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As filed with the Securities and Exchange Commission
on August 31, 1998
Registration No. 811-8162
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM N-1A
AMENDMENT NO. 7 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 No. 7 to the Registration Statement of Master Investment
Portfolio (the "Trust") is being filed to add a new Master Portfolio to the
Trust -- the Money Market Master Portfolio.
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.
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MASTER INVESTMENT PORTFOLIO
MONEY MARKET MASTER PORTFOLIO
PART A
SEPTEMBER 1, 1998
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 one
diversified portfolio - the MONEY MARKET MASTER PORTFOLIO (the "Master
Portfolio"). The 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 of MIP is not
deemed to be an interestholder of any other master portfolio of MIP. 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 nine 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 the 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 the 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. Organizations or other entities
that hold shares of beneficial interest in the Master Portfolio may be referred
to herein as "feeder funds."
INVESTMENT OBJECTIVE AND POLICIES.
* The MONEY MARKET MASTER PORTFOLIO seeks to provide investors with a
high level of income, while preserving capital and liquidity, by investing in
high quality, short-term investments. These securities include obligations of
the U.S. Government, its agencies and instrumentalities (including
government-sponsored enterprises), certificates of deposit and U.S. Treasury
bills, high-quality debt obligations, such as corporate debt, certain
obligations of U.S. banks and certain repurchase agreements.
The investment objective of the Master Portfolio cannot be changed
without approval by the holders of a majority (as defined in the 1940 Act) of
the Master Portfolio's outstanding voting securities. The investment objective
and policies of the Master Portfolio determine the types of portfolio securities
in which it invests and can be expected to affect the degree of risk to which
the Master Portfolio is subject and the performance of the Master Portfolio.
There can be no assurance that the Master Portfolio's investment objective will
be achieved.
CERTAIN FUNDAMENTAL POLICIES. The Master Portfolio may (i) borrow
from banks up to 10% of the current value of its net assets only for temporary
purposes 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); (ii) make loans of portfolio
securities or other assets, however, as a matter of current operating policy,
the Master Portfolio does not loan its portfolio securities and loans for
purposes of this restriction will not include the purchase of fixed-time
deposits, repurchase agreements, commercial paper and other short-term
obligations, and other types of debt instruments commonly sold in a public or
private offering; and (iii) may not invest
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25% or more of its total assets (i.e., concentrate) in any particular
industry, excluding: a) U.S. Government obligations and b) obligations of
banks to the extent that the SEC, by rule or interpretation, permits funds to
a reserve freedom to concentrate in such obligations. See Item 13, "Investment
Objective and Policies -- Investment Restrictions," in Part B.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES.
1. The Master Portfolio may invest in shares of other open-end management
investment companies, subject to the limitations of Section 12(d)(1) of the 1940
Act. Under the 1940 Act, the Master Portfolio's investment in such securities
currently is limited, subject to certain exceptions, to (i) 3% of the total
voting stock of any one investment company, (ii) 5% of the 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. Other investment companies in
which the Master Portfolio invests can be expected to charge fees for operating
expenses, such as investment advisory and administration fees, that would be in
addition to those charged by the Master Portfolio.
2. The Master Portfolio may not invest more than 10% of its net assets in
illiquid securities. For this purpose, illiquid securities include, among
others, (i) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (ii) fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, and (iii) repurchase agreements not terminable within
seven days.
3. The Master Portfolio may lend securities from its portfolio to brokers,
dealers and financial institutions, in amounts not to exceed (in the aggregate)
one-third of the Master Portfolio's total assets. Any such loans of portfolio
securities will be fully collateralized based on values that are marked to
market daily. The Master Portfolio will not enter into any portfolio security
lending arrangement having a duration of longer than one year.
See Item 13, "Investment Objectives and Policies -- Investment
Restrictions," in Part B.
RISK CONSIDERATIONS.
The Master Portfolio's investments are expected to present minimal risks
because of their relatively short maturities and the high credit quality
(financial strength) of the issuers. The Master Portfolio seeks to maintain a
portfolio of investments that will permit interestholders to maintain a net
asset value of $1.00 per share; however, there is no assurance that this will be
achieved.
Pursuant to the Investment Company Act of 1940, as amended (the "1940 Act"),
the Master Portfolio must comply with certain investment criteria designed to
provide liquidity and reduce risk to allow the interestholders to maintain a
stable net asset value of $1.00 per share. The Master Portfolio seeks to reduce
risk by investing its assets in securities of various issuers. As such, the
Master Portfolio is considered to be diversified for purposes of the 1940 Act.
The Master Portfolio emphasizes safety of principal and high credit quality.
In particular, the internal investment policies of the Master Portfolio's
investment adviser, BGFA, have always prohibited the purchase by the Master
Portfolio of many types of floating-rate instruments commonly referred to as
derivatives that are considered to be potentially volatile. The Master Portfolio
may only invest in floating-rate securities that bear interest at a rate that
resets quarterly or more frequently, and that resets based on changes in
standard money market rate indices such as U.S. Government Treasury bills,
London Interbank Offered Rate, the prime rate, published commercial paper rates,
federal funds rates, Public Securities Associates floaters or JJ Kenney index
floaters.
The Master Portfolio's dollar-weighted average portfolio maturity must not
exceed 90 days. Any security that the Master Portfolio purchases must have a
remaining maturity of not more than 397 days (13 months). In addition, any
security that the Master Portfolio purchases must present minimal credit risks
and be of "high
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quality." "High quality" means to be rated in the top two rating categories by
the requisite NRSROs or, if unrated, determined to be of comparable quality to
such rated securities by BGFA, as the Master Portfolio's investment adviser,
under guidelines adopted by MIP's Board of Trustees. The Master Portfolio may
not achieve as high a level of current income as other mutual funds that do
not limit their investment to the high credit quality instruments in which the
Master Portfolio invests.
The Master Portfolio may invest up to 10% of its assets in illiquid
securities. Illiquid securities, which may include certain restricted
securities, may be difficult to sell promptly at an acceptable price. Certain
restricted securities may be subject to legal restrictions on resale. Delay or
difficulty in selling securities may result in a loss or be costly to the Master
Portfolio.
YEAR 2000 -- Many computer software systems in use today cannot distinguish the
Year 2000 from the Year 1900. Most of the services provided to the Master
Portfolio depend on the smooth functioning of computer systems. Any failure to
adapt these systems in time could hamper the Master Portfolio's operations and
services. The Master Portfolio's principal service providers have advised the
Master Portfolio that they are working on necessary changes to their systems and
that they expect their systems to be adapted in time. There can, of course, be
no assurance of success. In addition, because the Year 2000 issue affects
virtually all organizations, the companies or entities in which the Master
Portfolio invests also could be adversely impacted by the Year 2000 issue. The
extent of such impact cannot be predicted.
ITEM 5. MANAGEMENT OF THE MASTER PORTFOLIO
INVESTMENT ADVISER -- BGFA serves as investment adviser to the Master Portfolio.
BGFA is a direct subsidiary of Barclays Global Investors, N.A. (which, in turn,
is an indirect subsidiary of Barclays Bank PLC ("Barclays")) and is located at
45 Fremont Street, San Francisco, CA 94105. As of April 30, 1998, BGFA and its
affiliates provided investment advisory services for approximately $575 billion
of assets under management.
BGFA provides the Master Portfolio with investment guidance and policy
direction in connection with daily portfolio management, subject to the
supervision of MIP's Board of Trustees and in conformity with Delaware law and
the stated policies of the Master Portfolio. BGFA furnishes to MIP's Board of
Trustees periodic reports on the investment strategy and performance of the
Master Portfolio.
BGFA is entitled to receive monthly fees at the annual rate of 0.10% of
the average daily net assets of the 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 the Master Portfolio and,
accordingly, have a favorable impact on its performance.
Purchase and sale orders of the securities held by the 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 Portfolio 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,
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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.
CO-ADMINISTRATORS -- Stephens and Barclays Global Investors, N.A. ("BGI") are
the Master Portfolio's co-administrators. Stephens and BGI provide the Master
Portfolio with administration services, including general supervision of the
Master Portfolio's non-investment operations, coordination of the other services
provided to the Master Portfolio, 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
Portfolio's 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 Portfolio other than the fees
payable to BGFA. Stephens and BGI are not entitled to compensation for providing
administration services to the Master Portfolio, so long as they 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. To the extent that Stephens and BGI provide administration services
to the Master Portfolio in connection with assets of a feeder fund for which
they do not provide administration services, they can make arrangements to be
compensated for administration services to the extent of such other feeder
fund's investment in the 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.
PLACEMENT AGENT -- Stephens is the placement agent for the Master Portfolio.
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 Portfolio's custodian. The
principal business address of IBT is 200 Clarendon Street, Boston, Massachusetts
02116.
TRANSFER AGENT -- IBT also acts as the Master Portfolio's Transfer and Dividend
Disbursing Agent (the "Transfer Agent").
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 Portfolio, Stephens and BGI have agreed to bear
all costs of the Master Portfolio's 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 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 exists and it was unable to
meet its obligations.
To date, the Board of Trustees has authorized the creation of fifteen
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.
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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 September 1, 1998, the Money Market Fund of MasterWorks Funds Inc.
("MasterWorks"), 111 Center Street, Little Rock, Arkansas 72201, owned
approximately 99.99% of the outstanding voting securities of the Master
Portfolio. As such, said Fund could be considered a "controlling person" of the
Master Portfolio for purposes of the 1940 Act.
INTERESTS IN THE 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 THE MASTER PORTFOLIO INVOLVES CERTAIN INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE YIELD AND INVESTMENT RETURN OF THE
MASTER PORTFOLIO IS EXPECTED TO FLUCTUATE AND INVESTMENTS IN THE MASTER
PORTFOLIO 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
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 the 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 the Master Portfolio generally will be declared
as a dividend daily and paid monthly to all investors of record as of 1:00 p.m.
(Pacific time). 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. All of the net investment
income of the Master Portfolio so determined is allocated pro rata among the
investors in the Master Portfolio at the time of such determination.
Dividends and capital gain distributions, if any, paid by the Master
Portfolio will be reinvested in the investor's interest in the Master Portfolio
at net asset value and credited to the investor's account on the payment date.
TAXES
Based upon the anticipated classification of the Master Portfolio for
federal income tax purposes, MIP believes that the Master Portfolio will qualify
as a partnership for such purposes. MIP therefore believes that the Master
Portfolio will not be subject to any federal income tax on its income and net
capital gains (if any). However, each investor in the Master Portfolio will be
taxable on its distributive share of the 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 the Master Portfolio's assets, income and distributions
will be managed in such a way that a regulated investment company investing in
the Master Portfolio may satisfy the requirements of Subchapter M of the Code by
investing substantially all of its assets in the Master Portfolio.
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Investor inquiries should be directed to Master Investment Portfolio,
111 Center Street, Little Rock, Arkansas 72201.
ITEM 7. PURCHASE OF INTERESTS AND NET ASSET VALUE.
Beneficial interests in the 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 the 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 the 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 the Master
Portfolio is determined as of the close of trading of the New York Stock
Exchange (currently 1:00 p.m., Pacific Time), on each day the New York Stock
Exchange is open for business (a "Business Day"). On any day the trading markets
for both U.S. government securities and money market instruments close early,
the NAV calculation time and the dividend, purchase and redemption cut-off times
for the Fund may be earlier than 1:00 p.m. (Pacific time).
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 its total number of shares outstanding. All expenses are accrued daily and
taken into account for the purpose of calculating net asset value. The Master
Portfolio uses the amortized cost method to value its portfolio securities. The
amortized cost method involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, generally without regard to
the impact of fluctuating interest rates on the market value of the security.
MIP's Board of Trustees believes that this valuation method accurately reflects
fair value.
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.
The Master Portfolio will make payment for all shares redeemed within
three days after receipt by the Transfer Agent of a redemption request in proper
form, except as provided by the rules of the Securities and Exchange Commission.
Investments in the 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, the Master Portfolio may
invest in the securities described below.
U.S. GOVERNMENT OBLIGATIONS -- The Master Portfolio 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.
ASSET BACKED SECURITIES - The Master Portfolio may purchase asset-backed
securities, which are securities backed by installment contracts, credit-card
receivables or other assets. Asset-backed securities represent interests in
"pools" of assets in which payments of both interest and principal on the
securities are made monthly, thus in effect "passing through" monthly payments
made by the individual borrowers on the assets that underlie the securities, net
of any fees paid to the issuer or guarantor of the securities. The average life
of asset-backed securities varies with the maturities of the underlying
instruments and is likely to be substantially less than the original maturity of
the assets underlying the securities as a result of prepayments. For this and
other reasons, an asset-backed security's stated maturity may be shortened, and
the security's total return may be difficult to predict precisely. The Master
Portfolio may invest in such securities up to the limits prescribed by Rule 2a-7
and other provisions of the 1940 Act.
BANK OBLIGATIONS -- The Master Portfolio may invest in bank obligations
which include, but are not limited to, negotiable certificates of deposit
("CDs"), bankers' acceptances and fixed time deposits. The Master Portfolio also
may invest in high-quality short-term 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.
Fixed time deposits are obligations of U.S. banks, foreign branches of U.S.
banks or foreign banks which are payable at a stated maturity date and bear a
fixed rate of interest. Generally fixed time deposits may be withdrawn on demand
by the investor, but they may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity of the
obligation. Although fixed time deposits do not have an established market,
there are no contractual restrictions on the Master Portfolio's right to
transfer a beneficial interest in the deposit to a third party. It is the policy
of the Master Portfolio not to invest in fixed time deposits subject to
withdrawal penalties, other than overnight deposits, or in repurchase agreements
with more than seven days to maturity or other illiquid securities, if more than
10% of the value of its net assets would be so invested.
Obligations of foreign banks and foreign branches of U.S. banks involve
somewhat different investment risks from those affecting domestic obligations,
including the possibilities that liquidity could be impaired because of future
political and economic developments, that the obligations may be less marketable
than comparable obligations of U.S. banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions (such as foreign exchange controls) may be adopted which might
adversely affect the payment of principal and interest on those obligations and
that the selection of those obligations may be more difficult because there may
be less publicly available information concerning foreign banks or the
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accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign banks may differ from those applicable to
U.S. banks. In that connection, foreign banks are not subject to examination by
any U.S. Government agency or instrumentality.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT INSTRUMENTS -- The 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.
The Master Portfolio also may invest in non-convertible corporate debt
securities (e.g., bonds and debentures) with not more than thirteen months
remaining to maturity at the date of settlement. The 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 to the 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 -- 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. The period of maturity is usually quite short, often overnight
or a few days, although it may extend over a number of months. The 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. The 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 Master Portfolios advised by BGFA.
LETTERS OF CREDIT -- Certain of the debt obligations, certificates of
participation, commercial paper and other short-term obligations which the
Master Portfolio is permitted to purchase may be backed by an unconditional and
irrevocable letter of credit of a bank, savings and loan association or
insurance company which assumes the obligation for payment of principal and
interest in the event of default by the issuer. Letter of credit-backed
investments must, in the opinion of BGFA, be of investment quality comparable to
other permitted investments of the Master Portfolio.
OTHER INVESTMENT COMPANIES -- The Master Portfolio may invest in shares of
other open-end investment companies that invest exclusively in high-quality
short-term securities subject. The Master Portfolio may also purchase shares of
exchange listed closed-end Master Portfolios.
MUNICIPAL OBLIGATIONS -- The Master Portfolio may invest in municipal
obligations. Municipal bonds generally have a maturity at the time of issuance
of up to 40 years. Medium-term municipal notes are generally issued in
anticipation of the receipt of tax Master Portfolios, of the proceeds of bond
placements, or of other revenues. The ability of an issuer to make payments on
notes is therefore especially dependent on such tax receipts, proceeds from bond
sales or other revenues, as the case may be. Municipal commercial paper is a
debt obligation with a stated maturity of 270 days or less that is issued to
finance seasonal working capital needs or as short-term financing in
anticipation of longer-term debt.
A-2
<PAGE>
The Master Portfolio will invest in `high-quality'(as that term is defined
in Rule 2a-7 of the 1940 Act) long-term municipal bonds, municipal notes and
short-term commercial paper, with remaining maturities not exceeding 13 months.
FLOATING- AND VARIABLE-RATE OBLIGATIONS -- The Master Portfolio may purchase
debt instruments with interest rates that are periodically adjusted at specified
intervals or whenever a benchmark rate or index changes. The floating- and
variable-rate instruments that the Master Portfolio may purchase include
certificates of participation in such instruments. 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.
PARTICIPATION INTERESTS -- The Fund may invest in participation interests in
any type of security in which the Fund may invest. A participation interest
gives the Fund an undivided interest in the underlying securities in the
proportion that the Fund's participation interest bears to the total principal
amount of the underlying securities.
ILLIQUID SECURITIES -- The Master Portfolio may invest in securities not
registered under the 1933 Act and other securities subject to legal or other
restrictions on resale. Because such securities may be less liquid than other
investments, they may be difficult to sell promptly at an acceptable price.
Delay or difficulty in selling securities may result in a loss or be costly to
the Master Portfolio.
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. The 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-3
<PAGE>
MASTER INVESTMENT PORTFOLIO
MONEY MARKET MASTER PORTFOLIO
PART B -- STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 1, 1998
ITEM 10. COVER PAGE.
Master Investment Portfolio ("MIP", at times the "Trust") 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 September 1,
1998. 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
Master Investment Portfolio, c/o Investors Bank & Trust Co., -- Transfer Agent,
P.O. Box 9130, Mail Code MFD23, Boston, MA 02117-9130, or by calling
1-800-204-3956. 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>
<S> <C>
PAGE
General Information and History ................................................................... 1
Investment Objectives and Policies ................................................................ 1
Management of MIP.................................................................................. 6
Control Persons and Principal Holders of Securities ............................................... 8
Investment Advisory and Other Services............................................................. 9
Brokerage Allocation and Other Practices........................................................... 11
Capital Stock and Other Securities................................................................. 12
Purchase, Redemption and Pricing of Securities .................................................... 12
Tax Status......................................................................................... 14
Underwriters....................................................................................... 14
Calculations of Performance Data................................................................... 14
Financial Information ............................................................................. 14
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 Objective. By this offering document, MIP is offering a
diversified portfolio, the Money Market Master Portfolio (the "Master
Portfolio"). Organizations and other entities that hold shares of beneficial
interest of the Master Portfolio may be referred to herein as "feeder funds."
The 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 objective of the Master Portfolio will be
achieved. The 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
the Master Portfolio's outstanding voting interests.
1
<PAGE>
Investment Restrictions. The Master Portfolio has adopted investment
restrictions numbered 1 through 11 as fundamental policies. These restrictions
cannot be changed without approval by the holders of a majority (as defined in
the 1940 Act) of the Master Portfolio's outstanding voting securities.
Investment restrictions numbered 12 through 14 are not fundamental policies and
may be changed by vote of a majority of the Trustees of MIP at any time.
MASTER PORTFOLIO FUNDAMENTAL INVESTMENT RESTRICTIONS. The Master Portfolio
is subject to the following investment restrictions, all of which are
fundamental policies.
The Money Market Master Portfolio may not:
(1) purchase the securities of issuers conducting their principal business
activity in the same industry if, immediately after the purchase and as a
result thereof, the value of the Master Portfolio's investments in that
industry would be 25% or more of the current value of the Master Portfolio's
total assets, provided that there is no limitation with respect to investments
in (i) obligations of the U.S. Government, its agencies or instrumentalities;
and (ii) obligations of banks, to the extent that the U.S. Securities and
Exchange Commission ("SEC"), by rule or interpretation, permits funds to
reserve freedom to concentrate in such obligations;
(2) purchase or sell real estate or real estate limited partnerships (other
than securities secured by real estate or interests therein or securities issued
by companies that invest in real estate or interests therein);
(3) purchase commodities or commodity contracts (including futures
contracts), except that the Master Portfolio may purchase securities of an
issuer which invests or deals in commodities or commodity contracts;
(4) purchase interests, leases, or limited partnership interests in oil,
gas, or other mineral exploration or development programs;
(5) purchase securities on margin (except for short-term credits necessary
for the clearance of transactions and except for margin payments in connection
with options, futures and options on futures) or make short sales of securities;
(6) underwrite securities of other issuers, except to the extent that the
purchase of permitted investments directly from the issuer thereof or from an
underwriter for an issuer and the later disposition of such securities in
accordance with the Master Portfolio's investment program may be deemed to be an
underwriting;
(7) make investments for the purpose of exercising control or management;
(8) borrow money or issue senior securities as defined in the Investment
Company Act of 1940 (the "1940 Act"), except that the 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);
(9) write, purchase or sell puts, calls, straddles, spreads, warrants,
options or any combination thereof, except that the Master Portfolio may
purchase securities with put rights in order to maintain liquidity;
(10) purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities) if, as a
result, with respect to 75% of its total assets, more than 5% of the value of
the Master Portfolio's total assets would be invested in the securities of any
one issuer or, with respect to 100% of its total assets the Master Portfolio's
ownership would be more than 10% of the outstanding voting securities of such
issuer; or
(11) make loans, except that the Master Portfolio may purchase or hold debt
instruments or lend its portfolio securities in accordance with its investment
policies, and may enter into repurchase agreements.
MASTER PORTFOLIO NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The Master
Portfolio is subject to the following investment restrictions, all of which are
non-fundamental policies.
As a matter of non-fundamental policy:
(12) The Master Portfolio may invest in shares of other open-end management
investment companies, subject to the limitations of Section 12(d)(1) of the 1940
Act. Under the 1940 Act, the Master Portfolio's investment in such securities
currently is limited, subject to certain exceptions, to (i) 3% of the total
voting stock of any one investment company, (ii) 5% of the 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. Other investment companies in
which the Master Portfolio invests can be expected to charge fees for operating
expenses, such as investment advisory and administration fees, that would be in
addition to those charged by the Master Portfolio.
(13) The Master Portfolio may not invest more than 10% of its net assets in
illiquid securities. For this purpose, illiquid securities include, among
others, (i) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (ii) fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, and (iii) repurchase agreements not terminable within
seven days.
(14) The Master Portfolio may lend securities from its portfolio to brokers,
dealers and financial institutions, in amounts not to exceed (in the aggregate)
one-third of the Master Portfolio's total assets. Any such loans of portfolio
securities will be fully collateralized based on values that are marked to
market daily. The Master Portfolio will not enter into any portfolio security
lending arrangement having a duration of longer than one year.
