<PAGE>
As filed with the Securities and Exchange Commission on October 30, 1998
Registration Nos. 333-50529;
811-08759
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 1 /X/
Post-Effective Amendment No. __ / /
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No. 1 /X/
BARR ROSENBERG VARIABLE INSURANCE TRUST
(Exact Name of Registrant as Specified in Charter)
c/o Rosenberg Institutional Equity Management, Four Orinda Way, Building E,
Orinda, CA 94563
(Address of Principal Executive Offices) (Zip code)
925-254-6464
(Registrant's Telephone Number, including Area Code)
Name and address
of agent for service: Copies to:
--------------------- ----------
Kenneth Reid J.B. Kittredge, Esq.
Rosenberg Institutional Ropes & Gray
Equity Management One International Place
Four Orinda Way Boston, MA 02110-2624
Building E
Orinda, CA 94563
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Title of Securities Being Registered: Shares of Beneficial Interest of the Barr
Rosenberg VIT Market Neutral Fund.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
BARR ROSENBERG VARIABLE INSURANCE TRUST
CROSS-REFERENCE SHEET
Required by Rule 495 Under the Securities Act of 1933
N-1A Item No. Location
- ------------- --------
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description Description of the Trust and Ownership of
of Registrant Shares; Investment Objectives and Policies;
Cover Page; and General Description of Risks
and Fund Investments
Item 5. Management of the Management of the Trust; Back Cover
Fund
Item 5A. Management's Not Applicable
Discussion of Fund
Performance
Item 6. Capital Stock and Description of the Trust and Ownership of
Other Securities Shares; Distributions; Shareholder Inquiries;
Taxes; and Back Cover
Item 7. Purchase of Purchase of Shares; Exchange of Fund Shares;
Securities Being Management of the Trust; Determination of Net
Offered Asset Value; and Back Cover
Item 8. Redemption or Redemption of Shares; Exchange of Fund Shares;
Repurchase and Determination of Net Asset Value
Item 9. Pending Legal Not Applicable
Proceedings
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
<PAGE>
N-1A Item No. Location
- ------------- --------
Item 12. General Information Description of the Trust and Ownership of
and History Shares
Item 13. Investment Investment Objective and Policies;
Objectives and Miscellaneous Investment Practices; and
Policies Investment Restrictions
Item 14. Management of the Management of the Trust
Fund
Item 15. Control Persons and Description of the Trust and Ownership of
Principal Holders of Shares
Securities
Item 16. Investment Advisory Investment Advisory and Other Services;
and Other Services Management of the Trust
Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices
Item 18. Capital Stock and Description of the Trust and Ownership of
Other Securities Shares
Item 19. Purchase, Redemption Determination of Net Asset Value; See in Part
and Pricing of A, Purchase of Shares; Exchange of Fund
Securities Being Shares; Redemption of Shares; Determination of
Offered Net Asset Value
Item 20. Tax Status Income Dividends, Distributions and Tax Status
Item 21. Underwriters Investment Advisory and Other Services
Item 22. Calculation of Total Return Calculations
Performance Data
Item 23. Financial Statements Not Applicable
PART C
Information to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
-2-
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 30, 1998
BARR ROSENBERG VARIABLE INSURANCE TRUST
BARR ROSENBERG VIT MARKET NEUTRAL FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-925-254-6464
NOVEMBER , 1998
Barr Rosenberg Variable Insurance Trust (the "Trust") is an open-end
management investment company offering shares of the Barr Rosenberg VIT Market
Neutral Fund (the "Fund") for purchase by separate accounts of insurance
companies. The Fund's investment manager is Rosenberg Institutional Equity
Management (the "Manager").
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY SUCH SECURITIES BE ACCEPTED PRIOR TO THE TIME SUCH REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
The Fund seeks long-term capital appreciation while maintaining minimal
exposure to general equity market risk by taking long positions in stocks
principally traded in the markets of the United States that the Manager has
identified as undervalued and short positions in such stocks that the Manager
has identified as overvalued. For a description of the risks of an investment in
the Fund, see "Investment Objective and Policies," "General Description of Risks
and Fund Investments" and "Description of the Trust and Ownership of Shares."
The Fund seeks a total return greater than the return on 3-month U.S. Treasury
Bills. For a description of the differences between an investment in the Fund
and in 3-month U.S. Treasury Bills, see "Investment Objective and Policies."
This Prospectus concisely describes the information that investors ought to
know before investing in the Fund and should be read in conjunction with the
prospectus for the separate account of the variable annuity or variable life
insurance product that accompanies this prospectus.
A Statement of Additional Information dated November , 1998 (the
"Statement") is available free of charge by writing to the Trust at 3435 Stelzer
Road, Columbus, Ohio 43219 or by telephoning 1-925-254-6464. The Statement,
which contains more detailed information about the Fund, has been filed with the
Securities and Exchange Commission (the "Commission") and is incorporated by
reference into this Prospectus. The Commission maintains a World Wide Web site
at http://www.sec.gov that contains the Statement, material incorporated by
reference into this Prospectus and the Statement, and other information
regarding registrants that file electronically with the Commission.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE PRESENTLY AVAILABLE AND ARE BEING MARKETED
EXCLUSIVELY AS A POOLED FUNDING VEHICLE FOR VARIABLE ANNUITY CONTRACT AND
VARIABLE LIFE INSURANCE SEPARATE ACCOUNTS OF VARIOUS INSURANCE COMPANIES.
<PAGE>
TABLE OF CONTENTS
PAGE
----
FUND EXPENSES......................................................... 3
INVESTMENT OBJECTIVE AND POLICIES..................................... 4
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS..................... 5
PERFORMANCE INFORMATION............................................... 7
MANAGEMENT OF THE TRUST............................................... 8
PURCHASE OF SHARES.................................................... 17
REDEMPTION OF SHARES.................................................. 18
DETERMINATION OF NET ASSET VALUE...................................... 19
DISTRIBUTIONS......................................................... 19
TAXES................................................................. 20
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES...................... 20
OTHER INFORMATION..................................................... 22
SHAREHOLDER INQUIRIES................................................. 22
2
<PAGE>
FUND EXPENSES
The estimated annual expenses of the Fund are set forth in the following
table, the form of which is prescribed by federal securities laws and
regulations.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT SHAREHOLDER OPERATING
FEE (AFTER SERVICE DISTRIBUTION OTHER EXPENSES
WAIVER) FEE FEE EXPENSES(a) (AFTER WAIVER)(a)
---------- ----------- ------------ ----------- -----------------
<S> <C> <C> <C> <C> <C>
Barr Rosenberg VIT
Market Neutral Fund............................. 1.57% None None 0.43%* 2.00%
</TABLE>
The Manager has undertaken to reduce its management fee and bear certain
expenses until further notice in order to limit the total annual operating
expenses (exclusive of nonrecurring account fees, extraordinary expenses and
dividends and interest paid on securities sold short) to the percentage of the
Fund's average daily net assets listed under Total Fund Operating Expenses
above. Absent such undertaking by the Manager to waive its fee and bear such
expenses, the Fund's management fees would be 1.90% and estimated Total Fund
Operating Expenses would be 2.33%. See "Management of the Trust."
- -------------------
(a) Other Expenses and Total Fund Operating Expenses do not include dividend
expenses incurred in connection with short sales (estimated at 0.88% for the
Fund's first fiscal year), which are included in and reduce the investment
return of the Fund.
* Estimated Other Expenses without reimbursement of expenses by the Manager.
EXAMPLE:
<TABLE>
<CAPTION>
YOU WOULD PAY THE FOLLOWING
EXPENSES ON A $1,000
INVESTMENT ASSUMING A 5%
ANNUAL RETURN (WITH OR WITHOUT
A REDEMPTION AT THE END OF
EACH TIME PERIOD)(b):
------------------------------
1 YEAR 3 YEARS
------- --------
<S> <C> <C>
Barr Rosenberg VIT Market Neutral Fund............ $20 $63
</TABLE>
- -------------------
(b) Excluding dividend expenses incurred in connection with short sales.
THE PURPOSE OF THIS TABLE IS TO ASSIST YOU IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES OF THE FUND THAT YOU WILL BEAR DIRECTLY OR INDIRECTLY. THE
EXPENSES USED IN THE EXAMPLE AND THE FIVE PERCENT ANNUAL RETURN (WHICH IS
MANDATED BY THE SECURITIES AND EXCHANGE COMMISSION) ARE NOT REPRESENTATIONS OF
PAST OR FUTURE EXPENSES OR PERFORMANCE; ACTUAL EXPENSES AND/OR PERFORMANCE MAY
BE MORE OR LESS THAN THOSE SHOWN.
3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek long-term capital
appreciation while maintaining minimal exposure to general equity market risk.
The Fund seeks a total return greater than the return on 3-month U.S. Treasury
Bills. The Fund attempts to achieve its objective by taking long positions in
stocks principally traded in the markets of the United States that the Manager
has identified as undervalued and short positions in such stocks that the
Manager has identified as overvalued. See "General Description of Risks and Fund
Investments -- Risks of Short Sales" below. By taking long and short positions
in different stocks, the Fund attempts to cancel out the effect of general stock
market movements on the Fund's performance. It is expected that the Fund can
achieve a positive return if the Fund's long portfolio outperforms the Fund's
short portfolio. Conversely, it is expected that the Fund will incur losses if
the Fund's long portfolio underperforms the Fund's short portfolio. The Manager
will determine the size of each long or short position by analyzing the tradeoff
between the attractiveness of each position and its impact on the risk
characteristics of the overall portfolio. The Fund seeks to construct a
diversified portfolio that has minimal net exposure to the U.S. equity market
generally and near neutral exposure to specific industries, specific
capitalization ranges and certain other risk factors. It is currently expected
that the long and short positions of the Fund will be invested primarily in
small capitalization stocks and smaller mid-capitalization stocks. For purposes
of the preceding sentence, the 200 stocks principally traded in the markets of
the United States with the largest market capitalizations are considered large
capitalization stocks, the next 800 largest stocks are considered
mid-capitalization stocks and all other stocks are considered small
capitalization stocks. Stocks of companies with relatively small market
capitalizations tend to be less liquid and more volatile than stocks of
companies with relatively large market capitalizations.
Although the Fund's investment strategy seeks to minimize the risk
associated with investing in the equity market, an investment in the Fund will
be subject to various risks, including the risk of poor stock selection by the
Manager. There can be no assurance that the Manager will successfully take long
positions in stocks and short positions in other stocks, such that the portfolio
of long positions outperforms the portfolio of short positions. In addition, the
Manager may fail to construct a portfolio that has minimal exposure to general
equity market risk or that has near neutral exposure to specific industries,
specific capitalization ranges and certain other risk factors. Further, because
the Manager will manage both a long and a short portfolio, an investment in the
Fund will involve the risk that the Manager may make more poor investment
decisions than a manager of a typical stock mutual fund with only a long
portfolio. Moreover, an investment in the Fund is different from an investment
in 3-month U.S. Treasury Bills because Treasury Bills are backed by the full
faith and credit of the U.S. Government, Treasury Bills have a fixed rate of
return, investors in Treasury Bills do not bear the risk of losing their
investment. and an investment in the Fund is more volatile than an investment in
Treasury Bills.
To meet margin requirements related to short sales, redemption requests, or
for investment purposes, the Fund may also temporarily hold a portion of its
assets in full faith and credit obligations of the United States government
(E.G., U.S. Treasury Bills) and in short-term notes, commercial paper or other
money market instruments of high quality (I.E., rated at least "A-2" or "AA" by
Standard & Poor's ("S&P") or Prime 2 or "Aa" by Moody's Investors Service, Inc.
("Moody's")) issued by companies having an outstanding debt issue rated at least
"AA" by S&P or at least "Aa" by Moody's, or determined by the Manager to be of
comparable quality to any of the foregoing.
4
<PAGE>
The Fund's long and short positions may involve without limit equity
securities of foreign issuers that are principally traded in the markets of the
United States. See "General Description of Risks and Fund Investments -- Special
Considerations of Foreign Investments." The Fund will not invest in equity
securities that are principally traded outside of the United States.
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS
INVESTMENT RISKS. The value of Fund shares may increase or decrease
depending on market, economic, political, regulatory and other conditions
affecting the Fund's portfolio. Investment in shares of the Fund is more
volatile and risky than some other forms of investment. In addition, it is
possible that the Fund's long positions will decline in value at the same time
that the value of securities sold short increases, thereby increasing the
potential for loss of the Fund. Moreover, the market neutral strategy has the
effect of accelerating the recognition of gain for tax purposes and increasing
the short-term gain component of gains in the Fund. Short-term gains are
ordinarily taxed to shareholders at ordinary income tax rates, thereby
increasing the amount of taxes payable by shareholders.
RISKS OF SHORT SALES. When the Manager anticipates that a security is
overvalued, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund will incur a loss as
a result of a short sale if the price of the borrowed security increases between
the date of the short sale and the date on which the Fund replaces such
security. The Fund may realize a gain if the security declines in price between
those dates. There can be no assurance that the Fund will be able to close out a
short position at any particular time or at an acceptable price. During the time
the Fund is short a security it is subject to the risk that the lender will
terminate the loan at a time when the Fund is unable to borrow the same security
from another lender, in which event the Fund may be "bought in" at the price
required to purchase the security to close out the short position. Although the
Fund's gain is limited to the amount at which it sold a security short, its
potential loss is limited only by the maximum attainable price of the security
less the price at which the security was sold. Until the security sold short is
replaced, the Fund is required to repay the lender any dividends or interest
that accrue during the period of the loan. To borrow the security, the Fund also
may be required to pay a premium. The Fund also will incur transaction costs in
effecting short sales. The amount of any gain resulting from a short sale will
be decreased, and the amount of any loss increased, by the amount of premiums,
dividends, interest or expenses the Fund may be required to pay in connection
with a short sale. Until the Fund replaces a borrowed security, it will maintain
daily a segregated account with its Custodian containing cash, U.S. Government
securities, or other liquid securities such that the amount deposited in the
account plus any amount deposited with a broker or other custodian as collateral
will at least equal the current market value of the security sold short.
Depending on arrangements made with such broker or custodian, the Fund may not
receive any payments (including interest) on collateral deposited with such
broker or custodian. The Fund will not make a short sale if, after giving effect
to such sale, the market value of all securities sold exceeds 100% of the value
of the Fund's net assets. The Fund's use of short sales may result in the Fund
realizing more short-term capital gains (subject to tax at ordinary income
rates) than it would if it did not engage in short sales.
SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS. Investing in securities of
foreign issuers involves certain risks not typically found in investing in
securities of U.S. issuers. These include risks of adverse change in foreign
economic, political, regulatory and other conditions, and changes in currency
exchange rates,
5
<PAGE>
exchange control regulations (including currency blockage), expropriation of
assets or nationalization, imposition of withholding taxes on dividend or
interest payments, and possible difficulty in obtaining and enforcing judgments
against foreign entities. Furthermore, issuers of foreign securities are subject
to different, and often less comprehensive, accounting, reporting and disclosure
requirements than domestic issuers. In certain countries, legal remedies
available to investors may be more limited than those available with respect to
investments in the United States or other countries. The securities of some
foreign issuers may be less liquid and at times more volatile than securities of
comparable U.S. issuers.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements, by
which the Fund purchases a security and obtains a simultaneous commitment from
the seller (a bank or, to the extent permitted by the Investment Company Act of
1940, as amended (the "1940 Act"), a recognized securities dealer) to repurchase
the security at an agreed-upon price and date (usually seven days or less from
the date of original purchase). The resale price is in excess of the purchase
price and reflects an agreed-upon market rate unrelated to the coupon rate on
the purchased security. Such transactions afford the Fund the opportunity to
earn a return on temporarily available cash. Although the underlying security
may be a bill, certificate of indebtedness, note or bond issued by an agency,
authority or instrumentality of the U.S. Government, the obligation of the
seller is not guaranteed by the U.S. Government and there is a risk that the
seller may fail to repurchase the underlying security. In such event, the Fund
would attempt to exercise rights with respect to the underlying security,
including possible disposition in the market. However, the Fund may be subject
to various delays and risks of loss, including possible declines in the value of
the underlying security during the period while the Fund seeks to enforce its
rights thereto and inability to enforce rights and the expenses involved in
attempted enforcement.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend some or all of its
portfolio securities to broker-dealers. Securities loans are made to
broker-dealers pursuant to agreements requiring that loans be continuously
secured by collateral in cash or U.S. Government securities at least equal at
all times to the market value of the securities lent. The borrower pays to the
Fund an amount equal to any dividends or interest received on the securities
lent. When the collateral is cash, the Fund may invest the cash collateral in
interest-bearing, short-term securities. When the collateral is U.S. Government
securities, the Fund usually receives a fee from the borrower. Although voting
rights or rights to consent with respect to the loaned securities pass to the
borrower, the Fund retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by the Fund
if the holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. The Fund may also call such loans in order
to sell the securities involved. The risks in lending portfolio securities, as
with other extensions of credit, include possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. However, such loans will be made only to broker-dealers that are
believed by the Manager to be of relatively high credit standing.
ILLIQUID SECURITIES. The Fund may purchase "illiquid securities," defined
as securities which cannot be sold or disposed of in the ordinary course of
business within seven days at approximately the price at which the Fund has
valued such securities, so long as no more than 15% of the Fund's net assets
would be invested in such illiquid securities after giving effect to a purchase.
Investment in illiquid securities involves the risk that, because of the lack of
consistent market demand for such securities, the Fund may be forced to sell
them at a discount from the last offer price.
6
<PAGE>
PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions of the Manager. The rate of the Fund's portfolio
turnover may vary significantly from time to time depending on the volatility of
economic and market conditions. Although the rate of portfolio turnover is
difficult to predict, it is not anticipated that under normal circumstances the
annual portfolio turnover rate of each of the long and short portfolios of the
Fund will exceed 150%. It is, however, impossible to predict portfolio turnover
in future years. High portfolio turnover involves correspondingly greater
brokerage commissions or dealer markup and other transaction costs, which will
be borne directly by the Fund, and could involve realization of capital gains
that would be taxable when distributed to shareholders of such Fund. To the
extent portfolio turnover results in the realization of net short-term capital
gains, such gains ordinarily are taxed to shareholders at ordinary income tax
rates. See "Taxes."
INVESTMENT OBJECTIVE AND POLICIES. Except as explicitly described
otherwise, the investment objective and policies of the Fund may be changed
without shareholder approval.
PERFORMANCE INFORMATION OF MARKET NEUTRAL ACCOUNTS
Rosenberg Institutional Equity Management also serves as the manager of
other accounts (the "Market Neutral Accounts") that have investment objectives,
policies and strategies that are substantially similar to those of the Fund. The
information below should not be considered a prediction of the future
performance of the Fund. The performance of the Fund may be higher or lower than
the performance of the Market Neutral Accounts. The performance information
shown below is based on a composite of all of the Manager's accounts with
substantially similar investment objectives, policies and strategies as the Fund
and has been adjusted to give effect to the estimated annualized expenses
(without giving effect to any expense waivers or reimbursements) of the Fund
during its first fiscal year. All but one of the Market Neutral Accounts were
not registered under the 1940 Act and Subchapter M of the Internal Revenue Code
(the "Code") and therefore were not subject to certain investment restrictions
imposed by the 1940 Act. If those Market Neutral Accounts had been registered
under the 1940 Act or subject to Subchapter M of the Code, their performance and
the composite performance might have been adversely affected. In addition,
separate account fees and changes will be levied against the assets of the Fund
and would have adversely affected the performance of the Market Neutral Accounts
if such fees and charges had been levied against the assets of these accounts.
The following table shows the average annual total return for the one-year,
three-year, five-year and since-inception periods ending March 31, 1998 for a
composite of the Market Neutral Accounts adjusted to give effect to the
estimated annual expenses of the Fund during its first fiscal year. The
following table also shows the average annual total return on 3-month U.S.
Treasury bills for the same periods.
<TABLE>
<CAPTION>
THREE-YEAR FIVE-YEAR PERIOD FROM
ONE-YEAR PERIOD PERIOD PERIOD FEBRUARY 28, 1989
ENDING ENDING ENDING TO
MARCH 31, 1998 MARCH 31, 1998 MARCH 31, 1998 MARCH 31, 1998
--------------- ---------------- --------------- -------------------
<S> <C> <C> <C> <C>
Market Neutral Accounts.................... 8.13% 15.78% 11.25% 7.19%
3-month U.S. Treasury Bills................ 5.23% 5.28% 4.75% 5.35%
</TABLE>
An investment in the Fund is different from an investment in 3-month U.S.
Treasury Bills because Treasury Bills are backed by the full faith and credit of
the U.S. Government, Treasury Bills have a fixed rate of return, investors in
Treasury Bills do not bear the risk of losing their investment and an investment
in the Fund is more volatile than an investment in Treasury Bills. Giving effect
to the expense limitation of 2.00% on the expenses of the Fund as set forth in
the "Fund Expenses" section, the average annual total return for the
7
<PAGE>
one-year, three-year, five-year and since-inception periods ending March 31,
1998 for the Market Neutral Accounts would have been 9.03%, 16.74%, 12.18% and
8.08%, respectively. There have been two enhancements to the Manager's market
neutral strategy since its inception in 1989. First, the Manager incorporated
its Earnings Change Model and Investor Sentiment Model into its market neutral
strategy in October 1992 and April 1993, respectively. See "Management of the
Trust -- The Manager's General Investment Philosophy and Strategy." The second
change to the Manager's market neutral strategy occurred in July 1995, when the
Manager focused its strategy on medium and smaller capitalization companies.
Prior to such date, the Manager had applied its market neutral strategy to
companies across the capitalization spectrum (i.e., large, medium and small
capitalization companies). Since inception of the market neutral strategy,
however, the Manager has maintained long and short positions of approximately
the same dollar amount within a given capitalization sector. The Fund reserves
the freedom to invest in stocks of companies of any capitalization to meet
risk/return objectives and liquidity needs. Despite the two enhancements to the
Manager's market neutral strategy since 1989, the Fund will have substantially
similar investment objectives, policies and strategies as the Market Neutral
Accounts.
MANAGEMENT OF THE TRUST
The Fund is advised and managed by Rosenberg Institutional Equity Management
(the "Manager"), which provides investment advisory services to a number of
institutional investors and several mutual funds.
KEY PERSONNEL OF THE MANAGER
The biography of each of the General Partners of the Manager is set forth
below. Kenneth Reid is also a Trustee of the Trust.
BARR ROSENBERG. Dr. Rosenberg is Managing General Partner and Chief
Investment Officer of the Manager. As such, he has ultimate responsibility for
the Manager's securities valuation and portfolio optimization systems used to
manage the Fund and for the implementation of the decisions developed therein.
His area of special concentration is the design of the Manager's proprietary
securities valuation model.
Dr. Rosenberg earned a B.A. degree from the University of California,
Berkeley, in 1963. He earned an M.Sc. from the London School of Economics in
1965, and a Ph.D. from Harvard University, Cambridge, Massachusetts, in 1968.
From 1968 until 1983, Dr. Rosenberg was a Professor of Finance, Econometrics,
and Economics at the School of Business Administration at the University of
California, Berkeley. Concurrently, from 1968 until 1974, Dr. Rosenberg worked
as a consultant in applied decision theory in finance, banking and medicine. In
1975, he founded Barr Rosenberg Associates, a financial consulting firm (now
known as BARRA) where he was a managing partner, and later chief scientist until
his departure in 1986. Dr. Rosenberg, the founder of the Berkeley Program in
Finance, is acknowledged as an expert in the modeling of complex processes with
substantial elements of risk.
MARLIS S. FRITZ. Ms. Fritz is a General Partner of the Manager. She has
primary responsibility for the Manager's new business development and secondary
responsibility for client service.
Ms. Fritz earned a B.S. degree from the University of Michigan, Ann Arbor,
in 1971. After working in life insurance management and sales for seven years,
she entered the investment management business in
8
<PAGE>
1978 as Marketing Associate with Forstmann-Leff Associates, New York. From 1983
until 1985, she was Vice President, Marketing at Criterion Investment Management
Company, Houston, Texas.
KENNETH REID. Dr. Reid is a General Partner and Director of Research of the
Manager. His work is focused on the design and estimation of the Manager's
valuation models and he has primary responsibility for analyzing the empirical
evidence that validates and supports the day-to-day recommendations of the
Manager's securities valuation models. Patterns of short-term price behavior
discussed by Dr. Reid as part of his Ph.D. dissertation have been refined and
incorporated into the Manager's proprietary valuation and trading systems.
Dr. Reid earned both a B.A. degree (1973) and an M.D.S. (1975) from Georgia
State University, Atlanta. In 1982, he earned a Ph.D. from the University of
California, Berkeley, where he was awarded the American Bankers Association
Fellowship. From 1981 until June 1986, Dr. Reid worked as a consultant at BARRA
in Berkeley, California. His responsibilities included estimating
multiple-factor risk models, designing and evaluating active management
strategies, and serving as an internal consultant on econometric matters in
finance.
GENERAL. There are 43 professional staff members of the Manager and the
Manager's affiliate, Barr Rosenberg Investment Management, Inc., located in
Orinda, California. Included among the Manager's professional staff are seven
individuals with Ph.D.s and nineteen individuals with other graduate degrees.
Six members of the staff have been awarded C.F.A. certificates.
THE OUTSIDE TRUSTEES
William F. Sharpe and Nils H. Hakansson are the Trustees of the Trust who
are not "interested persons" (as defined in the 1940 Act) of the Trust or the
Manager.
