As filed with the Securities and Exchange Commission on December 27, 2007
Registration Nos. 33-54126
811-07332
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 62 [ ]
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 66 [X]
BARCLAYS GLOBAL INVESTORS FUNDS
(Exact Name of Registrant as Specified in Charter)
45 Fremont Street
San Francisco, CA 94105
(Address of Principal Executive Offices)
Registrant's Telephone Number: 1-877-244-1544
c/o State Street Bank and Trust Company
200 Clarendon Street
Boston, MA 02116
(Name and Address of Agent for Service)
With a copy to:
Leonard A. Pierce
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, MA 02109
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on - pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on - pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment.
Subject to completion _____, 2008.
PROSPECTUS [______], 2008
MONEY MARKET FUNDS
CAPITAL SHARES
INSTITUTIONAL MONEY MARKET FUND
PRIME MONEY MARKET FUND
GOVERNMENT MONEY MARKET FUND
TREASURY MONEY MARKET FUND
The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES DESCRIBED HEREIN MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE IN WHICH THE OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL.
BGICash FROM BARCLAYS GLOBAL INVESTORS FUNDS
Table of Contents
Investment Objectives . 1 Principal Investment 2 Strategies Principal Risk Factors 3 Investment Returns .... 4 Fees and Expenses ..... 7 Management of the 9 Funds Shareholder 11 Information Financial Highlights .. 17 |
Investment Objectives(1)
INSTITUTIONAL MONEY MARKET FUND AND PRIME MONEY MARKET FUND
The investment objective for both the Institutional Money Market Fund and the
Prime Money Market Fund is to seek a high level of income consistent with
liquidity and the preservation of capital.
GOVERNMENT MONEY MARKET FUND AND TREASURY MONEY MARKET FUND
The investment objective for both the Government Money Market Fund and the Treasury Money Market Fund is to seek to provide investors with a high level of current income consistent with the preservation of capital and liquidity.
Principal Investment Strategies
INSTITUTIONAL MONEY MARKET FUND AND PRIME MONEY MARKET FUND The Funds seek to achieve their investment objectives by investing in high-quality, short-term money market instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition. Each Fund's portfolio will maintain an average weighted maturity of 90 days or less. In general, the Prime Money Market Fund expects to maintain an average weighted maturity of 60 days or less. Under normal circumstances, each Fund expects to invest at least 95% of its assets in any combination of such investments, which may include certificates of deposit, high-quality debt obligations, such as corporate debt, certain obligations of U.S. and foreign banks, certain repurchase agreements and obligations of the U.S. government, its agencies and instrumentalities (including government-sponsored enterprises).
Each of the Institutional Money Market Fund and the Prime Money Market Fund reserves the right to concentrate its investments (I.E., invest 25% or more of its total assets in securities of issuers in a particular industry) in the obligations of domestic banks.
GOVERNMENT MONEY MARKET FUND
The Fund seeks to achieve its investment objective by investing in high-quality, short-term money market instruments that, at the time of investment, have remaining maturities of 397 calendar days or less from the date of acquisition. The Fund's portfolio will maintain an average weighted maturity of 90 days or less. In general, the Fund expects to maintain an average weighted maturity of 60 days or less. Under normal circumstances, at least 80% of the Fund's assets will be invested in obligations of the U.S. government, its agencies and instrumentalities, repurchase agreements with regard to such obligations, and other money market funds that have substantially the same investment objective and strategies as the Fund. The principal and interest of all securities held by the Fund are payable in U.S. dollars.
TREASURY MONEY MARKET FUND
The Fund seeks to achieve its investment objective by investing only in high-quality, short-term money market instruments that, at the time of investment, have remaining maturities of 397 days or less from the date of acquisition. The Fund's portfolio will maintain an average weighted maturity of 90 days or less. In general, the Fund expects to maintain an average weighted maturity of 60 days or less. Under normal circumstances, at least 80% of the Fund's assets will be invested in U.S. Treasury obligations, in repurchase agreements with regard to U.S. Treasury obligations and in other money market funds that have substantially the same investment objective and strategies as the Fund.
It is further intended that under normal circumstances, 100% of the Fund's investments will be in U.S. Treasury obligations or repurchase agreements with regard to U.S. Treasury obligations and other money market funds that have substantially the same investment objective and strategies as the Fund. U.S. Treasury obligations are backed by the full faith and credit of the U.S. government. The principal and interest of all securities held by the Fund are payable in U.S. dollars.
Principal Risk Factors
INSTITUTIONAL MONEY MARKET FUND, PRIME MONEY MARKET FUND AND GOVERNMENT MONEY
MARKET FUND
An investment in a Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in a Fund.
While some of the Funds' portfolio securities are issued and guaranteed by the U.S. government, its agencies or instrumentalities, such securities are subject to the risk of sharply rising or falling interest rates that could cause the Funds' income to fluctuate as the market value of the Funds' securities fluctuates.
Each Fund's income and/or share price could also be affected by downgrades or defaults of any of the Fund's holdings. Certain securities issued by U.S. government-sponsored entities, such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Home Loan Banks, are not guaranteed by the U.S. government, and no assurance can be given that the U.S. government would provide financial support to its agencies or instrumentalities where it is not obligated to do so.
Each Fund's yield will vary as the securities in its portfolio mature or are sold and the proceeds are reinvested in securities with different interest rates.
The risks generally associated with concentrating investments in the banking industry include interest rate risk, credit risk, and the risk of negative regulatory or market developments affecting the banking and financial services industries.
TREASURY MONEY MARKET FUND
An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
While some of the Fund's portfolio securities are issued and guaranteed by the U.S. government, such securities are subject to the risk of sharply rising or falling interest rates that could cause the Fund's income to fluctuate as the market value of the Fund's securities fluctuates.
The Fund's income and/or share price could also be affected by downgrades or defaults of any of the Fund's holdings. However, the Fund minimizes this risk by investing only in U.S. Treasury obligations that are backed by the full faith and credit of the U.S. government, or repurchase agreements with regard to U.S. Treasury obligations.
The Fund's yield will vary as the securities in its portfolio mature or are sold and the proceeds are reinvested in securities with different interest rates.
FOR A FURTHER DESCRIPTION OF THE FUNDS' POLICIES AND PROCEDURES WITH RESPECT TO DISCLOSURE OF THE FUNDS' MASTER PORTFOLIOS' PORTFOLIO HOLDINGS, AND A DISCUSSION OF THE FUNDS' INVESTMENTS AND RISKS, PLEASE REFER TO THE FUNDS' COMBINED STATEMENT OF ADDITIONAL INFORMATION ("SAI").
WHO MAY WANT TO INVEST IN THE FUNDS
The Funds are designed for investors who seek income from a high quality portfolio and/or wish to maintain the value of their investment in the long- and short-term.
Investment Returns
TOTAL RETURNS
The bar charts and table in this section provide some indication of the risks
of investing in the Funds by showing the changes in their performance from year
to year. Although Institutional Shares are not offered in this Prospectus, the
returns for Institutional Shares are provided herein because the Capital Shares
offered in this Prospectus are expected to have substantially similar annual
returns since the Capital Shares are invested in the same Master Portfolios.
ANNUAL RETURNS FOR THE CAPITAL SHARES WOULD DIFFER FROM ANNUAL RETURNS FOR THE
INSTITUTIONAL SHARES BECAUSE THE CAPITAL SHARES HAVE DIFFERENT EXPENSES THAN THE
INSTITUTIONAL SHARES. The bar charts show the returns of the Institutional
Shares of the Funds for each full calendar year since the Funds' respective
inception dates. The average annual total return table compares the average
annual total return of the Institutional Shares of the Funds to those of a group
of corresponding funds for various periods of time. How the Funds performed in
the past is not necessarily an indication of how they will perform in the
future.
Institutional Money Market Fund - Institutional Shares
YEAR-BY-YEAR RETURNS (YEARS ENDED DECEMBER 31)
[GRAPHIC APPEARS HERE]
2000 6.55% 2001 4.23% 2002 1.83% 2003 1.14% 2004 1.39% 2005 3.29% 2006 5.11% |
The best calendar quarter return during the years shown above was 1.68% in the 4th quarter of 2000; the worst was 0.25% in the 1st quarter of 2004.
Prime Money Market Fund - Institutional Shares
YEAR-BY-YEAR RETURNS (YEARS ENDED DECEMBER 31)
[GRAPHIC APPEARS HERE]
2004 1.40% 2005 3.26% 2006 5.07 % |
The best calendar quarter return during the years shown above was 1.33% in the 3rd and 4th quarters of 2006; the worst was 0.26% in the 1st and 2nd quarters of 2004.
Government Money Market Fund - Institutional Shares
YEAR-BY-YEAR RETURNS (YEARS ENDED DECEMBER 31)
[GRAPHIC APPEARS HERE]
2005 3.28% 2006 5.04% |
The best calendar quarter return during the years shown above was 1.33% in the 4th quarter of 2006; the worst was 0.62% in the 1st quarter of 2005.
Treasury Money Market Fund - Institutional Shares
YEAR-BY-YEAR RETURNS (YEARS ENDED DECEMBER 31)
[GRAPHIC APPEARS HERE]
2005 3.20% 2006 5.04% |
The best calendar quarter return during the years shown above was 1.33% in the 4th quarter of 2006; the worst was 0.59% in the 1st quarter of 2005.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED DECEMBER 31, 2006
INSTITUTIONAL SHARES(1)
1 YEAR 5 YEARS SINCE INCEPTION
---------- --------- ----------------
Institutional Money 5.11% 2.54% 3.47%
Market Fund
MFR Averages/FTIA(2) 4.79% 2.20% 3.13%(5)
Prime Money Market Fund 5.07% N/A 2.83%
MFR Averages/FTIA(2) 4.79% N/A 2.47%(5)
Government Money Market 5.04% N/A 3.83%
Fund
MFR Averages/GIA(3) 4.61% N/A 3.36%(5)
Treasury Money Market 5.04% N/A 3.78%
Fund
MFR Averages/T&RIA(4) 4.60% N/A 3.34%(5)
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Each Fund's seven-day yield, also called the current yield, annualizes the amount of income each Fund generates over a seven-day period by projecting the amount for an entire year.
To learn each Fund's current seven-day yield, call 1-877-BGI-1544 (1-877-244-1544) (toll-free) Monday through Friday from 8:30 a.m. to 6:30 p.m. Eastern Time or visit www.bgicash.com.
Fees and Expenses
The table below describes the fees and expenses that you may pay if you buy and hold Capital Shares of the Funds.
ANNUAL CLASS OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS
(Expenses that are Deducted from Class Assets)
INSTITUTIONAL PRIME GOVERNMENT TREASURY
MONEY MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND
--------------- ------------- ------------- ------------
Management fees(1) 0.10% 0.10% 0.10% 0.10%
Other expenses 0.07% 0.07% 0.10% 0.11%
(Administration fees;
Independent
Expenses(2))
Total annual class 0.17% 0.17% 0.20% 0.21%
operating expenses(1),
(2), (3)
Less fee waivers and/or (0.03)% (0.03)% (0.06)% (0.07)%
expense
reimbursements(1), (2)
Net expenses(1), (2), (4) 0.14% 0.14% 0.14% 0.14%
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EXAMPLE
The example below is intended to help you compare the cost of investing in Capital Shares of the Funds with the cost of investing in other mutual funds. The example illustrates the cost you would have incurred on an initial $10,000 investment in Capital Shares of each Fund over the time periods shown. It assumes your investment earns an annual return of 5% over the periods, that total operating expenses remain the same and that the contractual fee waivers and reimbursements with BGFA and BGI are in effect for one year.
THE FUNDS DO NOT CHARGE A SALES LOAD OR OTHER FEE UPON REDEMPTION. This means that your cost for each period would be the same whether or not you sell your shares at the end of a period. Your actual costs may be higher or lower than this hypothetical example.
CAPITAL SHARES
1 YEAR 3 YEARS
-------- --------
Institutional Money $ $
Market Fund
Prime Money Market Fund $ $
Government Money Market $ $
Fund
Treasury Money Market $ $
Fund
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Management of the Funds
INVESTMENT ADVISER
Each Fund is a feeder fund that invests all of its assets in a Master Portfolio that has a substantially identical investment objective, strategies and policies as the Fund. BGFA, a registered investment adviser, serves as investment adviser to each Master Portfolio. BGFA manages the investing of the Master Portfolios' assets and provides the Master Portfolios with investment guidance and policy direction in connection with daily portfolio management, subject to the supervision of the Master Portfolios' Board of Trustees. For its services to the Master Portfolios, BGFA is entitled to receive an advisory fee at the annual rate of 0.10% (0.07% pursuant to the current contractual fee waiver) of each Master Portfolio's average daily net assets.
BGFA is located at 45 Fremont Street, San Francisco, CA 94105. It is a wholly-owned subsidiary of BGI, which in turn is a majority-owned subsidiary of Barclays Bank PLC. As of September 30, 2007, BGI and its affiliates, including BGFA, provided investment advisory services for assets in excess of $2.0 trillion. BGI, BGFA, Barclays Global Investors Services, Barclays Bank PLC and their affiliates deal, trade and invest for their own accounts in the types of securities in which the Master Portfolios invest.
A discussion regarding the basis for the Master Portfolios' Board of Trustees' approval of the investment advisory agreements with BGFA is available in each Fund's semi-annual report for the 6-month period ending June 30.
ADMINISTRATIVE SERVICES
BGI provides the following services, among others, as the Funds' Administrator:
[] Supervise the Funds' administrative operations;
[] Provide or cause to be provided management reporting and treasury administration services;
[] Financial reporting;
[] Legal, blue sky and tax services;
[] Preparation of proxy statements and shareholder reports; and
[] Engaging and supervising shareholder servicing agents, including servicing and processing agents (together, the "Shareholder Servicing Agents"), on behalf of the Funds.
BGI is entitled to receive fees for these services at the annual rate of 0.07% of the average daily net assets of the Capital Shares of each Fund. In addition to performing these services, BGI has agreed to bear all costs of operating the Funds, other than brokerage expenses, advisory fees, distribution fees, certain fees and expenses related to the Funds' independent Trustees and their counsel, auditing fees, litigation expenses, taxes or other extraordinary expenses. No additional administration fees are charged at the Master Portfolio level.
The Shareholder Servicing Agents service individual and omnibus Fund accounts. In addition to serving as agents of the Funds for purposes of accepting orders for purchases and redemptions of Fund shares, Shareholder Servicing Agents may provide administrative support and account services such as processing purchases and redemptions of shares on behalf of individual and omnibus Fund accounts, answering shareholder inquiries, keeping records, transmitting reports and communications from the Funds, and providing reports on the status of individual and omnibus accounts. BGI pays shareholder servicing fees to certain Shareholder Servicing Agents in amounts not exceeding the maximum fee rates approved by the Funds' Board of Trustees for those services that the Shareholder Servicing Agents perform for their clients that would otherwise be performed by BGI or the Funds' other service providers. In addition, BGFA and/or BGI may pay significant additional amounts from their own resources to Shareholder Servicing Agents for those services.
From time to time, BGFA, BGI and/or the Funds' distributor may also pay significant additional amounts from their own resources to other intermediaries that perform services in connection with the sale of Fund shares.
Shareholder Information
WHO IS ELIGIBLE TO INVEST
The minimum initial investment amount for the Capital Shares of each Fund is
$25 million; however, in certain situations, this minimum initial investment
amount may be reduced or waived. Please contact your Shareholder Servicing
Agent or State Street Bank and Trust Company ("State Street") the Funds'
custodian, transfer agent and dividend disbursing agent, for more information.
In order to invest, a completed account application form must be submitted to and processed by your Shareholder Servicing Agent or State Street and an account number assigned. You may be asked to provide information to verify your identity when opening an account.
Your Shareholder Servicing Agent may charge you a fee and may offer additional account services. Additionally, your Shareholder Servicing Agent may have procedures for placing orders for Capital Shares that differ from those of the Funds, such as different investment minimums or earlier trading deadlines. Please contact your Shareholder Servicing Agent directly for more information and details.
HOW TO BUY SHARES
You may buy Fund shares without paying a sales charge. Your purchase order must be received in proper form, as determined by the Fund's transfer agent or an intermediary pursuant to an appropriate agreement, on any day the Funds are open (a "Business Day") by 5:00 p.m. Eastern Time on any Business Day (or, if the Fund closes early, at such closing time) to purchase shares at that day's net asset value ("NAV"). Orders received after 5:00 p.m. Eastern Time on any Business Day (or, if the Fund closes early, at such closing time) will be executed on the next Business Day. The Funds are generally open Monday through Friday and are closed on weekends and generally closed on all other days that the primary markets for the Master Portfolios' portfolio securities are closed or the Fedwire Funds Service is closed. The Institutional Money Market Fund and the Prime Money Market Fund do not intend to (but reserve the right to) close early on a Business Day prior to a U.S. national holiday for the bond markets if the bond markets close early on such Business Day. The Government Money Market Fund and the Treasury Money Market Fund generally will close early on a Business Day prior to a U.S. national holiday for the bond markets if the bond markets close early on such Business Day.
Each Fund reserves the right to suspend or discontinue the offer and sale of its shares and reject or cancel any purchase order for any reason.
Purchases generally must be made in U.S. dollars and funds must be received via the Fedwire Funds Service by its close, or by such other means as the Funds may from time to time determine. You may be charged for any costs incurred in connection with a purchase order that has been placed but for which the Fund has not received full payment.
HOW TO SELL SHARES
You may sell Fund shares without paying a sales charge. Your order to sell shares must be received in proper form, as determined by State Street or an intermediary pursuant to an appropriate agreement, by 5:00 p.m. Eastern Time on any Business Day (or, if the Fund closes early, at such closing time) to sell shares at that day's NAV. Orders received after 5:00 p.m. Eastern Time on any Business Day (or, if the Fund closes early, at such closing time) will be executed on the next Business Day.
The Funds generally remit the proceeds from a sale the same Business Day after
receiving a properly executed order to sell. Each Fund can delay payment for
one day, or longer than one day under extraordinary circumstances. Generally,
those extraordinary circumstances are when: (i) the New York Stock Exchange
("NYSE") is closed (other than customary weekend and holiday closings); (ii)
trading on the NYSE is restricted; (iii) an emergency exists as a result of
which disposal or valuation of a Fund's investment is not reasonably
practicable; or (iv) for such other periods as the Securities and Exchange
Commission ("SEC") by order may permit. Each Fund reserves the right to suspend
your right of redemption and to delay delivery of your redemption proceeds, as
permitted under Section 22(e) of the Investment Company Act of 1940 and other
applicable laws. Each Fund further reserves the right to automatically redeem
your shares and close your account for any reason, subject to applicable law,
and send you the proceeds, which would reflect the NAV on the day the Fund
automatically redeems your shares. For example, a Fund may automatically redeem
your shares to reimburse the Fund for any losses sustained by reason of your
failure to make full payment for shares purchased or to collect any charge
relating to a transaction effected for your benefit that is applicable to the
Fund's shares, as provided from time to time in this Prospectus.
In addition, each Fund reserves the right to send your redemption proceeds in the form of securities from its Master Portfolio.
Upon redemption, the identity of the holder of the account to which the proceeds are being sent may need to be verified.
SPECIAL INSTRUCTIONS FOR DIRECT BUYERS
A direct buyer who has established an account with a Fund can add to or redeem from that account by wire instructions, by phone or through the mail.
[] To invest by wire, check that option on your account application when you open your account. If you already have an account, please call State Street at 1-888-204-3956 to receive a bank-wire application.
You should instruct your bank to wire funds as follows:
State Street Bank and Trust Company
ABA # 011001438
Attn: Transfer Agent
Account # DDA 555555535
For Further Credit to: Barclays Global Investors Funds
Shareholder Account Name:
Shareholder Account Number:
Fund Share Class Numbers:
____ (Institutional Money Market Fund - Capital Shares)
____(Prime Money Market Fund - Capital Shares)
___ (Government Money Market Fund - Capital Shares)
____ (Treasury Money Market Fund - Capital Shares)
[] To invest by mail, make your check payable to the Fund of your choice and mail it to State Street Bank and Trust Company, P.O. Box 642, Boston, MA 02117-0642. Please include the Fund's Share Class number and your account number on your check. You will find the numbers on your monthly statements.
[] To redeem shares by phone, call 1-888-204-3956 between 8:30 a.m. and 5:00
p.m. Eastern Time on any Business Day (or, if the Fund closes early, at such
closing time). State Street will employ procedures designed to confirm that
your order is valid. These may include asking for identifying information and
recording the phone call. Neither State Street nor the Funds may be held
liable for acting on telephone instructions that State Street reasonably
believes to be valid. State Street will wire proceeds directly to your
designated bank account.(1)
[] To redeem shares by mail, indicate the dollar amount you wish to receive or the number of shares you wish to sell in your order to sell. Include your Fund's Share Class number and your account and taxpayer identification numbers. All account signatories must sign the order.
[] To invest or redeem shares online, please contact State Street for information about how to access online trading features.
[] A direct buyer can ask State Street to wire proceeds directly to its designated bank account.(2)
[] When a direct buyer purchases Fund shares and then quickly sells (E.G., sells before clearance of the purchase check), the Fund may delay the payment of proceeds up to ten days to ensure that purchase checks have cleared.
CALCULATING THE FUNDS' SHARE PRICE
Each Fund's share price (also known as a Fund's NAV) is calculated by dividing the value of the net assets of the Fund (I.E., the value of its total assets less total liabilities) by the total number of outstanding shares of the Fund, generally rounded to the nearest cent.
Each Fund's NAV is calculated at 5:00 p.m. Eastern Time on any Business Day (or, if the Fund closes early, at such closing time). The NAV of each Fund is calculated based on the net asset value of the Master Portfolio in which the Fund invests. The Funds' SAI includes a description of the methods for valuing the Master Portfolios' investments.
The Funds seek to maintain a constant NAV of $1.00 per share, although they can offer no assurance that they will be able to do so.
FUND DISTRIBUTIONS
Each Fund declares distributions of its net investment income daily and distributes them monthly to shareholders. A Fund distributes its net realized capital gains, if any, to shareholders at least annually. Distributions payable to you by a Fund will be automatically reinvested in additional shares of that Fund unless you have elected to receive distribution payments in cash.
You begin earning distributions on your shares the day your purchase order takes effect. You continue earning daily distributions on your shares up to but not including the date you sell them.
Each Fund credits distributions earned on weekends and holidays to the preceding Business Day. If you sell shares before the monthly distribution payment date, each Fund remits any distributions declared but not yet paid on the next distribution payment date. If you sell all shares before the monthly distribution payment date, each Fund remits all distributions accrued with the sale proceeds.
FREQUENT TRADING IN FUND SHARES
Frequent purchases and redemptions of mutual fund shares ("frequent trading") may have a detrimental effect on a fund and its shareholders. Depending on various factors, such as the size of the fund's investment portfolio and the amount of assets maintained in cash, frequent trading may harm the performance of the fund by interfering with the implementation of its investment strategies and/or increasing transaction costs and taxes, and/or may dilute the value of fund shares held by long-term investors. Frequent trading may include activity that appears to attempt to take advantage of a potential arbitrage opportunity presented by a lag between a change in the value of a fund's investment portfolio securities after the close of the primary markets for those portfolio securities and the reflection of that change in the fund's NAV ("market timing").
The Funds invest only in interests of the Master Portfolios, and the Boards of Trustees of the Master Portfolios and the Funds have each considered the issues of frequent trading and market timing, including the fact that money market funds are a type of mutual fund that is designed to offer maximum liquidity. The Master Portfolios' Board of Trustees has adopted a policy of not monitoring for possible market timing or any other frequent trading activity because of the investment objective and strategy of the Master Portfolios. The Funds' Board of Trustees has not adopted a policy of monitoring for market timing or other frequent trading activity in the Funds in light of the nature of the Funds' investment in the Master Portfolios, the policies of the Master Portfolios, and the historical nature of flows into and out of the Funds.
TAXES
The following discussion regarding U.S. federal income taxes is based upon laws in effect as of the date of this Prospectus and summarizes only some of the important U.S. federal income tax considerations affecting the Funds and their U.S. shareholders. This discussion is not intended as a substitute for careful tax planning. Please see the SAI for additional U.S. federal income tax information.
Distributions from your Fund's net investment income and net realized capital gains are taxable to you, whether you choose to receive them in cash or automatically reinvest them in additional Fund shares. The amount of taxes you owe will vary depending on your tax status and based on the amount and character of the Fund's distributions to you and your tax rate.
Distributions from the Funds generally are taxable as follows:
DISTRIBUTION TYPE TAX STATUS ------------------------- -------------------------- Income .................. Ordinary income(1) Short-term capital gain . Ordinary income Long-term capital gain .. Long-term capital gain(2) |
Normally, the Funds do not expect to realize or distribute a significant amount of long-term capital gains.
After the end of each year, the Funds will send to you a notice that tells you how much you have received in distributions during the year and their U.S. federal income tax status. You could also be subject to foreign, state and local taxes on such distributions.
In certain circumstances, you may be subject to backup withholding taxes on distributions to you from the Funds if you fail to provide the Funds with your correct social security number or other taxpayer identification number, or to make required certifications, or if you have been notified by the Internal Revenue Service that you are subject to backup withholding.
TAX CONSIDERATIONS FOR TAX-EXEMPT OR FOREIGN INVESTORS OR THOSE HOLDING FUND SHARES THROUGH A TAX-DEFERRED ACCOUNT, SUCH AS A 401(K) PLAN OR INDIVIDUAL RETIREMENT ACCOUNT, WILL BE DIFFERENT. BECAUSE EACH INVESTOR'S TAX CIRCUMSTANCES ARE UNIQUE AND BECAUSE TAX LAWS ARE SUBJECT TO CHANGE, YOU SHOULD
CONSULT YOUR TAX ADVISOR ABOUT YOUR INVESTMENT.
