STATE FARM MUTUAL FUND TRUST (Form: 485APOS, Received: 06/30/2008 17:31:17)

As filed with the Securities and Exchange Commission on June 30, 2008

Securities Act Registration No. 333-42004

Investment Company Act File No. 811-10027

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 27

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 28

State Farm Mutual Fund Trust

(Exact name of Registrant as Specified in Charter)


One State Farm Plaza, Bloomington, Illinois		61710-0001
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, including Area Code (800) 447-4930


		Alan Goldberg
		Bell Boyd & Lloyd LLP
Michael L. Tipsord		Three First National Plaza
One State Farm Plaza		70 West Madison St., Suite 3300
Bloomington, Illinois 61710-0001		Chicago, Illinois 60602

(Names and addresses of agents for service)

Amending Parts A, B and C, and filing exhibits

It is proposed that this filing will become effective:

¨	immediately upon filing pursuant to rule 485(b)

¨	on May 1, 2009 pursuant to rule 485(b)

x	60 days after filing pursuant to rule 485(a)(1)

¨	on May 1, 2008 pursuant to rule 485(b)

¨	75 days after filing pursuant to rule 485(a)(2)

¨	on ___________ pursuant to rule 485(a)(2)

STATE FARM MUTUAL FUND TRUST

September 2, 2008 Supplement to the

Class A, Class B, Legacy Class A, and Legacy Class B Shares Prospectus Dated May 1, 2008

The information in this supplement updates information in, and should be read in conjunction with, the Prospectus.

Effective September 2, 2008,

•

Capital Guardian Trust Company will cease serving as investment sub-adviser to the Equity Fund and to the International Equity Fund,

•

Bridgeway Capital Management, Inc. and Westwood Management Corp. will begin serving as co-investment sub-advisers to the Equity Fund, and

•

Marsico Capital Management, LLC and Northern Cross, LLC will begin serving as co-investment sub-advisers to the International Equity Fund.

The information on page 1 of the Prospectus under the heading “STATE FARM EQUITY FUND” is replaced with the following:

STATE FARM EQUITY FUND

Investment Objective —

The State Farm Equity Fund (the “Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

Two different investment sub-advisers, Bridgeway Capital Management, Inc. (“Bridgeway”) and Westwood Management Corp. (“Westwood”), select investments for the Equity Fund. Bridgeway and Westwood each manage approximately one-half of the Equity Fund’s portfolio. The Manager monitors the performance of the sub-advisers and the split of the portfolio between the sub-advisers. The principal investment strategies employed by the two sub-advisers for their respective portions of the portfolio are discussed separately below.

Bridgeway

Bridgeway invests its portion of the Equity Fund in a diversified portfolio of large growth stocks that are listed on the New York Stock Exchange, the American Stock Exchange, and the National Association of Securities Dealers Automated Quotation System (“NASDAQ”). Bridgeway defines “large stocks” as the largest 500 U.S. companies as measured by market capitalization (stock market worth). As of June 30, 2008, each of the stocks in this group had a market capitalization greater than $ [ ] billion. The median company size in the Bridgeway large-cap universe was $ [ ] billion. Growth stocks are those that Bridgeway believes have above average prospects for economic growth. Bridgeway selects stocks within the large-cap growth category for the Equity Fund according to proprietary quantitative models. At least 80% of Bridgeway’s portion of the Equity Fund’s net assets (plus borrowings for investment purposes) are invested in stocks from among those in the large-cap growth category at the time of pur chase. However, Bridgeway will not necessarily sell a stock if it “migrates” to a different category after purchase.

Westwood

Under normal market conditions, Westwood invests at least 80% of its portion of the Equity Fund (which includes, for purposes of this test, the amount of any borrowings for investment purposes) in common stocks and other equity securities of large capitalization companies. Westwood invests in a portfolio of seasoned companies utilizing a value style of investing in which it chooses those stocks that Westwood believes have earnings prospects that are currently undervalued by the market relative to some financial measure of worth, such as the ratio of price to earnings, price to sales or price to cash flow. Westwood defines large capitalization companies as those companies with market capitalizations greater than $5 billion at the time of purchase, while seasoned companies generally have been operating for at least three years.

In selecting securities, Westwood maintains a list of approved securities of issuers which it believes have proven records and potential for above-average earnings growth. Westwood considers purchasing a security on such list if Westwood’s forecast for growth rates and earnings for that issuer exceeds Wall Street expectations. Other key metrics for evaluating the risk/return profile of an investment include an improving return on equity, a declining debt to equity ratio and, in the case of common equities, positive earnings surprises without a corresponding increase in Wall Street estimates. Westwood has disciplines in place that serve as sell signals, such as a security reaching a pre-determined price target, and/or a fundamental change that negatively impacts the outlook and original investment thesis. The investment team will also review a stock if the price of the stock declines 15% or more in the first 45 days held. The risk characteristics of Westwood’s portion of the Equity Fund, such as beta (a measure of

volatility), are generally expected to be less than those of the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Fund’s benchmark effective September 2, 2008.

Page 3 of the Prospectus is replaced with the following:

STATE FARM INTERNATIONAL EQUITY FUND

Investment Objective —

The State Farm International Equity Fund (the “International Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

Two different investment sub-advisers, Marsico Capital Management, LLC (“Marsico”) and Northern Cross, LLC (“Northern Cross”), select investments for the International Equity Fund. Marsico and Northern Cross each manage approximately one-half of the International Equity Fund’s portfolio. The Manager monitors the performance of the sub-advisers and the split of the portfolio between the sub-advisers. The principal investment strategies employed by the two sub-advisers for their respective portions of the portfolio are discussed separately below.

Marsico

Marsico invests its portion of the International Equity Fund primarily in foreign equity securities issued by companies that are selected for their long-term growth potential. Marsico may invest its portion of the International Equity Fund in an unlimited number of companies of any size throughout the world, and normally invests in the securities of issuers that are economically tied to at least four different foreign countries. The Fund may invest in securities of companies economically tied to emerging markets. Some issuers or securities in the Fund’s portfolio may be based in or economically tied to the U.S. In selecting investments for the Fund, Marsico uses an approach that combines ‘top-down’ macro-economic analysis with ‘bottom-up’ stock selection.

Northern Cross

Northern Cross invests its portion of the International Equity Fund in securities issued by foreign companies in the “value” category, which it defines as securities Northern Cross believes are priced cheaply relative to some financial measure of worth, such ration of price to earnings, price to sales or price to cash flow. Under normal market conditions Northern Cross will invest its portion of the International Equity Fund in 70 to 90 companies with a diversified representation of sectors. Northern Cross may invest up to 20% of its portion of the International Equity Fund in emerging markets. In selecting securities for the International Equity Fund, careful consid eration is given to currency, political stability and other effects of international investing.

Page 30 of the Prospectus discusses Adviser Related Performance. State Farm Mutual Fund Trust (the “Trust”) no longer shows Adviser Related Performance for the Equity Fund or for the International Equity Fund.

On Page 31 of the Prospectus under the heading, “ How the State Farm non-LifePath Funds Invest ,” the third sentence of the first paragraph is amended to read as follows:

If the Manager or sub-adviser to a Fund determines that market or economic conditions warrant a temporary defensive position, the Funds each manage (or the applicable portion of such Fund ) may hold up to 100% of their assets in cash, cash equivalents or other temporary investments such as short-term government or corporate obligations.

On page 43 of the Prospectus under the heading, “ Investment Adviser ,” the third paragraph is replaced with the following:

Bridgeway and Westwood are the investment sub-advisers to the Equity Fund. As investment sub-advisers, Bridgeway and Westwood make investment decisions for the Equity Fund, subject to the oversight of the Manager and the Board of the Trust. The Manager pays Bridgeway and Westwood for their services with the investment advisory and management fees the Manager receives from the Equity Fund.

Marsico and Northern Cross are the investment sub-advisers to the International Equity Fund. As investment sub-advisers, Marsico and Northern Cross make investment decisions for the International Equity Fund, subject to the oversight of the Manager and the Board of the Trust. The Manager pays Marsico and Northern Cross for their services with the investment advisory and management fees the Manager receives from the International Equity Fund.

The two paragraphs on page 44 of the Prospectus under the heading, “ Investment Sub-Adviser for the Equity Fund and the International Equity Fund ,” are replaced with the following:

Investment Sub-Advisers for the Equity Fund

Effective September 2, 2008, the Manager has engaged Bridgeway and Westwood as the investment sub-advisers to provide day-to-day portfolio management for the Equity Fund.

Prior to September 2, 2008, Capital Guardian Trust Company served as the investment sub-adviser to the Equity Fund.

Bridgeway is located at 5615 Kirby Drive, Suite 518, Houston, Texas 77005-2448. Bridgeway is a quantitative investment management firm that employs a wide array of proprietary statistical models to create investment portfolios for its institutional and mutual fund clients.

Westwood is located at 200 Crescent Court, Suite 1200, Dallas, Texas 75201. Westwood is a fundamental investment management firm that employs a bottom-up, value-based stock selection strategy to construct portfolios designed to generate superior risk-adjusted returns for its institutional and mutual fund clients.

For more information regarding Bridgeway and Westwood, please read the sections entitled “Investment Advisory Agreements – Between the Manager and Bridgeway” and “Investment Advisory Agreement – Between the Manager and Westwood” in the Trust’s SAI.

Investment Sub-Advisers for the International Equity Fund

Effective September 2, 2008, the Manager has engaged Marsico and Northern Cross as the investment sub-advisers to provide day-to-day portfolio management for the International Equity Fund. Prior to September 2, 2008, Capital Guardian Trust Company served as the investment sub-adviser to the International Equity Fund.

Marsico is located at 1200 17 ^th Street, Suite 1600, Denver, Colorado 80202. In addition to sub-advising a segment of the International Equity Fund, Marsico provides investment services to other mutual funds and private accounts.

Northern Cross is located at 125 Summer Street, 14 ^th Floor, Suite 1470, Boston, Massachusetts 02110. Northern Cross is an investment management firm specializing in international equity mandates.

For more information regarding Marsico and Northern Cross, please read the sections entitled “Investment Advisory Agreements – Between the Manager and Marsico” and “Investment Advisory Agreement – Between the Manager and Northern Cross” in the Trust’s SAI.

The following information replaces the information beginning on page 45 with, “ Compensating Capital Guardian for its Services ,” and ending with, “ S&P 500 Index Fund and LifePath Funds – Compensation in the Master/Feeder Mutual Fund Structure ” on page 46:

Compensating Bridgeway for its Services

The Manager pays Bridgeway for its services to the Equity Fund and to the Small/Mid Cap Equity Fund at the rates shown in the tables below:


Equity Fund
On the first $50 million		0.50% of average daily net assets
$50 million to $100 million		0.45% of average daily net assets
$100 million to $200 million		0.40% of average daily net assets
Over $200 million		0.35% of average daily net assets


Small/Mid Cap Equity Fund
On the first $100 million		0.60% of average daily net assets
$100 million to $250 million		0.55% of average daily net assets
Over $250 million		0.50% of average daily net assets

Compensating Westwood for its Services

The Manager pays Westwood for its services to the Equity Fund at the rates shown in the table below:


Equity Fund
On the first $25 million		0.55% of average daily net assets
$25 million to $50 million		0.45% of average daily net assets
Over $50 million		0.30% of average daily net assets

Compensating Rainier for its Services

The Manager pays Rainier for its services to the Small/Mid Cap Equity Fund at the rates shown in the tables below:


Small/Mid Cap Equity Fund
On the first $100 million		0.60% of average daily net assets
$100 million to $250 million		0.55% of average daily net assets
Over $250 million		0.50% of average daily net assets

Compensating Marsico for its Services

The Manager pays Marsico for its services to the International Equity Fund at the rates shown in the tables below:


International Equity Fund
On the first $300 million		0.50% of average daily net assets
$300 million to $400 million		0.45% of average daily net assets
Over $400 million		0.40% of average daily net assets

Compensating Northern Cross for its Services

The Manager pays Northern Cross for its services to the International Equity Fund at the rates shown in the tables below:


International Equity Fund
On the first $500 million		0.60% of average daily net assets
Over $500 million		0.55% of average daily net assets

Compensating Northern Trust Investments for its Services

The Manager pays Northern Trust Investments for its services to the Small Cap Index Fund and the International Index Fund at the rates shown in the tables below:


Small Cap Index Fund and International Index Fund
On the first $150 million		0.13% of average daily net assets
Over $150 million		0.10% of average daily net assets

For purposes of calculating the fees under the above schedules, other assets managed in a similar style by the sub-adviser for other investment companies advised by the Manager or other companies affiliated with the Manager are included in determining the appropriate fee to be paid to the respective sub-adviser.

On Prospectus page 47, the following replaces the information on the portfolio managers for the Equity Fund:

Equity Fund

The chart below indicates the name, title, and length of service of the persons associated with Bridgeway and Westwood who are primarily responsible for the day-to-day management for each respective sub-adviser’s segment of the Equity Fund’s portfolio, and each person’s business experience during the past five years:

Bridgeway Portfolio Managers


*Portfolio Manager and Title* *with Bridgeway*	*Length of Service* *with Bridgeway*	*Business Experience During the* *past 5 years*
John Montgomery, President	14 years	Portfolio manager of equity securities
Elena Khoziaeva, Investment Team Member	9 years	Investment management, research and analysis
Michael Whipple, Investment Team Member	5 years	Investment management, research and analysis
Rasool Shaik, Investment Team Member	2 years	Investment management, research and analysis

Westwood Portfolio Managers


*Portfolio Manager and Title* *with Westwood*	Length of Service with Westwood	*Business Experience During the* *past 5 years*
Susan M. Byrne, Chairman and Chief Investment Officer	25 years	Portfolio manager of equity securities
Mark R. Freeman, CFA, Senior Vice President and Portfolio Manager	9 years	Portfolio manager of equity and fixed income securities
Kellie R. Stark, CFA, Senior Vice President	16 years	Portfolio manager of equity securities
Scott D. Lawson, CFA, Vice President and Senior Research Analyst	5 years	Portfolio manager of equity securities
Jay K. Singhania, CFA, Vice President and Research Analyst	7 years	Portfolio manager of equity securities

On Prospectus pages 48-49, the following replaces the information on the portfolio managers for the International Equity Fund:

International Equity Fund

The chart below indicates the name, title, and length of service of the persons associated with Marsico and Northern Cross who are primarily responsible for the day-to-day management for each respective sub-adviser’s segment of the International Equity Fund’s portfolio, and each person’s business experience during the past five years:

Marsico Portfolio Manager

Portfolio Manager and Title

with Marsico

Length of Service
with Marsico

Business Experience During the

past 5 years

James G. Gendelman,
Portfolio Manager

8 years

Portfolio manager of equity securities

Northern Cross Portfolio Managers


*Portfolio Manager and Title* *with Northern Cross*	Length of Service with Northern Cross	*Business Experience During the* *past 5 years*
Howard Appleby, CFA, Principal	5 years	Portfolio manager of equity securities
James LaTorre, CFA, Principal	5 years	Portfolio manager of equity securities
Edward E. Wendell, Jr., Principal	5 years	Portfolio manager of equity securities
Jean-Francois Ducrest, Principal	5 years	Portfolio manager of equity securities

FINANCIAL HIGHLIGHTS

The Fund’s financial highlights beginning on page 72 of the Prospectus are supplemented by adding the financial highlights for the six-month period ending June 30, 2008. This in formation has not been audited by the Trust’s independent registered public accounting firm, Ernst & Young, LLP. [To be added by amendment.]

STATE FARM MUTUAL FUND TRUST

September 2, 2008 Supplement to the

Institutional Shares Prospectus Dated May 1, 2008

The information in this supplement updates information in, and should be read in conjunction with, the Prospectus.

Effective September 2, 2008,

•

Capital Guardian Trust Company will cease serving as investment sub-adviser to the Equity Fund and to the International Equity Fund,

•

Bridgeway Capital Management, Inc. and Westwood Management Corp. will begin serving as co-investment sub-advisers to the Equity Fund, and

•

Marsico Capital Management, LLC and Northern Cross, LLC will begin serving as co-investment sub-advisers to the International Equity Fund.

The information on page 1 of the Prospectus under the heading “STATE FARM EQUITY FUND” is replaced with the following:

STATE FARM EQUITY FUND

Investment Objective —

The State Farm Equity Fund (the “Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

Bridgeway

Westwood

volatility), are generally expected to be less than those of the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Fund’s benchmark effective September 2, 2008.

Page 3 of the Prospectus is replaced with the following:

STATE FARM INTERNATIONAL EQUITY FUND

Investment Objective —

The State Farm International Equity Fund (the “International Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

Marsico

Northern Cross

On Page 28 of the Prospectus under the heading, “ How the State Farm non-LifePath Funds Invest ,” the third sentence of the first paragraph is amended to read as follows:

If the Manager or sub-adviser to a Fund determines that market or economic conditions warrant a temporary defensive position, the Funds each manage (or the applicable portion of such Fund) may hold up to 100% of their assets in cash, cash equivalents or other temporary investments such as short-term government or corporate obligations.

On page 38 of the Prospectus under the heading, “ Investment Adviser ,” the third paragraph is replaced with the following:

The two paragraphs that begin on page 38 of the Prospectus under the heading, “ Investment Sub-Adviser for the Equity Fund and the International Equity Fund ,” are replaced with the following:

Investment Sub-Advisers for the Equity Fund

Effective September 2, 2008, the Manager has engaged Bridgeway and Westwood as the investment sub-advisers to provide day-to-day portfolio management for the Equity Fund. Prior to September 2, 2008, Capital Guardian Trust Company served as the investment sub-adviser to the Equity Fund.

Bridgeway is located at 5615 Kirby Drive, Suite 518, Houston, Texas 77005-2448. Bridgeway is a quantitative investment

management firm that employs a wide array of proprietary statistical models to create investment portfolios for its institutional and mutual fund clients.

Investment Sub-Advisers for the International Equity Fund

Northern Cross is located at 125 Summer Street, 14 ^th Floor, Suite 1470, Boston, Massachusetts 02110. Northern Cross is an investment management firm specializing in international equity mandates.

The following information replaces the information beginning on page 40 with, “ Compensating Capital Guardian for its Services ,” and ending with, “ S&P 500 Index Fund and LifePath Funds – Compensation in the Master/Feeder Mutual Fund Structure ” on page 41:

Compensating Bridgeway for its Services

The Manager pays Bridgeway for its services to the Equity Fund and to the Small/Mid Cap Equity Fund at the rates shown in the tables below:


Equity Fund
On the first $50 million		0.50% of average daily net assets
$50 million to $100 million		0.45% of average daily net assets
$100 million to $200 million		0.40% of average daily net assets
Over $200 million		0.35% of average daily net assets


Small/Mid Cap Equity Fund
On the first $100 million		0.60% of average daily net assets
$100 million to $250 million		0.55% of average daily net assets
Over $250 million		0.50% of average daily net assets

Compensating Westwood for its Services

The Manager pays Westwood for its services to the Equity Fund at the rates shown in the table below:


Equity Fund
On the first $25 million		0.55% of average daily net assets
$25 million to $50 million		0.45% of average daily net assets
Over $50 million		0.30% of average daily net assets

Compensating Rainier for its Services

The Manager pays Rainier for its services to the Small/Mid Cap Equity Fund at the rates shown in the tables below:


Small/Mid Cap Equity Fund
On the first $100 million		0.60% of average daily net assets
$100 million to $250 million		0.55% of average daily net assets
Over $250 million		0.50% of average daily net assets

Compensating Marsico for its Services

The Manager pays Marsico for its services to the International Equity Fund at the rates shown in the tables below:


International Equity Fund
On the first $300 million		0.50% of average daily net assets
$300 million to $400 million		0.45% of average daily net assets
Over $400 million		0.40% of average daily net assets

Compensating Northern Cross for its Services

The Manager pays Northern Cross for its services to the International Equity Fund at the rates shown in the tables below:


International Equity Fund
On the first $500 million		0.60% of average daily net assets
Over $500 million		0.55% of average daily net assets

Compensating Northern Trust Investments for its Services

The Manager pays Northern Trust Investments for its services to the Small Cap Index Fund and the International Index Fund at the rates shown in the tables below:


Small Cap Index Fund and International Index Fund
On the first $150 million		0.13% of average daily net assets
Over $150 million		0.10% of average daily net assets

On Prospectus page 42, the following replaces the information on the portfolio managers for the Equity Fund:

Equity Fund

Bridgeway Portfolio Managers


*Portfolio Manager and Title* *with Bridgeway*	Length of Service with Bridgeway	*Business Experience During the* *past 5 years*
John Montgomery, President	14 years	Portfolio manager of equity securities
Elena Khoziaeva, Investment Team Member	9 years	Investment management, research and analysis
Michael Whipple, Investment Team Member	5 years	Investment management, research and analysis
Rasool Shaik, Investment Team Member	2 years	Investment management, research and analysis

Westwood Portfolio Managers


*Portfolio Manager and Title* *with Westwood*	Length of Service with Westwood	*Business Experience During the* *past 5 years*
Susan M. Byrne, Chairman and Chief Investment Officer	25 years	Portfolio manager of equity securities
Mark R. Freeman, CFA, Senior Vice President and Portfolio Manager	9 years	Portfolio manager of equity and fixed income securities
Kellie R. Stark, CFA, Senior Vice President	16 years	Portfolio manager of equity securities
Scott D. Lawson, CFA, Vice President and Senior Research Analyst	5 years	Portfolio manager of equity securities
Jay K. Singhania, CFA, Vice President and Research Analyst	7 years	Portfolio manager of equity securities

On Prospectus page 44, the following replaces the information on the portfolio managers for the International Equity Fund:

International Equity Fund

Marsico Portfolio Manager

Portfolio Manager and Title

with Marsico

Length of Service
with Marsico

Business Experience During the

past 5 years

James G. Gendelman,
Portfolio Manager

8 years

Portfolio manager of equity securities

Northern Cross Portfolio Managers


*Portfolio Manager and Title* *with Northern Cross*	Length of Service with Northern Cross	*Business Experience During the* *past 5 years*
Howard Appleby, CFA, Principal	5 years	Portfolio manager of equity securities
James LaTorre, CFA, Principal	5 years	Portfolio manager of equity securities
Edward E. Wendell, Jr., Principal	5 years	Portfolio manager of equity securities
Jean-Francois Ducrest, Principal	5 years	Portfolio manager of equity securities

FINANCIAL HIGHLIGHTS

The Fund’s financial highlights beginning on page 60 of the Prospectus are supplemented by adding the financial highlights for the six-month period ending June 30, 2008. This in formation has not been audited by the Trust’s independent registered public accounting firm, Ernst & Young, LLP. [To be added by amendment.]

STATE FARM MUTUAL FUND TRUST

September 2, 2008 Supplement to the

Class R-1, R-2, and R-3 Prospectus Dated May 1, 2008

The information in this supplement updates information in, and should be read in conjunction with, the Prospectus.

Effective September 2, 2008,

•

Capital Guardian Trust Company will cease serving as investment sub-adviser to the Equity Fund and to the International Equity Fund,

•

Bridgeway Capital Management, Inc. and Westwood Management Corp. will begin serving as co-investment sub-advisers to the Equity Fund, and

•

Marsico Capital Management, LLC and Northern Cross, LLC will begin serving as co-investment sub-advisers to the International Equity Fund.

The information on page 1 of the Prospectus under the heading “STATE FARM EQUITY FUND” is replaced with the following:

STATE FARM EQUITY FUND

Investment Objective —

The State Farm Equity Fund (the “Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

Bridgeway

Westwood

volatility), are generally expected to be less than those of the Standard & Poor’s 500 Index (the “S&P 500 Index”), the Fund’s benchmark effective September 2, 2008.

Page 3 of the Prospectus is replaced with the following:

STATE FARM INTERNATIONAL EQUITY FUND

Investment Objective —

The State Farm International Equity Fund (the “International Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

Marsico

Northern Cross

Page 28 of the Prospectus discusses Adviser Related Performance. State Farm Mutual Fund Trust (the “Trust”) no longer shows Adviser Related Performance for the Equity Fund or for the International Equity Fund.

