performance Calculations for each
Master Portfolio for the stated periods of time as shall be mutually agreed
upon, and communicate in a timely manner the result of such computation to the
Trust.

(b) In performing the Performance Calculations, the Bank will
derive from the records it generates and maintains for each Master Portfolio
pursuant Section 11 hereof, the data necessary for the computation. The Bank
shall have no responsibility to review, confirm, or otherwise assume any duty or
liability with respect to the accuracy or correctness of any such data supplied
to it by the Trust, any of the its designated agents or any of its designated
third-party providers.

(c) At the request of the Bank, the Trust shall provide, and the
Bank shall be entitled to rely on, written standards and guidelines to be
followed by the Bank in interpreting and applying the computation methods
pursuant to the rules or any Subsequent Staff Positions as they specifically
apply to a Master Portfolio, provided that the Bank shall be responsible for
general knowledge of such rules and any Subsequent Staff Positions. In the event
that the computation methods in a rule or the Subsequent Staff Positions or the
application to a Master Portfolio of a standard or guideline is not free from
doubt or in the event there is any question of interpretation as to the
characterization of a particular security or any aspect of a security or a
payment with respect thereto (e.g., original issue discount, participating debt
security, income or return of capital, etc.) or otherwise or as to any other
element of the computation that is pertinent to the Master Portfolio, the Trust
or its designated agent, BGFA, shall have the full responsibility for making the
determination of how the security, or payment, is to be treated for purposes of
the computation and how the computation is to be made and shall inform the Bank
thereof on a timely basis. The Bank shall have no responsibility to make
independent determinations with respect to any item that is covered by this
Section, and the Bank shall not be responsible for its computations made in
accordance with such determinations so long as such computations are
mathematically correct.

(d) The Trust shall keep the Bank informed of all publicly
available information, and of any non-public advice or information, obtained by
the Trust from its independent auditors or by its personnel or the personnel of
its investment adviser, related to the computations to be undertaken by the Bank
pursuant to this Agreement, and the Bank shall not be deemed to have

17
<PAGE>

knowledge of such information (except as contained in the Registration
Statement) unless it has been furnished to the Bank in writing.; provided that
the Bank shall be charged with knowledge of any material changes to the 1933
Act, the 1940 Act, and any related rules under such acts related to the
computations to be undertaken by the Bank pursuant to this Agreement without
specific notice from the Trust.

13. Concerning the Bank.
-------------------

13.1 Bank Warranty. The Bank warrants that it has and will maintain
-------------
at least the minimum qualifications required by Section 17(f)(1) of the 1940 Act
to act as custodian of the Portfolio Securities and other assets including cash
of the Trust's Master Portfolios.

13.2 Standard of Care and Performance of Duties.
------------------------------------------

(a) The Bank agrees to use reasonable care with regard to its
obligations under this Agreement and the safekeeping of property of the Master
Portfolios. In performing its duties hereunder and any other duties listed on
the Schedules hereto, the Bank will be entitled to receive and act upon the
advice of independent counsel of its own selection, which may be counsel for the
Trust, and the Bank will be without liability for any action taken or thing
done, or omitted to be done, so long as the Bank's actions or inactions are
without negligence and in accordance with this Agreement in good faith in
conformity with such advice. The Bank shall be liable to, and shall indemnify
and hold harmless the Trust from and against any loss which shall occur as the
result of the failure of the Bank or a sub-custodian (other than a foreign
securities depository or clearing agency and except as provided in subsections
6.8, 13.2 and 13.3(i) hereof) to exercise reasonable care with respect to their
respective obligations under this Agreement and the safekeeping of such
property. Subject to the foregoing, the Bank will not be responsible for any
act, omission, default or for the solvency of any foreign securities depository
or clearing agency utilized in connection with the provision of services under
this Agreement.

(b) In the performance of its duties hereunder, the Bank will be
protected and not be liable, and will be indemnified and held harmless for any
action taken or omitted to be taken by it with reasonable care and in good faith
reliance upon the terms of this Agreement, any Officer's Certificate, Proper
Instructions, resolution of the Board, facsimile, telegram, notice, request,
certificate or other instrument reasonably believed by the Bank to be genuine
and for any other loss to the Fund except in the case of its negligent actions
or inactions or lack of good faith or reasonable care in the performance of its
obligations or duties hereunder.

(i) the validity of the issue of any Portfolio Securities
purchased by or for a Master Portfolio, the legality of the purchases thereof or
the propriety of the price incurred therefor;

(ii) the legality of any sale of any Portfolio Securities by
or for the Master Portfolio or the propriety of the amount for which the same
are sold;

18
<PAGE>

(iii) the legality of an issue or sale of any interests of a
Master Portfolio or the sufficiency of the amount to be received therefor;

(iv) the legality of the repurchase of any interests of a
Master Portfolio or the propriety of the amount to be paid therefor;

(v) the legality of the declaration of any dividend by a
Master Portfolio or the legality of the distribution of any Portfolio Securities
as payment in kind of such dividend; and

(vi) any property or moneys of a Master Portfolio unless and
until received by it, and any such property or moneys delivered or paid by it
pursuant to the terms hereof.

(d) Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of a Master Portfolio are such as may properly be held by the
Master Portfolio under the provisions of its Trust Declaration, By-Laws, any
federal or state statutes or any rule or regulation of any governmental agency.

(e) Notwithstanding anything in this Agreement to the contrary, in
no event shall the Bank be liable hereunder or to any third party:

(i) for any losses or damages of any kind resulting from acts
of God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events, except
as results from the Bank's own negligence, provided that the Bank shall make all
reasonable efforts, whenever necessary, to use data processing back-up
facilities provided by Electronic Data Systems, Inc.; or

(ii) for special, punitive or consequential damages arising
from the provision of services hereunder, even if the Bank has been advised of
the possibility of such damages; provided, however, that the parties
specifically acknowledge and agree that damages, if any, incurred by the Trust,
its Master Portfolios or its agents (including, but not limited to, BGFA or the
Trust's transfer or shareholder servicing agents) on account of late or
incorrect net asset values and related information provided to the Trust, its
Master Portfolios, its agents or other third parties as may be agreed in writing
by BGI and IBT from time to time, are not to be considered special, punitive or
consequential damages for purposes of this subsection 13.2(e)(ii).

(f) The Bank shall supply BGI with such daily information
regarding the cash and securities positions and activity of each Master
Portfolio as the Bank and BGI shall from time to time agree.

(g) The Bank need not maintain any insurance for the exclusive
benefit of the Trust, but hereby warrants that as of the date of this Agreement
it is maintaining a bankers

19
<PAGE>

Blanket Bond and hereby agrees to notify the Trust in the event that such bond
is canceled or otherwise lapses.

13.3 Agents and Sub-custodians with Respect to Property of the Master
----------------------------------------------------------------
Portfolios Held in the United States. The Bank may employ agents in the
- ------------------------------------
performance of its duties hereunder and shall be responsible for the acts and
omissions of such agents as if performed by the Bank hereunder. Without
limiting the foregoing, certain duties of the Bank hereunder may be performed by
one or more affiliates of the Bank.

Upon receipt of Proper Instructions, the Bank may employ sub-custodians,
provided that any such sub-custodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of a Master
Portfolio's assets with respect to property of the Master Portfolio held in the
United States. The Bank shall have no liability to the Trust or any other
person by reason of any act or omission of any sub-custodian and the Trust shall
indemnify the Bank and hold it harmless from and against any and all actions,
suits and claims, arising directly or indirectly out of the performance of any
sub-custodian. Upon request of the Bank, the Trust shall assume the entire
defense of any action, suit, or claim subject to the foregoing indemnity. All
fees and expenses of any sub-custodian shall be paid in accordance with Schedule
B hereto.

13.4 Duties of the Bank with Respect to Property of the Master
---------------------------------------------------------
Portfolio Held Outside of the United States.
- -------------------------------------------

(a) Appointment of Foreign Sub-custodians. The Trust hereby
-------------------------------------
authorizes and instructs the Bank to employ as sub-custodians for the Trust's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated by
the Board (each, a "Selected Foreign Sub-custodian"). Upon receipt of Proper
Instructions, together with a certified resolution of the Trust's Board of
Trustees, the Bank and the Trust may agree to designate additional foreign
banking institutions and foreign securities depositories to act as Selected
Foreign Sub-custodians hereunder. Upon receipt of Proper Instructions, the
Trust may instruct the Bank to cease the employment of any one or more such
Selected Foreign Sub-custodians for maintaining custody of a Master Portfolio's
assets, and the Bank shall so cease to employ such sub-custodian as soon as
alternate custodial arrangements have been implemented.

