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As filed with the Securities and Exchange Commission on May 1, 2000
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. 5 / X /
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REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
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Amendment No. 7 / 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:
/ X / Immediately upon filing pursuant to paragraph (b)
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/ / On _________ pursuant to paragraph (b)
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/ / 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.
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BARR ROSENBERG VARIABLE INSURANCE TRUST
BARR ROSENBERG VIT MARKET NEUTRAL FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-925-254-6464
MAY 1, 2000
The Barr Rosenberg VIT Market Neutral Fund seeks to increase the value
of your investment in bull markets and in bear markets through strategies
designed to maintain limited 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.
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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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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 limited net exposure to
stock market risk.
SUMMARY OF PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its investment objective by buying stocks that
its investment adviser believes are undervalued and by "selling short" stocks
that its investment adviser believes are overvalued. The Fund invests only
in stocks that are principally traded in the markets of the United States.
By buying and selling short different stocks, the Fund attempts to limit
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. Although the Fund's investment strategy seeks to limit
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 investment adviser. Because the investment adviser could
make poor investment decisions about both the long and the 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 approximately equal dollar
amounts invested in 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 has limited exposure 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
buying a stock at a higher price than the price at which the Fund
previously sold the security short.
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PERFORMANCE INFORMATION
The Fund does not have performance information for a full calendar year
because it commenced operations on July 1, 1999.
PRINCIPAL INVESTMENT STRATEGIES
The investment objective of the Fund is to seek to increase the value of
your shares while maintaining limited net 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 limit 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 limited net
exposure to the U.S. equity market generally and to specific industries,
specific capitalization ranges and 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 that exceed the benchmark. An investment in the
Fund is different from an investment in 3-month U.S. Treasury Bills because,
among other things, 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
as compared to other stock mutual funds.
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 and sell short different
stocks 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.
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RISKS OF REPURCHASE AGREEMENTS
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.
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PORTFOLIO TURNOVER
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 charged by
the insurance company to investor accounts. These fees and charges would
have adversely affected an investor's return on the Market Neutral Accounts.
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The following table compares the average annual total return for a
composite of the 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. . . . . . . 2.59% 14.21% 11.70% 7.55%
3-month U.S.
Treasury Bills. . . . 4.96% 5.10% 5.02% 5.31%
</TABLE>
An investment in the Fund is different from an investment in 3-month
U.S. Treasury Bills because, among other things, 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, the returns would
have been 2.80%, 14.44%, 11.92% and 7.76% for the one-year, three-year,
five-year and since-inception periods ending December 31, 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 the 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.
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FUND MANAGEMENT
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.
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INDEPENDENT TRUSTEES
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
or other disclosure documents 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 or other
disclosure documents 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 or other disclosure documents 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 or other
disclosure documents 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, the Trust believes that the
chance of resulting financial loss for a shareholder is remote since that
type of liability may arise only in very limited circumstances.
20
<PAGE>
(Back cover)
The Fund's statement of additional information ("SAI") dated May 1, 2000
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. Additional information about the Fund's
investments is available in the Fund's annual and semi-annual reports to
shareholders. You may obtain free copies of the SAI and the Fund's annual and
semi-annual reports, 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 the
Annual and Semi-Annual Reports and the SAI at the Public Reference Room of
the Securities and Exchange Commission. You may obtain text-only copies, for
a fee, by writing to the Public Reference Section of the Commission,
Washington D.C. 20549-0102, or by calling 1-202-942-8090, or by electronic
request via e-mail at the following address: [email protected]. You may
obtain text-only copies for free from the Edgar database on the Commission's
website at http://www.sec.gov.
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
<PAGE>
BARR ROSENBERG VARIABLE INSURANCE TRUST
BARR ROSENBERG VIT MARKET NEUTRAL FUND
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
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 May 1, 2000 (the
"Prospectus"). You may obtain a copy of the Prospectus from Barr Rosenberg
Variable Insurance Trust, 3435 Stelzer Road, Columbus, Ohio 43219.
<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. . . . . . . . . . . . . . . . . . . . . . .20
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .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."
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NOTICE ON SHAREHOLDER APPROVAL
Unless otherwise indicated in the Prospectus or this Statement of
Additional Information, the investment objective and policies of the Fund may be
changed without shareholder approval.
INVESTMENT 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 OR OTHER
DISCLOSURE DOCUMENTS 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 (57) 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* (50) Chief Executive Officer, AXA Rosenberg Investment
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 (50) 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 (62) Sylvan C. Coleman Professor of Finance and
Trustee Accounting, Haas School of Business, University of
California, Berkeley, June 1969 to present;
Director, Supershare
-8-
<PAGE>
Services Corporation (investment management), Los
Angeles, California, November 1989 to 1995.
William F. Sharpe (65) 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 (56) Professor of Finance and Real Estate, Haas School
Trustee of Business, University of California, Berkeley,
California, July 1991 to present.
Po-Len Hew (33) 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 (40) 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 (56) 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 (56) President and Chief Executive Officer, Barr
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 (52) 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. (43) 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 an additional fee 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 total compensation accrued and payable to each of
the Trustees of the Trust in the year ended December 31, 1999.
-10-
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION TABLE
(3) (5)
(2) PENSION OR RETIREMENT (4) TOTAL
(1) AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL COMPENSATION
NAME OF PERSON, COMPENSATION AS PART OF BENEFITS FROM FUND AND
POSITION FROM FUND TRUST EXPENSES UPON RETIREMENT FUND COMPLEX (a)
-------- --------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
Nils H. Hakansson $10,890.00(b) $0 $0 $81,180.00(b)
Trustee
William F. Sharpe $10,890.00(b) $0 $0 $81,180.00(b)
Trustee
Dwight M. Jaffee $10,890.00(b) $0 $0 $81,180.00(b)
Trustee
Kenneth Reid $0 $0 $0 $0
Trustee
</TABLE>
(a) The Fund Complex consists of ten funds: the Barr Rosenberg VIT Market
Neutral Fund and the nine series of Barr Rosenberg Series Trust, as
follows, the U.S. Small Capitalization Series, the International Small
Capitalization Series, the Japan Series, the Barr Rosenberg Market Neutral
Fund, the Barr Rosenberg Double Alpha Market Fund, the Barr Rosenberg
Select Sectors Market Neutral Fund, the AXA Rosenberg Equity Enhanced Index
Fund, the AXA Rosenberg International Equity Fund and the AXA Rosenberg
Global Market Neutral Fund, the last three of which will not commence
operations until May 1, 2000.
(b) Reflects fees accrued during the fiscal year regardless of when paid.
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 (the "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.
Pursuant to its management contract, the Adviser has been entitled to
receive $38,103 in management fees from the Barr Rosenberg VIT Market Neutral
Fund since its inception (7/1/99) and has waived $38,103 of such fees.
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.
Pursuant to its Administration Agreement, the Administrator has been
entitled to receive $3,010 in administrative fees from the Barr Rosenberg VIT
Market Neutral Fund since its inception (7/1/99) and has waived $3,010 of such
fees. Pursuant to its Fund Accounting Agreement, the Fund Accountant has
received $26,012 in fund accounting fees from the Barr Rosenberg VIT Market
Neutral Fund since its inception (7/1/99).
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 being
preferred over any other account.
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<PAGE>
BROKERAGE AND RESEARCH SERVICES
Transactions on stock exchanges and other agency transactions involve the
payment of negotiated brokerage commissions. Such commissions vary among
different brokers. There is generally no stated commission in the case of
securities traded in the over-the-counter markets, but the price paid for such
securities usually includes an undisclosed dealer commission or mark up. In
placing orders for the portfolio transactions of the Fund, the 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.
For the fiscal year ended December 31, 1999, the Fund paid $25,521
in brokerage commissions. The Funds pay brokerage commissions to Donaldson
Lufkin and Jenrette, which may be deemed to be an "affiliate of an affiliate" of
the Trust. Securities and Exchange Commission rules require that commissions
paid to an affiliate of an affiliate by the Fund for portfolio transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." The Trustees, including those who are not "interested persons"
of the Trust, have adopted procedures for evaluating the reasonableness of
commissions paid to such affiliates and will review these procedures
periodically. During the fiscal year ended December 31, 1999, the Fund paid $395
to Donaldson Lufkin and Jenrette in brokerage commissions.
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
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<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.
The cumulative return for the Fund for the period from it's inception
(7/1/99) through December 31, 1999 was -3.80%.
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: (1) 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
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<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
December 31. The Trust changed its name to "Barr Rosenberg Variable
Insurance Trust" from "Barr Rosenberg Variable Trust" on March 27, 1998.
Interests in the Trust's portfolios are currently represented by shares
of one series, the Barr Rosenberg VIT Market Neutral Fund, issued pursuant to
the Declaration of Trust. The rights of shareholders and powers of the
Trustees of the Trust with respect to 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 their 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.
-19-
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
The procedures for purchasing shares of the Fund and for determining the
offering price of such shares are described in the Prospectus.
FINANCIAL STATEMENTS
The Report of Independent Accountants, financial highlights and
financial statements of the Barr Rosenberg VIT Market Neutral Fund included in
its Annual Report for the period ended March 31, 1999 (the "Annual Report") are
incorporated herein by reference to such Annual Report. Copies of such Annual
Report are available without charge upon request by writing to Barr Rosenberg
Series Trust, 3435 Stelzer Road, Columbus, Ohio 43219 or telephoning
1-800-447-3332.
The financial statements incorporated by reference into this Statement
of Additional Information have been audited by PricewaterhouseCoopers LLP,
independent accountants, and have been so included and incorporated by reference
in reliance upon the report of said firm, which report is given upon their
authority as experts in auditing and accounting.
<PAGE>
<PAGE>
<PAGE>
<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 - incorporated by reference to Post-Effective
Amendment No. 1 to the Registration Statement filed on
February 16, 1999;
(e) None;
(f) None;
(g) (1) Custody Agreement between the Registrant and Custodial Trust
Company -- incorporated by reference to Post-Effective
Amendment No. 3 filed on April 16, 1999.
(2) Special Custody Account Agreement among the Registrant,
Custodial Trust Company and Bear, Stearns Securities Corp. --
incorporated by reference to Post-Effective Amendment No. 3
filed on April 16, 1999.
(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 --
incorporated by reference to Post-Effective Amendment No. 1 to
the Registration Statement filed on February 16, 1999;
(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 -- filed herewith
(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) Distribution and Service Plan of the Registrant -- incorporated
by reference to Post-Effective Amendment No. 3 filed on
April 16, 1999.
