<PAGE>
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1996
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
</TABLE>
Rosenberg Series Trust
--------------------------------------------
(Name of Registrant as Specified in Charter)
--------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing is
calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
[ X] Fee paid previously with preliminary materials.
- -------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
ROSENBERG SERIES TRUST
SMALL CAPITALIZATION SERIES
FOUR ORINDA WAY, SUITE 300E
ORINDA, CA 94563
July 10, 1996
Dear Shareholder:
As a shareholder of the Small Capitalization Series (the "Fund"), a
series of Rosenberg Series Trust (the "Trust"), you are cordially invited to
attend or to send in the enclosed proxy so that you are represented at a
Special Meeting of Shareholders of the Fund which will be held on August 1,
1996 at 10:00 a.m., California time, at Four Orinda Way, Suite 300E, Orinda,
California.
The matters to be acted upon at the Special Meeting with respect to the
Fund are described in the attached Notice and Proxy Statement. As described
in the Proxy Statement, the Trustees are seeking your vote to approve a new
Management Contract between Rosenberg Institutional Equity Management
("RIEM") and the Trust on behalf of the Fund which would increase the
management fee payable under the existing contract. As further described,
RIEM will voluntarily waive some or all of the compensation it receives under
the new Management Contract to the extent necessary to limit the Fund's total
annual operating expenses. The Trustees are also taking this opportunity to
request that you vote to make non-fundamental certain of the Fund's
fundamental investment policies so that the Trustees may adopt less
restrictive policies, as described.
Although we would prefer to have each shareholder attend the Special
Meeting, we realize that you may be unable to attend. Whether or not you plan
to be present at the Special Meeting, we need your vote. WE URGE YOU TO
COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. A POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR THIS PURPOSE.
Proxies may be revoked at any time before they are voted by a written
revocation received by the Clerk of the Trust, by properly executing a later-
dated proxy or by attending the meeting and voting in person.
We look forward to seeing you at the meeting or receiving your proxy so
that your shares may be voted at the meeting.
By order of the Board of Trustees,
Kenneth Reid, President
<PAGE>
ROSENBERG SERIES TRUST
SMALL CAPITALIZATION SERIES
FOUR ORINDA WAY, SUITE 300E
ORINDA, CALIFORNIA 94563
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To The Shareholders of the Small Capitalization Series:
A Special Meeting of Shareholders (the "Special Meeting") of the Small
Capitalization Series (the "Fund"), a series of Rosenberg Series Trust (the
"Trust"), will be held on August 1, 1996 at 10:00 a.m., California time, at Four
Orinda Way, Suite 300E, Orinda, California, for the following purposes:
1. To approve or disapprove of a new Management Contract between the
Trust and Rosenberg Institutional Equity Management on behalf of the
Fund as described in Part I of the accompanying Proxy Statement.
2. A. To make non-fundamental and amend the Fund's fundamental
investment policy relating to investments in illiquid securities,
restricted securities and certain repurchase agreements to
increase the Fund's permissible limit on such investments, as
described in Part II-A of the accompanying Proxy Statement.
B. To make non-fundamental and amend the Fund's fundamental
investment policy relating to investments in the voting
securities of any one issuer to increase the Fund's permissible
limit on such investments, as described in Part II-B of the
accompanying Proxy Statement.
3. To consider such other matters as may properly come before the Special
Meeting.
By order of the Board of Trustees,
Carolyn Demler
Clerk
July 10, 1996
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE SO YOU WILL BE REPRESENTED AT THE SPECIAL MEETING.
<PAGE>
ROSENBERG SERIES TRUST
SMALL CAPITALIZATION SERIES
FOUR ORINDA WAY, SUITE 300E
ORINDA, CA 94563
JULY 10, 1996
PROXY STATEMENT
THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF ROSENBERG SERIES TRUST
(THE "TRUST") for use at a Special Meeting of Shareholders (the "Special
Meeting") of the Small Capitalization Series (the "Fund"), a series of the
Trust, to be held on August 1, 1996, and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Special Meeting of Shareholders
(the "Notice"). Shareholders of record of the Fund at the close of business on
July 5, 1996 (the "Record Date") are entitled to notice of and to vote at the
Special Meeting or any adjourned session thereof.
On the Record Date, 7,407,105.072 shares of the Fund were issued and
outstanding. Each whole share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional share shall be entitled to a
proportionate fractional vote. The Notice, proxy and this Proxy Statement have
been mailed to such shareholders of record on or about July 10, 1996.
With respect to the matters specified in this proxy, shares will be voted
in accordance with the specifications made. IF NO SPECIFICATION IS MADE WITH
RESPECT TO A PARTICULAR MATTER, SHARES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE TRUSTEES. Proxies may be revoked at any time before they
are exercised by sending written revocation which is received by the Clerk of
the Trust, by properly executing a later-dated proxy or by attending the meeting
and voting in person.
FURTHER INFORMATION CONCERNING THE FUND IS CONTAINED IN ITS MOST RECENT
ANNUAL REPORT TO SHAREHOLDERS, WHICH MAY BE OBTAINED FREE OF CHARGE BY WRITING
TO ROSENBERG SERIES TRUST, 237 PARK AVENUE, SUITE 910, NEW YORK, NY 10017 OR BY
TELEPHONING 1-800-447-3332.
BENEFICIAL OWNERS OF 5% OR MORE OF THE FUND'S SHARES
On the Record Date, the Trustees and Officers of the Trust owned less than
1% of the Fund's outstanding shares although, as indicated below, those Trustees
and Officers who are affiliates of Rosenberg Institutional Equity Management, a
California limited partnership which is the Fund's investment adviser (the
"Manager"), have an indirect interest in shares of
<PAGE>
the Fund through their interest in the Manager's pension plan, Rosenberg
Institutional Equity Management Money Purchase Plan. Information concerning
shareholders who were known to be the beneficial owners of more than 5% of
the Fund's shares as of the Record Date is set forth below.
