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As filed with the Securities and Exchange Commission on February 12, 1999
File 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 /
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Pre-Effective Amendment No. __ / /
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Post-Effective Amendment No. 1 / X /
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REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
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Amendment No. 3 / X /
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BARR ROSENBERG VARIABLE INSURANCE TRUST
(Exact Name of Registrant as Specified in Charter)
c/o AXA Rosenberg Investment Management LLC, 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:
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Kenneth Reid J.B. Kittredge, Esq.
AXA Rosenberg Investment Ropes & Gray
Management LLC 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.
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
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/ / On _________ pursuant to paragraph (b)
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/ X / 60 days after filing pursuant to paragraph (a)(1)
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/ / On _________ pursuant to paragraph (a)(1)
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/ / 75 days after filing pursuant to paragraph (a)(2)
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/ / On _________ pursuant to paragraph (a)(2)
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If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
--- previously filed post-effective amendment.
NOTE: This Amendment relates solely to shares of beneficial interest in the
Barr Rosenberg VIT Market Neutral Fund. Information contained in the
Registration Statement relating to the other series of the Registrant is
neither amended nor superseded hereby.
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SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1999
BARR ROSENBERG VARIABLE INSURANCE TRUST
BARR ROSENBERG VIT MARKET NEUTRAL FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-925-254-6464
APRIL __, 1999
The Fund seeks to increase the value of your investment in bull markets and
in bear markets through strategies designed to maintain minimal net exposure to
stock market risk. The Fund's investment adviser is AXA Rosenberg Investment
Management LLC. We are offering shares of the Fund exclusively for sale to
insurance company separate accounts.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIME.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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TABLE OF CONTENTS
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Page
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RISK/RETURN SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PRINCIPAL INVESTMENT STRATEGIES. . . . . . . . . . . . . . . . . . . . . . 4
PRINCIPAL RISKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PERFORMANCE INFORMATION FROM THE ADVISER'S OTHER
MARKET NEUTRAL ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE ADVISER'S GENERAL INVESTMENT PHILOSOPHY. . . . . . . . . . . . . . . . 10
FUND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
HOW THE FUND PRICES ITS SHARES . . . . . . . . . . . . . . . . . . . . . . 16
PURCHASING FUND SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 17
REDEEMING FUND SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . 19
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RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The Fund seeks to increase the value of your investment in bull markets and
in bear markets through strategies designed to maintain minimal net exposure to
stock market risk.
SUMMARY OF PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its investment objective by buying stocks long
that its investment adviser believes are undervalued and by borrowing and
"selling short" stocks that its investment adviser believes are overvalued. The
Fund trades only in stocks that are principally traded in the markets of the
United States.
By buying long and selling short different stocks, the Fund attempts to
neutralize the effect on its performance of general U.S. stock market movements.
Because the Fund uses long and short positions in this way, the Fund expects
that its shares will increase in value if its long portfolio outperforms its
short portfolio. By contrast, the Fund expects that its shares will decline in
value if its short portfolio outperforms its long portfolio.
SUMMARY OF PRINCIPAL RISKS
As with any stock mutual fund, you may lose money if you invest in the
Fund. The principal risks that could adversely affect the value of the Fund's
shares and cause you to lose money on your investment include:
- - MANAGEMENT RISK. This is the risk that, because of poor stock selection by
the Fund's investment adviser, the Fund's long positions will decrease in
value at the same time that its short positions increase in value. Because
the investment adviser could make adverse judgments about both the long and
short positions of the Fund, the Fund's potential losses exceed those of
conventional stock mutual funds that hold only long portfolios.
- - PORTFOLIO RISK. Although the Fund seeks to have equal dollar amounts of
long and short positions, there is a risk that the Fund's investment
adviser will fail to construct a portfolio of long and short positions that
is near neutral to general U.S. stock market movements, capitalization or
other risk factors.
- - RISK OF SHORT SALES. This is the risk that the Fund will incur a loss by
acquiring a security at a time when the security's price is higher than
when it previously borrowed the same security to sell it short.
PERFORMANCE INFORMATION
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The Fund has not yet begun operation and therefore has no performance
history.
PRINCIPAL INVESTMENT STRATEGIES
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 Fund's
investment adviser, AXA Rosenberg Investment Management LLC (the "Adviser"), has
identified as undervalued and short positions in such stocks that the Adviser
has identified as overvalued. 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 its short portfolio.
Conversely, it is expected that the Fund will incur losses if the Fund's long
portfolio underperforms its short portfolio. The Adviser 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 limited 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.
The Adviser uses the return that an investor could achieve through an
investment in 3-month U.S. Treasury Bills as a benchmark against which to
measure the Fund's performance. The Adviser attempts to achieve returns for the
Fund's shareholders which exceed the benchmark. An investment in the Fund is
different from an investment in 3-month U.S. Treasury Bills because, among other
differences, 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 risk losing their investment, and an investment in the Fund is more
volatile than an investment in Treasury Bills.
To meet margin requirements related to short sales or 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
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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
Adviser 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 "Principal Risks - Special Risks of Foreign Investments."
The Fund will not invest in equity securities that are principally traded
outside of the United States.
PRINCIPAL RISKS
INVESTMENT RISKS
The value of Fund shares may increase or decrease depending on external
conditions affecting the Fund's portfolio. These conditions depend upon market,
economic, political, regulatory and other factors. Investment in shares of the
Fund is more volatile and risky than some other forms of investment. Also, the
Fund's long positions may decline in value at the same time that the market
value of securities sold short increases, thereby increasing the magnitude of
the loss that you may suffer on your investment.
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
Adviser. The Adviser may fail to purchase some stocks and sell other stocks
short such that the long positions outperform the short positions. Also, the
Adviser may fail to construct a portfolio that has limited exposure to general
equity market risk or that has limited exposure to specific industries,
specific capitalization ranges and certain other risk factors.
An investment in the Fund is different from an investment in 3-month U.S.
Treasury Bills because, among other differences, 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 risk losing their investment,
and an investment in the Fund is more volatile than an investment in Treasury
Bills.
RISKS OF SHORT SALES
When the Adviser believes that a security is overvalued, it may sell the
security short by borrowing it from a third party and selling it at the then
current market price. The Fund will incur a loss if the price of the borrowed
security increases between when the Fund sells it and when the Fund replaces it.
The Fund may gain if the price of the borrowed security decreases during that
period of time. The Fund cannot guarantee that it will be able to replace a
security at any particular time or at an acceptable price.
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During the time the Fund is short a security, it is always subject to the
risk that the security's lender will terminate the loan at a time when the Fund
is unable to borrow the same security from another lender. If this happens, the
Fund must buy the replacement share immediately at its then market value or "buy
in" by paying the lender an amount equal to the price required to purchase the
security to close out the short position. The Fund's gain on a short sale is
limited by the price at which it sold the borrowed security. By contrast, its
loss on a short sale is limited only by the maximum attainable price of the
security less the price at which it was sold.
Short sales also involve other costs. The Fund must repay to the lender
any dividends or interest that accrue while it is holding a security sold short.
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 ultimate gain for the Fund resulting from a short sale will be decreased,
and the amount of any ultimate loss for the Fund will be 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. The amount deposited in the segregated
account plus any amount deposited as collateral with a broker or other custodian
will at least equal the current market value of the security sold short.
Depending on the arrangements made with such broker or custodian, the Fund might
not receive any payments (including interest) on collateral deposited with the
broker or custodian. The Fund will not make a short sale if after giving effect
to the sale the market value of all securities sold short would exceed 100% of
the value of the Fund's net assets.
SPECIAL RISKS OF FOREIGN INVESTMENTS
Although it invests only in securities principally traded in U.S. markets,
the Fund may invest in stocks of foreign companies that trade on U.S. markets.
Investments in securities of foreign issuers involve certain risks that
generally do not apply to investments in securities of U.S. issuers. These
include risks of adverse changes in foreign economic, political, regulatory and
other conditions, changes in currency exchange rates or exchange control
regulations (including currency blockage). A foreign government may expropriate
or nationalize invested assets, or impose withholding taxes on dividend or
interest payments. The Fund may be unable to obtain and enforce 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 companies may be less liquid and at times more volatile than
securities of comparable U.S. companies.