(n) Not Applicable;
(o) Not Applicable;
(p) (1) Code of Ethics of the Registrant -- filed herewith;
(2) Code of Ethics of AXA Rosenberg Investment Management LLC,
investment adviser to the Funds -- filed herewith;
(3) Code of Ethics of BISYS Fund Services Ohio, Inc., principal
underwriter to the funds -- filed herewith;
(q) (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 -- incorporated
by reference to Post-Effective Amendment No. 1 to
the Registration Statement filed on February 16, 1999;
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 and to the six series of Barr Rosenberg
Series Trust, an open-end management investment company.
Set forth below are the substantial business engagements during at least
the past two fiscal years of each director 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 Fund certifies that it meets all of the
requirements for effectiveness of this Amendment to its Registration
Statement under Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 5 to its Registration Statement to
be signed on its behalf by the undersigned, duly authorized, in the City of
Orinda, and the State of California, on the 28th day of April, 2000.
BARR ROSENBERG VARIABLE INSURANCE
TRUST
By: RICHARD L. SAALFELD
-------------------------------------
Richard L. Saalfeld
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to its Registration Statement has been signed below by the following
persons in the capacities indicated and on the 28th day of April, 2000.
SIGNATURE TITLE DATE
--------- ----- ----
RICHARD L. SAALFELD President (principal April 28, 2000
------------------- executive officer)
Richard L. Saalfeld
KENNETH REID Trustee April 28, 2000
----------------
Kenneth Reid
Po-Len Hew* Treasurer April 28, 2000
- ------------------------ (principal financial and
Po-Len Hew accounting officer)
William F. Sharpe* Trustee April 28, 2000
- ------------------------
William F. Sharpe
Nils H. Hakansson* Trustee April 28, 2000
- ------------------------
Nils H. Hakansson
Dwight M. Jaffee* Trustee April 28, 2000
- ------------------------
Dwight M. Jaffee
*By: KENNETH REID
----------------------
Kenneth Reid
Attorney-in-Fact
Date: April 28, 2000
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
23(i) Opinion of Ropes & Gray
23(j) Consent of PricewaterhouseCoopers LLP
23(p)(1) Code of Ethics of the Registrant;
23(p)(2) Code of Ethics of AXA Rosenberg Investment
Management LLC, investment adviser to the Fund;
23(p)(3) Code of Ethics of BISYS Fund Services Ohio, Inc.,
principal underwriter to the Fund;
<PAGE>
EXHIBIT 23(i)
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
Fax: (617) 951-7050
April 28, 2000
Barr Rosenberg Variable Insurance Trust
4 Orinda Way, Building E
Orinda, CA 94563
Ladies and Gentlemen:
We are furnishing this opinion in connection with the proposed offer and
sale by Barr Rosenberg Variable Insurance Trust, a Massachusetts business trust
(the "Trust"), of shares of beneficial interest of its Barr Rosenberg VIT Market
Neutral Fund (the "Shares") pursuant to a registration statement on Form N-1A
(the "Registration Statement") under the Securities Act of 1933, as amended.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's By-Laws, as
amended, and its Agreement and Declaration of Trust, as amended (the
"Declaration of Trust"), on file in the office of the Secretary of The
Commonwealth of Massachusetts and such other documents as we have deemed
necessary for the purposes of this opinion.
We assume that upon sale of the Shares the Trust will receive the net
asset value thereof.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the Shares are
issued and sold, they will be validly issued, fully paid and nonassessable by
the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
the property of the particular series of shares for all loss and expense of any
shareholder of that
<PAGE>
Barr Rosenberg Variable Insurance Trust -2- April 28, 2000
series held personally liable solely by reason of his or her having been a
shareholder of that series. Thus, the risk of shareholder liability is limited
to circumstances in which that series itself would be unable to meet its
obligations.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
ROPES & GRAY
Ropes & Gray
<PAGE>
EXHIBIT 23(j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting parts of this
Post-Effective Amendment No. 5 to the registration statement on Form N-1A
(the "Registration Statement") of our report dated February 11, 2000 relating
to the financial statements and financial highlights of the Barr Rosenberg
VIT Market Neutral Fund (a portfolio of Barr Rosenberg Variable Insurance
Trust) which appears in the December 31, 1999 Annual Report to Shareholders
of Barr Rosenberg Variable Insurance Trust which is also incorporated by
reference into the Registration Statement. We also consent to the references
to us under the heading "Financial Highlights" in the Prospectus and the
headings "Independent Accountants" and "Financial Statements" in the
Statement of Additional Information.
PRICEWATERHOUSECOOPERS LLP
- -------------------------------------
PricewaterhouseCoopers LLP
San Francisco, California
April 28, 2000
<PAGE>
EXHIBIT 23(p)(1)
BARR ROSENBERG VARIABLE INSURANCE TRUST - CODE OF ETHICS
In order to ensure that personnel of Barr Rosenberg Variable Insurance
Trust (the "Trust") comply with the requirements of Section 17(j) of the
Investment Company Act of 1940 (the "Act") and of Rule 17j-l thereunder, the
Trust has adopted the Code of Ethics (the "Code") set forth below.
Certain of the officers and Trustees of the Trust are officers or
directors of the Trust's investment manager, AXA Rosenberg Investment Management
LLC ("AXA"). AXA reviews and determines investment policies for the Trust and
manages the day-to-day investment affairs of the Trust, including selecting
securities to be purchased, held and sold, and placing orders for portfolio
transactions.
I. DEFINITIONS
(A) "Access person" means any Trustee, officer or advisory person of the
Trust.
(B) "Advisory person" means (i) any employee of the Trust or of any
company in a control relationship to the Trust, who, in connection
with his or her regular functions or duties, makes, participates in,
or obtains information regarding the purchase or sale of a security by
the Trust, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and (ii) any
natural person in a control relationship to the Trust who obtains
information concerning recommendations made to the Trust with regard
to the purchase or sale of a security.
(C) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated or, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
(D) A security is "being purchased or sold" by an Investment Company from
the time when a purchase or sale program has been communicated to the
person who placed the buy and sell orders for such Investment Company
until the time when such program has been fully completed and
terminated.
(E) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that the determination of direct or
indirect beneficial ownership shall apply to all securities which an
access person has or acquires.
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(F) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act. Section 2(a)(9) provides that "control" means the
power to exercise a controlling influence over the management or
policies of a company, unless such power is solely the result of an
official position with such company.
(G) "Disinterested Trustee" means a Trustee of the Trust who is not an
"interested person" of the Trust within the meaning of Section
2(a)(19) of the Act.
(H) "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include securities issued by the
Government of the United States (including government money market
instruments of the type issued by agencies of the federal government
or guaranteed by the federal government or its agencies) bankers'
acceptances, bank certificates of deposit, commercial paper and shares
of registered open-end investment companies, or such other securities
as may be excepted under the provisions of Rule 17j-1.
(I) "Security held or to be acquired" by the Trust means any security
which, within the most recent fifteen days, (i) is or has been held by
the Trust, or (ii) is being or has been considered by the Trust or its
investment adviser for purchase by the Trust.
II. A person who normally only assists in the preparation of public reports, or
receives public reports, but receives no information about current
recommendations or trading is neither an "advisory person" nor an "access
person." A single instance or infrequent, inadvertent instances of
obtaining knowledge does not make one either then or for all times an
advisory person. Under the definition of "advisory person" the phrase
"makes . . . the purchase or sale" means someone who places orders or
otherwise arranges transactions. An advisory person or access person of the
Trust does not include an employee of a company in a control relationship
to the Trust where such company is required to have a code of ethics
containing provisions reasonably necessary to prevent its access persons
from engaging in any act, practice or course of business prohibited by Rule
17j-1(a) and such employee is required to report his transactions to such
company.
III. EXEMPTED TRANSACTIONS
The prohibitions of Section III of this Code shall not apply to the
following transactions by access persons:
(1) Purchases or sales over which the access person has no direct or
indirect influence or control.
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(2) Purchases or sales of securities which are not eligible for
purchase or sale by the Trust, as determined by reference to the
Act and blue sky laws and regulations thereunder, the investment
objectives and policies and investment restrictions of the Trust
and its series, undertakings made to regulatory authorities, and
other policies adopted from time to time by the Trust or AXA.
(3) Purchases or sales which are nonvolitional on the part of either
the access person or the Trust, including purchases or sales upon
exercise of puts or calls written by the access person and sales
from a margin account pursuant to a bona fide margin call.
(4) Purchases which are part of an automatic dividend reinvestment
plan.
(5) Purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its securities, to
the extent such rights were acquired from such issuer.
(6) Transactions which appear to present no reasonable likelihood of
harm to the Trust, which are otherwise in accordance with Rule
17j-1, and which the President of the Trust has authorized in
advance. Such transactions would normally include purchases or
sales of up to 500 shares of a security which is being considered
for purchase or sale by the Trust (but not being purchased or
sold) if the issuer has a market capitalization of over $1
billion.
(7) Transactions which the Disinterested Trustees, after
consideration of all the facts and circumstances, determine to
have not been fraudulent, deceptive or manipulative as to the
Trust.
IV. PROHIBITED PURCHASES AND SALES
(A) No access person shall, in connection with the purchase or sale,
directly or indirectly, by such person of a security held or to be
acquired by the Trust:
(1) employ any device, scheme or artifice to defraud the Trust;
(2) make to the Trust any untrue statement of material fact or omit
to state to the Trust a material fact necessary in order to make
the statements made, in light of the circumstances under which
they are made, not misleading;
(3) engage in any act, practice or course of business which would
operate as a fraud or deceit upon the Trust; or
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(4) engage in any manipulative practice with respect to the Trust.
(B) In this connection, subject to the exceptions stated in Section II of
this Code, it shall be impermissible for any access person to purchase
or sell, directly or indirectly, any security (or any option to
purchase or sell such security) in which he had, or by reason of such
transaction acquires, any direct or indirect beneficial ownership and
which he actually knows at the time of such purchase or sale:
(1) is being considered for purchase or sale by the Trust; or
(2) is being purchased or sold by the Trust.
(C) Any access person who questions whether a contemplated transaction is
prohibited by this Code should discuss the transaction with the
President of the Trust prior to proceeding with the transaction.
V. REPORTING
(A) Every access person shall file with the Clerk of the Trust a report
containing the information described in Section IV(C) of this Code
with respect to transactions in any security in which such access
person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security (regardless of whether
such transaction is listed in Section II(2)-(6); provided, however,
that such access person shall not be required to make a report with
respect to transactions effected for any account over which such
person does not have any direct or indirect influence or control, and
provided, further, that the term "security" does not include the
savings or demand deposit accounts of access persons with banks or
thrifts.