2
<PAGE>
PORTFOLIO SECURITIES.
General. The assets of the Master Portfolio consist only of obligations
-------
maturing within thirteen months from the date of acquisition (as determined in
accordance with the regulations of the SEC), and the dollar-weighted average
maturity of the Master Portfolio may not exceed 90 days. The securities in which
the Master Portfolio may invest will not yield as high a level of current income
as may be achieved from securities with less liquidity and less safety. There
can be no assurance that the Master Portfolio's investment objective will be
realized as described in the Master Portfolio's Prospectus.
Unrated Investments. The Master Portfolio may purchase instruments that are
-------------------
not rated if, in the opinion of BGFA, such obligations are of investment quality
comparable to other rated investments that are permitted for purchase by the
Master Portfolio, if they are purchased in accordance with the Master
Portfolio's procedures adopted by the Trust's Board of Trustees in accordance
with Rule 2a-7 under the 1940 Act. Such procedures require approval or
ratification by the Trustees of the purchase of unrated securities. After
purchase by the Master Portfolio, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Master Portfolio.
Neither event will require an immediate sale of such security by the Master
Portfolio provided that, when a security ceases to be rated, the Trust's Board
of Trustees determines that such security presents minimal credit risks and,
provided further that, when a security rating is downgraded below the eligible
quality for investment or no longer presents minimal credit risks, the Board
finds that the sale of such security would not be in the Master Portfolio's
interestholder's best interests. However, in no event will such securities
exceed 5% of the Master Portfolio's net assets.
To the extent the ratings given by a nationally recognized statistical
ratings organization ("NRSRO") may change as a result of changes in such
organizations or their rating systems, the Master Portfolio will attempt to
use comparable ratings as standards for investments in accordance with the
investment policies contained in the Prospectus and in this SAI. The ratings
of NRSROs are more fully described in the SAI Appendix.
Pass-Through Obligations. Certain of the debt obligations in which the
------------------------
Master Portfolio may invest may be pass-through obligations that represent an
ownership interest in a pool of mortgages and the resultant cash flow from those
mortgages. Payments by homeowners on the loans in the pool flow through to
certificate holders in amounts sufficient to repay principal and to pay interest
at the pass-through rate. The stated maturities of pass-through obligations may
be shortened by unscheduled prepayments of principal on the underlying
mortgages. Therefore, it is not possible to predict accurately the average
maturity of a particular pass-through obligation. Variations in the maturities
of pass-through obligations will affect the yield of any Master Portfolio
investing in such obligations. Furthermore, as with any debt obligation,
fluctuations in interest rates will inversely affect the market value of
pass-through obligations.
Loans of Portfolio Securities. The Master Portfolio may lend its securities
-----------------------------
to brokers, dealers and financial institutions, provided (1) the loan is secured
continuously by collateral consisting of cash, U.S. Government securities
or an irrevocable letter of credit which is marked to market
daily to ensure that each loan is fully collateralized; (2) the
Master Portfolio may at any time recall the loan and obtain the return of the
securities loaned within five business days; (3) the Master Portfolio will
receive any interest or dividends paid on the securities loaned; and (4) the
aggregate market value of securities loaned will not at any time exceed
one-third of the total assets of the Master Portfolio. The Master Portfolio may
earn income in connection with securities loans either through the reinvestment
of the cash collateral or the payment of fees by the borrower. The Master
Portfolio does not currently intend to lend its portfolio securities.
Repurchase Agreements. The 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.
3
<PAGE>
Securities acquired as collateral by the Master Portfolio under a repurchase
agreement will be held in a segregated account at a bank. 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. BGFA monitors on an
ongoing basis the value of the collateral to assure that it always equals or
exceeds the repurchase price. Certain costs may be incurred by 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 the Master Portfolio under the 1940
Act.
Floating- and Variable-Rate Obligations. The 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 Master Portfolio may invest in obligations which
are not so rated only if BGFA determines that at the time of investment the
obligations are of comparable quality to the other obligations in which the
Master Portfolio may invest. BGFA, 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.
Forward Commitments, When-Issued Purchases and Delayed-Delivery
---------------------------------------------------------------
Transactions. The Master Portfolio may purchase securities on a when-issued or
- ------------
forward commitment (sometimes called a delayed-delivery) basis, which means that
the price is fixed at the time of commitment, but delivery and payment
ordinarily take place a number of days after the date of the commitment to
purchase. The Master Portfolio will make commitments to purchase such securities
only with the intention of actually acquiring the securities, but the Master
Portfolio may sell these securities before the settlement date if it is deemed
advisable. The Master Portfolio will not accrue income in respect of a security
purchased on a forward commitment basis prior to its stated delivery date.
4
<PAGE>
Securities purchased on a when-issued or forward commitment basis and
certain other securities held in the Master Portfolio's investment portfolio are
subject to changes in value (both generally changing in the same way, i.e.,
- -
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a when-issued or forward commitment basis may expose the Master
Portfolio to risk because they may experience such fluctuations prior to their
actual delivery. Purchasing securities on a when-issued or forward commitment
basis can involve the additional risk that the yield available in the market
when the delivery takes place actually may be higher than that obtained in the
transaction itself. A segregated account of the Master Portfolio consisting of
cash or U.S. Government obligations or other high quality liquid debt securities
at least equal at all times to the amount of the when-issued or forward
commitments will be established and maintained at the Master Portfolio's
custodian bank. Purchasing securities on a forward commitment basis when the
Master Portfolio is fully or almost fully invested may result in greater
potential fluctuation in the value of the Master Portfolio's total net assets
and its net asset value per share. In addition, because the Master Portfolio
will set aside cash and other high quality liquid debt securities as described
above, the liquidity of the Master Portfolio's investment portfolio may decrease
as the proportion of securities in the Master Portfolio's portfolio purchased on
a when-issued or forward commitment basis increases.
The value of the securities underlying a when-issued purchase or a forward
commitment to purchase securities, and any subsequent fluctuations in their
value, is taken into account when determining the Master Portfolio's net asset
value starting on the day the Master Portfolio agrees to purchase the
securities. The Master Portfolio does not earn interest on the securities it has
committed to purchase until they are paid for and delivered on the settlement
date. When the Master Portfolio makes a forward commitment to sell securities it
owns, the proceeds to be received upon settlement are included in the Master
Portfolio's assets, and fluctuations in the value of the underlying securities
are not reflected in the Master Portfolio's net asset value as long as the
commitment remains in effect.
Rule 144A. It is possible that unregistered securities, purchased by the
---------
Master Portfolio in reliance upon Rule 144A under the Securities Act of 1933,
could have the effect of increasing the level of the Master Portfolio's
illiquidity to the extent that qualified institutional buyers become, for a
period, uninterested in purchasing these securities.
Foreign Obligations. Investments in foreign obligations involve certain
-------------------
considerations that are not typically associated with investing in domestic
obligations. There may be less publicly available information about a foreign
issuer than about a domestic issuer. Foreign issuers also are not generally
subject to uniform accounting, auditing and financial reporting standards or
governmental supervision comparable to those applicable to domestic issuers. In
addition, with respect to certain foreign countries, taxes may be withheld at
the source under foreign income tax laws, and there is a possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect investments in, the
liquidity of, and the ability to enforce contractual obligations with respect
to, securities of issuers located in those countries. The Master Portfolio may
invest up to 25% of its assets in foreign obligations.
Obligations of foreign banks and foreign branches of U.S. banks involve
somewhat different investment risks from those affecting obligations of U.S.
banks, including the possibilities that liquidity could be impaired because of
future political and economic developments; the obligations may be less
marketable than comparable obligations of U.S. banks; a foreign jurisdiction
might impose withholding taxes on interest income payable on those obligations;
foreign deposits may be seized or nationalized; foreign governmental
restrictions (such as foreign exchange controls) may be adopted which might
adversely affect the payment of principal and interest on those obligations; and
the selection of those obligations may be more difficult because there may be
less publicly available information concerning foreign banks. In addition, the
accounting, auditing and financial reporting standards, practices and
requirements applicable to foreign banks may differ from those applicable to
U.S. banks. In that connection, foreign banks are not subject to examination by
any U.S. Government agency or instrumentality.
5
<PAGE>
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
*R. Greg Feltus, 46 Trustee, Senior Vice President of
President Stephens; President of Stephens
and Trustee, Insurance Services Inc.; Senior
Vice President of Stephens
Sports Management Inc.; and
President of Investors
Brokerage Insurance Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE POSITION DURING PAST 5 YEARS
--------------------- -------- -----------------------
<S> <C> <C>
Thomas S. Goho, 55 Trustee Associate Professor of Finance,
P.O. Box 7285 Calloway School of Business and
Reynolda Station Accounting, Wake Forest
Winston-Salem, NC 27104 University, since 1982.
*W. Rodney Hughes, 71 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
*J. Tucker Morse, 53 Trustee Chairman of Home Account
4 Beaufain Street Networks, Inc.; Real Estate
Charleston, SC 29401 Developer; Chairman of
Renaissance Properties Ltd;
President of Morse Investment
Corporation; and Co-Managing
Partner of Main Street
Ventures.
Richard H. Blank, Jr., 41 Chief Operating Vice President of Stephens;
Officer, Secretary Director of Stephens Sports
and Treasurer Management Inc.; and Director
of Capo Inc.
</TABLE>
COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT
NAME AND POSITION FROM REGISTRANT AND FUND COMPLEX
----------------- ---------------------- ----------------
<S> <C> <C>
Jack S. Euphrat $0 $11,250
Trustee
*R. Greg Feltus 0 0
Trustee
Thomas S. Goho 0 11,250
Trustee
*Zoe Ann Hines/1/ 0 0
Trustee
*W. Rodney Hughes 0 11,000
Trustee
Robert M. Joses/2/ 0 1,000
Trustee
*J. Tucker Morse 0 11,000
Trustee
</TABLE>
7
<PAGE>
- --------------------------
/1/ Zoe Ann Hines retired as of January 28, 1998.
/2/ Robert M. Joses retired as of December 31, 1997.
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., Stagecoach Trust and
Life & Annuity Trust together form a separate fund complex (the "Wells Fargo
Fund Complex"). Prior to December 15, 1997, the Wells Fargo Fund Complex also
included Overland Express Funds, Inc. and Master Investment Trust. On that date,
Overland Express Funds, Inc. was consolidated with and into Stagecoach Funds,
Inc. and Master Investment Trust was dissolved. 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. 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 September 1, 1998, the Money Market Fund of MasterWorks Funds
Inc. ("MasterWorks"), 111 Center Street, Little Rock, Arkansas 72201, owned
approximately 99.99% of the outstanding voting securities of the Master
Portfolio and could be considered a "controlling person" of the Master Portfolio
for purposes of the 1940 Act.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
The following information supplements and should be read in conjunction
with Item 5 in Part A.
Investment Adviser. BGFA provides investment advisory services to the
Master Portfolio pursuant to an Investment Advisory Contract (the "Advisory
Contract") with MIP. As to the Master Portfolio, the 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
the 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. The Advisory
Contract is terminable without penalty, on 60 days' written notice, by either
party and will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
Co-Administrators. Stephens and BGI are the Master Portfolio's
co-administrators. Stephens and BGI provide the Master Portfolio with
administrative services, including general supervision of the Master Portfolio'
non-investment operations, coordination of the other services provided to the
Master Portfolio, 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 Portfolio'
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 Portfolio other than the fees payable to BGFA. Stephens
and BGI are not entitled to compensation for providing administration services
to the Master Portfolio.
8
<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.
Placement Agent. Stephens is the placement agent for the Master
Portfolio. 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 Portfolio's 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 Portfolio.
Transfer and Dividend Disbursing Agent. IBT also acts as the Master
Portfolio's Transfer and Dividend Disbursing Agent (the "Transfer Agent"). IBT
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 Portfolio.
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 Portfolio, Stephens and BGI have
agreed to bear all costs of the Master Portfolio' and MIP's operations.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
General. BGFA assumes general supervision over placing orders on behalf
of the Master Portfolio for the purchase or sale of portfolio securities.
Allocation of brokerage transactions, including their frequency, is made in the
best judgment of BGFA and in a manner deemed fair and reasonable to
interestholders. In executing portfolio transactions and selecting brokers or
dealers, BGFA seeks to obtain the best overall terms available for the 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 Portfolio may transact
business offer commission rebates to the Master Portfolio. 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.
Securities of Regular Broker/Dealers. On February 28, 1998, the Master
Portfolio was not yet in operation and therefore did not own securities of its
"regular brokers or dealers" or their parents, as defined in the 1940 Act.
Portfolio Turnover. Because the portfolio of the Master Portfolio
consists of securities with relatively short-term maturities, the Master
Portfolio expects to experience high portfolio turnover. A high portfolio
turnover rate should not adversely affect the Master Portfolio since portfolio
transactions ordinarily will be made directly with principals on a net basis
and, consequently, the Master Portfolio usually will not incur brokerage
expenses or excessive transaction costs.
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 the Master Portfolio. Investors in the
Master Portfolio are entitled to participate pro rata in distributions of
taxable income, loss, gain and credit of the Master Portfolio. Upon liquidation
or dissolution of the Master Portfolio,
9
<PAGE>
investors are entitled to share pro rata in the Master Portfolio's net assets
available for distribution to its investors. Investments in the 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 portfolios, in proportion to the amount of its investment in the
MIP. Investors in the 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 the
Master Portfolio affected by such matter. Rule 18f-2 further provides that the
Master Portfolio shall be deemed to be affected by a matter unless it is clear
that the interests of the Master Portfolio in the matter are identical or that
the matter does not affect any interest of the 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 the 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 the 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, the 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 the 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.
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 Portfolio
ordinarily utilizes is restricted, or when an emergency exists as determined by
the Securities and Exchange Commission so that disposal of the Master Portfolio'
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 Portfolio's
interestholders.
10
<PAGE>
PRICING OF SECURITIES.
The Master Portfolio uses the amortized cost method to determine the value
of its portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The
amortized cost method involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
that the Master Portfolio would receive if the security were sold. During these
periods the yield to a shareholder may differ somewhat from that which could be
obtained from a similar Master Portfolio that uses a method of valuation based
upon market prices. Thus, during periods of declining interest rates, if the use
of the amortized cost method resulted in a lower value of the Master Portfolio's
portfolio on a particular day, a prospective investor in the Master Portfolio
would be able to obtain a somewhat higher yield than would result from
investment in the Master Portfolio using solely market values, and existing
Master Portfolio interestholders would receive correspondingly less income. The
converse would apply during periods of rising interest rates.
Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, the Money Market Master Portfolio must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase securities having
remaining maturities (as defined in Rule 2a-7) of thirteen months or less and
invest only in those high-quality securities that are determined by the Board of
Directors to present minimal credit risks. The maturity of an instrument is
generally deemed to be the period remaining until the date when the principal
amount thereof is due or the date on which the instrument is to be redeemed.
However, Rule 2a-7 provides that the maturity of an instrument may be deemed
shorter in the case of certain instruments, including certain variable- and
floating-rate instruments subject to demand features.
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 the
Master Portfolio will be treated as a partnership for such purposes and,
therefore, the Master Portfolio will not be subject to any federal income tax.
However, each investor in the Master Portfolio will be taxable on its share (as
determined in accordance with the governing instruments of MIP) of the Master
Portfolio's ordinary income and capital gains 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.
The Master Portfolio's assets, income and distributions will be managed
in such a way that an investor in the 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 the 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 the Master Portfolio of MIP.
11
<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 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 were audited by other independent auditors. Such auditors
expressed an unqualified opinion on the financial statements of the MIP.
The audited financial statements, including the portfolio of
investments, and independent auditors' report for MIP for the fiscal year ended
February 28, 1998 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 1, 1998. The audited financial statements for MIP are attached to all Part
Bs delivered to interestholders or prospective interestholders.
12
<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
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.
THOMPSON'S BANK WATCH
Management may also use the bond categorizations and recommendations of
Thompson's Bank Watch, a banking industry monitor, to select certain portfolio
investments.
A-5
<PAGE>
MASTER INVESTMENT PORTFOLIO
FILE NO. 811-8162
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial Statements
(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, and filed herewith.
1(b) - Certificate of Trust, incorporated by reference to the Registration Statement on Form N-1A,
filed November 15, 1993, and filed herewith.
1(c) - Amendment to the Amended and Restated Agreement and Declaration of Trust dated August 19, 1998,
filed herewith.
1(d) - Certificate of Amendment to the Certificate of Trust dated August 19, 1998, filed herewith.
2 - By-Laws, incorporated by reference to the Registration Statement on Form N-1A filed November 15,
1993, and filed herewith.
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.
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------------------------- -------------------------------------------------------------------------------------------------------
<S> <C>
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.
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.
5(j) - Form of Investment Advisory Contract by and among Barclays Global Fund Advisors and Master
Investment Portfolio dated June 11, 1998, on behalf of the Money Market Master Portfolio, filed
herewith.
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, incorporated by reference to Amendment No. 5 to the Registration Statement, filed June
30, 1997.
9(a) - Co-Administration Agreement with Stephens Inc. and Barclays Global Investors, N.A. dated October
21, 1996 on behalf of each Master Portfolio, incorporated by reference to Amendment No. 5 to the
Registration Statement, filed June 30, 1997.
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, incorporated by reference to Amendment No. 5
to the Registration Statement, filed June 30, 1997.
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------------------------- -------------------------------------------------------------------------------------------------------
<S> <C>
9(c) - Third Party Feeder Fund Agreement with Massmutual Institutional Funds and Massachusetts Mutual Life
Insurance Company dated February 27, 1998, filed June 30, 1998.
9(d) - Third Party Feeder Fund Agreement by and among Strong Equity Funds, Inc., Strong Funds
Distributors, Inc. and Master Investment Portfolio dated April 25, 1997, filed herewith.
9(e) - Form of Third Party Feeder Fund Agreement by and among Hewitt Series Funds, its Distributor and MIP
dated April 29, 1998, filed herewith.
10 - Not Applicable.
11 - Not Applicable.
12 - Not Applicable.
13 - Not Applicable.
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, incorporated by reference to Amendment No. 5 to the
Registration Statement, filed June 30, 1997.
27 - Financial Data Schedules for the fiscal period ended February 28, 1998, incorporated by reference
to the Form N-SAR filed on April 28, 1998.
</TABLE>
C-3
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
- ------- -------------------------------------------------------------
No person is controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities
- ------- -------------------------------
As of June 1, 1998, 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 2
Asset Allocation Master Portfolio 2
U.S. Treasury Allocation Master Portfolio 2
Money Market Master Portfolio N/A
</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.
<TABLE>
<CAPTION>
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 of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Patricia Dunn Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Lawrence G. Tint Chairman of the Board of Directors of BGFA and
Chairman and Director Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 94111
</TABLE>
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
C-5
<PAGE>
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 & Greene
Director 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 Executive Officer,
Director 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 Officer of
Director First Interstate Bancorp
633 West Fifth Street
Los Angeles, CA 90071
Director of Aztar Corporation
2390 East Camelback Road Suite 400
Phoenix, AZ 85016
Director of Castle & Cook, Inc.
10900 Wilshire Blvd.
Los Angeles, CA 90024
</TABLE>
C-6
<PAGE>
<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>
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>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ---------------------------- --------------------------------------------------------------------------------
<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>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ---------------------------- --------------------------------------------------------------------------------
<S> <C>
Philip J. Quigley Chairman, President and Chief Executive Officer of
Director 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 Teledyne, Inc.
Director 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>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ---------------------------- --------------------------------------------------------------------------------
<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 Cellular One
Director 651 Gateway Blvd.
San Francisco, CA 94080
David M. Tellep Retired Chairman of the Board and Chief Executive Officer of
Director 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 Berkeley
Director 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>
<CAPTION>
Name and Position Principal Business(es) and Address(es)
at Wells Fargo Bank During at Least the Last Two Fiscal Years
- ---------------------------- --------------------------------------------------------------------------------
<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 Life & Annuity Trust,
MasterWorks Funds Inc., Stagecoach Funds, Inc., Stagecoach Trust, Nations Fund,
Inc., Nations Fund Trust, Nations Fund Portfolios, Inc., Nations LifeGoal Funds,
Inc. and Nations Institutional Reserves, and is the exclusive placement agent
for Managed Series Investment Trust and Master Investment Portfolio, all of
which are registered open-end management investment companies.
(b) Information with respect to each director and officer of the
principal underwriter is incorporated by reference to Form ADV and Schedules A
and D filed by Stephens Inc. with the Securities and Exchange Commission
pursuant to the Investment Advisors Act of 1940 (File No. 501-15510).
(c) Not Applicable
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 200 Clarendon Street, Boston, Massachusetts
02116.
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 31st day of August, 1998.
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
-------------------------
(W. Rodney Hughes)
* Trustee
-------------------------
(J. Tucker Morse)
*By: /s/ Richard H. Blank, Jr.
-------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
August 31, 1998
<PAGE>
MASTER INVESTMENT PORTFOLIO
FILE NO. 811-8162
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
EX-99.B1(a) * Amended and Restated Declaration of Trust, incorporated by
reference to the Registration Statement on Form N-1A, filed
November 15, 1993, and filed herewith.
EX-99.B1(b) * Certificate of Trust, incorporated by reference to the
Registration Statement on Form N-1A, filed November 15,
1993, and filed herewith.
EX-99.B1(c) * Amendment to the Amended and Restated Agreement and
Declaration of Trust.
EX-99.B1(d) * Certificate of Amendment to the Certificate of Trust.
EX-99.B2 * By-Laws, incorporated by reference to the Registration
Statement on Form N-1A, filed November 15, 1993, and
filed herewith.
EX-99.B5(j) * Form of Investment Advisory Contract.
EX-99.B9(d) * Third Party Feeder Fund Agreement (Strong Funds).
EX-99.B9(e) * Form of Third Party Feeder Fund Agreement (Hewitt).
<PAGE>
EXHIBIT 99.B1(a)
MASTER INVESTMENT PORTFOLIO
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST,
made this 3rd day of January, 1994, by the Trustees hereunder (hereinafter with
any additional and successor trustees referred to as the "Trustees") and by the
holders of Interests to be issued hereunder as hereinafter provided.