RISKS OF REPURCHASE AGREEMENTS
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The Fund may enter into repurchase agreements, by which the Fund will
purchase a security and obtain a simultaneous commitment from the seller to
repurchase the security from the Fund at an agreed-upon price and date (usually
seven days or less from the date of original purchase). The resale price will
exceed the purchase price and reflect an agreed-upon market rate which is
unrelated to the coupon rate of the purchased security. Entering into
repurchase agreements allows the Fund 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. There is a risk, therefore, that the seller will fail to honor its
repurchase obligation. If this happened, the Fund would try to exercise its
legal rights, including possibly its right to sell the underlying security 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,
inability to enforce its rights, and enforcement-related expenses.
RISKS OF LENDING PORTFOLIO SECURITIES
The Fund may lend its portfolio securities to broker-dealers. These loans
will be secured by cash or U.S. Government securities at all times equal to or
greater than the market value of the securities loaned. 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. The borrower pays to the Fund any dividends or
interest received on the securities loaned.
Any voting rights or rights to consent with respect to the loaned
securities pass to the borrower. The Fund retains the right, however, to
require the return of the borrowed securities at any time on reasonable notice.
The Fund will exercise that right in order to regain its ability to vote on or
consent to any matters which materially affect the investment. The Fund may
also require the return of the borrowed securities in order to sell them. The
risks in lending portfolio securities 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 the
Adviser believes to be of relatively high credit standing.
RISKS OF ILLIQUID SECURITIES
The Fund may purchase "illiquid securities," so long as no more than 15% of
the Fund's net assets would be invested in such securities after giving effect
to a purchase. These are 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 them. Because there is no consistent market demand
for illiquid securities, investment in illiquid securities carries the risk that
the Fund may be forced to sell them at a discount from the last offer price.
PORTFOLIO TURNOVER
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Portfolio turnover related considerations will not limit or constrain the
Adviser's investment decisions. 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, under normal circumstances the annual turnover rate of the Fund's
portfolio should not exceed 150%. It is, however, impossible to predict
portfolio turnover in future years. High portfolio turnover involves
correspondingly greater brokerage commissions, dealer markup and other
transaction costs for the Fund. Such costs will reduce the Fund's return.
RISK OF YEAR 2000 PROBLEMS
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. Any failure of the service systems to process
information properly could have an adverse impact on the Fund's operations and
the services it provides to shareholders. The Adviser, Transfer Agent,
Custodian, Administrator and certain other service providers to the Fund have
reported that each is working toward minimizing the risks associated with the
so-called "year 2000 problem." However, the Fund and the Adviser cannot be
certain that they can correct the problem in all respects and that such problems
will not adversely affect the Fund's operations and the services it provides to
shareholders.
PERFORMANCE INFORMATION FROM THE ADVISER'S OTHER MARKET
NEUTRAL ACCOUNTS
AXA Rosenberg Investment Management LLC also serves as adviser to 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 accounts of the
Adviser and its predecessor 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 Investment Company Act of
1940 (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 that 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.
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The following table compares the average annual total return for a
composite of the Adviser's other market neutral accounts with the average annual
total return on 3-month U.S. Treasury bills. The table shows the returns for
the one-year, three-year, five-year and since-inception periods ending December
31, 1998.
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ONE-YEAR PERIOD THREE-YEAR PERIOD FIVE-YEAR PERIOD PERIOD FROM
ENDING ENDING ENDING FEBRUARY 28, 1989 TO
DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998
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Market Neutral
Accounts. . . . . . . % % % %
3-month U.S.
Treasury Bills. . . . % % % %
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An investment in the Fund is different from an investment in 3-month U.S.
Treasury Bills because, among other differences, 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.
The Adviser will reduce its management fee and bear certain expenses until
further notice to limit the Fund's total annual operating expenses (exclusive of
nonrecurring account fees, extraordinary expenses and dividends and interest
paid on securities sold short) to 2.00% of the Fund's average daily net assets.
If this limitation were used in calculating the average annual total return of
the composite of the Adviser's other market neutral accounts, that return would
have been 9.37%, 17.50%, 12.39% and 8.23% for the one-year, three-year,
five-year and since-inception periods ending September 30, 1998.
There have been three modifications to the Adviser's market neutral
strategy since its inception in 1989. First, the Adviser's predecessor
incorporated its Earnings Change Model and Investor Sentiment Model into its
market neutral strategy in October 1992 and April 1993. The second change to
the Adviser's market neutral strategy occurred in July 1995, when the
Adviser's predecessor focused its strategy on medium and smaller
capitalization companies. See "Principal Investment Strategies." Prior to
such date, the Adviser's predecessor 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 Adviser and its predecessor have 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 Adviser's market neutral strategy
occurred in approximately October 1998, when the Adviser's predecessor
combined the Earnings Change Model and the Investor Sentiment Model into the
Near-Term Prospects Model. See "The Adviser's General Investment Philosophy
- - Stock Selection." Despite the three enhancements to the Adviser's market
neutral strategy since 1989, the Fund will have investment objectives,
policies and strategies substantially similar to those of the Market Neutral
Accounts.
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THE ADVISER'S GENERAL INVESTMENT PHILOSOPHY
INVESTMENT PHILOSOPHY
The Adviser is a value investor. The Adviser believes that often the
market price of a company's stock imperfectly reflects the company's fundamental
value, that is, the actual present value of the company's expected future
earnings. The market at times values some stocks above and others below their
fundamental values. The Adviser believes that in time the market prices will
move toward the fundamental values as investors gain more information about the
inaccurately valued companies. Therefore, the Adviser believes that if the
Adviser can correctly determine fundamental values before the market corrects
for mispricing and apply a disciplined investment process to select those stocks
that are undervalued (in the case of purchases) and overvalued (in the case of
short sales), the Fund will outperform the benchmark over time.
The premise of the Adviser's investment philosophy is that the price of a
company's stock reflects the market's assessment of how well the company is
positioned to generate future earnings and/or future cash flow. The Adviser
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
Adviser believes that the market will recognize the "better value" and that the
mispricing will be corrected as the stocks in the Fund's portfolio are purchased
or sold by other investors.
In determining whether or not a stock is attractive, the Adviser considers
the company's current estimated fundamental value as determined by the Adviser's
proprietary Appraisal Model and Near-Term Prospects Model. The Adviser
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 Adviser identifies and causes the Fund to sell
short an overvalued stock.
DECISION PROCESS
The Adviser's decision process operates through on-going research and
portfolio management. The Adviser continually researches and analyzes the more
than 12,000 securities in the global universe, both fundamentally and
technically, and determines the risk characteristics of the benchmark. The
Adviser optimizes each portfolio's composition, executes trades, and monitors
performance and trading costs.
The essence of the Adviser's approach is attention to important aspects of
the investment process. Typically, this involves attention to the following
considerations: (1) accurate and timely data on a large universe of companies;
(2) subtle methods through which to describe value and predict changes in value;
and (3) insightful definitions of similar businesses. The Adviser
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collects, checks and structures the input data on which its investment models
rely. The Adviser believes that if the data is correct, the recommendations made
by the system will be sound.
STOCK SELECTION
The Adviser's stock selection process begins with two analytical devices:
the Appraisal Model and the Near-Term Prospects Model. The Appraisal Model
analyzes a company's fundamental value as compared with other similar
businesses. The Near-Term Prospects Model attempts to assess a company's
potential for short-term earnings growth.
The Adviser's Appraisal Model forms the heart of the fundamental valuation
process. Through the Model, the Adviser analyzes companies in the United States
and Canada in a single, unified model. The Appraisal Model discriminates where
the two markets are substantially different and yet compares companies in the
two markets according to their degrees of similarity. To maximize its basis for
comparative valuation, the Adviser analyzes European and Asian companies (other
than Japanese companies) in a nearly global model, including the United States
and Canada but not Japan. Japanese companies are analyzed in an independent
national model. To ensure meaningful comparisons, the Appraisal Model makes
adjustments for the various accounting standards which apply in different
markets.
To determine the relative value of a stock, the Adviser compares
similar companies. The Adviser believes that, in any group of similar
companies, there are some that are overvalued, some that are undervalued, and
some that are correctly valued by the market. The Adviser identifies the
market's valuation errors by thoroughly analyzing fundamental company data.
After identifying the valuation errors, the Adviser exploits both under- and
overvaluations through purchases and short sales, respectively.
