As filed with the Securities and Exchange Commission
on December 8, 2000
Registration No. 811-8162
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-1A
AMENDMENT NO. 13 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
<PAGE>
EXPLANATORY NOTE
This Amendment No. 13 to the Registration Statement of Master
Investment Portfolio (the "Trust") is being filed to add the new Russell 2000
Index Master Portfolio to the Trust.
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.
<PAGE>
Master Investment Portfolio
Cross Reference Sheet
Form N-1A Item Number
Part A Caption
4 Investment Objectives, Principal Investment Strategies and Related
Risks
5 Management's Discussion of Fund Performance
6 Management, Organization and Capital Structure
7 Interestholder Information
8 Distribution Arrangements
9 Financial Highlights
Part B Caption
10 Cover Page and Table of Contents
11 Trust History
12 Description of the Master Portfolio and Its
Investments and Risks
13 Management of the Trust
14 Control Persons and Principal Holders of Securities
15 Investment Advisory and Other Services
16 Brokerage Allocation and Other Practices
17 Capital Stock and Other Securities
18 Purchase, Redemption and Pricing of Interests
19 Taxation of the Trust
20 Underwriters
21 Calculation of Performance Data
22 Financial Statements
Part C Other Information
23-30 Information required to be included in Part C is
set forth under the appropriate Item, so numbered,
in Part C of this document.
<PAGE>
MASTER INVESTMENT PORTFOLIO
RUSSELL 2000 INDEX MASTER PORTFOLIO
PART A
December 7, 2000
Responses to Items 1 through 3 have been omitted pursuant to
Instruction B(2)(b) of the General Instructions to Form N-1A.
Item 4. Investment Objectives, Principal Investment Strategies and related
risks.
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. This is the Part A for the Russell 2000 Index
Master Portfolio (the "Master Portfolio"), a diversified portfolio of MIP. 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 the Master Portfolio is not deemed to be an
interestholder of any other portfolio of MIP. As described below, for certain
matters MIP interestholders vote together as a group; as to others they vote
separately by portfolio. MIP currently offers twelve 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. Investment companies that hold
beneficial interest in the Master Portfolio are sometimes referred to herein as
"feeder funds."
INVESTMENT OBJECTIVE
o The Russell 2000 Index Master Portfolio seeks to match as
closely as practicable, before fees and expenses, the
performance of the Russell 2000 Index (the "Russell 2000
Index" or "Index").1
The Master Portfolio's investment objective can be changed by MIP's
Board of Trustees without interestholder approval. The objective and policies of
the Master Portfolio determines the types of portfolio securities in which it
invests, the degree of risk to which it is subject and, ultimately, its
performance. There can be no assurance that the Master Portfolio's investment
objective will be achieved.
--------
1 Frank Russell Company does not sponsor the Master Portfolio, nor is it
affiliated in any way with Barclays Global Fund Advisors or the Master
Portfolio. Frank Russell Company and Russell 2000(R) Index are trademarks of
Frank Russell Company. The Master Portfolio is not sponsored, endorsed, sold, or
promoted by Frank Russell Company, and Frank Russell Company makes no
representation or warranty, express or implied, regarding the advisability of
investing in the Master Portfolio.
2 As used herein, "Director" shall refer to the Directors of BGIF and the
Trustees of MIP.
3 As used herein, "shareholders" shall refer to the shareholders of BGIF Funds
and interestholders of MIP Master Portfolios.
PRINCIPAL STRATEGIES
o The Russell 2000 Index Master Portfolio seeks to match the total return
performance of the small-capitalization sector of the U.S. stock
market by investing in common stocks included in the Russell 2000
Index. The Russell 2000 Index measures the small-capitalization
sector of the U.S. equity market. It consists of the smallest 2000
companies in the Russell 3000 Index. The Russell 3000 Index consists
of the 3000 largest companies domiciled in the U.S. and its
territories and represents approximately 98% of the investible U.S.
public equity market. The weightings of stocks in the Russell 2000
Index are based on each stock's relative total market capitalization;
that is, its market price per share times the number of shares
outstanding. As of the date of this prospectus, the Russell 2000 Index
represents approximately 6% of the market capitalization of listed
U.S. equities. The Master Portfolio invests in a representative
sample of these securities. Securities are selected for investment
by the Master Portfolio in accordance with their capitalization,
industry sector and valuation, among other factors.
No attempt is made to manage the portfolio of the Master Portfolio
using economic, financial and market analysis. The Master Portfolio is managed
by determining which securities are to be purchased or sold to match, to the
extent feasible, the capitalization range and returns of the Russell 2000 Index.
Under normal market conditions, at least 90% of the value of the Master
Portfolio's total assets is invested in securities comprising the Russell 2000
Index. The Master Portfolio attempts to achieve, in both rising and falling
markets, a correlation of at least 95% between the total return of its net
assets before expenses and the total return of the Russell 2000 Index. The
Master Portfolio's ability to match its investment performance to the investment
performance of the Russell 2000 Index may be affected by, among other things:
the Master Portfolio's expenses; the amount of cash and cash equivalents held by
the Master Portfolio; the manner in which the total return of the Russell 2000
Index is calculated; the size of the Master Portfolio's investment portfolio;
and the timing, frequency and size of interestholder purchases and redemptions.
The Master Portfolio uses cash flows from interestholder purchase and redemption
activity to maintain, to the extent feasible, the similarity of its
capitalization range and returns to those of the securities comprising the
Russell 2000 Index. Barclays Global Fund Advisors ("BGFA") regularly monitors
the Master Portfolio's correlation to the Russell 2000 Index and adjusts the
Master Portfolio's portfolio to the extent necessary. Inclusion of a security in
the Russell 2000 Index in no way implies an opinion by Frank Russell Company as
to its attractiveness as an investment.
The sampling techniques utilized by the Master Portfolio are designed
to allow the Master Portfolio to substantially duplicate the investment
performance of the Russell 2000 Index. However, the Master Portfolio is not
expected to track the Russell 2000 Index with the same degree of accuracy that
complete replication of such Index would provide. In addition, at times, the
portfolio composition of the Master Portfolio may be altered (or "rebalanced")
to reflect changes in the characteristics of the Russell 2000 Index.
In seeking to match the performance of the Russell 2000 Index, the
Master Portfolio also may engage in futures and options transactions and other
derivative securities transactions and lend its portfolio securities, each of
which involves risk. The Master Portfolio attempts to be fully invested at all
times in securities comprising the Russell 2000 Index and in futures contracts
and options on futures contracts, although the Master Portfolio may invest up to
10% of its assets in high-quality money market instruments to provide liquidity.
The Master Portfolio may invest up to 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for settlement in
more than seven days. See Item 12, "Description of the Master Portfolio and Its
Investments and Risks," in Part B.
RISK CONSIDERATIONS
General -- The value of the Master Portfolio's interests is neither
insured nor guaranteed, is not fixed and should be expected to fluctuate.
Equity Securities -- The stock investments of the Master Portfolio are
subject to equity market risk. Equity market risk is the possibility that common
stock prices will fluctuate or decline over short or even extended periods. The
U.S. stock market tends to be cyclical, with periods when stock prices generally
rise and periods when prices generally decline. In addition, many of the
companies whose securities comprise the Russell 2000 Index are smaller companies
which, historically, have been more susceptible to market fluctuations than
securities of larger capitalization companies.
Debt Securities -- The debt instruments in which the Master Portfolio
may invest are subject to credit and interest rate risk. Credit risk is the risk
that issuers of debt instruments may default on the payment of principal and/or
interest. Interest rate risk is the risk that increases in market interest rates
may adversely affect the value of debt instruments. The value of debt
instruments generally changes inversely to market interest rates. Debt
securities with longer maturities, which tend to produce higher yields, are
subject to potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular security may also affect the
value of debt instruments. Although some debt instruments are guaranteed by the
U.S. Government, its agencies or instrumentalities, such instruments are subject
to interest rate risk and the market value of these instruments will fluctuate.
No assurance can be given that the U.S. Government would provide financial
support to the agencies or instrumentalities that issue or guarantee these
instruments where it is not obligated to do so.
Other Investment Considerations -- The Master Portfolio may enter into
transactions in futures contracts and options on futures contracts, each of
which involves risk. The futures contracts and options on futures contracts that
the Master Portfolio may purchase may be considered derivatives. Derivatives are
financial instruments whose values are derived, at least in part, from the
prices of other securities or specified assets, indices or rates. The Master
Portfolio intends to use futures contracts and options as part of its short-term
liquidity holdings and/or substitutes for comparable market positions in the
underlying securities. Some derivatives may be more sensitive than direct
securities to changes in interest rates or sudden market moves. Some derivatives
also may be susceptible to fluctuations in yield or value due to their structure
or contract terms.
ITEM 5. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE.
The response to Item 5 has been omitted pursuant to paragraph B(2)(b)
of the General Instructions to Form N-1A.
ITEM 6. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE.
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) and is located
at 45 Fremont Street, San Francisco, CA 94105. As of September 30, 2000, BGFA
and its affiliates provided investment advisory services for approximately $832
billion of assets under management.
BGFA provides the Master Portfolio with investment guidance and policy
direction in connection with the daily portfolio management of the Master
Portfolio, 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 0.08% 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 for portfolio securities of 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 may from time to time execute trades on behalf of and for the account of
the Master Portfolio with brokers or dealers that are affiliated with BGFA.
CO-ADMINISTRATORS - Stephens Inc. ("Stephens") and Barclays Global
Investors, N.A. ("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'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.
Stephens and BGI have agreed to bear all costs of the Master
Portfolio's and MIP's operations, except for extraordinary expenses, brokerage
and other expenses connected with the execution of portfolio transactions and
certain other expenses which are borne by the Master Portfolio, such as fees
payable to BGFA. Expenses attributable only to the Master Portfolio shall be
charged only against the assets of the Master Portfolio. General expenses of MIP
shall be allocated among its portfolios in a manner proportionate to the net
assets of each, on a transactional basis or on such other basis as the Board of
Trustees deems equitable. Stephens and BGI are entitled to receive a monthly
fee, in the aggregate, at an annual rate of 0.02% of the average daily net
assets of the Master Portfolio for providing administrative services and
assuming expenses.
ITEM 7. INTERESTHOLDER INFORMATION.
PURCHASE OF INTERESTS
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 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.
Investments in the Master Portfolio are valued based on an interestholder's
proportionate ownership interest in the Master Portfolio's aggregate net assets
as next determined after an order is received in proper form. The aggregate net
asset value of the Master Portfolio ("NAV") (i.e., the value of its assets less
liabilities) is determined as of 4:00 p.m. (Eastern time) ("Valuation Time") on
each day the New York Stock Exchange is open for business (a "Business Day").
The Master Portfolio's investments are valued each Business Day, typically by
using available market quotations or at fair value determined in good faith by
MIP's Board of Trustees. For further information regarding the methods employed
in valuing the Master Portfolio's investments, see Item 18, "Purchase,
Redemption and Pricing of Interests" in Part B.
An investor in the Master Portfolio may add to or reduce its investment in
a Master Portfolio on any Business Day. At the Valuation Time on each Business
Day, the value of each interestholder's beneficial interest in the Master
Portfolio is determined by multiplying the Master Portfolio's NAV by the
percentage, effective for that day, that represents that investor's share of the
aggregate beneficial interests in the Master Portfolio. Any additions to or
withdrawals of those interests, which are to be effected on that day, will then
be effected. Each investor's share of the aggregate beneficial interests in the
Master Portfolio will then be recomputed using the percentage equal to the
fraction (i) the numerator of which is the value of the investor's investment in
the Master Portfolio on that day plus or minus, as the case may be, the amounts
of net additions or withdrawals from such investment effected on that day and
(ii) the denominator of which is the Master Portfolio's aggregate NAV as of the
Valuation Time on that day plus or minus, as the case may be, the amount of the
net additions to or withdrawals from the aggregate investments in the Master
Portfolio by all investors. The percentages so determined will then be applied
to determine the value of each investor's respective interest in the Master
Portfolio as of the Valuation Time on the following Business Day.
REDEMPTION OR REPURCHASE
An investor in the Master Portfolio may withdraw all or any portion of its
interest on any Business Day at the NAV next determined after a withdrawal
request is received in proper form. The Master Portfolio will make payment for
all interests redeemed within three days after receipt of a redemption request
in proper form, except as provided by the rules of the SEC. 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.
The Master Portfolio reserves the right to pay redemption securities
proceeds in portfolio securities rather than cash. These "in kind" redemptions
normally occur if the amount to be redeemed is large enough to affect the Master
Portfolio's operations (e.g., if it represents more than 1% of the Master
Portfolio's assets).
NET INVESTMENT INCOME AND CAPITAL GAIN DISTRIBUTIONS
The net investment income of the Master Portfolio generally will be
declared and paid quarterly to all investors of record as of 4:00 p.m. (Eastern
time) on any Business Day. Net investment income for a Saturday, Sunday or
Holiday will be declared to investors of record as of 4:00 p.m. (Eastern time)
on the previous business day with respect to the Master Portfolio. All 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.
A distribution of capital gains, if any, will be declared and paid at least
annually. Net investment income 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
The Master Portfolio will be operated in a manner so as to qualify it as a
non-publicly traded partnership for federal income tax purposes. Provided that
the Master Portfolio so qualifies, it will not be subject to any federal income
tax on its income and gain (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. As a
non-publicly traded partnership, the Master Portfolio will be deemed to have
"passed through" to interestholders any of the Master Portfolio's interest,
dividends, gains or losses realized on its investments. The determination of
such share will be made in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations promulgated thereunder. The Master
Portfolio will have fewer than 100 investors.
It is intended that the Master Portfolio assets, income and distributions
will be managed in such a way that an entity electing and qualifying as a
"regulated investment company" under the Code can continue to so qualify by
investing substantially all of its assets through the Master Portfolio, provided
that the regulated investment company meets other requirements for such
qualification not within the control of the Master Portfolio (e.g., distributing
at least 90% of the regulated investment company's "investment company taxable
income" annually).
Investor inquiries should be directed to Master Investment Portfolio, 111
Center Street, Little Rock, Arkansas 72201.
ITEM 8. DISTRIBUTION ARRANGEMENTS.
MIP is registered as an open-end management investment company under the
1940 Act. MIP was organized as a business 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 MIP is
unable to meet its obligations.
The Board of Trustees has authorized MIP to issue multiple series. All
consideration received by MIP for interests in one of the series and all assets
in which such consideration is invested will belong to that series (subject only
to the rights of creditors of MIP) and will be subject to the liabilities
related thereto. The income attributable to, and the expenses of, one series are
treated separately from those of the other series. From time to time, MIP may
create new series without shareholder approval.
The business and affairs of MIP are managed under the direction of its
Board of Trustees. The office of MIP is located at 111 Center Street, Little
Rock, Arkansas 72201.
MASTER/FEEDER STRUCTURE
The Master Portfolio is a "master" fund in a "master/feeder" structure. A
non-accredited investor does not directly purchase an interest in the Master
Portfolio, but instead purchases shares in a corresponding "feeder" fund that
invests all of its assets in the Master Portfolio. Other investors may also be
permitted to invest in the Master Portfolio. All other investors will invest in
the Master Portfolio on the same terms and conditions as the feeder funds,
although there may be different administrative and other expenses. Therefore,
the feeder funds may have different returns than other investors of the Master
Portfolio.
ITEM 9. FINANCIAL HIGHLIGHTS.
The response to Item 9 has been omitted pursuant to paragraph B(2)(b)
of the General Instructions to Form N-1A.
<PAGE>
MASTER INVESTMENT PORTFOLIO
RUSSELL 2000 INDEX MASTER PORTFOLIO
PART B -- STATEMENT OF ADDITIONAL INFORMATION
December 7, 2000
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
Master Investment Portfolio ("MIP," or 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 December 7, 2000. 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 1-888-204-3956.
MIP's Registration Statement may be examined at the office of the Securities and
Exchange Commission ("SEC") in Washington, D.C.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
Trust History ..................................................................................... 1
Description of the Master Portfolio and Its Investments and Risks ................................. 2
Management of the Trust ........................................................................... 8
Control Persons and Principal Holders of Securities ............................................... 9
Investment Advisory and Other Services ............................................................ 9
Brokerage Allocation and Other Practices .......................................................... 10
Capital Stock and Other Securities ................................................................ 10
Purchase, Redemption and Pricing of Interests ..................................................... 11
Taxation of the Trust ............................................................................. 12
Underwriters ...................................................................................... 12
Calculations of Performance Data .................................................................. 12
Financial Statements .............................................................................. 12
Appendix .......................................................................................... A-1
</TABLE>
ITEM 11. TRUST HISTORY.
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. This is
Part B for the Russell 2000 Index Master Portfolio (the "Master Portfolio"), a
diversified portfolio of MIP. 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 and an interestholder of the Master
Portfolio is not deemed to be an interestholder of any other portfolio of MIP.
As described below, for certain matters MIP interestholders vote together as a
group; as to others they vote separately by portfolio. MIP currently offers
twelve 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. Investment companies that hold
beneficial interests in the Master Portfolio are sometimes referred to herein as
"feeder funds."
ITEM 12. DESCRIPTION OF THE MASTER PORTFOLIO AND ITS INVESTMENTS AND RISKS.
The following information supplements and should be read in conjunction
with Item 4 in Part A.
Investment Objectives. The Master Portfolio's investment objective is set
forth in Item 4, "Investment Objectives, Principal Strategies and Related
Risks," of Part A. The Master Portfolio's investment objective can be changed by
MIP's Board of Trustees without interestholder approval. The objective and
policies of the Master Portfolio determines the types of portfolio securities in
which it invests, the degree of risk to which it is subject and, ultimately, its
performance. There can be no assurance that the investment objectives of the
Master Portfolio will be achieved.
Investment Restrictions.
Fundamental Investment Restrictions. The Master Portfolio has adopted the
following investment restrictions as fundamental policies. These restrictions
cannot be changed, as to the Master Portfolio, without approval by the holders
of a majority (as defined in the 1940 Act) of the Master Portfolio's outstanding
voting interests. The 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
equal or exceed 25% of the current value of the Master Portfolio's total assets,
provided that this restriction does not limit the Master Portfolio's: (i)
investments in securities of other investment companies, (ii) investments in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (iii) investments in repurchase agreements provided
further that the Master Portfolio reserves the right to concentrate in the
obligations of domestic banks (as such term is interpreted by the SEC or its
staff); and provided further that the Master Portfolio reserves the right to
concentrate in any industry in which the Russell 2000 Index becomes concentrated
to the same degree during the same period.
(2) Purchase securities of any issuer if, as a result, with respect to 75%
of the Master Portfolio's total assets, more than 5% of the value of its total
assets would be invested in the securities of any one issuer or the Master
Portfolio's ownership would be more than 10% of the outstanding voting
securities of such issuer, provided that this restriction does not limit the
Master Portfolio's investments in securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, or investments in securities of
other investment companies.
(3) Borrow money, except to the extent permitted under the 1940 Act,
including the rules, regulations and any orders obtained thereunder.
(4) Issue senior securities, except to the extent permitted under the 1940
Act, including the rules, regulations and any orders obtained thereunder.
(5) Make loans to other parties if, as a result, the aggregate value of
such loans would exceed one-third of the Master Portfolio's total assets. For
the purposes of this limitation, entering into repurchase agreements, lending
securities and acquiring any debt securities are not deemed to be the making of
loans.
(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 a Master Portfolio's investment program may be deemed to be an
underwriting.
(7) Purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Master
Portfolio from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business).
(8) Purchase or sell commodities, provided that (i) currency will not be
deemed to be a commodity for purposes of this restriction, (ii) this restriction
does not limit the purchase or sale of futures contracts, forward contracts or
options, and (iii) this restriction does not limit the purchase or sale of
securities or other instruments backed by commodities or the purchase or sale of
commodities acquired as a result of ownership of securities or other
instruments.
Non-Fundamental Investment Restrictions. The Master Portfolio has adopted the
following investment restrictions as non-fundamental policies. These
restrictions may be changed without interestholder approval by vote of a
majority of the Trustees of MIP, at any time. The Master Portfolio is subject to
the following investment restrictions, all of which are 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 15% of it's net assets in
illiquid securities. For this purpose, illiquid securities include, among
others, (a) securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale, (b) fixed time
deposits that are subject to withdrawal penalties and that have maturities of
more than seven days, and (c) 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.
Portfolio Securities
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 or sell securities on a when-issued or
delayed-delivery basis and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued, delayed-delivery or forward commitment basis
involve a risk of loss if the value of the security to be purchased declines, or
the value of the security to be sold increases, before the settlement date.
Although the Master Portfolio will generally purchase securities with the
intention of acquiring them, the Master Portfolio may dispose of securities
purchased on a when-issued, delayed-delivery or a forward commitment basis
before settlement when deemed appropriate by the adviser.
Futures Contracts and Options on Futures Contracts.
--------------------------------------------------
The Master Portfolio may enter into futures contracts and may purchase and
write options thereon. Upon exercise of an option on a futures contract, the
writer of the option delivers to the holder of the option the futures position
and the accumulated balance in the writer's futures margin account, which
represents the amount by which the market price of the futures contract exceeds,
in the case of a call, or is less than, in the case of a put, the exercise price
of the option on the futures contract. The potential loss related to the
purchase of options on futures contracts is limited to the premium paid for the
option (plus transaction costs). Because the value of the option is fixed at the
time of sale, there are no daily cash payments to reflect changes in the value
of the underlying contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of the Master
Portfolio.
In order to comply with undertakings made by the Master Portfolio pursuant
to Commodity Futures Trading Commission ("CFTC") Regulation 4.5, the Master
Portfolio will use futures and option contracts solely for bona fide hedging
purposes within the meaning and intent of CFTC Reg. 1.3(z); provided, however,
that in addition, with respect to positions in commodity futures or commodity
option contracts which do not come within the meaning and intent of CFTC Reg.
1.3(z), the aggregate initial margin and premiums required to establish such
positions will not exceed five percent of the liquidation value of the Master
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any such contract it has entered into; and provided
further, that in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount as defined in CFTC Reg. 190.01(x) may be
excluded in computing such five percent.
Future Developments. The Master Portfolio may take advantage of
opportunities in the area of options and futures contracts and options on
futures contracts and any other derivative investments which are not presently
contemplated for use by the Master Portfolio or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with the Master Portfolio's investment objective and legally
permissible for the Master Portfolio. Before entering into such transactions or
making any such investment, the Master Portfolio will provide appropriate
disclosure in its prospectus.
Stock Index Futures and Options on Stock Index Futures. The Master
Portfolio may invest in stock index futures and options on stock index futures
as a substitute for a comparable market position in the underlying securities. A
stock index future obligates the seller to deliver (and the purchaser to take),
effectively, an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. With respect to
stock indices that are permitted investments, the Master Portfolio intends to
purchase and sell futures contracts on the stock index for which it can obtain
the best price with consideration also given to liquidity. There can be no
assurance that a liquid market will exist at the time when the Master Portfolio
seeks to close out a futures contract or a futures option position. Lack of a
liquid market may prevent liquidation of an unfavorable position.
Index Swaps. The Master Portfolio may enter into index swaps in pursuit of
its investment objective. Index swaps involve the exchange by the Master
Portfolio with another party of cash flows based upon the performance of an
index of securities or a portion of an index of securities that usually include
dividends or income. In each case, the exchange commitments can involve payments
to be made in the same currency or in different currencies. The Master Portfolio
will usually enter into swaps on a net basis. In so doing, the two payment
streams are netted out, with the Master Portfolio receiving or paying, as the
case may be, only the net amount of the two payments. If the Master Portfolio
enters into a swap, it will maintain a segregated account on a gross basis,
unless the contract provides for a segregated account on a net basis. If there
is a default by the other party to such a transaction, the Master Portfolio will
have contractual remedies pursuant to the agreements related to the transaction.
The use of index swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio security transactions. There is no limit, except as provided below, on
the amount of swap transactions that may be entered into by the Master
Portfolio. These transactions generally do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps generally is limited to the net amount of payments
that the Master Portfolio is contractually obligated to make. There is also a
risk of a default by the other party to a swap, in which case the Master
Portfolio may not receive net amount of payments that the Master Portfolio
contractually is entitled to receive.
Illiquid Securities.
The Master Portfolio may invest up to 15% of the value of its net assets in
securities as to which a liquid trading market does not exist, provided such
investments are consistent with its investment objective. Such securities may
include securities that are not readily marketable, such as privately issued
securities and other securities that are subject to legal or contractual
restrictions on resale, floating- and variable-rate demand obligations as to
which the Master Portfolio cannot exercise a demand feature on not more than
seven days' notice and as to which there is no secondary market and repurchase
agreements providing for settlement more than seven days after notice.
Initial Public Offerings.
------------------------
Although it is not a principal investment strategy of the Master Portfolio,
the Master Portfolio may purchase shares issued in initial public offerings
("IPOs") in anticipation of such shares becoming part of the Russell 2000 Index.
Although companies can be any age or size at the time of their IPOs, they are
often smaller and have a limited operating history, which creates a greater
potential for the value of their securities to be impaired following the IPO. In
addition, market psychology prevailing at the time of an IPO can have a
substantial and unpredictable effect on the price of an IPO security, causing
the price of a company's securities to be particular volatile at the time of its
IPO and for a period thereafter. Because of the nature of IPOs and the fact that
such securities may not be part of the Russell 2000 Index at the time of the
Master Portfolio's purchase, the Master Portfolio's investments in IPOs may
cause its performance to track the Russell 2000 Index less closely.
Investment Company Securities.
The Master Portfolio may invest in securities issued by other open-end,
management investment companies to the extent permitted under the 1940 Act. As a
general matter, under the 1940 Act, investment in such securities is limited to:
(i) 3% of the outstanding voting stock of any one investment company, (ii) 5% of
the Master Portfolio's total assets with respect to any one investment company
and (iii) 10% of the Master Portfolio's total assets with respect to all such
companies in the aggregate. Investments in the securities of other investment
companies generally will involve duplication of advisory fees and certain other
expenses. The Master Portfolio may also purchase shares of exchange-listed
closed-end funds to the extent permitted under the 1940 Act.
Loans of Portfolio Securities.
-----------------------------
The Master Portfolio may lend securities from its portfolio to brokers,
dealers and financial institutions (but not individuals) if cash, U.S.
Government securities or other high quality debt obligations equal to at least
100% of the current market value of the securities loaned (including accrued
interest thereon) plus the interest payable to such Master Portfolio with
respect to the loan is maintained with the Master Portfolio. In determining
whether or not to lend a security to a particular broker, dealer or financial
institution, the Master Portfolio's investment adviser considers all relevant
facts and circumstances, including the size, creditworthiness and reputation of
the broker, dealer, or financial institution. Any loans of portfolio securities
are fully collateralized based on values that are marked to market daily. The
Master Portfolio does not enter into any portfolio security lending arrangements
having a duration longer than one year. Any securities that the Master Portfolio
receives as collateral do not become part of its portfolio at the time of the
loan and, in the event of a default by the borrower, the Master Portfolio will,
if permitted by law, dispose of such collateral except for such part thereof
that is a security in which the Master Portfolio is permitted to invest. During
the time securities are on loan, the borrower will pay the Master Portfolio any
accrued income on those securities, and the Master Portfolio may invest the cash
collateral and earn income or receive an agreed-upon fee from a borrower that
has delivered cash- equivalent collateral. The Master Portfolio will not lend
securities having an aggregate market value that exceeds one-third of the
current value of its total assets. Loans of securities by the Master Portfolio
are subject to termination at the Master Portfolio's or the borrower's option.
The Master Portfolio may pay reasonable administrative and custodial fees in
connection with a securities loan and may pay a negotiated portion of the
interest or fee earned with respect to the collateral to the borrower or the
placing broker. Borrowers and placing brokers are not permitted to be
affiliated, directly or indirectly, with the Master Portfolio, BGFA or Stephens.
Repurchase Agreements.
The Master Portfolio may engage in a repurchase agreement with respect to
any security in which it is authorized to 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. 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. 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 a Master Portfolio under the 1940 Act.
Short-Term Instruments and Temporary Investments.
------------------------------------------------
The Master Portfolio may invest in high-quality money market instruments on
an ongoing basis to provide liquidity, for temporary purposes when there is an
unexpected level of interestholder purchases or redemptions or when "defensive"
strategies are appropriate. The instruments in which the Master Portfolio may
invest include: (i) short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises); (ii) negotiable certificates of deposit ("CDs"), bankers'
acceptances, fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and that are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
Federal Deposit Insurance Corporation ("FDIC"); (iii) commercial paper rated at
the date of purchase "Prime-1" by Moody's or "A-1+" or "A-1" by S&P, or, if
unrated, of comparable quality as determined by BGFA; (iv) non-convertible
corporate debt securities (e.g., bonds and debentures) with remaining maturities
at the date of purchase of not more than one year that are rated at least "Aa"
by Moody's or "AA" by S&P; (v) repurchase agreements; and (vi) short-term, U.S.
dollar-denominated obligations of foreign banks (including U.S. branches) that,
at the time of investment have more than $10 billion, or the equivalent in other
currencies, in total assets and in the opinion of BGFA are of comparable quality
to obligations of U.S. banks which may be purchased by the Master Portfolio.
Bank Obligations. The Master Portfolio may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Master Portfolio will not benefit from
insurance from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the FDIC.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations, bearing fixed, floating- or variable-interest
rates.
Commercial Paper and 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 to the 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 one year 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.
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.
ITEM 13. MANAGEMENT OF THE TRUST.
The following information supplements and should be read in conjunction
with the Part A section entitled "Management, Organization and Capital
Structure." 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>
<S> <C> <C>
Jack S. Euphrat, 78 Trustee Private Investor.
415 Walsh Road
Atherton, CA 94027
*R. Greg Feltus, 49 Trustee, Chairman Executive Vice President of Stephens Inc.; President
and President of Stephens Insurance Services Inc.; Senior Vice
President of Stephens Sports Management Inc.; and
President of Investors Brokerage Insurance Inc.
W. Rodney Hughes, 74 Trustee Private Investor.
31 Dellwood Court
San Rafael, CA 94901
Leo Soong, 54 Trustee Managing Director of Crystal Geyser Roxane Water
Crystal Geyser Water Co. Co.; Co-Founder and President of Crystal Geyser
55 Francisco Street, Suite 410 Water Co.
San Francisco, CA 94133
Richard H. Blank, Jr., 44 Chief Operating Vice President of Stephens Inc.; Director of
Officer, Secretary Stephens Sports Management Inc.; and Director of
and Treasurer Capo Inc.
</TABLE>
Compensation Table
For the Calendar Year Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Aggregate Total Compensation
Compensation from Registrant
Name and Position from Registrant and Fund Complex
----------------- - --------------- ----------------
Jack S. Euphrat $5,875 $11,750
Trustee
*R. Greg Feltus $0 $0
Trustee
Thomas S. Goho1 $1,500 $3,000
Trustee
W. Rodney Hughes $5,875 $11,750
Trustee
*J. Tucker Morse1 $1,500 $3,000
Trustee
</TABLE>
--------------------
1 Retired from the Board of Trustees of MIP on April 28, 1999.
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 and
Barclays Global Investors Funds, Inc. ("BGIF") are considered to be members of
the same "fund complex" as such term is defined in Form N-1A under the 1940 Act.
The Trustees are compensated by MIP and BGIF for their services as
Directors/Trustees to MIP and BGIF. Currently, the Trustees do not receive any
retirement benefits or deferred compensation from MIP or BGIF. As of the date of
this Part B, the Trustees and Principal Officer of MIP as a group beneficially
owned less than 1% of the outstanding beneficial interest of MIP.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
The Master Portfolio is newly organized. Accordingly, as of the date of
this Part B, no persons own 5% or more of the outstanding voting securities of
the Master Portfolio.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
The following information supplements and should be read in conjunction
with Item 6 in Part A.