Dr. Sharpe is the STANCO 25 Professor of Finance at Stanford University's
Graduate School of Business. He is best known as one of the developers of the
Capital Asset Pricing Model, including the beta and alpha concepts used in risk
analysis and performance measurement. He developed the widely-used binomial
method for the valuation of options and other contingent claims. He also
developed the computer algorithm used in many asset allocation procedures. Dr.
Sharpe has published articles in a number of professional journals. He has also
written six books, including PORTFOLIO THEORY AND CAPITAL MARKETS, (McGraw-Hill,
1970), ASSET ALLOCATION TOOLS, (SCIENTIFIC PRESS, 1987), FUNDAMENTALS OF
INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey, Prentice-Hall, 1993)
and INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey, Prentice-Hall,
1995). Dr. Sharpe is a past President of the American Finance Association. He is
currently Chairman of Financial Engines Incorporated, an electronic investment
advice company. He has also served as consultant to a number of corporations and
investment organizations. He is also a member of the Board of Trustees of Smith
Breeden Trust, an investment company, and a director at CATS Software and
Stanford Management Company. He received the Nobel Prize in Economic Sciences in
1990.
Professor Hakansson is the Sylvan C. Coleman Professor of Finance and
Accounting at the Haas School of Business, University of California, Berkeley.
He is a former member of the faculty at UCLA as well as at Yale University. At
Berkeley, he served as Director of the Berkeley Program in Finance (1988-1991)
and as Director of the Professional Accounting Program (1985-1988). Professor
Hakansson is a Certified Public Accountant and spent three years with Arthur
Young & Company prior to receiving his Ph.D. from UCLA in
9
<PAGE>
1966. He has twice been a Visiting Scholar at Bell Laboratories in New Jersey
and was, in 1975, the Hoover Fellow at the University of New South Wales in
Sydney and, in 1982, the Chevron Fellow at Simon Fraser University in British
Columbia. In 1984, Professor Hakansson was a Special Visiting Professor at the
Stockholm School of Economics, where he was also awarded an honorary doctorate
in economics. He is a past president of the Western Finance Association
(1983-1984). Professor Hakansson has published numerous articles in academic
journals and in professional volumes. Many of his papers address various aspects
of asset allocation procedures as well as topics in securities innovation,
information economics and financial reporting. He has served on the editorial
boards of several professional journals and been a consultant to the RAND
Corporation and a number of investment organizations. Professor Hakansson is a
member of the board of two foundations and a past board member of SuperShare
Service Corporation and of Theatrix Interactive, Inc. He is also a Fellow of the
Accounting Researchers International Association and a member of the Financial
Economists Roundtable.
THE MANAGER'S GENERAL INVESTMENT PHILOSOPHY AND STRATEGY
The Manager attempts to add value relative to a benchmark through a
quantitative stock selection process, and seeks to diversify investment risk
across the holdings in the Fund. In seeking to outperform the Fund's benchmark,
the Manager also attempts to control risk in the Fund's portfolio relative to
the benchmark.
INVESTMENT PHILOSOPHY. The Manager's investment strategy is based on the
belief that stock prices imperfectly reflect the present value of the expected
future earnings of companies, their "fundamental value." The Manager believes
that market prices will converge towards fundamental value over time, and that
therefore, if the Manager can accurately determine fundamental value, and can
apply a disciplined investment process to select those stocks that are currently
undervalued (in the case of purchases) or overvalued (in the case of short
sales), the Manager will outperform the Fund's benchmark over time.
The premise of the Manager's investment philosophy is that there is a link
between the price of a stock and the underlying financial and operational
characteristics of the company. In other words, the price reflects the market's
assessment of how well the company is positioned to generate future earnings
and/or future cash flow. The Manager identifies and purchases those stocks which
are undervalued (I.E., they are currently cheaper than similar stocks with the
same characteristics) and engages in short sales with respect to those stocks
that are overvalued (I.E., they are currently more expensive than similar stocks
with the same characteristics). The Manager believes that the market will
recognize the "better value" and that the mispricing will be corrected as the
stocks in the Fund's portfolios are purchased or sold by other investors.
In determining whether or not a stock is attractive, the Manager considers
the company's current estimated fundamental value as determined by the Manager's
proprietary Appraisal Model, the Manager's model for expected earnings, and
analysis of investor sentiment toward the stock. The Manager identifies and
causes the Fund to purchase an undervalued stock and to hold it in the Fund's
portfolio until the market recognizes and corrects for the misvaluation.
Conversely, the Manager identifies and causes the Fund to sell short an
overvalued stock.
10
<PAGE>
DECISION PROCESS. The Manager's decision process is a continuum. Its
research function develops models that analyze the approximately 12,000
securities in the global universe, both fundamentally and technically, and
determines the risk characteristics of the Fund's benchmark. The portfolio
management function optimizes each portfolio's composition, executes trades, and
monitors performance and trading costs.
The essence of the Manager's approach is attention to important aspects of
the investment process. Factors crucial to successful stock selection include:
(1) accurate and timely data on a large universe of companies; (2) subtle
quantitative descriptors of value and predictors of changes in value; and (3)
insightful definitions of similar businesses. The Manager assimilates, checks
and structures the input data on which its Models rely. The Manager believes
that if the data is correct, the recommendations made by the system will be
sound.
STOCK SELECTION. Fundamental valuation of stocks is key to the Manager's
investment process, and the heart of the valuation process lies in the Manager's
proprietary Appraisal Model. Analysis of companies in the United States and
Canada is conducted in a single unified Model. The Appraisal Model discriminates
where the two markets are substantially different, while simultaneously
comparing companies in the two markets according to their degrees of similarity.
European companies and Asian companies (other than Japanese companies) are
analyzed in a nearly global model, which includes the United States and Canada
as a further basis for comparative valuation, but which excludes Japan. Japanese
companies are analyzed in an independent national model. The Appraisal Model
incorporates the various accounting standards which apply in different markets
and makes adjustments to ensure meaningful comparisons.
An important feature of the Appraisal Model is the classification of
companies into one or more of 166 groups of "similar" businesses. Currently, in
the United States, 160 groups are applicable; in Japan, 122 groups are
applicable; and in Europe, 154 groups are applicable. Each company is broken
down into its individual business segments, and each segment is compared with
similar business operations of other companies doing business in the same
geographical market. In most cases, the comparison is extended to include
companies with similar business operations in different markets. Subject to the
availability of data in different markets, the Manager appraises the company's
assets, operating earnings and sales within each business segment, accepting the
market's valuation of that category of business as fair. The Manager then
integrates the segment appraisals into balance sheet, income statement and sales
valuation models for the total company, and simultaneously adjusts the segment
appraisals to include appraisals for variables which are declared only for the
total company, such as taxes, capital structure, and pension funding. The result
is a single valuation for each of the approximately 12,000 companies followed.
The difference between the Manager's appraisal and the market price is
believed to represent an opportunity for profit. For each stock, the Manager
develops "appraisal alphas" (I.E., the expected rate of extraordinary return) by
adjusting for the rate at which the market has corrected for such misvaluations
in the past.
A second sphere of analysis is captured by the Manager's proprietary
Earnings Change Model, which analyzes more than 20 variables to predict
individual company earnings over a one-year horizon. The variables are
fundamental and fall into three categories: measures of past profitability,
measures of company operations and consensus earnings forecasts. The Earnings
Change Model is independent of the Appraisal
11
<PAGE>
Model and projects the change in a company's earnings in cents/current price.
The value of the projected earnings change is converted to an "earnings change
alpha" by multiplying the projected change by the market's historical response
to changes of that magnitude.
Finally, the Manager's proprietary Investor Sentiment Model quantifies
investor sentiment about features of stocks which influence price but which are
not captured by the Appraisal Model or the Earnings Change Model. This Model
measures company quality by looking at past price patterns and by predicting the
probability of deficient earnings. The Investor Sentiment Model also captures
market enthusiasm towards individual stocks by looking at broker recommendations
and analyst estimates. Investor sentiment alphas are developed by multiplying
the Model's sentiment scores by the market's historical response to such scores.
Each company's earnings change alpha and investor sentiment alpha are added
to its appraisal alpha to arrive at a total company alpha. Stocks with large
positive total company alphas are candidates for purchase. Stocks with large
negative total company alphas are candidates for short sales.
Before trading, the Manager systematically analyzes the short-term price
behavior of individual stocks to determine the timing of trades. The Investor
Sentiment Model quantifies investor enthusiasm for each stock by analyzing its
short-term performance relative to similar stocks, changes in analyst and broker
opinions about the stock, and earnings surprises. The Manager develops a
"trading alpha" for each stock, which is the Manager's prediction of the
short-term return of a particular stock. This return is calculated by the
Manager's proprietary model by analyzing short-term factors such as trading
volume and price movements. The Manager believes its model, used in this way,
can add value by helping determine the optimal timing of portfolio trades.
OPTIMIZATION. The Manager's portfolio optimization system attempts to
construct a Fund portfolio that will outperform the relevant benchmark, while
maintaining portfolio risk characteristics similar to those of the Fund's
benchmark. The optimizer simultaneously considers both the results of the
Manager's stock selection models and risk in determining the benefit to a
portfolio of a particular transaction. No transaction will be executed unless
the opportunity offered by a purchase or sale candidate sufficiently exceeds the
potential of an existing holding to justify the transaction costs.
TRADING. The Manager's trading system aggregates the recommended
transactions for the Fund and determines the feasibility of each recommendation
in light of the stock's liquidity, the expected transaction costs, and general
market conditions. It relays target price information to a trader for each stock
considered for purchase or sale. Trades are executed through any one of four
trading strategies: traditional brokerage, networks, accommodation, and package
or "basket" trades.
The network arrangements the Manager has developed with Instinet Matching
System (IMS), Portfolio System for Institutional Trading (POSIT), and the
Arizona Stock Exchange (AZX) facilitate large volume trading with little or no
price disturbance and low commission rates.
Accommodative trading (also referred to herein as the Manager's "match
system") allows institutional buyers and sellers of stock to electronically
present the Manager with their "interest" lists each morning. Any matches
between the inventory that the brokers have presented and the Manager's own
recommended trades are signaled to the Manager's traders. Because the broker is
doing agency business and has a client on the other side of the trade, the
Manager expects that the other side will be accommodative in the price. The
12
<PAGE>
Manager's objective in using this match system is to execute most trades on the
Manager's side of the bid/ask spread so as to minimize market impact.
Package trades further allow the Manager to trade large lists of orders
simultaneously using state of the art tools such as the Instinet Real-Time
System, Instinet Order Matching System and Lattice Trading System. Those tools
provide order entry, negotiation and execution capabilities, either directly to
other institutions or electronically to the floor of the exchange. The
advantages of using such systems include speed of execution, low commissions,
anonymity and very low market impact.
The Manager continuously monitors trading costs to determine the impact of
commissions and price disturbances on the Fund's portfolio.
INDIVIDUALS RESPONSIBLE FOR THE FUND
Each of the following General Partners of the Manager holds a greater than
5% interest in the Manager: Marlis S. Fritz and Kenneth Reid. Rosenberg Alpha
L.P., a California limited partnership, is a limited partner of the Manager and
holds a greater than 5% interest in the Manager. Barr M. Rosenberg, the Managing
General Partner of the Manager, and his wife, June Rosenberg, each holds a
greater than 5% general partnership interest in Rosenberg Alpha L.P.
Management of the portfolio of the Fund is overseen by the Manager's General
Partners who are responsible for the design and maintenance of the Manager's
portfolio system, and by a portfolio manager who is responsible for research and
monitoring the Fund's characteristic performance against the relevant benchmark
and for monitoring cash balances. Dr. Rosenberg, Dr. Reid and F. William Jump,
Jr., the portfolio manager, are responsible for the day-to-day management of the
Fund's portfolio. Dr. Rosenberg and Dr. Reid both have been employed by the
Manager since 1985. Mr. Jump has had numerous responsibilities including
trading, applications programming, new product development and portfolio
engineering since he joined the Manager in 1990. He received a B.A. from
Swarthmore College in 1977 and a M.B.A. from The Wharton School, University of
Pennsylvania in 1983.
MANAGEMENT CONTRACTS
Under a Management Contract with the Trust on behalf of the Fund, the
Manager selects and reviews the Fund's investments and provides executive and
other personnel for the management of the Trust. Pursuant to the Trust's
Agreement and Declaration of Trust, as amended, the Board of Trustees supervises
the affairs of the Trust as conducted by the Manager. In the event that the
Manager ceases to be the manager of the Fund, the right of the Trust to use the
identifying name "Barr Rosenberg" and/or "Rosenberg" may be withdrawn.
The Fund will pay all other expenses incurred in the operation of the Fund,
including, but not limited to, brokerage commissions and transfer taxes in
connection with the Fund's portfolio transactions, all applicable taxes and
filing fees, the fees and expenses for registration or qualification of its
shares under the federal or state securities laws, the compensation of trustees
who are not partners, officers or employees of the Manager, interest charges,
expenses of issue or redemption of shares, charges of custodians, auditing and
legal expenses, expenses of determining net asset value of Fund shares, expenses
of reports to shareholders,
13
<PAGE>
expenses of meetings of shareholders, expenses of printing and mailing proxy
statements to existing shareholders, expenses of mailing and printing
prospectuses, and insurance premiums.
In addition, the Fund has agreed to pay the Manager a quarterly management
fee at the annual percentage rate of the Fund's average daily net assets set
forth below. The Manager has voluntarily undertaken to waive some or all of its
management fee and, if necessary, to bear certain expenses of the Fund until
further notice to the extent required to limit the total annual operating
expenses (exclusive of nonrecurring account fees, extraordinary expenses and
dividends and interest paid on securities sold short) of the Fund to the
percentage of the Fund's average daily net assets listed in the Expense
Limitation column below. The Manager's fee for management of the Fund is higher
than that paid by most other mutual funds although the Manager believes it is
competitive with the fees for similar collective investment vehicles.
<TABLE>
<CAPTION>
CONTRACTUAL
MANAGEMENT FEE (AS EXPENSE LIMITATION
A % OF AVERAGE DAILY (AS A % OF AVERAGE
NET ASSETS) DAILY NET ASSETS)
--------------------- ---------------------
<S> <C> <C>
Barr Rosenberg VIT Market Neutral Fund...................................... 1.90% 2.00%
</TABLE>
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
BISYS Fund Services (the "Administrator"), a wholly-owned subsidiary of The
BISYS Group, Inc., serves as the Trust's administrator and generally assists the
Trust in all aspects of its administration and operation. As compensation for
its administrative services, the Administrator receives a monthly fee based upon
an annual percentage rate of 0.15% of the aggregate average daily net assets of
the Trust.
BISYS Fund Services, Inc. (the "Transfer Agent") serves as the Trust's
transfer agent and provides disbursing services for the Trust. The principal
business address of the Transfer Agent is 3435 Stelzer Road, Columbus, Ohio
43219.
Custodial Trust Company (the "Custodian") serves as custodian of the assets
of the Fund. The principal address of the Custodian is 101 Carnegie Center,
Princeton, New Jersey 08540.
YEAR 2000 ISSUES
Many services provided to the Fund depend on the smooth functioning of
computer systems. Many systems in use today cannot distinguish between the year
1900 and the year 2000. Should any of the service systems fail to process
information properly, that could have an adverse impact on the Fund's operations
and services provided to shareholders. The Manager, Distributor, Servicing
Agent, Transfer Agent, Custodian, Administrator and certain other service
providers to the Fund have reported that each is working toward mitigating the
risks associated with the so-called "year 2000 problem." However, there can be
no assurance that the problem will be corrected in all respects and that the
Fund's operations and services provided to shareholders will not be adversely
affected.
14
<PAGE>
PURCHASE OF SHARES
Shares of the Fund may only be purchased by a separate account (a "Separate
Account") of an insurance company (a "Participating Insurance Company"). This
Prospectus should be read in conjunction with the prospectus of the separate
account of the specific insurance product which accompanies this Prospectus.
The offering price for shares of the Fund is the net asset value per share
next determined after receipt of a purchase order. See "Determination of Net
Asset Value." The minimum initial investment in the Fund is $1,000 and the
minimum subsequent investment in the Fund is $500.
For purposes of calculating the purchase price of Fund shares, a purchase
order is received by the Trust on the day that it is in "good order" unless it
is rejected by the Trust. For a purchase order of shares to be in "good order"
on a particular day, a check or money order must be received on or before 4:00
p.m., New York Time of that day. If the consideration is received by the Trust
after the deadline, the purchase price of Fund shares will be based upon the
next determination of net asset value of Fund shares.
The Trust reserves the right, in its sole discretion, to suspend the
offering of shares of the Fund or to reject purchase orders when, in the
judgment of the Manager, such suspension or rejection would be in the best
interests of the Trust.
Purchases of the Fund's shares may be made in full or in fractional shares
of the Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
REDEMPTION OF SHARES
The value of shares redeemed may be more or less than the original cost of
those shares, depending on the market value of the investment securities held by
the Fund at the time of the redemption. The Trust will redeem its shares at the
net asset value next determined after the request is received in "good order."
See "Determination of Net Asset Value."
If the Manager determines, in its sole discretion, that it would not be in
the best interests of the remaining shareholders of the Fund to make a
redemption payment wholly or partly in cash, the Fund may pay the redemption
price in whole or in part by a distribution in kind of readily marketable
securities held by the Fund in lieu of cash. Securities used to redeem Fund
shares in kind will be valued in accordance with the Fund's procedures for
valuation described under "Determination of Net Asset Value." Securities
distributed by the Fund in kind will be selected by the Manager in light of the
Fund's objective and will not generally represent a PRO RATA distribution of
each security held in the Fund's portfolio. Investors may incur brokerage
charges on the sale of any such securities so received in payment of
redemptions.
The Trust may suspend the right of redemption and may postpone payment for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the Securities and
Exchange Commission, during periods when trading on the Exchange is restricted
or during an emergency which makes it impracticable for the Fund to dispose of
its securities or to fairly determine the value of its net assets, or during any
other period permitted by the Securities and Exchange Commission for the
protection of investors.
15
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value of each class of shares of the Fund will be determined
once on each day on which the New York Stock Exchange is open as of 4:00 p.m.,
New York Time. The net asset value per share of the Fund is determined by
dividing the total market value of the Fund's portfolio investments and other
assets, less any applicable liabilities, by the total outstanding shares of the
Fund.
Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent quoted
bid price for long securities and at the most recent quoted ask price for
securities sold short. Price information on listed securities is generally taken
from the closing price on the exchange where the security is primarily traded.
Unlisted securities for which market quotations are readily available are valued
at the most recent quoted bid price for long securities and at the most recent
quoted ask price for securities sold short, except that debt obligations with
sixty days or less remaining until maturity may be valued at their amortized
cost. Exchange-traded options on futures are valued at the settlement price as
determined by the appropriate clearing corporation. Futures contracts are valued
by computing the gain or loss by reference to the current settlement price as
determined by the appropriate clearing corporation. Other assets and securities
for which no quotations are readily available are valued at fair value as
determined in good faith by the Trustees of the Trust or by persons acting at
their direction.
DISTRIBUTIONS
The Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net short-term capital gains). The Fund also intends to
distribute substantially all of its net long-term capital gains, if any, after
giving effect to any available capital loss carryover. The Fund's policy is to
declare and pay distributions of its dividends and interest annually although it
may do so more frequently as determined by the Trustees of the Trust. The Fund's
policy is to distribute net short-term capital gains and net long-term gains
annually, although it may do so more frequently as determined by the Trustees of
the Trust to the extent permitted by applicable regulations.
All dividends and/or distributions will be paid out in the form of
additional shares of the Fund at net asset value unless the shareholder elects
to receive cash. Shareholders may make this election by marking the appropriate
box on the Account Application or by writing to the Administrator.
If you elect to receive distributions in cash and checks (1) are returned
and marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
TAXES
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
and to meet all other requirements necessary for it
16
<PAGE>
to be relieved of federal income taxes on income and gains it distributes to
insurance company separate accounts. For information concerning federal income
tax consequences for the holders of variable annuity contracts and variable life
insurance policies, contract holders should consult the prospectus of the
applicable separate account.
Internal Revenue Service regulations applicable to variable annuity and
variable life insurance separate accounts generally require that portfolios that
serve as the funding vehicles solely for such separate accounts invest no more
than 55% of the value of their assets in one investment, 70% in two investments,
80% in three investments and 90% in four investments. Alternatively, a portfolio
will be treated as meeting these requirements for any quarter of its taxable
year if, as of the close of such quarter, the portfolio meets the
diversification requirements applicable to regulated investments companies and
no more than 55% of the value of its total assets consists of cash and cash
items (including receivables), U.S. government securities and securities of
other regulated investment companies. The Fund intends to comply with these
requirements.
If the Fund's investments are not "adequately diversified" under these
requirements, income with respect to variable contracts invested in the Fund at
any time during the calendar quarter in which the failure occurred could become
currently taxable to the owners of the variable contracts and income for prior
periods with respect to such contracts also could be taxable, most likely in the
year of the failure to achieve the required diversification. Other adverse tax
consequences also could ensue.
Fund investments in foreign securities may be subject to withholding taxes
at the source on dividend or interest payments. In that case, the Fund's yield
on those securities would be decreased.
The foregoing is a general summary of the federal income tax consequences of
investing in the Fund. Please refer to the prospectus for your separate account
and variable contract for information regarding the federal income tax treatment
of variable contracts in general and of distributions to your separate account
in particular. See "Income Dividends, Distributions and Tax Status" in the
Trust's Statement of Additional Information for more information on taxes.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
The Trust is designed to serve as a funding vehicle for insurance company
separate accounts associated with variable annuity contracts and variable life
insurance policies. The Trust presently intends to serve as a funding vehicle
for variable annuity contracts and variable life insurance policies offered by
separate accounts of various life insurance companies. You should consult the
prospectus issued by the relevant insurance company for more information about a
separate account.
The Trust is a diversified open-end series management investment company
organized as a Massachusetts business trust under the laws of The Commonwealth
of Massachusetts by an Agreement and Declaration of Trust dated March 1, 1998,
as amended from time to time (the "Declaration of Trust").
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest. Interests in the Fund are
represented by shares of the Fund. The Declaration of Trust also permits the
Trustees, without shareholder approval, to subdivide any series of shares into
various sub-series of shares with such preferences and other rights as the
Trustees may designate. While the Trustees have no current intention to exercise
this power, it is intended to allow them to provide for an equitable allocation
17
<PAGE>
of the impact of any future regulatory requirements which might affect various
classes of shareholders differently. The Trustees may also, without shareholder
approval, establish one or more additional separate portfolios for investments
in the Trust, terminate a series of the Trust or merge two or more existing
portfolios. Shareholders' investments in such a portfolio would be evidenced by
a separate series of shares.
All shares of the Fund have identical voting rights. Shares are freely
transferable, are entitled to dividends as declared by the Trustees and, in
liquidation of the Fund's portfolio, are entitled to receive the net assets of
such portfolio. The Trust does not generally hold annual meetings of
shareholders and will do so only when required by law. Shareholders holding a
majority of the outstanding shares may remove Trustees by votes cast in person
or by proxy at a meeting of shareholders or by written consent.
The Trust may, in the future, offer shares of the Fund directly to qualified
pension and profit-sharing plans.
Although conflicts of interest may potentially arise from the sale of the
Fund's shares to variable annuity contract-owners and variable life insurance
policy-owners of affiliated and unaffiliated insurance companies, the Trust
currently does not foresee any disadvantages to policy-owners and
contract-owners because the Trust offers its shares to separate accounts of
various insurance companies to serve as the investment medium for their variable
products. Nevertheless, the Trustees intend to monitor events in order to
identify any material irreconcilable conflicts of interest which may possibly
arise, and to determine what action, if any, should be taken in response to such
conflicts. If such a conflict were to occur, one or more insurance companies'
separate accounts might be required to withdraw their investments in the Fund.
This might force the Fund to sell portfolio securities at disadvantageous
prices. In addition, under the President's 1999 Budget Proposal, such a
withdrawal may be currently taxable to owners of variable annuity contracts and
variable life insurance policies.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust, may, however, be terminated at any time by vote of at least
two-thirds of the outstanding shares of each series of the Trust.
Shareholders could, under certain circumstances, be held personally liable
for the obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of that liability is considered remote since it may
arise only in very limited circumstances.
OTHER INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Total return for the Fund is measured by
comparing the value of an investment in the Fund at the beginning of the
relevant period to the redemption value of the investment in the Fund at the end
of such period (assuming immediate reinvestment of any dividends or capital
gains distributions). All data are based on the Fund's past investment results
and do not predict future performance. Investment performance, which will vary,
is based on many factors, including market conditions, the composition of the
Fund's portfolio and the Fund's operating expenses. Investment performance also
often reflects the risks associated with the Fund's investment objective and
policies. These factors should be considered when comparing the Fund's
investment results with those of other mutual funds and other investment
vehicles. Quotations of investment performance for any period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect.
18
<PAGE>
Performance information presented for the Fund should not be compared
directly with performance information of other insurance products without taking
into account insurance-related charges and expenses payable with respect to
these insurance products. Insurance-related charges and expenses are not
reflected in the Fund's performance information. As a result of such
insurance-related charges and expenses, an investor's return under the insurance
product would be lower.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust at Barr Rosenberg Variable
Insurance Trust, P.O. Box 182495, Columbus, Ohio 43219-2495.