Number of Percentage
Name and Address Shares Ownership
of Beneficial Owner Beneficially Owned of the Fund
- ----------------------------------------- ------------------ -----------
The Common Fund 736,433.6800 9.94%
450 Post Road East
P.O. Box 909
Westport, CT 06881-0909
The Nathan Cummings Foundation 762,295.9550 10.29%
1926 Broadway, Suite 600
New York, NY 10023
Board of Pensions
Re: Luther Account 2,005,936.7300 27.08%
Re: Martin Account 226,237.5150 3.05%
Evangelical Lutheran Church in America
800 Marquette Avenue, Suite 1050
Minneapolis, MN 55402-2885
Rosenberg Institutional Equity 983,666.5990 13.28%
Management Money Purchase Plan
4 Orinda Way, Suite 300E
Orinda, CA 94563
University of Washington 1,296,155.0460 17.50%
Financial Management
Box 351248
Seattle, WA 98195-1248
Leland Stanford Junior University 1,396,379.5470 18.85%
c/o Stanford Management Company
2770 Sand Hill Road
Menlo Park, CA 94025
Effective August 5, 1996, the Fund intends to re-classify and designate its
then outstanding shares as "Institutional Shares" and to begin issuing two
additional classes of shares, designated as "Adviser Shares" and "Select
Shares." This Proxy Statement is being sent only to holders of shares that will
be designated as Institutional Shares. References herein
2
<PAGE>
to annual expenses of the Fund refer to annual expenses that have been or
will be allocated to the class to be designated as Institutional Shares.
Proxy solicitation and related costs will initially be borne by the
Fund. However, as described below, the Manager currently voluntarily waives
some or all of its management fee and bears certain expenses with respect to the
Fund until further notice to the extent that the Fund's total annual
operating expenses (including the management fee but excluding brokerage
commissions, transfer taxes and extraordinary items) do not otherwise exceed
0.90% of the average daily net assets attributable to the class to be
designated as Institutional Shares of the Fund. As a result, proxy
solicitation and related costs may in effect be borne by the Manager.
I. APPROVAL OR DISAPPROVAL OF A NEW MANAGEMENT CONTRACT
You are being requested to approve a new Management Contract (the
"Proposed Agreement") between the Manager and the Trust on behalf of the
Fund. The Proposed Agreement would replace the Fund's existing Management
Contract (the "Current Agreement") between the Manager and the Trust. In
order for the Proposed Agreement to come into effect, the Investment Company
Act of 1940, as amended (the "1940 Act"), requires that the agreement be
approved both by the Trust's Board of Trustees and the Fund's shareholders as
described below.
The Trustees of the Fund, including those Trustees who are not
"interested persons" or affiliates (as defined in the 1940 Act) of any party
to the Proposed Agreement (the "Independent Trustees"), approved the Proposed
Agreement in person at a meeting held on May 20, 1996.
The Proposed Agreement is identical in all material respects to the
Current Agreement, except that the Proposed Agreement reflects (i) an
increase in the management fee payable to the Manager from an annual rate of
0.80% to 0.90% of the Fund's average daily net assets, (ii) a change in the
name of the Trust from "Rosenberg Series Trust" to "Barr Rosenberg Series
Trust", (iii) a change in the name of the Fund from "Small Capitalization
Series" to "U.S. Small Capitalization Series", and (iv) a new effective date
and other typographical changes.
The Current Agreement and the Proposed Agreement, including the services
provided and to be provided thereunder, terms relating to compensation and
procedures for termination and renewal are described below under "Description
of Current and Proposed Agreements." The description of the Proposed
Agreement is qualified in its entirety by reference to the form of Proposed
Agreement which is set forth in Appendix A to this Proxy Statement.
Additional information about the Manager is set forth below under "Other
Information."
3
<PAGE>
DESCRIPTION OF CURRENT AND PROPOSED AGREEMENTS
THE CURRENT AGREEMENT. Pursuant to the Current Agreement, dated
September 13, 1988, the Manager renders advisory services to the Fund subject
to the control and supervision of the Trustees of the Trust. The sole
initial shareholder of the Fund approved the Current Agreement on July 26,
1988. The Trustees of the Trust last approved the continuance of the Current
Agreement at a meeting held on May 20, 1996.
Under the Current Agreement, the Manager is entitled to receive a fee
computed and paid quarterly at the annual rate of 0.80% of the Fund's average
daily net asset value. The fees to which the Manager is entitled under the
Current Agreement are higher than the management fees paid by most other
mutual funds. As described above, the Manager currently voluntarily waives
some or all of its management fee under the Current Agreement and
bears certain Fund expenses until further notice to the extent that the Fund's
total annual operating expenses (including the management fee but excluding
brokerage commissions, transfer taxes and extraordinary items) do not
otherwise exceed 0.90% of the Fund's average daily net assets (the "Current
Expense Limitation"). Accordingly, so long as the Manager continues to
observe the Current Expense Limitation, total annual operating expenses of
the Fund will not exceed 0.90% of the Fund's average daily net assets. For
the fiscal year ended March 31, 1996, the Manager was paid $356,473 under the
Current Agreement. Absent the Current Expense Limitation, the Manager would
have been paid $514,386 under the Current Agreement for such fiscal year.
Under the Current Agreement, subject always to the control of the
Trustees of the Trust and such policies as the Trustees may determine, the
Manager, at its own expense, furnishes continuously an investment program for
the Fund, makes investment decisions on behalf of the Fund and places all
orders for the purchase and sale of the Fund's portfolio securities. The
Manager also furnishes office space and equipment, provides bookkeeping and
clerical services (excluding determination of net asset value, shareholder
accounting services and fund accounting services) for the Fund, and pays all
salaries, fees and expenses of officers and Trustees of the Trust who are
affiliated with the Manager. In the performance of its duties under the
Current Agreement, the Manager is required to comply with the provisions of
the Agreement and Declaration of Trust and By-laws of the Trust and the
Fund's stated investment objective, policies and restrictions.
The Current Agreement provides that it will continue in effect for an
initial term of two years from its date of execution and thereafter so long
as it is approved at least annually in accordance with the 1940 Act. The
1940 Act requires that, after the initial two-year term, all advisory
agreements for a fund be approved at least annually by (i) the vote, cast in
person at a meeting called for the purpose, of a majority of the independent
trustees of the fund and (ii) the majority vote of the full board of trustees
or the vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) of the fund. The Current Agreement provides that it will
terminate automatically, without the payment of any penalty, in the event of
its assignment and that it may be terminated, without the payment of any
penalty, by the Trust or
4
<PAGE>
the Manager by not more than sixty days' written notice to the other party.