Investment Adviser. Barclays Global Fund Advisors ("BGFA") provides
investment advisory services to the Master Portfolio pursuant to an Investment
Advisory Contract ("BGFA Advisory Contract") with MIP. As to the Master
Portfolio, the BGFA Advisory Contract is subject to annual approval by (i) MIP's
Board of Trustees or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting interests 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. As to the Master Portfolio, the BGFA Advisory Contract is terminable
without penalty, on 60 days' written notice, by either party. The BGFA Advisory
Contract will terminate automatically, as to the Master Portfolio, in the event
of its assignment (as defined in the 1940 Act).
Advisory Fees. BGFA is entitled to receive monthly fees at the annual
rate of 0.08% 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.
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 administrative 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
"Expenses," Stephens and BGI will be responsible for paying all expenses
incurred by the Master Portfolio other than the advisory fees payable to BGFA.
Stephens and BGI are entitled to receive a monthly fee, in the aggregate, at an
annual rate of 0.02% of the average daily net assets of the Master Portfolio for
providing administrative services and assuming expenses.
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
to the Master Portfolio.
Custodian. IBT acts as the Master Portfolio's custodian. The principal
business address of IBT is 200 Clarendon Street, Boston, Massachusetts 02116.
IBT will only receive compensation for its custodial services from Stephens and
BGI.
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 the
Master Portfolio 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's and MIP's operations. Expenses
attributable only to the Master Portfolio shall be charged only against the
assets of the Master Portfolio. General expenses of MIP shall be allocated among
its portfolios in a manner proportionate to the net assets of each, on a
transactional basis or on such other basis as the Board of Trustees deems
equitable.
ITEM 16. 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.
Brokers also are selected because of their ability to handle special executions
such as are involved in large block trades or broad distributions, provided the
primary consideration is met. Portfolio turnover may vary from year to year, as
well as within a year. High turnover rates over 100% are likely to result in
comparatively greater brokerage expenses. BGFA may from time to time execute
trades on behalf of and for the account of the Master Portfolio with brokers or
dealers that are affiliated with BGFA.
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
Pursuant to MIP's Declaration of Trust, the Trustees are authorized to
issue 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, 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 interests of an investment
company, such as MIP, will not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding interests of
each Master Portfolio affected by such matter. Rule 18f-2 further provides that
a Master Portfolio shall be deemed to be affected by a matter unless it is clear
that the interests of such Master Portfolio in the matter are identical or that
the matter does not affect any interest of such Master Portfolio. However, the
Rule exempts the selection of independent accountants and the election of
Trustees from the separate voting requirements of the Rule.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF INTERESTS.
The following information supplements and should be read in conjunction
with Item 7 in Part A.
Purchase of Interests. 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 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 interests 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 such Master Portfolio by
the investor upon receipt from the issuer. Securities acquired through an
in-kind purchase will be acquired for investment and not for immediate resale.
Interests purchased in exchange for securities generally cannot be redeemed
until the transfer has settled.
Suspension of Redemptions. The right of redemption of Master Portfolio
interests 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's 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.
Pricing of Securities. The securities of the Master Portfolio are valued as
discussed below. Domestic securities are valued at the last sale price on the
domestic securities or commodities exchange or national securities market on
which such securities primarily are traded. Securities not listed on a domestic
exchange or national securities market, or securities in which there were no
transactions, are valued at the most recent bid prices. Portfolio securities
which are traded primarily on foreign securities or commodities exchanges
generally are valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
value was so established is likely to have changed such value, then the fair
value of those securities is determined by BGFA in accordance with guidelines
approved by MIP's Board of Trustees. Short-term investments are carried at
amortized cost, which approximates value. Any securities or other assets for
which recent market quotations are not readily available are valued at fair
value as determined in good faith by BGFA in accordance with such guidelines.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by MIP's Board of Trustees, are valued at fair value as
determined in good faith by BGFA in accordance with guidelines approved by MIP's
Board of Trustees. BGFA and MIP's Board of Trustees periodically review the
method of valuation. In making its good faith valuation of restricted
securities, BGFA generally takes the following factors into consideration:
restricted securities which are, or are convertible into, securities of the same
class of securities for which a public market exists usually will be valued at
market value less the same percentage discount at which purchased. This discount
is revised periodically if it is believed that the discount no longer reflects
the value of the restricted securities. Restricted securities not of the same
class as securities for which a public market exists usually are valued
initially at cost. Any subsequent adjustment from cost is based upon
considerations deemed relevant by MIP's Board of Trustees or its delegates.
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 19. TAXATION OF THE TRUST.
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 non-publicly traded 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 income and 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.
The Master Portfolio's taxable year-end is the last day of December.
Although the Master Portfolio will not be subject to federal income tax, it will
file appropriate federal income tax returns.
It is intended that the Master Portfolio's assets, income and distributions
will be managed in such a way that an entity electing and qualifying as a
"regulated investment company" under the Code can continue to so qualify by
investing substantially all of its assets through the Master Portfolio, provided
that the regulated investment company meets other requirements for such
qualification not within the control of the Master Portfolio (e.g., distributing
at least 90% of the regulated investment company's "investment company taxable
income" annually).
ITEM 20. 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.
ITEM 21. CALCULATIONS OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
KPMG LLP provides audit services, tax services and assistance and
consultation in connection with the review of certain SEC filings. KPMG LLP's
address is Three Embarcadero Center, San Francisco, California 94111.
<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.
S&P Commercial Paper Ratings
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.
"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.
Moody's Commercial Paper Ratings
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.
"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.
Fitch Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
"F-1+"
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
"F-1"
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
"F-2"
Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payments, but the margin of safety is not as
great as the "F-1+" and "F-1" categories.
Duff Bond Ratings
"AAA"
Bonds rated "AAA" are considered highest credit quality. The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA"
Bonds rated "AA" are considered high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A"
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.
Duff Commercial Paper Ratings
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.
IBCA 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.
IBCA International and U.S. Bank Ratings
An IBCA bank rating represents IBCA's current assessment of the
strength of the bank and whether such bank would receive support should it
experience difficulties. In its assessment of a bank, IBCA uses a dual rating
system comprised of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks Long- and Short-Term Ratings as used in the corporate ratings
discussed above. Legal Ratings, which range in gradation from "1" through "5,"
address the question of whether the bank would receive support provided by
central banks or shareholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of credit risk.
Individual Ratings, which range in gradations from "A" through "E," represent
IBCA's assessment of a bank's economic merits and address the question of how
the bank would be viewed if it were entirely independent and could not rely on
support from state authorities or its owners.
<PAGE>
MASTER INVESTMENT PORTFOLIO
File No. 811-8162
PART C
OTHER INFORMATION
Item 23. Exhibits.
--------
<TABLE>
<CAPTION>
----------------------- ----------------------------------------------------------------------------------------------
<S> <C>
Exhibit Description
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(a)(1) Amended and Restated Declaration of Trust,
incorporated by reference to the Registration
Statement on Form N-1A, filed November 15, 1993,
and August 31, 1998.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(a)(2) Certificate of Trust, incorporated by reference to
the Registration Statement on Form N-1A, filed
November 15, 1993, and August 31, 1998.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(a)(3) Amendment to the Amended and Restated Agreement
and Declaration of Trust, incorporated by
reference to the Registration Statement on Form
N-1A, filed August 31, 1998.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(a)(4) Certificate of Amendment to the Certificate of
Trust, incorporated by reference to the
Registration Statement on Form N-1A, filed
September 9, 1998.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(b) By-Laws, incorporated by reference to the Registration Statement on Form N-1A
filed November 15, 1993.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(c) Not applicable
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(1) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the LifePath
2000 Master Portfolio, incorporated by reference
to Amendment No. 3 to the Registration Statement,
filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(2) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the LifePath
2010 Master Portfolio, incorporated by reference
to Amendment No. 3 to the Registration Statement,
filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(3) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the LifePath
2020 Master Portfolio, incorporated by reference
to Amendment No. 3 to the Registration Statement,
filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(4) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the LifePath
2030 Master Portfolio, incorporated by reference
to Amendment No. 3 to the Registration Statement,
filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(5) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the LifePath
2040 Master Portfolio, incorporated by reference
to Amendment No. 3 to the Registration Statement,
filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(6) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the Bond Index
Master Portfolio, incorporated by reference to
Amendment No. 3 to the Registration Statement,
filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(7) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio on behalf of the Asset
Allocation Master Portfolio, incorporated by
reference to Amendment No. 3 to the Registration
Statement, filed January 5, 1996.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(8) Investment Advisory Contract by and among BZW
Barclays Global Fund Advisors and Master
Investment Portfolio 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.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(9) Investment Advisory Contract by and among Barclays
Global Fund Advisors and Master Investment
Portfolio on behalf of the Money Market Master
Portfolio, incorporated by reference to Amendment
No. 9 to the Registration Statement, filed
February 22, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(10) Investment Advisory Contract by and among Barclays
Global Fund Advisors and Master Investment
Portfolio on behalf of the Extended Index Master
Portfolio, incorporated by reference to Amendment
No. 9 to the Registration Statement, filed
February 22, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(11) Investment Advisory Contract by and among Barclays
Global Fund Advisors and Master Investment
Portfolio on behalf of the U.S. Equity Index
Master Portfolio, incorporated by reference to
Amendment No. 9 to the Registration Statement,
filed February 22, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(12) Investment Advisory Contract by and among Barclays
Global Fund Advisors and Master Investment
Portfolio on behalf of the International Index
Master Portfolio, incorporated by reference to
Amendment No. 11 to the Registration Statement,
filed September 29, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(d)(13) Investment Advisory Contract by and among Barclays
Global Fund Advisors and Master Investment
Portfolio on behalf of the Russell 2000 Index
Master Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(e) Placement Agency Agreement with Stephens Inc. on behalf of each Master
Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(f) Not applicable.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(g) Custody Agreement with Investors Bank & Trust Co. on behalf of each Master
Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(1) Co-Administration Agreement with Stephens Inc. and
Barclays Global Investors, N.A. on behalf of the
Asset Allocation, Bond Index, LifePath Income,
LifePath 2010, LifePath 2020, LifePath 2030,
LifePath 2040, Money Market and S&P 500 Index
Master Portfolios, incorporated by reference to
Amendment No. 11 to the Registration Statement,
filed September 29, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(2) Co-Administration Agreement with Stephens Inc. and Barclays Global Investors,
N.A. on behalf of Extended Index, International Index, Russell 2000 Index and
U.S. Equity Index Master Portfolios, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(3) Sub-Administration Agreement with Investors Bank & Trust and Barclays Global
Investors, N.A. on behalf of each Master Portfolio, incorporated by reference
to Amendment No. 9 to the Registration Statement, filed February 22, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(4) Third Party Feeder Fund Agreement by and among Strong Equity Funds, Inc.,
Strong Funds Distributors, Inc. and Master Investment Portfolio, incorporated
by reference to Amendment No. 7 to the Registration Statement, filed August
31, 1998.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(5) Third Party Feeder Fund Agreement by and among Hewitt Series Funds, Hewitt
Services LLC and Master Investment Portfolio, incorporated by reference to
Amendment No. 10 of the Registration Statement, filed June 30, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(6) First Amendment to the Third Party Feeder Fund
Agreement by and among Hewitt Series Funds, Hewitt
Services LLC and Master Investment Portfolio,
filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(7) Third Party Feeder Fund Agreement by and among
Diversified Investors Stock Index Fund,
Diversified Investors Securities Corporation and
Master Investment Portfolio, incorporated by
reference to Amendment No. 10 of the Registration
Statement, filed June 30, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(8) Third Party Feeder Fund Agreement by and among
Diversified Institutional Stock Index Fund,
Diversified Investors Securities Corporation and
Master Investment Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(9) Third Party Feeder Fund Agreement by and among
Vantagepoint Funds, ICMA - RC Services, LLC and
Master Investment Portfolio, incorporated by
reference to Amendment No. 10 of the Registration
Statement, filed June 30, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(10) Third Party Feeder Fund Agreement by and among INTRUST SERIES TRUST, BISYS
Fund Services, BISYS Fund Services, Inc., INTRUST Bank, N.A., Investors Bank
& Trust Company and Master Investment Portfolio, incorporated by reference to
Amendment No. 10 of the Registration Statement, filed June 30, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(11) Amended and Restated Third Party Feeder Fund Agreement by and among E*Trade
Funds, E*Trade Securities and Master Investment Portfolio, incorporated by
reference to Amendment No. 12 of the Registration Statement, filed June 30,
2000.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(12) Amendment No. 2 to the Amended and Restated Third Party Feeder Fund Agreement
by and among E*Trade Funds, E*Trade Securities and Master Investment
Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(13) Third Party Feeder Fund Agreement by and among X.Com Funds, X.Com Asset
Management, Inc. and Master Investment Portfolio, incorporated by reference
to Amendment No. 12 of the Registration Statement, filed June 30, 2000.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(14) Third Party Feeder Fund Agreement by and among Smith Barney Investment Trust,
CFBDS, Inc. and Master Investment Portfolio, incorporated by reference to
Amendment No. 12 of the Registration Statement, filed June 30, 2000.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(15) Third Party Feeder Fund Agreement by and among Whatifi Funds, BISYS Fund
Services, BISYS Fund Services, Inc., Investors Bank & Trust Co. and Master
Investment Portfolio, incorporated by reference to Amendment No. 12 of the
Registration Statement, filed June 30, 2000.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(16) Third Party Feeder Fund Agreement by and among Atlas Assets, Inc., Atlas
Securities, Inc. and Master Investment Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(17) Third Party Feeder Fund Agreement by and among
BB&T Funds, BISYS Fund Services Limited
Partnership and Master Investment Portfolio, filed
herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(h)(18) Third Party Feeder Fund Agreement by and among State Farm Mutual Fund Trust,
State Farm VP Management Corp. and Master Investment Portfolio, filed
herewith.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(i) Not applicable.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(j)(1) Powers of Attorney for Jack S. Euphrat, R. Greg Feltus and W. Rodney Hughes,
incorporated by reference to Amendment No. 5 to the Registration Statement,
filed June 30, 1997.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(j)(2) Power of Attorney for Leo Soong, incorporated by reference to Amendment No.
12, filed June 30, 2000.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(k) Not applicable
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(l) Not applicable
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(m) Distribution Plan on behalf of the Asset
Allocation, Institutional Money Market, LifePath
Income, LifePath 2010, LifePath 2020, LifePath
2030 and LifePath 2040 Funds, incorporated by
reference to Post-Effective Amendment No. 22,
filed July 30, 1999.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(n) Not applicable.
----------------------- ----------------------------------------------------------------------------------------------
----------------------- ----------------------------------------------------------------------------------------------
(p) Code of Ethics of Master Investment Portfolio, filed herewith.
----------------------- ----------------------------------------------------------------------------------------------
</TABLE>
Item 24. Persons Controlled by or Under Common Control with
Registrant
No person is controlled by or under common control with the
Registrant.
Item 25. 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.
Item 26. Business and Other Connections of Investment Adviser.
----------------------------------------------------
The Master Portfolios are advised by Barclays Global Fund Advisors
("BGFA"), a wholly-owned subsidiary of Barclays Global Investors, N.A. ("BGI").
BGFA's business is that of a registered investment adviser to certain open-end,
management investment companies and various other institutional investors.
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.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------- ------------------------------------------------------------------------------
<S> <C>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
----------------------------------- ------------------------------------------------------------------------------
----------------------------------- ------------------------------------------------------------------------------
Patricia Dunn Director of BGFA and C-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
----------------------------------- ------------------------------------------------------------------------------
----------------------------------- ------------------------------------------------------------------------------
Lawrence G. Tint Chairman of the Board of Directors of BGFA
Chairman and Director and Chief Executive Officer of BGI
45 Fremont Street, San Francisco, CA 94105
----------------------------------- ------------------------------------------------------------------------------
----------------------------------- ------------------------------------------------------------------------------
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997
Chief Financial Officer 45 Fremont Street, San Francisco, CA 94105
Managing Director and Principal Accounting Officer at
Bankers Trust Company from 1988 - 1997
505 Market Street, San Francisco, CA 94105
----------------------------------- ------------------------------------------------------------------------------
</TABLE>
Item 27. Principal Underwriters.
----------------------
(a) Stephens Inc., distributor for the Registrant, does not
presently act as investment adviser for any other registered investment
companies, but does act as distributor for Nations Fund Trust, Nations Fund,
Inc., Nations Reserves, Nations LifeGoal Funds, Inc., Nations Funds Trust,
Wells Fargo Funds Trust and Wells Fargo Variable Trust and is the exclusive
placement agent for Wells Fargo Core Trust, Nations Master Investment Trust,
and Master Investment Portfolio, all of which are registered open-end management
investment companies, and has acted as principal underwriter for the Liberty
Term Trust, Inc., Nations Government Income Term Trust 2003, Inc., Nations
Government Income Term Trust 2004, Inc., Nations Balanced Target Maturity Fund,
Inc., and Hatteras Income Securities, Inc., closed-end management investment
companies.
(b) Information with respect to each director and officer of
the principal underwriter is incorporated by reference to Form ADV filed by
Stephens Inc. with the SEC pursuant to the 1940 Act (file No. 501-15510).
(c) Not applicable.
Item 28. 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) Stephens maintains all Records relating to its services as
sponsor, co- administrator and distributor at 111 Center Street, Little Rock,
Arkansas 72201.
(e) IBT maintains all Records relating to its services as
sub-administrator and custodian at 89 South Street, Boston, Massachusetts 02111.
Item 29. Management Services
Other than as set forth under the captions "Item 6, Management,
Organization and Capital Structure" in Part A of this Registration Statement,
and "Item 13, Management of the Trust" and "Item 15, Investment Advisory and
Other Services" in Part B of this Registration Statement, Registrant is not a
party to any management-related service contract.
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
as amended (the "1940 Act"), 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 8th day of December, 2000.
MASTER INVESTMENT PORTFOLIO
By /s/ Richard H. Blank, Jr.
---------------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the 1940 Act, this Amendment No. 13
to the Registration Statement on Form N-1A has been signed below by the
following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title
* Trustee, Chairman and President 12/8/00
------------------------------
(R. Greg Feltus) (Principal Executive Officer)
Secretary and Treasurer 12/8/00
------------------------------
(Richard H. Blank, Jr.) (Principal Financial Officer)
* Trustee 12/8/00
------------------------------
(Jack S. Euphrat)
* Trustee 12/8/00
------------------------------
(W. Rodney Hughes)
* Trustee 12/8/00
------------------------------
(Leo Soong)
</TABLE>
*By: /s/ Richard H. Blank, Jr.
------------------------------
Richard H. Blank, Jr.
As Attorney-in-Fact
December 8, 2000
<PAGE>
MASTER INVESTMENT PORTFOLIO
SEC FILE No. 811-8162
EXHIBIT INDEX
<TABLE>
Exhibit Number Description
<CAPTION>
<S> <C>
Exhibit(d)(13) Investment Advisory Contract
by and among Barclays Global Fund
Advisors and Master Investment
Portfolio on behalf of the Russell
2000 Index Master Portfolio.
Exhibit (e) Placement Agency Agreement with Stephens Inc.
Exhibit (g) Custody Agreement with Investors Bank & Trust Co.
Exhibit (h)(2) Co-Administration Agreement with Stephens Inc. and Barclays Global
Investors, N.A. on behalf of Extended Index, International Index, Russell
2000 Index and U.S. Equity Index Master Portfolios.
Exhibit(h)(6) First Amendment to the Third
Party Feeder Fund Agreement by and
among Hewitt Series Funds, Hewitt
Services LLC and Master Investment
Portfolio.
Exhibit (h)(8) Third Party Feeder Fund Agreement by and among Diversified
Institutional Stock Index Fund, Diversified Investors Securities
Corporation and Master Investment Portfolio
Exhibit (h)(12) Amendment No. 2 to the Amended and Restated Third Party Feeder Fund
Agreement by and among E*Trade Funds, E*Trade Securities and Master
Investment Portfolio
Exhibit (h)(16) Third Party Feeder Fund Agreement by and among Atlas Assets, Inc.,
Atlas Securities, Inc. and Master Investment Portfolio.
Exhibit (h)(17) Third Party Feeder Fund
Agreement by and among BB&T Funds,
BISYS Fund Services Limited
Partnership and Master Investment
Portfolio.
Exhibit (h)(18) Third Party Feeder Fund Agreement by and among State Farm Mutual Fund
Trust, State Farm VP Management Corp. and Master Investment Portfolio.
Exhibit (p) Code of Ethics of Master Investment Portfolio
</TABLE>
<PAGE>
INVESTMENT ADVISORY CONTRACT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
[December 7, 2000]
Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Dear Sirs:
This will confirm the agreement between Master Investment Portfolio
(the "Trust") on behalf of the Russell 2000 Index Master Portfolio (the "Master
Portfolio") and Barclays Global Fund Advisors (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company currently
consisting of thirteen investment portfolios, but which may from time to time
consist of a greater or lesser number of investment portfolios (the "Master
Portfolios"). The Russell 2000 Index Master Portfolio is one of the 13 Master
Portfolios. The Trust proposes to engage in the business of investing and
reinvesting the assets of the Master Portfolio in the manner and in accordance
with the investment objective and restrictions specified in the Trust's
Registration Statement, as amended from time to time (the "Registration
Statement"), filed by the Trust under the Investment Company Act of 1940 (the
"Act"). Copies of the Registration Statement have been furnished to the Adviser.
Any amendments to the Registration Statement shall be furnished to the Adviser
promptly.
2. The Trust is engaging the Adviser to manage the investing and reinvesting of
the Master Portfolio's assets and to provide the advisory services specified
elsewhere in this contract to the Master Portfolio, subject to the overall
supervision of the Board of Trustees of the Trust.
3. (a) The Adviser shall make investments for the account of the Master
Portfolio in accordance with the Adviser's best judgment and consistent with the
investment objective and restrictions set forth in the Trust's Registration
Statement, the Act and the provisions of the Internal Revenue Code of 1986
relating to regulated investment companies, subject to policy decisions adopted
by the Trust's Board of Trustees. The Adviser shall advise the Trust's officers
and Board of Trustees, at such times as the Trust's Board of Trustees may
specify, of investments made for the Master Portfolio and shall, when requested
by the Trust's officers or Board of Trustees, supply the reasons for making
particular investments.
(b) The Adviser shall provide to the Trust investment guidance
and policy direction in connection with its daily management of the Master
Portfolio's assets, including oral and written research, analysis, advice,
statistical and economic data and information and judgments, and shall furnish
to the Trust's Board of Trustees periodic reports on the investment strategy and
performance of the Master Portfolio and such additional reports and information
as the Trust's Board of Trustees and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing
all materials relating to the Master Portfolio prepared by it, or prepared at
its request, other than such costs relating to proxy statements, Part As,
reports for holders of beneficial interests of the Master Portfolio
("Interestholders") and other materials distributed to existing or prospective
Interestholders on behalf of the Master Portfolio.
(d) The Adviser shall, at its expense, employ or associate with
itself such persons as the Adviser believes appropriate to assist it in
performing its obligations under this contract.
<PAGE>
4. The Trust understands that the Adviser, in rendering its services to the
Master Portfolio hereunder, may delegate certain advisory responsibilities
hereunder to a sub-adviser (the "Sub-Adviser"), provided that the Adviser shall
continue to supervise and monitor the performance of the duties delegated to the
Sub-Adviser and provided that any such delegation will not relieve the Adviser
of its duties and obligations under this contract. The Adviser will not seek to
amend any such Sub-Advisory Contract to materially alter the obligations of the
parties unless the Adviser gives the Trust at least 60 days' prior written
notice thereof.
5. The Adviser shall give the Trust and the Master Portfolio the benefit of the
Adviser's best judgment and efforts in rendering services under this contract.
As an inducement to the Adviser's undertaking to render these services, the
Trust agrees that the Adviser shall not be liable under this contract for any
mistake in judgment or in any other event whatsoever except for lack of good
faith, provided that nothing in this contract shall be deemed to protect or
purport to protect the Adviser against any liability to the Trust or its
Interestholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties under this contract or by reason of reckless disregard of its
obligations and duties hereunder.
6. In consideration of the services to be rendered by the Adviser under this
contract, the Trust shall pay the Adviser a monthly fee on the first business
day of each month, at the annual rate of 0.08% of the average daily value (as
determined on each day that such value is determined for the Master Portfolio at
the time set forth in the Registration Statement for determining net asset value
per share) of the Master Portfolio's net assets during the preceding month. If
the fee payable to the Adviser pursuant to this paragraph 6 begins to accrue
after the beginning of any month or if this contract terminates before the end
of any month, the fee for the period from the effective date to the end of that
month or from the beginning of that month to the termination date, respectively,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of the Master Portfolio's net
assets shall be computed in the manner specified in the Registration Statement
and the Trust's Agreement and Declaration of Trust for the computation of the
value of the Master Portfolio's net assets in connection with the determination
of the net asset value of Master Portfolio interests.
7. If in any fiscal year the aggregate expenses of the Master Portfolio
(including fees pursuant to this contract, but excluding interest, taxes,
brokerage and, with the prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over the Master Portfolio, the Trust may deduct from the
fees to be paid hereunder, or the Adviser will bear, such excess expense to the
extent required by state law. The Adviser's obligation pursuant hereto will be
limited to the amount of the Adviser's fees hereunder. For purposes of computing
the excess, if any, over the most restrictive applicable expense limitation, the
value of the Master Portfolio's net assets shall be computed in the manner
specified in the last sentence of paragraph 6, and any reimbursements required
to be made by the Adviser shall be made once a year promptly after the end of
the Master Portfolio's fiscal year.
8. This contract shall become effective on its execution date and shall
thereafter continue in effect for a period of more than two years from the date
hereof only so long as the continuance is specifically approved at least
annually (a) by the vote a majority of the Master Portfolio's outstanding voting
securities (as defined in the Act) or by the Trust's Board of Trustees and (b)
by the vote, cast in person at a meeting called for the purpose, of a majority
of the Trust's trustees who are not parties to this contract or "interested
persons" (as defined in the Act) of any such party. This contract may be
terminated at any time by the Trust without the payment of any penalty, by a
vote of a majority of the Master Portfolio's outstanding voting securities (as
defined in the Act) or by a vote of a majority of the Trust's entire Board of
Trustee's on 60 days' written notice to the Adviser or by the Adviser on 60
days' written notice to the Trust. This contract shall terminate automatically
in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Adviser's obligations under
this contract, nothing herein shall be deemed to limit or restrict the right of
the Adviser, or any affiliate of the Adviser, or any employee of the Adviser, to
engage in any other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to any other corporation, firm,
individual or association.
10. This contract shall be governed by and construed in accordance with the
laws of the State of California.
11. This contract has been executed on behalf of the Trust by the undersigned
officer of the Trust in his capacity as an officer of the Trust. The obligations
of this contract shall only be binding upon the assets and property of the
Master Portfolio, as provided for in the Trust's Agreement and Declaration of
Trust, and shall not be binding upon any Trustee, officer or Interestholder of
the Trust or Master Portfolio individually.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
on behalf of the Russell 2000 Index Master Portfolio
/s/ Richard H. Blank, Jr.
--------------------------------------------------
Richard H. Blank, Jr.
Chief Operating Officer
ACCEPTED as of the date set forth above:
BARCLAYS GLOBAL FUND ADVISORS
By: /s/ Mike Latham
-------------------------------------------------
Mike Latham
Managing Director, Director of Operations
By: /s/ Danell Doty
-------------------------------------------------
Danell Doty
Principal, Manager of Mutual Fund Administration
<PAGE>
PLACEMENT AGENCY AGREEMENT
MASTER INVESTMENT PORTFOLIO
111 Center Street
Little Rock, Arkansas 72201
February 25, 1994
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Master Investment Portfolio, a Delaware
business trust (the "Master Portfolio") consisting of the portfolios named on
Schedule 1 hereto, as such Schedule may be revised from time to time (each, a
"Master Series"), has agreed that you shall be, for the period of this
Agreement, the exclusive placement agent for shares of beneficial interest of
each Master Series.
1. You will act as agent for the private placement of shares of
each Master Series covered by, and in accordance with, the registration
statement and prospectus then in effect under the Investment Company Act of
1940, as amended, and will transmit promptly any orders received by you for
purchase or redemption of shares of a Master Series to the Transfer and Dividend
Disbursing Agent for the Master Portfolio of which the Master Portfolio has
notified you in writing. All orders from you shall be subject to acceptance and
confirmation by the Master Portfolio.
2. You shall act as exclusive placement agent for each Master
Series' shares in compliance with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the Investment Company Act of 1940, as amended, by the Securities
and Exchange Commission or any securities association registered under the
Securities Exchange Act of 1934, as amended.
3. Whenever in their judgment such action is warranted by market,
economic or political conditions, or by abnormal circumstances of any kind, the
Master Portfolio's officers may decline to accept any orders for, or make any
sales of, any of the Master Series' shares until such time as they deem it
advisable to accept such orders and to make such sales and the Master Portfolio
shall advise you promptly of such determination.
4. Ownership of Master Series shares sold hereunder shall be
registered in such names and denominations as are specified in writing to the
Master Portfolio or to its agent designated for the purpose. No certificates for
shares of the Master Series will be issued.
5. The Master Portfolio agrees to pay all expenses in connection
with maintaining facilities for the issue and transfer of the Master Series'
shares and for supplying information, prices and other data to be furnished by
the Master Portfolio hereunder, and all expenses in connection with preparing
and printing the Master Portfolio's prospectuses and statements of additional
information for regulatory purposes and for distribution to shareholders;
provided, however, that nothing contained herein shall be deemed to require the
Master Portfolio to pay any of the costs of advertising the sale of the Master
Series' shares. You shall pay all other expenses incurred by you in connection
with the sale of the Master Series' shares as contemplated in this agreement.
6. All shares offered for sale and sold by you shall be offered
for sale and sold by you to investors at the price per share (the "offering
price," which is the net asset value per share) specified and determined as
provided in the prospectus relating to the offering of relevant Master Series'
shares for sale. If the offering price is not an exact multiple of one cent, it
shall be adjusted to the nearest full cent. The Master Portfolio shall determine
and furnish promptly to you a statement of the offering price at least once on
each day on which the prospectus states the Master Portfolio is required to
determine the relevant Master Series' net asset value for the purpose of pricing
purchase orders. Each offering price shall become effective at the time and
shall remain in effect during the period specified in the statement. Each such
statement shall show the basis of its computation. For purposes of establishing
the offering price, the Master Portfolio shall consider a purchase order to have
been presented to it at the time it was originally entered by you for
transmission to it, provided the original purchase order and your fulfilling
order to the Master Portfolio are appropriately time stamped or evidenced to
show the time of original entry and that your fulfilling order to the Master
Portfolio is received by the Master Portfolio within a time deemed by it to be
reasonable after the purchase order was originally entered. Purchases of shares
shall be made for full and fractional shares, carried to the third decimal
place.
7. The Master Portfolio shall furnish you from time to time, for
use in connection with the sale of the Master Series' shares, such information
with respect to the Master Portfolio and the Master Series' shares as you may
reasonably request, all of which shall be signed by one or more of the Master
Portfolio's duly authorized officers; and the Master Portfolio warrants that the
statements contained in any such information, when so signed by the Master
Portfolio's officers, shall be true and correct. The Master Portfolio also shall
furnish you with copies of its reports to shareholders and such additional
information regarding a Master Series' financial condition as you may reasonably
request from time to time.
