<PAGE>
As filed with the Securities and Exchange Commission on November 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. 2 /X/
Post-Effective Amendment No. __ / /
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No. 2 /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 Not Applicable
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description Description of the Trust and Ownership of
of Registrant Shares; Investment Objective 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
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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 NOVEMBER 25, 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 "General Description of Risks and Fund
Investments."
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
----
INVESTMENT OBJECTIVE AND POLICIES..................................... 3
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS..................... 3
PERFORMANCE INFORMATION OF MARKET NEUTRAL ACCOUNTS.................... 6
MANAGEMENT OF THE TRUST............................................... 7
PURCHASE OF SHARES.................................................... 13
REDEMPTION OF SHARES.................................................. 13
DETERMINATION OF NET ASSET VALUE...................................... 14
DISTRIBUTIONS......................................................... 14
TAXES................................................................. 15
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES...................... 15
OTHER INFORMATION..................................................... 16
SHAREHOLDER INQUIRIES................................................. 17
2
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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.
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.
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.
3
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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.
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, 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
4
<PAGE>
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.
5
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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.
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 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, their performance and the
composite performance might have been adversely affected. In addition, all but
one of the Market Neutral Accounts were not subject to Subchapter M of the
Internal Revenue Code. If those Market Neutral Accounts had been subject to
Subchapter M, their performance might have been adversely affected. In addition,
separate account fees and charges 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, the average
annual total return for the 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%,
6
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12.18% and 8.08%, respectively. There have been three 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. The third
enhancement to the Manager's market neutral strategy occurred in approximately
October 1998, when the Manager combined the Earnings Change Model and the
Investor Sentiment Model into the Near-Term Prospects Model. Despite the three
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, has experience 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.
7
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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 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 approximately 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
8
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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 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.
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<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 Manager's proprietary Near-Term Prospects Model attempts to predict the
earnings growth of companies over a one-year period. This Model examines, among
other things, measures of company profitability as well as measures of investor
sentiment towards a company, such as broker recommendations, analyst earnings
estimates and prior market performance. The Manager combines the results of this
Model with the results of the Appraisal Model to measure the attractiveness of a
stock for purchase or sale.
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
10
<PAGE>
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
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
11
<PAGE>
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 CONTRACT
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, 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 Ohio, Inc. (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 Ohio, 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.
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<PAGE>
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.
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" and the prospectus of the separate
account of the specific insurance product that accompanies this Prospectus.
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
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<PAGE>
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.
DETERMINATION OF NET ASSET VALUE
The net asset value 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. Portfolio securities listed on the Nasdaq Stock Market
are valued at the closing price on each business day if traded on such 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. 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.
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<PAGE>
All dividends and/or distributions will be paid out in the form of
additional shares of the Fund at net asset value unless an election is made on
behalf of a separate account to receive distributions in cash.
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 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 at least
one of 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.
15
<PAGE>
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
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.
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
16
<PAGE>
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.
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.
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<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 Ohio, Inc.
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 NOVEMBER 25, 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. . . . . . . . . . . . . . . . . . . . . . . . . .13
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . .14
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . .16
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . .16
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .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. See "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.
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(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
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<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").
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<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.
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 (61) Sylvan C. Coleman Professor of Finance
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 (64) STANCO 25 Professor of Finance, Stanford
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.
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<PAGE>
Sara Ronan (39) 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. The following table sets forth information concerning the
estimated total compensation paid to each of the Trustees who are not
interested persons of the Trust or Manager in the current fiscal year:
COMPENSATION TABLE
<TABLE>
<CAPTION>
(3) (5)
(2) PENSION OR RETIREMENT (4) ESTIMATED TOTAL
ESTIMATED AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL COMPENSATION FROM
(1) COMPENSATION AS PART OF BENEFITS TRUST AND FUND
NAME OF PERSON, POSITION FROM TRUST (a) TRUST EXPENSES UPON RETIREMENT COMPLEX (a)
- ------------------------ ------------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
Nils H. Hakansson $24,090.00 $0 $0 $82,665.00
Trustee
William F. Sharpe $24,090.00 $0 $0 $82,665.00
Trustee
</TABLE>
(a) Estimated compensation payable to the independent Trustees for service
during the current fiscal year.
Messrs. Reid and Lyman and Ms. Fritz, Hew and Ronan 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
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<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.