W I T N E S S E T H :
---------------------
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as trustees of a Delaware business trust in accordance
with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of
the same upon the following terms and conditions for the pro rata benefit of the
holders from time to time of Interests, whether or not certificated, in this
Trust as hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as Master
--------- ----
Investment Portfolio.
Section 2. Definitions. Whenever used herein, unless otherwise
--------- -----------
required by the context or specifically provided:
(a) The term "Commission" shall have the meaning provided in
the 1940 Act;
(a) The "Trust" refers to the Delaware business trust
established by this Agreement and Declaration of Trust, as amended from time to
time;
(b) The term "Interestholder" shall mean a record owner of
Interests of the Trust;
(c) The term "Interests" shall mean the equal proportionate
non-transferable units of interest into which the beneficial interest in the
Trust shall be divided from time to time or, if more than one series or class of
Interests is authorized by the Trustees, the equal proportionate
non-transferable units into which each series or class of Interests shall be
divided from time to time, and includes a fraction of an Interest as well as a
whole Interest;
<PAGE>
(d) The "1940 Act" refers to the Investment Company Act of
1940, and the Rules and Regulations thereunder, all as amended form time to
time;
(e) The term "Manager" is defined in Article IV, Section 5;
(f) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other enterprise;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time;
(i) The term "series" or "series of Interests" refers to the
one or more separate investment portfolios of the Trust into which the assets
and liabilities of the Trust may be divided and the Interests of the Trust
representing the beneficial interest of Interestholders in such respective
portfolios;
(j) The term "class" or "class of Interests" refers to the
division of Interests representing any series into two or more classes as
provided in Article III, Section 1 hereof;
(k) The term "Delaware Act" shall mean the Delaware Business
Trust Act, 12 Del.C. ss. 3801, et seq.; and
(l) The term "Bankruptcy" shall mean, with respect to any
Interestholder, any of the following:
(i) filing a voluntary petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the Bankruptcy Code
(as now or in the future amended) or an admission seeking the relief therein
provided;
(i) making a general assignment for the benefit of
creditors;
(ii) consenting to the appointment of a receiver for
all or a substantial part of such Interestholder's property;
(iii) in the case of the filing of an involuntary petition
in bankruptcy, an entry of an order for relief;
(iv) the entry of a court order appointing a receiver or
trustee for all or a substantial part of such Interestholder's property without
its consent; or
(v) the assumption of custody or sequestration by a
court of competent jurisdiction of all or substantially all of such
Interestholder's property.
2
<PAGE>
(m) The term "Adjusted Basis" shall mean, with respect to any
Security, its adjusted basis for federal income tax purposes.
(n) The term "Adjusted Gross Asset Value" shall mean, with
respect to a Built-in Gain Security, the lesser of (i) the Gross Asset Value of
such Security on the day such Security is contributed to the Trust and (ii) the
lowest Gross Asset Value of such Security on any day thereafter, and, with
respect to a Built-in Loss Security, the higher of (i) the Gross Asset Value of
such Security on the day such Security is contributed to the Trust and (ii) the
highest Gross Asset Value of such Security on any day thereafter.
(o) The term "Appreciated Security" shall mean any Security
held by the Trust immediately before but on the same day as a new Interestholder
is admitted to the Trust if on such day the Gross Asset Value of such Security
exceeds its Adjusted Basis or if such Security is a Built-in Gain Security its
Adjusted Gross Asset Value.
(p) The term "Book Capital Account" shall mean, with respect
to any Interestholder, the Capital Account maintained for such Interestholder
on a daily basis in accordance with the following provisions:
(ii) To each Interestholder's Book Capital Account there
shall be credited (a) the amount of money and the Gross Asset Value of any
property contributed by such Interestholder to the Trust, (b) such
Interestholder's distributive share of Net Income, (c) such Interestholder's
distributive share of Book Sales Gain, and (d) the amount of any Trust
liabilities assumed by such Interestholder or which are secured by any property
distributed to such Interestholder.
(i) To each Interestholder's Book Capital Account there
shall be debited (a) the amount of money and the Gross Asset Value of any
property distributed to such Interestholder pursuant to any provision of this
Agreement, (b) such Interestholder's distributive share of Net Loss, (c) such
Interestholder's distributive share of Book Sales Loss, and (d) and the amount
of any liabilities of such Interestholder assumed by the Trust or which are
secured by any property contributed by such Interestholder to the Trust.
Any decisions relating to the maintenance of Book Capital
Accounts shall be made by the Trustees in any manner that reasonably reflects
the purpose and intention of this Agreement. In the event the Trustees shall
determine that it is prudent to modify the manner in which the Book Capital
Accounts, or any debits or credits thereto, are computed in order to reflect the
purpose and intention of this Agreement, the Trustee may make such modification.
(q) The terms "Book Sales Gain" or "Book Sales Loss" shall
mean, for any day, the difference, positive or negative, as the case may be,
between (x) the aggregate gross asset value of all Securities held by the Trust
at any time during such day other than Securities acquired by the Trust on such
day and (y) the aggregate gross asset value of all such Securities as determined
for the preceding day.
3
<PAGE>
(r) The term "Built-in Gain Security" shall mean any Security
contributed by an Interestholder to the Trust if on the day such Security is
contributed to the Trust, its Gross Asset Value exceeds its Adjusted Basis.
(s) The term "Built-in Loss Security" shall mean any Security
contributed by an Interestholder to the Trust if on the day such Security is
contributed to the Trust, its Gross Asset Value is less than its Adjusted Basis.
(t) The term "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time (or any corresponding provisions of
succeeding law).
(u) The term "Depreciated Security" shall mean any Security
held by the Trust immediately before but on the same day as a new Interestholder
is admitted to the Trust if on such day such Security's Gross Asset Value is
less than its Adjusted Basis or if such Security is a Built-in Loss Security its
Adjusted Gross Asset Value.
(v) The term "Gross Asset Value" shall mean, with respect to
any Security, the value of such Security determined as follows:
Securities are valued at the last sale price on the securities
exchange on which such securities are primarily traded or at
the last sale price on the national securities market.
Securities not listed on an exchange or national securities
market, or securities in which there were no transactions, are
valued at the average of the most recent bid and asked prices.
Bid price is used when no asked price is available. Market
quotations for foreign securities in foreign currencies are
translated into U.S. dollars at the prevailing rates of
exchange. Any securities or other assets for which recent
market quotations are not readily available are valued at fair
market as determined in good faith by the Trustees. Securities
sold are valued for the day of sale at their net sales price.
(w) The term "Modified Gross Asset Value" shall mean, with
respect to an Appreciated Security, the lesser of (i) the Gross Asset Value of
such Security on the day such Security became an Appreciated Security and (ii)
the lowest Gross Asset Value of such Security on any day thereafter, and, with
respect to a Depreciated Security, the higher of (i) the Gross Asset Value of
such Security on the day such Security became a Depreciated Security and (ii)
the highest Gross Asset Value of such Security on any day thereafter.
(x) The terms "Net Income" or "Net Loss" shall mean, for any
day, the sum, if positive, or if negative, as the case may be, of all items of
income, gain, deduction and loss (other than items included in computing Tax
Sales Gain, Tax Sales Loss, Remaining Built-in Gain, Remaining Built-in Loss,
Remaining Appreciated Gain or Remaining Depreciated Loss) recognized by the
Trust on such day for federal income tax purposes and determined in accordance
with the provisions of this Agreement.
(y) The term "Percentage Interest" shall mean, with respect to
any Interestholder, as of any day, the ratio (expressed as a percentage) of such
4
<PAGE>
Interestholder's Book Capital Account as of the close of business on the
preceding day to the aggregate Book Capital Accounts of all Interestholders as
of the close of business on such preceding day, such Book Capital Accounts to be
determined after giving effect to all contributions, distributions, and
allocations through such preceding day.
(z) The term "Positive Book/Tax Disparity" shall mean, with
respect to any Interestholder, the excess (if any) of such Interestholder's Book
Capital Account over the sum of such Interestholder's (i) Tax Capital Account,
(ii) Remaining Built-in Gain with respect to each Built-in Gain Security
contributed b y such Interestholder to the Trust and (iii) share of Remaining
Appreciated Gain.
(aa) The term "Positive Tax/Book Disparity" shall mean, with
respect to any Interestholder, the excess (if any) of such Interestholder's Tax
Capital Account over the sum of such Interestholder's (i) Book Capital Account,
(ii) Remaining Built-in Loss with respect to each Built-in Loss Security
contributed by such Interestholder to the Trust and (iii) share of Remaining
Depreciated Gain.
(bb) The term "Regulations" shall mean the Income Tax
Regulations, including Temporary Regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
(cc) The term "Remaining Appreciated Gain" shall mean, with
respect to each Appreciated Security, the excess (if any) of such Security's
Modified Gross Asset Value over such Security's Adjusted Basis, or if such
Security is a Built-in Gain Security its Adjusted Gross Asset Value, on the day
such Security became an Appreciated Security.
(dd) The term "Remaining Built-in Gain" shall mean, with
respect to each Built-in Gain Security, the excess (if any) of such Security's
Adjusted Gross Asset Value over such Security's Adjusted Basis on the day such
Security is contributed to the Trust.
(ee) The term "Remaining Built-in Loss" shall mean, with
respect to each Built-in Loss Security, the excess (if any) of such Security's
Adjusted Basis on the day such Security is contributed to the Trust over such
Security's Adjusted Gross Asset Value.
(ff) The term "Remaining Depreciated Loss" shall mean, with
respect to each Depreciated Security, the excess (if any) of such Security's
Adjusted Basis, or if such Security is a Built-in Loss Security its Adjusted
Gross Asset Value, on the day such Security became a Depreciated Security over
such Security's Modified Gross Asset Value.
(gg) The term "Tax Capital Account" shall mean, with respect
to any Interestholder, the Capital Account maintained for such Interestholder on
a daily basis in accordance with the following provisions:
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(iii) To each Interestholder's Tax Capital Account there
shall be credited (a) the amount of money and the Adjusted Basis of any property
contributed by such Interestholder to the Trust, (b) such Interestholder's
distributive share of Net Income, (c) such Interestholder's distributive share
of Tax Sales Gain, and (d) the amount of any Trust liabilities assumed by such
Interestholder or which are secured by any property distributed to such
Interestholder.
(i) To each Interestholder's Tax Capital Account there
shall be debited (a) the amount of money and the Gross Asset Value of any
property distributed to such Interestholder pursuant to any provision of this
Agreement, (b) such Interestholder's distributive share of Net Loss, (c) such
Interestholder's distributive share of Tax Sales Loss, and (d) the amount of any
liabilities of such Interestholder assumed by the Trust or which are secured by
any property contributed by such Interestholder to the Trust.
Any decisions relating to the maintenance of Tax Capital
Accounts shall be made by the Trustees in any manner that reasonably reflects
the purpose and intention of this Agreement. In the event the Trustees shall
determine that it is prudent to modify the manner in which the Tax Capital
Accounts, or any debits or credits thereto, are computed in order to reflect the
purpose and intention of this Agreement, the Trustee may make such modification.
(hh) The terms "Tax Sales Gain" or "Tax Sales Loss" shall
mean, for any day, the sum, if positive, or if negative, as the case may be, of
all items of gain or loss recognized by the Trust on such day for federal income
tax purposes from the sale or other disposition of Securities (other than items
of gain or loss included in Remaining Built-in Gain, Remaining Built-in Loss,
Remaining Appreciated Gain or Remaining Depreciated Loss with respect to such
Securities).
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, lend, write options on,
exchange, distribute or otherwise dispose of and deal in and with securities of
every nature, kind, character, type and form, including, without limitation of
the generality of the foregoing, all types of stocks, shares, futures contracts,
bonds, debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, evidences of ownership,
guarantees, warrants, options or evidences of indebtedness issued or created by
or guaranteed as to principal and interest by any state or local government or
any agency or instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory,
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district or possession thereof, by any corporation organized under the laws of
any state, the United States or any territory or possession thereof or under
the laws of any foreign country, bank certificates of deposit, bank time
deposits, bankers' acceptances and commercial paper; to pay for the same in
cash or by the issue of stock, including treasury stock, bonds or notes of the
Trust or otherwise; and to exercise any and all rights, powers and privileges
of ownership or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of said rights,
powers and privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure
the same by mortgaging, pledging or otherwise subjecting as security the assets
of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, and otherwise deal in, Interests
including Interests in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Interests any
funds or other assets of the appropriate series or class of Interests, whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the State of Delaware;
(e) to conduct its business, promote its purposes, and carry
on its operations in any and all of its branches and maintain offices both
within and without the State of Delaware, in any and all States of the United
States of America, in the District of Columbia, and in any other parts of the
world; and
(f) to do all and everything necessary, suitable, convenient,
or proper for the conduct, promotion, and attainment of any of the businesses
and purposes herein specified or which at any time may be incidental thereto or
may appear conducive to or expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in or carried on by a Trust
organized under the Delaware Act, and to have and exercise all of the powers
conferred by the laws of the State of Delaware upon a Delaware business trust.
The foregoing provisions of this Article II shall be construed
both as purposes and powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
Section 1. Interests. The Interests of the Trust are
--------- ---------
non-transferable and shall be issued in one or more series as the Trustees may,
without Interestholder approval, authorize. Each series shall be separate from
all other series in respect of the assets and liabilities allocated to that
series and shall represent a separate investment portfolio of the Trust. The
beneficial interest in each series at all times shall be divided
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into Interests, with or without par value as the Trustees may from time to
time determine, each of which shall, except as provided in the following
sentence, represent an equal proportionate interest in the series with each
other Interest of the same series, none having priority or preference over
another. The Trustees may, without Interestholder approval, divide Interests
of any series into two or more classes, Interests of each such class having
such preferences and special or relative rights and privileges (including
conversion rights, if any) as the Trustees may determine. The number of
Interests authorized shall be unlimited, and the Interests so authorized may
be represented in part by fractional Interests. From time to time, the
Trustees may divide or combine the Interests of any series or class into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the series or class.
All consideration received by the Trust for the issue or sale
of Interests of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be held
and accounted for separately from the other assets of the Trust and of every
other series and may be referred to herein as "assets of" that series. The
assets of a particular series shall belong to that series for all purposes, and
to no other series, subject only to the rights of creditors of that series. In
addition, any assets, income, earnings, profits or funds, or payments and
proceeds with respect thereto, which are not readily identifiable as belonging
to any particular series shall be allocated by the Trustees between and among
one or more of the series in such manner as the Trustees, in their sole
discretion, deem fair and equitable. Each such allocation shall be conclusive
and binding upon the Interestholders of all series for all purposes, and such
assets, income, earnings, profits or funds, or payments and proceeds with
respect thereto shall be assets of that series. The assets of a particular
series shall be so recorded upon the books of the Trust, and shall be held by
the Trustees in trust for the benefit of the holders of Interests of that
series. The assets of each particular series shall be charged with the
liabilities of that series and all expenses, costs, charges and reserves
attributable to that series. Any general liabilities, expenses, costs, charges
or reserves of the Trust which are not readily identifiable as belonging to any
particular series shall be allocated and charged by the Trustees between or
among any one or more of the series in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall be conclusive and
binding upon the Interestholders of all series for all purposes. Without
limitation of the foregoing provisions of this Section, but subject to the right
of the Trustees in their discretion to allocate general liabilities, expenses,
costs, charges or reserves as herein provided, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series shall be enforceable against the assets of such
series only, and not against the assets of any other series. Notice of this
limitation on inter-series liabilities may, in the Trustees' sole discretion, be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on inter-series liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust)
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shall become applicable to the Trust and each series. Every note, bond,
contract or other undertaking issued by or on behalf of a particular series
shall include a recitation limiting the obligation represented thereby to that
series and its assets. No shareholder or former Interestholder of any series
shall have a claim on or any right to any assets allocated or belonging to any
other series.
The establishment and designation of any series or of any
class of Interests of any series shall be effective (i) upon the execution by a
majority of the Trustees of an instrument setting forth such establishment and
designation of the relative rights and preferences of the Interests of such
series or class, (ii) upon the execution of an instrument in writing by an
officer of the Trust pursuant to the vote of a majority of the Trustees, or
(iii) as otherwise provided in either such instrument. At any time that there
are no Interests outstanding of any particular series or class previously
established and designated, the Trustees may by an instrument executed by a
majority of the Trustees (or by an instrument executed by an officer of the
Trust pursuant to the vote of a majority of the Trustees) abolished that series
or class and the establishment and designation thereof. Each instrument
establishing and designating any series or class shall have the status of an
amendment to this Declaration of Trust.
Section 2. Non-Transferability. An Interestholder may not
--------- -------------------
transfer, sell or exchange Interests of the Trust, except to the Trust.
Notwithstanding the foregoing, an Interestholder may assign its right to receive
dividends, distributions or other allocations of income or property from the
Trust, but such assignment will not result in a change of ownership of the
Interestholder's Interests of the Trust.
Section 3. Ownership of Interests. The ownership of Interests
--------- ----------------------
will be recorded in the books of the Trust or a transfer agent. The record books
of the Trust or any transfer agent, as the case may be, shall be conclusive as
to who are the holders of Interests of each series and class and as to the
number of Interests of each series and class held from time to time by each. No
certificates certifying the ownership of Interests need be issued except as the
Trustees may otherwise determine from time to time.
Section 4. Issuance of Interests. The Trustees are authorized,
--------- ---------------------
from time to time, to issue or authorize the issuance of Interests at not less
than the par value thereof, if any, and to fix the price or the minimum price or
the consideration (in cash and/or such other property, real or personal,
tangible or intangible, as from time to time they may determine) or minimum
consideration for such Interests, all without action or approval of the
Interestholders. Interests so issued shall be validly issued, fully paid and
nonassessable. Anything herein to the contrary notwithstanding, the Trustees may
issue Interests pro rata to the Interestholders of a series at any time for no
consideration as a stock dividend, except to the extent otherwise required or
permitted by the preferences and special or relative rights and privileges of
any classes of Interests of that series, and any stock dividend to the
Interestholders of a particular class of Interests shall be made to such
Interestholders pro rata in proportion to the number of Interests of such class
held by each of them.
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Interests may be issued in fractional denominations to the
same extent as whole Interests, and Interests in fractional denominations shall
be Interests having proportionately to the respective fractions represented
thereby all the rights of whole Interests, including, without limitation, the
right to vote, the right to receive dividends and distributions, and the right
to participate upon liquidation of the Trust or of a particular series of
Interests.
The Trustees may classify or re-classify any unissued
Interests or Interests previously issued and reacquired of any series or class
thereof into one or more series or classes thereof that may be established and
designated from time to time. The Trustees may hold as treasury Interests,
re-issue for such consideration and on such terms as they may determine, or
cancel, in their discretion from time to time, any Interests of any series or
class thereof reacquired by the Trust.
Section 5. No Preemptive or Appraisal Rights; Derivative
--------- ---------------------------------------------
Suits. Interestholders shall have no preemptive or appraisal or other right to
- -----
subscribe for any additional Interests or other securities issued by the Trust.
Interestholders shall have no right to demand payment for their Interests or any
other rights of dissenting shareholders in the event the Trust participates in
any transaction which would give rise to appraisal or dissenters' rights by a
shareholder of a corporation organized under the General Corporation Law of the
State of Delaware, or otherwise. No action may be brought by a Interestholder on
behalf of the Trust or a series unless Interestholders owning not less than 10
percent of the then outstanding Interests or series join in the bringing of such
action.
Section 6. Status of Interests and Limitation of Personal
--------- ----------------------------------------------
Liability. Interests shall be deemed to be personal property giving only the
- ---------
rights provided in this instrument. Every Interestholder by virtue of having
become a Interestholder shall be held to have expressly assented and agreed to
the terms hereof and to have become a party hereto. The death of an
Interestholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased Interestholder
to an accounting or to take any action in court or elsewhere against the Trust
or the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Interests shall not entitle the Interestholder to any title in or
to the whole or any part of the Trust property or right to call for a partition
or division of the same or for an accounting, nor shall the ownership of
Interests constitute the Interestholders partners. Interestholders of a series
of the Trust shall be jointly and severally liable (with rights of contribution
inter se in proportion to their respective interests in that series) for the
liabilities and obligations of such series in the event the Trust fails to
satisfy such liabilities and obligations. Neither the Trust nor the Trustees,
nor any officer, employee or agent of the Trust shall have any power to bind any
Interestholder or Trustee personally or, subject to the preceding sentence, to
call upon any Interestholder for the payment of any sum of money or assessment
whatsoever other than such as the Interestholder at any time personally may
agree to pay by way of subscription for any Interests or otherwise. Every note,
bond, contract or other undertaking issued by or on behalf of a particular
series shall include a recitation limiting the obligation represented thereby to
that series and its assets.
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ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either by the
--------- --------
Trustees or the Interestholders. The Trustees named herein shall serve until the
first meeting of the Interestholders or until the election and qualification of
their successors. Prior to the first meeting of Interestholders the initial
Trustees hereunder may elect additional Trustees to serve until such meeting and
until their successors are elected and qualified. The Trustees also at any time
may elect Trustees to fill vacancies in the number of Trustees. The number of
Trustees shall be fixed from time to time by the Trustees and, at or after the
commencement of the business of the Trust, shall be not less than three. Each
Trustee, whether named above or hereafter becoming a Trustee, shall serve as a
Trustee during the lifetime of this Trust, until such Trustee dies, resigns,
retires, or is removed, or, if sooner, until the next meeting of Interestholders
called for the purpose of electing Trustees and the election and qualification
of his successor. Subject to Section 16(a) of the 1940 Act, the Trustees may
elect their own successors and, pursuant to this Section, may appoint Trustees
to fill vacancies.