8. The Master Portfolio represents to you that all registration
statements and prospectuses filed by the Master Portfolio with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended,
with respect to the Master Series' shares have been carefully prepared in
conformity with the requirements of said Act and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Master Portfolio represents and
warrants to you that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with said Act and the rules and regulations
of said Commission; that all statements of fact contained in any such
registration statement and prospectus will be true and correct when such
registration statement becomes effective; and that neither any registration
statement nor any prospectus when such registration statement becomes effective
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Master Portfolio may but shall not be obligated to propose
from time to time such amendment or amendments to any registration statement and
such supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Master Portfolio's counsel, be
necessary or advisable. If the Master Portfolio shall not propose such amendment
or amendments and/or supplement or supplements within fifteen days after receipt
by the Master Portfolio of a written request from you to do so, you may, at your
option, terminate this agreement or decline to make offers of the Master Series'
securities until such amendments are made. The Master Portfolio shall not file
any amendment to any registration statement or supplement to any prospectus
without giving you reasonable notice thereof in advance; provided, however, that
nothing contained in this agreement shall in any way limit the Master
Portfolio's right to file at any time such amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Master Portfolio may deem advisable, such right being in all respects absolute
and unconditional.
9. The Master Portfolio authorizes you to use any prospectus in
the form furnished to you from time to time, in connection with the sale of the
Master Series' shares. The Master Portfolio agrees to indemnify, defend and hold
you, your several officers and directors, and any person who controls you within
the meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which you,
your officers and directors, or any such controlling person, may incur under the
Securities Act of 1933, as amended, or under common law or otherwise, arising
out of or based upon any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement or any prospectus or
arising out of or based upon any omission, or alleged omission, to state a
material fact required to be stated in either any registration statement or any
prospectus or necessary to make the statements in either thereof not misleading;
provided, however, that the Master Portfolio's agreement to indemnify you, your
officers or directors, and any such controlling person shall not be deemed to
cover any claims, demands, liabilities or expenses arising out of any untrue
statement or alleged untrue statement or omission or alleged omission made in
any registration statement or prospectus in reliance upon and in conformity with
written information furnished to the Master Portfolio by you specifically for
use in the preparation thereof. The Master Portfolio's agreement to indemnify
you, your officers and directors, and any such controlling person, as aforesaid,
is expressly conditioned upon the Master Portfolio's being notified of any
action brought against you, your officers or directors, or any such controlling
person, such notification to be given by letter or by telegram addressed to the
Master Portfolio at its office in San Francisco, California within ten days
after the summons or other first legal process shall have been served. The
failure so to notify the Master Portfolio of any such action shall not relieve
the Master Portfolio from any liability which the Master Portfolio may have to
the person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Master Portfolio's indemnity agreement contained in this
paragraph 9. The Master Portfolio will be entitled to assume the defense of any
suit brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by the Master
Portfolio and approved by you. In the event the Master Portfolio elects to
assume the defense of any such suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case the
Master Portfolio does not elect to assume the defense of any such suit, or in
case you do not approve of counsel chosen by the Master Portfolio, the Master
Portfolio will reimburse you, your officers and directors, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by you or them. The Master Portfolio's
indemnification agreement contained in this paragraph 9 and the Master
Portfolio's representations and warranties in this agreement shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of you, your officers and directors, or any controlling person, and
shall survive the delivery of any of the Master Series' shares. This agreement
of indemnity will inure exclusively to your benefit, to the benefit of your
several officers and directors, and their respective estates, and to the benefit
of any controlling persons and their successors. The Master Portfolio agrees
promptly to notify you of the commencement of any litigation or proceedings
against the Master Portfolio or any of its officers or Trustees in connection
with the issue and sale of any of the Master Series' shares.
10. You agree to indemnify, defend and hold the Master Portfolio,
its several officers and Trustees, and any person who controls the Master
Portfolio within the meaning of Section 15 of the Securities Act of 1933, as
amended, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which the Master Portfolio, its officers or Trustees, or any such
controlling person, may incur under the Securities Act of 1933, as amended, or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Master Portfolio, its officers or Trustees, or such
controlling person resulting from such claims or demands, shall arise out of or
be based upon (a) any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by you to the Master Portfolio
specifically for use in the Master Portfolio's registration statement and used
in the answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by you to the Master
Portfolio and required to be stated in such answers or necessary to make such
information not misleading or (b) any act or omission or alleged act or omission
on your part as the Master Portfolio's agent that has not been expressly
authorized by the Master Portfolio in writing. Your agreement to indemnify the
Master Portfolio, its officers and Trustees, and any such controlling person, as
aforesaid, is expressly conditioned upon your being notified of any action
brought against the Master Portfolio, its officers or Trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to you at your principal office in Little Rock, Arkansas within ten
days after the summons or other first legal process shall have been served. You
shall have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Master Portfolio, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event the Master Portfolio, its officers or Trustees or such controlling person
shall each have the right to participate in the defense or preparation of the
defense of any such action. The failure so to notify you of any such action
shall not relieve you from any liability which you may have to the Master
Portfolio, its officers or Trustees, or to such controlling person by reason of
any such untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
paragraph 10.
11. None of the Master Series' shares shall be offered by either
you or the Master Portfolio under any of the provisions of this agreement and no
orders for the purchase or sale of such shares hereunder shall be accepted by
the Master Portfolio if and so long as the effectiveness of the registration
statement then in effect or any necessary amendments thereto shall be suspended
under any of the provisions of the Investment Company Act of 1940, as amended;
provided, however, that nothing contained in this paragraph 11 shall in any way
restrict or have an application to or bearing upon the Master Portfolio's
obligation to repurchase any of the Master Series' shares from any shareholder
in accordance with the provisions of the Master Portfolio's prospectus or
Declaration of Trust.
12. The Master Portfolio agrees to advise you immediately in
writing:
(a) of any request by the Securities and Exchange Commission
for amendments to the registration statement or prospectus
then in effect or for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectus then
in effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus
which may from time to time be filed with the Securities and Exchange
Commission.
13. Insofar as they concern the Master Portfolio, the Master
Portfolio shall comply with all applicable laws, rules and regulations,
including, without limiting the generality of the foregoing, all rules or
regulations made or adopted pursuant to the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, or by any securities association
registered under the Securities Exchange Act of 1934, as amended.
14. You may, if you desire and at your own cost and expense,
appoint or employ agents to assist you in carrying out your obligations under
this agreement, but no such appointment or employment shall relieve you of any
of your responsibilities or obligations to the Master Portfolio under this
agreement.
15. As to each Master Series, subject to the provisions of
Paragraph 8, this agreement shall continue until the date set forth opposite
such Master Series' name on Schedule 1 hereto (the "Reapproval Date"), and
thereafter shall continue automatically for successive annual periods ending on
the day of each year set forth opposite such Master Series' name on Schedule 1
hereto (the "Reapproval Day"), provided such continuance is specifically
approved at least annually by (i) the Master Portfolio's Board of Trustees or
(ii) vote of a majority (as defined in the Investment Company Act of 1940, as
amended) of the Master Portfolio's outstanding voting securities, provided that
in either event its continuance also is approved by a majority of the Master
Portfolio's trustees who are not "interested persons" (as defined in said Act)
of any party to this agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This agreement is terminable without
penalty, on 60 days' notice, by vote of holders of a majority of the Master
Portfolio's shares, and, as to each Master Series, by the Master Portfolio's
Board of Trustees or by you. This agreement also will terminate automatically,
as to the relevant Master Series, in the event of its assignment (as defined in
said Act).
16. This agreement has been executed on behalf of the Master
Portfolio by the undersigned officer of the Master Portfolio in his capacity as
an officer of the Master Portfolio. The obligations of this agreement shall only
be binding upon the assets and property of the relevant Master Series, as
provided for in the Master Portfolio's Agreement and Declaration of Trust, and
shall not be binding upon any Trustee, officer or shareholder of the Master
Portfolio or Master Series individually.
<PAGE>
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below, whereupon it
shall become a binding agreement between us.
Very truly yours,
MASTER INVESTMENT PORTFOLIO
By: /s/ Richard H. Blank, Jr.
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
ACCEPTED:
STEPHENS INC.
By: /s/ Richard H. Blank, Jr.
-------------------------------------------------
Name: Richard H. Blank, Jr.
Title: Vice President
<PAGE>
SCHEDULE 1
Name of Master Series
LifePath Income Master Series
LifePath 2010 Master Series
LifePath 2020 Master Series
LifePath 2030 Master Series
LifePath 2040 Master Series
Asset Allocation Master Series
Bond Index Master Series
Money Market Master Series
S & P 500 Index Master Series
Extended Index Master Series
U.S. Equity Index Master Series
International Index Master Series
Russell 2000 Index Master Series
Dated: February 25, 1998
Approved as amended: October 28, 1998 to include the Extended Index and
U.S. Equity Index Master Series
Approved as amended: July 28, 1999 to include the International Index Master
Series
Approved as amended: August 16, 2000 to include the Russell 2000 Index Master
Series
<PAGE>
CUSTODY AGREEMENT
between
MASTER INVESTMENT PORTFOLIO
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C>
1. Bank Appointed Custodian.........................................................................
2. Definitions......................................................................................
2.1 Authorized Person.....................................................................
2.2 Board.................................................................................
2.3 Security..............................................................................
2.4 Portfolio Security....................................................................
2.5 Officer's Certificate.................................................................
2.6 Book-Entry System.....................................................................
2.7 Depository............................................................................
2.8 Proper Instructions...................................................................
2.9 Foreign Securities....................................................................
2.8 Performance Calculations .............................................................
3. Separate Accounts................................................................................
4. Certification as to Authorized Persons...........................................................
5. Custody of Cash..................................................................................
5.1 Purchase of Securities................................................................
5.2 Redemptions...........................................................................
5.3 Distributions and Expenses of the Master Portfolios...................................
5.4 Payment in Respect of Securities......................................................
5.5 Repayment of Loans....................................................................
5.6 Repayment of Cash
5.7 Foreign Exchange Transactions.........................................................
5.8 Other Authorized Payments.............................................................
5.9 Termination...........................................................................
6. Securities
6.1 Segregation and Registration..........................................................
6.2 Voting and Proxies....................................................................
6.3 Corporate Action......................................................................
6.4 Book-Entry System.....................................................................
6.5 Use of a Depository...................................................................
6.6 Use of Book-Entry System for Commercial Paper.........................................
6.7 Use of Immobilization Programs........................................................
6.8 Eurodollar CDs........................................................................
6.9 Options and Futures Transactions......................................................
6.10 Segregated Account....................................................................
6.11 Interest Bearing Call or Time Deposits................................................
6.12 Transfer of Securities
7. Redemptions......................................................................................
8. Merger, Dissolution, etc. of the Trust or a Master Portfolio.....................................
9. Actions of the Bank Without Prior Authorization..................................................
10. Collections and Defaults.........................................................................
11. Maintenance of Records and Accounting Services..................................................
12. Master Portfolio Evaluation and Performance Calculation..........................................
12.1 Master Portfolio Evaluation...........................................................
12.2 Performance Calculation...............................................................
13. Concerning the Bank..............................................................................
13.1 Bank Warranty.........................................................................
13.2 Standards of Care and Performance of Duties...........................................
13.3 Agents and Sub-custodians with Respect to Property
of the Master Portfolios Held in the United States....................................
13.4 Duties of the Bank with Respect to Property
Held Outside of the United States
13.5 Insurance.............................................................................
13.6 Fees and Expenses of Bank.............................................................
13.7 Advances by Bank......................................................................
14. Termination......................................................................................
15. Confidentiality..................................................................................
16. Notices..........................................................................................
17. Amendments.......................................................................................
18. Parties..........................................................................................
19. Governing Law....................................................................................
20. Counterparts.....................................................................................
21. Limitations of Liability.........................................................................
22. Single Agreement.................................................................................
</TABLE>
<PAGE>
CUSTODY AGREEMENT
..................AGREEMENT made as of this 21st day of October, 1996, between
MASTER INVESTMENT PORTFOLIO, a Delaware business trust (the "Trust"), and
INVESTORS BANK & TRUST COMPANY (the "Bank" or, at times, "IBT").
The Trust, an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of
the individual Master Portfolios listed on Schedule A hereto, as such Schedule
may be amended from time to time, desires to place and maintain all of the
Master Portfolios' portfolio securities and other assets including cash in the
custody of the Bank, and the Bank has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
.........NOW, THEREFORE, in consideration of the premises and of the
mutual agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Trust hereby appoints the Bank as
custodian of the Master Portfolios' portfolio securities and cash delivered to
the Bank as hereinafter described, and the Bank agrees to act as such upon the
terms and conditions hereinafter set forth.
.........2........Definitions. Whenever used herein, the terms listed
below will have the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Trust and its Master Portfolios by appropriate resolution of the Board of
Trustees of the Trust, and set forth in a certificate as required by Section 4
hereof.
2.2 Board. Board will mean the Trust's Board of Trustees .
-----
2.3 Security. The term security as used herein will have the
same meaning as when such term is used in the Securities Act of 1933, as amended
(the "1933 Act"), including, without limitation, any note, stock, treasury
stock, bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security, certificate of deposit, or
group or index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or privilege entered into on
a national securities exchange relating to a foreign currency, or, in general,
any interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing, and futures, forward contracts and
options thereon.
2.4 Portfolio Security. Portfolio Security will mean any
security owned by a Master Portfolio of the Trust.
2.5 Officer's Certificate. Officer's Certificate will mean,
unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by an Authorized Person of the Trust.
2.6 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor(s) and its nominee(s).
2.7 Depository. Depository shall mean The Depository Trust
Company ("DTC") and any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and its successor(s) and its nominee(s). The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor(s) and its nominee(s),
specifically identified in a certified copy of a resolution of the Board.
2.8 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Trust
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Trust shall cause all oral instructions to be promptly confirmed in writing
or by facsimile. The Bank shall act upon and comply with any subsequent Proper
Instruction which modifies a prior instruction, and the sole obligation of the
Bank with respect to any follow-up or confirmatory instruction shall be to make
reasonable efforts to detect any discrepancy between the original instruction
and such confirmation and to report such discrepancy to the Trust. The Trust
shall be responsible, at the expense of the applicable Master Portfolio, for
taking any action, including any reprocessing, necessary to correct any such
discrepancy or error, and, to the extent such action requires the Bank to act,
the Trust shall give the Bank specific Proper Instructions as to the action
required. Upon receipt by the Bank of an Officer's Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Trust, Proper Instructions may include communication effected
directly between electromechanical or electronic devices provided that the Trust
and the Bank are satisfied that such procedures afford adequate safeguards for a
Master Portfolio's assets.
2.9 Foreign Securities. The term Foreign Securities as used
herein will have the same meaning as when such term is used in Rule 17f-5 of the
1940 Act.
2.10 Performance Calculations. Performance Calculations as used
herein shall include standard performance calculations required pursuant to the
1933 Act, the 1940 Act, and any applicable rules and interpretations of the
staff of the Securities and Exchange Commission , and shall also include other
non-standard performance calculations as shall be agreed upon by both parties to
this Agreement from time to time.
3. Separate Accounts. The Bank will segregate the assets of each Master
Portfolio to which this Agreement relates into a separate account for each such
Master Portfolio containing the assets of such Master Portfolio (and all
investment earnings thereon). Unless the context otherwise requires, any
reference in this Agreement to any actions to be taken by the Trust shall be
deemed to refer to the Trust acting on behalf of one or more of its Master
Portfolios, any reference in this Agreement to any assets of the Trust,
including, without limitation, any Portfolio Securities and other assets
including cash and any earnings thereon, shall be deemed to refer only to assets
of the applicable Master Portfolio, any duty or obligation of the Bank hereunder
to the Trust shall be deemed to refer to duties and obligations with respect to
the individual Master Portfolios, and any obligation or liability of the Trust
hereunder shall be binding only with respect to the individual Master Portfolio
and shall be discharged only out of the assets of such Master Portfolio.
4. Certification as to Authorized Persons. The Secretary or an
Assistant Secretary of the Trust will at all times maintain on file with the
Bank his or her certification to the Bank, in such form as may be acceptable to
the Bank, of (i) the names and signatures of the Authorized Persons and (ii) the
names of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or an
Assistant Secretary of the Trust, will sign a new or amended certification
setting forth the change of the new, additional or omitted names or signatures.
The Bank will be entitled to rely and act upon any Officer's Certificate given
to it by the Trust that has been signed by Authorized Persons named in the most
recent certification received by the Bank.
5. Custody of Cash. As custodian, the Bank will open and maintain a
separate account or accounts in the name of each Master Portfolio or in the name
of the Bank, as custodian of the Master Portfolios, and will deposit to the
account of a Master Portfolio all of the cash of the Master Portfolio, except
for cash held by a sub-custodian appointed pursuant to subsections 13.3 or 13.4
hereof, including borrowed funds, delivered to the Bank, subject only to draft
or order by the Bank acting pursuant to the terms of this Agreement. Upon
receipt by the Bank of Proper Instructions (which may be continuing
instructions) or in the case of payments for redemptions and repurchases of
outstanding interests of a Master Portfolio, notification from the Master
Portfolio's transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank will release
funds for deposit, and stating that it is for a purpose permitted under the
terms of this Section 5, specifying the applicable subsection, the Bank will
make payments of cash held for the accounts of the Master Portfolio, insofar as
funds are available for that purpose, only as permitted in subsections 5.1-5.9
below.
5.1 Purchase of Securities. Upon the purchase of securities for
a Master Portfolio, against contemporaneous receipt of such securities by the
Bank, or against delivery of such securities to the Bank, in accordance with
generally accepted settlement practices or customs in the jurisdiction or market
in which the transaction occurs, such securities to be registered in the name of
the Master Portfolio or in the name of, or properly endorsed and in form for
transfer to, the Bank, or a nominee of the Bank, or receipt for the account of
the Bank pursuant to the provisions of Section 6 below, each such payment to be
made at the purchase price shown on a broker's confirmation (or transaction
report in the case of Book Entry Paper) of purchase of the securities that is
received by the Bank before such payment is made and that has been confirmed in
the Proper Instructions also received by the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of interests of a Master Portfolio offered for
repurchase or redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of the Master Portfolios. For the
payment on the account of a Master Portfolio of dividends or other distributions
to interestholders as may from time to time be declared by the Board, interest,
taxes, investment advisory or administration fees, and, as and to the extent
provided on Schedule B hereto, any fees of the Bank for its services hereunder
and any reimbursement of the expenses and liabilities of the Bank related to
such services with respect to a Master Portfolio of the Trust as provided
pursuant to subsection 13.6 hereunder and on Schedule B hereto.
5.4 Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by a Master Portfolio held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to a Master
Portfolio, but, in the case of final payment, only upon redelivery to the Bank
of any Portfolio Securities pledged or hypothecated therefor and upon surrender
of documents evidencing the loan.
5.6 Repayment of Cash. To repay the cash delivered to a Master
Portfolio for the purpose of collateralizing the obligation to return to a
Master Portfolio certificates borrowed from the Master Portfolio representing
Portfolio Securities, but only upon redelivery to the Bank of such borrowed
certificates.
5.7 Foreign Exchange Transactions. For payments in connection
with foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery ("Foreign Exchange Agreements") that may
be entered into by the Bank on behalf of a Master Portfolio upon the receipt of
Proper Instructions, such Proper Instructions to specify the currency broker or
banking institution (which may be the Bank, or any other sub-custodian or agent
hereunder, acting as principal) with which the contract or option is made, and
the Bank shall have no duty with respect to the selection of such currency
brokers or banking institutions with which a Master Portfolio deals or for their
failure to comply with the terms of any contract or option.
5.8 Other Authorized Payments. For other authorized transactions
of a Master Portfolio, or other obligations of a Master Portfolio incurred for
proper purposes with respect to a Master Portfolio; provided that before making
any such payment, the Bank also will receive Proper Instructions or a certified
copy of a resolution of the Board signed by an Authorized Person (other than the
Person certifying such resolution) and certified by its Secretary or Assistant
Secretary, naming the person or persons to whom such payment is to be made, and
either describing the transaction for which payment is to be made and declaring
it to be an authorized transaction of a Master Portfolio, or specifying the
amount of the obligation for which payment is to be made, setting forth the
purpose for which such obligation was incurred and declaring such purpose to be
a proper corporate purpose.
5.9 Termination. Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
----------
6.1 Segregation and Registration. Except as otherwise provided
herein, and except for Portfolio Securities to be delivered to any sub-custodian
appointed pursuant to subsections 13.2 or 13.3 hereof, the Bank as custodian,
will receive and hold pursuant to the provisions hereof, in a separate account
or accounts and physically segregated at all times from those of other persons,
any and all Portfolio Securities which may now or hereafter be delivered to it
by or for the account of a Master Portfolio. All such Portfolio Securities will
be held or disposed of by the Bank for, and subject at all times to, the
instructions of the Trust pursuant to the terms of this Agreement. Subject to
the specific provisions herein relating to Portfolio Securities that are not
physically held by the Bank, the Bank will register all Portfolio Securities
(unless otherwise directed by Proper Instructions or an Officer's Certificate),
in the name of a registered nominee of the Bank as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued thereunder,
and will execute and deliver all such certificates in connection therewith as
may be required by such laws or regulations or under the laws of any state. The
Bank will use its best efforts to the end that the specific Portfolio Securities
held by it hereunder will be at all times identifiable.
The Trust, on behalf of a Master Portfolio, will from time to
time furnish to the Bank appropriate instruments to enable it to hold or deliver
in proper form for transfer, or to register in the name of its registered
nominee, any Portfolio Securities which may from time to time be registered in
the name of a Master Portfolio
6.2 Voting and Proxies. Neither the Bank nor any nominee of the
Bank will vote any of the Portfolio Securities held hereunder, except in
accordance with Proper Instructions or an officers' Certificate. The Bank will
execute and deliver, or will cause to be executed and delivered, to the Trust or
its designated agent all notices, proxies and proxy soliciting materials with
respect to such Portfolio Securities, but without indicating the manner in which
such proxies are to be voted, such proxy to be executed by the registered holder
of such Portfolio Securities (if registered otherwise than in the name of a
Master Portfolio), in accordance with the Proper Instructions or an Officer's
Certificate.
6.3 Corporate Action. If at any time the Bank is notified that
an issuer of a Portfolio Security has taken or intends to take a corporate
action (a "Corporate Action") that affects the rights, privileges, powers,
preferences, qualifications or ownership of the Portfolio Security, including,
without limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Trust's designee, Barclays Global Fund Advisors ("BGFA"), promptly of
the Corporate Action, the Response required in connection with the Corporate
Action, and the Bank's deadline for receipt from the Trust's designee, BGFA, of
Proper Instructions regarding the Response (the "Response Deadline"). Except as
provided in subsection 6.3(c) below, the date specified as the Response Deadline
shall not be more than 24 hours prior to the Response expiration day set by the
depository processing such Corporate Action. The Bank shall forward to the
Trust's designee, BGFA, via facsimile and/or overnight courier all notices,
information statements or other materials relating to the Corporate Action
within twenty-four (24) hours of receipt of such materials by the Bank.
(a) The Bank shall act upon a required Response only
after receipt by the Bank of Proper Instructions from the Trust's designee,
BGFA, no later than 4:00 p.m. (Pacific time) on the date specified as the
Response Deadline and only if the Bank (or its agent or sub-custodian
hereunder) has actual possession of all Portfolio Securities (but only if such
Portfolio Securities are necessary for the consummation of the Corporate
Action ("Necessary Portfolio Securities")), consents and other materials
no later than 4:00 p.m. (Pacific time) on the date specified as the Response
Deadline. Portfolio Securities in the possession of a broker or other
borrower pursuant to the Bank's securities lending program shall be deemed to be
in the possession of the Bank for the purposes of this subsection 6.3.
(b) The Bank shall have no duty to act upon a required
Response if Proper Instructions relating to such Response and all Necessary
Portfolio Securities, consents and other materials are not received by and in
the possession of the Bank no later than 4:00 p.m.(Pacific time) on the date
specified as the Response Deadline. Notwithstanding, the Bank may, in its
sole discretion, use its best efforts to act upon a Response for which
Proper Instructions and/or Necessary Portfolio Securities, consents or other
materials are received by the Bank after 4:00 p.m. (Pacific time) on the date
specified as the Response Deadline, it being acknowledged and agreed by the
parties that any undertaking by the Bank to use its best efforts in such
circumstances shall in no way create any duty upon the Bank to complete
such Response prior to its expiration.
(c) In the event that the Trust's designee, BGFA,
notifies the Bank of a Corporate Action requiring a Response and the Bank has
received no other notice of such Corporate Action, the Response Deadline shall
be 48 hours prior to the Response expiration time set by the depository
processing such Corporate Action.
(d) Subsection 13.4(g) of this Agreement shall govern
any Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Sub-custodian.
6.4 Book-Entry System. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of a
Master Portfolio assets in the Book-Entry System, and (ii) for any subsequent
changes to such arrangements following such approval, the Board has reviewed and
approved the arrangement and has not delivered an Officers Certificate to the
Bank indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio Securities are represented in an
account ("Account") of the Bank (or its agent) in such System that shall not
include any assets of the Bank (or such agent) other than assets held as a
fiduciary, custodian, or otherwise for customers:
(b) The records of the Bank (and any such agent) with
respect to a Master Portfolio's participation in the Book-Entry System
through the Bank (or any such agent) will identify by book entry Portfolio
Securities that are included with other securities deposited in the Account and
shall at all times during the regular business hours of the Bank (or such agent)
be open for inspection by duly authorized officers, employees or agents of the
Trust. Where securities are transferred to a Master Portfolio's account, the
Bank shall also, by book entry or otherwise, identify as belonging to the
Master Portfolio a quantity of Portfolio Securities in a fungible bulk of
securities (i) registered in the name of the Bank or its nominee, or (ii) shown
on the Bank's account on the books of the Federal Reserve Bank;
(c) The Bank (or its agent) shall pay for securities
purchased for the account of a Master Portfolio or shall pay cash collateral
against the return of Portfolio Securities loaned by a Master Portfolio upon
(i) receipt of advice from the Book-Entry System that such Securities have been
transferred to the Account, and (ii) the making of an entry on the records of
the Bank (or its agent) to reflect such payment and transfer for the account
of the Master Portfolio. The Bank (or its agent) shall transfer Portfolio
Securities sold or loaned for the account of a Master Portfolio upon:
(i) receipt of advice from the Book-Entry System
that payment for securities sold or payment of the initial cash collateral
against the delivery of Portfolio Securities loaned by the Master Portfolio has
been transferred to the Account: and
(ii) the making of an entry on the records of the
Bank (or its agent) to reflect such transfer and payment for the account of a
Master Portfolio. Copies of all advices from the Book-Entry System of
transfers of Portfolio Securities for the account of a Master
Portfolio shall identify the Master Portfolio, be maintained for the Master
Portfolio by the Bank and shall be provided to the Master Portfolio at its
request. The Bank shall send a Master Portfolio a confirmation, as defined by
Rule 17f-4 of the 1940 Act, of any transfers to or from the account of the
Master Portfolio;
(d) The Bank will promptly provide the Trust with any
report obtained by the Bank or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Book-Entry System;
(e) The Bank shall be liable to the Trust and a Master
Portfolio for any loss or damage to the Master Portfolio resulting from use of
the Book-Entry System by reason of any negligent actions or inactions of
the Bank or any of its agents or of any of its or their employees, or
from any failure by the Bank or any such agent to use its best efforts to
enforce such rights as it may have against the Book-Entry System; at
the election of the Master Portfolio, it shall be entitled to be subrogated for
the Bank in any claim against the Book-Entry System or any other person that the
Bank or its agent may have as a consequence of any such loss or damage if and to
the extent that the Master Portfolio has not been made whole for any loss or
damage;
6.5 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive,
exchange, release, lend, deliver and otherwise deal with Portfolio Securities
including stock dividends, rights and other items of like nature, and to
receive and remit to the Bank on behalf of a Master Portfolio all income and
other payments thereon and to take all steps necessary and proper in
connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in
the name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be
made through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the
account of a Master Portfolio and the Master Portfolio shall pay cash
collateral against the return of Portfolio Securities loaned by the Master
Portfolio only upon delivery of the Securities to or for the account
of the Master Portfolio; and upon any sale of Portfolio Securities, delivery of
the Securities will be made only against payment thereof or, in the event
Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Master Portfolio: and
(d) The Bank shall be liable to a Master Portfolio for
any loss or damage to a Master Portfolio resulting from use of a Depository by
reason of any negligent actions or inactions of the Bank or its employees
or from any failure by the Bank to use its best efforts to enforce such
rights as it may have against a Depository. In this connection, the Bank shall
use its best efforts to ensure that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;
(ii) Any proxy materials received by a Depository
with respect to Portfolio Securities deposited with such Depository are
forwarded immediately to the Bank for voting in accordance with subsection 6.2
above;
(iii) Such Depository immediately forwards to the
Bank confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to a Master Portfolio's account;
(iv) Such Depository prepares and delivers to the
Bank such records with respect to the performance of the Bank's obligations
and duties hereunder as may be necessary for a Master portfolio to
comply with the recordkeeping requirements of Section 31(a) of the 1940 Act and
Rule 31(a) thereunder; and
(v) Such Depository delivers to the Bank and the
Trust all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Trust may
reasonably request in order to verify the Portfolio Securities held by such
Depository.
6.6 Use of Book-Entry System for Commercial Paper. Provided (i)
the Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that a Master Portfolio has purchased such Issuer's
Book-Entry Paper, the Bank shall issue and hold in book-entry form, on behalf of
the Master Portfolio, commercial paper issued by issuers with whom the Bank has
entered into a book-entry agreement (the "Issuers"). In maintaining its
procedures for Book-Entry Paper, the Bank agrees that:
(a) The Bank will maintain all Book-Entry Paper held by
a Master Portfolio in an account of the Bank that includes only assets held by
it for customers;
(b) The records of the Bank with respect to a Master
Portfolio's purchase of Book-Entry Paper through the Bank will identify, by
book-entry, commercial paper belonging to the Master Portfolio that is included
in the Book-Entry Paper System and shall at all times during the regular
business hours of the Bank be open for inspection by duly authorized officers,
employees or agents of the Trust;
(c) The Bank shall pay for Book-Entry Paper purchased
for the account of a Master Portfolio upon contemporaneous (i) receipt of
advice from the Issuer that such sale of Book-Entry Paper has been
effected, and (ii) the making of an entry on the records of the Bank to
reflect such payment and transfer for the account of the Master Portfolio;
(d) The Bank shall cancel such Book-Entry Paper
obligation upon the maturity thereof upon contemporaneous (i) receipt of advice
that payment for such Book-Entry Paper has been transferred to the Master
Portfolio, and (ii) the making of an entry on the records of the Bank to
reflect such payment for the account of the Master Portfolio;
(e) The Bank shall transmit to the Trust a transaction
journal confirming each transaction in Book-Entry Paper for the account of a
Master Portfolio on the next business day following the transaction: and
(f) The Bank will send to the Trust such reports on its
system of internal accounting control with respect to Book-Entry Paper as the
Trust may reasonably request from time to time.
6.7 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a sub-custodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities that are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Portfolio Securities are identified on the books of the Bank
as belonging to a Master Portfolio and that the books of the Bank identify the
European Branch holding such Portfolio Securities. Notwithstanding any other
provision of this Agreement to the contrary, except as stated in the first
sentence of this subsection 6.8, the Bank shall be under no other duty with
respect to such Eurodollar CDs belonging to a Master Portfolio, and the Bank
shall have no liability to the Master Portfolio or its interestholders with
respect to the actions, inactions, whether negligent or otherwise of such
European Branch in connection with such Eurodollar CDs, except for any loss or
damage to the Master Portfolio resulting from the Bank's own negligent actions
or inactions or lack of reasonable care in the performance of its duties
hereunder.