The Current Agreement may be amended only by the affirmative vote of the
holders of a majority of the outstanding voting securities of the Fund (as
defined in the 1940 Act) and by the vote, cast in person at a meeting called
for the purpose, of a majority of the Independent Trustees.
The Current Agreement provides that, in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Manager or
reckless disregard of the Manager's obligations and duties thereunder, the
Manager shall not be subject to any liability to the Trust or to any
shareholder thereof for any act or omission in the course of, or connected
with, rendering services thereunder.
The Current Agreement also provides that, in placing orders for the
portfolio transactions of the Fund, the Manager will seek the best price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below.
The Current Agreement provides that, subject to such policies as the Trustees
may determine, the Manager shall not be deemed to have acted unlawfully or to
have breached any duty under the agreement or otherwise solely by reason of
its having caused the Fund to pay a broker or dealer an amount of commission
for effecting a portfolio transaction for the Fund in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction. However, the Manager may only do so if it determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by the broker or dealer
viewed in terms of either that particular transaction or the Manager's
overall responsibilities with respect to the Fund and to other clients of the
Manager as to which the Manager exercises investment discretion. In using
its best efforts to obtain the most favorable price and execution available
for the Fund, the Manager will consider all factors it deems relevant,
including the overall net economic benefit 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 for the Fund in the future
and the financial strength and stability of the broker.
THE PROPOSED AGREEMENT. Under the Proposed Agreement, the Manager would
be entitled to receive a fee computed as described above at the annual rate
of 0.90% of the Fund's average daily net asset value. The fees to which the
Manager would be entitled under the Proposed Agreement are higher than the
management fees paid by most other mutual funds. The Manager has informed
the Trust that, effective on or about August 5, 1996, it intends to
voluntarily waive some or all of its management fee under the Proposed
Agreement (or the Current Agreement if the Proposed Agreement is not
approved) and to bear certain Fund expenses until further notice to the
extent that the Fund's total annual operating expenses (including the
management fee but excluding brokerage commissions, transfer taxes and
extraordinary items) would otherwise exceed 1.15% of the Fund's average daily
net asset value (the "New Expense Limitation"). Accordingly, so long as the
Manager observes the New Expense Limitation under either the Current or
Proposed Agreement, total annual operating expenses of the Fund will not
exceed 1.15% of the Fund's average daily net assets.
5
<PAGE>
The following tables and examples are provided to assist shareholders in
understanding and comparing the various costs and expenses of the Fund that
would be borne directly or indirectly by shareholders of the Fund with the
Current or Proposed Agreement in effect. Information is provided only with
respect to the class of shares of the Fund that will be designated as
Institutional Shares effective on or about August 5, 1996. Estimated Annual
Fund Operating Expenses and related Examples are presented as if (i) the
Current Agreement and Current Expense Limitation were in effect (the present
situation), and (ii) the Proposed Agreement and New Expense Limitation were
in effect. As described above, the Manager has informed the Trust that it
intends to implement the New Expense Limitation on or about August 5, 1996
whether or not the Proposed Agreement is approved.
SHAREHOLDER TRANSACTION EXPENSES
(Note: Shares of the Fund are sold without any sales charges)
CURRENT PROPOSED
AGREEMENT AGREEMENT
--------- ----------
Fund Reimbursement Fee - Purchase
(as a percentage of amount purchased)*......... .25% .25%
Fund Reimbursement Fee - Redemption
(as a percentage of amount redeemed)*.......... .25% .25%
* Applies only with respect to certain cash payments and redemptions. Each
Fund Reimbursement Fee is retained by the Fund to defray the costs and
expenses associated with investing the proceeds of the sale of the Fund's
shares in the case of purchases, and the sale of the Fund's portfolio
securities in the case of redemptions.
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average daily net assets)
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
MANAGEMENT SHAREHOLDER EXPENSES
FEE (AFTER SERVICE DISTRIBUTION OTHER (AFTER
WAIVER) FEE FEE EXPENSES(c) WAIVER)
<S> <C> <C> <C> <C> <C>
UNDER CURRENT AGREEMENT
(With Current Expense 0.55%(a) None None 0.35% 0.90%
Limitation in Effect)
UNDER PROPOSED AGREEMENT
(With New Expense 0.80%(b) None None 0.35% 1.15%
Limitation in Effect)
</TABLE>
(a) Under the Current Expense Limitation, the Manager currently
voluntarily waives some or all of its management fees and bears certain
expenses until further notice
6
<PAGE>
in order to limit the total annual operating expenses (which do not include
nonrecurring account fees and extraordinary items) to 0.90% of the Fund's
total annual operating expenses listed under Total Fund Operating Expenses
above. Absent such agreement by the Manager to waive its fee, management fees
would be 0.80% under the Current Agreement and Total Fund Operating Expenses
would be 1.15% under the Current Agreement.
(b) Under the New Expense Limitation, the Manager would agree to waive
some or all of its management fee and bear certain expenses until further
notice in order to limit the total annual operating expenses (which do not
include nonrecurring account fees and extraordinary items) to 1.15% of the
Fund's total annual operating expenses listed under Total Fund Operating
Expenses above. Absent such agreement by the Manager to waive its fee,
management fees would be 0.80% under the Current Agreement and 0.90% under
the Proposed Agreement and Total Fund Operating Expenses would be 1.15% under
the Current Agreement and 1.25% under the Proposed Agreement.
(c) Other Expenses are based on actual results for the fiscal year ended
March 31, 1996.
<TABLE>
<S> <C> <C>
EXAMPLE: You would pay the following expenses You would pay the following
on a $1,000 investment assuming expenses on a $1,000
(1) 5% annual return and (2) investment assuming (1) 5%
redemption at the end of each annual return and (2) no
time period: redemption:
<CAPTION>
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT AGREEMENT $14 $34 $55 $117 $12 $31 $52 $113
(With Current Expense
Limitation in Effect)
PROPOSED AGREEMENT $17 $42 $71 $154 $14 $40 $67 $150
(With New Expense
Limitation in Effect)
</TABLE>
The foregoing Examples assume the payment of a Fund Reimbursement Fee at the
time of purchase. The purpose of the forgoing tables is to assist shareholders
in understanding the various costs and expenses that are or would be borne
directly or indirectly by shareholders.