(B) A Disinterested Trustee of the Trust need only report a transaction,
if at the time of that transaction, such Trustee knew or, in the
ordinary course of fulfilling his official duties as a Trustee, should
have known that, during the 15-day period immediately preceding or
following the date of the transaction by the Trustee, such security is
or was purchased or sold by the Trust or was being considered by the
Trust or AXA for purchase or sale by the Trust. (The "should have
known" standard implies no duty or inquiry, does not presume that
there should have been any deduction or extrapolation for discussions
or memoranda dealing with tactics to be employed in meeting the
Trust's investment objectives, or that any knowledge is to be imputed
because of prior knowledge of the Trust's portfolio holdings, market
considerations, or the Trust's investment policies, objectives and
restrictions.)
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(C) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(1) The date of the transaction and the title and number of shares of
principal amount of each security involved;
(2) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition), including information
sufficient to establish any exemption listed in Sections
II(2)-(6) which is relied upon;
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or through whom the
transaction was effected.
(D) The making of such report shall not be construed as an admission by
the person making such report that he has any direct or indirect
beneficial ownership in the security to which the report relates, and
the existence of any report shall not be construed as an admission
that any event reported on constitutes a violation of Section III (A)
hereof.
VI. REVIEW AND ENFORCEMENT
(A) REVIEW
(1) The President of the Trust shall cause the reported personal
securities transactions to be compared with completed and
contemplated portfolio transactions of the Trust to determine
whether any transactions (each a "Reviewable Transaction") listed
in Section III may have occurred.
(2) If the President of the Trust determines that a Reviewable
Transaction may have occurred, he shall then determine whether a
violation of this Code may have occurred, taking into account all
the exceptions provided under Section II. Before making any
determination that a violation has been committed by an
individual, the President of the Trust shall give such person an
opportunity to supply additional information regarding the
transaction in question.
(B) ENFORCEMENT
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(1) If the President of the Trust determines that a violation of this
Code may have occurred, he shall promptly report the possible
violation to the Trustees of the Trust, who, with the exception
of any person whose transaction is under consideration, shall
take such actions as they consider appropriate, including
imposition of any sanctions that they consider appropriate.
(2) No person shall participate in a determination of whether he has
committed a violation of this code or in the imposition of any
sanction against himself. If a securities transaction of the
President of the Trust is under consideration, a Trustee or other
officer of the Trust designated for the purpose by the vote of
the Trustees of the Trust, shall act in all respects in the
manner prescribed herein for the President of the Trust.
VI. INVESTMENT ADVISER'S CODE OF ETHICS
Any investment manager, adviser or sub-adviser and any principal
underwriter of the Trust shall:
(A) Submit to the Board of Trustees of the Trust a copy of a Code of
Ethics adopted pursuant to Rule 17j-1 and satisfactory to the Trust;
(B) Promptly report to the Trust in writing any material amendments to
such Code;
(C) Promptly furnish to the Trust upon request at any time and from time
to time copies of any reports made pursuant to such Code by any person
who is an advisory person or access person as to the Trust; and
(D) Shall immediately furnish to the Trust, without request, all material
information regarding any violation of such Code by any person who is
an advisory person or access person as to the Trust.
VII. RECORDS
(A) The Trust shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the Act and shall be
available for appropriate examination by representatives of the
Securities and Exchange Commission.
(1) A copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
in an easily accessible place.
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(2) A record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs.
(3) A copy of each report made pursuant to this Code by any access
person shall be preserved by the Trust for a period of not less
than five years from the end of the fiscal year in which it is
made, the first two years in an easily accessible place.
(4) A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code shall be
maintained in an easily accessible place.
(B) CONFIDENTIALITY
All reports of securities transactions and any other information filed
with the Trust pursuant to this Code shall be treated as confidential,
except as regards appropriate examinations by representatives of the
Securities and Exchange Commission.
VIII. AMENDMENT; INTERPRETATION OF PROVISIONS
The Trustees may from time to time amend this Code or adopt such
interpretations of this Code as they deem appropriate.
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EXHIBIT 23(p)(2)
CODE OF ETHICS
OF
AXA ROSENBERG INVESTMENT MANAGEMENT LLC
This Code of Ethics (the "Code"), has been adopted by AXA Rosenberg Investment
Management LLC (the "Company") on April 26, 2000. The Code shall apply to all
Covered Persons (as defined below in Section 2), except as noted in Section 3
below.
1. STATEMENT OF GENERAL PRINCIPLES.
This Code is intended as a statement of general fiduciary principles that govern
the personal investment and other activities of all Covered Persons. In addition
to the specific standards and guidelines set forth below, Covered Persons must
govern themselves in accordance with the AXA Rosenberg Group Policy On Personal
Trading and Insider Trading (attached as Exhibit 1 and incorporated herein by
reference) and the following general principles:
A. The Code is based on the principle that all Covered Persons owe a
fiduciary duty to, among others, the shareholders of the U.S.
registered investment companies and series thereof (each a "Fund" and,
collectively, the "Funds") and other clients for which the Company
acts as investment adviser (each a "Client" and, collectively, its
"Clients"), to conduct their personal securities transactions in a
manner which does not interfere with a Fund's or a Client's portfolio
transactions or otherwise take unfair advantage of their relationship
to any Fund or Client. Persons covered by this Code must adhere to
this general principle and must comply with the specific provisions
contained in the Code and in the AXA Rosenberg Group Policy On
Personal Trading and Insider Trading.
B. Covered Persons should not take inappropriate advantage of their
positions. Troublesome questions can arise whenever Covered Persons
receive unusual investment opportunities, perquisites, or gifts of
more than de minimis value from persons doing or seeking to do
business with a Fund or the Company. As a general principle, it is
imperative that those who work for or on behalf of the Fund or the
Company avoid any situation which might compromise or call into
question the exercise of their fully independent judgment or the
fulfillment of their fiduciary duties to any Fund or Client.
C. This Code does not attempt to identify all possible conflicts of
interests and literal compliance with each of the specific procedures
will not necessarily shield Covered Persons from liability for
personal trading or other conduct which violates their fiduciary
duties to a Fund or a Client. In addition to the specific prohibitions
contained in this Code, Covered Persons are also subject to a general
requirement not to engage in any act or practice that would defraud a
Fund or Client. This general prohibition includes, in
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connection with the purchase or sale of a Security Held or to be
Acquired (as such term is defined in Section 2 below) by a Fund or
Client:
(i) Making any untrue statement of a material fact;
(ii) Creating materially misleading impressions by omitting to
state or failing to provide any information necessary to make
any statements made, in light of the circumstances in which
they are made, not misleading;
(iii) Making investment changes in the research model and trading
decisions other than for the benefit of and in the overall
best interest of the Company's Funds and Clients;
(iv) Using information about investment or trading decisions or
changes in the research model (whether considered, proposed or
made) to benefit or avoid economic injury to anyone other than
a Fund or a Client;
(v) Taking, delaying, or omitting to take any action with respect
to any research model recommendation or report or any
investment or trading decision for a Fund or a Client in order
to avoid economic injury to anyone other than a Fund or a
Client;
(vi) Purchasing or selling a Security on the basis of knowledge of
a possible trade by or for a Fund or a Client;
(vii) Revealing to any other person (except in the normal course of
an Covered Person's duties on behalf of a Fund or a Client)
any information regarding Securities transactions by a Fund or
on behalf of a Client or the consideration by a Fund or a
Client of any such Securities transactions; or
(viii)Engaging in any manipulative practice with respect to a Fund
or a Client.
2. DEFINITIONS.
A. "Covered Person" means any director, trustee, officer, member,
employee, general partner, or Advisory Person of the Company including
any person whose function causes such person to be an "Access Person"
of the Company as defined by Rule 17j-1 of the Investment Company Act
of 1940 ("Investment Company Act"). In addition, "Covered Person"
includes any director, officer, or employee of a Subadviser or
Distributor whose function causes such person to be an "Access Person"
as defined by Rule 17j-1 of the Investment Company Act."Covered
Person" shall also include all "Investment Personnel" (as defined
herein).
B. "Advisory Person" means any employee of a Fund or the Company, or of
any company in a Control relationship to a Fund or the Company, who,
in connection with his regular
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functions or duties, makes, participates in, or obtains information,
regarding the purchase or sale of a Security by a Fund, or whose
functions relate to the making of any recommendations with respect to
such purchases or sales.
C. "AXA Rosenberg Group Policy On Personal Trading and Insider Trading"
means the personal trading policy and procedures (as the same may from
time to time be revised, amend or restated) applicable to Covered
Persons.
D. "Beneficial Ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16a-1(a)(2) of the Securities Exchange Act of 1934 and the
rules and regulations thereunder, except that the determination of
direct or indirect beneficial ownership shall apply to all securities
which an Covered Person has or acquires.
E. "Company" shall mean AXA Rosenberg Investment Management LLC.
F. "Compliance Officer" shall mean that person, as designated by the
Company from time to time, who is primarily responsible for the
various compliance functions of such officer as set forth in this Code
and for ensuring that the provisions of this Code are followed by
those persons to whom they apply. Initially, the Compliance Officer
shall be William R. Wiebe, Esq.
G. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act.
H. "Distributor" means Barr Rosenberg Funds Distributor, Inc.
I. "Fund" means the investment companies and series thereof.
J. "Client" means any person or other business entities for which the
Company acts as investment adviser.
K. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933 [15 U.S.C. 77a], the issuer of which,
immediately before the registration, was not subject to the reporting
requirements of sections 13 of 15(d) of the Securities Exchange Act of
1934 [15 U.S.C. 78m or 78o(d)].
L. "Investment Personnel" means: (i) Any employee of a Fund or the
Company (or of any company in a Control relationship to a Fund or the
Company) who, in connection with his or her regular functions or
duties, makes or participates in making recommendations regarding the
purchase or sale of securities by a Fund; (ii) any natural person who
controls a Fund or the Company and who obtains information concerning
recommendations made to a Fund regarding the purchase or sale of
securities by such Fund.
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M. "Purchase or sale of a Security" includes, INTER ALIA, the writing of
an option to purchase or sell a security, including any security that
is convertible into or exchangeable for any security that is held or
to be acquired by a Fund or a Client.
N. "Restricted Person" means the Covered Person, his/her spouse
(including any domestic partner or "significant other" of the Covered
Person living in the same household as the Covered Person), the
Covered Person's minor children, and/or any other of the Covered
Person's immediate adult family members living in the same household
as the Covered Person to whom the Covered Person provides investment
advice or information relating to such proposed trade (please note
that Covered Persons are prohibited from disclosing any investment
information obtained in the course of their work with the Company,
except as required by law or as required for legitimate Company
business purposes) or any trust(s) of which the Covered Person or a
Restricted Person is a trustee or beneficiary.
O. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Investment Company Act, except that it shall not include shares of
registered open-end investment companies, securities issued by the
Government of the United States, short-term debt securities which are
"government securities" within the meaning of Section 2(a)(16) of the
Investment Company Act, repurchase agreements and other high quality
short term debt instruments (any instrument with a maturity at
issuance of less than 366 days and that is rated in one of the two
highest rating categories by a nationally recognized rating
organization), bankers' acceptances, bank certificates of deposit,
commercial paper, and such other money market instruments as
designated by the board of trustees of a Fund.
P. "Security Held or to be Acquired" by a Fund or a Client means: any
Security (including any option to purchase or sell, and any security
convertible into or exchangeable for, a Security) which: (A) is held
by the Fund or in a Client account; or (B) is being considered by the
Fund or the Company for purchase by a Fund or a Client account.
Q. "Subadviser" means such companies, if any, which may from time to time
act as a subadviser to the Company for a Fund.
3. APPLICATION.
The Subadvisers to a Fund, if any, and their affiliates will have their own
Codes of Ethics pursuant to Rule 17j-l under the Investment Company Act. Any
person, who is subject to a Subadviser's Code of Ethics that has been approved
by a Fund's trustees pursuant to Rule 17j-1 and who complies with such Code,
shall not be subject to the provisions of this Code with respect to his
relations with such Fund.
4. EXEMPTED TRANSACTIONS.
The prohibitions of Section 5 of this Code shall not apply to:
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(i) Purchases or sales of Securities effected in any account over which
the Covered Person has no direct or indirect influence or control.
(ii) Purchases or sales of Securities which are non-volitional on the
part of the Covered Person or the relevant Fund of Client account.
(iii) Purchases of Securities which are part of an automatic dividend
reinvestment plan.
(iv) Purchases of Securities effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
5. PROHIBITED PURCHASES OR SALES.
A Covered Person shall not purchase or sell, directly or indirectly, any
Security in which he or she has, or by reason of such transaction acquires, any
direct or indirect Beneficial Ownership and which he or she knows (or should
have known at the time of such purchase or sale):
(i) is being (or is recommended to be) purchased by the Company's
investment model on behalf of a Fund or a Client (in the case of a
purchase of a Security by an Covered Person); or
(ii) is being (or is recommended to be) sold by the Company's investment
model on behalf of a Fund or a Client (in the case of a sale of a
Security by an Covered Person); or
(iii) for any other reason has not been approved by the Compliance Officer
(or his or her designated representative).
6. PRE-CLEARANCE OF PERSONAL TRADES.
For any non-exempt transaction, Covered Persons shall obtain approval from the
Compliance Officer (or his or her designated representative) prior to the
acquisition or sale of any Security on behalf of any Restricted Person (such
transactions shall include any "trade" as defined in the AXA Rosenberg Group
Policy On Personal Trading and Insider Trading). Any request for pre-clearance
of a personal trade shall be made in the manner provided in the AXA Rosenberg
Group Policy On Personal Trading and Insider Trading.
7. PRE-CLEARANCE OF PARTICIPATION IN PRIVATE PLACEMENTS AND INITIAL PUBLIC
OFFERINGS.
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All Investment Personnel shall obtain approval from the Compliance Officer (or
his or her designated representative) prior to the acquisition of securities
issued pursuant to a private placement or an Initial Public Offering on behalf
of any Restricted Person. Any request for pre-clearance of a private placement
or an Initial Public Offering shall be made in the manner provided in the AXA
Rosenberg Group Policy On Personal Trading and Insider. In reviewing the
request, the Compliance Officer shall take into account, among other factors,
whether the opportunity is being offered to such person as a result of his or
her position with a Fund or the Company and whether such approval would create
any material conflict of interest or any appearance of a material conflict of
interest.
8. REPORTING.
A. Every Covered Person shall, in a timely manner, provide to the
Compliance Officer (or his or her designated representative) all
applicable information required to be reported under the provisions
contained in the AXA Rosenberg Group Policy On Personal Trading and
Insider Trading, including, without limitation, all quarterly and
annual reporting and disclosure requirements contained therein and all
reports and account statements with respect to any non-exempt
transactions regarding any Security in which such Covered Person has,
or by reason of such transaction on behalf of any Restricted Person
acquires, any direct or indirect Beneficial Ownership.
B. Any such report provided by a Covered Person may contain a statement
that the report shall not be construed as an admission by the person
making such report that he or she has any direct or indirect
Beneficial Ownership in the Security to which the report relates.
C. All such reports, account statements, and all related information
described in this Section 8 of the Code shall be subject to review by
the Compliance Officer (or his or her designated representative) or
other appropriate management personnel.
D. Confidentiality. All reports of securities transactions and any other
information filed with the Company by Covered Persons pursuant to this
Code or the AXA Rosenberg Group Policy On Personal Trading and Insider
Trading shall be treated as confidential by the Company, except in
regards to examinations by appropriate Company management,
representatives of the Securities and Exchange Commission, or as
otherwise required by law.
9. RECORDS.
The Company shall maintain records in the manner and to the extent set forth
below that shall be available for appropriate examination by representatives of
the Securities and Exchange Commission.
A. A copy of this Code and any other code which is, or at any time within
the past five years has been, in effect shall be preserved in an
easily accessible place.
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B. A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs.
C. The Company shall preserve a copy of each report made pursuant to this
Code by any Covered Person for a period of not less than five years
from the end of the fiscal year in which it is made, the first two
years in an easily accessible place.
D. A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code shall be
maintained in an easily accessible place.
E. A record of any decision, and the reasons supporting the decision, to
approve the acquisition by Covered Persons of securities under
Sections 6 and 7 of this Code, shall be maintained for at least five
years after the end of the fiscal year in which the approval is
granted.
10. OTHER RESTRICTED ACTIVITIES OF COVERED PERSONS.
A. GIFTS. Covered Persons are prohibited from receiving, either directly
or indirectly, any item which has a value in excess of a DE MINIMIS
amount from any person where such payment or gratuity is in relation
to the business of the employer of the offeror of the payment or
gratuity.
B. SERVICE AS A DIRECTOR. Covered Persons are prohibited from serving on
the boards of directors of publicly traded companies, absent a prior
authorization from the Compliance Officer based upon a determination
that the board service would not be inconsistent with the interests of
the Funds or the Company's Clients.
11. SANCTIONS.
Upon discovering a violation of this Code, the Company may impose such sanctions
as it deems appropriate, including INTER ALIA, a letter of censure or suspension
or termination of the employment of the violator. Any material violations of
this Code and any sanctions imposed with respect hereto shall be reported
periodically to the board of trustees (or directors) of the relevant Fund or
Funds.
12. CERTIFICATION OF COMPLIANCE WITH CODE.
All Covered Persons shall certify annually that they:
(i) have read and understood the Code and are subject thereto;
(ii) have complied with the requirements of the Code; and
(iii) disclosed or reported all personal securities transactions
required to be disclosed or reported pursuant to the
requirements of the Code.
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13. REPORT AND CERTIFICATION OF ADEQUACY TO THE MEMBERS AND BOARDS.
On an annual basis, the Compliance Officer shall prepare a written report to the
management of the Company and the boards of trustees (or directors) of the Funds
setting forth the following:
(i) stating that the Code of Ethics procedures have been designed to
prevent Covered Persons from violating the Code;
(ii) a summary of existing procedures concerning personal investing and
any changes in procedures made during the past year;
(iii) identifying any violations that required significant remedial action
during the past year; and
(iv) identifying any recommended changes in existing restrictions or
procedures based upon the Company's experience under the Code,
evolving industry practices, or developments in applicable laws or
regulations.
14.
15. BOARD APPROVAL.
Following the report and certification by the Compliance Officer, the boards of
trustees of the Fund or Funds(s) (including a majority of independent trustees)
must approve this Code of Ethics on an annual basis. Any material change to this
Code must be approved within six months.
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EXHIBIT 1
AXA ROSENBERG GROUP POLICY ON PERSONAL TRADING AND INSIDER TRADING
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AXA ROSENBERG GROUP
POLICY ON PERSONAL TRADING AND INSIDER TRADING
Various restrictions, policies, guidelines and regulations relating to personal
trading have either been mandated or suggested by the various regulatory
authorities in jurisdictions where the AXA Rosenberg Group LLC and/or its
subsidiaries (hereafter collectively referred to as "AXA Rosenberg Group") are
located and/or do business.(1) In response to these various regulatory and
advisory schemes, the AXA Rosenberg Group has adopted the following policy on
personal trading which applies globally to (i) all permanent, part-time and
contracted employees of the AXA Rosenberg Group, (ii) all officers of the AXA
Rosenberg Group, (iii) certain directors (including all directors of
SEC-registered investment advisers within the AXA Rosenberg Group(2) and to any
other directors of other AXA Rosenberg Group entities as may be required by
applicable law or regulation) and (iv) certain designated independent
contractors or consultants who work at the AXA Rosenberg Group (hereinafter
(i)-(iv) collectively referred to as "employees").
I. PERSONAL TRADING
Although the management of the AXA Rosenberg Group would prefer that employees
do not trade actively in equities or equity derivatives for their personal
accounts, such trading is not prohibited. If an employee does wish to trade
equities or equity derivatives, any and all trades must be approved in advance
and in writing (electronically or otherwise) by the appropriate compliance
officer or the back-up compliance officer(s) (see Attachment A). (The
appropriate compliance officer is the compliance officer or back-up compliance
officer(s) designated in the zone where the stock is valued in real-time.) U.S.,
Canadian and Asian ex-Japan stocks are valued in real-time in Orinda,
California; Japanese stocks are valued in real-time in Tokyo; European stocks
are valued in real-time in London. The current compliance officer (and the
back-up compliance officer(s)) for each office are listed in Attachment A. These
individuals may change from time to time.
For purposes of the AXA Rosenberg Group Personal Trading Policy, a "trade" is
defined as any trade made in the name of, or on behalf of, the employee, his/her
spouse (including any domestic partner or "significant other" of the employee
living in the same household as the employee), the employee's minor children,
and/or any other of the employee's immediate adult family members living in the
same household as the employee to whom the employee provides investment advice
or information relating to such proposed trade (please note that employees are
prohibited from disclosing any investment information obtained in the course of
their work with the AXA Rosenberg Group, except as required by law or as
required for legitimate AXA Rosenberg Group business
- ------------------
(1) These regulatory authorities include, but are not necessarily limited to,
the Securities and Exchange Commission ("SEC") in the US, Financial Services
Agency ("FSA") in Japan, the Investment Management Regulatory Organization
("IMRO") of the Financial Services Authority in the United Kingdom, and the
Monetary Authority of Singapore ("MAS").
(2) See Rule 204-2(a)(12) of the Investment Advisers Act, "advisory
representatives" including all "directors" of the investment adviser and
requires that they report/record their trades with the Investment Adviser within
10 days of the end of the quarter in which the trade took place.