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<PAGE>
ADMINISTRATIVE SERVICES
The Trust has entered into a Fund Administration Agreement with BISYS
Fund Services Ohio, Inc. (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 Ohio, 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"), 100 Carnegie Center,
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
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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 that 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.
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<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
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<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.
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<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
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<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 as of 4:00 p.m., New York Time 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.
FINANCIAL STATEMENTS
The financial statements in this Statement of Additional Information
have been audited by PricewaterhouseCoopers LLP, independent accountants, and
have been so included in reliance upon the report of said firm, which report
is given upon their authority as experts in auditing and accounting.
-16-
<PAGE>
<TABLE>
<CAPTION>
Barr Rosenberg VIT Market Neutral Fund
Statement of Assets and Liabilities
November 16, 1998
<S> <C>
ASSETS:
Cash $ 100,000
Total Assets 100,000
LIABILITIES:
-
------------
NET ASSETS: $ 100,000
------------
------------
NET ASSETS CONSIST OF:
Capital $ 100,000
------------
------------
------------
NET ASSETS: $ 100,000
------------
------------
------------
SHARES OUTSTANDING: 10,000
------------
------------
NET ASSET VALUE:
Offering and redemption price per share $ 10.00
------------
------------
</TABLE>
See notes to Statement of Assets and Liabilities.
<PAGE>
BARR ROSENBERG VIT MARKET NEUTRAL FUND
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
November 16, 1998
1. ORGANIZATION
The Barr Rosenberg Variable Insurance Trust (the "Trust") was organized as
a Massachusetts business trust on March 1, 1998. The Trust is a
diversified open-end management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). There are an unlimited
number of authorized units of beneficial interest ("shares") of the Trust
which may be divided into an unlimited number of series of shares.
Currently, there is one series; the Barr Rosenberg VIT Market Neutral Fund
(the "Fund").
The objective of the Fund is to seek long term capital appreciation, while
maintaining minimal exposure to general equity market risk. The Fund seeks
to achieve its objective by taking long positions in stocks principally
traded in the markets of the United States that Rosenberg Institutional
Equity Management (the "Manager") has identified as undervalued and short
positions in such stocks that the Manager has identified as overvalued.
2. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION EXPENSE. All costs incurred by the Trust in connection with
the organization of the Fund and the initial public offering of shares of
the Fund, principally professional fees and printing, were paid on behalf
of the Trust by the Manager.
FEDERAL INCOME TAXES: The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and to make the requisite distributions of taxable income to its
shareholders which will be sufficient to relieve it from all or
substantially all federal income taxes.
USE OF ESTIMATES: Estimates and assumptions are required to be made
regarding assets and liabilities when financial statements are prepared.
Changes in the economic environment, financial markets and any other
parameters used in determining these estimates could cause actual results
to differ from these amounts.
3. RELATED PARTY TRANSACTIONS
Rosenberg Institutional Equity Management (the "Manager") will serve as the
investment adviser of the Fund. Under the terms of an investment advisory
agreement between the Trust and the Manager , the Manager will be entitled
to receive fees based on a percentage of the average net assets of the
Fund. The Fund will pay the Manager an annual rate of 1.90% of the Fund's
average daily net assets. The Manager has undertaken to waive its
management fee and bear certain expenses in order to limit the total annual
operating expenses to 2.00% of the Funds average daily net assets.
<PAGE>
As part of the Fund's organization the Fund has issued in a private
placement 10,000 shares of beneficial interest to the Manager at $10.00 a
share.
BISYS Fund Services Ohio, Inc. ("BISYS"), a wholly-owned subsidiary of
The BISYS Group, Inc., will serve as the administrator for the Fund.
BISYS Fund Services Ohio, Inc. will serve as transfer agent for and
provide fund accounting services to the Trust.
Certain officers of the Trust are affiliated with the Manager or BISYS.
Such persons are not paid directly by the Trust for serving in those
capacities.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Barr Rosenberg VIT Market Neutral Fund
In our opinion, the accompanying statement of assets and liabilities present
fairly, in all material respects, the financial position of Barr Rosenberg VIT
Market Neutral Fund (the "Fund") at November 16, 1998, in conformity with
generally accepted accounting principles. This financial statement is the
responsibility of the Fund's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
November 16, 1998
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
See "Financial Statements" in the Statement of Additional
Information.