NOTE: THE FIVE PERCENT ANNUAL RETURN AND THE EXPENSES USED IN THE EXAMPLES ARE
MANDATED BY THE SECURITIES AND EXCHANGE COMMISSION AND ARE NOT REPRESENTATIONS
OF PAST OR FUTURE PERFORMANCE OR EXPENSES; ACTUAL PERFORMANCE AND/OR EXPENSES
MAY BE MORE OR LESS THAN THOSE SHOWN.
7
<PAGE>
The following compares the aggregate amounts that the Manager received or
would have received under the Current and Proposed Agreements for the fiscal
year ended March 31, 1996.
ACTUAL / HYPOTHETICAL ADVISORY FEES PAID OR THAT WOULD
HAVE BEEN PAID TO THE MANAGER FOR THE FISCAL YEAR ENDED
MARCH 31, 1996 UNDER THE CURRENT AND PROPOSED AGREEMENTS
Increase in fees under
Proposed Agreement stated
Current Proposed as a % of fees paid/payable
Agreement Agreement under Current Agreement
--------- --------- ---------------------------
With Current
Expense Limitation(1) $356,473 $356,473 No Change
With New
Expense Limitation(2) $514,386 $517,138 0.54%
With No
Expense Limitation(3) $514,386 $578,684 12.5%
_______________________________
(1) Calculated such that the Fund's total annual operating expenses would not
exceed 0.90% of the Fund's average daily net assets.
(2) Calculated such that the Fund's total annual operating expenses would not
exceed 1.15% of the Fund's average daily net assets.
(3) Calculated as if the actual management fee percentage (.80% under the
Current Agreement and .90% under the Proposed Agreement) were paid to the
Manager. The Manager would have received approximately $64,298 more under the
Proposed Agreement than it would have under the Current Agreement with no
Expense Limitation in effect for the 1996 fiscal year. This represents
approximately a 12.5% increase over what would have been paid to the Manager
under the Current Agreement under such circumstances.
BASIS FOR THE TRUSTEES' RECOMMENDATION. In approving the Proposed
Agreement at their May 20, 1996 meeting, the Trustees, including the
Independent Trustees, requested and
8
<PAGE>
evaluated information provided by the Manager which, in the Manager's
opinion, constituted all information reasonably necessary for the Trustees to
form a judgment as to whether the Proposed Agreement would be in the best
interests of the Fund and its shareholders.
The Trustees considered the fact that the Proposed Agreement would,
except as described herein, have terms and conditions identical to those of
the Current Agreement with the exception of the increase in the compensation
payable to the Manager thereunder. The Trustees believe that the proposed
fee increase will allow the Manager to continue to receive fees for its
services that are competitive with fees paid by other mutual funds to
high-quality investment managers. In recent years, the Trustees have noticed
a general increase in the complexity of the investment process and in the
competition for talented investment personnel and believe that the proposed
increase will, over the long term, enable the Manager to continue to provide
high-quality management services to the Fund. The Trustees also considered
that, by observing the New Expense Limitation, the Manager would be able to
limit the amount of compensation it receives under the Proposed Agreement to
the extent that the Fund's total annual operating expenses would not reach a
level that would preclude the Fund from remaining competitive with similar
funds in the industry.
In considering the Proposed Agreement, the Trustees placed primary
emphasis upon the nature and quality of the services being provided by the
Manager, taking into account the relative complexity of managing the Fund.
The Trustees also considered the recent investment performance of the Fund
and the management fees and other expenses paid by the Fund as compared to
those of similar funds managed by other investment advisers.
The Trustees also considered that, under both the Current and Proposed
Agreements, the Manager may receive research services from brokers in
connection with portfolio securities transactions for the Fund as described
above. The Trustees and the Manager foresee no material changes to the
Fund's brokerage arrangements resulting from the Proposed Agreement.
TRUSTEES RECOMMENDATION. As described above, following consideration of
these and other factors, the Trustees approved the Proposed Agreement on May
20, 1996. The Trustees, including the Independent Trustees, recommend that
the shareholders vote FOR approval of the Proposed Agreement.
REQUIRED VOTE. Approval of this proposal will require the affirmative
vote of a "majority of the outstanding voting securities" of the Fund, which
means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares of the Fund
present at the Special Meeting if more than 50% of the Fund's outstanding
shares are present at the meeting in person or by proxy. IF THE SHAREHOLDERS
OF THE FUND DO NOT APPROVE THE PROPOSED AGREEMENT, THE CURRENT AGREEMENT WILL
REMAIN IN EFFECT AND THE TRUSTEES WILL TAKE SUCH FURTHER ACTION AS THEY DEEM
TO BE IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE FUND.
9
<PAGE>
II. APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUND'S INVESTMENT POLICIES
The Fund's fundamental investment policies are those investment policies
and restrictions which may be changed only by a shareholder vote, while
non-fundamental, operating policies are those investment policies and
restrictions which may be changed by the Trustees on behalf of shareholders
of the Fund without shareholder approval. The proposals described below
request that shareholders give their approval to make non-fundamental and
allow the Trustees to amend certain of the Fund's fundamental investment
policies which are more restrictive than related limitations imposed by law
and positions of the Securities and Exchange Commission (the "SEC"). The
Trustees recommend that shareholders approve these changes in order to
provide the Fund with greater flexibility in pursuing its investment
objective.
A. PROPOSAL TO MAKE NON-FUNDAMENTAL AND AMEND THE FUND'S FUNDAMENTAL
INVESTMENT POLICY RELATING TO INVESTMENTS IN ILLIQUID SECURITIES,
RESTRICTED SECURITIES AND REPURCHASE AGREEMENTS
The Trustees recommend that the Fund's fundamental investment policy
with respect to investments in securities the disposition of which is
restricted under the federal securities laws ("restricted securities"),
securities which at the time of investment are not readily marketable
("illiquid securities") and repurchase agreements maturing in more than seven
days be made non-fundamental and amended to allow the Fund to operate under a
less restrictive policy. The Trustees believe that the proposed change would
provide the Fund with greater flexibility in responding to developments in
the securities markets and recent changes in SEC rules and positions that
give open-end investment companies ("funds") greater freedom to invest in
such securities.