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<PAGE>
purposes) (such individuals herein after collectively referred to as "restricted
persons"), as well as any trade in the name of a trust(s) of which the employee
or a restricted person is a trustee or beneficiary. Exempt from the definition
of a "trade" is any trade in open-end mutual funds (or similar investment
vehicles such as unit trusts or investment trusts in the U.K. and investment
trusts in Japan), closed-end mutual funds, tender offers, bonds, government
securities, money market accounts, index unit investment trusts such as Spiders,
Diamonds, Qubes, and WEBS, widely recognized and traded index futures or options
on index futures (examples of such indexes include the S&P 500, OEX, Nasdaq, and
other similar US or international index futures or options), automatic dividend
re-investment plans, and those trades over which the employee (or the other
restricted person), his/her spouse, and/or minor children exercise no
discretion, including wrap accounts, blind trusts, and discretionary accounts
which are managed by third party investment advisers and in which the employee
makes no stock selection recommendations. Execution of a previously approved
option or other equities derivative on the expiration day for such option or
other equities derivative shall not be considered a "trade" requiring approval.
If an employee is uncertain whether an investment would qualify as an exempt
trade outlined above, the employee should contact the designated compliance
officer in his or her relevant AXA Rosenberg office. A "trade" includes all
other trades by an employee or a restricted person in publicly-traded stocks,
options, warrants on common stock, financial futures, and all other forms of
equity related derivatives.
In seeking approval for a trade (either for the employee or on behalf of the
restricted person related to the employee), the employee must comply with the
applicable personal trade approval procedures in Appendix 1 (outlining the
automated and non-automated trade approval procedures) as such procedures may,
from time to time, be amended, revised or restated. These procedures may vary
depending upon the location of the appropriate compliance officer and on whether
or not the trade approval process has been automated.
Regardless of the procedure used for approving an employee's personal trade, the
employee's requested personal trade will be checked against the AXA Rosenberg
Group's current recommendations from the most recent overnight and real-time
Trading Assistant ("TA") system. No trade will be approved for the purchase or
cover of a stock that is currently recommended for purchase or cover on the AXA
Rosenberg Group's most recent overnight and real-time TA system. Likewise, no
trade will be approved for the sale or short of a stock that is currently
recommended for sale or short on the AXA Rosenberg Group's most recent overnight
and real-time TA system.
If the TA is NOT recommending the same transaction, the compliance officer will
USUALLY approve the trade, although he or she has the discretion and the
authority to deny trade approval, even if the TA is not recommending the same or
a similar transaction, if the compliance officer believes that the trade would
not be in the best interest of the AXA Rosenberg Group or its clients or if for
some other reason, the compliance officer believes that trade approval is not
appropriate. (For example, if trading in the stock is suspended or limited
because of activities related to other members of the AXA Group.) Only AFTER the
employee has received WRITTEN trade approval from the appropriate compliance
officer may the employee execute the approved personal trade.
Except as stated in the following paragraph, approval of an employee's personal
trade is valid only through the end of the trading day in the zone of the
appropriate compliance officer. Specifically,
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trades may be approved and are valid as follows: in Orinda between 6:30 a.m. and
1:15 p.m. Orinda time; in London, between 8:30 a.m. and 4:30 p.m. London time;
in Tokyo, between 9:00 a.m. and 3:00 p.m. Tokyo time. If the trade is not
effected within these hours and the employee still wants to make the trade the
next day (or on any subsequent day), the employee must again seek approval for
the trade under the procedures outlined below.
An employee seeking to effect a "good-til-cancel" ("GTC") trade does NOT have to
have approval from the compliance officer each day until the order is filled.
Instead, the GTC trade approval request is handled initially in the same manner
as any other request for personal trade approval, except that the employee
request's for trade approval must seek authorization to trade the order as
"good-til-cancel" and must state the limit price. If, for any reason, the
employee wants to CHANGE a pending GTC order (other than canceling the GTC
order), that employee must submit a NEW request for personal trade approval to
the appropriate compliance officer, just as if there had been no prior trade
approval.
QUARTERLY SUMMARY OF PERSONAL TRADING ACTIVITIES
Within 10 (ten) calendar days of the end of each calendar quarter (or before the
employee's last date of employment, which ever is earlier), each employee shall
complete a "Summary of Personal Transactions" form and submit it to the
compliance officer who is located in the same office as the employee, REGARDLESS
OF WHETHER THE EMPLOYEE HAS COMPLETED ANY PERSONAL TRADES OR NOT DURING THE
QUARTER. (The only exception is made for employees who sign a statement that
they do not intend to make any trades in the future which would be subject to
advance approval under this policy.) If the employee made any personal trades
during the quarter, including trades approved by a compliance officer located in
another office, the employee shall indicate so on the "Summary of Personal
Transactions" form.
For each trade approved under the AUTOMATED trade approval procedures outlined
in Appendix 1, the employee must submit a copy of the "completed personal trade
response" for each trade. For each trade approved under the NON-AUTOMATED trade
approval procedures, also outlined in Appendix 1, the employee must submit the
duplicate copy of each approved "Request for Personal Transaction" form to the
local compliance officer. Regardless of the form of approval, the employee also
must submit a copy of the broker confirmation for each trade or some other
independent evidence (such as a copy of the monthly statement from the broker)
that the trade was executed.
If no trade was executed during the quarter, the employee shall indicate that on
the "Summary of Personal Transactions" form and submit it to the local
compliance officer.
Any employee who does not submit a completed "Summary of Personal Transactions"
within the allotted 10 (ten) days will - to the extent permitted by law - have
the equivalent of US$500 deducted from his/her next net paycheck. Moreover, in
such cases, the compliance officer located in the employee's home office will
not approve any subsequent personal trades for that employee until such time as
the employee has complied with this policy. In addition, the local compliance
officer will advise the other personal trading compliance officers in the AXA
Rosenberg Group not to approve any trades for that employee until further
notice. (In the case of a terminating employee
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who has not submitted all paperwork by the final date of employment, the $500
penalty - to the extent permitted by law - will be withheld from the employee's
final paycheck until the proper documentation has been submitted to the
compliance officer.) In certain circumstances, AXA Rosenberg Group may waive the
penalty, but generally such a waiver will be considered only if the employee
requests such a waiver before the end of the 10 (ten) day period. If the
completed "Summary of Personal Transactions" is still outstanding 14 (fourteen)
days after it is due, the relevant compliance officer will notify AXA Rosenberg
Group's Legal Group which will refer the matter to the AXA Rosenberg Group's
Management Committee for further disciplinary action as deemed appropriate.
In the case of an employee who has traded "across zones" during the quarter, the
compliance officer in that employee's local zone, upon receipt of the "Summary
of Personal Transactions" will forward (by fax or mail) a copy of the approved
"Request for Personal Transaction Form" or the "completed personal trade
response" as applicable for all trades effected in other zones, and the evidence
that the trade was made, to the appropriate compliance officer (who had
originally approved the trade).
ADDITIONAL REPORTING REQUIREMENTS BY "ACCESS PERSONS"
Effective as of October 29, 1999, "Access Persons", as defined by Rule 17j-1 of
the Investment Company Act of 1940,(3) of any AXA Rosenberg Group entity that is
an investment adviser to a US mutual fund also must submit initial and annual
holdings reports listing all covered securities4 beneficially owned by them. The
initial report must be provided within 10 days of becoming an Access Person.
These report must include EVERY security (as defined in Rule 17j-1) that the
Access Person beneficially owns, regardless of whether the relevant US mutual
fund owns, or intends or proposes to acquire the security. The holdings report
must state the name of the security, the number of shares held, and the
principal amount of the security. The Access Person must also disclose any and
all securities accounts that he or she maintains with a broker, dealer or bank.
AXA Rosenberg Group will establish procedures hereunder, by which appropriate
management or compliance personnel review these reports. The information provide
hereunder will otherwise be maintained in strict confidentiality.
- -----------------
(3) Rule 17j-1 defines "Access Person" to include: (i) any director, officer, or
general partner of a fund or of a fund's investment adviser, or any employee of
a fund or of a fund's investment adviser who, in connection with his or her
regular functions or duties, participates in the selection of a fund's portfolio
securities or who has access to information regarding a fund's future purchases
or sales of portfolio securities.
(4) "COVERED SECURITY" means a security as defined in section 2(a)(36) of the
Investment Company Act of 1940, except that it does not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial paper
and high quality short-term debt instruments, including repurchase
agreements; and
(iii) Shares issued by open-end Funds.
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PRE-APPROVAL OF INVESTMENTS IN IPOS AND PRIVATE PLACEMENTS
Effective as of October 29, 1999, "Investment Personnel", as defined by Rule
17j-1(e) of the Investment Company Act of 1940,(5) of any AXA Rosenberg Group
entity which is an investment adviser to a US mutual fund, must obtain AXA
Rosenberg Group approval before directly or indirectly acquiring any beneficial
ownership in securities in an IPO or private placement. In general, such
requests for approval MAY be granted if AXA Rosenberg Group determines that the
investment opportunity is available to the relevant Investment Personnel for
reasons OTHER THAN the individual's position at AXA Rosenberg and that the
particular facts relating to the investment opportunity reflect that the
investment would create no material conflict of interest. Requests for approval
should be directed to the AXA Rosenberg Legal Group and must be provided with
sufficient time to allow the AXA Rosenberg Group to make its determination. The
Investment Personnel may invest in the IPO or private placement only after
receipt of WRITTEN approval from the AXA Rosenberg Group.(6)
RELEASE OF LIABILITY FOR PERSONAL TRADING ACTIVITIES
In the event that AXA Rosenberg Group delays or does not approve the trade or
IPO/Private Placement pre-approval request for any reason, the AXA Rosenberg
Group shall not be liable for any losses or lost opportunities which the
employee may realize as a result of the delay or denial of trade approval. Each
employee, by signing this policy, agrees to accept sole and complete personal
liability for any trading or investment losses incurred in his or her personal
trading account or in any IPO/Private Placement and acknowledges that the AXA
Rosenberg Group has no liability resulting from its enforcement of this policy
which may, at times, result INTER ALIA in denying the employee approval to
execute a personal trade or trades or in the denial of approval for an IPO or
Private Placement investment. Each employee also acknowledges and agrees that
this policy may, from time to time, be modified, revised, amended, or restated
and that upon notice, such employee shall be bound by any such change.
BROKER RELATIONSHIPS
In no event may employee accounts be traded in-house or may the AXA Rosenberg
Group's institutional broker relationships be used to execute employee trades.
Employees are responsible
- --------------------
(5) Rule 17j-1(a)(7) of the Investment Company Act of 1940 defines "Investment
Personnel" to include:
(i) Any employee of the Fund or investment adviser (or of any company in a
control relationship to the Fund or investment adviser) who, in connection
with his or her regular functions or duties, makes or participates in
making recommendations regarding the purchase or sale of securities by the
Fund.