(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 - incorporated by reference to
Pre-effective Amendment No. 1 to the Registration Statement
filed on October 30, 1998;
(b) Form of Special Custody Account Agreement among the
Registrant, Custodial Trust Company and Bear, Stearns
Securities Corp. -- incorporated by reference to
Pre-effective Amendment No. 1 to the Registration Statement
filed on October 30, 1998;
<PAGE>
(9) (a) Transfer Agency Agreement between the Registant and BISYS
Fund Services Ohio, Inc. -- incorporated by reference to
Pre-effective Amendment No. 1 to the Registration Statement
filed on October 30, 1998;
(b) (i) 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;
(ii) Form of Notification of Expense Limitation by
Rosenberg Institutional Equity Management to the
Barr Rosenberg VIT Market Neutral Fund -- filed
herewith.
(c) Fund Administration Agreement between the Registrant and
BISYS Fund Services Ohio, Inc. -- incorporated by reference
to Pre-effective Amendment No. 1 to the Registration
Statement filed on October 30, 1998;
(d) Fund Accounting Agreement between the Registrant and BISYS
Fund Services Ohio, Inc. -- incorporated by reference to
Pre-effective Amendment No. 1 to the Registration Statement
filed on October 30, 1998;
(10) Opinion of Ropes & Gray -- filed herewith;
(11) Consent of PricewaterhouseCoopers LLP -- filed herewith;
(12) None;
(13) Investment letter regarding initial capital -- filed
herewith;
(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 --
incorporated by reference to Pre-effective Amendment No. 1
to the Registration Statement filed on October 30, 1998.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Board of Trustees of Registrant is substantially similar to the Board
of Trustees of other funds advised by Rosenberg Institutional Equity Management.
In addition, the officers of these funds are substantially identical.
Nonetheless, the Registrant takes the position that it is not under common
control with these other funds since the power residing in the respective
boards and officers arises as the result of an official position with the
respective funds.
-2-
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of November 30, 1998, there was one record holder of shares of the
Registrant.
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.
* * * * *
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
-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. 2 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 24th day of November, 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 24th day of November, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S><C>
/s/ Kenneth Reid President and Trustee November 24, 1998
- -------------------------- (principal executive
Kenneth Reid officer)
Po-Len Hew* Treasurer November 24, 1998
- -------------------------- (principal financial
Po-Len Hew and accounting officer)
William F. Sharpe* Trustee November 24, 1998
- --------------------------
William F. Sharpe*
Nils H. Hakansson* Trustee November 24, 1998
- --------------------------
Nils H. Hakansson
*By: /s/ Kenneth Reid
-------------------------------
Kenneth Reid
Attorney-in-Fact
Date: November 24, 1998
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
99.9(b)(ii) Form of Notification of Expense
Limitation
99.10 Opinion of Ropes and Gray
99.11 Consent of PricewaterhouseCoopers LLP
99.13 Form of Investment letter regarding
initial capital
</TABLE>
<PAGE>
NOTIFICATION OF
EXPENSE LIMITATION
NOTIFICATION made this __th day of November, 1998 by Rosenberg
Institutional Equity Management, a California limited partnership (the
"Adviser"), to Barr Rosenberg Variable Insurance Trust, a Massachusetts business
trust (the "Trust"), and its Barr Rosenberg VIT Market Neutral Fund (the
"Fund").
WITNESSETH:
WHEREAS, the Adviser serves as investment adviser for the Fund;
WHEREAS, on or about January __, 1998, the Fund will offer shares that will
be subject to various fees and expenses; and
WHEREAS, the Adviser believes it would benefit from a high sales volume of
shares of the Fund in that such a volume would maximize the Adviser's fee as
investment adviser to the Fund; and
WHEREAS, the Adviser has undertaken to furnish certain services and, as
necessary, to voluntarily bear a portion of the costs thereof and/or reimburse
certain expenses so as to enable the Fund to offer competitive returns with
respect to investments in shares of the Fund.