6.9 Options and Futures Transactions.
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(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the Counter.
(i) The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by a Master
Portfolio regarding escrow or other arrangements in accordance with the
provisions of any agreement entered into upon receipt of Proper Instructions
between the Bank, any broker-dealer registered under the Exchange Act and a
member of the National Association of Securities Dealers, Inc. (the
"NASD"), and, if necessary, the Trust, on behalf of the Master Portfolio,
relating to the compliance with the rules of the Options Clearing Corporation
and of any registered national securities exchange, or of any similar
organization or organizations.
(ii)Unless another agreement requires it to do so,
the Bank shall be under no duty or obligation to see that a Master Portfolio
has deposited or is maintaining adequate margin, if required, with any
broker in connection with any option, nor shall the Bank be under duty or
obligation to present such option to the broker for exercise unless it
receives Proper Instructions from the Trust. The Bank shall have no
responsibility for the legality of any put or call purchased or sold on behalf
of a Master Portfolio, the propriety of any such purchase or sale, or the
adequacy of any collateral delivered to a broker in connection with an option or
deposited to or withdrawn from a Segregated Account (as defined in subsection
6.10 below). The Bank specifically, but not by way of limitation, shall not be
under any duty or obligation to: (1) periodically check or notify a Master
Portfolio that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker or the Master Portfolio
against any loss; (2) effect the return of any collateral delivered to a broker;
or (3) advise the Master Portfolio that any option it holds, has or is about to
expire. Such duties or obligations shall be the sole responsibility of a Trust.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action, upon receipt of
Proper Instructions, as to puts, calls and futures contracts ("futures")
purchased or sold by a Master Portfolio in accordance with the provisions of
any agreement among the Trust, on behalf of a Master Portfolio, the
Bank and a Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization(s), regarding account deposits in connection with transactions by
the Master Portfolio.
(ii) The responsibilities and liabilities of the
Bank as to futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as set
forth in subparagraph (a)(ii) of this subsection 6.9 as if such subparagraph
referred to Futures Commission Merchants rather than brokers, and futures
and puts and calls thereon instead of options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of a Master Portfolio, into which Account or Accounts may be transferred
upon receipt of Proper Instructions, cash and/or Portfolio Securities.
(a) Cash and/or Portfolio Securities may be transferred
into a Segregated Account in the following circumstances, upon receipt of Proper
Instructions:
(i) in accordance with the provisions of any
agreement among the Trust, on behalf of a Master Portfolio, the Bank and a
broker-dealer registered under the Exchange Act and a member of the NASD or
any Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange or the Commodity
Futures Trading Commission or any registered Contract Market, or of any similar
organizations regarding escrow or other arrangements in connection with
transactions by a Master Portfolio;
(ii) for the purpose of segregating cash or
Securities in connection with options purchased or written by a Master Portfolio
or commodity futures purchased or written by a Master Portfolio;
(iii) for the deposit of liquid assets, such as
cash, U.S. Government obligations or other high-grade debt obligations, having
a market value (marked-to-market on a daily basis) at all times equal to not
less than the aggregate purchase price due on the settlement dates of all a
Master Portfolio's then outstanding forward commitment or "when-issued
agreements relating to the purchase of Portfolio Securities and all a Master
Portfolio's then outstanding commitments under any reverse repurchase
agreements entered into with broker-dealer firms;
(iv) for the purposes of compliance by a Master
Portfolio with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of Segregated Accounts by registered
investment companies;
(v) for other proper corporate purposes, but only,
in the case of this clause (v), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the
Executive Committee, signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, setting forth the purpose(s) of such
Segregated Account and declaring such purpose(s) to be a proper corporate
purpose(s).
(b) assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only:
(i) with respect to assets deposited in accordance
with the provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;
(ii ) with respect to assets deposited pursuant to
(a)(iii) or (a)(iv) above, for sale or delivery to meet a Master Portfolio's
obligations under outstanding forward-commitment, delayed-settlement or
when-issued agreements for the purchase of Portfolio Securities and under
reverse repurchase agreements;
(iii) for exchange for other liquid assets of
equal or greater value deposited in the Segregated Account;
(iv) to the extent that a Master Portfolio's
outstanding forward- commitment or when-issued agreements for the purchase of
portfolio securities or any reverse repurchase agreements are sold to other
parties or the Master Portfolio's obligations thereunder are met
from assets of the Master Portfolio other than those in the Segregated Account;
(v) for delivery upon settlement of a forward-
commitment, delayed-settlement or when-issued agreement for the sale of
Portfolio Securities: or
(vi) with respect to assets deposited pursuant to
(a)(v) above, in accordance with the purposes of such account as set forth in
Proper Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall,
upon receipt of Proper Instructions relating to the purchase by a Master
Portfolio of interest-bearing fixed-term and call deposits, transfer cash, by
wire or otherwise, in such amounts and to such bank(s) as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of a Master Portfolio appropriate notation as to the amount of each
such deposit, the banking institution with which such deposit is made (the
"Deposit Bank"), and shall retain such forms of advice or receipt evidencing the
deposit, if any, as may be forwarded to the Bank by the Deposit Bank. Such
deposits shall be deemed Portfolio Securities of a Master Portfolio and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the Master
Portfolio.
6.12 Transfer of Securities. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section, the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this subsection
6.12, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:
(a) upon sales of Portfolio Securities for the account
of a Master Portfolio, against contemporaneous receipt by the Bank of payment
therefor in full, or against payment to the Bank in accordance with
generally accepted settlement practices and customs in the jurisdiction or
market in which the transaction occurs, each such payment to be in the amount
of the sale price shown in a broker's confirmation of sale of the Portfolio
Securities received by the Bank before such payment is made, as confirmed
in the Proper Instructions received by the Bank before such payment is made;
(b) in exchange for, or upon conversion into, other
securities alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of
subscription, purchase or sale or other similar rights represented by such
Portfolio Securities, or for the purpose of tendering shares in the event of a
tender offer therefor, provided however that in the event of an offer of
exchange, tender offer, or other exercise of rights requiring the physical
tender or delivery of Portfolio Securities, the Bank shall have no liability for
failure to so tender in a timely manner unless such Proper Instructions are
received by the Bank at least two business days prior to the date required for
tender, and unless the Bank (or its agent or sub-custodian hereunder) has actual
possession of such Portfolio Security at least two business days prior to the
date of tender
(c) upon conversion of Portfolio Securities pursuant to
their terms into other securities;
(d) for the purpose of redeeming in kind interests of a
Master Portfolio upon authorization from the Master Portfolio;
(e) in the case of option contracts owned by a Master
Portfolio, for presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed
or retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of
Portfolio Securities held by the Bank in order to collateralize loans made to a
Master Portfolio by any bank, including the Bank; provided, however, that
such Securities will be released only upon payment to the Bank for the account
of the Master Portfolio of the moneys borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, and
such fact is made to appear in the Proper Instructions, further Portfolio
Securities may be released for that purpose without any such payment.
In the event that any such pledged Portfolio Securities are held by the Bank,
they will be so held for the account of the lender, and after notice to
the Master Portfolio from the lender in accordance with the normal procedures of
the lender, that an event of deficiency or default on the loan has occurred, the
Bank may deliver such pledged Portfolio Securities to or for the account of the
lender,
(h) for the purpose of releasing certificates
representing Portfolio Securities, against contemporaneous receipt by the Bank
of the fair market value of such security, as set forth in the Proper
Instructions received by the Bank before such payment is made;
(i) for the purpose of delivering Portfolio Securities
lent by a Master Portfolio to a bank or broker dealer, but only against receipt
in accordance with street delivery custom except as otherwise provided
herein, of adequate collateral as agreed upon from time to time by the Master
Portfolio and the Bank, and upon receipt of payment in connection with any
repurchase agreement relating to such Securities entered into by the Master
Portfolio;
(j) for other authorized transactions of a Master
Portfolio or for other proper corporate purposes; provided that before making
such transfer, the Bank will also receive a certified copy of resolutions of
the Board, signed by an authorized officer of the Trust (other than the
officer certifying such resolution) and certified by its Secretary or
an Assistant Secretary, specifying the Portfolio Securities to be delivered,
setting forth the transaction in or purpose for which such delivery is to be
made, declaring such transaction to be an authorized transaction of the Master
Portfolio or such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such Securities shall be made; and
(k) upon termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of a Master Portfolio
held by the Bank in connection with redemptions and repurchases by the Master
Portfolio of outstanding interests, the Bank will rely on notification by the
Trust's transfer agent of receipt of a request for redemption before such
payment is made. Payment shall be made in accordance with the Amended and
Restated Declaration of Trust (the "Trust Declaration") and By-Laws of the
Trust, from assets available for said purpose.
8. Merger, Dissolution. etc. of the Trust or a Master Portfolio. In the
case of the following transactions, not in the ordinary course of business,
namely, the merger of a Master Portfolio into or the consolidation of the Trust
with another investment company, the sale by the Trust of all, or substantially
all, of the assets of one or more Master Portfolios to another investment
company, or the liquidation or dissolution of a Master Portfolio and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Trust,
on behalf of such Master Portfolio(s) set forth in an Officer's Certificate,
accompanied by a certified copy of a resolution of the Board authorizing any of
the foregoing transactions. Upon completion of such delivery and disbursement
and the payment of the fees, disbursements and expenses of the Bank, this
Agreement will terminate with respect to such Master Portfolio or Trust, as
applicable.
9. Actions of the Bank Without Prior Authorization.
Notwithstanding anything herein to the contrary, unless and until the Bank
receives an Officer's Certificate to the contrary, it will without prior
authorization or instruction of the Trust or the transfer agent:
(a) Endorse for collection and collect on behalf of and
in the name of a Master Portfolio all checks, drafts, or other negotiable or
transferable instruments or other orders for the payment of money received by
it for the account of the Master Portfolio and hold for the account of the
Master Portfolio all income, dividends, interest and other payments or
distributions of cash with respect to the Portfolio Securities held thereunder;
(b) Present for payment all coupons and other income
items held by it for the account of a Master Portfolio that call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Master Portfolio;
(c) Receive and hold for the account of a Master
Portfolio all securities received as a distribution on Portfolio Securities
as a result of a stock dividend, share split-up, reorganization,
recapitalization, merger, consolidation, readjustment, distribution of
rights and similar securities issued with respect to any Portfolio
Securities held by it hereunder.
(d) execute as agent on behalf of a Master Portfolio
all necessary ownership and other certificates and affidavits required by the
Internal Revenue Code or the regulations of the Treasury Department issued
thereunder, or by the laws of any state, now or hereafter in effect,
inserting a Master Portfolio's name on such certificates as the owner of the
securities covered thereby, to the extent it may lawfully do so and as may be
required to obtain payment in respect thereof. The Bank will execute and
deliver such certificates in connection with Portfolio Securities
delivered to it or by it under this Agreement as may be required under the
provisions of the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, or under the laws of any State;
(e) present for payment all Portfolio Securities that
are called, redeemed, retired or otherwise become payable, and hold cash
received by it upon payment for the account of a Master Portfolio; and
(f) exchange interim receipts or temporary securities
for definitive securities.
10. Collections and Defaults. The Bank will use all reasonable efforts
to collect any funds that may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Trust, on behalf of a Master Portfolio, notice actually received
by the Bank of any call for redemption, offer of exchange, right of
subscription, reorganization or other proceedings affecting such Portfolio
Securities. If Portfolio Securities upon which such income is payable are in
default or payment is refused after due demand or presentation, the Bank will
notify the Trust, on behalf of a Master Portfolio, in writing of any default or
refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal. In addition, the Bank will send the Trust
a written report once each month showing any income on any Portfolio Security
held by Bank on behalf of a Master Portfolio that is more than ten days overdue
on the date of such report.
11. Maintenance of Records and Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act and will furnish the Trust
daily with a statement of condition of each Master Portfolio. The Bank will
furnish to the Trust at the end of every month, and at the close of each quarter
of the Trust's fiscal year, a list of the Portfolio Securities and the aggregate
amount of cash held by Bank on behalf of each Master Portfolio. The books and
records of the Bank pertaining to its actions under this Agreement and reports
by the Bank or its independent accountants concerning its accounting system,
procedures for safeguarding securities and internal accounting controls will be
open to inspection and audit at reasonable times by officers of or auditors
employed by the Trust and will be preserved by the Bank in the manner and in
accordance with the applicable rules and regulations under the 1940 Act.
The Bank shall perform the fund accounting services listed on
Schedule C hereto and shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Trust.
The Bank shall assist generally in the preparation of reports
to shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Master Portfolio Evaluation and Performance Calculations.
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12.1 Master Portfolio Evaluation. The Bank shall compute and,
unless otherwise directed by the Board, determine as of the close of regular
trading on the New York Stock Exchange on each day on which said Exchange is
open for unrestricted trading and as of such other days, or hours, if any, as
may be authorized by the Board, the net asset value and the offering price of an
interest of each Master Portfolio, such determination to be made in accordance
with the provisions of the Trust Declaration and By-Laws and Registration
Statement of the Trust relating to the Master Portfolios, as it may from time to
time be amended, and any applicable resolutions of the Board at the time in
force and applicable; and promptly to notify the Trust, any applicable exchange,
the NASD or such other persons as the Trust may request of the results of such
computation and determination. In computing the net asset value hereunder, the
Bank may rely in good faith upon information that the Bank reasonably believes
to be accurate and reliable furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of each Master Portfolio and in
respect of liabilities of a Master Portfolio not appearing on its books of
account kept by the Bank, (ii) reserves, if any, authorized by the Board or that
no such reserves have been authorized, (iii) the source of the quotations to be
used in computing the net asset value, (iv) the value to be assigned to any
security for which no price quotations are available, and (v) the method of
computation of the offering price on the basis of the net asset value of the
interests, and the Bank shall not be responsible for any loss occasioned by its
reasonable and good faith reliance on any quotations received from a source
pursuant to (iii) above.
12.2. Performance Calculations. The Bank will compute the
performance results of each Master Portfolio (the "Performance Calculations") in
accordance with applicable provisions of the 1933 Act and 1940 Act and the rules
under such Acts related to the computations to be undertaken by the Bank
pursuant to this Agreement, as promulgated by the Securities and Exchange
Commission, as such provisions and or rules may be amended from time to time,
and any published interpretations of or general conventions accepted by the
staff of the Securities and Exchange Commission with respect to such rules or
the subject matter thereof ("Subsequent Staff Positions"), subject to the
Registration Statement, as amended from time to time, and the terms set forth
below:
(a) The Bank shall compute the Performance Calculations
for each Master Portfolio for the stated periods of time as shall be mutually
agreed upon, and communicate in a timely manner the result of such computation
to the Trust.
(b) In performing the Performance Calculations, the
Bank will derive from the records it generates and maintains for each
Master Portfolio pursuant Section 11 hereof, the data necessary for the
computation. The Bank shall have no responsibility to review, confirm, or
otherwise assume any duty or liability with respect to the accuracy
or correctness of any such data supplied to it by the Trust, any of the its
designated agents or any of its designated third-party providers.
(c) At the request of the Bank, the Trust shall provide,
and the Bank shall be entitled to rely on, written standards and guidelines to
be followed by the Bank in interpreting and applying the computation methods
pursuant to the rules or any Subsequent Staff Positions as they specifically
apply to a Master Portfolio, provided that the Bank shall be responsible for
general knowledge of such rules and any Subsequent Staff Positions. In the
event that the computation methods in a rule or the Subsequent Staff Positions
or the application to a Master Portfolio of a standard or guideline is not
free from doubt or in the event there is any question of interpretation as
to the characterization of a particular security or any aspect of a security or
a payment with respect thereto (e.g., original issue discount, participating
debt security, income or return of capital, etc.) or otherwise or as to any
other element of the computation that is pertinent to the Master
Portfolio, the Trust or its designated agent, BGFA, shall have the full
responsibility for making the determination of how the security, or payment, is
to be treated for purposes of the computation and how the computation is to be
made and shall inform the Bank thereof on a timely basis. The Bank shall have no
responsibility to make independent determinations with respect to any item that
is covered by this Section, and the Bank shall not be responsible for its
computations made in accordance with such determinations so long as such
computations are mathematically correct.
(d) The Trust shall keep the Bank informed of all publicly available
information, and of any non-public advice or information, obtained by the Trust
from its independent auditors or by its personnel or the personnel of its
investment adviser, related to the computations to be undertaken by the Bank
pursuant to this Agreement, and the Bank shall not be deemed to have knowledge
of such information (except as contained in the Registration Statement) unless
it has been furnished to the Bank in writing.; provided that the Bank shall be
charged with knowledge of any material changes to the 1933 Act, the 1940 Act,
and any related rules under such acts related to the computations to be
undertaken by the Bank pursuant to this Agreement without specific notice from
the Trust.
13. Concerning the Bank.
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13.1 Bank Warranty. The Bank warrants that it has and will
maintain at least the minimum qualifications required by Section 17(f)(1) of the
1940 Act to act as custodian of the Portfolio Securities and other assets
including cash of the Trust's Master Portfolios.
13.2 Standard of Care and Performance of Duties.
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(a) The Bank agrees to use reasonable care with regard
to its obligations under this Agreement and the safekeeping of property of the
Master Portfolios. In performing its duties hereunder and any other duties
listed on the Schedules hereto, the Bank will be entitled to receive and act
upon the advice of independent counsel of its own selection, which may be
counsel for the Trust, and the Bank will be without liability for any action
taken or thing done, or omitted to be done, so long as the Bank's actions or
inactions are without negligence and in accordance with this Agreement in
good faith in conformity with such advice. The Bank shall be liable to, and
shall indemnify and hold harmless the Trust from and against any loss which
shall occur as the result of the failure of the Bank or a
sub-custodian (other than a foreign securities depository or clearing agency and
except as provided in subsections 6.8, 13.2 and 13.3(i) hereof) to exercise
reasonable care with respect to their respective obligations under this
Agreement and the safekeeping of such property. Subject to the foregoing, the
Bank will not be responsible for any act, omission, default or for the solvency
of any foreign securities depository or clearing agency utilized in connection
with the provision of services under this Agreement.
(b) In the performance of its duties hereunder, the
Bank will be protected and not be liable, and will be indemnified and held
harmless for any action taken or omitted to be taken by it with reasonable
care and in good faith reliance upon the terms of this Agreement, any
Officer's Certificate, Proper Instructions, resolution of the Board,
facsimile, telegram, notice, request, certificate or other instrument
reasonably believed by the Bank to be genuine and for any other loss to the Fund
except in the case of its negligent actions or inactions or lack of good faith
or reasonable care in the performance of its obligations or duties hereunder.
(c) The Bank will be under no duty or obligation to
inquire into and will not be liable for:
(i) the validity of the issue of any Portfolio
Securities purchased by or for a Master Portfolio, the legality of the purchases
thereof or the propriety of the price incurred therefor;
(ii) the legality of any sale of any Portfolio
Securities by or for the Master Portfolio or the propriety of the amount for
which the same are sold;
(iii) the legality of an issue or sale of any
interests of a Master Portfolio or the sufficiency of the amount to be received
therefor;
(iv) the legality of the repurchase of any
interests of a Master Portfolio or the propriety of the amount to be paid
therefor;
(v) the legality of the declaration of any
dividend by a Master Portfolio or the legality of the distribution of any
Portfolio Securities as payment in kind of such dividend; and
(vi) any property or moneys of a Master Portfolio
unless and until received by it, and any such property or moneys delivered or
paid by it pursuant to the terms hereof.
(d) Moreover, the Bank will not be under any duty or
obligation to ascertain whether any Portfolio Securities at any time delivered
to or held by it for the account of a Master Portfolio are such as may properly
be held by the Master Portfolio under the provisions of its
Trust Declaration, By-Laws, any federal or state statutes or any rule or
regulation of any governmental agency.
(e) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Bank be liable hereunder or to any third party:
(i) for any losses or damages of any kind
resulting from acts of God, earthquakes, fires, floods, storms or other
disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation, or computers (hardware or software)
and computer facilities, the unavailability of energy sources and other similar
happenings or events, except as results from the Bank's own negligence, provided
that the Bank shall make all reasonable efforts, whenever necessary, to use data
processing back-up facilities provided by Electronic Data Systems, Inc.; or
(ii) for special, punitive or consequential
damages arising from the provision of services hereunder, even if the Bank has
been advised of the possibility of such damages; provided, however, that
the parties specifically acknowledge and agree that damages, if
any, incurred by the Trust, its Master Portfolios or its agents (including, but
not limited to, BGFA or the Trust's transfer or shareholder servicing agents) on
account of late or incorrect net asset values and related information provided
to the Trust, its Master Portfolios, its agents or other third parties as may be
agreed in writing by BGI and IBT from time to time, are not to be considered
special, punitive or consequential damages for purposes of this subsection
13.2(e)(ii).
(f) The Bank shall supply BGI with such daily
information regarding the cash and securities positions and activity of each
Master Portfolio as the Bank and BGI shall from time to time agree.
(g) The Bank need not maintain any insurance for the
exclusive benefit of the Trust, but hereby warrants that as of the date of this
Agreement it is maintaining a bankers Blanket Bond and hereby agrees to
notify the Trust in the event that such bond is canceled or
otherwise lapses.
13.3 Agents and Sub-custodians with Respect to Property of the
Master Portfolios Held in the United States. The Bank may employ agents in the
performance of its duties hereunder and shall be responsible for the acts and
omissions of such agents as if performed by the Bank hereunder. Without limiting
the foregoing, certain duties of the Bank hereunder may be performed by one or
more affiliates of the Bank.
Upon receipt of Proper Instructions, the Bank may employ
sub-custodians, provided that any such sub-custodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of a Master Portfolio's assets with respect to property of the Master
Portfolio held in the United States. The Bank shall have no liability to the
Trust or any other person by reason of any act or omission of any sub-custodian
and the Trust shall indemnify the Bank and hold it harmless from and against any
and all actions, suits and claims, arising directly or indirectly out of the
performance of any sub-custodian. Upon request of the Bank, the Trust shall
assume the entire defense of any action, suit, or claim subject to the foregoing
indemnity. All fees and expenses of any sub-custodian shall be paid in
accordance with Schedule B hereto.
13.4 Duties of the Bank with Respect to Property of the Master Portfolio Held
Outside of the United States.
(a) Appointment of Foreign Sub-custodians. The Trust hereby authorizes and
instructs the Bank to employ as sub-custodians for the Trust's Portfolio
Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated by the Board (each, a "Selected Foreign Sub-custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Trust's Board of Trustees, the Bank and the Trust may agree to designate
additional foreign banking institutions and foreign securities
depositories to act as Selected Foreign Sub-custodians hereunder. Upon receipt
of Proper Instructions, the Trust may instruct the Bank to cease the employment
of any one or more such Selected Foreign Sub-custodians for maintaining custody
of a Master Portfolio's assets, and the Bank shall so cease to employ such
sub-custodian as soon as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Bank and the Trust, assets of a Master Portfolio shall
be maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the provisions set
forth in subparagraph (d) hereof. Notwithstanding the foregoing, except as may
otherwise be agreed upon in writing by the Bank and the Trust, the Trust
authorizes the deposit in Euro-Clear, the securities clearance and
depository facilities operated by Morgan Guaranty Trust Company of New York in
Brussels, Belgium, of Foreign Securities eligible for deposit therein and
to utilize such securities depository in connection with settlements
of purchases and sales of securities and deliveries and returns of securities,
until notified to the contrary pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its books as
belonging to a Master Portfolio the Foreign Securities held by each Selected
Foreign Sub-custodian. Each agreement pursuant to which the Bank employs a
foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account, Foreign Securities and
other assets of the Master Portfolios, and, in the event that such
institution deposits Foreign Securities in a foreign securities depository,
that it shall identify on its books as belonging to the Bank the securities so
deposited.
(d) Agreements with Foreign Banking Institutions. Each of the agreements
pursuant to which a foreign banking institution holds assets of the Trust's
Master Portfolios (each, a "Foreign Sub-custodian Agreement") shall be
substantially in the form previously made available to the Trust and shall
provide that: (a) such assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for their
safe custody or administration (including, without limitation, any fees or
taxes payable upon transfers or reregistration of securities);
(b) beneficial ownership of such assets will be freely transferable
without the payment of money or value other than for custody or administration
(including, without limitation, any fees or taxes payable upon transfers or
reregistration of securities); (c) adequate records will be maintained
identifying the assets as belonging to the Bank; (d) officers of or auditors
employed by, or other representatives of the Bank, including to the extent
permitted under applicable law, the independent auditors for the Trust, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Bank; and (e) assets of a
Master Portfolio held by the Selected Foreign Sub-custodian will be subject only
to the instructions of the Bank or its agents.
(e) Access of Independent Auditors of the Trust.
Upon request of the Trust, the Bank will use its best efforts to arrange for the
Trust's independent auditors to be afforded access to the books and records
of any foreign banking institution employed as a Selected Foreign
Sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its Foreign Sub-custodian
Agreement.
(f) Reports by the Bank. The Bank will supply to the
Trust from time to time, as mutually agreed upon statements in respect of the
securities and other assets of a Master Portfolio held by Selected Foreign
Sub-custodians, including but not limited to an identification of entities
having possession of the Foreign Portfolio Securities and other assets of the
Master Portfolio.
(g) Transactions in Foreign Custody Accounts.
Transactions with respect to the assets of a Master Portfolio held by a Selected
Foreign Sub-custodian shall be effected pursuant to Proper Instructions from
the Trust to the Bank and shall be effected in accordance with the applicable
Foreign Sub-custodian Agreement. If at any time any Foreign Portfolio
Securities shall be registered in the name of the nominee of the
Selected Foreign Sub-custodian, the Trust agrees to hold any such nominee
harmless from any liability by reason of the registration of such securities in
the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Securities received for the account of a
Master Portfolio and delivery of Foreign Securities maintained for the account
of a Master Portfolio may be effected in accordance with the customary
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer.
In connection with any action to be taken with respect to the Foreign
Securities held hereunder, including, without limitation, the exercise of any
voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Trust or
its investment adviser such information in connection therewith as is made
available to the Bank by the Foreign Sub-custodian, and the Bank shall promptly
forward to the applicable Foreign Sub-custodian any instructions, forms or
certifications with respect to such Rights, and any instructions relating to the
actions to be taken in connection therewith, as the Bank shall receive pursuant
to Proper Instructions. The Bank agrees to use its best efforts to obtain and
forward to the Trust or its designated agent, BGFA, information regarding Rights
with respect to Foreign Securities held hereunder. Notwithstanding the
foregoing, the Bank shall have no further duty or obligation with respect to
such Rights, including, without limitation, the determination of whether a
Master Portfolio is entitled to participate in such Rights under applicable U.S.
and foreign laws, or the determination of whether any action proposed to be
taken with respect to such Rights by the Master Portfolio or by the applicable
Foreign Sub-custodian will comply with all applicable terms and conditions of
any such Rights or any applicable laws or regulations, or market practices
within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-custodians.
Each Foreign Sub-custodian Agreement with a foreign banking institution shall
require the institution to exercise reasonable care in the performance of
its duties and to indemnify, and hold harmless, the Bank and Trust from and
against certain losses, damages, costs, expenses, liabilities or claims
arising out of or in connection with the institution's performance of such
obligations, all as set forth in the applicable Foreign Sub-custodian
Agreement. The Trust acknowledges that the Bank, as a participant in Euroclear,
is subject to the Terms and Conditions Governing the Euroclear System, a copy of
which has been made available to the Trust. The Trust acknowledges that pursuant
to such Terms and Conditions, Morgan Guaranty Brussels shall have the sole right
to exercise or assert any and all rights or claims in respect of actions or
omissions of, or the bankruptcy or insolvency of, any other depository,
clearance system or custodian utilized by Euroclear in connection with a Master
Portfolio's Portfolio Securities and other assets.
(i) Liability of Bank. The Bank shall have no more or
less responsibility or liability on account of the acts or omissions of any
Selected Foreign Sub-custodian employed hereunder than any such Selected
Foreign Sub-custodian has to the Bank and, without limiting the foregoing,
the Bank shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism, political risk (including, but not
limited to, exchange control restrictions, confiscation, insurrection, civil
strife or armed hostilities) other losses due to Acts of God, nuclear incident
or any loss where the Selected Foreign Sub-custodian has otherwise exercised
reasonable care.
(j) Monitoring Responsibilities. The Bank shall
furnish annually to the Trust, information concerning the Selected Foreign
Sub-custodians employed hereunder for use by the Trust's Board or its
designated agent in evaluating such Selected Foreign Sub-custodians to
ensure compliance with the requirements of Rule 17f-5 of the 1940 Act. In
addition, the Bank will promptly inform the Trust in the event that the Bank is
notified by a Selected Foreign Sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of a Master Portfolio held by a Foreign
Sub-custodian.
(k) Tax Law. The Bank shall have no liability for any
obligations now or hereafter imposed on the Trust, or its Master Portfolios,
or the Bank as custodian of the Trust by the tax laws of any jurisdiction.
The sole responsibility of the Bank with regard to such taxes shall be to use
reasonable efforts to assist the Trust with respect to the
withholding and payment by the Trust of such taxes and with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Trust
is entitled to such exemptions or refunds.
13.5 Insurance. The Bank shall use the same care with respect to
the safekeeping of Portfolio Securities and cash of the Trust's Master
Portfolios held by it as it uses in respect of its own similar property but need
not maintain any special insurance for the benefit of the Trust.
13.6. Fees and Expenses of Bank. The Trust, on behalf of a
Master Portfolio, will pay or reimburse the Bank from time to time for any
transfer taxes payable upon transfer of Portfolio Securities made hereunder. All
necessary proper disbursements, expenses and charges made or incurred by the
Bank in the performance of this Agreement (including any duties listed on
Schedule C hereto) including any indemnities for any loss, liabilities or
expense to the Bank as provided above shall be paid in accordance with Schedule
B hereto, provided that the Bank shall not be entitled to compensation and/or
reimbursement for services and/or expenses and liabilities by the Trust, with
respect to the Master Portfolios (with the exception of the Extended Index and
U.S. Equity Index Master Portfolios), hereunder so long as the Bank is entitled
to receive compensation and reimbursements from Barclays Global Investors, N.A.
("BGI") for providing sub-administration services to the Trust on behalf of the
Master Portfolios. If the Bank no longer is entitled to receive such
compensation and reimbursements from BGI, the Bank shall be entitled hereunder
to such compensation or fees and reimbursements at such rate and at such times
as it may from time to time negotiate with the Trust, and such Schedule B shall
be amended accordingly.
13.7 Advances by Bank. The Bank may, in its sole discretion,
advance funds on behalf of a Master Portfolio to make any payment permitted by
this Agreement upon receipt of any proper authorization required by this
Agreement for such payments. Should such a payment or payments, with advanced
funds, result in an overdraft (due to insufficiencies of a Master Portfolio's
account with the Bank, or for any other reason) this Agreement deems any such
overdraft or related indebtedness, a loan made by the Bank to the Master
Portfolio payable on demand and bearing interest at the current rate charged by
the Bank for such loans unless the Master Portfolio shall provide the Bank with
agreed upon compensating balances. The Trust agrees that the Bank shall have a
continuing lien and security interest to the extent of any overdraft or
indebtedness, in and to any property at any time held by it for a Master
Portfolio's benefit or in which the Master Portfolio has an interest and which
is then in the Bank's possession or control (or in the possession or control of
any third party acting on the Bank's behalf). The Trust authorizes the Bank, in
its sole discretion, at any time to charge any overdraft or indebtedness,
together with interest due thereon against any balance of account standing to
the credit of a Master Portfolio on the Bank's books.
