<PAGE>
File Nos. 33-21677
811-5547
As filed with the Securities and Exchange Commission
on May 22, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 11 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT /X/
COMPANY ACT OF 1940
Amendment No. 14 /X/
ROSENBERG SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
Four Orinda Way, Suite 300E, Orinda, CA 94563
(Address of principal executive offices)
510-254-6464
(Registrant's telephone number, including area code)
Barr M. Rosenberg with a copy to:
Rosenberg Institutional J. B. Kittredge, Jr.
Equity Management Ropes & Gray
Four Orinda Way One International Place
Suite 300 E Boston, Massachusetts 02110-2624
Orinda, CA 94563
(Name and address of agent for service)
- -------------------------------------------------------------------------------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has previously registered an indefinite number or amount of its
shares of beneficial interest under the Securities Act of 1933. Registrant
will file a Rule 24f-2 Notice with respect to the Registrant's fiscal year
ended March 31, 1996 in May, 1996.
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On _________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On _________ pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / On ________ pursuant to paragraph (a)(2), of Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
ROSENBERG SERIES TRUST
CROSS REFERENCE SHEET
N-1A Item No. Location
- ------------- --------
PART A
- ------
Item 1. Cover Page . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . Schedule of Fees
Item 3. Condensed Financial
Information. . . . . . . . . . . [To be provided in a
subsequent Amendment under
Rule 485(b)]
Item 4. General Description of
Registrant . . . . . . . . . . . Description of the Trust
and Ownership of Shares;
Investment Objective and
Policies; Cover Page
Item 5. Management of the Fund . . . . . Management of the Trust;
Back Cover
Item 5A. Management's Discussion
of Fund Performance. . . . . . . . Investment Performance of
the Fund
Item 6. Capital Stock and Other
Securities . . . . . . . . . . . Description of the Trust
and Ownership of Shares;
Distributions;
Back Cover
Item 7. Purchase of Securities Being
Offered. . . . . . . . . . . . . Purchase of Shares;
Determination of Net Asset
Value
Item 8. Redemption or Repurchase . . . . Redemption of Shares;
Determination of Net Asset
Value
Item 9. Legal Proceedings. . . . . . . . None
PART B
- ------
Item 10. Cover Page . . . . . . . . . . . Cover Page
Item 11. Table of Contents. . . . . . . . Table of Contents
Item 12. General Information and
History. . . . . . . . . . . . . Not Applicable
Item 13. Investment Objectives
and Policies . . . . . . . . . . Investment Objective and
Policies; Investment
Restrictions
Item 14. Management of the Fund . . . . . Management of the Trust
-2-
<PAGE>
Item 15. Control Persons and Principal
Holders of Securities. . . . . . Description of the Trust
and Ownership of Shares;
Management of the Trust;
Part A, Description of the
Trust and Ownership of
Shares
Item 16. Investment Advisory and Other
Services . . . . . . . . . . . . Investment Advisory and
Other Services
Item 17. Brokerage Allocation and Other
Practices. . . . . . . . . . . . Portfolio Transactions
Item 18. Capital Stock and Other
Securities . . . . . . . . . . . Description of the Trust
and Ownership of Shares
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered. . . See in Part A, Purchase of
Shares; Redemption of
Shares; Determination of
Net Asset Value
Item 20. Tax Status . . . . . . . . . . . Income Dividends,
Distributions and Tax
Status
Item 21. Underwriters . . . . . . . . . . Investment Advisory and
Other Services --
Distributor and Distribution
Plan
Item 22. Calculation of Yield Quotations
of Money Market Funds. . . . . . Not Applicable
Item 23. Financial Statements . . . . . . [To be provided in a
subsequent Amendment pursuant
to Rule 485(b)]
PART C
- ------
Information to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
-3-
<PAGE>
Subject to Completion dated May 22, 1996
BARR ROSENBERG SERIES TRUST
237 Park Avenue, Suite 910
New York, New York 10017
1-800-
_______ __, 1996
The Barr Rosenberg Series Trust (the "Trust") is an open-end management
investment company offering the following three diversified portfolios with
different investment objectives and strategies: the U.S. Small Capitalization
Series, the International Small Capitalization Series and the Japan Series. The
Trust's portfolios are referred to individually as a "Series" or a "Fund," and
collectively as the "Series" or the "Funds." Each Fund's investment manager is
Rosenberg Institutional Equity Management (the "Manager").
DOMESTIC EQUITY PORTFOLIO
The U.S. SMALL CAPITALIZATION SERIES seeks a total return greater than that
of the Russell 2000 Index through investment primarily in equity securities of
smaller companies which are traded principally in the markets of the United
States. The Fund is designed for long-term investors willing to assume
above-average risk in return for above-average capital growth potential.
INTERNATIONAL EQUITY PORTFOLIOS
The INTERNATIONAL SMALL CAPITALIZATION SERIES seeks a total return greater
than that of the Cazenove Rosenberg Global Smaller Companies Index excluding the
United States ("CRIEXUS") through investment primarily in equity securities of
smaller companies which are traded principally in markets outside of the United
States. The Fund is designed for long-term investors willing to assume
above-average risk in return for above-average capital growth potential.
The JAPAN SERIES seeks a total return greater than that of the Tokyo Stock
Price Index of the Tokyo Stock Exchange ("TOPIX") through investment in Japanese
securities, primarily in common stocks of Japanese companies traded in Japanese
markets. The Fund is designed for long-term investors willing to assume
above-average risk in return for above-average capital growth potential.
INFORMATION CONTAINED HEREIN PERTAINING TO ADVISER AND SELECT SHARES OF THE
TRUST'S U.S. SMALL CAPITALIZATION SERIES, INTERNATIONAL SMALL CAPITALIZATION
SERIES AND JAPAN SERIES AND TO INSTITUTIONAL SHARES OF THE TRUST'S INTERNATIONAL
SMALL CAPITALIZATION SERIES (COLLECTIVELY, THE "PENDING SECURITIES") IS SUBJECT
TO COMPLETION OR AMENDMENT. A POST-EFFECTIVE AMENDMENT TO THE REGISTRATION
STATEMENT RELATING TO, AMONG OTHER THINGS, THE PENDING SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. PENDING SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY SUCH SECURITIES BE ACCEPTED PRIOR TO THE TIME THE
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF PENDING SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Each Fund offers three classes of shares: Institutional Shares, Adviser
Shares and Select Shares. Whether an investor is eligible to purchase
Institutional, Adviser or Select Shares generally depends on the amount invested
in a particular Fund and on whether the investor makes the investment in the
Fund directly or through a financial adviser. The classes differ primarily with
respect to (i) the level of Shareholder Service Fee and (ii) the level of
Distribution Fee borne by each class. The following table sets forth basic
investment and fee information for each class.
<TABLE>
<CAPTION>
Minimum Method Annual Annual
Fund Subsequent of Shareholder Distribution
Name of Class Investment* Investments* Investment* Service Fee Fee
<S> <C> <C> <C> <C> <C>
Institutional $1 million $10,000 Direct None None
Adviser $100,000 $1,000 Financial Adviser .25% None
Select $10,000 $500 Direct .25% .25%
</TABLE>
*Certain exceptions apply. See "Multiple Classes."
The offering price is based on the net asset value per share next determined
after an order is received. Generally, a separate Fund Reimbursement Fee applies
to both purchases and redemptions of all classes, although certain exceptions
apply. See "Purchase of Shares" and "Redemption of Shares."
This Prospectus concisely describes the information which investors ought
to know before investing. Please read this Prospectus carefully and keep it for
further reference.
A Statement of Additional Information dated ____ __, 1996 is available free
of charge by writing to Barr Rosenberg Funds Distributor, Inc., the Funds'
distributor (the "Distributor"), at 230 Park Avenue, New York, New York 10169 or
by telephoning 1-800-________. The Statement, which contains more detailed
information about the Trust, has been filed with the Securities and Exchange
Commission and is incorporated by reference in this Prospectus.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
-2-
<PAGE>
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-3-
<PAGE>
TABLE OF CONTENTS
Page
----
SHAREHOLDER TRANSACTION AND FUND EXPENSES. . . . . . . . . . . . . . . . 5
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . .18
INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . .27
MULTIPLE CLASSES . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
PURCHASE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .30
RETIREMENT PLAN ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . .33
REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . .34
EXCHANGE OF FUND SHARES. . . . . . . . . . . . . . . . . . . . . . . . .36
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .38
DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . .40
SHAREHOLDER INQUIRIES. . . . . . . . . . . . . . . . . . . . . . . . . .41
-4-
<PAGE>
SHAREHOLDER TRANSACTION AND FUND EXPENSES
The estimated expenses of each of the Funds for the fiscal year are set
forth in the following tables, the forms of which are prescribed by federal
securities laws and regulations.
SHAREHOLDER TRANSACTION EXPENSES
All Classes
International
U.S. Small Small Cap Japan
Cap Series Series Series
Fund Reimbursement Fee - Purchase
(as a percentage of amount purchased)* .25% .50% .50%
Fund Reimbursement Fee - Redemption
(as a percentage of amount redeemed)* .25% .50% .50%
* Applies only with respect to certain cash purchases and redemptions. See
"Purchase of Shares" and "Redemption of Shares." Also, investors are
charged Fund Reimbursement Fees in connection with exchanges of Fund
Shares. See "Exchange of Fund Shares." Each Fund Reimbursement Fee is
retained by the Fund purchased or redeemed 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
<TABLE>
<CAPTION>
Total Fund
Operating
Management Shareholder Expenses
Fee (after Service Distribution Other (after
waiver) Fee Fee Expenses(b) waiver)
<S> <C> <C> <C> <C> <C>
Institutional Shares
U.S. Small Cap Series 0.78%a None None 0.37% 1.15%
International Small Cap Series 1.00% None None 0.50% 1.50%
Japan Series 1.00% None None 0.50% 1.50%
Adviser Shares
U.S. Small Cap Series 0.78%a 0.25% None 0.37% 1.40%
International Small Cap Series 1.00% 0.25% None 0.50% 1.75%
Japan Series 1.00% 0.25% None 0.50% 1.75%
Select Shares
U.S. Small Cap Series 0.78%a 0.25% 0.25% 0.37% 1.65%
International Small Cap Series 1.00% 0.25% 0.25% 0.50% 2.00%
Japan Series 1.00% 0.25% 0.25% 0.50% 2.00%
</TABLE>
(a) The Manager has agreed to reduce 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 expenses) of each class to the percentage of a Fund's total
annual operating expenses attributable to that class listed under Total
Fund Operating Expenses above. Absent such agreement by the Manager to
waive its fee, management fees would be 0.90% for the U.S. Small Cap
Series and Total Fund Operating Expenses for the U.S. Small Cap Series
would be 1.27% for Institutional Shares, 1.52% for Adviser Shares and 1.77%
for Select Shares. See "Management of the Trust."