MASTER/FEEDER MUTUAL FUND STRUCTURE
The Funds do not have their own investment adviser. Instead, each Fund invests all of its assets in a separate mutual fund, called a Master Portfolio, that has a substantially identical investment objective, strategies and policies as the Fund. BGFA serves as investment adviser to each Master Portfolio. The Master Portfolios may accept investments from other feeder funds. Certain actions involving other feeder funds, such as a substantial withdrawal, could affect the Master Portfolios and, therefore, the Funds.
FEEDER FUND EXPENSES
Feeder funds, including the Funds, bear their respective Master Portfolio's expenses in proportion to the amount of assets each invests in the Master Portfolio. Each feeder fund can set its own transaction minimums, fund-specific expenses and conditions.
FEEDER FUND RIGHTS
Under the master/feeder structure, the Funds' Board of Trustees retains the right to withdraw a Fund's assets from its Master Portfolio if it believes doing so is in the best interests of the Fund's shareholders. If the Board of Trustees decides to withdraw a Fund's assets, it would then consider whether the Fund should hire its own investment adviser, invest in another master portfolio or take other action.
SHARE CLASS
The Funds offer additional share classes with different expenses and expected returns than those described in this Prospectus, including share classes you may be eligible to purchase. Call 1-877-BGI-1544 (1-877-244-1544) (toll-free) for additional information.
Financial Highlights
The Capital Shares of the Funds are newly created and have no operating history. The Funds' independent registered public accounting firm is PricewaterhouseCoopers LLP.
Copies of the Prospectus, SAI, annual and semi-annual reports to shareholders and other information can be found on our website at www.bgicash.com. For more detailed information about Barclays Global Investors Funds and the Funds, you may request a copy of the SAI. The SAI provides information about the Funds and is incorporated by reference into this Prospectus. This means that the SAI, for legal purposes, is a part of this Prospectus.
If you have any questions about the Funds or you wish to obtain the SAI or semi-annual or annual reports free of charge, please:
Call: 1-877-BGI-1544 (1-877-244-1544) (toll-free)
Monday through Friday
8:30 a.m. to 6:30 p.m. (Eastern Time)
E-mail: cash.us@barclaysglobal.com
Write: Barclays Global Investors Funds
c/o SEI Investments Distribution Co.
One Freedom Valley Drive, Oaks, PA 19456
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Information about a Fund (including its SAI) can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-202-551-8090. Reports and other information about the Funds are available on the EDGAR Database on the SEC's website at www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS ABOUT ANY FUND AND ITS SHARES NOT CONTAINED IN THIS PROSPECTUS AND YOU SHOULD NOT RELY ON ANY OTHER INFORMATION. READ AND KEEP THE PROSPECTUS FOR FUTURE REFERENCE.
Investment Company Act File No.: 811-07332
For more information visit our website at www.bgicash.com or call1-877-BGI-1544 (1-877-244-1544)
(toll-free)
BGI-F-___-_____
[GRAPHIC APPEARS HERE]
BARCLAYS GLOBAL INVESTORS
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SECURITIES DESCRIBED HEREIN MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE IN WHICH THE OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL.
BARCLAYS GLOBAL INVESTORS FUNDS
Statement of Additional Information
Dated [________________], 2008
Subject to completion December 27, 2007.
Prime Money Market Fund
Institutional Money Market Fund
Government Money Market Fund
Treasury Money Market Fund
(Premium, Institutional, Select, Trust, Aon Captives and Capital Shares)
Barclays Global Investors Funds (the "Trust" or "BGIF") is an open-end, series management investment company. This combined Statement of Additional Information ("SAI") contains additional information about the Premium, Institutional, Select, Trust and Capital Shares of the following series of the Trust - the Prime Money Market Fund, the Institutional Money Market Fund, the Government Money Market Fund and the Treasury Money Market Fund (each, a "Fund" and collectively, the "Funds"). This SAI also contains information about the Aon Captives Shares of the Institutional Money Market Fund.
Each Fund seeks to achieve its investment objective by investing all of its assets in a master portfolio of the Master Investment Portfolio ("MIP"). The Institutional Money Market Fund invests in the Money Market Master Portfolio; the Prime Money Market Fund invests in the Prime Money Market Master Portfolio; the Government Money Market Fund invests in the Government Money Market Master Portfolio; and the Treasury Money Market Fund invests in the Treasury Money Market Master Portfolio (each, a "Master Portfolio" and collectively, the "Master Portfolios"). Barclays Global Fund Advisors ("BGFA" or the "Investment Adviser") serves as investment adviser to each Master Portfolio. References to the investments, investment policies and risks of a Fund, unless otherwise indicated, should be understood as references to the investments, investment policies and risks of each Fund's Master Portfolio.
This SAI is not a prospectus and should be read in conjunction with the current prospectuses for the Premium, Institutional, Select and Trust Shares of the Funds, and the Aon Captives Shares of the Institutional Money Market Fund, each dated May 1, 2007, and the prospectus for the Capital Shares of the Funds, dated [________________], 2008 (each, a "Prospectus" and collectively, the "Prospectuses"), and as amended from time to time, for the relevant class of shares. The audited financial statements for the Funds, which include the schedules of investments and independent auditor's reports for the fiscal year ended December 31, 2006 and the unaudited financial statement for the Funds, which includes each Fund's schedule of investments for the period ended June 30, 2007, are hereby incorporated by reference to the Funds' annual reports, semi-annual reports and Prospectuses for the Premium, Institutional, Select and Trust Shares of the Funds, and the Aon Captives Shares of the Institutional Money Market Fund. Copies of the Prospectuses, annual reports and semi-annual reports may be obtained without charge by writing to Barclays Global Investors Funds, c/o SEI Investments Distribution Co., One Freedom Valley Drive, Oaks, PA 19456, or by calling 1-877-BGI-1544 (1-877-244-1544) (toll-free), or e-mailing the Funds at cash.us@barclaysglobal.com.
TABLE OF CONTENTS
PAGE
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History of the Trust 1
Description of the Funds and their 1
Investments and Risks
Investment Objectives and 1
Policies
Master/Feeder Structure 1
Fundamental Investment 2
Restrictions
Non-Fundamental Investment 2
Restrictions
Investments and Risks 3
Asset-Backed and Commercial 3
Mortgage-Backed Securities
Bank Obligations 4
Commercial Paper and Short-Term 5
Corporate Debt Instruments
Floating- and Variable-Rate 5
Obligations
Foreign Obligations 5
Forward Commitments, 6
When-Issued Purchases and
Delayed-Delivery Transactions
Funding Agreements 6
Illiquid Securities 6
Investment Company Securities 6
Letters of Credit 6
Loans of Portfolio Securities 6
Loan Participation Agreements 7
Mortgage Pass-Through Securities 7
Municipal Securities 8
Participation Interests 8
Repurchase Agreements 8
Restricted Securities 8
Unrated Investments 8
U.S. Government Obligations 9
U.S. Treasury Obligations 9
Portfolio Holdings Information 9
Service Providers 9
Third-Party Feeder Funds 10
Securities and Exchange 10
Commission Filings
Other Public Disclosure 10
Approved Recipients 10
Management 11
Committees 13
Beneficial Equity Ownership 14
Information
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PAGE
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Ownership of Securities of 14
Certain Entities
Codes of Ethics 14
Shareholder Communications to 14
the Board of Trustees
Compensation of Trustees 14
Control Persons and Principal 15
Holders of Securities
Investment Adviser and Other 19
Service Providers
Investment Adviser 19
Advisory Fees 19
Administrator 20
Distributor 21
Institutional Money Market Fund 21
- Aon Captives Shares Distributio n
Plan
Shareholder Servicing Agents 22
Custodian 23
Transfer and Dividend 23
Disbursing Agent
Independent Registered Public 24
Accounting Firm
Legal Counsel 24
Determination of Net Asset Value 24
Purchase, Redemption and Pricing 24
of Shares
Terms of Purchase and Redemption 24
In-Kind Purchases 25
Suspension of Redemption Rights 25
or Payment of Redemption Proceeds
Portfolio Transactions 25
General 25
Portfolio Turnover 26
Securities of Regular 26
Broker-Dealers
Frequent Trading of Fund Shares 26
Distributions and Taxes 26
Qualification as a Regulated 27
Investment Company
Excise Tax 28
Capital Loss Carry-Forwards 28
Investment through the Master 28
Portfolios
Taxation of Fund Investments 28
Taxation of Distributions 29
Sales of Fund Shares 30
Foreign Taxes 30
Federal Income Tax Rates 30
Backup Withholding 30
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PAGE
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Tax-Deferred Plans 30
Foreign Shareholders 30
Capital Stock 32
Voting 32
Dividends and Distributions 32
Master Portfolios 32
Additional Information on the Funds 33
Financial Statements 33
Appendix A-1
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History of the Trust
The Trust was organized on December 4, 2001 as a statutory trust under the laws
of the State of Delaware. On August 21, 2001, the Board of Directors of
Barclays Global Investors Funds, Inc. (the "Company") approved a proposal to
redomicile the Company from a Maryland corporation to a Delaware statutory
trust (the "Redomiciling"). Shareholders of the Company approved the
Redomiciling on November 16, 2001. The Trust was established with multiple
series, including the Funds, corresponding to, and having identical
designations as, the Company's series. The Redomiciling was effected on January
11, 2002, at which time the Trust assumed the operations of the Company and
adopted the Company's registration statement. Shortly thereafter, the Company
was dissolved.
The Trust's principal office is located at 45 Fremont Street, San Francisco, CA 94105. Each Fund invests all of its assets in a Master Portfolio of MIP (as shown below), which has substantially the same investment objective, policies and restrictions as the related Fund.
FUND MASTER PORTFOLIO IN WHICH THE FUND INVESTS
----------------------------------- -------------------------------------------
Prime Money Market Fund Prime Money Market Master Portfolio
Institutional Money Market Money Market Master Portfolio
Fund
Government Money Market Fund Government Money Market Master Portfolio
Treasury Money Market Fund Treasury Money Market Master Portfolio
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Each series of the Trust issues shares in multiple classes, currently including Premium, Institutional, Select, Trust and Capital Shares, and with respect only to the Institutional Money Market Fund, Aon Captives Shares. On August 14, 2002, the Trust's board of trustees (the "Board of Trustees" or the "Board") approved changing the name of the Institutional Money Market Fund's Distributor Shares to the "Aon Captives Shares." The Capital Shares of the Funds are expected to commence operations on or shortly after the date of this SAI.
Description of the Funds and their Investments and Risks INVESTMENT OBJECTIVES AND POLICIES. The Trust is an open-end, series management investment company. Each Fund and Master Portfolio has adopted an investment objective and investment policies that may be fundamental or non-fundamental. Fundamental policies cannot be changed without approval by the holders of a majority (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of the outstanding voting securities of such Fund or Master Portfolio, as the case may be. Non-fundamental policies may be changed without shareholder approval by the vote of a majority of the trustees of the Trust or MIP (the "Trustees"), as the case may be, at any time.
The Funds and the Master Portfolios in which they invest are diversified funds as defined in the 1940 Act. Each Fund's investment objective is set forth in its Prospectus. Each Fund's investment objective is non-fundamental and can be changed by the Trust's Board of Trustees without shareholder approval. The investment objective and investment policies of a Fund determine the types of portfolio securities in which the Fund invests, the degree of risk to which the Fund is subject and, ultimately, the Fund's performance. There can be no assurance that the investment objective of any Fund will be achieved.
MASTER/FEEDER STRUCTURE. Each Fund seeks to achieve its investment objective by investing all of its assets in a Master Portfolio of MIP. The Trust's Board of Trustees believes that under normal circumstances, none of the Funds or their shareholders will be adversely affected by investing Fund assets in a Master Portfolio. However, if a mutual fund or other investor redeems its interests from a Master Portfolio, the economic efficiencies (E.G., spreading fixed expenses over a larger asset base) that the Trust's Board of Trustees believes may be available through a Fund's investment in such Master Portfolio may not be fully achieved. In addition, given the relative novelty of the master/feeder structure, accounting or operational difficulties, although unlikely, could arise.
The fundamental policies of each Master Portfolio cannot be changed without approval by the holders of a majority (as defined in the 1940 Act) of a Master Portfolio's outstanding interests. Whenever a Fund, as an interestholder of a Master Portfolio, is requested to vote on any matter submitted to interestholders of the Master Portfolio, a Fund will either hold a meeting of its
shareholders to consider such matters and cast its votes in proportion to the votes received from its shareholders (shares for which a Fund receives no voting instructions will be voted in the same proportion as the votes received from the other Fund shareholders) or cast its votes, as an interestholder of the Master Portfolio, in proportion to the votes received by the Master Portfolio from all other interestholders of the Master Portfolio.
Certain policies of the Master Portfolios that are non-fundamental may be changed by vote of a majority of MIP's Trustees without interestholder approval. If a Master Portfolio's investment objective or fundamental or non-fundamental policies are changed, a Fund may elect to change its objective or policies to correspond to those of the related Master Portfolio. Each Fund may redeem its interests from its Master Portfolio only if the Trust's Board of Trustees determines that such action is in the best interests of the Fund and its shareholders, for this or any other reason. Prior to such redemption, the Trust's Board of Trustees would consider alternatives, including whether to seek a new investment company with a matching investment objective in which to invest or retain its own investment adviser to manage the Fund's portfolio in accordance with its investment objective. In the latter case, a Fund's inability to find a substitute investment company in which to invest or equivalent management services could adversely affect shareholders' investments in the Fund.
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Funds are subject to the following investment restrictions, all of which are fundamental policies. Each Fund 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 Fund's investments in that industry would equal or exceed 25% of the current value of the Fund's total assets, provided that this restriction does not limit the Fund'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 collateralized by U.S. government securities; and further provided that, with respect to the Prime Money Market Fund and the Institutional Money Market Fund, the Fund reserves the right to concentrate in the obligations of domestic banks (as such term is interpreted by the Securities Exchange Commission ("SEC") or its staff);
(2) Purchase the securities of any single issuer if, as a result, with respect to 75% of the Fund's total assets, more than 5% of the value of its total assets would be invested in the securities of such issuer or the Fund's ownership would be more than 10% of the outstanding voting securities of such issuer, provided that this restriction does not limit the Fund's cash or cash items, investments in U.S. government securities, or investments in securities of other investment companies;
(3) Borrow money or issue senior securities, except to the extent permitted under the 1940 Act, including the rules, regulations and any orders obtained thereunder;
(4) Make loans to other parties, except to the extent permitted under the 1940 Act, including the rules, regulations and any orders obtained thereunder. 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;
(5) Underwrite securities of other issuers, except to the extent that the purchase of permitted investments directly from the issuer thereof or from an underwriter for an issuer and the later disposition of such securities in accordance with the Fund's investment program may be deemed to be an underwriting; and provided further, that the purchase by the Fund of securities issued by an open-end management investment company, or a series thereof, with substantially the same investment objective, policies and restrictions as the Fund shall not constitute an underwriting for purposes of this paragraph;
(6) Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business); and
(7) 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.
With respect to paragraph (3) above, the 1940 Act currently allows each Fund to borrow up to one-third of the value of its total assets (including the amount borrowed) valued at the lesser of cost or market, less liabilities (not including the amount borrowed) at the time the borrowing is made. With respect to paragraph (4) above, the 1940 Act and regulatory interpretations currently limit the percentage of each Fund's securities that may be loaned to one-third of the value of its total assets.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The Funds have adopted the following investment restrictions as non-fundamental policies. These restrictions may be changed without shareholder approval by a majority of the Trustees of the Trust at any time.
(1) Each Fund may invest in shares of other open-end management investment companies, subject to the limitations of Section 12(d)(1) of the 1940 Act, including the rules, regulations and exemptive orders obtained thereunder;
(2) Each Fund may not invest more than 10% of its net assets in illiquid securities. For this purpose, illiquid securities include, among others, (i) securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale, (ii) fixed time deposits that are subject to withdrawal penalties and that have maturities of more than seven days, and (iii) repurchase agreements not terminable within seven days.
(3) Each Fund may lend securities from its portfolio to brokers, dealers and financial institutions, in amounts not to exceed (in the aggregate) one-third of a Fund's total assets. Any such loans of portfolio securities will be fully collateralized based on values that are marked to market daily.
(4) Each Fund may not make investments for the purpose of exercising control or management; provided that a Fund may invest all of its assets in a diversified, open-end management investment company, or a series thereof, with substantially the same investment objective, policies and restrictions as the Fund, without regard to the limitations set forth in this paragraph.
The Government Money Market Fund and the Treasury Money Market Fund have adopted the following investment restriction as a non-fundamental policy:
Each Fund will provide shareholders with at least 60 days' notice of any change to the Fund's non-fundamental policy to invest at least 80% of the Fund's assets in the types of securities described in the Fund's principal investment strategies. The notice will be provided in plain English in a separate written document, and will contain the following prominent statement or similar statement in bold-face type: "Important Notice Regarding Change in Investment Policy." This statement will appear on both the notice and the envelope in which it is delivered, unless it is delivered separately from other communications to investors, in which case the statement will appear either on the notice or the envelope in which the notice is delivered.
The Prime Money Market Fund and the Institutional Money Market Fund have adopted the following investment restrictions as non-fundamental policies:
(1) Each Fund may not purchase interests, leases, or limited partnership interests in oil, gas, or other mineral exploration or development programs.
(2) Each Fund may not write, purchase or sell puts, calls, straddles, spreads, warrants, options or any combination thereof, except that the Fund may purchase securities with put rights in order to maintain liquidity.
(3) Each Fund may not purchase securities on margin (except for short-term credits necessary for the clearance of transactions) or make short sales of securities.
Notwithstanding any other investment policy or restriction (whether or not fundamental), each Fund may (and does) invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objective, policies and limitations as the Fund.
INVESTMENTS AND RISKS. To the extent set forth in this SAI, each Fund, through its investment in a related Master Portfolio, may invest in the securities described below. To avoid the need to refer to both the Funds and the Master Portfolios in every instance, the following sections generally refer to the Funds only.
The assets of each Fund consist only of obligations maturing within 397 calendar days from the date of acquisition (as determined in accordance with the regulations of the SEC), and the dollar-weighted average maturity of a Fund may not exceed 90 days. Under normal circumstances, the Prime Money Market Fund, the Government Money Market Fund and the Treasury Money Market Fund expect to maintain a dollar-weighted average portfolio maturity of 60 days or less. The securities in which each Fund invests may not yield as high a level of current income as may be achieved from securities with less liquidity and less safety. There can be no assurance that a Fund's investment objective will be realized as described in its Prospectus.
The Treasury Money Market Fund invests exclusively in U.S. Treasury obligations, as described below. The Government Money Market Fund invests exclusively in U.S. government obligations, as described below. Practices described below relating to illiquid securities, investment company securities, loans of portfolio securities and repurchase agreements also apply to the Treasury Money Market Fund and the Government Money Market Fund. The Prime Money Market Fund and the Institutional Money Market Fund may invest in any of the instruments or engage in any practice described below.
ASSET-BACKED AND COMMERCIAL MORTGAGE-BACKED SECURITIES. The Funds may invest in asset-backed and commercial mortgaged-backed securities. Asset-backed securities are securities backed by installment contracts, credit-card receivables or other
assets. Commercial mortgage-backed securities are securities backed by commercial real estate properties. Both asset-backed and commercial mortgage-backed securities represent interests in "pools" of assets in which payments of both interest and principal on the securities are made on a regular basis. The payments are, in effect, "passed through" to the holder of the securities (net of any fees paid to the issuer or guarantor of the securities). The average life of asset-backed and commercial mortgage-backed securities varies with the maturities of the underlying instruments and, as a result of prepayments, can often be less than the original maturity of the assets underlying the securities. For this and other reasons, an asset-backed and commercial mortgage-backed security's stated maturity may be shortened, and the security's total return may be difficult to predict. The Funds may invest in such securities up to the limits prescribed by Rule 2a-7 and other provisions of or under the 1940 Act.
BANK OBLIGATIONS. The Funds 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 branches of foreign banks, domestic savings and loan associations and other banking institutions.
Certificates of deposit ("CDs") are negotiable certificates evidencing the obligation of a bank to repay funds deposited with it for a specified period of time.
Time deposits ("TDs") are non-negotiable deposits maintained in a banking institution for a specified period of time at a stated interest rate. TDs that may be held by the Funds will not benefit from insurance from the Bank Insurance Fund or the Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation ("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.
Domestic commercial banks organized under federal law are supervised and examined by the Comptroller of the Currency and are required to be members of the Federal Reserve System and to have their deposits insured by the FDIC. Domestic banks organized under state law are supervised and examined by state banking authorities and are members of the Federal Reserve System only if they elect to join. In addition, state banks whose CDs may be purchased by the Funds are insured by the FDIC (although such insurance may not be of material benefit to a Fund, depending on the principal amount of the CDs of each bank held by the Fund) and are subject to federal examination and to a substantial body of federal law and regulation. As a result of federal or state laws and regulations, domestic branches of domestic banks whose CDs may be purchased by the Funds generally are required, among other things, to maintain specified levels of reserves, are limited in the amounts that they can loan to a single borrower and are subject to other regulations designed to promote financial soundness. However, not all of such laws and regulations apply to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries of domestic banks and domestic and foreign branches of foreign banks, such as CDs and TDs, may be general obligations of the parent banks in addition to the issuing branch, or may be limited by the terms of a specific obligation and/or governmental regulation. Such obligations are subject to different risks than are those of domestic banks. These risks include foreign economic and political developments, foreign governmental restrictions that may adversely affect payment of principal and interest on the obligations, foreign exchange controls and foreign withholding and other taxes on amounts realized on the obligations. These foreign branches and subsidiaries are not necessarily subject to the same or similar regulatory requirements that apply to domestic banks, such as mandatory reserve requirements, loan limitations, and accounting, auditing and financial record keeping requirements. In addition, less information may be publicly available about a foreign branch of a domestic bank or about a foreign bank than about a domestic bank.
Obligations of U.S. branches of foreign banks may be general obligations of the parent bank in addition to the issuing branch, or may be limited by the terms of a specific obligation or by federal or state regulation, as well as governmental action in the country in which the foreign bank has its head office. A domestic branch of a foreign bank with assets in excess of $1 billion may be subject to reserve requirements imposed by the Federal Reserve System or by the state in which the branch is located if the branch is licensed in that state.
In addition, federal branches licensed by the Comptroller of the Currency and branches licensed by certain states ("State Branches") may be required to: (1) pledge to the appropriate regulatory authority, by depositing assets with a designated bank within the relevant state, a certain percentage of their assets as fixed from time to time by such regulatory authority; and (2) maintain assets within the relevant state in an amount equal to a specified percentage of the aggregate amount of liabilities of the foreign bank payable at or through all of its agencies or branches within the state. The deposits of federal and State Branches generally must be insured by the FDIC if such branches take deposits of less than $100,000.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT INSTRUMENTS. The Funds 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 usually has a maturity at the time of issuance not exceeding nine months. Variable amount master demand notes are demand obligations that permit a Fund to invest fluctuating amounts, which may change daily without penalty, pursuant to direct arrangements between a Fund, as lender, and the borrower. The interest on these notes varies pursuant to the arrangements between the Fund and the borrower. Both the borrower and the Fund have the right to vary the amount of the outstanding indebtedness on the notes. BGFA monitors on an ongoing basis the ability of an issuer of a demand instrument to pay principal and interest on demand.
The Funds also may invest in non-convertible corporate debt securities (E.G., bonds and debentures) with not more than thirteen months remaining to maturity at the date of settlement. A Fund will invest only in such corporate bonds and debentures that are deemed appropriate by BGFA in accordance with Rule 2a-7 under the 1940 Act. Subsequent to its purchase by a Fund, an issue of securities may cease to be rated or its rating may be reduced below the minimum rating required for purchase by the Fund. BGFA will consider such an event in determining whether the Fund should continue to hold the obligation. To the extent the Fund continues to hold the obligation, it may be subject to additional risk of default.
FLOATING- AND VARIABLE-RATE OBLIGATIONS. The Funds may purchase debt instruments with interest rates that are periodically adjusted at specified intervals or whenever a benchmark rate or index changes. The floating- and variable-rate instruments that the Funds may purchase include certificates of participation in such instruments. The interest rate adjustments generally limit the increase or decrease in the amount of interest received on the debt instruments. Floating- and variable-rate instruments are subject to interest rate risk and credit risk.
The Funds may purchase floating- and variable-rate obligations. The Funds 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 397 days, as defined in accordance with Rule 2a-7 and the 1940 Act. Variable-rate demand notes are demand obligations that permit a Fund to invest fluctuating amounts, which may change daily without penalty, pursuant to direct arrangements between a Fund, 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.
These obligations are direct lending arrangements between the lender and borrower. There may not be an 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, a Fund'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 a Fund may invest in obligations that 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 a Fund may invest. BGFA considers on an ongoing basis the creditworthiness of the issuers of the floating- and variable-rate demand obligations in a Fund's portfolio.
FOREIGN OBLIGATIONS. The Funds may invest in certain securities of non-U.S. issuers. Investing in the securities of foreign issuers involves special risks and considerations not typically associated with investing in U.S. issuers. These include differences in accounting, auditing and financial reporting standards, the possibility of expropriation or potentially confiscatory taxation, adverse changes in investment or exchange control regulations, political instability which could affect U.S. investments in foreign countries, potential restrictions of the flow of international capital and transaction costs of foreign currency conversions. Foreign issuers may be subject to less governmental regulation than U.S. issuers. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy with respect to growth of gross domestic product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payment positions.