(b) Foreign Securities Depositories. Except as may otherwise be
-------------------------------
agreed upon in writing by the Bank and the Trust, assets of a Master Portfolio
shall be maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign Sub-
custodians pursuant to the terms hereof. Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Trust, the Trust authorizes the
deposit in Euro-Clear, the securities clearance and depository facilities
operated by Morgan Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Securities eligible for deposit therein and to utilize such securities
depository in connection with settlements of purchases and sales of securities
and

20
<PAGE>

deliveries and returns of securities, until notified to the contrary pursuant to
subparagraph (a) hereunder.

(c) Segregation of Securities. The Bank shall identify on its books
-------------------------
as belonging to a Master Portfolio the Foreign Securities held by each Selected
Foreign Sub-custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Securities and
other assets of the Master Portfolios, and, in the event that such institution
deposits Foreign Securities in a foreign securities depository, that it shall
identify on its books as belonging to the Bank the securities so deposited.

(d) Agreements with Foreign Banking Institutions. Each of the
--------------------------------------------
agreements pursuant to which a foreign banking institution holds assets of the
Trust's Master Portfolios (each, a "Foreign Sub-custodian Agreement") shall be
substantially in the form previously made available to the Trust and shall
provide that: (a) such assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of such
assets will be freely transferable without the payment of money or value other
than for custody or administration (including, without limitation, any fees or
taxes payable upon transfers or reregistration of securities); (c) adequate
records will be maintained identifying the assets as belonging to the Bank; (d)
officers of or auditors employed by, or other representatives of the Bank,
including to the extent permitted under applicable law, the independent auditors
for the Trust, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with the Bank;
and (e) assets of a Master Portfolio held by the Selected Foreign Sub-custodian
will be subject only to the instructions of the Bank or its agents.

(e) Access of Independent Auditors of the Trust. Upon request of the
-------------------------------------------
Trust, the Bank will use its best efforts to arrange for the Trust's independent
auditors to be afforded access to the books and records of any foreign banking
institution employed as a Selected Foreign Sub-custodian insofar as such books
and records relate to the performance of such foreign banking institution under
its Foreign Sub-custodian Agreement.

(f) Reports by the Bank. The Bank will supply to the Trust from time
-------------------
to time, as mutually agreed upon, statements in respect of the securities and
other assets of a Master Portfolio held by Selected Foreign Sub-custodians,
including but not limited to an identification of entities having possession of
the Foreign Portfolio Securities and other assets of the Master Portfolio.

(g) Transactions in Foreign Custody Accounts. Transactions with
----------------------------------------
respect to the assets of a Master Portfolio held by a Selected Foreign Sub-
custodian shall be effected pursuant to Proper Instructions from the Trust to
the Bank and shall be effected in accordance with the applicable Foreign Sub-
custodian Agreement. If at any time any Foreign Portfolio Securities shall be
registered in the name of the nominee of the Selected Foreign Sub-custodian,

21
<PAGE>

the Trust agrees to hold any such nominee harmless from any liability by reason
of the registration of such securities in the name of such nominee.

Notwithstanding any provision of this Agreement to the contrary, settlement
and payment for Foreign Securities received for the account of a Master
Portfolio and delivery of Foreign Securities maintained for the account of a
Master Portfolio may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.

In connection with any action to be taken with respect to the Foreign
Securities held hereunder, including, without limitation, the exercise of any
voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Trust or
its investment adviser such information in connection therewith as is made
available to the Bank by the Foreign Sub-custodian, and the Bank shall promptly
forward to the applicable Foreign Sub-custodian any instructions, forms or
certifications with respect to such Rights, and any instructions relating to the
actions to be taken in connection therewith, as the Bank shall receive pursuant
to Proper Instructions. The Bank agrees to use its best efforts to obtain and
forward to the Trust or its designated agent, BGFA, information regarding Rights
with respect to Foreign Securities held hereunder. Notwithstanding the
foregoing, the Bank shall have no further duty or obligation with respect to
such Rights, including, without limitation, the determination of whether a
Master Portfolio is entitled to participate in such Rights under applicable U.S.
and foreign laws, or the determination of whether any action proposed to be
taken with respect to such Rights by the Master Portfolio or by the applicable
Foreign Sub-custodian will comply with all applicable terms and conditions of
any such Rights or any applicable laws or regulations, or market practices
within the market in which such action is to be taken or omitted.

(h) Liability of Selected Foreign Sub-custodians. Each Foreign Sub-
--------------------------------------------
custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and Trust from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-custodian Agreement. The Trust acknowledges
that the Bank, as a participant in Euroclear, is subject to the Terms and
Conditions Governing the Euroclear System, a copy of which has been made
available to the Trust. The Trust acknowledges that pursuant to such Terms and
Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euroclear in connection with a Master Portfolio's
Portfolio Securities and other assets.

(i) Liability of Bank. The Bank shall have no more or less
-----------------
responsibility or liability on account of the acts or omissions of any Selected
Foreign Sub-custodian employed

22
<PAGE>

hereunder than any such Selected Foreign Sub-custodian has to the Bank and,
without limiting the foregoing, the Bank shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism, political
risk (including, but not limited to, exchange control restrictions,
confiscation, insurrection, civil strife or armed hostilities) other losses due
to Acts of God, nuclear incident or any loss where the Selected Foreign Sub-
custodian has otherwise exercised reasonable care.

(j) Monitoring Responsibilities. The Bank shall furnish annually to
---------------------------
the Trust, information concerning the Selected Foreign Sub-custodians employed
hereunder for use by the Trust's Board or its designated agent in evaluating
such Selected Foreign Sub-custodians to ensure compliance with the requirements
of Rule 17f-5 of the 1940 Act. In addition, the Bank will promptly inform the
Trust in the event that the Bank is notified by a Selected Foreign Sub-custodian
that there appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below $200 million (in each case computed
in accordance with generally accepted U.S. accounting principles) or any other
capital adequacy test applicable to it by exemptive order, or if the Bank has
actual knowledge of any material loss of the assets of a Master Portfolio held
by a Foreign Sub-custodian.

(k) Tax Law. The Bank shall have no liability for any obligations
-------
now or hereafter imposed on the Trust, or its Master Portfolios, or the Bank as
custodian of the Trust by the tax laws of any jurisdiction. The sole
responsibility of the Bank with regard to such taxes shall be to use reasonable
efforts to assist the Trust with respect to the withholding and payment by the
Trust of such taxes and with respect to any claim for exemption or refund under
the tax law of jurisdictions for which the Trust is entitled to such exemptions
or refunds.

13.5 Insurance. The Bank shall use the same care with respect to the
---------
safekeeping of Portfolio Securities and cash of the Trust's Master Portfolios
held by it as it uses in respect of its own similar property but need not
maintain any special insurance for the benefit of the Trust.

13.6. Fees and Expenses of Bank. The Trust, on behalf of a Master
-------------------------
Portfolio, will pay or reimburse the Bank from time to time for any transfer
taxes payable upon transfer of Portfolio Securities made hereunder. All
necessary proper disbursements, expenses and charges made or incurred by the
Bank in the performance of this Agreement (including any duties listed on
Schedule C hereto) including any indemnities for any loss, liabilities or
expense to the Bank as provided above shall be paid in accordance with Schedule
B hereto, provided that the Bank shall not be entitled to compensation and/or
reimbursement for services and/or expenses and liabilities by the Trust, with
respect to the Master Portfolios, hereunder so long as the Bank is entitled to
receive compensation and reimbursements from Barclays Global Investors, N.A.
("BGI") for providing sub-administration services to the Trust on behalf of the
Master Portfolios. If the Bank no longer is entitled to receive such
compensation and reimbursements from BGI, the Bank shall be entitled hereunder
to such compensation or fees and reimbursements at such rate and at such times
as it may from time to time negotiate with the Trust, and such Schedule B shall
be amended accordingly.