(b) For the U.S. Small Cap Series and the Japan Series, Other Expenses are
based on actual results for Institutional Shares for the fiscal year ended
March 31, 1996. For the International Small Cap Series, Other Expenses are
based on estimated amounts for the fiscal year ending March 31, 1997.
-5-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
EXAMPLE:
You would pay the following You would pay the following
expenses on a $1,000 expenses on a $1,000
investment assuming (1) 5% investment assuming (1) 5%
annual return and (2) annual return and (2) no
redemption at the end of redemption:
each time period:
-----------------------------------------------------------------
1 3 5 10 1 3 5 10
year year years year year year years year
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Shares
U.S. Small Cap Series
International Small -- -- -- --
Cap Series
Japan Series
Adviser Shares [To be provided in a subsequent post-effective
amendment to be filed prior to the effective
U.S. Small Cap Series date to this post-effective Amendment pursuant
to Rule 485(b)]
International Small -- -- -- --
Cap Series
Japan Series
Select Shares
U.S. Small Cap Series
International Small -- -- -- --
Cap Series
Japan Series
</TABLE>
- --------------------------------------------------------------------------------
The foregoing Examples assume the payment of a Fund Reimbursement Fee both
at the time of purchase and at the time of redemption even though such fees may
not be applicable (see "Purchase of Shares" and "Redemption of Shares").
The purpose of this table is to assist in understanding the various costs
and expenses of a Fund that are borne by holders of shares of such Fund. 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.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables present audited per share financial information for
the periods listed for each Fund which had commenced operations prior to the
date of this Prospectus. Each of the Financial Highlights has been examined by
Price Waterhouse LLP, independent accountants. These statements should be read
in conjunction with the other audited financial statements and related notes
which are included in the Statement of Additional Information.
U.S. SMALL CAPITALIZATION SERIES
FINANCIAL HIGHLIGHTS
(FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT
EACH PERIOD, DURING WHICH ONLY ONE CLASS OF SHARES WAS OFFERED)
Period ended
Year Ended March 31 March 30,
---------------------------------------------------- 1989 (a)
------------
1996 1995 1994 1993 1992 1991 1990 1989
[TO BE PROVIDED IN A SUBSEQUENT POST-EFFECTIVE
AMENDMENT TO BE FILED PRIOR TO THE EFFECTIVE
DATE OF THIS POST-EFFECTIVE AMENDMENT
PURSUANT TO RULE 485(B)]
-7-
<PAGE>
JAPAN SERIES
FINANCIAL HIGHLIGHTS
(FOR AN INSTITUTIONAL SHARE OUTSTANDING THROUGHOUT
EACH PERIOD, DURING WHICH ONLY ONE CLASS OF SHARES WAS OFFERED)
Period ended
Year Ended March 31 March 30,
---------------------------------------------------- 1989(a)
------------
1996 1995 1994 1993 1992 1991 1990 1989
[TO BE PROVIDED IN A SUBSEQUENT POST-EFFECTIVE
AMENDMENT TO BE FILED PRIOR TO THE EFFECTIVE
DATE OF THIS POST-EFFECTIVE AMENDMENT
PURSUANT TO RULE 485(B)]
-8-
<PAGE>
MANAGEMENT OF THE TRUST
Each Fund is advised and managed by Rosenberg Institutional Equity
Management (the "Manager") which provides investment advisory services
to a substantial number of institutional investors.
KEY PERSONNEL OF THE MANAGER
The biography of each of the General Partners of the Manager, each of
which is also a Trustee of the Trust, is set forth below.
BARR ROSENBERG. Dr. Rosenberg is Managing General Partner and Chief
Investment Officer for the Manager. As such, he has ultimate
responsibility for the Manager's securities valuation and portfolio
optimization systems used to manage the Funds and for the implementation
of the decisions developed therein. His area of special concentration
is the design of the Manager's proprietary securities valuation model.
Dr. Rosenberg earned a B.A. degree from the University of California,
Berkeley, in 1963. He earned an M.Sc. from the London School of
Economics in 1965, and a Ph.D. from Harvard University, Cambridge,
Massachusetts, in 1968. From 1968 until 1983, Dr. Rosenberg was a
Professor of Finance, Econometrics, and Economics at the School of
Business Administration at the University of California, Berkeley.
Concurrently, from 1968 until 1974, Dr. Rosenberg worked as a consultant
in applied decision theory in finance, banking, and medicine. In 1975,
he founded Barr Rosenberg Associates, a financial consulting firm (now
know as BARRA) where he was a managing partner, and later chief
scientist. Dr. Rosenberg, the founder of the Berkeley Program in
Finance, is acknowledged as an expert in the modeling of complex
processes with substantial elements of risk.
MARLIS S. FRITZ. Ms. Fritz is a General Partner for the Manager.
She has primary responsibility for the Manager's new business
development and secondary responsibility for client service.
Ms. Fritz earned a B.S. degree from the University of Michigan, Ann
Arbor, in 1971. After working in life insurance management and sales
for seven years, she entered the investment management business in 1978
as Marketing Associate with Forstmann-Leff Associates, New York. From
1983 until 1985, she was Vice President, Marketing at Criterion
Investment Management Company, Houston, Texas.
-9-
<PAGE>
KENNETH REID. Dr. Reid is a General Partner and Director of Research
for the Manager. His work is focused on the design and estimation of
the Manager's valuation models and he has primary responsibility for
analyzing the empirical evidence that validates and supports the
day-to-day recommendations of the Manager's portfolio valuation models.
Patterns of short-term price behavior discussed by Dr. Reid as part of
his Ph.D. dissertation have been refined and incorporated into the
Manager's proprietary valuation and trading systems.
Dr. Reid earned both a B.A. degree (1973) and an M.D.S. (1975) from
Georgia State University, Atlanta. In 1982, he earned a Ph.D. from the
University of California, Berkeley, where he was awarded the American
Bankers Association Fellowship. From 1981 until June 1986, Dr. Reid
worked as a consultant at BARRA in Berkeley, California. His
responsibilities included estimating multiple-factor risk models,
designing and evaluating active management strategies, and serving as an
internal consultant on econometric matters in finance.
There are 38 professional staff members of the Manager and the
Manager's affiliate, Barr Rosenberg Investment Management, Inc., located
in Orinda, California. Included among the Manager's professional staff
are eight individuals with Ph.D.s and twenty-three individuals with
other graduate degrees. Five members of the staff have been awarded
C.F.A. certificates.
THE OUTSIDE TRUSTEES
WILLIAM F. SHARPE and NILS H. HAKANSSON are Trustees of the Trust who
are not "interested persons" (as defined in the Investment Company Act
of 1940) of the Trust or the Manager.
Dr. Sharpe is the STANCO 25 Professor of Finance at Stanford
University's Graduate School of Business. He is best known as one of
the developers of the Capital Asset Pricing Model, including the beta
and alpha concepts used in risk analysis and performance measurement.
He developed the widely-used binomial method for the valuation of
options and other contingent claims. He also developed the computer
algorithm used in many asset allocation procedures. Dr. Sharpe has
published articles in a number of professional journals. He has also
written six books, including Portfolio Theory and Capital Markets,
(McGraw-Hill, 1970), Asset Allocation Tools, (Scientific Press, 1987),
Fundamentals of Investments (with Gordon J. Alexander and Jeffery
Bailey, Prentice-Hall, 1993) and Investments (with Gordon J. Alexander
and Jeffery Bailey, Prentice-Hall, 1995). Dr. Sharpe is a past
President of the American Finance Association. He 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.
-10-
<PAGE>
Professor Hakansson is the Sylvan C. Coleman Professor of Finance and
Accounting of 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 numerous
articles in academia journals and in professional volumes. Many of his
papers address various aspects of asset allocation procedures as well as
topics in security innovation, information economics, and financial
reporting. He has served on the editorial boards of several professional
journals and been a consultant to the RAND Corporation and a number of
investment organizations. Professor Hakansson is a member of the board of
two foundations and a past board member of SuperShare Service Corporation and
of Theatrix Interactive, Inc. He is also a Fellow of the Accounting
Researchers International Association and a member of the Financial
Economists Roundtable.
THE MANAGER'S GENERAL INVESTMENT PHILOSOPHY AND STRATEGY
The Manager attempts to add value relative to the benchmark
through a quantitative stock selection process, and seeks to diversify
investment risk across the several hundred holdings in each Fund. In
seeking to outperform each Fund's designated benchmark, the Manager also
attempts to control risk in the Fund's portfolio relative to the
securities constituting that benchmark. So that each Fund is
substantially invested in equities at all times, the Manager does not
earn the extraordinary return, or "alpha," by timing the market. The
Manager seeks to avoid constructing portfolios that significantly differ
from the relevant benchmark with respect to characteristics such as
market capitalization, historic volatility, or "beta," and industry
weightings. Each Fund seeks to have a similar exposure to these factors
as the designated benchmark.
INVESTMENT PHILOSOPHY. The Manager's investment strategy is based on
the belief that stock prices imperfectly reflect the present value of
the expected future earnings of companies, their "fundamental value."