On Page 29 of the Prospectus under the heading, “ How the State Farm non-LifePath Funds Invest ,” the third sentence of the first paragraph is amended to read as follows:

If the Manager or sub-adviser to a Fund determines that market or economic conditions warrant a temporary defensive position, the Funds each manage (or the applicable portion of such Fund) may hold up to 100% of their assets in cash, cash equivalents or other temporary investments such as short-term government or corporate obligations.

On page 41 of the Prospectus under the heading, “ Investment Adviser ,” the third paragraph is replaced with the following:

The two paragraphs that begin on page 42 of the Prospectus under the heading, “ Investment Sub-Adviser for the Equity Fund and the International Equity Fund ,” are replaced with the following:

Investment Sub-Advisers for the Equity Fund

Effective September 2, 2008, the Manager has engaged Bridgeway and Westwood as the investment sub-advisers to provide day-to-day portfolio management for the Equity Fund.

Prior to September 2, 2008, Capital Guardian Trust Company served as the investment sub-adviser to the Equity Fund.

Investment Sub-Advisers for the International Equity Fund

Northern Cross is located at 125 Summer Street, 14 ^th Floor, Suite 1470, Boston, Massachusetts 02110. Northern Cross is an investment management firm specializing in international equity mandates.

The following information replaces the information beginning on page 43 with, “ Compensating Capital Guardian for its Services ,” and ending with, “ S&P 500 Index Fund and LifePath Funds – Compensation in the Master/Feeder Mutual Fund Structure ” on page 44:

Compensating Bridgeway for its Services

The Manager pays Bridgeway for its services to the Equity Fund and to the Small/Mid Cap Equity Fund at the rates shown in the tables below:


Equity Fund
On the first $50 million		0.50% of average daily net assets
$50 million to $100 million		0.45% of average daily net assets
$100 million to $200 million		0.40% of average daily net assets
Over $200 million		0.35% of average daily net assets


Small/Mid Cap Equity Fund
On the first $100 million		0.60% of average daily net assets
$100 million to $250 million		0.55% of average daily net assets
Over $250 million		0.50% of average daily net assets

Compensating Westwood for its Services

The Manager pays Westwood for its services to the Equity Fund at the rates shown in the table below:


Equity Fund
On the first $25 million		0.55% of average daily net assets
$25 million to $50 million		0.45% of average daily net assets
Over $50 million		0.30% of average daily net assets

Compensating Rainier for its Services

The Manager pays Rainier for its services to the Small/Mid Cap Equity Fund at the rates shown in the tables below:


Small/Mid Cap Equity Fund
On the first $100 million		0.60% of average daily net assets
$100 million to $250 million		0.55% of average daily net assets
Over $250 million		0.50% of average daily net assets

Compensating Marsico for its Services

The Manager pays Marsico for its services to the International Equity Fund at the rates shown in the tables below:


International Equity Fund
On the first $300 million		0.50% of average daily net assets
$300 million to $400 million		0.45% of average daily net assets
Over $400 million		0.40% of average daily net assets

Compensating Northern Cross for its Services

The Manager pays Northern Cross for its services to the International Equity Fund at the rates shown in the tables below:


International Equity Fund
On the first $500 million		0.60% of average daily net assets
Over $500 million		0.55% of average daily net assets

Compensating Northern Trust Investments for its Services

The Manager pays Northern Trust Investments for its services to the Small Cap Index Fund and the International Index Fund at the rates shown in the tables below:


Small Cap Index Fund and International Index Fund
On the first $150 million		0.13% of average daily net assets
Over $150 million		0.10% of average daily net assets

On Prospectus page 45, the following replaces the information on the portfolio managers for the Equity Fund:

Equity Fund

Bridgeway Portfolio Managers


*Portfolio Manager and Title* *with Bridgeway*	Length of Service with Bridgeway	*Business Experience During the* *past 5 years*
John Montgomery, President	14 years	Portfolio manager of equity securities
Elena Khoziaeva, Investment Team Member	9 years	Investment management, research and analysis
Michael Whipple, Investment Team Member	5 years	Investment management, research and analysis
Rasool Shaik, Investment Team Member	2 years	Investment management, research and analysis

Westwood Portfolio Managers


*Portfolio Manager and Title* *with Westwood*	Length of Service with Westwood	*Business Experience During the* *past 5 years*
Susan M. Byrne, Chairman and Chief Investment Officer	25 years	Portfolio manager of equity securities
Mark R. Freeman, CFA, Senior Vice President and Portfolio Manager	9 years	Portfolio manager of equity and fixed income securities
Kellie R. Stark, CFA, Senior Vice President	16 years	Portfolio manager of equity securities
Scott D. Lawson, CFA, Vice President and Senior Research Analyst	5 years	Portfolio manager of equity securities
Jay K. Singhania, CFA, Vice President and Research Analyst	7 years	Portfolio manager of equity securities

On Prospectus pages 46-47, the following replaces the information on the portfolio managers for the International Equity Fund:

International Equity Fund

Marsico Portfolio Manager

Portfolio Manager and Title

with Marsico

Length of Service
with Marsico

Business Experience During the

past 5 years

James G. Gendelman,
Portfolio Manager

8 years

Portfolio manager of equity securities

Northern Cross Portfolio Managers


*Portfolio Manager and Title* *with Northern Cross*	Length of Service with Northern Cross	*Business Experience During the* *past 5 years*
Howard Appleby, CFA, Principal	5 years	Portfolio manager of equity securities
James LaTorre, CFA, Principal	5 years	Portfolio manager of equity securities
Edward E. Wendell, Jr., Principal	5 years	Portfolio manager of equity securities
Jean-Francois Ducrest, Principal	5 years	Portfolio manager of equity securities

FINANCIAL HIGHLIGHTS

The Fund’s financial highlights beginning on page 54 of the Prospectus are supplemented by adding the financial highlights for the six-month period ending June 30, 2008. This in formation has not been audited by the Trust’s independent registered public accounting firm, Ernst & Young, LLP. [To be added by amendment.]

May 1, 2008

State Farm Mutual Fund Trust

PROSPECTUS


		Class A Class B Legacy Class A Legacy Class B State Farm Equity Fund State Farm Small/Mid Cap Equity Fund State Farm International Equity Fund State Farm S&P 500 Index Fund State Farm Small Cap Index Fund State Farm International Index Fund State Farm Equity and Bond Fund State Farm Bond Fund State Farm Tax Advantaged Bond Fund State Farm Money Market Fund State Farm LifePath ^® Income Fund State Farm LifePath 2010 ^® Fund State Farm LifePath 2020 ^® Fund State Farm LifePath 2030 ^® Fund State Farm LifePath 2040 ^® Fund State Farm LifePath 2050 ^® Fund*


		* Not available until July 14, 2008

State Farm Mutual Fund Trust

Class A Shares

Class B Shares

Legacy Class A Shares

Legacy Class B Shares

State Farm Equity Fund

State Farm Small/Mid Cap Equity Fund

State Farm International Equity Fund

State Farm S&P 500 Index Fund

State Farm Small Cap Index Fund

State Farm International Index Fund

State Farm Equity and Bond Fund

State Farm Bond Fund

State Farm Tax Advantaged Bond Fund

State Farm Money Market Fund

State Farm LifePath ^® Income Fund

State Farm LifePath 2010 ^® Fund

State Farm LifePath 2020 ^® Fund

State Farm LifePath 2030 ^® Fund

State Farm LifePath 2040 ^® Fund

State Farm LifePath 2050 ^® Fund (Not available until July 14, 2008)

The Securities and Exchange Commission has not approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

PROSPECTUS—MAY 1, 2008

TABLE OF CONTENTS


		Page

*Funds at a Glance*		1

State Farm Equity Fund		1

State Farm Small/Mid Cap Equity Fund		2

State Farm International Equity Fund		3

State Farm S&P 500 Index Fund		4

State Farm Small Cap Index Fund		5

State Farm International Index Fund		6

State Farm Equity and Bond Fund		7

State Farm Bond Fund		8

State Farm Tax Advantaged Bond Fund		9

State Farm Money Market Fund		10

State Farm LifePath Funds		11

*Expense Information*		24

*Investor Profile*		29

*Adviser Related Performance*		30

*How the Funds Invest*		31

Managing the Investments of the Funds		43


		Page

*Shareholder Information*		51

Minimum Investments		51

Reduced Sales Charge Options		51

Calculating Net Asset Value		59

How to Buy Shares		59

How to Exchange Shares		62

How to Redeem Fund Shares		63

Policies for Low Balance Accounts		65

Signature Guarantee		65

Excessive Trading/Market Timing		66

Arbitration Agreement		67

*Shared Delivery*		68

*Dividends, Distributions and Taxes*		69

*Financial Highlights*		72

*Appendix A*		102

Additional Information About the Funds		109

This Prospectus provides information about State Farm Mutual Fund Trust (the “Trust”). The Trust has sixteen separate portfolios (the “Funds”), each of which is a separate investment portfolio with its own investment objective, investment policies, restrictions, and risks. State Farm Investment Management Corp. (the “Manager” or “SFIMC”) is the investment adviser to each Fund. Each Fund, other than the Tax Advantaged Bond Fund and State Farm LifePath 2050 Fund, offers eight classes of shares: Class A, Legacy Class A, Class B, Legacy Class B, Institutional shares, Class R-1, Class R-2 and Class R-3. The Tax Advantaged Bond Fund offers four classes of shares: Class A, Legacy Class A, Class B, and Legacy Class B. The State Farm LifePath 2050 Fund offers three classes of shares: Class A, Class R-1 and Class R-2. This Prospectus offers Class A, Legacy Class A, Class B and Legacy Class B shares of the Funds. Additional information concerning each of these Funds, including information related to performance and risks of investing in the Funds, appears following Funds At A Glance.

FUNDS AT A GLANCE

This section discusses each Fund’s investment objective and principal investment strategies.

STATE FARM EQUITY FUND

Investment Objective —

The State Farm Equity Fund (the “Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

The Equity Fund invests under normal circumstances at least 80% of its net assets plus any borrowings in common stocks and other equity securities of U.S. companies with market capitalizations of at least $1.5 billion. Capital Guardian Trust Company (“Capital Guardian”), sub-adviser to the Equity Fund, chooses stocks for the Fund’s portfolio for their long-term potential to generate capital growth.

In making investment decisions on specific securities, Capital Guardian looks for companies with one or more of the following characteristics:

•

Below-market price-to-earnings

•

Below-market price-to-book

•

Above-market yield

Capital Guardian may sell securities the Fund holds for a variety of reasons, such as to secure gains, limit losses, or redeploy assets into more promising opportunities. The Fund may invest up to 20% of its assets in equity securities and depositary receipts of foreign companies.

FUNDS AT A GLANCE continued

STATE FARM SMALL/MID CAP EQUITY FUND

Investment Objective —

The State Farm Small/Mid Cap Equity Fund (the “Small/Mid Cap Equity Fund”) (formerly the State Farm Small Cap Equity Fund) seeks long-term growth of capital.

Principal Investment Strategies

Two different investment sub-advisers, Bridgeway Capital Management, Inc. (“Bridgeway”) and Rainier Investment Management, Inc. (“Rainier”), select investments for the Small/Mid Cap Equity Fund. Bridgeway and Rainier each manage approximately one-half of the Small/Mid Cap Equity Fund’s portfolio. The Manager monitors the performance of the sub-advisers and the split of the portfolio between the sub-advisers. The principal investment strategies employed by the two sub-advisers for their respective portions of the portfolio are discussed separately below.

Bridgeway

Bridgeway invests its segment of the Fund in a diversified portfolio of small and mid-capitalization stocks issued by companies listed on the New York Stock Exchange, the American Stock Exchange and the National Association of Securities Dealers Automated Quotation System (“NASDAQ”). Bridgeway defines “small and mid-capitalization stocks” as those stocks issued by companies smaller than the largest 500 U.S. companies as measured by market capitalization (stock market worth). Bridgeway will not necessarily sell a stock if it migrates to a different category after purchase, for example large or growth. Bridgeway selects stocks using its proprietary quantitative investment models which consider multiple factors. Bridgeway does not time the market or incorporate macro-economic forecasting into its stock selection process.

Bridgeway invests in small and mid-capitalization stocks in the “value” category, which it defines as those stocks that Bridgeway believes are priced cheaply relative to some financial measures of worth, such as the ratio of price to earnings, price to sales or price to cash flow.

Bridgeway may invest up to 10% of its segment of the Fund’s assets in equity securities and depositary receipts of foreign companies.

Rainier

Rainier invests its segment of the Fund primarily (at least 80%) in the common stock of mid-capitalization companies traded in the U.S. with prospects of strong earnings growth and attractive overall business fundamentals, selling at reasonable valuations. Rainier considers a mid-capitalization company as one with market capitalization, at the time of purchase, within the range of companies included in the Russell Midcap ^® Index, an index that includes the smallest 800 securities in the Russell 1000 ^® Index. The market capitalization range of the Russell Midcap Index as of December 31, 2007 was $0.5 to $42.1 billion, with a median market capitalization of $3.76 billion. The market capitalization of companies in which Rainier may invest may vary with market conditions. Investments in companies that grow above these maximum capitalization criteria may continue to be held if Rainier considers them to be particularly attractive. Rainier will normally invest its segment of the Small/Mid Cap Equity Fund in securities issued by approximately 75-150 companies.

Rainier focuses on companies that are likely to demonstrate superior earnings growth relative to their peers, and whose equities are selling at attractive relative valuations. As a result, the portfolio managed by Rainier will invest in a blend of stocks with both growth and value characteristics. Rainier believes that a primary benefit of this strategy is the ability to generate competitive investment returns in many different market environments. In selecting common stock for purchase by the Small/Mid Cap Equity Fund, Rainier emphasizes companies that it believes are likely to demonstrate superior business fundamentals, such as revenue and earnings growth; sustainable competitive advantage; potential for positive price or business catalysts, including earnings surprise or market expansion; disciplined management with shareholder focus; and attractive relative valuations.

The portion of the Small/Mid Cap Equity Fund managed by Rainier is diversified over a broad cross section of economic sectors and industries. To help control risk, Rainier compares the portfolio’s economic sector weightings to a broad index of medium-sized companies, such as the Russell Midcap ^® Index, and normally avoids extreme overweighting or underweighting relative to that index.

Rainier may invest up to 20% of its segment of the Fund’s assets in equity securities and depositary receipts of foreign companies.

Rainier considers the sale of specific common stock when fundamentals deteriorate; when a stock reaches or surpasses its price target; or when better opportunities are perceived in alternative stocks.

FUNDS AT A GLANCE continued

STATE FARM INTERNATIONAL EQUITY FUND

Investment Objective —

The State Farm International Equity Fund (the “International Equity Fund”) seeks long-term growth of capital.

Principal Investment Strategies

The International Equity Fund invests its assets primarily in common stocks of companies located in Europe, Canada, Australia and the Far East. The Fund may invest up to 10% of its net assets in companies located in emerging or developing markets, such as Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela. The risks associated with investments in emerging or developing markets are discussed in the Prospectus under the sub-heading of “Foreign Investing Risks.” There is no restriction on the size of the companies in which the Fund invests.

The Fund invests in securities that Capital Guardian, sub-adviser to the International Equity Fund, thinks represent good long-term investment opportunities. Capital Guardian may sell securities when it believes they no longer represent good long-term value.

FUNDS AT A GLANCE continued

STATE FARM S&P 500 INDEX FUND

Investment Objective —

The State Farm S&P 500 Index Fund (the “S&P 500 Index Fund”) seeks to provide investment results that correspond to the total return of publicly traded common stocks in the aggregate, as represented by the Standard & Poor’s 500 Stock Index (the “S&P 500 ^® Index”). ¹

Principal Investment Strategies

The S&P 500 Index Fund invests all of its assets in a separate series of an unaffiliated mutual fund called Master Investment Portfolio (the “Master Fund”). That series, called the S&P 500 Index Master Portfolio, holds each of the stocks that make up the S&P 500 Index. The S&P 500 Index Master Portfolio and the S&P 500 Index Fund have substantially similar investment objectives. Barclays Global Fund Advisors (“Barclays”) is the investment adviser to the S&P 500 Index Master Portfolio.

Barclays seeks to achieve investment performance that is similar to the S&P 500 Index (the Fund’s target benchmark). The S&P 500 Index is a widely used measure of large U.S. company stock performance. Standard & Poor’s Corporation Ratings Group (“S&P”) selects stocks for the S&P 500 Index based upon the following factors:

•

market value

•

industry group classification (so that the S&P 500 Index represents a broad range of industry segments within the U.S. economy)

•

trading activity, to ensure ample liquidity and efficient share pricing

•

fundamental analysis, to ensure that companies in the S&P 500 Index are stable

The S&P 500 Index Master Portfolio pursues its investment objective by:

•

investing in all of the securities that make up the S&P 500 Index

•

investing in these securities in proportions that match the weightings of the S&P 500 Index

Under normal operating conditions, the S&P 500 Index Master Portfolio seeks to invest at least 90% of its total assets in stocks that are represented in the S&P 500 Index.

“Standard & Poor’s ^® ,” “S&P ^® ,” “S&P 500 ^® ,” “Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc. that have been licensed for use by State Farm Mutual Fund Trust. The S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representations regarding the advisability of investing in the S&P 500 Index Fund. For more information regarding the S&P 500 Index, see the Trust’s SAI.

FUNDS AT A GLANCE continued

STATE FARM SMALL CAP INDEX FUND

Investment Objective —

The State Farm Small Cap Index Fund (the “Small Cap Index Fund”) seeks to match as closely as practicable, before fees and expenses, the performance of the Russell 2000 Small Stock Index ^® ² (the “Russell 2000 Index”).

Principal Investment Strategies

Northern Trust Investments, N.A. (“Northern Trust Investments”), sub-adviser to the Small Cap Index Fund, seeks to achieve investment performance for the Small Cap Index Fund that is similar to the Russell 2000 Index.

The Russell 2000 Index is an index of 2,000 small companies that is created by taking the largest 3,000 companies in the U.S. and eliminating the largest 1,000 of those companies.

The Small Cap Index Fund pursues its investment objective by investing in a representative sample of the securities contained in the Russell 2000 Index based upon replication and optimization modeling techniques.

Under normal operating conditions, the Small Cap Index Fund seeks to invest at least 80% of its total assets in the equity securities included in the Russell 2000 Index, in weights that approximate the relative composition of the securities contained in the index.

The Russell 2000 ^® Index is a trademark/service mark, and Russell ^® is a trademark of the Frank Russell Company, doing business as Russell Investment Group (“Russell”). The Small Cap Index Fund is not sponsored, endorsed, sold or promoted by Russell, and Russell makes no representation regarding the advisability of investing in the Small Cap Index Fund. For more information regarding the Russell 2000 Small Stock Index, see the Trust’s SAI.

FUNDS AT A GLANCE continued

STATE FARM INTERNATIONAL INDEX FUND

Investment Objective —

The State Farm International Index Fund (the “International Index Fund”) seeks to match as closely as practicable, before fees and expenses, the performance of an international portfolio of common stocks represented by the Morgan Stanley Capital International Europe, Australasia, and Far East Free Index (“EAFE ^® Free Index”). ³

Principal Investment Strategies

Northern Trust Investments, sub-adviser to the International Index Fund, seeks to achieve investment performance for the International Index Fund that is similar to the EAFE Free Index. The EAFE Free Index is a capitalization-weighted index that currently includes stocks of companies located in 16 European countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom), Australia, New Zealand, Hong Kong, Japan and Singapore. The International Index Fund selects a representative sample of the securities contained in the EAFE Free Index based upon replication and optimization modeling techniques.

The International Index Fund attempts to remain as fully invested as practicable in a pool of stocks and other equity securities that are found in the EAFE Free Index in a manner that is expected to approximate the performance of the EAFE Free Index. Under normal operating conditions, the International Index Fund seeks to invest at least 80% of its total assets in the equity securities included in the EAFE Free Index, in weights that approximate the relative composition of the securities contained in the index.

The EAFE ^® Free Index is the exclusive property of Morgan Stanley Capital International Inc. (“MSCI”). Morgan Stanley Capital International is a service mark of MSCI and has been licensed for use by the State Farm Mutual Fund Trust (the “Trust”). EAFE ^® Free is a trade or service mark of MSCI and its affiliates and has been licensed for use for certain purposes by the Trust. The International Index Fund, based on the EAFE ^® Free Index, has not been passed on by MSCI as to its legality or suitability and is not issued, sponsored, endorsed, sold or promoted by MSCI. MSCI makes no warranties and bears no liability with respect to the International Index Fund. MSCI has no responsibility for, and does not participate in the management of, the International Index Fund’s assets or the sale of the International Index Fund’s shares. The SAI contains a more detailed description of the limited relationship MSCI has with the Trust and the International Index Fund.

FUNDS AT A GLANCE continued

STATE FARM EQUITY AND BOND FUND

Investment Objective —

The State Farm Equity and Bond Fund (the “Equity and Bond Fund”) seeks long-term growth of principal while providing some current income.

Principal Investment Strategies

The Equity and Bond Fund invests all of its assets in shares of the State Farm Equity Fund and the State Farm Bond Fund. Generally, the Equity and Bond Fund attempts to maintain approximately 60% of its net assets in shares of the State Farm Equity Fund and approximately 40% of its net assets in shares of the State Farm Bond Fund. The Equity and Bond Fund never invests more than 75% of its net assets in either underlying Fund. Though the Equity and Bond Fund is not an asset allocation or market timing mutual fund, it does, from time to time, adjust the amount of its assets invested in each underlying Fund as economic, market and financial conditions warrant. Please refer to the descriptions of the investments of the State Farm Equity Fund and the State Farm Bond Fund for a discussion of the portfolio securities of these Funds and the risks associated with each.

FUNDS AT A GLANCE continued

STATE FARM BOND FUND

Investment Objective —

The State Farm Bond Fund (the “Bond Fund”) seeks to realize over a period of years the highest yield consistent with investing in investment grade bonds.

Principal Investment Strategies

The Bond Fund invests primarily in investment grade bonds issued by U.S. companies, U.S. government and agency obligations, and mortgage backed securities. Under normal circumstances, the Bond Fund invests at least 80% of its net assets plus any borrowings in investment grade bonds or in bonds that are not rated, but that the Manager has determined to be of comparable quality. A bond is investment grade if Moody’s Investors Service, Inc. (“Moody’s”) or S&P has rated the bond in one of their respective four highest rating categories. Non-investment grade bonds are commonly referred to as “junk bonds.” The Bond Fund may invest in any of the following instruments:

•

Corporate Debt Securities: investment grade securities issued by domestic and foreign corporations and to a limited extent (up to 20% of its assets), in lower rated securities

•

U.S. Government Debt Securities: securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities

•

Foreign Government Debt Securities: investment grade securities issued or guaranteed by a foreign government or its agencies or instrumentalities, payable in U.S. dollars

•

Asset Backed and Mortgage Backed Securities: investment grade securities backed by mortgages, consumer loans and other assets

•

Other Issuer Debt Securities: the Fund may invest up to 20% of its assets in investment grade debt securities and preferred stocks that are convertible into common stocks as well as nonconvertible preferred stocks or securities.

FUNDS AT A GLANCE continued

STATE FARM TAX ADVANTAGED BOND FUND

Investment Objective —

The State Farm Tax Advantaged Bond Fund (the “Tax Advantaged Bond Fund”) seeks as high a rate of income exempt from federal income taxes as is consistent with prudent investment management.

Principal Investment Strategies

The Tax Advantaged Bond Fund normally invests so that either (1) 80% or more of the Fund’s net investment income is exempt from regular federal income tax or (2) 80% or more of the Fund’s net assets is invested in securities that produce income exempt from regular federal income tax. The Tax Advantaged Bond Fund invests primarily in a diversified selection of municipal bonds (for example, general obligation bonds of a state or bonds financing a specific project). Dividends from the Fund largely will be exempt from federal income tax, but a portion of those dividends may be subject to the federal alternative minimum tax and state income taxes. The Fund may hold bonds with maturities of one to thirty years, although a majority of the Fund’s investments are in bonds with maturities longer than five years.