The Appraisal Model classifies companies into one or more of 166 groups of
"similar" businesses. The Model breaks down each company into its individual
business segments and compares each segment with similar segments of other
companies doing business in the same geographical market. In most cases, the
comparison also includes companies with similar segments in different markets.
The Adviser uses available data to appraise the company's assets, operating
earnings and sales within each business segment. The Adviser then integrates the
segment appraisals into balance sheet, income statement and sales valuation
models for the total company. In doing so, it adjusts the segment appraisals to
include appraisals for variables which apply only to the total company, such as
taxes, capital structure, and pension funding. The result is a single valuation
for each of the companies followed.
The Adviser's Near-Term Prospects model attempts to predict the earnings
growth of companies over a one-year period. It examines measures of company
profitability and investor sentiment towards a company such as broker
recommendations, analyst earnings estimates and the company's prior market
performance. The Adviser combines the results of this Model with the results of
the Appraisal Model to measure the attractiveness of a stock for purchase or
sale.
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OPTIMIZATION
The Adviser's portfolio optimization system attempts to construct a Fund
portfolio that will outperform the Fund's benchmark, while maintaining portfolio
risk characteristics similar to those of the benchmark. The optimizer
simultaneously considers both the results of the Adviser's stock selection
models and the applicable 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 Adviser's trading system aggregates the transactions which the stock
selection models have recommended for the Fund. It then determines whether the
Fund should follow each recommendation in light of the particular stock's
liquidity, the expected transaction costs, and general market conditions. It
then 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 Adviser has developed with Instinet Matching
System (IMS), Portfolio System for Institutional Trading (POSIT), the Arizona
Stock Exchange (AZX), and Optimark Trading System (OPTIMARK) allow the Fund to
trade large volumes of stock at one time with little or no price disturbance and
low commission rates.
Accommodative trading, also known as the Adviser's "match system," allows
institutional buyers and sellers of stock to present electronically lists of
stocks that interest them to the Adviser each morning. Any matches between the
interest lists and the Adviser's own recommended trades are signaled to the
Adviser's traders. Because the broker is doing agency business and has a client
on the other side of the trade, the Adviser expects that the other side will be
accommodative in the price. The Adviser's objective in using this match system
is to execute most trades on the Adviser's side of the bid/ask spread so as to
minimize market impact.
Package trades allow the Adviser 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 increased speed of execution, low
commissions, anonymity and very low market impact.
The Adviser continuously monitors trading costs to determine the impact of
commissions and price disturbances on the Fund's portfolio.
FUND MANAGEMENT
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The Fund's trustees oversee the general conduct of the Fund's business.
INVESTMENT ADVISER
As of January 1, 1999, AXA Rosenberg Investment Management LLC (the
"Adviser") has succeeded Rosenberg Institutional Equity Management ("RIEM") as
the Trust's investment adviser. The Adviser is responsible for making
investment decisions for the Fund and managing the Fund's other affairs and
business, subject to the supervision of the Board of Trustees. The Adviser
provides investment advisory services to a number of institutional investors and
several mutual funds. As with the Adviser's predecessor RIEM in the past, the
Fund will pay the Adviser a management fee for these services equal to 1.90% of
its average daily net assets on a quarterly basis. The Adviser will reduce its
management fee and bear certain expenses until further notice to limit the
Fund's total annual operating expenses (exclusive of nonrecurring account fees,
extraordinary expenses and dividends and interest paid on securities sold short)
to 2.00% of the Fund's average daily net assets.
PORTFOLIO MANAGER
Management of the Fund's portfolio is overseen by the Adviser's executive
officers who are responsible for the design and maintenance of the Adviser's
portfolio system, and by a portfolio manager who is responsible for research and
monitoring the Fund's characteristic performance against the benchmark and for
monitoring cash balances. Barr Rosenberg, the Director of Research of the
Adviser and the Chairman of AXA Rosenberg Group LLC, the parent of the Adviser,
Kenneth Reid, the Chief Executive Officer of the Adviser, 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
Adviser or its predecessor since 1985. Mr. Jump has had numerous
responsibilities including trading, applications programming, new product
development and portfolio engineering since he joined the Adviser's predecessor
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.
EXECUTIVE OFFICERS
The biography of each of the executive officers of the Adviser is set forth
below. Kenneth Reid is also a Trustee of the Trust.
BARR ROSENBERG. Dr. Rosenberg is the Director of Research of the Adviser,
Chairman of AXA Rosenberg Group LLC, the parent of the Adviser, and Managing
Director of Barr Rosenberg Research Center LLC. As such, he has ultimate
responsibility for the Adviser'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
Adviser's proprietary securities valuation model.
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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. From 1985 to 1998, he was the founder and Managing General
Partner of Rosenberg Institutional Equity Management, the predecessor company to
the Adviser.
KENNETH REID. Dr. Reid is the Chief Executive Officer of the Adviser. His
work is focused on the design and estimation of the Adviser's valuation models
and he has primary responsibility for analyzing the empirical evidence that
validates and supports the day-to-day recommendations of the Adviser'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 Adviser'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. From 1986 to 1998, Dr. Reid was a general partner of Rosenberg
Institutional Equity Management.
WILLIAM RICKS. Dr. Ricks is the Chief Investment Officer of the Adviser.
His primary responsibilities are the various aspects of the investment process:
trading, operations, portfolio engineering, and portfolio construction. He is
responsible for the implementation of the investment strategies that are
designed by the Research Center.
Dr. Ricks earned a B.S. from the University of New Orleans, Louisiana and a
Ph.D. from the University of California, Berkeley in 1980. He worked as a
senior accountant for Ernst & Ernst in New Orleans from 1974 to 1976. He was a
financial and managerial accounting instructor at the University of California,
Berkeley from 1978 to 1979, after which he was an associate professor of finance
and accounting at Duke University until 1989. From 1989 to 1998, he was a
research associate, a portfolio engineer and the Director of Accounting Research
at Rosenberg Institutional Equity Management.
INDEPENDENT TRUSTEES
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William F. Sharpe, Nils H. Hakansson and Dwight M. Jaffee are the Trustees
of the Trust who are not "interested persons" (as defined in the 1940 Act) of
the Trust or the Adviser.
Dr. Sharpe is the STANCO 25 Professor of Finance at Stanford University's
Graduate School of Business. He is best known as one of the developers of the
Capital Asset Pricing Model, including the beta and alpha concepts used in risk
analysis and performance measurement. He developed the widely-used binomial
method for the valuation of options and other contingent claims. He also
developed the computer algorithm used in many asset allocation procedures.
Dr. Sharpe has published articles in a number of professional journals. He has
also written six books, including PORTFOLIO THEORY AND CAPITAL MARKETS,
(McGraw-Hill, 1970), ASSET ALLOCATION TOOLS, (Scientific Press, 1987),
FUNDAMENTALS OF INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey,
Prentice-Hall, 1993) and INVESTMENTS (with Gordon J. Alexander and Jeffery
Bailey, Prentice-Hall, 1995). Dr. Sharpe is a past President of the American
Finance Association. He is currently Chairman of Financial Engines
Incorporated, an electronic investment advice company. He has also served as
consultant to a number of corporations and investment organizations. He is also
a member of the Board of Trustees of Smith Breeden Trust, an investment company,
and a director at CATS Software and Stanford Management Company. He received
the Nobel Prize in Economic Sciences in 1990.
Professor Hakansson is the Sylvan C. Coleman Professor of Finance and
Accounting at the Haas School of Business, University of California, Berkeley.
He is a former member of the faculty at UCLA as well as at Yale University. At
Berkeley, he served as Director of the Berkeley Program in Finance (1988-1991)
and as Director of the Professional Accounting Program (1985-1988). Professor
Hakansson is a Certified Public Accountant and spent three years with Arthur
Young & Company prior to receiving his Ph.D. from UCLA in 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 a number of 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.
Professor Jaffee is the Willis H. Booth Professor of Banking and Finance at
the Haas School of Business, University of California, Berkeley. He was
previously a Professor of Economics at Princeton University for many years,
where he served as the Vice Chairman of the faculty. At Berkeley, he serves on
a continuing basis as the Co-chairman of the Fisher Center for
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<PAGE>
Real Estate and Urban Economics and as the Director of the UC Berkeley-St.