The Funds may invest in U.S. dollar-denominated short-term obligations issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities that are determined by BGFA to be of comparable quality to the other obligations in which the Funds may invest. The Funds may also invest in debt obligations of supranational entities. Supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the Asian Development Bank and the InterAmerican Development Bank. The percentage of each Fund's assets invested in obligations of foreign governments and supranational entities will vary depending on the relative yields of such securities, the economic and financial markets of the countries in which the investments are made and the interest rate climate of such countries.
FORWARD COMMITMENTS, WHEN-ISSUED PURCHASES AND DELAYED-DELIVERY TRANSACTIONS.
The Funds 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 Funds
will generally purchase securities with the intention of acquiring them, the
Funds may dispose of securities purchased on a when-issued, delayed-delivery or
a forward commitment basis before settlement when deemed appropriate by BGFA.
FUNDING AGREEMENTS. The Funds may invest in short-term funding agreements. A funding agreement is a contract between an issuer and a purchaser that obligates the issuer to pay a guaranteed rate of interest on a principal sum deposited by the purchaser. Funding agreements will also guarantee the return of principal and may guarantee a stream of payments over time. A funding agreement has a fixed maturity and may have either a fixed-, variable- or floating-interest rate that is based on an index and guaranteed for a fixed time period. The Funds will purchase short-term funding agreements only from banks and insurance companies. The Funds may also purchase Guaranteed Investment Contracts ("GICs").
The secondary market, if any, for these funding agreements is limited; thus, such investments purchased by the Funds may be treated as illiquid. If a funding agreement is determined to be illiquid it will be valued at its fair market value as determined by procedures approved by the Board of Trustees. Valuation of illiquid indebtedness involves a greater degree of judgment in determining the value of each Fund's assets than if the value were based on available market quotations.
ILLIQUID SECURITIES. Each Fund may invest 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 Fund cannot exercise a demand feature on not more than seven days' notice and as to which there is no secondary market, and repurchase agreements providing for settlement more than seven days after notice.
INVESTMENT COMPANY SECURITIES. Each Fund may invest in shares of open-end
investment companies, including investment companies that are affiliated with
the Funds and BGFA, that invest exclusively in high-quality short-term
securities to the extent permitted under the 1940 Act, including the rules,
regulations and exemptive orders obtained thereunder; provided, however, that a
Fund, if it has knowledge that its beneficial interests are purchased by
another investment company investor pursuant to Section 12(d)(1)(G) of the 1940
Act, will not acquire any securities of registered open-end management
investment companies or registered unit investment trusts in reliance on
Section 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act. Other investment companies
in which a Fund 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 Fund. A Fund may also purchase shares of exchange
listed closed-end funds to the extent permitted under the 1940 Act. Under the
1940 Act, a Fund's investment in investment companies is limited to, subject to
certain exceptions, (i) 3% of the total outstanding voting stock of any one
investment company, (ii) 5% of the Fund's total assets with respect to any one
investment company, and (iii) 10% of the Fund's total assets with respect to
investment companies in the aggregate. To the extent allowed by law or
regulation, each Fund may invest its assets in securities of investment
companies that are money market funds, including those advised by BGFA or
otherwise affiliated with BGFA, in excess of the limits discussed above.
LETTERS OF CREDIT. Certain of the debt obligations (including municipal securities, certificates of participation, commercial paper and other short-term obligations) that the Funds may purchase may be backed by an unconditional and irrevocable letter of credit issued by a bank, savings and loan association or insurance company that assumes the obligation for payment of principal and interest in the event of default by the issuer. Only banks, savings and loan associations and insurance companies that, in the opinion of BGFA, are of comparable quality to issuers of other permitted investments of the Funds may be used for letter of credit-backed investments.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend portfolio securities to certain creditworthy borrowers, including borrowers affiliated with BGFA. The borrowers provide collateral that is maintained in an amount at least equal to the current market value of the securities loaned plus any accrued interest or dividends. A Fund may terminate a loan at any time and obtain the return of the securities loaned. Each Fund receives the value of any interest or cash or non-cash distributions paid on the loaned securities.
With respect to loans that are collateralized by cash, the borrower will be entitled to receive a fee based on the amount of cash collateral. The Fund is compensated by the difference between the amount earned on the reinvestment of cash collateral and the fee paid to the borrower. In the case of collateral other than cash, the Fund is compensated by a fee paid by the borrower equal to a percentage of the market value of the loaned securities. Any cash collateral may be reinvested in certain short-term instruments either directly on behalf of each lending Fund or through one or more joint accounts or money market funds, including those managed by BGFA.
Securities lending involves exposure to certain risks, including operational risk (I.E., the risk of losses resulting from problems in the settlement and accounting process), "gap" risk (I.E., the risk of a mismatch between the return on cash collateral reinvestments and the fees the Fund has agreed to pay a borrower), and credit, legal, counterparty and market risk. In the event a borrower does not return a Fund's securities as agreed, the Fund may experience losses if the proceeds received from liquidating the collateral do not at least equal the value of the loaned security at the time the collateral is liquidated plus the transaction costs incurred in purchasing replacement securities.
A Fund may pay a portion of the interest or fees earned from securities lending to a borrower as described above, and to a securities lending agent who administers the lending program in accordance with guidelines approved by the Trust's Board of Trustees. Barclays Global Investors, N.A. ("BGI") acts as securities lending agent for the Funds subject to the overall supervision of BGFA. BGI receives a portion of the revenues generated by securities lending activities as compensation for its services in this regard.
LOAN PARTICIPATION AGREEMENTS. Each Fund may purchase interests in loan participations that typically represent direct participation in a loan to a corporate borrower, and generally are offered by an intermediary bank or other financial institution or lending syndicate. Under these loan participation arrangements, a Fund will have the right to receive payments of principal, interest and any fees to which it is entitled from the bank selling the loan participation upon receipt by the bank of the payments from the borrower. The borrower in the underlying loan will be deemed to be the issuer of the participation interest except to the extent the Fund derives its rights from the intermediary bank that sold the loan participation. Such loans must be made to issuers in whose obligations the Funds may invest.
Because the bank issuing the loan participation does not guarantee the participation in any way, the participation is subject to the credit risks associated with the underlying corporate borrower. In addition, it may be necessary under the terms of the loan participation for the Funds to assert their rights against the underlying corporate borrower in the event that the underlying corporate borrower should fail to pay principal and interest when due. Thus, the Funds could be subject to delays, expenses, and risks that are greater than those that would have been involved if the Funds had purchased a direct obligation of the borrower. Moreover, under the terms of the loan participation, the Funds may be regarded as creditors of the issuing bank (rather than of the underlying corporate borrower), so that the Funds also may be subject to the risk that the issuing bank may become insolvent. Further, in the event of the bankruptcy or insolvency of the corporate borrower, the loan participation might be subject to certain defenses that can be asserted by the borrower as a result of improper conduct by the issuing bank.
The secondary market, if any, for these loan participation interests is limited; thus, such participations purchased by the Funds may be treated as illiquid. If a loan participation is determined to be illiquid it will be valued at its fair market value as determined by procedures approved by the Board of Trustees. Valuation of illiquid indebtedness involves a greater degree of judgment in determining the value of each Fund's assets than if the value were based on available market quotations.
MORTGAGE PASS-THROUGH SECURITIES. Each Fund may invest in mortgage pass-through securities, which are a category of pass-through securities backed by pools of mortgages and issued by one of several U.S. government-sponsored enterprises including: the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation. In the basic mortgage pass-through structure, mortgages with similar issuer, term and coupon characteristics are collected and aggregated into a "pool" consisting of multiple mortgage loans. The pool is assigned a CUSIP number and undivided interests in the pool are traded and sold as pass-through securities. The holder of the security is entitled to a pro rata share of principal and interest payments (including unscheduled prepayments) from the pool of mortgage loans.
An investment in a specific pool of pass-through securities requires an analysis of the specific prepayment risk of mortgages within the covered pool (since mortgagors typically have the option to prepay their loans). The level of prepayments on a pool of mortgage securities is difficult to predict and can impact the subsequent cash flows and value of the mortgage pool. In addition, when trading specific mortgage pools, precise execution, delivery and settlement arrangements must be negotiated for each transaction. These factors combine to make trading in mortgage pools somewhat cumbersome. For these and other reasons, the
Funds may obtain exposure to U.S. agency mortgage pass-through securities primarily through the use of "to-be-announced" or "TBA transactions." "TBA" refers to a commonly used mechanism for the forward settlement of U.S. agency mortgage pass-through securities, and not to a separate type of mortgage-backed security. Most transactions in mortgage pass-through securities occur through the use of TBA transactions. TBA transactions generally are conducted in accordance with widely-accepted guidelines that establish commonly observed terms and conditions for execution, settlement and delivery. In a TBA transaction, the buyer and seller decide on general trade parameters, such as agency, settlement date, par amount, and price. The actual pools delivered generally are determined two days prior to the settlement date. The Funds may use TBA transactions in several ways. For example, the Funds may regularly enter into TBA agreements and "roll over" such agreements prior to the settlement date stipulated in such agreements. This type of TBA transaction is sometimes known as a "TBA roll." In a "TBA roll," a Fund generally will sell the obligation to purchase the pools stipulated in the TBA agreement prior to the stipulated settlement date and will enter into a new TBA agreement for future delivery of pools of mortgage pass-through securities. In addition, a Fund may enter into TBA agreements and settle such transactions on the stipulated settlement date by accepting actual receipt or delivery of the pools of mortgage pass-through securities stipulated in the TBA agreement. Default by or bankruptcy of a counterparty to a TBA transaction would expose a Fund to possible loss because of adverse market action, expenses or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction. To minimize this risk, the Funds will enter into TBA transactions only with established counterparties (such as major broker-dealers) and BGFA will monitor the creditworthiness of such counterparties. The use of "TBA rolls" may cause the Funds to experience higher portfolio turnover and to pay higher capital gain distributions, which may result in larger amounts of short-term capital gains allocable to shareholders.
MUNICIPAL SECURITIES. Each Fund may invest in municipal securities. Municipal securities are generally issued by states and local governments and their agencies, authorities and other instrumentalities. Municipal bonds are subject to interest rate, credit and market risk. The ability of a municipal security issuer to make payments on that security could be affected by litigation, legislation or other political events or the bankruptcy of the issuer. Lower rated municipal bonds are subject to greater credit and market risk than higher quality municipal bonds. Municipal securities in which the Funds may invest include, but are not limited to, municipal lease obligations and securities issued by entities whose underlying assets are municipal bonds.
Each Fund will invest in high-quality, long-term municipal bonds, municipal notes and short-term commercial paper with remaining maturities not exceeding 397 calendar days.
PARTICIPATION INTERESTS. Each Fund may invest in participation interests in any type of security in which the Fund may invest. A participation interest gives the Fund an undivided interest in the underlying securities in the proportion that the Fund's participation interest bears to the total principal amount of the underlying securities.
REPURCHASE AGREEMENTS. Each Fund will enter into repurchase agreements with certain counterparties. Repurchase agreements involve an agreement to purchase financial instruments and to resell those instruments back to the same counterparty at an agreed-upon date and price, which price reflects a rate of interest unrelated to a coupon rate or maturity of the purchased instruments. The value of the instruments purchased may be more or less than the price at which the counterparty has agreed to repurchase them. As protection against the risk that the counterparty will not fulfill its obligation, the instruments are marked to market daily and are maintained at a value at least equal to the sale price plus the accrued incremental amount. Delays or losses could result if the counterparty to the repurchase agreement defaults or becomes insolvent. The Funds will only enter into repurchase agreements with counterparties whose creditworthiness has been reviewed and found satisfactory by BGFA.
RESTRICTED SECURITIES. Restricted securities are subject to legal restrictions on their sale. Difficulty in selling restricted securities may result in a loss or be costly to the Funds. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, as amended, or in a registered public offering. Where registration is required, the restricted security's holder may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time the holder decides to seek registration and the time the holder may be permitted to sell the security under an effective registration statement. If, during that period, adverse market conditions were to develop, the holder might obtain a less favorable price than prevailed when it decided to seek registration of the security.
UNRATED INVESTMENTS. Each Fund may purchase instruments that are not rated if, in the opinion of BGFA, such obligations are of an investment quality that is comparable to other rated investments that are permitted for purchase by a Fund, and they are purchased in accordance with the Trust's procedures adopted by the Trust's Board of Trustees in accordance with Rule 2a-7 under the 1940 Act. Such procedures require approval or ratification by the Board of Trustees of the purchase of unrated securities. After purchase by a Fund, a security may cease to be rated or its rating may be reduced below the minimum required for purchase by
the Fund. Neither event will require an immediate sale of such security by a Fund provided that, when a security ceases to be rated, BGFA determines that such security presents minimal credit risks and, provided further that, when a security rating is downgraded below the eligible quality for investment or no longer presents minimal credit risks, BGFA finds that the sale of such security would not be in a Fund's shareholders' best interests.
To the extent the ratings given by a nationally recognized statistical ratings organization ("NRSRO") may change as a result of changes in such organization or its rating systems, the Funds will attempt to use comparable ratings as standards for investments in accordance with the investment policies contained in their Prospectuses and this SAI. The ratings of NRSROs are more fully described in the Appendix of this SAI.
U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in U.S. government obligations, including 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.
U.S. TREASURY OBLIGATIONS. U.S. Treasury obligations are direct obligations of the U.S. government that are backed by the full faith and credit of the United States. U.S. Treasury obligations include, among other things, U.S. Treasury bills, notes, bonds, and the separately traded principal and interest components of securities guaranteed or issued by the U.S. Treasury if such components are traded independently under the Separate Trading of Registered Interest and Principal of Securities Program ("STRIPS").
Portfolio Holdings Information
The Boards of Trustees of the Trust and MIP have adopted a policy regarding the
disclosure of portfolio holdings information that requires that such
information be disclosed in a manner that (a) is consistent with applicable
legal requirements and in the best interests of each Fund's and Master
Portfolio's respective shareholders or interestholders, as applicable; (b) does
not put the interests of the Investment Adviser, the Funds' distributor, SEI
Investments Distribution Co. (the "Distributor" or "SEI"), or any affiliated
person of the Funds, the Master Portfolios, the Investment Adviser or the
Distributor, above those of the Funds' shareholders and the Master Portfolios'
interestholders; (c) does not advantage any current or prospective Fund
shareholders or Master Portfolio interestholders over any other current or
prospective Fund shareholders or Master Portfolio interestholders; and (d) does
not provide selective access to portfolio holdings information except pursuant
to the procedures outlined below and to the extent appropriate confidentiality
arrangements and/or control mechanisms (such as by virtue of duties to the
Funds or the Master Portfolios) limiting the use of such information are in
effect. None of the Funds, the Master Portfolios, the Investment Adviser or BGI
receive any compensation or other consideration in connection with the
disclosure of portfolio holdings information pursuant to the arrangements
described below.
The policy described herein only relates to the disclosure of portfolio holdings information of the Funds and the Master Portfolios.
SERVICE PROVIDERS. Daily access to information concerning portfolio holdings is permitted, without any lag between the date of the information and the date on which such information is disclosed, (i) to personnel of the Investment Adviser who manage the Master Portfolios' assets ("Portfolio Managers") or who provide administrative, operational, risk management, or other support to the Portfolio Managers ("Support Staff"), and (ii) to other personnel of the Investment Adviser and the Funds' and Master Portfolios' service providers, such as BGI, State Street Bank and Trust Company ("State Street") and SEI, who deal directly with, or assist in, functions related to investment management, administration, custody, and fund accounting, as may be necessary to conduct business in the ordinary course in a manner consistent with agreements with the Master Portfolios and the Funds and the terms of their respective current registration statements. Portfolio Managers and Support Staff may also release and discuss portfolio holdings information with various broker-dealers, including broker-dealers affiliated with the Investment Adviser, in connection with managing the Master Portfolios' assets and settling the Master Portfolios' transactions, as may be necessary to conduct business in the ordinary course in a manner consistent with agreements with the Master Portfolios and the Funds and the terms of their respective current registration statements.
From time to time, portfolio holdings information may also be provided, in the ordinary course of business without any lag between the date of the information and the date on which such information is disclosed (provided that such information is provided no earlier than the close of trading on the same business day as the date of such information), to other persons and entities, including, among others, the Trust's and MIP's Trustees; the auditors of the Funds and the Master Portfolios; counsel to the Trust or MIP, and counsel to the Trustees who are not "interested persons" of the Trust or MIP (as such term is defined in the 1940 Act) (the "Independent Trustees"); pricing service vendors; proxy voting service providers; financial printers; regulatory authorities; stock exchanges and other listing organizations; rating or ranking organizations; or as otherwise required by law or regulation. The following is a list, as of [ ], 2008, of all such persons and entities with which the Funds and the Master Portfolios have ongoing arrangements to provide portfolio holdings information in the ordinary course of business without any lag as described above: Moody's Investors Services, Inc. ("Moody's"), Standard & Poor's ("S&P"), Lipper, Inc. and Morningstar, Inc., as the rating organizations for certain of the Master Portfolios; and Interactive Data Corp. and Reuters, as the pricing services for the Master Portfolios. Any additions, modifications or deletions to the foregoing list that have occurred since [ ], 2008 are not reflected. Generally, the above persons and entities are subject to duties of confidentiality arising under law or contract that the Boards of Trustees of the Trust and MIP believe provide an adequate safeguard for such information.
THIRD-PARTY FEEDER FUNDS. Each Master Portfolio provides portfolio holdings
information to the sponsors, administrators or other service providers for
feeder funds sponsored by institutions not affiliated with BGFA that invest in
such Master Portfolio (each, a "third-party feeder fund") as may be necessary
to (i) conduct business of the third-party feeder funds in the ordinary course
in a manner consistent with agreements with the third-party feeder funds and
the terms of the Master Portfolio's current registration statement, or (ii)
satisfy legal requirements applicable to the third-party feeder funds. Such
portfolio holdings information may be provided without any lag between the date
of the information and the date on which such information is disclosed. Each
third-party feeder fund is subject to the terms and duties of confidentiality
of its own portfolio holdings disclosure policy as adopted by its board of
directors or trustees (which policy may be different than the Trust's and MIP's
policy described herein), and none of BGFA, BGI or the Board of Trustees of the
Trust or MIP exercises control over any third-party feeder fund's policies. The
following is a list, as of [ ], 2008, of third-party feeder funds and
their service providers with which the Master Portfolios have ongoing
arrangements to provide portfolio holdings information: Barclays Global
Investors Cayman Prime Money Market Fund, Ltd., Hewitt Money Market Fund,
Hewitt Series Trust, Hewitt Financial Services LLC, PayPal Money Market Fund,
PayPal Funds, and PayPal Asset Management, Inc. Such information is generally
provided within five business days following month-end. Any additions,
modifications or deletions to the foregoing list that have occurred since
[ ], 2008 are not reflected.
BGFA, BGI and the Master Portfolios may also provide portfolio holdings information to the sponsors, administrators or other service providers for a potential third-party feeder fund to the extent necessary for such entities to evaluate a potential investment in the relevant Master Portfolio, subject to appropriate confidentiality arrangements limiting the use of such information to that purpose.
SECURITIES AND EXCHANGE COMMISSION FILINGS. Each Fund will disclose its complete portfolio holdings schedule in public filings with the SEC on a quarterly basis, based on such Fund's fiscal year, within 70 days after the end of the calendar quarter, and will provide that information to shareholders, as required by federal securities laws and regulations thereunder.
OTHER PUBLIC DISCLOSURE. A Fund or its related Master Portfolio may voluntarily disclose portfolio holdings information in advance of required filings with the SEC to persons and entities that make such information generally available to interested persons, such as institutional investors and their advisers and representatives. These persons and entities may make such information available through a variety of methods, including without limitation via websites, e-mail and other forms of publication. Such portfolio holdings information may be provided without any lag between the date of the information and the date on which such information is disclosed, provided that such information is provided no earlier than the close of trading on the same business day as the date of such information. No conditions or restrictions are placed on the use of such information because the Funds and the Master Portfolios intend that the persons and entities to which such information is provided will make such information generally available to all interested persons. The following is a list, as of March 31, 2008, of all such persons and entities with which the Funds or the Master Portfolios have ongoing arrangements to provide portfolio holdings information and the frequency with which such information is provided: iMoney Net (weekly) and Bloomberg (monthly). Any additions, modifications or deletions to the foregoing list that have occurred since [ ], 2008 are not reflected.
APPROVED RECIPIENTS. The Funds' and the Master Portfolios' Chief Compliance Officer may authorize disclosure of portfolio holdings information pursuant to the above policy.
The Boards of Trustees of the Trust and MIP review the above policy and the procedures with respect to the disclosure of portfolio holdings information at least annually. There can be no assurance that the Trust's and MIP's policy and procedures with respect to disclosure of portfolio holdings information will prevent the misuse of such information by persons that receive such information.
Management
The Trust's Board of Trustees has responsibility for the overall management and
operations of the Funds. Each Trustee serves until he or she resigns, is
removed, dies, retires or becomes incapacitated. Officers generally serve at
the pleasure of the Trustees. The Trust, Barclays Foundry Investment Trust
("BFIT"), MIP, iShares Trust and iShares, Inc. are considered to be members of
the same fund complex, as defined in Form N-1A under the 1940 Act. Lee T.
Kranefuss also serves as a Trustee of MIP and iShares Trust and as a Director
of iShares, Inc. Each other Trustee of the Trust also serves as a Trustee for
MIP. The address for each Trustee and officer, unless otherwise noted in the
tables below, is Barclays Global Investors, N.A., c/o Mutual Fund
Administration, 45 Fremont Street, San Francisco, CA 94105.
The Trust's Trustees have designated Leo Soong as the Lead Independent Trustee.
INTERESTED TRUSTEE
POSITION(S), LENGTH
NAME AND YEAR OF BIRTH OF SERVICE
------------------------ -----------------------
Lee T. Kranefuss* Trustee and
(1961) Chairperson of the
Board (since 2001).
H. Michael Trustee, President
Williams** and Chief Executive
(1960) Officer (since 2007).
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
PRINCIPAL OCCUPATION OVERSEEN
NAME AND YEAR OF BIRTH DURING PAST FIVE YEARS BY TRUSTEE OTHER DIRECTORSHIPS
------------------------ ------------------------------------- ------------ ---------------------------------
Lee T. Kranefuss* Chief Executive Officer, iShares [150] Director (since 2003) of BGI
(1961) Intermediary and Markets Group Cayman Prime Money Market
of BGI (since 2003); Chief Fund, Ltd.; Trustee (since
Executive Officer of the 2001) of MIP; Trustee (since
Intermediary Investor and 2003) of iShares Trust; Director
Exchange Traded Products (since 2001) of iShares, Inc.
Business of BGI (2003-2005);
Director of Barclays Global Fund
Advisors (since 2005); Director,
President and Chief Executive
Officer of Barclays Global
Investors International, Inc. (since
2005); Director and Chairman of
Barclays Global Investors Services
(since 2005); Chief Executive
officer of the Individual Investor
Business of BGI (1999-2003).
H. Michael Head, Global Index and Markets 24 Trustee (since 2007) of BFIT
Williams** Group of BGI (since 2006); and MIP; Trustee, University of
(1960) Global Head of Securities Lending California Berkeley Foundation;
of BGI (2002-2006). Executive Board, College of
Letters and Science, University
of California Berkeley.
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INDEPENDENT TRUSTEES
POSITION(S), LENGTH
NAME AND YEAR OF BIRTH OF SERVICE
------------------------ -----------------------
Mary G. F. Bitterman Trustee (since 2001)
(1944) and Chairperson of
the Nominating and
Governance
Committee (since
2006).
A. John Gambs Trustee and
(1945) Chairperson of the
Audit Committee
(since 2006).
Hayne E. Leland Trustee (since 2007).
(1941)
Jeffrey M. Lyons Trustee (since 2007).
(1955)
Wendy Paskin-Jordan Trustee (since 2006).
(1956)
Leo Soong Trustee (since 2000)
(1946) and Lead
Independent Trustee
(since 2006).
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX
PRINCIPAL OCCUPATION OVERSEEN
NAME AND YEAR OF BIRTH DURING PAST FIVE YEARS BY TRUSTEE OTHER DIRECTORSHIPS
------------------------ ----------------------------------- ------------ ---------------------------------
Mary G. F. Bitterman President (since 2004) and 24 Trustee (since 2001) of MIP;
(1944) Director (since 2002) of the Director (since 1984) and Lead
Bernard Osher Foundation; Independent Director (since
Director (2003-2004) of Osher 2000) of the Bank of Hawaii;
Lifelong Learning Institutes; Director (since 2002) and
President and Chief Executive Chairman of the Board (since
Officer (2002-2003) of The James 2005) of PBS (Public
Irvine Foundation; President and Broadcasting Service).
Chief Executive Officer (1993-
2002) of KQED, Inc.
A. John Gambs Retired. 24 Trustee (since 2006) of MIP.
(1945)
Hayne E. Leland Professor of Finance (since 1974) 24 Trustee (since 2007) of MIP.
(1941) at University of California,
Berkeley: Haas School of
Business.
Jeffrey M. Lyons Retired (since 2006); President, 24 Trustee (since 2007) of MIP.
(1955) Active Trader Business (2004-
2006) and President, Asset
Management Division (2001-2004)
of Charles Schwab & Co. (1984-
2006).
Wendy Paskin-Jordan Managing Partner (since 1999) of 24 Trustee (since 2006) of MIP;
(1956) Paskin & Kahr Capital Director (since 2001) of the
Management; Registered California State Automobile
Representative (since 2005) of Association; Director (since
ThinkEquity Partners (broker- 2001) of Maier Siebel Baber.
dealer); Registered Representative
(1999-2005) of ePlanning
Securities Inc. (broker-dealer).