The Tax Advantaged Bond Fund normally invests at least 80% of its total assets in municipal bonds within the highest four rating categories of Moody’s or S&P, meaning that the Fund may invest up to 20% of the Fund’s total assets in medium and lower-quality bonds.

The Tax Advantaged Bond Fund tends to hold most municipal bonds until they mature or are called. The Fund may sell a bond when the proportion of bonds with longer maturities is reduced in anticipation of a bond market decline (a result of rising interest rates), or increased in anticipation of a bond market rise (resulting from a decline in interest rates), or to meet cash flow needs. The Manager may also sell a bond if its credit risk increases significantly or if market conditions have changed so that more attractive investment opportunities are available.

FUNDS AT A GLANCE continued

STATE FARM MONEY MARKET FUND

Investment Objective —

The State Farm Money Market Fund (the “Money Market Fund”) seeks to maximize current income to the extent consistent with the preservation of capital and maintenance of liquidity.

Principal Investment Strategies

Unlike the other Funds, the Money Market Fund seeks to maintain a stable net asset value of $1.00 per share. The Fund invests exclusively in short-term, U.S. dollar-denominated money market securities, including those issued by U.S. and foreign financial institutions, corporate issuers, the U.S. Government and its agencies and instrumentalities, municipalities, foreign governments, and multi-national organizations, such as the World Bank.

FUNDS AT A GLANCE continued

STATE FARM LIFEPATH ^® FUNDS

•

STATE FARM LIFEPATH ^® INCOME FUND

•

STATE FARM LIFEPATH 2010 ^® FUND

•

STATE FARM LIFEPATH 2020 ^® FUND

•

STATE FARM LIFEPATH 2030 ^® FUND

•

STATE FARM LIFEPATH 2040 ^® FUND

•

STATE FARM LIFEPATH 2050 ^® FUND*

The State Farm LifePath ^® ⁴ Funds (together referred to as the “LifePath Funds”) offer investors comprehensive asset allocation investment strategies tailored to the time when they expect to begin withdrawing assets. Asset allocation is the distribution of investments among broad types of asset classes: stock, bonds and money market instruments. Each LifePath Fund indirectly invests in a combination of stocks, bonds and short-term money market funds in proportions suggested by its own comprehensive investment strategy that gradually becomes more conservative as the year in the LifePath Fund’s name approaches, except for the State Farm LifePath Income Fund that is already in its most conservative phase.

Each LifePath Fund invests all of its assets in a separate series (each, a “Master Portfolio”) of the Master Fund that has a substantially identical investment objective as the LifePath Fund. Each Master Portfolio, in turn, invests in a combination of stock, bond and money market funds (the “Underlying Funds”). For simplicity’s sake, all discussion of investment objectives, strategies and risks of a particular LifePath Fund refers also to the objectives, strategies and risks of its corresponding Master Portfolio, unless otherwise indicated. A detailed description of the relationship of the LifePath Funds to their Master Portfolios appears on page 43.

Investment Objectives —

Each LifePath Fund seeks to maximize assets for retirement or other purposes, consistent with the quantitatively measured risk that investors on average may be willing to accept given their investment time horizon. As a general rule, investors with a longer time horizon have a greater tolerance for risk than investors with a shorter time horizon. Long-term investors are more likely to accept a greater risk of short-term loss for the opportunity of achieving greater long-term gains. Each LifePath Fund has its own time horizon that affects the acceptable risk level of the LifePath Fund and, in turn, its asset allocation.

Specifically:

•

State Farm LifePath Income Fund is managed for investors seeking income and moderate long-term growth of capital.

•

State Farm LifePath 2010 Fund, State Farm LifePath 2020 Fund, State Farm LifePath 2030 Fund, State Farm LifePath 2040 Fund and the State Farm LifePath 2050 Fund are managed for investors planning to retire (or begin to withdraw substantial portions of their investment) approximately in the year included in each Fund’s name.

Principal Investment Strategies

Principal Investment Strategies Common to All LifePath Funds

The LifePath Funds pursue a common strategy of allocating and reallocating among the Underlying Funds. The LifePath Funds with longer time horizons invest a greater portion of their assets in Underlying Funds that invest in stocks, which provide a greater opportunity for capital appreciation over the long-term. The LifePath Funds with shorter time horizons invest a greater portion of their assets in Underlying Funds that invest in bonds and money market instruments, which typically offer reduced risk and price volatility. The LifePath Funds with shorter time horizons, accordingly, have lower expected returns than the LifePath Funds with longer time horizons.

The Underlying Funds include (but are not limited to) exchange-traded funds (ETFs), which are investment companies that trade on an exchange like shares of common stock. The ETFs are each based on an index that is composed of a group of securities chosen to represent an entire stock or bond market, or a major market segment. The ETFs attempt to reproduce the return of their respective underlying indexes by holding some or all of the securities included in those indexes. An underlying index may include securities that meet objective criteria, such as foreign, industry sector or company size. Including a security in an index only means that it has satisfied the selection criteria. It implies no expectation about performance.

Not available until July 14, 2008

⁴

LifePath ^® Funds, LifePath Income ^® , LifePath 2010 ^® , LifePath 2020 ^® , LifePath 2030 ^® , LifePath 2040 ^® , and LifePath 2050 ^® are registered trademarks of Barclays Global Investors, N.A. (“BGI”).

FUNDS AT A GLANCE continued

Asset Allocation Decisions. In determining the allocation of assets to the Underlying Funds, Barclays, the Master Portfolios’ investment adviser, uses an investment model that focuses on selecting a mix of investments by measuring their risk level and expected returns. The investment model is based on a proprietary set of criteria that analyzes extensive financial and economic data (such as market interest rates and inflation data), as well as risk correlation and expected return statistics of the world’s equity and bond markets. Barclays then allocates the LifePath Funds’ assets among the various Underlying Funds. The investment model adjusts each LifePath Fund’s risk level by gradually shifting assets from more risky investments, such as Underlying Funds that invest in stocks, to more conservative investments, like Underlying Funds that invest in bonds and money market instruments as the year in the LifePath Fund’s name approaches, except for the LifePath Income Fund, which is already in its most conservative phase. As the stated time horizon of a State Farm LifePath Fund approaches, the allocation will become less risky and have lower expected returns.

This strategy stems from the belief that asset allocation decisions — for example, choosing between stocks and bonds — matter more to overall investment performance than the selection of a particular stock or bond.

Risk Tolerance

Two general rules of investing have shaped the strategies of the LifePath Funds:

•

Higher investment returns usually go hand-in-hand with higher risk. Put another way, the greater an investment’s potential return, the greater its potential loss. Historically, for example, stocks have outperformed bonds, but the worst year for stocks on record was much worse than the worst year for bonds.

•

The longer the investors’ time horizons, the greater their risk tolerance; their investments have more time to recover from losses.

After a Fund Reaches Its Time Horizon. By the time a LifePath Fund reaches the decade identified by its name, it has reached its most conservative phase in terms of building capital (the LifePath Income Fund has already entered this phase). This does not mean, however, that the LifePath Income Fund invests exclusively in the underlying money market fund. Rather, because Barclays believes that most investors are still willing to take some risks in pursuing returns even while drawing on their investments, a portion of the LifePath Income Fund’s assets will continue to be allocated to the underlying stock and bond funds, in addition to the underlying money market fund.

Principal Investment Strategies for Each LifePath Fund

•

State Farm LifePath Income Fund is designed for investors seeking income and moderate long-term growth of capital. As of December 31, 2007, the State Farm LifePath Income Fund intends to hold about 37% of its assets in the underlying stock funds, 62% of its assets in the underlying bond funds and the rest of its assets in the underlying money market fund.

•

State Farm LifePath 2010 Fund is designed for investors expecting to begin withdrawing assets around the year 2010. As of December 31, 2007, the State Farm LifePath 2010 Fund intends to hold about 43% of its assets in the underlying stock funds, 56% of its assets in the underlying bond funds and the rest of its assets in the underlying money market fund.

•

State Farm LifePath 2020 Fund is designed for investors expecting to begin withdrawing assets around the year 2020. As of December 31, 2007, the State Farm LifePath 2020 Fund intends to hold about 64% of its assets in the underlying stock funds, 35% of its assets in the underlying bond funds and the rest of its assets in the underlying money market fund.

•

State Farm LifePath 2030 Fund is designed for investors expecting to begin withdrawing assets around the year 2030. As of December 31, 2007, the State Farm LifePath 2030 Fund intends to hold about 78% of its assets in the underlying stock funds, 21% of its assets in the underlying bond funds and the rest of its assets in the underlying money market fund.

•

State Farm LifePath 2040 Fund is designed for investors expecting to begin withdrawing assets around the year 2040. As of December 31, 2007, the State Farm LifePath 2040 Fund intends to hold about 91% of its assets in the underlying stock funds, 8% of its assets in the underlying bond funds and the rest of its assets in the underlying money market fund.

•

State Farm LifePath 2050 Fund is designed for investors expecting to begin withdrawing assets around the year 2050. As of the date of this prospectus, the State Farm LifePath 2050 Fund intends to hold about 99% of its assets in the underlying stock funds, 1% of its assets in the underlying bond funds and the rest of its assets in the underlying money market fund. The State Farm LifePath 2050 Fund will not be available for purchase until July 14, 2008.

FUNDS AT A GLANCE continued

For the LifePath 2010 Fund, LifePath 2020 Fund, LifePath 2030 Fund, LifePath 2040 Fund, and the LifePath 2050 Fund, as time passes the allocations within each fund will become less risky and each Fund will have a lower expected return.

Risks

Principal Risks of Investing in the Funds

Investors who purchase shares of the Funds are subject to various risks, and it is possible for you to lose money by investing in the Funds. An investment in a Fund is not a deposit of any bank or other insured depository institution and is not insured or guaranteed by the Federal Deposit Insurance Corporation or (FDIC) or another government agency. Although the Money Market Fund seeks to preserve the value of your investment by maintaining a stable net asset value of $1.00 per share, the Fund may not succeed and you may still lose money by investing in the Fund.

A description of the various types or risks faced by persons investing in the Funds follows.

•

Market Risk. Several Funds invest all or a portion of their portfolios in common stocks, which represent an equity interest (ownership) in a business. Stock prices may fluctuate widely over short or even extended periods in response to company, market, or economic news. Stock markets also tend to move in cycles, with periods of rising stock prices and periods of falling stock prices.

•

Foreign Investing Risk. Some of the Funds invest in foreign securities, which involves higher trading and custody costs than investing in U.S. companies. Accounting, legal and reporting practices are different than in the U.S. and regulation is often less stringent. Potential political or economic instability presents risks, as does the fluctuation in currency exchange rates, as well as the possible imposition of exchange control regulation or currency restrictions that could prevent the conversion of local currencies into U.S. dollars. Some foreign markets are considered to be emerging market countries. Investments in these countries subject a Fund to a greater risk of loss than investments in a developed country. This is due to, among other things, greater market volatility, lower trading volume, political and economic instability, greater risk of market shut down and more governmental limitations on foreign investment policy than those typically found in a developed market.

•

Management Risk. The assessment by a Fund’s investment adviser or sub-adviser of the securities to be purchased or sold by a Fund may prove incorrect, resulting in losses or poor performance, even in a rising market.

•

Smaller Company Size Risk. The Small Cap Index Fund primarily invests its assets in securities issued by companies with smaller market capitalizations. The Small/Mid Cap Equity Fund invests a significant portion of its assets in such securities. Market capitalization is the value of a company calculated by multiplying a company’s stock price by the number of its outstanding shares. Other Funds invest to a lesser extent in securities issued by companies with smaller market capitalizations. The securities of small capitalization companies are often more difficult to value or dispose of, more difficult to obtain information about, and more volatile than stocks of larger, more established companies. In addition, the markets for a Fund’s investments may not be actively traded, which increases the risk that the Fund’s investment adviser or sub-adviser may have difficulty selling securities the Fund holds.

•

Indexing Risk. The S&P 500 Index Fund, the Small Cap Index Fund and the International Index Fund (collectively, the “Equity Index Funds”) attempt to match the performance of a securities market index, but there is no guarantee that these funds will succeed in their attempt to match such performance. The degree to which an Equity Index Fund fails to match the performance of its benchmark index is referred to as “tracking error.” Barclays expects that the tracking error for the S&P 500 Index Master Portfolio, the master portfolio into which the S&P 500 Index Fund invests substantially all of its assets, will be less than 5% over time. With respect to the Small Cap Index Fund and the International Index Fund, Northern Trust Investments expects that over time and under normal circumstances, the quarterly performance of these two funds, before expenses, will be within 95% of the performance of each Fund’s applicable benchmark index. Each Equity Index Fund tries to stay fully invested at all times in assets that will help the Fund achieve its investment objective. Even when stock prices are falling, an Equity Index Fund will stay fully invested and may decline more than its benchmark index. An index is not a mutual fund and you cannot invest in an index. The composition and weighting of securities in an index can, and often do, change.

•

Interest Rate Risk and Call Risk. The risk that the bonds a Fund holds may decline in value due to an increase in interest rates. All bonds, including those issued by the U.S. Government, are subject to interest rate risk. Bonds with longer maturities are affected more by interest rate movements than bonds with shorter maturities. Another risk associated with interest rate changes is call risk. Call risk is the risk that during

FUNDS AT A GLANCE continued

periods of falling interest rates, a bond issuer will “call” or repay a higher yielding bond before the maturity date of the bond. Under these circumstances, the Fund may have to reinvest the proceeds in an investment that provides a lower yield than the called bond.

•

Prepayment Risk. The risk that homeowners or consumers may repay mortgage or consumer loans, which may affect the yield of mortgage- or asset-backed securities that are backed by such loans.

•

Credit Risk. The risk that a bond issuer fails to make principal or interest payments when due to the Fund, or that the credit quality of the issuer falls. The Fund’s investments in securities issued by U.S. Government sponsored entities, such as the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, are not funded by Congressional appropriations and are neither guaranteed nor insured by the U.S. Government. Furthermore, no assurances 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. Corporate bonds are subject to greater credit risk than U.S. Government bonds.

•

High Yield, High Risk Securities. Bonds that are in low or below investment-grade categories, or are unrated at the time of purchase (sometimes referred to as “junk bonds” or high yield securities) have a greater risk of default and are more volatile than higher-rated securities of similar maturity. The value of these securities is affected by overall economic conditions, interest rates, and the creditworthiness of the individual issuers. Additionally, these lower-rated or unrated bonds may be less liquid and more difficult to value than higher-rated securities.

•

Liquidity Risk. The investment adviser or sub-adviser to the Fund may have difficulty selling securities the Fund holds at the time it would like to sell, and at the value the Fund has placed on those securities.

•

Income Risk. The risk that the income from the bonds a Fund holds will decline in value due to falling interest rates.

•

Municipal Bond Risk. Municipal securities can be significantly affected by political changes as well as uncertainties related to taxation, legislative changes or the rights of municipal security holders. Because many municipal securities are issued to finance similar projects (for example, education, healthcare or transportation), conditions in those sectors can affect the overall municipal market.

Additionally, some municipal securities are secured by insurance, bank credit agreements or escrow accounts. The credit quality of the companies that provide such credit enhancements will affect the value of those securities. Certain significant providers of insurance for municipal securities have recently incurred significant losses as a result of exposure to sub-prime mortgages and other lower credit quality investments that have experienced recent defaults or otherwise suffered extreme credit deterioration. As a result, such losses have reduced the insurers’ capital and called into question their continued ability to perform their obligations under such insurance if they are called upon to do so in the future. While an insured municipal security will typically be deemed to have the rating of its insurer, if the insurer of a municipal security suffers a downgrade in its credit rating or the market discounts the value of the insurance provided by the insurer, the rating of the underlying municipal security will be more relevant and the value of the municipal security would more closely, if not entirely, reflect such rating. In such a case, the value of insurance associated with a municipal security would decline in value and may become worthless. The insurance feature of a municipal security does not guarantee the full payment of principal and interest through the life of an insured obligation, the market value of the insured obligation or the net asset value of any Fund shares represented by such insured obligation.

•

Inflation Risk. The risk that the value of the assets or income from an investment will be worth less in the future as inflation decreases the value of money.

•

Security Selection Risk. Because securities market indices are developed by persons unrelated to the Trust, the Manager or to the Trust’s sub-advisers, a Fund that attempts to match the performance of a securities market index may hold stocks in companies that present risks that an investment adviser or sub-adviser researching individual stocks might avoid.

•

Market Trading Risks. Through their investments in the LifePath Master Portfolios, the LifePath Funds indirectly are subject to the risk that an active and liquid trading market may not develop or may cease to exist for Underlying Funds that are ETFs. ETFs are listed and traded on securities exchanges. Trading in ETFs may be halted because of market conditions or for reasons that, in the view of the listing exchange, make trading in ETFs inadvisable. In addition, trading in ETFs is subject to trading halts caused by extraordinary market volatility pursuant to “circuit breaker” rules. There can be no

FUNDS AT A GLANCE continued

assurance that the requirements necessary to maintain the listing of ETFs will continue to be met or will remain unchanged. An ETF may trade at, above or below its net asset value (“NAV”) per share. The NAV of an ETF will fluctuate with changes in the market value of its holdings. The trading price of an ETF will generally fluctuate in accordance with changes in its NAV, as well as market supply and demand.

•

Model Risk. Although the investment model used to manage the LifePath Funds’ assets has been developed and refined over many years, neither the LifePath Funds nor Barclays can offer any assurance that the recommended allocation will either maximize returns or minimize risks. Nor can the LifePath Funds or Barclays offer assurance that a recommended allocation will be the appropriate allocation in all circumstances for every investor with a particular time horizon.

The principal investment risks specific to each Fund follows:


	Market Risk	Foreign Investing Risk	Management Risk	Smaller Company Size Risk	Indexing Risk
Equity Fund	X	X	X
Small/Mid Cap Equity Fund	X	X	X	X
International Equity Fund	X	X	X
S&P 500 Index Fund	X		X		X
Small Cap Index Fund	X		X	X	X
International Index Fund	X	X	X		X
Equity and Bond Fund	X	X	X
Bond Fund			X
Tax Advantaged Bond Fund			X
Money Market Fund			X
LifePath Income Fund	X	X	X	X	X
LifePath 2010 Fund	X	X	X	X	X
LifePath 2020 Fund	X	X	X	X	X
LifePath 2030 Fund	X	X	X	X	X
LifePath 2040 Fund	X	X	X	X	X
LifePath 2050 Fund	X	X	X	X	X

FUNDS AT A GLANCE continued


	Interest Rate Risk and Call Risk	Prepayment Risk	Credit Risk	High Yield, High Risk Securities	Liquidity Risk
Equity Fund
Small/Mid Cap Equity Fund
International Equity Fund
S&P 500 Index Fund
Small Cap Index Fund
International Index Fund
Equity and Bond Fund	X	X	X	X	X
Bond Fund	X	X	X	X	X
Tax Advantaged Bond Fund	X	X	X	X	X
Money Market Fund	X		X
LifePath Income Fund	X	X	X	X	X
LifePath 2010 Fund	X	X	X	X	X
LifePath 2020 Fund	X	X	X	X	X
LifePath 2030 Fund	X	X	X	X	X
LifePath 2040 Fund	X	X	X	X	X
LifePath 2050 Fund	X	X	X	X	X

Income

Risk

Municipal
Bond
Risk

Inflation
Risk

Security
Selection
Risk

Market
Trading
Risk

Model
Risk

Equity Fund

Small/Mid Cap Equity Fund

International Equity Fund

S&P 500 Index Fund

Small Cap Index Fund

International Index Fund

Equity and Bond Fund

Bond Fund

Tax Advantaged Bond Fund

Money Market Fund

LifePath Income Fund

LifePath 2010 Fund

LifePath 2020 Fund

LifePath 2030 Fund

LifePath 2040 Fund

LifePath 2050 Fund

FUNDS AT A GLANCE continued

Performance–

The following bar charts illustrate certain risks of investing in the Funds by showing each Fund’s total return for the calendar years noted (other than the LifePath 2050 Fund which, is newly created and has no performance history). The information in the bar charts relates to Legacy Class A shares. Sales loads and taxes are not reflected in the bar charts, and if those charges were included, the returns would be lower than indicated.

The information in the bar charts is intended to help you assess the variability of Fund returns over the periods listed (and consequently, the potential rewards and risks of a Fund investment).

A Fund’s past performance (before and after taxes) doesn’t necessarily indicate how it will perform in the future.

Equity Fund ⁵

LOGO

Small/Mid Cap Equity Fund ⁶

LOGO

International Equity Fund

LOGO

S&P 500 Index Fund

LOGO

Small Cap Index Fund ⁷

LOGO

⁵

Capital Guardian began serving as investment sub-adviser to the Equity Fund on September 1, 2005. Prior to September 1, 2005, the Manager was responsible for managing the Equity Fund.

⁶

Bridgeway and Rainier began sub-advising the Small/Mid Cap Equity Fund on December 1, 2006. Prior to that date, Capital Guardian sub-advised the Fund.

⁷

Northern Trust Investments began serving as investment sub-adviser to the Small Cap Index Fund on September 9, 2005. Prior to September 9, 2005, the Small Cap Index Fund was a feeder fund that invested all of its assets into a series of the Master Fund.

FUNDS AT A GLANCE continued

International Index Fund ⁸

LOGO

Equity and Bond Fund

LOGO

Bond Fund

LOGO

Tax Advantaged Bond Fund

LOGO

Money Market Fund ⁹

LOGO

LifePath Income Fund

LOGO

⁸

Northern Trust Investments began serving as investment sub-adviser to the International Index Fund on September 9, 2005. Prior to September 9, 2005, the International Index Fund was a feeder fund that invested all of its assets into a series of the Master Fund.

⁹

Unlike the other fourteen Funds, Class A shares of the Money Market Fund are not subject to a sales load. Accordingly, sales loads are not reflected in the performance information included for that Fund’s bar chart because sales loads do not apply to Class A shares of the Money Market Fund.

FUNDS AT A GLANCE continued

LifePath 2010 Fund

LOGO

LifePath 2020 Fund

LOGO

LifePath 2030 Fund

LOGO

LifePath 2040 Fund

LOGO

LifePath 2050 Fund

The LifePath 2050 Fund will be available for purchase on July 14, 2008. Because the LifePath 2050 Fund is newly created, the Fund has no performance history.

FUNDS AT A GLANCE continued

During the periods included in the bar charts above, each Fund’s highest and lowest quarterly returns were as follows:


*Fund*	*High*	Quarter Ended	*Low*	Quarter Ended
Equity Fund	11.64%	6/30/2003	- 14.92%	9/30/2002
Small/Mid Cap Equity Fund	25.93%	12/31/2001	- 25.71%	9/30/2001
International Equity Fund	17.88%	6/30/2003	- 20.86%	9/30/2002
S&P 500 Index Fund	15.24%	6/30/2003	- 17.36%	9/30/2002
Small Cap Index Fund	22.74%	6/30/2003	- 21.50%	9/30/2002
International Index Fund	19.15%	6/30/2003	- 20.13%	9/30/2002
Equity and Bond Fund	7.82%	6/30/2003	- 7.57%	3/31/2001
Bond Fund	4.74%	9/30/2002	- 2.88%	6/30/2004
Tax Advantaged Bond Fund	6.55%	9/30/2002	- 2.61%	6/30/2004
Money Market Fund	1.33%	3/31/2001	0.11%	9/30/2003
LifePath Income Fund	4.44%	12/31/2004	- 1.50%	6/30/2004
LifePath 2010 Fund	5.75%	12/31/2004	- 1.05%	6/30/2004
LifePath 2020 Fund	7.66%	12/31/2004	- 2.14%	12/31/2007
LifePath 2030 Fund	9.03%	12/31/2004	- 3.15%	12/31/2007
LifePath 2040 Fund	10.14%	12/31/2004	- 4.06%	12/31/2007
LifePath 2050 Fund	N/A		N/A

Performance — Average Annual Total Returns (for periods ended 12/31/2007)

The following tables illustrate certain risks of investing in the Funds by comparing a Fund’s average annual total return (before and after taxes) for the periods listed to a market index (except for returns of the Money Market Fund which are shown before taxes only and which are not compared to a market index). The after-tax returns in the tables are intended to show the impact of assumed federal income taxes on an investment in a Fund. The after-tax returns are shown for Legacy Class A shares only, and the after-tax returns for Class A, Class B and Legacy Class B shares will vary.