19
<PAGE>
SHAREHOLDER SERVICES
1-925-254-6464
Additional Information about the Manager may be found on the World Wide Web at
http://www.riem.com
BARR ROSENBERG VARIABLE INSURANCE TRUST
3435 Stelzer Road
Columbus, Ohio 43219
MANAGER
Rosenberg Institutional Equity Management
Four Orinda Way, Building E
Orinda, CA 94563
ADMINISTRATOR, TRANSFER AND
DIVIDEND PAYING AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN OF ASSETS
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
555 California Street
San Francisco, CA 94104
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 30, 1998
BARR ROSENBERG VARIABLE INSURANCE TRUST
BARR ROSENBERG VIT MARKET NEUTRAL FUND
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER __, 1998
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the prospectus of the Barr
Rosenberg VIT Market Neutral Fund of Barr Rosenberg Variable Insurance Trust
dated November __, 1998 (the "Prospectus") and should be read in conjunction
therewith. A copy of the Prospectus may be obtained from Barr Rosenberg
Variable Insurance Trust, 3435 Stelzer Road, Columbus, Ohio 43219.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES. . . . . . . . . . . . . . . . . . . . . . 3
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . 6
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . 9
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .11
TOTAL RETURN CALCULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . .12
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . .14
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . .16
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . .16
</TABLE>
-2-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Barr Rosenberg VIT Market
Neutral Fund (the "Fund") of Barr Rosenberg Variable Insurance Trust (the
"Trust") are summarized on the front page of the Prospectus and in the text of
the Prospectus under the headings "Investment Objective and Policies" and
"General Description of Risks and Fund Investments."
In addition, the following is an additional description of certain
investments of the Fund.
SHORT SALES. The Fund will seek to realize additional gains through short
sales. Short sales are transactions in which a Fund sells a security it does
not own, in anticipation of a decline in the value of that security relative to
the long positions held by the Fund. To complete such a transaction, the Fund
must borrow the security to make delivery to the buyer. The Fund then is
obligated to replace the security borrowed by purchasing it at the market price
at or prior to the time of replacement. The price at such time may be more or
less than the price at which the security was sold by the Fund. Until the
security is replaced, the Fund is required to repay the lender any dividends or
interest that accrue during the period of the loan. To borrow the security, the
Fund also may be required to pay a premium, which would increase the cost of the
security sold. The net proceeds of the short sale will be retained by the
broker (or by the Fund's custodian in a special custody account), to the extent
necessary to meet margin requirements, until the short position is closed out.
The Fund also will incur transaction costs in effecting short sales.
The Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund may realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends, interest or expenses the Fund may be required to pay in connection
with a short sale. There can be no assurance that the Fund will be able to
close out a short position at any particular time or at an acceptable price.
MISCELLANEOUS INVESTMENT PRACTICES
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and almost always involves the payment by the Fund of
brokerage commissions or dealer markup and other transaction costs on the sale
of securities as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover is not a limiting factor with respect to
investment decisions. As disclosed in the Prospectus, high portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs, which will be borne directly by the Fund, and could involve realization
of capital gains that would be taxable when distributed to shareholders of the
Fund. To the extent that portfolio turnover results in the realization of net
short-term capital gains, such gains are ordinarily taxed to shareholders at
ordinary income tax rates. See "Income Dividends, Distributions and Tax
Status" and "Portfolio Transactions."
-3-
<PAGE>
NOTICE ON SHAREHOLDER APPROVAL. Unless otherwise indicated in the
Prospectus or this Statement of Additional Information, the investment objective
and policies of the Fund may be changed without shareholder approval.
INVESTMENT RESTRICTIONS
Without a vote of the majority of the outstanding voting securities of the
Fund, the Trust will not take any of the following actions with respect to the
Fund:
(1) Borrow money in excess of 10% of the value (taken at the lower
of cost or current value) of the Fund's total assets (not including the
amount borrowed) at the time the borrowing is made, and then only from
banks as a temporary measure to facilitate the meeting of redemption
requests (not for leverage) which might otherwise require the untimely
disposition of portfolio investments or for extraordinary or emergency
purposes. Such borrowings will be repaid before any additional investments
are purchased. Short sales and related borrowings of securities are not
subject to this restriction.
(2) Pledge, hypothecate, mortgage or otherwise encumber its assets
in excess of 10% of the Fund's total assets (taken at cost) and then only
to secure borrowings permitted by Restriction 1 above. (For the purposes
of this restriction, collateral arrangements with respect to options, short
sales, stock index, interest rate, currency or other futures, options on
futures contracts and collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge or other encumbrance of
assets. Collateral arrangements with respect to swaps and other
derivatives are also not deemed to be a pledge or other encumbrance of
assets.)
(3) Purchase securities on margin, except such short-term credits
as may be necessary for the clearance of purchases and sales of securities.
(For this purpose, the deposit or payment of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.)
(4) Make short sales of securities or maintain a short position
if, when added together, more than 100% of the value of the Fund's net
assets would be (i) deposited as collateral for the obligation to replace
securities borrowed to effect short sales, and (ii) allocated to segregated
accounts in connection with short sales. Short sales "against the box" are
not subject to this limitation.
(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, the Fund may be deemed to be an underwriter under federal
securities laws.
-4-
<PAGE>
(6) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, including securities of
real estate investment trusts, and may purchase securities which are
secured by interests in real estate.
(7) Concentrate more than 25% of the value of its total assets in
any one industry.
(8) Invest in securities of other investment companies, except to
the extent permitted by the Investment Company Act of 1940, as amended (the
"1940 Act"), or by an exemptive order issued by the Securities and Exchange
Commission.
(9) Purchase or sell commodities or commodity contracts except
that each of the Funds may purchase and sell stock index and other
financial futures contracts and options thereon.
(10) Make loans, except by purchase of debt obligations or by
entering into repurchase agreements or through the lending of the Fund's
portfolio securities.
(11) Issue senior securities. (For the purpose of this restriction
none of the following is deemed to be a senior security: any pledge or
other encumbrance of assets permitted by restriction (2) above; any
borrowing permitted by restriction (1) above; short sales permitted by
restriction (4) above; any collateral arrangements with respect to short
sales, swaps, options, future contracts and options on future contracts and
with respect to initial and variation margin; and the purchase or sale of
options, future contracts or options on future contracts.)
It is contrary to the present policy of the Fund, which may be changed by
the Trustees of the Trust without shareholder approval, to:
(a) Invest in warrants or rights (other than warrants or rights
acquired by the Fund as a part of a unit or attached to
securities at the time of purchase).
(b) Write, purchase or sell options on particular securities (as
opposed to market indices).
(c) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.
(d) Make investments for the purpose of exercising control of a
company's management.
(e) Invest in (a) securities which at the time of investment are
not readily marketable and (b) repurchase agreements maturing
in more than seven
-5-
<PAGE>
days if, as a result, more than 15% of the Fund's net assets
(taken at current value) would then be invested in such
securities.
Unless otherwise indicated, all percentage limitations on investments set
forth herein and in the Prospectus will apply at the time of the making of an
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment.
The phrase "shareholder approval," as used in the Prospectus and herein,
and the phrase "vote of a majority of the outstanding voting securities," as
used herein, means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund or the Trust, as the case may be, or (2) 67%
or more of the shares of the Fund or the Trust, as the case may be, present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The tax status of the Fund and the distributions which it may make are
summarized in the Prospectus under the headings "Distributions" and "Taxes." The
Fund intends to qualify each year as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"). In order to qualify as
a "regulated investment company" and to qualify for the special tax treatment
accorded regulated investment companies and their shareholders, the Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
or other disposition of securities or foreign currencies or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such securities or
currencies; (b) diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally with respect to any
one issuer to not more than 5% of the total assets of the Fund and not more than
10% of the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its total assets is invested in the securities of any issuer
(other than U.S. Government securities or securities of other regulated
investment companies); and (c) distribute annually at least 90% of the sum of
its taxable net investment income, its net tax-exempt income (if any), and, the
excess, if any, of net short-term capital gains over net long-term capital
losses for such year. To the extent the Fund qualifies for treatment as a
regulated investment company, the Fund will not be subject to federal income tax
on income paid to its shareholders in the form of dividends or capital gain
distributions.
Section 817(h) of the Code requires that the investments of a segregated
asset account (a "Separate Account") of an insurance company be "adequately
diversified" as provided therein or in accordance with U.S. Treasury Regulations
in order for the account to serve as the basis for variable annuity contracts
("VA contracts") or variable life insurance policies ("VLI policies").
-6-
<PAGE>
The Fund intends to comply with applicable requirements so that the Fund's
investments are "adequately diversified" for this purpose. Section 817(h) and
the U.S. Treasury Regulations issued thereunder provide the manner in which a
segregated asset account will treat investments in a regulated investment
company for purposes of the diversification requirements. If the Fund satisfies
certain conditions, a segregated asset account owning shares of the Fund will be
treated as owning multiple investments consisting of the account's proportionate
share of each of the assets of the Fund. The Fund intends to satisfy these
conditions so that the shares of the Fund owned by a segregated asset account of
an insurance company depositor will be treated as multiple investments. If,
however, the Fund is not "adequately diversified" within the meaning of Section
817(h) of the Code, the VA contracts and VLI policies supported by the Fund
would not be treated as annuity or life insurance contracts, as the case may be,
for any period (or subsequent period) during which the Fund is not "adequately
diversified."
As described in the Prospectus under the heading "Distributions," the Fund
intends to pay out substantially all of its ordinary income and net short-term
capital gains, and to distribute substantially all of its net capital gains, if
any, after giving effect to any available capital loss carryover. Net capital
gain is the excess of net gains from assets held for more than one year over net
losses from capital assets held for not more than one year. In order to avoid
an excise tax imposed on certain undistributed income, the Fund must distribute
prior to each calendar year end without regard to the Fund's fiscal year end (i)
98% of the Fund's ordinary income, and (ii) 98% of the Fund's capital gain net
income, if any, realized in the one-year period ending on October 31.
Assuming that the Separate Accounts meet the requirements of Section 817,
distributions from the Fund will not be subject to federal income tax currently
on dividends or distributions from the Fund. Each organization or entity should
review its own circumstances and the federal tax treatment of its income.
To the extent such investments are permissible for the Fund, the Fund's
transactions in options, futures contracts, hedging transactions, forward
contracts and straddles will be subject to special tax rules (including
mark-to-market, constructive sale, straddle, wash sale and short sale rules),
the effect of which may be to accelerate income to the Fund, defer losses to the
Fund, cause adjustments in the holding periods of the Fund's securities and
convert short-term capital losses into long-term capital losses. These rules
could therefore affect the amount, timing and character of distributions to
shareholders.
Investment in an entity that qualifies as a "passive foreign investment
company" under the Code could subject the Fund to a U.S. federal income tax or
other charge on certain "excess distributions" with respect to the investment
and on the proceeds from the disposition of the investment; however, this tax
can be avoided by making an election to mark such investments to market
annually. Other elections may also be available.
-7-
<PAGE>
THE TAX DISCUSSION SET FORTH ABOVE IS A SUMMARY INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. PLEASE REFER TO THE PROSPECTUS FOR THE SEPARATE
ACCOUNTS AND THE VARIABLE CONTRACT FOR INFORMATION REGARDING THE FEDERAL INCOME
TAX TREATMENT OF VARIABLE CONTRACTS IN GENERAL AND DISTRIBUTIONS TO THE SEPARATE
ACCOUNT IN PARTICULAR. THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR
CAREFUL TAX PLANNING.
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
Kenneth Reid* (49) General Partner and Director of
President, Trustee Research, Rosenberg Institutional Equity
Management, June 1986 to present.
Marlis S. Fritz (49) General Partner and Director of
Vice President Marketing, Rosenberg Institutional
Equity Management, April 1985 to
present.
Nils H. Hakansson Sylvan C. Coleman Professor of Finance
(61) Trustee and Accounting, Haas School of Business,
University of California, Berkeley, June
1969 to present. Director, Supershare
Services Corporation (investment
management), Los Angeles, California,
November 1989 to 1995.
William F. Sharpe STANCO 25 Professor of Finance, Stanford
(64) Trustee University. Chairman, Financial Engines
Incorporated, Los Altos, California
(electronic investment advice), March
1996 to present.
Po-Len Hew (32) Accounting Manager, Rosenberg
Treasurer Institutional Equity Management, October
1989 to present.
Edward H. Lyman (55) Executive Vice President, Barr Rosenberg
Vice President Investment Management, Inc., and General
Counsel to the Rosenberg Group of
companies, 1990 to present.
-8-
<PAGE>
Sara Ronan (38) Paralegal, Rosenberg Institutional
Clerk Equity Management, September 1997 to
present; Director of Marketing, MIG
Realty Advisors, January 1996 to
September 1997; Vice President,
Liquidity Financial Advisors, May 1985
to January 1996.
- ---------------
* Trustees who are "interested persons" (as defined in the 1940 Act) of the
Trust or the Manager.
The mailing address of each of the officers and Trustees is c/o Barr
Rosenberg Variable Insurance Trust, 3435 Stelzer Road, Columbus, OH 43219.
The principal occupations of the officers and Trustees for the last five
years have been with the employers as shown above, although in some cases they
have held different positions with such employers.
The Trust pays the Trustees other than those who are interested persons of
the Trust or Manager an annual fee of $7590 plus $3300 for each meeting
attended. The Trust does not pay any pension or retirement benefits for its
Trustees. The Trust does not pay any compensation to officers or Trustees of
the Trust other than those Trustees who are not interested persons of the Trust
or Manager.
Messrs. Reid and Lyman and Ms. Fritz and Hew, each being a general partner,
limited partner, officer or employee of the Manager, will each benefit from the
management fees paid by the Trust to the Manager, but receive no direct
compensation from the Trust.
INVESTMENT ADVISORY AND OTHER SERVICES
MANAGEMENT CONTRACT
As disclosed in the Prospectus under the heading "Management of the Trust,"
under a management contract (a "Management Contract") between the Trust, on
behalf of the Fund, and Rosenberg Institutional Equity Management (the
"Manager"), subject to the control of the Trustees of the Trust and such
policies as the Trustees may determine, the Manager will furnish continuously an
investment program for the Fund and will make investment decisions on behalf of
the Fund and place all orders for the purchase and sale of portfolio securities.
Subject to the control of the Trustees, the Manager furnishes office space and
equipment, provides certain bookkeeping and clerical services and pays all
salaries, fees and expenses of officers and Trustees of the Trust who are
affiliated with the Manager. As indicated under "Portfolio Transactions --
Brokerage and Research Services," the Trust's portfolio transactions may be
-9-
<PAGE>
placed with broker-dealers which furnish the Manager, at no cost, certain
research, statistical and quotation services of value to the Manager in advising
the Trust or its other clients.
As disclosed in the Prospectus, the Fund has agreed to pay the Manager a
quarterly management fee at the annual percentage rate of the Fund's average
daily net assets set forth in the Prospectus. The Manager has informed the
Trust that it will voluntarily waive some or all of its management fees under
the Management Contract and, if necessary, will bear certain expenses of the
Fund until further notice so that the Fund's total annual operating expenses
(exclusive of nonrecurring account fees, and extraordinary expenses and
dividends and interest paid on securities sold short) will not exceed the
percentage of the Fund's average daily net assets set forth in the Prospectus.
In addition, the Manager's compensation under the Management Contract is subject
to reduction to the extent that in any year the expenses of the Fund (including
investment advisory fees but excluding taxes, portfolio brokerage commissions
and any distribution expenses paid by a class of shares of the Fund pursuant to
a distribution plan or otherwise) exceed the limits on investment company
expenses imposed by any statute or regulatory authority of any jurisdiction in
which shares of the Fund are qualified for offer and sale.
The Management Contract provides that the Manager shall not be subject to
any liability to the Trust or to any shareholder of the Trust in connection with
the performance of its services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties thereunder.
The Management Contract will continue in effect for a period of no more
than two years from the date of its execution only so long as its continuance is
approved at least annually by (i) vote, cast in person at a meeting called for
that purpose, of a majority of those Trustees who are not "interested persons"
of the Manager or the Trust, and by (ii) the majority vote of either the full
Board of Trustees or the vote of a majority of the outstanding shares of the
Fund. The Management Contract automatically terminates on assignment, and is
terminable on not more than 60 days' written notice by the Trust to the Manager.
In addition, the Management Contract may be terminated on not more than 60
days' written notice by the Manager to the Trust.
As disclosed in the Prospectus, the general partners of the Manager are
Barr M. Rosenberg, Marlis S. Fritz and Kenneth Reid. Each of these persons
may be deemed a controlling person of the Manager.
As discussed in this Statement of Additional Information under the heading
"Management of the Trust," Marlis S. Fritz is Vice President of the Trust as
well as a general partner of the Manager; and Kenneth Reid is a Trustee and
President of the Trust as well as a general partner and Director of Research of
the Manager.
-10-
<PAGE>
ADMINISTRATIVE SERVICES
The Trust has entered into a Fund Administration Agreement with BISYS Fund
Services (the "Administrator") pursuant to which the Administrator provides
certain management and administrative services necessary for the Fund's
operations including: (i) general supervision of the operation of the Fund
including coordination of the services performed by the Fund's investment
adviser, transfer agent, custodian, independent accountants and legal counsel,
regulatory compliance, including the compilation of information for documents
such as reports to, and filings with, the SEC and state securities commissions,
and preparation of proxy statements and shareholder reports for the Fund; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Fund's officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Fund. For these services, the Administrator is
entitled to receive a fee, payable monthly, at the annual rate of 0.15% of the
average daily net assets of the Trust. The Trust has also entered into a Fund
Accounting Agreement with BISYS Fund Services, Inc. (the "Fund Accountant")
pursuant to which the Fund Accountant provides certain accounting services
necessary for the Fund's operations. For these services, the Fund Accountant is
entitled to receive an annual fee of $30,000.
CUSTODIAL ARRANGEMENTS. Custodial Trust Company ("CTC"), Princeton, NJ 08540,
is the Trust's custodian. As such, CTC holds in safekeeping certificated
securities and cash belonging to the Trust and, in such capacity, is the
registered owner of securities in book-entry form belonging to the Fund. Upon
instruction, CTC receives and delivers cash and securities of the Fund in
connection with Fund transactions and collects all dividends and other
distributions made with respect to Fund portfolio securities.
INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are
PricewaterhouseCoopers LLP, 555 California Street, San Francisco, California
94104. PricewaterhouseCoopers LLP conducts an annual audit of the Trust's
financial statements, assists in the preparation of the Trust's federal and
state income tax returns and the Trust's filings with the Securities and
Exchange Commission, and consults with the Trust as to matters of accounting
and federal and state income taxation.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. The purchase and sale of portfolio securities for
the Fund and for the other investment advisory clients of the Manager are made
by the Manager with a view to achieving each client's investment objective. For
example, a particular security may be purchased or sold on behalf of certain
clients of the Manager even though it could also have been purchased or sold for
other clients at the same time.
Likewise, a particular security may be purchased on behalf of one or more
clients when the Manager is selling the same security on behalf of one or more
other clients. In some
-11-
<PAGE>
instances, therefore, the Manager, acting for one client may sell indirectly a
particular security to another client. It also happens that two or more clients
may simultaneously buy or sell the same security, in which event purchases or
sales are effected prorata on the basis of cash available or other equitable
basis so as to avoid any one account's being preferred over any other account.
BROKERAGE AND RESEARCH SERVICES. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different brokers. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid for such securities usually includes an undisclosed dealer
commission or mark up. In placing orders for the portfolio transactions of the
Fund, the Manager will seek the best price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions for brokerage
and research services as described below. The determination of what may
constitute best price and execution by a broker-dealer in effecting a securities
transaction involves a number of considerations, including, without limitation,
the overall net economic result to the Fund (involving price paid or received
and any commissions and other costs paid), the efficiency with which the
transaction is effected, the ability to effect the transaction at all where a
large block is involved, availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Because of such factors, a broker-dealer effecting a
transaction may be paid a commission higher than that charged by another
broker-dealer. Most of the foregoing are judgmental considerations.
Over-the-counter transactions often involve dealers acting for their own
account. It is the Manager's policy to place over-the-counter market orders for
the Fund with primary market makers unless better prices or executions are
available elsewhere.
Although the Manager does not consider the receipt of research services as
a factor in selecting brokers to effect portfolio transactions for the Fund, the
Manager will receive such services from brokers who are expected to handle a
substantial amount of the Fund's portfolio transactions. Research services may
include a wide variety of analyses, reviews and reports on such matters as
economic and political developments, industries, companies, securities and
portfolio strategy. The Manager uses such research in servicing other clients
as well as the Trust.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and subject to such policies as the Trustees of the Trust may
determine, the Manager may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in the Act) to the Manager an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction.
-12-
<PAGE>
TOTAL RETURN CALCULATIONS
The Fund computes its average annual total return by determining the
average annual compounded rates of return during specified periods that would
equate the initial amount invested in a particular share class to the ending
redeemable value of such investment in the class, according to the following
formula:
n
P(1 + T) = ERV
Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of a period at the end of such period
P = A hypothetical initial payment of $1,000
n = Number of years
The calculation of average annual total return assumes that any dividends
and distributions are reinvested immediately, rather than paid to the investor
in cash. The ending redeemable value (variable "ERV" in the formula) is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the period covered by
the computations.
Unlike bank deposits or other investments that pay a fixed yield or return
for a stated period of time, the return for the Fund will fluctuate from time to
time and does not provide a basis for determining future returns. Average
annual total return is based on many factors, including market conditions, the
composition of the Fund's portfolio and the Fund's operating expenses.
PERFORMANCE COMPARISONS
Investors may judge the performance of the Fund by comparing it to the
performance of other mutual fund portfolios with comparable investment
objectives and policies through various mutual fund or market indices such as
those prepared by Dow Jones & Co., Inc. and Standard & Poor's Corporation and to
data prepared by Lipper Analytical Services, Inc., a widely-recognized
independent service which monitors the performance of mutual funds. Comparisons
may also be made to indices or data published in MONEY MAGAZINE, FORBES,
BARRON'S, THE WALL STREET JOURNAL, MORNINGSTAR, INC., IBBOTSON ASSOCIATES,
CDA/WIESENBERGER, THE NEW YORK TIMES, BUSINESS WEEK, U.S.A. TODAY, INSTITUTIONAL
INVESTOR and other periodicals. In addition to performance information, general
information about the Fund that appears in a publication such
-13-
<PAGE>
as those mentioned above may be included in advertisements, sales literature and
reports to shareholders. The Fund may also include in advertisements and
reports to shareholders information discussing the performance of the Manager in
comparison to other investment advisers and to other institutions.
From time to time, the Trust may include the following types of
information in advertisements, supplemental sales literature and reports to
shareholders: discussions of general economic or financial principles (such
as the effects of inflation, the power of compounding and the benefits of
dollar cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for the Fund; (5)
descriptions of investment strategies for the Fund; (6) descriptions or
comparisons of various investment products, which may or may not include the
Fund; (7) comparisons of investment products (including the Fund) with
relevant market or industry indices or other appropriate benchmarks; (8)
discussions of fund rankings or ratings by recognized rating organizations;
and (9) testimonials describing the experience of persons that have invested
in the Fund. The Trust may also include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results in such
communications. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of the Fund.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
As more fully described in the Prospectus, the Trust is a diversified
open-end series investment company organized as a Massachusetts business trust.
A copy of the Agreement and Declaration of Trust of the Trust, as amended
(the "Declaration of Trust"), is on file with the Secretary of The Commonwealth
of Massachusetts. The fiscal year of the Trust ends on March 31. The Trust
changed its name to "Barr Rosenberg Variable Insurance Trust" from "Barr
Rosenberg Variable Trust" on March 27, 1998.
Interests in the Trust's portfolios are currently represented by shares of
one series, the Barr Rosenberg VIT Market Neutral Fund, issued pursuant to the
Declaration of Trust. The rights of shareholders and powers of the Trustees of
the Trust with respect to such shares are described in the Prospectus.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust may, however, be terminated at any time by vote of at least two-thirds
of the outstanding shares of the Trust.
-14-
<PAGE>
VOTING RIGHTS
Shareholders are entitled to one vote for each full share held (with
fractional votes for fractional shares held) and will vote (to the extent
provided herein) in the election of Trustees and the termination of the Trust
and on other matters submitted to the vote of shareholders.
There will normally be no meetings of shareholders for the purpose of
electing Trustees, except that in accordance with the 1940 Act (i) the Trust
will hold a shareholders' meeting for the election of Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy in the Board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may only be filled by a vote of the shareholders. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for the purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of at least 1% of the outstanding shares
stating that such shareholders wish to communicate with the other shareholders
for the purpose of obtaining the signatures necessary to demand a meeting to
consider removal of a Trustee, the Trust has undertaken to provide a list of
shareholders or to disseminate appropriate materials (at the expense of the
requesting shareholders). Except as set forth above, the Trustees shall
continue to hold office and may appoint successor Trustees. Voting rights are
not cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust except (i)
to change the Trust's name or to cure technical problems in the Declaration of
Trust and (ii) to establish, designate or modify new and existing series,
sub-series or classes of shares of any series of Trust shares or other
provisions relating to Trust shares in response to applicable laws or
regulations.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Trust or
the Trustees. The Declaration of Trust provides for indemnification out of all
the property of the Fund for all loss and expense of any shareholder of that
Fund held personally liable for the obligations of the Trust. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability is
considered remote since it is limited to circumstances in which the disclaimer
is inoperative and the Fund is unable to meet its obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing
in the Declaration of Trust protects a Trustee against any liability to which
the Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
-15-
<PAGE>
conduct of his office. The Declaration of Trust also provides for
indemnification by the Trust of the Trustees and the officers of the Trust
against liabilities and expenses reasonably incurred in connection with
litigation in which they may be involved because of their offices with the
Trust, except if it is determined in the manner specified in the Declaration of
Trust that such Trustees are liable to the Trust or its shareholders by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties. In addition, the Manager has agreed to indemnify each Trustee
who is not "an interested person" of the Trust to the maximum extent permitted
by the 1940 Act against any liabilities arising by reason of such Trustee's
status as a Trustee of the Trust.