(ii) Any natural person who controls the Fund or investment adviser and
who obtains information concerning recommendations made to the Fund
regarding the purchase or sale of securities by the Fund."
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for their own broker relationships.
II. POLICY ON INSIDER INFORMATION
A. PROHIBITION ON TRADING ON INSIDE INFORMATION
No trade can be made on the basis of information believed to be "inside
information" as commonly defined, regardless of whether that information lies
outside of the proprietary valuation models developed by the AXA Rosenberg
Group. Some examples: trading on material non-public information on
publicly-held companies is inside information and is in violation of the law.
Trading in advance of an analyst's change in a company's earnings estimate may
be inside information. If it feels like inside information, it probably is.
B. PROHIBITION ON COMMUNICATING INSIDE INFORMATION
No employee may communicate to anyone information which that employee believes
to be inside information.
AXA ROSENBERG GROUP
POLICY ON PERSONAL TRADING AND INSIDER TRADING
I ACKNOWLEDGE THAT I HAVE READ THE AFOREMENTIONED POLICIES ON PERSONAL TRADING
AND INSIDER TRADING, THAT I UNDERSTAND THE POLICIES AND THE PENALTIES FOR
NON-COMPLIANCE, AND THAT I WILL NOT VIOLATE ANY OF THE POLICIES. I AUTHORIZE THE
DEDUCTION FROM MY SALARY OF THE SPECIFIED PENALTIES IN THE EVENT OF MY
NON-COMPLIANCE WITH THE POLICIES. I FURTHER UNDERSTAND THAT THE INDIVIDUAL
LIABILITY FOR VIOLATION OF THE INSIDER TRADING AND SECURITIES FRAUD ENFORCEMENT
ACT IN THE UNITED STATES CARRIES: 1) CRIMINAL PENALTIES OF UP TO $1 MILLION AND
UP TO 10 YEARS IN JAIL FOR EACH VIOLATION; 2) CIVIL PENALTIES, WHICH MAY INCLUDE
TREBLE DAMAGES AND DISGORGEMENT OF PROFITS. OTHER CIVIL AND CRIMINAL PENALTIES
MAY BE IMPOSED BY REGULATORY AUTHORITIES WHERE THE TRADES TAKE PLACE.
Signed:
-----------------------------------
-----------------------------------
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(Print name as signed above)
System User Id:
(Required)
-----------------------------------
Dated:
-----------------------------------
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ATTACHMENT A
COMPLIANCE OFFICER(S) LOCATION
Sandra Bates Hinck Orinda, California
Bob Byrne (Back-up)
Sara Ronan (Back-up)
William Wiebe (Back-up)
Jonathan Lidster London, England
Joseph Leung (Back-up)
Satta Atsuko Tokyo, Japan
Kunio Noguchi (Back-up)
Suzuki Kouichi (Back-up)
Ken Yeo Singapore
Cheng Liao (Back-up)
Adeleen Chu (Back-up)
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APPENDIX 1
TRADE APPROVAL PROCEDURES
As noted in the accompanying policy statement on personal trading, the
procedures for approving an employee's personal trade may vary depending upon
the location of the appropriate compliance officer and on whether or not the
trade approval process has been automated. If you have any questions relating to
the personal trade approval process, please refer them to the AXA Rosenberg
Legal Group.
1. AUTOMATED PERSONAL TRADE APPROVAL PROCEDURES
The following procedures (Steps 1 to 10) apply to any employee with a VMS user
ID on mainframes RM763A, RM763B or RM412A (including all employees located in
Orinda) seeking personal trade approval for any U.S., Canadian and Asian
ex-Japan trade.
To get a VMS user ID, you must contact the "syshelp" group, who will provide you
with an ID and will install the CRT program on your computer. Once you have a
VMS user ID and the CRT program installed, you can follow these steps to submit
personal trade requests for approval.
1. If you do not have a CRT window for a VMS machine opened on
your computer, click on the CRT icon and double click on any of the RM
nodes (e.g., "rm412a") and click "OK."
2. Login to the VMS machine by entering your VMS users ID and
password (if necessary).
3. At the system prompt, type PTRADE and press the RETURN or ENTER
key.
4. The following text should appear: ENTER ZONE UJCEO (DEFAULT = U):
5. Select the letter initial for the "zone" in which the trade is
valued in real-time. (U= US, J= Japan, C= Canada, E= Europe, and O =
Orient (Asia ex-Japan)) and press the RETURN or ENTER key. The default
is "U."
6. The following menu options should appear:
---- PERSONAL TRADE REQUEST ----
1. SEND PERSONAL TRADE REQUEST
2. SUBMIT EXECUTED, CANCELLED, OR EXPIRED PERSONAL TRADE
3. DISPLAY OPEN PERSONAL TRADE REQUEST
4. DISPLAY TODAY'S PERSONAL TRADE REQUEST
5. DISPLAY PERSONAL TRADE REQUEST HISTORY (END OF QUARTER REPORTING)
0. EXIT
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SELECT OPTION 0 THROUGH 5 (DEFAULT = 3 ):
OPTION 1 is used to request approval of a personal trade.
OPTION 2 is used to submit the completed personal trade responses discussed in
detail in Step 10.
OPTION 3 displays all the personal trade requests that you have submitted and
not yet executed and confirmed.
OPTION 4 displays the trade requests you have submitted today.
OPTION 5 displays the trade request history by date range or by quarters. After
viewing the trade request history, you can send the report to a printer or file.
As discussed below, a copy of your trade history for the quarter must be
submitted to the personal trading compliance officer in your zone within 10
(ten) days of the end of each calendar quarter.
Select the appropriate option and hit enter.
7. As noted above, to request approval of a personal trade, select Option 1 and
hit enter.
8. You will be asked the stock symbol, trade date, buy or sell side, security
type (S=Stock, C=Call, P=Put, F=Future), good-til-cancel price, trade on behalf
of yourself or others, and comments about the trade if any. If you enter zero
("0") for the "good-til-cancel price," then the order is automatically treated
as a day order request only. If our system cannot recognize the stock symbol
provided, then you must enter the company name of the security in question.
After entering the requested information, a summary of the requested trade will
appear. At that point you can either send the request for approval or you can
cancel the trade approval request (e.g., if there is an error in the input). If
you submit the request, an e-mail message will be sent to the appropriate
compliance officer (with copies to the Legal Group and other for monitoring
purposes). After you have sent your request, YOU MUST WAIT FOR AN E-MAIL MESSAGE
FROM THE APPROPRIATE COMPLIANCE OFFICER APPROVING YOUR PERSONAL TRADE REQUEST
BEFORE EXECUTING THE TRADE.
9. The system will automatically check the employee's requested personal trade
against the AXA Rosenberg Group's TA recommendations as outlined above. If there
is no apparent conflict (or potential conflict), the compliance officer will
typically send you an e-mail approving your trade. If there is a conflict or
potential conflict, you will be sent an e-mail denying your request. Please read
the e-mail message carefully to ensure that it is approving (rather than
denying) your trade request. AGAIN, YOU MUST ALWAYS WAIT FOR A REPLY E-MAIL
MESSAGE APPROVING YOUR TRADE REQUEST BEFORE YOU CAN TRADE. IF NO RESPONSE IS
RECEIVED, YOU MAY NOT TRADE. In general, you should not directly (by phone or in
person) contact the appropriate compliance officer in regards to a personal
trade approval other than as outlined in this policy. If no response is received
to a request for personal trade approval in reasonable period of time, you
should send a regular e-mail to the appropriate compliance officer (with a copy
to the back-up compliance officer and to the Legal
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Group) requesting a response.
10. If your personal trade request is approved, you will need to submit a
"completed personal trade response." THIS COMPLETED PERSONAL TRADE RESPONSE MUST
BE SUBMITTED REGARDLESS OF WHETHER YOU ACTUALLY COMPLETED THE APPROVED
TRANSACTION OR NOT. To submit this response, you return to the options menu
described in Step 6 and select option "2." This option will display all of your
trades that have been approved. You enter the control number of the trade you
have executed or a trade that has expired. If traded, you will be asked the
trade date, traded price, and broker. If the order expired without execution,
you indicate that no trade occurred. If the entered information is correct, you
can then submit the trade confirmation.
For approved day orders, the "completed personal trade response" is due after
(i) the trade is executed or (ii) at the end of the market day. For approved
good-til-cancel orders, the completed personal trade response is due after (i)
the trade is executed, (ii) the order is canceled, or (iii) the order expires.
An e-mail message reminder will be sent to you if you have any outstanding
approved orders not confirmed, but it is the responsibility of each employee to
make sure that completed personal trade responses are timely submitted.
2. NON-AUTOMATED PERSONAL TRADE APPROVAL PROCEDURES
The following procedures apply to any employee seeking personal trade approval
for which the automated trade approval procedures outlined above are
unavailable. These procedures may vary slightly depending upon the location of
the appropriate compliance officer. Steps 1 through 3 apply when the appropriate
compliance officer works in the same office as the employee seeking approval to
trade. Step 4 sets out alternative procedures to follow when the appropriate
compliance officer is not located in the same office as the employee seeking the
approval to trade.
1. To initiate the non-automated trade approval process, a written "Request for
Personal Transaction" form must be completed by the employee and given to the
appropriate compliance officer for approval prior to any trade being executed.
These forms are available from the appropriate compliance officer. Should a
compliance officer wish to trade for his/her own account in the zone where
he/she has trade approval authority, advance written approval of the trade must
be obtained from the back-up compliance officer (using the Request for Personal
Transaction form).
Before approving a trade, the appropriate compliance officer, using the TA, must
check that the AXA Rosenberg Group is not currently recommending the same or a
similar transaction (see discussion above). If there is no conflict and the
trade is approved, the appropriate compliance officer shall print a copy of the
TA's current recommendation for the stock. The employee must attach the printout
of the TA's recommendation to the ORIGINAL copy of the approved Request for
Personal Transaction form as verification for the approval.
2. If an approved trade is executed that day, the original copy of the approved
Request for Personal Transaction is completed with details of the trade and is
returned (along with the attached TA recommendation) to the compliance officer
who approved the trade by the end of the same day.
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The employee keeps the duplicate copy of the form. If an approved day order is
not executed on the day of approval, the employee indicates this on the Request
for Personal Transaction form and returns the original to the appropriate
compliance officer.