Section 2. Powers. The Trustees shall have all powers
--------- ------
necessary or desirable to carry out the purposes of the Trust, including,
without limitation, the powers referred to in Article II hereof. Without
limiting the generality of the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that they do
not reserve that right to the Interestholders and such By-Laws are deemed to
be incorporated and included in this Declaration of Trust; they may fill
vacancies in their number, including vacancies resulting from increases in
their own number, and may elect and remove such officers and employ, appoint
and terminate such employees or agents as they consider appropriate; they may
appoint from their own number and terminate any one or more committees; they
may employ one or more custodians of the assets of the Trust and may authorize
such custodians to employ subcustodians and to deposit all or any part of such
assets in a system or systems for the central handling of securities, retain a
transfer agent and an Interestholder servicing agent, or both, provide for the
distribution of Interests through a principal placement agent or otherwise,
set record dates, and in general delegate such authority as they consider
desirable (including, without limitation, the authority to purchase and sell
securities and to invest funds, to determine the net income of the Trust for
any period, the value of the total assets of the Trust and the net asset value
of each Interest, and to execute such deeds, agreements or other instruments
either in the name of the Trust or the names of the Trustees or as their
attorney or attorneys or otherwise as the Trustees from time to time may deem
expedient) to any officer of the Trust, committee of the Trustees, any such
employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the Trustees
shall have full power and authority:
(a) To invest and reinvest cash and to hold cash uninvested;
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(b) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to execute
and deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees shall deem
proper;
(c) To hold any security or property in a form not indicating
any trust whether in bearer, unregistered or other negotiable form or in the
name of the Trust or custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or concern, and to
pay calls or subscriptions with respect to any security held in the Trust;
(e) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(f) To compromise, arbitrate, or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including, but not
limited to, claims for taxes;
(g) Subject to the provisions of Article III, Section 1, to
allocate assets, liabilities, income and expenses of the Trust to a particular
series of Interests or to apportion the same among two or more series, provided
that any liabilities or expenses incurred by a particular series of Interests
shall be payable solely out of the assets and by the Interestholders of that
series; and to the extent necessary or appropriate to give effect to the
preferences and special or relative rights and privileges of any classes of
Interests, to allocate assets, liabilities, income and expenses of a series to a
particular class of Interests of that series or to apportion the same among two
or more classes of Interests of that series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Interestholders,
Trustees, officers, employees, agents, investment advisers or Managers,
principal underwriters, or independent contractors of the Trust individually
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against all claims and liabilities of every nature arising by reason of
holding, being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as
Interestholder, Trustee, officer, employee, agent, investment adviser or
Manager, principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
such liability;
(j) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust;
(k) To establish a registered office and have a registered
agent in the State of Delaware;
(l) To establish separate and distinct series with separately
defined investment objectives and policies and separately defined investment
purposes in accordance with the provisions of Article III hereof and to
establish classes of such series having relative rights, powers and duties as
they may provide consistent with applicable law;
(m) Subject to Article X, Section 9 hereof, to reorganize the
Trust; and
(n) Subject to Article X, Section 10 hereof, to sell all or
substantially all of the assets of the Trust or any series.
Further, without limiting the generality of the foregoing, the
Trustees shall have full power and authority to incur and pay out of the
principal or income of the Trust such expenses and liabilities as may be deemed
by the Trustees to be necessary or proper for the purposes of the Trust;
provided, however, that all expenses and liabilities incurred by or arising in
- -------- -------
connection with a particular series of Interests, as determined by the Trustees,
shall be payable solely out of the assets and by the Interestholders of that
series.
Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles by or pursuant to the authority granted by the Trustees, as to the
amount of the assets, debts, obligations or liabilities of the Trust, its
Interestholders or a particular series or class of Interests; the amount of any
reserves or charges set up and the propriety thereof; the time of or purpose for
creating such reserves or charges; the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged);
the price or closing bid or asked price of any investment owned or held by the
Trust or a particular series; the market value of any investment or fair value
of any other asset of the Trust or a particular series; the number
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<PAGE>
of Interests outstanding; the estimated expense to the Trust or a particular
series in connection with purchases of its Interests; the ability to liquidate
investments in an orderly fashion; and the extent to which it is practicable
to deliver a cross-section of the portfolio of the Trust or a particular
series in payment for any such Interests, or as to any other matters relating
to the issue, sale, purchase and/or other acquisition or disposition of
investments or Interests of the Trust or a particular series, shall be final
and conclusive, and shall be binding upon the Trust or such series and its
Interestholders, past, present and future, and Interests are issued and sold
on the condition and understanding that any and all such determinations shall
be binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a
--------- --------
majority of the Trustees then in office shall constitute a quorum. Any meeting
may be adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice.
When a quorum is present at any meeting, a majority of the
Trustees present may take any action, except when a larger vote is required by
this Declaration of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of
the Trustees or of any committee thereof may be taken without a meeting, if a
written consent to such action is signed by a majority of the Trustees or
members of any such committee then in office, as the case may be, and such
written consent is filed with the minutes of proceedings of the Trustees or any
such committee.
The Trustees or any committee designed by the Trustees may
participate in a meeting of the Trustees or such committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Notwithstanding anything to the contrary stated in this
Section 3, unless otherwise permitted under the 1940 Act, meetings of the
Trustees to approve advisory agreements or distribution arrangements shall be
held in person.
Section 4. Ownership of Assets of the Trust. Title to all of
--------- --------------------------------
the assets of each series of Interests of the Trust at all times shall be vested
in the Trust as a separate legal entity under the Delaware Act.
Section 5. Investment Advice and Management Services. The
--------- -----------------------------------------
Trustees shall not in any way be bound or limited by any present or future law
or custom in regard to investments by trustees. The Trustees from time to time
may enter into a written contract or contracts with any person or persons
(herein called the "Manager"), including any firm, corporation, trust or
association in which any Trustee or Interestholder may be interested, to act as
investment advisers and/or managers of the Trust and to provide such investment
advice and/or management as the Trustees from time to time may consider
necessary for the proper management of the assets of the Trust,
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<PAGE>
including, without limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments. Any such contract shall be subject to the requirement
of the 1940 Act with respect to its continuance in effect, its termination and
the method of authorization and approval of such contract, or any amendment
thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be
associated also may act as broker for the Trust in making purchases and sales of
securities for or to the Trust for its investment portfolio, and may charge and
receive from the Trust the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as broker for the
Trust shall be responsible only for the proper execution of transactions in
accordance with the instructions of the Trust and shall be subject to no further
liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a
distributor for the sale of Interests by separate contract or may be a person
controlled by or affiliated with any Trustee or any distributor or a person in
which any Trustee or any distributor is interested financially, subject only to
applicable provisions of law. Nothing herein contained shall operate to prevent
any Manager, who also acts as such a distributor, from also receiving
compensation for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The Trustees
--------- -----------------------------------
or the Interestholders (by vote of 66-2/3% of the outstanding Interests
entitled to vote thereon) may remove at any time any Trustee with or without
cause, and any Trustee may resign at any time as Trustee, without penalty by
written notice to the Trust; provided that sixty days' advance written notice
shall be given in the event that there are only three or fewer Trustees at the
time a notice of resignation is submitted.
Section 7. Additional Provisions. The By-Laws may include
--------- ---------------------
further provisions for Trustees' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE V
Interestholders' Voting Powers and Meetings
Section 1. Voting Powers. The Interestholders shall have power
--------- -------------
to vote only (i) for the election of Trustees as provided in Article IV, Section
1, of this Declaration of Trust; provided, however, that no meeting of
-------- -------
Interestholders is required to be called for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees have been
elected by the Interestholders, (ii) for the removal of Trustees as provided in
Article IV, Section 6, (iii) with respect to any Manager as provided in Article
IV, Section 5, (iv) with respect to any amendment of this Declaration of Trust
as provided in Article X, Section 8, (v) with respect to the termination of the
Trust or a series of Interests as provided in Article X, Section 4, and (vi)
with respect to such additional matters relating to the Trust as may be required
by law, by this
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Declaration of Trust, or the By-Laws of the Trust or any registration of the
Trust with the Commission or any state, or as the Trustees may consider
desirable. Each whole Interest shall be entitled to one vote as to any matter
on which it is entitled to vote (except that in the election of Trustees said
vote may be cast for as many persons as there are Trustees to be elected), and
each fractional Interest shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any
matter submitted to a vote of Interestholders, all Interests of the Trust then
entitled to vote shall be voted in the aggregate as a single class without
regard to series or classes of Interests, except (i) when required by the 1940
Act or when the Trustees shall have determined that the matter affects one or
more series or classes differently Interests shall be voted by individual
series or class and (ii) when the Trustees have determined that the matter
affects only the interests of one or more series or classes then only
Interestholders of such series or classes shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees. Interests may
be voted in person or by proxy. A proxy with respect to Interests held in the
name of two or more persons shall be valid if executed by any one of them,
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Interestholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Whenever no Interests of any series or class are
issued and outstanding, the Trustees may exercise with respect to such series
or class all rights of Interestholders and may take any action required by
law, this Declaration of Trust or any By-Laws of the Trust to be taken by
Interestholders.
Section 2. Meetings. No annual or regular meeting of
--------- --------
Interestholders is required. Meetings of the Interestholders may be called by
the Trustees or such other person or persons as may be specified in the By-Laws
and shall be called by the Trustees upon the written request of Interestholders
owning at least 10% of the outstanding Interests entitled to vote.
Interestholders shall be entitled to at least ten days' prior notice of any
meeting.
Section 3. Quorum and Required Vote. Thirty percent (30%) of
--------- ------------------------
the outstanding Interests shall be a quorum for the transaction of business at
an Interestholders' meeting, except that where any provision of law or of
this Declaration of Trust permits or requires that holders of any series or
class shall vote as a series or class, then thirty percent (30%) of the
aggregate number of Interests of that series or class entitled to vote shall
be necessary to constitute a quorum for the transaction of business by that
series or class. Any lesser number, however, shall be sufficient for
adjournment and any adjourned session or sessions may be held within 90 days
after the date set for the original meeting without the necessity of further
notice. Except when a larger vote is required by any provision of this
Declaration of Trust or the By-Laws of the Trust and subject to any applicable
requirements of law, a majority of the Interests voted shall decide any
question, provided that where any provision of law or of this Declaration of
Trust permits or requires that the holders of any series or class shall vote
as a series or class, then a majority of the Interests of that series or class
voted on the matter shall decide that matter insofar as that series or class
is concerned.
16
<PAGE>
Section 4. Action by Written Consent. Any action required or
--------- -------------------------
permitted to be taken at any meeting may be taken without a meeting if a consent
in writing, setting forth such action, is signed by a majority of
Interestholders entitled to vote on the subject matter thereof (or such larger
proportion thereof as shall be required by any express provision of this
Declaration of Trust) and such consent is filed with the records of the Trust.
Section 5. Additional Provisions. The By-Laws may include
--------- ---------------------
further provisions for Interestholders' votes and meetings and related matters.
ARTICLE VI
Allocations
Section 1. Net Income and Net Loss. For each day, Net Income
--------- -----------------------
or Net Loss of the Trust, if any, will be allocated among the Interestholders,
and credited or charged, as the case may be, to their Book Capital Accounts and
Tax Capital Accounts, in accordance with their Percentage Interests on such day.
Section 2. Book Sales Gain and Book Sales Loss. For each day,
--------- -----------------------------------
Book Sales Gain or Book Sales Loss of the Trust, if any, will be allocated among
the Interestholders, and credited or charged, as the case may be, to their Book
Capital Accounts, in accordance with their Percentage Interests on such day.
Section 3. Tax Sales Gain and Tax Sales Loss. For each day,
--------- ---------------------------------
Tax Sales Gain or Tax Sales Loss of the Trust, if any, will be allocated among
the Interestholders, and credited or charged, as the case may be, to their Tax
Capital Accounts, as follows:
(a) Tax Sales Gain will be allocated, first, to those
Interestholders with Positive Book/Tax Disparities in proportion to and to the
extent thereof, second, to the Interestholders in such manner so as to eliminate
as quickly as possible any difference between the ratio (expressed as a
percentage) of each Interestholder's Positive Tax/Book Disparity to the
aggregate Positive Tax/Book Disparities of all Interestholders and such
Interestholder's Percentage Interest, and, thereafter, to all Interestholders in
accordance with their Percentage Interests.
(a) Tax Sales Loss will be allocated, first, to those
Interestholders with Positive Tax/Book Disparities in proportion to and to the
extent thereof, second, to the Interestholders in such manner so as to eliminate
as quickly as possible any difference between the ratio (expressed as a
percentage) of each Interestholder's Positive Book/Tax Disparity to the
aggregate Positive Book/Tax Disparities of all Interestholders and such
Interestholder's Percentage Interest, and, thereafter, to all Interestholders in
accordance with their Percentage Interests.
Section 4. Remaining Built-in Gain and Remaining Built-in
--------- ----------------------------------------------
Loss. Whenever the Trust recognizes gain or loss for federal income tax purposes
- ----
from the sale
17
<PAGE>
or other disposition of a Security, any Remaining Built-in Gain or
Remaining Built-in Loss with respect to such Security shall be allocated to the
Interestholder who contributed such Security to the Trust.
Section 5. Remaining Associated Gain and Remaining Appreciated
--------- ---------------------------------------------------
Loss.
- ----
(a) For purposes of computing an Interestholder's Positive
Book/Tax Disparity or Positive Tax/Book Disparity, such Interestholder's share
of Remaining Appreciated Gain or Remaining Appreciated Loss with respect to an
Appreciated Security or a Depreciated Security shall be determined by such
Interestholder's Percentage Interest on the day such Security became an
Appreciated Security or a Depreciated Security.
(b) Whenever the Trust recognizes gain or loss for federal
income tax purposes from the sale or other disposition of a Security, any
Remaining Appreciated Gain or Remaining Depreciated Loss with respect to such
Security shall be allocated to the Interestholders in accordance with their
Percentage Interests on the day such Security became an Appreciated Security or
a Depreciated Security.
Section 6. Distribution In-kind. Whenever the Trust makes an
--------- --------------------
in-kind distribution of a Security to an Interestholder, such Security shall be
treated for all purposes of this Agreement as sold for an amount equal to the
Gross Asset Value of such Security on the day of distribution.
Section 7. Code Section 754 Adjustment. Whenever an adjustment
--------- ---------------------------
to the Adjusted Basis of any Trust Security pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(iv)(m) to be taken into account in determining capital accounts as
the result of a distribution to an Interestholder in complete liquidation of its
interest in the Trust, appropriate adjustments shall be Tax Capital Accounts
(and related items) of Interestholders to reflect such adjustment.
Any elections or other decisions relating to allocations under
this Section 4 shall be made by the Trustees in any manner that reasonably
reflects the purpose and intention of this Agreement. Allocations of Tax Sales
Gain, Tax Sales Loss, Remaining Built-in Gain, Remaining Built-in Loss,
Remaining Appreciated Gain and Remaining Depreciated Loss are solely for
purposes of federal, state and local taxes and shall not affect, or any way to
be taken into account, in computing any Interestholder's Book Capital Account or
share of Book Sales Gain and Book Sales Loss, other related items, or
distributions pursuant to any provisions of this Agreement.
18
<PAGE>
ARTICLE VII
Distributions and Redemptions
Section 1. Distributions. The Trustees shall distribute
--------- -------------
periodically to the Interestholders of each series of Interests an amount
approximately equal to the net income of that series, determined by the Trustees
or as they may authorize and as herein provided. Distributions of income may be
made in one or more payments, which shall be in Interests, cash or otherwise,
and on a date or dates and as of a record date or dates determined by the
Trustees. At any time and from time to time in their discretion, the Trustees
also may cause to be distributed to the Interestholders of any one or more
series as of a record date or dates determined by the Trustees, in Interests,
cash or otherwise, all or part of any gains realized on the sale or disposition
of the assets of the series or all or part of any other principal of the Trust
attributable to the series. Each distribution pursuant to this Section 1 shall
be made ratably according to the number of Interests of the series held by the
several Interestholders on the record date for such distribution, except to the
extent otherwise required or permitted by the preferences and special or
relative rights and privileges of any classes of Interests of that series, and
any distribution to the Interestholders of a particular class of Interests shall
be made to such Interestholders pro rata in proportion to the number of
Interests of such class held by each of them. No distribution need be made on
Interests purchased pursuant to orders received, or for which payment is made,
after such time or times as the Trustees may determine.
Section 2. Determination of Net Income. In determining the net
--------- ---------------------------
income of each series or class of Interests for any period, there shall be
deducted from income for that period (a) such portion of all charges, taxes,
expenses and liabilities due or accrued as the Trustees shall consider properly
chargeable and fairly applicable to income for that period or any earlier period
and (b) whatever reasonable reserves the Trustees shall consider advisable for
possible future charges, taxes, expenses and liabilities which the Trustees
shall consider properly chargeable and fairly applicable to income for that
period or any earlier period. The net income of each series or class for any
period may be adjusted for amounts included on Account of net income in the net
asset value of Interests issued or redeemed or repurchased during that period.
In determining the net income of a series or class for a period ending on a date
other than the end of its fiscal year, income may be estimated as the Trustees
shall deem fair. Gains on the sale or disposition of assets shall not be treated
as income, and losses shall not be charged against income unless appropriate
under applicable accounting principles, except in the exercise of the
discretionary powers of the Trustees. Any amount contributed to the Trust which
is received as income pursuant to a decree of any court of competent
jurisdiction shall be applied as required by the said decree.
Section 3. Redemptions. Any Interestholder shall be entitled
--------- -----------
to require the Trust to redeem and the Trust shall be obligated to redeem at the
option of such Interestholder all or any part of the Interests owned by said
Interestholder, at the redemption price pursuant to the method, upon the terms
and subject to the conditions hereinafter set forth:
19
<PAGE>
(a) Certificates for Interests, if issued, shall be presented
for redemption in proper form for transfer to the Trust or the agent of the
Trust appointed for such purpose, and these shall be presented with a written
request that the Trust redeem all or any part of the Interests represented
thereby.
(b) The redemption price per Interest shall be the net asset
value per Interest when next determined by the Trust at such time or times as
the Trustees shall designate, following the time of presentation of certificates
for Interests, if issued, and an appropriate request for redemption, or such
other time as the Trustees may designate in accordance with any provision of the
1940 Act, or any rule or regulation made or adopted by any securities
association registered under the Securities Exchange Act of 1934, as determined
by the Trustees, less any applicable charge or fee imposed from time to time as
determined by the Trustees.
(c) Net asset value of each Interests (for the purpose of
issuance of Interests as well as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of such series or class
determined as provided in paragraph (d) below less, to the
extent determined by or pursuant to the direction of the
Trustees in accordance with generally accepted accounting
principles, all debts, obligations and liabilities of such
series or class (which debts, obligations and liabilities
shall include, without limitation of the generality of the
foregoing, any and all debts, obligations, liabilities, or
claims, of any and every kind and nature, fixed, accrued and
otherwise, including the estimated accrued expenses of
management and supervision, administration and distribution
and any reserves or charges for any or all of the foregoing,
whether for taxes, expenses, or otherwise, and the price of
Interests redeemed but not paid for) but excluding the
Trust's liability upon its Interests and its surplus, by
(ii) the total number of Interests of such series or class
outstanding.
The Trustees are empowered, in their absolute discretion, to
establish other methods for determining such net asset value whenever such other
methods are deemed by them to be necessary to enable the Trust to comply with
applicable law, or are deemed by them to be desirable, provided they are not
inconsistent with any provision of the 1940 Act.
(d) In determining for the purposes of this Declaration of
Trust the total value of the assets of each series or class of Interests at any
time, investments and any other assets of such series or class shall be valued
in such manner as may be determined from time to time by or pursuant to the
order of the Trustees.
(e) Payment of the redemption price by the Trust may be made
either in cash or in securities or other assets at the time owned by the Trust
or partly in cash and partly in securities or other assets at the time owned by
the Trust. The value of any part
20
<PAGE>
of such payment to be made in securities or other assets of the Trust shall be
the value employed in determining the redemption price. Payment of the
redemption price shall be made on or before the seventh day following the day
on which the Interests are properly presented for redemption hereunder, except
that delivery of any securities included in any such payment shall be made as
promptly as any necessary transfers on the books of the issuers whose
securities are to be delivered may be made and, except as postponement of the
date of payment may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct
from the payment made for any Interests redeemed a liquidating charge not in
excess of an amount determined by the Trustees from time to time.
(f) The right of any holder of Interests redeemed by the Trust
as provided in this Article VII to receive dividends or distributions thereon
and all other rights of such Interestholder with respect to such Interests shall
terminate at the time as of which the redemption price of such Interests is
determined, except the right of such Interestholder to receive (i) the
redemption price of such Interests from the Trust in accordance with the
provisions hereof, and (ii) any dividend or distribution to which such
Interestholder previously had become entitled as the record holder of such
Interests on the record date for such dividend or distribution.
(g) Redemption of Interests by the Trust is conditional upon
the Trust having funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may
repurchase its Interests, out of funds legally available therefor, upon such
terms and conditions and for such consideration as the Trustees shall deem
advisable, by agreement with the owner at a price not exceeding the net asset
value per Interest as determined by or pursuant to the order of the Trustees at
such time or times as the Trustees shall designate, less any applicable charge,
if and as fixed by the Trustees from time to time, and to take all other steps
deemed necessary or advisable in connection therewith.
(i) Interests purchased or redeemed by the Trust shall be
cancelled or held by the Trust for reissue, as the Trustees from time to time
may determine.
(j) The obligations set forth in this Article VII may be
suspended or postponed, (1) for any period (i) during which the New York Stock
Exchange is closed other than for customary weekend and holiday closings, or
(ii) during which trading on the New York Stock Exchange is restricted, (2) for
any period during which an emergency exists as a result of which (i) the
disposal by the Trust of investments owned by it is not reasonably practicable,
or (ii) it is not reasonably practicable for the Trust fairly to determine the
value of its net assets, or (3) for such other periods as the Commission or any
successor governmental authority by order may permit.
21
<PAGE>
(k) Interestholders of a series of the Trust shall not be
liable for obligations of such series arising from conduct on a date or dates
after the date on which they have redeemed their shares of that series of the
Trust.
Notwithstanding any other provision of this Section 3 of
Article VII, if certificates representing such Interests have been issued, the
redemption or repurchase price need not be paid by the Trust until such
certificates are presented in proper form for i transfer to the Trust or the
agent of the Trust appointed for such purpose; however, the redemption or
repurchase shall be effective, in accordance with the resolution of the
Trustees, regardless of whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The Trust
--------- --------------------------------------
shall have the right at its option and at any time to redeem Interests of any
Interestholder at the net asset value thereof as determined in accordance with
Section 3 of Article VII of this Declaration of Trusts (i) if at such time such
Interestholder owns fewer Interests than, or Interests having an aggregate net
asset value of less than, an amount determined from time to time by the
Trustees; or (ii) to the extent that such Interestholder owns Interests of a
particular series or class of Interests equal to or in excess of a percentage of
the outstanding Interests of that series or class determined from time to time
by the Trustees; or (iii) to the extent that such Interestholder owns Interests
of the Trust representing a percentage equal to or in excess of such percentage
of the aggregate number of outstanding Interests of the Trust or the aggregate
net asset value of the Trust determined from time to time by the Trustees.