23
<PAGE>

13.7 Advances by Bank. The Bank may, in its sole discretion, advance
----------------
funds on behalf of a Master Portfolio to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments. Should such a payment or payments, with advanced funds,
result in an overdraft (due to insufficiencies of a Master Portfolio's account
with the Bank, or for any other reason) this Agreement deems any such overdraft
or related indebtedness, a loan made by the Bank to the Master Portfolio payable
on demand and bearing interest at the current rate charged by the Bank for such
loans unless the Master Portfolio shall provide the Bank with agreed upon
compensating balances. The Trust agrees that the Bank shall have a continuing
lien and security interest to the extent of any overdraft or indebtedness, in
and to any property at any time held by it for a Master Portfolio's benefit or
in which the Master Portfolio has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Trust authorizes the Bank, in its sole discretion,
at any time to charge any overdraft or indebtedness, together with interest due
thereon against any balance of account standing to the credit of a Master
Portfolio on the Bank's books.

14. Termination.
-----------

(a) This Agreement shall be effective for an initial term of two (2)
years commencing upon the date hereof (the "Initial Term") unless earlier
terminated as provided in subsection (b) below. Thereafter, the Agreement may
be terminated at any time, without penalty upon sixty (60) days' written notice
delivered by either party to the other by means of registered mail, and upon the
expiration of such sixty (60) days, this Agreement will terminate; provided,
however, that the effective date of such termination may be postponed to a date
not more than ninety (90) days from the date of delivery of such notice (i) by
the Bank in order to prepare for the transfer by the Bank of all of the assets
of the Master Portfolios held hereunder, or (ii) by the Trust in order to give
it an opportunity to make suitable arrangements for a successor custodian. At
any time after the termination of this Agreement, the Bank agrees to make
available to the Trust, at its request, the records maintained by the Bank
relating to the performance of its duties as custodian and to preserve such
records for the periods prescribed in Rule 31a-2 under the 1940 Act.

(b) Notwithstanding subsection (a) above, either party hereto may
terminate this Agreement at any time prior to the expiration of the Initial Term
in the event that the other party violates any material provision of this
Agreement, provided that the violating party does not cure such violation within
ninety (90) days of receipt of written notice from the non -violating party of
such violation.

(c) Notwithstanding subsection (a) above, the Trust may terminate
this Agreement at any time prior to the expiration of the Initial Term in the
event that (i) the Board of Trustees determines that the performance of the Bank
does not meet the reasonable satisfaction (considered in light of industry
standards) of the Board of Trustees, provided that the Bank does not cure such
unsatisfactory performance within ninety (90) days of receipt of written notice
specifying such unsatisfactory performance; or (ii) if the Bank becomes the
subject of any state or federal bankruptcy proceeding that is not dismissed
within sixty (60) days of the initiation of such proceeding.

24
<PAGE>

(d) In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Trust. The obligation of the Bank to deliver and transfer over the assets of
the Trust's Master Portfolios held by the Bank directly to such successor
custodian will commence as soon as such successor is appointed and will continue
until completed as aforesaid. If the Trust does not select a successor
custodian within ninety (90) days from the date of delivery of notice of
termination the Bank may, subject to the provisions of subsection 14(c), deliver
the Portfolio Securities and cash of the Trust's Master Portfolio held by the
Bank to a bank or trust company of its own selection that meets the requirements
of Section 17(f)(1) of the 1940 Act and has a reported capital, surplus and
undivided profits aggregating not less than $2,000,000, to be held as the
property of the Trust's Master Portfolios under terms similar to those on which
they were held by the Bank, whereupon such bank or trust company so selected by
the Bank will become the successor custodian of such assets of the Trust's
Master Portfolios with the same effect as though selected by the Board.

(e) Prior to the expiration of ninety (90) days after notice of
termination has been given, the Trust may furnish the Bank with an order of the
Trust advising that a successor custodian cannot be found willing and able to
act upon reasonable and customary terms and that there has been submitted to the
Master Portfolio's interestholders the question of whether a Master Portfolio
will be liquidated or will function without a custodian for the assets of the
Master Portfolio. In that event the Bank will deliver the Portfolio Securities
and cash of the Trust's Master Portfolios, subject as aforesaid, in accordance
with one of such alternatives that may be approved by the requisite vote of
shareholders, upon receipt by the Bank of a copy of the minutes of the meeting
of shareholders at which action was taken, certified by the Trust's Secretary
and an opinion of counsel to the Trust in form and content satisfactory to the
Bank.

15. Confidentiality. Both parties hereto agree than any non-public
---------------
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, in addition to all other remedies at law or in equity and without bond
or other security, to an injunction or injunctions to prevent breaches of this
provision.

16. Notices. Any notice or other instrument in writing authorized or
-------
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered, via registered U.S.
Mail or facsimile with written confirmation via registered U.S. Mail, to it at
its office at the address set forth below; namely:

(a) In the case of notices sent to the Trust or a Master Portfolio
to:

Master Investment Portfolio
111 Center Street
Little Rock, AR 72201
Attention: Richard H. Blank, Jr.

25
<PAGE>

With a copy to:

Barclays Global Investors
45 Fremont Street
San Francisco, CA 94105
Attention: Legal Department

(b) In the case of notices sent to the Bank to:

Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Andrew Nesvet

With a copy to: John E. Henry

or at such other place as such party may from time to time designate in
writing.

17. Amendments. This Agreement may not be altered or amended, except by an
----------
instrument in writing, executed by both parties, and in the case of the Trust,
such alteration or amendment will be authorized and approved by its Board.

18. Parties. This Agreement will be binding upon and shall inure to the
-------
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Trust
without the written consent of the Bank or by the Bank without the written
consent of the Trust, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.

19. Governing Law. This Agreement and all performance hereunder will be
-------------
governed by the laws of the Commonwealth of Massachusetts.

20. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.

21. Limitation of Liability. The Trust and the Bank agree that the Trust's
-----------------------
obligations under this Agreement shall not be binding upon any Trustee,
interestholder, officer, employee or agent of the Trust individually but are
binding only upon the assets and property of the appropriate Master Portfolio.

22. Single Agreement. This Agreement (including any exhibits, appendices
----------------
and schedules hereto) constitutes the entire agreement between the Bank and the
Trust as to the

26
<PAGE>

subject matter hereof and supersedes any and all agreements, representations and
warranties, written or oral, regarding such subject matter made prior to the
time at which this Agreement has been executed and delivered between the Bank
and the Trust.

23. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.

27
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the day
and year first written above.

Master Investment Portfolio

By: /s/ Richard H. Blank, Jr.
------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer

Investors Bank & Trust Company

By: /s/ Robert D. Mancuso
------------------------------
Name: Robert D. Mancuso
Title: Managing Director

Investors Bank & Trust Company

By: /s/ John E. Henry
------------------------------
Name: John E. Henry
Title: General Counsel

28
<PAGE>

SCHEDULE A
----------

CUSTODY AGREEMENT
MASTER INVESTMENT PORTFOLIO

LIST OF MASTER PORTFOLIOS
-------------------------

LifePath 2000 Master Portfolio

LifePath 2010 Master Portfolio

LifePath 2020 Master Portfolio

LifePath 2030 Master Portfolio

LifePath 2040 Master Portfolio

Asset Allocation Master Portfolio

Bond Index Master Portfolio

S & P 500 Index Master Portfolio

U.S. Treasury Allocation Master Portfolio

Dated: October 21, 1996

A-1
<PAGE>

SCHEDULE B
----------

CUSTODY AGREEMENT
MASTER INVESTMENT PORTFOLIO

IBT shall not be entitled to separate compensation from MIP for
providing custody and fund accounting services to MIP's Master Portfolios
pursuant to this Agreement so long as IBT is entitled to receive fees and
related expenses from BGI, pursuant to the Sub-administration Agreement between
BGI and IBT, for providing such custody and fund accounting services to MIP's
Master Portfolios. If IBT is no longer entitled to receive such fees and
expenses under such Sub-administration Agreement, then IBT shall be entitled to
receive compensation from MIP as IBT may from time to time negotiate with MIP,
and this Schedule B shall be amended accordingly.