“Return After Taxes on Distributions” shows the effect of taxable distributions, but assumes that you still hold Fund shares at the end of the period and that you do not have any taxable gain or loss on the disposition of your Fund shares. “Return After Taxes on Distributions and Sale of Fund Shares” shows the effect of both taxable distributions and any taxable gain or loss that you would realize if you purchased Fund shares at the beginning of the specified period and sold Fund shares at the end of the specified period. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as individual retirement accounts. In some instances the “Return After Taxes on Distributions and Sale of Fund Shares” may be greater than the “Return Before Taxes” because the investor is assumed to be able to use the capital loss on the sale of the Fund shares to offset other taxable gains.

The information in the performance tables is intended to help you assess the variability of Fund returns over the periods listed (and consequently, the potential rewards and risks of a Fund investment). A Fund’s past performance (before and after taxes) doesn’t necessarily indicate how it will perform in the future.


*Equity Fund*	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	– 9.38%	8.25%	0.44%
Return Before Taxes—Legacy Class B	– 9.50%	8.23%	0.47%
Return After Taxes on Distributions— Legacy Class A	– 10.72%	7.31%	– 0.22%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	– 8.24%	7.01%	0.25%
Russell 1000 ^® Value Index	– 0.17%	14.63%	7.11%

FUNDS AT A GLANCE continued


Small /Mid Cap Equity Fund	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	11.87%	13.98%	5.13%
Return Before Taxes—Legacy Class B	11.99%	14.04%	5.19%
Return After Taxes on Distributions— Legacy Class A	8.75%	12.84%	4.37%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	9.11%	11.95%	4.22%
Russell 2000 Index	– 1.57%	16.25%	8.77%
Russell 2500 Index	1.38%	16.99%	9.52%

Bridgeway and Rainier began sub-advising the Small/Mid Cap Equity Fund on December 1, 2006. At the same time the benchmark for the Small/Mid Cap Equity Fund changed from the Russell 2000 Index to the Russell 2500 Index to reflect the Fund’s new investment strategy. In the future the Manager intends to eliminate the Russell 2000 Index as a comparative index for the Small/Mid Cap Equity Fund.


International Equity Fund	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	7.32%	17.31%	5.86%
Return Before Taxes—Legacy Class B	7.36%	17.40%	5.91%
Return After Taxes on Distributions— Legacy Class A	6.16%	16.90%	5.51%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	6.24%	15.28%	5.01%
EAFE Free Index	11.17%	21.59%	8.58%


S&P 500 Index Fund	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	1.62%	11.24%	1.99%
Return Before Taxes—Legacy Class B	1.41%	11.30%	2.07%
Return After Taxes on Distributions— Legacy Class A	1.37%	11.06%	1.81%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	1.38%	9.81%	1.65%
S&P 500 Index	5.49%	12.83%	3.26%


Small Cap Index Fund	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	– 5.49%	14.27%	7.17%
Return Before Taxes—Legacy Class B	– 5.66%	14.32%	7.24%
Return After Taxes on Distributions— Legacy Class A	– 6.46%	13.46%	6.49%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	– 4.70%	12.50%	6.12%
Russell 2000 Index	– 1.57%	16.25%	8.77%


International Index Fund	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	6.31%	19.52%	6.89%
Return Before Taxes—Legacy Class B	6.17%	19.65%	6.95%
Return After Taxes on Distributions— Legacy Class A	6.17%	19.28%	6.68%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	5.77%	17.40%	6.03%
EAFE Free Index	11.17%	21.59%	8.58%


Equity and Bond Fund	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	– 4.22%	6.30%	2.37%
Return Before Taxes—Legacy Class B	– 4.47%	6.23%	2.44%
Return After Taxes on Distributions— Legacy Class A	– 5.64%	5.38%	1.44%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	– 4.21%	5.09%	1.59%
Russell 1000 Value Index	– 0.17%	14.63%	7.11%
Lehman Brothers U.S. Aggregate Bond Index	6.97%	4.42%	5.82%
Blended Benchmark	2.78%	10.57%	6.84%


*Bond Fund*	*1-Year*	*5-Year*	Since 12/18/2000
Return Before Taxes—Legacy Class A	3.30%	3.06%	4.52%
Return Before Taxes—Legacy Class B	2.97%	2.93%	4.57%
Return After Taxes on Distributions— Legacy Class A	1.73%	1.63%	2.84%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	1.89%	1.77%	2.85%
Lehman Brothers U.S. Aggregate Bond Index	6.97%	4.42%	5.82%

FUNDS AT A GLANCE continued


Tax Advantaged Bond Fund	*1-Year*		*5-Year*		Since 12/18/2000
Return Before Taxes—Legacy Class A	0.85	%	3.16	%	4.46	%
Return Before Taxes—Legacy Class B	0.59	%	3.03	%	4.50	%
Return After Taxes on Distributions— Legacy Class A	0.77	%	3.14	%	4.37	%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	1.30	%	3.27	%	4.34	%
Lehman Brothers Municipal Bond Index	3.36	%	4.30	%	5.21	%


Money Market Fund	*1-Year*		*5-Year*		Since 12/18/2000
Return Before Taxes— Legacy Class A	4.67	%	2.61	%	2.55	%
Return Before Taxes— Legacy Class B	1.26	%	1.83	%	2.14	%

The Money Market Fund’s current seven-day yield on December 31, 2007 was 3.96% for Legacy Class A shares and 3.55% for Legacy Class B shares.


*LifePath Income Fund*	*1-Year*		Since (5/09/2003)
Return Before Taxes—Legacy Class A	0.93	%	5.82	%
Return Before Taxes—Legacy Class B	0.59	%	5.74	%
Return After Taxes on Distributions—Legacy Class A	– 0.24	%	4.94	%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	0.36	%	4.60	%
Lehman Brothers U.S. Aggregate Bond Index	6.97	%	4.11	%
S&P 500 Index	5.49	%	12.28	%
Blended Benchmark	7.00	%	8.12	%


*LifePath 2010 Fund*	*1-Year*		Since (5/09/2003)
Return Before Taxes—Legacy Class A	0.59	%	7.10	%
Return Before Taxes—Legacy Class B	0.30	%	7.05	%
Return After Taxes on Distributions—Legacy Class A	– 0.50	%	6.35	%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	0.16	%	5.84	%
Lehman Brothers U.S. Aggregate Bond Index	6.97	%	4.11	%
S&P 500 Index	5.49	%	12.28	%
Blended Benchmark	6.88	%	9.45	%


*LifePath 2020 Fund*	*1-Year*		Since (5/09/2003)
Return Before Taxes—Legacy Class A	– 0.22	%	8.91	%
Return Before Taxes—Legacy Class B	– 0.46	%	8.93	%
Return After Taxes on Distributions—Legacy Class A	– 1.13	%	8.30	%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	– 0.34	%	7.55	%
Lehman Brothers U.S. Aggregate Bond Index	6.97	%	4.11	%
S&P 500 Index	5.49	%	12.28	%
Blended Benchmark	6.38	%	11.19	%


*LifePath 2030 Fund*	*1-Year*		Since (5/09/2003)
Return Before Taxes—Legacy Class A	– 0.88	%	10.24	%
Return Before Taxes—Legacy Class B	– 1.14	%	10.22	%
Return After Taxes on Distributions—Legacy Class A	– 1.63	%	9.73	%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	– 0.78	%	8.81	%
Lehman Brothers U.S. Aggregate Bond Index	6.97	%	4.11	%
S&P 500 Index	5.49	%	12.28	%
Blended Benchmark	5.98	%	12.59	%


*LifePath 2040 Fund*	*1-Year*		Since (5/09/2003)
Return Before Taxes—Legacy Class A	– 1.46	%	11.30	%
Return Before Taxes—Legacy Class B	– 1.80	%	11.34	%
Return After Taxes on Distributions—Legacy Class A	– 2.19	%	10.83	%
Return After Taxes on Distributions and Sale of Fund Shares—Legacy Class A	– 1.26	%	9.77	%
Lehman Brothers U.S. Aggregate Bond Index	6.97	%	4.11	%
S&P 500 Index	5.49	%	12.28	%
Blended Benchmark	5.62	%	13.73	%

Descriptions of Indices

The indices represent unmanaged groups of securities that differ from the composition of the Funds. Unlike an investment in the Funds, a theoretical investment in any index or benchmark does not reflect any expenses or investing or deductions for taxes. It is not possible to invest directly in an index or benchmark.

•

The Russell 1000 ^® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth rates.

FUNDS AT A GLANCE continued

•

The S&P 500 ^® Index tracks the common stock performance of large U.S. companies in the manufacturing, utilities, transportation and financial industries. In total, the S&P 500 Index is comprised of 500 common stocks.

•

The Russell 2000 ^® Index tracks the common stock performance of the 2,000 smallest U.S. companies in the Russell 3000 ^® Index, which represents approximately 10% of the total capitalization of the Russell 3000 Index.

•

The Russell 2500 ^® Index measures the performance of the 2,500 smallest securities in the Russell 3000 ^® Index, which represents approximately 20% of the total market capitalization of the Russell 3000 Index.

•

The Morgan Stanley Capital International Europe, Australasia and Far East (EAFE ^® ) Free Index currently measures the performance of stock markets of Europe, Australia, New Zealand, and the Far East and takes into account local market restrictions on share ownership by foreigners. The EAFE Free Index is meant to reflect actual opportunities for foreign investors in a local market.

•

The Lehman Brothers U.S. Aggregate Bond Index represents debt securities in the U.S. investment grade fixed rate taxable bond market, including government and corporate debt securities, mortgage pass-through debt securities and asset-backed debt securities with maturities greater than one year.

•

For the Equity and Bond Fund, the Manager computes the Blended Benchmark using 60% Russell 1000 Value Index and 40% Lehman Brothers U.S. Aggregate Bond Index.

•

The Lehman Brothers Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market and is made up of investment grade municipal bonds issued after December 31, 1990, having a remaining maturity of at least one year.

•

The customized LifePath Blended Benchmarks represent hypothetical performance of the respective LifePath Master Portfolio’s asset classes according to their weightings as of the most recent quarter end. The weightings of the various indices that are included in the Blended Benchmarks are adjusted quarterly to reflect the LifePath Master Portfolio’s changing asset allocation over time. The following indices are used to calculate the LifePath Master Portfolios’ Blended Benchmarks: S&P 500 Index, S&P MidCap 400 Index, S&P SmallCap 600 Index, MSCI EAFE Index, Lehman Brothers U.S. Aggregate Bond Index, Lehman TIPS Index, and Cohen & Steers Realty Majors Index.

EXPENSE INFORMATION

The following tables describe the fees and expenses you would pay if you buy and hold shares of the Funds.

Shareholder Transaction Expenses – For All Funds, Other Than the Bond Fund, Tax Advantaged Bond Fund and the Money Market Fund

(fees paid directly from your investment)


	*Class A*	*Class B*	*Legacy Class A*	*Legacy Class B*
Maximum sales charge (load) imposed on purchases	5.00%	None	3.00%	None
Maximum deferred sales charge (load)	None	5.00%	None	3.00%
Maximum Account Fee ⁽¹⁾	None	None	None	None

Shareholder Transaction Expenses – Bond Fund and Tax Advantaged Bond Fund

(fees paid directly from your investment)


	*Class A*	*Class B*	*Legacy Class A*	*Legacy Class B*
Maximum sales charge (load) imposed on purchases	3.00%	None	3.00%	None
Maximum deferred sales charge (load)	None	3.00%	None	3.00%
Maximum Account Fee ⁽¹⁾	None	None	None	None

Shareholder Transaction Expenses – Money Market Fund

(fees paid directly from your investment)


	*Class A*	*Class B*		*Legacy Class A*	*Legacy Class B*
Maximum sales charge (load) imposed on purchases	None	None		None	None
Maximum deferred sales charge (load)	None	3.00%	⁽²⁾	None	3.00%	⁽³⁾
Maximum Account Fee ⁽¹⁾	None	None		None	None

⁽¹⁾

For certain types of accounts, if your account balance falls below $1,000 at the close of business on the first business day of November, the account will be charged a low balance fee of $25. See “Shareholder Information – Policies for Low Balance Accounts” for details.

⁽²⁾

A person can invest in Class B shares of the Money Market Fund only by exchanging into Class B shares of the Money Market Fund from Class B shares of another Fund. A Class B shareowner of the Money Market Fund who redeems his or her shares will incur a contingent deferred sales charge on the redemption of up to 3% of the amount redeemed. See the “Shareholder Information – Reduced Sales Charge Options” section of this prospectus for the amount of the contingent deferred sales charge.

⁽³⁾

A person can invest in Legacy Class B shares of the Money Market Fund only by exchanging from Legacy Class B shares of another Fund. A Legacy Class B shareowner of the Money Market Fund who redeems his or her shares will incur a contingent deferred sales charge on the redemption of up to 3% of the amount redeemed. See the “Shareholder Information – Reduced Sales Charge Options” section of this prospectus for the amount of the contingent deferred sales charge.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)


	*Equity Fund*				*Small/Mid Cap Equity Fund*
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	Legacy Class A	Legacy Class B
Management fees	0.60%	0.60%	0.60%	0.60%	0.80%	0.80%	0.80%	0.80%
Distribution (12b-1) Fees	0.25%	0.95%	0.25%	0.65%	0.25%	0.85%	0.25%	0.65%
Other Expenses	0.32%	0.32%	0.32%	0.32%	0.39%	0.39%	0.39%	0.39%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	1.17%	1.87%	1.17%	1.57%	1.44%	2.04%	1.44%	1.84%

	*International Equity Fund*				*S&P 500 Index Fund ⁽²⁾⁽⁵⁾*
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	Legacy Class A	*Legacy* *Class B*
Management fees	0.80%	0.80%	0.80%	0.80%	0.20%	0.20%	0.20%	0.20%
Distribution (12b-1) Fees	0.25%	0.85%	0.25%	0.65%	0.25%	0.95%	0.25%	0.65%
Other Expenses	0.55%	0.55%	0.55%	0.55%	0.33%	0.33%	0.33%	0.33%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	1.60%	2.20%	1.60%	2.00%	0.78%	1.48%	0.78%	1.18%

EXPENSE INFORMATION continued


	Small Cap Index Fun d				International Index Fund
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	*Legacy* *Class A*	*Legacy* *Class B*
Management fees	0.35%	0.35%	0.35%	0.35%	0.50%	0.50%	0.50%	0.50%
Distribution (12b-1) Fees	0.25%	0.95%	0.25%	0.65%	0.25%	0.95%	0.25%	0.65%
Other Expenses	0.39%	0.38%	0.39%	0.39%	0.53%	0.53%	0.53%	0.52%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	0.99%	1.68%	0.98%	1.38%	1.28%	1.98%	1.28%	1.67%

	Equity and Bond Fund ⁽³⁾				*Bond Fund*
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	Legacy Class A	Legacy Class B
Management fees	0.00%	0.00%	0.00%	0.00%	0.10%	0.10%	0.10%	0.10%
Distribution (12b-1) Fees	0.25%	0.85%	0.25%	0.65%	0.25%	0.65%	0.25%	0.65%
Other Expenses	0.09%	0.09%	0.09%	0.09%	0.35%	0.35%	0.35%	0.35%
Acquired Fund Fees and Expenses	0.75%	0.75%	0.75%	0.75%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	1.09%	1.69%	1.09%	1.49%	0.70%	1.10%	0.70%	1.10%

	Tax Advantaged Bond Fund				Money Market Fund
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	Legacy Class A	Legacy Class B
Management fees	0.10%	0.10%	0.10%	0.10%	0.10%	0.10%	0.10%	0.10%
Distribution (12b-1) Fees	0.25%	0.65%	0.25%	0.65%	0.15%	0.55%	0.15%	0.55%
Other Expenses	0.37%	0.37%	0.37%	0.37%	0.39%	0.38%	0.38%	0.38%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	0.72%	1.12%	0.72%	1.12%	0.64%	1.03%	0.63%	1.03%

	State Farm LifePath Income Fund ⁽²⁾				State Farm LifePath 2010 Fund ⁽²⁾
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	Legacy Class A	Legacy Class B
Management fees	1.05%	1.05%	1.05%	1.05%	1.05%	1.05%	1.05%	1.05%
Distribution (12b-1) Fees	0.25%	0.95%	0.25%	0.65%	0.25%	0.95%	0.25%	0.65%
Other Expenses	0.36%	0.36%	0.35%	0.35%	0.30%	0.30%	0.30%	0.30%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	1.66%	2.36%	1.65%	2.05%	1.60%	2.30%	1.60%	2.00%
Less: Waivers and Credits ^(1)(5)(6)	- 0.34%	- 0.34%	- 0.34%	- 0.34%	- 0.33%	- 0.33%	- 0.33%	- 0.33%
Net Expenses ⁽¹⁾	1.32%	2.02%	1.31%	1.71%	1.27%	1.97%	1.27%	1.67%

	State Farm LifePath 2020 Fund ⁽²⁾				State Farm LifePath 2030 Fund ⁽²⁾
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*	*Class B*	Legacy Class A	Legacy Class B
Management fees	1.05%	1.05%	1.05%	1.05%	1.05%	1.05%	1.05%	1.05%
Distribution (12b-1) Fees	0.25%	0.95%	0.25%	0.65%	0.25%	0.95%	0.25%	0.65%
Other Expenses	0.30%	0.30%	0.29%	0.30%	0.31%	0.31%	0.31%	0.31%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	1.60%	2.30%	1.59%	2.00%	1.61%	2.31%	1.61%	2.01%
Less: Waivers and Credits ^(1)(5)(6)	- 0.33%	- 0.33%	- 0.33%	- 0.33%	- 0.33%	- 0.33%	- 0.33%	- 0.33%
Net Expenses ⁽¹⁾	1.27%	1.97%	1.26%	1.67%	1.28%	1.98%	1.28%	1.68%

EXPENSE INFORMATION continued



	State Farm LifePath 2040 Fund ⁽²⁾				State Farm LifePath 2050 Fund ⁽²⁾⁽⁴⁾
	*Class A*	*Class B*	Legacy Class A	Legacy Class B	*Class A*
Management fees	1.05%	1.05%	1.05%	1.05%	1.05%
Distribution (12b-1) Fees	0.25%	0.95%	0.25%	0.65%	0.25%
Other Expenses	0.33%	0.33%	0.32%	0.32%	10.25%
Acquired Fund Fees and Expenses	0.00%	0.00%	0.00%	0.00%	0.00%
Total Annual Fund Operating Expenses ⁽¹⁾	1.63%	2.33%	1.62%	2.02%	11.55%
Less: Waivers and Credits ^(1)(5)(6)	- 0.33%	- 0.33%	- 0.33%	- 0.33%	- 0.33%
Net Expenses ⁽¹⁾	1.30%	2.00%	1.29%	1.69%	11.22%

⁽¹⁾

For all Funds other than the LifePath Funds, the Manager has agreed to voluntarily reimburse each Fund if, and to the extent, the Fund’s total annual operating expenses exceed the percentage of each Fund’s average net assets indicated in the table below. Barclays, the investment adviser to the LifePath Master Portfolios, has contractually agreed to waive its management fees at the Master Portfolio level in an amount equal to advisory fees and administration fees, if any, charged to the Underlying Funds through April 30, 2009 (the “contractual waiver”). Barclays may not discontinue or modify this contractual waiver without the approval of the Board of Trustees of the Master Portfolios. The Manager has agreed to reimburse each LifePath Fund if, and to the extent the LifePath Fund’s total annual operating expenses, including net expenses incurred at the Master Portfolio and Underlying Fund levels, exceed the percentages of each LifePath Fund’s average net assets shown in the table below:


*Fund*	*Expense* *Reimbursement Threshold*
	*Class A*		*Class B*		Legacy Class A		Legacy Class B
Equity Fund	1.20%		1.90%		1.20%		1.60%
Small/Mid Cap Equity Fund	1.40%		2.00%		1.40%		1.80%
International Equity Fund	1.50%		2.10%		1.50%		1.90%
S&P 500 Index Fund	0.80%		1.50%		0.80%		1.20%
Small Cap Index Fund	0.95%		1.65%		0.95%		1.35%
International Index Fund	1.15%		1.85%		1.15%		1.55%
Equity and Bond Fund	0.98%	⁽³⁾	1.58%	⁽³⁾	0.98%	⁽³⁾	1.38%	⁽³⁾
Bond Fund	0.70%		1.10%		0.70%		1.10%
Tax Advantaged Bond Fund	0.70%		1.10%		0.70%		1.10%


*Fund*	*Expense* *Reimbursement Threshold*
	*Class A*	*Class B*	Legacy Class A	Legacy Class B
Money Market Fund	0.60%	1.00%	0.60%	1.00%
State Farm LifePath Income Fund	1.30%	2.00%	1.30%	1.70%
State Farm LifePath 2010 Fund	1.30%	2.00%	1.30%	1.70%
State Farm LifePath 2020 Fund	1.30%	2.00%	1.30%	1.70%
State Farm LifePath 2030 Fund	1.30%	2.00%	1.30%	1.70%
State Farm LifePath 2040 Fund	1.30%	2.00%	1.30%	1.70%
State Farm LifePath 2050 Fund	1.30%

The Manager’s agreement to reimburse the Funds is voluntary and may be eliminated by the Manager at any time.

⁽²⁾

For the S&P 500 Index Fund, the fees and expenses listed include the Fund’s and the Master Portfolio’s fees and expenses. For the LifePath Funds, the fees and expenses listed include the fees and expenses of the LifePath Funds, the Master Portfolios, and a weighted average of the total operating expense ratios of the Underlying Funds in which the Master Portfolios invest.

⁽³⁾

The Manager has agreed not to be paid an investment advisory and shareholder services fee for performing services for the Equity and Bond Fund. Nevertheless, the Manager receives investment advisory and shareholder service fees for performing these services for the Funds in which the Equity and Bond Fund invest. The Manager has agreed to reimburse the Equity and Bond Fund for all expenses directly incurred by the Fund except 12b-1 distribution fees and acquired fund fees and expenses. This expense reimbursement is voluntary and the Manager may eliminate it at any time.

⁽⁴⁾

Other expenses for the LifePath 2050 Fund are based upon estimated amounts for the current fiscal year.

⁽⁵⁾

Barclays contractually agreed to provide an offsetting credit against the investment advisory fees received from the LifePath Master Portfolios and the S&P 500 Index Master Portfolio in an amount equal to the fees and expenses of the MIP independent trustees, counsel to such trustees, and independent registered public accounting firm (“independent expenses”) that are paid by these Master Portfolios through April 30, 2009. Also, Barclays Global Investors (“BGI”), an affiliate of Barclays and administrator of certain of the Underlying Funds, contractually agreed to provide an offsetting credit against the administration fees paid by the Active Stock and CoreAlpha Bond Master Portfolios to BGI in an amount equal to the independent expenses that are paid by these two Underlying Funds through April 30, 2009. Barclays and BGI may not discontinue or modify this contractual waiver or these offsetting credits without the approval of the Board of Trustees of the Master Portfolios.

⁽⁶⁾

BGI voluntarily agreed to waive 0.02% of the administration fees charged to the Active Stock Master Portfolio. This arrangement is voluntary and may be terminated by BGI at any time.