Petersburg University (Russia) School of Management Program. He has been a
Visiting Professor at many Universities around the world, most recently at the
University of Aix/Marseille in France and at the European University in Florence
Italy. Professor Jaffee has authored 5 books and numerous articles in academic
and professional journals. His research has focused on 3 key financial markets:
business lending, real estate finance, and catastrophe insurance. His current
research is focused on methods for securitizing real estate finance and
catastrophe insurance risks, and on the impact of international trade on the
U.S. computer industry. He has served on the editorial boards of numerous
academic journals, and has been a consultant to a number of U.S. government
agencies and to the World Bank. In the past, Professor Jaffee has been a member
of the Board of Directors of various financial institutions, including the
Federal Home Loan Bank of New York. He is currently a Visiting Scholar at the
Federal Reserve Bank of San Francisco.
HOW THE FUND PRICES ITS SHARES
The price of the Fund's shares is based on its net asset value as next
determined after receipt of a purchase order. See "Determination of Net Asset
Value."
For purposes of calculating the purchase price of Fund shares, if it does
not reject a purchase order, the Trust considers an order received on the day
that it receives a check or money order on or before 4:00 p.m., New York Time.
If the Trust receives the payment after the deadline, it will base the purchase
price of Fund shares on 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 the Adviser
believes that 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, the Trust will not issue certificates for shares.
DETERMINATION OF NET ASSET VALUE
The Trust will determine the Fund's net asset value per share once on each
day on which the New York Stock Exchange is open. It will make the
determination at 4:00 p.m., New York Time. The Fund expects that the days,
other than weekend days, that the New York Stock Exchange will not be open are
Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving
Day, Christmas Day, New Year's Day, Martin Luther King, Jr. Day and
Washington's Birthday. The Trust calculates the net asset value per share of the
Fund by dividing the total market value of the Fund's assets, less any
applicable liabilities, by the number of outstanding shares of the Fund.
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<PAGE>
The Trust will value portfolio securities listed on an exchange for which
market quotations are available at the last quoted sale price on each business
day. The Trust will value any security for which there is no reported sale on a
given day at the most recent quoted bid price (for long securities) or at the
most recent quoted ask price (for securities sold short). A bid price is that
price which a prospective buyer has offered and an ask price is that price which
a prospective seller has demanded for a given security. A buyer or seller may
"quote" a price even though the sale in question may not actually be
consummated. The Trust will value any security which is listed on the NASDAQ
National Market and which traded on a particular day at the closing price. The
Trust will value any security which is listed on NASDAQ and which does not trade
on a particular day at the most recent quoted bid price.
The Trust takes price information on listed securities from the closing
price on the exchange where the security is primarily traded. The Trust values
unlisted securities for which market quotations are readily available at the
most recent quoted bid price (for long securities) or at the most recent quoted
ask price (for securities sold short). The Trust may value debt obligations
with sixty days or less remaining until maturity 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.
PURCHASING FUND SHARES
Only a separate account of an insurance company which participates in Fund
investments may purchase shares of the Fund. You may buy shares of the Fund
only through your policy or contract with a participating insurance company.
You should read this prospectus in conjunction with the prospectus of the
separate account of the specific insurance product which accompanies this
prospectus. The minimum initial investment in the Fund is $1,000, and the
minimum subsequent investment in the Fund is $500.
In conformance with Rule 12b-1 under the 1940 Act, the Trust has adopted a
written distribution and service plan. Pursuant to this plan, the Fund is
authorized to pay certain fees for the sale and distribution of its shares and
for services provided to its shareholders. No payments are currently being made
under the plan. However, under the plan, the Fund could pay distribution and
service fees at an annual rate not to exceed .25% of the Fund's average daily
assets. Because these fees would be paid out of the Fund's assets, over time
these fees would increase the cost of your investment and could cost more than
paying other types of sales charges.
REDEEMING FUND SHARES
As a shareholder in the Fund, you have the right to ask the Fund at any
time to redeem your shares, that is, buy your shares back from you. The Trust
will redeem shares at the net asset value next determined after a redemption
request is received. See "How the Fund Prices Its
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<PAGE>
Shares - Determination of Net Asset Value" and the prospectus of the separate
account of the specific insurance product that accompanies this prospectus.
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 Fund reserves the right to redeem in kind. This means that, if the
Adviser determines that it would not be in the best interests of the remaining
shareholders of the Fund to make a redemption payment in cash, the Fund may pay
the redemption price partly or entirely in readily marketable securities held by
the Fund. We will value all securities used to redeem Fund shares in accordance
with the Fund's procedures for valuation described under "How the Fund Prices
Its Shares - Determination of Net Asset Value." The Adviser will select
securities to use for redemption of Fund shares in light of the Fund's
objective. Those selections generally will not reflect a PRO RATA distribution
of each security held in the Fund's portfolio. Investors may incur brokerage
charges on the sale of any securities received in payment of redemptions.
The Trust may suspend the right of redemption and may postpone payment for
more than seven days when any of the following occurs: (1) the New York Stock
Exchange is closed for other than weekends or holidays (if the rules of the
Securities and Exchange Commission permit), (2) trading on the Exchange is
restricted, (3) an emergency makes it impracticable for the Fund to dispose of
its securities or to determine fairly the value of its net assets, or (4) any
other event for which the Securities and Exchange Commission permits delay for
the protection of investors.
DISTRIBUTIONS
The Fund intends to distribute to its insurance company separate accounts
as dividends substantially all of its net investment income (which comes from
dividends, 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 deducting any available capital loss
carry-overs. The Fund will declare and pay distributions of its dividends and
interest and distribute net short-term capital gains and net long-term gains all
on an annual basis unless the Trustees determine that it should do so more
frequently where permitted by applicable regulations.
SHAREHOLDER OPTIONS
The Fund will pay all dividends and distributions in additional Fund shares
at net asset value unless an election is made by a particular 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, and to meet
all other
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<PAGE>
requirements necessary to avoid precipitating federal income taxes on income and
gains it distributes to insurance company separate accounts.
Generally, owners of variable annuity and variable life contracts are not
taxed currently on income or gains realized with respect to such contracts.
However, some distributions from such contracts may be taxable at ordinary
income tax rates. In addition, distributions made to an owner who is younger
than 59 1/2 may be subject to a 10% penalty tax. Investors should ask their own
tax advisers for more information on their own tax situations, including
possible foreign, state or local taxes.
In order for investors to receive the favorable tax treatment available to
holders of variable annuity and variable life contracts, the separate accounts
underlying such contracts, as well as the Portfolios in which such accounts
invest, must meet certain diversification requirements. Each Portfolio intends
to comply with these requirements. If a Portfolio does not meet such
requirements, income allocable to the contracts would be taxable currently to
the holders of such contracts.
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 above information constitutes 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 Fund's Statement of Additional Information
for more information on taxes.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
The Trust is designed to serve and presently intends to serve as a funding
vehicle for insurance company separate accounts associated with variable annuity
contracts and variable life insurance policies. This means that participating
insurance companies will invest money from separate accounts of various annuity
contracts and life insurance policies in the Fund to provide for future
benefits. You should consult the prospectus issued by the relevant insurance
company for more information about a separate account.
All shares of the Fund have identical voting rights. Shares are freely
transferable, are entitled to dividends as declared by the Trustees, and are
entitled to receive the net assets of the Fund's portfolio upon liquidation.
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.
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<PAGE>
In the future, the Trust may offer shares of the Fund directly to qualified
pension and profit-sharing plans.
Although conflicts of interest could arise from the sale of Fund 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 related disadvantages to policy-owners and contract-owners. This is
because the Trust offers its shares to separate accounts of various insurance
companies only 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 arise. Should such a
conflict arise, the Trustees will determine what action, if any, should be taken
in response. 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.
Under certain circumstances, shareholders could be held personally liable
for the obligations of the Trust. However, we believe that the chance of
resulting financial loss for a shareholder is remote since that type of
liability may arise only in very limited circumstances.
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<PAGE>
(Back cover)
The Fund's statement of additional information ("SAI") dated January 29,
1999 contains additional information about the Fund. It is incorporated by
reference into this prospectus, which means that it is part of this prospectus
for legal purposes. You may obtain a free copy of the SAI, request other
information about the Fund, or make shareholder inquiries by writing to the
Trust at the address below or by telephoning 1-800-447-3332.