B-1
<PAGE>

SCHEDULE C
----------

CUSTODY AGREEMENT
MASTER INVESTMENT PORTFOLIO

FUND ACCOUNTING DUTIES
----------------------

I. A. Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash and
all other debits and credits, as required by subsection (b)(1) of rule 31a-1
under the 1940 Act (the "Rule");

B. General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including interest accrued and
interest received, as required by subsection (b)(2)(i) of the Rule;

C. Separate ledger accounts required by subsection (b) (2) (ii) and
(iii) of the Rule; and

D. A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule.

II. All such books and records shall be the property of the Trust, and IBT
agrees to make such books and records available for inspection by the Trust or
by the Securities and Exchange Commission at reasonable times and otherwise to
keep confidential all records and other information relative to the Trust;
except when requested to divulge such information by duly constituted
authorities or court process, or when requested by the Trust.

III. In addition to the maintenance of the books and records specified
above, IBT shall perform the following accounting services daily for each Master
Portfolio;

A. Calculate the net asset value per interest;

B. Calculate changes in net asset value;

C-1
<PAGE>

C. Calculate the per share dividend distribution rates:

D. Calculate dividends and any capital-gain distributions;

E. Calculate performance figures, including any yield or total return
and other performance figures, as appropriate;

F. Provide the following reports:

1. a current security position report;

2. a summary report of transactions and pending maturities
(including the principal cost, and accrued interest on each
portfolio security in maturity date order); and

3. a current cash position report (including cash available from
portfolio sales and maturities and sales of a Master Portfolio's
interests less cash needed for redemptions and settlement of
portfolio purchases);

G. Such other similar services with respect to a Master Portfolio as
may be reasonably requested by the Trust.

IV. IBT shall forward the information contained in Section III of this
Schedule to third-party service providers reasonably requested by the Trust, the
Co-Administrators or BGFA.

C-2

<PAGE>

EXHIBIT 99.B9(a)

CO-ADMINISTRATION AGREEMENT

MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201

October 21, 1996

Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201

Barclays Global Investors, N.A.
45 Fremont Street
San Francisco, CA 94105

Ladies and Gentlemen:

This will confirm the agreement among Master Investment Portfolio (the
"Trust") on behalf of its Master Portfolios listed in the attached Appendix A;
as such Appendix may be amended from time to time (each, a "Master Portfolio"
and, collectively, the "Master Portfolios"), Barclays Global Investors, N.A.
("BGI") and Stephens Inc. ("Stephens", together with BGI, the "Co-
administrators") as follows:

1. The Trust is a registered open-end, management investment company. The
Trust engages in the business of investing and reinvesting the assets of each
Master Portfolio in the manner and in accordance with the applicable investment
objective, policies and restrictions specified in the Trust's currently
effective 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, as most recently
amended, have been furnished to the Co-administrators. Any amendments to the
Registration Statement shall be furnished to the Co-administrators promptly.

2. The Trust is engaging the Co-administrators to provide, or cause to be
provided, the administrative services specified elsewhere in this agreement,
subject to the overall supervision of the Trust's Board of Trustees. Pursuant
to advisory contracts between the Trust and Barclays Global Fund Advisors (the
"Adviser") on behalf of each Master Portfolio, the Trust has engaged the Adviser
to manage the investing and reinvesting of the assets of the Master Portfolios
and to provide advisory services as specified in such advisory contracts.

1
<PAGE>

3. The Co-administrators agree, at their expense, to supervise the
administrative operations and undertake to provide, or cause to be provided, the
services described on Appendix B, as such Appendix may be amended from time to
time by the mutual consent of the parties, the provision of, and liability
thereto, for certain of such services to be allocated on such Appendix, in
connection with the operations of the Trust and the Master Portfolios, and take
all reasonable action in the performance of their obligations under this
agreement to assure that the necessary information is made available to other
service providers, as such may be required by the Trust from time to time; and
to provide all other administrative services reasonably necessary for the
operation of the Master Portfolios, other than those services that are to be
provided by the Adviser pursuant to the advisory contracts and by the Trust's
transfer and dividend disbursing agent and custodian.

4. Except as provided in the advisory contracts on behalf of each of the
Trust's Master Portfolios and in this agreement, and only for so long as the Co-
administrators are entitled to compensation for providing co-administration
services to a feeder fund that invests substantially all of its assets in a
corresponding Master Portfolio, the Co-administrators agree to bear such feeder
fund's pro rata portion of the costs of the operations of such Master Portfolio,
including, but not limited to, its pro rata portion of the compensation of the
Trust's trustees who are not affiliated with the Adviser, the Co-administrators
or any of their affiliates; governmental fees; interest charges; taxes; fees and
expenses of its independent auditors, legal counsel (other than in connection
with litigation), transfer agent and dividend disbursing agent; fees paid to
shareholder servicing and other special purpose agents; expenses of preparing
and printing any Parts A or B, interestholders' reports, notices, proxy
statements and reports to regulatory agencies; travel expenses of trustees of
the Trust in connection with their attendance at Board and other meetings
relating to the Trust; office supplies; premiums for fidelity bonds and errors
and omissions and/or officers and trustees liability insurance; trade
association membership dues; fees and expenses of any custodian and fund
accountant, including those for keeping books and accounts and calculating the
net asset value per interest of the Master Portfolios; expenses of
interestholders' meetings; expenses relating to the issuance, registration,
qualification and redemption of interests of the Master Portfolios; any pricing
services; and organizational expenses. Notwithstanding anything to the
contrary, the Co-administrators shall not be required to bear any portion of
brokerage fees payable to the Adviser under its advisory contracts with the
Trust and other expenses connected with the execution of portfolio securities
transactions, litigation expenses, taxes (including income, excise, transfer and
withholding taxes) or cost or expense that a majority of the disinterested
trustees of the Trust deems to be an extraordinary expense. Expenses
attributable to one or more, but not all, of the Master Portfolios shall be
charged against the assets of the relevant Master Portfolios. General expenses
of the Trust shall be allocated among the Master Portfolios in a manner
proportionate to the net assets of each Master Portfolio, on a transactional
basis or on such other basis as the Board of Trustees deems equitable.

2
<PAGE>

5. Each Co-administrator shall exercise reasonable care and shall give the
Trust the benefit of the Co-administrator's best judgment and efforts in
rendering services under this agreement. As an inducement to the Co-
administrators' undertaking to render services hereunder, the Trust agrees that
a Co-administrator shall not be liable under this agreement for any mistake in
judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this agreement shall be deemed to protect or purport to
protect the Co-administrator against any liability to the Trust or its
interestholders to which the Co-administrator would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of the
Co-administrators' duties under this agreement or by reason of reckless
disregard of its obligations and duties hereunder.

6. The Co-administrators shall not be entitled to compensation for
providing administrative services to a Master Portfolio so long as the Co-
administrators are entitled to receive fees for providing similar services to a
feeder fund of another registered investment company that invests all of its
assets in the Master Portfolio.

7. This agreement shall become effective on its execution date.
Thereafter, this agreement shall continue with respect to a Master Portfolio for
successive annual periods only so long as the continuance is specifically
approved at least annually (a) by the vote of 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 Co-
administrators, or by the Co-administrators on 60 days' written notice to the
Trust. This contract shall terminate automatically in the event of its
assignment (as defined in the Act).

8. Except to the extent necessary to perform the Co-administrators'
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Co-administrators, or any affiliate of the Co-
administrators, or any employee of the Co-administrators, 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.

9. This agreement shall be governed by and construed in accordance with
the laws of the State of Arkansas.

10. The Trust hereby agrees and acknowledges that each Co-administrator
may allocate or further delegate responsibility for any or all of the services
to be provided hereunder, as listed on Appendix B hereto, between each Co-
administrator; provided that

3
<PAGE>

the Co-administrators shall have joint and several liability for the provision
of the services under this agreement, except that BGI or Stephens each agree to
assume sole responsibility, and related liability thereto, for providing the
duties and services identified as the sole responsibility of BGI or Stephens on
such Appendix B; and, further provided that each Co-administrator agrees to
remain fully liable to the Trust for the provision of any service that such Co-
administrator delegates to another entity.

12. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.

4
<PAGE>

If the foregoing correctly sets forth the agreement between the Trust and
the Co-administrators, please so indicate by signing and returning to the Trust
the enclosed copy hereof.

Very truly yours,

MASTER INVESTMENT PORTFOLIO,
on behalf of LifePath 2000, LifePath 2010,
LifePath 2020, LifePath 2030, LifePath 2040, Asset
Allocation, Bond Index, S&P 500 Index, and U.S.
Treasury Allocation Master Portfolios

By: /s/Richard H. Blank, Jr.
---------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer,
Secretary and Treasurer

ACCEPTED as of the date
set forth above:

BARCLAYS GLOBAL INVESTORS, N.A.