Leo Soong President (since 2002) of Trinity 24 Trustee (since 2000) of MIP;
(1946) Products LLC/IQ Organics LLC Vice Chairman (since 2005) of
(healthy beverage companies); the California Pacific Medical
Managing Director (since 1989) of Center; Director (since 1990) of
CG Roxane LLC (water the California State Automobile
company); Co-Founder (President Association; Director (since
through 1999) of Crystal Geyser 2002) of the American
Water Co. Automobile Association.
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OFFICERS
POSITION(S), LENGTH PRINCIPAL OCCUPATION OTHER
NAME AND YEAR OF BIRTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
------------------------ --------------------- ------------------------------------ ---------------
Geoffrey D. Flynn Treasurer and Chief Director, Mutual Fund Operations, None.
(1956) Financial Officer BGI (since 2007); President, Van
(since 2007) Kampen Investors Services (2003-
2007); Managing Director, Morgan
Stanley (2002-2007); President,
Morgan Stanley Trust, FSB (2002-
2007).
Eilleen M. Clavere Secretary Head of Legal Administration- None.
(1952) (since 2007) IIB, BGI (since 2006); Legal
Counsel and Vice President of
Atlas Funds, Atlas Advisers, Inc.
and Atlas Securities, Inc. (2005-
2006); Counsel, Kirkpatrick &
Lockhart LLP (2001-2005).
Stephen Monroe Executive Vice Global Head of Cash None.
(1960) President Management, BGI (since 2006);
(since 2007) Managing Director, National Sales
Manager, JP Morgan Securities,
Inc. (1997-2006).
Ira P. Shapiro (1963) Vice President and Associate General Counsel, BGI None.
Chief Legal Officer (since 2004); First Vice President,
(since 2007) Merrill Lynch Investment
Managers (1993-2004).
David Lonergan Vice President Head of U.S. Cash Management, None.
(1970) (since 2007) BGI (since 2002); U.S. Liquidity
Manager, BGI (2000-2002).
Alan Mason (1960) Vice President Head of Allocations and Solutions, None.
(since 2007) BGI (since 2006); Investment
Strategist, BGI (2000-2006).
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COMMITTEES. There are two standing committees of the Board of Trustees - the Nominating and Governance Committee and the Audit Committee. Members of the Nominating and Governance Committee and the Audit Committee include each Independent Trustee. The Nominating and Governance Committee is responsible for recommending to the Board persons to be nominated for election as Trustees by the shareholders or for appointment as Trustees by the sitting Trustees, when permissible. Pursuant to the rules under the 1940 Act, only Independent Trustees may select and nominate other Independent Trustees for BGIF. The Nominating and Governance Committee generally does not consider nominees recommended by shareholders, but may do so if the Nominating and Governance Committee deems it appropriate. Shareholders who want to recommend nominees can contact the Nominating and Governance Committee by sending a signed letter that provides relevant information regarding the nominee and includes: (a) the shareholder's name and address; (b) the number of shares owned by the shareholder; (c) the Fund(s) of which the shareholder owns shares; and (d) if such shares are owned indirectly through a broker, financial intermediary or other record owner, the name of the broker, financial intermediary or other record owner. The letter should be addressed to BGIF Board of Trustees - Nominating and Governance Committee, c/o Barclays Global Investors, N.A. - Mutual Fund Administration, 45 Fremont Street, San Francisco, CA 94105. Mary G. F. Bitterman serves as Chairperson of the Nominating and Governance Committee. Prior to August 29, 2006, the Nominating and Governance Committee was known as the Nominating Committee. During the fiscal year ended December 31, 2006, the Nominating and Governance Committee held four meetings.
The Audit Committee operates pursuant to a separate charter and is responsible for, among other things, overseeing the Funds' accounting and financial reporting practices, reviewing the results of the annual audits of the Funds' financial statements and
interacting with the Funds' independent auditors on behalf of the full Board.
A. John Gambs serves as Chairperson of the Audit Committee. During the fiscal
year ended December 31, 2006, the Audit Committee held four meetings.
BENEFICIAL EQUITY OWNERSHIP INFORMATION. The table below shows for each Trustee the amount of interests in each Fund beneficially owned by the Trustee and the aggregate value of all investments in equity securities within the same family of investment companies, stated as one of the following ranges: 0 = $0; A = $1-$10,000; B = $10,001-$50,000; C = $50,001-$100,000; and D = over $100,000.
AGGREGATE
DOLLAR
RANGE OF
SECURITIES
GOVERNMENT INSTITUTIONAL TREASURY IN THE FAMILY
MONEY MONEY PRIME MONEY MONEY OF INVESTMENT
INTERESTED TRUSTEE MARKET FUND MARKET FUND MARKET FUND MARKET FUND COMPANIES
--------------------- ------------- --------------- ------------- ------------- --------------
Lee T. Kranefuss 0 0 0 0 D
H. Michael Williams 0 0 0 0 0
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AGGREGATE
DOLLAR
RANGE OF
SECURITIES
GOVERNMENT INSTITUTIONAL TREASURY IN THE FAMILY
MONEY MONEY PRIME MONEY MONEY OF INVESTMENT
INDEPENDENT TRUSTEES MARKET FUND MARKET FUND MARKET FUND MARKET FUND COMPANIES
---------------------- ------------- --------------- ------------- ------------- --------------
Mary G. F. Bitterman 0 0 0 0 0
A. John Gambs 0 0 0 0 0
Hayne E. Leland 0 0 0 0 0
Jeffrey M. Lyons 0 0 0 0 0
Wendy Paskin-Jordan 0 0 0 0 0
Leo Soong 0 0 0 0 0
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OWNERSHIP OF SECURITIES OF CERTAIN ENTITIES. The Independent Trustees and their immediate family members, as of December 31, 2006, did not own any securities of BGFA, the Distributor, or any entity controlling, controlled by, or under common control with BGFA or the Distributor as of such a date, unless noted above.
CODES OF ETHICS. The Trust, BGFA and SEI have adopted Codes of Ethics pursuant to Rule 17j-1 under the 1940 Act. The Codes of Ethics permit personnel subject to the Codes of Ethics to invest in securities, subject to certain limitations, including securities that may be purchased or held by the Master Portfolios. The Codes of Ethics are on public file with, and are available from, the SEC.
SHAREHOLDER COMMUNICATIONS TO THE BOARD OF TRUSTEES. The Board of Trustees has
established a process for shareholders to communicate with the Board of
Trustees. Shareholders may contact the Board of Trustees by mail.
Correspondence should be addressed to Barclays Global Investors Funds Board of
Trustees, c/o Barclays Global Investors, N.A. - Mutual Fund Administration, 45
Fremont Street, San Francisco, CA 94105. Shareholders' communications to the
Board of Trustees should include the following information: (a) the name and
address of the shareholder; (b) the number of shares owned by the shareholder;
(c) the Fund(s) of which the shareholder owns shares; and (d) if these shares
are owned indirectly through a broker, financial intermediary or other record
owner, the name of the broker, financial intermediary or other record owner.
All correspondence received as set forth above shall be reviewed by the
Secretary of the Trust and reported to the Board of Trustees.
COMPENSATION OF TRUSTEES. The Trust pays each Independent Trustee an annual base fee of $17,500 and a per meeting fee of $2,500 for meetings of the Board attended by the Trustee. Committee members receive a fee of $500 for each committee meeting attended. Additionally, the Trust pays the Trustee who serves as Chairperson of the Audit Committee an annual fee of $2,500 and
the Trustee who serves as Chairperson of the Nominating and Governance Committee an annual fee of $1,250. The Lead Independent Trustee receives an additional annual base fee of $5,000.
Prior to January 2007, the Trust paid each Independent Trustee an annual base fee of $12,500 and a per meeting fee of $2,000 for meetings of the Board attended by the Trustee. Committee members received a fee of $500 for each committee meeting attended. Additionally, the Trust paid the Audit Committee Chairperson an annual base fee of $2,500 and the Lead Independent Trustee an additional annual base fee of $5,000.
The Trust reimburses each Trustee for travel and other out-of-pocket expenses incurred by him/her in connection with attending Board and committee meetings. Currently, the Trustees do not receive any retirement benefits or deferred compensation from the fund complex, as defined in Form N-1A under the 1940 Act.
AGGREGATE COMPENSATION TOTAL COMPENSATION
NAME OF INTERESTED TRUSTEE(3) FROM THE TRUST FROM FUND COMPLEX(2)
------------------------------ ------------------------ ---------------------
Lee T. Kranefuss $0 $0
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AGGREGATE COMPENSATION TOTAL COMPENSATION
NAME OF INDEPENDENT TRUSTEES(3) FROM THE TRUST FROM FUND COMPLEX(2)
-------------------------------- ------------------------ ---------------------
Mary G. F. Bitterman $25,000 $ 50,000
Jack S. Euphrat(4) $ 8,625 $ 17,250
A. John Gambs(5) $18,755 $ 37,511
Richard K. Lyons $26,337 $ 154,413(6)
Wendy Paskin-Jordan(5) $18,375 $ 36,750
Leo Soong $29,880 $ 59,761
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Control Persons and Principal Holders of Securities As of December 7, 2007, the shareholders below were known by the Trust to own 5% or more of the outstanding shares of the specified Fund's outstanding Premium, Institutional, Select, Trust and Aon Captives Shares, as the case may be, in the listed capacity. As of such date, the Capital Shares of the Funds have not yet commenced operations.
PERCENTAGE NATURE OF
NAME OF FUND NAME AND ADDRESS OF SHAREHOLDER OF SHARE CLASS OWNERSHIP
------------------------ --------------------------------- ---------------- -----------
Prime Money Market Fund
Capital Shares N/A N/A N/A
Institutional Shares INVESTORS BANK AND TRUST 32% Record
200 CLARENDON STREET
BOSTON, MA 02116
BANC OF AMERICA SECURITIES LLC 10% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
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PERCENTAGE NATURE OF
NAME OF FUND NAME AND ADDRESS OF SHAREHOLDER OF SHARE CLASS OWNERSHIP
-------------------------------- ----------------------------------------- ---------------- -----------
Premium Shares CHICAGO MERCANTILE EXCHANGE INC 38% Record
20 SOUTH WACKER DRIVE, SUITE 500
CHICAGO, IL 60606
MELLON FINANCIAL BANK NA 14% Record
ONE MELLON BANK CENTER
500 GRANT STREET ROOM 151-0440
PITTSBURGH, PA 15258
HARE & CO 13% Record
11 SANDERS CREEK PARKWAY
EAST SYRACUSE, NY 13057
CITIGROUP GLOBAL MARKETS INC 10% Record
333 WEST 34TH ST
NEW YORK, NY 10001
CHICAGO MERCANTILE EXCHANGE INC 6% Record
20 SOUTH WACKER DRIVE, SUITE 500
CHICAGO, IL 60606
Select Shares UNION BANK 60% Record
530 B ST
SAN DIEGO, CA 92101
BANC OF AMERICA SECURITIES LLC 36% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
BEAR STEARNS SECURITIES CORP 5% Record
ONE METROTECH CENTER NORTH
BROOKLYN, NY 11201
Trust Shares BARCLAYS CALIFORNIA CORPORATION 100% Record
33RD FLOOR 45 FREMONT STREET
SAN FRANCISCO, CA 94105
Institutional Money Market Fund
Capital Shares N/A N/A N/A
Aon Captives Shares BARCLAYS NOMINEES (MANX) LIMITED 45% Record
BARCLAYS HOUSE VICTORIA STREET, PO BOX 9
DOUGLAS ISLE OF MAN, UK IM99 1AJ
NRI INSURANCE COMPANY 28% Record
76 ST PAUL STREET SUITE 500
BURLINGTON, VT 05401-4477
BARCLAYS NOMINEES (MANX) LIMITED 11% Record
BARCLAYS HOUSE VICTORIA STREET, PO BOX 9
DOUGLAS ISLE OF MAN, UK IM99 1AJ
BOM AMBIENTE INSURANCE COMPANY 11% Record
PO BOX 69 GT
GRAND CAYMAN ISLANDS
Institutional Shares DELOITTE & TOUCHE USA LLP 21% Record
SELLS DRIVE
HERMITAGE, TN 37076
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PERCENTAGE NATURE OF
NAME OF FUND NAME AND ADDRESS OF SHAREHOLDER OF SHARE CLASS OWNERSHIP
----------------------------- --------------------------------- ---------------- -----------
TOYOTA MOTOR CREDIT CORPORATION 16%
Record
19001 SOUTH WESTERN AVE
TORRANCE, CA 90501
AT&T INC 9% Record
175 E HOUSTON ST, RM 7D9
SAN ANTONIA, TX 78205
INVESTORS BANK & TRUST 7% Record
MAIL CODE TRD 18
200 CLARENDON STREET
BOSTON, MA 02116
ELECTRIC ARTS INC 6% Record
209 REDWOOD SHORES PRKWY
REDWOOD CITY, CA 94065
BANC OF AMERICA SECURITIES LLC 5% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
Premium Shares CHICAGO MERCANTILE EXCHANGE INC 46% Record
30 SOUTH WALKER DRIVE
CHICAGO, IL 60606
CHICAGO MERCANTILE EXCHANGE INC 41% Record
30 SOUTH WALKER DRIVE
CHICAGO, IL 60606
BEAR STEARNS SECURITIES CORP 5% Record
ONE METROTECH CENTER NORTH
BROOKLYN, NY 11201
Select Shares BANC OF AMERICA SECURITIES LLC 65% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
ALMAR SALES CO 16% Record
31 WEST 34TH ST, 8TH FLR
NEW YORK, NY 10001
BEAR STEARNS SECURITIES CORP 9% Record
ONE METROTECH CENTER NORTH
BROOKLYN, NY 11201
Trust Shares FTCI AGENT REVENUE 100% Record
600 FIFTH ST
NEW YORK, NY 10020
Government Money Market Fund
Capital Shares N/A N/A N/A
Institutional Shares INTEL CORPORATION 91% Record
2200 MISSION COLLEGE BLVD
SANTA MONICA, CA 95052
MONSTER WC 7% Record
622 THIRD AVENUE, 39TH FLOOR
NEW YORK, NY 10017
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PERCENTAGE NATURE OF
NAME OF FUND NAME AND ADDRESS OF SHAREHOLDER OF SHARE CLASS OWNERSHIP
--------------------------- --------------------------------- ---------------- ------------
Premium Shares BANC OF AMERICA SECURITIES LLC 87% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
BEAR STEARNS SECURITIES CORP 7% Record
ONE METROTECH CENTER NORTH
BROOKLYN, NY 11201
Select Shares CAROLINA FIRST BANK 100% Record
1501 MAIN STREET 3RD FLOOR
COLUMBIA, SC 29201
Trust Shares BARCLAYS CALIFORNIA CORPORATION 100% Record
33RD FLOOR 45 FREMONT STREET
SAN FRANCISCO, CA 94105
Treasury Money Market Fund
Capital Shares N/A N/A N/A
Institutional Shares COUNTY OF FAIRFAX 74% Record
12000 GOVERNMENT CENTER PARKWAY
FAIRFAX, VA 22035
BANC OF AMERICA SECURITIES LLC 8% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
AMICA GENERAL AGENCY 7% Record
100 AMICA WAY
LINCOLN, RI 02865
Premium Shares PACIFIC MARITIME ASSOCIATION 99% Record
555 MARKET STREET, 3RD FLR
SAN FRANCISCO, CA 94105
MELLON BANK NA 19% Record
ONE MELLON BANK CENTER
500 GRANT STREET ROOM 151-0440
PITTSBURGH, PA 15258
Select Shares BANC OF AMERICA SECURITIES LLC 100% Record
200 N COLLEGE ST, 3RD FLR
CHARLOTTE, NC 28255
Trust Shares BARCLAYS CALIFORNIA CORPORATION 100% Record
33RD FLOOR 45 FREMONT STREET
SAN FRANCISCO, CA 94105
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For purposes of the 1940 Act, any person who owns directly or through one or more controlled companies more than 25% of the voting securities of a company is presumed to "control" such company. Accordingly, to the extent that a shareholder identified in the foregoing table is identified as the beneficial holder of more than 25% of a Fund, or is identified as the holder of record of more than 25% of a Fund and has voting and/or investment powers, such shareholder may be presumed to control such Fund.
As of December 7, 2007, Trustees and officers of the Trust, as a group, beneficially owned less than 1% of the outstanding shares of the Trust.
Investment Adviser and Other Service Providers INVESTMENT ADVISER. The Funds are feeder funds in a master/feeder structure. As a result each Fund invests all of its assets in a related Master Portfolio of MIP. The Master Portfolios have retained BGFA as the investment adviser to manage their assets.
ADVISORY FEES. BGFA is entitled to receive monthly fees at the annual rate of 0.10% of each Master Portfolio's average daily net assets. From time to time, BGFA may waive such fees in whole or in part. Any such waiver will reduce the expenses of each Master Portfolio and, accordingly, have a favorable impact on its performance. BGFA has contractually agreed to waive a portion of its advisory fees and accept payment at an annual rate of 0.07% from May 1, 2006 through April 30, 2009 with respect to each Master Portfolio. Pursuant to the advisory contracts between BGFA and the Master Portfolios ("Advisory Contracts"), BGFA furnishes MIP's Board of Trustees with periodic reports on the investment strategy and performance of the Master Portfolios.
BGFA is a wholly-owned subsidiary of BGI. BGI is a national bank which is in turn, a majority-owned subsidiary of Barclays Bank PLC.
The applicable Advisory Contract is subject to annual approval by (i) MIP's Board of Trustees or (ii) the vote of a majority (as defined in the 1940 Act) of the outstanding voting interests of such Master Portfolio, provided that in either event the continuance also is approved by a majority of MIP's Board of Trustees who are not "interested persons" (as defined in the 1940 Act) of MIP, by a vote cast in person at a meeting called for the purpose of voting on such approval. The applicable Advisory Contract is terminable without penalty, on 60 days' written notice, by either party. The applicable Advisory Contract will terminate automatically, as to the relevant Master Portfolio, in the event of its assignment (as defined in the 1940 Act).
For the fiscal period and years shown below, the related Master Portfolio of each Fund paid with respect to the Funds the following advisory fees to BGFA:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund $1,715,240 $9,771,810 $6,970,881
Institutional Money Market Fund $2,435,562 $3,442,469 $4,184,973
Government Money Market Fund* $ 0 $ 121,718 $ 119,967
Treasury Money Market Fund* $ 0 $ 0 ($23,305)
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For the fiscal period and years shown below, BGFA waived the following advisory fees with respect to the Funds:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund $3,874,593 $2,766,658 $1,703,570
Institutional Money Market Fund $2,426,836 $3,129,635 $1,272,918
Government Money Market Fund* $ 133,897 $ 799,065 $ 31,382
Treasury Money Market Fund* $ 134 $ 17,151 $ 85,545
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The fees and expenses of the Independent Trustees of MIP, counsel to the Independent Trustees of MIP, and the independent registered public accounting firm that provides audit and non-audit services in connection with the Master Portfolios (collectively referred to as the "MIP Independent Expenses") are paid directly by the Master Portfolios. For the fiscal year ended December 31, 2006, BGFA voluntarily agreed to cap the expenses of the Master Portfolios at the rate at which the Master Portfolios paid advisory fees to BGFA and, therefore, BGFA provided an offsetting credit against the advisory fees paid by the Master Portfolios in an amount equal to the MIP Independent Expenses. For the period from January 1, 2007 through April 30, 2009, each of BGI and BGFA, as applicable, has contractually undertaken to reimburse or provide an offsetting credit to each Master Portfolio for such MIP Independent Expenses.
For the fiscal period and years shown below, BGFA provided an offsetting credit, in the amounts shown, against advisory fees paid with respect to the Master Portfolios:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund N/A N/A $87,361
Institutional Money Market Fund N/A N/A $57,289
Government Money Market Fund* N/A N/A $24,138
Treasury Money Market Fund* N/A N/A $23,305
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ADMINISTRATOR. The Trust has engaged BGI to provide certain administration services to the Funds. Pursuant to an Administration Agreement with the Trust, BGI provides as administration services, among other things: supervision of the administrative operation of the Trust and the Funds, provision of management reporting and treasury administration services, financial reporting, legal and tax services, and preparation of proxy statements and shareholder reports for the Funds. BGI also furnishes office space and certain facilities required for conducting the business of the Trust together with all other administrative services that are not being furnished by the Funds' Investment Adviser. BGI also pays the compensation of the Trust's Trustees who are not Independent Trustees and of officers and employees who are affiliated with the Trust. For providing such services, BGI is entitled to a monthly fee at an annual rate of 0.05% of each Fund's average daily net assets for the Aon Captives Shares and Institutional Shares, 0.07% of each Fund's average daily net assets for the Capital Shares, 0.10% of each Fund's average daily net assets for the Premium Shares, 0.15% of each Fund's average daily net assets for the Select Shares (0.13% pursuant to BGI's contractual agreement to waive a portion of its administration fees for the Select Shares from September 1, 2006 through April 30, 2008), and 0.38% of each Fund's average daily net assets for the Trust Shares. BGI has contracted with State Street to provide certain sub-administration services to the Funds. BGI, not the Funds, is responsible for providing compensation to State Street for such services.
BGI also may engage and supervise Shareholder Servicing Agents and Servicing Agents, as defined in "Shareholder Servicing Agents" below, on behalf of the Funds.
In addition, BGI has agreed to bear all costs of the Funds' and the Trust's operations, including, in the case of each Fund's Institutional Shares, shareholder servicing fees of up to 0.05%, in the case of each Fund's Capital Shares, shareholder servicing fees of up to 0.07%, in the case of each Fund's Premium Shares, shareholder servicing fees of up to 0.10%, in the case of each Fund's Select Shares, shareholder servicing fees of up to 0.15%, and, in the case of each Fund's Trust Shares, shareholder servicing fees of up to 0.25% and processing fees of up to 0.13%, but not including brokerage expenses, advisory fees, distribution plan expenses, certain fees and expenses related to the Trust's Independent Trustees and their counsel, auditing fees, litigation expenses, taxes or other extraordinary expenses.
BGI is not entitled to compensation for providing administration services to a Master Portfolio for so long as BGI is entitled to compensation for providing administration services to the Fund that invests substantially all of its assets in the Master Portfolio, or BGI or an affiliate receives advisory fees from the Master Portfolio. Each Fund having multiple classes allocates all expenses of the Master Portfolio, including the Master Portfolio's advisory fee, to each share class in proportion to the aggregate net asset value of such class as compared to all classes of the Fund, in accordance with the Fund's multi-class plan under Rule 18f-3 under the 1940 Act.
For the fiscal period and years shown below, the Funds paid the following administration fees to BGI:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund $936,988 $2,960,690 $4,288,650
Institutional Money Market Fund $909,702 $1,247,007 $1,982,245
Government Money Market Fund* $ 162 $ 124,446 $ 127,639
Treasury Money Market Fund* $ 162 $ 1,572 ($9,603)
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For the fiscal period and years shown below, BGI waived the following administration fees with respect to the Funds:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund $1,118,034 $2,322,017 $ 462,858
Institutional Money Market Fund $ 472,072 $1,312,234 $1,182,953
Government Money Market Fund* $ 26,775 $ 163,899 $ 2,845
Treasury Money Market Fund* $ 25 $ 3,428 $ 39,028
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The fees and expenses of the Independent Trustees of the Trust, counsel to the Independent Trustees of the Trust, and the independent registered public accounting firm that provides audit and non-audit services in connection with the Funds (collectively referred to as the "BGIF Independent Expenses") are paid directly by the Funds. For the fiscal year ended December 31, 2006, BGI voluntarily agreed to provide an offsetting credit against the administration fees paid by the Funds in an amount equal to the BGIF Independent Expenses. For the period from January 1, 2007 through April 30, 2009, each of BGI and BGFA, as applicable, has contractually undertaken to reimburse or provide an offsetting credit to the Funds for such BGIF Independent Expenses.
For the fiscal period and years shown below, BGI provided an offsetting credit, in the amounts shown, against administration fees paid with respect to the Funds:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund N/A N/A $80,681
Institutional Money Market Fund N/A N/A $54,048
Government Money Market Fund* N/A N/A $17,259
Treasury Money Market Fund* N/A N/A $16,432
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DISTRIBUTOR. SEI is the distributor for the Funds' shares. SEI is a registered broker-dealer located at One Freedom Valley Drive, Oaks, PA 19456. Since 1968, SEI has been a leading provider of outsourced investment business solutions for fund administration and distribution, asset management and investment systems and processing.
SEI, as the principal underwriter of the Funds within the meaning of the 1940 Act, has entered into a distribution agreement (the "Distribution Agreement") with the Trust pursuant to which SEI has the responsibility for distributing Fund shares. The Distribution Agreement provides that SEI shall act as agent for the Funds for the sale of Fund shares, and may enter into sales support agreements with selling agents that wish to make available Fund shares to their respective customers ("Selling Agents"). BGI presently acts as a Selling Agent, but does not receive any fee from the Funds for such activities. In addition, SEI provides certain compliance related, sales related and other services for the Funds pursuant to a Service Standards Agreement with BGI, and BGI compensates SEI for these services.
INSTITUTIONAL MONEY MARKET FUND - AON CAPTIVES SHARES DISTRIBUTION PLAN. With respect solely to the Institutional Money Market Fund, the Fund has adopted a distribution plan (a "Plan") under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder for its Aon Captives Shares. The Plan was adopted by the Trust's Board of Trustees, including a majority of the Independent Trustees. The Plan was adopted because of its anticipated benefits to the Fund. The anticipated benefits include: easier and more effective management as a result of steady inflows of cash from the sale of new shares, a reduction in the expense ratio as a result of achieving economies of scale, lower transaction costs or better prices as a result of the ability to purchase larger blocks of securities, and avoidance of the forced sale of securities to meet redemptions that might adversely affect the performance of the Fund. The Institutional Money Market Fund currently does not have a distribution plan in place for its Premium, Institutional, Select, Capital or Trust Shares. Shareholders of the Premium, Institutional, Select, Capital or Trust Shares of each Fund do not pay any fees for distribution services.