EXPENSE INFORMATION continued

Expense Examples

These examples are intended to help you compare the cost of investing in a Fund with the cost of investing in other mutual funds. The examples assume you invest $10,000 for the time periods indicated, earn a 5% return each year, redeem your shares at the end of the period and that operating expenses remain constant at the level above for “Total Annual Fund Operating Expenses.” Your actual returns and costs may be higher or lower than those shown, but based on these assumptions, your expenses will be:


*Fund*	*Class A*
	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm Equity Fund	$	613	$	853	$	1,111	$	1,849
State Farm Small/Mid Cap Equity Fund	$	639	$	933	$	1,248	$	2,138
State Farm International Equity Fund	$	655	$	980	$	1,327	$	2,305
State Farm S&P 500 Index Fund	$	576	$	737	$	912	$	1,418
State Farm Small Cap Index Fund	$	596	$	800	$	1,020	$	1,652
State Farm International Index Fund	$	624	$	886	$	1,167	$	1,968
State Farm Equity and Bond Fund	$	606	$	829	$	1,071	$	1,762
State Farm Bond Fund	$	369	$	517	$	678	$	1,144
State Farm Tax Advantaged Bond Fund	$	371	$	523	$	689	$	1,168
State Farm Money Market Fund	$	65	$	205	$	357	$	798
State Farm LifePath Income Fund	$	628	$	897	$	1,187	$	2,011
State Farm LifePath 2010 Fund	$	623	$	883	$	1,162	$	1,957
State Farm LifePath 2020 Fund	$	623	$	883	$	1,162	$	1,957
State Farm LifePath 2030 Fund	$	624	$	886	$	1,167	$	1,968
State Farm LifePath 2040 Fund	$	626	$	891	$	1,177	$	1,989
State Farm LifePath 2050 Fund	$	1,533	$	3,410		N/A		N/A


*Fund*	*Class B*
	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm Equity Fund	$	690	$	938	$	1,211	$	2,008
State Farm Small/Mid Cap Equity Fund	$	707	$	990	$	1,298	$	2,215


*Fund*	*Class B*
	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm International Equity Fund	$	723	$	1,038	$	1,380	$	2,382
State Farm S&P 500 Index Fund	$	651	$	818	$	1,008	$	1,579
State Farm Small Cap Index Fund	$	671	$	880	$	1,113	$	1,804
State Farm International Index Fund	$	701	$	971	$	1,268	$	2,126
State Farm Equity and Bond Fund	$	672	$	883	$	1,118	$	1,839
State Farm Bond Fund	$	412	$	625	$	806	$	1,228
State Farm Tax Advantaged Bond Fund	$	414	$	631	$	817	$	1,251
State Farm Money Market Fund	$	405	$	603	$	769	$	1,155
State Farm LifePath Income Fund	$	705	$	984	$	1,288	$	2,168
State Farm LifePath 2010 Fund	$	700	$	968	$	1,262	$	2,115
State Farm LifePath 2020 Fund	$	700	$	968	$	1,262	$	2,115
State Farm LifePath 2030 Fund	$	701	$	971	$	1,268	$	2,126
State Farm LifePath 2040 Fund	$	703	$	977	$	1,278	$	2,147


*Fund*	*Legacy Class A*
	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm Equity Fund	$	413	$	660	$	924	$	1,678
State Farm Small/Mid Cap Equity Fund	$	442	$	742	$	1,063	$	1,972
State Farm International Equity Fund	$	458	$	790	$	1,145	$	2,143
State Farm S&P 500 Index Fund	$	377	$	542	$	720	$	1,237
State Farm Small Cap Index Fund	$	397	$	603	$	825	$	1,465
State Farm International Index Fund	$	426	$	694	$	981	$	1,799
State Farm Equity and Bond Fund	$	408	$	636	$	883	$	1,589
State Farm Bond Fund	$	369	$	517	$	678	$	1,144
State Farm Tax Advantaged Bond Fund	$	371	$	523	$	689	$	1,168

EXPENSE INFORMATION continued


*Fund*	*Legacy Class A*
	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm Money Market Fund	$	64	$	202	$	351	$	786
State Farm LifePath Income Fund	$	429	$	703	$	997	$	1,832
State Farm LifePath 2010 Fund	$	425	$	691	$	976	$	1,788
State Farm LifePath 2020 Fund	$	425	$	688	$	971	$	1,777
State Farm LifePath 2030 Fund	$	426	$	694	$	981	$	1,799
State Farm LifePath 2040 Fund	$	427	$	697	$	986	$	1,810


*Fund*	*Legacy Class B*
	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm Equity Fund	$	460	$	771	$	1,055	$	1,760
State Farm Small/Mid Cap Equity Fund	$	487	$	854	$	1,195	$	2,057
State Farm International Equity Fund	$	503	$	902	$	1,278	$	2,224
State Farm S&P 500 Index Fund	$	420	$	650	$	849	$	1,321
State Farm Small Cap Index Fund	$	440	$	712	$	955	$	1,548
State Farm International Index Fund	$	470	$	801	$	1,107	$	1,873
State Farm Equity and Bond Fund	$	452	$	746	$	1,013	$	1,671
State Farm Bond Fund	$	412	$	625	$	806	$	1,228
State Farm Tax Advantaged Bond Fund	$	414	$	631	$	817	$	1,251
State Farm Money Market Fund	$	405	$	603	$	769	$	1,152
State Farm LifePath Income Fund	$	474	$	814	$	1,128	$	1,914
State Farm LifePath 2010 Fund	$	470	$	801	$	1,107	$	1,870
State Farm LifePath 2020 Fund	$	470	$	801	$	1,107	$	1,867
State Farm LifePath 2030 Fund	$	471	$	805	$	1,113	$	1,881
State Farm LifePath 2040 Fund	$	472	$	808	$	1,118	$	1,892

Using the same assumptions as for the first table, but assuming that you did not redeem your shares at the end of each period, you would bear the following expenses for Class B shares:

Class B without Redemption at the End of the Period


*Fund*	*1 Year*		*3 Year*		*5 Year*		*10 Year*
State Farm Equity Fund	$	190	$	588	$	1,011	$	2,008
State Farm Small/Mid Cap Equity Fund	$	207	$	640	$	1,098	$	2,215
State Farm International Equity Fund	$	223	$	688	$	1,180	$	2,382
State Farm S&P 500 Index Fund	$	151	$	468	$	808	$	1,579
State Farm Small Cap Index Fund	$	171	$	530	$	913	$	1,804
State Farm International Index Fund	$	201	$	621	$	1,068	$	2,126
State Farm Equity and Bond Fund	$	172	$	533	$	918	$	1,839
State Farm Bond Fund	$	112	$	350	$	606	$	1,228
State Farm Tax Advantaged Bond Fund	$	114	$	356	$	617	$	1,251
State Farm Money Market Fund	$	105	$	328	$	569	$	1,155
State Farm LifePath Income Fund	$	205	$	634	$	1,088	$	2,168
State Farm LifePath 2010 Fund	$	200	$	618	$	1,062	$	2,115
State Farm LifePath 2020 Fund	$	200	$	618	$	1,062	$	2,115
State Farm LifePath 2030 Fund	$	201	$	621	$	1,068	$	2,126
State Farm LifePath 2040 Fund	$	203	$	627	$	1,078	$	2,147

INVESTOR PROFILE

The Equity Fund, Small/Mid Cap Equity Fund, International Equity Fund, S&P 500 Index Fund, Small Cap Index Fund, and the International Index Fund each invests a significant portion of its assets in equity securities, which represent an ownership interest in a business and the value of which fluctuates widely over short or even extended periods in response to company, market or economic news. These Funds are designed for investors with long-term investment objectives similar to those expressed by the applicable Fund.

You may want to invest in these Funds if you can tolerate the price fluctuations and volatility that are inherent in investing in a mutual fund that primarily invests in equity securities, want to diversify your investments, are seeking a growth investment as part of an asset allocation program or are investing for retirement or other goals that are many years in the future. You may not want to invest in these Funds if you are investing with a shorter investment time horizon in mind, are seeking income rather than capital appreciation or are uncomfortable with an investment whose value is likely to vary substantially.

You may want to invest in the Equity and Bond Fund and/or one or more LifePath Funds if you are seeking long-term growth potential and some current income, or if you are seeking the convenience of a balanced portfolio of stocks and bonds in a single investment. You may not want to invest in these Funds if you have a short-term investment horizon, want the greater growth potential of an investment entirely in equity securities or are unwilling to accept share price fluctuations.

You may want to invest in the Bond Fund if you are seeking higher potential returns than money market funds and are willing to accept the price volatility of bonds with longer maturities, want to diversify your investments, are seeking an income mutual fund for an asset allocation program or are retired or nearing retirement. You may not want to invest in the Bond Fund if you are investing for maximum return over a long time horizon, want the greater growth potential of an investment in equity securities or require stability of your principal. A person who wants to invest in the Bond Fund may also be a suitable investor for the Tax Advantaged Bond Fund, if he or she wants regular tax-free dividends and wants to reduce federal income taxes on investment income.

The person should consider investing in the Money Market Fund if he or she requires stability of principal, is seeking an investment for the cash portion of an asset allocation plan or is looking for an investment with a lower degree of risk. A person may not want to invest in the Money Market Fund if he or she is seeking an investment that is likely to significantly outpace inflation, is investing for retirement or other longer-term goals, or is investing for growth or maximum current income.

ADVISER RELATED PERFORMANCE

Most of the Funds were modeled after either another mutual fund that Barclays manages or a composite of accounts that Capital Guardian or Northern Trust Investments manages, as shown below:


*Fund*		*Corresponding Fund or Composite*

Equity Fund		Capital Guardian U.S. Equity Composite

Small/Mid Cap Equity Fund		No comparable fund

International Equity Fund		Capital Guardian Non-U.S. Equity Composite

S&P 500 Index Fund		S&P 500 Index Master Portfolio

Small Cap Index Fund		Northern Trust Investments Small Cap Index Composite

International Index Fund		Northern Trust Investments International Index Composite

Equity and Bond Fund		No comparable fund

Bond Fund		No comparable fund

Tax Advantaged Bond Fund		No comparable fund

Money Market Fund		No comparable fund

State Farm LifePath Income Fund		LifePath Retirement Master Portfolio

State Farm LifePath 2010 Fund		LifePath 2010 Master Portfolio

State Farm LifePath 2020 Fund		LifePath 2020 Master Portfolio

State Farm LifePath 2030 Fund		LifePath 2030 Master Portfolio

State Farm LifePath 2040 Fund		LifePath 2040 Master Portfolio

State Farm LifePath 2050 Fund		LifePath 2050 Master Portfolio

The investment policy of each Fund is substantially similar to its corresponding fund or composite. Attached as Appendix A to this Prospectus is the investment performance for each corresponding fund or composite except for the LifePath 2050 Master Portfolio. The LifePath 2050 Master Portfolio is newly created and has no operating history. The data provided in Appendix A is provided to illustrate the past performance of Northern Trust Investments, Capital Guardian and Barclays in managing similar types of investment mandates.

HOW THE FUNDS INVEST

Each Fund has its own investment objective. The Trust’s Board may change these investment objectives without a vote of the Trust’s shareholders. A Fund will provide shareholders with at least 60 days prior notice of any change in an investment objective.

The following discussion provides additional information about how certain of the Funds invest. The first part of this discussion relates to how the Funds, other than the State Farm LifePath Funds, invest. The second part of the discussion relates to how the State Farm LifePath Funds invest.

How the State Farm non-LifePath Funds Invest

Under ordinary circumstances, each Fund is substantially fully invested. Except for the Equity Index Funds and the Money Market Fund, each Fund may take a temporary defensive position in attempting to respond to adverse market, economic, political or other conditions. If the Manager, Bridgeway, Rainier or Capital Guardian determine that market or economic conditions warrant a temporary defensive position, the Funds each manage (or the applicable portion of such Fund) may hold up to 100% of their assets in cash, cash equivalents or other temporary investments such as short-term government or corporate obligations. During those periods, a Fund’s assets may not be invested in accordance with its strategy and the Fund may not achieve its investment objective.

Each Fund may also:

•

Lend securities to financial institutions, enter into repurchase agreements and purchase securities on a when-issued or forward commitment basis; and

•

Invest in U.S. dollar-denominated foreign money market securities, although no more than 25% of a Fund’s assets may be invested in foreign money market securities unless such securities are backed by a U.S. parent financial institution.

Except for the Equity Index Funds, each Fund may, from time to time, borrow money in amounts up to 33 ¹ / 3 % of its total assets (including the amount borrowed) for temporary purposes to pay for redemptions. A Fund may not purchase additional securities when borrowings exceed 5% of its total assets (including the amount borrowed).

Except for the segment of the Small/Mid Cap Equity Fund sub-advised by Rainier, the Funds do not generally anticipate engaging in active and frequent trading of portfolio securities as a principal investment strategy.

Due to a sell discipline based in part on price targets, Rainier’s segment of the Small/Mid Cap Equity Fund may be actively traded. This is particularly true in a market environment where securities prices are rising rapidly. Generally, the rate of portfolio turnover will not be a deciding factor in Rainier’s determining whether to sell or hold securities for its segment of the Small/Mid Cap Equity Fund. A high portfolio turnover rate (100% or more) in that portion of the Small/Mid Cap Equity Fund has the potential to result in the realization and distribution to shareholders of higher capital gains. This may mean that you would be likely to have a higher tax liability. A high portfolio turnover rate also leads to higher transaction costs, which would negatively affect overall performance of the Small/Mid Cap Equity Fund. Active trading, however, can also be defensive and actually add to the Small/Mid Cap Equity Fund’s performance if, for example, a fully valued investment is sold before a price decline or in favor of an investment with better appreciation potential.

S&P 500 Index Fund

The S&P 500 Index Fund invests all of its assets in a separate series of the Master Fund known as the S&P 500 Index Master Portfolio. Barclays serves as investment adviser to the S&P 500 Index Master Portfolio. The S&P 500 Index Master Portfolio may accept investments from other feeder funds. Certain actions involving other feeder funds, such as a substantial withdrawal, could affect the S&P 500 Index Master Portfolio. Barclays and its affiliates invest for their own accounts in the types of securities in which the S&P 500 Index Master Portfolio may also invest.

The S&P 500 Index Master Portfolio invests mostly in stocks, although it may invest in stock index futures contracts and options on futures contracts. By investing in all of the stocks within its benchmark index, the S&P 500 Index Master Portfolio avoids the risk of individual stock selection and, instead, tries to match the performance of its benchmark index, whether the index goes up or down.

The S&P 500 Index Master Portfolio attempts to remain as fully invested as practicable in the stocks that are represented in its benchmark index. Under normal market conditions, the S&P 500 Index Master Portfolio seeks to invest at least 90% of its total assets in stocks that are represented in its benchmark index.

Barclays does not manage the S&P 500 Index Master Portfolio according to traditional methods of “active” investment management, which involves buying and selling securities based on economic, financial and market analysis and investment judgment. Instead, Barclays utilizes a “passive” or indexing investment approach for the S&P 500 Index Master Portfolio, attempting to approximate the investment performance of the S&P 500 Index. Barclays selects stocks for the S&P 500 Index Master Portfolio so that the overall investment

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characteristics of the S&P 500 Index Master Portfolio (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures are similar to those of the S&P 500 Index.

The S&P 500 Index Master Portfolio may invest any assets not invested in stocks that are represented in the S&P 500 Index in:

•

the same type of short-term high quality debt securities in which the Money Market Fund invests (described below);

•

other equity securities that are similar to the stocks in the S&P 500 Index or that are awaiting disposition after a change in composition of the benchmark index or a rebalancing of the portfolio;

•

stock index futures contracts, options on such futures contracts; and/or

•

cash.

The S&P 500 Index Master Portfolio may invest in those financial instruments to find a short-term investment for uninvested cash balances or to provide liquid assets for anticipated redemptions by interestholders.

From time to time, the portfolio composition of the S&P 500 Index Master Portfolio may be altered (or “rebalanced”) to reflect changes in the characteristics of the S&P 500 Index, with a view to bringing the performance and characteristics of the S&P 500 Index Master Portfolio more closely in line with that of the S&P 500 Index.

Barclays attempts to track the performance of the S&P 500 Index Master Portfolio’s benchmark index, but there is no assurance that Barclays will be successful. The degree to which the S&P 500 Index Master Portfolio fails to track the performance of its benchmark index is referred to as the “tracking error.” Barclays expects that, over time, the tracking error of the S&P 500 Index Master Portfolio will be less than 5%. Barclays monitors the tracking error of the S&P 500 Index Master Portfolio on an ongoing basis and seeks to minimize tracking error to the extent possible. There can be no assurance that the S&P 500 Index Master Portfolio will achieve any particular level of tracking error. For more information on this subject, see the discussion of “tracking error” in the Trust’s SAI.

Another reason why the performance of the S&P 500 Index Master Portfolio may not always equal the performance of its benchmark index is because the performance of its benchmark index does not take into account operating expenses of the S&P 500 Index Master Portfolio and operating expenses of the S&P 500 Index Fund.

The S&P 500 Index Master Portfolio may purchase stock index futures contracts on its benchmark index or a comparable stock index to simulate investment in its benchmark index. This may be done to rapidly gain exposure to the securities comprising its benchmark index in anticipation of purchasing such securities over time, to reduce transaction costs, or to gain exposure to such securities at a lower cost than by making direct investments in the cash market. If the S&P 500 Index Master Portfolio cannot sell a futures contract that it holds, it may write call and buy put options on the contract to effectively close out or offset the contract. The S&P 500 Index Master Portfolio will not use futures contracts or options on futures contracts for speculation.

Small Cap Index Fund and International Index Fund

Northern Trust Investments serves as investment sub-adviser to the Small Cap Index Fund and the International Index Fund. These Funds invest mostly in stocks, although each may invest in stock index futures contracts and options on futures contracts. By investing in stocks within each Fund’s benchmark index, the Small Cap Index Fund and the International Index Fund avoid the risk of individual stock selection and, instead, try to match the performance of each Fund’s benchmark index, whether the index goes up or down.

The Small Cap Index Fund and the International Index Fund attempt to remain as fully invested as practicable in the stocks that are represented in each Fund’s benchmark index. Under normal market conditions, the Small Cap Index Fund and the International Index Fund seek to invest at least 80% of each Fund’s net assets in stocks that are represented in the Fund’s benchmark index and in stock index futures contracts on each Fund’s benchmark index.

Northern Trust Investments does not manage the Small Cap Index Fund and the International Index Fund according to traditional methods of “active” investment management, which involves buying and selling securities based on economic, financial and market analysis and investment judgment. Instead, Northern Trust Investments utilizes a “passive” or indexing investment approach for the Small Cap Index Fund and the International Index Fund, attempting to approximate the investment performance of each Fund’s benchmark index. Northern Trust Investments will buy and sell securities for the Small Cap Index Fund and the International Index Fund in response to changes in each Fund’s benchmark index. Northern Trust Investments selects stocks for the Small Cap Index Fund and the International Index Fund so that the overall investment characteristics of each Fund (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures are similar to those of each Fund’s benchmark index.

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The Small Cap Index Fund and the International Index Fund may invest any assets not invested in stocks that are represented in the Fund’s benchmark index in:

•

the same type of short-term high quality debt securities in which the Money Market Fund invests (described below);

•

other equity securities that are similar to the stocks in the Fund’s benchmark index or that are awaiting disposition after a change in composition of the benchmark index or a rebalancing of the portfolio;

•

stock index futures contracts, options on such futures contracts; and/or

•

cash.

The Small Cap Index Fund and the International Index Fund may invest in those financial instruments to find a short-term investment for uninvested cash balances or to provide liquid assets for anticipated redemptions by shareholders.

Neither the Small Cap Index Fund nor the International Index Fund generally hold all of the issues that comprise their respective benchmark index, due in part to the costs involved and, in certain instances, the potential illiquidity of certain securities. Instead, both the Small Cap Index Fund and the International Index Fund attempt to hold a representative sample of the securities in the appropriate benchmark index, which Northern Trust Investments will select utilizing certain replication and optimization modeling techniques. These replication and optimization modeling techniques may not be successful, and may result in the Small Cap Index Fund and the International Index Fund not tracking their respective indices with the same degree of accuracy that complete replication of the index would provide. As a result of these replication and optimization modeling techniques, the Small Cap Index Fund and the International Index Fund may not have the identical capitalization, industry and fundamental characteristics as their benchmark indices. Please refer to the Trust’s SAI for a more detailed discussion of the techniques that Northern Trust Investments employs in selecting the portfolio securities for these Funds.

From time to time, the portfolio composition of the Small Cap Index Fund and the International Index Fund may be altered (or “rebalanced”) to reflect changes in the characteristics of the applicable benchmark index, with a view to bringing the performance and characteristics of these Funds more closely in line with that of each Fund’s applicable benchmark index.

Northern Trust Investments attempts to track the performance of the Small Cap Index Fund’s and the International Index Fund’s respective benchmark indices, but there is no assurance that Northern Trust Investments will be successful. The degree to which these Funds fail to track the performance of their benchmark indices is referred to as the “tracking error.” Northern Trust Investments expects that, over time and under normal circumstances, the quarterly performance of the Small Cap Index Fund and the International Index Fund, before expenses, will track the performance of the applicable benchmark index within a 0.95 correlation coefficient.

The correlation coefficient, a concept from statistics, is a measure of how well trends in predicted values, such as the actual performance of the Small Cap Index Fund, follow trends in actual values, such as the performance of the Russell 2000 Index. The correlation coefficient is a measure of how well the predicted values “fit” with the actual values. The correlation coefficient is a number between - 1 and 1. If there is no relationship between the predicted values and the actual values, the correlation coefficient is 0 or very low (the predicted values are no better than random numbers). As the strength of the relationship between the predicted values and actual values increases, so does the correlation coefficient. A perfect fit gives a coefficient of 1.0. Thus, when tracking an index, the higher the correlation coefficient, the better.

There can be no assurance that the Small Cap Index Fund and the International Index Fund will achieve any particular level of tracking error. For more information on this subject, see the discussion of “tracking error” in the Trust’s SAI.

Another reason why the performance of the Small Cap Index Fund and the International Index Fund may not always equal the performance of its benchmark index is because the performance of the benchmark index does not include operating expenses incurred by each Fund.

The Small Cap Index Fund and the International Index Fund may purchase stock index futures contracts on their benchmark indices or a comparable stock index to simulate investment in their benchmark indices. This may be done to rapidly gain exposure to the securities comprising a Fund’s benchmark index in anticipation of purchasing such securities over time, to reduce transaction costs, or to gain exposure to such securities at a lower cost than by making direct investments in the cash market. If the Small Cap Index Fund or the International Index Fund cannot sell a futures contract that it holds, it may write call and buy put options on the contract to effectively close out or offset the contract. The Small Cap Index Fund and the International Index Fund will not use futures contracts or options on futures contracts for speculation.

Equity and Bond Fund

The Equity and Bond Fund invests in shares of the Equity Fund and the Bond Fund. The Equity and Bond Fund may hold a portion of its assets in U.S. Government securities,

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short-term paper, or may invest in the Money Market Fund to provide flexibility in meeting redemptions, expenses, and the timing of new investments, and to serve as a short-term defense during periods of unusual volatility.

Bond Fund

The Bond Fund invests primarily in investment grade bonds (e.g., those bonds that S&P or Moody’s have rated within their respective four highest rating categories), and in the same types of securities as the Money Market Fund. Under normal circumstances, at least 80% of the Fund’s total assets will be invested in investment grade bonds or unrated debt securities that the Manager determines to be of equivalent quality. The Bond Fund may also invest in investment grade mortgage-backed and asset-backed securities, including those representing pools of mortgage, commercial or consumer loans originated by financial institutions.

The Bond Fund usually maintains a duration target of less than 7 years based on expectations about the direction of interest rates and other economic factors. Duration is a measure of sensitivity of bond prices to interest rate movements. The longer the duration of a debt obligation, the more sensitive its value is to changes in interest rates.

In selecting bonds for the Fund, the Manager seeks to maximize current income while minimizing risk and volatility through prudent investment management. Accordingly, the Fund seeks to limit its exposure to very risky or speculative investments by investing primarily in investment grade bonds that offer the potential for attractive returns.

The Fund may also invest up to 20% of its assets in the following securities:

•

Debt securities that S&P or Moody’s have rated lower than the four highest rating categories or comparable unrated debt securities. Bonds that are rated lower than BBB by S&P or Baa by Moody’s are often referred to as “junk bonds.” Rating agencies consider junk bonds to have varying degrees of speculative characteristics. Consequently, although they can be expected to provide higher yields, such securities may be subject to greater market value fluctuations and greater risk of loss of income and principal than lower-yielding, higher-rated fixed-income securities. For more information, see “Description of Bond Ratings” in the SAI.

