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As filed with the Securities and Exchange Commission
on September 9, 1998
Registration No. 811-8162
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM N-1A
AMENDMENT NO. 8 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. 8 to the Registration Statement of Master Investment
Portfolio (the "Trust") is being filed to change certain non-fundamental
policies and certain other non-material changes to 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
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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. 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 ratings 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 certain 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.
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.
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.
BANKWATCH
BankWatch ratings are based upon a qualitative and quantitative analysis of
all segments of the organization including, where applicable, holding company
and operating subsidiaries. BankWatch ratings do not constitute a recommendation
to buy or sell securities of any of these companies. Further, BankWatch does not
suggest specific investment criteria for individual clients.
BankWatch long-term ratings apply to specific issues of long-term debt and
preferred stock. The long-term ratings specifically assess the likelihood of
untimely payment of principal or interest over the term to maturity of the rated
instrument. The following are the three highest investment grade ratings used by
BankWatch for long-term debt:
AAA -- The highest category; indicates ability to repay principal and
interest on a timely basis is extremely high.
AA -- The second highest category; indicates a very strong ability to
repay principal and interest on a timely basis with limited incremental
risk versus issues rated in the highest category.
A -- The third highest category; indicates the ability to repay
principal and interest is strong. Issues rated "A" could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
The BankWatch short-term ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned. The BankWatch short-term ratings specifically assess
the likelihood of an untimely payment of principal or interest.
TBW-1 -- The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.
TBW-2 -- The second highest category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated
"TBW-1".
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 August 31, 1998.
1(b) - Certificate of Trust, incorporated by
reference to the Registration Statement on
Form N-1A, filed November 15, 1993, and filed
August 31, 1998.
1(c) - Amendment to the Amended and Restated
Agreement and Declaration of Trust dated
August 19, 1998, filed August 31, 1998.
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 August 31, 1998.
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
August 31, 1998.
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 August 31, 1998.
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
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
EX-99.B9(e) * Third Party Feeder Fund Agreement (Hewitt).
</TABLE>
<PAGE>
EXHIBIT 99.B9(e)
THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
HEWITT SERIES TRUST
HEWITT SERVICES LLC
AND
MASTER INVESTMENT PORTFOLIO
dated as of
September 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I. REPRESENTATIONS AND WARRANTIES...............................
1.1 Trust........................................................
1.2 MIP..........................................................
1.3 Distributor..................................................
ARTICLE II. COVENANTS....................................................
2.1 Trust........................................................
2.2 MIP..........................................................
2.3 Reasonable Actions...........................................
ARTICLE III. INDEMNIFICATION..............................................
3.1 Trust and Distributor........................................
3.2 MIP..........................................................
ARTICLE IV. ADDITIONAL AGREEMENTS........................................
4.1 Access to Information........................................
4.2 Confidentiality..............................................
4.3 Obligations of Trust 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 1st
day of September, 1998, by and among Hewitt Series Trust, a Delaware business
("Trust"), for itself and on behalf of its series, Hewitt Money Market Fund
("Fund"), Hewitt Services LLC ("Distributor"), an Illinois limited liability
company, and Master Investment Portfolio ("MIP"), a Delaware business trust, for
itself and on behalf of its series, the Money Market Master Portfolio
("Portfolio").
WITNESSETH
----------
WHEREAS, Trust and MIP are each registered under the Investment Company
Act of 1940 (the "1940 Act") as open-end management investment companies;
WHEREAS, Fund and Portfolio have the same investment objective and
substantially the same investment policies;
WHEREAS, Fund desires to pursue its investment objective by investing
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 Trust. Trust represents and warrants to MIP that:
(a) Organization. Trust is a trust duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware
and Fund is a duly and validly designated series of Trust. Each of
Trust 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 Trust on behalf of Fund and the conduct of business
contemplated hereby have been duly authorized by all necessary action
on the part of Trust's Board of Trustees 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 Trust on
behalf of Fund shall constitute a legal, valid and binding obligation
of Trust, enforceable against Fund in accordance with
1
<PAGE>
its terms. No meeting of, or consent by, shareholders of Fund is
necessary to approve or implement the Investments.