The Fund's current fundamental investment policy provides that the Fund
may not: "Invest in (a) securities which at the time of such investment are
not readily marketable, (b) securities the disposition of which is restricted
under federal securities laws, and (c) repurchase agreements maturing in more
than seven days if, as a result, more than 10% of the Fund's total assets
(taken at current value) would then be invested in securities described in
(a), (b) and (c) above." Subsections (b) and (c) are included in the policy
because the SEC previously took the position that all restricted securities
and repurchase agreements maturing in more than seven days were "illiquid
securities" for these purposes. Shareholder approval is required to change
the fundamental policy to a non-fundamental policy.
The SEC has long taken the position that an open-end fund should limit
its investments in illiquid securities because the fund may have difficulty
meeting redemption requests within seven days if it holds a material
percentage of its assets in such securities. The SEC is also concerned that
a fund may have difficulty valuing its shares where the fund invests in
illiquid securities for which market quotations are not available. In 1969,
the SEC stated that a
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prudent limit on an open-end fund's holdings of illiquid securities was 10%
of the fund's net assets. However, in connection with its efforts to remove
unnecessary barriers to capital formation and to facilitate access to the
capital markets by small businesses, the SEC determined in 1992 that it would
be consistent with investor protection to increase the limit to 15% of a
fund's net assets. The SEC noted that a 15% limit should be satisfactory to
assure that open-end funds will be able to make timely payments for redeemed
shares.
Also, in recognition of the increased size and liquidity of the
institutional markets for unregistered securities and the importance of
institutional investors in the capital formation process, in 1990 the SEC
adopted Rule 144A under the Securities Act of 1933 (the "Securities Act"),
which is designed to facilitate efficient trading of restricted securities
among institutional investors. Rule 144A allows for a broad institutional
trading market for restricted securities. In adopting Rule 144A, the SEC
specifically provided that restricted securities traded under Rule 144A may
be treated as liquid for purposes of investment limitations for a fund if the
trustees of the fund determine that the securities are, in fact, liquid. The
SEC has taken the position that fund trustees may also determine that other
categories of restricted securities are liquid for these purposes, including
commercial paper issued pursuant to Section 4(2) of the Securities Act ("4(2)
Commercial Paper"). The Trustees of the Trust have delegated to the Manager
the daily function of determining and monitoring the liquidity of restricted
securities. The Trustees, however, will retain general oversight and
ultimate responsibility for these determinations.
As the securities markets have evolved and new types of instruments have
developed, the Trustees and the Manager have come to believe that the Fund's
current fundamental investment policy is overly broad and unnecessarily
restrictive. The fact that a security may be restricted will not necessarily
adversely affect either the liquidity of the investment or the ability of the
Fund to determine the value of the investment. As institutional markets
develop, the Fund could be unnecessarily constrained by its current
investment policy where the institutional markets for restricted securities
provide both readily ascertainable values for restricted securities and allow
funds to reduce an investment to cash in order to satisfy redemption orders
on a timely basis.
So that the Fund may take advantage of these regulatory initiatives and
the increasingly liquid institutional trading markets for restricted
securities, the Trustees recommend that shareholders vote to make
non-fundamental the Fund's fundamental investment policy regarding investment
in restricted securities, illiquid securities and repurchase agreements. If
shareholders approve this proposal, the Trustees intend to amend the
non-fundamental policy such that the Fund will be permitted to invest up to
15% of its net assets in illiquid securities (including restricted securities
and applicable repurchase agreements), the maximum percentage currently
permitted under SEC guidelines. To the extent the Trustees determine that
investments in restricted securities traded under Rule 144A or 4(2)
Commercial Paper are in fact liquid, the securities will not be counted in
calculating the 15% limit. In contrast to the existing fundamental policy, a
non-fundamental investment policy may be amended or eliminated by the
Trustees without shareholder approval.
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The Fund would generally be unable to obtain fair market value for
illiquid securities if the Fund were required to sell such securities on
short notice. Of course, the Fund's investment practice resulting from
approval of this proposal could have the effect of increasing, from time to
time, the level of illiquidity of the portfolio securities of the Fund. This
could make it marginally more difficult for the Fund to value its shares
and/or to fulfill shareholder redemption requests on a timely basis.
TRUSTEES RECOMMENDATION. The Trustees, including the Independent
Trustees, recommend that the shareholders vote FOR the proposal.
REQUIRED VOTE. Approval of this proposal will require the affirmative
vote of a "majority of the outstanding voting securities" of the Fund, which
means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares of the Fund
present at the Special Meeting if more than 50% of the Fund's outstanding
shares are present at the meeting in person or by proxy. IF THE SHAREHOLDERS
OF THE FUND DO NOT APPROVE THE PROPOSAL, THE FUNDAMENTAL POLICY WILL REMAIN
IN EFFECT AND THE TRUSTEES WILL TAKE SUCH FURTHER ACTION AS THEY DEEM TO BE
IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE FUND.
B. PROPOSAL TO MAKE NON-FUNDAMENTAL AND AMEND THE FUND'S FUNDAMENTAL
INVESTMENT POLICY RELATING TO INVESTMENTS IN THE VOTING SECURITIES OF
ANY ONE ISSUER
The Trustees recommend that the Fund's fundamental investment policy
with respect to investments in the voting securities of any one issuer be
made non-fundamental and amended to grant the Fund the maximum
flexibility permitted for "diversified" funds under the 1940 Act.
The Fund is a "diversified" fund under the 1940 Act. In order for the
Fund to qualify as such, the 1940 Act requires that at least 75% of the value
of the Fund's total assets be invested in securities limited with respect to
any one issuer to not more than 10% of the outstanding voting securities of
that issuer.
The Fund's current fundamental investment policy, which is more
restrictive than the limit imposed by the 1940 Act, provides that the Fund
may not: "Acquire more than 10% of the voting securities of any issuer."