Under the Plan and pursuant to the related Distribution Agreement, the Institutional Money Market Fund pays an annual fee of 0.10% of the average daily net asset value ("NAV") of the Institutional Money Market Fund's Aon Captives Shares as
compensation for distribution-related services or as reimbursement for distribution-related expenses. Aon Securities Corporation ("Aon") has executed a Selling Group Agreement with SEI that enables Aon to serve as the exclusive distributor for the Aon Captives Shares. The Aon Captives Shares are sold primarily to captive insurance companies administered by Aon Insurance Managers, the captive management and risk finance consulting arm of Aon.
For the fiscal years shown below, the Aon Captives Shares of the Institutional Money Market Fund paid the following distribution fees under the Plan:
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- ------------------- ------------------- ------------------
Institutional Money Market Fund
(Aon Captives
Shares) $84,379 $95,721 $76,420
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The actual fee payable to the Distributor by the Institutional Money Market Fund's Aon Captives Shares is determined, within such limits, from time to time by mutual agreement between the Trust and the Distributor and will not exceed the maximum sales charges payable by mutual funds sold by members of the Financial Industry Regulatory Authority ("FINRA") under the NASD Conduct Rules. The Distributor may enter into selling agreements with one or more selling agents under which such agents may receive compensation for distribution-related services from the Distributor, including, but not limited to, commissions or other payments to such agents based on the average daily net assets of Institutional Money Market Fund shares attributable to their customers. The Distributor may retain any portion of the total distribution fee payable thereunder to compensate it for distribution-related services provided by it or to reimburse it for other distribution-related expenses.
The Plan will continue in effect from year to year if such continuance is approved by a majority vote of both the Board of Trustees and, voting separately, the Independent Trustees. The Distribution Agreement related to the Plan also must be approved by such vote of the Board of Trustees and the Independent Trustees. The Distribution Agreement will terminate automatically if assigned, and may be terminated at any time, without payment of any penalty, by a vote of a majority of the outstanding voting securities of the Aon Captives Shares of the Fund or by the vote of a majority of the Independent Trustees on not more than 60 days' written notice. The Plan may not be amended to increase materially the amounts payable thereunder without the approval of a majority of the outstanding voting securities of the Fund, and no material amendment to the Plan may be made except by a majority of both the Board of Trustees and the Independent Trustees.
The Plan requires that the Treasurer of the Trust shall provide to the Trustees, and the Trustees shall review, at least quarterly, a written report of the amounts expended (and purposes therefor) under the Plan. Rule 12b-1 also requires that the selection and nomination of Independent Trustees be made by such Independent Trustees.
In addition to payments received from the Fund, selling or servicing agents may receive significant additional payments directly from BGI, BGFA, SEI or their affiliates in connection with the sale of Fund shares.
SHAREHOLDER SERVICING AGENTS. The Institutional, Premium, Select, Capital and Trust Shares of the Funds have adopted a Shareholder Servicing Plan pursuant to which they have entered into Shareholder Servicing Agreements with BGI and other entities, and BGI may enter into Shareholder Servicing Agreements with other entities (collectively, "Shareholder Servicing Agents") for the provision of certain services to Fund shareholders.
The Trust Shares of the Funds have also adopted a Shareholder Servicing and Processing Plan pursuant to which they or BGI have entered into Shareholder Servicing and Processing Agreements with certain financial institutions, securities dealers and other industry professionals (collectively, "Servicing Agents") for providing services to the Trust Class shareholders.
The Shareholder Servicing Plan services provided by BGI or Shareholder Servicing Agents may include serving as an agent of the Funds for purposes of accepting orders for purchases and redemptions of Fund shares, providing administrative support and account service such as processing purchases and redemptions of shares on behalf of individual and omnibus Fund accounts, answering shareholder inquiries, keeping records, transmitting reports and communications from the Funds, and providing reports on the status of individual and omnibus accounts.
Pursuant to its Administration Agreement with the Trust, as described in the section entitled "Administrator," BGI pays shareholder servicing fees to certain Shareholder Servicing Agents in amounts not exceeding maximum fee rates approved by the Trust's Board of Trustees, for those shareholder servicing, sub-administration, recordkeeping, sub-transfer agency and processing services that the Shareholder Servicing Agents perform for their clients that would otherwise be performed by BGI or the Funds' other
service providers. For providing some or all of these services, each Shareholder Servicing Agent is entitled to receive a monthly fee at the annual rate of up to 0.05% of the average daily value of each Fund represented by Institutional Shares owned, up to 0.07% of the average daily value of each Fund represented by the Capital Shares owned, up to 0.10% of the average daily value of each Fund represented by Premium Shares owned, up to 0.15% of the average daily value of each Fund represented by Select Shares owned, and up to 0.25% of the average daily value of each Fund represented by the Trust Shares owned during the period for which payment is being made by investors with whom the Shareholder Servicing Agent maintains a servicing relationship, or an amount that equals the maximum amount payable to the Shareholder Servicing Agent under applicable laws, regulations or rules, including the NASD Conduct Rules , whichever is less.
Pursuant to the Shareholder Servicing and Processing Plan for the Trust Shares, Servicing Agents provide personal services relating to the aggregation and processing of purchase and redemption orders, processing of dividend payments, certain sub-accounting services, transmission and receipt of funds in connection with purchase and redemption orders, verification of certain personal information in connection with the purchase or redemption of Fund shares, and generating and distributing periodic statements and other information as required. For these services, each Servicing Agent is entitled to receive a monthly fee at the annual rate of up to 0.13% of the average daily value of each Fund represented by Trust Shares owned during the period for which payment is being made by investors with whom the Servicing Agent maintains a servicing arrangement.
In addition, BGFA and/or BGI may pay significant additional amounts from their own resources to Shareholder Servicing Agents or Servicing Agents for the services described above. From time to time, BGFA, BGI and/or the Distributor may also pay significant additional amounts from their own resources to other intermediaries that perform services in connection with the sale of Fund shares.
As discussed above, BGI has agreed to pay the Shareholder Servicing Plan and Shareholder Servicing and Processing Plan fees pursuant to its Administration Agreement with the Trust. For the fiscal period and years shown below, BGI paid shareholder servicing fees on behalf of the Funds in the following amounts:
FISCAL PERIOD ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
FUND 12/31/2004 12/31/2005 12/31/2006
-------------------------------- --------------------- ------------------- ------------------
Prime Money Market Fund $403,024 $ 490,258 $937,097
Institutional Money Market Fund $578,047 $1,985,566 $477,863
Government Money Market Fund* $ 0 $ 88,500 $ 78,215
Treasury Money Market Fund* $ 0 $ 506 $ 6,934
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A Shareholder Servicing Agent (or Servicing Agent for the Trust Class) also may impose certain conditions on its customers, subject to the terms of this SAI, that are in addition to or different from those imposed by the Trust, such as requiring a minimum initial investment or payment of a separate fee for additional services.
CUSTODIAN. State Street has been retained to act as custodian for the Funds and the Master Portfolios and performs such services at 200 Clarendon Street, Boston, MA 02116. The custodian, among other things, maintains a custody account or accounts in the name of the Funds and the Master Portfolios; receives and delivers all assets for each Fund and each Master Portfolio upon purchase and upon sale or maturity, and collects and receives all income and other payments and distributions on account of the assets of the Funds and the Master Portfolios. State Street is not entitled to compensation for providing custody services to each Fund and each Master Portfolio pursuant to the Custody Agreement so long as it receives compensation from BGI for providing sub-administration services to the Trust, on behalf of the Funds.
TRANSFER AND DIVIDEND DISBURSING AGENT. State Street has also been retained to act as the transfer and dividend disbursing agent for the Funds and the Master Portfolios. For its services as transfer and dividend disbursing agent to the Funds and the Master Portfolios, State Street is paid fees based on the Funds' and the Master Portfolios' net assets. State Street is entitled to be reimbursed for out-of-pocket expenses or advances incurred by it in performing its obligations under the Transfer Agency Agreement. BGI has agreed to pay these fees and expenses pursuant to its Administration Agreement with the Trust. In addition, the Transfer Agency Agreement contemplates that State Street will be reimbursed for other expenses incurred by it at the request or with the written consent of the Funds, including, without limitation, any equipment or supplies that the Trust specifically orders or requires State Street to order.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. PricewaterhouseCoopers LLP, located at Three Embarcadero Center, San Francisco, CA 94111, serves as the independent registered public accounting firm for the Trust.
LEGAL COUNSEL. Wilmer Cutler Pickering Hale and Dorr LLP, located at 60 State Street, Boston, MA 02109, serves as legal counsel to the Trust, MIP and BGFA.
Determination of Net Asset Value
The Master Portfolios use the amortized cost method to determine the value of
their respective securities pursuant to Rule 2a-7 under the 1940 Act. The
amortized cost method involves valuing a security at its cost and amortizing
any discount or premium over the period until maturity, regardless of the
impact of fluctuating interest rates on the market value of the security. While
this method provides certainty in valuation, it may result in periods during
which the value, as determined by amortized cost, is higher or lower than the
price that the Funds would receive if the security were sold. During these
periods the yield to a shareholder may differ somewhat from that which could be
obtained from a similar fund that uses a method of valuation based upon market
prices. Thus, during periods of declining interest rates, if the use of the
amortized cost method results in a lower value of each Fund's portfolio on a
particular day, a prospective investor in the Funds would be able to obtain a
somewhat higher yield than would result from making an investment in the Funds
using solely market values, and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.
Rule 2a-7 provides that in order to value their portfolios using the amortized cost method, the Funds must maintain a dollar-weighted average portfolio maturity of 90 days or less, purchase securities having remaining maturities (as defined in Rule 2a-7) of 397 calendar days (about 13 months) or less and invest only in those high-quality securities that are determined by the Board of Trustees to present minimal credit risks. The maturity of an instrument is generally deemed to be the period remaining until the date when the principal amount thereof is due or the date on which the instrument is to be redeemed. However, Rule 2a-7 provides that the maturity of an instrument may be deemed shorter in the case of certain instruments, including certain variable- and floating-rate instruments subject to demand features. Pursuant to Rule 2a-7, the Board is required to establish procedures designed to stabilize, to the extent reasonably possible, each Fund's price per share as computed for the purpose of sales and redemptions at $1.00. Such procedures include review of each Fund's portfolio holdings by the Board of Trustees, at such intervals as it may deem appropriate, to determine whether a Fund's net asset value calculated by using available market quotations deviates from the $1.00 per share based on amortized cost. The extent of any deviation will be examined by the Board of Trustees. If such deviation exceeds 1/2 of 1%, the Board will promptly consider what action, if any, will be initiated. In the event the Board determines that a deviation exists that may result in material dilution or other unfair results to shareholders, the Board will take such corrective action as it regards as necessary and appropriate, including the sale of portfolio instruments prior to maturity to realize capital gains or losses or to shorten average portfolio maturity, withholding dividends or establishing a net asset value per share by using available market quotations.
Purchase, Redemption and Pricing of Shares TERMS OF PURCHASE AND REDEMPTION. The Funds are generally open Monday through Friday and are closed on weekends and are generally closed on all other days that the Fedwire Funds Service (the "Fedwire") is closed or the primary markets for the Master Portfolios' portfolio securities are closed. The Institutional Money Market Fund and the Prime Money Market Fund do not intend to (but reserve the right to) close early on a Business Day prior to a U.S. national holiday for the bond markets if the bond markets close early on such Business Day. The Government Money Market Fund and the Treasury Money Market Fund generally will close early on a Business Day prior to a U.S. national holiday for the bond markets if the bond markets close early on such Business Day. The holidays on which the Fedwire is closed currently are: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. Each Fund reserves the right to change the amount of the minimum investment and subsequent purchases in the Fund. An investor's investment in the Funds and/or other investment vehicles managed or maintained by BGFA or its affiliates may be aggregated when determining whether an investor meets a minimum investment amount. The minimum initial investment amounts for the classes of the Funds may be reduced or waived by BGFA. On any day a Fund closes early, purchase and redemption orders received after the Funds' closing time will be executed on the next business day. In addition, the Funds reserve the right to advance the time by which purchase and redemption orders must be received to be executed on the same business day as permitted by the SEC and applicable law.
IN-KIND PURCHASES. Payment for shares of the Funds may, at the discretion of
BGFA, be made in the form of securities that are permissible investments for
the Funds and must meet the investment objectives, policies and limitations of
the Funds as described in their Prospectuses. In connection with an in-kind
securities payment, the Funds 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 Funds or the Master Portfolios; (ii) are accompanied by
satisfactory assurance that the Funds will have good and marketable title to
such securities received by them; (iii) are not subject to any restrictions
upon resale by the Funds; (iv) be in proper form for transfer to the Funds; 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
Funds engaged in the in-kind purchase transaction and must be delivered to such
Fund or Funds 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. A Fund immediately will transfer to its Master Portfolio any
and all securities received by it in connection with an in-kind purchase
transaction, in exchange for interests in such Master Portfolio. Shares
purchased in exchange for securities generally cannot be redeemed until the
transfer has settled.
SUSPENSION OF REDEMPTION RIGHTS OR PAYMENT OF REDEMPTION PROCEEDS. The Trust
may suspend the right of redemption or postpone redemption payments for one day
or longer than one day for any period during which (i) the New York Stock
Exchange (the "NYSE") is closed (other than customary weekend and holiday
closings); (ii) trading on the NYSE is restricted; (iii) an emergency exists as
a result of which disposal or valuation of a Master Portfolio's investments is
not reasonably practicable; or (iv) for such other periods as the SEC by order
may permit. Each Fund reserves the right to suspend investors' rights of
redemption and to delay delivery of redemption proceeds, as permitted under
Section 22(e) of the 1940 Act, and other applicable laws.
Portfolio Transactions
Since the Funds invest all of their assets in portfolios of MIP, set forth
below is a description of the Master Portfolios' policies governing portfolio
securities transactions.
GENERAL. BGFA assumes general supervision over placing orders for the purchase and sale of portfolio securities. In selecting brokers or dealers for any transaction in portfolio securities, BGFA's policy is to make such selection based on factors deemed relevant, including but not limited to, the breadth of the market in the security, the price of the security, the reasonableness of the commission or mark-up or mark-down, if any, execution capability, settlement capability, back office efficiency and the financial condition of the broker or dealer, both for the specific transaction and on a continuing basis. 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 may also be selected because of their ability to handle special or difficult executions, such as may be involved in large block trades, less liquid securities, broad distributions, or other circumstances. While BGFA generally seeks reasonably competitive spreads on commissions, each Master Portfolio will not necessarily be paying the lowest spread on commission available.
BGFA does not consider the provision or value of research, products or services a broker or dealer may provide, if any, as a factor in the selection of a broker or dealer or the determination of the reasonableness of commissions paid in connection with portfolio transactions. The Master Portfolios have adopted policies and procedures that prohibit the consideration of sales of a Master Portfolio's interests or a Fund's shares as a factor in the selection of a broker or a dealer to execute its portfolio transactions.
Purchases and sales of fixed income securities for the Master Portfolios usually are principal transactions and ordinarily are purchased directly from the issuer or from an underwriter or broker-dealer. The Master Portfolios do not usually pay brokerage commissions in connection with such purchases and sales, but such transactions may be subject to mark-ups or mark-downs. A Master Portfolio's purchase and sale orders for securities may be combined with those of other accounts that BGFA manages or advises, and for which it has brokerage placement authority. If purchases or sales of portfolio securities of a Master Portfolio and one or more other accounts managed or advised by BGFA are considered at or about the same time, transactions in such securities are allocated among the Master Portfolio and the other accounts in a manner deemed equitable to all by BGFA. In some cases, this procedure could have a detrimental effect on the price or volume of the security as far as a Master Portfolio is concerned. However, in other cases, it is possible that the ability to participate in volume transactions and to negotiate lower brokerage commissions will be beneficial to a Master Portfolio. BGFA may deal, trade and invest for its own account in the types of securities in which the Master Portfolios may invest. BGFA may, from time to time, effect trades on behalf of and for the account of a Master Portfolio with brokers or dealers that are affiliated with BGFA, in conformity with the 1940 Act and SEC rules and regulations. Under these provisions, any commissions paid to affiliated brokers or dealers must be reasonable and fair compared to
the commissions charged by other brokers or dealers in comparable transactions. The Master Portfolios will not deal with affiliates in principal transactions unless permitted by applicable SEC rule or regulation or by SEC exemptive order.
PORTFOLIO TURNOVER. Portfolio turnover may vary from year to year, as well as within a year. Because the portfolios of the Funds consist of securities with relatively short-term maturities, the Funds expect to experience high portfolio turnover. A high portfolio turnover rate should not adversely affect the Funds since portfolio transactions ordinarily will be made directly with principals on a net basis and, consequently, the Funds usually will not incur brokerage expenses or excessive transaction costs.
SECURITIES OF REGULAR BROKER-DEALERS. As of December 31, 2006, none of the Master Portfolios owned securities of their "regular brokers or dealers" (as defined in the 1940 Act), or their parents, except as disclosed below:
MASTER PORTFOLIO REGULAR BROKER-DEALER OR PARENT AMOUNT
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Prime Money Market Master Portfolio Citigroup Global Markets Holdings Inc. $ 400,000,000
Morgan Stanley $ 100,000,000
Merrill Lynch & Co. Inc. $ 65,000,000
Money Market Master Portfolio Merrill Lynch & Co. Inc. $ 60,000,000
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FREQUENT TRADING OF FUND SHARES. Frequent purchases and redemptions of mutual fund shares ("frequent trading") may have a detrimental effect on funds and their shareholders. Depending on various factors, such as the size of a fund's portfolio and the amount of assets maintained in cash, frequent trading may harm the performance of a fund by interfering with the implementation of its investment strategies and/or increasing transaction costs and taxes, and/or may dilute the value of fund shares held by long-term investors. Frequent trading may include activity that appears to attempt to take advantage of a potential arbitrage opportunity presented by a lag between a change in the value of a fund's portfolio securities after the close of the primary markets for those portfolio securities and the reflection of that change in the fund's net asset value ("market timing").
The Funds invest only in interests of the Master Portfolios, and the Boards of Trustees of the Trust and MIP have each considered the issues of frequent trading and market timing, including the fact that money market funds are a type of mutual fund that is designed to offer maximum liquidity. MIP's Board of Trustees has adopted a policy of not monitoring for possible market timing or any other frequent trading activity because of the investment objectives and strategies of the Master Portfolios. The Trust's Board of Trustees has not adopted a policy of monitoring for market timing or other frequent trading activity in the Funds in light of the nature of the Funds' investments in Master Portfolios, the policies of the Master Portfolios, and the historical nature of flows into and out of the Funds.
Distributions and Taxes
The following information supplements, and should be read in conjunction with,
the section in each Prospectus entitled "Taxes." The Prospectuses generally
describe the U.S. federal income tax treatment of distributions by the Funds.
This section of the SAI provides additional information concerning U.S. federal
income taxes. It is based on the U.S. Internal Revenue Code of 1986, as amended
(the "IRC"), applicable Treasury Regulations, judicial authority, and
administrative rulings and practice, all as of the date of this SAI and all of
which are subject to change, including changes with retroactive effect. The
following discussion does not address any state, local or foreign tax matters.
A shareholder's tax treatment may vary depending upon his or her particular situation. This discussion only applies to shareholders who are U.S. persons, I.E., U.S. citizens or residents or U.S. corporations, partnerships, trusts or estates, and who are subject to U.S. federal income tax and hold Fund shares as capital assets within the meaning of the IRC. Except as otherwise noted, it may not apply to certain types of shareholders who may be subject to special rules, such as insurance companies, tax-exempt organizations, shareholders holding Fund shares through tax-advantaged accounts (such as 401(k) plan accounts or individual retirement accounts ("IRAs")), financial institutions, broker-dealers, entities that are not organized under the laws of the United States or a political subdivision thereof, persons who are neither citizens nor residents of the United States, shareholders holding Fund shares as part of a hedge, straddle or conversion transaction, and shareholders who are subject to the U.S. federal alternative minimum tax.
The Trust has not requested and will not request an advance ruling from the Internal Revenue Service (the "IRS") as to the U.S. federal income tax matters described below. The IRS could adopt positions contrary to those discussed below and such positions could be sustained. In addition, the foregoing discussion and the discussions in the Prospectuses applicable to each shareholder
address only some of the U.S. federal income tax considerations generally affecting investments in the Funds. Prospective shareholders are urged to consult with their own tax advisers and financial planners as to the particular U.S. federal tax consequences to them of an investment in the Funds, as well as the applicability and effect of any state, local or foreign laws, and the effect of possible changes in applicable tax laws.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund has elected to be treated, has qualified and intends to continue to qualify each year, as a "regulated investment company" under Subchapter M of the IRC as long as such qualification is in the best interests of the Fund's shareholders. Each Fund will be treated as a separate entity for U.S. federal income tax purposes. Thus, the provisions of the IRC applicable to regulated investment companies generally will apply separately to each Fund, even though each Fund is a series of a trust. Furthermore, each Fund separately determines its income, gains, losses and expenses for U.S. federal income tax purposes.
In order to qualify as a regulated investment company under the IRC, each Fund must, among other things, derive at least 90% of its annual gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income attributable to its business of investing in such stock, securities or foreign currencies (including, but not limited to, gains from options, futures or forward contracts) and net income derived from an interest in a qualified publicly traded partnership (as defined in Section 851(h) of the IRC). Pursuant to regulations that may be promulgated in the future, the IRS may limit qualifying income from foreign currency gains to the amount of such currency gains that are directly related to a regulated investment company's principal business of investing in stock or securities. Each Fund must also diversify its holdings so that, at the end of each quarter of each taxable year: (i) at least 50% of the value of its assets consists of (A) cash and cash items (including receivables), U.S. government securities and securities of other regulated investment companies, and (B) other securities, with such other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of the Fund's total assets and to not more than 10% of the outstanding voting securities of such issuer and (ii) not more than 25% of the value of the Fund's total assets is invested in (A) the securities (other than U.S. government securities and securities of other regulated investment companies) of any one issuer, (B) the securities (other than the securities of other regulated investment companies) of two or more issuers that the Fund controls and that are engaged in the same, similar, or related trades or businesses, or (C) the securities of one or more qualified publicly traded partnerships. The qualifying income and diversification requirements applicable to a Fund may limit the extent to which it can engage in transactions in options, futures contracts, forward contracts and swap agreements.
In addition, each Fund generally must distribute to its shareholders an amount
equal to or exceeding the sum of (i) 90% of its "investment company taxable
income," as that term is defined in the IRC (which generally includes, among
other things, dividends, taxable interest, and the excess of any net short-term
capital gains over net long-term capital losses, as reduced by certain
deductible expenses) without regard to the deduction for dividends paid and
(ii) 90% of its net tax-exempt income earned in each taxable year. A Fund
generally will not be subject to U.S. federal income tax on the investment
company taxable income and "net capital gain" (I.E., the excess of net
long-term capital gain over net short-term capital loss) it distributes to its
shareholders. Although dividends generally will be treated as distributed when
paid, if a Fund declares a distribution to shareholders of record in October,
November or December of one year and pays the distribution by January 31 of the
following year, the Fund and its shareholders will be treated as if the Fund
paid the distribution by December 31 of the calendar year in which it was
declared. Each Fund intends to distribute its net income and gain in a timely
manner to maintain its status as a regulated investment company and eliminate
fund-level U.S. federal income taxation of such income and gain. However, no
assurance can be given that a Fund will not be subject to U.S. federal income
taxation.
If, in any taxable year, a Fund fails to qualify as a regulated investment company under the IRC or fails to meet the distribution requirements described above, the Fund would be taxed in the same manner as an ordinary U.S. corporation without any deduction for distributions to shareholders, and all distributions from the Fund's earnings and profits (including any distributions of net tax-exempt income and net long-term capital gains) to its shareholders would also be taxable as ordinary income at the shareholder level. To qualify again to be taxed as a regulated investment company in a subsequent year, the Fund may be required to pay an interest charge and penalty to the IRS as well as distribute to its shareholders its earnings and profits attributable to non-regulated investment company years. In addition, if the Fund fails to qualify as a regulated investment company for a period greater than two taxable years, the Fund may be required to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if the Fund had been liquidated) or, alternatively, to be subject to taxation on such built-in gain recognized for a period of ten years, in order to qualify as a regulated investment company in a subsequent year.
EXCISE TAX. A 4% non-deductible excise tax will be imposed on each Fund to the extent it fails to distribute during each calendar year (1) at least 98% of its ordinary income (excluding capital gains and losses) for the calendar year, (2) at least 98% of its net capital gain income for the 12 month period ending on October 31, and (3) all of its ordinary income and net capital gain income from previous years that were not distributed or subject to tax during such years. Each Fund intends to actually or be deemed to distribute substantially all of its net income and gains, if any, by the end of each calendar year and, thus, expects not to be subject to the excise tax. However, no assurance can be given that a Fund will not be subject to the excise tax.
CAPITAL LOSS CARRY-FORWARDS. A Fund is permitted to carry forward a net capital loss from any year to offset its capital gains, if any, realized during the eight years following the year of the loss. A Fund's capital loss carry-forward is treated as a short-term capital loss in the year to which it is carried. If future capital gains are offset by carried-forward capital losses, such future capital gains are not subject to Fund-level U.S. federal income taxation, regardless of whether they are distributed to shareholders. Accordingly, the Funds do not expect to distribute such capital gains. The Funds cannot carry back or carry forward any net operating losses. As a money market fund, each Fund does not expect to have material capital loss carry-forwards, but no assurance can be given to this effect.