Section 5. Dividends, Distributions. Redemptions and
--------- ------------------------
Repurchases. No dividend or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any series) with respect
to, nor any redemption or repurchase of, the Interests of any series shall be
effected by the Trust other than from the assets of such series
ARTICLE VIII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to
--------- ------------
reasonable compensation from the Trust and may fix the amount of their
compensation.
Section 2. Limitation of Liability. A Trustee, when acting in
--------- -----------------------
such capacity, shall not be personally liable to any person other than the Trust
or an Interestholder for any act, omission or obligation of the Trust or any
Trustee. The Trustees shall not be responsible or liable to the Trust or an
Interestholder in any event for any neglect or wrongdoing of any officer, agent,
employee or Manager of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee, but nothing herein contained shall protect
any Trustee against any liability to the Trust or an Interestholder to which he
would otherwise be subject by reason of willful misfeasance,
22
<PAGE>
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office.
Every note, bond, contract, instrument, certificate, share, or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust,
shall be deemed conclusively to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon.
ARTICLE IX
Indemnification
Section 1. Indemnification of Trustees, Officers. Employees
--------- -------------------------------------
and Agents. Each person who is or was a Trustee, officer, employee or agent of
the Trust or who serves or has served at the Trust's request as a director,
officer or trustee of another person in which the Trust has or had any interest
as a shareholder, creditor or otherwise shall be entitled to indemnification out
of the assets of the Trust to the extent provided in, and subject to the
provisions of, the By-Lows, provided that no indemnification shall be granted by
the Trust in contravention of the 1940 Act.
Section 2. Merged Persons. For the purposes of this Article
--------- --------------
VIII references to "the Trust" include any constituent person (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, trustees, officers, employees or agents as well as the
resulting or surviving person; so that any person who is or was a director,
trustee, officer, employee or agent of such a constituent person or is or was
serving at the request of such a constituent person as a trustee, director,
officer, employee or agent of another person shall stand in the same position
under the provisions of this Article IX with respect to the resulting or
surviving person as he would have with respect to such a constituent person if
its separate existence had continued.
Section 3. Interestholders. In case any Interestholder or
--------- ---------------
former Interestholder shall be held to be personally liable solely by reason of
his being or having been an Interestholder and not because of his acts or
omissions or for some other reason, the Interestholder or former Interestholder
(or his heirs, executors, administrators or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the particular series of
Interests of which he is or was an Interestholder to be held harmless from and
indemnified against all losses and expenses arising from such liability. Upon
request, the Trust shall cause its counsel to assume the defense of any claim
which, if successful, would result in an obligation of the Trust to indemnify
the Interestholder as aforesaid.
23
<PAGE>
ARTICLE X
Other General Provisions
Section 1. Trustee's Good Faith Action, Expert Advice, No
--------- ----------------------------------------------
Bond or Surety. The exercise by the Trustees of their powers and discretion
- --------------
hereunder under the circumstances then prevailing, shall be binding upon
everyone interested. Subject to Article VIII, Section 2 hereof, a Trustee shall
be liable for his or her own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee, and for nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Declaration of Trust,
and subject to the provisions of Section 2 of Article VIII shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice. The Trustees shall not be required to give any bond as
such, nor any surety if a bond is required.
Section 2. Liability of Third Persons Dealing with Trustees.
--------- ------------------------------------------------
No person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees
pursuant hereto or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Section 3. Trustees, Officers, etc. Not Personally Liable:
--------- ----------------------------------------------
Notice. All persons extending credit to, contracting with or having any claim
- ------
against the Trust or a particular series of Interests shall look only to the
assets of the Trust or the assets and the Interestholders of that particular
series of Interests for payment under such credit, contract or claim; and
neither the Trustees nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable therefor. Every
note, bond, contract or other undertaking issued by or on behalf of a particular
series shall include a recitation limiting the obligation represented thereby to
that series and its assets.
Section 4. Termination of Trust. Unless terminated as provided
--------- --------------------
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by vote of Interestholders holding at least a majority of
the Interests of each series entitled to vote or by the Trustees by written
notice to the Interestholders. Any series of Interests may be terminated at any
time by vote of Interestholders holding at least a majority of the Interests of
such series entitled to vote or by the Trustees by written notice to the
Interestholders of such series.
Upon termination of the Trust or of any one or more series of
Interests, after paying or otherwise providing for all charges, taxes, expenses
and liabilities, whether due or accrued or anticipated as may be determined by
the Trustees, the Trust shall reduce, in accordance with such procedures as the
Trustees consider appropriate, the remaining assets to distributable form in
cash or shares or other securities, or any combination thereof, and distribute
the proceeds to the Interestholders of the series involved, ratably according to
the number of Interests of such series held by the several
24
<PAGE>
Interestholders of such series on the date of termination, except to the
extent otherwise required or permitted by the preferences and special or
relative rights and privileges of any classes of Interests of that series,
provided that any distribution to the Interestholders of a particular class of
Interests shall be made to such Interestholders pro rata in proportion to the
number of Interests of such class held by each of them.
Upon termination of the Trust, following completion of winding
up of its business, the Trustees shall cause a certificate of cancellation of
the Trust's certificate of trust to be filed in accordance with Section 3810 of
the Delaware Act, which certificate of cancellation may be signed by any one
Trustee.
Section 5. Termination Upon Bankruptcy of a Interestholder.
--------- -----------------------------------------------
Upon the bankruptcy of any Interestholder of a series of the Trust, such series
of the Trust shall be terminated effective 120 days after the event. However,
the Interestholders of that series of the Trust (other than such bankrupt
Interestholder) may, by a unanimous affirmative vote at any meeting of such
Interestholders or by an instrument in writing without a meeting executed by a
majority of the Trustees and consented to by all such Interestholders, agree to
continue the business of such series of the Trust even if there has been such an
event.
Section 6. Filing of Copies References, Headings. The initial
--------- -------------------------------------
Trustees shall file a certificate of Trust of the Trust with the Secretary of
State of the State of Delaware in accordance with Section 3810 of the Delaware
Act. The original or a copy of this instrument and of each amendment hereto and
of each Declaration of Trust supplemental hereto shall be kept at the office of
the Trust where it may be inspected by any Interestholder. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments or supplemental Declarations of Trust have been made and
as to matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such amendment or supplemental
Declaration of Trust. In this instrument or in any such amendment or
supplemental Declaration of Trust, references to this instrument, and all
expressions like "herein," "hereof," and "hereunder," shall be deemed to refer
to this instrument as amended or affected by any such amendment or supplemental
Declaration of Trust. Headings are placed herein for convenience of reference
only and in case of any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 7. Applicable Law. This Declaration of Trust shall be
--------- --------------
governed by and construed in accordance with the laws of the State of Delaware.
The trust created hereby shall be a business trust created under, And subject to
the provisions of, the Delaware Act and may exercise all powers which are
ordinarily exercised by such a trust under the Delaware Act; provided, however,
that there shall not be applicable to the Trust, the Trustees or this
Declaration of Trust (a) the provisions of Section 3540 of Title 12 of the
Delaware Code or (b) any provisions of the laws (statutory or common) of the
State of Delaware (other than the Delaware Act) pertaining to trusts which are
inconsistent with the rights, duties, powers, limitations or liabilities of the
Trustees set forth or referenced in this Declaration of Trust.
Section 8. Amendments. Except as specifically provided
--------- ----------
herein, the Trustees may, without Interestholder vote, amend or to otherwise
supplement this Declaration of Trust by an instrument in writing signed by a
majority of the Trustees; provided, however, the Interestholders shall have the
right to vote (a) on any amendment which would affect their right to
25
<PAGE>
vote granted in Section 1 of Article V hereof, (b) on any amendment to this
Section, (c) on any amendment as may be required by the 1940 Act and (d) on
any amendment submitted to them by the Trustees. Any amendment required or
permitted to be submitted to the Interestholders which, as the Trustees
determine, shall affect the Interestholders of one or more series shall be
authorized by vote of the Interestholders of each series affected and no vote
of Interestholders of a series not affected shall be required.
Section 9. Reorganization. Notwithstanding anything else
--------- --------------
herein, the Trustees, in order to change the form of organization of the Trust,
may, without Interestholder approval, (a) cause the Trust to merge or
consolidate with or into one or more trusts, partnerships, associations or
corporations so long as the surviving or resulting entity is an investment
company under the 1940 Act, or is a series thereof, or (b) cause the Trust or R
any series thereof to incorporate under the laws of the State of Delaware. Any
agreement of merger or consolidation or certificate of merger may be signed by a
majority of the Trustees and facsimile signatures conveyed by electronic or
telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything else herein, an
agreement of merger or consolidation approved by the Trustees in accordance with
this Section may effect any amendment to this Declaration of Trust or effect the
adoption of a new declaration of trust of the Trust if it is the surviving or
resulting trust in the merger or consolidation.
Section 10. Sale of Assets. Notwithstanding anything else
---------- --------------
herein, the Trustees may, without Interestholder approval, sell and convey all
or substantially all of the assets of the Trust or any series to one or more
trusts, partnerships, associations or corporations so long as the transferee is
an investment company under the 1940 Act, or is a series thereof. Any sale shall
be for such consideration as the Trustees, in their absolute discretion, deem
adequate and may include the assumption of all outstanding obligations, taxes
and other liabilities, accrued or contingent, of the Trust or any series and may
include shares of beneficial interest, stock or other ownership interest of the
transferee or of a series thereof.
26
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Trustees has
hereunto his /her hand for himself/herself and his/her assigns as of the day and
year first above written.
/s/ Jack S. Euphrat
-------------------
Jack S. Euphrat
/s/ R. Greg Feltus
------------------
R. Greg Feltus
/s/ Thomas S. Goho
------------------
Thomas S. Goho
/s/ Zoe Ann Hines
-----------------
Zoe Ann Hines
/s/ W. Rodney Hughes
--------------------
W. Rodney Hughes
/s/ Robert M. Joses
-------------------
Robert M. Joses
/s/ J. Tucker Morse
-------------------
J. Tucker Morse
27
<PAGE>
EXHIBIT 99.B1(b)
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
BUSINESS TRUST OF "MASTER INVESTMENT PORTFOLIO" FILED IN THIS OFFICE ON THE
TWENTY-FIRST DAY OF OCTOBER, A.D. 1993, AT 9 O'CLOCK A.M.
/s/ William T. Quillen
-------------------------------------
[SEAL] William T. Quillen,
Secretary of State
AUTHENTICATION: 4111843
DATE: 10/21/1993
<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 09:00 AM 10/21/1993
932945289-2356195
CERTIFICATE OF TRUST OF
MASTER INVESTMENT PORTFOLIO
---------------------------
THIS Certificate of Trust of Master Investment Portfolio (the
"Trust"), dated October 20, 1993, is being duly executed and filed by Beth A.
Stephens, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. C. ss. 3801, et seq.).
------ ------
1. Name. The name of the business trust formed hereby is Master
----
Investment Portfolio.
2. Registered Agent. The business address of the registered
----------------
office of the Trust in the State of Delaware is One Rodney Square, 10th Floor,
Tenth and King Streets in the City of Wilmington, County of New Castle, 19801.
The name of the Trust's registered agent at such address is RL&F Service Corp.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon the date and time of filing.
4. Series Trust. Notice is hereby given that pursuant to Section
------------
3804 of the Delaware Business Trust Act, the debts, liabilities, obligations
and expenses incurred, contracted for or otherwise existing with respect to a
particular series of the Trust shall be enforceable against the assets of such
series only and not against the assets of the Trust generally. The Trust will
be a registered investment company under the Investment Company Act of 1940,
as amended.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first
above-written.
/s/ Beth A. Stephens
----------------------------------
Beth A. Stephens, Sole Trustee
<PAGE>
EXHIBIT 99.B1(C)
AMENDMENT TO THE
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
BY THE BOARD OF TRUSTEES
OF
MASTER INVESTMENT PORTFOLIO
(A DELAWARE BUSINESS TRUST)
WHEREAS, under the "Interest" Section of Article III of the Amended and
Restated Agreement and Declaration of Trust (the "Declaration"), the Trustees
are fully empowered to establish and designate new series of Interests in
accordance with the provisions of Section 1; and further, that the Trustees are
authorized to fix and determine the variations in the relative rights and
preferences as between the different series; and
WHEREAS, pursuant to Article III, Section 1, of the Declaration, the
establishment and designation of any series of Interests shall become effective
upon the execution by a majority of the current Trustees of an instrument
setting forth the establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument; which
instrument shall be considered an amendment to the Declaration; and no vote of
the Holders being necessary under Article X, Section 8, of the Declaration, to
make an amendment;
NOW THEREFORE:
The undersigned, being all of the Trustees of Master Investment Portfolio
(the "Portfolio"), adopted at a meeting held on June 11, 1998, the following
resolutions to establish a new series to serve as the master portfolio for
corresponding feeder funds of other open-end management investment companies
including, but not limited to, MasterWorks Funds Inc. and Hewitt Series Trust:
RESOLVED, that pursuant to the powers vested in the Trustees, a new series
of Interests be, and it hereby is, established and designated as the "Money
Market Master Portfolio" (the "New Series"); and
FURTHER RESOLVED, that the New Series shall have exactly the same
preferences, privileges, limitations, and rights, including voting and dividend
rights, as any previously existing series; and
FURTHER RESOLVED, that only the Interests in the New Series shall be
subject to the expenses and fees of the New Series; and further, that the New
Series shall be subject to a pro rata portion of the general expenses and fees
of the Trust, as are any previously existing series; and
FURTHER RESOLVED, that the appropriate Officers of the Trust be, and each
hereby is, authorized and directed to prepare and file with the Securities and
Exchange
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Commission, and with such state securities commissions and authorities
as they deem advisable, any material relating to this Amendment to the
Declaration, and an amendment to the Registration Statement of the Trust on Form
N-1A, containing such current information and revisions as such Officer(s) deems
necessary or appropriate to reflect the changes effected at this meeting, with
advice of counsel, in their sole discretion, and to prepare and file a
certificate of amendment or a certificate of amended and restated Declaration
with the Secretary of State of the State of Delaware and take any and all such
other actions as and when the Officer taking such action, with advice of
counsel, deems necessary or advisable to effect the purpose and intent of the
foregoing resolutions; and
FURTHER RESOLVED, such changes to be effective immediately upon the filing
with the Secretary of State of the State of Delaware of a written certificate
evidencing such clarification to the Declaration; and
FURTHER RESOLVED, that this instrument is to be filed with the minutes of
the Trust's Board of Trustees.
Dated: August 19, 1998 /s/ JACK S. EUPHRAT
-------------------
Jack S. Euphrat
Dated: August 19, 1998 /s/ R. GREG FELTUS
------------------
R. Greg Feltus
Dated: August 19, 1998 /s/ THOMAS S. GOHO
------------------
Thomas S. Goho
Dated: August 19, 1998 /s/ W. RODNEY HUGHES
--------------------
W. Rodney Hughes
Dated: August 19, 1998 /s/ J. TUCKER MORSE
-------------------
J. Tucker Morse
2
<PAGE>
EXHIBIT 99.B1(D)
MASTER INVESTMENT PORTFOLIO
---------------------------
CERTIFICATE OF AMENDMENT
------------------------
TO THE CERTIFICATE OF TRUST
---------------------------
The undersigned hereby certifies that the Board of Trustees of Master
Investment Portfolio took the following action at a meeting held on June 11,
1998:
1. The name of the business trust is MASTER INVESTMENT PORTFOLIO (the
"Business Trust").
2. Pursuant to the powers vested in the Trustees, a new series of Interests
be, and it hereby is, established and designated as the "Money Market Master
Portfolio" (the "New Series").
3. The New Series shall have exactly the same preferences, privileges,
limitations, and rights, including voting and dividend rights, as any previously
existing series.
4. Only the Interests in the New Series shall be subject to the expenses and
fees of the New Series; and further, the New Series shall be subject to a pro
rata portion of the general expenses and fees of the Trust, as are any
previously existing series.
5. This Amendment is made pursuant to the "Interest" Section of Article III
of the Amended and Restated Agreement and Declaration of Trust, which reserves
the right to the Trustees to establish and designate new series of Interests in
accordance with the provisions of Section 1, and authorizes the Trustees to fix
and determine the variations in the relative rights and preferences as between
the different series, and no vote of the Holders is necessary under Article X,
Section 8, of the Amended and Restated Agreement and Declaration of Trust, to
make such amendment.
6. The Certificate of Amendment is effective immediately.
IN WITNESS WHEREOF, the undersigned, being a trustee of the Business Trust,
has duly executed this Certificate of Amendment as of this 19th day of August,
1998.
/s/ R. GREG FELTUS
------------------
R. Greg Feltus, Trustee
1
<PAGE>
EXHIBIT 99.B2
BY-LAWS
OF
MASTER INVESTMENT PORTFOLIO
ARTICLE 1
AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject
----------------------------------
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of the above-captioned Delaware business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust
-----------------------------
shall be located in Little Rock, Arkansas, or in such other city and state as
may be determined from time to time by resolution of the Board of Trustees.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 Regular Meetings. Regular meetings of the Trustees may be held
----------------
without call or notice at such places and at such times as the Trustees from
time to time may determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may be held at
----------------
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3 Notice of Special Meetings. It shall be sufficient notice to a
--------------------------
Trustee of a special meeting to send notice by mail at least forty-eight hours
or by telegram or confirmed telefacsimile at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
2.4 Notice of Certain Actions by Consent. If in accordance with the
------------------------------------
provisions of the Declaration of Trust any action is taken by the Trustees by a
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did
1
<PAGE>
not execute such written consent, provided that the effectiveness of such
action shall not be impaired by any delay or failure to furnish such notice.
ARTICLE 3
OFFICERS
3.1 Enumeration; Qualification. The officers of the Trust shall be a
--------------------------
President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust also may
have such agents as the Trustees from time to time may in their discretion
appoint. Officers may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2 Election. The President, the Treasurer and the Secretary shall be
--------
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3 Tenure. The President, Treasurer and Secretary shall hold office in
------
each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each
------
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as commonly are incident
to the office occupied by him or her as if the Trust were organized as a
Delaware corporation or such other duties and powers as the Trustees may from
time to time designate.
3.5 President. Unless the Trustees otherwise provide, the President
---------
shall preside at all meetings of the shareholders and of the Trustees. Unless
the Trustees otherwise provide, the President shall be the chief executive
officer.
3.6 Treasurer. The Treasurer shall be the chief financial and
---------
accounting officer of the Trust, and, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, shall be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.7 Secretary. The Secretary shall record all proceedings of the
---------
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a temporary Secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
2
<PAGE>
3.8 Resignations and Removals. Any Trustee or officer may resign at any
-------------------------
time by written instrument signed by him or her and delivered to the President
or Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without cause. Except to
the extent expressly provided in a written agreement with the Trust, no Trustee
or officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 Appointment. The Trustees may appoint from their number an
-----------
executive committee and other committees. Except as the Trustees otherwise may
determine, any such committee may make rules for conduct of its business.
4.2 Quorum; Voting. A majority of the members of any Committee of the
--------------
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present).
ARTICLE 5
REPORTS
The Trustees and officers shall render reports at the time and in the
manner required by the Declaration of Trust or any applicable law. Officers and
Committees shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
The fiscal year of the Trust shall be fixed, and shall be subject to
change, by the Board of Trustees.
3
<PAGE>
ARTICLE 7
SEAL
The seal of the Trust shall consist of a flat-faced die with the word
"Delaware," together with the name of the Trust and the year of its organization
cut or engraved thereon but, unless otherwise required by the Trustees, the seal
shall not be necessary to be placed on, and in its absence shall not impair the
validity of, any document, instrument or other paper executed and delivered by
or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
Except as the Trustees generally or in particular cases may authorize
the execution thereof in some other manner, all deeds, leases, contracts, notes
and other obligations made by the Trustees shall be signed by the President, any
Vice President, or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1 Sale of Shares. Except as otherwise determined by the Trustees, the
--------------
Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share as from time to
time determined in accordance with the Declaration of Trust and these By-Laws
and, in the case of fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such securities shall be
valued in accordance with the provisions for determining value of assets of the
Trust as stated in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 9.1.
9.2 Share Certificates. In lieu of issuing certificates for shares, the
------------------
Trustees or the transfer agent either may issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case, for all purposes hereunder, be deemed to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees at any time may authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a transfer agent, or
by a registrar, other
4
<PAGE>
than a Trustee, officer or employee of the Trust. In case any officer who has
signed or whose facsimile signature has been placed on such certificate shall
cease to be such officer before such certificate is issued, it may be issued
by the Trust with the same effect as if he or she were such officer at the
time of its issue.
9.3 Loss of Certificates. The Trust, or if any transfer agent is
--------------------
appointed for the Trust, the transfer agent with the approval of any two
officers of the Trust, is authorized to issue and countersign replacement
certificates for the shares of the Trust which have been lost, stolen or
destroyed subject to the deposit of a bond or other indemnity in such form and
with such security, if any, as the Trustees may require.
9.4 Discontinuance of Issuance of Certificates. The Trustees at any
------------------------------------------
time may discontinue the issuance of share certificates and by written notice to
each shareholder, may require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
INDEMNIFICATION
10.1 Trustees, Officers, etc. To the fullest extent permitted by law,
-----------------------
the Trust shall indemnify each of its Trustees and officers (including persons
who serve at the Trust's request as directors, officers or trustees of another
person in which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person") against all
liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil, criminal,
administrative or investigative, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, in any way relating to the Trust or
by reason of being or having been such a Trustee or officer, except with respect
to any matter as to which such Covered Person shall have been finally
adjudicated in a decision on the merits in any such action, suit or other
proceeding not to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Trust and except that
no Covered Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid by
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided that (a) such Covered Person
shall provide security for his undertaking, (b) the Trust shall be insured
against losses arising by reason of such Covered Person's failure to fulfill his
5
<PAGE>
undertaking, or (c) a majority of the Trustees who are disinterested persons and
who are not Interested Persons (as that term is defined in the Investment
Company Act of 1940) (provided that a majority of such Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (but not a full
trial-type inquiry), that there is reason to believe such Covered Person
ultimately will be entitled to indemnification.