14. Termination.
-----------
(a) This Agreement shall be effective for an initial
term of two (2) years commencing upon the date hereof (the "Initial Term")
unless earlier terminated as provided in subsection (b) below.
Thereafter, the Agreement may be terminated at any time, without penalty upon
sixty (60) days' written notice delivered by either party to the other by means
of registered mail, and upon the expiration of such sixty (60) days, this
Agreement will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than ninety (90) days from the
date of delivery of such notice (i) by the Bank in order to prepare for the
transfer by the Bank of all of the assets of the Master Portfolios held
hereunder, or (ii) by the Trust in order to give it an opportunity to make
suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Bank agrees to make available to the Trust,
at its request, the records maintained by the Bank relating to the performance
of its duties as custodian and to preserve such records for the periods
prescribed in Rule 31a-2 under the 1940 Act.
(b) Notwithstanding subsection (a) above, either party
hereto may terminate this Agreement at any time prior to the expiration of the
Initial Term in the event that the other party violates any material provision
of this Agreement, provided that the violating party does not cure such
violation within ninety (90) days of receipt of written notice from the
non -violating party of such violation.
(c) Notwithstanding subsection (a) above, the Trust may
terminate this Agreement at any time prior to the expiration of the
Initial Term in the event that (i) the Board of Trustees determines that
the performance of the Bank does not meet the reasonable satisfaction
(considered in light of industry standards) of the Board of Trustees,
provided that the Bank does not cure such unsatisfactory performance within
ninety (90) days of receipt of written notice specifying such
unsatisfactory performance; or (ii) if the Bank becomes the subject of any state
or federal bankruptcy proceeding that is not dismissed within sixty (60) days of
the initiation of such proceeding.
(d) In the event of the termination of this Agreement,
the Bank will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio Securities duly
endorsed and all records maintained under Section 11 to the successor
custodian when appointed by the Trust. The obligation of the Bank to
deliver and transfer over the assets of the Trust's Master Portfolios held by
the Bank directly to such successor custodian will commence as soon as such
successor is appointed and will continue until completed as aforesaid. If the
Trust does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection 14(c), deliver the Portfolio Securities and cash of the
Trust's Master Portfolio held by the Bank to a bank or trust company of its own
selection that meets the requirements of Section 17(f)(1) of the 1940 Act and
has a reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Trust's Master Portfolios under
terms similar to those on which they were held by the Bank, whereupon such bank
or trust company so selected by the Bank will become the successor custodian of
such assets of the Trust's Master Portfolios with the same effect as though
selected by the Board.
(e) Prior to the expiration of ninety (90) days after
notice of termination has been given, the Trust may furnish the Bank with an
order of the Trust advising that a successor custodian cannot be found
willing and able to act upon reasonable and customary terms and that there has
been submitted to the Master Portfolio's interestholders the question of
whether a Master Portfolio will be liquidated or will function without a
custodian for the assets of the Master Portfolio. In that event the Bank will
deliver the Portfolio Securities and cash of the Trust's Master
Portfolios,subject as aforesaid, in accordance with one of such alternatives
that may be approved by the requisite vote of shareholders, upon receipt by the
Bank of a copy of the minutes of the meeting of shareholders at which action was
taken, certified by the Trust's Secretary and an opinion of counsel to the Trust
in form and content satisfactory to the Bank.
15. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, in addition to all other remedies at law or in equity and without bond
or other security, to an injunction or injunctions to prevent breaches of this
provision.
16. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered, via registered U.S.
Mail or facsimile with written confirmation via registered U.S. Mail, to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Trust or a Master
Portfolio to:
Master Investment Portfolio
111 Center Street
Little Rock, AR 72201
Attention: Richard H. Blank, Jr.
With a copy to:
Barclays Global Investors
45 Fremont Street
San Francisco, CA 94105
Attention: Legal Department
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Andrew Nesvet
With a copy to: John E. Henry
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case of
the Trust, such alteration or amendment will be authorized and approved by its
Board.
18. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Trust
without the written consent of the Bank or by the Bank without the written
consent of the Trust, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of the Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
21. Limitation of Liability. The Trust and the Bank agree that the
Trust's obligations under this Agreement shall not be binding upon any Trustee,
interestholder, officer, employee or agent of the Trust individually but are
binding only upon the assets and property of the appropriate Master Portfolio.
22. Single Agreement. This Agreement (including any exhibits,
appendices and schedules hereto) constitutes the entire agreement between the
Bank and the Trust as to the subject matter hereof and supersedes any and all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered between the Bank and the Trust.
23. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first written above.
Master Investment Portfolio
By: /s/ Richard H. Blank, Jr.
--------------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
Investors Bank & Trust Company
By: /s/ Robert D. Mancuso
--------------------------------------------
Name: Robert D. Mancuso
Title: Managing Director
Investors Bank & Trust Company
By: /s/ John E. Henry
--------------------------------------------
Name: John E. Henry
Title: General Counsel
<PAGE>
Schedule A
Custody Agreement
Master Investment Portfolio
List of Master Portfolios
LifePath Income Master Portfolio
LifePath 2010 Master Portfolio
LifePath 2020 Master Portfolio
LifePath 2030 Master Portfolio
LifePath 2040 Master Portfolio
Asset Allocation Master Portfolio
Bond Index Master Portfolio
Money Market Master Portfolio
S & P 500 Index Master Portfolio
Extended Index Master Portfolio
U.S. Equity Index Master Portfolio
International Index Master Portfolio
Russell 2000 Index Master Portfolio
Dated: October 21,1996
Amended: June 11, 1998 to include the Money Market Master Portfolio
Amended: October 28, 1998 to include the Extended Index and U.S. Equity
Index Master Portfolios
Amended: July 28, 1999 to include the International Index Master Portfolio
Amended: August 16, 2000 to include the Russell 2000 Index Master Portfolio
<PAGE>
Schedule B
Custody Agreement
Master Investment Portfolio
IBT shall not be entitled to separate compensation from MIP
for providing custody and fund accounting services to MIP's Master Portfolios
(with the exception of the Extended Index and U.S. Equity Index Master
Portfolios) pursuant to this Agreement so long as IBT is entitled to receive
fees and related expenses from BGI, pursuant to the Sub-administration Agreement
between BGI and IBT, for providing such custody and fund accounting services to
MIP's Master Portfolios. If IBT is no longer entitled to receive such fees and
expenses under such Sub-administration Agreement, then IBT shall be entitled to
receive compensation from MIP as IBT may from time to time negotiate with MIP,
and this Schedule B shall be amended accordingly.
<PAGE>
Schedule C
Custody Agreement
Master Investment Portfolio
Fund Accounting Duties
I. A.Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash and
all other debits and credits, as required by subsection (b)(1) of rule 31a-1
under the 1940 Act (the "Rule");
B.General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including interest accrued and
interest received, as required by subsection (b)(2)(i) of the Rule;
C.Separate ledger accounts required by subsection (b) (2) (ii)
and (iii) of the Rule; and
D.A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule.
II. All such books and records shall be the property of the Trust, and
IBT agrees to make such books and records available for inspection by the Trust
or by the Securities and Exchange Commission at reasonable times and otherwise
to keep confidential all records and other information relative to the Trust;
except when requested to divulge such information by duly constituted
authorities or court process, or when requested by the Trust.
III. In addition to the maintenance of the books and records
specified above, IBT shall perform the following accounting services daily for
each Master Portfolio;
A.Calculate the net asset value per interest;
B.Calculate changes in net asset value;
C.Calculate the per share dividend distribution rates:
D.Calculate dividends and any capital-gain distributions;
E.Calculate performance figures, including any yield or total
return and other performance figures, as appropriate;
F.Provide the following reports:
1. a current security position report;
2. a summary report of transactions and pending
maturities (including the principal cost, and accrued interest on each portfolio
security in maturity date order); and
3. a current cash position report (including cash
available from portfolio sales and maturities and sales of a Master Portfolio's
interests less cash needed for redemptions and settlement of portfolio
purchases);
G.Such other similar services with respect to a Master Portfolio
as may be reasonably requested by the Trust.
IV. IBT shall forward the information contained in Section III of this
Schedule to third-party service providers reasonably requested by the Trust, the
Co-Administrators or BGFA.
<PAGE>
CO-ADMINISTRATION AGREEMENT
Master Investment Portfolio
111 Center Street
Little Rock, Arkansas 72201
October 28, 1998
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Barclays Global Investors, N.A.
45 Fremont Street
San Francisco, CA 94105
Ladies and Gentlemen:
This will confirm the agreement among Master Investment Portfolio (the
"Trust") on behalf of its Master Portfolios listed in the attached Appendix A;
as such Appendix may be amended from time to time (each, a "Master Portfolio"
and, collectively, the "Master Portfolios"), Barclays Global Investors, N.A.
("BGI") and Stephens Inc. ("Stephens," together with BGI, the
"Co-administrators") as follows:
1. The Trust is a registered open-end, management investment company.
The Trust engages in the business of investing and reinvesting the assets of
each Master Portfolio in the manner and in accordance with the applicable
investment objective, policies and restrictions specified in the Trust's
currently effective Registration Statement, as amended from time to time (the
"Registration Statement"), filed by the Trust under the Investment Company Act
of 1940 (the "Act"). Copies of the Registration Statement, as most recently
amended, have been furnished to the Co-administrators. Any amendments to the
Registration Statement shall be furnished to the Co-administrators promptly.
2. The Trust is engaging the Co-administrators to provide, or cause to
be provided, the administrative services specified elsewhere in this agreement,
subject to the overall supervision of the Trust's Board of Trustees. Pursuant to
advisory contracts between the Trust and Barclays Global Fund Advisors (the
"Adviser") on behalf of each Master Portfolio, the Trust has engaged the Adviser
to manage the investing and reinvesting of the assets of the Master Portfolios
and to provide advisory services as specified in such advisory contracts.
3. The Co-administrators agree to supervise the administrative
operations and undertake to provide, or cause to be provided, the services
described on Appendix B, as such Appendix may be amended from time to time by
the mutual consent of the parties, the provision of, and liability thereto, for
certain of such services to be allocated on such Appendix, in connection with
the operations of the Trust and the Master Portfolios, and take all reasonable
action in the performance of their obligations under this agreement to assure
that the necessary information is made available to other service providers, as
such may be required by the Trust from time to time; and to provide all other
administrative services reasonably necessary for the operation of the Master
Portfolios, other than those services that are to be provided by the Adviser
pursuant to the advisory contracts and by the Trust's transfer and dividend
disbursing agent and custodian.
4. In consideration of the administration services to be rendered by
the Co-administrators under this agreement, the Co-administrators are entitled
to a monthly fee based on the average daily value (as determined on each
business day at the time set forth in the Prospectus for determining net asset
value per share) of the each Master Portfolio's net assets during the preceding
month at the rates listed in Appendix A. If the fee payable pursuant to this
Paragraph 4 begins to accrue before the end of any month or if this agreement
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating each such monthly fee, the value
of each Master Portfolio's net assets shall be computed in the manner specified
in the Registration Statement and Declaration of Trust for the computation of
the value of the Master Portfolio's net assets in connection with the
determination of the net asset value of interests of the Master Portfolio. For
purposes of this agreement, a "business day" is any day that Barclays Global
Investors Funds, Inc. is open for trading.
5. Except as provided in the advisory contracts on behalf of each of
the Trust's Master Portfolios and in this agreement, the Co-administrators agree
to bear such feeder fund's pro rata portion of the costs of the operations of
such Master Portfolio, including, but not limited to, its pro rata portion of
the compensation of the Trust's trustees who are not affiliated with the
Adviser, the Co-administrators or any of their affiliates; governmental fees;
interest charges; taxes; fees and expenses of its independent auditors, legal
counsel (other than in connection with litigation), transfer agent and dividend
disbursing agent; fees paid to shareholder servicing and other special purpose
agents; expenses of preparing and printing any Parts A or B, interestholders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of trustees of the Trust in connection with their attendance at Board
and other meetings relating to the Trust; office supplies; premiums for fidelity
bonds and errors and omissions and/or officers and trustees liability insurance;
trade association membership dues; fees and expenses of any custodian and fund
accountant, including those for keeping books and accounts and calculating the
net asset value per interest of the Master Portfolios; expenses of
interestholders' meetings; expenses relating to the issuance, registration,
qualification and redemption of interests of the Master Portfolios; any pricing
services; and organizational expenses. Notwithstanding anything to the contrary,
the Co-administrators shall not be required to bear any portion of brokerage
fees payable to the Adviser under its advisory contracts with the Trust and
other expenses connected with the execution of portfolio securities
transactions, litigation expenses, taxes (including income, excise, transfer and
withholding taxes) or cost or expense that a majority of the disinterested
trustees of the Trust deems to be an extraordinary expense. Expenses
attributable to one or more, but not all, of the Master Portfolios shall be
charged against the assets of the relevant Master Portfolios. General expenses
of the Trust shall be allocated among the Master Portfolios in a manner
proportionate to the net assets of each Master Portfolio, on a transactional
basis or on such other basis as the Board of Trustees deems equitable.
6. Each Co-administrator shall exercise reasonable care and shall give
the Trust the benefit of the Co-administrator's best judgment and efforts in
rendering services under this agreement. As an inducement to the
Co-administrators' undertaking to render services hereunder, the Trust agrees
that a Co-administrator shall not be liable under this agreement for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this agreement shall be deemed to protect or purport to
protect the Co-administrator against any liability to the Trust or its
interestholders to which the Co-administrator would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of the
Co-administrators' duties under this agreement or by reason of reckless
disregard of its obligations and duties hereunder.
7. This agreement shall become effective on its execution date.
Thereafter, this agreement shall continue with respect to a Master Portfolio for
successive annual periods only so long as the continuance is specifically
approved at least annually (a) by the vote of a majority of the Master
Portfolio's outstanding voting securities (as defined in the Act) or by the
Trust's Board of Trustees and (b) by the vote, cast in person at a meeting
called for the purpose, of a majority of the Trust's trustees who are not
parties to this contract or "interested persons" (as defined in the Act) of any
such party. This contract may be terminated at any time by the Trust without the
payment of any penalty, by a vote of a majority of the Master Portfolio's
outstanding voting securities (as defined in the Act) or by a vote of a majority
of the Trust's entire Board of Trustee's on 60 days' written notice to the
Co-administrators, or by the Co-administrators on 60 days' written notice to the
Trust. This contract shall terminate automatically in the event of its
assignment (as defined in the Act).
8. Except to the extent necessary to perform the Co-administrators'
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Co-administrators, or any affiliate of the
Co-administrators, or any employee of the Co-administrators, to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm, individual or
association.
9. This agreement shall be governed by and construed in
accordance with the laws of the State of Arkansas.
10. The Trust hereby agrees and acknowledges that each Co-administrator
may allocate or further delegate responsibility for any or all of the services
to be provided hereunder, as listed on Appendix B hereto, between each
Co-administrator; provided that the Co-administrators shall have joint and
several liability for the provision of the services under this agreement, except
that BGI or Stephens each agree to assume sole responsibility, and related
liability thereto, for providing the duties and services identified as the sole
responsibility of BGI or Stephens on such Appendix B; and, further provided that
each Co-administrator agrees to remain fully liable to the Trust for the
provision of any service that such Co-administrator delegates to another entity.
11. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
<PAGE>
If the foregoing correctly sets forth the agreement between the Trust
and the Co-administrators, please so indicate by signing and returning to the
Trust the enclosed copy hereof.
Very truly yours,
MASTER INVESTMENT PORTFOLIO,
on behalf of the Master Portfolios listed on the attached Appendix A
By: /s/ Richard H. Blank, Jr.
________________________
Richard H. Blank, Jr.
Chief Operating Officer
ACCEPTED as of the date set forth above:
BARCLAYS GLOBAL INVESTORS, N.A.
By: /s/ Mike Latham
-------------------------------------------------
Mike Latham
Managing Director
By: /s/ Danell Doty
-------------------------------------------------
Danell Doty
Principal
STEPHENS INC.
By: /s/ Richard H. Blank, Jr.
--------------------------------------------------
Richard H. Blank, Jr.
Vice President
<PAGE>
Appendix A
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------- -------------------------------
Co-Administration Fee
Master Portfolio (as a % of net assets)
---------------------------------------------------------- -------------------------------
---------------------------------------------------------- -------------------------------
Extended Index 0.02%
---------------------------------------------------------- -------------------------------
---------------------------------------------------------- -------------------------------
International Index 0 - $1 billion 0.10%
> $1 billion 0.07%
---------------------------------------------------------- -------------------------------
---------------------------------------------------------- -------------------------------
U.S. Equity Index 0.01%
---------------------------------------------------------- -------------------------------
---------------------------------------------------------- -------------------------------
Russell 2000 Index 0.02%
---------------------------------------------------------- -------------------------------
</TABLE>
Dated: October 28, 1998
Approved as amended: July 28, 1999
Approved as amended: August 16, 2000
<PAGE>
Appendix B
Master Investment Portfolio
LIST OF ADMINISTRATIVE SERVICES
Stephens Inc.
(1) Review agenda and assemble Board materials for quarterly Board
meetings; prepare supporting information when necessary; prepare
minutes of Board and committee meetings.
(2) Review and approve Board material.
(3) Provide expense budgets.
(4) Monitor actual expenses and update budgets/expense accruals as
necessary.
(5) Review and authorize filing of Forms N-SAR.
(6) Maintain records of sales and file appropriate registrations and
renewals, sales information and other required material for Blue Sky
purposes.
(7) Review and provide advice to the distributor and the Trust on
behalf of the Master Portfolios and investment adviser regarding
sales literature and marketing plans to assure regulatory
compliance.
Barclays Global Investors
(8) Continuously monitor portfolio activity and related functions in
conjunction with all applicable regulatory requirements. Take
corrective action as necessary.
(9) Identify the services to which the Master Portfolios report performance
information. Provide information as requested on performance
questionnaires.
(10) Prepare appropriate management letter and coordinate production of
Management Discussion and Analysis, with respect to the preparation
and printing of shareholder reports.
(11) Coordinate review and approval by portfolio managers of portfolio
listings to be included in financial statements, with respect to
the preparation and printing of shareholder reports.
(12) Prepare selected portfolio and financial information for inclusion in
Board material.
(13) Assist in presentation to Board as desired by Trust Officer(s).
(14) Calculate total return information and other statistical
information including undistributed income and capital gains with
respect to condensed financial information for review by
management.
(15) Perform tests of specific portfolio activities against compliance
checklists designed from the provisions of the Master Portfolios'
current Registration Statement.
(16) Calculate dividend amounts available for distribution.
(17) Coordinate review of dividend amounts by management and auditors.
(18) Notify fund accounting and transfer agent of authorized dividends
rates.
(19) Prepare responses to various performance questionnaires; coordinate as
necessary, and submit responses to the appropriate agency;
(20) Prepare Forms N-SAR for filing; obtain any necessary supporting
documents; file with the SEC via EDGAR.
(21) Draft semi-annual and annual shareholder reports and coordinate auditor
and management review.
(22) Coordinate printing of reports and EDGAR conversion with outside
printer and filing with the SEC via EDGAR.
(23) Provide information for Financial Highlights and expense tables.
(24) Continuously monitor portfolio activity regarding diversification
in conjunction with IRS requirements for registered investment
companies.
(25) Continuously monitor portfolio activity regarding "short short"
income and qualifying income in conjunction with IRS requirements
for registered investment companies.
Stephens Inc. and Barclays Global Investors
(26) Prepare, or assist in the preparation, and file with the SEC and
state securities regulators, if applicable, registration
statements, notices, reports, and other material required to be
filed under applicable laws.
(27) Review financial information and take any necessary action.
(28) Develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with each Master Portfolio's
investment objective, policies and restrictions as established by
the Trust's Board, perform compliance testing and approve
resolution of compliance issues.
(29) Approve dividend rates; obtain Board approval when required.
(30) Determine allocation of invoices among funds. Authorize and send to
fund accountants for payment of expenses.
(31) Coordinate activities of other vendors as necessary.
(32) Provide appropriate responses to Forms N-SAR.
(33) Provide marketing input of shareholder report style and graphics.
(34) Review and approve entire shareholder report.
(35) Review drafts and coordinate review process of Forms N-1A updates and
prospectus supplements.
(36) Coordinate printing, EDGAR conversion, and filing with the SEC with outside
printers of Forms N-1A.
(37) Maintain and preserve the corporate records of the Trust, including
each Master Portfolio.
(38) Make appropriate representations in conjunction with audit.
(39) Review diversification test results and corrective actions taken, with
respect to qualifications as a registered investment company.
(40) Approve tax positions taken regarding qualification as a registered
investment company.
(41) Review "short short" income and qualifying income test results and
corrective actions taken, with respect to qualifications as a
registered investment company.
(42) Approve tax positions taken regarding "short short" income and
qualifying income, with respect to qualifications as a registered
investment company.
(43) Approve tax accounting positions to be taken.
(44) Approve distributions
(45) Review tax returns and coordinate signature thereof with a Trust
Officer.
Approved: October 28, 1998
Signed: /s/ Mike Latham Signed: /s/ Richard H. Blank, Jr.
------------------------- ---------------------------
By: Mike Latham By: Richard H. Blank, Jr.
Title: Managing Director Title: Vice President
Barclays Global Stephens Inc.
Investors, N.A.
Signed: /s/ Danell Doty
--------------------------------------
By: Danell Doty
Title: Principal
Barclays Global
Investors, N.A.
Signed: Richard H. Blank, Jr.
--------------------------------------
By: Richard H. Blank, Jr.
Title: Chief Operating Officer
Master Investment Portfolio
<PAGE>
December 7, 2000
First Amendment to the Third Party Feeder Fund Agreement
A Third Party Feeder Fund Agreement (the "Agreement") was entered into as of the
first 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 Financial 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"). WHEREAS, the Fund has split into two funds, Hewitt
Money Market Fund, and Hewitt Institutional Money Market Fund. 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 as follows:
1. Fund is now defined as Hewitt Money Market Fund and Hewitt
Institutional Money Market Fund.
[The rest of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by
their respective officers thereunto duly authorized as of __________________
____, 2000.
HEWITT SERIES TRUST
on behalf of itself and the HEWITT MONEYMARKET FUND
and HEWITT INSTITUTIONAL MONEY MARKET FUND
By: /s/ Stacey Schams
-------------------------------------------------
Name: Stacey Schams
Title: Secretary
HEWITT SERVICES LLC
By: /s/ C.L. Connelly
-------------------------------------------------
Name: C.L. Connelly
Title: President
MASTERINVESTMENT 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
<PAGE>
FORM OF
THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
DIVERSIFIED INSTITUTIONAL STOCK INDEX FUND
DIVERSIFIED INVESTORS SECURITIES CORP.
AND
MASTER INVESTMENT PORTFOLIO
dated as of
___________________, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
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...........................................................................................
3.2 Distributor.....................................................................................
3.3 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 the Fund...........................................................................
6.11 Relationship of Parties; No Joint Venture, Etc. ................................................
6.12 Use of Name.....................................................................................
</TABLE>
Signatures
Schedule A
Schedule B
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the ____ day of
_______________, 2000, by and among The Diversified Investors Fund Group, a
Massachusetts business trust (the "Trust"), for itself and on behalf of its
series set forth on Schedule A, the Diversified Institutional Stock Index Fund,
Fund Distributor - Diversified Investors Securities Corp. (the "Distributor"), a
Delaware corporation , and Master Investment Portfolio ("MIP"), a Delaware
business trust, for itself and on behalf of its series, the S&P 500 Index Master
Portfolio ("Portfolio").
WITNESSETH
WHEREAS, Trust and MIP are each registered under the Investment Company Act of
1940 (the "1940 Act") as open-end management investment companies;
WHEREAS, each Fund and its corresponding Portfolio have the same investment
objective and substantially the same investment policies;
WHEREAS, each Fund desires to invest on an ongoing basis all or substantially
all of its investable assets (the "Assets") in exchange for a beneficial
interest in the corresponding Portfolio (the "Investment") 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 business trust duly organized, validly
existing and in good standing under the laws of the State of Massachusetts, and
the Funds are duly and validly designated series of Trust. Trust and each 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 the Funds 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 Funds, or the performance by
Funds of their obligations hereunder. This Agreement when executed and delivered
by Trust on behalf of the Funds shall constitute a legal, valid and binding
obligation of Trust, enforceable against the Funds in accordance with its terms.
No meeting of, or consent by, shareholders of the Funds is necessary to approve
or implement the Investments.
(c) 1940 Act Registration. Trust is duly registered under the Investment
Company Act of 1940, as amended (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, as amended (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 the
Funds' shares, any meetings of its shareholders and its registration as an
investment company. All SEC Filings relating to the Funds were prepared to
comply in all material respects in accordance 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, provided that Trust makes no representation or warranty hereunder
with respect to information supplied by MIP or any service provider of MIP for
use in Trust's SEC filings, including but not limited to any written information
contained in MIP's current registration statement relating to the Portfolios.
(e) Fund Assets. Each Fund currently intends on an ongoing basis to invest
its Assets solely in the corresponding Portfolio, although it reserves the right
to invest Assets in other securities and other assets and/or to redeem any or
all units of the Portfolio at any time without notice.
(f) Registration Statement. Trust has reviewed MIP's and the Portfolios'
most recent registration statement on Form N-lA, as filed with the SEC.
(g) Insurance. Trust has in force an errors and omissions liability
insurance policy insuring the Funds against loss up to $ 5 million for
negligence or wrongful acts.
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 the Portfolios are
duly and validly designated series of MIP. MIP and each Portfolio has the
requisite power and authority to own its property and conduct its business as
now being conducted and as proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by MIP on behalf of the Portfolios 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 the Portfolios, or the
performance by the Portfolios of their obligations hereunder and the
consummation by the Portfolios of the transactions contemplated hereby. This
Agreement when executed and delivered by MIP on behalf of the Portfolios shall
constitute a legal, valid and binding obligation of MIP and the Portfolios,
enforceable against MIP and the Portfolios in accordance with its terms. No
meeting of, or consent by, interestholders of the Portfolios is necessary to
approve the issuance of the Interests (as defined below) to the Funds.
(c) Issuance of Beneficial Interest. The issuance by MIP of beneficial
interests in the Portfolios ("Interests") in exchange for the Investments by the
corresponding Funds of their Assets has been duly authorized by all necessary
action on the part of the Board of Trustees of MIP. When issued in accordance
with the terms of this Agreement, the Interests will be validly issued, fully
paid and non-assessable.
(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 the Portfolios required to be filed with the SEC
under the Securities Laws. Interests in Portfolios 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 the
Portfolios are either noticed or qualified for sale or exempt from notice or
qualification requirements under applicable securities laws in those states and
other jurisdictions in which Interests are offered and sold. All SEC Filings
relating to the Portfolios 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. Each Portfolio is taxable as a partnership for federal
income tax purposes under the Internal Revenue Code of 1986, as amended
(the "Code").
(g) Taxable and Fiscal Year. The taxable and fiscal year end of each
Portfolio is December 31st.
(h) Insurance. MIP has in force an errors and omissions liability insurance
policy insuring the Portfolios against loss up to $ 5 million for negligence and
wrongful acts. 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.
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 the Funds' 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 three (3) 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 the Portfolios 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 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 information provided
in the Portfolios' 1940 Act registration statement or otherwise provided by MIP
for inclusion therein. In addition, neither the Funds nor Distributor will make
any other written or oral representations about MIP or the Portfolios 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 the Funds' shares, any meetings of its shareholders, and its
registration as a series of 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 the Funds are or will be noticed for sale ("State Filings"). The
Funds' SEC Filings will be prepared in all material respects in accordance 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 the Funds 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. The
Funds' 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.
(d) Tax Status. The Funds will qualify for treatment as regulated
investment companies under Subchapter M of the Code for any taxable year
during which this Agreement continues in effect, except to the extent that
a failure to so qualify may result from any action or omission of the
corresponding portfolio or MIP.
(e) Fiscal Year. Each Fund shall take appropriate action to adopt and
maintain the same fiscal year end as the corresponding Portfolio (currently
December 31st).
(f) Proxy Voting. If requested to vote on matters pertaining to MIP or
Portfolio, a Fund will either seek instructions from its shareholders with
regard to the voting of all proxies with respect to Portfolio's securities and
vote such proxies only in accordance with such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of
Portfolio's securities; provided that the Fund will not be obligated to take
such action if and to the extent the Fund obtains an exemption from Section
12(d)(1)(E)(iii)(aa) of the 1940 Act.
(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.
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 a Fund will be effected in cash pursuant to
Section 2.2(c). In the event a Fund desires to withdraw its entire Investment
from a corresponding Portfolio, either by submitting a redemption request or by
terminating this agreement in accordance with Section 5.1 hereof, Portfolio, at
its sole discretion, and in accordance with the 1940 Act and the rules and
regulations thereunder, may effect such redemption "in kind" and in such manner
that the securities delivered to the Fund or its custodian approximate the
Fund's proportionate share of Portfolio's net assets immediately prior to such
redemption. In addition, in the event a Fund makes a redemption (or series of
redemptions over any three consecutive business days) of an amount that exceeds
10% of Portfolio's net asset value, Portfolio, at its sole discretion, and in
accordance with the 1940 Act and the rules and regulations thereunder, may
effect such redemption "in kind" and in such manner that the securities
delivered to Fund or its custodian approximate the Fund's proportionate share of
Portfolio's net assets immediately prior to such redemption. Each Portfolio will
use its best efforts to settle redemptions on the business day following the
receipt of a redemption request by a Fund and if such next business day
settlement is not practicable, will immediately notify the Fund regarding the
anticipated settlement date, which shall in all events be a date permitted under
the 1940 Act.
(c) Ordinary Course Redemptions. The Portfolio will
effect its redemptions of Interest in accordance with the provisions of
the 1940 Act and the rules and regulations thereunder. Except as
described in Section 2.2(b), all redemptions will be effected in cash
at the next determined net asset value after the redemption request is
received. The Portfolio will use its best effort to settle redemptions
on the business day following the receipt of a redemption request by a
Fund and if such next business day settlement is not practicable, will
immediately notify the 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 the
Portfolios' investors and its registration as an investment company and will
provide copies of all such definitive filings to Trust. The Portfolios' 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 and
Treasury Regulations, each Portfolio will continue to be treated as a
partnership for federal income tax purposes. Each 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 Trust prior to the Funds' initial Investment a copy of its opinion
of counsel or private letter ruling relating to the tax status of the
Portfolios and agrees that Trust and the Funds may rely upon such opinion or
ruling during the term of this Agreement.
(g) Securities Exemptions. Interests in the Portfolios have been and will
continue to be offered and sold solely in private placement transactions which
do not involve any "public offering" within the meaning of Section 4(2) of the
1933 Act or require registration or notification 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 a Portfolio's investment
objective, and at least sixty (60) days' advance notice, or if MIP has knowledge
or should have 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 or should have obtained such
knowledge, of any material change in a Portfolio's investment policies or
activities, any material increase in a Portfolio's fees or expenses, or any
change in a Portfolio's fiscal year or time for calculating net asset value for
purposes of Rule 22c-1.
(i) Compliance with Laws. MIP shall comply, in all material respects, with
all applicable laws, rules and regulations in connection with conducting its
operations as a registered investment company. 2.3 Reasonable Actions. Each
party covenants that it will, subject to the provisions of this Agreement, from
time to time, as and when requested by another party or in its own discretion,
as the case may be, execute and deliver or cause to be executed and delivered
all such documents, assignments and other instruments, take or cause to be taken
such actions, and do or cause to be done all things reasonably necessary, proper
or advisable in order to conduct the business contemplated by this Agreement and
to carry out its intent and purpose.