The officers and trustees of the Trust, as a group, own less than 1% of the
outstanding shares of the Trust.
DETERMINATION OF NET ASSET VALUE
As indicated in the Prospectus, the net asset value of the Fund share is
determined on each day on which the New York Stock Exchange is open for trading.
The Trust expects that the days, other than weekend days, that the New York
Stock Exchange will not be open are Independence Day (observed), Labor Day,
Thanksgiving Day Christmas Day, New Year's Day, Martin Luther King, Jr. Day,
Washington's Birthday, Good Friday and Memorial Day.
Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent
quoted bid price. Price information on listed securities is generally taken
from the closing price on the exchange where the security is primarily
traded. Unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price, except that debt
obligations with sixty days or less remaining until maturity may be valued at
their amortized cost. Exchange-traded options, futures and options on futures
are valued at the settlement price as determined by the appropriate clearing
corporation. Other assets and securities for which no quotations are readily
available are valued at fair value as determined in good faith by the
Trustees of the Trust or by persons acting at their direction.
PURCHASE AND REDEMPTION OF SHARES
The procedures for purchasing shares of the Fund and for determining the
offering price of such shares are described in the Prospectus.
-16-
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Exhibits:
(1)(a) Agreement and Declaration of Trust of the Registrant --
incorporated by reference to the Registration Statement
filed on April 20, 1998;
(1)(b) Amendment No. 1 to Agreement and Declaration of Trust of the
Registrant -- incorporated by reference to the Registration
Statement filed on April 20, 1998;
(2) By-Laws of the Registrant --incorporated by reference to the
Registration Statement filed on April 20, 1998;
(3) None;
(4) None;
(5) Form of Management Contract between the Registrant on behalf
of its Barr Rosenberg VIT Market Neutral Fund and Rosenberg
Institutional Equity Management --incorporated by reference
to the Registration Statement filed on April 20, 1998;
(6) None;
(7) None;
(8) (a) Form of Custody Agreement between the Registrant and
Custodial Trust Company - filed herewith;
(b) Form of Special Custody Account Agreement among the
Registrant, Custodial Trust Company and Bear, Stearns
Securities Corp. -- filed herewith;
<PAGE>
(9) (a) Transfer Agency Agreement between the Registant and BISYS
Fund Services Ohio, Inc. -- filed herewith;
(b) Form of Notification of Expense Limitation by Rosenberg
Institutional Equity Management to the Barr Rosenberg VIT
Market Neutral Fund -- incorporated by reference to the
Registration Statement filed on April 20, 1998;
(c) Fund Administration Agreement between the Registrant and
BISYS Fund Services Ohio, Inc. -- filed herewith;
(d) Fund Accounting Agreement between the Registrant and BISYS
Fund Services Ohio, Inc. -- filed herewith;
(10) Opinion of Ropes & Gray -- to be filed by amendment;
(11) Consent of PricewaterhouseCoopers LLP -- to be filed by
amendment;
(12) None;
(13) Investment letter regarding initial capital -- to be filed
by amendment;
(14) None;
(15) None;
(16) Not Applicable;
(17) Not Applicable;
(18) Not Applicable;
(19) Power of Attorney of Po-Len Hew --incorporated by reference
to the Registration Statement filed on April 20, 1998; Power
of Attorney of Nils H. Hakansson and William F. Sharpe --
filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
-2-
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
None.
ITEM 27. INDEMNIFICATION.
Article VIII of the Registrant's Agreement and Declaration of Trust reads
as follows (referring to the Registrant as the "Trust"):
ARTICLE VIII
Indemnification
SECTION 1. TRUSTEES, OFFICERS, ETC. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding to be liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust shall be insured against losses arising from any such advance
payments or (c) either a majority of the disinterested Trustees acting on the
matter (provided that a majority of the disinterested Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
full trial type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Article.
SECTION 2. COMPROMISE PAYMENT. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the proceeding was
brought, that such Covered Person is liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office,
-3-
<PAGE>
indemnification shall be provided if (a) approved, after notice that it involves
such indemnification, by at least a majority of the disinterested Trustees
acting on the matter (provided that a majority of the disinterested Trustees
then in office act on the matter) upon a determination, based upon a review of
readily available facts (as opposed to a full trial type inquiry) that such
Covered Person is not liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, or (b) there has been
obtained an opinion in writing of independent legal counsel, based upon a review
of readily available facts (as opposed to a full trial type inquiry) to the
effect that such indemnification would not protect such Person against any
liability to the Trust to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. Any approval pursuant to
this Section shall not prevent the recovery from any Covered Person of any
amount paid to such Covered Person in accordance with this Section as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction to have been liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office.
SECTION 3. INDEMNIFICATION NOT EXCLUSIVE. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article VIII, the term
"Covered Person" shall include such person's heirs, executors and administrators
and a "disinterested Trustee" is a Trustee who is not an "interested person" of
the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been
exempted from being an "interested person" by any rule, regulation or order of
the Commission), and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person; provided, however, that the Trust shall
not purchase or maintain any such liability insurance in contravention of
applicable law, including without limitation the 1940 Act.
SECTION 4. SHAREHOLDERS. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled to be held harmless from and indemnified against all loss and expense
arising from such liability, but only out of the assets of the particular Series
of Shares of which he or she is or was a Shareholder.
-4-
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR AND PORTFOLIO
MANAGERS.
Rosenberg Institutional Equity Management (the "Manager") was organized as
a limited partnership under the laws of the State of California in 1985, and is
registered as an investment adviser under the Investment Advisers Act of 1940.
The Manager provides investment advisory services to a substantial number of
institutional investors and to the six series of Barr Rosenberg Series Trust,
an open-end management investment company.
Set forth below are the substantial business engagements during at least
the past two fiscal years of each director, officer or partner of the Manager:
Name and Position with Manager Business and Other Connections
- ------------------------------ ------------------------------
Barr M. Rosenberg General Partner, Rosenberg Alpha L.P.
Managing General Partner and Chief (formerly RBR Partners (limited partner
Investment Officer of Manager)), 12 El Sueno, Orinda,
California, December 1984 to present;
Chairman of the Board, Rosenberg
Management Company S.A., 2 Place Winston
Churchill, L-1340 Luxembourg, April 1989
to present; Chairman of the Board,
Rosenberg U.S. Japan Management Company
S.A., 2 Place Winston Churchill, L-1340
Luxembourg, July 1989 to present.
Chairman of the Board, Rosenberg Global
Management Company, S.A., 2 Place
Winston Churchill, L-1340 Luxemburg,
April 1990 to present; Director and
Chairman of the Board, Rosenberg Nomura
Asset Management Company, Ltd., Dai-Ichi
Edobashi Bldg., 1-11-1 Nihonbashi
Chuo-Ku, Tokyo 103, Japan; Chairman of
the Board and Director of Barr Rosenberg
Investment Management, Inc., 4 Orinda
Way, Orinda, California, February 1990
to present. Chairman, Barr Rosenberg
European Management, Ltd., 9A Devonshire
Square, London EC2M 4LY, United Kingdom,
March 1990 to present.
-5-
<PAGE>
Marlis S. Fritz Director, Barr Rosenberg European
General Partner Management Ltd., 9A Devonshire Square,
London EC2M 4LY, United Kingdom, May
1990 to present; Director, Barr
Rosenberg Investment Management, Inc., 4
Orinda Way, Orinda, California, February
1990 to present.
Kenneth Reid Director, Barr Rosenberg Investment
General Partner Management, Inc., 4 Orinda Way, Orinda,
and Director of Research California, February 1990 to present.
Po-Len Hew Controller, Rosenberg Institutional
Controller Equity Management, October 1989 to
present, Treasurer, Barr Rosenberg
Investment Management, Inc., May 1994 to
present.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The account books and other documents required to be maintained Section
31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder will be maintained at the offices of:
1) Barr Rosenberg Variable Insurance Trust
3435 Stelzer Road
Columbus, Ohio 43219
Rule 31a-1 (b)(1),(2),(3), (4), (5), (6), (7), (8), (9), (10), (11)
Rule 31a-2 (a)
2) Rosenberg Institutional Equity Management
Four Orinda Way
Building E
Orinda, CA 94563
Rule 31a-1 (f)
Rule 31a-2 (e)
-6-
<PAGE>
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
The Registrant undertakes to comply with the last three paragraphs of
Section 16(c) of the Investment Company Act of 1940 as though such provisions of
the Act were applicable to the Trust.
-7-
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust, as amended, of the
Registrant is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
for any of the trustees or shareholders individually but are binding only upon
the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Orinda, and
the State of California, on the 29th day of October, 1998.
BARR ROSENBERG VARIABLE INSURANCE TRUST
By: /s/ Kenneth Reid
------------------------------------------
Kenneth Reid
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacities indicated and on the 29th day of October, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S><C>
/s/ Kenneth Reid President and Trustee October 29, 1998
- -------------------------- (principal executive
Kenneth Reid officer)
Po-Len Hew* Treasurer October 29, 1998
- -------------------------- (principal financial
Po-Len Hew and accounting officer)
*By: /s/ Kenneth Reid
-------------------------------
Kenneth Reid
Attorney-in-Fact
Date: October 29, 1998
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
99.8(a) Form of Custody Agreement between the
Registrant and Custodial Trust Company
99.8(b) Form of Special Custody Agreement among
the Registrant, Custodial Trust Company
and Bear, Stearns Securities Corp.
99.9(a) Transfer Agency Agreement between the
Registrant and BISYS Fund Services
Ohio, Inc.
99.9(c) Fund Administration Agreement between
the Registrant and BISYS Fund Services
Ohio, Inc.
99.9(d) Fund Accounting Agreement between the
Registrant and BISYS Fund Services
Ohio, Inc.
99.19 Power of Attorney of Nils H. Hakansson
and William F. Sharpe.
</TABLE>
<PAGE>
CUSTODY AGREEMENT
AGREEMENT, dated as of _________, 1998, by and between BARR ROSENBERG
VARIABLE INSURANCE TRUST (the "Trust"), a business trust organized and existing
under the laws of The Commonwealth of Massachusetts, acting with respect to and
on behalf of each of the series of the Trust that are identified on Exhibit A
hereto, as amended from time to time (each, a "Portfolio"), and CUSTODIAL TRUST
COMPANY, a bank organized and existing under the laws of the State of New Jersey
(the "Custodian").
WHEREAS, the Trust desires that the securities, funds and other assets
of the Portfolios be held and administered by Custodian pursuant to this
Agreement;
WHEREAS, each Portfolio is an investment portfolio represented by a
series of Shares included among the shares of beneficial interest issued by the
Trust, an open-end management investment company registered under the 1940 Act;
WHEREAS, Custodian represents that it is a bank having the
qualifications prescribed in the 1940 Act to act as custodian for management
investment companies registered under the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the
context otherwise requires, shall mean:
1.1 "AUTHORIZED PERSON" means any person authorized by resolution of
the Board of Trustees to give Oral Instructions and Written Instructions on
behalf of the Trust and identified, by
<PAGE>
name or by office, in Exhibit B hereto or any person designated to do so by an
investment adviser of any Portfolio who is named by the Trust in Exhibit C
hereto.
1.2 "BOARD OF TRUSTEES" means the Board of Trustees of the Trust or,
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "BOOK-ENTRY SYSTEM" means a book-entry system maintained by a
Federal Reserve Bank for securities of the United States government or of
agencies or instrumentalities thereof (including government-sponsored
enterprises).
1.4 "BUSINESS DAY" means any day on which banks in the State of New
Jersey and New York are open for business.
1.5 "CUSTODY ACCOUNT" means, with respect to a Portfolio, the account
in the name of such Portfolio, which is provided for in Section 3.2 below.
1.6 "DOMESTIC SECURITIES DEPOSITORY" means The Depository Trust Company
and any other clearing agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, which acts as a securities
depository.
1.7 "ELIGIBLE DOMESTIC BANK" means a bank as defined in the 1940 Act.
1.8 "ELIGIBLE FOREIGN CUSTODIAN" means any banking institution, trust
company or other entity (including any Foreign Securities Depository)
incorporated or organized under the laws of a country other than the United
States which is eligible under the 1940 Act to act as a custodian for securities
and other assets of a Portfolio held outside the United States.
1.9 "FOREIGN CUSTODY MANAGER" has the same meaning as in the 1940 Act.
1.10 "FOREIGN SECURITIES DEPOSITORY" means a foreign securities
depository or clearing agency that qualifies as an Eligible Foreign Custodian as
defined in the 1940 Act.
-2-
<PAGE>
1.11 "MASTER REPURCHASE AGREEMENT" means the Master Repurchase
Agreement of even date herewith between the Trust and Bear, Stearns & Co. Inc.
as it may from time to time be amended.
1.12 "MASTER SECURITIES LOAN AGREEMENT" means the Master Securities
Loan Agreement of even date herewith between the Trust and Bear, Stearns
Securities Corp. as it may from time to time be amended.
1.13 "1940 ACT" means the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
1.14 "ORAL INSTRUCTIONS" means instructions orally transmitted to and
received by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person and (b) completed in accordance with
Custodian's reasonable requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust.
1.15 "PROPER INSTRUCTIONS" means Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by the Trust and Custodian.
1.16 "SECURITIES DEPOSITORY" means any Domestic Securities
Depository or Foreign Securities Depository.
1.17 "SHARES" means, with respect to a Portfolio, those shares in a
series or class of beneficial interests of the Trust that represent interests in
such Portfolio.
1.18 "WRITTEN INSTRUCTIONS" means written communications received by
Custodian that are (a) reasonably believed by Custodian to have been signed or
sent by an Authorized Person, (b) sent or transmitted by letter, facsimile,
central processing unit connection, on-line terminal or magnetic
-3-
<PAGE>
tape, and (c) completed in accordance with Custodian's reasonable requirements
from time to time as to content of instructions and their manner and timeliness
of delivery by the Trust.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Trust hereby appoints Custodian as custodian of
all such securities, funds and other assets of each Portfolio as may be
acceptable to Custodian and from time to time delivered to it by the Trust or
others for the account of such Portfolio.
2.2 ACCEPTANCE. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1 SEGREGATION. All securities and non-cash property of a Portfolio in
the possession of Custodian (other than securities maintained by Custodian with
a sub-custodian appointed pursuant to this Agreement or in a Securities
Depository or Book-Entry System) shall be physically segregated from other such
securities and non-cash property in the possession of Custodian. All cash,
securities and other non-cash property of a Portfolio shall be identified as
belonging to such Portfolio.
3.2 CUSTODY ACCOUNT. (a) Custodian shall open and maintain in its trust
department a custody account in the name of each Portfolio, subject only to
draft or order of Custodian, in which Custodian shall enter and carry all
securities, funds and other assets of such Portfolio which are delivered to
Custodian and accepted by it.
(b) If, with respect to any Portfolio, Custodian at any time fails to
receive any of the documents referred to in Section 3.10(a) below, then, until
such time as it receives such document,
-4-
<PAGE>
it shall not be obligated to receive any securities into the Custody Account of
such Portfolio and shall be entitled to return to such Portfolio any securities
that it is holding in such Custody Account.
3.3 SECURITIES IN PHYSICAL FORM. Custodian may, but shall not be
obligated to, hold securities that may be held only in physical form.
3.4 DISCLOSURE TO ISSUERS OF SECURITIES. Custodian is authorized to
disclose the Trust's and any Portfolio's names and addresses, and the securities
positions in such Portfolio's Custody Account, to the issuers of such securities
when requested by them to do so.
3.5 APPOINTMENT OF DOMESTIC SUB-CUSTODIANS. Custodian may at any time
and from time to time, subject to the Trust=s prior approval, appoint and
employ, and at any time, in its sole discretion, cease to employ, any Eligible
Domestic Bank qualified to act as custodian for management investment companies
registered under the 1940 Act as sub-custodian to hold securities and other
assets of a Portfolio that are maintained in the United States and to carry out
such other provisions of this Agreement as it may determine. The appointment of
any such sub-custodian shall be at Custodian's expense and shall not relieve
Custodian of any of its obligations or liabilities under this Agreement.
3.6 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. (a) At any time and from
time to time, Custodian may, in its discretion, appoint and employ in accordance
with the 1940 Act (i) any overseas branch of any Eligible Domestic Bank, or (ii)
any Eligible Foreign Custodian selected by the Foreign Custody Manager, in each
case as a foreign sub-custodian for securities and other assets of a Portfolio
that are maintained outside the United States, provided that the employment of
any such overseas branch has been approved by the Fund, and provided that, in
the case of any such Eligible Foreign Custodian, the Foreign Custody Manager has
approved, in writing, the agreement (and/or, in the case of a Foreign Securities
Depository, the rules and/or established practices or procedures thereof)
pursuant to which Custodian employs such Eligible Foreign Custodian.
-5-
<PAGE>
(b) Set forth on Exhibit D hereto, with respect to each Portfolio, are
the foreign sub-custodians (including Foreign Securities Depositories) that
Custodian may employ pursuant to Section 3.6(a) above. Exhibit D shall be
revised from time to time as foreign sub-custodians are added or deleted.
(c) If the Trust proposes to have a Portfolio make an investment which
is to be held in a country in which Custodian does not have appropriate
arrangements in place with a foreign sub-custodian selected by the Foreign
Custody Manager, then the Trust shall inform Custodian sufficiently in advance
of such investment to allow Custodian to put such arrangements in place.
(d) Notwithstanding anything to the contrary in Section 8.1 below or
elsewhere in this Agreement, Custodian shall have no greater liability to any
Portfolio or the Trust for the actions or omissions of any foreign sub-custodian
appointed pursuant to this Agreement than any such foreign sub-custodian has to
Custodian, and Custodian shall not be required to discharge any such liability
which may be imposed on it unless and until such foreign sub-custodian has
effectively indemnified Custodian against it or has otherwise discharged its
liability to Custodian in full.
(e) Upon the request of the Foreign Custody Manager, Custodian shall
furnish to the Foreign Custody Manager (but no more often than once per year)
information concerning all foreign sub-custodians appointed pursuant to this
Agreement which shall be similar in kind and scope to any such information that
may have been furnished to the Foreign Custody Manager in connection with the
initial approval by the Foreign Custody Manager of the agreements pursuant to
which Custodian employs such foreign sub-custodians or as otherwise required by
the 1940 Act.
3.7 APPOINTMENT OF OTHER AGENTS. Custodian may employ other suitable
agents, which may include affiliates of Custodian such as Bear, Stearns & Co.
Inc. ("Bear Stearns") or Bear, Stearns Securities Corp. ("BS Securities"), both
of which are securities broker-dealers, provided, however, that Custodian shall
not employ (a) BS Securities to hold any collateral pledged by BS Securities
under the Master Securities Loan Agreement or any other securities loan
agreement between the Trust and BS Securities, whether now or hereafter in
effect, or (b) Bear Stearns to hold any securities
-6-
<PAGE>
purchased from Bear Stearns under the Master Repurchase Agreement or any other
repurchase agreement between the Trust and Bear Stearns, whether now or
hereafter in effect, and Custodian shall not employ any agent that would subject
a Portfolio to any special audits or other requirements pursuant to Rule 17f-1
under the 1940 Act. The appointment of any agent pursuant to this Section 3.7
shall not relieve Custodian of any of its obligations or liabilities under this
Agreement.
3.8 BANK ACCOUNTS. In its discretion and from time to time Custodian
may open and maintain one or more demand deposit accounts with any Eligible
Domestic Bank (any such accounts to be in the name of Custodian and subject only
to its draft or order), provided, however, that the opening and maintenance of
any such account shall be at Custodian's expense and shall not relieve Custodian
of any of its obligations or liabilities under this Agreement.
3.9 DELIVERY OF ASSETS TO CUSTODIAN. Provided they are acceptable to
Custodian, the Trust shall deliver to Custodian the securities, funds and other
assets of each Portfolio, including without limitation (a) payments of income,
payments of principal and capital distributions received by such Portfolio with
respect to securities, funds or other assets owned by such Portfolio at any time
during the term of this Agreement, and (b) funds received by such Portfolio for
the issuance, at any time during such term, of Shares of such Portfolio.
Custodian shall not be under any duty or obligation to require the Trust to
deliver to it any securities or other assets owned by a Portfolio and shall have
no responsibility or liability for or on account of securities or other assets
not so delivered.
3.10 DOMESTIC SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. Custodian
and any sub-custodian appointed pursuant to Section 3.5 above may deposit and/or
maintain securities of any Portfolio in a Domestic Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of a Portfolio in any Domestic
Securities Depository or Book-Entry System, the Trust shall deliver to Custodian
a resolution of the Board of Trustees, certified by an officer of the Trust,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.5 above) on an on-going basis to deposit in such Domestic
Securities
-7-
<PAGE>
Depository or Book-Entry System all securities eligible for deposit therein and
to make use of such Domestic Securities Depository or Book-Entry System to the
extent possible and practical in connection with the performance of its
obligations hereunder (or under the applicable sub-custody agreement in the case
of such sub-custodian), including, without limitation, in connection with
settlements of purchases and sales of securities, loans of securities, and
deliveries and returns of collateral consisting of securities.
(b) Securities of a Portfolio kept in a Book-Entry System or Domestic
Securities Depository shall be kept in an account ("Depository Account") of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) in
such Book-Entry System or Domestic Securities Depository which includes only
assets held by Custodian (or such sub-custodian) as a fiduciary, custodian or
otherwise for customers (i.e., a non-proprietary account).
(c) The records of Custodian with respect to securities of a Portfolio
that are maintained in a Book-Entry System or Domestic Securities Depository
shall at all times identify such securities as belonging to such Portfolio.
(d) If securities purchased by a Portfolio are to be held in a
Book-Entry System or Domestic Securities Depository, Custodian (or any
sub-custodian appointed pursuant to Section 3.5 above) shall pay for such
securities upon (i) receipt of advice from the Book-Entry System or Domestic
Securities Depository that such securities have been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
(or of such sub-custodian) to reflect such payment and transfer for the account
of such Portfolio. If securities sold by a Portfolio are held in a Book-Entry
System or Domestic Securities Depository, Custodian (or such sub-custodian)
shall transfer such securities upon (A) receipt of advice from the Book-Entry
System or Domestic Securities Depository that payment for such securities has
been transferred to the Depository Account, and (B) the making of an entry on
the records of Custodian (or of such sub-custodian) to reflect such transfer and
payment for the account of such Portfolio.
-8-
<PAGE>
(e) Custodian shall provide the Trust with copies of any report
obtained by Custodian (or by any sub-custodian appointed pursuant to Section 3.5
above) from a Book-Entry System or Domestic Securities Depository in which
securities of a Portfolio are kept on the internal accounting controls and
procedures for safeguarding securities deposited in such Book-Entry System or
Domestic Securities Depository.
(f) At its election, the Trust shall be subrogated to the rights of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) with
respect to any claim against a Book-Entry System or Domestic Securities
Depository or any other person for any loss or damage to a Portfolio arising
from the use of such Book-Entry System or Domestic Securities Depository, if and
to the extent that such Portfolio has not been made whole for any such loss or
damage.
3.11 RELATIONSHIP WITH SECURITIES DEPOSITORIES. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or sub-contractor of Custodian for purposes of Section 3.7 above or
otherwise.
3.12 PAYMENTS FROM CUSTODY ACCOUNT. Upon receipt of Proper Instructions
with respect to a Portfolio but subject to its right to foreclose upon and
liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall make payments from the Custody Account of such Portfolio, but only in the
following cases, provided, FIRST, that there are sufficient funds in such
Custody Account to make such payments, whether belonging to such Portfolio or
advanced to it by Custodian in its sole and absolute discretion as set forth in
Section 3.18 below, and, SECOND, that after the making of such payments, such
Portfolio would not be in violation of any margin or other requirements agreed
upon pursuant to Section 3.18 below:
(a) For the purchase of securities for such Portfolio but only (i) in
the case of securities (other than options on securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any
sub-custodian appointed pursuant to this Agreement) of such securities
-9-
<PAGE>
registered as provided in Section 3.20 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities Depository, in accordance with the conditions set forth in
Section 3.10 above, and (ii) in the case of options, futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of such Portfolio, the
Custodian, any such sub-custodian, or any nominee referred to in Section 3.20
below;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.13(f) below, of securities owned by such Portfolio;
(c) For transfer in accordance with the provisions of any agreement
among the Trust, Custodian and a securities broker-dealer, relating to
compliance with rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions of such
Portfolio;
(d) For transfer in accordance with the provisions of any agreement
among the Trust, Custodian and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of such Portfolio;
(e) For the funding of any time deposit (whether certificated or not)
or other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial institution of
loan participations, but only if Custodian has in its possession a copy of the
agreement between the Trust and such banking or other financial institution with
respect to the purchase of such loan participations and provided
-10-
<PAGE>
that Custodian shall receive and retain such participation certificate or other
evidence of participation (if any) as such banking or other financial
institution may deliver with respect to any such loan participation;
(g) For the purchase and/or sale of foreign currencies or of options to
purchase and/or sell foreign currencies, for spot or future delivery, for the
account of such Portfolio pursuant to contracts between the Trust and any
banking or other financial institution (including Custodian, any sub-custodian
appointed pursuant to this Agreement and any affiliate of Custodian);
(h) For transfer to a securities broker-dealer as margin for a short
sale of securities for such Portfolio, or as payment in lieu of dividends paid
on securities sold short for such Portfolio;
(i) For the payment of amounts in respect of equity swap contracts
entered into by such Portfolio;
(j) For the payment as provided in Article IV below of any dividends,
capital gain distributions or other distributions declared on the Shares of such
Portfolio;
(k) For the payment as provided in Article IV below of the redemption
price of the Shares of such Portfolio;
(l) For the payment of any expense or liability incurred by such
Portfolio, including but not limited to the following payments for the account
of such Portfolio: interest, taxes, and administration, investment advisory,
distribution, servicing, accounting, auditing, transfer agent, custodian,
trustee and legal fees, and other operating expenses of such Portfolio; in all
cases, whether or not such expenses are to be in whole or in part capitalized or
treated as deferred expenses; and
(m) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of such Portfolio, and naming the person or
persons to whom such payment is to be made.