10.2 Compromise Payment. As to any matter disposed of (whether by a
------------------
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, indemnification shall be provided if (a) approved as in the
best interest of the Trust, after notice that it involves such indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
Interested Persons (provided that a majority of such Trustees then in office act
on the matter), upon a determination, based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office, or (b)
there has been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
10.3 Indemnification Not Exclusive. The right of indemnification hereby
-----------------------------
provided shall not be exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article 10, the term "Covered
Person" shall include such person's heirs, executors and administrators, and a
"disinterested person" is a person against whom none of the actions, suits or
other proceedings in question or another action, suit, or other proceeding on
the same or similar grounds is then or has been pending. Nothing contained in
this article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of such person.
6
<PAGE>
10.4 Limitation. Notwithstanding any provisions in the Declaration of
----------
Trust and these By-Laws pertaining to indemnification, all such provisions are
limited by the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is
asserted by a Trustee, officer or controlling person of the
Trust in connection with the registered securities of the
Trust, the Trust will not make such indemnification unless (i)
the Trust has submitted, before a court or other body, the
question of whether the person to be indemnified was liable by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained a final
decision on the merits that such person was not liable by
reason of such conduct or (ii) in the absence of such
decision, the Trust shall have obtained a reasonable
determination, based upon a review of the facts, that such
person was not liable by virtue of such conduct, by (a) the
vote of a majority of Trustees who are neither interested
persons as such term is defined in the Investment Company Act
of 1940, nor parties to the proceeding or (b) an independent
legal counsel in a written opinion.
The Trust will not advance attorneys' fees or other
expenses incurred by the person to be indemnified unless the
Trust shall have (i) received an undertaking by or on behalf
of such person to repay the advance unless it is ultimately
determined that such person is entitled to indemnification and
one of the following conditions shall have occurred: (x) such
person shall provide security for his undertaking, (y) the
Trust shall be insured against losses arising by reason of any
lawful advances or (z) a majority of the disinterested,
non-party Trustees of the Trust, or an independent legal
counsel in a written opinion, shall have determined that based
on a review of readily available facts there is reason to
believe that such person ultimately will be found entitled to
indemnification.
ARTICLE 11
SHAREHOLDERS
11.1 Meetings. A meeting of the shareholders shall be called by the
--------
Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to vote at
such meeting. If the meeting is a meeting of the shareholders of one or more
series of shares, but not a meeting of all shareholders of the Trust, then only
the shareholders of such one or more series shall be entitled to notice of and
to vote at the meeting. If the Secretary, when so ordered or requested, refuses
or neglects for more than five days to call such meeting, the Trustees, or the
shareholders so requesting may, in the name of the Secretary, call the meeting
by giving notice thereof in the manner required when notice is given by the
Secretary.
11.2 Access to Shareholder List. Shareholders of record may apply to
--------------------------
the Trustees for assistance in communicating with other shareholders for the
purpose of calling a meeting in
7
<PAGE>
order to vote upon the question of removal of a Trustee. When ten or more
shareholders of record who have been such for at least six months preceding
the date of application and who hold in the aggregate shares having a net
asset value of at least $25,000 or at least 1% of the outstanding shares,
whichever is less, so apply, the Trustees shall within five business days
either:
(i) afford to such applicants access to a list of names and
addresses of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of
shareholders of record and the approximate cost of mailing material to them and,
within a reasonable time thereafter, mail, materials submitted by the
applicants, to all such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be misleading or in violation
of applicable law.
11.3 Record Dates. For the purpose of determining the shareholders of
------------
any series who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend or of any other
distribution, the Trustees from time to time may fix a time, which shall be not
more than 90 days before the date of any meeting of shareholders or the date of
payment of any dividend or of any other distribution, as the record date for
determining the shareholders of such series having the right to notice of and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right notwithstanding any transfer of shares on the
books of the Trust after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer books for all
or part of such period.
11.4 Place of Meetings. All meetings of the shareholders shall be held
-----------------
at the principal office of the Trust or at such other place within the United
States as shall be designated by the Trustees or the President of the Trust.
11.5 Notice of Meetings. A written notice of each meeting of
------------------
shareholders, stating the place, date and hour and the purposes of the meeting,
shall be given at least ten days before the meeting to each shareholder entitled
to vote thereat by leaving such notice with him or at his residence or usual
place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the Trust. Such
notice shall be given by the Secretary or an Assistant Secretary or by an
officer designated by the Trustees. No notice of any meeting of shareholders
need be given to a shareholder if a written waiver of notice, executed before or
after the meeting by such shareholder or his attorney thereunto duly authorized,
is filed with the records of the meeting.
11.6 Ballots. No ballot shall be required for any election unless
-------
requested by a shareholder present or represented at the meeting and entitled to
vote in the election.
11.7 Proxies. Shareholders entitled to vote may vote either in person
-------
or by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be
8
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filed with the Secretary or other person responsible to record the proceedings
of the meeting before being voted. Unless otherwise specifically limited by
their terms, such proxies shall entitle the holders thereof to vote at any
adjournment of such meeting but shall not be valid after the final adjournment
of such meeting.
ARTICLE 12
AMENDMENTS TO THE BY-LAWS
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such a majority.
Dated: October 20, 1993
9
<PAGE>
EXHIBIT 99.B5(J)
FORM OF
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
___________, 1998
Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the Money Market Master Portfolio (the "Master Portfolio") and
Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of fourteen investment portfolios, but which may from time
to time consist of a greater or lesser number of investment portfolios (the
"Master Portfolios"). The Money Market Master Portfolio is one of the fifteen
Master Portfolios. The Trust proposes to engage in the business of investing and
reinvesting the assets of the Master Portfolio in the manner and in accordance
with the investment objective and restrictions specified in the Trust's
Registration Statement, as amended from time to time (the "Registration
Statement"), filed by the Trust under the Investment Company Act of 1940 (the
"Act"). Copies of the Registration Statement have been furnished to the Adviser.
Any amendments to the Registration Statement shall be furnished to the Adviser
promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the Master Portfolio's assets and to provide the advisory
services specified elsewhere in this contract to the Master Portfolio, subject
to the overall supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the Master
Portfolio in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Trust's Registration
Statement, the Act and the provisions of the Internal Revenue Code of 1986
relating to regulated investment companies, subject to policy decisions adopted
by the Trust's Board of Trustees. The Adviser shall advise the Trust's officers
and Board of Trustees, at such times as the Trust's Board of Trustees may
specify, of investments made for the Master Portfolio and shall, when requested
by the Trust's officers or Board of Trustees, supply the reasons for making
particular investments.
(b) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy and
performance of the Master Portfolio and such additional reports and information
as the Trust's Board of Trustees and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing all
materials relating to the Master Portfolio prepared by it, or prepared at its
request, other than such costs relating to proxy statements, Part As, reports
for holders of beneficial interests of the Master Portfolio ("Interestholders")
and other materials distributed to existing or prospective Interestholders on
behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate with itself
such persons as the Adviser believes appropriate to assist it in performing its
obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services to the
Master Portfolio hereunder, may delegate certain advisory responsibilities
hereunder to a sub-adviser (the "Sub-Adviser"), provided that the Adviser shall
continue to supervise and monitor the performance of the duties delegated to the
Sub-Adviser and provided that any such delegation will not relieve the Adviser
of its duties and
1
<PAGE>
obligations under this contract. The Adviser will not seek to amend any such
Sub-Advisory Contract to materially alter the obligations of the parties unless
the Adviser gives the Trust at least 60 days' prior written notice thereof.
5. The Adviser shall give the Trust and the Master Portfolio the benefit
of the Adviser's best judgment and efforts in rendering services under this
contract. As an inducement to the Adviser's undertaking to render these
services, the Trust agrees that the Adviser shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except for
lack of good faith, provided that nothing in this contract shall be deemed to
protect or purport to protect the Adviser against any liability to the Trust or
its Interestholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties under this contract or by reason of reckless disregard of its
obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser under
this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at the annual rate of 0.10% of the average daily
value (as determined on each day that such value is determined for the Master
Portfolio at the time set forth in the Registration Statement for determining
net asset value per share) of the Master Portfolio's net assets during the
preceding month. If the fee payable to the Adviser pursuant to this paragraph 6
begins to accrue after the beginning of any month or if this contract terminates
before the end of any month, the fee for the period from the effective date to
the end of that month or from the beginning of that month to the termination
date, respectively, shall be prorated according to the proportion that the
period bears to the full month in which the effectiveness or termination occurs.
For purposes of calculating each such monthly fee, the value of the Master
Portfolio's net assets shall be computed in the manner specified in the
Registration Statement and the Trust's Agreement and Declaration of Trust for
the computation of the value of the Master Portfolio's net assets in connection
with the determination of the net asset value of Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master Portfolio
(including fees pursuant to this contract, but excluding interest, taxes,
brokerage and, with the prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over the Master Portfolio, the Trust may deduct from the
fees to be paid hereunder, or the Adviser will bear, such excess expense to the
extent required by state law. The Adviser's obligation pursuant hereto will be
limited to the amount of the Adviser's fees hereunder. For purposes of computing
the excess, if any, over the most restrictive applicable expense limitation, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the last sentence of paragraph 6, and any reimbursements required
to be made by the Adviser shall be made once a year promptly after the end of
the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and shall
thereafter continue in effect for a period of more than two years from the date
hereof only so long as the continuance is specifically approved at least
annually (a) by the vote a majority of the Master Portfolio's outstanding voting
securities (as defined in the Act) or by the Trust's Board of Trustees and (b)
by the vote, cast in person at a meeting called for the purpose, of a majority
of the Trust's trustees who are not parties to this contract or "interested
persons" (as defined in the Act) of any such party. This contract may be
terminated at any time by the Trust without the payment of any penalty, by a
vote of a majority of the Master Portfolio's outstanding voting securities (as
defined in the Act) or by a vote of a majority of the Trust's entire Board of
Trustee's on 60 days' written notice to the Adviser or by the Adviser on 60
days' written notice to the Trust. This contract shall terminate automatically
in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
10. This contract shall be governed by and construed in accordance with the
laws of the State of California.
2
<PAGE>
11. This contract has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust. The
obligations of this contract shall only be binding upon the assets and property
of the Master Portfolio, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any Trustee, officer or
Interestholder of the Trust or Master Portfolio individually.
If the foregoing correctly sets forth the agreement between the Trust and
the Adviser, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the Money Market Master
Portfolio
By:
---------------------------
Name:
-------------------------
Title:
------------------------
ACCEPTED as of the date
set forth above:
BARCLAYS GLOBAL FUND ADVISORS
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
3
<PAGE>
EXHIBIT 99.B9(D)
THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
STRONG EQUITY FUNDS, INC.
STRONG FUNDS DISTRIBUTORS, INC.
AND
MASTER INVESTMENT PORTFOLIO
DATED AS OF
APRIL 25, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
Preambles........................................................1
ARTICLE I. REPRESENTATIONS AND WARRANTIES.....................
1.1 Corporation........................................
1.2 Portfolio..........................................
1.3 SFDI...............................................
ARTICLE II. COVENANTS..........................................
2.1 Corporation........................................
2.2 MIP................................................
2.3 Reasonable Actions.................................
ARTICLE III. INDEMNIFICATION....................................
3.1 Corporation and SFDI...............................
3.2 MIP................................................
3.3 Survival...........................................
ARTICLE IV. ADDITIONAL AGREEMENTS..............................
4.1 Access to Information..............................
4.2 Confidentiality....................................
4.3 Public Announcements...............................
ARTICLE V. TERMINATION, AMENDMENT.............................
5.1 Termination........................................
5.2 Amendment..........................................
ARTICLE VI. GENERAL PROVISIONS.................................
6.1 Expenses...........................................
6.2 Headings...........................................
6.3 Entire Agreement...................................
6.4 Successors.........................................
6.5 Governing Law......................................
6.6 Counterparts.......................................
6.7 Third Parties......................................
6.8 Notices............................................
6.9 Interpretation.....................................
6.10 Operation of Fund..................................
6.11 Relationship of Parties; No Joint Venture, Etc.....
6.12 Use of Name........................................
Signatures
i
<PAGE>
AGREEMENT
---------
THIS AGREEMENT (the "Agreement") is made and entered into as of the 25th
day of April, 1997, by and among Strong Equity Funds, Inc., a Wisconsin
corporation (the "Corporation"), for itself and on behalf of its series, the
Strong Index 500 Fund ("Fund"), Strong Funds Distributors, Inc. ("SFDI"), a
Wisconsin corporation, and Master Investment Portfolio ("MIP"), a Delaware
business trust, for itself and on behalf of its series, the S & P 500 Index
Master Portfolio ("Portfolio").
WITNESSETH
----------
WHEREAS, Fund and Portfolio are each open-end management investment
companies having the same investment objectives and substantially the same
investment policies;
WHEREAS, Fund desires to invest on an ongoing basis all of its investable
assets (the "Assets") in Portfolio (the "Investments") on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises made
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
------------------------------
1. 1 Corporation. Corporation represents and warrants to MIP that:
-----------
(a) Organization. Corporation is a Wisconsin corporation duly
------------
organized, validly existing and in good standing under the laws of the
State of Wisconsin and Fund is a duly and validly designated series of
Corporation. Each of Corporation and Fund has the requisite power and
authority to own its property and conduct its business as proposed to be
conducted pursuant to this Agreement. For purposes hereof, "good standing"
means that Corporation (i) has filed with the Division of Financial
Institutions of the State of Wisconsin all annual reports required to be
filed by Section 180.1622 of the Wisconsin Business Corporation Law (the
"WBCL"), and Section 180.1403 of the WBCL.
(b) Authorization of Agreement. The execution and delivery of
--------------------------
this Agreement by Corporation on behalf of Fund and the conduct of business
contemplated hereby, including the implementation of the Investments, have
been duly authorized by all necessary action on the part of Corporation's
Board of Directors and no other action or proceeding is necessary for the
execution and delivery of this Agreement by Fund, or the performance by
Fund of its obligations hereunder. This Agreement when executed and
delivered by Corporation on behalf of Fund shall constitute a legal, valid
and binding
<PAGE>
obligation of Corporation and Fund, enforceable against Corporation and
Fund in accordance with its terms. No meeting of, or consent by,
shareholders of Fund is necessary to approve or implement the Investments.
(c) 1940 Act Registration. Corporation is duly registered as an
----------------------
open-end management investment company under the Investment Company Act of
1940 (the "1940 Act") and such registration is in full force and effect.
(d) SEC Filings. Corporation has duly filed all SEC Filings, as
-----------
defined herein, relating to Fund and required to be filed with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Act of 1933 (the "1933 Act") and the 1940 Act. All SEC Filings relating to
Fund comply in all material respects with the requirements of the
applicable Securities Laws, as defined herein, and do not, as of the date
of this Agreement, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) Fund Assets. Fund's Assets currently consist solely of cash
-----------
and Fund intends on an ongoing basis to invest its Assets solely in
Portfolio.
(f) Registration Statement. Fund has reviewed Portfolio's
----------------------
registration statement on Form N-lA, as filed with the SEC, and agrees that
its Investments will be subject to the terms thereof. Fund understands and
acknowledges that Portfolio has the right, in its sole discretion, at any
time, to limit or reject additional Investments from Fund.
(g) Insurance. Fund has in force reasonable insurance coverage
---------
against any and all liabilities that may arise as a result of Fund's
business as a registered investment company.
1.2 Portfolio. MIP represents and warrants to Corporation that:
---------
(a) Organization. MIP is a trust duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware and
Portfolio is a duly and validly designated series of MIP. Each of MIP and
Portfolio has the requisite power and authority to own its property and
conduct its business as now being conducted.
(b) Authorization of Agreement. The execution and delivery of
--------------------------
this Agreement by MIP on behalf of Portfolio and the conduct of business
contemplated hereby have been duly authorized by all necessary action on
the part of MIP's Board of Trustees and no other action or proceeding is
necessary for the execution and delivery of this Agreement by Portfolio, or
the performance by Portfolio of its obligations hereunder. This Agreement
when executed and delivered by MIP on behalf of Portfolio shall constitute
a legal, valid and binding obligation of MIP and Portfolio, enforceable
against
2
<PAGE>
MIP and Portfolio in accordance with its terms. No meeting of, or consent
by, interestholders of Portfolio is necessary to approve the issuance of
the Interests (as defined below) to Fund.
(c) Authorization of Issuance of Beneficial Interest. The
------------------------------------------------
issuance by Portfolio of shares of beneficial interest ("Interests") in
exchange for the Investments by Fund of its Assets has been duly authorized
by all necessary action on the part of the Board of Trustees of Portfolio.
(d) 1940 Act Registration. MIP is duly registered as an open-end
----------------------
management investment company under the 1940 Act and such registration is
in full force and effect.
(e) SEC Filings; Securities Exemptions. MIP has duly filed all
----------------------------------
SEC Filings, as defined herein, relating to Portfolio required to be filed
with the SEC pursuant to the 1940 Act. Interests in Portfolio are not
required to be registered under the 1933 Act, because such Interests are
offered solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act. In
addition, Interests in Portfolio are either registered or exempt from
registration under applicable securities laws in those states or
jurisdictions in which Interests are offered and sold. All SEC Filings
relating to Portfolio comply in all material respects with the requirements
of the applicable Securities Laws, as defined herein, and do not, as of the
date of this Agreement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(f) Tax Status. Based upon applicable IRS interpretations and
-----------
rulings, Portfolio is treated as a partnership for federal income tax
purposes under the Code for its current taxable year.
1.3 SFDI. SFDI represents and warrants to MIP that the execution and
----
delivery of this Agreement by SFDI have been duly authorized by all necessary
action on the part of SFDI and no other action or proceeding is necessary for
the execution and delivery of this Agreement by SFDI, or the performance by SFDI
of its obligations hereunder. This Agreement when executed and delivered by
SFDI shall constitute a legal, valid and binding obligation of SFDI, enforceable
against SFDI in accordance with its terms.
ARTICLE II
COVENANTS
---------
2.1 Corporation. Corporation covenants that:
-----------
3
<PAGE>
(a) Advance Review of Certain Documents. Corporation will
-----------------------------------
furnish MIP at least ten (10) business days prior to the earlier of filing
or first use, as the case may be, with drafts of Fund's registration
statement on Form N-lA and any amendments thereto, and any prospectus and
statement of additional information supplements or amendments. In
addition, Corporation and SFDI will furnish MIP at least five (5) business
days prior to the earlier of filing or first use, as the case may be, with
any proposed advertising or sales literature that contains language that
describes or refers to MIP or Portfolio and that was not previously
approved by MIP. Corporation agrees that it will include in all such Fund
documents any disclosures that may be required by law, and that it will
incorporate in all such Fund documents any material and reasonable comments
made by MIP. MIP will not, however, in any way be liable for any errors or
omissions in such documents, whether or not it makes any objection thereto,
except to the extent such errors or omissions result from information
provided by MIP expressly for inclusion therein. In addition, neither Fund
nor SFDI will make any other written or oral representations about MIP or
Portfolio other than those contained in such documents without MIP's prior
written consent.
(b) SEC and Blue Sky Filings. Corporation will file all forms,
------------------------
reports, proxy statements and other documents (collectively, the "SEC
Filings") required to be filed with the SEC under the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations thereunder,
(collectively, the "Securities Laws") in connection with the registration
of Fund's shares, any meetings of its shareholders and its registration as
a series of an investment company. Corporation will file such similar or
other documents as may be required to be filed with any securities
commission or similar authority by the laws or regulations of any state,
territory or possession of the United States, including the District of
Columbia, in which shares of Fund are or will be registered for sale
("State Filings"). Fund's SEC Filings will comply in all material respects
with the requirements of the applicable Securities Laws, and will not, at
the time they are filed or used to offer Fund shares, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Fund's State Filings will be prepared in accordance with the requirements
of applicable state and federal law and the rules and regulations
thereunder.
(c) 1940 Act Registration. Fund will be duly registered as an
---------------------
open-end management investment company under the 1940 Act and in any states
where such registration is necessary and such registrations will be and
remain in full force and effect.
(d) Tax Status. Fund will qualify for treatment as a regulated
----------
investment company under Subchapter M of the Code for any taxable year
during which this Agreement continues in effect, unless such lack of
qualification is solely as a result of Portfolio's failure to meet the
diversification requirements of Subchapter M of the Code.
(e) Fiscal Year. Fund shall take appropriate action to adopt and
-----------
maintain the same fiscal year end as Portfolio (currently February 28).
4
<PAGE>
(f) Proxy Voting. If requested to vote on matters pertaining to
------------
Portfolio, Fund will, if required under the 1940 Act or by SEC staff policy
or interpretation, seek instructions from its shareholders regarding such
matters and will cast all of its votes proportionally as instructed by its
shareholders. Fund will vote the shares held by Fund shareholders who do
not give voting instructions in the same proportion as the shares of Fund
shareholders who do give voting instructions or in such other manner as is
permissible under the 1940 Act.
(g) Compliance with Laws. Corporation shall comply, in all
--------------------
material respects, with all applicable laws, rules and regulations in
connection with conducting its operations as a registered investment
company.
(h) Insurance. Fund will maintain in full force and effect for
---------
so long as this Agreement is in effect reasonable insurance coverage
against any and all liabilities that may arise as a result of Fund's
business as a registered investment company.
2.2 MIP. MIP covenants that:
---
(a) Signature Pages. MIP shall promptly provide all required
---------------
signature pages to Corporation for inclusion in any SEC Filings of
Corporation, provided Corporation is in material compliance with its
covenants and other obligations under this Agreement at the time such
signature pages are provided and included in the SEC Filing. Corporation
and SFDI acknowledge and agree that the provision of such signature pages
does not constitute a representation by MIP, its Trustees or Officers, that
such SEC Filing complies with the requirements of the applicable Securities
Laws, or that such SEC Filing does not contain any untrue statement of a
material fact or does not omit to the state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except with respect to information provided by MIP for inclusion in such
SEC Filing or for use by Corporation in preparing such filing, including
but not limited to any written information obtained from MIP's current
registration statement on Form N-1A.