The SAI has been filed with the Commission. You may review and copy
information about the Fund, including the SAI, at the Commission's Public
Reference Room in Washington, D.C. You may call the Commission at
1-800-SEC-0330 for information about the operation of the Public Reference Room.
The Commission maintains a World Wide Web site at http://www.sec.gov, which
contains reports and other information about the Fund. You may also obtain
copies of these materials, upon payment of a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009.
ADDRESS CORRESPONDENCE TO:
Barr Rosenberg Variable Insurance Trust
P.O. Box 182495
Columbus, Ohio 43219-2495.
1-800-447-3332
Shareholder Services
1-800-447-3332
Additional Information about the Adviser may be found on the
World Wide Web at http://www.axarosenberg.com
ADVISER
AXA Rosenberg Investment Management LLC
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
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<PAGE>
101 Carnegie Center
Princeton, NJ 08540
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
333 Market Street
San Francisco, CA 94105
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
Investment Company Act File No. 811-08759
22
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1999
BARR ROSENBERG VARIABLE INSURANCE TRUST
BARR ROSENBERG VIT MARKET NEUTRAL FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL __, 1999
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to and should be read in conjunction
with the prospectus of the Barr Rosenberg VIT Market Neutral Fund of Barr
Rosenberg Variable Insurance Trust dated February 12, 1999 (the "Prospectus").
You may obtain a copy of the Prospectus from Barr Rosenberg Variable Insurance
Trust, 3435 Stelzer Road, Columbus, Ohio 43219.
The information in this Statement of Additional Information is not
complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This Statement of Additional Information is not an offer to sell
these securities and is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
<PAGE>
TABLE OF CONTENTS
PAGE
----
INVESTMENT STRATEGIES AND RESTRICTIONS . . . . . . . . . . . . . . . . . . . ..3
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . ..6
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . ..8
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .11
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
TOTAL RETURN CALCULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .15
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . . .17
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . .19
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . .19
FINANCIAL STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
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INVESTMENT STRATEGIES AND RESTRICTIONS
The investment objective and principal investment strategies of the Barr
Rosenberg VIT Market Neutral Fund (the "Fund") of Barr Rosenberg Variable
Insurance Trust (the "Trust") are, in the Prospectus, summarized under the
heading "Risk/Return Summary" and described in more detail under the heading
"Principal Investment Strategies."
The following is an additional description of certain investment strategies
of the Fund.
SHORT SALES
The Fund will seek to realize additional gains through short sales. Short
sales are transactions in which the 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 ultimate gain
for the Fund will be decreased, and the amount of any ultimate 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.
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."
NOTICE ON SHAREHOLDER APPROVAL
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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 POLICIES AND 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.
Such borrowings involve risk because, so long as the loan is outstanding,
the lender will be secured by the assets of the Fund and will have first
rights to those assets. 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.) Pledging, hypothecating, mortgaging or otherwise encumbering Fund
assets involves risk because the pledgee or mortgagee will have first
rights to those assets for the duration of the encumbrance.
(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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<PAGE>
(6) Purchase or sell real estate, although it may purchase securities
of issuers which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by
interests in real estate.
(7) Concentrate more than 25% of the value of its total assets in any
one industry.
(8) Invest in securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940, as amended (the
"1940 Act"), or by an exemptive order issued by the Securities and Exchange
Commission.
(9) Purchase or sell commodities or commodity contracts except that
each of the Funds may purchase and sell stock index and other financial
futures contracts and options thereon.
(10) Make loans, except by purchase of debt obligations or by entering
into repurchase agreements or through the lending of the Fund's portfolio
securities.
(11) Issue senior securities. (For the purpose of this restriction
none of the following is deemed to be a senior security: any pledge or
other encumbrance of assets permitted by restriction (2) above; any
borrowing permitted by restriction (1) above; short sales permitted by
restriction (4) above; any collateral arrangements with respect to short
sales, swaps, options, future contracts and options on future contracts and
with respect to initial and variation margin; and the purchase or sale of
options, future contracts or options on future contracts.)
It is contrary to the present policy of the Fund, which may be changed by
the Trustees of the Trust without shareholder approval, to:
(a) Invest in warrants or rights (other than warrants or rights
acquired by the Fund as a part of a unit or attached to
securities at the time of purchase).
(b) Write, purchase or sell options on particular securities (as
opposed to market indices).
(c) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
(d) Make investments for the purpose of exercising control of a
company's management.
(e) Invest in (a) securities which at the time of investment are not
readily marketable and (b) repurchase agreements maturing in more
than seven
-5-
<PAGE>
days if, as a result, more than 15% of the Fund's net assets
(taken at current value) would then be invested in such
securities.
Unless otherwise indicated, all percentage limitations on investments set
forth herein and in the Prospectus will apply at the time of the making of an
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment.
The phrase "shareholder approval," as used in the Prospectus and herein,
and the phrase "vote of a majority of the outstanding voting securities," as
used herein, means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund or the Trust, as the case may be, or (2) 67%
or more of the shares of the Fund or the Trust, as the case may be, present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The tax status of the Fund and the distributions which it may make are
summarized in the Prospectus under the headings "Distributions" and "Taxes." The
Fund intends to qualify each year as a regulated investment company under
Subchapter M of 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.
If a Fund failed to qualify under Subchapter M as a regulated investment
company accorded special tax treatment in any taxable year, the Fund would be
subject to tax on its taxable income at corporate rates, and all distributions
from earnings and profits, including any distributions of net tax-exempt income
and net long-term capital gains, would be taxable to
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<PAGE>
shareholders as ordinary income. In addition, the Fund could be required to
recognize unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying as a regulated investment company
that is accorded special tax treatment.
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"). 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 of the Trust are responsible for generally overseeing the
conduct of Fund business. Subject to such policies as the Trustees may
determine, the Trust's investment adviser, AXA Rosenberg Investment Management
LLC (the "Adviser"), furnishes a continuing investment program for the Fund and
makes investment decisions on its behalf. Subject to the control of the
Trustees, the Adviser also manages the Fund's other affairs and business.
The Trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
Barr M. Rosenberg (56) Director of Research, AXA Rosenberg Investment
Vice President Management LLC, January 1999 to present; Chairman,
AXA Rosenberg Group LLC, January 1999 to present;
Director, Barr Rosenberg Research Center LLC,
January 1999 to present; Managing General Partner
and Chief Investment Officer, Rosenberg
Institutional Equity Management, January 1985 to
December 1998.
Kenneth Reid* (49) Chief Executive Officer, AXA Rosenberg Investment
President, Trustee Management LLC, January 1999 to present; General
Partner and Director of Research, Rosenberg
Institutional Equity Management, June 1986 to
December 1998.
Marlis S. Fritz (49) Global Marketing Director, AXA Rosenberg
Vice President Group LLC, January 1999 to present;
General Partner and Director of Marketing,
Rosenberg Institutional Equity Management, April
1985 to December 1998.
Nils H. Hakansson (61) Sylvan C. Coleman Professor of Finance and
Trustee Accounting, Haas School of Business, University of
California, Berkeley, June 1969 to present;
Director, Supershare
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<PAGE>
Services Corporation (investment management), Los
Angeles, California, November 1989 to 1995.
William F. Sharpe (64) STANCO 25 Professor of Finance, Stanford Trustee
University, September 1995 to present; Professor
of Finance, Stanford University, September 1992 to
September 1995; Timken Professor Emeritus of
Finance, Stanford University, September 1989 to
September 1992; Timken Professor of Finance,
Stanford University, September 1970 to September
1989; Chairman, Financial Engines Incorporated,
Los Altos, California (electronic investment
advice), March 1996 to present.
Dwight M. Jaffee (55) Professor of Finance and Real Estate, Haas School
Trustee of Business, University of California, Berkeley,
California, July 1991 to present.
Po-Len Hew (32) Director of Finance, AXA Rosenberg Global Services
Treasurer LLC, January 1999 to present; Chief Financial
Officer, Rosenberg Institutional Equity
Management, April 1994 to December 1998;
Accounting Manager, Rosenberg Institutional Equity
Management, October 1989 to December 1998.
Sara Ronan (39) Global Services Coordinator and Paralegal, AXA
Clerk Rosenberg Global Services LLC, January 1999 to
present; Paralegal, Rosenberg Institutional Equity
Management, September 1997 to December 1998;
Director of Marketing, MIG Realty Advisors,
January 1996 to September 1997; Vice President,
Liquidity Financial Advisors, May, 1985 to January
1996.