As of December 31, 2006, the following Fund had capital loss carry-forwards approximating the amount indicated for U.S. federal income tax purposes and expiring in the year indicated, as follows:
EXPIRING
FUND 12/31/2014
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Institutional Money Market Fund $818
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INVESTMENT THROUGH THE MASTER PORTFOLIOS. The Funds seek to continue to qualify as regulated investment companies by investing their assets through the Master Portfolios. Each Master Portfolio is treated as a non-publicly traded partnership (or, in the event that a Fund is the sole investor in a Master Portfolio, as disregarded from the Fund) for U.S. federal income tax purposes rather than as a regulated investment company or a corporation under the IRC. Under the rules applicable to a non-publicly traded partnership (or disregarded entity), a proportionate share of any interest, dividends, gains and losses of a Master Portfolio will be deemed to have been realized by (I.E., "passed-through" to) its investors, including the corresponding Fund, regardless of whether any amounts are actually distributed by the Master Portfolio. Each investor in a Master Portfolio will be taxable on such share, as determined in accordance with the governing instruments of the particular Master Portfolio, the IRC and Treasury Regulations. Therefore, to the extent that a Master Portfolio were to accrue but not distribute any income or gains, the corresponding Fund would be deemed to have realized its proportionate share of such income or gains without receipt of any corresponding distribution. However, each of the Master Portfolios will seek to minimize recognition by its investors (such as the Funds) of income and gains without a corresponding distribution. Furthermore, each Master Portfolio's assets, income and distributions will be managed in such a way that an investor in a Master Portfolio will be able to continue to qualify as a regulated investment company by investing its assets through the Master Portfolio.
TAXATION OF FUND INVESTMENTS. In general, if a Fund realizes gains or losses on the sale of portfolio securities, such gains or losses are capital gains or losses. If the Fund has held the disposed securities for more than one year at the time of disposition, such gains and losses generally are treated as long-term capital gains or losses.
If a Fund purchases a debt obligation with original issue discount ("OID"), generally at a price less than its principal amount, such as a zero-coupon bond, the Fund may be required to annually include in its taxable income a portion of the OID as ordinary income, even though the Fund will not receive cash payments for such discount until maturity or disposition of the obligation. A portion of the OID includible in income with respect to certain high-yield corporate debt securities may be treated as a dividend for U.S. federal income tax purposes. Gains recognized on the disposition of a debt obligation (including a municipal obligation) purchased by a Fund at a market discount, generally at a price less than its principal amount, generally will be treated as ordinary income to the extent of the portion of market discount which accrued, but was not previously recognized pursuant to an available election, during the term that the Fund held the debt obligation. A Fund generally will be required to make distributions to shareholders representing the OID on debt securities that is currently includible in income, even though the cash representing such income may not have been received by the Fund. Cash to pay such distributions may be obtained from borrowing or from sales proceeds of securities held by a Fund which the Fund otherwise might have continued to hold.
If an option granted by a Fund lapses or is terminated through a closing transaction, such as a repurchase by the Fund of the option from its holder, the Fund generally will realize a short-term capital gain or loss, depending on whether the premium income is greater or less than the amount paid by the Fund in the closing transaction. If securities are sold by a Fund pursuant to the
exercise of a call option granted by it, the Fund will add the premium received to the sale price of the securities delivered in determining the amount of gain or loss on the sale. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund will subtract the premium received from its cost basis in the securities purchased.
Foreign exchange gains and losses realized by a Fund in connection with certain transactions involving foreign currency-denominated debt securities, certain options and futures contracts relating to foreign currency, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currency are subject to Section 988 of the IRC, which generally causes such gains and losses to be treated as ordinary income and losses and may affect the amount and timing of recognition of the Fund's income. Under Treasury Regulations that may be promulgated in the future, any such transactions that are not directly related to a Fund's principal business of investing in stock or securities (or its options contracts or futures contracts with respect to stock or securities) may have to be limited in order to enable the Fund to satisfy the 90% income test described above. If the net foreign exchange loss for a year exceeds a Fund's investment company taxable income (computed without regard to such loss), the resulting ordinary loss for such year will not be deductible by the Fund or its shareholders in future years.
If a Fund enters into a "constructive sale" of any appreciated financial position in stock, a partnership interest, or certain debt instruments, the Fund will be treated as if it had sold and immediately repurchased the property and must recognize gain (but not loss) with respect to that position. A constructive sale occurs when a Fund enters into one of the following transactions with respect to the same or substantially identical property: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv) other transactions identified in Treasury Regulations that may be promulgated in the future. The character of the gain from constructive sales will depend upon a Fund's holding period in the property. Losses from a constructive sale of property will be recognized when the property is subsequently disposed of. The character of such losses will depend upon a Fund's holding period in the property and the application of various loss deferral provisions in the IRC. Constructive sale treatment does not apply to a transaction if such transaction is closed before the end of the 30th day after the close of the Fund's taxable year, the Fund holds the appreciated financial position throughout the 60-day period beginning with the day such transaction was closed, and the Fund's risk of loss with respect to such position is not reduced at any time during such 60-day period.
In addition to the investments described above, prospective shareholders should be aware that other investments made by the Funds may involve sophisticated tax rules that may result in income or gain recognition by the Funds without corresponding current cash receipts. Although the Funds seek to avoid significant non-cash income, such non-cash income could be recognized by the Funds, in which case the Funds may distribute cash derived from other sources in order to meet the minimum distribution requirements described above. In this regard, the Funds could be required at times to liquidate investments prematurely in order to satisfy their minimum distribution requirements.
TAXATION OF DISTRIBUTIONS. For U.S. federal income tax purposes, a Fund's earnings and profits, described above, are determined at the end of the Fund's taxable year and are allocated pro rata to distributions made throughout the entire year. All distributions paid out of a Fund's earnings and profits (as determined at the end of the year), whether paid in cash or reinvested in the Fund, generally are deemed to be taxable distributions and must generally be reported on each Fund shareholder's U.S. federal income tax return. Distributions in excess of a Fund's earnings and profits will first be treated as a return of capital up to the amount of a shareholder's tax basis in the shareholder's Fund shares and any such amount in excess of that basis as capital gain from the sale of shares, as discussed below. A Fund may make distributions in excess of earnings and profits to a limited extent, from time to time.
In general, assuming that each Fund has sufficient earnings and profits, distributions from investment company taxable income are taxable as ordinary income. Since each Fund's income is derived from sources that do not pay "qualified dividend income," as defined in Section 1(h)(11)(B) of the IRC, distributions from investment company taxable income of the Funds generally will not qualify for taxation at the maximum 15% U.S. federal income tax rate available to individuals on qualified dividend income.
Distributions designated by a Fund as a capital gain dividend, if any, will be taxed to shareholders as long-term capital gain (to the extent such distributions do not exceed the Fund's actual net capital gain for the taxable year), regardless of how long a shareholder has held Fund shares. Each Fund will designate capital gains dividends, if any, in a written notice mailed by the Fund to its shareholders not later than 60 days after the close of a Fund's taxable year.
Distributions from each Fund paid to corporate shareholders are not expected to qualify for the dividends-received deductions generally available to corporate taxpayers. The U.S. federal income tax status of all distributions will be reported to shareholders annually.
Some states will not tax distributions made to individual shareholders that are attributable to interest a Fund earned on direct obligations of the U.S. government if the Fund meets the state's minimum investment or reporting requirements, if any. Investments in GNMA or FNMA securities, bankers' acceptances, commercial paper and repurchase agreements collateralized by U.S. government securities generally do not qualify for tax-free treatment. This exemption may not apply to corporate shareholders.
SALES OF FUND SHARES. Redemptions generally are taxable events for shareholders that are subject to tax. Shareholders should consult their own tax adviser with reference to their individual circumstances to determine whether any particular transaction in Fund shares is properly treated as a sale for tax purposes, as the following discussion assumes, and the tax treatment of any gains or losses recognized in such transaction. In general, if Fund shares are sold, a shareholder will recognize gain or loss equal to the difference between the amount realized on the sale and the shareholder's adjusted tax basis in the shares. As long as the Funds maintain a constant net asset value of $1.00 per share, generally no gain or loss should be recognized upon the sale of Fund shares. If a shareholder recognizes gain or loss on the sale of Fund shares, this gain or loss will be long-term capital gain or loss if the shareholder has held such Fund shares for more than one year at the time of the sale. If a shareholder receives a capital gain dividend with respect to any Fund share and such Fund share is held for six months or less, then (unless otherwise disallowed) any loss on the sale or exchange of that Fund share will be treated as a long-term capital loss to the extent of the capital gain dividend. Losses on redemptions or other dispositions of shares may be disallowed under "wash sale" rules in the event of other investments in the same Fund (including those made pursuant to reinvestment of dividends and/or capital gain distributions) within a period of 61 days beginning 30 days before and ending 30 days after a redemption or other disposition of shares. In such a case, the disallowed portion of any loss generally would be included in the U.S. federal tax basis of the shares acquired in the other investments.
FOREIGN TAXES. Amounts realized by a Fund on foreign securities may be subject to withholding and other taxes imposed by foreign countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If more than 50% of the value of a Fund's total assets at the close of its taxable year were to consist of securities of non-U.S. corporations, the Fund would be eligible to file an annual election with the IRS pursuant to which the Fund could pass-through to its shareholders on a pro rata basis foreign income and similar taxes paid by the Fund, which could be claimed, subject to certain limitations, either as a tax credit or deduction by shareholders. However, none of the Funds expects to qualify for this election.
FEDERAL INCOME TAX RATES. As of the date of this SAI, the maximum stated individual U.S. federal income tax rate applicable to (i) ordinary income generally is 35%; (ii) capital gain dividends is 15%; and (iii) long-term capital gains generally is 15%.
The current maximum stated corporate U.S. federal income tax rate applicable to ordinary income, capital gain dividends, and long-term capital gains generally is 35%. Actual marginal tax rates may be higher for some shareholders, for example, through reductions in deductions. Naturally, the amount of tax payable by any taxpayer will be affected by a combination of tax laws covering, for example, deductions, credits, deferrals, exemptions, sources of income and other matters. U.S. federal income tax rates are set to increase in future years under various "sunset" provisions of laws enacted in 2001 and 2003.
BACKUP WITHHOLDING. The Trust may be required to withhold, subject to certain exemptions, at a rate of 28% ("backup withholding") on all distributions and redemption proceeds (including proceeds from exchanges and redemptions in-kind) paid or credited to a Fund shareholder, unless the shareholder generally certifies under penalties of perjury that the "taxpayer identification number" ("TIN"), generally the shareholder's social security or employer identification number, provided is correct and that the shareholder is not subject to backup withholding, or the IRS notifies the Fund that the shareholder's TIN is incorrect or that the shareholder is subject to backup withholding. This tax is not an additional U.S. federal income tax imposed on the shareholder, and the shareholder may claim the tax withheld as a tax payment on his or her federal income tax return, provided that the required information is furnished to the IRS. An investor must provide a valid TIN upon opening or reopening an account. If a shareholder fails to furnish a valid TIN upon request, the shareholder can also be subject to IRS penalties. The rate of backup withholding is set to increase in future years under "sunset" provisions of a law enacted in 2001.
TAX-DEFERRED PLANS. Shares of the Funds may be available for a variety of tax-deferred retirement and other tax-advantaged plans and accounts, including IRAs, Simplified Employee Pension Plans ("SEP-IRAs"), Savings Incentive Match Plans for Employees ("SIMPLE Plans"), Roth IRAs, and Coverdell Education Savings Accounts. Prospective investors should contact their tax advisers and financial planners regarding the tax consequences to them of holding Fund shares through a tax-advantaged plan or account.
FOREIGN SHAREHOLDERS. With respect to taxable years of a Fund beginning on or after January 1, 2005 and before January 1, 2008, certain distributions, if designated by a Fund as "interest-related dividends," that are generally attributable to the Fund's net interest income earned on certain debt obligations paid to a non-resident alien individual, foreign trust (I.E., a trust other than a
trust which a U.S. court is able to exercise primary supervision over administration of that trust and one or more U.S. persons have authority to control substantial decisions of that trust), foreign estate (I.E., the income of which is not subject to U.S. tax regardless of source) or a foreign corporation (each, a "foreign shareholder") generally will be exempt from U.S. federal income tax withholding tax, provided the Fund obtains a properly completed and signed certificate of foreign status from such foreign shareholder ("exempt foreign shareholder"). Each Fund may choose to designate any interest-related dividends in a written notice mailed by the Fund to its shareholders not later than 60 days after the close of the Fund's taxable year. Other distributions made to exempt foreign shareholders attributable to net investment income, such as dividends received by a Fund, generally will be subject to non-refundable U.S. federal income tax withholding at a 30% rate (or a lower rate if so provided under an applicable income tax treaty). Notwithstanding the foregoing, if a distribution described above is "effectively connected" with a U.S. trade or business (or, if an income tax treaty applies, is attributable to a permanent establishment) of the recipient foreign shareholder, U.S. federal income tax withholding and exemptions attributable to foreign persons will not apply and the distribution will be subject to the tax, reporting and withholding requirements generally applicable to U.S. persons.
In general, a foreign shareholder's capital gains realized on the disposition of Fund shares, capital gain distributions and, with respect to taxable years of a Fund beginning on or after January 1, 2005 and before January 1, 2008, "short-term capital gain distributions" (defined below) are not subject to U.S. federal income tax withholding, provided that the Fund obtains a properly completed and signed certificate of foreign status, unless: (i) such gains or distributions are "effectively connected" with a U.S. trade or business (or, if an income tax treaty applies, are attributable to a permanent establishment) of the foreign shareholder; (ii) in the case of an individual foreign shareholder, the shareholder is present in the U.S. for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met; or (iii) with respect to taxable years of a Fund beginning on or after January 1, 2005, and before January 1, 2008, such gains or distributions are attributable to gain from the sale or exchange of a U.S. real property interest. If such gains or distributions are "effectively connected" with a U.S. trade or business or are attributable to a U.S. permanent establishment of the foreign shareholder pursuant to an income tax treaty, the tax, reporting and withholding requirements applicable to U.S. persons generally apply. If such gains or distributions are not "effectively connected" for this purpose, but the foreign shareholder meets the requirements of clause (ii) described above, such gains and distributions will be subject to U.S. federal income tax withholding tax at a 30% rate (or a lower rate if so provided under an applicable income tax treaty). Gains or distributions attributable to gain from sales or exchanges of U.S. real property interests are taxed to a foreign shareholder as if that gain were "effectively connected" with the shareholder's conduct of a U.S. trade or business, and therefore such gains or distributions may be required to be reported by a foreign shareholder on a U.S. federal income tax return. Such gains or distributions also will be subject to U.S. federal income tax at the rates applicable to U.S. holders and/or may be subject to U.S. federal income tax withholding. While the Funds do not expect Fund shares to constitute U.S. real property interests, a portion of a Fund's distributions may be attributable to gain from the sale or exchange of U.S. real property interests. Foreign shareholders should contact their tax advisers and financial planners regarding the tax consequences to them of such distributions. "Short-term capital gain distributions" are certain distributions that a Fund may choose to designate as such in a written notice mailed by the Fund to its shareholders not later than 60 days after the close of the Fund's taxable year generally attributable to the Fund's net short-term capital gain.
If a foreign shareholder is a resident of a foreign country but is not a citizen or resident of the United States at the time of the shareholder's death, Fund shares will be deemed to be property situated in the United States and will be subject to U.S. federal estate taxes (at current graduated rates of 18% to 45% of the total value, less allowable deductions and credits). With respect to estates of decedents dying after December 31, 2003, and before January 1, 2008, if a foreign shareholder is a resident of a foreign country but is not a citizen or resident of the United States at the time of the shareholder's death, Fund shares will not be deemed to be property situated in the United States in the proportion that, at the end of the quarter of the Fund's taxable year immediately preceding the shareholder's date of death, the assets of the Fund that were "qualifying assets" (I.E., bank deposits, debt obligations or property not within the United States) with respect to the decedent bore to the total assets of the Fund. In general, no U.S. federal gift tax will be imposed on gifts of Fund shares made by foreign shareholders.
The availability of reduced U.S. taxes pursuant to the 1972 Convention or the applicable estate tax convention depends upon compliance with established procedures for claiming the benefits thereof, and may, under certain circumstances, depend upon the foreign shareholder making a satisfactory demonstration to U.S. tax authorities that the shareholder qualifies as a foreign person under U.S. federal income tax laws and the 1972 Convention.
Special rules apply to foreign partnerships and those holding Fund shares through foreign partnerships.
Capital Stock
As of the date of this SAI, the beneficial interests in the Trust are divided
into transferable shares of eleven separate and distinct series authorized and
established by the Board of Trustees. The number of shares of each series, and
class thereof, is unlimited and each share has no par value. The Board of
Trustees may, in the future, authorize the issuance of other series
representing shares of additional investment portfolios or funds.
Although the Trust is not required to hold regular annual shareholder meetings, occasional annual or special meetings may be required for purposes such as electing and removing Trustees, approving advisory contracts, and changing a Fund's investment objective or fundamental investment policies.
VOTING. All shares of the Trust have equal voting rights and will be voted separately by individual series, except: (i) when required by the 1940 Act, shares will be voted in the aggregate and not by individual series; and (ii) when the Trustees have determined that the matter affects the interests of more than one series, then the shareholders of all such affected series will be entitled to vote thereon in the aggregate and not by individual series. The Trustees also may determine that a matter affects only the interests of one or more classes of a series, in which case any such matter will be voted on separately by such class or classes. For example, a change in a Fund's fundamental investment policy would be voted upon only by shareholders of that Fund. Additionally, approval of a Master Portfolio's Advisory Contract is a matter to be determined separately by each Master Portfolio. Approval by the shareholders of a Fund is effective as to that Fund whether or not sufficient votes are received from the shareholders of the other investment portfolios to approve the proposal as to those investment portfolios. As used in the Prospectuses of each Fund and in this SAI, the term "1940 Act majority," when referring to approvals to be obtained from shareholders of a Fund, means the vote of the lesser of (i) 67% of the shares of the Fund represented at a meeting if the holders of more than 50% of the outstanding shares of the Fund are present in person or by proxy, or (ii) more than 50% of the outstanding shares of the Fund. The term "majority," when referring to the approvals to be obtained from shareholders of the Trust as a whole, means the vote of the lesser of (i) 67% of the Trust's shares represented at a meeting if the holders of more than 50% of the Trust's outstanding shares are present in person or by proxy, or (ii) more than 50% of the Trust's outstanding shares.
Each share will entitle the holder thereof to one vote for each dollar (and each fractional dollar thereof) of NAV (number of shares owned times NAV per share) of shares outstanding in such holder's name on the books of the Trust. There shall be no cumulative voting in the election of Trustees. For additional voting information and a discussion of the possible effects of changes to a Master Portfolio's objective or policies on a Fund, as an interestholder in the Master Portfolio, or the Fund's shareholders, see "Master/ Feeder Structure" above.
The Trust may dispense with an annual meeting of shareholders in any year in which it is not required to elect Trustees under the 1940 Act. However, the Trust will hold a special meeting of its shareholders for the purpose of voting on the question of removal of a Trustee or Trustees if requested in writing by the holders of at least 10% of the Trust's outstanding voting securities, and to assist in communicating with other shareholders as required by Section 16(c) of the 1940 Act.
DIVIDENDS AND DISTRIBUTIONS. Each share of a Fund represents an equal proportional interest in the Fund with each other share and is entitled to such dividends and distributions out of the income earned on the assets belonging to the Fund as are declared in the discretion of the Trustees. In the event of the liquidation or dissolution of the Trust, shareholders of a Fund are entitled to receive the assets attributable to the Fund that are available for distribution, and a distribution of any general assets not attributable to a particular investment portfolio that are available for distribution in such manner and on such basis as the Trustees in their sole discretion may determine. Shareholders are not entitled to any preemptive rights. All shares, when issued, will be fully paid and non-assessable by the Trust.
MASTER PORTFOLIOS. MIP is an open-end, series management investment company organized as a Delaware statutory trust on October 20, 1993. MIP's Declaration of Trust provides that obligations of MIP are not binding upon its Trustees individually but only upon the property of MIP and that the Trustees will not be liable for any action or failure to act, but nothing in the Declaration of Trust protects a Trustee against any liability to which the Trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the Trustee's office.
The interests in each Master Portfolio of MIP have voting and other rights
generally corresponding to those rights enumerated above for shares of the
Funds. MIP also intends to dispense with annual meetings, but is required by
Section 16(c) of the 1940 Act to hold a special meeting and assist investor
communications under the circumstances described above with respect to the
Trust. Whenever a Fund is requested to vote on a matter with respect to its Master Portfolio, the Fund will follow its voting procedures, as described in "Voting" above.
Additional Information on the Funds
The Trust provides annual and semi-annual reports to all shareholders. The
annual reports contain audited financial statements and other information about
the Funds, including additional information on performance. Shareholders may
obtain a copy of the Trust's most recent annual or semi-annual reports without
charge by calling 1-877-BGI-1544 (1-877-244-1544) (toll-free) or e-mailing the
Funds at cash.us@barclaysglobal.com.
The registration statement, including the Prospectuses, this SAI and the exhibits filed therewith, may be examined at the office of the SEC in Washington, D.C. Statements contained in the Prospectuses or this SAI as to the contents of any contract or other document referred to herein or in the Prospectuses are not necessarily complete and, in each instance, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference.
No person has been authorized to give any information or to make any representations other than those contained in the Prospectuses, this SAI and in the Trust's official sales literature in connection with the offer of the Funds' shares and, if given or made, such other information or representations must not be relied upon as having been authorized by the Trust. This SAI does not constitute an offer in any state in which, or to any person to whom, such offering may not lawfully be made.
Financial Statements
The audited financial statements, including the schedule of investments,
financial highlights and independent registered public accounting firm's
reports for the fiscal year ended December 31, 2006 for each Fund and related
Master Portfolio are hereby incorporated by reference to the Trust's annual
report, as filed with the SEC on March 9, 2007. The audited financial
statements are attached to all SAIs delivered to shareholders or prospective
shareholders.
The unaudited interim financial statements, including the schedule of investments and financial highlights for the Funds for the six-month period ended June 30, 2007, are included in each Fund's Form N-CSRS (SEC File No. 0000893818) as filed with the SEC on September 9, 2007 and are hereby also incorporated by reference. The unaudited interim financial statements reflect all adjustments, which in the opinion of BGFA, are necessary to a fair statement of the results for the interim period ended June 30, 2007. The unaudited interim financial statements for the Funds are attached to all SAIs delivered to shareholders or prospective shareholders.
Appendix
Description of certain ratings assigned by S&P, Moody's and Fitch, Inc.
("Fitch"):
"AAA"
An obligor rated `AAA' has EXTREMELY STRONG capacity to meet its financial commitments. AAA is the highest issuer credit rating assigned by S&P.
"AA"
An obligor rated `AA' has VERY STRONG capacity to meet its financial commitments. It differs from the highest rated obligors only in small degree.
"A"
An obligor rated `A' has STRONG capacity to meets its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in higher rated categories.
"BBB"
An obligor rated `BBB' has ADEQUATE capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.
"BB"
An obligor rated `BB' is LESS VULNERABLE in the near term than other lower-rated obligors. However, it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitments.
"B"
An obligor rated `B' is MORE VULNERABLE than the obligors rated `BB', but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments.
"CCC"
An obligor rated `CCC' is CURRENTLY VULNERABLE, and is dependent upon favorable business, financial, and economic conditions to meets its financial commitments.
"CC"
An obligor rated `CC' is CURRENTLY HIGHLY VULNERABLE.
Obligors rated `BB', `B', `CCC', and `CC' are regarded as having significant speculative characteristics. `BB' indicates the least degree of speculation and `CC' the highest. While such obligors will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
PLUS (+) OR MINUS (-)
The ratings from `AA' to `CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
"R"
An obligor rated `R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision the regulators may have the power to favor one class of obligations over another class or pay some obligations and not others. Please see S&P issue credit ratings for a more detailed description of the effects of regulatory supervision on specific issues or classes of obligations.
"SD" AND "D"
An obligor rated `SD' (Selective Default) or `D' has failed to pay one or more of its financial obligations (rated or unrated) when it came due. A `D' rating is assigned when S&P believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. An `SD' rating is assigned when S&P believes that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligation on other issues or classes of obligations in a timely manner. Please see S&P issue credit ratings for a more detailed description of the effects of a default on specific issues or classes of obligations.
"N.R."
An issuer designated `N.R.' is not rated.
"PUBLIC INFORMATION RATINGS"
Ratings with a `pi' subscript are based on an analysis of an issuer's published financial information, as well as additional information in the public domain. They do not, however, reflect in-depth meetings with an issuer's management and are therefore based on less comprehensive information than ratings without a `pi' subscript. Ratings with a `pi' subscript are reviewed annually based on each new year's financial statements, but may be reviewed on an interim basis if a major event occurs that may affect the issuer's credit quality.
Outlooks are not provided for ratings with a `pi' subscript, nor are they subject to potential CreditWatch listings. Ratings with a `pi' subscript generally are not modified with `+' or `-' designations. However, such designations may be assigned when the issuer's credit rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group.
"A-1"
An obligor rated `A-1' has STRONG capacity to meet its financial commitments. It is rated in the highest category by S&P. Within this category, certain obligors are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitments is EXTREMELY STRONG.
"A-2"
An obligor rated `A-2' has SATISFACTORY capacity to meet its financial commitments. However, it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligors in the highest rating category.
"A-3"
An obligor rated `A-3' has ADEQUATE capacity to meet its financial obligations. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.
"B"
An obligation rated `B' is MORE VULNERABLE to non-payment then obligations rated `BB', but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.
"C"
A subordinated debt or preferred stock obligation rated `C' is CURRENTLY HIGHLY VULNERABLE to non-payment. The `C' rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this
obligation are being continued. A `C' also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying.