-11-
<PAGE>
3.13 DELIVERIES FROM CUSTODY ACCOUNT. Upon receipt of Proper
Instructions with respect to a Portfolio but subject to its right to foreclose
upon and liquidate collateral pledged to it pursuant to Section 9.3 below,
Custodian shall release and deliver securities and other assets from the Custody
Account of such Portfolio, but only in the following cases, provided, FIRST,
that there are sufficient amounts and types of securities or other assets in
such Custody Account to make such delivery, and, SECOND, that after the making
of such delivery, such Portfolio would not be in violation of any margin or
other requirements agreed upon pursuant to Section 3.18 below:
(a) Upon the sale of securities for the account of such Portfolio but,
subject to Section 3.14 below, only against receipt of payment therefor or, if
such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
(b) To an offeror's depository agent in connection with tender or other
similar offers for securities of such Portfolio; provided that, in any such
case, the funds or other consideration for such securities is to be delivered to
Custodian;
(c) To the issuer thereof or its agent when such securities are called,
redeemed or otherwise become payable, provided that in any such case the funds
or other consideration for such securities is to be delivered to Custodian;
(d) To the issuer thereof or its agent for exchange for a different
number of certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new securities
are to be delivered to Custodian;
(e) To the securities broker through whom securities are being sold for
such Portfolio, for examination in accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement,
-12-
<PAGE>
including surrender or receipt of underlying securities in connection with the
issuance or cancellation of depository receipts; provided that, in any such
case, the new securities and funds, if any, are to be delivered to Custodian;
(g) In the case of warrants, rights or similar securities, to the
issuer of such warrants, rights or similar securities, or its agent, upon the
exercise thereof, provided that, in any such case, the new securities and funds,
if any, are to be delivered to Custodian;
(h) To the borrower thereof, or its agent, in connection with any loans
of securities for such Portfolio pursuant to any securities loan agreement
entered into by the Trust, but only against receipt by Custodian of such
collateral as is required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings from
such lender by such Portfolio that require a pledge of assets of such Portfolio,
but only against receipt by Custodian of the amounts borrowed;
(j) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of such Portfolio or the Trust;
(k) For delivery in accordance with the provisions of any agreement
among the Trust, Custodian and a securities broker-dealer, relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions of such Portfolio;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, Custodian, and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of such Portfolio;
-13-
<PAGE>
(m) For delivery to a securities broker-dealer as margin for a short
sale of securities for such Portfolio;
(n) To the issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter, collectively, "ADRs") for such securities, or
its agent, against a written receipt therefor adequately describing such
securities, provided that such securities are delivered together with
instructions to issue ADRs in the name of Custodian or its nominee and to
deliver such ADRs to Custodian;
(o) In the case of ADRs, to the issuer thereof, or its agent, against a
written receipt therefor adequately describing such ADRs, provided that such
ADRs are delivered together with instructions to deliver the securities
underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of such Portfolio, and naming the person or persons to
whom delivery of such securities or other assets is to be made.
3.14 DELIVERY PRIOR TO FINAL PAYMENT. When instructed by the Trust to
deliver securities of a Portfolio against payment, Custodian shall be entitled,
but only if in accordance with generally accepted market practice, to deliver
such securities prior to actual receipt of final payment therefor and,
exclusively in the case of securities in physical form, prior to receipt of
payment therefor. In any such case, such Portfolio shall bear the risk that
final payment for such securities may not be made or that such securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and Custodian shall have no liability for any of the foregoing.
3.15 CREDIT PRIOR TO FINAL PAYMENT. In its sole discretion and from
time to time, Custodian may credit the Custody Account of a Portfolio, prior to
actual receipt of final payment thereof, with (a) proceeds from the sale of
securities of such Portfolio which it has been instructed to deliver against
payment, (b) proceeds from the redemption of securities or other assets in such
Custody
-14-
<PAGE>
Account, and (c) income from securities, funds or other assets in such Custody
Account. Any such credit shall be conditional upon actual receipt by Custodian
of final payment and may be reversed if final payment is not actually received
in full. Custodian may, in its sole discretion and from time to time, permit a
Portfolio to use funds so credited to its Custody Account in anticipation of
actual receipt of final payment. Any funds so used shall constitute an advance
subject to Section 3.18 below.
3.16 DEFINITION OF FINAL PAYMENT. For purposes of this Agreement,
"final payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, levy, lien or other encumbrance.
3.17 PAYMENTS AND DELIVERIES OUTSIDE UNITED STATES. Notwithstanding
anything to the contrary that may be required by Section 3.12 or Section 3.13
above, or elsewhere in this Agreement, in the case of securities and other
assets maintained outside the United States and in the case of payments made
outside the United States, Custodian and any sub-custodian appointed pursuant to
this Agreement may receive and deliver such securities or other assets, and may
make such payments, in accordance with the laws, regulations, customs,
procedures and practices applicable in the relevant local market outside the
United States;
3.18 CLEARING CREDIT. Custodian may, in its sole discretion and from
time to time, advance funds to the Trust to facilitate the settlement of a
Portfolio's transactions in the Custody Account of such Portfolio. Any such
advance (a) shall be repayable immediately upon demand made by Custodian, (b)
shall be fully secured as provided in Section 9.3 below, and (c) shall bear
interest at such rate, and be subject to such other terms and conditions, as
Custodian and the Trust may agree.
3.19 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Trust, Custodian shall with respect to all securities and
other assets held for a Portfolio:
-15-
<PAGE>
(a) Subject to Section 8.4 below, receive into the Custody Account of
such Portfolio any funds or other property, including payments of principal,
interest and dividends, due and payable on or on account of such securities and
other assets;
(b) Deliver securities of such Portfolio to the issuers of such
securities or their agents for the transfer thereof into the name of such
Portfolio, Custodian or any of the nominees referred to in Section 3.20 below;
(c) Endorse for collection, in the name of such Portfolio, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or securities in temporary form for
securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws of the United States, or the laws
or regulations of any other taxing authority, in connection with the transfer of
such securities or other assets or the receipt of income or other payments with
respect thereto;
(f) Receive and hold for such Portfolio all rights and similar
securities issued with respect to securities or other assets of such Portfolio;
(g) As may be required in the execution of Proper Instructions,
transfer funds from the Custody Account of such Portfolio to any demand deposit
account maintained by Custodian pursuant to Section 3.8 above; and
(h) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase and transfer of, and other
dealings in, such securities and other assets.
-16-
<PAGE>
3.20 REGISTRATION AND TRANSFER OF SECURITIES. All securities held for a
Portfolio that are issuable only in bearer form shall be held by Custodian in
that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for a Portfolio may be registered in the name of (a)
Custodian as agent, (b) any sub-custodian appointed pursuant to this Agreement,
(c) any Securities Depository, or (d) any nominee or agent of any of them. The
Trust shall furnish to Custodian appropriate instruments to enable Custodian to
hold or deliver in proper form for transfer, or to register as in this Section
3.20 provided, any securities or other assets delivered to Custodian which are
registered in the name of a Portfolio.
3.21 RECORDS. (a) Custodian shall maintain complete and accurate
records with respect to securities, funds and other assets held for a Portfolio,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of securities and all
receipts and disbursements of funds; (ii) ledgers (or other records) reflecting
(A) securities in transfer, if any, (B) securities in physical possession, (C)
monies and securities borrowed and monies and securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) canceled checks and bank records related thereto. Custodian
shall keep such other books and records with respect to securities, funds and
other assets of a Portfolio which are held hereunder as the Trust may reasonably
request or as may be required by the 1940 Act.
(b) All such books and records maintained by Custodian for a Portfolio
shall (i) be maintained in a form acceptable to the Trust and in compliance with
the rules and regulations of the Securities and Exchange Commission, (ii) be the
property of such Portfolio and at all times during the regular business hours of
Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Trust (including without limitation
independent auditors of the Trust) and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained under the 1940 Act,
be preserved for the periods prescribed therein.
-17-
<PAGE>
3.22 ACCOUNT REPORTS BY CUSTODIAN. Custodian shall furnish the Trust
with a daily activity statement, including a summary of all transfers to or from
the Custody Account of each Portfolio (in the case of securities and other
assets maintained in the United States, on the day following such transfers). At
least monthly and from time to time, Custodian shall furnish the Trust with a
detailed statement of the securities, funds and other assets held for each
Portfolio under this Agreement.
3.23 OTHER REPORTS BY CUSTODIAN. Custodian shall provide the Trust with
such reports as the Trust may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.24 PROXIES AND OTHER MATERIALS. (a) Unless otherwise instructed by
the Trust, Custodian shall promptly deliver to the Trust all notices of
meetings, proxy materials (other than proxies) and other announcements, which it
receives regarding securities held by it in the Custody Account of a Portfolio.
Whenever Custodian or any of its agents receives a proxy with respect to
securities in the Custody Account of a Portfolio, Custodian shall promptly
request instructions from Trust on how such securities are to be voted, and
shall give such proxy, or cause it to be given, in accordance with such
instructions. If Trust timely informs Custodian that Trust wishes to vote any
such securities in person, Custodian shall promptly seek to have a legal proxy
covering such securities issued to Trust. Unless otherwise instructed by the
Trust, neither Custodian nor any of its agents shall exercise any voting rights
with respect to securities held hereunder.
(b) Unless otherwise instructed by the Trust, Custodian shall promptly
transmit to the Trust all other written information received by Custodian from
issuers of securities held in the Custody Account of any Portfolio. With respect
to tender or exchange offers for such securities or rights offerings in
connection therewith, Custodian shall promptly transmit to the Trust all written
information received by Custodian from the issuers of the securities whose
tender or exchange is sought and from the party (or its agents) making the
tender or exchange offer or from the issuers of the securities with respect to
which the rights offering is being made. If the Trust desires to take action
with respect to any tender offer, exchange offer, rights offering or other
similar transaction,
-18-
<PAGE>
the Trust shall notify Custodian (i) in the case of securities maintained
outside the United States, such number of Business Days prior to the date on
which Custodian is to take such action as will allow Custodian to take such
action in the relevant local market for such securities in a timely fashion, and
(ii) in the case of all other securities, at least three Business Days prior to
the date on which Custodian is to take such action.
3.25 CO-OPERATION. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trust to keep or audit
the books of account of a Portfolio, to record the owners of the Portfolios=
Shares and/or to compute the value of the assets of a Portfolio.
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 TRANSFER OF FUNDS. From such funds as may be available for the
purpose in the Custody Account of a Portfolio, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of such
Portfolio or to pay dividends or other distributions to holders of Shares of
such Portfolio, Custodian shall transfer each amount specified in such Proper
Instructions to such account of such Portfolio or of an agent thereof (other
than Custodian), at such bank, as the Trust may designate therein with respect
to such amount.
4.2 SOLE DUTY OF CUSTODIAN. Custodian's sole obligation with respect to
the redemption of Shares of a Portfolio and the payment of dividends and other
distributions thereon shall be its obligation set forth in Section 4.1 above,
and Custodian shall not be required to make any payments to the various holders
from time to time of Shares of a Portfolio nor shall Custodian be responsible
for the payment or distribution by the Trust, or any agent designated in Proper
Instructions given pursuant to Section 4.1 above, of any amount paid by
Custodian to the account of the Trust or such agent in accordance with such
Proper Instructions.
-19-
<PAGE>
ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish
and maintain a segregated account or accounts for and on behalf of any
Portfolio, into which account or accounts may be transferred funds and/or
securities, including securities maintained in a Securities Depository:
(a) in accordance with the provisions of any agreement among the Trust,
Custodian and a securities broker-dealer (or any futures commission merchant),
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions of such Portfolio,
(b) for purposes of segregating funds or securities in connection with
securities options purchased or written by such Portfolio or in connection with
financial futures contracts (or options thereon) purchased or sold by such
Portfolio,
(c) which constitute collateral for loans of securities made by such
Portfolio,
(d) for purposes of compliance by such Portfolio with requirements
under the 1940 Act for the maintenance of segregated accounts by registered
management investment companies in connection with reverse repurchase
agreements, when-issued, delayed delivery and firm commitment transactions,
short sales of securities, and any other appropriate transactions, and
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of such Portfolio.
-20-
<PAGE>
ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make for the account of such Portfolio the transfers of funds and
deliveries of securities which such Portfolio is required to make pursuant to
the Master Repurchase Agreement and shall receive for the account of such
Portfolio the transfers of funds and deliveries of securities which the seller
under the Master Repurchase Agreement is required to make pursuant thereto.
Custodian shall make and receive all such transfers and deliveries pursuant to,
and subject to the terms and conditions of, the Master Repurchase Agreement.
6.2 COLLATERAL. Custodian shall daily mark to market the securities
purchased under the Master Repurchase Agreement and held in the Custody Account
of a Portfolio, and shall give to the seller thereunder any such notice as may
be required thereby in connection with such mark-to-market.
6.3 EVENTS OF DEFAULT. Custodian shall promptly notify the Trust of any
event of default under the Master Repurchase Agreement (as such term "event of
default" is defined therein) of which it has actual knowledge.
6.4 MASTER REPURCHASE AGREEMENT. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Repurchase Agreement. The Trust
shall provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
-21-
<PAGE>
ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make for the account of such Portfolio the transfers of funds and
deliveries of securities which such Portfolio is required to make pursuant to
the Master Securities Loan Agreement and shall receive for the account of such
Portfolio the transfers of funds and deliveries of securities which the borrower
under the Master Securities Loan Agreement is required to make pursuant thereto.
Custodian shall make and receive all such transfers and deliveries pursuant to,
and subject to the terms and conditions of, the Master Securities Loan
Agreement.
7.2 COLLATERAL. Custodian shall daily mark to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding thereunder.
7.3 DEFAULTS. Custodian shall promptly notify the Trust of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4 MASTER SECURITIES LOAN AGREEMENT. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Securities Loan Agreement. The
Trust shall provide Custodian, prior to the effectiveness thereof, with a copy
of any amendment to the Master Securities Loan Agreement.
ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 STANDARD OF CARE. Notwithstanding any other provisions of this
Agreement, Custodian shall be held to the exercise of reasonable care in
carrying out its obligations under this Agreement, and shall be without
liability to any Portfolio or the Trust for any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim which does not
arise from willful
-22-
<PAGE>
misfeasance, bad faith or negligence on the part of Custodian. In no event shall
Custodian be liable for special, incidental or consequential damages, even if
Custodian has been advised of the possibility of such damages, or be liable in
any manner whatsoever for any action taken or omitted upon instructions from an
Authorized Person of the Trust or any authorized agent of the Trust in
conformity with such instructions.
8.2 ACTUAL COLLECTION REQUIRED. So long as and to the extent that it is
in the exercise of reasonable care, Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to a Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such funds or collect on
such instrument.
8.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that
it is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any assets or evidence of title thereto
received or delivered by it or its agents.
8.4 LIMITATION ON DUTY TO COLLECT. Custodian shall promptly notify the
Trust whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for a Portfolio is not timely received
by it. Custodian shall not, however, be required to enforce collection, by legal
means or otherwise, of any such money or other property not paid when due, but
will use commercially reasonable efforts to obtain such money or property and
shall receive the proceeds of such collections as may be effected by it or its
agents in the ordinary course of Custodian's custody and safekeeping business or
of the custody and safekeeping business of such agents.
8.5 EXPRESS DUTIES ONLY. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account of any
Portfolio and is not a fiduciary to any Portfolio or the Trust. In particular,
Custodian shall not
-23-
<PAGE>
be under any obligation at any time to monitor or to take any other action with
respect to compliance by any Portfolio or the Trust with the 1940 Act, the
provisions of the trust's trust instruments or by-laws, or any Portfolio's
investment objectives, policies and limitations as in effect from time to time.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. Each Portfolio shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including reasonable attorneys' fees and disbursements), liability (including,
without limitation, liability arising under the Securities Act of 1933, the
Securities Exchange Act of 1934, the 1940 Act, and any federal, state or foreign
securities and/or banking laws) or claim arising directly or indirectly (a) from
the fact that securities or other assets in the Custody Account of such
Portfolio are registered in the name of any such nominee, or (b) from any action
or inaction, with respect to such Portfolio, by Custodian or such sub-custodian
or nominee (i) at the request or direction of or in reliance on the advice of an
Authorized Person of the Trust or any of its authorized agents, or (ii) upon
Proper Instructions, or (c) generally, from the performance of its obligations
under this Agreement with respect to such Portfolio, provided that Custodian,
any such sub-custodian or any nominee of any of them shall not be indemnified
and held harmless from and against any such loss, damage, cost, expense,
liability or claim arising from willful misfeasance, bad faith or negligence on
the part of Custodian or any such sub-custodian or nominee.
9.2 INDEMNITY TO BE PROVIDED. If the Trust requests Custodian to take
any action with respect to securities or other assets of a Portfolio, which may,
in the opinion of Custodian, result in Custodian or its nominee becoming liable
for the payment of money or incurring liability of some other form, Custodian
shall not be required to take such action until such Portfolio shall have
provided indemnity therefor to Custodian in an amount and form satisfactory to
Custodian.
-24-
<PAGE>
9.3 SECURITY. As security for the payment of any present or future
obligation or liability of a Portfolio arising under Section 3.18 hereof to
Custodian (but not to any affiliate of Custodian or any other person), the Trust
hereby pledges to Custodian all securities, funds and other assets of every kind
which are in such Custody Account or otherwise held for such Portfolio pursuant
to this Agreement in an amount not to exceed the total amount advanced under
Section 3.18 hereof, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such securities, funds and other assets.
ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance
of its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS WITH RESPECT TO PORTFOLIOS. The Trust represents
and warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of each Portfolio, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of each
Portfolio, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by-law, or other instrument, restriction
or provision applicable to it or such Portfolio or by which it or such
Portfolio, or their respective assets, may be bound, and (c) this Agreement
constitutes a legal, valid and binding obligation of the Trust, enforceable
against the Portfolios in accordance with its terms.
11.2 REPRESENTATIONS OF CUSTODIAN. Custodian represents and warrants
that (a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other
-25-
<PAGE>
instrument, restriction or provision applicable to it or by which it or its
assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
Each Portfolio shall pay Custodian such fees and charges as are set
forth in Exhibit E hereto, as such Exhibit E may from time to time be amended in
writing by Custodian and the Trust. Any annual fee payable by a Portfolio shall
be calculated on the basis of the total market value of the assets in the
Custody Account of such Portfolio as determined on the last Business Day of the
month for which such fee is charged; and such fee, and any transaction charges
payable by such Portfolio, shall be paid monthly by automatic deduction from
such Custody Account. Out-of-pocket expenses incurred by Custodian in the
performance of its services hereunder, and all other proper charges and
disbursements of the Custody Account of any Portfolio, shall be charged to such
Custody Account by Custodian and paid therefrom.
ARTICLE XIII
TAXES
13.1 TAXES PAYABLE BY PORTFOLIOS. Any and all taxes, including any
interest and penalties with respect thereto, which may be levied or assessed
under present or future laws in respect of the Custody Account of any Portfolio
or any income thereof shall be charged to such Custody Account by Custodian and
paid therefrom.
13.2 TAX RECLAIMS. Custodian shall exercise, on behalf of any
Portfolio, any tax reclaim rights of such Portfolio which arise in connection
with foreign securities in the Custody Account of such Portfolio.
-26-
<PAGE>
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1 AUTHORIZED PERSONS. Custodian may rely upon and act in accordance
with any notice, confirmation, instruction or other communication received by it
from the Trust which is reasonably believed by Custodian to have been given or
signed on behalf of the Trust by one of the Authorized Persons designated by the
Trust in Exhibit B hereto, as it may from time to time be revised. The Trust may
revise Exhibit B hereto at any time by notice in writing to Custodian given in
accordance with Section 14.4 below, but no revision of Exhibit B hereto shall be
effective until Custodian actually receives such notice.
14.2 INVESTMENT ADVISERS. Custodian may also act in accordance with any
Written or Oral Instructions given with respect to a Portfolio which are
reasonably believed by Custodian to have been given or signed by one of the
persons designated from time to time by any of the investment advisers of such
Portfolio who are specified in Exhibit C hereto (if any) as it may from time to
time be revised. The Trust may revise Exhibit C hereto at any time by notice in
writing to Custodian given in accordance with Section 14.4 below, and each
investment adviser specified in Exhibit C hereto (if any) may at any time by
like notice designate an Authorized Person or remove an Authorized Person
previously designated by it, but no revision of Exhibit C hereto (if any) and no
designation or removal by such investment adviser shall be effective until
Custodian actually receives such notice.
14.3 ORAL INSTRUCTIONS. Custodian may rely upon and act in accordance
with Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the validity of the transaction authorized by such Oral
Instructions or the authorization given by an Authorized Person to effect such
transaction. Custodian shall incur no liability to any Portfolio or the Trust in
acting upon Oral Instructions. To the extent such Oral Instructions vary from
any confirming Written Instructions, Custodian shall advise the
-27-
<PAGE>
Trust of such variance but unless confirming Written Instructions are timely
received, such Oral Instructions shall govern.
14.4 ADDRESSES FOR NOTICES. Unless otherwise specified herein, all
demands, notices, instructions, and other communications to be given hereunder
shall be sent, delivered or given to the recipient at the address, or the
relevant telephone number, set forth after its name hereinbelow:
IF TO THE TRUST:
Barr Rosenberg Variable Insurance Trust for [INSERT NAME OF FUND]
4 Orinda Way, Bldg E Orinda, CA 94563
Attention: EDWARD H. LYMAN
Telephone: (510) 254-6464
Facsimile: (510) 253-0141
IF TO CUSTODIAN:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: VICE PRESIDENT - TRUST OPERATIONS
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
14.5 REMOTE CLEARANCE. Written Instructions for the receipt, delivery
or transfer of securities may include, and Custodian shall accept, Remote
Clearance Instructions (as defined hereinbelow) and Bulk Input Instructions (as
defined hereinbelow), provided that such Instructions are given in accordance
with the procedures prescribed by Custodian from time to time as to content of
instructions and their manner and timeliness of delivery by Customer. Custodian
shall be entitled to conclusively assume that all Remote Clearance Instructions
and Bulk Input Instructions have been
-28-
<PAGE>
given by an Authorized Person, and Custodian is hereby irrevocably authorized to
act in accordance therewith. For purposes of this Agreement, "Remote Clearance
Instructions" means instructions that are input directly via a remote terminal
which is located on the premises of the Trust, or of an investment adviser named
in Exhibit C hereto, and linked to Custodian; and "Bulk Input Instructions"
means instructions that are input by bulk input computer tape delivered to
Custodian by messenger or transmitted to it via such transmission mechanism as
the Trust and Custodian shall from time to time agree upon.
ARTICLE XV
TERMINATION
Either party hereto may terminate this Agreement with respect to one or
more of the Portfolios by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than thirty
(30) days after the date of the giving of such notice. Upon the date set forth
in such notice this Agreement shall terminate with respect to each Portfolio
specified in such notice, and Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on that date (a) deliver directly to the
successor custodian or its agents all securities (other than securities held in
a Book-Entry System or Securities Depository) and other assets then owned by
such Portfolio and held by Custodian as custodian, and (b) transfer any
securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of such Portfolio, provided that such Portfolio shall have
paid to Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled.
ARTICLE XVI
LIMITATION OF LIABILITIES
To the extent that the trustees of the Trust are regarded as entering
into this Agreement, they do so only as trustees of the Trust and not
individually. The obligations under this Agreement of the Trust or any Portfolio
shall not be binding upon any trustee, officer or employee of the Trust
individually, or upon any holder of Shares individually, but shall be binding
only upon the assets and property of such Portfolio. Such trustees, officers,
employees and holders, when acting in such capacities, shall not be personally
liable under this Agreement, and Custodian shall look solely to
-29-
<PAGE>
the assets and property of each Portfolio for the performance of this Agreement
with respect to such Portfolio and the payment of any claim against such
Portfolio under this Agreement.
ARTICLE XVII
MISCELLANEOUS
17.1 BUSINESS DAYS. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
17.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
17.3 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for a Portfolio and such other printed
matter as merely identifies Custodian as custodian for a Portfolio. The Trust
shall submit printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel prior to any
deadline for printing.