Edward H. Lyman (55) Chief Operating Officer, AXA Rosenberg Group LLC,
Vice President January 1999 to present; Chief Executive Officer,
AXA Rosenberg Global Services LLC, January 1999 to
present; Executive Vice President, Barr Rosenberg
Investment Management, Inc. and General Counsel to
the Rosenberg Group of companies, 1990 to present.
Richard L. Saalfeld (55) President and Chief Executive Officer, Barr Vice
President Rosenberg Mutual Funds, January 1999 to present;
President and Chief Executive Officer of mutual
fund unit of Rosenberg Institutional Equity
Management, June 1996 to December
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<PAGE>
1998; Consultant to Rosenberg Institutional Equity
Management, September 1995 to May 1996; Chairman
and Chief Executive Officer of CoreLink Resources,
Inc. (mutual fund marketing organization),
Concord, California, April 1993 to August 1995;
Consultant, December 1992 to March 1993.
Harold L. Arbit (51) Managing Director, Barr Rosenberg Mutual Funds,
Vice President January 1999 to present; Vice President and
Partner, Rosenberg Alpha L.P., 1984 to present.
F. William Jump, Jr. (42) Strategy Engineer, AXA Rosenberg Investment
Vice President Management, LLC, January 1999 to present;
Portfolio Engineer, Rosenberg Institutional Equity
Management, August 1990 to December 1998.
- ---------------------
* Trustee who is an "interested person" (as defined in the 1940 Act) of the
Trust or the Adviser.
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 Adviser an annual fee of $7590 plus $825 per Fund 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 Adviser. 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 Adviser in the year ended March 31, 2000:
-10-
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
(3) (5)
(2) PENSION OR RETIREMENT (4) ESTIMATED TOTAL
(1) ESTIMATED AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL COMPENSATION
NAME OF PERSON, COMPENSATION AS PART OF BENEFITS FROM FUND AND
POSITION FROM FUND (a) TRUST EXPENSES UPON RETIREMENT FUND COMPLEX (a)
-------- --------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
Nils H. Hakansson $11,715.00 $0 $0 $93,720.00
Trustee
William F. Sharpe $11,715.00 $0 $0 $93,720.00
Trustee
Dwight M. Jaffee $11,715.00 $0 $0 $93,720.00
Trustee
</TABLE>
(a) Estimated compensation payable to the independent Trustees for service
during the current fiscal year. The figures in column (2) "Estimated
Aggregate Compensation from Fund" represent the amounts estimated to be
paid to the Trustees as compensation from the Fund during the fiscal year
ending on March 31, 2000. The figures in column (5) "Estimated Total
Compensation From Fund and Fund Complex" represent the amounts paid to the
Trustees as compensation from the fund complex of seven funds during the
fiscal year ending on March 31, 2000.
Messrs. Rosenberg, Reid, Arbit, Lyman, Saalfeld and Jump and Ms. Fritz,
Ronan and Hew, each being an officer or employee of the Adviser or its
affiliates, will each benefit from the management fees paid by the Trust to the
Adviser, 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 the Adviser, subject to the control of the Trustees of
the Trust and such policies as the Trustees may determine, the Adviser 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 Adviser
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 Adviser.
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<PAGE>
As disclosed in the Prospectus, the Fund has agreed to pay the Adviser a
quarterly management fee at the annual percentage rate of the Fund's average
daily net assets set forth in the Prospectus. The Adviser 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 Adviser'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 Adviser 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 no more than
one year from the date of its execution, and renewals thereof must be approved
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 Adviser 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' notice by the Trust to the Adviser. In addition, the Management Contract
may be terminated on not more than 60 days' written notice by the Adviser to the
Trust.
The Manager is wholly owned by Axa Rosenberg Group LLC, a holding company
for the AXA Rosenberg businesses. Axa Rosenberg Group LLC is contractually
controlled by AXA-IM Rose Inc, a holding company. AXA-IM Rose Inc. is wholly
owned by AXA-IM Holdings U.S. Inc., a U.S. intermediate holding company. AXA-IM
Holdings U.S. Inc. is wholly owned by AXA Investment Managers S.A., a French
holding company for the AXA investment management businesses, which, in turn, is
owned, collectively, by AXA Assurances IARD, S.A., a French property and
casualty insurance company, and AXA-UAP, a French holding company. AXA
Assurances IARD, S.A. is owned, collectively, by AXA France Assurance, a French
insurance holding company, and UAP Incendie Accidents, a French casualty and
insurance company, each of which, in turn, is wholly owned by AXA-UAP. Finaxa,
a French holding company, beneficially owns more than 25% of the voting
securities of ("Controls") AXA-UAP. Mutuelles Axa, a group of four French
mutual insurance companies, one of which Controls Finaxa, acting as a group,
Control both AXA-UAP and Finaxa. Each of these entities may be deemed a
controlling person of the Manager.
-12-
<PAGE>
As discussed in this Statement of Additional Information under the heading
"Management of the Trust," Kenneth Reid is a Trustee of the Trust and the Chief
Executive Officer of the Manager; Barr M. Rosenberg is a Vice President of the
Trust and the Director of Research of the Manager. Dr. Rosenberg, Dr. Reid and
Marlis S. Fritz, the former general partners of RIEM, may be deemed to be
controlling persons of the Manager as a result of their interest in AXA
Rosenberg Group LLC, the parent of the Manager.
ADMINISTRATIVE SERVICES
The Trust has entered into a Fund Administration Agreement with BISYS Fund
Services (the "Administrator") pursuant to which the Administrator provides
certain management and administrative services necessary for the Fund's
operations including: (i) general supervision of the operation of the Fund
including coordination of the services performed by the Fund's investment
adviser, transfer agent, custodian, independent accountants and legal counsel,
regulatory compliance, including the compilation of information for documents
such as reports to, and filings with, the SEC and state securities commissions,
and preparation of proxy statements and shareholder reports for the Fund; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Fund's officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Fund. For these services, the Administrator is
entitled to receive a fee, payable monthly, at the annual rate of 0.15% of the
average daily net assets of the Trust. The Trust has also entered into a Fund
Accounting Agreement with BISYS Fund Services, Inc. (the "Fund Accountant")
pursuant to which the Fund Accountant provides certain accounting services
necessary for the Fund's operations. For these services, the Fund Accountant is
entitled to receive an annual fee of $30,000.
DISTRIBUTION AND SERVICE PLAN
Solely for the purpose of compensating for services and expenses primarily
intended to result in the sale of Fund shares, such shares are subject to an
annual Distribution and Service Fee of up to 0.25% of the average daily net
assets of the Fund in accordance with a Distribution and Service Plan (the
"Distribution and Service Plan") adopted by the Trust pursuant to Rule 12b-1
promulgated under the 1940 Act. Activities for which the Fund may reimburse
include, but are not limited to, the development and implementation of direct
mail promotions and advertising for the Fund, the preparation, printing and
distribution of prospectuses for the Fund to recipients other than existing
shareholders, and contracting with one or more wholesalers of the Fund's shares.
The Distribution and Service Plan is of the type known as a "compensation" plan.
This means that, although the Trustees of the Trust are expected to take into
account the expenses of the fees' recipient or recipients in their periodic
review of the Distribution and Service Plan, the fees are payable to compensate
the recipient or recipients for services rendered even if the amount paid
exceeds the expenses of the recipient or recipients. No payments currently are
being made under the plan. It is anticipated that, to the extent that the Fund
pays Distribution and Service Fees, those payments will encourage sales
-13-
<PAGE>
of Fund shares, which will increase the Fund's net asset value, resulting in
lower expenses per share.
CUSTODIAL ARRANGEMENTS
Custodial Trust Company ("CTC"), Princeton, NJ 08540, is the Trust's
custodian. As such, CTC holds in safekeeping certificated securities and cash
belonging to the Trust and, in such capacity, is the registered owner of
securities in book-entry form belonging to the Fund. Upon instruction, CTC
receives and delivers cash and securities of the Fund in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities.
INDEPENDENT ACCOUNTANTS
The Trust's independent accountants are PricewaterhouseCoopers LLP, 333
Market Street, San Francisco, California 94105. 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.