•

Convertible debt securities, convertible preferred stocks and nonconvertible preferred stocks. Convertible securities are fixed income securities that are convertible into common stock at a specified price or conversion ratio.

•

Bond futures contracts, options, credit swaps, interest rate swaps, and other types of derivatives. Losses (or gains) involving futures contracts can sometimes be substantial — in part because a relatively small price movement in a futures contact may result in an immediate and substantial loss (or gain) for the Fund. Similar risks exist for other types of derivatives. For this reason, the Fund will not use futures, options, or other derivatives for speculative purposes or as leveraged investments that magnify the gains or losses of an investment. The Fund will invest in futures and options to (i) keep cash on hand to meet shareholder redemptions or other needs, while simulating full investment in bonds and/or (ii) reduce the Fund’s transaction costs, for hedging purposes or to add value when these instruments are favorably priced.

Tax Advantaged Bond Fund

Tax Advantaged Bond Fund invests primarily in a diversified selection of municipal bonds. Municipal bonds generally are designed to meet longer-term capital needs and have maturities of more than one year when issued. States, territories, local governments and municipalities issue municipal bonds to raise money for various purposes (for example, to pay for a road construction project, or to build an airport). The interest on a municipal bond is generally exempt from federal income tax, but may be subject to the federal alternative minimum tax and state income taxes.

Under ordinary circumstances at least 80% of the Fund’s total assets will consist of investment grade municipal bonds (e.g., municipal bonds rated within the four highest rating categories of Moody’s or S&P), and money market securities and cash. Up to 20% of the Fund’s total assets may be invested in municipal bonds that are unrated or rated below investment grade by Moody’s or by S&P.

Lower-rated municipal bonds and fixed income securities generally carry a greater degree of risk than higher-rated municipal bonds. Bonds rated below BBB by S&P and below Baa by Moody’s have speculative characteristics, and are commonly referred to as “junk bonds” and present a higher degree of credit risk. In addition, the Fund may purchase municipal bonds that represent lease obligations. These carry special risks because the issuer of the bonds may not be obligated to appropriate money annually to make payments under the lease. To reduce this risk, the Fund will only purchase these bonds if the Manager believes the issuer has a strong incentive to continue making appropriations until maturity.

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The Fund may invest in bond (interest rate) futures and options contracts and other types of derivatives. Losses (or gains) involving futures can sometimes be substantial – in part because relatively small price movement in a futures contract may result in an immediate and substantial loss (or gain) for the Fund. The Fund will not use futures for speculative purposes or as leveraged investments that magnify the gains or losses of an investment. The Fund’s obligation to purchase securities under futures contracts will not exceed 20% of its total assets. The reasons for which the Fund may use futures and options are to: (i) keep cash on hand to meet shareholder redemptions or other needs, while simulating full investment in bonds and/or (ii) reduce the Fund’s transaction costs or add value when these instruments are favorably priced.

The Fund invests primarily in a diversified selection of municipal bonds with maturities of one to thirty years. A majority of the Fund’s investments are in issues with maturities longer than five years.

The Fund will hold assets not invested in municipal bonds in (i) interest-bearing demand notes, (ii) bank savings accounts, (iii) high-grade money market securities (iv) U.S. Treasury securities or (v) securities of taxable or tax-exempt money market mutual funds. To the extent the Manager invests the Fund’s asset in securities of money market mutual funds, you will pay fund operating expenses at both the Fund level and at the money market mutual fund level.

The Fund may also invest in variable rate securities, such as inverse floaters, whose rates vary inversely with changes in market rates of interest. Investments in such securities involve special risks as compared to a fixed rate municipal security. The extent of increases and decreases in the value of such securities and the corresponding change to the net asset value of the Fund generally will be larger than comparable changes in value of an equal principal amount of a fixed rate municipal security having similar credit quality, redemption provisions and maturity.

Money Market Fund

In selecting securities for the Money Market Fund, the Manager seeks highly liquid investments that present minimal credit risk. The Fund primarily invests in high quality short-term money market instruments. At least 95% of the Fund’s assets must be rated in the highest short-term category by at least two nationally recognized statistical rating organizations (“NRSROs”) (or one NRSRO, if only one has issued a rating), and 100% of the Fund’s assets must be invested in securities rated in the two highest rating categories. An NRSRO, such as Moody’s or S&P, assigns ratings to securities based on its assessment of the creditworthiness of the securities’ issuer. The SAI has a detailed description of the various rating categories.

The Fund may invest in securities that are not rated by an NRSRO if the Manager determines that such securities are of comparable quality to, and present a comparable amount of risk as, similar securities that have received a rating from an NRSRO.

Among the securities that the Money Market Fund may invest in are the following:

•

Securities issued or guaranteed by the U.S. Government or its agencies, including Treasury Bills, notes, and securities issued by U.S. government agencies such as the Federal National Mortgage Association.

•

Commercial paper issued or guaranteed by U.S. corporations and certain other entities that are rated in the two highest rating categories of a NRSRO.

•

Repurchase agreements with certain parties.

•

Certain obligations of large (more than $1 billion in total assets) U.S. banks and their subsidiaries (including, certain Canadian affiliates), including, but not limited to, bank notes, commercial paper, and certificates of deposit.

•

Other short-term obligations issued by or guaranteed by U.S. corporations, state and municipal governments, or other entities.

•

Securities backed by mortgages, consumer loans and other assets.

Given the types of securities that the Fund invests in, the level of risk associated with the Fund is lower than most other types of mutual funds. However every investment involves some kind of risk. To the extent that the Fund invests in certain securities (for example, repurchase agreements, when-issued securities or foreign money market securities), the Fund may be affected by additional risks.

Other Risks of Investing in these Funds

Foreign Securities

Investments in foreign securities, including those of foreign governments, involve additional risks not normally present when investing in comparable domestic securities.

Some securities of foreign companies and governments may be traded in the U.S., such as American Depository Receipts (“ADRs”), but most are traded primarily in foreign markets. The risks of investing in foreign securities include:

Currency Risk. For securities that are based in value on foreign currencies (including ADRs), a Fund must buy the local currency to buy a foreign security and sell the same local currency after it sells the security. Therefore, the value of that security to a Fund is affected by the value of the local

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currency relative to the U.S. currency. As a result, if the value of the local currency falls relative to U.S. currency, the value of that security falls, even if the security has not decreased in value in its home country.

Political and Economic Risk. Foreign investments can be subject to greater political and economic risks. In some countries, there is the risk that the government may take over assets or operations of the company or impose taxes or place limits on the removal of assets that would adversely affect the value of the security. The possibility of default in foreign government securities, political or social instability or diplomatic developments generally are more of a concern in developing countries, where the possibility of political instability (including revolution) and dependence on foreign economic assistance may be greater than in developed countries.

Regulatory Risk. In many countries there is less publicly available information about issuers than is available for companies in the U.S. Foreign companies may not be subject to uniform accounting, auditing and financial reporting standards, and auditing practices and requirements may not be comparable to those applicable to the U.S. companies. In many foreign countries there is less government supervision and regulation of business and industry practices, and it may be more difficult to obtain or enforce judgments against foreign entities.

Market Risks. Foreign securities often trade with less frequency and volume than domestic securities and are therefore less liquid and more volatile than securities of comparable domestic issuers. Further, the settlement period of securities transactions in foreign markets may be longer than in domestic markets.

Transaction Costs. Commission rates in foreign countries, which are generally fixed rather than subject to negotiation as in the U.S., are likely to be higher. In addition, other costs, such as tax and custody costs, are generally higher than for domestic transactions.

Particular Risks for Developing Countries. In general, the risks noted above are heightened for developing countries. In addition, certain developing countries have experienced substantial, and in some cases, rapidly fluctuating rates of inflation for a number of years. Inflation has, and may continue to have, a debilitating effect on the underlying economies of these countries. Many developing countries are heavily dependent on international trade and can be adversely affected by trade barriers and protectionist measures, as well as the depreciation or devaluation of their currencies.

High Yield/High Risk Securities (Junk Bonds)

These securities tend to offer higher yields than higher-rated securities of comparable maturities because the historical fi nancial condition of the issuers of these securities is usually not as strong as that of other issuers.

High yield fixed-income securities usually present greater risk of loss of income and principal than higher-rated securities. For example, because investors generally perceive that there are greater risks associated with investing in medium- or lower-rated securities, the yields and price of such securities may tend to fluctuate more than those of higher-rated securities. Moreover, in the lower-quality segments of the fixed income securities market, changes in perception of the creditworthiness of individual issuers tend to occur more frequently and in a more pronounced manner than do changes in higher-quality segments of the fixed-income securities market. The yield and price of medium-to lower-rated securities therefore may experience greater volatility than is the case with higher-rated securities.

Under adverse market or economic conditions, the secondary market for high yield/high risk securities could contract further, independent of any specific adverse changes in the condition of a particular issuer. As a result, the Funds could find it more difficult to sell such securities or may be able to sell the securities only at prices lower than if such securities were widely traded. Prices realized upon the sale of such lower-rated securities therefore may be less than the prices used in calculating the Fund’s net asset value.

Mortgage-Backed and Asset Backed Securities Risk

Mortgage-backed and asset-backed securities are subject to prepayment risk, when interest rates decline, unscheduled prepayments can be expected to accelerate, and a Fund holding such securities would be required to reinvest the proceeds of the prepayments at the lower interest rates then available. Unscheduled prepayments would also limit the potential for capital appreciation on mortgage-backed and asset-backed securities. Conversely, when interest rates rise, the value of mortgage-backed and asset backed securities generally fall. Since rising interest rates typically result in decreased prepayments, this could lengthen the average lives of such securities, and cause their value to decline more than traditional fixed-income securities. See “Mortgage-Backed Securities” and “Asset-Backed Securities” in the Trust’s SAI.

Additionally, certain types of mortgage-backed and asset backed securities may experience significant valuation uncertainties, greater volatility, and significantly less liquidity due to the sharp rise in 2006, 2007 and 2008 of foreclosures on home loans secured by subprime mortgages. Subprime mortgages have a higher credit risk than prime mortgages, as the credit criteria for obtaining a subprime mortgage is more flexible than that used with prime borrowers. To the extent

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that a Fund invests in securities that are backed by pools of mortgage loans, the risk to the Fund may be significant. Additionally, if a Fund purchases mortgage-backed or asset-backed securities that are “subordinated” to other interests in the same mortgage pool, the Fund as a holder of those securities may only receive payments after the pool’s obligations to other investors have been satisfied. For example, an unexpectedly high rate of defaults on the mortgages held by a mortgage pool may limit substantially the pool’s ability to make payments of principal or interest to the Fund as a holder of such subordinated securities, reducing the values of those securities or in some cases rendering them worthless; the risk of such defaults is generally higher in the case of mortgage pools that include subprime mortgages.

How the State Farm LifePath Funds Invest

The LifePath Funds seek to maximize assets for retirement or other purposes consistent with the quantitatively measured risk that investors, on average, may be willing to accept given their investment time horizons. The LifePath Funds (other than the State Farm LifePath Income Fund) attempt to manage the investment risk in each strategy for investors whose time horizons correspond to the decade in the Fund’s name. For example, the State Farm LifePath 2010 Fund is designed for investors who plan to begin withdrawing a substantial portion of their investment in the decade beginning in the year 2010. Similarly, the State Farm LifePath 2040 Fund is designed for investors who plan to begin withdrawing a substantial portion of their investment in the decade beginning in the year 2040. The State Farm LifePath Income Fund is designed for investors who are currently withdrawing, or who plan to begin withdrawing, a substantial portion of their investment in the near future.

Under ordinary circumstances, each LifePath Fund, through its investment in its corresponding Master Portfolio, is substantially fully invested. Neither the Manager on behalf of the LifePath Funds nor Barclays on behalf of the LifePath Master Portfolios holds cash, cash equivalents, or money market instruments as temporary defensive positions.

The LifePath Investment Model

Barclays, a subsidiary of BGI, serves as the Master Portfolios’ investment adviser. BGI pioneered research in asset allocation, indexed investing and investment modeling.

Each LifePath Fund seeks to achieve its objective through an investment strategy that relies on one of Barclays’ proprietary investment models. Barclays employs a proprietary investment model that analyzes securities market data, including risk, asset class correlations, and expected returns, to provide portfolio allocations among the asset classes offered through the Underlying Funds. The allocations are constantly monitored and rebalanced in an effort to maximize expected return for a given level of risk. In managing the LifePath Funds, Barclays focuses on long-term targets and objectives. The progression over time of a LifePath Fund’s asset allocation to less risky asset classes is a relatively steady process resulting in only minor changes to the asset allocation from month to month. The LifePath Funds (through their investment in the Master Portfolios (that, in turn, invest in the Underlying Funds)) do not engage in active and frequent trading of portfolio securities as a principal investment strategy.

How It Works: Spending Your “Risk Budget” Wisely

One way to understand how the LifePath Funds adjust their asset allocation is to regard the statistically determined risk in each Fund as its “risk budget.” Barclays’ analysis begins with a statistical determination of how much a hypothetical investor, with a given time horizon for investment, on average, can afford to lose. This tolerance for loss can be viewed as the Fund’s risk budget. This risk budget reflects Barclays’ statistical determination of risk, and may not be appropriate to you in measuring the specific degree of risk you are willing to accept.

Different investment allocations can have the same risk of loss but with different expected returns. Barclays seeks the Fund allocations that offer the highest expected return while keeping within a Fund’s statistically determined risk of loss.

Expected returns are not guaranteed returns. They are average projections based on comprehensive research and accepted principles of market behavior. Likewise, statistically determined risk covers the most likely scenarios, but it does not cover all possible losses.

Principal Investments:

The LifePath Funds, through their investment in the Master Portfolios (that, in turn, invest in the Underlying Funds), may invest in the following investments:

•

money market instruments

•

bonds

•

stocks, including:

•

stocks of the largest U.S. companies

•

stocks of all other publicly traded U.S. companies

•

stocks of issuers located outside the U.S., including those located in emerging markets

•

real estate investment trusts (“REITs”)

Within stocks and bonds are sub-categories of securities:

•

U.S. stocks can be separated according to the value of their outstanding stock (or capitalization), into large-cap, mid-cap and small-cap groupings.

HOW THE FUNDS INVEST continued

•

Each of the stock capitalization categories can be separated according to their price-to-book ratios: the ratio of the value of a company’s traded stock to the book value of its plant, equipment and other tangible assets. The companies with the higher price-to-book ratios are considered growth stocks, and the companies with the lower price-to-book ratios are considered value stocks.

•

U.S. Government bonds, bonds issued by corporations, mortgage-backed securities, high yield bonds and foreign bonds form five separate sub-categories of bond investments. The first two sub-categories are further subdivided by maturity: long-term, intermediate-term and short-term.

While the model does not allocate among each of these sub-categories and the Underlying Funds do not generally correspond to the sub-categories, all of these sub-categories are included within the various Underlying Funds.

The following table lists the Underlying Funds and the approximate asset allocations for each Master Portfolio as of March 31, 2008 (except for the LifePath 2050 Master Portfolio). Barclays allocates each Master Portfolio’s assets among the Underlying Funds based on each Master Portfolio’s investment objective and policies. The asset allocation for each Master Portfolio will vary over time, and Barclays is not required to invest any Master Portfolio’s assets in each of the Underlying Funds or in any particular percentage. Barclays may add, eliminate or replace Underlying Funds at any time.


*UNDERLYING FUNDS (As of March 31, 2008)*
	*LifePath Retirement		LifePath 2010		LifePath 2020		LifePath 2030		LifePath 2040
*CAPITAL GROWTH*
Master Investment Portfolio Active Stock Master Portfolio	19	%	22	%	34	%	43	%	50	%
iShares S&P MidCap 400 Index Fund	4	%	4	%	5	%	6	%	7	%
iShares Small Cap 600 Fund	2	%	2	%	2	%	3	%	3	%
iShares MSCI EAFE Index Fund	8	%	9	%	13	%	16	%	18	%
iShares Cohen & Steers Realty Majors Index Fund	3	%	3	%	5	%	6	%	7	%
iShares MSCI Emerging Markets Index Fund	2	%	2	%	3	%	4	%	5	%
iShares MSCI Canada Index Fund	1	%	1	%	1	%	1	%	2	%
*CAPITAL GROWTH and INCOME*
CoreAlpha Bond Master Portfolio	53	%	48	%	31	%	18	%	18	%
iShares Lehman TIPS Bond Index	9	%	8	%	5	%	3	%	3	%

The corresponding Master Portfolio into which the State Farm LifePath Income Fund invests.

Note: The allocation percentages may not add to 100% due to rounding

The LifePath 2050 Master Portfolio is newly created and has no operating history. As of the date of this prospectus, the LifePath 2050 Master Portfolio intends to allocate approximately 99% of its assets among the Underlying Funds within the Capital Growth category and approximately 1% of its assets among the Underlying Funds within the Capital Growth and Income category.

Description of Underlying Funds

Each LifePath Fund may invest in some or all of the Underlying Funds described below. Please refer to the chart above for each Master Portfolio’s approximate target asset allocation for each Underlying Fund.

Each of the Underlying Funds that is an ETF seeks to reproduce index returns gross of management fees and other costs, and is not actively managed. Three of the Underlying Funds in which the Master Portfolios may invest are actively managed funds that rely on portfolio managers for investment determinations.

In managing the ETFs, Barclays uses two basic indexing strategies: replication and representative sampling. Repli cation is investing in substantially all of the securities in the relevant underlying index in approximately the same proportions as the index. Representative sampling is investing in a representative sample of securities in the underlying index, which have a similar investment profile as the index. Securities selected under a representative sampling strategy have aggregate investment characteristics (based on market capitalization and industry weightings), fundamental characteristics (such as return variability, earnings valuation and yield) and liquidity measures similar to those of the relative underlying index. Underlying Funds that use representative sampling generally do not hold all of the securities that are included in the relevant underlying index.

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Master Investment Portfolio Active Stock Master Portfolio seeks to provide long-term appreciation of capital. The Active Stock Master Portfolio invests, under normal circumstances, at least 80% of its assets in common stocks. The Active Stock Master Portfolio invests primarily in equity securities of U.S. companies with capitalizations similar to the range of capitalizations represented in the S&P 500 Index. Barclays invests the Active Stock Master Portfolio’s assets using a proprietary quantitative model that is designed to select stocks based on an analysis of a wide range of company-specific factors, such as relative values based on earnings and cash flows; earnings quality as measured by the company’s financial condition and earnings reports; sentiment as expressed through management and market participant behavior; and industry classification. Barclays considers risk parameters in deciding upon the Active Stock Master Portfolio’s aggregate holdings, and factors trading costs into its stock selection process.

Master Investment Portfolio CoreAlpha Bond Master Portfolio seeks to provide a combination of income and capital growth. Barclays invests the CoreAlpha Bond Master Portfolio’s assets pursuant to a systematic method that relies on proprietary quantitative models to allocate assets among various bond sectors by evaluating each sector’s relative value and risk-adjusted return. Barclays’ models also allocate assets among bonds of different maturities based on yield characteristics and expectations. Specific security selection decisions are made on the basis of evaluations of relative value, credit quality and other factors. The CoreAlpha Bond Master Portfolio invests, under normal circumstances, at least 80% of its assets in bonds. For the purposes of this strategy, “bonds” include the following: obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities; mortgage-backed securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, including U.S. agency mortgage pass-through securities; commercial mortgage-backed securities; debt obligations of U.S. corporations; dollar-denominated debt obligations of foreign issuers; municipal securities; and asset-backed securities.

iShares S&P 500 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P 500 ^® Index. The S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market. The stocks in the S&P 500 Index are selected according to the total market value of their outstanding shares. The Fund uses a replication strategy to try to track the S&P 500 Index.

iShares S&P MidCap 400 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P MidCap 400 ^® Index. The S&P MidCap 400 Index measures the performance of the mid-capitalization sector of the U.S. equity market. The stocks in the Index have a market capitalization between $1.5 billion and $5.5 billion (which may fluctuate depending on the overall level of the equity markets) and are selected for liquidity and industry group representation. The Fund uses a representative sampling strategy to try to track the S&P MidCap 400 Index.

iShares S&P SmallCap 600 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Standard & Poor’s SmallCap 600 Index. The S&P SmallCap 600 Index measures the performance of the small capitalization sector of the U.S. equity market.

iShares Russell MidCap Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Russell MidCap Index ^® . The Russell MidCap Index is a capitalization-weighted index consisting of the 800 smallest companies in the Russell 1000 Index. The Fund uses a representative sampling strategy to try to track the Russell MidCap Index.

iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Russell 2000 ^® Index. The Russell 2000 Index measures the performances of the small capitalization sector of the U.S. equity market. The Russell 2000 Index is a capitalization-weighted index of the approximately 2000 smallest companies in the Russell 3000 Index. The Fund uses a representative sampling strategy to try to track the Russell 2000 Index.

iShares Cohen & Steers Realty Majors Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cohen & Steers Realty Majors Index (the “Cohen & Steers Index”). The Cohen & Steers Index ^® consists of selected U.S. REITs. The objective of the Cohen & Steers Index is to represent relatively large and liquid REITs that may benefit from future consolidation and securitization of the U.S. real estate industry. REITs are selected for inclusion in the Cohen & Steers Index based on a rigorous review of several factors, including management, portfolio quality, and sector and geographic diversification. The REITs selected for inclusion in the Cohen & Steers Index must meet minimum market capitalization and liquidity requirements. The Cohen & Steers Index is weighted according to the total market value of each REIT’s outstanding shares and is adjusted quarterly so that no REIT represents more than 8% of the index. The Fund uses a representative sampling strategy to try to track the Cohen & Steers Index.