For approved good-til-cancel orders, the Request for Personal Transaction is
completed with details of the trade and is returned (along with the attached TA
recommendation) to the compliance officer who approved the trade when the trade
is executed. If the trade is canceled or otherwise expires, the employee
indicates this on the- Request for Personal Transaction form and returns the
original to the appropriate compliance officer. If, for any reason, the employee
wants to CHANGE a pending GTC order (other than canceling the GTC order), that
employee must submit a NEW "Request for Personal Transaction" form to the
appropriate compliance officer and receive a new approval prior to changing the
good-til-canceled order.
3. The compliance officer who has approved the trade will keep the original copy
of each approved "Request for Personal Transaction" form for each trade that has
been made. At the end of each calendar quarter, the compliance officer shall
match the original copies with the duplicate copies submitted by the employee
along with a copy of the broker statement or contract note (See Section I.B.
above, discussing quarterly reporting requirements). Any previously approved
trades that were executed but which are "unmatched" at the end of the quarter,
must be reconciled by the compliance officer. The compliance officer will
maintain a file of each employee's "Summary of Personal Transactions" and the
attached "Request for Personal Transaction" forms.
4. Employees seeking non-automated trade approval for trades outside the zone of
their home office follow the same procedure for obtaining and documenting
approval as detailed above with the following exceptions:
The "Request for Personal Transaction" form will be completed and faxed to the
appropriate compliance officer (with responsibility in the zone where the stock
is valued in real-time). The employee wishing to trade should message that
compliance officer (by e-mail or telephone) that the fax has been sent. If the
trade is approved, the appropriate compliance officer will make a photocopy of
the approved Request for Personal Transaction form and the printout of the
model's recommendation, and will fax it back to the employee, keeping the
original copy (with the attached model's recommendation). The appropriate
compliance officer will notify both the employee and the compliance officer in
the employee's office that the trade has been approved (again, either by e-mail
or telephone).
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EXHIBIT 23(p)(3)
BISYS FUND SERVICES
CODE OF ETHICS
I. INTRODUCTION
This Code of Ethics (the "Code") sets forth the basic policies of
ethical conduct for all directors, officers and associates (hereinafter referred
to as "Covered Persons") of the BISYS Fund Services companies listed on Exhibit
A hereto (hereinafter collectively referred to as "BISYS").
Rule 17j-1(b) under the Investment Company Act of 1940, as amended,
(the "1940 Act") makes it unlawful for BISYS companies operating as a principal
underwriter of a registered investment company (hereinafter referred to
individually as a "Fund" or collectively as the "Funds"), or any affiliated
person of such principal underwriter, in connection with the purchase or sale by
such person of a security "HELD OR TO BE ACQUIRED"(1) by any Fund:
(1) to employ any device, scheme or artifice to defraud the Fund;
(2) to make to the Fund any untrue statement of a material fact or
omit to state to the Fund a material fact necessary in order
to make the statements made, in light of the circumstances
under which they are made, not misleading;
(3) to engage in any act, practice or course of business that
operates or would operate as a fraud or deceit upon the Fund;
or
(4) to engage in any manipulative practice with respect to the
Fund.
Any violation of this provision by a Covered Person shall be deemed to
be a violation of this Code.
II. RISKS OF NON-COMPLIANCE
Any violation of this Code may result in the imposition by BISYS of
sanctions against the Covered Person, or may be grounds for the immediate
termination of the Covered Person's position with BISYS. In addition, in some
cases (e.g., the misuse of inside information), a violation of
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(1) A security "HELD OR TO BE ACQUIRED" is defined under Rule 17j-l(a)(10) as
any COVERED SECURITY which, within the most recent fifteen (15) days: (A) is or
has been held by a Fund, or (B) is being or has been considered by a Fund or the
investment adviser for a Fund for purchase by the Fund. A purchase or sale
includes the writing of an option to purchase or sell and any security that is
convertible into or exchangeable for, any security that is held or to be
acquired by a Fund. "COVERED SECURITIES", as defined under Rule 17j-1(a)(4), DO
NOT INCLUDE: (i) securities issued by the United States Government; (ii)
bankers' acceptances, bank certificates of deposit, commercial paper and high
quality short-term debt instruments, including repurchase agreements; (iii)
shares of open-end investment companies; (iv) transactions which you had no
direct or indirect influence or control; (v) transactions that are not
initiated, or directed, by you; and (vi) securities acquired upon the exercise
of rights issued by the issuer to all shareholders pro rata.
<PAGE>
federal and state civil and criminal statutes may subject the Covered Person to
fines, imprisonment and/or monetary damages.
2
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III. ETHICAL STANDARDS
The foundation of this Code consists of basic standards of conduct
including, but not limited to, the avoidance of conflicts between personal
interests and interests of BISYS or its Fund clients. To this end, Covered
Persons should understand and adhere to the following ethical standards:
(a) THE DUTY AT ALL TIMES TO PLACE THE INTERESTS OF FUND
SHAREHOLDERS FIRST;
This duty requires that all Covered Persons avoid serving
their own personal interests ahead of the interests of the
shareholders of any Fund for which BISYS serves as the
administrator, distributor, transfer agent or fund accountant.
(b) THE DUTY TO ENSURE THAT ALL PERSONAL SECURITIES TRANSACTIONS
BE CONDUCTED IN A MANNER THAT IS CONSISTENT WITH THIS CODE TO
AVOID ANY ACTUAL OR POTENTIAL CONFLICT OF INTEREST OR ANY
ABUSE OF SUCH COVERED PERSON'S POSITION OF TRUST AND
RESPONSIBILITY; AND
Covered Persons should study this Code and ensure that they
understand its requirements. Covered Persons should conduct
their activities in a manner that not only achieves technical
compliance with this Code but also abides by its spirit and
principles.
(c) THE DUTY TO ENSURE THAT COVERED PERSONS DO NOT TAKE
INAPPROPRIATE ADVANTAGE OF THEIR POSITION WITH BISYS.
Covered Persons engaged in personal securities transactions
should not take inappropriate advantage of their position or
of information obtained during the course of their association
with BISYS. Covered Persons should avoid situations that might
compromise their judgment (e.g., the receipt of perquisites,
gifts of more than de minimis value or unusual investment
opportunities from persons doing or seeking to do business
with BISYS or the Funds).
A "PERSONAL SECURITIES TRANSACTION" is considered to be a
transaction in a Covered Security of which the Covered Person
is deemed to have "BENEFICIAL OWNERSHIP."(2) This includes,
but is not limited to, transactions in accounts of the Covered
Person's spouse, minor children, or other relations residing
in the Covered Person's household, or accounts in which the
Covered Person has discretionary investment control.
- ----------
(2) "BENEFICIAL OWNERSHIP" of a security is defined under Rule 16a-1(a)(2) of
the Securities Exchange Act of 1934, which provides that a Covered Person
should consider himself/herself the beneficial owner of securities held by
his/her spouse, his/her minor children, a relative who shares his/her home,
or other persons, directly or indirectly, if by reason of any contract,
understanding, relationship, agreement or other arrangement, he/she obtains
from such securities benefits substantially equivalent to those of ownership.
He/she should also consider himself/herself the beneficial owner of
securities if he/she can vest or revest title in himself/herself now or in
the future.
3
<PAGE>
IV. RESTRICTIONS AND PROCEDURES
This section is divided into two (2) parts. Part A relates to
restrictions and procedures applicable to all Covered Persons in addition to the
aforementioned Rule 17j-1(b) provisions. Part B imposes additional restrictions
and reporting requirements for those Covered Persons who are listed on Exhibit B
hereto (hereinafter referred to as "ACCESS PERSONS"(3)).
A. RESTRICTIONS AND PROCEDURES FOR ALL COVERED PERSONS:
1. PROHIBITION AGAINST USE OF MATERIAL INSIDE INFORMATION
Covered Persons may have access to information about Funds
that is confidential and not available to the general public,
such as (but not limited to) information concerning securities
held in, or traded by, Fund portfolios, information concerning
certain underwritings of broker/dealers affiliated with a Fund
that may be deemed to be "MATERIAL INSIDE INFORMATION", and
information which involves a merger or acquisition that has
not been disclosed to the public.
"MATERIAL INSIDE INFORMATION" IS DEFINED AS ANY INFORMATION
ABOUT A COMPANY WHICH HAS NOT BEEN DISCLOSED TO THE GENERAL
PUBLIC AND WHICH EITHER A REASONABLE PERSON WOULD DEEM TO BE
IMPORTANT IN MAKING AN INVESTMENT DECISION OR THE
DISSEMINATION OF WHICH IS LIKELY TO IMPACT THE MARKET PRICE OF
THE COMPANY'S SECURITIES.
Covered Persons in possession of material inside information
must not trade in or recommend the purchase or sale of the
securities concerned until the information has been properly
disclosed and disseminated to the public.
2. INITIAL AND ANNUAL CERTIFICATIONS
Within ten (10) days following the commencement of their
employment or otherwise becoming subject to this Code and at
least annually following the end of the calendar year, all
Covered Persons shall be required to sign and submit to the
Code Compliance Officer a written certification, in the form
of Exhibit C hereto, affirming that he/she has read and
understands this Code to which he/she is subject. In addition,
the Covered Person must certify annually that he/she has
complied with the requirements of this Code and has disclosed
and reported all personal securities
- ----------
(3) An "ACCESS PERSON" is defined under Rule 17j-1(a)(1)(ii) to include any
director, officer or general partner of a principal underwriter for a Fund who,
in the ordinary course of business, makes, participates in or OBTAINS
INFORMATION regarding the purchase or sale of securities for such Fund or whose
functions or duties in the ordinary course of business relate to the making of
any recommendation to such Fund regarding the purchase or sale of securities.
This Code has included BISYS associates that are not directors, officers or
general partners of any BISYS Fund Services company but would otherwise be
deemed Access Persons for purposes of this Code.
4
<PAGE>
transactions that are required to be disclosed and reported by
this Code. The Code Compliance Officer will circulate the
Annual Certifications and Holdings Reports for completion
following the end of each calendar year.
B. RESTRICTIONS AND REPORTING REQUIREMENTS FOR ALL ACCESS PERSONS:
Each Access Person must refrain from engaging in a PERSONAL
SECURITIES TRANSACTION when the Access Person knows, or in the
ordinary course of fulfilling his/her duties would have reason
to know, that at the time of the personal securities
transaction a Fund has a pending buy or sell order in the same
Covered Security.
1. INITIAL AND ANNUAL HOLDINGS REPORTS
All Access Persons must file a completed Initial and Annual
Holdings Report, in the form of Exhibit D hereto, with the
Code Compliance Officer WITHIN TEN (10) DAYS OF COMMENCEMENT
OF THEIR EMPLOYMENT OR OTHERWISE BECOMING SUBJECT TO THIS CODE
AND THEREAFTER ON AN ANNUAL BASIS FOLLOWING THE END OF THE
CALENDAR YEAR IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE
CODE COMPLIANCE OFFICER.