(b) Redemption. Except as otherwise provided in this Section
----------
2.2(b), redemptions of Interests owned by Fund will be effected pursuant to
Section 2.2(c). In the event Fund desires to withdraw its entire
Investment from Portfolio, either by submitting a redemption request or by
terminating this Agreement in accordance with Section 5.1 hereof,
Portfolio, unless otherwise agreed to by the parties, and in all cases
subject to Section 18 of the 1940 Act and the rules and regulations
thereunder, will effect such redemption "in kind" and in such a manner that
the securities delivered to Fund or its custodian for the account of Fund
mirror, as closely as practicable, the composition of Portfolio immediately
prior to such redemption. Portfolio further agrees that, to the extent
legally possible, it will not take or cause to be taken any action without
Fund's prior approval that would cause the withdrawal of Fund's Investments
to be treated as a
5
<PAGE>
taxable event to Fund. Portfolio further agrees to conduct its activities
in accordance with all applicable requirements of Rule 1.731-2(e) under the
Internal Revenue Code or any successor regulation.
(c) Ordinary Course Redemptions. Portfolio will effect its
---------------------------
redemptions in accordance with the provisions of the 1940 Act and the rules
and regulations thereunder. All redemption requests other than a
withdrawal of Fund's entire Investment in Portfolio under Section 2.2(b)
or, at the sole discretion of MIP, a withdrawal (or series of withdrawals
over any 3 consecutive business days) of an amount that exceeds 10% of
Portfolio's net asset value will be effected in cash at the next determined
net asset value after the redemption request is received. Portfolio will
use its best efforts to settle redemptions on the business day following
the receipt of a redemption request by Fund and if such next business day
settlement is not practicable, will immediately notify Fund and SFDI
regarding the anticipated settlement date.
(d) SEC Filings. MIP will file all SEC Filings required to be
-----------
filed with the SEC under the Securities Laws in connection with any
meetings of Portfolio's investors and Portfolio's registration as a series
of an investment company. Portfolio's SEC Filings will comply in all
material respects with the requirements of the applicable Securities Laws,
and will not, at the time they are filed or used, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) 1940 Act Registration. MIP will remain duly registered as an
----------------------
open-end management investment company under the 1940 Act.
(f) Tax Status. Based upon applicable IRS interpretations and
-----------
rulings, Portfolio will continue to be treated as a partnership for federal
income tax purposes under the Code. Portfolio will continue to satisfy the
diversification requirements of Subchapter M as if such requirements were
applicable directly to it for so long as this Agreement continues in
effect. MIP agrees to forward to Fund prior to Fund's initial Investment a
copy of its opinion of counsel or private letter ruling relating to the tax
status of Portfolio and agrees that Fund may rely upon such opinion or
ruling during the term of this Agreement.
(g) Securities Exemptions. Interests in Portfolio have been and
---------------------
will continue to be offered and sold solely in private placement
transactions which do not involve any "public offering" within the meaning
of Section 4(2) of the 1933 Act.
(h) Advance Notice of Certain Changes. MIP shall provide
---------------------------------
Corporation with at least one hundred twenty (120) days' advance notice, or
such lesser time as may be agreed to by the parties, of any change in
Portfolio's investment objective, and at least sixty (60) days' advance
notice, or if MIP has knowledge that one of the following changes is likely
to occur more than sixty (60) days in advance of such event, notice shall
6
<PAGE>
be provided as soon as reasonably possible after MIP obtains such
knowledge, of any material change in Portfolio's investment policies or
activities, any material increase in Portfolio's fees or expenses or any
change in Portfolio's fiscal year.
(i) Compliance with Laws. MIP shall comply, in all material
--------------------
respects, with all applicable laws, rules and regulations in connection
with conducting its operations as a registered investment company.
2.3 Reasonable Actions. Each party covenants that it will, subject
------------------
to the provisions of this Agreement, from time to time, as and when requested by
another party or in its own discretion, as the case may be, execute and deliver
or cause to be executed and delivered all such documents, assignments and other
instruments, take or cause to be taken such actions, and do or cause to be done
all things reasonably necessary, proper or advisable in order to conduct the
business contemplated by this Agreement and to carry out its intent and purpose.
ARTICLE III
INDEMNIFICATION
---------------
3.1 Corporation and SFDI
--------------------
(a) Corporation and SFDI agree, jointly and severally, to
indemnify and hold harmless MIP, Portfolio and Portfolio's investment
adviser, and any director/trustee, officer, employee or agent of MIP,
Portfolio or Portfolio's investment adviser (in this Section, each, a
"Covered Person" and collectively, "Covered Persons"), against any and all
losses, claims, demands, damages, liabilities or expenses (including, with
respect to each Covered Person, the reasonable cost of investigating and
defending against any claims therefor and any counsel fees incurred in
connection therewith, except as provided in subparagraph (b)), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable
statute, rule, regulation or common law, or are incurred in connection
with or as a result of any formal or informal administrative
proceeding or investigation by a regulatory agency, insofar as such
violation or alleged violation, proceeding or investigation arises out
of or is based upon any direct or indirect omission or commission (or
alleged omission or commission) by Corporation or any of its
directors, officers, employees or agents, or by SFDI or any of its
directors, officers, employees or agents, but only insofar as such
omissions or commissions relate to SFDI's activities with respect to
Fund; or
(ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
advertising or sales literature,
7
<PAGE>
prospectus, registration statement, or any other SEC Filing relating
to Fund, or any amendments or supplements to the foregoing
(hereinafter referred to collectively as the "Offering Documents"), or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances
under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was not made in the
Offering Documents in reliance upon and in conformity with written
information furnished to Fund by MIP expressly for use therein or for
use by Fund in preparing such documents, including but not limited to
any written information contained in MIP's current registration
statement on Form N-1A;
provided, however, that in no case shall Corporation or SFDI be
-------- -------
liable for indemnification hereunder with respect to any claims made
against any Covered Person unless a Covered Person shall have notified
Corporation or SFDI in writing within a reasonable time after the summons,
other first legal process, notice of a federal, state or local tax
deficiency, or formal initiation of a regulatory investigation or
proceeding giving information of the nature of the claim shall have
properly been served upon or provided to a Covered Person seeking
indemnification. Failure to notify Corporation or SFDI of such claim shall
not relieve Corporation or SFDI from any liability that it may have to any
Covered Person otherwise than on account of the indemnification contained
in this Section.
(b) Corporation and SFDI each will be entitled to participate at
its own expense in the defense or, if it so elects, to assume the defense
of any suit brought to enforce any such liability, but, if Corporation
and/or SFDI elect(s) to assume the defense, such defense shall be conducted
by counsel chosen by Corporation and/or SFDI, as applicable. In the event
Corporation and/or SFDI elect(s) to assume the defense of any such suit and
retain such counsel, each Covered Person in the suit may retain additional
counsel but shall bear the fees and expenses of such counsel unless (A)
Corporation and SFDI shall have specifically authorized the retaining of
and payment of fees and expenses of such counsel or (B) the parties to such
suit include any Covered Person and Corporation and/or SFDI, and any such
Covered Person has been advised in a written opinion by counsel reasonably
acceptable to Corporation and SFDI that one or more legal defenses may be
available to it that may not be available to Corporation and/or SFDI, in
which case Corporation and/or SFDI shall not be entitled to assume the
defense of such suit notwithstanding their obligation to bear the fees and
expenses of one counsel to such persons. Corporation shall not be required
to indemnify any Covered Person for any settlement of any such claim
effected without its written consent and SFDI shall not be required to
indemnify any Covered Person for any settlement of any such claim effected
without its written consent, which consent, in each case, shall not be
unreasonably withheld or delayed. The indemnities set forth in paragraph
(a) will be in addition to any liability that Corporation and/or SFDI might
otherwise have to Covered Persons.
8
<PAGE>
(c) MIP agrees that the obligations of Corporation under the
indemnities set forth in paragraph (a) shall be limited in all cases to the
assets of Fund, including, but not limited to, any insurance proceeds, and
that MIP shall not seek satisfaction of any such obligation from the
officers, agents, employees, directors or shareholders of Fund or other
classes or series of Corporation.
3.2 MIP.
---
(a) MIP agrees to indemnify and hold harmless Corporation, SFDI
and Fund, and any director, officer, employee or agent of Corporation, SFDI
or Fund (in this Section, each, a "Covered Person" and collectively,
"Covered Persons"), against any and all losses, claims, demands, damages,
liabilities or expenses (including, with respect to each Covered Person,
the reasonable cost of investigating and defending against any claims
therefor and any counsel fees incurred in connection therewith, except as
provided in subparagraph (b)), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable
statute, rule, regulation or common law or are incurred in connection
with or as a result of any formal or informal administrative
proceeding or investigation by a regulatory agency, insofar as such
violation or alleged violation, proceeding or investigation arises out
of or is based upon any direct or indirect omission or commission (or
alleged omission or commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any Offering
Documents relating to Portfolio, or arise out of or are based upon the
omission or alleged omission to state therein, a material fact
required to be stated therein, or necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading; or
(ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any Offering
Documents relating to Corporation or Fund, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Fund by MIP expressly
for use therein or for use by Fund in preparing such documents,
including but not limited to any written information contained in
MIP's current registration statement on Form N-1A.
9
<PAGE>
provided, however, that in no case shall MIP be liable for
-------- -------
indemnification hereunder with respect to any claims made against any
Covered Person unless a Covered Person shall have notified MIP in writing
within a reasonable time after the summons, other first legal process,
notice of a federal, state or local tax deficiency, or formal initiation of
a regulatory investigation or proceeding giving information of the nature
of the claim shall have properly been served upon or provided to a Covered
Person seeking indemnification. Failure to notify MIP of such claim shall
not relieve MIP from any liability that it may have to any Covered Person
otherwise than on account of the indemnification contained in this Section.
(b) MIP will be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if MIP elects to assume the defense, such
defense shall be conducted by counsel chosen by MIP. In the event MIP
elects to assume the defense of any such suit and retain such counsel, each
Covered Person in the suit may retain additional counsel but shall bear the
fees and expenses of such counsel unless (A) MIP shall have specifically
authorized the retaining of and payment of fees and expenses of such
counsel or (B) the parties to such suit include any Covered Person and MIP,
and any such Covered Person has been advised in a written opinion by
counsel reasonably acceptable to MIP that one or more legal defenses may be
available to it that may not be available to MIP, in which case MIP shall
not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of one counsel to such persons.
MIP shall not be required to indemnify any Covered Person for any
settlement of any such claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed. The indemnities set
forth in paragraph (a) will be in addition to any liability that MIP might
otherwise have to Covered Persons.
(c) Corporation agrees that the obligations of MIP under the
indemnities set forth in paragraph (a) shall be limited in all cases to the
assets of Portfolio and that Corporation shall not seek satisfaction of any
such obligation from the officers, agents, employees, trustees or
shareholders of Portfolio or other classes or series of MIP.
3.3 Survival. The indemnities granted by the parties in this Article III
--------
shall survive the termination of this Agreement.
ARTICLE IV
ADDITIONAL AGREEMENTS
---------------------
4.1 Access to Information. Throughout the life of this Agreement,
---------------------
Corporation and MIP shall afford each other reasonable access at all reasonable
times to such party's officers, employees, agents and offices and to all
relevant books and records and shall furnish each other party with all relevant
financial and other data and information as such other party may reasonably
request.
10
<PAGE>
4.2 Confidentiality. Each party agrees that it shall hold in strict
---------------
confidence all data and information obtained from another party (unless such
information is or becomes readily ascertainable from public or published
information or trade sources or public disclosure of such information is
required by law) and shall ensure that its officers, employees and authorized
representatives do not disclose such information to others without the prior
written consent of the party from whom it was obtained, except if disclosure is
required by the SEC, any other regulatory body, Fund's or Portfolio's respective
auditors, or in the opinion of counsel to the disclosing party such disclosure
is required by law, and then only with as much prior written notice to the other
party as is practical under the circumstances. Each party hereto acknowledges
that the provisions of this Section 4.2 shall not prevent Corporation from
filing a copy of this Agreement as an exhibit to Corporation's registration
statement on Form N-1A as it relates to Fund, and that such disclosure by
Corporation shall not require any additional consent from MIP.
4.4 Public Announcements. Each party shall consult with the other parties
--------------------
and with legal counsel before issuing any press release or otherwise making any
public statements with respect to the matters covered by this Agreement and
shall not issue any press release or make any public statement prior to such
consultation, except if in the opinion of counsel to the disclosing party such
disclosure is required by law and then only with as much prior written notice to
the other party as is practical under the circumstances.
ARTICLE V
TERMINATION, AMENDMENT
----------------------
5.1 Termination. This Agreement may be terminated at any time by the
-----------
mutual agreement of all parties, or by any party on ninety (90) days' advance
written notice to the other parties hereto; provided, however, that this Section
-------- -------
5.1 shall not limit Corporation's right to redeem all or a portion of its
Investment in Portfolio pursuant to the 1940 Act and the rules thereunder.
5.2 Amendment. This Agreement may be amended, modified or supplemented at
---------
any time in such manner as may be mutually agreed upon in writing by the
parties.
ARTICLE VI
GENERAL PROVISIONS
------------------
6.1 Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the conduct of business contemplated hereby shall be paid by the
party incurring such costs and expenses.
11
<PAGE>
6.2 Headings. The headings and captions contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.3 Entire Agreement. Except as set forth below, this Agreement sets
----------------
forth the entire understanding between the parties concerning the subject matter
of this Agreement and incorporates or supersedes all prior negotiations and
understandings. There are no covenants, promises, agreements, conditions or
understandings, either oral or written, between the parties relating to the
subject matter of this Agreement other than those set forth herein and the
terms, conditions and descriptions set forth in MIP's Registration Statement, as
in effect from time to time.
6.4 Successors. Each and all of the provisions of this Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement, nor any
-------- -------
rights herein granted may be assigned to, transferred to or encumbered by any
party, without the prior written consent of the other parties hereto.
6.5 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California; provided, however, that in
-------- -------
the event of any conflict between the 1940 Act and the laws of California, the
1940 Act shall govern.
6.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing one or more counterparts.
6.7 Third Parties. Nothing herein expressed or implied is intended or
-------------
shall be construed to confer upon or give any person, other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
6.8 Notices. All notices and other communications given or made pursuant
-------
hereto shall be in writing and shall be deemed to have been duly given or made
when delivered in person or three days after being sent by certified or
registered United States mail, return receipt requested, postage prepaid,
addressed:
If to Corporation of SFDI:
General Counsel
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
If to MIP:
12
<PAGE>
Chief Operating Officer
Master Investment Portfolio
c/o Stephens Inc.
111 Center Street
Little Rock, AR 72201
6.9 Interpretation. Any uncertainty or ambiguity existing herein
--------------
shall not be interpreted against any party, but shall be interpreted according
to the application of the rules of interpretation for arms' length agreements.
6.10 Operation of Fund. Except as otherwise provided herein, this
-----------------
Agreement shall not limit the authority of Fund, Corporation or SFDI to take
such action as it may deem appropriate or advisable in connection with all
matters relating to the operation of Fund and the sale of its shares.
6.11 Relationship of Parties; No Joint Venture, Etc. It is
-----------------------------------------------
understood and agreed that neither Corporation nor SFDI shall hold itself out as
an agent of MIP with the authority to bind such party, nor shall MIP hold itself
out as an agent of Corporation or SFDI with the authority to bind such party.
6.12 Use of Name. Except as otherwise provided herein, neither
-----------
Corporation, Fund nor SFDI shall describe or refer to the name of MIP or any
derivation thereof, or any affiliate thereof, or to the relationship
contemplated by this Agreement in any advertising or promotional materials
without the prior written consent of MIP, nor shall MIP describe or refer to the
name of Corporation, Fund or SFDI or any derivation thereof, or any affiliate
thereof, or to the relationship contemplated by this Agreement in any
advertising or promotional materials without the prior written consent of
Corporation, Fund or SFDI, as the case may be. In no case shall any such
consents be unreasonably withheld or delayed. In addition, the party required
to give its consent shall have at least five (5) business days prior to the
earlier of filing or first use, as the case may be, to review the proposed
advertising or promotional materials.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first written above.
STRONG EQUITY FUNDS, INC.,
on behalf of its series, the STRONG
INDEX 500 FUND
By /s/ JOHN S. WEITZER
-------------------
Name: John S. Weitzer
Title: Vice President
MASTER INVESTMENT PORTFOLIO,
on behalf of its series, the S&P 500 INDEX
MASTER PORTFOLIO
By /s/ RICHARD H. BLANK, JR.
-------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
STRONG FUNDS DISTRIBUTORS, INC.
By /s/ STEPHEN J. SHENKENBERG
--------------------------
Name: Stephen J. Shenkenberg
Title: Vice President
14
<PAGE>
EXHIBIT 99.B9(E)
FORM OF
THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
[FEEDER FUND]
[FEEDER FUND DISTRIBUTOR]
AND
MASTER INVESTMENT PORTFOLIO
DATED AS OF
___________________, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I. REPRESENTATIONS AND WARRANTIES.........................
1.1 Company..................................................
1.2 MIP......................................................
1.3 Distributor..............................................
ARTICLE II. COVENANTS.............................................
2.1 Company..................................................
2.2 MIP......................................................
2.3 Reasonable Actions.......................................
ARTICLE III. INDEMNIFICATION......................................
3.1 Company and Distributor..................................
3.2 MIP......................................................
ARTICLE IV. ADDITIONAL AGREEMENTS.................................
4.1 Access to Information....................................
4.2 Confidentiality..........................................
4.3 Obligations of Company and MIP...........................
ARTICLE V. TERMINATION, AMENDMENT.................................
5.1 Termination..............................................
5.2 Amendment................................................
ARTICLE VI. GENERAL PROVISIONS....................................
6.1 Expenses.................................................
6.2 Headings.................................................
6.3 Entire Agreement.........................................
6.4 Successors...............................................
6.5 Governing Law............................................
6.6 Counterparts.............................................
6.7 Third Parties............................................
6.8 Notices..................................................
6.9 Interpretation...........................................
6.10 Operation of Fund........................................
6.11 Relationship of Parties; No Joint Venture, Etc...........
6.12 Use of Name..............................................
Signatures
i
<PAGE>
AGREEMENT
---------
THIS AGREEMENT (the "Agreement") is made and entered into as of the ____
day of _______________, 1998, by and among [Feeder Fund], a [______________
company/trust] (the "Company"), for itself and on behalf of its series, the
_____________ Fund (the "Fund"), Fund Distributor (the "Distributor"), a
_____________ corporation, and Master Investment Portfolio ("MIP"), a Delaware
business trust, for itself and on behalf of its series, the ___________________
Master Portfolio ("Portfolio").
WITNESSETH
----------
WHEREAS, Company and MIP are each open-end management investment companies;
WHEREAS, Fund and Portfolio have the same investment objective and
substantially the same investment policies;
WHEREAS, Fund desires to invest on an ongoing basis all of its investable
assets (the "Assets") in Portfolio (the "Investments") on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises made
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
------------------------------
1. 1 Company. Company represents and warrants to MIP that:
-------
(a) Organization. Company is a ______________ corporation/trust
------------
and Fund is a duly and validly designated series of Company. Each of
Company and Fund has the requisite power and authority to own its property
and conduct its business as proposed to be conducted pursuant to this
Agreement.
(b) Authorization of Agreement. The execution and delivery of
--------------------------
this Agreement by Company on behalf of Fund and the conduct of business
contemplated hereby, including the implementation of the Investments, have
been duly authorized by all necessary action on the part of Company's Board
of Directors and no other action or proceeding is necessary for the
execution and delivery of this Agreement by Fund, or the performance by
Fund of its obligations hereunder. This Agreement when executed and
delivered by Company on behalf of Fund shall constitute a legal, valid and
binding obligation of Company, enforceable against Fund in accordance with
its terms. No
<PAGE>
meeting of, or consent by, shareholders of Fund is necessary
to approve or implement the Investments.
(c) 1940 Act Registration. Company is duly registered as an
----------------------
open-end management investment company under the Investment Company Act of
1940 (the "1940 Act") and such registration is in full force and effect.
(d) SEC Filings. Company has duly filed all forms, reports,
-----------
proxy statements and other documents (collectively, the "SEC Filings")
required to be filed with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933 (the "1933 Act"), the Securities
Exchange Act of 1934 (the "1934 Act") and the Investment Company Act of
1940 (the "1940 Act"), and the rules and regulations thereunder,
(collectively, the "Securities Laws") in connection with the registration
of Fund's shares, any meetings of its shareholders and its registration as
a series of an investment company. All SEC Filings relating to Fund comply
in all material respects with the requirements of the applicable Securities
Laws and do not, as of the date of this Agreement, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) Fund Assets. Fund currently intends on an ongoing basis to
-----------
invest its Assets solely in Portfolio.
(f) Registration Statement. Company has reviewed MIP's and
----------------------
Portfolio's registration statement on Form N-lA, as filed with the SEC, and
agrees that Fund's Investments will be subject to the terms thereof. Fund
understands and acknowledges that Portfolio has the right, in its sole
discretion, at any time, to limit or reject additional Investments from
Fund, provided that MIP shall provide Company at least thirty (30) days'
advance written notice, or such lesser time as may be agreed to by the
parties, of any such limit or rejection.
(g) Insurance. Fund has in force reasonable insurance coverage
---------
against any and all liabilities that may arise as a result of Fund's
business as a registered investment company.
1.2 MIP. MIP represents and warrants to Company that:
---
(a) Organization. MIP is a trust duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware and
Portfolio is a duly and validly designated series of MIP. Each of MIP and
Portfolio has the requisite power and authority to own its property and
conduct its business as now being conducted.
(b) Authorization of Agreement. The execution and delivery of
--------------------------
this Agreement by MIP on behalf of Portfolio and the conduct of business
contemplated hereby have been duly authorized by all necessary action on
the part of MIP's Board of
2
<PAGE>
Trustees and no other action or proceeding is necessary for the execution
and delivery of this Agreement by Portfolio, or the performance by
Portfolio of its obligations hereunder. This Agreement when executed and
delivered by MIP on behalf of Portfolio shall constitute a legal, valid and
binding obligation of MIP and Portfolio, enforceable against MIP and
Portfolio in accordance with its terms. No meeting of, or consent by,
interestholders of Portfolio is necessary to approve the issuance of the
Interests (as defined below) to Fund.