Therefore, the Fund may not currently invest in more than 10% of the voting
securities of any one issuer under any circumstance. Absent the current
policy, the 1940 Act would permit the Fund to invest without regard to this
limitation with respect to 25% of its total assets and still qualify as a
diversified fund. Shareholder approval is required to change the fundamental
policy to a non-fundamental policy.
The Trustees and the Manager believe that there may be circumstances
where it would be beneficial for the Fund to acquire more than 10% of the
voting securities of an issuer. The Manager has advised the Trustees that
the current fundamental policy could prevent the Fund
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from investing in attractive investment opportunities which fit within the
Fund's investment objective. For example, the 10% limit may be unnecessarily
restrictive in the case of an issuer with particularly small market
capitalization. Accordingly, in order to provide the Fund with the maximum
flexibility permitted under relevant law, the Trustees recommend that
shareholders vote to make non-fundamental the Fund's fundamental investment
policy regarding investments in the voting securities of any one issuer. If
shareholders approve this proposal, the Trustees intend to amend the
non-fundamental policy to allow the Fund to invest up to 25% of its total
assets without regard to the 10% limitation. In contrast to the existing
fundamental policy, a non-fundamental investment policy may be amended or
eliminated by the Trustees without shareholder approval. However, the
Trustees may not adopt a policy which would allow the Fund to exceed the
investment limits imposed on "diversified" funds under the 1940 Act without
first obtaining shareholder approval to change the Fund's classification from
a "diversified" to a "non-diversified" fund.
In considering this proposal, shareholders should be aware that there
are various risks associated with permitting the Fund to own a higher
percentage of the voting securities of a single issuer. To the extent that
the Fund owns all or a major portion of the outstanding voting securities of
a particular issuer, under adverse market or economic conditions, or in the
event of adverse changes in the financial condition of the issuer, the
securities could become less liquid. Therefore, the Fund could find it more
difficult to sell such securities or to determine the fair market value of
such securities for purposes of computing the Fund's net asset value.
TRUSTEES RECOMMENDATION. The Trustees, including the Independent
Trustees, recommend that the shareholders vote FOR the proposal.
REQUIRED VOTE. Approval of this proposal will require the affirmative
vote of a "majority of the outstanding voting securities" of the Fund, which
means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, or (2) 67% or more of the shares of the Fund
present at the Special Meeting if more than 50% of the Fund's outstanding
shares are present at the meeting in person or by proxy. IF THE SHAREHOLDERS
OF THE FUND DO NOT APPROVE THE PROPOSAL, THE FUNDAMENTAL POLICY WILL REMAIN
IN EFFECT AND THE TRUSTEES WILL TAKE SUCH FURTHER ACTION AS THEY DEEM TO BE
IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE FUND.
III. OTHER INFORMATION
THE MANAGER. The Manager is registered as an investment adviser under
the Investment Advisers Act of 1940 and provides investment advisory services
to each series of the Trust as well as to a number of institutional investors
and accounts. The Manager's institutional accounts may invest in the Fund
and other series of the Trust.
The Manager is a California limited partnership organized in 1985 with
three general partners, Barr M. Rosenberg, Marlis S. Fritz and Kenneth Reid, and
one limited partner,
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Rosenberg Alpha L.P., a California limited partnership organized in 1985.
The address of Rosenberg Alpha L.P. is 12 El Sueno, Orinda, CA 94563.
Information concerning the principal executive officer and each general
partner of the Manager is set forth below.
Name and Address Position with Manager Principal Occupation
- ----------------------- ------------------------ ---------------------
Barr M. Rosenberg Managing General Partner Position with Manager
12 El Sueno and Chief Investment
Orinda, CA 94563 Officer
Marlis S. Fritz General Partner and Position with Manager
3515 Washington Street Director of Marketing
San Francisco, CA 94118
Kenneth Reid General Partner and Position with Manager
178 Estates Drive Director of Research
Piedmont, CA 95611
Rosenberg Alpha L.P. has two general partners, Barr M. Rosenberg and
June D. Rosenberg, and one limited partner, Harold L. Arbit. The address of
Ms. Rosenberg is 12 El Sueno, Orinda, CA 94563 and of Mr. Arbit is 835
Chiltern Road, Hillsborough, CA 94010.
In addition to their respective positions with the Manager, Mr.
Rosenberg is a Trustee of the Trust, Mr. Reid is the President and a Trustee
of the Trust and Ms. Fritz is the Vice President and a Trustee of the Trust.
Also, Carolyn Demler is the Clerk of the Trust and the Administrative
Coordinator of the Manager and Po-Len Hew is the Treasurer of the Trust and
the Accounting Manager of the Manager.
Messrs. Rosenberg and Reid and Ms. Fritz, Hew and Demler, each being a
general partner, officer or employee of the Manager, benefit from the
management fees paid by the Fund to the Manager and, accordingly, may have an
interest in the approval of the Proposed Agreement. However, these persons
do not receive any direct compensation from the Fund or the Trust.
THE ADMINISTRATOR. Furman Selz LLC, a Delaware limited liability
company ("Furman Selz"), serves as the Trust's administrator and generally
assists the Fund in all aspects of its administration and operation. The
address of Furman Selz is 230 Park Avenue, New York, New York 10169. As
compensation for its administrative services on behalf of the Fund, Furman
Selz receives a monthly fee based upon an annual rate of 0.15% of the Fund's
average daily net assets. Furman Selz did not begin to serve as the Trust's
administrator until May of 1996 and received no compensation from the Fund or
the Trust during the fiscal year ended March 31, 1996.
SOLICITATION OF PROXIES. In addition to solicitation of proxies by mail,
the Trustees and officers of the Trust and officers and employees of the
Manager, affiliates of the Manager, or
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other representatives of the Trust may also solicit proxies by telephone or
telegraph or in person.
QUORUM AND METHODS OF TABULATION. In accordance with the Trust's
Agreement and Declaration of Trust, except when a larger quorum is required
by law, 40% of the shares of the Fund entitled to vote (present in person or
represented by proxy) constitutes a quorum for the transaction of business at
the Special Meeting. Votes cast by proxy or in person at the Special Meeting
will be counted by a person appointed by the Trust as a teller (the "Teller")
for the Meeting. With respect to all proposals, abstentions and broker
non-votes have the effect of negative votes on the proposal.