17.4 NO WAIVER. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
17.5 AMENDMENTS. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
17.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
-30-
<PAGE>
17.7 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
17.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; PROVIDED, HOWEVER, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 17.8 shall be void.
17.9 JURISDICTION. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, in the United States District Court for the Southern District of
New York, in the Superior Court of the State of California or in the United
States District Court for the Northern District of California and the parties
hereto hereby submit to the non-exclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding, and hereby waive for such
purpose any other preferential jurisdiction by reason of their present or future
domicile or otherwise.
17.10 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
BARR ROSENBERG VARIABLE
INSURANCE TRUST
By:
--------------------------------
Title:
CUSTODIAL TRUST COMPANY
By:
--------------------------------
Title:
-31-
<PAGE>
EXHIBIT A
PORTFOLIOS
- Barr Rosenberg VIT Market Neutral Fund
-32-
<PAGE>
EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Custody Accounts of the Portfolios.
Name Signature
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- - -
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- - -
-33-
<PAGE>
EXHIBIT C
INVESTMENT ADVISERS
ALL PORTFOLIOS
Rosenberg Institutional Equity Management
-34-
<PAGE>
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
ALL PORTFOLIOS
Foreign Sub-custodian Country(ies) Securities Depositories
- --------------------- ------------ -----------------------
-35-
<PAGE>
EXHIBIT E
CUSTODY FEES AND TRANSACTION CHARGES
All fees and charges set forth in this Exhibit E shall be calculated
and paid in the manner provided in Article XII above. For purposes of
calculating the annual fee hereinafter provided for and charging the
transactions fees hereinafter provided for, all assets held in the account
established for the Barr Rosenberg VIT Market Neutral Fund (the "Portfolio")
pursuant to the Special Custody Agreement among the The Barr Rosenberg Variable
Insurance Trust, Custodian and Bear Stearns, dated as of ___________, 1998,
shall be deemed to be held in the Custody Account of the Portfolio under this
Agreement and all transactions in such assets shall be deemed to have occurred
in such Custody Account. The Trust shall pay Custodian the following fees for
assets maintained in the Custody Account and charges for transactions by such
Portfolio, all such fees and charges to be payable monthly:
(1) an annual fee consisting of the total of 0.04% (4 basis points) per
annum of the first $50 million of assets in the Custody Account of such
Portfolio, 0.02% (2 basis points) per annum of the next $150 million of such
assets and 0.01% (1 basis point) per annum of the amount of such assets in
excess of $200 million;
(2) a transaction charge for each repurchase transaction in the Custody
Account of such Portfolio which represents a cash sweep investment for such
Portfolio's account, computed at a rate of 0.10% (ten basis points) per annum on
the amount of the purchase price paid by such Portfolio in such repurchase
transaction;
(3) a charge of $10 for each "free" transfer of funds from the Custody
Account of such Portfolio; and
(4) a service charge for each holding of securities or other assets of
such Portfolio that are sold by way of private placement or in such other manner
as to require services by Custodian which
-36-
<PAGE>
in its reasonable judgment are materially in excess of those ordinarily required
for the holding of publicly traded securities in the United States.
-37-
<PAGE>
SPECIAL CUSTODY ACCOUNT AGREEMENT
(Short Sales)
AGREEMENT (the "Agreement") dated as of ________, 1998, by and among
Custodial Trust Company, in its capacity as custodian hereunder (the "Bank"),
Barr Rosenberg Variable Insurance Trust, on behalf of its Barr Rosenberg VIT
Market Neutral Fund (the "Customer"), and Bear, Stearns Securities
Corp. (the "Broker").
WHEREAS, Broker is a securities broker-dealer and is a
member of several national securities exchanges; and
WHEREAS, Customer desires from time to time to execute various
securities transactions, including short sales (which are permitted by
Customer's investment policies), and in connection therewith has executed
Broker's Customer Agreement which provides for margin transactions; and
WHEREAS, to facilitate Customer's transactions in short sales of
securities, Customer and Broker desire to establish procedures for the
compliance by Broker with the provisions of Regulation T of the Board of
Governors of the Federal Reserve System and other applicable requirements (the
"Margin Rules"); and
WHEREAS, to assist Broker and Customer in complying with the Margin
Rules, Bank is prepared to act as custodian to hold Collateral as defined below.
NOW THEREFORE, be it agreed as follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
(a) "Adequate Margin" in respect of short sales shall mean such
collateral as is adequate in Broker's reasonable judgment
under the Margin Rules and the internal policies of Broker,
the latter of which shall be subject to modification by Broker
in its sole and absolute discretion upon prior notice given
orally to Customer and Bank.
(b) "Advice from Broker" or "Advice" means a written
notice sent to Customer and Bank or transmitted by a
facsimile sending device, except that Advice for
initial or additional Collateral or with respect to
Broker's ability to effect a short sale for the
Customer may be given orally. With respect to any
short sale or Closing Transaction, the Advice from
Broker shall mean a standard confirmation in use by
Broker and sent or transmitted to Customer and Bank.
With respect to substitutions or releases of
Collateral, Advice from Broker means a written notice
signed by
<PAGE>
Broker and sent or transmitted to Customer and Bank. An
authorized agent of Broker will certify to Customer and Bank
the names and signatures of those employees who are
authorized to sign Advice from Broker, which certification
may be amended from time to time. When used herein, the term
"Advise" means the act of sending an Advice from Broker.
(c) "Closing Transaction" is a transaction in which Customer
purchases securities which have been sold short.
(d) "Collateral" shall mean cash or U.S. Government securities or
other marginable securities acceptable to Broker.
(e) "Insolvency" means that (A) an order, judgment or
decree has been entered under the bankruptcy,
reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or
similar law (herein called the "Bankruptcy law") of
any competent jurisdiction adjudicating the
Customer insolvent; or (B) the Customer has
petitioned or applied to any tribunal for, or
consented to the appointment of, or taking
possession by, a trustee, receiver, liquidator or
similar official, of the Customer, or commenced a
voluntary case under the Bankruptcy Law of the United
States or any proceedings relating to the Customer
under the Bankruptcy Law of any other competent
jurisdiction, whether now or hereinafter in effect;
or (C) any such petition or application has been
filed, or any such proceedings commenced, against
the Customer and the Customer by any act has
indicated its approval thereof, consent thereto or
acquiescence therein, or an order for relief has been
entered in an involuntary case under the Bankruptcy
Law of the United States, as now or hereinafter
constituted, or an order, judgment or decree has
been entered appointing any such trustee, receiver,
liquidator or similar official, or approving the
petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect
for more than 60 days.
(f) "Instructions from Customer" or "Instructions" means
a request, direction or certification in writing
signed by Customer and delivered to Bank and Broker
or transmitted by a facsimile sending device. An
officer of Customer will certify to Bank and Broker
the names and signatures of those persons authorized
to sign the instructions, which certification may be
amended from time to time. When used herein, the
term "Instruct" shall mean the act of sending an
Instruction from Customer.
(g) "Receipt of Payment" means receipt by Bank, of (1) a certified
or official bank check or wire transfer to Bank; (2) a written
or telegraphic advice from a registered clearing agency that
funds have been or will be credited to the account of Bank; or
(3) a transfer of funds from any of Broker's accounts
maintained at Bank.
2
<PAGE>
(h) "Receipt of Securities" means receipt by Bank, of (1)
securities in proper form for transfer; or (2) a written or
telegraphic advice from a registered clearing agency that
securities have been credited to the account of Bank for the
Special Custody Account.
(i) "Special Custody Account" shall have the meaning assigned to
that term in Section 2 hereof.
2. SPECIAL CUSTODY ACCOUNT
(a) OPENING CUSTODY ACCOUNT. Bank shall open an account
on its books entitled "Special Custody Account for
Bear, Stearns Securities Corp. as Pledgee of Barr
Rosenberg Variable Insurance Trust, on behalf of its
Barr Rosenberg VIT Market Neutral Fund" (the "Special
Custody Account") and shall hold therein all
securities and similar property as shall be received
and accepted by it therein pursuant to this
Agreement. Customer agrees to instruct Bank in
Instructions from Customer as to cash and specific
securities which Bank is to identify on its books and
records as pledged to Broker as Collateral in the
Special Custody Account. Customer agrees that the
value of such cash and securities shall be at least
equal in value to what Broker shall initially and
from time to time Advise Customer in an Advice from
Broker is necessary to constitute Adequate Margin.
Such Collateral (i) will be held by Bank for Broker
as agent of Broker, (ii) may be released only in
accordance with the terms of this Agreement, and
(iii) except as required to be released hereunder to
Broker, shall not be made available to Broker or any
other person claiming through Broker, including the
creditors of the Broker. In the event Customer
wishes to add another series of Barr Rosenberg
Variable Insurance Trust to this Agreement, the
title of such account shall be appended to this
Agreement as a schedule.
(b) SECURITY INTEREST. Customer hereby grants a
continuing security interest to Broker in the
Collateral in the Special Custody Account. To
perfect Broker's security interest, Bank will hold
the Collateral in the Special Custody Account,
subject to the interest therein of Broker as the
pledgee and secured party thereof in accordance with
the terms of this Agreement. Such security interest
will terminate at such time as Collateral is
released as provided herein. Bank shall have no
responsibility for the validity or enforceability of
such security interest.
(c) CONFIRMATION. Bank will confirm in writing to Broker and
Customer all pledges, releases or substitutions of Collateral
and will supply Broker and Customer with a monthly statement
of Collateral and transactions in the Special Custody Account
for such month. Bank will also advise Broker upon request of
the kind and amount of Collateral pledged to Broker.
3
<PAGE>
(d) EXCESS COLLATERAL. Upon the request of Customer, Broker shall
Advise Bank and Customer of any excess of Collateral in the
Special Custody Account. Such excess shall at Customer's
request be transferred therefrom upon Advice from Broker.
Customer represents and warrants to Broker that securities
included at any time in the Collateral shall be in good
deliverable form (or bank shall have the unrestricted power to
put such securities into good deliverable form) in accordance
with the requirements of such exchanges as may be the primary
market or markets for such securities.
(e) ACCOUNTS AND RECORDS. Bank will maintain accounts and records
for the Collateral in the Special Custody Account as more
fully described in sub-paragraph 5(a) below. The Collateral
shall at all times remain the property of the Customer subject
only to the extent of the interest and rights therein
of Broker as the pledgee thereof.
3. ORIGINAL AND VARIATION MARGIN ON SHORT SALES
(a) SHORT SALES. From time to time, Customer may place orders with
Broker for the short sale of securities. Prior to the
acceptance of such orders Broker will Advise Customer of
Broker's ability to borrow such securities or other properties
and acceptance of short sale orders will be contingent upon
same.
(b) OPEN SHORT SALES BALANCE. Broker shall, based on the
closing market price on each business day, compute
the aggregate net credit or debit balance on
Customer's open short sales and advise Customer
and/or Customer's designated agent by 11:00 A.M. New
York time on the next business day (the
"Determination Day") of the amount of the net debit
or credit, as the case may be. If a net debit
balance exists on the Determination Day, Customer
will cause an amount equal to such net debit balance
to be paid to Broker by the close of business on the
Determination Day. If a net credit balance exists
on the Determination Day, Broker will pay such credit
balance to Customer by the close of business on the
Determination Day. As Customer's open short
positions are marked-to- market each business day,
payments will be made by or to Customer to reflect
changes (if any) in the credit or debit balances.
Broker will charge interest on debit balances, and
Broker will pay interest on credit balances.
Balances will be appropriately adjusted when short
sales are closed out.
4. PLACING ORDERS
It is understood and agreed that Customer, when placing with Broker any
order to sell short for Customer's account, will designate the order as such and
hereby authorizes Broker to mark such order as being "short", and when placing
with Broker any order to sell long for Customer's account, will designate the
order as such and hereby authorizes Broker to mark such order as being "long".
4
<PAGE>
Any sell order which Customer shall designate as being for long account as above
provided is for securities then owned by Customer and, if such securities are
not then deliverable by Broker from any account of Customer, the placing of such
order shall constitute a representation by Customer that it is impracticable for
Customer then to deliver such securities to Broker but that Customer shall
deliver them by the settlement date or as soon as possible thereafter.
5. RIGHTS AND DUTIES OF THE BANK
(a) GENERALLY. The Bank shall receive and hold in the
Special Custody Account, as custodian upon the terms
of this Agreement, all Collateral deposited and
maintained pursuant to the terms of this Agreement
and, except as provided in sub-paragraph 5(b) below,
shall receive and hold all monies and other property
paid, distributed or substituted in respect of such
Collateral or realized on the sale or other
disposition of such Collateral; provided, however,
that the Bank shall have no duty to require any
money or securities to be delivered to it or to
determine that the amount and form of assets
delivered to it comply with any applicable
requirements. Collateral held in the Special Custody
Account shall be released only in accordance with this
Agreement or as required by applicable law. The Customer
warrants its authority to deposit in such account any money,
securities and other property received by the Bank. The Bank
may hold the securities in the Special Custody Account in
bearer, nominee, book entry, or other form and in a depository
or clearing corporation, with or without indicating that the
securities are held hereunder; provided, however, that all
securities held in the Special Custody Account shall be
identified on the Bank's records as subject to this Agreement
and shall be in a form that permits transfer without
additional authorization or consent of the Customer.
(b) DIVIDENDS AND INTEREST. Any interest, dividends or other
distributions paid with respect to the Collateral held in the
Special Custody Account shall be retained therein as
additional Collateral.
(c) REPORTS. The Bank shall provide Broker and Customer
with written confirmation of each transfer into and
out of the Special Custody Account, in each case as
promptly as practical, but in any event not later
than the next business day. The Bank also shall
render to the Broker and the Customer and/or
Customer's designated agent a monthly statement of
the Collateral held in the Special Custody Account.
In addition, the Bank will advise the Broker and the
Customer and/or Customer's designated agent, upon
request of the Broker or Customer, at any time of the
type and amount of Collateral held in the account;
provided, however, that the Bank shall have no
responsibility for making any determination as to
the value of such Collateral.
5
<PAGE>
(d) LIMITATION OF BANK'S LIABILITY. The Bank's duties
and responsibilities under this Agreement are as set
forth herein. The Bank shall act only upon receipt
of Advice from Broker regarding release or
substitution of Collateral. The Bank shall not be
liable or responsible for anything done, or omitted
to be done by it in good faith and in the absence of
negligence and may rely and shall be protected in
acting upon any notice, instruction or other
communication which it reasonably believes to be
genuine and authorized. As between Customer and the
Bank, the terms of the Custodian Agreement entered
into thereby shall apply with respect to the
responsibilities of the Bank and any losses or
liabilities of such parties arising out of matters
covered by this Agreement. As between the Bank and
Broker, Broker shall indemnify and hold the Bank
harmless with regard to any losses or liabilities of
the Bank (including counsel fees) imposed on or
incurred by the Bank arising out of any action or
omission of the Bank in accordance with any Advice,
notice or instruction of Broker under this
Agreement. In matters concerning or relating to
this Agreement, the Bank shall not be responsible for
compliance with any statute or regulation regarding
the establishment or maintenance of margin credit,
including but not limited to Regulations T or X of
the Board of Governors of the Federal Reserve System,
or with any rules or regulations of the Office of
the Controller of the Currency (or the Securities and
Exchange Commission). With respect to all securities, however
registered, it is understood that all voting rights and other
rights and powers shall be exercised exclusively by Customer.
Bank's only duty with respect thereto shall be to mail to
Customer any documents received, including proxy statements
and offering circulars, with any proxies for securities
registered in a nominee name executed by such nominee. The
Bank shall not be liable to any party for any acts or
omissions of the other parties to this Agreement.
(e) COMPENSATION. Bank shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing between Customer
and Bank.
6. DELIVERY OF COLLATERAL TO BROKER
In the event of any failure by Customer to timely comply with any
obligation on Customer's part to be performed or observed under this Agreement
or the Customer Agreement, including, but not limited to, the obligation to
maintain Adequate Margin, or in the event of Customer's Insolvency, Broker may
effect a Closing Transaction or buy-in of any securities of which Customer's
account may be short, provided that Broker shall first use reasonable efforts to
(i) give notice to Customer specifying such default (which notice may be by
telegraph, facsimile transmission or hand delivery) and (ii) hold a discussion
with Customer regarding such default and Broker's intended actions in response
thereto. Notwithstanding the foregoing, neither notice nor a discussion shall be
required in the event market conditions render same impracticable in the
reasonable discretion of Broker. In the event of any default
6
<PAGE>
as aforesaid, after making a reasonable attempt to give notice to and hold a
discussion with Customer (subject to market conditions as set forth above),
Broker shall also have the right to sell any and all Collateral in the Special
Custody Account and to give Advice to Bank to deliver such Collateral free of
payment to Broker, which Advice shall state that, pursuant to this Agreement,
the condition precedent to Broker's right to receive such Collateral free of
payment has occurred. The Bank will provide immediate telephone notice to
Customer of any receipt by Bank of Advice from Broker to deliver Collateral free
of payment, and shall promptly effect delivery of Collateral to Broker. Subject
to applicable requirements of the New York Uniform Commercial Code, such sale or
purchase may be made according to Broker's judgement and may be made at Broker's
discretion, on the principal exchange or other market for such securities, or in
the event such principal market is closed, in a manner commercially reasonable
for such securities.
7. LIMITATION OF BROKER LIABILITY
Broker shall not be liable for any losses, costs, damages, liabilities
or expenses suffered or incurred by Customer as a result of any transaction
executed hereunder, or any other action taken or not taken by Broker hereunder
for Customer's account at Customer's direction or otherwise, except to the
extent that such loss, cost, damage, liability or expense is the result of
Broker's own negligence, recklessness, willful misconduct or bad faith. With
respect to all securities in the Special Custody Account, it is understood that
all voting rights and other rights and powers shall be exercised exclusively by
Customer, and that Broker shall have no responsibilities in connection
therewith, whether pertaining to the delivery of proxy statements or offering
circulars or otherwise.
Notwithstanding the foregoing, no party to this Agreement shall be liable
for any losses caused directly or indirectly by any inability of such party to
perform occasioned by suspension of trading, wars, civil disturbances, strikes,
natural calamities, labor or material shortages, government restrictions, acts
or omissions of exchanges, specialists, markets, clearance organizations or
information providers, delays in mails, delays or inaccuracies in the
transmission of orders or information, governmental, exchange or self-regulatory
organization laws, rules or actions, or any other causes beyond such party's
control, or for any consequential, incidental, punitive, special or indirect
damages, economic loss or lost profits, even if such party has been advised of
the possibility of such damages or loss.
8. CUSTOMER REPRESENTATION
Customer represents and warrants that the Collateral will not be
subject to any other liens or encumbrances other than those granted to the Bank
under the Custodian Agreement.
9. TERMINATION
Any of the parties hereto may terminate this Agreement by 30 days'
notice in writing to the other parties hereto; provided, however, that the
status of any short sales, and of Collateral held at
7
<PAGE>
the time of such notice to margin such short sales shall not be affected by such
termination until the release of such Collateral pursuant to applicable law or
regulations or rules of any self regulatory organization to which the Broker is
subject. In the event of the release of Collateral, the Collateral shall be
transferred to Customer.
10. NOTICE
Written communications hereunder shall be telegraphed, sent by
facsimile transmission or hand delivered as required herein, when another method
of delivery is not specified, may be mailed first class postage prepaid, except
that written notice of termination shall be sent by certified mail, addressed:
(a) if to Bank, to:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
Attention: Vice President - Trust Operations
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
(b) if to Customer, to:
Barr Rosenberg Variable Insurance Trust
4 Orinda Way, Building E
Orinda, California 95463
Attention: Edward H. Lyman
Telephone: (510) 254-6464
Facsimile: (510) 253-0141
(c) if to Broker, to:
Bear, Stearns Securities Corp.
245 Park Avenue
New York, New York 10167
Attention: Michael Minikes, Treasurer
Telephone: 212-272-2089
Facsimile: 212-272-3099
8
<PAGE>
11. CONTROLLING LAW
The construction and enforcement of this Agreement shall be subject to
and governed by the laws of the State of New York.
12. LIMITATION OF LIABILITY
To the extent that the trustees of Barr Rosenberg Variable Insurance
Trust are regarded as entering into this Agreement, they do so only as trustees
thereof and not individually. The obligations under this Agreement of Barr
Rosenberg Variable Insurance Trust or Barr Rosenberg VIT Market Neutral Fund
shall not be binding upon any trustee, officer or employee of Barr Rosenberg
Variable Insurance Trust individually, or upon any holder of shares issued by
Barr Rosenberg Variable Insurance Trust individually, but shall be binding only
upon the assets and property of Barr Rosenberg VIT Market Neutral Fund. Such
trustees, officers, employees and holders, when acting in such capacities, shall
not be personally liable under this Agreement, and Broker and Bank shall look
solely to the assets and property of Barr Rosenberg VIT Market Neutral Fund for
the performance of this Agreement thereby and for the payment of any claim
against Barr Rosenberg VIT Market Neutral Fund pertaining to this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the day and year first above
written.
BARR ROSENBERG VARIABLE INSURANCE TRUST
ON BEHALF OF ITS
BARR ROSENBERG VIT MARKET NEUTRAL FUND
By:
---------------------------
Name:
Title:
CUSTODIAL TRUST COMPANY
By:
---------------------------
Name:
Title:
BEAR, STEARNS SECURITIES CORP.
By:
---------------------------
Name:
Title:
10
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT made this __ day of October, 1998, between BARR ROSENBERG
VARIABLE INSURANCE TRUST (the "Trust"), a Massachusetts business trust, and
BISYS FUND SERVICES OHIO, INC. ("BISYS"), an Ohio corporation.
WHEREAS, the Trust desires that BISYS perform certain services for each
series of the Trust (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. RETENTION OF BISYS.
The Trust hereby engages BISYS to act as the transfer agent for
the Funds to perform (i) the transfer agent services set forth in Schedule A
hereto (the "Initial Services"), (ii) such special services (the "Special
Services") incidental to the performance of such services as may be agreed to by
the parties from time to time (for such fees as the parties may agree as
aforesaid) and (iii) such additional services (collectively with the Initial
Services and the Special Services, the "Services"), as may be agreed to by the
parties from time to time and set forth in an amendment to said Schedule A (for
such fees as the parties may agree as aforesaid).
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the Trust
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Trust or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub- transfer Agent and shall not be relieved of any of its
responsibilities hereunder by the appointment of such Sub-transfer Agent.
2. FEES.
The Trust shall pay BISYS for the services to be provided by
BISYS under this Agreement in accordance with, and in the manner set forth in,
Schedule B hereto. Fees for any additional services to be provided by BISYS
pursuant to an amendment to Schedule A hereto shall be subject to mutual
agreement at the time such amendment to Schedule A is proposed.
<PAGE>
3. REIMBURSEMENT OF EXPENSES.
In addition to paying BISYS the fees described in Section 2
hereof, the Trust agrees to reimburse BISYS for BISYS' reasonable out-of-pocket
expenses in providing services hereunder, including without limitation, the
following:
(a) All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from the
Trust and in delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy
or other electronic transmission expenses incurred by
BISYS in communication with the Trust, the Trust's
investment adviser or custodian, dealers, shareholders or
others as required for BISYS to perform the services to be
provided hereunder;
(c) Costs of postage, couriers, stock computer paper,
statements, labels, envelopes, checks, reports, letters,
tax forms, proxies, notices or other form of printed
material which shall be required by BISYS for the
performance of the services to be provided hereunder;
(d) The cost of microfilm or microfiche of records or
other materials;
(e) All systems-related expenses associated with the provision
of special reports and services pursuant to Schedule C
attached hereto; and
(f) Any expenses BISYS shall reasonably incur at the written
direction of an officer of the Trust (other than an
officer of the Trust who is also an employee of BISYS)
thereunto duly authorized.
4. EFFECTIVE DATE.
This Agreement shall become effective as of the date first
written above (the "Effective Date").
5. TERM.
The initial term of this Agreement (the "Initial Term") shall be
for a period commencing on the date first written above and ending on October 1,
1999. Thereafter, it shall be renewed automatically for successive one-year
terms unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided, however, that, after the Initial Term, (i) the Trust may
terminate this Agreement at any time, without the payment of a penalty, by a
vote of a majority of the Trust's outstanding voting
2
<PAGE>
securities (as defined in the 1940 Act) or by vote of a majority of the Trustees
of the Trust on 60 days' written notice to BISYS and (ii) BISYS may terminate
this Agreement at any time, without penalty, on 60 days' written notice to the
Trust; and, provided further, that after such termination, for so long as BISYS,
with the written consent of the Trust, in fact continues to perform any one or
more of the services contemplated by this Agreement or any Schedule or exhibit
hereto, the provisions of this Agreement, including without limitation the
provisions dealing with indemnification, shall continue in full force and
effect. Fees and reasonable out-of-pocket expenses incurred by BISYS but unpaid
by the Trust upon termination of this Agreement shall be immediately due and
payable upon and notwithstanding such termination. BISYS shall be entitled to
collect from the Trust, in addition to the fees and disbursements provided by
Sections 2 and 3 hereof, the amount of all of BISYS' reasonable costs in
connection with BISYS' activities in effecting such termination, including
without limitation, the delivery to the Trust and/or its distributor or
investment adviser and/or other parties, of the Trust's property, records,
instruments and documents, or any copies thereof. To the extent that BISYS may
retain in its possession copies of any Trust documents or records subsequent to
such termination which copies had not been requested by or on behalf of the
Trust in connection with the termination process described above, BISYS will
provide the Trust with reasonable access to such copies; provided, that BISYS
shall be reimbursed for reasonable costs incurred in connection therewith.