NOW THEREFORE, pursuant to Section 3 of the Management Contract between the
Adviser and the Trust on behalf of the Fund (the "Management Contract"), the
Adviser hereby notifies the Trust that the Adviser shall, until further notice,
voluntarily reduce its compensation due under the Management Contract and, if
necessary, bear certain expenses of the Fund to the extent required to limit the
expenses (which do not include extraordinary expenses and dividends and interest
paid on securities sold short) of shares of the Fund to the following annual
percentage of the Fund's average daily net asset value:
Total Fund Operating Expenses
applicable after waiver
Barr Rosenberg VIT Market Neutral Fund 2.00%
<PAGE>
IN WITNESS WHEREOF, the Adviser has executed this Notification of Expense
Limitation on the day and year first above written.
ROSENBERG INSTITUTIONAL EQUITY MANAGEMENT
By:
------------------------------------
Title:
The foregoing is hereby accepted:
BARR ROSENBERG VARIABLE INSURANCE TRUST,
on behalf of its Barr Rosenberg VIT Market Neutral Fund
By:
-------------------------------
Title:
-2-
<PAGE>
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
Fax: (617) 951-7050
November 30, 1998
Barr Rosenberg Variable Insurance Trust
4 Orinda Way, Building E
Orinda, CA 94563
Ladies and Gentlemen:
We are furnishing this opinion in connection with the proposed offer and
sale by Barr Rosenberg Variable Insurance Trust, a Massachusetts business trust
(the "Trust"), of shares of beneficial interest of its Barr Rosenberg VIT Market
Neutral Fund (the "Shares") pursuant to a registration statement on Form N-1A
(the "Registration Statement") under the Securities Act of 1933, as amended.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's By-Laws, as
amended, and its Agreement and Declaration of Trust, as amended (the
"Declaration of Trust"), on file in the office of the Secretary of The
Commonwealth of Massachusetts and such other documents as we have deemed
necessary for the purposes of this opinion.
We assume that upon sale of the Shares the Trust will receive the net asset
value thereof.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the Shares are
issued and sold, they will be validly issued, fully paid and nonassessable by
the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." 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
the property of the particular series of shares for all loss and expense of any
shareholder of that
<PAGE>
Barr Rosenberg Variable Insurance Trust -2- November 30, 1998
series held personally liable solely by reason of his or her having been a
shareholder of that series. Thus, the risk of shareholder liability is limited
to circumstances in which that series itself would be unable to meet its
obligations.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
ROPES & GRAY
Ropes & Gray
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 2 to the Registration
Statement on Form N-1A of our report dated November 16, 1998, relating to the
Statement of Assets and Liabilities of Barr Rosenberg VIT Market Neutral
Fund, which appears in such Statement of Additional Information. We further
consent to the reference to us under the headings "Independent Accountants"
and "Financial Statements" in the Statement of Additional Information and
"Independent Accountants" in the Prospectus.
/s/PricewaterhouseCoopers LLP
San Francisco, California
November 25, 1998
<PAGE>
ROSENBERG INSTITUTIONAL EQUITY MANAGEMENT
4 ORINDA WAY, BUILDING E
ORINDA, CA 94563
November 16, 1998
Barr Rosenberg Variable Insurance Trust
3435 Stelzer Road
Columbus, OH 43219
Gentlemen:
In connection with your sale to us today of 10,000 shares (the "Shares") of
beneficial interest in the Barr Rosenberg VIT Market Neutral Fund (the "Fund"),
we understand that: (i) the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"); (ii) your sale of the
Shares to us is in reliance on the sale being exempt under Section
4(2) of the 1933 Act as not involving any public offering; and (iii) in part,
your reliance on such exemption is predicated on our representation, which we
hereby confirm, that we are acquiring the Shares for investment and for our own
account as the sole beneficial owner hereof, and not with a view to or in
connection with any resale or distribution of any or all of the Shares or of any
interest therein. We hereby agree that we will not sell, assign or transfer the
Shares or any interest therein except upon repurchase or redemption by the Fund
unless and until the Shares have been registered under the 1933 Act or you have
received an opinion of your counsel indicating to your satisfaction that such
sale, assignment or transfer will not violate the provisions of the 1933 Act or
any rules and regulations promulgated thereunder.
This letter is intended to take effect as an instrument under seal and
shall be construed under the laws of Massachusetts as of the date above written.
Very truly yours,
ROSENBERG INSTITUTIONAL
EQUITY MANAGEMENT
By: /s/ Kenneth Reid
-------------------------
Kenneth Reid
General Partner