(c) 1940 Act Registration. Trust is duly registered under the
---------------------
1940 Act as an open-end management investment company, and such
registration is in full force and effect.
(d) SEC Filings. Trust 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 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 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. Trust has reviewed MIP's and
----------------------
Portfolio's registration statement on Form N-lA, as filed with the SEC
on August 31, 1998, 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 Trust
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. As of the date of commencement of its
---------
operations, 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 Trust 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.
2
<PAGE>
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 MIP of beneficial interests in the Portfolio ("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 Securities Laws. 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, 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 Internal Revenue Code of 1986, as amended (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 Trust. Trust covenants that:
-----
(a) Advance Review of Certain Documents. Trust will furnish
-----------------------------------
MIP at least ten (10) business days prior to the earlier of filing or
first use, with drafts of Fund's registration statement on Form N-lA
and any amendments thereto, and also will furnish MIP at least five (5)
business days' prior to the earlier of filing or first use, with drafts
of any prospectus or statement of additional information supplements.
In addition, Trust 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. Trust 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 to the Trust for any errors or omissions in such
documents, whether or not MIP makes any objection thereto, except to
the extent such errors or omissions result from errors in or omissions
in information provided in MIP's 1940 Act registration statement or
otherwise provided by MIP for inclusion therein, or result from the
failure of MIP to provide information requested by the Trust or
information otherwise required to be provided to them under this
Agreement. 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. Trust 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 an investment company. Trust 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 MIP, 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. Trust will be duly registered as an
---------------------
open-end management investment company under the 1940 Act.
4
<PAGE>
(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 (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. Trust 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. Trust will maintain in full force and effect
---------
for so long as this Agreement is in effect insurance coverage against
liabilities that may arise as a result of Fund's business as a
registered investment company, in such amount and covering such
liabilities as the Board of Trustees of Trust deems reasonable.
2.2 MIP. MIP covenants that:
---
(a) Signature Pages. MIP shall promptly provide all required
---------------
signature pages to Trust for inclusion in any SEC Filings of Trust,
provided Trust 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. Trust 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 Trust 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
5
<PAGE>
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
Trust's prior approval that would cause the withdrawal of Fund's
Investments to be treated as a taxable event to Fund. Portfolio further
agrees to conduct its activities in accordance with all applicable
requirements of Regulation 1.731-2(e) under the Code or any successor
regulation.
(c) Ordinary Course Redemptions. Portfolio will effect
---------------------------
redemptions of Interests 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 its registration as an investment
company and will provide copies of all such definitive filings to
Trust. 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 conduct its business and activities so as 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 under any state law. MIP will file such documents
and take such other actions as may be necessary to qualify the offer
and sale of Interests for exemption from qualification under any state
law.
(h) Advance Notice of Certain Changes. MIP shall provide Trust
---------------------------------
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.
(j) Delivery of Information. MIP shall provide Trust with such
-----------------------
information regarding MIP and Portfolio as may be necessary for Trust
and Fund to comply with the Securities Laws and for Fund to comply with
the requirements for qualification as a regulated investment company
under the Code and to make distributions in the amounts necessary to
avoid income and excise taxes. MIP shall also provide Trust with such
information as may be necessary for Fund to file federal and state tax
returns. MIP shall provide the information described in this paragraph
a reasonable period of time prior to the date by which Trust or Fund is
required to make any filing or send any report or other document the
contents of which includes or is based upon such information, provided
Trust gives MIP adequate advance notice of the dates by which such
information is required, giving due consideration to the actions that
Trust and Fund will be required to take after the information is
received to enable such filing to be made or such report or other
document to be sent.