The Manager believes that market prices will converge towards
fundamental value over time, and that therefore any investor who can
accurately determine fundamental value, and who applies a disciplined
investment process to select those stocks that are currently undervalued
(i.e., the price is less than fundamental value), will outperform the
market over time.
The premise of the Manager's investment philosophy is that there is
a link between the price of a stock and the underlying financial and
operational characteristics of the company. In other words, the price
reflects the market's assessment of how well the company is positioned
to generate future earnings and/or future cash flow. The Manager
identifies and purchases those stocks which are undervalued (i.e., they
are currently cheaper than similar stocks with the same
characteristics). The Manager believes that the market will recognize
the "better value" and that the mispricing will be corrected as the
stocks in the Funds' portfolios are purchased by other investors.
Determination of the relative valuation of a stock is based upon a
comparison of similar companies. In any group of similar companies, it
is the Manager's view that there are always some that are overvalued,
some that are undervalued, and some that are fairly-valued relative to
the average valuation for the group. These moderate valuation errors
are believed to be present in every sector of the market and can be
identified through rigorous quantitative analysis of fundamental data.
-11-
<PAGE>
In determining whether or not a stock is attractive, the Manager
considers the company's current estimated fundamental value as
determined by the Manager's proprietary Appraisal Model, the company's
future earnings, and investor sentiment toward the stock. The Manager
identifies and causes a Fund to purchase an undervalued stock and to
hold it in the relevant Fund's portfolio until the market recognizes and
corrects for the misvaluation. The Funds' portfolios are composed of
undervalued stocks from every sector represented in the relevant Fund's
benchmark, with a typical portfolio consisting of several hundred stocks.
DECISION PROCESS. The Manager's decision process is a continuum.
Its research function develops Models which analyze the 12,000
securities in the global universe, both fundamentally and technically,
and determines the risk characteristics of the relevant Fund's
benchmark. The portfolio management function optimizes each portfolio's
composition, executes trades, and monitors performance and trading costs.
The essence of the Manager's approach is rigorous attention to
important aspects of the investment process. Factors crucial to
successful stock selection include: (1) accurate and timely data on a
large universe of companies; (2) subtle quantitative descriptors of
value and predictors of changes in value; and (3) insightful definitions
of similar businesses. The Manager takes great care assimilating,
checking and structuring the input data on which its models rely. The
Manager believes that if the data is correct, the recommendations made
by the system will be sound.
STOCK SELECTION. Fundamental valuation of stocks is key to the
Manager's investment process, and the heart of the valuation process
lies in the Manager's proprietary Appraisal Model. Analysis of
companies in the United States and Canada is conducted in a single
unified Model. The Model discriminates where the two markets are
substantially different, while simultaneously comparing companies in the
two markets according to their degrees of similarity. European
companies and Asian companies (other than Japanese companies) are
analyzed in a nearly global Model, which includes the United States and
Canada as a further basis for comparative valuation, but which excludes
Japan. Japanese companies are analyzed in an independent national
Model. The model incorporates the various accounting standards which
apply in different markets and makes adjustments to ensure meaningful
comparisons.
An important feature of the Appraisal Model is the classification of
companies into one or more of 166 groups of "similar" businesses.
Currently, in the United States, 160 groups are applicable; in Japan,
122 groups are applicable; and in Europe, 154 groups are applicable.
Each company is broken down into its individual business segments, and
each segment is compared with similar business operations of other
companies doing business in the same geographical market. In most
cases, the comparison is extended to include companies with similar
business operations in different markets. Subject to the availability
of data in different markets, the Manager appraises the company's assets,
-12-
<PAGE>
operating earnings and sales within each business segment, accepting the
market's valuation of that category of business as fair. The Manager
then integrates the segment appraisals into balance sheet, income
statement, and sales valuation models for the total company and sales,
and simultaneously adjusts the segment appraisals to include appraisals
for variables which are declared only for the total company, such as
taxes, capital structure, and pension funding. The result is a single
valuation for each of the 12,000 companies followed.
The difference between the Manager's appraisal and the market price
is believed to represent an opportunity for profit. For each stock, the
Manager develops "appraisal alphas" (i.e., the expected rate of
extraordinary return) by adjusting for the rate at which the market has
corrected for such misvaluations in the past.
A second sphere of analysis is captured by the Manager's proprietary
Earnings Change Model, which analyzes more than 20 variables to predict
individual company earnings over a one year horizon. The variables are
fundamental and fall into three categories: measures of past
profitability, measures of company operations and consensus earnings
forecasts. The Earnings Change Model is independent of the Appraisal
Model and projects the change in a company's earnings in cents/current
price. The value of the projected earnings change is converted to an
"earnings change alpha" by multiplying the projected change by the
market's historical response to changes of that magnitude.
Finally, the Manager's proprietary Investor Sentiment Model
quantifies investor sentiment about features of stocks which influence
price but which are not captured by the Appraisal Model or the Earnings
Change Model. This Model measures company quality by looking at past
price patterns and by predicting the probability of deficient earnings.
The model also captures market enthusiasm towards individual stocks by
looking at broker recommendations and analyst estimates. Investor
sentiment alphas are developed by multiplying the Model's sentiment
scores by the market's historical response to such scores.
Each company's earnings change alpha and investor sentiment alpha is
added to its appraisal alpha to arrive at a total company alpha. Stocks
with large positive total company alphas are candidates for purchase.
Stocks held in a portfolio with total company alphas that are only
slightly positive, zero or negative are candidates for sale.
Before trading, the Manager systematically analyzes the short-term
price behavior of individual stocks to determine the timing of trades.
The model quantifies investor enthusiasm for each stock by analyzing its
short-term performance relative to similar stocks, changes in analyst
and broker opinions about the stock, and earnings surprises. The Manager
develops a "trading alpha" for each stock (i.e., the expected short-term
extraordinary return) which is designed to enable the Funds to purchase
stocks from supply and to sell stocks into demand, greatly reducing
trading costs.
-13-
<PAGE>
OPTIMIZATION. The Manager's portfolio optimization system seeks to
optimize the trade-off between risk and reward relative to each Fund's
benchmark. It exploits the information developed by the Manager's stock
selection models to maximize return relative to the benchmark, while
avoiding a portfolio with exposure to any other extraneous factors that
would distinguish the Fund's portfolio from the stocks constituting the
relevant benchmark. Within the geographic zone appropriate for each
Fund, the optimizer recommends positions in companies which in aggregate
constitute the most efficient portfolio. The optimizer simultaneously
considers total company alphas, trading alphas, and risk and quantifies
the expected "net benefit" to the portfolio of each recommended
transaction. A stock is considered for sale when a higher alpha stock
with complementary risk characteristics has been identified. No
transaction will be executed unless the opportunity offered by the
purchase candidate sufficiently exceeds the potential of an existing
holding to justify the transaction costs. In most markets, portfolios
are reoptimized continuously throughout the day, allowing the Manager to
respond immediately to investment opportunities, subject to certain
limitations on short-term trading applicable by virtue of each Fund's
intention to qualify as a regulated investment company under the
Internal Revenue Code.
TRADING. The Manager's trading system aggregates the recommended
transactions for each of the Funds and determines the feasibility of
each recommendation in light of the stock's liquidity, the expected
transaction costs, and general market conditions. It relays target
price information to a trader for each stock considered for purchase or
sale. Trades are executed through any one of four trading strategies:
traditional brokerage, networks, accommodation, and package or "basket"
trades.
The network arrangements the Manager has developed with Instinet
Matching System (IMS), Portfolio System for Institutional Trading
(POSIT), and the Arizona Stock Exchange (AZX) facilitate large volume
trading with little or no price disturbance and low commission rates.
Accommodative trading (which we also refer to as the Manager's "match
system") allows institutional buyers and sellers of stock to
electronically present the Manager with their "interest" lists each
morning. Any matches between the inventory which the brokers have
presented and the Manager's own recommended trades are signaled to the
Manager's traders. Since the broker is doing agency business and has a
client on the other side of the trade, the Manager expects that the
other side will be accommodative in the price. The Manager's objective
in using this match system is to execute most trades on the Manager's
side of the bid/ask spread so as to minimize market impact.
Package trades further allow the Manager to trade large lists of
orders simultaneously using state of the art tools such as the Instinet
Real-Time System, Instinet Order Matching System and Lattice Trading
System. Those tools provide order entry, negotiation and execution
capabilities, either directly to other institutions or electronically
-14-
<PAGE>
to the floor of the exchange. The advantages of using such systems
include speed of execution, low commissions, anonymity and very low
market impact.
The Manager continuously monitors trading costs to determine the
impact of commissions and price disturbance on the Funds' portfolios.
INDIVIDUALS RESPONSIBLE FOR EACH FUND
Each Fund is advised and managed by Rosenberg Institutional Equity
Management (the "Manager") which also provides investment advisory
services to a substantial number of institutional investors. Each of
the following General Partners of the Manager holds a greater than 5%
interest in the Manager: Marlis S. Fritz and Kenneth Reid. Rosenberg
Alpha L.P., a California limited partnership, is a limited partner of
the Manager and holds a greater than 5% interest in the Manager. Barr
M. Rosenberg, the Managing General Partner of the Manager, and his
wife, June Rosenberg, each holds a greater than 5% general partnership
interest in Rosenberg Alpha L.P.
Management of the portfolio of each Fund is overseen by the Manager's
General Partners who are responsible for design and maintenance of the
Manager's portfolio system, and by a portfolio manager who is
responsible for research and monitoring each Fund's characteristic
performance against the relevant benchmark and for monitoring cash
balances.
U.S. SMALL CAPITALIZATION SERIES. Dr. Rosenberg, Dr. Reid and
Floyd Coleman, the portfolio manager, are responsible for the day to day
management of the U.S. Small Capitalization Series' portfolio. Dr.
Rosenberg and Dr. Reid both have been employed by the Manager for the
past five years. Mr. Coleman has been a trader and portfolio manager
for the Manager since 1988. He received a B.S. from Northwestern
University in 1982, a M.S. from Polytechnic Institute, Brooklyn in 1984
and a M.B.A. from Harvard Business School in 1988.