"R"
An obligor rated `R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision the regulators may have the power to favor one class of obligations over another class or pay some obligations and not others. Please see S&P issue credit ratings for a more detailed description of the effects of regulatory supervision on specific issues or classes of obligations.
"SD" AND "D"
An obligor rated `SD' (Selective Default) or `D' has failed to pay one or more of its financial obligations (rated or unrated) when it came due. A `D' rating is assigned when S&P believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. An `SD' rating is assigned when S&P believes that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. Please see S&P issue credit ratings for a more detailed description of the effects of a default on specific issues or classes of obligations.
"N.R."
An issuer designated `N.R.' is not rated.
LOCAL CURRENCY AND FOREIGN CURRENCY RISKS
Country risk considerations are a standard part of S&P analysis for credit ratings on any issuer or issue. Currency of repayment is a key factor in this analysis. An obligor's capacity to repay foreign currency obligations may be lower than its capacity to repay obligations in its local currency due to the sovereign government's own relatively lower capacity to repay external versus domestic debt. These sovereign risk considerations are incorporated in the debt ratings assigned to specific issues. Foreign currency issuer ratings are also distinguished from local currency issuer ratings to identify those instances where sovereign risks make them different for the same issuer.
"AAA"
Obligations rated `Aaa' are judged to be of the highest quality, with minimal credit risk.
"AA"
Obligations rated `Aa' are judged to be of high quality and are subject to very low credit risk.
"A"
Obligations rated `A' are considered upper-medium grade and are subject to low credit risk.
"BAA"
Obligations rated `Baa' are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.
"BA"
Obligations rated `Ba' are judged to have speculative elements and are subject to substantial credit risk.
"B"
Obligations rated `B' are considered speculative and are subject to high credit risk.
"CAA"
Obligations rated `Caa' are judged to be of poor standing and are subject to very high credit risk.
"CA"
Obligations rated `Ca' are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
"C"
Obligations rated `C' are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest.
NOTE: Moody's appends numerical modifiers 1, 2 and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
"P-1"
Issuers (or supporting institutions) rated `Prime-1' have a superior ability to repay short-term debt obligations.
"P-2"
Issuers (or supporting institutions) rated `Prime-2' have a strong ability to repay short-term debt obligations.
"P-3"
Issuers (or supporting institutions) rated `Prime-3' have an acceptable ability to repay short-term obligations.
"NP"
Issuers (or supporting institutions) rated `Not Prime' do not fall within any of the Prime rating categories.
Fitch's long-term credit 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"
Highest credit quality. `AAA' ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
"AA"
Very high credit quality. `AA' ratings denote expectations of very low credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
"A"
High credit quality. `A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.
"BBB"
Good credit quality. `BBB' ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category.
"BB"
Speculative. `BB' ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade.
"B"
Highly speculative. `B' ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
"CCC", "CC" AND "C"
High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic development. A `CC' rating indicates that default of some kind appears probable. `C' ratings signal imminent default.
"RD"
Indicates an entity that has failed to make due on payments (within the applicable grace period) on some but not all material financial obligations, but continues to honor other classes of obligations.
"D"
Indicates an entity or sovereign that has defaulted on all of its financial obligations.
"NR"
Denotes that Fitch does not publicly rate the associated issue or issuer.
NOTE: The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the `AAA' long-term category, to categories below `CCC', or to short-term ratings other than `F1.' (The +/- modifiers are only used to denote issues within the CCC category, whereas issuers are only rated CCC without the use of modifiers.)
Fitch's short-term credit 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.
A short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for U.S. public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.
"F-1"
Highest credit quality. Indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature.
"F-2"
Good credit quality. Indicates a satisfactory capacity for timely payment of financial commitments; the margin of safety is not as great as in the case of the higher ratings.
"F-3"
Fair credit quality. Indicates the capacity for timely payment of financial commitments is adequate; however, near-term adverse changes could result in a reduction to non-investment grade.
"B"
Speculative. Indicates minimal capacity for timely payments of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.
"C"
High default risk. Default is a real possibility. Indicates capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.
"D"
Indicates an entity or sovereign that has defaulted on all of its financial obligations.
"NR"
Denotes that Fitch does not publicly rate the associated issue or issuer.
NOTE: The modifiers "+" or "-" may be appended to a rating to denote relative status within major rating categories.
BARCLAYS GLOBAL INVESTORS FUNDS
FILE NOs. 33-54126; 811-07332
PART C
OTHER INFORMATION
Amendment No. 62
Item 23. Exhibits
Exhibit Description
--------- --------------------------------------------------------------------
(a) Amended and Restated Agreement and Declaration of Trust, dated
November 17, 2006, is incorporated herein by reference to Barclays
Global Investors Funds' ("Registrant") Post-Effective Amendment No.
59, filed April 30, 2007 ("PEA No. 59").
(a)(1) Amendment No. 1 to the Amended and Restated Agreement and
Declaration of Trust, dated December 11, 2007, filed herewith.
(b) Amended and Restated By-Laws, dated November 17, 2006, are
incorporated herein by reference to PEA No. 59.
(c) Not applicable.
(d) Not applicable.
(e)(1) Distribution Agreement between Registrant and SEI Investments
Distribution Co. ("SEI") on behalf of the Funds, dated March 31,
2003, is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 42, filed May 1, 2003.
(e)(2) Amended Schedule I, dated December 11, 2007, to the Distribution
Agreement between Registrant and SEI is filed herewith.
(f) Not applicable.
(g)(1) Custody Agreement between Registrant and Investors Bank & Trust
Company ("IBT")(1) on behalf of the Funds, dated October 21, 1996,
is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 22, filed July 30, 1999 ("PEA No. 22").
(g)(2) Amendment to Custody Agreement, effective September 1, 2004, between
Registrant and IBT(1) is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 57, filed March 2, 2006
("PEA No. 57").
(g)(3) Amendment to Custody Agreement, effective January 1, 2006, between
Registrant and IBT(1) is incorporated herein by reference to PEA No.
59.
(h)(1) Transfer Agency and Service Agreement between Registrant and IBT(1)
on behalf of the Funds, dated February 27, 1998, is incorporated
herein by reference to PEA No. 22.
(h)(2) Amendment to Transfer Agency and Service Agreement, effective June
1, 2001, between Registrant and IBT(1) is incorporated herein by
reference to PEA No. 57.
(h)(3) Amendment to Transfer Agency and Service Agreement, effective
September 1, 2004, between Registrant and IBT(1) is incorporated
herein by reference to PEA No. 57.
(h)(4) Amendment to Transfer Agency and Service Agreement, dated July 8,
2005, between Registrant and IBT(1) is incorporated herein by
reference to PEA No. 57.
(h)(5) Amendment to Transfer Agency and Service Agreement, effective
January 1, 2006, between Registrant and IBT(1) is incorporated
herein by reference to PEA No. 59.
(h)(6) Amended and Restated Shareholder Servicing Plan, with respect to
only the Funds and their relevant classes as listed in Schedule 1
thereto, dated December 11, 2007, is filed herewith.
(h)(7) Amended and Restated Shareholder Servicing and Processing Plan, with
respect to only the Trust Class Shares of the Funds listed in
Schedule 1 thereto, is incorporated herein by reference to PEA No.
58.
|
(h)(8)(A) Amended and Restated Administration Agreement between Registrant and
Barclays Global Investors, N.A. ("BGI"), dated May 1, 2006, is
incorporated by reference to PEA No. 58.
(h)(8)(B) Amended Appendix A, dated December 11, 2007, to the Amended and
Restated Administration Agreement between the Registrant and BGI is
filed herewith.
(h)(9) Master Administration Fee Waiver Agreement between Registrant and
BGI, dated September 1, 2006, is incorporated herein by reference to
PEA No. 59.
(h)(10) Sub-Administration Agreement among Registrant, BGI, and IBT(1) on
behalf of the Funds, dated October 21, 1996, is incorporated herein
by reference to Registrant's Post-Effective Amendment No. 14, filed
June 30, 1997.
(h)(11) Amendment to Sub-Administration Agreement, effective December 31,
2002, among Registrant, BGI and IBT(1) is incorporated herein by
reference to PEA No. 57.
(h)(12) Amendment to Sub-Administration Agreement, effective September 1,
2004, among Registrant, BGI and IBT is incorporated herein by
reference to PEA No 58.
(h)(13) Amendment to Sub-Administration Agreement, effective January 1,
2006, among Registrant, BGI and IBT is incorporated herein by
reference to PEA No. 59.
(h)(14) Amendment to Sub-Administration Agreement, effective January 1,
2007, among Registrant, BGI and IBT is incorporated herein by
reference to PEA No. 59.
(h)(15) Revised Master Fee Schedule, dated January 1, 2006, to each of the
Sub-Administration, Custody and Transfer Agency and Service
Agreements between Registrant and IBT is incorporated herein by
reference to PEA No. 59.
(h)(16) Service Agreement between Registrant and Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") on behalf of the
Funds, dated December 31, 1997, is incorporated herein by reference
to the Registrant's Post-Effective Amendment No. 15, filed June 30,
1998 ("PEA No. 15").
(h)(17) Financial Services Agreement between Registrant and Merrill Lynch on
behalf of the Funds, dated December 31, 1997, is incorporated herein
by reference to PEA No. 15.
(h)(18)
License Agreement, dated January 1, 2003, between Standard & Poor's
and BGI is incorporated herein by reference to PEA No. 57.
(h)(19) Securities Lending Agency Agreement, dated April 2, 2007, between
Registrant and BGI is incorporated herein by reference to PEA No.
59.
(h)(20) Independent Expense Waiver Agreement among Registrant, Master
Investment Portfolio ("MIP"), BGI and Barclays Global Fund Advisors
("BGFA"), dated April 12, 2007, is incorporated herein by reference
to PEA No. 59.
(h)(21) Form of Bank Agency Agreement between Registrant and SEI is
incorporated herein by reference to PEA No. 59.
(h)(22) Form of Sub-Distribution Agreement between Registrant and SEI is
incorporated herein by reference to PEA No. 59.
(i) Opinion and Consent of Counsel (Wilmer Cutler Pickering Hale and
Dorr LLP) to be filed by amendment.
(j) Consent of Independent Registered Public Accounting Firm
(PricewaterhouseCoopers LLP) to be filed by amendment.
(k) Not applicable.
(l) Not applicable.
(m) Distribution Plan, dated March 2, 2005, is incorporated herein by
reference to PEA No. 57.
(n) Amended and Restated Rule 18f-3 Multi-Class Plan, dated December 11,
2007, is filed herewith.
(p)(1) Joint Code of Ethics of Registrant and MIP, dated June 1, 2005, is
incorporated herein by reference to PEA No. 57.
(p)(2) Code of Ethics of BGFA, dated June 1, 2005, is incorporated herein
by reference to PEA No. 57.
|
(p)(3) Code of Ethics of SEI, dated January 2004, is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 56, filed
April 29, 2005.
(q) Powers of Attorney for A. John Gambs, Wendy Paskin-Jordan, Mary G.
F. Bitterman, Lee T. Kranefuss, H. Michael Williams, Hayne E.
Leland, Jeffrey M. Lyons and Leo Soong are filed herewith.
|
Item 24. Persons Controlled by or Under Common Control with Registrant
The chart below identifies persons who, as of December 7, 2007, are controlled by or who are under common control with a Fund (or Fund class). For purposes of the 1940 Act, any person who owns directly or through one or more controlled companies more than 25% of the voting securities of a company is presumed to "control" such company. Each of the companies listed below is organized under the laws of the State of Delaware.
Percentage of
Person Controlled by or under Common Voting
Fund or Fund Class Control with the Registrant Securities
-------------------------------- ---------------------------------------- -------------
Bond Index Fund Bond Index Master Portfolio 100%
45 Fremont Street
San Francisco, CA 94105
LifePath(R) Retirement Portfolio LifePath Retirement Master Portfolio 48%
45 Fremont Street
San Francisco, CA 94105
LifePath 2010 Portfolio(R) LifePath 2010 Master Portfolio 52%
45 Fremont Street
San Francisco, CA 94105
LifePath 2020 Portfolio(R) LifePath 2020 Master Portfolio
45 Fremont Street 53%
San Francisco, CA 94105
LifePath 2030 Portfolio(R) LifePath 2030 Master Portfolio
45 Fremont Street 52%
San Francisco, CA 94105
LifePath 2040 Portfolio(R) LifePath 2040 Master Portfolio 50%
45 Fremont Street
San Francisco, CA 94105
Government Money Market Fund Government Money Market Master Portfolio
45 Fremont Street 100%
San Francisco, CA 94105
Treasury Money Market Fund Treasury Money Market Master Portfolio
45 Fremont Street 100%
San Francisco, CA 94105
Prime Money Market Fund Prime Money Market Master Portfolio 94%
45 Fremont Street
San Francisco, CA 94105
|
Item 25. Indemnification.
Section 10.02 of the Registrant's Amended and Restated Agreement and Declaration of Trust provides:
(a) Subject to the exceptions and limitations contained in paragraph
(b) below: (i) every Person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit, or proceeding in which he or she
becomes involved as a party or otherwise by virtue of his being or having
been a Trustee or officer and against amounts paid or incurred by him or
her in the settlement thereof; and (ii) the words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits, or
proceedings (civil, criminal, or other, including appeals), actual or
threatened, while in office or thereafter, and the words "liability" and
"expenses" shall include, without limitation, attorney's fees, costs,
judgments, amounts paid in settlement, fines, penalties, and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person: (i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his office
or (B) not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or (ii) in the event of a
settlement, unless there has been a determination that such Trustee or
officer did not engage in willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his office:
(A) by the court or other body approving the settlement; (B) by at least a
majority of those Trustees who neither are Interested Persons of the Trust
nor are parties to the matter based upon a review of readily-available
facts (as opposed to a full trial-type inquiry); or (C) by written opinion
of independent legal counsel based upon a review of readily-available facts
(as opposed to a full trial-type inquiry); provided, however, that any
Shareholder, by appropriate legal proceedings, may challenge any such
determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person and shall inure to the benefit of the heirs, executors, and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel, other than Covered Persons, and other persons may be entitled by contract or otherwise under law.
(d) To the maximum extent permitted by applicable law, expenses in connection with the preparation and presentation of a defense to any claim, action, suit, or proceeding of the character described in paragraph (a) of this Section 10.02 may be paid by the Trust or Series from time to time prior to final disposition thereof upon receipt of any undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the Trust or Series if it ultimately is determined that he or she is not entitled to indemnification under this Section 10.02; provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking; (b) the Trust is insured against losses arising out of any such advance payments; or (c) either a majority of the Trustees who are neither Interested Persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily-available facts (as opposed to a trial-type inquiry or full investigation), that there is a reason to believe that such Covered Person will be found entitled to indemnification under this Section 10.02.
Item 26. Business and Other Connections of Investment Adviser.
The Funds currently do not retain an investment adviser. The MIP Master Portfolio in which a given Fund invests is advised by BGFA, a wholly-owned subsidiary of BGI, located at 45 Fremont Street, San Francisco, California 94105. BGFA's business is that of a registered investment adviser to certain open-end, management investment companies and various other institutional investors.
The directors and officers of BGFA consist primarily of persons who during the past two years have been active in the investment management business. Each of the directors and executive officers of BGFA will also have substantial responsibilities as directors and/or officers of BGI. Information as to the executive officers and directors of BGFA is included in its Form ADV initially filed with the SEC (File No. 801-22609) on November 15, 1984, and updated thereafter, and is incorporated herein by reference.
Item 27. Principal Underwriters.
(a) Furnish the name of each investment company (other than the Registrant) for which each principal underwriter currently distributing the securities of the Registrant also acts as a principal underwriter, distributor or investment adviser.
Registrant's distributor, SEI (the "Distributor"), acts as distributor for:
SEI Daily Income Trust HighMark Funds
SEI Liquid Asset Trust iShares, Inc.
SEI Tax Exempt Trust CNI Charter Funds
SEI Index Funds Oak Associates Funds
SEI Institutional Managed Trust iShares Trust
SEI Institutional International Trust Johnson Family Funds, Inc.
The Advisors' Inner Circle Fund Causeway Capital Management Trust
The Advisors' Inner Circle Fund II The Japan Fund, Inc.
Bishop Street Funds The Arbitrage Funds
SEI Asset Allocation Trust The Turner Funds
SEI Institutional Investments Trust ProShares Trust
Community Reinvestment Act Qualified Investment Fund
|
The Distributor provides numerous financial services to investment managers, pension plan sponsors, and bank trust departments. These services include portfolio evaluation, performance measurement and consulting services and automated execution, clearing and settlement of securities transactions.
(b) Furnish the information required by the following table with respect to each director, officer or partner of each principal underwriter named in the answer to Item 20 of Part B. Unless otherwise noted, the business address of each director or officer is One Freedom Valley Drive, Oaks, Pennsylvania 19456.
Positions and
Offices
Name Positions and Offices with Underwriter with Registrant
------------------ ---------------------------------------- ---------------
William M. Doran Director --
Edward D. Loughlin Director --
Wayne M. Withrow Director --
Kevin Barr President & Chief Executive Officer --
Maxine Chou Chief Financial Officer & Treasurer --
Thomas Rodman Chief Operations Officer --
John Munch General Counsel & Secretary --
Karen LaTourette Chief Compliance Officer, Anti-Money
Laundering Officer & Assistant Secretary --
Mark J. Held Senior Vice President --
Lori L. White Vice President & Assistant Secretary --
Robert Silvestri Vice President --
John Coary Vice President & Assistant Secretary --
Michael Farrell Vice President --
Al DelPizzo Vice President --
Mark McManus Vice President
|
(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 1940 Act and the rules thereunder (collectively, "Records") at the offices of IBT/1/, 200 Clarendon Street, Boston, Massachusetts 02116.
(b) BGFA and BGI maintain all Records relating to their services as adviser to the MIP Master Portfolios and administrator, respectively, at 45 Fremont Street, San Francisco, California 94105.
(c) SEI maintains all Records relating to its services as distributor at One Freedom Valley Drive, Oaks, Pennsylvania 19456.
(d) IBT(1) maintains all Records relating to its services as sub-administrator, transfer agent and custodian at 200 Clarendon Street, Boston, Massachusetts 02116.
Item 29. Management Services.
Other than as set forth under the caption "Management" in the Statements of Additional Information constituting Part B of this Registration Statement, the Registrant is not a party to any management-related service contract.
Item 30. Undertakings.
Not applicable.
/1/ On July 2, 2007, State Street Corporation acquired Investors Financial Services Corporation, the parent company of IBT which provides sub-administrative, custodial and transfer agency services for the Funds.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended ("Securities Act"), and the Investment Company Act of 1940, as amended, this Post-Effective Amendment No. 61 to the Registration Statement on Form N-1A of Barclays Global Investors Funds (the "Registrant"), pursuant to Rule 485(a) under the Securities Act, has been signed on behalf of the Registrant by the undersigned, thereto duly authorized, in the City of San Francisco, State of California on the 27 day of December, 2007.
BARCLAYS GLOBAL INVESTORS FUNDS
By
Geoffrey D. Flynn
Treasurer
(Chief Financial Officer)
Pursuant to the requirements of the Securities Act, this Post-Effective Amendment No. 61 to the Registration Statement on Form N-1A of the Registrant has been signed below by the following persons in the capacities and on the dates indicated:
Signature Title Date
*
Trustee and President December 27, 2007
H. Michael Williams (Chief Executive Officer)
*
---------------------------- Trustee December 27, 2007
Mary G.F. Bitterman
*
---------------------------- Trustee December 27, 2007
A. John Gambs
*
---------------------------- Trustee December 27, 2007
Hayne E. Leland
*
---------------------------- Trustee December 27, 2007
Jeffrey M. Lyons
*
---------------------------- Trustee December 27, 2007
Lee T. Kranefuss
*
---------------------------- Trustee December 27, 2007
Wendy Paskin-Jordan
*
---------------------------- Trustee December 27, 2007
Leo Soong
|
---------------------------- Treasurer
Geoffrey D. Flynn (Chief Financial Officer) December 27, 2007
By:
Geoffrey D. Flynn *
|
* As Attorney-in-Fact pursuant to the powers of attorney filed herewith.
SIGNATURES
This Registration Statement on Form N-1A of Barclays Global Investors Funds (the "Registrant") contains certain disclosures regarding series of the Master Investment Portfolio (the "Trust"). The Trust has, subject to the next sentence, duly caused this Registration Statement on Form N-1A of the Registrant to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco and the State of California on December 27, 2007. The Trust is executing this Registration Statement only in respect of the disclosures contained herein specifically describing the Trust and hereby disclaims any responsibility or liability as to any other disclosures in this Registration Statement.
MASTER INVESTMENT PORTFOLIO
By
Geoffrey D. Flynn
Treasurer
(Chief Financial Officer)
This Registration Statement on Form N-1A of the Registrant has been signed below by the following persons, solely in the capacities indicated and subject to the next sentence on December 27, 2007. Each of the following persons is signing this Registration Statement only in respect of the disclosures contained herein specifically describing the Trust and hereby disclaims any responsibility or liability as to any other disclosures in this Registration Statement.
Signature Title Date
*
Trustee and President December 27, 2007
H. Michael Williams (Chief Executive Officer)
*
---------------------------- Trustee December 27, 2007
Mary G.F. Bitterman
*
---------------------------- Trustee December 27, 2007
A. John Gambs
*
---------------------------- Trustee December 27, 2007
Hayne E. Leland
*
---------------------------- Trustee December 27, 2007
Jeffrey M. Lyons
*
---------------------------- Trustee December 27, 2007
Lee T. Kranefuss
*
---------------------------- Trustee December 27, 2007
Wendy Paskin-Jordan
|
*
----------------------------
Leo Soong Trustee December 27, 2007
----------------------------
Geoffrey D. Flynn Treasurer
(Chief Financial Officer) December 27, 2007
By:
Geoffrey D. Flynn *
|
* As Attorney-in-Fact pursuant to the powers of attorney filed herewith.
Exhibit Index
(a)(1) Amendment No. 1 to the Amended and Restated Agreement and
Declaration of Trust.
(e)(2) Amended Schedule I to the Distribution Agreement
(h)(6) Amended and Restated Shareholder Servicing Plan.
(h)(8)(B) Amended Schedule A to the Amended and Restated Administration
Agreement
(n) Amended and Restated Rule 18f-3 Multi-Class Plan
(q) Powers of Attorney for A. John Gambs, Wendy Paskin-Jordan,
Mary G. F. Bitterman, Lee T. Kranefuss, H. Michael Williams,
Hayne E. Leland, Jeffrey M. Lyons and Leo Soong
Exhibit (a)(1)
BARCLAYS GLOBAL INVESTORS FUNDS
Amendment No. 1
to
Amended and Restated Agreement and Declaration of Trust
THIS AMENDMENT NO. 1, dated December 11, 2007, to the Amended and Restated Agreement and Declaration of Trust, dated November 17, 2006 (the "Declaration of Trust"), of Barclays Global Investors Funds (the "Trust"), is made by each of the undersigned trustees (the "Trustees"). Capitalized terms used herein and not otherwise defined have their meanings ascribed in the Declaration of Trust.
WHEREAS, the shareholders of the following Series of the Trust approved an amendment to the Declaration of Trust with respect to such Series at a meeting of shareholders held on November 16, 2007:
- LifePath Retirement Portfolio;
- LifePath 2010 Portfolio;
- LifePath 2020 Portfolio;
- LifePath 2030 Portfolio; and
- LifePath 2040 Portfolio
WHEREAS, the Trustees desire to amend the Declaration of Trust in order to reflect the provisions approved by shareholders and set forth herein.
NOW, THEREFORE, the Declaration of Trust is hereby amended as follows:
Section 1. The provisions set forth below are added to the end of Section 11.04:
The following provision of Section 11.04 is applicable solely to the LifePath Retirement Portfolio, LifePath 2010 Portfolio, LifePath 2020 Portfolio, LifePath 2030 Portfolio, LifePath 2040 Portfolio, and any LifePath Portfolio commencing operations after December 11, 2007 (collectively, the "Covered LifePath Portfolios") and supersedes any conflicting or inconsistent provision(s) of Section 11.04 of the Declaration of Trust solely with respect to the Covered LifePath Portfolios. Section 11.04 of the Declaration of Trust shall continue to apply in its entirety to all Series that are not Covered LifePath Portfolios.
The Trustees may, by vote of a majority of the Trustees, cause any Covered LifePath Portfolio to (i) merge or consolidate with or into, (ii) sell, convey and transfer all or substantially all of its assets to, or (iii) exchange its Shares for Shares of, one or more LifePath Portfolio(s). Any such merger, consolidation, asset sale or Share exchange shall not require the vote of the Shareholders unless such vote is required by the 1940 Act; provided, however, that the Trust shall provide at least 30 days' prior written notice to the Shareholders of the applicable Covered LifePath Portfolio of such merger, consolidation, asset sale or Share exchange. In all respects not governed by the 1940 Act, other applicable law or the requirements of any securities exchange on which Shares are listed for trading, the Trustees shall have the power to prescribe additional procedures or terms necessary or
appropriate to accomplish any such merger, consolidation, asset sale or Share exchange, including the power (x) to create one or more Series or separate statutory trusts (or series thereof) or other business entities to which all or any part of the assets, liabilities, profits or losses of the applicable Covered LifePath Portfolio may be transferred, (y) to provide for the conversion of Shares into beneficial interests in such Series or separate statutory trust or trusts (or series thereof) or other business entities, and (z) to condition or not to condition any asset sale upon the assumption by the transferee of the liabilities associated with the Covered LifePath Portfolio the assets of which are so transferred.