ARTICLE III
INDEMNIFICATION
3.1 Trust
(a) Trust agrees to indemnify and hold harmless MIP, the Portfolios and the
Portfolios' investment adviser, and any director/trustee, officer, employee or
agent of MIP, the Portfolio or Portfolios' 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)) ("Losses"), 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 any of its
trustees/directors, officers, employees or agents, but only insofar as such
omissions or commissions relate to the Funds; 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 the Funds, 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 the Funds or by any
service provider of MIP for use therein or for use by the Funds 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 be liable for
indemnification hereunder with respect to any claims made against any Covered
Person unless a Covered Person shall have notified Trust in writing within a
reasonable time after the summons, other first legal process, notice of a
federal, state or local tax deficiency, or formal initiation of a regulatory
investigation or proceeding giving information of the nature of the claim shall
have properly been served upon or provided to a Covered Person seeking
indemnification. Failure to notify Trust of such claim shall not relieve Trust
from any liability that it may have to any Covered Person otherwise than on
account of the indemnification contained in this Section.
(b) Trust 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 elects to assume the defense, such defense shall be
conducted by counsel chosen by Trust. In the event Trust 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 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 any such Covered Person has been
advised in a written opinion by counsel reasonably acceptable to Trust that one
or more legal defenses may be available to it that may not be available to
Trust, in which case Trust shall not be entitled to assume the defense of such
suit notwithstanding its obligation to bear the fees and expenses of one counsel
to all such persons. Trust 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 Trust might otherwise
have to Covered Persons.
3.2 Distributor
(a) Distributor agrees to indemnify and hold harmless MIP, the Portfolios
and the Portfolios' investment adviser, and any director/trustee, officer,
employee or agent of MIP, the Portfolios or Portfolios' 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))
("Losses"), 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 Distributor or by any
of its or their trustees/directors, officers, employees or agents, but only
insofar as such omissions or commissions relate to the Funds; 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 the Funds, 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 the Funds or by any
service provider of MIP for use therein or for use by the Funds 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 Distributor be liable for Losses to the extent Trust pays the
amount of such Losses to the Covered Person under Section 3.1(a) hereof,
nor shall Distributor be liable for indemnification hereunder with respect
to any claims made against any Covered Person unless a Covered Person shall
have notified Distributor in writing within a reasonable time after the
summons, other first legal process, notice of a federal, state or local tax
deficiency, or formal initiation of a regulatory investigation or proceeding
giving information of the nature of the claim shall have properly
been served upon or provided to a Covered Person seeking indemnification.
Failure to notify Distributor of such claim shall not relieve Distributor from
any liability that it may have to any Covered Person otherwise than on account
of the indemnification contained in this Section.
(b) Distributor 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 Distributor elects to assume the defense,
such defense shall be conducted by counsel chosen by Distributor. In the event
Distributor 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) 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
Distributor, and any such Covered Person has been advised in a written opinion
by counsel reasonably acceptable to Distributor that one or more legal defenses
may be available to it that may not be available to Distributor, in which case
Distributor shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of one counsel to
all such persons. Distributor 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
Distributor might otherwise have to Covered Persons.
3.3 MIP.
---
(a) MIP agrees to indemnify and hold harmless Trust, the Funds,
Distributor, and any affiliate providing services to Trust and/or the Funds, 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))
("Losses"), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable statute, rule,
regulation or common law or are incurred in connection with or as a result of
any formal or informal administrative proceeding or investigation by a
regulatory agency, insofar as such violation or alleged violation, proceeding or
investigation arises out of or is based upon any direct or indirect omission or
commission (or alleged omission or commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii)arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any advertising or sales
literature, or any other SEC Filing relating to the Portfolios, or any
amendments to the foregoing (in this Section, collectively, the "Offering
Documents") relating to the Portfolios, 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 the Funds, 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 the Funds by MIP for use
therein or for use by the Funds 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 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 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, the Funds' or Portfolios' 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 the Funds or Portfolios, 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 the Funds,
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 the Funds, and in no
case shall MIP or any covered person have recourse to the assets of any series
of the Trust other than the Funds. Trust agrees that the financial obligations
of MIP under this Agreement shall be binding only upon the assets of the
Portfolios and that, except to the extent 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. This Agreement may be terminated at any time by the mutual
agreement in writing of all parties, or by any party on ninety (90) days'
advance written notice to the other parties hereto; provided, however, that
nothing in this Agreement shall limit Trust's right to redeem all or a portion
of its units of the Portfolios in accordance with the 1940 Act and the rules
thereunder. The provisions of Article III and Sections 4.2 and 4.3 shall survive
any termination of this Agreement.
5.2 Amendment. This Agreement may be amended, modified or supplemented
at any time in such manner as may be mutually agreed upon in writing by the
parties.
ARTICLE VI
GENERAL PROVISIONS
6.1 Expenses. All costs and expenses incurred in connection with this Agreement
and the conduct of business contemplated hereby shall be paid by the party
incurring such costs and expenses.
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. 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. This Agreement may be amended only in a writing signed
by all parties.
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 without regard to the
conflicts of laws provisions thereof; provided, however, that in the event of
any conflict between the 1940 Act and the laws of California, the 1940 Act shall
govern.
6.6 Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party hereto
may execute this Agreement by signing one or more counterparts.
6.7 Third Parties. Except as expressly provided in Article III, 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 Trust:
The Diversified Investors Funds Group
Four Manhattanville Road
Purchase, NY 10577
Attention: Robert F. Colby
If to Distributor:
The Diversified Investors Securities Corp.
Four Manhattanville Road
Purchase, NY 10577
Attention: Robert F. Colby
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 the Funds. Except as otherwise provided herein, this Agreement
shall not limit the authority of the Funds, Trust or Distributor to take such
action as they may deem appropriate or advisable in connection with all matters
relating to the operation of the Funds and the sale of their 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, the Funds nor
Distributor shall describe or refer to the name of MIP, the Portfolios 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, the Funds 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,
the Funds or Distributor, as the case may be. In no case shall any such consents
be unreasonably withheld or delayed. In addition, the party required to give its
consent shall have at least three (3) business days prior to the earlier of
filing or first use, as the case may be, to review the proposed advertising or
promotional materials.
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.
The Diversified Investors Funds Group
on behalf of itself and the
Diversified Institutional Stock Index Fund
By: /s/ R.F. Colby
-----------------------------------------------
Name: R.F. Colby
Title: Secretary
Distributor,
The Diversified Investors Securities Corp.
By: /s/ R.F. Colby
-----------------------------------------------
Name: R.F. Colby
Title: Vice President
MASTER INVESTMENT PORTFOLIO,
on behalf of itself and the S&P INDEX MASTER PORTFOLIO
By: /s/ Richard H. Blank, Jr.
-----------------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
<PAGE>
SCHEDULE A
DIVERSIFIED FUND
Diversified Institutional Stock Index Fund
Approved: [________, 2000]
<PAGE>
SCHEDULE B
MASTER INVESTMENT PORTFOLIOS
MIP S&P 500 Index Master Portfolio
Approved: [________, 2000]
<PAGE>
December 7, 2000
AMENDMENT NO. 2
TO THE AMENDED AND RESTATED
THIRD PARTY FEEDER FUND AGREEMENT
The Amended and Restated Third Party Feeder Fund Agreement, dated as of
October 22, 1999, by and among E*TRADE Funds, E*TRADE Securities, Inc. and
Master Investment Portfolio is hereby further amended as follows:
1. Schedule A is hereby amended and substituted with the attached
Schedule A.
2. Schedule B is hereby amended and substituted with the attached
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to the Amended and Restated Third Party Feeder Fund Agreement to be executed by
their respective officers, thereunto duly authorized, as of __________, 2000.
E*TRADE Funds
on behalf of itself and each Fund
set forth on Schedule A
By: /s/ Ulla Tartsup
----------------------------------------
Title: Vice President
E*TRADE Securities, Inc.
By: /s/ Connie Dotson
----------------------------------------
Title: Secretary
MASTER INVESTMENT PORTFOLIO
on behalf of itself and each Master
Portfolio set forth on Schedule B
By: /s/ Richard H. Blank, Jr.
----------------------------------------
Title: Chief Operating Officer
<PAGE>
SCHEDULE A
E*TRADE FUNDS
PORTFOLIOS
E*TRADE S&P 500 Index Fund
E*TRADE Extended Market Index Fund
E*TRADE Bond Index Fund
E*TRADE International Index Fund
E*TRADE Premier Money Market Fund
E*TRADE Russell 2000 Index Fund
<PAGE>
SCHEDULE B
MASTER INVESTMENT PORTFOLIO
PORTFOLIOS
S&P 500 Index Master Portfolio
Extended Index Master Portfolio
Bond Index Master Portfolio
International Index Master Portfolio
Money Market Master Portfolio
Russell 2000 Index Master Portfolio
<PAGE>
THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
Atlas Assets, Inc.
Atlas Securities, Inc.
AND
MASTER INVESTMENT PORTFOLIO
dated as of
August 15, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I. REPRESENTATIONS AND WARRANTIES..................................................................
1.1 Company.........................................................................................
1.2 MIP.............................................................................................
1.3 Distributor.....................................................................................
ARTICLE II. COVENANTS.......................................................................................
2.1 Company.........................................................................................
2.2 MIP.............................................................................................
2.3 Reasonable Actions..............................................................................
ARTICLE III. INDEMNIFICATION.................................................................................
3.1 Company.........................................................................................
3.2 Distributor.....................................................................................
3.3 MIP.............................................................................................
ARTICLE IV. ADDITIONAL AGREEMENTS...........................................................................
4.1 Access to Information...........................................................................
4.2 Confidentiality.................................................................................
4.3 Obligations of Company and MIP ................................................................
ARTICLE V. TERMINATION, AMENDMENT..........................................................................
5.1 Termination.....................................................................................
5.2 Amendment.......................................................................................
ARTICLE VI. GENERAL PROVISIONS..............................................................................
6.1 Expenses........................................................................................
6.2 Headings........................................................................................
6.3 Entire Agreement................................................................................
6.4 Successors......................................................................................
6.5 Governing Law...................................................................................
6.6 Counterparts....................................................................................
6.7 Third Parties...................................................................................
6.8 Notices.........................................................................................
6.9 Interpretation..................................................................................
6.10 Operation of the Fund...........................................................................
6.11 Relationship of Parties; No Joint Venture, Etc. ................................................
6.12 Use of Name.....................................................................................
</TABLE>
Signatures
Schedule A
Schedule B
<PAGE>
i
1
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the 15th day of
August, 2000, by and among Atlas Assets, Inc., a Maryland Corporation (the "
Company"), for itself and on behalf of its series set forth on Schedule A,
(each, a Fund and collectively, the "Funds") Atlas Securities, Inc.(the
"Distributor"), a California corporation, and Master Investment Portfolio
("MIP"), a Delaware business trust, for itself and on behalf of its series set
forth on Schedule B (each, a "Portfolio" and collectively, the "Portfolios").
WITNESSETH
WHEREAS, Company and MIP are each registered under the Investment Company Act of
1940 (the "1940 Act") as open-end management investment companies;
WHEREAS, each Fund and its corresponding Portfolio have the same investment
objective and substantially the same investment policies;
WHEREAS, each Fund desires to invest on an ongoing basis all or substantially
all of its investable assets (the "Assets") in exchange for a beneficial
interest in the corresponding Portfolio (the "Investment") on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises made
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
1.1 Company. Company represents and warrants to MIP that:
(a) Organization. Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Maryland, and the Funds are
duly and validly designated series of Company. Company and each Fund has the
requisite power and authority to own its property and conduct its business as
proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by Company on behalf of the Funds and the conduct of business
contemplated hereby have been duly authorized by all necessary action on the
part of Company's Board of Directors and no other action or proceeding is
necessary for the execution and delivery of this Agreement by Funds, or the
performance by Funds of their obligations hereunder. This Agreement when
executed and delivered by Company on behalf of the Funds shall constitute a
legal, valid and binding obligation of Company, enforceable against the Funds in
accordance with its terms. No meeting of, or consent by, shareholders of the
Funds is necessary to approve or implement the Investments.
(c) 1940 Act Registration. Company is duly registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as an open-end management
investment company, and such registration is in full force and effect.
(d) SEC Filings. Company has duly filed all forms, reports, proxy
statements and other documents (collectively, the "SEC Filings") required to be
filed with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (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 the Funds' shares, any meetings of its shareholders and its
registration as an investment company. All SEC Filings relating to the Funds
were prepared to comply in all material respects in accordance with the
requirements of the applicable Securities Laws and do not to the best knowledge
of the Company, 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, provided that Company
makes no representation or warranty hereunder with respect to information
supplied by MIP or any service provider of MIP for use in Company SEC filings,
including but not limited to any written information contained in MIP's current
registration statement relating to the Portfolios.
(e) Fund Assets. Each Fund currently intends on an ongoing basis to invest
its Assets solely in the corresponding Portfolio, although it reserves the right
to invest Assets in other securities and other assets and/or to redeem any or
all units of the Portfolio at any time without notice.
(f) Registration Statement. Company has reviewed MIP's and the
Portfolios' most recent registration statement on Form N-lA, as filed with
the SEC.
(g) Insurance. Company has in force an errors and omissions liability
insurance policy insuring the Funds against loss up to $1.5 million for
negligence or wrongful acts.
1.2 MIP. MIP represents and warrants to Company that:
---
(a) Organization. MIP is a trust duly organized, validly existing and in
good standing under the laws of the State of Delaware and the Portfolios are
duly and validly designated series of MIP. MIP and each Portfolio has the
requisite power and authority to own its property and conduct its business as
now being conducted and as proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by MIP on behalf of the Portfolios 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 the Portfolios, or the
performance by the Portfolios of their obligations hereunder and the
consummation by the Portfolios of the transactions contemplated hereby. This
Agreement when executed and delivered by MIP on behalf of the Portfolios shall
constitute a legal, valid and binding obligation of MIP and the Portfolios,
enforceable against MIP and the Portfolios in accordance with its terms. No
meeting of, or consent by, interestholders of the Portfolios is necessary to
approve the issuance of the Interests (as defined below) to the Funds.
(c) Issuance of Beneficial Interest. The issuance by MIP of beneficial
interests in the Portfolios ("Interests") in exchange for the Investments by the
corresponding Funds of their Assets has been duly authorized by all necessary
action on the part of the Board of Trustees of MIP. When issued in accordance
with the terms of this Agreement, the Interests will be validly issued, fully
paid and non-assessable.
(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 the Portfolios required to be filed with the SEC
under the Securities Laws. Interests in Portfolios 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 the
Portfolios are either noticed or qualified for sale or exempt from notice or
qualification requirements under applicable securities laws in those states and
other jurisdictions in which Interests are offered and sold. All SEC Filings
relating to the Portfolios comply in all material respects with the requirements
of the applicable Securities Laws and do not to the best knowledge of the
Portfolios, 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. Each Portfolio is taxable as a partnership for federal
income tax purposes under the Internal Revenue Code of 1986, as amended
(the "Code").
(g) Taxable and Fiscal Year. The taxable and fiscal year end of each
Portfolio is December 31st.
(h) Insurance. MIP has in force an errors and omissions liability insurance
policy insuring the Portfolios against loss up to $5 million for negligence and
wrongful acts. 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.
ARTICLE II
COVENANTS
2.1 Company. Company covenants that:
--------
(a) Advance Review of Certain Documents. Company will furnish MIP, at least
ten (10) business days prior to the earlier of filing or first use, with drafts
of the Funds' 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, Company will furnish or will cause to be
furnished to MIP at least three (3) 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 the Portfolios and
that was not previously approved by MIP. Company agrees that it will include in
all such Fund documents any disclosures that may be required by law, and that it
will incorporate in all such Fund documents any material and reasonable comments
made by MIP. MIP will not, however, in any way be liable to Company 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 information
provided in the Portfolios' 1940 Act registration statement or otherwise
provided by MIP for inclusion therein. In addition, neither the Funds nor
Distributor will make any other written or oral representations about MIP or the
Portfolios other than those contained in such documents without MIP's prior
written consent.
(b) SEC and Blue Sky Filings. Company will file all SEC Filings required to
be filed with the SEC under the Securities Laws in connection with the
registration of the Funds' shares, any meetings of its shareholders, and its
registration as a series of an investment company. Company will file such
similar or other documents as may be required to be filed with any securities
commission or similar authority by the laws or regulations of any state,
territory or possession of the United States, including the District of
Columbia, in which shares of the Funds are or will be noticed for sale ("State
Filings"). The Funds' SEC Filings will be prepared in all material respects in
accordance 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 to the best knowledge of the Company, at the time they
are filed or used to offer the Funds 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. The Funds' State
Filings will be prepared in accordance with the requirements of applicable state
and federal law and the rules and regulations thereunder.
(c) 1940 Act Registration. Company will be duly registered as an open-end
management investment company under the 1940 Act.
(d) Tax Status. The Funds will qualify for treatment as regulated
investment companies under Subchapter M of the Code for any taxable year
during which this Agreement continues in effect, except to the
extent that a failure to so qualify may result from any action or omission of
the corresponding portfolio or MIP.
(e) Fiscal Year. Each Fund shall take appropriate action to adopt and
maintain the same fiscal year end as the corresponding Portfolio (currently
December 31st).
(f) Proxy Voting. If requested to vote on matters pertaining to MIP or a
Portfolio, a Fund will either seek instructions from its shareholders with
regard to the voting of all proxies with respect to Portfolio's securities and
vote such proxies only in accordance with such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of
Portfolio's securities; provided that the Fund will not be obligated to take
such action if and to the extent the Fund obtains an exemption from Section
12(d)(1)(E)(iii)(aa) of the 1940 Act.
(g) Compliance with Laws. Company shall use its reasonable best efforts to
comply, in all material respects, with all applicable laws, rules and
regulations in connection with conducting its operations as a registered
investment company.
2.2 MIP. MIP covenants that:
---
(a) Signature Pages. MIP shall promptly provide all required signature
pages to Company for inclusion in any SEC Filings of Company, provided Company
is in material compliance with its covenants and other obligations under this
Agreement at the time such signature pages are provided and included in the SEC
Filing. Company and Distributor acknowledge and agree that the provision of such
signature pages does not constitute a representation by MIP, its Trustees or
Officers, that such SEC Filing complies with the requirements of the applicable
Securities Laws, or that such SEC Filing does not contain any untrue statement
of a material fact or does not omit to the state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except with
respect to information provided by MIP for inclusion in such SEC Filing or for
use by Company in preparing such filing, which shall in any event include any
written information obtained from MIP's current registration statement on Form
N-1A.
(b) Redemptions. Except as otherwise provided in this Section 2.2(b),
redemptions of interests owned by a Fund will be effected in cash pursuant to
Section 2.2(c). In the event a Fund desires to withdraw its entire Investment
from a corresponding Portfolio, either by submitting a redemption request or by
terminating this agreement in accordance with Section 5.1 hereof, Portfolio, at
its sole discretion, and in accordance with the 1940 Act and the rules and
regulations thereunder, may effect such redemption "in kind" and in such manner
that the securities delivered to Fund or its custodian approximate the Fund's
proportionate share of Portfolio's net assets immediately prior to such
redemption. In addition, in the event a Fund makes a redemption (or series of
redemptions over any three consecutive business days) of an amount that exceeds
10% of Portfolio's net asset value, Portfolio, at its sole discretion, and in
accordance with the 1940 Act and the rules and regulations thereunder, may
effect such redemption "in kind" and in such manner that the securities
delivered to the Fund or its custodian approximate the Fund's proportionate
share of Portfolio's net assets immediately prior to such redemption. Each
Portfolio will use its best efforts to settle redemptions on the business day
following the receipt of a redemption request by a Fund and if such next
business day settlement is not practicable, will immediately notify the Fund
regarding the anticipated settlement date, which shall in all events be a date
permitted under the 1940 Act.
(c) Ordinary Course Redemptions. Each Portfolio will effect its redemptions
in accordance with the provisions of the 1940 Act and the rules and regulations
thereunder. Except as described in Section 2.2(b), all redemptions will be
effected in cash at the next determined net asset value after the redemption
request is received in proper form. Each Portfolio will use its best efforts to
settle redemptions on the business day following the receipt of a redemption
request by a Fund and if such next business day settlement is not practicable,
will immediately notify the 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 the
Portfolios' investors and its registration as an investment company and will
provide copies of all such definitive filings to Company. The Portfolios' SEC
Filings will comply in all material respects with the requirements of the
applicable Securities Laws, and will not to the best knowledge of the
Portfolios, 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 and
Treasury Regulations, each Portfolio will continue to be treated as a
partnership for federal income tax purposes. Each 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 Company prior to the Funds' initial Investment a copy of
its opinion of counsel or private letter ruling relating to the tax status of
the Portfolios and agrees that Company and the Funds may rely upon such opinion
or ruling during the term of this Agreement.
(g) Securities Exemptions. Interests in the Portfolios have been and will
continue to be offered and sold solely in private placement transactions which
do not involve any "public offering" within the meaning of Section 4(2) of the
1933 Act or require registration or notification under any state law.
(h) Advance Notice of Certain Changes. MIP shall provide Company with at
least one hundred twenty (120) days' advance notice, or such lesser time as may
be agreed to by the parties, of any change in a Portfolio's investment
objective, and at least sixty (60) days' advance notice, or if MIP has knowledge
or should have 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 or should have obtained such
knowledge, of any material change in a Portfolio's investment policies or
activities, any material increase in a Portfolio's fees or expenses, or any
change in a Portfolio's fiscal year or time for calculating net asset value for
purposes of Rule 22c-1.
(i) Compliance with Laws. MIP shall comply, in all material respects, with
all applicable laws, rules and regulations in connection with conducting its
operations as a registered investment company. 2.3 Reasonable Actions. Each
party covenants that it will, subject to the provisions of this Agreement, from
time to time, as and when requested by another party or in its own discretion,
as the case may be, execute and deliver or cause to be executed and delivered
all such documents, assignments and other instruments, take or cause to be taken
such actions, and do or cause to be done all things reasonably necessary, proper
or advisable in order to conduct the business contemplated by this Agreement and
to carry out its intent and purpose.
ARTICLE III
INDEMNIFICATION
3.1 Company
---------
(a) Company agrees to indemnify and hold harmless MIP, the Portfolios and
the Portfolios' investment adviser, and any director/trustee, officer, employee
or agent of MIP, the Portfolio or Portfolios' 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))
("Losses"), that:
(i) arise out of or are based upon any violation or alleged
violation of tax treatment 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 Company
or by any of its trustees/directors, officers, employees or agents, but only
insofar as such omissions or commissions relate to the Funds; 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 the Funds, 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 the Funds or by any
service provider of MIP for use therein or for use by the Funds in preparing
such documents, including but not limited to any written information contained
in MIP's current registration statement on Form N-1A;
provided, however, that in no case shall Company be liable for
indemnification hereunder with respect to any claims made against any Covered
Person unless a Covered Person shall have notified Company in writing within a
reasonable time after the summons, other first legal process, notice of a
federal, state or local tax deficiency, or formal initiation of a regulatory
investigation or proceeding giving information of the nature of the claim shall
have properly been served upon or provided to a Covered Person seeking
indemnification. Failure to notify Company of such claim shall not relieve
Company from any liability that it may have to any Covered Person otherwise than
on account of the indemnification contained in this Section.
(b) Company will be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if Company elects to assume the defense, such
defense shall be conducted by counsel chosen by Company. In the event Company
elect(s) to assume the defense of any such suit and retain such counsel, each
Covered Person in the suit may retain additional counsel but shall bear the fees
and expenses of such counsel unless (A) Company shall have specifically
authorized the retaining of and payment of fees and expenses of such counsel or
(B) the parties to such suit include any Covered Person and Company , and any
such Covered Person has been advised in a written opinion by counsel reasonably
acceptable to Company that one or more legal defenses may be available to it
that may not be available toCompany in which case Company shall not be entitled
to assume the defense of such suit notwithstanding its obligation to bear the
fees and expenses of one counsel to all such persons. Company 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 Company might otherwise have to Covered Persons.
3.2 Distributor
(a) Distributor agrees to indemnify and hold harmless MIP, the Portfolios
and the Portfolios' investment adviser, and any director/trustee, officer,
employee or agent of MIP, the Portfolios or Portfolios' 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))
("Losses"), 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 Company or Distributor or by
any of its or their trustees/directors, officers, employees or agents, but only
insofar as such omissions or commissions relate to the Funds; 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 the Funds, 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 the Funds or by any
service provider of MIP for use therein or for use by the Funds 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 Distributor be liable for Losses
to the extent Company pays the amount of such Losses to the Covered Person under
Section 3.1(a) hereof, nor shall Distributor be liable for indemnification
hereunder with respect to any claims made against any Covered Person unless a
Covered Person shall have notified Distributor in writing within a reasonable
time after the summons, other first legal process, notice of a federal, state or
local tax deficiency, or formal initiation of a regulatory investigation or
proceeding giving information of the nature of the claim shall have properly
been served upon or provided to a Covered Person seeking indemnification.
Failure to notify Distributor of such claim shall not relieve Distributor from
any liability that it may have to any Covered Person otherwise than on account
of the indemnification contained in this Section.
(b) Distributor 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 Distributor elects to assume the defense,
such defense shall be conducted by counsel chosen by Distributor. In the event
Distributor 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) 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
Distributor, and any such Covered Person has been advised in a written opinion
by counsel reasonably acceptable to Distributor that one or more legal defenses
may be available to it that may not be available to Distributor, in which case
Distributor shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of one counsel to
all such persons. Distributor 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
Distributor might otherwise have to Covered Persons.
3.3 MIP.
---
(a) MIP agrees to indemnify and hold harmless Company , the Funds,
Distributor, and any affiliate providing services to Company and/or the Funds,
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))
("Losses"), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable statute, rule,
regulation or common law or are incurred in connection with or as a result of
any formal or informal administrative proceeding or investigation by a
regulatory agency, insofar as such violation or alleged violation, proceeding or
investigation arises out of or is based upon any direct or indirect omission or
commission (or alleged omission or commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii)arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any advertising or sales
literature, or any other SEC Filing relating to the Portfolios, or any
amendments to the foregoing (in this Section, collectively, the "Offering
Documents") relating to the Portfolios, or arise out of or are based upon the
omission or alleged omission to state therein, a material fact required to be
stated therein, or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any Offering Documents
relating to Company or the Funds, 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 the Funds by MIP for use
therein or for use by the Funds 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 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 MIP elects to assume the defense, such defense shall be
conducted by counsel chosen by MIP. In the event MIP elects to assume the
defense of any such suit and retain such counsel, each Covered Person in the
suit may retain additional counsel but shall bear the fees and expenses of such
counsel unless (A) MIP shall have specifically authorized the retaining of and
payment of fees and expenses of such counsel or (B) the parties to such suit
include any Covered Person and MIP, and any such Covered Person has been advised
in a written opinion by counsel reasonably acceptable to MIP that one or more
legal defenses may be available to it that may not be available to MIP, in which
case MIP shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of one counsel to
such persons. MIP shall not be required to indemnify any Covered Person for any
settlement of any such claim effected without its written consent, which consent
shall not be unreasonably withheld or delayed. The indemnities set forth in
paragraph (a) will be in addition to any liability that MIP might otherwise have
to Covered Persons.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Access to Information. Throughout the life of this Agreement, Company and
MIP shall afford each other reasonable access at all reasonable times to such
party's officers, employees, agents and offices and to all relevant books and
records and shall furnish each other party with all relevant financial and other
data and information as such other party may reasonably request.
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, the Funds' or Portfolios' respective auditors, or in
the opinion of counsel to the disclosing party such disclosure is required by
law, and then only with as much prior written notice to the other parties as is
practical under the circumstances. Each party hereto acknowledges that the
provisions of this Section 4.2 shall not prevent Company or MIP from filing a
copy of this Agreement as an exhibit to a registration statement on Form N-1A as
it relates to the Funds or Portfolios, respectively, and that such disclosure by
Company or MIP shall not require any additional consent from the other parties.
4.3 Obligations of Company and MIP. MIP agrees that the financial obligations of
Company under this Agreement shall be binding only upon the assets of the Funds,
and that except to the extent liability may be imposed under relevant Securities
Laws, MIP shall not seek satisfaction of any such obligation from the officers,
agents, employees, trustees or shareholders of Company or the Funds, and in no
case shall MIP or any covered person have recourse to the assets of any series
of the Company other than the Funds. Company agrees that the financial
obligations of MIP under this Agreement shall be binding only upon the assets of
the Portfolios and that, except to the extent liability may be imposed under
relevant Securities Laws, Company shall not seek satisfaction of any such
obligation from the officers, agents, employees, trustees or shareholders of MIP
or other classes or series of MIP.
ARTICLE V
TERMINATION, AMENDMENT
5.1 Termination. This Agreement may be terminated at any time by the mutual
agreement in writing of all parties, or by any party on ninety (90) days'
advance written notice to the other parties hereto; provided, however, that
nothing in this Agreement shall limit Company's right to redeem all or a portion
of its units of the Portfolios in accordance with the 1940 Act and the rules
thereunder. The provisions of Article III and Sections 4.2 and 4.3 shall survive
any termination of this Agreement.
5.2 Amendment. This Agreement may be amended, modified or supplemented
at any time in such manner as may be mutually agreed upon in writing by the
parties.
ARTICLE VI
GENERAL PROVISIONS
6.1 Expenses. All costs and expenses incurred in connection with this Agreement
and the conduct of business contemplated hereby shall be paid by the party
incurring such costs and expenses.
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. 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. This Agreement may be amended only in a writing signed
by all parties.
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 without regard to the
conflicts of laws provisions thereof; provided, however, that in the event of
any conflict between the 1940 Act and the laws of California, the 1940 Act shall
govern.
6.6 Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party hereto
may execute this Agreement by signing one or more counterparts.
6.7 Third Parties. Except as expressly provided in Article III, 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 Company :
Chief Operating Officer
Atlas Assets, Inc.
794 Davis Street
San Leandro, CA 94577
If to Distributor:
Chief Operating Officer
Atlas Securities, Inc.
794 Davis Street
San Leandro, CA 94577
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 the Funds. Except as otherwise provided herein, this Agreement
shall not limit the authority of the Funds, Company or Distributor to take such
action as they may deem appropriate or advisable in connection with all matters
relating to the operation of the Funds and the sale of their shares.
6.11 Relationship of Parties; No Joint Venture, Etc. It is understood and agreed
that neither Company nor Distributor shall hold itself out as an agent of MIP
with the authority to bind such party, nor shall MIP hold itself out as an agent
of Company or Distributor with the authority to bind such party.
6.12 Use of Name. Except as otherwise provided herein or required by law (e.g.,
in Company's Registration Statement on Form N-1A), neither Company , the Funds
nor Distributor shall describe or refer to the name of MIP, the Portfolios or
any derivation thereof, or any affiliate thereof, or to the relationship
contemplated by this Agreement in any advertising or promotional materials
without the prior written consent of MIP, nor shall MIP describe or refer to the
name of Company , the Funds or Distributor or any derivation thereof, or any
affiliate thereof, or to the relationship contemplated by this Agreement in any
advertising or promotional materials without the prior written consent of
Company , the Funds or Distributor, as the case may be. In no case shall any
such consents be unreasonably withheld or delayed. In addition, the party
required to give its consent shall have at least three (3) business days prior
to the earlier of filing or first use, as the case may be, to review the
proposed advertising or promotional materials.
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.
Atlas Assets, Inc.
on behalf of itself and the
Atlas S&P 500 Index Fund
By: /s/ Larry E. Case
-----------------------------------------------
Name: Larry E. LaCasse
Title: Group Senior Vice President,
Chief Operating Officer
Distributor
By: /s/ Larry E. Case
-----------------------------------------------
Name: Larry E. LaCasse
Title: Group Senior Vice President,
Chief Operating Officer
MASTER INVESTMENT PORTFOLIO,
on behalf of itself and each Master Portfolio
listed in Appendix B
By: /s/ Richard H. Blank, Jr.