JAPAN SERIES. Dr. Rosenberg, Dr. Reid, and Cheng S. Liao, the
portfolio manager, are responsible for the day to day management of the
Japan Series' portfolio. Mr. Liao has been a senior research associate,
programmer and portfolio manager, specializing in the Japanese market
with the Manager since 1989. Mr. Liao has also been a trader for the
Manager in Japanese securities since 1994. He received a B.S. from
Tohobu University, Japan, in 1984, a M.S. from Stanford University in
1986, and a M.S. in Computer Science from Polytechnic Institute, New
York in 1988.
-15-
<PAGE>
INTERNATIONAL SMALL CAPITALIZATION SERIES. Dr. Rosenberg, Dr. Reid and
Joseph Leung, the portfolio manager, are responsible for the day to day
management of the International Small Capitalization Series' portfolio.
Mr. Leung has been a senior research associate, programmer and portfolio
manager with the Manager since 1993. He received a B.S. and a B.A. from
Queen's University, Ontario, Canada in 1989 and a M.B.A. from the
University of Chicago in 1993.
MANAGEMENT CONTRACTS
Under separate Management Contracts with the Trust on behalf of
each Fund, the Manager selects and reviews each Fund's investments and
provides executive and other personnel for the management of the Trust.
Pursuant to the Trust's Agreement and Declaration of Trust, the Board of
Trustees supervises the affairs of the Trust as conducted by the
Manager. In the event that the Manager ceases to be the manager of a
Fund, the right of the Trust to use the identifying name "Rosenberg"
may be withdrawn.
The organizational expenses of the U.S. Small Capitalization Series
and the Japan Series were borne by the Manager and such expenses of the
International Small Capitalization Series will be borne by the Manager.
Each Fund will pay all other expenses incurred in the operation of such
Fund, including but not limited to brokerage commissions and transfer
taxes in connection with its portfolio transactions, all applicable
taxes and filing fees, the fees and expenses for registration or
qualification of its shares under the federal or state securities laws,
the compensation of trustees who are not partners, officers or employees
of the Manager, interest charges, expenses of issue or redemption of
shares, charges of custodians, auditing and legal expenses, expenses of
determining net asset value of Fund shares, reports to shareholders,
expenses of meetings of shareholders, expenses of printing and mailing
prospectuses, proxy statements and proxies to existing shareholders,
insurance premiums and professional association dues or assessments.
In addition, each of the Funds has agreed to pay the Manager a
quarterly management fee at the annual percentage rate of the relevant
Fund's average daily net assets set forth below. The Manager has agreed
to reduce 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 expenses) of
each class to the percentage of each Fund's average daily net assets
attributable to that class listed in the Expense Limitation column
below. The Manager's fee for management of each of the Funds is higher
than that paid by most other mutual funds.
-16-
<PAGE>
<TABLE>
<CAPTION>
Contractual
Management Fee Expense Limitation
(as a % of Average (as a % of Average
Daily Net Assets) (a) Daily Net Assets)
--------------------- ------------------
<S> <C> <C>
Institutional Shares
- --------------------
U.S. Small Capitalization Series .90% 1.15%
Japan Series 1.00% 1.50%
International Small Capitalization Series 1.00% 1.50%
Adviser Shares
- --------------
U.S. Small Capitalization Series .90% 1.40%
Japan Series 1.00% 1.75%
International Small Capitalization Series 1.00% 1.75%
Select Shares
- -------------
U.S. Small Capitalization Series .90% 1.65%
Japan Series 1.00% 2.00%
International Small Capitalization Series 1.00% 2.00%
</TABLE>
_______________
(a) During the fiscal year ended March 31, 1996, the Management Fee
actually paid was [fiscal 1996]% of average daily net asset for the
U.S. Small Capitalization Series and [fiscal 1996]% of average daily
net assets for the Japan Series. The International Small Capitalization
Series had not yet commenced operations.
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
Furman Selz LLC ("Furman Selz" or the "Administrator"), a Delaware
limited liability company with its principal place of business at 230
Park Avenue, New York, New York 10169, serves as the Trust's
administrator and generally assists the Trust in all aspects of its
administration and operation. As compensation for its administrative
services, Furman Selz receives a monthly fee based upon an annual
percentage rate of 0.15% of the aggregate average daily net assets of
the Funds.
Furman Selz has also entered into an agreement with the Trust for
the provision of transfer agency services (and is referred to herein as
the "Transfer Agent" in such capacity) and dividend disbursing services
for the Funds. The principal business address of the Transfer Agent is
230 Park Avenue, New York, New York 10169.
State Street Bank and Trust Company (the "Custodian") serves as
custodian of the assets of the Funds. The principal address of the
Custodian is Mutual Funds Division, Boston, Massachusetts 02102.
-17-
<PAGE>
A further discussion of the terms of the Trust's administrative,
custody and transfer agency arrangements is contained in the
Statement of Additional Information.
DISTRIBUTOR
Adviser and Select Shares of each Fund are sold on a
continuous basis by the Company's distributor, Barr Rosenberg Funds
Distributor, Inc. (the "Distributor"), a wholly-owned subsidiary of
Furman Selz. The Distributor's principal offices are located at
230 Park Avenue, New York, New York 10169. Institutional Shares
are purchased directly from the Funds.
Solely for the purpose of compensating the Distributor for
services and expenses primarily intended to result in the sale of
Select Shares of the Funds, such shares are subject to an annual
Distribution Fee of up to 0.50% of the average daily net assets
attributable to such shares in accordance with a Distribution Plan
(the "Distribution Plan") adopted by the Trust pursuant to Rule
12b-1 under the 1940 Act. Currently, each Fund pays the
Distributor an annual Distribution Fee of 0.25% of the Fund's
average daily net assets attributable to Select Shares. Activities
for which the Distributor may be reimbursed include (but are not
limited to) the development and implementation of direct mail
promotions and advertising for the Funds, the preparation, printing
and distribution of prospectuses for the Funds to recipients other
than existing shareholders, and contracting with one or more
wholesalers of the Funds shares. The Distribution Plan for Select
Shares went into effect on ________, 1996. The Distribution 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 Distributor in their periodic review of
the Plan, the fees are payable to compensate the Distributor for
services rendered even if the amount paid exceeds the Distributor's
expenses.
The Distributor may also provide (or arrange for another
intermediary or agent to provide) personal and/or account
maintenance services to Adviser and Select shareholders of the
Funds (the Distributor or such entity is referred to as a
"Servicing Agent" in such capacity). A Servicing Agent will be
paid some or all of the Shareholder Servicing Fees charged with
respect to Adviser and Select Shares of the Funds pursuant to
Servicing Plans for such shares.
INVESTMENT OBJECTIVES AND POLICIES
U.S. SMALL CAPITALIZATION SERIES
The Fund's investment objective is a total return greater than
that of the Russell 2000 Index through investment primarily in
equity securities of smaller companies which are traded principally
in the markets of the United States. Total return is a combination
of capital appreciation and current income (dividend or interest).
In the case of the
-18-
<PAGE>
Fund, total return will be measured by changes in value of an investment
over a given period, assuming that any dividends or capital gains
distributions are reinvested in the Fund rather than paid to the
investor in cash. The Fund does not seek to maximize total return but,
as indicated above, seeks a total return greater than that of the common
stocks referred to above. Because the companies in which the Fund
invests typically do not distribute significant amounts of company
earnings to shareholders, the Fund's objective will place relatively
greater emphasis on capital appreciation than on current income.
It is currently expected that, under normal circumstances, most of
the Fund's assets will be invested in common stocks of companies with
total market capitalization of less than $750 million ("small
capitalization securities"). This corresponds with the defining range
of market capitalization of companies in the Russell 2000 Index.
Investments in issuers of small capitalization securities may present
greater opportunities for capital appreciation because of high potential
earnings growth, but may also involve greater risk. See "General
Description of Risks and Fund Investments -- Companies with Small Market
Capitalizations" below.
To meet redemptions or pending investments in common stock, the
Fund may also temporarily hold a portion of its assets not invested in
small capitalization securities in full faith and credit obligations of
the United States government (e.g., U.S. Treasury Bills) and in
short-term notes, commercial paper or other money market instruments of
high quality (i.e., rated at least "A-2" or "AA" by Standard & Poor's
("S&P") or Prime 2 or "Aa" by Moody's Investors Service, Inc.
("Moody's")) issued by companies having an outstanding debt issue rated
at least "AA" by S&P or at least "Aa" by Moody's, or determined by the
Manager to be of comparable quality to any of the foregoing. See also
"General Description of Risks and Fund Investments -- Stock Index
Futures" below.
Also, the Fund may invest without limit in common stocks of foreign
issuers which are listed on a United States securities exchange or
traded in the United States in the OTC market. Investments in common
stocks of foreign issuers may involve certain special risks due to
foreign economic, political and legal developments. See "General
Description of Risks and Fund Investments -- Special Consideration of
Foreign Investments" below. The Fund will not invest in securities
which are principally traded outside of the United States.
FUNDAMENTAL POLICIES. The Fund will normally invest most of its
assets in small capitalization securities, and it is a fundamental
policy of the Fund, which may not be changed without shareholder
approval, that at least 65% of the Fund's total assets will be invested
in small capitalization securities.
It is also a fundamental policy of the Fund, which may not be
changed without shareholder approval, that no more than 5% of the Fund's
total assets will be invested in
-19-
<PAGE>
the securities of any one issuer, although up to 25% of the Fund's total
assets may be invested without regard to this restriction.