In the event of a material breach of this Agreement by either
party, the non- breaching party shall notify the breaching party in writing of
such breach and, upon receipt of such notice, the breaching party shall have 45
days to remedy the breach. In the event the breach is not remedied within such
time period, the nonbreaching party may immediately terminate this Agreement.
If, for any reason, other than a material breach of this
Agreement or termination of this Agreement by the Trust after the Initial Term,
BISYS is replaced as transfer agent, or if a third party is added to perform all
or a part of the services provided by BISYS under this Agreement (excluding any
sub-transfer agent appointed by BISYS as provided in Section 1 hereof), then the
Trust shall make a one-time cash payment, as liquidated damages to, BISYS equal
to the balance due BISYS for the remainder of the term of this Agreement,
assuming for purposes of calculation of the payment that the asset level of the
Trust on the date BISYS is replaced, or a third party is added, will remain
constant for the balance of the contract term.
In the event the Trust is merged into another legal entity in
part or in whole pursuant to any form of business reorganization or is
liquidated in part or in whole prior to the expiration of the Initial Term of
this Agreement, the parties acknowledge and agree that (i) the liquidated
damages provision set forth above shall be applicable in those instances in
which BISYS is not retained to provide transfer agency services and (ii) for
purposes of calculating the payment amount representing liquidated damages, the
number of shareholder accounts within the Trust shall be the greater of: (i) the
number of shareholder accounts at the time the Trust's Board of Trustees
receives notification of an intention on the part of Fund management to effect
such a business reorganization or liquidation; (ii) the number of shareholder
accounts at the time the Trust's Board of Trustees
3
<PAGE>
formally approves such a business reorganization or liquidation; or (iii) the
number of shareholder accounts on the day prior to the first day during which
assets are transferred by the Trust pursuant to the plan of reorganization or
liquidation. The one-time cash payment referenced above shall be due and payable
on the day prior to the first day during which assets are transferred to the
surviving entity pursuant to the plan of reorganization or liquidation.
The parties further acknowledge and agree that, in the event the
BISYS ceases to be retained, as set forth above, (i) a determination of actual
damages incurred by the BISYS would be extremely difficult, and (ii) the
liquidated damages provision contained herein is intended to adequately
compensate BISYS for damages incurred and is not intended to constitute any form
of penalty.
6. UNCONTROLLABLE EVENTS.
BISYS assumes no responsibility hereunder, and shall not be
liable for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control.
7. LEGAL ADVICE.
BISYS shall notify the Trust at any time BISYS believes that it
is in need of the advice of counsel (other than counsel in the regular employ of
BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Trust, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing (which counsel shall be reasonably acceptable to the
Trust) and BISYS shall in no event be liable to the Trust or any Fund or any
shareholder or beneficial owner of the Trust for any action reasonably taken
pursuant to such advice.
8. INSTRUCTIONS.
Whenever BISYS is requested or authorized to take action
hereunder pursuant to instructions from a shareholder, or a properly authorized
agent of a shareholder ("shareholder's agent"), concerning an account in a Fund,
BISYS shall be entitled to rely upon any certificate, letter or other instrument
or communication, reasonably believed by BISYS to be genuine and to have been
properly made, signed or authorized by an officer or other authorized agent of
the Trust or by the shareholder or shareholder's agent, as the case may be, and
shall be entitled to receive as conclusive proof of any fact or matter required
to be ascertained by it hereunder a certificate signed by an officer of the
Trust or any other person authorized by the Trust's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Trust relating to the Funds
4
<PAGE>
to the extent that such services are described therein unless BISYS receives
written instructions to the contrary in a timely manner from the Trust.
9. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other reasonable expenses of every nature and
character arising out of or in any way relating to BISYS' actions taken or
nonactions with respect to the performance of services under this Agreement or
based, if applicable, upon reasonable reliance on information, records,
instructions or requests given or made to BISYS by a duly authorized
representative of the Trust or the investment adviser and on any records
provided by any fund accountant or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS, its employees,
agents, directors, officers and nominees in cases of their own bad faith,
willful misfeasance, negligence or reckless disregard by any or all of them of
BISYS' obligations and duties; and further provided that prior to confessing any
claim against it which may be the subject of this indemnification, BISYS shall
give the Trust written notice of and a reasonable opportunity to defend against
said claim in its own name or in the name of BISYS.
BISYS agrees to indemnify and hold harmless the Trust, its
employees, agents, Trustees, officers and nominees from and against any and all
actions, suits, demands and claims, whether groundless or otherwise, and from
and against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way relating to BISYS' or its employees', agents', directors',
officers' and nominees' bad faith, willful misfeasance, negligence or reckless
disregard by any or all of them of BISYS' obligations and duties with respect to
the performance of services under this Agreement; provided, that, prior to
confessing any claim against it which may be the subject of this
indemnification, the Trust shall give BISYS written notice of and a reasonable
opportunity to defend against said claim in its own name or in the name of the
Trust.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for
5
<PAGE>
indemnification against the indemnifying party, but failure to do so
in good faith shall not affect the rights hereunder.
The indemnifying party shall be entitled to participate at its
own expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the indemnifying party and satisfactory to the
other party, whose approval shall not be unreasonably withheld. In the event
that the indemnifying party elects to assume the defense of any suit and retain
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect to
assume the defense of a suit, it will reimburse the indemnified party for the
reasonable fees and expenses of any counsel retained by the other party.
10. RECORD RETENTION AND CONFIDENTIALITY.
BISYS shall keep and maintain on behalf of the Trust all books
and records which the Trust or BISYS is, or may be, required to keep and
maintain pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the Investment Company Act of
1940, as amended (the "1940 Act"), relating to the maintenance of books and
records in connection with the services to be provided hereunder. BISYS further
agrees that all such books and records shall be the property of the Trust and to
make such books and records available for inspection by the Trust or by the
Securities and Exchange Commission (the "Commission") at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Trust and its shareholders, except when requested to divulge
such information by duly-constituted authorities or court process, or requested
by a shareholder or shareholder's agent with respect to information concerning
an account as to which such shareholder has either a legal or beneficial
interest or when requested by the Trust, the shareholder, or shareholder's
agent, or the dealer of record as to such account.
11. REPORTS.
BISYS will furnish to the Trust and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
C.
12. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform
services required to be provided by BISYS under this Agreement are the property
of BISYS. All records and other data except such computer programs and
procedures are the exclusive property of the Trust and all such
6
<PAGE>
other records and data will be furnished to the Trust in appropriate form as
soon as practicable after termination of this Agreement for any reason.
13. RETURN OF RECORDS.
BISYS may at its option at any time, and shall promptly upon the
Trust's demand, turn over to the Trust and cease to retain BISYS' files, records
and documents created and maintained by BISYS pursuant to this Agreement which
are no longer needed by BISYS in the performance of its services or for its
legal protection. If not so turned over to the Trust, such documents and records
will be retained by BISYS for six years from the year of creation. At the end of
such six-year period, such records and documents will be turned over to the
Trust unless the Trust authorizes in writing the destruction of such records and
documents.
14. BANK ACCOUNTS.
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as are necessary
in order that BISYS may perform the services required to be performed hereunder.
To the extent that the performance of such services shall require BISYS directly
to disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Trust and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
15. REPRESENTATIONS OF THE TRUST.
The Trust certifies to BISYS that: (a) as of the close of
business on the Effective Date, each Fund which is in existence as of the
Effective Date has authorized unlimited shares, and (b) by virtue of its
Agreement and Declaration of Trust, as amended, shares of each Fund which are
redeemed by the Trust may be sold by the Trust from its treasury, and (c) this
Agreement has been duly authorized by the Trust and, when executed and delivered
by the Trust, will constitute a legal, valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties
and general principles of equity.
16. REPRESENTATIONS OF BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and
shall continue to be in, substantial compliance with all provisions of law,
including Section 17A(c) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), required in connection with the performance of its duties under
this Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Trust and BISYS' records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are
7
<PAGE>
adequate and that it will make such changes therein from time to time as are
required for the secure performance of its obligations hereunder.
17. INSURANCE.
BISYS shall notify the Trust should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Trust of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS, or will furnish to BISYS
within 90 days following the Effective Date, the following:
(a) Copies of the Agreement and Declaration of Trust of the
Trust and of any amendments thereto, certified by the
proper official of the state in which such Declaration has
been filed.
(b) Copies of the following documents:
1. The Trust's By-Laws and any amendments thereto.
2. Certified copies of resolutions of the Board of
Trustees covering the following matters:
A. Approval of this Agreement and authorization
of a specified officer of the Trust to
execute and deliver this Agreement and
authorization for specified officers of the
Trust to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer
Agent for the Trust on behalf of the Funds.
3. Any Fund Participation Agreement to which the Trust
is a party.
(c) A list of all officers of the Trust, together with
specimen signatures of those officers, who are authorized
to instruct BISYS in all matters.
(d) Two copies of the following (if such documents are
employed by the Trust):
8
<PAGE>
1. Prospectuses and Statement of Additional
Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest
of the Trust authorized, issued, and outstanding
as of the Effective Date of BISYS' appointment as
Transfer Agent (or as of the date on which BISYS'
services are commenced, whichever is the later
date) and as to receipt of full consideration by
the Trust for all shares outstanding, such
statement to be certified by the Treasurer of the
Trust.
19. INFORMATION FURNISHED BY BISYS.
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' By-Laws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the
following matters:
1. Approval of this Agreement, and authorization
of a specified officer of BISYS to execute and
deliver this Agreement;
2. Authorization of BISYS to act as Transfer Agent for
the Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed
with the Commission pursuant to Rule 17Ad-13 under the
Exchange Act.
20. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish BISYS written copies of any amendments
to, or changes in, any of the items referred to in Section 18 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the Prospectuses or Statement of
Additional Information of the Trust which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Trust
first obtains BISYS' approval of such amendments or changes.
9
<PAGE>
21. RELIANCE ON AMENDMENTS.
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Trust pursuant to Sections 18
and 20 of this Agreement and the Trust hereby agrees to indemnify and hold
harmless BISYS from and against any and all claims, demands, actions, suits,
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other reasonable expenses of every nature and character which may result
from actions or omissions on the part of BISYS in reasonable reliance upon such
amendments and/or changes. Although BISYS is authorized to rely on the
above-mentioned amendments to and changes in the documents and other items to be
provided pursuant to Sections 18 and 20 hereof, BISYS shall be under no duty to
comply with or take any action as a result of any of such amendments or changes
unless the Trust first obtains BISYS' written consent to and approval of such
amendments or changes.
22. COMPLIANCE WITH LAW.
Except for the obligations of BISYS set forth in Section 10
hereof, the Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the 1940
Act has been declared or becomes effective.
23. NOTICES.
Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice at the following address: if to the Trust, to it at Rosenberg
Institutional Equity Management, 4 Orinda Way, Orinda, California 94563, Attn:
Edward H. Lyman, Esq., with a copy to J.B. Kittredge, Esq., Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624; if to BISYS, to it at
3435 Stelzer Road, Columbus, Ohio 43219, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
24. HEADINGS.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
10
<PAGE>
25. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
26. GOVERNING LAW AND MATTERS RELATING TO THE TRUST AS A
MASSACHUSETTS BUSINESS TRUST.
This Agreement shall be governed by and its provisions shall be
construed in accordance with the laws of the State of Ohio. It is expressly
agreed that the obligations of the Trust hereunder shall not be binding upon any
of the Trustees, shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the property of the Trust. The execution
and delivery of this Agreement have been authorized by the Trustees, and this
Agreement has been signed and delivered by an authorized officer of the Trust,
acting as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the property of the Trust as provided in the Trust's Amended and
Restated Agreement and Declaration of Trust, which is on file with the Secretary
of The Commonwealth of Massachusetts.
27. CONFIDENTIAL INFORMATION.
Each party acknowledges that it may acquire knowledge and
information relating to the other party and its affiliates which is not
generally known by others including, but not limited to, information pertaining
to business plans, prior, present or potential shareholders, employees,
customers and/or suppliers, and that all such knowledge and information acquired
or developed is and shall be confidential and proprietary information (all such
confidential and proprietary information is herein collectively referred to as
the "Confidential Information"). Each party agrees to hold the Confidential
Information in strict confidence, to refrain from directly or indirectly
disclosing it to others or using it in any way except for purposes of performing
services hereunder, and to prevent any unauthorized person access to it either
before or after termination of this Agreement, without the prior written consent
of the other party. Both parties further agree to take all action reasonable and
necessary to protect the confidentiality of the Confidential Information. The
parties shall use their best efforts to have their officers, partners, employees
and agents agree to the terms of this Section. The obligations of the parties
contained in this section shall survive termination of this Agreement. Neither
party's confidentiality obligations under this provision shall apply to such
information that (i) was in the public domain or available to a third party
without restrictions at or prior to the time such information was made known to
such party, (ii) had been independently known to such party at the time of
disclosure from persons who were not subject to
11
<PAGE>
similar confidentiality obligations, or (iii) is required to be disclosed by law
(except that each party will use best efforts to give the other party written
notice prior to any such disclosure).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BARR ROSENBERG VARIABLE
INSURANCE TRUST
By:
--------------------------------
Title:
-----------------------------
BISYS FUND SERVICES OHIO, INC.
By:
--------------------------------
Title:
-----------------------------
12
<PAGE>
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BARR ROSENBERG VARIABLE INSURANCE TRUST
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENCY SERVICES
1. SHAREHOLDER TRANSACTIONS
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
2. Shareholder Information Services
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
d. Provide toll-free lines for direct shareholder use, plus
customer liaison staff with on-line inquiry capacity.
A-1
<PAGE>
3. COMPLIANCE REPORTING
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in
which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and capital
gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. DEALER/LOAD PROCESSING (IF APPLICABLE)
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
c. Calculate Fund Reimbursement Fees, fees due under 12b-1 plans
for distribution and marketing expenses and any shareholder
servicing fees.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. SHAREHOLDER ACCOUNT MAINTENANCE
a. Maintain all shareholder records for each account in
the Trust.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
A-2
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BARR ROSENBERG VARIABLE INSURANCE TRUST
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENT FEES
ANNUAL FEES
BISYS shall be entitled to receive an annual account maintenance fee of
$15.00 per shareholder account which is in existence at any time during the
month for which payment is made, such fee to be paid in equal monthly
installments. BISYS shall be entitled to receive the account maintenance fee on
all shareholder accounts maintained in its records during the year, including
those shareholder accounts which have a zero balance during any portion of the
year. The annual account maintenance fee set forth above shall be subject to a
minimum annual fee of $12,000 per Fund.
ADDITIONAL SERVICES:
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts are subject to additional fees which will
be quoted upon request. Programming costs or database management fees for
special reports or specialized processing will be quoted upon request.
OUT-OF-POCKET EXPENSES:
BISYS shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses including, but not limited to, the expenses set forth in
Section 3 of the Transfer Agency Agreement to which this Schedule B is attached.
B-1
<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BARR ROSENBERG VARIABLE INSURANCE TRUST
AND
BISYS FUND SERVICES OHIO, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
C-1
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this ___ day of October, 1998, by and
between BARR ROSENBERG VARIABLE INSURANCE TRUST, a Massachusetts business trust
(the "Trust"), and BISYS FUND SERVICES OHIO, INC. (the "Administrator"), an Ohio
corporation.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), that is authorized to issue series of shares of beneficial interest
("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby engages the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such engagement and agrees to
perform the duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE SERVICES. The Administrator shall perform or
supervise the performance by others of administrative services in connection
with the operations of the Portfolios, and, on behalf of the Trust, will
investigate, assist in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Portfolios' operations. The Administrator
shall provide the Trustees of the Trust with such reports regarding investment
performance as they may reasonably request but shall have no responsibility for
supervising the performance by any investment adviser or sub-adviser of its
responsibilities.
The Administrator shall provide the Trust with regulatory reporting,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and Trustees
of the Trust) for handling the affairs of the Portfolios and such other services
as the Administrator shall, from time to time, determine to be necessary to
perform its obligations under this Agreement. In addition, at the request of the
Board of Trustees,
<PAGE>
the Administrator shall make reports to the Trust's Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator
shall:
(a) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Trust's yields, total return, expense ratios, portfolio
turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements
and proxy materials;
(c) prepare such reports, applications and documents
(including reports regarding the sale and redemption
of Shares as may be required in order to comply with
Federal and state securities law) as may be necessary
or desirable to register the Trust's Shares with
state securities authorities, monitor the sale of
Trust Shares for compliance with state securities
laws, and file with the appropriate state securities
authorities the registration statements and reports
for the Trust and the Trust's Shares and all
amendments thereto, as may be necessary or convenient
to register and keep effective the Trust and the
Trust's Shares with state securities authorities to
enable the Trust to make a continuous offering of its
Shares;
(d) develop and prepare, with the assistance of the
Trust's investment adviser, communications to Shareholders,
including the annual report to Shareholders,
coordinate the mailing of prospectuses, notices, proxy
statements, proxies and other reports to Trust
Shareholders, and supervise and facilitate the proxy
solicitation process for all shareholder meetings,
including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among
others, the Trust's investment adviser, distributor,
custodian, transfer agent and fund accountant;
(f) supervise the Trust's transfer agent with respect to
the payment of dividends and other distributions to
Shareholders;
(g) calculate performance data of the Trust and its Portfolios for
dissemination to information services covering the investment
company industry;
(h) coordinate and supervise the preparation and filing of
the Trust's tax returns;
(i) examine and review the operations and performance of
the various organizations providing services to the
Trust or any Portfolio of the Trust, including,
without limitation, the Trust's investment adviser,
distributor, custodian, fund accountant, transfer
agent, outside legal counsel and independent public
accountants, and at the
2
<PAGE>
request of the Board of Trustees, report to the Board on the
performance of such organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to
Shareholders;
(k) assist with the design, development, and operation of the
Trust Portfolios, including new classes, investment
objectives, policies and structure;
(l) provide individuals reasonably acceptable to the Trust's Board
of Trustees to serve as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters
concerning the Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(d)(7) under the 1940 Act as such bonds and policies are
approved by the Trust's Board of Trustees;
(o) monitor and advise the Trust and its Portfolios with respect
to (i) their regulated investment company status under the
Internal Revenue Code of 1986, as amended (the "Code") and
(ii) compliance with the requirements of Section 817(h) of the
Code;
(p) perform all administrative services and functions of
the Trust and each Portfolio to the extent
administrative services and functions are not provided
to the Trust or such Portfolio pursuant to the
Trust's or such Portfolio's investment advisory
agreement, distribution agreement, custodian
agreement, transfer agent agreement and fund
accounting agreement;
(q) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Trust and the Administrator shall determine desirable;
(r) prepare and file with the SEC the semi-annual report for the
Trust on Form N-SAR and all required notices pursuant to Rule
24f-2; and
(s) furnish information pursuant to any Fund Participation
Agreement to which the Trust is a party.
The Administrator shall perform such other services for the Trust that
are mutually agreed
3
<PAGE>
upon by the parties from time to time. Such services may include performing
internal audit examinations; mailing the annual reports of the Portfolios;
preparing an annual list of Shareholders; and mailing notices of Shareholders'
meetings, proxies and proxy statements, for all of which the Trust will pay the
Administrator's out-of-pocket expenses.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide at
its own expense the items which it is obligated to provide under this Agreement,
and shall pay all compensation, if any, of officers of the Trust as well as all
Trustees of the Trust who are affiliated persons of the Administrator or any
affiliated corporation of the Administrator; provided, however, that unless
otherwise specifically provided, the Administrator shall not be obligated to pay
the compensation of any employee of the Trust retained by the Trustees of the
Trust to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Directors who are not
affiliated persons of the Administrator or the investment adviser to the Trust
or any affiliated corporation of the Administrator or the investment adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly.
If this Agreement becomes effective subsequent to the first
day of a month or termination of this Agreement occurs before the last day of a
month, the Administrator's compensation for that part of the month in which this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Payment of the Administrator's
compensation for the preceding month shall be made promptly.
4
<PAGE>
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
directors, officers, employees and other agents of the Administrator as well as
the Administrator itself.) Further, notwithstanding its agreement hereunder to
conduct reviews of each Portfolio's compliance with the requirements of
Subchapter M and Section 817(h) of the Code, the Administrator shall not bear
any responsibility for any Portfolio's failure to comply with such requirements.
So long as the Administrator acts in good faith and with due
diligence and without negligence or reckless disregard of its obligations and
duties hereunder, the Trust assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any
and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of the
administration services described herein or any other service rendered to the
Trust hereunder. The Administrator agrees to indemnify and hold harmless the
Trust, its employees, agents, Trustees, officers and nominees from and
against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, payments, reasonable counsel fees and disbursements
and other expenses of every nature and character (including reasonable
investigation expenses) arising directly or indirectly out of or in any way
relating to the Administrator's bad faith, willful misfeasance, negligence or
reckless disregard by it of its obligations and duties with respect to the
performance of services under this Agreement. The indemnity and defense
provisions set forth herein shall indefinitely survive the termination of
this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party, but failure to do so
in good faith shall not affect the rights hereunder.
5
<PAGE>
The indemnifying party shall be entitled to participate at its own
expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the indemnifying party and satisfactory to the
other party, whose approval shall not be unreasonably withheld. In the event
that the indemnifying party elects to assume the defense of any suit and
retain counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect
to assume the defense of a suit, it will reimburse the indemnified party for
the reasonable fees and expenses of any counsel retained by the other party.
The Administrator may apply to the Trust at any time for instructions
and may consult counsel for the Trust or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instructions or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and shareholders of the Trust are or may be or become interested in the
Administrator, as partners, officers and employees or otherwise and that
partners, officers and employees of the Administrator and its counsel are or may
be or become similarly interested in the Trust, and that the Administrator may
be or become interested in the Trust as a shareholder or otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense and with the written consent of the Trust,
subcontract with any entity or person concerning the provision of the services
contemplated hereunder. The Administrator shall not, however, be relieved of any
of its obligations under this Agreement by the appointment of such subcontractor
and provided further, that the Administrator shall be responsible, to the extent
provided in Article 5 hereof, for all acts of such subcontractor as if such acts
were its own. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
6
<PAGE>
ARTICLE 9. AMENDMENTS. This Agreement may be amended if such amendment
is specifically approved (i) by the vote of a majority of the Trustees of the
Trust, and (ii) by the vote of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons of the Trust.
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: if to the Administrator, to it at 3435
Stelzer Road, Columbus, Ohio 43219; if to the Trust, to it at Rosenberg
Institutional Equity Management, 4 Orinda Way, Orinda, California 94563, Attn:
Edward H. Lyman, Esq., with a copy to J.B. Kittredge, Esq., Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624, or at such other address
as such party may from time to time specify in writing to the other party
pursuant to this Section.
ARTICLE 13. GOVERNING LAW. This Agreement shall be construed in
accordance with the substantive laws of the State of Ohio and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Ohio, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
7
<PAGE>
ARTICLE 15. CONFIDENTIAL INFORMATION. Each party acknowledges that it
may acquire knowledge and information relating to the other party and its
affiliates which is not generally known by others including, but not limited to,
information pertaining to business plans, prior, present or potential
shareholders, employees, customers and/or suppliers, and that all such knowledge
and information acquired or developed is and shall be confidential and
proprietary information (all such confidential and proprietary information is
herein collectively referred to as the "Confidential Information"). Each party
agrees to hold the Confidential Information in strict confidence, to refrain
from directly or indirectly disclosing it to others or using it in any way
except for purposes of performing services hereunder, and to prevent any
unauthorized person access to it either before or after termination of this
Agreement, without the prior written consent of the other party. Both parties
further agree to take all action reasonable and necessary to protect the
confidentiality of the Confidential Information. The parties shall use their
best efforts to have their officers, partners, employees and agents agree to the
terms of this Section. The obligations of the parties contained in this section
shall survive termination of this Agreement. Neither party's confidentiality
obligations under this provision shall apply to such information that (i) was in
the public domain or available to a third party without restrictions at or prior
to the time such information was made known to such party, (ii) had been
independently known to such party at the time of disclosure from persons who
were not subject to similar confidentiality obligations, or (iii) is required to
be disclosed by law (except that each party will use best efforts to give the
other party written notice prior to any such disclosure).
ARTICLE 16. MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS BUSINESS
TRUST. It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the property of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Trust, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the property of the Trust as provided in the
Trust's Amended and Restated Agreement and Declaration of Trust, which is on
file with the Secretary of The Commonwealth of Massachusetts.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BARR ROSENBERG VARIABLE INSURANCE TRUST
By:
-----------------------------------
Title:
--------------------------------
BISYS FUND SERVICES OHIO, INC.
By:
-----------------------------------
Title:
--------------------------------
9
<PAGE>
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1998
BETWEEN
BARR ROSENBERG VARIABLE INSURANCE TRUST
AND
BISYS FUND SERVICES OHIO, INC.
Portfolios: This Agreement shall apply to all Portfolios of
Barr Rosenberg Variable Insurance Trust, either or
hereafter created (collectively, the "Portfolios").