By: /s/Donald Luskin
---------------------------
Name: Donald Luskin
Title: Vice Chairman

BARCLAYS GLOBAL INVESTORS, N.A.

By: /s/Matthew Shelton
--------------------------------
Name: Matthew Shelton
Title: Principal

STEPHENS INC.

By: /s/Richard H. Blank, Jr.
----------------------------------
Name: Richard H. Blank, Jr.
Title: Vice President

5
<PAGE>

Appendix A

Master Investment Portfolio
---------------------------

LifePath 2000 Master Portfolio

LifePath 2010 Master Portfolio

LifePath 2020 Master Portfolio

LifePath 2030 Master Portfolio

LifePath 2040 Master Portfolio

Asset Allocation Master Portfolio

Bond Index Master Portfolio

S & P 500 Index Master Portfolio

U.S. Treasury Allocation Master Portfolio

Dated: October 21, 1996

A-1
<PAGE>

APPENDIX B
MASTER INVESTMENT PORTFOLIO
---------------------------

LIST OF ADMINISTRATIVE SERVICES
-------------------------------

STEPHENS INC.
- -------------

(1) Review agenda and assemble Board materials for quarterly Board meetings;
prepare supporting information when necessary; prepare minutes of Board and
committee meetings.

(2) Review and approve Board material.

(3) Provide expense budgets.

(4) Monitor actual expenses and update budgets/expense accruals as necessary.

(5) Review and authorize filing of Forms N-SAR.

(6) Maintain records of sales and file appropriate registrations and renewals,
sales information and other required material for Blue Sky purposes.

(7) Review and provide advice to the distributor and the Trust on behalf of
the Master Portfolios and investment adviser regarding sales literature and
marketing plans to assure regulatory compliance.

BARCLAYS GLOBAL INVESTORS
- -------------------------

(8) Continuously monitor portfolio activity and related functions in
conjunction with all applicable regulatory requirements. Take corrective
action as necessary.

(9) Identify the services to which the Funds report performance information.
Provide information as requested on performance questionnaires.

(10) Prepare appropriate management letter and coordinate production of
Management Discussion and Analysis, with respect to the preparation and
printing of shareholder reports.

(11) Coordinate review and approval by portfolio managers of portfolio listings
to be included in financial statements, with respect to the preparation and
printing of shareholder reports.

B-1
<PAGE>

(12) Prepare selected portfolio and financial information for inclusion in
Board material.

(13) Assist in presentation to Board as desired by Fund Officer(s).

(14) Calculate total return information and other statistical information
including undistributed income and capital gains with respect to condensed
financial information for review by management.

(15) Perform tests of specific portfolio activities against compliance
checklists designed from the provisions of the Masters' and Money Market
Fund's current Prospectus and SAI.

(16) Calculate dividend amounts available for distribution.

(17) Coordinate review of dividend amounts by management and auditors.

(18) Notify fund accounting and transfer agent of authorized dividends rates.

(19) Prepare responses to various performance questionnaires; coordinate as
necessary, and submit responses to the appropriate agency;

(20) Prepare Forms N-SAR for filing; obtain any necessary supporting documents;
file with the SEC via EDGAR.

(21) Draft semi-annual and annual shareholder reports and coordinate auditor
and management review.

(22) Coordinate printing of reports and EDGAR conversion with outside printer
and filing with the SEC via EDGAR.

(23) Provide information for Financial Highlights and expense tables.

(24) Continuously monitor portfolio activity regarding diversification in
conjunction with IRS requirements for registered investment companies.

(25) Continuously monitor portfolio activity regarding "short short" income and
qualifying income in conjunction with IRS requirements for registered
investment companies.

B-2
<PAGE>

STEPHENS INC. AND BARCLAYS GLOBAL INVESTORS
- -------------------------------------------

(26) Prepare, or assist in the preparation, and file with the SEC and state
securities regulators, if applicable, registration statements, notices,
reports, and other material required to be filed under applicable laws.

(27) Review financial information and take any necessary action.

(28) Develop and implement procedures for monitoring compliance with regulatory
requirements and compliance with each Master Portfolio's investment
objective, policies and restrictions as established by the Trust's Board,
perform compliance testing and approve resolution of compliance issues.

(29) Approve dividend rates; obtain Board approval when required.

(30) Determine allocation of invoices among funds. Authorize and send to fund
accountants for payment of expenses.

(31) Coordinate activities of other vendors as necessary.

(32) Provide appropriate responses to Forms N-SAR.

(33) Provide marketing input of shareholder report style and graphics.

(34) Review and approve entire shareholder report.

(35) Review drafts and coordinate review process of Forms N-1A updates and
prospectus supplements.

(36) Coordinate printing, EDGAR conversion, and filing with the SEC with
outside printers of Forms N-1A.

(37) Maintain and preserve the corporate records of the Company, including each
Master Portfolio.

(38) Make appropriate representations in conjunction with audit.

(39) Review diversification test results and corrective actions taken, with
respect to qualifications as a registered investment company.

(40) Approve tax positions taken regarding qualification as a registered
investment company.

(41) Review "short short" income and qualifying income test results and
corrective actions taken, with respect to qualifications as a registered
investment company.

B-3
<PAGE>

(42) Approve tax positions taken regarding "short short" income and qualifying
income, with respect to qualifications as a registered investment company.

(43) Approve tax accounting positions to be taken.

(44) Approve distributions

(45) Review tax returns and coordinate signature thereof with a Fund Officer.

Approved: October 21, 1996

Signed: /s/Donald Luskin Signed: /s/Richard H. Blank, Jr.
---------------------- -----------------------------
By: Donald Luskin By: Richard H. Blank, Jr.
Managing Director Vice President
Barclays Global Stephens, Inc.
Investors, N.A.

Signed: /s/ Matthew Shelton
-----------------------
By: Matthew Shelton
Principal
Barclays Global
Investors, N.A.

Signed: /s/ Richard H. Blank, Jr.
----------------------------
By: Richard H. Blank, Jr., Chief Operating Officer
Master Investment Portfolio

B-4

<PAGE>

EXHIBIT 99.B9(b)

SUB-ADMINISTRATION AGREEMENT

October 21, 1996

Investors Bank & Trust Company
89 South Street
Boston, MA 02111

Ladies and Gentlemen:

This will confirm the agreement between Investors Bank & Trust Company
("IBT" or, at times, the "Sub-administrator") and Barclays Global Investors,
N.A. ("BGI" or, at times, the "Co-administrator") with respect to Master
Investment Portfolio ("MIP"), on behalf of its Master Portfolios, Managed Series
Investment Trust ("MSI Trust"), on behalf of its Master Portfolios, and
MasterWorks Funds Inc. ("MasterWorks"), on behalf of its Funds, listed in the
attached Appendix A, as such Appendix may be amended from time to time (the
"Master Portfolios" and Funds are, collectively, the "Portfolios"), as follows:

1. (a) MIP is a registered open-end, management investment company
consisting of a number of operating investment portfolios in accordance with
MIP's Amended and Restated Declaration of Trust (the "MIP Declaration"). MIP
engages in the business of investing and reinvesting the assets of each Master
Portfolio in the manner and in accordance with the applicable investment
objective, policies and restrictions specified in MIP's currently effective
Registration Statement, as amended from time to time (the "Registration
Statement"), filed under the Investment Company Act of 1940 (the "Act"). MIP
has retained BGI and Stephens Inc. as co-administrators pursuant to a co-
administration agreement. Copies of MIP's agreements with all service
providers, the MIP Declaration, its By-Laws and most recent amendment to its
Registration Statement have been furnished to the Sub-administrator.