INTERNATIONAL SMALL CAPITALIZATION SERIES
The investment objective of the International Small Capitalization
Series is to seek total return greater than the Cazenove Rosenberg
Global Smaller Companies Index excluding the United States ("CRIEXUS")
through investment primarily in equity securities (i) that are traded
principally in securities markets outside of the United States and (ii)
that represent interests in companies currently with market
capitalization of between $15 million and $1 billion at the time of
purchase by the Fund. Such companies are referred to herein as "small
capitalization companies." CRIEXUS is comprised of stocks of smaller
capitalization companies in mature markets. Total return is a
combination of capital appreciation and current income (dividend or
interest). In the case of the Fund, total return will be measured by
changes in value of an investment over a given period, assuming that any
dividends or capital gains distributions are reinvested in the Fund
rather than paid to the investor in cash. The Fund does not seek to
maximize total return but, as indicated above, seeks a total return
greater than that of the common stocks referred to above. Because the
companies in which the Fund invests typically do not distribute
significant amounts of company earnings to shareholders, the Fund's
objective will place relatively greater emphasis on capital appreciation
than on current income.
There are no prescribed limits on geographic asset distribution and
the Fund has the authority to invest in securities traded in securities
markets of any country in the world. It is currently expected that the
Fund will invest in approximately twenty different countries across
three regions -- Europe, Pacific and North America (excluding the United
States). Under certain adverse investment conditions, the Fund may
restrict the number of securities markets in which its assets will be
invested, although under normal market circumstances the Fund's
investments will involve securities principally traded in at least three
different countries. See "General Description of Risks and Fund
Investments -- Special Considerations of Foreign Investments" and
"General Description of Risks and Fund Investments -- Foreign Exchange
Transactions" below.
Under normal circumstances, at least 90% of the Fund's total assets
will be invested in common stocks of small capitalization companies.
Investments in such companies may present greater opportunities for
capital appreciation because of high potential earnings growth, but may
also involve greater risk. See "General Description of Risks and Fund
Investments --Companies with Small Market Capitalizations" below.
The Fund will not normally invest in securities of United States
issuers traded on United States securities markets.
-20-
<PAGE>
FUNDAMENTAL POLICIES. The Fund will normally invest at least 90% of its
total assets in common stocks of small capitalization companies, and it
is the fundamental policy of the Fund, which may not be changed without
shareholder approval, that at least 65% of the Fund's total assets will
be invested common stocks of small capitalization companies.
It is also a fundamental policy of the Fund, which may not be changed
without shareholder approval, that no more than 5% of the Fund's total
assets will be invested in the securities of any one issuer, although up
to 25% of the Fund's total assets may be invested without regard to this
restriction.
JAPAN SERIES
The Fund seeks a total return greater than that of the Tokyo Stock
Price Index ("TOPIX") of the Tokyo Stock Exchange. TOPIX is a
capitalization weighted index of all stocks in the First Section of the
Tokyo Stock Exchange. Total return is a combination of capital
appreciation and current income (dividend or interest). The Fund will
seek to meet this objective primarily through investment in Japanese
equity securities, primarily in common stocks of Japanese companies.
The Fund expects that any income it derives will be from dividend or
interest payments on securities.
It is currently expected that, under normal circumstances, the Fund
will invest at least 90% of its assets in "Japanese Securities," that
is, securities issued by entities ("Japanese Companies") that are
organized under the laws of Japan and that either have 50% or more of
their assets in Japan or derive 50% or more of their revenues from
Japan. While the Fund will invest primarily in common stocks of
Japanese Companies, it may also invest in other Japanese Securities,
such as convertible preferred stock, warrants or rights, as well as
short-term government debt securities or other short-term prime
obligations (i.e., high quality debt obligations maturing not more than
one year from the date of issuance). See "General Description of Risks
and Fund Investments --Foreign Exchange Transactions" below. The Fund
will not customarily purchase warrants or rights, although it may
receive warrants or rights through distributions on other securities it
owns. In those cases, the Fund expects to sell such warrants and rights
within a reasonable period of time following their distribution to the
Fund. The Fund does not currently expect to own warrants or rights with
an aggregate value of greater than 5% of the Fund's assets. See the
Statement of Additional Information for further information with respect
to the Fund's investments in warrants or rights.
The Fund currently intends to make its investments in Japanese equity
securities principally in well-established Japanese Companies that have
an active market for their shares. Japanese Companies will be
considered well-established if they have been subject for at least two
years to the financial accounting rules for a company whose securities
are traded on a Japanese securities exchange. In the discretion of the
Fund's management,
-21-
<PAGE>
the balance of the Fund's investments may be in companies that do not
meet all such qualifications, although the nature of the market for the
shares will always be an important consideration in determining whether
the Fund will invest in such shares. The Fund anticipates that most
Japanese equity securities in which it will invest, either directly or
indirectly (by means of convertible debentures), will be listed on
securities exchanges in Japan.
INDEX FUTURES. The Fund may also purchase futures contracts or
options on futures contracts on the Tokyo Stock Price Index ("TOPIX") or
the NIKKEI 225 Index ("NIKKEI") for investment purposes. TOPIX futures
are traded on the Chicago Board of Trade and NIKKEI futures are traded
on the Chicago Mercantile Exchange. See "General Description of Risks
and Fund Investments -- Stock Index Futures" below.
RISKS OF INVESTING IN JAPANESE SECURITIES. Unlike other mutual funds
which invest in the securities of many countries, the Fund will invest
almost exclusively in Japanese Securities. Generally, the Manager will
not vary the percentage of the Fund's assets which are invested in
Japanese Securities based on its assessment of Japanese economic,
political or regulatory developments or changes in currency exchange
rates. However, the Manager reserves the right to hedge against a
possible decline in the Japanese Securities market by utilizing futures
and options on futures on Japanese stock indices as described above with
respect to no more than ___% of the Fund's total assets.
Because a high percentage of the Fund asset's will be invested in
Japanese Securities, investment in the Fund will involve the general
risks associated with investing in foreign securities. See "General
Description of Risks and Fund Investments -- Special Considerations of
Foreign Investments" below. In addition, investors will be subject to
the market risk associated with investing almost exclusively in stocks
of companies which are subject to Japanese economic factors and
conditions. Since the Japanese economy is dependent to a significant
extent on foreign trade, the relationships between Japan and its trading
partners and between the yen and other currencies are expected to have a
significant impact on particular Japanese companies and on the Japanese
economy generally. The Fund is designed for investors who are willing
to accept the risks associated with changes in such conditions and
relationships.
FUNDAMENTAL POLICIES. The Fund will normally invest at least 90% of
its total assets in Japanese Securities, and it is a fundamental policy
of the Fund, which may not be changed without shareholder approval, that
at least 65% of the Fund's total assets will be invested in Japanese
Securities.
It is also a fundamental policy of the Fund, which may not be changed
without shareholder approval, that no more than 5% of the Fund's total
assets will be invested in the securities of any one issuer, although up
to 25% of the Fund's total assets may be invested without regard to this
restriction.
-22-
<PAGE>
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS
INVESTMENT RISKS. An investment in the Funds involves risks similar
to those of investing in common stocks directly. Just as with common
stocks, the value of Fund shares may increase or decrease depending on
market, economic, political, regulatory and other conditions affecting a
Fund's portfolio. These types of risks may be greater with respect to
investments in securities of foreign issuers. Investment in shares of
the Funds is, like investment in common stocks, more volatile and risky
than some other forms of investment.
COMPANIES WITH SMALL MARKET CAPITALIZATIONS. As specified above, the
U.S. Small Capitalization Series and the International Small
Capitalization Series will invest a relatively high percentage of their
assets in companies with relatively small market capitalizations
(generally, market capitalizations of under $750 million for the U.S.
Small Capitalization Series and under $1 billion for the International
Small Capitalization Series). Companies with small market
capitalizations may be dependent upon a single proprietary product or
market niche, may have limited product lines, markets or financial
resources, or may depend on a limited management group. Typically, such
companies have fewer securities outstanding, which may be less liquid
than securities of larger companies. Their common stock and other
securities may trade less frequently and in limited volume and are
generally more sensitive to purchase and sale transactions. Therefore,
the prices of such securities tend to be more volatile than the prices
of securities of companies with larger market capitalizations. As a
result, the absolute values of changes in the price of securities of
companies with small market capitalizations may be greater than those of
larger, more established companies.
SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS. Investing in foreign
securities (i.e., those which are traded principally in markets outside
of the United States) involves risks not typically found in investing in
U.S. domestic securities. These include risks of adverse change in
foreign economic, political, regulatory and other conditions, and
changes in currency exchange rates, exchange control regulations
(including currency blockage), expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments, and possible difficulty in obtaining and enforcing judgments
against foreign entities. Furthermore, issuers of foreign securities
are subject to different, and often less comprehensive, accounting,
reporting and disclosure requirements than domestic issuers. In certain
countries, legal remedies available to investors may be more limited
than those available with respect to investments in the United States or
other countries. The laws of some foreign countries may limit a Fund's
ability to invest in securities of certain issuers located in those
countries. The securities of some foreign issuers and securities traded
principally in foreign securities markets are less liquid and at times
more volatile than securities of comparable U.S. issuers and securities
traded principally in U.S. securities markets. Foreign brokerage
commissions and other fees are also generally higher than those charged
in the United States. There are also special tax
-23-
<PAGE>
considerations which apply to securities of foreign issuers and
securities principally traded in foreign securities markets.
The risks of investing in foreign securities may be intensified in
the case of investments in emerging markets or countries with limited or
developing capital markets. Prices of securities in emerging markets
can be significantly more volatile than prices in the more developed
nations of the world, reflecting the greater uncertainties of investing
in less established markets and economies. In particular, countries
with emerging markets may have relatively unstable governments, present
the risk of nationalization of businesses, restrictions on foreign
ownership, or prohibitions of repatriation of assets, and may have less
protection of property rights than more developed countries. The
economies of countries with emerging markets may be predominantly based
on only a few industries or dependent on revenues from particular
commodities or on international aid or development assistance, may be
highly vulnerable to changes in local or global trade conditions, and
may suffer from extreme and volatile debt burdens or inflation rates.
Local securities markets may trade a small number of securities and may
be unable to respond effectively to increases in trading volume,
potentially making prompt liquidation of substantial holdings difficult
or impossible at times. Consequently, securities of issuers located in
countries with emerging markets may have limited marketability and may
be subject to more abrupt or erratic price movements. Also, such local
markets typically offer less regulatory protections for investors.