The Teller will count the total number of votes cast "FOR" approval of
the proposals for purposes of determining whether sufficient affirmative
votes have been cast. The Teller will count shares represented by proxies
that reflect abstentions and broker non-votes for purposes of determining the
presence of a quorum.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS OF
SHAREHOLDERS. The Trust's Agreement and Declaration of Trust does not
provide for annual meetings of shareholders and the Trust does not currently
intend to hold such a meeting for holders of existing classes of shares in
1996 or 1997. Shareholder proposals for inclusion in the Trust's proxy
statement for any subsequent meeting must be received by the Trust within a
reasonable period of time prior to any such meeting.
ADJOURNMENT. In the event that sufficient votes in favor of any of the
proposals set forth in the Notice of Special Meeting of Shareholders are not
received by the time scheduled for the meeting, the persons named as proxies
may propose one or more adjournments of the meeting for a reasonable time (up
to 90 days) after the date set for the original meeting without further
notice to permit further solicitation of proxies with respect to any of such
proposals. In addition, if, in the judgment of the persons named as proxies,
it is advisable to defer action on one or more proposals but not all
proposals, the persons named as proxies may propose one or more adjournments
of the meeting for a reasonable time in order to defer action on such
proposals as they deem advisable. Any such adjournments will require the
affirmative vote of a majority of the votes properly cast on the question,
whether or not a quorum is present, as required by the Trust's Agreement and
Declaration of Trust. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor of
such proposals. They will vote against any such adjournment those proxies
required to be voted against any of such proposals. The cost of any such
additional solicitation and of any adjourned session will be borne by the
Fund. However, as described above, the Manager currently voluntarily waives
some or all of its management fee and bears certain expenses with respect to
the Fund to the extent that the Fund's total annual operating expenses
(including the management fee but excluding brokerage commissions, transfer
taxes and extraordinary items) do not otherwise exceed 0.90% of the Fund's
average daily net assets. As a result, the costs of any additional
solicitation may in effect be borne by the Manager. Any proposals for which
sufficient favorable votes have been received by the time of the
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Special Meeting will be acted upon and such action will be final regardless
of whether the meeting is adjourned to permit additional solicitation with
respect to any other proposal.
OTHER MATTERS. The Trustees are not aware of any other matters that are
expected to arise at the Special Meeting. However, if any other matters
properly come before the Special Meeting, it is the Trustees' intention that
proxies that do not contain specific instructions to the contrary will be
voted on such matters in accordance with the judgment of the persons named as
proxies in the enclosed form of proxy.
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APPENDIX A
MANAGEMENT CONTRACT
Management Contract executed as of ______, 1996, between Barr Rosenberg
Series Trust, a Massachusetts business trust (the "Trust"), on behalf of its
U.S. Small Capitalization Series (the "Fund"), and Rosenberg Institutional
Equity Management, a California limited partnership (the "Manager").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO THE TRUST.
(a) Subject always to the control of the Trustees of the Trust and to
such policies as the Trustees may determine, the Manager will, at its
expense, (i) furnish continuously an investment program for the Fund and
will make investment decisions on behalf of the Fund and place all orders
for the purchase and sale of its portfolio securities and (ii) furnish
office space and equipment, provide bookkeeping and clerical services
(excluding determination of net asset value, shareholder accounting
services and the fund accounting services for the Fund being supplied by
State Street Bank and Trust Company) and pay all salaries, fees and
expenses of officers and Trustees of the Trust who are affiliated with the
Manager. In the performance of its duties, the Manager will comply with
the provisions of the Agreement and Declaration of Trust and By-laws of the
Trust and the Fund's stated investment objective, policies and
restrictions.
(b) In placing orders for the portfolio transactions of the Fund, the
Manager will seek the best price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for
brokerage and research services as described below. In using its best
efforts to obtain for the Fund the most favorable price and execution
available, the Manager shall consider all factors it deems relevant,
including, without limitation, the overall net economic BENEFIT to the Fund
(involving price paid or received and any commissions and other costs
paid), the efficiency with which the transaction is effected, the ability
to effect the transaction at all where a large block is involved,
availability of the broker to stand ready to execute possibly difficult
transactions in the future and financial strength and stability of the
broker. Subject to such policies as the Trustees may determine, the
Manager shall not be deemed to have acted unlawfully or to have breached
any duty created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides brokerage
and research services to the Manager an amount of commission for effecting
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<PAGE>
a portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction,
if the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Manager's overall responsibilities with
respect to the Trust and to other clients of the Manager as to which the
Manager exercises investment discretion.
(c) The Manager shall not be obligated under this agreement to pay
any expenses of or for the Trust or of or for the Fund not expressly
assumed by the Manager pursuant to this Section 1 other than as provided in
Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Manager, and in any person
controlled by or under common control with the Manager, and that the Manager
and any person controlled by or under common control with the Manager may
have an interest in the Trust. It is also understood that the Manager and
persons controlled by or under common control with the Manager have and may
have advisory, management service, distribution or other contracts with other
organizations and persons, and may have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.
The Trust, on behalf of the Fund, will pay to the Manager as
compensation for the Manager's services rendered, for the facilities
furnished and for the expenses borne by the Manager pursuant to Section 1, a
fee, computed and paid quarterly at the annual rate of 0.90% of the Fund's
average daily net asset value. Such average daily net asset value of the
Fund shall be determined by taking an average of all of the determinations of
such net asset value during such quarter at the close of business on each
business day during such quarter while this Contract is in effect. Such fee
shall be payable for each quarter within five (5) business days after the end
of such quarter.
In the event that expenses of the Fund (including investment advisory
fees but excluding taxes, portfolio brokerage commissions and any
distribution expenses paid by the Fund pursuant to a distribution plan or
otherwise) for any fiscal year should exceed the expense limitation on
investment company expenses imposed by any statute or regulatory authority of
any jurisdiction in which shares of the Fund are qualified for offer and
sale, the compensation due the Manager for such fiscal year shall be reduced
by the amount of such excess by reduction or refund thereof. In the event
that the expenses of the Fund exceed any expense limitation that the Manager
may, by written notice to the Trust, voluntarily declare to be effective with
respect to the Fund, subject to such terms and conditions as the Manager may
prescribe in such notice, the compensation due the Manager shall be reduced,
and, if
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<PAGE>
necessary, the Manager shall bear the Fund's expenses to the extent required
by such expense limitation.