Section 2. Except as amended by Section 1 of this Amendment, all provisions of the Declaration of Trust remain in full force and effect.
IN WITNESS WHEREOF, each of the undersigned Trustees has hereunto set his or her hand as of the day and year first above written.
/s/ Mary G. F. Bitterman ---------------------------------- Mary G. F. Bitterman /s/ A. John Gambs ---------------------------------- A. John Gambs /s/ Lee T. Kranefuss ---------------------------------- Lee T. Kranefuss /s/ Hayne E. Leland ---------------------------------- Hayne E. Leland /s/ Jeffrey M. Lyons ---------------------------------- Jeffrey M. Lyons |
/s/ Leo Soong ---------------------------------- Leo Soong |
Exhibit (e)(2)
SCHEDULE I
Funds/Portfolios and Classes
Bond Index Fund
Institutional Money Market Fund
Aon Captives Class
Institutional Class
Capital Class
Premium Class
Select Class
Trust Class
LifePath Retirement Portfolio
Class I
Class R
Class S
LifePath 2010 Portfolio
Class I
Class R
Class S
LifePath 2020 Portfolio
Class I
Class R
Class S
LifePath 2030 Portfolio
Class I
Class R
Class S
LifePath 2040 Portfolio
Class I
Class R
Class S
Prime Money Market Fund
Institutional Class
Capital Class
Premium Class
Select Class
Trust Class
S&P 500 Stock Fund
Government Money Market Fund
Institutional Class
Capital Class
Premium Class
Select Class
Trust Class
Funds/Portfolios and Classes
Treasury Money Market Fund
Institutional Class
Capital Class
Premium Class
Select Class
Trust Class
Amended and Approved by the Board of Trustees of Barclays Global Investors Funds on December 11, 2007.
Exhibit (h)(6)
BARCLAYS GLOBAL INVESTORS FUNDS
AMENDED AND RESTATED
SHAREHOLDER SERVICING PLAN
Introduction: The Board of Trustees (the "Board") of Barclays Global Investors Funds (the "Trust") previously approved a Shareholder Servicing Plan on November 27, 2001 (the "Initial Plan") with respect to the various classes of shares (each, a "Class") of the portfolios of the Trust listed on Schedule 1 thereto, as such Schedule may be revised from time to time (each, a "Fund"). It is proposed that the Board amend and restate the Initial Plan, as set forth in this Amended and Restated Shareholder Servicing Plan (this "Plan"), to authorize Barclays Global Investors, N.A., as administrator of the Trust (the "Administrator") to engage and pay certain financial institutions, securities dealers and other industry professionals (collectively, "Shareholder Servicing Agents") for providing services to Fund shareholders. The Initial Plan was not, and this Plan is not to be, adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act"), and the fee under the Initial Plan and this Plan is intended to be a "service fee," as defined in National Association of Securities Dealers, Inc. ("NASD") Conduct Rule 2830.
The Board has requested and evaluated such information as it deemed necessary to an informed determination as to whether the Initial Plan should be amended and restated, and has considered such pertinent factors as it deemed necessary to form the basis for a decision to use Trust assets for such purposes.
In voting to approve the implementation of this Plan, the Board has concluded, in the exercise of its reasonable business judgment and in light of applicable fiduciary duties, that there is a reasonable likelihood that this Plan will benefit the Trust and its shareholders.
The Plan: The material aspects of this Plan are as follows:
1. Fees. The Trust is permitted to pay to one or more Shareholder Servicing Agents a maximum fee per Class at the annual rate set forth opposite the name of each Fund's Class on Schedule 1 hereto, based upon the value of such Class's average daily net assets, in respect of the provision of personal services to shareholders of such Class and/or the maintenance of shareholder accounts. The Board has delegated to the Administrator and the Administrator has assumed certain responsibilities with respect to the Shareholder Servicing Agents, including the obligation to pay the Shareholder Servicing Agents such compensation as their respective shareholder servicing agreements may provide. The Board shall retain the authority to determine the maximum shareholder servicing fee that the Administrator may agree to pay to the Shareholder Servicing Agents pursuant to this Plan.
2. Services. Payments of the shareholder servicing fee shall be used to compensate Shareholder Servicing Agents for serving as agents of the Trust for the limited purpose of accepting orders to purchase or redeem in Fund shares and for providing services including, but not limited to: (a) answering inquiries from shareholders regarding account status
and history, the manner in which purchases and redemptions of shares may be
effected, and other matters pertaining to the Funds; (b) assisting shareholders
in designating and changing dividend options, account designations and
addresses; (c) providing sub-accounting for Fund shares beneficially owned by
shareholders or the information necessary for such sub-accounting; (d)
aggregating and processing purchase and redemption requests and placing net
purchase and redemption orders with the Fund's Transfer Agent or distributor;
(e) verifying and guaranteeing shareholder signatures in connection with orders
to purchase or redeem Fund shares; (f) providing periodic statements showing
account balances and, to the extent practicable, integrating such information
with other transactions otherwise effected by the Shareholder Servicing Agent;
(g) furnishing (either separately or on an integrated basis with other reports
sent to an account by a Shareholder Servicing Agent) monthly and annual
statements and confirmations of all purchases and redemptions of Fund shares;
(h) transmitting, on behalf of the Fund, proxy statements, shareholder reports,
prospectuses and other communications from the Fund or the Administrator to
accounts; (i) receiving, tabulating and transmitting to the Fund or the
Administrator proxies executed by shareholders with respect to shareholder
meetings; (j) arranging for wiring of funds and transmitting and receiving funds
in connection with orders to purchase or redeem Fund shares; (k) processing
dividend payments from the Fund on behalf of shareholders; (l) providing such
other similar services as the Fund or the Administrator may request; and (m)
providing necessary personnel and facilities to conduct the activities described
above.
3. Authorization of the Administrator: The Board has determined that it is consistent with the best interests of the Funds and appropriate in furtherance of the purposes of this Plan that the Administrator, by operation of this Plan, be authorized as follows:
(a) New Agreements. With respect to new agreements entered into after the date of this restatement, (i) to identify Shareholder Servicing Agents; (ii) to appoint Shareholder Servicing Agents to act as agents for the Trust for the limited purpose of accepting orders to purchase or redeem Fund shares and (iii) to engage Shareholder Servicing Agents to perform shareholder servicing services by entering into shareholder servicing agreements; (iv) to terminate Shareholder Servicing Agents, pursuant to the terms of the relevant agreements; and (v) to pay Shareholder Servicing Agents out of the Administrator's fees the amount due them under the shareholder servicing agreements, subject to compliance by a Shareholder Servicing Agent with the terms of the related agreements between the Shareholder Servicing Agent and the Administrator. Forms of agreement entered into by the Administrator in connection with this Plan will be presented to the Board from time to time, but the Board has determined that the Administrator may enter into agreements with the Shareholder Servicing Agents that differ from those forms in such form or substance as the Administrator deems necessary or appropriate; provided, however, that the Administrator shall not have authority to exceed the maximum fee set by the Board for agreements entered into in connection with this Plan nor to eliminate terms creating third party beneficiary or similar rights in favor of the Trust or the Funds .
(b) Existing Agreements. With respect to existing shareholder servicing agreements between a Shareholder Servicing Agent and the Trust, (i) to amend or restate such agreements, or any terms thereof, as the Administrator deems necessary or appropriate; (ii) to terminate such agreements or cause them to be superseded by new agreements in accordance
with paragraph 3(a) above; and (iii) to pay the Shareholder Servicing Agents out of the Administrator's fees the amounts due them under the shareholder servicing agreements between the Shareholder Servicing Agent and the Trust.
4. Fee Calculation. For the purpose of determining the fees payable under this Plan, the value of the net assets of each Fund shall be computed in the manner specified in the Trust's registration statement on Form N-1A for the computation of the value of the Fund's net assets.
5. Reporting. The Administrator shall provide the Board, at least quarterly, with a written report that includes the names of the firms that serve as Shareholder Servicing Agents pursuant to agreements entered into in connection with this Plan and all amounts actually expended during the reporting period pursuant to this Plan, expressed both as dollar amounts and percentages. The report shall state the purpose for which the amounts were expended; provided, however, it shall be assumed that the purposes are to compensate Shareholder Servicing Agents for some or all of the of services described above in paragraph 2. Barclays Global Fund Advisors, as adviser to the Master Investment Portfolio ("MIP"), shall identify amounts received by the Administrator from the Trust and retained as compensation separately in reports presented to the Board in connection with the annual approval of the MIP advisory agreements.
6. Effectiveness.This Plan will become effective immediately upon approval by a majority of the Board members, including a majority of the Board members who are not "interested persons" (as defined in the Act) of the Trust and have no direct or indirect financial interest in the operation of this Plan or in any agreements entered into in connection with this Plan.
7. Term. This Plan shall continue for a period of one year from its effective date, unless earlier terminated in accordance with its terms, and thereafter shall continue automatically for successive annual periods, provided such continuance is approved at least annually in the manner provided in paragraph 6 hereof. This Plan is terminable without penalty at any time by vote of a majority of the Board members who are not "interested persons" (as defined in the Act) of the Trust and have no direct or indirect financial interest in the operation of this Plan or in any agreements entered into in connection with this Plan.
8. Amendments. This Plan may be amended at any time by the Board, provided that any material amendments of the terms of this Plan shall become effective only upon approval as provided in paragraph 6 hereof.
9. Limitation of Liability. The obligations hereunder and under any agreement shall only be binding upon the assets and property of the relevant Fund, as provided for in the Trust's Agreement and Declaration of Trust and By-Laws and shall not be binding upon any Trustee, officer or shareholder of the Trust or Fund individually.
[Approved by the Board of Trustees of Barclays Global Investors Funds on December 11, 2007.]
SCHEDULE 1
Fees are expressed as a percentage of the average daily net asset value of the particular Class of the particular Fund beneficially owned by or attributable to clients of the Shareholder Servicing Agent.
Maximum
Annual
Fund and Share Classes Fee Rate
------------------------------- --------
Institutional Money Market Fund
Institutional Class 0.05%
Capital Class 0.07%
Premium Class 0.10%
Select Class 0.15%
Aon Captives Shares 0.05%
Prime Money Market Fund
Institutional Class 0.05%
Capital Class 0.07%
Premium Class 0.10%
Select Class 0.15%
Government Money Market Fund
Institutional Class 0.05%
Capital Class 0.07%
Premium Class 0.10%
Select Class 0.15%
Treasury Money Market Fund
Institutional Class 0.05%
Capital Class 0.07%
Premium Class 0.10%
Select Class 0.15%
LifePath Retirement Portfolio
Class I 0.25%
Class R 0.25%
LifePath 2010 Portfolio
Class I 0.25%
Class R 0.25%
LifePath 2020 Portfolio
Class I 0.25%
Class R 0.25%
LifePath 2030 Portfolio
Class I 0.25%
Class R 0.25%
LifePath 2040 Portfolio
Class I 0.25%
Class R 0.25%
S&P 500 Stock Fund 0.15%
Bond Index Fund 0.15%
|
Amended and approved by the Board of Trustees of Barclays Global Investors Funds on December 11, 2007.
Exhibit (h)(8)(B)
Appendix A
Fees
Funds of the Trust with Class, Administration Fee
if applicable (as % of net assets)/1/
--------------------------------------------- -----------------------
Fund Class Total
----------------------------- ------------- -----------------------
Money Market N/A 0.38
Institutional Money Market Institutional 0.05
Capital 0.07
Premium 0.10
Select 0.15
Aon Captives 0.05
Trust 0.38
Prime Money Market Institutional 0.05
Capital 0.07
Premium 0.10
Select 0.15
Trust 0.38
Government Money Market Institutional 0.05
Capital 0.07
Premium 0.10
Select 0.15
Trust 0.38
Treasury Money Market Institutional 0.05
Capital 0.07
Premium 0.10
Select 0.15
Trust 0.38
LifePath Retirement Portfolio Class I 0.50
Class R 0.50
LifePath 2010 Portfolio Class I 0.50
Class R 0.50
Class S 0.15
LifePath 2020 Portfolio Class I 0.50
----------
|
/1/ Expenses attributable to one or more, but not all, of the Funds or share classes (such as shareholder servicing expenses) shall be charged against the assets of the relevant Funds or share classes. Because of the differences in the expenses attributable to one or more, but not all, of the share classes of a particular Fund, a Fund may have different administration fees for different share classes.
Funds of the Trust with Class, Administration Fee
if applicable (as % of net assets)/1/
--------------------------------------------- -----------------------
Class R 0.50
Class S 0.15
LifePath 2030 Portfolio Class I 0.50
Class R 0.50
Class S 0.15
LifePath 2040 Portfolio Class I 0.50
Class R 0.50
Class S 0.15
S&P 500 Stock N/A 0.15
Bond Index N/A 0.15
|
Amended and approved by the Board of Trustees of Barclays Global Investors Funds on December 11, 2007.
Exhibit (n)
BARCLAYS GLOBAL INVESTORS FUNDS
AMENDED AND RESTATED
RULE 18f-3 MULTI-CLASS PLAN
I. Introduction.
Pursuant to Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940 Act"), this Amended and Restated Rule 18f-3 Multi-Class Plan (the "Plan") sets forth the method for allocating fees and expenses among each class of shares in the separate investment portfolios (the "Funds") of Barclays Global Investors Funds (the "Trust"). In addition, the Plan sets forth the distribution fees, administration fees (including shareholder servicing fees and processing fees), minimum investments, maximum initial sales charges, contingent deferred sales charges ("CDSCs"), conversion features, exchange privileges and other features applicable to each class of shares of the Funds.
The Trust is an open-end series investment company registered under the 1940 Act, the shares of which are registered on Form N-lA under the Securities Act of 1933, as amended. The Trust hereby elects to offer multiple classes of shares of the Funds pursuant to the provisions of Rule 18f-3 and the Plan. Appendix A, as it may be amended from time to time, lists the Funds that have approved the Plan and the classes of each such Fund. Each such Fund that has authorized the issuance of multiple classes of shares is referred to as a "Multi-Class Fund" hereunder.
II. Allocation of Expenses.
A. Mandatory Class Expenses. Pursuant to Rule 18f-3 under the 1940 Act, the Trust allocates to each class of shares of a Multi-Class Fund: (i) any fees and expenses incurred by the Multi-Class Fund in connection with the distribution of such class of shares under a distribution plan adopted for such class of shares pursuant to Rule 12b-l under the 1940 Act; and (ii) any fees and expenses under the Multi-Class Fund's shareholder servicing plan or its shareholder servicing and processing plan in connection with the provision of shareholder servicing and/or processing services to the holders of such class of shares (which fees and expenses are payable by Barclays Global Investors, N.A., the Multi-Class Fund's administrator ("BGI"), pursuant to the Trust's Amended and Restated Administration Agreement with BGI, effective December 11, 2007 (the "Administration Agreement").
B. Discretionary Class Expenses. In addition, pursuant to Rule 18f-3, the Trust may allocate the following fees and expenses to a particular class of shares of a Multi-Class Fund:
(i) transfer agent fees identified by the transfer agent as being attributable to such class of shares;
(ii) printing and postage expenses related to preparing and distributing materials such as shareholder reports, notices, prospectuses, reports, and proxies to current shareholders of that class or to regulatory agencies with respect to such class of shares;
(iii) blue sky notification or other filing fees incurred with respect to such class of shares;
(iv) Securities and Exchange Commission registration fees incurred with respect to such class of shares;
(v) the expense of administrative personnel and services (including, but not limited to, those of a portfolio accountant, custodian or dividend paying agent charged with calculating net asset values or determining or paying dividends) as required to support the shareholders of such class of shares;
(vi) litigation or other legal expenses incurred with respect to such class of shares;
(vii) fees of the Trust's Trustees incurred with respect to matters affecting such class of shares;
(viii) independent accountants' fees incurred with respect to such class of shares; and
(ix) any other fees and expenses, not including advisory or custodial fees or other expenses related to the management of the Multi-Class Fund's assets, incurred with respect to such class of shares.
For all purposes under this Plan, fees and expenses incurred "with respect to" a class of shares are those fees and expenses that are actually incurred in a different amount by the class or that relate to a different kind or degree of services provided to the class.
Notwithstanding any other provision of this Plan, the Trust, as
contemplated by Subsection II.B.(v) above, allocates to each class of shares of
a Multi-Class Fund administration fees incurred pursuant to the Administration
Agreement with respect to such class based on fees and expenses that are
actually incurred in a different amount by the class or that relate to a
different kind or degree of services provided to the class, as described in
Section III below.
C. Relative Net Asset Value Allocation. Income, realized and unrealized capital gains and losses, and any expenses of a Multi-Class Fund not allocable to a particular class of the Multi-Class Fund pursuant to this Plan shall be allocated to each class of the Multi-Class Fund based upon the relative net asset value of that class in relation to the aggregate net asset value of the Multi-Class Fund.
D. Waivers and Reimbursements. In certain cases, a service provider for a Multi-Class Fund may waive or reimburse all or a portion of the expenses of a specific class of shares of the Multi-Class Fund. The Board of Trustees of the Trust will monitor any such waivers or reimbursements to ensure that they do not generate inappropriate cross-subsidization between classes.
III. Class Arrangements.
Appendix A summarizes the Rule 12b-l distribution fees, administration fees (including shareholder servicing fees and processing fees), investment minimums, maximum initial sales charges, CDSCs, conversion features, exchange privileges and other features applicable to a particular class of shares of each Multi-Class Fund. In view of the different scale and cost of meeting servicing demands for accounts that vary by size or type (e.g., retirement plans) and differing arrangements offered by intermediaries for different types of accounts (e.g., omnibus v. direct accounts), the administration fees (including shareholder servicing fees and processing fees) and minimum initial investments vary among the classes of the Multi-Class Funds. In addition, in view of the distribution arrangements applicable to certain classes of the Multi-Class Funds (e.g., distribution to the retirement market), those classes of the Multi-Class Funds are subject to 12b-l fees as set forth in Appendix A. Additional details and restrictions regarding such fees, features, services and distribution arrangements are set forth in the relevant Multi-Class Fund's current Prospectus and Statement of Additional Information. Except as set forth in this Plan or, with respect to voting, in the Trust's Declaration of Trust, each class of shares of a Multi-Class Fund will have the same relative rights and privileges and be subject to the same fees and expenses.
IV. Board Review.
The Board of Trustees of the Trust shall review the Plan as it deems necessary. Prior to any material amendment(s) to the Plan with respect to any Multi-Class Fund's shares, the Trust's Board of Trustees, including a majority of the Trustees that are not "interested persons" of the Trust (as defined in the 1940 Act), shall find that the Plan, as proposed to be amended (including any proposed amendments to the method of allocating class and/or fund expenses), is in the best interest of each class of shares of the Multi-Class Fund individually and the Multi-Class Fund as a whole. In considering whether to approve any proposed amendment(s) to the Plan, the Trustees of the Trust shall request and evaluate such information as they consider reasonably necessary to evaluate the proposed amendment(s) to the Plan.
Amended and approved by the Board of Trustees of Barclays Global Investors Funds on December 11, 2007.
APPENDIX A
Maximum Conversion
Maximum Maximum Initial Features/
BGIF Maximum Administration Shareholder Processing Minimum Sales Exchange
Multi-Class Funds 12b-1 Fee Fee Servicing Fee/1/ Fee/1/ Investment Charge/CDSC Privileges
--------------------------- --------- -------------- ---------------- ---------- -------------- ----------- ----------
1. Institutional Money
Market Fund
Aon Captives Share Class 0.10% 0.05% 0.05% None $500,000 None None
Institutional Class None 0.05% 0.05% None $100 million None None
Capital Share Class None 0.07% 0.07% None $25 million None None
Premium Class None 0.10% 0.10% None $10 million None None
Select Class None 0.15% 0.15% None $1 million None None
Trust Class None 0.38% 0.25% 0.13% $100,000 None None
2. LifePath Retirement
Portfolio
Class I None 0.50% 0.25% None $1 million /2/ None None
Class R 0.25% 0.50% 0.25% None N/A None None
Class S None 0.15% None None N/A/3/ None None
3. LifePath 2010 Portfolio
Class I None 0.50% 0.25% None $1 million /2/ None None
Class R 0.25% 0.50% 0.25% None N/A None None
Class S None 0.15% None None N/A/3/ None None
4. LifePath 2020 Portfolio
Class I None 0.50% 0.25% None $1 million /2/ None None
Class R 0.25% 0.50% 0.25% None N/A None None
Class S None 0.15% None None N/A/3/ None None
5. LifePath 2030 Portfolio
Class I None 0.50% 0.25% None $1 million /2/ None None
Class R 0.25% 0.50% 0.25% None N/A None None
Class S None 0.15% None None N/A/3/ None None
6. LifePath 2040 Portfolio
Class I None 0.50% 0.25% None $1 million /2/ None None
Class R 0.25% 0.50% 0.25% None N/A None None
Class S None 0.15% None None N/A/3/ None None
7. Prime Money Market
Fund
Institutional Class None 0.05% 0.05% None $100 million None None
Capital Share Class None 0.07% 0.07% None $25 million None None
Premium Class None 0.10% 0.10% None $10 million None None
Select Class None 0.15% 0.15% None $1 million None None
Trust Class None 0.38% 0.25% 0.13% $100,000 None None
8. Government Money
Market Fund
Institutional Class None 0.05% 0.05% None $100 million None None
Capital Share Class None 0.07% 0.07% None $25 million None None
Premium Class None 0.10% 0.10% None $10 million None None
Select Class None 0.15% 0.15% None $1 million None None
Trust Class None 0.38% 0.25% 0.13% $100,000 None None
9. Treasury Money Market
Fund
Institutional Class None 0.05% 0.05% None $100 million None None
Capital Share Class None 0.07% 0.07% None $25 million None None
Premium Class None 0.10% 0.10% None $10 million None None
Select Class None 0.15% 0.15% None $1 million None None
Trust Class None 0.38% 0.25% 0.13% $100,000 None None
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/1/ All shareholder servicing fees and processing fees will be paid by the Funds' administrator; so shareholders will not bear any of these fees in addition to the administration fee.
/2/ For direct investments only.
/3/ Although the Class S shares do not have a minimum investment, they shall only be made available to plans that have certified to
having, or that the Funds' administrator or investment adviser reasonably believes to have, aggregate plan assets of $750 million or more.
Amended and approved by the Board of Trustees of Barclays Global Investors Funds on December 11, 2007.
Exhibit (q)
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that Leo Soong, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce, as his attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which he is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
October 1, 2007
/s/ Leo Soong ----------------------------- Name: Leo Soong |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that A. John Gambs, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce , as his attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which he is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
October 1, 2007
/s/ A. John Gambs ----------------------------- Name: A. John Gambs |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that Mary G.F. Bitterman, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce, as her attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which she is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in her name and on her behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
October 1, 2007
/s/ Mary G.F. Bitterman ----------------------------- Name: Mary G.F. Bitterman |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that Wendy Paskin-Jordan, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce, as her attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which she is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in her name and on her behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
October 1, 2007
/s/ Wendy Paskin-Jordan ----------------------------- Name: Wendy Paskin-Jordan |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that Lee T. Kranefuss, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce, as his attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which he is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
October 1, 2007
/s/ Lee T. Kranefuss ----------------------------- Name: Lee T. Kranefuss |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that H. Michael Williams, President, Chief
Executive Officer and a Trustee of Master Investment Portfolio and Barclays
Global Investors Funds (together, the "Trusts"), whose name and signature
appears below, constitutes and appoints Geoffrey D. Flynn and Leonard A. Pierce,
as his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign (i) any registration statement on Form N-1A, Form N-
14 or any other applicable registration form under the Investment Company Act of
1940, as amended, and/or under the Securities Act of 1933, as amended, and any
and all amendments thereto, filed by the Trusts of which he is now or is on the
date of such filing President, Chief Executive Officer and Trustee of the
Trusts, (ii) any application, notice or other filings with the Securities and
Exchange Commission and any and all amendments thereto, and (iii) any and all
other documents and papers, including any exhibits, in connection therewith, and
generally to do all such things in his name and on his behalf in the capacities
indicated to enable the Trusts to comply with the Investment Company Act of
1940, as amended, and/or the Securities Act of 1933, as amended, and the rules
thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitute or
substitutes, may do or cause to be done by virtue hereof.
November 30, 2007
/s/ H. Michael Williams ----------------------------- Name: H. Michael Williams |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that Jeffrey M. Lyons, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce, as his attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which he is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
November 30, 2007
/s/ Jeffrey M. Lyons ----------------------------- Name: Jeffrey M. Lyons |
POWER OF ATTORNEY
WITH RESPECT TO
MASTER INVESTMENT PORFOLIO and
BARCLAYS GLOBAL INVESTORS FUNDS
Know all men by these presents that Hayne E. Leland, a Trustee of Master Investment Portfolio and Barclays Global Investors Funds (together, the "Trusts"), whose name and signature appears below, constitutes and appoints H. Michael Williams, Geoffrey D. Flynn and Leonard A. Pierce, as his attorneys-in-fact, with power of substitution, and each of them in any and all capacities, to sign (i) any registration statement on Form N-1A, Form N-14 or any other applicable registration form under the Investment Company Act of 1940, as amended, and/or under the Securities Act of 1933, as amended, and any and all amendments thereto, filed by the Trusts of which he is now or is on the date of such filing a Trustee of the Trusts, (ii) any application, notice or other filings with the Securities and Exchange Commission and any and all amendments thereto, and (iii) any and all other documents and papers, including any exhibits, in connection therewith, and generally to do all such things in his name and on his behalf in the capacities indicated to enable the Trusts to comply with the Investment Company Act of 1940, as amended, and/or the Securities Act of 1933, as amended, and the rules thereunder, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.
November 30, 2007
/s/ Hayne E. Leland ----------------------------- Name: Hayne E. Leland |