-----------------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
<PAGE>
SCHEDULE A
Atlas Funds
Atlas S & P 500 Index Fund
Approved: August 15, 2000
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SCHEDULE B
MASTER INVESTMENT PORTFOLIO
S&P 500 Index Master Portfolio
Approved: August 15, 2000
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THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
BB&T FUNDS,
BISYS FUND SERVICES LIMITED PARTNERSHIP
AND
MASTER INVESTMENT PORTFOLIO
dated as of
September 6, 2000
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TABLE OF CONTENTS
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ARTICLE I. REPRESENTATIONS AND WARRANTIES.................................................................1
1.1 Trust..........................................................................................1
1.2 MIP............................................................................................2
1.3 Distributor....................................................................................3
ARTICLE II. COVENANTS......................................................................................4
2.1 Trust..........................................................................................4
2.2 MIP............................................................................................5
2.3 Reasonable Actions.............................................................................7
ARTICLE III. INDEMNIFICATION................................................................................7
3.1 Trust..........................................................................................7
3.2 Distributor....................................................................................8
3.3 MIP...........................................................................................10
ARTICLE IV. ADDITIONAL AGREEMENTS.........................................................................11
4.1 Access to Information.........................................................................11
4.2 Confidentiality...............................................................................12
4.3 Obligations of Trust and MIP .................................................................12
ARTICLE V. TERMINATION, AMENDMENT........................................................................12
5.1 Termination...................................................................................12
5.2 Amendment.....................................................................................12
ARTICLE VI. GENERAL PROVISIONS............................................................................13
6.1 Expenses......................................................................................13
6.2 Headings......................................................................................13
6.3 Entire Agreement..............................................................................13
6.4 Successors....................................................................................13
6.5 Governing Law.................................................................................13
6.6 Counterparts..................................................................................13
6.7 Third Parties.................................................................................13
6.8 Notices.......................................................................................13
6.9 Interpretation................................................................................14
6.10 Operation of the Fund.........................................................................14
6.11 Relationship of Parties; No Joint Venture, Etc. ..............................................14
6.12 Use of Name...................................................................................14
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Signatures
Schedule A
Schedule B
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AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the 6th day of
September, 2000, by and among BB&T Funds, a Massachusetts business trust (the
"Trust"), for itself and on behalf of its series set forth on Schedule A, (each,
a "Fund"), BISYS Fund Services Limited Partnership (the "Distributor"), an Ohio
limited partnership, and Master Investment Portfolio ("MIP"), a Delaware
business trust, for itself and on behalf of its series set forth on Schedule B
(each, a "Portfolio" and collectively, the "Portfolios").
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, each Fund and its corresponding Portfolio have the same investment
objective and substantially the same investment policies;
WHEREAS, each Fund desires to invest on an ongoing basis all or substantially
all of its investable assets (the "Assets") in exchange for a beneficial
interest in the corresponding Portfolio (the "Investment") 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 business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and the Funds are duly and validly designated series of Trust.
Trust and each 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 the Funds 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 Funds, or the performance by
Funds of their obligations hereunder. This Agreement when executed and delivered
by Trust on behalf of the Funds shall constitute a legal, valid and binding
obligation of Trust, enforceable against the Funds in accordance with its terms.
No meeting of, or consent by, shareholders of the Funds is necessary to approve
or implement the Investments.
(c) 1940 Act Registration. Trust is duly registered under the Investment
Company Act of 1940, as amended (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, as amended (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 the
Funds' shares, any meetings of its shareholders and its registration as an
investment company. All SEC Filings relating to the Funds were prepared to
comply in all material respects in accordance 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, provided that Trust makes no representation or warranty hereunder
with respect to information supplied by MIP or any service provider of MIP for
use in Trust's SEC filings, including but not limited to any written information
contained in MIP's current registration statement relating to the Portfolios.
(e) Fund Assets. Each Fund currently intends on an ongoing basis to invest
its Assets solely in the corresponding Portfolio, although it reserves the right
to invest Assets in other securities and other assets and/or to redeem any or
all units of the Portfolio at any time without notice.
(f) Registration Statement. Trust has reviewed MIP's and the Portfolios'
most recent registration statement on Form N-lA, as filed with the SEC.
(g) Insurance. Trust has in force an errors and omissions liability
insurance policy insuring the Funds against loss up to $ 5 million for
negligence or wrongful acts.
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 the Portfolios are
duly and validly designated series of MIP. MIP and each Portfolio has the
requisite power and authority to own its property and conduct its business as
now being conducted and as proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by MIP on behalf of the Portfolios 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 the Portfolios, or the
performance by the Portfolios of their obligations hereunder and the
consummation by the Portfolios of the transactions contemplated hereby. This
Agreement when executed and delivered by MIP on behalf of the Portfolios shall
constitute a legal, valid and binding obligation of MIP and the Portfolios,
enforceable against MIP and the Portfolios in accordance with its terms. No
meeting of, or consent by, interestholders of the Portfolios is necessary to
approve the issuance of the Interests (as defined below) to the Funds.
(c) Issuance of Beneficial Interest. The issuance by MIP of beneficial
interests in the Portfolios ("Interests") in exchange for the Investments by the
corresponding Funds of their Assets has been duly authorized by all necessary
action on the part of the Board of Trustees of MIP. When issued in accordance
with the terms of this Agreement, the Interests will be validly issued, fully
paid and non-assessable.
(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 the Portfolios required to be filed with the SEC
under the Securities Laws. Interests in Portfolios 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 the
Portfolios are either noticed or qualified for sale or exempt from notice or
qualification requirements under applicable securities laws in those states and
other jurisdictions in which Interests are offered and sold. All SEC Filings
relating to the Portfolios 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. Each Portfolio is taxable as a partnership for federal
income tax purposes under the Internal Revenue Code of 1986, as amended
(the "Code").
(g) Taxable and Fiscal Year. The taxable and fiscal year end of each
Portfolio is December 31st.
(h) Insurance. MIP has in force an errors and omissions liability insurance
policy insuring the Portfolios against loss up to $ 5 million for negligence and
wrongful acts. 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.
ARTICLE II
COVENANTS
2.1 Trust. Trust covenants that:
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(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 the Funds' 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 three (3) 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 the Portfolios 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 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 information provided
in the Portfolios' 1940 Act registration statement or otherwise provided by MIP
for inclusion therein. In addition, neither the Funds nor Distributor will make
any other written or oral representations about MIP or the Portfolios 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 the Funds' shares, any meetings of its shareholders, and its
registration as a series of 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 the Funds are or will be noticed for sale ("State Filings"). The
Funds' SEC Filings will be prepared in all material respects in accordance 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 the Funds 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. The
Funds' 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.
(d) Tax Status. The Funds will qualify for treatment as regulated
investment companies under Subchapter M of the Code for and taxable year
during which this Agreement continues in effect, except to the extent that
a failure to so qualify may result from any action or omission of
the corresponding portfolio or MIP.
(e) Fiscal Year. Each Fund shall take appropriate action to adopt and
maintain the same fiscal year end as the corresponding Portfolio (currently
December 31).
(f) Proxy Voting. If requested to vote on matters pertaining to MIP or
Portfolio, a Fund will either seek instructions from its shareholders with
regard to the voting of all proxies with respect to Portfolio's securities and
vote such proxies only in accordance with such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of
Portfolio's securities; provided that the Fund will not be obligated to take
such action if and to the extent the Fund obtains an exemption from Section
12(d)(1)(E)(iii)(aa) of the 1940 Act.
(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.
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 a Fund will be effected in cash pursuant to
Section 2.2(c). In the event a Fund desires to withdraw its entire Investment
from a corresponding Portfolio, either by submitting a redemption request or by
terminating this agreement in accordance with Section 5.1 hereof, Portfolio, at
its sole discretion, and in accordance with the 1940 Act and the rules and
regulations thereunder, may effect such redemption "in kind" and in such manner
that the securities delivered to Fund or its custodian approximate the Fund's
proportionate share of Portfolio's net assets immediately prior to such
redemption. In addition, in the event a Fund makes a redemption (or series of
redemptions over any three consecutive business days) of an amount that exceeds
10% of Portfolio's net asset value, Portfolio, at its sole discretion, and in
accordance with the 1940 Act and the rules and regulations thereunder, may
effect such redemption "in kind" and in such manner that the securities
delivered to the Fund or its custodian approximate the Fund's proportionate
share of Portfolio's net assets immediately prior to such redemption. Each
Portfolio will use its best efforts to settle redemptions on the business day
following the receipt of a redemption request by a Fund and if such next
business day settlement is not practicable, will immediately notify the Fund
regarding the anticipated settlement date, which shall in all events be a date
permitted under the 1940 Act.
(c) Ordinary Course Redemptions. The Portfolios 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 a Fund's entire Investment in the
corresponding 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 a Portfolio's net asset value, will be
effected in cash at the next determined net asset value after the redemption
request is received. The Portfolios will use their best efforts to settle
redemptions on the business day following the receipt of a redemption request by
a Fund and if such next business day settlement is not practicable, will
immediately notify the 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 the
Portfolios' investors and its registration as an investment company and will
provide copies of all such definitive filings to Trust. The Portfolios' 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 and
Treasury Regulations, each Portfolio will continue to be treated as a
partnership for federal income tax purposes. Each 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.
(g) Securities Exemptions. Interests in the Portfolios have been and will
continue to be offered and sold solely in private placement transactions which
do not involve any "public offering" within the meaning of Section 4(2) of the
1933 Act or require registration or notification 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 a Portfolio's investment
objective, and at least sixty (60) days' advance notice, or if MIP has knowledge
or should have 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 or should have obtained such
knowledge, of any material change in a Portfolio's investment policies or
activities, any material increase in a Portfolio's fees or expenses, or any
change in a Portfolio's fiscal year or time for calculating net asset value for
purposes of Rule 22c-1.
(i) Compliance with Laws. MIP shall comply, in all material respects, with
all applicable laws, rules and regulations in connection with conducting its
operations as a registered investment company. 2.3 Reasonable Actions. Each
party covenants that it will, subject to the provisions of this Agreement, from
time to time, as and when requested by another party or in its own discretion,
as the case may be, execute and deliver or cause to be executed and delivered
all such documents, assignments and other instruments, take or cause to be taken
such actions, and do or cause to be done all things reasonably necessary, proper
or advisable in order to conduct the business contemplated by this Agreement and
to carry out its intent and purpose.
ARTICLE III
INDEMNIFICATION
3.1 Trust
(a) Trust agrees to indemnify and hold harmless MIP, the Portfolios and the
Portfolios' investment adviser, and any director/trustee, officer, employee or
agent of MIP, the Portfolio or Portfolios' 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)) ("Losses"), 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 any of its
trustees/directors, officers, employees or agents, but only insofar as such
omissions or commissions relate to the Trust of the Funds; or
(ii)arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any ^ prospectus, registration
statement, or any other SEC Filing relating to the Funds, 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 the Funds or by any service provider of MIP for
use therein or for use by the Funds 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 be liable for
indemnification hereunder with respect to any claims made against any Covered
Person unless a Covered Person shall have notified Trust in writing within a
reasonable time after the summons, other first legal process, notice of a
federal, state or local tax deficiency, or formal initiation of a regulatory
investigation or proceeding giving information of the nature of the claim shall
have properly been served upon or provided to a Covered Person seeking
indemnification. Failure to notify Trust of such claim shall not relieve Trust
from any liability that it may have to any Covered Person otherwise than on
account of the indemnification contained in this Section.
(b) The Trust is 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 the Trust elects to assume the defense, such defense
shall be conducted by legal counsel acceptable to the applicable Covered
Persons, which acceptance shall not be unreasonably withheld or delayed. In
the event the Trust elects to assume the defense of any such suit and
retain such counsel, each Covered Person and any other defendant or
defendants may retain additional counsel, but shall bear the fees and
expenses of such counsel unless (1) The Trust shall have specifically
authorized the retaining of such counsel or (2) the parties to such suit
include any Covered Person and the Trust, and any such Covered Person has
been advised by counsel that one or more legal defenses may be available to
it that may not be available to the Trust, in which case the Trust shall
not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the fees and expenses of such counsel. The Trust shall
not be liable to indemnify any Covered Person for any settlement of any
claim affected without the Trust's 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 Trust in respect of a Fund
might otherwise have to a Covered Person.
3.2 Distributor
(a) Indemnification. Distributor will indemnify and hold
harmless MIP, each Portfolio, and MIP's trustees,
officers and employees, and each other person who
controls MIP or a Portfolio within the meaning of
Section 15 of the 1933 Act (each a "Covered Person"
and collectively "Covered Persons"), against any and
all losses, claims, demands, damages, liabilities and
expenses (each a "Liability" and collectively the
"Liabilities") (including, unless BISYS elects to
assume the defense pursuant to paragraph (b), the
reasonable cost of investigating and defending
against any claims therefor, including counsel fees
incurred in connection therewith), which:
(1) arise out of any misstatement of a material
fact or an omission of a material fact with
respect to information provided by the
Distributor in Trust's registration
statement (including amendments and
supplements thereto) or in advertisements or
sales literature prepared by the Distributor
on behalf of Trust, other than a
misstatement or omission arising from
information provided by MIP or a Portfolio;
(2) result from the failure of any
representation or warranty made in this
Agreement by the Distributor to be accurate
when made or the failure by the Distributor
to perform any covenant contained herein or
otherwise to comply with the terms of this
Agreement; or
(3) arise out of any unlawful or negligent act
or omission by the Distributor or any
director, officer, employee or agent of the
Distributor;
provided, however, that in no case shall the
Distributor be liable with respect to any claim made
against any Covered Person unless the Covered Person
shall have notified the Distributor in writing of the
nature of the claim within a reasonable time after
the summons, other first legal process or formal or
informal initiation of a regulatory investigation or
proceeding shall have been served upon or provided to
a Covered Person, or any federal, state or local tax
deficiency has come to the attention of MIP, a
Portfolio or a Covered Person. Failure to notify the
Distributor of such claim shall not relieve it from
any liability that it may have to any Covered Person
otherwise than on account of the indemnification
contained in this Section.
(b) Assumption of Defense. The Distributor is 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 the
Distributor elects to assume the defense, such
defense shall be conducted by legal counsel
acceptable to the applicable Covered Persons, which
acceptance shall not be unreasonably withheld or
delayed. In the event the Distributor elects to
assume the defense of any such suit and retain such
counsel, each Covered Person and any other defendant
or defendants may retain additional counsel, but
shall bear the fees and expenses of such
counsel unless (1) The Distributor shall have
specifically authorized the retaining of such counsel
or
(2) the parties to such suit include any Covered
Person and the Distributor, and any such Covered
Person has been advised by counsel that one or more
legal defenses may be available to it that may not be
available to the Distributor, in which case the
Distributor shall not be entitled to assume the
defense of such suit notwithstanding its obligation
to bear the fees and expenses of such counsel. The
Distributor shall not be liable to indemnify any
Covered Person for any settlement of any claim
affected without the Distributor's 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 Trust in
respect of a Fund might otherwise have to a Covered
Person.
3.3 MIP.
---
(a) MIP agrees to indemnify and hold harmless Trust, the Funds,
Distributor, and any affiliate providing services to Trust and/or the Funds, 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))
("Losses"), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable statute, rule,
regulation or common law or are incurred in connection with or as a result of
any formal or informal administrative proceeding or investigation by a
regulatory agency, insofar as such violation or alleged violation, proceeding or
investigation arises out of or is based upon any direct or indirect omission or
commission (or alleged omission or commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii)arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any advertising or sales
literature, or any other SEC Filing relating to the Portfolios, or any
amendments to the foregoing (in this Section, collectively, the "Offering
Documents") relating to the Portfolios, 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 the Funds, 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 lleged omission was made in reliance upon and in
conformity with written information furnished to the Funds by MIP for use
therein or for use by the Funds 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 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.
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(b) MIP is entitled to participate at its own expense in the defense or, if it so elects, to assume the defense
of any suit brought to enforce any such liability, but if MIP elects to assume the defense, such defense
shall be conducted by legal counsel acceptable to the applicable Covered Persons, which acceptance shall not
be unreasonably withheld or delayed. In the event MIP elects to assume the defense of any such suit and
retain such counsel, each Covered Person and any other defendant or defendants may retain additional counsel,
but shall bear the fees and expenses of such counsel unless (1) MIP shall have specifically authorized the
retaining of such counsel or (2) the parties to such suit include any Covered Person and MIP, and any such
Covered Person has been advised by counsel 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 such counsel. MIP shall not be liable to
indemnify any Covered Person for any settlement of any claim affected without MIP's 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 Trust in respect of a Fund might otherwise have to a Covered Person.
</TABLE>
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, the Funds' or Portfolios' 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 the Funds or Portfolios, 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 the Funds,
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 the Funds, and in no
case shall MIP or any covered person have recourse to the assets of any series
of the Trust other than the Funds. Trust agrees that the financial obligations
of MIP under this Agreement shall be binding only upon the assets of the
Portfolios and that, except to the extent 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. This Agreement may be terminated at any time by the mutual
agreement in writing of all parties, or by any party on ninety (90) days'
advance written notice to the other parties hereto; provided, however, that
nothing in this Agreement shall limit Trust's right to redeem all or a portion
of its units of the Portfolios in accordance with the 1940 Act and the rules
thereunder. The provisions of Article III and Sections 4.2 and 4.3 shall survive
any termination of this Agreement.
5.2 Amendment. This Agreement may be amended, modified or supplemented
at any time in such manner as may be mutually agreed 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. 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. This Agreement may be amended only in a writing signed
by all parties.
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 without regard to the
conflicts of laws provisions thereof; provided, however, that in the event of
any conflict between the 1940 Act and the laws of California, the 1940 Act shall
govern.
6.6 Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party hereto
may execute this Agreement by signing one or more counterparts.
6.7 Third Parties. Except as expressly provided in Article III, 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 Trust:
BB&T Funds
3435 Stelzer Road
Columbus, OH 43219
Attn: Walter B. Grimm
If to Distributor:
BISYS Fund Services Limited Partnership
c/o BISYS Fund Services, Inc., General Partner
3435 Stelzer Road
Columbus, OH 43219
Attn: President
If to MIP:
Chief Operating Officer
Master Investment Portfolio
c/o Stephens Inc.
111 Center Street, Suite 300
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 the Funds. Except as otherwise provided herein, this Agreement
shall not limit the authority of the Funds, Trust or Distributor to take such
action as they may deem appropriate or advisable in connection with all matters
relating to the operation of the Funds and the sale of their 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, the Funds nor
Distributor shall describe or refer to the name of MIP, the Portfolios 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, the Funds 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,
the Funds or Distributor, as the case may be. In no case shall any such consents
be unreasonably withheld or delayed. In addition, the party required to give its
consent shall have at least three (3) business days prior to the earlier of
filing or first use, as the case may be, to review the proposed advertising or
promotional materials.
<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.
BB&T FUNDS
on behalf of itself and the
Funds Listed on Schedule A
By: /s/ Mark S. Redmond
-----------------------------------------------------------------
Name: Mark S. Redmond
Title: Vice President
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc., its General Partner
By: /s/ William J. Tomko
---------------------------------------------------------------
Name: William J. Tomko
Title: President
MASTER INVESTMENT PORTFOLIO
By: /s/ Richard H. Blank, Jr.
---------------------------------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
<PAGE>
SCHEDULE A
BB&T FUNDS
BB&T Equity Index Fund
Approved: September 6, 2000
<PAGE>
SCHEDULE B
MASTER INVESTMENT PORTFOLIO
MIP S&P 500 Index Master Portfolio
Approved: September 6, 2000
<PAGE>
FORM OF
THIRD PARTY FEEDER FUND
AGREEMENT
AMONG
STATE FARM MUTUAL FUND TRUST
STATE FARM VP MANAGEMENT CORP.AND
MASTER INVESTMENT PORTFOLIO
dated as of
December __, 2000
<PAGE>
<TABLE>
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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...........................................................................................
3.2 Distributor.....................................................................................
3.3 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 the Fund...........................................................................
6.11 Relationship of Parties; No Joint Venture, Etc. ................................................
6.12 Use of Name.....................................................................................
</TABLE>
Signatures
Schedule A
Schedule B
<PAGE>
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the ____ day of
_______________, 2000, by and among State Farm Mutual Fund Trust, a Delaware
business trust (the "Trust"), for itself and on behalf of its series set forth
in Schedule A, State Farm S&P 500 Index Fund, State Farm International Index
Fund, and State Farm Small Cap Index Fund (each, a "Fund" and collectively, the
"Funds"), State Farm VP Management Corp. (the "Distributor"), a Delaware
corporation, and Master Investment Portfolio ("MIP"), a Delaware business trust,
for itself and on behalf of its series set forth on Schedule B (each, a
"Portfolio" and collectively, the "Portfolios").
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, each Fund and its corresponding Portfolio have the same investment
objective and substantially the same investment policies;
WHEREAS, each Fund desires to invest on an ongoing basis all or substantially
all of its investable assets (the "Assets") in exchange for a beneficial
interest in the corresponding Portfolio (the "Investment") 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 business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware, and the
Funds are duly and validly designated series of Trust. Trust and each 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 the Funds 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 Funds, or the performance by
Funds of their obligations hereunder. This Agreement when executed and delivered
by Trust on behalf of the Funds shall constitute a legal, valid and binding
obligation of Trust, enforceable against the Funds in accordance with its terms.
No meeting of, or consent by, shareholders of the Funds is necessary to approve
or implement the Investments.
(c) 1940 Act Registration. Trust is duly registered under the Investment
Company Act of 1940, as amended (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, as amended (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 the
Funds' shares, any meetings of its shareholders and its registration as an
investment company. All SEC Filings relating to the Funds comply in all material
respects in accordance with the requirements of the applicable Securities Laws
and do not, to the best understanding of the Trust 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, provided that Trust makes no representation or warranty
hereunder with respect to information supplied by MIP or any service provider of
MIP for use in Trust's SEC filings, including but not limited to any written
information contained in MIP's current registration statement relating to the
Portfolios.
(e) Fund Assets. Each Fund currently intends on an ongoing basis to invest
its Assets solely in the corresponding Portfolio, although it reserves the right
to invest Assets in other securities and other assets and/or to redeem any or
all units of the Portfolio at any time without notice.
(f) Registration Statement. Trust has reviewed MIP's and the Portfolios'
most recent registration statement on Form N-lA, as filed with the SEC.
(g) Insurance. Trust has in force a fidelity bond agreement insuring the
Funds against loss up to $3.3 million for wrongful acts.
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 the Portfolios are
duly and validly designated series of MIP. MIP and each Portfolio has the
requisite power and authority to own its property and conduct its business as
now being conducted and as proposed to be conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by MIP on behalf of the Portfolios 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 the Portfolios, or the
performance by the Portfolios of their obligations hereunder and the
consummation by the Portfolios of the transactions contemplated hereby. This
Agreement when executed and delivered by MIP on behalf of the Portfolios shall
constitute a legal, valid and binding obligation of MIP and the Portfolios,
enforceable against MIP and the Portfolios in accordance with its terms. No
meeting of, or consent by, interestholders of the Portfolios is necessary to
approve the issuance of the Interests (as defined below) to the Funds.
(c) Issuance of Beneficial Interest. The issuance by MIP of beneficial
interests in the Portfolios ("Interests") in exchange for the Investments by the
corresponding Funds of their Assets has been duly authorized by all necessary
action on the part of the Board of Trustees of MIP. When issued in accordance
with the terms of this Agreement, the Interests will be validly issued, fully
paid and non-assessable.
(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 the Portfolios required to be filed with the SEC
under the Securities Laws. Interests in Portfolios 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 the
Portfolios are either noticed or qualified for sale or exempt from notice or
qualification requirements under applicable securities laws in those states and
other jurisdictions in which Interests are offered and sold. All SEC Filings
relating to the Portfolios 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. Each Portfolio is taxable as a partnership for federal
income tax purposes under the Internal Revenue Code of 1986, as amended
(the "Code").
(g) Taxable and Fiscal Year. The taxable and fiscal year end of each
Portfolio is December 31.
(h) Insurance. MIP has in force an errors and omissions liability insurance
policy insuring the Portfolios against loss up to [$______] million for
negligence and wrongful acts. 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.
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 the Funds' 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 three (3) 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 the Portfolios and a
substantially similar form of which 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 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 information provided in the Portfolios' 1940 Act registration
statement or otherwise provided by MIP (or its officers, directors, or agents)
for inclusion therein. In addition, neither the Funds nor Distributor will make
any other written or oral representations about MIP or the Portfolios 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 the Funds' shares, any meetings of its shareholders, and its
registration as a series of 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 the Funds are or will be noticed for sale ("State Filings"). The
Funds' SEC Filings shall 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 the Funds 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. The Funds' State
Filings shall comply in all material respects 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.
(d) Tax Status. The Funds will qualify for treatment as regulated
investment companies under Subchapter M of the Code for any taxable year
during which this Agreement continues in effect, except to the
extent that a failure to so qualify may result from any action or omission of
the corresponding portfolio or MIP.
(e) Fiscal Year. Each Fund shall take appropriate action to adopt and
maintain the same fiscal year end as the corresponding Portfolio (currently
the last day of December).
(f) Proxy Voting. If requested to vote on matters pertaining to MIP or a
Portfolio, a Fund will either seek instructions from its shareholders with
regard to the voting of all proxies with respect to Portfolio's securities and
vote such proxies only in accordance with such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of
Portfolio's securities; provided that the Fund will not be obligated to take
such action if and to the extent the Fund obtains an exemption from Section
12(d)(1)(E)(iii)(aa) of the 1940 Act.
(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.
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) Redemptions. Except as otherwise provided in this Section 2.2(b),
redemptions of interests owned by a Fund will be effected in cash pursuant to
Section 2.2(c). In the event a Fund desires to withdraw its entire Investment
from a corresponding Portfolio, either by submitting a redemption request or by
terminating this agreement in accordance with Section 5.1 hereof, Portfolio, at
its sole discretion, and in accordance with the 1940 Act and the rules and
regulations thereunder, may effect such redemption "in kind" and in such manner
that the securities delivered to Fund or its custodian are equivalent to the
Fund's proportionate share of Portfolio's net assets immediately prior to such
redemption. In addition, in the event a Fund makes a redemption (or series of
redemptions over any three consecutive business days) of an amount that exceeds
10% of Portfolio's net asset value, Portfolio, at its sole discretion, and in
accordance with the 1940 Act and the rules and regulations thereunder, may
effect such redemption "in kind" and in such manner that the securities
delivered to the Fund or its custodian are equivalent to the Fund's
proportionate share of Portfolio's net assets immediately prior to such
redemption. Each Portfolio will use its best efforts to settle redemptions on
the business day following the receipt of a redemption request by a Fund and if
such next business day settlement is not practicable, will immediately notify
the Fund regarding the anticipated settlement date, which shall in all events be
a date permitted under the 1940 Act.
(c) Ordinary Course Redemptions. Each Portfolio will effect its redemptions
in accordance with the provisions of the 1940 Act and the rules and regulations
thereunder. Except as described in Section 2.2(b), all redemptions will be
effected in cash at the next determined net asset value after the redemption
request is received in proper form. Each Portfolio will settle redemptions on
the business day following the receipt of a redemption request by a Fund and if
such next business day settlement cannot be achieved by commercially reasonable
means, will immediately notify the 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 the
Portfolios' investors and its registration as an investment company and will
provide copies of all such definitive filings to Trust. The Portfolios' 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 and
Treasury Regulations, each Portfolio will continue to be treated as a
partnership for federal income tax purposes. Each 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 Trust prior to the Funds' initial Investment a copy of its
opinion of counsel or private letter ruling relating to the tax status of the
Portfolios and agrees that Trust and the Funds may rely upon such opinion or
ruling during the term of this Agreement.
(g) Securities Exemptions. Interests in the Portfolios have been and will
continue to be offered and sold solely in private placement transactions which
do not involve any "public offering" within the meaning of Section 4(2) of the
1933 Act or require registration or notification 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 a Portfolio's investment
objective, and at least sixty (60) days' advance notice, or if MIP has knowledge
or should have 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 or should have obtained such
knowledge, of any material change in a Portfolio's investment policies or
activities, any material increase in a Portfolio's fees or expenses, or any
change in a Portfolio's fiscal year or time for calculating net asset value for
purposes of Rule 22c-1.
(i) Compliance with Laws. MIP shall comply, in all material respects, with
all applicable laws, rules and regulations in connection with conducting its
operations as a registered investment company. 2.3 Reasonable Actions. Each
party covenants that it will, subject to the provisions of this Agreement, from
time to time, as and when requested by another party or in its own discretion,
as the case may be, execute and deliver or cause to be executed and delivered
all such documents, assignments and other instruments, take or cause to be taken
such actions, and do or cause to be done all things reasonably necessary, proper
or advisable in order to conduct the business contemplated by this Agreement and
to carry out its intent and purpose.
ARTICLE III
INDEMNIFICATION
3.1 Trust
(a) Trust agrees to indemnify and hold harmless MIP, the Portfolios and the
Portfolios' investment adviser, and any director/trustee, officer, employee or
agent of MIP, the Portfolio or Portfolios' 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)) ("Losses"), 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 any of its
trustees/directors, officers, employees or agents, but only insofar as such
omissions or commissions relate to the Funds; 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 the Funds, 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 the Funds or by any
service provider of MIP for use therein or for use by the Funds 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 be liable for
indemnification hereunder (i) with respect to any claims made against any
Covered Person unless a Covered Person shall have notified Trust 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 or (ii) if such Losses were the result of the negligence or
willful misconduct of the MIP or the Portfolios. Failure to notify Trust of such
claim shall not relieve Trust from any liability that it may have to any Covered
Person otherwise than on account of the indemnification contained in this
Section.
(b) Trust 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 elects to assume the defense, such defense shall be
conducted by counsel chosen by Trust. In the event Trust 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 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 any such Covered Person has been
advised in a written opinion by counsel reasonably acceptable to Trust that one
or more legal defenses may be available to it that may not be available to
Trust, in which case Trust shall not be entitled to assume the defense of such
suit notwithstanding its obligation to bear the fees and expenses of one counsel
to all such persons. Trust 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 Trust might otherwise
have to Covered Persons.
3.2 Distributor
(a) Distributor agrees to indemnify and hold harmless MIP, the Portfolios
and the Portfolios' investment adviser, and any director/trustee, officer,
employee or agent of MIP, the Portfolios or Portfolios' 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))
("Losses"), 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 Distributor or by any
of its or their trustees/directors, officers, employees or agents, but only
insofar as such omissions or commissions relate to the Funds; 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 the Funds, 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 the Funds or by any
service provider of MIP for use therein or for use by the Funds 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 Distributor be liable for Losses
to the extent Trust pays the amount of such Losses to the Covered Person under
Section 3.1(a) hereof, nor shall Distributor be liable for indemnification
hereunder (i) with respect to any claims made against any Covered Person unless
a Covered Person shall have notified Distributor in writing within a reasonable
time after the summons, other first legal process, notice of a federal, state or
local tax deficiency, or formal initiation of a regulatory investigation or
proceeding giving information of the nature of the claim shall have properly
been served upon or provided to a Covered Person seeking indemnification or (ii)
if such Losses were the result of the negligence or willful misconduct of the
MIP or the Portfolios. Failure to notify Distributor of such claim shall not
relieve Distributor from any liability that it may have to any Covered Person
otherwise than on account of the indemnification contained in this Section.