(b) MSI Trust is a registered open-end, management investment company
consisting of a number of operating investment portfolios in accordance with MSI
Trust's Declaration of Trust (the " MSI Trust Declaration"). MSI Trust engages
in the business of investing and reinvesting the assets of each Master Portfolio
in the manner and in accordance with the applicable investment objective,
policies and restrictions specified in MSI Trust's currently effective
Registration Statement, as amended from time to time, filed under the Act. MSI
Trust has retained BGI and Stephens Inc. as co-administrators pursuant to a co-
administration agreement. Copies of MSI Trust's agreements with all service
providers, the MSI Trust Declaration, its By-Laws and most recent amendment to
its Registration Statement have been furnished to the Sub-administrator.
<PAGE>

(c) MasterWorks is a registered open-end, management investment company
consisting of a number of operating investment portfolios in accordance with
MasterWorks' Articles of Incorporation (the "Articles"). MasterWorks engages in
the business of investing and reinvesting the assets of each Fund in the manner
and in accordance with the applicable investment objective, policies and
restrictions specified in MasterWorks' currently effective Registration
Statement, as amended from time to time, filed under the Act and the Securities
Act of 1933. MasterWorks has retained BGI and Stephens Inc. as co-
administrators pursuant to a co-administration agreement. Copies of
MasterWorks' agreements with all service providers, MasterWorks' Articles, its
By-Laws and most recent amendment to its Registration Statement and prospectuses
and statements of additional information thereto have been furnished to the Sub-
administrator.

(d) Any amendments to MIP's, MSI Trust's or MasterWorks' documents
listed above shall be furnished to the Sub-administrator promptly.

2. BGI is engaging the Sub-administrator to provide certain administrative
services specified on Appendix B hereto, subject to the supervision of BGI and
the overall supervision of the applicable Board of Trustees/Directors of MIP,
MSI Trust or MasterWorks. Pursuant to advisory contracts between MIP, MSI Trust
or MasterWorks, respectively, and Barclays Global Fund Advisors (the "Adviser")
on behalf of each Master Portfolio or Fund, as applicable, the Adviser has been
engaged to manage the investing and reinvesting of the assets of each Master
Portfolio or Fund and to provide advisory services as specified in such advisory
contracts.

3. The Sub-administrator agrees to provide the administrative services, as
described on Appendix B hereto, as such Appendix may be amended from time to
time by the consent of the parties to this Agreement, in connection with the
operations of MIP, MSI Trust and MasterWorks and the Master Portfolios and
Funds, and to take all reasonable action in the performance of its obligations
under this Agreement to assure that the necessary information is made available
to other service providers, as such may be required by BGI from time to time.

4. (a) For the services to be rendered and the facilities to be furnished
by the Sub-administrator to BGI and/or MIP, MSI Trust, or MasterWorks, BGI
agrees to compensate the Sub-administrator in accordance with the fee schedule
attached as Appendix C to this Agreement. BGI also agrees to reimburse the Sub-
administrator for its out-of-pocket disbursements connected with the services
provided hereunder and for other expenses, which, with BGI's prior written
approval, the Sub-administrator shall be entitled to bill separately. The
compensation rates to be paid to the Sub-administrator hereunder shall not be
increased for a period of three (3) years from the effective date of this
Agreement.

(b) The Sub-administrator agrees that MIP, MSI Trust and MasterWorks and
their Master Portfolios and Funds shall have no obligation to compensate
the Sub-

2
<PAGE>

administrator for services provided or facilities furnished under, or
expenses incurred in connection with, this Agreement.

(c) The Sub-administrator shall have no obligation to pay for any
expenses incurred by MIP, MSI Trust and MasterWorks or their Master
Portfolios or Funds.

(d) The Sub-administrator and BGI each agree to exercise reasonable care
in performing its duties under this Agreement, and each party agrees to be
liable to the other party for direct damages resulting from a failure to
exercise reasonable care in performing such duties.

5. (a) BGI agrees to hold harmless and indemnify the Sub-administrator,
its directors, officers, employees and agents (the "Sub-administrator
Indemnitees") against and from any and all losses, expenses or liabilities
incurred by or claims or actions asserted against any Sub-administrator
Indemnitee to the extent resulting from (i) a violation or alleged
violation by BGI of any law, rule or regulation, (ii) a material violation
or alleged material violation by BGI of any provision of this Agreement,
(iii) any failure of BGI to exercise reasonable care in rendering services
hereunder, or (iv) any erroneous or incomplete information provided by or
through BGI to the Sub-administrator in connection with the Sub-
administrator's performance of its duties hereunder, such indemnification
to include any reasonable counsel fees and expenses incurred in connection
with investigating and/or defending such claims or actions.

(b) The Sub-administrator may apply to BGI at any time for instructions
and may consult counsel for BGI, or its own counsel, and with auditors and
other experts with respect to any matter arising in connection with its
duties hereunder, and the Sub-administrator shall not be liable or
accountable for any action reasonably taken or omitted by it in good faith
in accordance with such instruction, or with the opinion of such counsel,
auditors, or other experts. The Sub-administrator shall not be liable for
any action reasonably taken or omitted by it in good faith reliance upon
any document, certificate or instrument that it reasonably believes to be
genuine and to be signed or presented by the proper person(s). The Sub-
administrator shall not be held to have notice of any change of authority
of any officers, employees or agents of MIP, MSI Trust or MasterWorks or
their Master Portfolios or Funds until the Sub-administrator has received
written notice thereof from BGI.

(c) The Sub-administrator agrees to hold harmless and indemnify BGI, MIP,
MSI Trust and MasterWorks and their Master Portfolios and Funds, including
any principals, directors or trustees, officers, and employees (the "BGI
Indemnitees") against and from any and all losses, expenses or liabilities
incurred by or claims or actions asserted against any BGI Indemnitee to the
extent resulting from a

3
<PAGE>

violation or alleged violation by the Sub-administrator of any law, rule or
regulation or material violation or alleged material violation by the Sub-
administrator of any provision of this Agreement, or any failure of the
Sub-administrator to exercise reasonable care in rendering services
hereunder, such indemnification to include any reasonable counsel fees and
expenses incurred in connection with investigating of defending such claims
or actions.

(d) In the event that the Sub-administrator is unable to perform, or is
delayed in performing, its obligations under the terms of this Agreement
because of acts of God, strikes, legal constraint, government actions, war,
emergency conditions, interruption of electrical power or other utilities,
equipment or transmission failure or damage reasonably beyond its control
or other causes reasonably beyond its control, the Sub-administrator shall
not be liable to BGI for any damages resulting from such failure to
perform, delay in performance, or otherwise from such causes, provided that
the Sub-administrator shall make all reasonable efforts, whenever
necessary, to use data processing back-up facilities provided by Electronic
Data Systems, Inc.

(e) In no event shall the Sub-administrator be liable for special,
incidental, or consequential damages, even if advised in advance of the
possibility of such damages.

(f) In no event shall either BGI or the Sub-administrator be liable to
the other party for actions taken or omitted or information provided that
is based upon information originally provided by such other party.

6. The term of this Agreement shall be two (2) years commencing upon the
date hereof (the "Initial Term"), unless earlier terminated as provided herein.
After the expiration of the Initial Term, this Agreement shall automatically
renew for successive one-year terms (each a "Renewal Term") unless notice of
non-renewal is delivered by the non-renewing party to the other party no later
than sixty (60) days prior to the expiration of the Initial Term or any Renewal
Term, as the case may be.

(a) Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the violating party
does not cure such violation within ninety (90) days of receipt of written
notice from the non-violating party of such violation.

(b) BGI may terminate this Agreement prior to the expiration of the
Initial Term in the event (i) the Board of Trustees/Directors of MIP, MSI
Trust or MasterWorks determines that the performance of the Sub-
Administrator does not meet the reasonable satisfaction (considered in
light of industry standards) of the Board of Trustees/Directors, provided
that the Sub-Administrator does not cure

4
<PAGE>

such unsatisfactory performance within ninety (90) days of receipt of
written notice specifying such unsatisfactory performance; or (ii) if the
Sub-administrator becomes the subject of any state or federal bankruptcy
proceeding which is not dismissed within sixty (60) days of the initiation
of such proceeding.

(c) Either party may terminate this Agreement during any Renewal Term
upon sixty (60) days written notice to the other party. Any termination
pursuant to this paragraph 6(b) shall be effective upon expiration of such
sixty (60) days, provided, however, that the effective date of such
termination may be postponed, at the request of BGI, to a date not more
than ninety (90) days after delivery of the written notice in order to give
BGI an opportunity to make suitable arrangements for a successor Sub-
administrator.

(d) At any time after the termination of this Agreement, BGI may, upon
written request, have reasonable access to the records of Sub-administrator
relating to its performance of its duties as Sub-administrator.