(k) Insurance. MIP will maintain in full force and effect for
---------
so long as this Agreement is in effect insurance coverage against
liabilities that may arise as a result of Portfolio's business, in such
amounts, and covering such liabilities as the Board of Trustees of MIP
deems reasonable.
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.
7
<PAGE>
ARTICLE III
INDEMNIFICATION
---------------
3.1 Trust and Distributor
(a) Trust 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 out of or is
based upon any direct or indirect omission or commission (or
alleged omission or commission) by Trust 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 and were not, directly or indirectly, the
result of or caused by, in whole or in part, the act or
omission of any Covered Person; 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 by any service provider of MIP 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 Trust or Distributor
-------- -------
be liable for indemnification hereunder with respect to any claims made
against any Covered Person unless a Covered Person shall have notified
Trust or Distributor in writing within a
8
<PAGE>
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 Trust or
Distributor of such claim shall not relieve Trust 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) Trust 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 Trust
and/or Distributor elect(s) to assume the defense, such defense shall
be conducted by counsel chosen by Trust and/or Distributor, as
applicable. In the event Trust 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) Trust 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 Trust and/or Distributor, and any such Covered
Person has been advised in a written opinion by counsel reasonably
acceptable to Trust and Distributor that one or more legal defenses may
be available to it that may not be available to Trust and/or
Distributor, in which case Trust and/or Distributor 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. Trust 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 Trust and/or Distributor might
otherwise have to Covered Persons.
3.2 MIP.
---
(a) MIP agrees to indemnify and hold harmless Trust, Fund,
Distributor, and any affiliate providing services to Trust 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
9
<PAGE>
omission or commission) by MIP, or any of its trustees,
officers, employees or agents, but only insofar as such
omissions or commissions relate to Portfolio and were not,
directly or indirectly, the result of or caused by, in whole
or in part, the act or omission of any Covered Person; 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 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 Trust 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, including but not limited to any written
information contained in MIP's current registration statement
on Form N-1A, or was made as a result of the failure of MIP to
provide information requested by Trust, Fund or Distributor or
otherwise required to be provided to them under this
Agreement.
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 Persons 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
10
<PAGE>
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, Trust
---------------------
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.
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 Trust 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 Trust or MIP shall not require any additional consent from the
other parties.
4.3 Obligations of Trust and MIP. MIP agrees that the financial
----------------------------
obligations of Trust under this Agreement shall be binding only upon 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 Trust or other classes
or series of Trust. Trust agrees that the financial obligations of MIP under
this Agreement shall be binding only upon the assets of Portfolio and that,
except to the extent
11
<PAGE>
liability may be imposed under relevant Securities Laws, Trust 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
-----------
2.2(j), 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.
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.
12
<PAGE>
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:
Hewitt Money Market Fund
100 Half Day Road
Lincolnshire, IL 60069
Attn: James B. Lee
copy to:
Peter Ross, Esq.
Hewitt Associates LLC
100 Half Day Road
Lincolnshire, IL 60069
If to Distributor:
Hewitt Services LLC
100 Half Day Road
Lincolnshire, IL 60069
Attn: Stacy L. Schaus
copy to:
Peter Ross, Esq.
Hewitt Associates LLC
100 Half Day Road
Lincolnshire, IL 60069
13
<PAGE>
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, Trust 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 Trust 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 Trust 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 Trust's Registration Statement on Form N-1A), neither Trust,
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 Trust, 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 Trust,
Fund or Distributor, as the case may be. 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.
14
<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.
HEWITT SERIES TRUST
on behalf of itself and HEWITT MONEY
MARKET FUND
By: /s/ Stacy Schaus
-------------------
Name: Stacy Schaus
Title: President
HEWITT SERVICES LLC
By: /s/ C. L. Connelly, III
--------------------------
Name: C. L. Connelly, III
Title: Secretary
MASTER INVESTMENT PORTFOLIO, on behalf of its
series, the MONEY MARKET MASTER PORTFOLIO
By: /s/ Richard H. Blank, Jr.
---------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
15