(b) Distributor 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 Distributor elects to assume the defense,
such defense shall be conducted by counsel chosen by Distributor. In the event
Distributor 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) 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
Distributor, and any such Covered Person has been advised in a written opinion
by counsel reasonably acceptable to Distributor that one or more legal defenses
may be available to it that may not be available to Distributor, in which case
Distributor shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of one counsel to
all such persons. Distributor 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
Distributor might otherwise have to Covered Persons.
3.3 MIP.
---
(a) MIP agrees to indemnify and hold harmless Trust, the Funds,
Distributor, and any affiliate providing services to Trust and/or the Funds, 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))
("Losses"), that:
(i) arise out of or are based upon any violation or alleged
violation of any of the Securities Laws, or any other applicable statute, rule,
regulation or common law or are incurred in connection with or as a result of
any formal or informal administrative proceeding or investigation by a
regulatory agency, insofar as such violation or alleged violation, proceeding or
investigation arises out of or is based upon any direct or indirect omission or
commission (or alleged omission or commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii)arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any advertising or sales
literature, or any other SEC Filing relating to the Portfolios, or any
amendments or supplements to the foregoing (in this Section, collectively, the
"Offering Documents") relating to the Portfolios, 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 the Funds, 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 the Funds by MIP for use
therein or for use by the Funds 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 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 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, the Funds' or Portfolios' 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 the Funds or Portfolios, 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 the Funds,
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 the Funds, and in no
case shall MIP or any covered person have recourse to the assets of any series
of the Trust other than the Funds. Trust agrees that the financial obligations
of MIP under this Agreement shall be binding only upon the assets of the
Portfolios and that, except to the extent 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. This Agreement may be terminated at any time by the mutual
agreement in writing of all parties, or by any party on ninety (90) days'
advance written notice to the other parties hereto; provided, however, that
nothing in this Agreement shall limit Trust's right to redeem all or a portion
of its units of the Portfolios in accordance with the 1940 Act and the rules
thereunder. The provisions of Article III and Sections 4.2 and 4.3 shall survive
any termination of this Agreement.
5.2 Amendment. This Agreement may be amended, modified or supplemented
at any time in such manner as may be mutually agreed up 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. 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. This Agreement may be amended only in a writing signed
by all parties.
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 without regard to the
conflicts of laws provisions thereof; provided, however, that in the event of
any conflict between the 1940 Act and the laws of California, the 1940 Act shall
govern.
6.6 Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party hereto
may execute this Agreement by signing one or more counterparts.
6.7 Third Parties. Except as expressly provided in Article III, 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 Trust:
State Farm Mutual Fund Trust
Three State Farm Plaza
Bloomington, Illinois 61791
Attn: Secretary
If to Distributor:
State Farm VP Management Corp.
Three State Farm Plaza
Bloomington, Illinois 61791
Attn: Secretary
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 the Funds. Except as otherwise provided herein, this Agreement
shall not limit the authority of the Funds, Trust or Distributor to take such
action as they may deem appropriate or advisable in connection with all matters
relating to the operation of the Funds and the sale of their 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, the Funds nor
Distributor shall describe or refer to the name of MIP, the Portfolios 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, the Funds 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,
the Funds or Distributor, as the case may be. In no case shall any such consents
be unreasonably withheld or delayed. In addition, the party required to give its
consent shall have at least three (3) business days prior to the earlier of
filing or first use, as the case may be, to review the proposed advertising or
promotional materials.
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.
State Farm Mutual Fund Trust
on behalf of itself and the Funds
By: /s/ Edward B. Rust, Jr.
-----------------------------------------------
Name: Edward B. Rust, Jr.
Title: President
State Farm VP Management Corp.
By: /s/ Roger S. Joslin
-----------------------------------------------
Name: Roger S. Joslin
Title: Senior Vice President and Treasurer
MASTER INVESTMENT PORTFOLIO,
on behalf of itself and
MASTER PORTFOLIOS
By: /s/ Richard H. Blank, Jr.
-----------------------------------------------
Name: Richard H. Blank, Jr.
Title: Chief Operating Officer
<PAGE>
SCHEDULE A
State Farm S&P 500 Index Fund
State Farm Small Cap Index Fund
State Farm International Index Fund
Approved: December __, 2000
<PAGE>
SCHEDULE B
MASTER INVESTMENT PORTFOLIOS
S&P 500 Index Master Portfolio
Russell 2000 Index Master Portfolio
International Index Master Portfolio
Approved: December __, 2000
<PAGE>
BARCLAYS GLOBAL INVESTORS FUNDS, INC.
MASTER INVESTMENT PORTFOLIO
JOINT CODE OF ETHICS
Adopted Under Rule 17j-1
Effective August 16, 2000
Barclays Global Investors Funds, Inc. ("BGIF") and Master Investment
Portfolio ("MIP") (each a "Company" and collectively, the "Companies") are
confident that their Directors,2 officers, and employees act with integrity and
good faith. The Companies recognize, however, that personal interests may
conflict with the Companies' interests where officers or Directors:
o know about present or future portfolio transactions; or
o have the power to influence portfolio transactions; and
o engage in securities transactions in their personal
account(s).
In an effort to prevent these conflicts and in accordance with Rule
17j-1 under the Investment Company Act of 1940 (the "1940 Act"), the Companies
have adopted this Joint Code of Ethics (the "Code") to prohibit transactions and
conduct that create conflicts of interest, and to establish reporting
requirements and enforcement procedures. (Definitions of underlined terms are
included in Appendix A). Although the Companies have adopted the Code jointly
pursuant to Rule 17j-1 under the 1940 Act, each Company is responsible for
implementing the Code on behalf of, and for compliance therewith by, its own
access persons.
I. About BGIF, MIP and the Advisor.
BGIF is a registered investment company that consists of multiple
investment portfolios (each a "Feeder Fund" and collectively, the "Feeder
Funds"). The Feeder Funds do not have their own investment advisor. Instead,
each Feeder Fund invests all of its assets in a corresponding master portfolio
of MIP (each a "Master Portfolio" and collectively, the "Master Portfolios")
that has substantially identical investment objectives, strategies and policies
as the Feeder Fund. MIP is a registered investment company that consists of
multiple Master Portfolios (collectively, with the Feeder Funds, the "Funds").
Barclays Global Fund Advisors (the "Advisor") is the investment advisor for the
Master Portfolios. The Advisor provides investment guidance and policy direction
for each Master Portfolio. In buying and selling securities for the Master
Portfolios, the Advisor employs replication and representative sampling
strategies for certain Master Portfolios and mathematical allocation models for
certain other Master Portfolios. Because of these investment methodologies, the
personal securities activities of the Directors and officers of the Companies
are less likely to create a conflict of interest than they may in investment
companies that employ performance based or fundamental research driven
investment or other discretionary strategies. Consequently, the Companies have
considered, but not adopted, certain of the recommendations of the Investment
Company Institute's Advisory Group on Personal Trading.
II. About this Code of Ethics.
A. Who is covered by the Code?
o All Company officers;
----------------
o All Directors, both interested and independent;
and
o Natural persons in a control relationship to a
Fund who obtain information concerning
recommendations about the purchase or sale of any
security by a Fund (Natural Control Persons).
B. What rules apply to me?
This Code sets forth specific prohibitions regarding
securities transactions and sets out certain
reporting requirements. For the reporting
requirements that apply to you, please refer to Parts
A - D, as indicated below.
Independent Directors Part A
---------------------
Interested Directors Part B
--------------------
Company Officers Part C
----------------
Natural Control Persons Part D
-------
III. Statement of General Principles.
In recognition of the trust and confidence placed in the Companies by
their shareholders,3 and because the Companies believe that their operations
should benefit their shareholders, the Companies have adopted the following
general principles:
A. The interests of our shareholders are paramount.
Shareholder interests must be placed before your own.
B. You must accomplish all personal securities
transactions in a manner that avoids a conflict between your personal interests
and those of the Companies and our shareholders.
C. You must avoid actions or activities that allow you
or your family to profit or benefit from your position with the
Companies, or that bring into question your independence or judgment.
IV. Prohibition Against Fraud, Deceit and Manipulation.
You cannot, in connection with the direct or indirect purchase or sale
of a security held or to be acquired by a Fund:
A. employ any device, scheme or artifice to defraud the
Fund;
B. make to the Fund any untrue statement of a material
fact or omit to state to the Fund a material fact necessary in order to make
the statements made, in light of the circumstances under which they are made,
not misleading;
C. engage in any act, practice or course of business
that operates or would operate as a fraud or deceit upon the Fund; or
D. engage in any manipulative practice with respect to
the Fund.
V. Review and Enforcement of the Code.
A. Appointment of a Review Officer.
A review officer (the "Review Officer") will be
appointed by the Chairman of the Board of Directors
of each Company ("Chairman") to perform the duties
described in this Section V.
B. The Review Officer's Duties and Responsibilities.
(1) The Review Officer shall notify each person who
becomes an access person of a Company and is required
to report under the Code of their reporting
obligations, no later than 10 days before the first
quarter in which such person is obligated to begin
reporting.
(2) The Review Officer will, on a quarterly basis,
compare all reported personal securities transactions
with the Funds' completed portfolio transactions and
a list of securities being considered for purchase
(i.e., trade lists) by the Advisor during the quarter
to determine whether a Code violation may have
occurred. The Review Officer may request additional
information or take any other appropriate measure
that the Review Officer decides is necessary to aid
in this determination. Before determining that a
person has violated the Code, the Review Officer must
give the person an opportunity to supply explanatory
material.
(3) If the Review Officer finds that a Code violation
may have occurred, the Review Officer must create and
submit a written report regarding the possible
violation, together with the confidential quarterly
report and any explanatory material provided by the
person, to the Chairman and legal counsel ("Counsel")
for a Company. The Chairman, with advice of Counsel,
will determine, in his or her sole discretion,
whether the person violated the Code.
(4) No person is required to participate in a
determination of whether he or she has committed a
Code violation or discuss the imposition of any
sanction against himself or herself.
(5) If required, the Review Officer will submit his
or her own reports (as required) to an Alternate
Review Officer who will fulfill the duties of the
Review Officer with respect to such reports. If a
securities transaction of the Review Officer is under
review for a possible violation, a Company officer
designated by the Chairman will act as the Alternate
Review Officer for purposes of this Section V.
(6) The Review Officer will, on an annual basis,
obtain from the Advisor, or any other investment
adviser to a Fund (including any sub-adviser) and the
Companies' principal underwriter (if applicable) a
written annual issues report and accompanying
certification.
C. Exceptions.
In the event that a person subject to the Code believes that he or she is
unable to comply with certain provisions of the Code, the person must
notify the Review Officer in writing, setting forth the reasons why he or
she cannot comply with the Code.
The Review Officer, in his or her discretion, may
exempt such person from any such provisions of the
Code, if the Review Officer determines that (a) the
services of the person are valuable to the Company or
the Advisor; (b) the failure to grant this exemption
will result in an undue burden on the person or
prevent the person from being able to render services
to the Company or the Advisor; and (c) granting the
exemption does not detrimentally affect the
shareholders of the Company or the Advisor or create
a risk of such an effect. The Review Officer will
prepare a report documenting the nature and scope of
any exemption granted, the persons involved and the
reasons for granting such exemption.
Any person granted an exemption with respect to a
particular transaction must furnish the Review
Officer with a written report concerning that
transaction within three days of the transaction.
D. Sanctions.
If the Chairman, with advice of Counsel, determines
that a person violated the Code pursuant to paragraph
B.(3) above, disciplinary action may be taken and
sanctions may be imposed.
VI. Recordkeeping.
The Companies will maintain records as set forth below. These records
will be maintained in accordance with Rule 31a-2 under the 1940 Act and the
following requirements. They will be available for examination by
representatives of the Securities and Exchange Commission and other regulatory
agencies.
A. A copy of this Code and any other code adopted by a
Company which is, or at any time within the past five
years has been, in effect will be preserved in an
easily accessible place.
B. A record of any Code violation and of any sanctions
taken will be preserved in an easily accessible place
for a period of at least five years following the end
of the fiscal year in which the violation occurred.
C. A copy of each Quarterly, Initial and Annual Report
submitted under this Code, including any information
provided in lieu of such reports, will be preserved
for a period of at least five years from the end of
the fiscal year in which it is made, for the first
two years in an easily accessible place.
D. A record of all persons, currently or within the past
five years, who are or were required to submit
reports under this Code, and a list of those who are
or were responsible for reviewing these reports, will
be maintained in an easily accessible place.
E. A copy of each annual issues report and accompanying
verification, as required by Section VIII.C of this
Code, must be maintained for at least five years from
the end of the fiscal year in which it is made, for
the first two years in any easily accessible place.
VII. Interrelationship with Other Codes of Ethics.
A. General Principle.
A person who is both an access person of a Company
and an access person of the Advisor or principal
underwriter is only required to report under and
otherwise comply with the Advisor's or principal
underwriter's Rule 17j-1 code of ethics,
respectively, provided that such code has been
adopted pursuant to and in compliance with Rule
17j-1. Such persons, however, are still subject to
the principles and prohibitions contained in Section
III and IV hereof.
B. Procedures.
The Advisor must:
(1) Submit to the Boards of Directors a copy
of its code of ethics adopted pursuant to
Rule 17j-1;
(2) Promptly furnish to the Companies, upon
request, copies of any reports made under
its code of ethics by any person who is also
covered by the Companies' Code; and
(3) Promptly report to the Companies in
writing any material amendments to its code
of ethics, along with the certification
described under Section VIII.C hereof.
VIII. Miscellaneous.
A. Confidentiality.
The Companies will endeavor to maintain the
confidentiality of all personal securities
transactions reports and any other information filed
with the Companies under this Code. Such reports and
related information, however, may be produced to the
Securities and Exchange Commission and other
regulatory agencies.
B. Interpretation of Provisions.
The Companies' Boards of Directors may from time to
time adopt such interpretations of this Code as they
deem appropriate.
C. Annual Issues Report and Accompanying Certification.
At least annually, each Company must provide the
following to its respective Board of Directors:
(1) a written report that describes any issues that
arose during the previous year under its code and any
procedures thereto, including any material code or
procedural violations, and any resulting sanctions;
and
(2) a certification that it has adopted procedures
reasonably necessary to prevent its access persons
from violating its code.
The Companies may report to the Boards more
frequently as they deem necessary or appropriate and
shall do so as requested by the Boards.
D. Initial and Annual Acknowledgment.
The Review Officer shall promptly provide all persons
covered by this Code with a copy of the Code. In
addition, all persons covered by this Code must
complete the Acknowledgment included as Appendix D
within 10 days of becoming an access person of the
Companies and must submit an Acknowledgment to the
Review Officer each year thereafter.
Adopted: August 16, 2000
<PAGE>
PART A
Independent Directors
I. Quarterly Reports
Each quarter, you must report any securities transactions, as well as any
securities accounts you established during the quarter. You must submit your
report to the Review Officer no later than 10 days after the end of each
calendar quarter. A Quarterly Report form is included as Appendix B.
If you had no reportable transactions and did not open any securities accounts
during the quarter, you are not required to submit a report.
You need not submit a Quarterly Report if the report would duplicate information
contained in broker trade confirmations or account statements received by the
Company, provided that all required information is contained in the broker trade
confirmations or account statements and is received by the Review Officer no
later than 10 days after the end of the calendar quarter. Please see the Review
Officer for more information.
II. What Must Be Included In Your Quarterly Reports?
(A) You must report all transactions in securities that: (i)
you directly or indirectly beneficially own or (ii) because of
the transaction, you acquire direct or indirect beneficial
ownership. The report must also list each securities account
you established during the quarter in which any securities
were held for your direct or indirect benefit.
(B) Reports of securities transactions are required only if
you knew at the time of the transaction or, in the ordinary
course of fulfilling your official duties as a Director,
should have known, that during the 15-day period immediately
preceding or following the date of your transaction, the same
security was purchased or sold, or was being considered for
purchase or sale, by a Fund.
For purposes of this exception, an independent director does
not have such specific actual or constructive knowledge that a
reportable security is or was purchased or sold, or was
considered for purchase or sale, if such knowledge is based
solely on the fact that the independent director "knew" that
MIP or BGI Funds that are index or index allocation funds,
purchase and sell securities comprising the indices on a daily
basis.
Note: The "should have known" standard does not:
----
o imply a duty of inquiry;
o presume you should have deduced or
extrapolated from discussions or memoranda
dealing with a Fund's investment strategies;
or
o impute knowledge from your awareness of a
Fund's portfolio holdings, market
considerations, benchmark index, or
investment policies, objectives and
restrictions.
III. What May Be Excluded from Your Quarterly Reports?
You are not required to include the following securities, transactions or
accounts on your Quarterly Reports:
(A) Purchases or sales effected for any account over which you
have no direct or indirect influence or control.
(B) Purchases of direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments, including
repurchase agreements, and shares issued by registered,
open-end investment companies.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in a security included in the report.
<PAGE>
PART B
Interested Directors
I. Initial and Annual Report of Securities Holdings and Accounts.
You must provide the Review Officer with a complete listing of your securities
accounts and any securities you beneficially own as of the date you first became
subject to the Code's reporting requirements. You must submit the initial list
within 10 days of the date you first became subject to the reporting
requirements. Each following year, you must submit a revised list to the Review
Officer showing your securities accounts and any securities you beneficially own
as of a date no more than 30 days before you submit the list. An Initial Report
form and an Annual Report form are included as Appendix C.
II. Quarterly Reports.
Each quarter, you must report any securities transactions, as well as any
securities accounts you established during the quarter. You must submit your
report to the Review Officer no later than 10 days after the end of each
calendar quarter. A Quarterly Report is included as Appendix B.
If you had no reportable transactions and did not open any securities accounts
during the quarter, you are still required to submit a report. Please note on
your report that you had no reportable items during the quarter, and return it,
signed and dated.
You need not submit a Quarterly Report if the report would duplicate information
contained in broker trade confirmations or account statements received by the
Company, provided that all required information is contained in the broker trade
confirmations or account statements and is received by the Review Officer no
later than 10 days after the end of the calendar quarter. Please see the Review
Officer for more information.
III. What Must Be Included In Your Reports?
You must report all transactions in securities that: (i) you directly or
indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. You also must list on the report each
account in which any securities were held for your direct or indirect benefit.
IV. What May Be Excluded from Your Reports?
You are not required to include the following securities, transactions or
accounts on your reports:
(A) Purchases or sales effected for any account over which you
have no direct or indirect influence or control.
(B) Purchases of direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments, including
repurchase agreements, and shares issued by registered,
open-end investment companies.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in a security included in the report.
<PAGE>
PART C
Company Officers
I. Initial and Annual Report of Securities Holdings and Accounts.
You must provide the Review Officer with a complete listing of your securities
accounts and any securities you beneficially own as of the date you first became
subject to the Code's reporting requirements. You must submit the initial list
within 10 days of the date you first became subject to the reporting
requirements. Each following year, you must submit a revised list to the Review
Officer showing your securities accounts and any securities you beneficially own
as of a date no more than 30 days before you submit the list. An Initial Report
form and an Annual Report form are included as Appendix C.
II. Quarterly Reports.
Each quarter, you must report any securities transactions, as well as any
securities accounts you established during the quarter. You must submit your
report to the Review Officer no later than 10 days after the end of each
calendar quarter. A Quarterly Report is included as Appendix B.
If you had no reportable transactions and did not open any securities accounts
during the quarter, you are still required to submit a report. Please note on
your report that you had no reportable items during the quarter, and return it,
signed and dated.
You need not submit a Quarterly Report if the report would duplicate information
contained in broker trade confirmations or account statements received by the
Company, provided that all required information is contained in the broker trade
confirmations or account statements and is received by the Review Officer no
later than 10 days after the end of the calendar quarter. Please see the Review
Officer for more information.
III. What Must Be Included In Your Reports?
You must report all transactions in securities that: (i) you directly or
indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. You also must list on the report each
account in which any securities were held for your direct or indirect benefit.
IV. What May Be Excluded from Your Reports?
You are not required to include the following securities, transactions or
accounts on your reports:
(A) Purchases or sales effected for any account over which you
have no direct or indirect influence or control.
(B) Purchases of direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments, including
repurchase agreements, and shares issued by registered,
open-end investment companies.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in a security included in the report.
<PAGE>
PART D
Natural Control Persons
I. Initial and Annual Report of Securities Holdings and Accounts.
You must provide the Review Officer with a complete listing of your securities
accounts and any securities you beneficially own as of the date you first became
subject to the Code's reporting requirements. You must submit the initial list
within 10 days of the date you first became subject to the reporting
requirements. Each following year, you must submit a revised list to the Review
Officer showing your securities accounts and any securities you beneficially own
as of a date no more than 30 days before you submit the list. An Initial Report
form and an Annual Report form are included as Appendix C.
II. Quarterly Reports.
Each quarter, you must report any securities transactions, as well as any
securities accounts you established during the quarter. You must submit your
report to the Review Officer no later than 10 days after the end of each
calendar quarter. A Quarterly Report is included as Appendix B.
If you had no reportable transactions and did not open any securities accounts
during the quarter, you are still required to submit a report. Please note on
your report that you had no reportable items during the quarter, and return it,
signed and dated.
You need not submit a Quarterly Report if the report would duplicate information
contained in broker trade confirmations or account statements received by the
Company, provided that all required information is contained in the broker trade
confirmations or account statements and is received by the Review Officer no
later than 10 days after the end of the calendar quarter. Please see the Review
Officer for more information.
III. What Must Be Included In Your Reports?
You must report all transactions in securities that: (i) you directly or
indirectly beneficially own or (ii) because of the transaction, you acquire
direct or indirect beneficial ownership. You also must list on the report each
account in which any securities were held for your direct or indirect benefit.
IV. What May Be Excluded from Your Reports?
You are not required to include the following securities, transactions or
accounts on your reports:
(A) Purchases or sales effected for any account over which you
have no direct or indirect influence or control.
(B) Purchases of direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments, including
repurchase agreements, and shares issued by registered,
open-end investment companies.
You may include a statement in your report that the report shall not be
construed as your admission that you have any direct or indirect beneficial
ownership in a security included in the report.
V. Pre-Approval of Investments in IPOs or Limited Offerings.
If you are a natural control person who controls the Company and who obtains
information concerning recommendations made to the Company regarding the
purchase or sale of securities by the Company, you may not directly or
indirectly acquire beneficial ownership in any securities in an IPO or limited
offering without obtaining prior approval from the Review Officer. The Review
Officer must review each request for approval and record the decision regarding
the request. Each such record must include the Review Officer's reasons
supporting the decision. The Companies must maintain a record of any decision,
and the reasons supporting the decision, to approve these investments for at
least five years after the end of the fiscal year in which the approval is
granted.
<PAGE>
App. A
APPENDIX A
Definitions
General Note
The definitions and terms used in this Code of Ethics are intended to mean the
same as they do under the 1940 Act and the other federal securities laws. If a
definition hereunder conflicts with the definition in the 1940 Act or other
federal securities laws, or if a term used in this Code is not defined, you
should follow the definitions and meanings in the 1940 Act or other federal
securities laws, as applicable.
Access person means any director, trustee or officer of a Company; any employee
of a Company (or of any company in a control relationship to a Company) who, in
connection with his or her regular functions or duties, makes, participates in,
or obtains information regarding the purchase or sale of securities by a Company
or whose functions relate to the making of any recommendations with respect to
the purchases or sales; and any natural person in a control relationship to a
Company, who obtains information concerning recommendations made to the Company
with regard to the purchase or sale of securities by the Company.
Beneficial ownership means the same as it does under Section 16 of the
Securities Exchange Act of 1934 and Rule 16a-1(a)(2) thereunder. You should
generally consider yourself the "beneficial owner" of any securities in which
you have a direct or indirect pecuniary (monetary) interest. In addition, you
should consider yourself the beneficial owner of securities held by your spouse,
your minor children, a relative who shares your home, or other persons by reason
of any contract, arrangement, understanding or relationship that provides you
with sole or shared voting or investment power.
Control means the same as it does under Section 2(a)(9) of the 1940 Act. Section
2(a)(9) provides that "control" means the power to exercise a controlling
influence over the management or policies of a company, unless such power is
solely the result of an official position with such company. Ownership of more
than 25% of a company's outstanding voting securities is presumed to give the
holder of such securities control over the company. This presumption may be
countered by the facts and circumstances of a given situation.
High quality short-term debt instrument means any instrument that has a maturity
at issuance of less than 366 days and that is rated in one of the two highest
rating categories by a nationally recognized statistical rating organization
(e.g., Moody's Investors Service).
Independent Director means a Director of a Company who is not an "interested
person" of the Company within the meaning of Section 2(a)(19) of the 1940 Act.
Interested Director means a Director of a Company who is an "interested person"
of the Company within the meaning of Section 2(a)(19) of the 1940 Act.
IPO (i.e., initial public offering) means an offering of securities registered
under the Securities Act of 1933 the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act of 1934.
Limited offering means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2), Section 4(6), Rule 504, Rule
505 or Rule 506 (e.g., private placements).
Purchase or sale of a security includes, among other things, the writing of an
option to purchase or sell a security.
Security means the same as it does under Section 2(a)(36) of the 1940 Act,
except that it does not include direct obligations of the U.S. Government,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments, including repurchase agreements, or shares
issued by registered open-end investment companies.
A security held or to be acquired by a Fund means: (i) any security
that within the most recent 15 days is or has been held by the Fund or is being
or has been considered by the Advisor for purchase by the Fund and (ii) any
option to purchase or sell, and any security convertible into or exchangeable
for, a security.
A security is being purchased by a Fund from the time a purchase or
sale program has been communicated to the person who places buy and sell orders
for the Fund until the program has been fully completed or terminated.
A security is being considered for purchase by a Fund when the Advisor
identifies a security as such. For purposes of this Code, the Advisor considers
securities on its "trade lists" as those "being considered for purchase."
Company officer means any person lawfully elected by a Board and authorized to
act on behalf of a Company.
<PAGE>
App. B
APPENDIX B
Quarterly Report
Name of Reporting Person: ___________________________
Calendar Quarter Ended: ______________
Date Report Due: ______ 10, ____
Date Report Submitted:_____________
Securities Transactions
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
---------------- ----------- ------------ -------------- -------------- ----------- ----------------
Principal
Amount, Name of
Name of No. of Maturity Broker, Dealer
Issuer and Shares Date and or Bank
Date of Title of (if Interest Rate Type of Effecting
Transaction Security applicable) (if Transaction Price Transaction
applicable)
---------------- ----------- ------------ -------------- -------------- ----------- ----------------
---------------- ----------- ------------ -------------- -------------- ----------- ----------------
---------------- ----------- ------------ -------------- -------------- ----------- ----------------
---------------- ----------- ------------ -------------- -------------- ----------- ----------------
---------------- ----------- ------------ -------------- -------------- ----------- ----------------
</TABLE>
If you have no securities transactions to report for the quarter, please check
here .
If you do not want this report to be construed as an admission that you have
beneficial ownership of one or more securities reported above, please describe
below and indicate which securities are at issue.
Securities Accounts
If you established a securities account during the quarter, please provide the
following information:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Name of Broker, Dealer or Bank Date Account was Name(s) on and Type of Account
Established
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
</TABLE>
If you did not establish a securities account during the quarter, please check
here.
I certify that I have included on this report all securities transactions and
accounts required to be reported pursuant to the Code of Ethics.
Signature: ____________________ Date: __________________
<PAGE>
App. C
APPENDIX C
Initial and Annual Reports of Securities and Accounts
INITIAL HOLDINGS REPORT
Name of Reporting Person: ____________________________
Date Person Became Subject to the Code's Reporting Requirements: ________
Information in Report Dated As Of: ____________
Date Report Due: __________
Date Report Submitted: __________
Securities Holdings
<TABLE>
<CAPTION>
<S> <C> <C>
------------------------------ --------------------- -----------------------------------------------
Name of Issuer and No. of Shares Principal Amount, Maturity Date and Interest
Title of Security (if applicable) Rate (if applicable)
------------------------------ --------------------- -----------------------------------------------
------------------------------ --------------------- -----------------------------------------------
------------------------------ --------------------- -----------------------------------------------
------------------------------ --------------------- -----------------------------------------------
------------------------------ --------------------- -----------------------------------------------
------------------------------ --------------------- -----------------------------------------------
------------------------------ --------------------- -----------------------------------------------
</TABLE>
If you have no securities holdings to report, please check here.
<TABLE>
<CAPTION>
<S> <C> <C>
If you do not want this report to be construed as an admission that you have
beneficial ownership of one or more securities reported above,please describe
below and indicate which securities are at issue.
Securities Accounts
----------------------------------------------------------------------------------------------------
Name of Broker, Dealer or Bank Name(s) on and Type of Account
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
</TABLE>
If you have no securities accounts to report, please check here.
I certify that I have included on this report all securities holdings and
accounts required to be reported pursuant to the Code of Ethics.
Signature: ____________________ Date: __________________
APPENDIX C (CONTINUED)
ANNUAL HOLDINGS REPORT
Name of Reporting Person:________________________________
Information in Report Dated As of:____________
Date Report Due: __________
Date Report Submitted:____________
Calendar Year Ended: December 31, _____
Securities Holdings
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Issuer and No. of Shares Principal Amount, Maturity Date and Interest Rate
Title of Security (if applicable) (if applicable)
------------------------------ --------------------- --------------------------------------------------------
------------------------------ --------------------- --------------------------------------------------------
------------------------------ --------------------- --------------------------------------------------------
------------------------------ --------------------- --------------------------------------------------------
------------------------------ --------------------- --------------------------------------------------------
------------------------------ --------------------- --------------------------------------------------------
------------------------------ --------------------- --------------------------------------------------------
</TABLE>
If you have no securities holdings to report for the year, please check here.
If you do not want this report to be construed as an admission that you have
beneficial ownership of one or more securities reported above, please describe
below and indicate which securities are at issue.
Securities Accounts
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Broker, Dealer or Bank Date Account Was Name(s) on and Type of Account
Established
--------------------------------------------------- ------------------- -------------------------------------
</TABLE>
If you have no securities accounts to report for the year, please check here.
I certify that I have included on this report all securities transactions and
accounts required to be reported pursuant to the Code of Ethics.
Signature: ____________________ Date: __________________
<PAGE>
C-5
APPENDIX D
Acknowledgment
TO: Review Officer
RE: Acknowledgment of Code of Ethics
--------------------------------------------------------------------------------
Initial Acknowledgment: Please check here if this is an initial acknowledgment.
I CERTIFY THAT (1) I HAVE RECEIVED, READ AND UNDERSTAND THE CODE OF ETHICS, (2)
I AM AWARE THAT I AM SUBJECT TO THE PROVISIONS OF THIS CODE, (3) I WILL COMPLY
WITH THIS CODE, AND (4) I WILL REPORT ALL HOLDINGS, TRANSACTIONS AND ACCOUNTS
THAT I AM REQUIRED TO REPORT PURSUANT TO THIS CODE.
--------------------------------------------------------------------------------
Annual Acknowledgment: Please check here if this is an annual acknowledgment.
I CERTIFY THAT (1) I HAVE RECEIVED, READ AND UNDERSTAND THE CODE OF ETHICS, (2)
I AM AWARE THAT I AM SUBJECT TO THE PROVISIONS OF THIS CODE, (3) I HAVE COMPLIED
WITH THIS CODE AT ALL TIMES DURING THE PREVIOUS CALENDAR YEAR, AND (4) I HAVE,
DURING THE PREVIOUS CALENDAR YEAR, REPORTED ALL HOLDINGS, TRANSACTIONS AND
ACCOUNTS THAT I AM REQUIRED TO REPORT PURSUANT TO THIS CODE.
--------------------------------------------------------------------------------
Name (print): ________________________
Position: ____________________________
Signature: ___________________________
Date Submitted: ______________________
Date Due: ___________________________