FOREIGN EXCHANGE TRANSACTIONS. The International Equity Portfolios
of the Trust (i.e., the International Small Capitalization Series and
the Japan Series) do not currently intend to hedge the foreign currency
risk associated with investments in securities denominated in foreign
currencies. However, in order to hedge against possible variations in
foreign exchange rates pending the settlement of securities
transactions, the International Equity Portfolios reserve the right to
buy or sell foreign currencies or to deal in forward foreign currency
contracts; that is, to agree to buy or sell a specified currency at a
specified price and future date. The International Equity Portfolios
also reserve the right to invest in currency futures contracts and
related options thereon for similar purposes. For example, if the
Manager anticipates that the value of the yen will rise relative to the
dollar, a Fund could purchase a currency futures contract or a call
option thereon or sell (write) a put option to protect against an
increase in the price of yen-denominated securities such Fund intends to
purchase. If the Manager anticipates a fall in the value of the yen
relative to the dollar, a Fund could sell a currency futures contract or
a call option thereon or purchase a put option on such futures contract
as a hedge. If the International Equity Portfolios change their present
intention and decide to utilize hedging strategies, futures contracts
and related options will be used only as a hedge against anticipated
currency rate changes (not for investment purposes) and all options on
currency futures written by a Fund will be covered. These practices, if
utilized, may present risks different from or in addition to the risks
associated with investments in foreign currencies.
-24-
<PAGE>
STOCK INDEX FUTURES. A stock index futures contract (an "Index
Future") is a contract to buy an integral number of units of the
relevant index at a specified future date at a price agreed upon when
the contract is made. A unit is the value at a given time of the
relevant index.
In connection with a Fund's investment in common stocks, a Fund may
invest in Index Futures while the Manager seeks favorable terms from
brokers to effect transactions in common stocks selected for purchase.
A Fund may also invest in Index Futures when the Manager believes that
there are not enough attractive common stocks available to maintain the
standards of diversity and liquidity set for the Fund pending investment
in such stocks when they do become available. Through the use of Index
Futures, a Fund may maintain a portfolio with diversified risk without
incurring the substantial brokerage costs which may be associated with
investment in multiple issuers. This may permit a Fund to avoid
potential market and liquidity problems (e.g., driving up or forcing
down the price by quickly purchasing or selling shares of a portfolio
security) which may result from increases or decreases in positions
already held by a Fund. Certain provisions of the Internal Revenue Code
may limit this use of Index Futures. A Fund may also invest in Index
Futures in order to hedge its equity positions.
As contrasted with purchases of a common stock, no price is paid or
received by a Fund upon the purchase of a futures contract. Upon
entering into a contract, a Fund will be required to deposit with its
custodian in a segregated account in the name of the futures broker a
specified amount of cash or securities. This is known by participants
in the market as "initial margin." The type of instruments that may be
deposited as initial margin, and the required amount of initial margin,
are determined by the futures exchange on which the Index Futures are
traded. The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer
to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Subsequent
payments, called "variation margin," to and from the broker, will be
made on a daily basis as the price of the particular Index fluctuates,
making the position in the futures contract more or less valuable, a
process known as "marking to the market."
A Fund may close out a futures contract purchase by entering into a
futures contract sale. This will operate to terminate the Fund's
position in the futures contract. Final determinations of variation
margin are then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain.
A Fund's investment in Index Futures involves risk. Positions in
Index Futures may be closed out by a Fund only on the futures exchanges
on which the Index Futures are then traded. There can be no assurance
that a liquid market will exist for any
-25-
<PAGE>
particular contract at any particular time. The liquidity of the market
in futures contracts could be adversely affected by "daily price
fluctuation limits" established by the relevant futures exchange which
limit the amount of fluctuation in the price of an Index Futures
contract during a single trading day. Once the daily limit has been
reached in the contract, no trades may be entered into at a price beyond
the limit. In such events, it may not be possible for a Fund to close
its futures contract purchase, and, in the event of adverse price
movements, a Fund would continue to be required to make daily cash
payments of variation margin. When the Fund has purchased a futures
contract, its risk is, however, limited to the amount of the contract.
The futures market may also attract more speculators than does the
securities market, because deposit requirements in the futures market
are less onerous than margin requirements in the securities market.
Increased participation by speculators in the futures market may also
cause price distortions.
A Fund will not purchase Index Futures if as a result, the Fund's
initial margin deposits on transactions that do not constitute "BONA
FIDE hedging" under relevant regulations of the Commodities Futures
Trading Commission would be greater than 5% of the Fund's total assets.
In addition to margin deposits, when a Fund purchases an Index Future,
it is required to maintain, at all times while an Index Future is held
by the Fund, cash, U.S. Government Securities or other high grade
liquid debt obligations in a segregated account with its Custodian, in
an amount which, together with the initial margin deposit on the futures
contract, is equal to the current value of the futures contract.
ILLIQUID SECURITIES. Each Fund may purchase "illiquid securities,"
defined as securities which cannot be sold or disposed of in the ordinary
course of business within seven days at approximately the value at which a
Fund has valued such securities, so long as no more than 15% (10% in the
case of the U.S. Small Capitalization Series) of the Fund's net assets would
be invested in such illiquid securities after giving effect to the purchase.
Investment in illiquid securities involves the risk that, because of the lack
of consistent market demand for such securities, the Fund may be forced to
sell them at a discount from the last offer price.
PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions. Although the rate of portfolio
turnover is very difficult to predict, it is not anticipated that under
normal circumstances the annual portfolio turnover rate for each of the
Funds will exceed 100%. In any particular year, market conditions may
well result in greater portfolio turnover rates than are presently
anticipated. The rate of a Fund's portfolio turnover may vary
significantly from time to time depending on the volatility of economic
and market conditions. High portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs, which will be
borne directly by a Fund, and could involve realization of capital gains
that would be taxable when distributed to shareholders of such Fund. To
the extent portfolio turnover
-26-
<PAGE>
results in the realization of net short-term capital gains, such gains
ordinarily are taxed to shareholders at ordinary income tax rates.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend some or all of its
portfolio securities to broker-dealers. Securities loans are made to
broker-dealers pursuant to agreements requiring that loans be
continuously secured by collateral in cash or U.S. Government
securities at least equal at all times to the market value of the
securities lent. The borrower pays to the lending Fund an amount equal
to any dividends or interest received on the securities lent. When the
collateral is cash, the Fund may invest the cash collateral in
interest-bearing, short-term securities. When the collateral is U.S.
Government securities, the Fund usually receives a fee from the
borrower. Although voting rights or rights to consent with respect to
the loaned securities pass to the borrower, a Fund retains the right to
call the loans at any time on reasonable notice, and it will do so in
order that the securities may be voted by the Fund if the holders of
such securities are asked to vote upon or consent to matters materially
affecting the investment. A Fund may also call such loans in order to
sell the securities involved. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible
delay in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. However, such loans
will be made only to broker-dealers that are believed by the Manager to
be of relatively high credit standing.
FUNDAMENTAL POLICIES. Except for investment policies which are
explicitly described as fundamental, the investment policies of the Fund
may be changed without shareholder approval.
INVESTMENT PERFORMANCE
U.S. SMALL CAPITALIZATION SERIES
[Graph depicting performance against the benchmark]
(1) Fund returns are net of all fees while the Russell 2000 Index
returns are based solely on market returns without deduction of fees or
transaction costs for rebalancing.
-27-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (PERIOD ENDED 3/31/96)
1 Year 3 Years 5 Years Since Inception (2/22/89)
------ ------- ------- -------------------------
Fund
Russell 2000 Index
The numbers reported in both the graph and the table represent past
performance and are not predictive of future performance.
JAPAN SERIES
[Graph depicting performance against the benchmark]
(1) Fund returns are net of all fees while the TOPIX returns are based
solely on market returns without deduction of fees or transaction costs
for rebalancing.
1 Year 3 Years 5 Years Since Inception (1/31/89)
------ ------- ------- -------------------------
Fund
TOPIX
The numbers reported in both the graph and the table represent past
performance and are not predictive of future performance.
MULTIPLE CLASSES
As indicated previously, the Funds offer three classes of shares to
investors, with eligibility generally depending on the amount invested
in the particular Fund and whether the investor makes the investment
directly or through a financial adviser. The three classes of shares
are Institutional Shares, Adviser Shares and Select Shares. Each class
of shares is generally subject to a Fund Reimbursement Fee at the time
of purchase and at the time of redemption, although certain exceptions
apply. See "Purchase of Shares" and "Redemption of Shares" below.
-28-
<PAGE>
INSTITUTIONAL SHARES
Institutional Shares may be purchased by endowments, foundations and
plan sponsors of 401(a), 401(k), 451 and 403(b) plans and by
individuals. In order to be eligible to purchase such shares, an
institution, plan or individual must make an initial investment of at
least $1 million in the particular Fund. In its sole discretion, the
Manager may waive this minimum investment requirement and the Manager
intends to do so for employees of the Manager, for the spouse, parents,
children, siblings, grandparents or grandchildren of such employees and
for employees of the Administrator. Institutional Shares are sold
without any initial or deferred sales charges and are not subject to any
ongoing distribution expenses or shareholder servicing fees.
ADVISER SHARES
Adviser shares may be purchased solely through accounts established
under a fee-based program which is sponsored and maintained by a
registered broker-dealer or other financial adviser approved by the
Trust's Distributor and under which each investor pays a fee to the
broker-dealer or other financial adviser, or its affiliate or agent, for
investment advisory or administrative services. In order to be eligible
to purchase Adviser Shares, a broker-dealer or other financial adviser
must make an initial investment of at least $100,000 of its client's
assets in the particular Fund. In its sole discretion, the Manager may
waive this minimum asset investment requirement. Adviser Shares are
sold without any initial or deferred sales charges and are not subject
to ongoing distribution expenses, but are subject to a Shareholder
Service Fee at an annual rate with respect to each Fund equal to 0.25%
of the Fund's average daily net assets attributable to Adviser Shares.