The current portfolios of the Trust are set forth
below:
Barr Rosenberg VIT Market Neutral Fund
Fees: Pursuant to Article 4, in consideration of
services rendered and expenses assumed pursuant to
this Agreement, the Trust will pay the Administrator
on the first business day of each month, or at such
time(s) as the Administrator shall request and the
parties hereto shall agree, a fee computed daily at
the annual rate of:
Fifteen one-hundredths of one percent (0.15%) of the
Trust's average daily net assets
The fee for the period from the day of the month this
Agreement is entered into until the end of that month shall be
prorated according to the proportion which such period bears
to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion which
such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Trust's Amended and Restated Agreement and Declaration of
Trust or in the Prospectus or Statement of Additional
Information respecting that Portfolio as from time to time in
effect for the computation of the value of such net assets in
connection with the determination of the liquidating value of
the shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder
shall be applied to each Portfolio as a whole, and not to
separate classes of shares within the Portfolios.
A-1
<PAGE>
Term: The initial term of this Agreement (the "Initial
Term") shall be for a period commencing on the date
first written above and ending on October 1, 1999.
This Agreement shall be renewed automatically for
successive periods of one year after the Initial
Term, unless written notice of nonrenewal is provided
by either party not less than 60 days prior to the
end of the then-current term. After the Initial
Term, (i) the Trust may terminate this Agreement at
any time, without the payment of any penalty, by a
vote of a majority of the Trust's outstanding voting
securities (as defined in the 1940 Act) or by a vote
of a majority of the Trustees of the Trust on 60
days' written notice to the Administrator and (ii) the
Administrator may terminate this Agreement at any
time, without penalty, on 60 days' written notice to
the Trust. In the event of a material breach of this
Agreement by either party, the non-breaching party
shall notify the breaching party in writing of such
breach and upon receipt of such notice, the breaching
party shall have 45 days to remedy the breach. In the
event the breach is not remedied within such time
period, the nonbreaching party may immediately
terminate this Agreement.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Trust, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with
indemnification, shall continue in full force and effect.
Compensation due the Administrator and unpaid by the Trust
upon such termination shall be immediately due and payable
upon and notwithstanding such termination. The Administrator
shall be entitled to collect from the Trust, in addition to
the compensation described in this Schedule A, the amount of
all of the Administrator's reasonable cash disbursements for
services in connection with the Administrator's activities in
effecting such termination, including without limitation, the
delivery to the Trust and/or its designees of the Trust's
property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, for a reasonable fee,
the Administrator will provide the Trust with reasonable
access to any Trust documents or records remaining in its
possession.
If, for any reason other than a material breach of this
Agreement or termination of this Agreement by the Trust after
the Initial Term, the Administrator is replaced as fund
manager and administrator, or if a third party is added to
perform all or a part of the services provided by the
Administrator under this Agreement (excluding any
sub-administrator appointed by the Administrator as provided
in Article 8 hereof), then the Trust shall make a one-time
cash payment, as liquidated damages, to the Administrator
equal to the balance due the Administrator for the remainder
of the term of this Agreement, assuming for purposes of
calculation of the payment that the asset level of the Trust
on the date the Administrator is replaced, or a third party is
added, will remain constant for the balance of the contract
term.
A-2
<PAGE>
In the event the Trust is merged into another legal entity in
part or in whole pursuant to any form of business organization
or is liquidated in part or in whole prior to the expiration
of the Initial Term of this Agreement, the parties acknowledge
and agree that (i) the liquidated damages provision set forth
above shall be applicable in those instances in which the
Administrator is not retained to provide administration
services and (ii) for purposes of calculating the payment
amount representing liquidated damages, the appropriate asset
level of the Trust shall be the greater of: (i) the asset
level calculated for the Trust at the time the Trust's Board
of Trustees receives notification of an intention on the part
of Fund management to effect such a business reorganization or
liquidation; (ii) the asset level calculated for the Trust at
the time the Trust's Board of Trustees formally approves such
a business reorganization or liquidation; or (iii) the asset
level calculated for the Trust on the day prior to the first
day during which assets are transferred by the Trust pursuant
to the plan of reorganization or liquidation. The one-time
cash payment referenced above shall be due and payable on the
day prior to the first day during which assets are transferred
pursuant to the plan of reorganization or liquidation.
The parties further acknowledge and agree that, in the event
the Administrator ceases to be retained, as set forth above,
(i) a determination of actual damages incurred by the
Administrator would be extremely difficult, and (ii) the
liquidated damages provision contained herein is intended to
adequately compensate the Administrator for damages incurred
and is not intended to constitute any form of penalty.
A-3
<PAGE>
FUND ACCOUNTING AGREEMENT
AGREEMENT made this __ day of October, 1998, between BARR ROSENBERG
VARIABLE INSURANCE TRUST (the "Trust"), a Massachusetts business trust, and
BISYS FUND SERVICES OHIO, INC. (the "Fund Accountant"), a corporation organized
under the laws of the State of Ohio.
WHEREAS, the Trust desires that the Fund Accountant perform certain
fund accounting services for each investment portfolio of the Trust, all as now
or hereafter may be established from time to time (individually referred to
herein as a "Fund" and collectively as the "Funds"); and
WHEREAS, the Fund Accountant is willing to perform such services on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as the Fund Accountant.
(a) MAINTENANCE OF BOOKS AND RECORDS. The Fund Accountant
will keep and maintain the following books and
records of each Fund pursuant to Rule 31a-1 under the
Investment Company Act of 1940 (the "Rule"):
(i) Journals containing an itemized daily record
in detail of all purchases and sales of
securities, all receipts and disbursements
of cash and all other debits and credits, as
required by subsection (b)(i) of the Rule;
(ii) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income
and expense accounts, including interest
accrued and interest received, as required
by subsection (b)(2)(I) of the Rule;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule;
and
(iv) A monthly trial balance of all ledger
accounts (except shareholder accounts) as
required by subsection (b)(8) of the Rule.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition
to the maintenance of the books and records specified
above, the Fund Accountant shall perform the
following accounting services daily for each Fund:
<PAGE>
(i) Calculate the net asset value per share
utilizing prices obtained from the sources
described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent
pricing services, or if such quotes are
unavailable, then obtain such prices from
each Fund's investment adviser or its
designee, as approved by the Trust's Board
of Trustees;
(iii) Verify and reconcile with the Fund's
custodian all daily trade activity;
(iv) Compute, as appropriate, each Fund's net
income and capital gains, dividend payables,
dividend factors, 7-day yields, 7-day
effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation
and dividend factor (if any) for each Fund
prior to release to shareholders, check and
confirm the net asset values and dividend
factors for reasonableness and deviations,
and distribute net asset values and yields
to NASDAQ;
(vi) Report to the Trust the daily market pricing
of securities in any money market Funds,
with the comparison to the amortized cost
basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable
net asset value Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than
face value, if requested by the Trust;
(ix) Update fund accounting system to reflect
rate changes, as received from a Fund's
investment adviser, on variable interest
rate instruments;
(x) Post Fund transactions to appropriate
categories;
(xi) Accrue expenses of each Fund according to
instructions received from the Trust's
Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2)
Fund share transactions and (3) income and
expense accounts;
<PAGE>
(xiii) Provide accounting reports in connection
with the Trust's regular annual audit and
other audits and examinations by regulatory
agencies; and
(xiv) Provide such periodic reports as the parties
shall agree upon, as set forth in a separate
schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) The Fund Accountant may provide additional
special reports upon the request of the
Trust or a Fund's investment adviser, which
may result in an additional charge, the
amount of which shall be agreed upon between
the parties.
(ii) The Fund Accountant may provide such other
similar services with respect to a Fund as
may be reasonably requested by the Trust,
which may result in an additional charge,
the amount of which shall be agreed upon
between the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. The Fund Accountant
shall also perform the following additional
accounting services for each Fund:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements
described below, upon request of the Trust.
The download will include the following
items:
Schedule of Investments,
Cash Statement,
Schedule of Capital Gains and Losses,
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the
following:
(A) federal and state income tax returns
and federal excise tax returns;
(B) the Trust's semi-annual reports with
the Securities and Exchange
Commission ("SEC") on Form N-SAR;
-3-
<PAGE>
(C) the Trust's annual, semi-annual and
quarterly (if any) shareholder
reports;
(D) registration statements on Form N-1A
and other filings relating to the
registration of Shares;
(E) the Administrator's monitoring of
the Trust's status as a regulated
investment company under Subchapter
M of the Internal Revenue Code, as
amended;
(F) annual audit by the Trust's
auditors; and
(G) examinations performed by the SEC.
2. SUBCONTRACTING.
The Fund Accountant may, at its expense and with the written
consent of the Trust, subcontract with any entity or person concerning the
provision of the services contemplated hereunder; provided, however, that the
Fund Accountant shall not be relieved of any of its obligations under this
Agreement by the appointment of such subcontractor and provided further, that
the Fund Accountant shall be responsible, to the extent provided in Section 7
hereof, for all acts of such subcontractor as if such acts were its own.
3. COMPENSATION.
The Trust shall pay the Fund Accountant for the services to be
provided by the Fund Accountant under this Agreement in accordance with, and in
the manner set forth in, Schedule A hereto, as such Schedule may be amended from
time to time.
4. REIMBURSEMENT OF EXPENSES.
In addition to paying the Fund Accountant the fees described
in Section 3 hereof, the Trust agrees to reimburse the Fund Accountant for the
Fund Accountant's reasonable out-of-pocket expenses in providing services
hereunder, including, but not limited to, the following:
(a) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by the Fund
Accountant in communication with the Trust, the Trust's
investment advisor or custodian, dealers or others as required
for the Fund Accountant to perform the services to be provided
hereunder;
(b) The cost of obtaining security market quotes pursuant to
Section l(b)(ii) above;
(c) All systems-related expenses associated with the provision of
special reports and
-4-
<PAGE>
services pursuant to Section 1(c) above;
(d) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust and in
delivering all materials to shareholders;
(e) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other form of printed material which shall
be required by BISYS for the performance of the services to be
provided hereunder;
(f) The cost of microfilm or microfiche of records or other
materials; and
(g) Any expenses the Fund Accountant shall incur at the written
direction of an officer of the Trust (other than an officer of
the Trust who is also an employee of BISYS) thereunto duly
authorized.
5. EFFECTIVE DATE.
This Agreement shall become effective with respect to a Fund
as of the date first written above.
6. TERM.
The initial term of this Agreement (the "Initial Term") shall
be for a period commencing on the date first written above and ending on October
1, 1999. This Agreement shall be renewed automatically for successive one-year
terms unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided, however, that, after the Initial Term, (i) the Trust may
terminate this Agreement at any time, without the payment of any penalty, by a
vote of a majority of the Trust's outstanding voting securities (as defined in
the 1940 Act) or by vote of a majority of the Trustees of the Trust on 60 days'
written notice to the Fund Accountant and (ii) the Fund Accountant may terminate
this Agreement at any time, without penalty, on 60 days' written notice to the
Trust; and, provided, further, that after this Agreement is terminated, for so
long as the Fund Accountant, with the written consent of the Trust, in fact
continues to perform any one or more of the services contemplated by this
Agreement or any schedule or exhibit hereto, the provisions of this Agreement,
including without limitation the provisions dealing with indemnification, shall
continue in full force and effect. Compensation due the Fund Accountant and
unpaid by the Trust upon such termination shall be immediately due and payable
upon and notwithstanding such termination. The Fund Accountant shall be entitled
to collect from the Trust, in addition to the compensation described under
Section 3 hereof, the amount of all of the Fund Accountant's reasonable cash
disbursements for services in connection with the Fund Accountant's activities
in effecting such termination, including without limitation, the delivery to the
Trust and/or its designees of the Trust's property, records, instruments and
documents, or any copies thereof. Subsequent to such termination, for a
-5-
<PAGE>
reasonable fee, the Fund Accountant will provide the Trust with reasonable
access to any Trust documents or records remaining in its possession.
In the event of a material breach of this Agreement by either
party, the non-breaching party shall notify the breaching party in writing of
such breach and, upon receipt of such notice, the breaching party shall have 45
days to remedy the breach. In the event the breach is not remedied within such
time period, the nonbreaching party may immediately terminate this Agreement.
If, for any reason other than a material breach of this
Agreement or termination of this Agreement by the Trust after the Initial Term,
the Fund Accountant is replaced as the Fund Accountant, or if a third party is
added to perform all or a part of the services provided by the Fund Accountant
under this Agreement (excluding any sub-accountant appointed by the Fund
Accountant as provided in Section 2 hereof), then the Trust shall make a
one-time cash payment, as liquidated damages, to the Fund Accountant equal to
the balance due the Fund Accountant for the remainder of the term of this
Agreement, assuming for purposes of calculation of the payment that the asset
level of the Trust on the date the Fund Accountant is replaced, or a third party
is added, will remain constant for the balance of the contract term.
In the event the Trust is merged into another legal entity in
part or in whole or is otherwise liquidated in part or in whole pursuant to a
business reorganization prior to the expiration of the Initial Term of this
Agreement, the parties acknowledge and agree that (i) the liquidated damages
provision set forth above shall be applicable in those instances in which the
Fund Accountant is not retained to provide fund accounting services and (ii) for
purposes of calculating the payment amount representing liquidated damages, the
appropriate asset level of the Trust shall be the greater of: (i) the asset
level calculated for the Trust at the time the Trust's Board of Trustees
receives notification of an intention on the part of Fund management to effect
such a business reorganization or liquidation; (ii) the asset level calculated
for the Trust at the time the Trust's Board of Trustees formally approves such a
business reorganization or liquidation; or (iii) the asset level calculated for
the Trust on the day prior to the first day during which assets are transferred
by the Trust pursuant to the plan of reorganization or liquidation. The one-time
cash payment referenced above shall be due and payable on the day prior to the
first day during which assets are transferred to the surviving entity pursuant
to the plan of reorganization.
The parties further acknowledge and agree that, in the event
the Fund Accountant is replaced, or a third party is added as set forth above,
(i) a determination of actual damages incurred by the Fund Accountant would be
extremely difficult, and (ii) the liquidated damages provision contained herein
is intended to adequately compensate the Fund Accountant for damages incurred
and is not intended to constitute any form of penalty.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
The Fund Accountant shall use its best efforts to ensure the
accuracy of all services performed under this Agreement, but shall not be liable
to the Trust for any action taken or omitted
-6-
<PAGE>
by the Fund Accountant in the absence of bad faith, willful misfeasance,
negligence or reckless disregard by it of its obligations and duties. The Trust
agrees to indemnify and hold harmless the Fund Accountant, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other reasonable expenses of every nature and
character arising out of or in any way relating to the Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement or based, if applicable, upon reasonable reliance on information,
records, instructions or requests with respect to a Fund given or made to the
Fund Accountant by a duly authorized representative of the Trust; provided that
this indemnification shall not apply to actions or omissions of the Fund
Accountant or its employees, agents, directors, officers or nominees in cases of
their own bad faith, willful misfeasance, negligence or reckless disregard by
any or all of them of the Fund Accountant's obligations and duties, and further
provided that prior to confessing any claim against it which may be the subject
of this indemnification, the Fund Accountant shall give the Trust written notice
of and reasonable opportunity to defend against said claim in its own name or in
the name of the Fund Accountant.
The Fund Accountant agrees to indemnify and hold harmless the
Trust, its employees, agents, Trustees, officers and nominees from and against
any and all actions, suits, demands and claims, whether groundless or otherwise,
and from and against any and all judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of or in any way relating to the Fund Accountant's or its
employees', agents', directors', officers' or nominees' bad faith, willful
misfeasance, negligence or reckless disregard by any or all of them of the Fund
Accountant's obligations and duties with respect to the performance of services
under this Agreement; provided, that, prior to confessing any claim against it
which may be the subject of this indemnification, the Trust shall give the Fund
Accountant written notice of and a reasonable opportunity to defend against said
claim in its own name or in the name of the Trust.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provisions contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party, but failure to do so
in good faith shall not affect the rights hereunder.
The indemnifying party shall be entitled to participate at its own
expense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
-7-
<PAGE>
conducted by counsel chosen by the indemnifying party and satisfactory to the
other party, whose approval shall not be unreasonably withheld. In the event
that the indemnifying party elects to assume the defense of any suit and retain
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect to
assume the defense of a suit, it will reimburse the indemnified party for the
reasonable fees and expenses of any counsel retained by the other party.
8. RECORD RETENTION AND CONFIDENTIALITY.
The Fund Accountant shall keep and maintain on behalf of the
Trust all books and records which the Trust and the Fund Accountant is, or may
be, required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. The Fund Accountant further agrees that all such books and records
shall be the property of the Trust and to make such books and records available
for inspection by the Trust or by the SEC at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Trust and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
9. UNCONTROLLABLE EVENTS.
The Fund Accountant assumes no responsibility hereunder, and
shall not be liable, for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
10. REPORTS.
The Fund Accountant will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports and at such times as are prescribed pursuant
to the terms and the conditions of this Agreement to be provided or completed by
the Fund Accountant, or as subsequently agreed upon by the parties pursuant to
an amendment hereto.
11. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform
services required to be provided by the Fund Accountant under this Agreement are
the property of the Fund Accountant. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
-8-
<PAGE>
12. RETURN OF RECORDS.
The Fund Accountant may at its option at any time, and shall
promptly upon the Trust's demand, turn over to the Trust and cease to retain the
Fund Accountant's files, records and documents created and maintained by the
Fund Accountant pursuant to this Agreement which are no longer needed by the
Fund Accountant in the performance of its services or for its legal protection.
If not so turned over to the Trust, such documents and records will be retained
by the Fund Accountant for six years from the year of creation. At the end of
such six-year period, such records and documents will be turned over to the
Trust unless the Trust authorizes in writing the destruction of such records and
documents.
13. REPRESENTATIONS OF THE TRUST.
The Trust certifies to the Fund Accountant that: (1) as of
the close of business on each Conversion Date, each Fund that is in
existence as of the Conversion Date has authorized unlimited shares, and (2)
this Agreement has been duly authorized by the Trust and, when executed and
delivered by the Trust, will constitute a legal, valid and binding obligation
of the Trust, enforceable against the Trust in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of creditors and
secured parties and general principles of equity.
14. REPRESENTATIONS OF THE FUND ACCOUNTANT.
The Fund Accountant represents and warrants that: (1) the
various procedures and systems which the Fund Accountant has implemented with
regard to safeguarding from loss or damage attributable to fire, theft, or any
other cause the records, and other data of the Trust and the Fund Accountant's
records, data, equipment, facilities and other property used in the performance
of its obligations hereunder are adequate and that it will make such changes
therein from time to time as are required for the secure performance of its
obligations hereunder, and (2) this Agreement has been duly authorized by the
Fund Accountant and, when executed and delivered by the Fund Accountant, will
constitute a legal, valid and binding obligation of the Fund Accountant,
enforceable against the Fund Accountant in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
15. INSURANCE.
The Fund Accountant shall notify the Trust should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. The Fund Accountant shall notify the
Trust of any material claims against it with respect to services performed under
this Agreement, whether or not they may be covered by insurance, and shall
notify the Trust from time to time as may be appropriate of the total
outstanding claims made by the Fund
-9-
<PAGE>
Accountant under its insurance coverage.
16. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to the Fund Accountant, or will
furnish to the Fund Accountant within 90 days following the effective date of
this Agreement, the following:
(a) Copies of the Agreement and Declaration of Trust of
the Trust and of any amendments thereto, certified by
the proper official of the state in which such
document has been filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments
thereto;
(ii) Certified copies of resolutions of the Board
of Trustees covering the approval of this
Agreement, authorization of a specified
officer of the Trust to execute and deliver
this Agreement and authorization for
specified officers of the Trust to instruct
the Fund Accountant thereunder; and
(iii) Any Fund Participation Agreement to which
the Trust is a party.
(c) A list of all the officers of the Trust, together
with specimen signatures of those officers who are
authorized to instruct the Fund Accountant in all
matters.
(d) Two copies of the Prospectuses and Statements of
Additional Information for each Fund.
17. INFORMATION FURNISHED BY THE FUND ACCOUNTANT.
(a) The Fund Accountant has furnished to the Trust
the following:
(i) The Fund Accountant's Articles of
Incorporation; and
(ii) The Fund Accountant's Bylaws and any
amendments thereto.
(b) The Fund Accountant shall, upon request, furnish
certified copies of corporate actions covering the
following matters:
(i) Approval of this Agreement, and
authorization of a specified officer of the
Fund Accountant to execute and deliver this
Agreement; and
-10-
<PAGE>
(ii) Authorization of the Fund Accountant to act
as fund accountant for the Trust and to
provide accounting services for the Trust.
18. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish the Fund Accountant written copies of
any amendments to, or changes in, any of the items referred to in Section 16
hereof forthwith upon such amendments or changes becoming effective. In
addition, the Trust agrees that no amendments will be made to the Prospectuses
or Statements of Additional Information of the Trust which might have the effect
of changing the procedures employed by the Fund Accountant in providing the
services agreed to hereunder or which amendment might affect the duties of the
Fund Accountant hereunder unless the Trust first obtains the Fund Accountant's
approval of such amendments or changes.
19. COMPLIANCE WITH LAW.
Except for the obligations of the Fund Accountant set forth in
Section 8 hereof, the Trust assumes full responsibility for the preparation,
contents and distribution of each prospectus of the Trust as to compliance with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. The Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
Shares. The Trust represents and warrants that no Shares of the Trust will be
offered to the public until the Trust's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
20. NOTICES.
Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
following address: if to the Fund Accountant, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Trust, to it at Rosenberg Institutional Equity
Management, 4 Orinda Way, Orinda, California, 94563, Attn: Edward H. Lyman,
Esq., with a copy to J.B. Kittredge, Esq., Ropes & Gray, One International
Place, Boston, Massachusetts 02110-2624, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
21. HEADINGS.
Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
-11-
<PAGE>
22. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not
be assignable with respect to a Fund by either of the parties hereto except by
the specific written consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. GOVERNING LAW.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio.
24. MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS BUSINESS
TRUST.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the property of the
Trust as provided in the Trust's Amended and Restated Agreement and Declaration
of Trust, which is on file with the Secretary of The Commonwealth of
Massachusetts.
25. CONFIDENTIAL INFORMATION.
Each party acknowledges that it may acquire knowledge and
information relating to the other party and its affiliates which is not
generally known by others including, but not limited to, information pertaining
to business plans, prior, present or potential shareholders, employees,
customers and/or suppliers, and that all such knowledge and information acquired
or developed is and shall be confidential and proprietary information (all such
confidential and proprietary information is herein collectively referred to as
the "Confidential Information"). Each party agrees to hold the Confidential
Information in strict confidence, to refrain from directly or indirectly
disclosing it to others or using it in any way except for purposes of performing
services hereunder, and to prevent any unauthorized person access to it either
before or after termination of this Agreement, without the prior written consent
of the other party. Both parties further agree to take all action reasonable and
necessary to protect the confidentiality of the Confidential Information. The
parties shall use their best efforts to have their officers, employees and
agents agree to the terms of this Section. The obligations of the parties
contained in this section shall survive termination of this Agreement. Neither
party's confidentiality obligations under this provision shall apply to such
information that (i) was in the public domain or available to a third party
without restrictions at or prior to the time such information was made known to
such party, (ii) had been independently known to such party at the time of
disclosure from persons who were not subject to similar
-12-
<PAGE>
confidentiality obligations, or (iii) is required to be disclosed by law (except
that each party will use best efforts to give the other party written notice
prior to any such disclosure).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BARR ROSENBERG VARIABLE
INSURANCE TRUST
By:
----------------------------
Title:
-------------------------
BISYS FUND SERVICES OHIO, INC.
By:
----------------------------
Title:
-------------------------
-13-
<PAGE>
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
BARR ROSENBERG VARIABLE INSURANCE TRUST
AND
BISYS FUND SERVICES OHIO, INC.
FEES
ANNUAL FEE
The Fund Accountant shall be entitled to receive an annual fee of
$30,000 per Fund.
OUT-OF-POCKET EXPENSES
The Fund Accountant shall be entitled to be reimbursed for all
reasonable out-of-pocket expenses, including, but not limited to, the
expenses set forth in Section 4 of the Fund Accounting Agreement to
which this Schedule A is attached.
A-1
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Kenneth Reid his true and lawful
attorney, with full power to sign for him, in his name and in the capacity
indicated below, any and all registration statements of Barr Rosenberg Variable
Insurance Trust, a Massachusetts business trust, under the Securities Act of
1933 or the Investment Company Act of 1940, and generally to do all things in
his name and in his behalf to enable Barr Rosenberg Variable Insurance Trust to
comply with the provisions of the Securities Act of 1933, the Investment Company
Act of 1940, and all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming his signature as it may be signed by
his said attorney to any and all registration statements and amendments thereto.
Witness my hand this 31st day of March, 1998.
/s/ Nils H. Hakansson
-------------------------
Nils H. Hakansson
Trustee
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Kenneth Reid his true and lawful
attorney, with full power to sign for him, in his name and in the capacity
indicated below, any and all registration statements of Barr Rosenberg Variable
Insurance Trust, a Massachusetts business trust, under the Securities Act of
1933 or the Investment Company Act of 1940, and generally to do all things in
his name and in his behalf to enable Barr Rosenberg Variable Insurance Trust to
comply with the provisions of the Securities Act of 1933, the Investment Company
Act of 1940, and all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming his signature as it may be signed by
his said attorney to any and all registration statements and amendments thereto.
Witness my hand this 30th day of March, 1998.
/s/ William F. Sharpe
-------------------------
William F. Sharpe
Trustee