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be
amended unless such amendment is approved at a meeting by the affirmative
vote of a majority of the outstanding shares of the Fund, and by the vote,
cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract by
not more than sixty days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust by majority vote or the
shareholders by the affirmative vote of a majority of the outstanding
shares of the Fund, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval, do
not specifically approve at least annually the continuance of this
Contract, then this Contract shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the expiration
of one year from the effective date of the last such continuance, whichever
is later; provided, however, that if the continuance of this Contract is
submitted to the shareholders of the Fund for their approval and such
shareholders fail to approve such continuance of this Contract as provided
herein, the Manager may continue to serve hereunder in a manner consistent
with the Investment Company Act of 1940 and the rules and regulations
thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
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6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a duly
called and held meeting of shareholders, (a) of the holders of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote
at such meeting, if the holders of more than 50% of the outstanding shares of
the Fund entitled to vote at such meeting are present in person or by proxy,
or (b) of the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940 and the rules and
regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act; and the
phrase "specifically approve at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940 and the rules and
regulations thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust, or
to any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. THE NAMES "ROSENBERG" OR "BARR ROSENBERG".
The Manager owns the right to use the names "Rosenberg" OR " Barr
Rosenberg" in connection with investment-related services or products, and
such names may be used by the Trust only with the consent of the Manager.
The Manager consents to the use by the Trust of the name "Barr Rosenberg
Series Trust" or to the use by the Trust of any other name embodying the
names "Rosenberg" OR "Barr Rosenberg", in such forms as the Manager shall in
writing approve, but only on condition and so long as (i) the Trust shall
fully perform, fulfill and comply with all provisions of this Contract
expressed herein to be performed, fulfilled or complied with by it. No such
name shall be used by the Trust at any time or in any place or for any
purposes or under any conditions except as in this section provided. The
foregoing authorization by the Manager to the Trust to use the names
"Rosenberg" OR "Barr Rosenberg" as part of a business or name is not
exclusive of the right of the Manager itself to use, or to authorize others
to use, the same; the Trust acknowledges and agrees that as between the
Manager and the Trust, the Manager has the exclusive right so to use, or to
authorize others to use, said names and the Trust agrees to take such action
as may reasonably be requested by the Manager to give full effect to the
provisions of this section (including, without limitation, consenting to such
use of said names). Without limiting the generality of the foregoing, the
Trust agrees, on behalf of the Fund, that, upon any termination of this
Contract by either party or upon the violation of any of its provisions
4
<PAGE>
by the Trust, the Trust will, at the request of the Manager made within six
months after the Manager has knowledge of such termination or violation, use
its best efforts to change the name of the Trust so as to eliminate all
reference, if any, to the names "Rosenberg" OR "Barr Rosenberg" and will not
thereafter transact any business in a name containing the names "Rosenberg"
OR "Barr Rosenberg" in any form or combination whatsoever, or designate
itself as the same entity as or successor to any entity of such name, or
otherwise use the names "Rosenberg" OR "Barr Rosenberg" or any other
reference to the Manager. Such covenants on the part of the Trust shall be
binding upon it, its trustees, officers, stockholders, creditors and all
other persons claiming under or through it.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Trust
as Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund.
5
<PAGE>
IN WITNESS WHEREOF, BARR Rosenberg Series Trust, on behalf of its U.S.
Small Capitalization Series, and Rosenberg Institutional Equity Management
have each caused this instrument to be signed in duplicate on its behalf by
its duly authorized representative, all as of the day and year first above
written.
BARR ROSENBERG SERIES TRUST , on behalf of its
U.S. Small Capitalization Series
By_______________________________
Title:
ROSENBERG INSTITUTIONAL EQUITY MANAGEMENT
By_______________________________
Title: General Partner
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<PAGE>
ROSENBERG SERIES TRUST
SMALL CAPITALIZATION SERIES
Proxy for a Special Meeting of Shareholders, August 1, 1996
The undersigned hereby appoints Marlis S. Fritz and Carolyn Demler, and
each of them separately, as proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at a
Special Meeting of Shareholders of the Small Capitalization Series (the
"Fund"), a series of Rosenberg Series Trust (the "Trust"), on August 1, 1996
at 10:00 a.m. California time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if
personally present. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1., 2.A. AND 2.B.
PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS
ON THIS PROXY. If the shares are registered
in more than one name, each joint owner or
each fiduciary should sign personally. Only
authorized persons should sign for
corporations.
Dated: , 1996
------------------------------------------
Signature
------------------------------------------
Signature (if held jointly)
- -------------------------------------------------------------------------------
At their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Trustees recommend a
vote FOR all proposals:
FOR AGAINST ABSTAIN
1. PROPOSAL TO APPROVE A NEW MANAGEMENT CONTRACT. / / / / / /
2. CHANGES TO INVESTMENT POLICIES.
A. PROPOSAL TO MAKE NON-FUNDAMENTAL AND AMEND
THE FUND'S FUNDAMENTAL INVESTMENT POLICY
RELATING TO INVESTMENTS IN ILLIQUID SECURITIES,
RESTRICTED SECURITIES AND REPURCHASE AGREEMENTS. / / / / / /
B. PROPOSAL TO MAKE NON-FUNDAMENTAL AND AMEND
THE FUND'S FUNDAMENTAL INVESTMENT POLICY
RELATING TO INVESTMENTS IN THE SECURITIES
OF ANY ONE ISSUER. / / / / / /
THIS PROXY IS SOLICITED ON BEHALF OF THE PLEASE SIGN AND DATE THE
TRUSTEES OF THE TRUST. PLEASE SIGN THE REVERSE SIDE OF THIS CARD.
REVERSE SIDE OF THIS CARD. YOUR SIGNATURE
ACKNOWLEDGES RECEIPT OF THE NOTICE OF
SPECIAL MEETING AND THE ACCOMPANYING
PROXY STATEMENT.