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iShares MSCI Canada Index Fund, which seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Canadian market, as measured by the MSCI Canada Index. The MSCI Canada Index is a capitalization-weighted index that aims to capture 85% of the publicly available total market capitalization of companies located in Canada. The Fund uses a representative sampling strategy to try to track the MSCI Canada Index.

iShares MSCI EAFE Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses of the MSCI EAFE ^® Index. The MSCI EAFE Index has been developed by Morgan Stanley Capital International, Inc. (“MSCI”) as an equity benchmark for international stock performance. The MSCI EAFE Index includes stocks from Europe, Australasia and the Far East. The Fund uses a representative sampling strategy to try to track the MSCI EAFE Index.

iShares MSCI Emerging Markets Index Fund seeks investment results that correspond to the price and yield performance before fees and expenses of the MSCI Emerging Markets Free Index ^® (the “Index”). The Fund’s investment objective may be changed without shareholder approval. The Index was developed by MSCI as an equity benchmark for international stock performance. The Index is designed to measure equity market performance in the global emerging markets. The Index consists of the following 21 emerging market country indices: Argentina, Brazil, Chile, China, Czech Republic, Egypt, Hong Kong, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Peru, Philippines, Russia, South Africa, Taiwan, Thailand, and Turkey. The Fund uses a representative sampling strategy to try to track the Index. In order to improve its portfolio liquidity and its ability to track the Index, the Fund may invest up to 10% of its assets in shares of other iShares Funds that invest in securities in the Index. Barclays does not charge portfolio management fees on that portion of the Fund’s assets invested in shares of other iShares Funds.

iShares Lehman Aggregate Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the total United States investment grade bond market as defined by the Lehman Brothers U.S. Aggregate Index (the “Lehman Brothers Index”). The Lehman Brothers Index measures the performance of the U.S. investment grade bond market, which includes investment grade U.S. Treasury bonds, government-related bonds, investment grade corporate bonds, mortgage pass-through securities, commercial mortgage-backed securities and asset-backed securities that are publicly offered for sale in the United States. The securities in the Lehman Brothers Index must have $250 million or more of outstanding face value and must have at least one year remaining to maturity. In addition, the secu rities must be denominated in U.S. dollars and must be fixed-rate and non-convertible. Certain types of securities, such as state and local government series bonds, structured notes with embedded swaps or other special features, private placements, floating-rate securities and Eurobonds are excluded from the Lehman Brothers Index. The Lehman Brothers Index is market capitalization-weighted and the securities in the Lehman Brothers Index are updated on the last calendar day of each month.

iShares Lehman TIPS Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the inflation-protected sector of the United States Treasury market as defined by the Lehman Brothers U.S. Treasury Inflation Notes Index. The Lehman Brothers U.S. Treasury Inflation Notes Index measures the performance of the inflation-protected public obligations of the U.S. Treasury, commonly known as “TIPS.”

iShares Lehman 1-3 Year Credit Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the investment grade credit sector of the United States bond market as defined by the Lehman Brothers 1-3 Year U.S Credit Index. The Lehman Brothers 1-3 Year U.S. Credit Index measures the performance of investment grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds that are U.S. dollar denominated and have a remaining maturity of greater than or equal to one year and less than three years.

iShares Lehman 1-3 Year Treasury Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the short-term sector of the United States Treasury market as defined by the Lehman Brothers 1-3 Year U.S. Treasury Index. The Lehman Brothers 1-3 Year U.S. Treasury Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to one year and less than three years.

iShares Lehman 3-7 Year Treasury Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the intermediate-term sector of the United States Treasury market as defined by the Lehman Brothers 3-7 Year U.S. Treasury Index. The Lehman Brothers 3-7 Year U.S. Treasury Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to three years and less than seven years.

iShares Lehman 7-10 Year Treasury Bond Fund seeks results that correspond generally to the price and yield performance, before fees and expenses, of the intermediate-term sector of the United States Treasury market as defined by the Lehman Brothers 7-10 Year U.S. Treasury Index. The Lehman Brothers 7-10 Year U.S. Treasury Index measures

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the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to seven years and less than ten years.

iShares Lehman 10-20 Year Treasury Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the long-term sector of the United States Treasury market as defined by the Lehman Brothers 10-20 Year U.S. Treasury Index. The Lehman Brothers 10-20 Year U.S. Treasury Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to ten years and less than 20 years.

iShares Lehman 20+ Year Treasury Bond Fund seeks results that correspond generally to the price and yield performance, before fees and expenses, of the long-term sector of the United States Treasury market as defined by the Lehman Brothers 20+ Year U.S. Treasury Index. The Lehman Brothers 20+ Year U.S. Treasury Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of 20 or more years.

iShares Lehman Credit Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the investment grade credit sector of the United States bond market as defined by the Lehman Brothers U.S. Credit Index. The Lehman Brothers U.S. Credit Index measures the performance of investment grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds that are U.S. dollar-denominated and have a remaining maturity of greater than or equal to one year.

iShares Lehman Government/Credit Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the U.S. government and investment grade U.S. corporate securities of the U.S. bond market as defined by the Lehman Brothers U.S. Government/Credit Index. The Lehman Brothers U.S. Government/Credit Index measures the performance of U.S. dollar denominated U.S. Treasuries, government-related ( i.e. , U.S. and foreign agencies, sovereign, supranational and local authority debt), and investment grade U.S. corporate securities that have a remaining maturity of greater than or equal to one year.

iShares Lehman Intermediate Credit Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the investment grade credit sector of the United States bond market as defined by the Lehman Brothers Intermediate U.S. Credit Index. The Lehman Brothers Intermediate U.S. Credit Index measures the performance of investment grade corporate debt and sovereign, supranational, local authority and non-U.S. agency bonds that are U.S. dollar denominated and have a remaining maturity of greater than or equal to one year.

iShares Lehman Intermediate Government/Credit Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the investment grade credit sector of the United States bond market and the total United States Treasury market as defined by the Lehman Brothers Intermediate U.S. Government/Credit Index. The Lehman Brothers Intermediate U.S. Government/Credit Index measures the performance of U.S. dollar denominated U.S. Treasuries, government-related ( i.e. , U.S. and foreign agencies, sovereign, supranational and local authority debt), and investment grade U.S. corporate securities that have a remaining maturity of greater than or equal to one year and less than ten years.

iShares Lehman MBS Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the investment grade agency mortgage-backed securities sector of the United States as defined by the Lehman Brothers U.S. MBS Index. The Lehman Brothers U.S. MBS Index measures the performance of investment grade fixed-rate mortgage-backed pass-through securities of Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and Freddie Mac (“FHLMC”).

iShares Lehman Short Treasury Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the short-term sector of the United States Treasury market as defined by the Lehman Brothers Short U.S. Treasury Index. The Lehman Brothers Short U.S. Treasury Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of between one and 12 months.

BGIF Institutional Money Market Fund seeks a high level of income consistent with liquidity and the preservation of capital. The Fund invests in high-quality, short-term money market instruments that include fixed rate, floating rate and variable rate debt securities. The Fund also may invest in high-quality, short-term U.S. and foreign government debt, including the debt of agencies and instrumentalities, such as Fannie Mae and the Student Loan Marketing Association, U.S. and foreign bank obligations, corporate obligations, repurchase agreements, and asset-backed securities. Repurchase agreements obligate a person selling U.S. government or other high-quality securities to buy them back within a specified period of time (usually one week or less) at an agreed-upon price.

iShares S&P National Municipal Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the municipal bond sector of the U.S. as defined by the S&P National Municipal Bond Index. The S&P National Municipal Bond Index measures the performance of the investment grade segment of the U.S. municipal bond market. As of August 1, 2007, there were 3,069 issues included in the S&P National Municipal Bond Index.

iShares S&P GSSI ^TM Natural Resources Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P GSSITM Natural Resources Index. The S&P GSSITM Natural Resources Index is designed to measure the performance of U.S.-traded natural resource-related stocks and includes com-

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panies in the following categories: producers of oil, gas and consumable fuels, energy equipment and services, metals and mining, manufacturers of paper and forest products, and producers of construction materials, containers and packaging.

iShares FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index. The FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index measures the stock performance of companies engaged in the ownership, disposure, and development of the Canadian, European, and Asian real estate markets. As of March 31, 2008, the FTSE EPRA/NAREIT Global Real Estate ex-U.S. Index was comprised of stocks of companies in the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Italy, Japan, Netherlands, New Zealand, Norway, Poland, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

iShares MSCI EAFE Small Cap Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI EAFE Small Cap Index. The MSCI EAFE Small Cap Index targets 40% of the eligible small cap universe in each industry group of each country represented by the MSCI EAFE Index. The MSCI EAFE Index includes securities from Europe, Australasia and the Far East. MSCI defines the small cap universe as all listed securities that have a market capitalization in the range of 200 - 1,500 million USD. In addition to this capitalization range, MSCI uses a specialized framework of foreign inclusion factors to adjust the market capitalization of securities for free float available to foreign investors.

iShares JPMorgan USD Emerging Markets Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the JPMorgan EMBI Global Core Index. The JPMorgan EMBI Global Core Index is a broad, diverse U.S. dollar denominated emerging markets debt benchmark that tracks the total return of actively traded external debt instruments in emerging market countries.

iShares iBoxx $ High Yield Corporate Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the U.S. dollar high yield corporate bond market as defined by the iBoxx $ Liquid High Yield Index. The iBoxx $ Liquid High Yield Index is a rules-based index consisting of the most liquid and tradable U.S. dollar-denominated, high yield corporate bonds for sale in the United States, as determined by the Index Provider, and is designed to provide a balanced representation of the U.S. dollar-denominated high yield corporate bond market through some of the most liquid high yield corporate bonds available. The number of issues in the The iBoxx $ Liquid High Yield Index is typically 50, although this may change from time to time.

“Standard & Poor’s ^® ,” “S&P ^® ,” “S&P500 ^® ,” “Standard & Poor’s 500,” “S&P 500 Index,” “S&P MidCap 400 Index,” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use for certain purposes by BGI. The Funds that are based on S&P Indices are not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in iShares.

Frank Russell Company, Russell 2000 ^® Index, Russell Midcap ^® Index, are trademarks of Frank Russell Company and have been licensed for use for certain purposes by BGI. The Funds that are based on the Russell Indices are not sponsored, endorsed, sold or promoted by Frank Russell Company, and Frank Russell Company makes no representation regarding the advisability of investing in iShares.

“Cohen & Steers” is a trademark and “Cohen & Steers Realty Majors Index ^® ” is a registered trademark of Cohen & Steers Capital Management, Inc. (“Cohen & Steers”), and both such trademarks have been licensed for use for certain purposes by BGI. The iShares Cohen & Steers Realty Majors Index Fund is not sponsored, endorsed, sold or promoted by Cohen & Steers, and Cohen & Steers makes no representation regarding the advisability of investing in iShares.

“Lehman Brothers,” “Lehman Brothers 1-3 Year U.S. Credit Index,” “Lehman Brothers 1-3 Year U.S. Treasury Index,” “Lehman Brothers 3-7 Year U.S. Treasury Index,” “Lehman Brothers 7-10 Year U.S. Treasury Index,” “Lehman Brothers 10-20 Year U.S. Treasury Index,” “Lehman Brothers 20+ Year U.S. Treasury Index,” “Lehman Brothers U.S. Aggregate Index,” “Lehman Brothers U.S. Credit Index,” “Lehman Brothers U.S. Government/Credit Index,” “Lehman Brothers Intermediate U.S. Credit Index,” “Lehman Brothers Intermediate U.S. Government/Credit Index,” “Lehman Brothers U.S. MBS Fixed-Rate Index,” “Lehman Brothers Short U.S. Treasury Index,” and the “Lehman Brothers U.S. TIPS Index” are trademarks of Lehman Brothers, Inc. (“Lehman Brothers”) and have been licensed for use for certain purposes by BGI. The iShares Lehman 1-3 Year Credit Bond Fund, iShares Lehman 1-3 Year Treasury Bond Fund, iShares Lehman 3-7 Year Treasury Bond Fund, iShares Lehman 7-10 Year Treasury Bond Fund, iShares Lehman 10-20 Year Treasury Bond Fund, iShares Lehman 20+ Year Treasury Bond Fund, Shares Lehman Aggregate Bond Fund, iShares Lehman Credit Bond Fund, iShares Lehman Government/Credit Bond Fund, iShares Intermediate Credit Bond Fund, iShares Lehman Intermediate Government/Credit Bond Fund, iShares Lehman MBS Fixed-Rate Bond Fund, iShares Short Treasury Bond Fund and the iShares Lehman TIPS Bond Fund are not sponsored or endorsed by Lehman Brothers, and neither Lehman Brothers nor any of its affiliates makes any representations regarding the advisability of investing in iShares.

MSCI is a registered trade mark of Morgan Stanley Capital International Inc. (“MSCI”) and its affiliates and has been licensed for use for certain purposes by BGI. The iShares MSCI EAFE Index Fund and the iShares MSCI Emerging Markets Index Fund have not been passed on by MSCI as to their legality or suitability, and are not issued, sponsored, endorsed, sold or promoted by MSCI. MSCI makes no warranties and bears no liability with respect to the Funds. MSCI has no responsibility for and does not participate in the management of the Fund assets or sale of the Fund shares. The prospectus for the iShares MSCI EAFE Index and iShares MSCI Emerging Markets Index Funds contains a more detailed description of the limited relationship MSCI has with BGI and the Funds. No purchaser, seller or holder of this security, or any other person or entity, should use or refer to any MSCI trade name, trademark or service mark to sponsor, endorse, market or promote this security without first contacting MSCI to determine whether MSCI’s permission is required. Under no circumstances may any person or entity claim any affiliation with MSCI without the prior written permission of MSCI.

“iBoxx ^® $ Liquid High Yield Index” is a trademark of International Index Company Limited (“IIC”) and has been licensed for use for certain purposes by BGI. The iShares iBoxx $ High Yield Corporate Bond Fund is not sponsored, endorsed, sold or promoted by IIC, and IIC makes no representation regarding the advisability of investing in iShares.

MANAGING THE INVESTMENTS OF THE FUNDS

Investment Adviser

The Manager is the investment adviser, transfer agent and dividend disbursing agent for the Funds and for other mutual funds in the State Farm family of mutual funds. Subject to the supervision of the Board of Trustees of the Trust, the Manager is responsible for providing investment advisory and administrative services to the Funds, overseeing the day-to-day operations and business affairs of the Trust, and monitoring the performance of the sub-advisers to the Funds and of each Master Portfolio in which a Fund invests. The Manager’s principal office is located at One State Farm Plaza, Bloomington, Illinois 61710-0001. The Manager is wholly-owned by State Farm Mutual Automobile Insurance Company.

The Manager also provides all executive, administrative, clerical and other personnel necessary to operate the Trust and pays the salaries and other costs of employing all these persons. The Manager furnishes the Trust with office space, facilities, and equipment and pays the day-to-day expenses related to the operating and maintenance of such office space, facilities and equipment. Except for those expenses the Manager expressly assumes, including those noted above, each Fund otherwise pays for all of its own expenses.

Capital Guardian is the investment sub-adviser to the Equity Fund and the International Equity Fund. As investment sub-adviser, Capital Guardian makes investment decisions for the Equity Fund and the International Equity Fund, subject to the oversight of the Manager and the Board of the Trust. Before September 1, 2005, the Manager made investment decisions for the Equity Fund. The Manager pays Capital Guardian for its services with the investment advisory and management services fee the Manager receives from the Equity Fund and the International Equity Fund.

Northern Trust Investments is the investment sub-adviser to the Small Cap Index Fund and the International Index Fund. As investment sub-adviser, Northern Trust Investments makes investment decisions for the Small Cap Index Fund and the International Index Fund, subject to the oversight of the Manager and the Board of the Trust. The Manager pays Northern Trust Investments for its services with the investment advisory and management services fee the Manager receives from these Funds.

The Equity and Bond Fund, Bond Fund, Tax Advantaged Bond Fund and the Money Market Fund are each managed by a team of the Manager’s employees (each an “Advisory Team”). Each Advisory Team makes the investment decisions for these Funds, subject to the oversight of the Board of the Trust.

Investment Management of the S&P 500 Index Fund and the LifePath Funds

The S&P 500 Index Fund and each LifePath Fund invests all of its assets into a separate Master Portfolio, each of which has substantially similar investment objectives, strategies and risks. The Master Portfolios in which the LifePath Funds invest, in turn, invest in combination of the Underlying Funds. Barclays serves as the investment adviser to each of the Master Portfolios, and also serves as investment adviser to each of the Underlying Funds, with the exception of the BFIF Institutional Money Market Fund, which invests in a Master Portfolio advised by Barclays. Barclays and its predecessors have been managing mutual funds since 1973. Barclays is an indirect subsidiary of Barclays Bank PLC and is located at 45 Fremont Street, San Francisco, California 94105. For more information regarding Barclays, please read the section entitled “Investment Advisory Agreements – Between Barclays and the Master Portfolios” in the Trust’s SAI.

Unlike some mutual funds, there is no single portfolio manager who makes investment decisions for the Master Portfolios. Instead, a team of investment professionals at Barclays is responsible for making investment decisions for the Master Portfolios. The S&P 500 Index Master Portfolio in which the S&P 500 Index Fund invests tracks the S&P 500 Index. For the Master Portfolios in which the LifePath Funds invest, the team of Barclays’ investment professionals evaluates recommendations made by Barclays’ proprietary mathematical model. This process reflects Barclays’ commitment to an objective and consistent investment management structure.

Oversight of Sub-Advisers

The Trust and the Manager have obtained an exemptive order from the U.S. Securities and Exchange Commission that permits the Trust and the Manager to retain sub-advisers and modify sub-advisory arrangements without shareholder approval. Under the exemptive order, the Manager may act as a “manager of managers” for the Equity Fund, Small/Mid Cap Equity Fund, International Equity Fund, Small Cap Index Fund, International Index Fund, Bond Fund, Tax Advantaged Bond Fund, Money Market Fund and LifePath Income Fund. The Manager supervises sub-advisers to each Fund that has retained a sub-adviser and has ultimate responsibility (subject to oversight by Trust’s Board of Trustees) to recommend their hiring, termination and replacement.

MANAGING THE INVESTMENTS OF THE FUNDS continued

Investment Sub-Adviser for the Equity Fund and the International Equity Fund

The Manager has engaged Capital Guardian as the investment sub-adviser to provide day-to-day portfolio management for the Equity Fund and the International Equity Fund. Capital Guardian, an experienced investment management organization founded in 1968, serves as investment sub-adviser to these Funds and other funds. Capital Guardian, a wholly owned indirect subsidiary of The Capital Group Companies, Inc., is headquartered at 333 South Hope Street, Los Angeles, California 90071. For more information regarding Capital Guardian, please read the section entitled “Investment Advisory Agreements – Between the Manager and Capital Guardian” in the Trust’s SAI.

Capital Guardian manages the Equity Fund and the International Equity Fund using a system of multiple portfolio managers for each Fund. Under this approach, the portfolio of each Fund is divided into segments, each of which is managed by an individual manager. Managers decide how their respective segments will be invested, within the limits provided by a Fund’s objective(s) and policies and by Capital Guardian’s investment committee. In addition, Capital Guardian’s investment analysts may make investment decisions for a portion of a Fund’s portfolio. The investment decisions for the Equity Fund and the International Equity Fund are made by Capital Guardian, subject to the oversight of the Board of the Trust.

Investment Sub-Advisers for the Small/Mid Cap Equity Fund

Effective December 1, 2006, the Manager has engaged Bridgeway and Rainier as the investment sub-advisers to provide day-to-day portfolio management for the Small/Mid Cap Equity Fund. Prior to December 1, 2006, Capital Guardian served as the investment sub-adviser to the Small/Mid Cap Equity Fund.

Bridgeway is located at 5615 Kirby Drive, Suite 518, Houston, Texas 77005-2448.

Rainier, which is located at 601 Union Street, Suite 2801, Seattle, Washington 98101, manages discretionary assets for various clients, including corporations, public and corporate pension plans, foundations and charitable endowments, high-net-worth individuals and mutual funds. Rainer is owned and operated by seventeen principals, twelve of whom are Rainier shareholders.

For more information regarding Bridgeway and Rainier, please read the sections entitled “Investment Advisory Agreements – Between the Manager and Bridgeway” and “Investment Advisory Agreements – Between the Manager and Rainier” in the Trust’s SAI.

Investment Sub-Adviser for the Small Cap Index Fund and the International Index Fund

The Manager has engaged Northern Trust Investments as the investment sub-adviser to provide day-to-day portfolio management for the Small Cap Index Fund and the International Index Fund. Northern Trust Investments is located at 50 South LaSalle Street, Chicago, IL 60603. Northern Trust Investments is an investment adviser registered under the Investment Advisers Act of 1940, as amended. It primarily manages assets for defined contribution and benefit plans, investment companies and other institutional investors. Northern Trust Investments is a subsidiary of The Northern Trust Company (“TNTC”). TNTC is an Illinois state chartered banking organization and a member of the Federal Reserve System. Formed in 1889, TNTC administers and manages assets for individuals, personal trusts, defined contribution and benefit plans and other institutional and corporate clients. TNTC is the principal subsidiary of Northern Trust Corporation, a company that is regulated by the Board of Governors of the Federal Reserve System as a financial holding company under the U.S. Bank Holding Company Act of 1956, as amended. For more information regarding Northern Trust Investments, please read the section entitled “Investment Advisory Agreements – Between the Manager and Northern Trust Investments” in the Trust’s SAI.

MANAGING THE INVESTMENTS OF THE FUNDS continued

Compensating the Manager for its Services

Each Fund pays the Manager an investment advisory and management services fee based upon that Fund’s average daily net assets. The fee is accrued daily and paid to the Manager quarterly at the following annual rates:


*Fund*		Rate of Advisory Fee

Equity Fund		0.60% of average daily net assets

Small/Mid Cap Equity Fund		0.80% of average daily net assets

International Equity Fund		0.80% of average daily net assets

S&P 500 Index Fund		0.20% of average daily net assets

Small Cap Index Fund		0.35% of average daily net assets

International Index Fund		0.50% of average daily net assets

Equity and Bond Fund		None

Bond Fund		0.10% of average daily net assets

Tax Advantaged Bond Fund		0.10% of average daily net assets

Money Market Fund		0.10% of average daily net assets

State Farm LifePath Income Fund		0.70% of average daily net assets

State Farm LifePath 2010 Fund		0.70% of average daily net assets

State Farm LifePath 2020 Fund		0.70% of average daily net assets

State Farm LifePath 2030 Fund		0.70% of average daily net assets

State Farm LifePath 2040 Fund		0.70% of average daily net assets

State Farm LifePath 2050 Fund		0.70% of average daily net assets

The Investment Advisory and Management Services Fee for the S&P 500 Index Fund and the LifePath Funds include the management fees of their corresponding Master Portfolios.

Compensating Capital Guardian for its Services

The Manager pays Capital Guardian for its services to the Funds it manages at the rates shown in the table below:

Equity Fund:


On the first $25 million		0.55% of average daily net assets

$25 million to $50 million		0.40% of average daily net assets

Over $50 million		0.275% of average daily net assets

International Equity Fund:


On the first $25 million		0.75% of average daily net assets

$25 million to $50 million		0.60% of average daily net assets

$50 million to $250 million		0.425% of average daily net assets

Over $250 million		0.375% of average daily net assets

For purposes of calculating the fees under the above schedules, other assets managed by Capital Guardian for companies associated with the Manager are taken into consideration according to Capital Guardian’s fee aggregation and discount policies.

Compensating Bridgeway and Rainier for their Services

The Manager pays Bridgeway and Rainier for their services to the Small/Mid Cap Equity Fund at the rate shown in the table below:


On the first $100 million		0.60% of average daily net assets

$100 million to $250 million		0.55% of average daily net assets

Over $250 million		0.50% of average daily net assets

MANAGING THE INVESTMENTS OF THE FUNDS continued

For purposes of calculating the fees under the above schedule, other assets managed by Bridgeway or Rainier for other investment companies advised by the Manager or other companies affiliated with the Manager are included in determining the appropriate fee to be paid to the respective sub-adviser.

Compensating Northern Trust Investments for its Services

The Manager pays Northern Trust Investments for its services to the Small Cap Index Fund and the International Index Fund at the rate shown in the table below:


On the first $150 million		0.13% of average daily net assets

Over $150 million		0.10% of average daily net assets

For purposes of calculating the fees under the above schedule, other assets managed by Northern Trust Investments for companies associated with the Manager are taken into consideration.

S&P 500 Index Fund and the LifePath Funds – Compensation in the Master/Feeder Mutual Fund Structure

The S&P 500 Index Fund and the LifePath Funds are feeder funds that invest all of their assets in Master Portfolios with substantially similar investment objectives, strategies and risks. Barclays manages each Master Portfolio. For its services to the Master Portfolios, Barclays receives annual fees based on the following annual rates:


*Fund*		*Annual Management Fee*

S&P 500 Index Master Portfolio		0.05% of average daily net assets

LifePath Retirement Master Portfolio*		0.35% of average daily net assets

LifePath 2010 Master Portfolio		0.35% of average daily net assets

LifePath 2020 Master Portfolio		0.35% of average daily net assets

LifePath 2030 Master Portfolio		0.35% of average daily net assets

LifePath 2040 Master Portfolio		0.35% of average daily net assets

LifePath 2050 Master Portfolio		0.35% of average daily net assets

The corresponding Master Portfolio into which the State Farm LifePath Income Fund invests.

For its services to the Underlying Funds in which the LifePath Master Portfolios invest, Barclays receives fees that differ from the fees described for the LifePath Funds in this prospectus. Barclays has agreed to waive the investment advisory fees charged to the Master Portfolios in an amount equal to the investment advisory fees charged to the Underlying Funds in order to avoid duplication of such fees. In addition, BGI may receive fees as administrator of certain of the Underlying Funds; however, Barclays has agreed to waive from the investment advisory fees charged to the Master Portfolios an amount equal to the administration and other fees paid to BGI by those Underlying Funds.

Feeder Fund Expenses. The S&P 500 Index Fund and each LifePath Fund bears its corresponding Master Portfolio’s expenses in proportion to the amount of assets it invests in the corresponding 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 Board of the Trust retains the right to withdraw the assets of the S&P 500 Index Fund or a LifePath Fund from a Master Portfolio if it believes doing so is in the best interests of the Fund and its shareholders. If the Board withdraws assets of any such Fund from a Master Portfolio, it would then consider whether that Fund should invest in another master portfolio or take other action.