(c) Authorization of Issuance of Beneficial Interest. The
------------------------------------------------
issuance by Portfolio of shares of beneficial interest ("Interests") in
exchange for the Investments by Fund of its Assets has been duly authorized
by all necessary action on the part of the Board of Trustees of MIP.
(d) 1940 Act Registration. MIP is duly registered as an open-end
----------------------
management investment company under the 1940 Act and such registration is
in full force and effect.
(e) SEC Filings; Securities Exemptions. MIP has duly filed all
----------------------------------
SEC Filings, as defined herein, relating to Portfolio required to be filed
with the SEC pursuant to the 1940 Act. Interests in Portfolio are not
required to be registered under the 1933 Act, because such Interests are
offered solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act. In
addition, Interests in Portfolio are either noticed for sale or exempt from
notice requirements under applicable securities laws in those states or
jurisdictions in which Interests are offered and sold. All SEC Filings
relating to Portfolio comply in all material respects with the requirements
of the applicable Securities Laws, as defined herein, and do not, as of the
date of this Agreement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(f) Tax Status. Based upon applicable IRS interpretations and
-----------
rulings, Portfolio is treated as a partnership for federal income tax
purposes under the Code for its current taxable year.
1.3 Distributor. Distributor represents and warrants to MIP that the
-----------
execution and delivery of this Agreement by Distributor have been duly
authorized by all necessary action on the part of Distributor and no other
action or proceeding is necessary for the execution and delivery of this
Agreement by Distributor, or the performance by Distributor of its obligations
hereunder. This Agreement when executed and delivered by Distributor shall
constitute a legal, valid and binding obligation of Distributor, enforceable
against Distributor in accordance with its terms.
3
<PAGE>
ARTICLE II
COVENANTS
---------
2.1 Company. Company covenants that:
-------
(a) Advance Review of Certain Documents. Company will furnish
-----------------------------------
MIP at least ten (10) business days prior to the earlier of filing or first
use, as the case may be, with drafts of Fund's registration statement on
Form N-lA and any amendments thereto, and also will give at least five (5)
business days' advance notice of any prospectus or statement of additional
information supplements. In addition, Company will furnish or will cause
to be furnished to MIP at least five (5) business days prior to the earlier
of filing or first use, as the case may be, any proposed advertising or
sales literature that contains language that describes or refers to MIP or
Portfolio and that was not previously approved by MIP. Company agrees that
it will include in all such Fund documents any disclosures that may be
required by law, and that it will incorporate in all such Fund documents
any material and reasonable comments made by MIP. MIP will not, however,
in any way be liable for any errors or omissions in such documents, whether
or not it makes any objection thereto, except to the extent such errors or
omissions result from information provided in Portfolio's 1940 Act
registration statement or otherwise provided by MIP for inclusion therein.
In addition, neither Fund nor Distributor will make any other written or
oral representations about MIP or Portfolio other than those contained in
such documents without MIP's prior written consent.
(b) SEC and Blue Sky Filings. Company will file all SEC Filings
------------------------
required to be filed with the SEC under the Securities Laws in connection
with the registration of Fund's shares, any meetings of its shareholders,
and its registration as a series of an investment company. Company will
file such similar or other documents as may be required to be filed with
any securities commission or similar authority by the laws or regulations
of any state, territory or possession of the United States, including the
District of Columbia, in which shares of Fund are or will be noticed for
sale ("State Filings"). Fund's SEC Filings will comply in all material
respects with the requirements of the applicable Securities Laws, and,
insofar as they relate to information other than that supplied or required
to be supplied by Portfolio, will not, at the time they are filed or used
to offer Fund shares, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Fund's State Filings will be
prepared in accordance with the requirements of applicable state and
federal law and the rules and regulations thereunder.
(c) 1940 Act Registration. Company will be duly registered as an
---------------------
open-end management investment company under the 1940 Act.
(d) Tax Status. Fund will qualify for treatment as a regulated
----------
investment company under Subchapter M of the Code for any taxable year
during which this
4
<PAGE>
Agreement continues in effect, unless such lack of qualification is solely
as a result of Portfolio's failure to meet (i) the income test imposed on
regulated investment companies under Section 851(b)(2) of the Code and (ii)
the asset test imposed on regulated investment companies under Section
851(b)(3) of the Code as if such Sections applied to it.
(e) Fiscal Year. Fund shall take appropriate action to adopt and
-----------
maintain the same fiscal year end as Portfolio (currently the last day of
February).
(f) Proxy Voting. If requested to vote on matters pertaining to
------------
MIP or Portfolio, Fund will vote such shares in accordance with applicable
law.
(g) Compliance with Laws. Company shall comply, in all material
--------------------
respects, with all applicable laws, rules and regulations in connection
with conducting its operations as a registered investment company.
(h) Insurance. Fund will maintain in full force and effect for
---------
so long as this Agreement is in effect reasonable insurance coverage
against any and all liabilities that may arise as a result of Fund's
business as a registered investment company.
2.2 MIP. MIP covenants that:
---
(a) Signature Pages. MIP shall promptly provide all required
---------------
signature pages to Company for inclusion in any SEC Filings of Company,
provided Company is in material compliance with its covenants and other
obligations under this Agreement at the time such signature pages are
provided and included in the SEC Filing. Company and Distributor
acknowledge and agree that the provision of such signature pages does not
constitute a representation by MIP, its Trustees or Officers, that such SEC
Filing complies with the requirements of the applicable Securities Laws, or
that such SEC Filing does not contain any untrue statement of a material
fact or does not omit to the state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except with
respect to information provided by MIP for inclusion in such SEC Filing or
for use by Company in preparing such filing, which shall in any event
include any written information obtained from MIP's current registration
statement on Form N-1A.
(b) Redemption. Except as otherwise provided in this Section
----------
2.2(b), redemptions of Interests owned by Fund will be effected pursuant to
Section 2.2(c). In the event Fund desires to withdraw its entire
Investment from Portfolio, either by submitting a redemption request or by
terminating this Agreement in accordance with Section 5.1 hereof,
Portfolio, unless otherwise agreed to by the parties, and in all cases
subject to Sections 17 and 18 of the 1940 Act and the rules and regulations
thereunder, will effect such redemption "in kind" and in such a manner that
the securities delivered to Fund or its custodian for the account of Fund
mirror, as closely as practicable, the
5
<PAGE>
composition of Portfolio immediately prior to such redemption. Portfolio
further agrees that, to the extent legally possible, it will not take or
cause to be taken any action without Company's prior approval that would
cause the withdrawal of Fund's Investments to be treated as a taxable event
to the Fund. Portfolio further agrees to conduct its activities in
accordance with all applicable requirements of Rule 1.731-2(e) under the
Internal Revenue Code or any successor regulation.
(c) Ordinary Course Redemptions. Portfolio will effect its
---------------------------
redemptions in accordance with the provisions of the 1940 Act and the rules
and regulations thereunder, including, without limitation, Section 17
thereof. All redemption requests other than a withdrawal of Fund's entire
Investment in Portfolio under Section 2.2(b) or, at the sole discretion of
MIP, a withdrawal (or series of withdrawals over any three (3) consecutive
business days) of an amount that exceeds 10% of Portfolio's net asset value
will be effected in cash at the next determined net asset value after the
redemption request is received. Portfolio will use its best efforts to
settle redemptions on the business day following the receipt of a
redemption request by Fund and if such next business day settlement is not
practicable, will immediately notify Fund regarding the anticipated
settlement date, which shall in all events be a date permitted under the
1940 Act.
(d) SEC Filings. MIP will file all SEC Filings required to be
-----------
filed with the SEC under the Securities Laws in connection with any
meetings of Portfolio's investors and Portfolio's registration as a series
of an investment company and will provide copies of all such definitive
filings to Company. Portfolio's SEC Filings will comply in all material
respects with the requirements of the applicable Securities Laws, and will
not, at the time they are filed or used, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(e) 1940 Act Registration. MIP will remain duly registered as an
---------------------
open-end management investment company under the 1940 Act.
(f) Tax Status. Based upon applicable IRS interpretations and
----------
rulings, Portfolio will continue to be treated as a partnership for federal
income tax purposes under the Code. Portfolio will continue to satisfy (i)
the income test imposed on regulated investment companies under Section
851(b)(2) of the Code and (ii) the asset test imposed on regulated
investment companies under Section 851(b)(3) of the Code as if such
Sections applied to it for so long as this Agreement continues in effect.
MIP agrees to forward to Fund prior to Fund's initial Investment a copy of
its opinion of counsel or private letter ruling relating to the tax status
of Portfolio and agrees that Fund may rely upon such opinion or ruling
during the term of this Agreement.
(g) Securities Exemptions. Interests in Portfolio have been and
---------------------
will continue to be offered and sold solely in private placement
transactions which do not involve any
6
<PAGE>
"public offering" within the meaning of Section 4(2) of the 1933 Act or
require registration or notification under any state law.
(h) Advance Notice of Certain Changes. MIP shall provide Company
---------------------------------
with at least one hundred twenty (120) days' advance notice, or such lesser
time as may be agreed to by the parties, of any change in Portfolio's
investment objective, and at least sixty (60) days' advance notice, or if
MIP has knowledge that one of the following changes is likely to occur more
than sixty (60) days in advance of such event, notice shall be provided as
soon as reasonably possible after MIP obtains such knowledge, of any
material change in Portfolio's investment policies or activities, any
material increase in Portfolio's fees or expenses, or any change in
Portfolio's fiscal year or time for calculating net asset value for
purposes of Rule 22c-1.
(i) Compliance with Laws. MIP shall comply, in all material
--------------------
respects, with all applicable laws, rules and regulations in connection
with conducting its operations as a registered investment company.
2.3 Reasonable Actions. Each party covenants that it will, subject to the
------------------
provisions of this Agreement, from time to time, as and when requested by
another party or in its own discretion, as the case may be, execute and deliver
or cause to be executed and delivered all such documents, assignments and other
instruments, take or cause to be taken such actions, and do or cause to be done
all things reasonably necessary, proper or advisable in order to conduct the
business contemplated by this Agreement and to carry out its intent and purpose.
ARTICLE III
INDEMNIFICATION
---------------
3.1 Company and Distributor
-----------------------
(a) Company and Distributor agree, jointly and severally, to
indemnify and hold harmless MIP, Portfolio and Portfolio's investment
adviser, and any director/trustee, officer, employee or agent of MIP,
Portfolio or Portfolio's investment adviser (in this Section, each, a
"Covered Person" and collectively, "Covered Persons"), against any and all
losses, claims, demands, damages, liabilities or expenses (including, with
respect to each Covered Person, the reasonable cost of investigating and
defending against any claims therefor and any counsel fees incurred in
connection therewith, except as provided in subparagraph (b)), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable
statute, rule, regulation or common law, or are incurred in connection
with or as a result of any formal or informal administrative
proceeding or investigation by a regulatory agency, insofar as such
violation or alleged violation, proceeding or investigation arises
7
<PAGE>
out of or is based upon any direct or indirect omission or commission
(or alleged omission or commission) by Company or by Distributor or by
any of its or their trustees/directors, officers, employees or agents,
but only insofar as such omissions or commissions relate to Fund; or
(ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
advertising or sales literature, prospectus, registration statement,
or any other SEC Filing relating to Fund, or any amendments or
supplements to the foregoing (in this Section, collectively "Offering
Documents"), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was not made
in the Offering Documents in reliance upon and in conformity with
MIP's registration statement on Form N-1A and other written
information furnished by MIP to Fund or any service provided of Fund
for use therein or for use by Fund in preparing such documents,
including but not limited to any written information contained in
MIP's current registration statement on Form N-1A;
provided, however, that in no case shall Company or Distributor
-------- -------
be liable for indemnification hereunder with respect to any claims made
against any Covered Person unless a Covered Person shall have notified
Company or Distributor in writing within a reasonable time after the
summons, other first legal process, notice of a federal, state or local tax
deficiency, or formal initiation of a regulatory investigation or
proceeding giving information of the nature of the claim shall have
properly been served upon or provided to a Covered Person seeking
indemnification. Failure to notify Company or Distributor of such claim
shall not relieve Company or Distributor from any liability that it may
have to any Covered Person otherwise than on account of the indemnification
contained in this Section.
(b) Company and Distributor each will be entitled to participate
at its own expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such liability, but if Company
and/or Distributor elect(s) to assume the defense, such defense shall be
conducted by counsel chosen by Company and/or Distributor, as applicable.
In the event Company and/or Distributor elect(s) to assume the defense of
any such suit and retain such counsel, each Covered Person in the suit may
retain additional counsel but shall bear the fees and expenses of such
counsel unless (A) Company and Distributor shall have specifically
authorized the retaining of and payment of fees and expenses of such
counsel or (B) the parties to such suit include any Covered Person and
Company and/or Distributor, and any such Covered Person has been advised in
a written opinion by counsel reasonably acceptable to Company and
Distributor that one or more legal defenses may be available to it that may
not be available to Company and/or Distributor, in which case Company
and/or Distributor shall not be entitled to assume the defense of such suit
notwithstanding their obligation to bear the fees and
8
<PAGE>
expenses of one counsel to such persons. Company shall not be required to
indemnify any Covered Person for any settlement of any such claim effected
without its written consent and Distributor shall not be required to
indemnify any Covered Person for any settlement of any such claim effected
without its written consent, which consent, in each case, shall not be
unreasonably withheld or delayed. The indemnities set forth in paragraph
(a) will be in addition to any liability that Company and/or Distributor
might otherwise have to Covered Persons.
3.2 MIP.
---
(a) MIP agrees to indemnify and hold harmless Company, Fund,
Distributor, and any affiliate providing services to Company and/or Fund,
and any trustee/director, officer, employee or agent of any of them (in
this Section, each, a "Covered Person" and collectively, "Covered
Persons"), against any and all losses, claims, demands, damages,
liabilities or expenses (including, with respect to each Covered Person,
the reasonable cost of investigating and defending against any claims
therefor and any counsel fees incurred in connection therewith, except as
provided in subparagraph (b)), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable
statute, rule, regulation or common law or are incurred in connection
with or as a result of any formal or informal administrative
proceeding or investigation by a regulatory agency, insofar as such
violation or alleged violation, proceeding or investigation arises out
of or is based upon any direct or indirect omission or commission (or
alleged omission or commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any
advertising or sales literature, or any other SEC Filing relating to
Portfolio, or any amendments to the foregoing (in this Section,
collectively, the "Offering Documents") relating to Portfolio, or
arise out of or are based upon the omission or alleged omission to
state therein, a material fact required to be stated therein, or
necessary to make the statements therein in light of the circumstances
under which they were made, not misleading; or
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any
Offering Documents relating to Company or Fund, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Fund by MIP for use
therein or for use by Fund in preparing such documents,
9
<PAGE>
including but not limited to any written information contained in
MIP's current registration statement on Form N-1A.
provided, however, that in no case shall MIP be liable for
-------- -------
indemnification hereunder with respect to any claims made against any
Covered Person unless a Covered Person shall have notified MIP in writing
within a reasonable time after the summons, other first legal process,
notice of a federal, state or local tax deficiency, or formal initiation of
a regulatory investigation or proceeding giving information of the nature
of the claim shall have properly been served upon or provided to a Covered
Person seeking indemnification. Without limiting the generality of the
foregoing, Portfolio's indemnity to Covered Person shall include all
relevant liabilities of Covered Persons under the Securities Laws, as if
the Offering Documents constitute a "prospectus" within the meaning of the
1933 Act, and MIP had registered its interests under the 1933 Act pursuant
to a registration statement meeting the requirements of the 1933 Act.
Failure to notify MIP of such claim shall not relieve MIP from any
liability that it may have to any Covered Person otherwise than on account
of the indemnification contained in this Section.
(b) MIP will be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but, if MIP elects to assume the defense, such
defense shall be conducted by counsel chosen by MIP. In the event MIP
elects to assume the defense of any such suit and retain such counsel, each
Covered Person in the suit may retain additional counsel but shall bear the
fees and expenses of such counsel unless (A) MIP shall have specifically
authorized the retaining of and payment of fees and expenses of such
counsel or (B) the parties to such suit include any Covered Person and MIP,
and any such Covered Person has been advised in a written opinion by
counsel reasonably acceptable to MIP that one or more legal defenses may be
available to it that may not be available to MIP, in which case MIP shall
not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of one counsel to such persons.
MIP shall not be required to indemnify any Covered Person for any
settlement of any such claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed. The indemnities set
forth in paragraph (a) will be in addition to any liability that MIP might
otherwise have to Covered Persons.
ARTICLE IV
ADDITIONAL AGREEMENTS
---------------------
4.1 Access to Information. Throughout the life of this Agreement, Company
---------------------
and MIP shall afford each other reasonable access at all reasonable times to
such party's officers, employees, agents and offices and to all relevant books
and records and shall furnish each other party with all relevant financial and
other data and information as such other party may reasonably request.
10
<PAGE>
4.2 Confidentiality. Each party agrees that it shall hold in strict
---------------
confidence all data and information obtained from another party (unless such
information is or becomes readily ascertainable from public or published
information or trade sources or public disclosure of such information is
required by law) and shall ensure that its officers, employees and authorized
representatives do not disclose such information to others without the prior
written consent of the party from whom it was obtained, except if disclosure is
required by the SEC, any other regulatory body, Fund's or Portfolio's respective
auditors, or in the opinion of counsel to the disclosing party such disclosure
is required by law, and then only with as much prior written notice to the other
parties as is practical under the circumstances. Each party hereto acknowledges
that the provisions of this Section 4.2 shall not prevent Company or MIP from
filing a copy of this Agreement as an exhibit to a registration statement on
Form N-1A as it relates to Fund or Portfolio, respectively, and that such
disclosure by Company or MIP shall not require any additional consent from the
other parties.
4.3 Obligations of Company and MIP. MIP agrees that the obligations of
------------------------------
Company under this Agreement shall be limited in all cases to the assets of
Fund, and that except to the extent liability may be imposed under relevant
Securities Laws, MIP shall not seek satisfaction of any such obligation from the
officers, agents, employees, trustees or shareholders of Company or other
classes or series of Company. Company agrees that the obligations of MIP under
this Agreement shall be limited in all cases to the assets of Portfolio and that
except to the extent liability may be imposed under relevant Securities Laws,
Company shall not seek satisfaction of any such obligation from the officers,
agents, employees, trustees or shareholders of MIP or other classes or series of
MIP.
ARTICLE V
TERMINATION, AMENDMENT
----------------------
5.1 Termination. The provisions of Article III and Sections 4.2 and 4.3
-----------
shall survive any termination of this Agreement.
5.2 Amendment. This Agreement may be amended, modified or supplemented at
---------
any time in such manner as may be mutually agreed upon in writing by the
parties.
ARTICLE VI
GENERAL PROVISIONS
------------------
6.1 Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the conduct of business contemplated hereby shall be paid by the
party incurring such costs and expenses.
11
<PAGE>
6.2 Headings. The headings and captions contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.3 Entire Agreement. Except as set forth below, this Agreement sets
----------------
forth the entire understanding between the parties concerning the subject matter
of this Agreement and incorporates or supersedes all prior negotiations and
understandings. There are no covenants, promises, agreements, conditions or
understandings, either oral or written, between the parties relating to the
subject matter of this Agreement other than those set forth herein and the
terms, conditions and descriptions set forth in MIP's Registration Statement, as
in effect from time to time.
6.4 Successors. Each and all of the provisions of this Agreement shall be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement, nor any
-------- -------
rights herein granted may be assigned to, transferred to or encumbered by any
party, without the prior written consent of the other parties hereto.
6.5 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California; provided, however, that in
-------- -------
the event of any conflict between the 1940 Act and the laws of California, the
1940 Act shall govern.
6.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing one or more counterparts.
6.7 Third Parties. Nothing herein expressed or implied is intended or
-------------
shall be construed to confer upon or give any person, other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
6.8 Notices. All notices and other communications given or made pursuant
-------
hereto shall be in writing and shall be deemed to have been duly given or made
when delivered in person or three days after being sent by certified or
registered United States mail, return receipt requested, postage prepaid,
addressed:
If to Fund:
____________________
____________________
____________________
____________________
12
<PAGE>
If to Distributor:
____________________
____________________
____________________
____________________
If to MIP:
Chief Operating Officer
Master Investment Portfolio
c/o Stephens Inc.
111 Center Street
Little Rock, AR 72201
6.9 Interpretation. Any uncertainty or ambiguity existing herein
--------------
shall not be interpreted against any party, but shall be interpreted according
to the application of the rules of interpretation for arms' length agreements.
6.10 Operation of Fund. Except as otherwise provided herein, this
-----------------
Agreement shall not limit the authority of Fund, Company or Distributor to take
such action as it may deem appropriate or advisable in connection with all
matters relating to the operation of Fund and the sale of its shares.
6.11 Relationship of Parties; No Joint Venture, Etc. It is
-----------------------------------------------
understood and agreed that neither Company nor Distributor shall hold itself out
as an agent of MIP with the authority to bind such party, nor shall MIP hold
itself out as an agent of Company or Distributor with the authority to bind such
party.
6.12 Use of Name. Except as otherwise provided herein or required by
-----------
law (e.g., in Company's Registration Statement on Form N-1A), neither Company,
Fund nor Distributor shall describe or refer to the name of MIP, Portfolio or
any derivation thereof, or any affiliate thereof, or to the relationship
contemplated by this Agreement in any advertising or promotional materials
without the prior written consent of MIP, nor shall MIP describe or refer to the
name of Company, Fund or Distributor or any derivation thereof, or any affiliate
thereof, or to the relationship contemplated by this Agreement in any
advertising or promotional materials without the prior written consent of
Company, Fund or Distributor, as the case may be. In no case shall any such
consents be unreasonably withheld or delayed. In addition, the party required
to give its consent shall have at least three (3) business days prior to the
earlier of filing or first use, as the case may be, to review the proposed
advertising or promotional materials.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first written above.
COMPANY
on behalf of itself and
-----------------------
- -------------------- FUND
By:
--------------------------------------------
Name:
Title:
DISTRIBUTOR
By:
--------------------------------------------
Name:
Title:
MASTER INVESTMENT PORTFOLIO,
on behalf of its series, the
------------------
MASTER PORTFOLIO
By:
--------------------------------------------
Name:
Title:
14