TRANSFER AND DIVIDEND-PAYING AGENT
The Trust's administrator and transfer and dividend-paying agent is BISYS
Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, OH 43219.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS
The purchase and sale of portfolio securities for the Fund and for the
other investment advisory clients of the Adviser are made by the Adviser 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 Adviser
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 Adviser is selling the same security on behalf of one or more
other clients. In some instances, therefore, the Adviser, 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
-14-
<PAGE>
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 Adviser 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 Adviser'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 Adviser does not consider the receipt of research services as
a factor in selecting brokers to effect portfolio transactions for the Fund, the
Adviser 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 Adviser 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 Adviser may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in that Act) to the Adviser 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.
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:
P(1 + T) TO THE POWER OF n = ERV
-15-
<PAGE>
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 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 Adviser 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
-16-
<PAGE>
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
The Trust is a diversified open-end management investment company and was
organized as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts on March 2, 1998.
A copy of the Trust's Agreement and Declaration of Trust dated March 1,
1998, 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
two series, the Barr Rosenberg VIT Market Neutral Fund and the Barr Rosenberg
VIT Select Sectors 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 shares of the Barr Rosenberg VIT Market Neutral Fund are described in
the Prospectus.
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 Fund 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, or terminate a series of the Trust.
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. All shares of the Fund represent
interests in the assets of the Fund and have identical dividend, liquidation and
other rights and the same terms and conditions.
-17-
<PAGE>
Because Rosenberg Institutional Equity Management, the predecessor of the
Adviser, provided the initial capital for the Fund, the Adviser may be deemed to
control the Fund because it beneficially owns more than 25% the Fund's shares.
As a result, it may not be possible for matters subject to a vote of a majority
of the outstanding voting securities of the Fund to be approved without the
affirmative vote of the Adviser, and it may be possible for such matters to be
approved by the Adviser without the affirmative vote of any other shareholder.
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
-18-
<PAGE>
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 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
Adviser 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 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
-19-
<PAGE>
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 has
been audited by PricewaterhouseCoopers LLP, independent accountants, and has
been so included in reliance upon the report of said firm, which report is given
upon their authority as experts in auditing and accounting.
<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.
-20-
<PAGE>
PART C.
OTHER INFORMATION --
THE BARR ROSENBERG VIT MARKET NEUTRAL FUND ONLY
ITEM 23. EXHIBITS.
(a) (1) Agreement and Declaration of Trust of the Registrant --
incorporated by reference to the Registration Statement filed on
April 20, 1998;
(2) Amendment No. 1 to Agreement and Declaration of Trust of the
Registrant -- incorporated by reference to the Registration
Statement filed on April 20, 1998;
(b) By-Laws of the Registrant --incorporated by reference to the
Registration Statement filed on April 20, 1998;
(c) None;
(d) Management Contract between the Registrant on behalf of its Barr
Rosenberg VIT Market Neutral Fund and AXA Rosenberg Investment
Management LLC - filed herewith;
(e) None;
(f) None;
(g) (1) 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;
(2) 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;
(h) (1) Transfer Agency 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;
<PAGE>
(2) Notification of Expense Limitation by AXA Rosenberg Investment
Management LLC to the Barr Rosenberg VIT Market Neutral Fund --
filed herewith;
(3) 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;
(4) 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;
(i) Opinion of Ropes & Gray -- incorporated by reference to
Pre-Effective Amendment No. 2 to the Registration Statement filed
on October 30, 1998;
(j) Consent of PricewaterhouseCoopers LLP -- filed herewith;
(k) None;
(l) Investment letter regarding initial capital --incorporated by
reference to Pre-Effective Amendment No. 2 to the Registration
Statement filed on October 30, 1998;
(m) None;
(n) Not Applicable;
(o) Not Applicable;
(p) (i) Power of Attorney of Po-Len Hew --incorporated by
reference to the Registration Statement filed on April
20, 1998;
(ii) Power of Attorney of Nils H. Hakansson -- incorporated
by reference to Pre-Effective Amendment No. 1 to the
Registration Statement filed on October 30, 1998
(iii) Power of Attorney of William F. Sharpe -- incorporated
by reference to Pre-Effective Amendment No. 1 to the
Registration Statement filed on October 30, 1998;
-2-
<PAGE>
(iv) Power of Attorney of Dwight M. Jaffee -- filed
herewith;
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
The Board of Trustees of Registrant is substantially similar to the
Board of Trustees of other Funds advised by AXA Rosenberg Investment
Management LLC. 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.
ITEM 25. INDEMNIFICATION.
(a) 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
-3-
<PAGE>
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, 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
-4-
<PAGE>
"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.
(b) Insurance
-5-
<PAGE>
The Trust maintains Professional Liability Insurance for each of its
directors and officers. The Trust's policy is carried by the American
International Specialty Lines Insurance Company and insures each
director and officer against professional liability for decisions made
in connection with the Trust, to the extent permitted by the 1940 Act,
up to a maximum of $3,000,000.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
AXA Rosenberg Investment Management LLC (the "Adviser") was organized as a
limited liability company under the laws of the State of Delaware in 1998, 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, to the Barr Rosenberg VIT Select Sectors Market
Neutral Fund (the other series of the Trust), 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 or officer of the Adviser:
Name and Position with Adviser Business and Other Connections
- ------------------------------ ------------------------------
Barr M. Rosenberg General Partner, Rosenberg Alpha L.P.
Director of Research (formerly RBR Partners (limited partner
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
-6-
<PAGE>
Square, London EC2M 4LY, United Kingdom,
March 1990 to present. Chairman, AXA
Rosenberg Group LLC, January 1999 to
present; Director, Barr Rosenberg
Research Center LLC, January 1999 to
present; Managing General Partner
and Chief Investment Officer, Rosenberg
Institutional Equity Management, January
1985 to December 1998.
Kenneth Reid Director, Barr Rosenberg Investment
Chief Executive Officer Management, Inc., 4 Orinda Way, Orinda,
California, February 1990 to present;
General Partner and Director of
Research, Rosenberg Institutional Equity
Management, June 1986 to December 1998.
William Ricks Director of Accounting Research,
Chief Investment Adviser Portfolio Engineer and Research
Associate, Rosenberg Institutional
Equity Management, 1989 to 1998.
Cecelia Baron Marketing Director, Rosenberg
Marketing Director Institutional Equity Management, 1993 to
1998; Vice president and Manager of
Business Development, Fischer Francis
Trees & Watts, New York, 1985 to 1993.
-7-
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The account books and other documents required to be maintained under
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) AXA Rosenberg Investment Management LLC
Four Orinda Way
Building E
Orinda, CA 94563
Rule 31a-1 (f)
Rule 31a-2 (e)
ITEM 29. MANAGEMENT SERVICES.
None.
ITEM 30. 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.
-8-
<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 Post-Effective
Amendment No. 1 to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Orinda, and the State of
California, on the 12th day of February, 1999.
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 12th day of February, 1999.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ Kenneth Reid President and Trustee February 12, 1999
- ----------------------- (principal executive
Kenneth Reid officer)
Po-Len Hew* Treasurer February 12, 1999
- ----------------------- (principal financial
Po-Len Hew and accounting officer)
William F. Sharpe* Trustee February 12, 1999
- -----------------------
William F. Sharpe
Nils H. Hakansson* Trustee February 12, 1999
- -----------------------
Nils H. Hakansson
Dwight M. Jaffee* Trustee February 12,1999
- -----------------------
Dwight M. Jaffee
*By: /S/ Kenneth Reid
-----------------------
Kenneth Reid
Attorney-in-Fact
Date: February 12, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99(d) Management Contract between
the Registrant on behalf of
its Barr Rosenberg VIT Market
Neutral Fund and AXA Rosenberg
Investment Management LLC
99(h)(2)
Notification of Expense
Limitation by AXA Rosenberg
Investment Management LLC to
the Barr Rosenberg VIT Market
Neutral Fund
99(j) Consent of
PricewaterhouseCoopers LLP
99(p)(iv) Power of Attorney of
Dwight M Jaffee
<PAGE>
MANAGEMENT CONTRACT
Management Contract executed as of December 30, 1998 between Barr Rosenberg
Variable Insurance Trust, a Massachusetts business trust (the "Trust"), on
behalf of its Barr Rosenberg VIT Market Neutral Fund (the "Fund"), and Axa
Rosenberg Investment Management LLC, a Delaware limited liability company (the
"Manager").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO THE TRUST.