SELECT SHARES
Select Shares may be purchased by intermediary financial institutions
and certain individual retirement accounts and individuals. In order to
be eligible to purchase such shares, an eligible investor must make an
initial investment of at least $10,000 in the particular Fund. In its
sole discretion, the Manager may waive this minimum investment
requirement. Select Shares are subject to an annual Shareholder Service
Fee equal to 0.25% of the average daily net assets attributable to
Select Shares and an annual Distribution Fee equal to 0.25% of the
average daily net assets attributable to Select Shares. As described
above, the Select Share Distribution Plan permits payments of up to
0.50% of the Funds' average daily net assets attributable to Select
Shares.
-29-
<PAGE>
GENERAL
The Shareholder Service Fee charged with respect to Adviser Shares
and Select Shares is intended to be compensation for personal services
rendered and for account maintenance with respect to such shares. The
Distribution Fee charged with respect to Select Shares is intended to
compensate the Distributor for services and expenses primarily intended
to result in the sale of Select Shares.
As described above, shares of the Funds may be sold to corporations
or other institutions such as trusts, foundations or broker-dealers
purchasing for the accounts of others ("Shareholder Organizations").
Investors purchasing and redeeming shares of the Funds through a
Shareholder Organization or through financial advisers may be charged a
transaction-based fee or other fee for the services provided by the
Shareholder Organization or financial adviser. Each such Shareholder
Organization and financial adviser is responsible for transmitting to
its customers a schedule of any such fees and information regarding any
additional or different conditions regarding purchases and redemptions
of Fund shares. Customers of Shareholder Organizations and financial
advisers should read this Prospectus in light of the terms governing
accounts with their particular organization.
PURCHASE OF SHARES
The offering price for shares of each Fund is the net asset value per
share next determined after receipt of a purchase order plus the
applicable Fund Reimbursement Fee. See "Net Asset Value." The payment
of a Fund Reimbursement Fee by each cash investor, which is used to
defray the significant costs associated with investing the proceeds of
the sale of the shares to such investors, is designed to eliminate the
diluting effect such costs would otherwise have on the net asset value
of shares held by pre-existing shareholders. The amount of the Fund
Reimbursement Fee represents the Manager's estimate of the costs
reasonably anticipated to be associated with the purchase of portfolio
securities by the Funds and is paid to and retained by the Funds and
used by the Funds to defray such costs. No portion of the Fund
Reimbursement Fee is paid to or retained by the Distributor or the
Manager. The Fund Reimbursement Fee for each Fund, expressed as a
percentage of the net asset value of the shares of each Fund, is as
follows: U.S. Small Capitalization Series -- 0.25%; International Small
Capitalization Series -- 0.50%; Japan Series -- 0.50%. Reinvestments of
dividends and capital gains distributions paid by the Funds, in-kind
investments, investments made through the Barr Rosenberg Automatic
Investment Program and additional investments of 401(k) participants are
not subject to a Fund Reimbursement Fee. Also, investors may be charged
an additional fee if they effect transactions through their particular
broker or agent.
As described below, the net asset value of the Japan Series shares is
determined as of 3:00 p.m., Tokyo time. See "Net Asset Value." Due to
the 14 hour difference between
-30-
<PAGE>
Tokyo time and New York time, investors who call in purchase orders
after 1:00 a.m. New York time (with adjustment for daylight savings
time) will get the price of Japan Series shares as determined on the
next business day in Tokyo. In such circumstances, investors should
expect to receive the price published in the Wall Street Journal or
similar publication on the following day (i.e., not the price published
on the morning of the day the order was placed).
INITIAL CASH INVESTMENTS BY WIRE
Subject to acceptance by the Trust, shares of each Fund may be
purchased by wiring federal funds to Investors Fiduciary Trust Company
(see instructions below). A completed Account Application should be
forwarded to the Trust at the address noted below under "Initial
Investments by Mail" in advance of the wire. Notification must be given
at 1-800-[ ] prior to 4:15 p.m., New York time, of the wire date.
(Prior notification must also be received from investors with existing
accounts.) Funds should be wired through the Federal Reserve Bank to:
Investors Fiduciary Trust Company
ABA # 101003621
Acct. # 7513003
F/B/O Barr Rosenberg Series Trust
Ref. (Fund name)
Federal funds purchases will be accepted only on a day on which each
of the Trust, the Distributor and the custodian bank are open for
business.
INITIAL CASH INVESTMENTS BY MAIL
Subject to acceptance by the Trust, an account may be opened by
completing and signing an Account Application and mailing it to the
Trust at the address noted below, together with a check (for the
applicable minimum) payable to Barr Rosenberg Series Trust:
Barr Rosenberg Series Trust
P.O. Box 1694
Scottsdale, Arizona 85252-1694
The Fund(s) to be purchased should be specified on the Account
Application. Purchases are accepted subject to collection of checks at
full value and conversion into federal funds. In all cases, subject to
acceptance by the Trust, payment for the purchase of shares received by
mail will be credited to a shareholder's account at the net asset value
per share of the Fund next determined after receipt with deduction of
any Fund
-31-
<PAGE>
Reimbursement Fee, even though the check may not yet have been converted
into federal funds.
ADDITIONAL CASH INVESTMENTS
Additional investments may be made at any time by mailing a check to
the Trust at the address noted under "Initial Cash Investments by Mail"
(payable to Barr Rosenberg Series Trust) or by wiring monies to
Investors Fiduciary Trust Company as outlined above. Notification must
be given at 1-800-________ prior to 4:15 p.m., New York time, of the
wire date. The minimum amounts for additional cash investments are
$10,000 for Institutional Shares, $1,000 for Adviser Shares and $500 for
Select Shares.
INVESTMENTS IN-KIND (INSTITUTIONAL SHARES)
Institutional Shares may be purchased in exchange for common stocks
on deposit at The Depository Trust Company ("DTC") or by a combination
of such common stocks and cash. Purchase of Institutional Shares of a
Fund in exchange for stocks is subject in each case to the determination
by the Manager that the stocks to be exchanged are acceptable.
Securities accepted by the Manager in exchange for Fund shares will be
valued as set forth under "Determination of Net Asset Value" (generally
the last quoted sale price) as of the time of the next determination of
net asset value after such acceptance. All dividends, subscription or
other rights which are reflected in the market price of accepted
securities at the time of valuation become the property of the Fund and
must be delivered to the Fund upon receipt by the investor from the
issuer. A gain or loss for federal income tax purposes would be
realized by investors subject to federal income taxation upon the
exchange, depending upon the investor's basis in the securities tendered.
The Manager will not approve the acceptance of securities in exchange
for Fund shares unless (1) the Manager, in its sole discretion, believes
the securities are appropriate investments for the Fund; (2) the
investor represents and agrees that all securities offered to the Fund
are not subject to any restrictions upon their sale by the Fund under
the Securities Act of 1933, or otherwise; and (3) the securities may be
acquired under the Fund's investment restrictions.
OTHER PURCHASE INFORMATION
An eligible shareholder may also participate in the Barr Rosenberg
Automatic Investment Program, an investment plan that automatically
debits money from the shareholder's bank account and invests it in
Select Shares of one or more of the Funds
-32-
<PAGE>
through the use of electronic funds transfers or automatic bank drafts.
Investors may commence their participation in this program with a
minimum initial investment of $10,000 and may elect to make subsequent
investments by transfers of a minimum of $50 into their established Fund
account on either the fifth or twentieth day of each month or calendar
quarter. You may contact the Trust for more information about the Barr
Rosenberg Automatic Investment Program.
For purposes of calculating the purchase price of Fund shares, a
purchase order is received by the Trust on the day that it is in "good
order" unless it is rejected by the Distributor. For a purchase order
to be in "good order" on a particular day a check or money wire must be
received on or before __:__ p.m. (in the case of Adviser Shares or
Select Shares) of that day or, in the case of Institutional Shares, the
investor's securities must be placed on deposit at DTC prior to 10:00
a.m. New York time or, in the case of cash investments, the Trust must
have received adequate assurances that federal funds will be wired to
the Fund prior to 4:15 p.m. New York time, on the following business
day. If the consideration is received by the Trust after the deadline,
the purchase order will not be accepted on that day and will have to be
resubmitted to the Trust on a subsequent business day.
The Trust reserves the right, in its sole discretion, to suspend the
offering of shares of its Funds or to reject purchase orders when, in
the judgment of the Manager, such suspension or rejection would be in
the best interests of the Trust.
Purchases of a Fund's shares may be made in full or in fractional
shares of the Fund calculated to three decimal places. In the interest
of economy and convenience, certificates for shares will not be issued.
RETIREMENT PLAN ACCOUNTS
Shares of all Funds may be used as a funding medium for IRAs and
other qualified retirement plans ("Plans"). The minimum initial
investment for an IRA or a Plan is $10,000. An IRA may be established
through a custodial account with Investors Fiduciary Trust Company. A
special application must be completed in order to create such an
account. A $5.00 establishment fee and an annual $12.00 maintenance and
custody fee is payable with respect to each IRA. In addition a $10.00
termination fee will be charged when the account is closed. Shares may
also be purchased for IRAs and Plans established with other authorized
custodians. Contributions to IRAs are subject to prevailing amount
limits set by the Internal Revenue Service. For more information about
IRAs and other Plan accounts, call the Trust at 1-800-___-____.
-33-
<PAGE>
REDEMPTION OF SHARES
Shares of each Fund may be redeemed by mail, or, if authorized, by
telephone. A Fund Reimbursement Fee is charged at the time of
redemption on all redemptions except in-kind redemptions of
Institutional Shares and redemptions made under the Systematic
Withdrawal Plan. The Fund Reimbursement Fee paid on such redemptions is
used to defray the significant costs to existing shareholders associated
with the sale of Fund portfolio securities to satisfy the redemption
requests and to eliminate the diluting effect such costs would otherwise
have on the net asset value of shares held by existing shareholders.