(e) BGI may terminate this Agreement if the Co-administration
Agreement between BGI and MIP, MSI Trust or MasterWorks is terminated and
no successor agreement between BGI and MIP, MSI Trust or MasterWorks for
the provision of administrative services is subsequently executed within 90
days after the termination of the Co-administration Agreement.

(f) Section 5 hereof shall survive any termination of this Agreement.

7. (a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to BGI or the Sub-administrator shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.

To BGI: Barclays Global Investors, N.A.
45 Fremont Street, 17th Floor
San Francisco, CA 94105
Attention: Legal Group

To the Sub-administrator: Investors Bank & Trust Company
89 South Street
Boston, MA 02111
Attention: Andrew Nesvet
With a copy to: John E. Henry, Esq.

(b) This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable without the written consent of the
other party.

5
<PAGE>

8. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.

9. BGI and the Sub-administrator agree that each party may disclose the
existence of this Agreement to third parties; provided that each agrees to keep
confidential all proprietary data, software, processes, information, and
documentation related to this Agreement, except as may be necessary to perform
obligations under this Agreement or otherwise as may be agreed to, from time to
time, in writing by the parties.

10. Neither the Sub-administrator nor any of its employees or agents are
authorized to make any representation concerning the interests of MIP, MSI
Trust, MasterWorks or their Master Portfolios or Funds without prior written
consent, except those contained in the then current Registration Statement or
applicable prospectuses and statements of additional information, copies of
which will be supplied to the Sub-administrator as described above; and the Sub-
administrator shall have no authority under this Agreement to act as agent for
MIP, MSI Trust, or MasterWorks or their Master Portfolios or Funds or for BGI,
except where necessary to perform specific services under this Agreement.

11. This Agreement may be amended only by a written instrument executed by
both BGI and the Sub-administrator.

12. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.

6
<PAGE>

If the foregoing correctly sets forth the agreement between BGI and the
Sub-administrator, please so indicate by signing and returning to BGI the
enclosed copy hereof.

Very truly yours,

BARCLAYS GLOBAL INVESTORS, N.A.,

By: /s/Donald Luskin
--------------------------------------
Name: Donald Luskin
Title: Vice Chairman

By: /s/Matthew Shelton
--------------------------------------
Name: Matthew Shelton
Title: Principal

ACCEPTED as of the date
set forth above:

INVESTORS BANK & TRUST

By: /s/Robert D. Mancuso
-------------------------------------
Name: Robert D. Mancuso,
Title: Managing Director

By: /s/John E. Henry
---------------------------------------
Name: John E. Henry,
Title: General Counsel

7
<PAGE>

Appendix A

Master Investment Portfolio
---------------------------

LifePath 2000 Master Portfolio
LifePath 2010 Master Portfolio
LifePath 2020 Master Portfolio
LifePath 2030 Master Portfolio
LifePath 2040 Master Portfolio
Asset Allocation Master Portfolio
Bond Index Master Portfolio
S & P 500 Index Master Portfolio
U.S. Treasury Allocation Master Portfolio

Managed Series Investment Trust
-------------------------------

Growth Stock Master Portfolio
Short-Intermediate Term Master Portfolio

MasterWorks Funds, Inc.
-----------------------

LifePath 2000 Fund
LifePath 2010 Fund
LifePath 2020 Fund
LifePath 2030 Fund
LifePath 2040 Fund
Asset Allocation Fund
Bond Index Fund
Growth Stock Fund
Money Market Fund
S&P 500 Index Fund
Short-Intermediate Term Fund
U.S. Treasury Allocation Fund

Dated : October 21, 1996

A-1
<PAGE>

APPENDIX B
LIST OF ADMINISTRATIVE SERVICES
-------------------------------

(1) Prepare selected portfolio and financial information for inclusion in
Board material

(2) Assist in presentation to Board as desired by Fund Officer(s);

(3) Calculate total return information and other statistical information
including undistributed income and capital gains with respect to condensed
financial information for review by management;

(4) Perform tests of specific portfolio activities against compliance
checklists designed from the provisions of the Masters' and Money Market
Fund's current Prospectus and SAI;

(5) Calculate dividend amounts available for distribution;

(6) Coordinate review of dividend amounts by management and auditors;

(7) Notify fund accounting and transfer agent of authorized dividends rates;

(8) Prepare responses to various performance questionnaires; coordinate as
necessary, and submit responses to the appropriate agency;

(9) Prepare Forms N-SAR for filing; obtain any necessary supporting documents;
file with the SEC via EDGAR;

(10) Draft semi-annual and annual shareholder reports and coordinate auditor
and management review;

(11) Coordinate printing of reports and EDGAR conversion with outside printer
and filing with the SEC via EDGAR;

(12) Provide information for Financial Highlights and expense tables;

(13) Coordinate the preparation of required reports and confirmations for audit
packages with IBT fund accounting.

(14) Assist in resolution of audit issues.

(15) Perform diversification testing pursuant to the Internal Revenue Code of
1986, as amended (the "Tax Code") -- preliminary at each month end, final
at quarter end, and as may otherwise be necessary. Follow-up on any issues
until Tax Code qualification issues are resolved.

B-1
<PAGE>

(16) Perform short-short income and qualifying income tests monthly or more
frequently, as test results dictate, with respect to qualification as a
regulated investment company under the Tax Code.

(17) Identify book-tax accounting differences with auditors and management.

(18) Track required information relating to accounting differences and
determine appropriate allocations to feeders.

(19) Follow appropriate Tax Code treatment for all passive foreign investment
company ("PFIC") lots identified by BGI.

Approved: October 21, 1996

Signed: /s/Donald Luskin Signed: /s/Robert D. Mancuso
---------------------------- --------------------------------
By: Donald Luskin, Vice Chairman By: Robert D. Mancuso, Managing Director
Barclays Global Investors, N.A. Investors Bank & Trust

Signed: /s/Matthew Shelton Signed: /s/John E. Henry
----------------------------- --------------------------------
By: Matthew Shelton, Principal By: John E. Henry, General Counsel
Barclays Global Investors, N.A. Investors Bank & Trust

B-2
<PAGE>

Appendix C

FEE SCHEDULE
------------

CUSTODY, FUND ACCOUNTING & CALCULATION OF N.A.V.

A. Fund Accounting and Calculation of N.A.V
----------------------------------------

The following annual fee will be charged for each Master Portfolio of MIP and
MSI Trust and stand-alone Fund of MasterWorks for which IBT serves as fund
accountant. This fee does not include domestic or global custody or transaction
costs.
<TABLE>
<CAPTION>

Annual Fee
----------
<S> <C>

Domestic Funds $25,000
International/Foreign Funds $40,000

Per Feeder Annual Charge $12,000
</TABLE>

B. Domestic Custody and Transactions**
---------------------------------

In addition to the transaction charges below, there will be a basis point
charge on all domestic assets that IBT is custodian as follows:

FOR ALL ASSETS .67 BASIS POINT

TRANSACTIONS CHARGES
- ------------ -------
<S> <C>
. DTC $ 4
. Fed Book Entry $ 5
. Physical Securities 35
. Options and Futures 18
. GNMA Securities 40
. Principal Paydown 5
. Foreign Currency 18***
. Cross Border 50
. Outgoing Wires 7
. Incoming Wires 5

</TABLE>

C-1
<PAGE>

**Trade information will be sent to IBT electronically. If the trades are not
sent electronically, the price per trade for DTC and Fed Book items will
increase to $12 per trade.

***There are no transaction charges for F/X contracts executed by IBT.

C. Global Custody:
--------------

. Incremental basis point and transaction fees will be charged for all
foreign assets for which IBT serves as custodian. The asset based fees
and transaction fees vary by country, based upon the attached global
custody fee schedule. Local duties, script fees, registration, exchange
fees, and other market charges are out-of-pocket.

. IBT will require international assets to be held within its international
custody network.

MUTUAL FUND ADMINISTRATION

A. Mutual Fund Administration
--------------------------

. The following basis point fees are based on all assets for which IBT
serves as Administrator. This fee does not include preparation of tax
returns and provisions.
<TABLE>
<CAPTION>

Annual Fee
----------
<S> <C>

First $1 billion of assets $2.75 Basis Points
Assets in excess of $1 billion 1.0 Basis Point
</TABLE>

. For any new funds beyond the existing 1 stand-alone fund, 11 master
portfolios and 11 feeder funds there will be a minimum fee as described
below.
<TABLE>
<CAPTION>

<S> <C>
First 6 months $10,000
Next 6 months $12,500
Each Year thereafter $35,000
</TABLE>

This minimum fee includes 1 master portfolios and 1 feeder fund or stand-
alone fund. Each additional feeder will be charged a yearly minimum fee
of $7,500.