2. TRANSACTION/NEW ACCOUNT REPORTS
All Access Persons must file a completed Transaction/New
Account Report, in the form of Exhibit E hereto, with the Code
Compliance Officer WITHIN TEN (10) DAYS AFTER (I) OPENING AN
ACCOUNT WITH A BROKER, DEALER OR BANK IN WHICH COVERED
SECURITIES ARE HELD; OR (II) ENTERING INTO ANY PERSONAL
SECURITIES TRANSACTION IN WHICH AN ACCESS PERSON HAS ANY
DIRECT OR INDIRECT BENEFICIAL OWNERSHIP. Personal securities
transactions are those involving any COVERED SECURITY(1) in
which the person has, or by reason of such personal securities
transaction acquires, any direct or indirect, "BENEFICIAL
OWNERSHIP."(2)
3. CONFIRMATIONS AND STATEMENTS
In order to provide BISYS with information to determine
whether the provisions of this Code are being observed, each
Access Person shall direct his/her broker, dealer or bank to
supply to the Code Compliance Officer, on a timely basis,
duplicate copies of confirmations of all personal securities
transactions and copies of monthly statements for all Covered
Securities accounts. The confirmations should match the
Transaction/New Account Reports. These confirmations and
statements should be mailed, on a confidential basis, to the
Code Compliance Officer at the following address:
5
<PAGE>
ATTN: Code Compliance Officer
Regulatory Services
BISYS Fund Services
3435 Stelzer Road, Suite 1000
Columbus, Ohio 43219-8001
C. REVIEW OF REPORTS AND ASSESSMENT OF CODE ADEQUACY:
The Code Compliance Officer shall review and maintain the
Initial and Annual Certifications, Initial and Annual Holdings
Reports and Transaction/New Account Reports (the "Reports")
with the records of BISYS. Following receipt of the Reports,
the Code Compliance Officer shall consider in accordance with
Procedures designed to prevent Access Persons from violating
this Code:
(a) whether any personal securities transaction evidences
an apparent violation of this Code; and
(b) whether any apparent violation of the reporting
requirement has occurred pursuant to Section B above.
Upon making a determination that a violation of this Code,
including its reporting requirements, has occurred, the Code
Compliance Officer shall report such violations to the General
Counsel of BISYS Fund Services who shall determine what
sanctions, if any, should be recommended to be taken by BISYS.
The Code Compliance Officer shall prepare quarterly reports to
be presented to the Fund Boards of Directors/Trustees with
respect to any material trading violations under this Code.
This Code, a copy of all Reports referenced herein, any
reports of violations, and lists of all Covered and Access
Persons required to make Reports, shall be preserved for the
period(s) required by Rule 17j-1. BISYS shall review the
adequacy of the Code and the operation of its related
Procedures at least once a year.
V. REPORTS TO FUND BOARDS OF DIRECTORS/TRUSTEES
BISYS shall submit the following reports to the Board of
Directors/Trustees for each Fund for which it serves as principal underwriter:
A. BISYS FUND SERVICES CODE OF ETHICS
A copy of this Code shall be submitted to the Board of each
Fund no later than September 1, 2000 or for new Fund clients,
prior to BISYS commencing operations as principal underwriter,
for review and approval. Thereafter, all material changes to
this Code shall be submitted to each Board for review and
approval not later than six (6) months following the date of
implementation of such material changes.
6
<PAGE>
B. ANNUAL CERTIFICATION OF ADEQUACY
The Code Compliance Officer shall annually prepare a written
report to be presented to the Board of each Fund detailing the
following:
1. Any issues arising under this Code or its related
Procedures since the preceding report, including
information about material violations of this Code or
its related Procedures and sanctions imposed in
response to such material violations; and
2. A Certification to Fund Boards, in the form of
Exhibit F hereto, that BISYS has adopted Procedures
designed to be reasonably necessary to prevent Access
Persons from violating this Code.
7
<PAGE>
BISYS FUND SERVICES
CODE OF ETHICS
EXHIBIT A
The following companies are subject to the BISYS Fund Services Code of
Ethics(1):
Barr Rosenberg Funds Distributor, Inc.
BISYS Fund Services, Inc.
BISYS Fund Services Limited Partnership
BISYS Fund Services Ohio, Inc.
BNY Hamilton Distributors, Inc.
CFD Fund Distributors, Inc.
Centura Funds Distributor, Inc.
Concord Financial Group, Inc.
Kent Funds Distributors, Inc.
Evergreen Distributor, Inc.
IBJ Funds Distributor, Inc..
Mentor Distributors, LLC
The One Group Services Company
Performance Funds Distributor, Inc.
VISTA Fund Distributors, Inc.
- -------------------------
(1) The companies listed on this Exhibit A may be amended from time to time, as
required.
AS OF JANUARY 11, 2000
A-1
<PAGE>
BISYS FUND SERVICES
CODE OF ETHICS
EXHIBIT B
The following Covered Persons are considered ACCESS PERSONS under the BISYS Fund
Services Code of Ethics(1):
Client Services - all associates
CFD Fund Distributors, Inc. - all directors, officers and employees
Directors/Officers of each BISYS entity listed on Exhibit A that met the
statutory definition of Access Person under Rule17j-1
Financial Services (Fund Accounting and Financial Administration) - all
associates
Fund Administration - all associates
Information Systems - all associates
Legal Services - all paralegals and attorneys
The One Group Services Company - all directors, officers and employees
Tax Services - all associates
VISTA Fund Distributors, Inc.- all officers, directors and employees
All wholesalers and telewholesalers employed by the BISYS companies listed on
Exhibit A
- -------------------------
(1) The Access Persons listed on this Exhibit B may be amended from time to
time, as required.
AS OF JANUARY 11, 2000
B-1
<PAGE>
BISYS FUND SERVICES
CODE OF ETHICS
EXHIBIT C
INITIAL AND ANNUAL CERTIFICATIONS
I hereby certify that I have read and thoroughly understand and agree
to abide by the conditions set forth in the BISYS Fund Services Code of Ethics.
I further certify that, during the time of my affiliation with BISYS, I will
comply or have complied with the requirements of this Code and will
disclose/report or have disclosed/reported all personal securities transactions
required to be disclosed/reported by the Code.
If I am deemed to be an Access Person under this Code, I certify that I
will comply or have complied with the Transaction/New Account Report
requirements as detailed in the Code and submit herewith my Initial and Annual
Holdings Report. I further certify that I will direct or have directed each
broker, dealer or bank with whom I have an account or accounts to send to the
BISYS Code Compliance Officer duplicate copies of all confirmations and
statements relating to my account(s).
- --------------------------------
Print or Type Name
- ---------------------------------
Signature
- ---------------------------------
Date
C-1
<PAGE>
BISYS FUND SERVICES
CODE OF ETHICS
EXHIBIT D
INITIAL AND ANNUAL HOLDINGS REPORT
<TABLE>
<CAPTION>
NAME AND ADDRESS OF ACCOUNT NUMBER(S) IF NEW ACCOUNT,
BROKER, DEALER OR BANK(S) DATE ESTABLISHED
<S> <C> <C>
- -------------------------------------- ------------------ ------------------
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- -------------------------------------- ------------------ ------------------
- -------------------------------------- ------------------ ------------------
- -------------------------------------- ------------------ ------------------
- -------------------------------------- ------------------ ------------------
</TABLE>
ATTACHED ARE THE COVERED SECURITIES BENEFICIALLY OWNED BY ME AS OF THE DATE OF
THIS INITIAL AND ANNUAL HOLDINGS REPORT.
- --------------------------------
Print or Type Name
- ---------------------------------
Signature
- ---------------------------------
Date
D-1
<PAGE>
<TABLE>
<CAPTION>
SECURITY NUMBER OF PRINCIPAL AMOUNT
DESCRIPTION COVERED
(SYMBOL/CUSIP) SECURITIES/
SHARES HELD
<S> <C> <C>
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ------------------ ---------------- ----------------
- ---------------- ---------------- ----------------
</TABLE>
D-2
<PAGE>
BISYS FUND SERVICES CODE OF ETHICS -TRANSACTION/NEW ACCOUNT REPORT EXHIBIT E
I hereby certify that the Covered Securities described below (or
attached hereto in the annual statement from my broker, dealer or bank) were
purchased or sold on the date(s) indicated. Such Covered Securities were
purchased or sold in reliance upon public information lawfully obtained by me
through independent research. I have also listed below the account number(s)
for any new account(s) opened in which Covered Securities are held. My
decision to enter into any personal securities transaction(s) was not based
upon information obtained as a result of my affiliation with BISYS.
COVERED SECURITIES PURCHASED/ACQUIRED OR SOLD/DISPOSED
<TABLE>
<CAPTION>
Security Trade Number of Per Share Principal Interest Maturity Name of Broker, Dealer Bought (B)
Description Date Shares Price Amount Rate Rate or Bank (and Account Number or Sold (S)
(Symbol/CUSIP) (If Applicable) (If Applicable) and Date Established, If New)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
- -------------- ----- ------ -------- -------- -------------- -------------- ---------------------------- -----------
</TABLE>
This Transaction/New Account Report is not an admission that you have
or had any direct or indirect beneficial ownership in the Covered Securities
listed above.
- --------------------------------
Print or Type Name
- -------------------------------- ------------------------------------
Signature Date
E-1
<PAGE>
BISYS FUND SERVICES
CODE OF ETHICS
EXHIBIT F
CERTIFICATION TO FUND BOARDS
BISYS Fund Services ("BISYS") requires that all directors, officers and
associates of BISYS ("Covered Persons") certify that they have read and
thoroughly understand and agree to abide by the conditions set forth in the
BISYS Code of Ethics (the "Code"). If such Covered Persons are deemed to be
Access Persons under the Code, they are required to submit Initial and Annual
Holdings Reports, as well as Transaction/New Account Reports, to the Code
Compliance Officer, listing all personal securities transactions in Covered
Securities for all such accounts in which the Access Person has any direct or
indirect beneficial interest within ten (10) days of entering into any such
transactions. Access Persons must direct their broker, dealer or bank(s) to send
duplicate trade confirmations and statements of all such personal securities
transactions directly to the Code Compliance Officer who compares them to the
required Transaction/New Account Reports. Additionally, the Code Compliance
Officer undertakes a quarterly review of all Access Person's personal securities
transactions against the Fund's Investment Adviser for all such Funds that BISYS
serves as principal underwriter.
The undersigned hereby certifies that BISYS has adopted Procedures designed to
be reasonably necessary to prevent Access Persons from violating BISYS' Code and
the required provisions of Rule 17j-1 under the Investment Company Act of 1940,
as amended.
- -------------------------------- ------------------
Kathleen McGinnis Date
Code Compliance Officer
BISYS Fund Services
F-1