MANAGING THE INVESTMENTS OF THE FUNDS continued

Approval of Investment Advisory and Investment Sub-Advisory Agreements

For information regarding the basis for the Board of Trustees approving the continuation of the investment advisory and investment sub-advisory agreements, please see the Trust’s semi-annual report for the six-month period ending June 30, 2007.

Portfolio Managers

The Funds are managed by portfolio management teams as described below.

Equity Fund

Capital Guardian uses a multiple portfolio manager system in managing the fund’s assets. Under this approach, the portfolio of a fund is divided into a segments managed by individual managers. Managers decide how their respective segments will be invested, within the limits provided by a fund’s objectives and policies and by Capital Guardian’s investment committee. In addition, Capital Guardian’s investment analysts may make investment decisions with respect to a portion of a fund’s portfolio. Certain portfolio managers may also have investment analyst responsibilities with respect to specific research coverage.

The chart below indicates the name, title, and length of service of the persons associated with Capital Guardian who are primarily responsible for the day-to-day management of the Equity Fund’s portfolio and each person’s business experience during the past five years.


*Portfolio Manager* *Title, Company Affiliation*	Length of Service with Capital Guardian	Business Experience During the past 5 years

Karen A. Miller Director and Senior Vice President, Capital Guardian	17 years	Portfolio manager of equity securities

Theodore R. Samuels Director and Senior Vice President, Capital Guardian	26 years	Portfolio manager of equity securities

Todd S. James Senior Vice President, Capital Guardian	22 years	Portfolio manager of equity securities

Small/Mid Cap Equity Fund

The chart below indicates the name, title, and length of service of the persons associated with Bridgeway and Rainier who are primarily responsible for the day-to-day management for each respective sub-adviser’s segment of the Small/Mid Cap Equity Fund’s portfolio, and each person’s business experience during the past five years:


*Bridgeway Portfolio Managers*
*Portfolio Manager and* *Title with Bridgeway*	Length of Service with Bridgeway	Business Experience During the past 5 years

John Montgomery, President	14 years	Portfolio manager of equity securities

Elena Khoziaeva, CFA, Investment Team Member	9 years	Investment management, research and analysis

Michael Whipple, CFA, Investment Team Member	5 years	Investment management, research and analysis

Rasool Shaik , CFA, Investment Team Member	2 years	Investment management, research and analysis; software consulting; MBA student


*Rainier Portfolio Managers*
*Portfolio Manager and* *Title with Rainier*	Length of Service with Rainier	Business Experience During the past 5 years

Daniel M. Brewer, CFA, Senior Portfolio Manager	More than 5 years	Portfolio manager of equity securities

MANAGING THE INVESTMENTS OF THE FUNDS continued


*Rainier Portfolio Managers*
*Portfolio Manager and* *Title with Rainier*	Length of Service with Rainier	Business Experience During the past 5 years

Mark W. Broughton, CFA, Senior Portfolio Manager	More than 5 years	Portfolio manager of equity securities

Mark H. Dawson, CFA, Senior Portfolio Manager	More than 5 years	Portfolio manager of equity securities

James R. Margard, CFA, Chief Investment Officer	More than 5 years	Portfolio manager of equity securities

Peter M. Musser, CFA, Senior Portfolio Manager	More than 5 years	Portfolio manager of equity securities

Andrea F. Durbin, CFA, Senior Portfolio Manager	More than 5 years	Portfolio manager of equity securities and fixed income

Stacie L. Cowell , CFA, Senior Portfolio Manager	2 years	Portfolio manager of equity securities; Senior Vice President and lead portfolio manager Invesco Funds 1996-2004

Rainier’s segment of the Small/Mid Cap Equity Fund is team-managed by the Rainier portfolio managers listed above. The portfolio managers make recommendations on investments within industries to which they are assigned. The Chief Investment Officer has final responsibility relating to asset allocation, equity selection and portfolio weightings.

International Equity Fund

The chart below indicates the name, title, and length of service of the persons associated with Capital Guardian who are primarily responsible for the day-to-day management of the International Equity Fund’s portfolio and each person’s business experience during the past five years.


*Portfolio Manager* *Title, Company Affiliation*	Length of Service with Capital Guardian or with a Capital Guardian Affiliate	*Business Experience* *During the past 5 years*

David I. Fisher Chairman of the Board, Capital Guardian	38 years	Portfolio manager of equity securities

Arthur J. Gromadzki Senior Vice President of Capital International Research, Inc, a Capital Guardian affiliate	21 years	Portfolio manager of equity securities

Richard N. Havas Vice Chairman and Director of Capital Guardian (Canada) Inc., a Capital Guardian affiliate	21 years	Portfolio manager of equity securities

Seung Kwak Senior Vice President for Capital International K.K, a Capital Guardian affiliate	5 years, 17 years with Zurich Scudder Investments	Portfolio manager of equity securities (regional coverage responsibilities in Japan)

MANAGING THE INVESTMENTS OF THE FUNDS continued


*Portfolio Manager* *Title, Company Affiliation*	Length of Service with Capital Guardian or with a Capital Guardian Affiliate	*Business Experience* *During the past 5 years*

Nancy J. Kyle Vice Chairman and Director, Capital Guardian	17 years	Portfolio manager of equity securities

John M.N. Mant President and Director of Capital International Limited a Capital Guardian affiliate	17 years	Portfolio manager of equity securities (regional coverage responsibilities in Europe)

Lionel M. Sauvage Director and Senior Vice President, Capital Guardian	20 years	Portfolio manager of equity securities

Nilly Sikorsky Chairman of Capital International S.A., a Capital Guardian affiliate	45 years	Portfolio manager of equity securities

Rudolf M. Staehelin Senior Vice President and Director of Capital International Research S.A., a Capital Guardian affiliate	26 years	Portfolio manager of equity securities

S&P 500 Index Fund

Diane Hsiung and Greg Savage (the “S&P 500 Stock Portfolio Managers”) are primarily responsible for the day-to-day management of the S&P 500 Index Master Portfolio and act collaboratively on all aspects concerning the S&P 500 Index Master Portfolio. Each S&P 500 Stock Portfolio Manager is responsible for various functions related to portfolio management, including, but not limited to, investing cash inflows, coordinating with members of his or her team to focus on certain asset classes, implementing investment strategies, researching and reviewing investment strategies, and overseeing members of his or her portfolio management team with more limited responsibilities, but each S&P 500 Stock Portfolio Manager has appropriate limitations on his or her authority for risk management and compliance purposes.

Diane Hsiung is an employee of BGFA and BGI and, together with the other S&P 500 Stock Portfolio Manager, has been primarily responsible for the day-to-day management of the S&P 500 Index Master Portfolio since January 1, 2008. Ms. Hsiung has been a senior portfolio manager for BGFA and BGI since 2007 and a portfolio manager for BGFA and BGI from 2002 to 2006.

Greg Savage, CFA is an employee of BGFA and BGI and, together with the other S&P 500 Stock Portfolio Manager, has been primarily responsible for the day-to-day management of the S&P 500 Index Master Portfolio since January 1, 2008. Mr. Savage has been a senior portfolio manager for BGFA and BGI since 2006 and a portfolio manager for BGFA and BGI from 2001 to 2006.

Small Cap Index Fund

Northern Trust Investments serves as the sub-adviser to the Small Cap Index Fund. The portfolio manager for the Small Cap Index Fund is Brent Reeder, Senior Vice President of Northern Trust Investments. Mr. Reeder, who joined Northern Trust in 1993, is a Portfolio Manager in the Quantitative Management Group and is responsible for the management of index portfolios. Mr. Reeder received a B.A. degree in Economics from DePauw University and an M.B.A. degree in Finance from DePaul University. Mr. Reeder is an Associated Person with the National Futures Association. For the past five years, he has managed quantitative equity portfolios.

International Index Fund

Northern Trust Investments serves as the sub-adviser to the International Index Fund. The portfolio manager for the International Index Fund is Shaun Murphy, Senior Vice President of Northern Trust Investments. Mr. Murphy, who is a Portfolio Manager in the U.S. Equities Division within the Quantitative Management Group, joined Northern Trust as a Vice President in June 2004. Since joining Northern Trust, Mr. Murphy has managed quantitative equity portfolios. From 1997 to 2003 he was a portfolio manager at State Street Global Advisors in London. Mr. Murphy received a degree in Business Studies from the University of Sunderland in the United Kingdom. He is a CFA charterholder and a member of the CFA Institute.

Equity and Bond Fund

The Equity and Bond Fund invests in shares of the Equity Fund and the Bond Fund, and these underlying funds invest in either common stocks or bonds. Consequently, the Equity

MANAGING THE INVESTMENTS OF THE FUNDS continued

and Bond Fund has the same portfolio managers as the Equity Fund and as the Bond Fund. For a description of the portfolio managers of the Equity Fund and the portfolio managers of the Bond Fund, please see the separate descriptions for those Funds included in this prospectus.

Bond Fund

Donald Heltner and Duncan Funk are the portfolio managers responsible for the day-to-day management of the Bond Fund. Mr. Heltner, Vice President – Fixed Income at State Farm Mutual Automobile Insurance Company, and Mr. Funk, Investment Officer – Fixed Income at State Farm Mutual Automobile Insurance Company, have been associated with the Bond Fund as portfolio managers since 2003 and 2000, respectively. Over the past five years, Messrs. Heltner and Funk have been involved in all aspects of managing fixed income investment portfolios for State Farm Mutual Automobile Insurance Company and its affiliates. Messrs. Heltner and Funk generally have different roles on the Bond Fund management team. Mr. Heltner’s role on the management team includes overseeing the process for buying and selling fixed income securities and maintaining investment policies. Mr. Funk’s role on the management team includes selecting fixed income securities for purchase and sale, conducting fixed income research, reviewing research data and maintaining investment policies.

Tax Advantaged Bond Fund

Donald Heltner and Robert Reardon are the portfolio managers primarily responsible for the day-to-day management of the Tax Advantaged Bond Fund. Mr. Heltner has been associated with the Tax Advantaged Bond Fund since 2003. Mr. Reardon, Investment Officer – Fixed Income at State Farm Mutual Automobile Insurance Company, has been associated with the Tax Advantaged Bond Fund since 2000. Over the past five years, Mr. Reardon has been involved in all aspects of managing tax advantaged fixed income portfolios for State Farm Mutual Automobile Insurance Company and its affiliated entities. Messrs. Heltner and Reardon generally have different roles on the Tax Advantaged Bond Fund management team. Mr. Heltner’s role on the Tax Advantaged Bond Fund management team is the same as identified for the Bond Fund. Mr. Reardon’s role on the Tax Advantaged Bond Fund management team includes selecting municipal securities for purchase and sale, conducting municipal research, and reviewing financial data and research reports.

LifePath Funds

Dagmar Nikles, Leslie Gambon and Jim Chan are primarily responsible for the day-to-day management of the LifePath Retirement Master Portfolio, LifePath 2010 Master Portfolio, LifePath 2020 Master Portfolio, LifePath 2030 Master Portfolio, LifePath 2040 Master Portfolio and LifePath 2050 Master Portfolio, the Master Portfolios into which the LifePath Funds invest. Each Portfolio Manager is responsible for various functions related to portfolio management, including, but not limited to, investing cash inflows, coordinating with members of their team to focus on certain asset classes, implementing investment strategies, researching and reviewing investment strategies, and overseeing members of his or her portfolio management team with more limited responsibilities.

Dagmar Nikles is an employee of BGFA and BGI and has been one of the Portfolio Managers primarily responsible for the day-to-day management of the LifePath Master Portfolios since June 2005. Ms. Nikles has been a member of the asset allocation portfolio management team since July 2003. Prior to joining BGI, Ms. Nikles received her Financial Risk Manager Certification and prior to that, Ms. Nikles was an assistant portfolio manager and analyst at Zurich Scudder Investments from 2000 to 2002.

Ms. Gambon is an employee of BGFA and BGI and has been one of the Portfolio Managers primarily responsible for the day-to-day management of the LifePath Master Portfolios since May 2007. Ms. Gambon has been a member of the asset allocation portfolio management team since April 2007. Prior to joining BGI, Ms. Gambon was an Active Equity Product Manager with Active Equity since 2001 and in October 2004 became Head of Portfolio Management Process at Active Equity.

Mr. Chan is an employee of BGFA and BGI and has been one of the Portfolio Managers primarily responsible for the day-to-day management of the LifePath Master Portfolios since May 2007. Mr. Chan has been a member of the asset allocation portfolio management team since April 2007. Prior to becoming a Portfolio Manager, Mr. Chan was a Research Analyst with BGI since June 2004.

The SAI provides additional information regarding the portfolio managers’ compensation, other accounts they manage, their ownership of securities issued by the Funds and additional information regarding possible conflicts of interest.

SHAREHOLDER INFORMATION

You may buy shares of any of the Funds by contacting your State Farm VP Management Corp. Registered Representative, by submitting a written order directly to State Farm VP Management Corp. at the address listed below, by contacting a State Farm VP Management Corp. Securities Products Representative at 1-800-447-4930 from 8:00 a.m. through 6:00 p.m. (Central Time) Monday through Friday (except holidays), or via the Internet. An interactive voice response (IVR) system, provides access to most information and many transactions, 24 hours per day.

We will employ reasonable procedures to confirm that telephone and internet instructions are genuine. These procedures include recording telephone calls, requiring the use of a personal identification number for internet transactions, and sending you transaction confirmation statements. If the Manager and the Funds fail to comply with such procedures, they may be liable for any losses due to unauthorized or fraudulent instructions. However, the Funds, the Manager and their respective officers, directors, employees and agents will not be liable for acting upon instructions given, when reasonably believed to be genuine.

During periods of volatile economic and market conditions, you may have difficulty initiating a transaction by telephone or by the internet, in which case you should consider sending in your request by letter or through your State Farm VP Management Corp. Registered Representative.

Telephone Transaction Privileges are automatically established for you unless you decline these privileges on the Application. If you currently do not have the Telephone Transaction Privileges but would like to sign up for these privileges, you may complete an Investor Account Services Form. Your signature on the Investor Account Services Form must be guaranteed (see “Signature Guarantee”).

Although the Application or the Investor Account Services Form authorize the Funds and the Manager to record all telephone instructions, the Funds may not honor telephone instructions unless permission to record is confirmed by the caller. Each Fund reserves the right at any time to suspend, limit, modify or terminate Telephone Transaction Privileges, but will not do so without giving you at least 30 days’ prior written notice.

Minimum Investments

Your initial and subsequent investment in each of the Funds has to meet these minimum requirements.


	*Investment Minimums*
*Type of Account*	*Initial Investment*	*Subsequent Investment*
Regular Accounts	$250	$50
Individual Retirement Accounts	$250	$50
Other Tax Qualified Retirement Plans	$250	$50
Automatic Investment Plans	$ 50	$50

The Funds may change the minimum investment amounts.

Reduced Sales Charge Options

This prospectus offers four different classes of Fund shares, which allows you to choose the method of purchasing shares that is most beneficial to you in light of factors such as the amount of your investment, your holdings of Fund shares and how long you expect to hold your investment.

As of May 1, 2006, the previously existing “Class A” and “Class B” shares were renamed “Legacy Class A” and “Legacy Class B” shares, and on that same day new Class A and new Class B shares were created. Any shareholder who owned former Class A or former Class B shares as of April 30, 2006, became the owner of the same number of Legacy Class A or Legacy Class B shares as of May 1, 2006.

The amount of sales charge you pay when buying Fund shares depends upon whether you are a “grandfathered” shareholder, a category of persons determined primarily based upon when you established your Fund account(s). An account is a distinct registration in which Fund shares are held, and each account has its own unique account number. Grandfathered shareholders may purchase Legacy Class A and Legacy Class B Fund shares whereas shareholders who are not grandfathered may purchase Class A or Class B Fund shares.

You are a grandfathered shareholder if you satisfy one or more of the following criteria:

•

Your account holding Legacy Class A or Legacy Class B Fund shares was established before May 1, 2006. In the case of all employer-sponsored qualified retirement plans, except Tax Sheltered Accounts (“TSAs”)

SHAREHOLDER INFORMATION continued

established under § 403(b)(7) of the Internal Revenue Code, your account is considered established when the plan itself is established. In the case of TSAs, your account is considered established on the date you the individual open your account.

•

Your account holding Legacy Class A or Legacy Class B shares is established after April 30, 2006, as a result of the death or divorce of one or more individual shareholder(s) who had a grandfathered account. For example, if John and Mary Smith established a grandfathered account before May 1, 2006, and that account is re-titled as a result of a death or divorce of John and/or Mary Smith, the re-titled account(s) will be treated as grandfathered account(s).

•

Your account holding Legacy Class A or Legacy Class B shares is established after April 30, 2006, as a result of a conversion or re-characterization of a grandfathered IRA account. For example, if you convert your grandfathered Traditional IRA account into a Roth IRA account, the Roth IRA account will be treated as a grandfathered account.

•

You are a trust that obtained its Legacy Class A or Legacy Class B shares from another grandfathered account.

Class A and Legacy Class A shares are available for investors choosing an initial sales charge, whereas Class B and Legacy Class B shares are available for investors who prefer a deferred sales charge. Shares of each class represent interests in the same Fund, have the same rights and, except for the differences in sales charges and distribution charges, are identical in all respects. Each class has different exchange privileges, as described in the section of this prospectus on “How to Exchange Shares.”

The net income attributable to each class of shares and the dividends payable on shares of each class will be reduced by the amount of the distribution and service (12b-1) fees and shareholder services fees attributable to those shares and incremental expenses associated with the class. Shareholders of each class of a Fund have exclusive voting rights on the distribution and service (12b-1) plan as it applies to that class. State Farm VP Management Corp. Registered Representatives receive equal compensation for selling the four classes of shares offered in this prospectus.

Owners of State Farm fixed or variable deferred annuities held as funding vehicles for tax-qualified plans can exchange part or all of their annuities for Fund shares through the State Farm Annuity Exchange Offer (the “State Farm Annuity Exchange Offer”). The State Farm annuities that qualify for the State Farm Annuity Exchange Offer include the State Farm Deferred Life Annuity, State Farm Flexible Premium Annuity, State Farm Single Premium Deferred Annuity or the State Farm Variable Deferred Annuity. State Farm annuities that qualify for the State Farm Annuity Exchange Offer are referred to as “Eligible Annuities.” The State Farm Annuity Exchange Offer only provides for a waiver of annuity surrender charges when proceeds from an Eligible Annuity are being transferred to a tax-qualified Fund account. The State Farm Annuity Exchange Offer does not include the State Farm Single Premium Immediate Life Annuity or the State Farm Single Premium Immediate Joint and Last Survivor Annuity.

Subject to some important exceptions discussed below, the State Farm Annuity Exchange Offer terminated with respect to Eligible Annuities acquired on or after July 15, 2003.

If you purchased an Eligible Annuity on or after May 1, 2001, and before July 15, 2003, as funding for a tax-qualified retirement plan under Internal Revenue Code sections 401(a), 408 or 408A, you may participate in the State Farm Annuity Exchange Offer if the exchange occurs before the tenth anniversary of the date of purchase of the Eligible Annuity.

Class A and Legacy Class A Shares

Initial Sales Charge

Class A Shares. You can buy Class A shares of each of the Funds at the offering price, which is the net asset value per share plus a sales charge (commission). The applicable sales charge schedule for your investment in Class A shares of the Funds, except an investment in the Bond Fund or the Tax Advantaged Bond Fund, is set forth in Sales Charge Schedule #1 below. If you are purchasing Class A shares of the Bond Fund or the Tax Advantaged Bond, the applicable sales charge schedule is Sales Charge Schedule #2 below. There is no initial sales charge for “new investments” in Class A shares of the Money Market Fund. A new investment is an investment you initially make in the Fund by means other than an exchange from another Fund.

Legacy Class A Shares. If you are a grandfathered shareholder, you can buy Legacy Class A shares of each of the Funds at the offering price, which is the net asset value per share plus a sales charge (commission). The applicable sales charge schedule for your investment in Legacy Class A shares of the Funds is set forth in Sales Charge Schedule #2 below. There is no initial sales charge for new investments in Legacy Class A shares of the Money Market Fund.

SHAREHOLDER INFORMATION continued

Sales Charge Schedule #1

Sales Charge as Percentage of


	*Offering* *Price*		*Net Amount* Invested*
Less than $25,000	5	%	5.26	%
$25,000 to $49,999	4.5	%	4.71	%
$50,000 to $99,999	4.0	%	4.17	%
$100,000 to $199,999	3.0	%	3.09	%
$200,000 to $299,999	2.5	%	2.56	%
$300,000 to $399,999	2.0	%	2.04	%
$400,000 to $499,999	1.5	%	1.52	%
$500,000 or more	0	%**	0	%

Sales Charge Schedule #2

Sales Charge as Percentage of


	Offering Price		Net Amount Invested*
Less than $50,000	3	%	3.09	%
$50,000 to $99,999	2.5	%	2.56	%
$100,000 to $199,999	2.0	%	2.04	%
$200,000 to $299,999	1.5	%	1.52	%
$300,000 to $399,999	1.0	%	1.01	%
$400,000 to $499,999	0.5	%	0.503	%
$500,000 or more	0	%**	0	%

The percentages for “Net Amount Invested” are rounded to the nearest one-hundredth or one-thousandth of one-percent. Your net amount invested may be slightly different than indicated by these percentages due to rounding.

No sales charge is imposed at the time of purchase on amounts of $500,000 or more. However, for investment of $500,000 or more in Class A or Legacy Class A shares of any Fund other than the Money Market Fund, a contingent deferred sales charge will be charged if shares are redeemed within 12 months following their purchase at the rate of 0.5% on the lesser of the value of the shares redeemed (exclusive of reinvested dividends and capital gains distributions) or the cost of such shares. The contingent deferred sales charge may be waived in certain circumstances. See “When will the Contingent Deferred Sales Charge Schedule be Waived?” on p. 57.

Whether you buy Class A or Legacy Class A shares, you may qualify for a reduced sales charge, or the sales charge may be waived, as described below under “When Will the Initial Sales Charge be Reduced or Waived?”

Initial Sales Charge for the Money Market Fund. The initial sales charge does not apply to new investments in Class A or Legacy Class A shares of the Money Market Fund. New investments in the Money Market Fund will only be accepted in Class A or Legacy Class A shares, whichever class of shares you are eligible to purchase.

Additional Sales Charge for Certain Exchanges from Class A Shares of the Bond Fund and the Tax Advantaged Bond Fund. If you should exchange a new investment in Class A shares of the Bond Fund or Class A shares of the Tax Advantaged Bond for Class A shares of another Fund (other than the Bond Fund or the Tax Advantaged Bond Fund) within 180 days of acquiring the Class A shares of the Bond Fund or the Class A shares of the Tax Advantaged Bond Fund, you will be charged an additional sales charge equal to 1% of the lesser of the value of the shares exchanged (exclusive of reinvested dividends and capital gains distributions) or the cost of such shares. This sales charge will be collected from the redemption proceeds to be reinvested in shares of the new Fund position unless you pay the sales charge in another manner. For purposes of assessing the 1% sales charge, a new investment in Class A shares of the Bond Fund or Class A shares of the Tax Advantaged Bond Fund includes shares acquired from a new investment in the Class A shares of the Money Market Fund. In determining the amount of the sales charge that applies to exchanges from the Bond Fund or the Tax Advantaged Bond Fund, the calculation will be made in a manner that results in the lowest possible sales charge. It will be assumed that the exchange is made first from shares of the Bond Fund or the Tax Advantaged Bond Fund acquired through an exchange from another Fund (other than an exchange into the Bond Fund or the Tax Advantaged Bond Fund made from a new investment in the Money Market Fund); next from shares acquired from the reinvestment of dividends and distributions; and finally, it will be assumed that the exchange is made from shares acquired as new investments in the Bond Fund or the Tax Advantaged Bond Fund. No breakpoints or reductions in the rate of this sales charge will apply when this sales charge is due. The 1% additional sales charge does not apply if the initial sales charge on your purchase of Class A shares of the Bond Fund or the Tax Advantaged Bond Fund was waived.

When will the Initial Sales Charge be Reduced or Waived for Class A and Legacy Class A Shares?

There are several ways to reduce or eliminate the initial sales charge:

•

Combined Purchases

•

Rights of Accumulation

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