C-2
<PAGE>

The minimum fees will apply until the basis point fee above exceeds the
minimum charge.

MISCELLANEOUS

A. Out-of-Pocket
-------------

. These charges consist of:

- Printing, Delivery & Postage
- Board Meeting Attendance
- Extraordinary Travel Expenses
- InvestView
- Legal Expenses
- Customized Systems Development/Reporting
- Pricing & Verification Services (Per day/issue; Bonds $.50, Stocks $.03)
- Int'l stocks and bonds $.40; Int'l corporate actions $3.00 per
month/issue.

B. Domestic Balance Credit
-----------------------

. IBT allows use of balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship. The
credit is based on collected balances reduced by balances required to
support the activity charges of the accounts. The monthly earnings
allowance is equal to 75% of the 90-day T-bill rate.

C. Securities Lending, Foreign Exchange & Cash Management
------------------------------------------------------

. This proposal is based upon IBT performing securities lending, foreign
exchange and cash management for the portfolios. Securities Lending
revenue is split between a master portfolio or a fund and IBT on a 60/40%
basis; 60% going to the master portfolio or fund.

D. Payment
-------

. An invoice with respect to the above fees will be sent to BGI and will be
payable within ten (10) business days after the invoice is received.

E. Systems
-------

. The details of any systems work will be determined after a thorough
business analysis. System's work will be billed on a time and material
basis.

C-3
<PAGE>

F. Legal & Audit Expertise
-----------------------

. IBT will rely on the outside counsel to MIP, MSI Trust and MasterWorks and
auditors for opinions on any structural changes to the master portfolios
or funds.

* This fee schedule is valid for the time frames described in the individual
contracts.

C-4
<PAGE>

- ------------------------------------------------------------
COUNTRY BP CHARGE TRADE CHARGE
- ------------------------------------------------------------
<S> <C> <C>

Argentina 22.00 $ 75.00
Australia 5.00 $ 60.00
Austria 7.00 $ 60.00
Bangladesh 41.00 $150.00
Belgium 7.00 $ 60.00
Bharain 41.00 $140.00
Botswana 50.00 $175.00
Brazil** 29.00 $ 80.00
Canada 5.00 $ 30.00
Chile*** 45.00 $100.00
China 20.00 $ 75.00
Colombia** 45.00 $140.00
Cyprus 50.00 $150.00
Czech Republic 20.00 $ 75.00
Denmark 5.00 $ 60.00
Ecuador 45.00 $100.00
Egypt 41.00 $100.00
Euroclear-Eurobonds 5.00 $ 20.00
Euroclear Non-Eurobond Issues 5.00 $ 60.00
Finland 7.00 $ 70.00
France 5.00 $ 60.00
France Debt 5.00 $ 60.00
Germany 5.00 $ 30.00
Ghana 50.00 $200.00
Greece 45.00 $130.00
Hong Kong 10.00 $ 65.00
Hungary 50.00 $200.00
India**** 50.00 .50BP
Indonesia 13.00 $ 65.00
Ireland 7.00 $ 60.00
Israel 50.00 $150.00
Italy Debt 5.00 $ 50.00
Italy Equity 5.00 $ 50.00
Japan 5.00 $ 30.00
Jordan 41.00 $120.00
Kenya 50.00 $200.00
Korea 13.00 $ 65.00
Lebanon 41.00 $140.00
Luxembourg 7.00 $ 60.00
Malaysia 10.00 $ 70.00
Mauritius 41.00 $140.00
</TABLE>

C-5
<PAGE>

- ------------------------------------------------------------
COUNTRY BP CHARGE TRADE CHARGE
- ------------------------------------------------------------
<S> <C> <C>

Mexico 10.00 $ 40.00
Morocco 40.00 $150.00
Namibia 50.00 $200.00
Netherlands 5.00 $ 40.00
New Zealand 5.00 $ 60.00
Norway 7.00 $ 90.00
Oman 41.00 $140.00
Pakistan 41.00 $140.00
Peru 50.00 $150.00
Philippines 13.00 $ 65.00
Poland 50.00 $150.00
Poland T Bills 29.00 $110.00
Portugal 20.00 $125.00
Russia Equities 41.00 $250.00
Russia Min Fins 35.00 $140.00
Singapore 10.00 $ 65.00
Slovakia 20.00 $ 75.00
South Africa 7.00 $ 40.00
Spain Eq & Corp. Debt 7.00 $ 60.00
Spain Gvt Debt 5.00 $ 60.00
Sri Lanka 13.00 $ 65.00
Swaziland 50.00 $200.00
Sweden 5.00 $ 40.00
Sweden Debt 5.00 $ 40.00
Switzerland 5.00 $ 60.00
Taiwan 13.00 $ 65.00
Thailand 10.00 $ 65.00
Turkey 41.00 $140.00
UK 5.00 $ 50.00
Uruguay 50.00 $150.00
Venezuela** 45.00 $140.00
Zambia 50.00 $200.00
Zimbabwe 50.00 $175.00

</TABLE>

C-6
<PAGE>

*Bonds billed at Residual Value
**Local Administrator Fees included in Custody fee
***20 BP Local Administration Charge Applied to Trades
****Trades billed at 50 BP

Out-of-Pocket Charges are passed through as actuals in all markets

Dated: October 21, 1996

<PAGE>

EXHIBIT 99.B19

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of MasterWorks Funds Inc., Managed Series
Investment Trust and Master Investment Portfolio, (each, a "Company") and any or
all amendments (including post-effective amendments) thereto and to file the
same, with any and all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and any state securities
commissions or authorities, and (ii) to execute any and all federal or state
regulatory filings, including all applications with regulatory authorities,
state charter or organizational documents and any amendments or supplements
thereto, to be executed by, on behalf of, or for the benefit of, a Company. The
undersigned hereby grants to each Attorney-in-Fact full power and authority to
do and perform each and every act and thing contemplated above, as fully and to
all intents and purposes as he might or could do in person, and hereby ratifies
and confirms all that said Attorney-in-Fact may lawfully do or cause to be done
by virtue hereof.

Dated: October 24, 1996 /s/ Jack S. Euphrat
----------------------------
Jack S. Euphrat
<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr. and Robert M. Kurucza, and each
of them, his true and lawful attorney-in-fact and agent (each, an "Attorney-in
Fact") with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, (i) to execute the
Registration Statement of each of MasterWorks Funds Inc., Managed Series
Investment Trust and Master Investment Portfolio, (each, a "Company") and any or
all amendments (including post-effective amendments) thereto and to file the
same, with any and all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and any state securities
commissions or authorities, and (ii) to execute any and all federal or state
regulatory filings, including all applications with regulatory authorities,
state charter or organizational documents and any amendments or supplements
thereto, to be executed by, on behalf of, or for the benefit of, a Company. The
undersigned hereby grants to each Attorney-in-Fact full power and authority to
do and perform each and every act and thing contemplated above, as fully and to
all intents and purposes as he might or could do in person, and hereby ratifies
and confirms all that said Attorney-in-Fact may lawfully do or cause to be done
by virtue hereof.

Dated: October 24, 1996 /s/ R. Greg Feltus
-----------------------------
R. Greg Feltus
<PAGE>

POWER OF ATTORNEY

Dated: October 24, 1996 /s/ Thomas S. Goho
-----------------------------
Thomas S. Goho
<PAGE>

POWER OF ATTORNEY

Dated: October 24, 1996 /s/ Zoe Ann Hines
-----------------------------
Zoe Ann Hines
<PAGE>

POWER OF ATTORNEY

Dated: October 24, 1996 /s/ W. Rodney Hughes
-----------------------------
W. Rodney Hughes
<PAGE>

POWER OF ATTORNEY

Dated: October 24, 1996 /s/ Robert M. Joses
----------------------------
Robert M. Joses
<PAGE>

POWER OF ATTORNEY

Dated: October 24, 1996 /s/ J. Tucker Morse
-----------------------------
J. Tucker Morse