(a) Subject always to the control of the Trustees of the Trust and to such
policies as the Trustees may determine, the Manager will, at its expense, (i)
furnish continuously an investment program for the Fund and make investment
decisions on behalf of the Fund and place all orders for the purchase and sale
of its portfolio securities and (ii) furnish office space and equipment, provide
bookkeeping and clerical services (excluding determination of net asset value,
shareholder accounting services and fund accounting services for the Fund being
supplied by BISYS Fund Services Ohio, Inc. or its successors and permitted
assigns) and pay all salaries, fees and expenses of officers and Trustees of the
Trust who are affiliated with the Manager. In the performance of its duties,
the Manager will comply with the provisions of the Agreement and Declaration of
Trust and By-laws of the Trust, each as amended from time to time, and the
Fund's stated investment objective, policies and restrictions.
(b) 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. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Manager shall
consider all factors it deems relevant, 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 financial strength and stability of the
broker. Subject to such policies as the Trustees may determine, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its having caused the
Fund to pay a broker or dealer that provides brokerage and research services 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, if the Manager determines
<PAGE>
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Manager's overall
responsibilities with respect to the Trust and to other clients of the Manager
as to which the Manager exercises investment discretion.
(c) The Manager shall not be obligated under this Contract to pay any
expenses of or for the Trust or of or for the Fund not expressly assumed by the
Manager pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Manager or any person
controlling, controlled by or under common control with the Manager, and that
the Manager and any person controlling, controlled by or under common control
with the Manager may have an interest in the Trust. It is also understood that
the Manager and persons controlling, controlled by or under common control with
the Manager have and may have advisory, management service, distribution or
other contracts with other organizations and persons, and may have other
interests and businesses.
3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager's services
rendered, for the facilities furnished and for the expenses borne by the Manager
pursuant to Section 1, a fee, computed and paid quarterly at the annual rate of
1.90% of the Fund's average daily net asset value. Such average daily net asset
value of the Fund shall be determined by taking an average of all of the
determinations of such net asset value during such quarter at the close of
business on each business day during such quarter while this Contract is in
effect. Such fee shall be payable for each quarter within five (5) business
days after the end of such quarter.
In the event that expenses of the Fund (including investment advisory fees
but excluding taxes, portfolio brokerage commissions and any distribution
expenses paid by the Fund pursuant to a distribution plan or otherwise) for any
fiscal year should exceed the expense limitation 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 compensation due the
Manager for such fiscal year shall be reduced by the amount of such excess by
reduction or refund thereof. In the event that the expenses of the Fund exceed
any expense limitation that the Manager may, by written notice to the Trust,
voluntarily declare to be effective with respect to the Fund, subject to such
terms and conditions as the Manager may prescribe in such notice, the
compensation due the Manager shall be reduced, and, if necessary, the Manager
shall bear the Fund's expenses to the extent required by such expense
limitation.
-2-
<PAGE>
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment is approved in such manner as may be required by the
Investment Company Act of 1940, as amended.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain
in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract by
not more than sixty days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust by majority vote or the
shareholders by the affirmative vote of a majority of the outstanding
shares of the Fund, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval, do
not specifically approve at least annually the continuance of this
Contract, then this Contract shall automatically terminate at the close of
business on the first anniversary of its execution, or upon the expiration
of one year from the effective date of the last such continuance, whichever
is later; provided, however, that if the continuance of this Contract is
submitted to the shareholders of the Fund for their approval and such
shareholders fail to approve such continuance of this Contract as provided
herein, the Manager may continue to serve hereunder in a manner consistent
with the Investment Company Act of 1940 and the rules and regulations
thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
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<PAGE>
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" of the Fund means the affirmative vote, at a duly called
and held meeting of shareholders, (a) of the holders of 67% or more of the
shares of the Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "control", "interested person"
and "assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act; and the phrase "specifically approve at least annually" shall be
construed in a manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust, or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. THE NAMES "ROSENBERG" AND "BARR ROSENBERG".
The Manager owns the right to use the names "Rosenberg" and "Barr
Rosenberg" in connection with investment-related services or products, and such
names may be used by the Trust only with the consent of the Manager. The
Manager consents to the use by the Trust of the name "Barr Rosenberg Variable
Insurance Trust" or any other name embodying the names "Rosenberg" or "Barr
Rosenberg", in such forms as the Manager shall in writing approve, but only on
condition and so long as (i) this Contract shall remain in full force and (ii)
the Trust shall fully perform, fulfill and comply with all provisions of this
Contract expressed herein to be performed, fulfilled or complied with by it. No
such name shall be used by the Trust at any time or in any place or for any
purposes or under any conditions except as in this section provided. The
foregoing authorization by the Manager to the Trust to use the name "Rosenberg"
or "Barr Rosenberg" as part of a business or name is not exclusive of the right
of the Manager itself to use, or to authorize others to use, said name; the
Trust acknowledges and agrees that as between the Manager and the Trust, the
Manager has the exclusive right so to use, or to authorize others to use, said
names; and the Trust agrees, on behalf of the Fund, to take such action as may
reasonably be requested by the Manager to give full effect to the provisions of
this section (including, without limitation, consenting to such use of said
names). Without limiting the generality of the foregoing, the Trust agrees
that, upon any termination of
-4-
<PAGE>
this Contract by either party or upon the violation of any of its provisions by
the Trust, the Trust will, at the request of the Manager made within six months
after the Manager has knowledge of such termination or violation, use its best
efforts to change the name of the Trust so as to eliminate all reference, if
any, to the names "Rosenberg" and "Barr Rosenberg" and will not thereafter
transact any business in a name containing the name "Rosenberg" or "Barr
Rosenberg" in any form or combination whatsoever, or designate itself as the
same entity as or successor to an entity of such name, or otherwise use the name
"Rosenberg" or "Barr Rosenberg" or any other reference to the Manager. Such
covenants on the part of the Trust shall be binding upon it, its trustees,
officers, stockholders, creditors and all other persons claiming under or
through it.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust, as amended,
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 Trustees of
the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
-5-
<PAGE>
IN WITNESS WHEREOF, Barr Rosenberg Variable Insurance Trust, on behalf of
its Barr Rosenberg VIT Market Neutral Fund, and Axa Rosenberg Investment
Management LLC have each caused this instrument to be signed in duplicate on its
behalf by its duly authorized representative, all as of the day and year first
above written.
BARR ROSENBERG VARIABLE INSURANCE TRUST, on behalf
of its Barr Rosenberg VIT Market Neutral Fund
By /S/ Kenneth Reid
---------------------------
Title: President
AXA ROSENBERG INVESTMENT
MANAGEMENT LLC
By /S/ Kenneth Reid
---------------------------
Title: A duly authorized signatory
-6-
<PAGE>
<PAGE>
NOTIFICATION OF
EXPENSE LIMITATION
NOTIFICATION made this 30th day of December, 1998 by Axa Rosenberg
Investment Management LLC, a Delaware limited liability company (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, the Fund offers shares that are 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
percentages 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.
AXA ROSENBERG INVESTMENT MANAGEMENT LLC
By: /S/ Kenneth Reid
----------------------------
Title: Chief Executive Officer
The foregoing is hereby accepted:
BARR ROSENBERG VARIABLE INSURANCE TRUST,
on behalf of its Barr Rosenberg VIT Market Neutral Fund
By: /S/ Kenneth Reid
-------------------------------
Title: President
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 1 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
February 9, 1999
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Kenneth Reid his true and lawful
attorney, with full power to sign for him, in his name and in the capacity
indicated below, any and all registration statements of Barr Rosenberg Variable
Insurance Trust, a Massachusetts business trust, under the Securities Act of
1933 or the Investment Company Act of 1940, and generally to do all things in
his name and in his behalf to enable Barr Rosenberg Variable Insurance Trust to
comply with the provisions of the Securities Act of 1933, the Investment Company
Act of 1940, and all requirements and regulations of the Securities and Exchange
Commission, hereby ratifying and confirming his signature as it may be signed by
his said attorney to any and all registration statements and amendments thereto.
Witness my hand this 1st day of February, 1999.
/s/ Dwight M. Jaffee
-----------------------------
Dwight M. Jaffee
Trustee