The amount of the Fund Reimbursement Fee represents the Manager's
estimate of the costs reasonably anticipated to be associated with
redemptions and is retained by the Funds to defray such costs. No
portion of the Fund Reimbursement Fee is paid to or retained by the
Distributor or the Manager. The Fund Reimbursement Fee for each Fund,
expressed as a percentage of the net asset value of the shares redeemed
of such Fund, is as follows: U.S. Small Capitalization Series -- 0.25%;
International Small Capitalization Series -- 0.50%; Japan Series --
0.50%. The value of shares redeemed may be more or less than the
purchase price, depending on the market value of the investment
securities held by the Fund.
BY MAIL
The Trust will redeem its shares at the net asset value next
determined after the request is received in "good order" and will deduct
from the proceeds the applicable Fund Reimbursement Fee. The net asset
values per share of the Funds are determined as of 4:15 p.m., New York
time, on each day that the New York Stock Exchange, Inc., the Trust and
the Distributor are open for business. Requests should be addressed to
Barr Rosenberg Series Trust, 237 Park Avenue, New York, New York 10017.
Requests in "good order" must include the following documentation:
(a) a letter of instruction, if required, or a stock assignment
specifying the number of shares or dollar amount to be redeemed, signed
by all registered owners of the shares in the exact names in which they
are registered;
(b) any required signature guarantees (see "Signature Guarantees"
below); and
(c) other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pension
and profit sharing plans and other organizations.
-34-
<PAGE>
SIGNATURE GUARANTEES
To protect shareholder accounts, the Trust and its transfer agent from
fraud, signature guarantees are required to enable the Trust to verify
the identity of the person who has authorized a redemption from an
account. Signature guarantees are required for (1) redemptions where
the proceeds are to be sent to someone other than the registered
shareholder(s) at the registered address, (2) redemptions of $25,000 or
more, and (3) share transfer requests. Signature guarantees may be
obtained from certain eligible financial institutions, including but not
limited to, the following: banks, trust companies, credit unions,
securities brokers and dealers, savings and loan associations and
participants in the Securities and Transfer Association Medallion
Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") or the
New York Stock Exchange Medallion Signature Program ("MSP").
Shareholders may contact the Trust at 1-800-[ ] for further details.
BY TELEPHONE
Provided the Telephone Redemption Option has been authorized by an
investor in an account application, a redemption of shares may be
requested by calling the Transfer Agent at 1-800-[ ] and requesting
that the redemption proceeds be mailed to the primary registration
address or wired per the authorized instructions. If the Telephone
Redemption Option or the Telephone Exchange Option (as described below)
is authorized, the Transfer Agent may act on telephone instruction from
any person representing himself or herself to be a shareholder and
believed by the Transfer Agent to be genuine. The Transfer Agent's
records of such instructions are binding and the shareholder, and not
the Trust or the Transfer Agent, bears the risk of loss in the event of
unauthorized instructions reasonably believed by the Transfer Agent to
be genuine. The Transfer Agent will employ reasonable procedures to
confirm that instructions communicated are genuine and, if it does not,
it may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures employed by the [Administrator] in
connection with transactions initiated by telephone include tape
recording of telephone instructions and requiring some form of personal
identification prior to acting upon instructions received by telephone.
SYSTEMATIC WITHDRAWAL PLAN
An owner of $12,000 or more of shares of a Fund may elect to have
periodic redemptions made from the investor's account to be paid on a
monthly, quarterly, semiannual or annual basis. The maximum payment per
year is 12% of the account value at the time of the election. The
shareholder will normally redeem a sufficient number of shares to make
the scheduled redemption payments on a date selected by the shareholder.
Depending on the size of the payment requested and fluctuation in the
net asset value, if any, of the shares redeemed, redemptions for the
purpose of making such payments may
-35-
<PAGE>
reduce or even exhaust the account. A shareholder may request that
these payments be sent to a predesignated bank or other designated
party. Capital gains and dividend distributions paid to the account
will automatically be reinvested at net asset value on the distribution
payment date.
FURTHER REDEMPTION INFORMATION
Redemption proceeds for shares of the Trust recently purchased by
check may not be distributed until payment for the purchase has been
collected, which may take up to fifteen business days from the purchase
date. Shareholders can avoid this delay by utilizing the wire purchase
option.
If the Manager determines, in its sole discretion, that it would not
be in the best interests of the remaining shareholders of a Fund to make
redemption payment wholly or partly in cash, the Fund may pay the
redemption price of Institutional Shares in whole or in part by a
distribution in kind of securities held by the relevant Fund in lieu of
cash. There will be no Fund Reimbursement Fee on redemptions in kind of
Institutional Shares. Securities used to redeem Fund shares in kind
will be valued in accordance with the Fund's procedures for valuation
described under "Determination of Net Asset Value." Securities
distributed by the Fund in kind will be selected by the Manager in light
of the Fund's objective and will not generally represent a pro rata
distribution of each security held in the Fund's portfolio. Investors
may incur brokerage charges on the sale of any such securities so
received in payment of redemptions.
The Trust may suspend the right of redemption and may postpone
payment for more than seven days when the New York Stock Exchange is
closed for other than weekends or holidays, or if permitted by the rules
of the Securities and Exchange Commission, during periods when trading
on the Exchange is restricted or during an emergency which makes it
impracticable for the Funds to dispose of their securities or to fairly
determine the value of their net assets, or during any other period
permitted by the Securities and Exchange Commission for the protection
of investors.
EXCHANGE OF FUND SHARES
The Funds offer two convenient ways to exchange shares in one Fund
for shares of another Fund in the Trust. Shares of a particular class
of a Fund may be exchanged only for shares of the same class in another
Fund. There is no sales charge on exchanges, but both the Fund from
which the exchange is made and the Fund into which the exchange is made
will charge any applicable Fund Reimbursement Fee. Before engaging in
an exchange transaction, a shareholder should read carefully the
information in the Prospectus describing the Fund into which the
exchange will occur. A shareholder may not exchange shares of a class
of one Fund for shares of the same class of another Fund that is not
qualified for sale in the state of the shareholder's residence.
Although the
-36-
<PAGE>
Trust has no current intention of terminating or modifying the exchange
privilege, it reserves the right to do so at any time. Except as
otherwise permitted by regulations of the Securities and Exchange
Commission, the Trust will give 60 days' advance notice to shareholders
of any termination or material modification of the exchange privilege.
An exchange is taxable as a sale of a security on which a gain or
loss may be recognized. Shareholders should receive written
confirmation of the exchange within a few days of the completion of the
transaction.
A new account opened by exchange must be established with the same
name(s), address and social security number as the existing account.
All exchanges will be made based on the respective net asset values next
determined following receipt of the request by the Funds containing the
information indicated below.
EXCHANGE BY MAIL
To exchange Fund shares by mail, shareholders should simply send a
letter of instruction to the Funds. The letter of instruction must
include: (a) the investor's account number; (b) the class of shares to
be exchanged; (c) the Fund from and the Fund into which the exchange is
to be made; (d) the dollar or share amount to be exchanged; and (e) the
signatures of all registered owners or authorized parties. All
signatures must be guaranteed by an eligible guarantor institution
including members of national securities exchanges, commercial banks or
trust companies, broker-dealers, credit unions and savings associations.
EXCHANGE BY TELEPHONE
To exchange Fund shares by telephone or to ask questions about the
exchange privilege, shareholders may call the Trust at 1-800-[ ]. If
you wish to exchange shares, please be prepared to give the telephone
representative the following information: (a) the account number, social
security number and account registration; (b) the class of shares to be
exchanged; (c) the name of the Fund from which and the Fund into which
the exchange is to be made; and (d) the dollar or share amount to be
exchanged. Telephone exchanges are available only if the shareholder so
indicates by checking the "yes" box on the Account Application. The
Trust employs procedures, including recording telephone calls, testing a
caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the
extent that a Fund does not follow such procedures, it may be liable for
losses due to unauthorized or fraudulent telephone instructions. A Fund
will not be liable for acting upon instructions communicated by
telephone that it reasonably believes to be genuine. The Trust reserves
the right to suspend or terminate the privilege of exchanging by mail or
by telephone at any time.
-37-
<PAGE>
DETERMINATION OF NET ASSET VALUE
With the exception of the Japan Series, the net asset value of each
class of shares of each Fund will be determined once on each day on
which the New York Stock Exchange is open as of 4:00 p.m., New York
time. In the case of the Japan Series, the net asset value of each
class of shares of that Fund will be determined once on each day on
which the Tokyo Stock Exchange is open as of 3:00 p.m., Tokyo time. Due
to the 14 hour time difference, 3:00 p.m. Tokyo time corresponds to
1:00 a.m. New York time (with adjustments for daylight savings time).
Accordingly, purchase orders received for the Japan Series after 1:00
a.m., New York time (with adjustments for daylight savings time) will
receive the offering price determined on the next business day in Japan.
See "Purchase of Shares" above.
The net asset value per share of each class of a Fund is determined
by dividing the particular class's proportionate interest in the total
market value of the Fund's portfolio investments and other assets, less
any applicable liabilities, by the total outstanding shares of that
class of the Fund. Specifically, each Fund's liabilities are allocated
among its classes. The total of such liabilities allocated to a
particular class plus that class's shareholder servicing and/or
distribution expenses, if any, and any other expenses specially
allocated to that class are then deducted from the class's proportionate
interest in the Fund's assets. The resulting amount for each class is
divided by the number of shares of that class outstanding to produce the
"net asset value" per share.
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.
DISTRIBUTIONS
Each Fund intends to pay out as dividends substantially all of its
net investment income (which comes from dividends and any interest it
receives from its investments and net realized short-term capital
gains). Each Fund also intends to distribute substantially all of its
net realized long-term capital gains, if any, after giving effect to any
available capital loss carryover. Each Fund's policy is to declare and
pay distributions of its dividends and interest annually although it may
do so more frequently as determined by
-38-
<PAGE>
the trustees of the Trust. The Funds' policy is to distribute net
realized short-term capital gains and net realized long-term gains
annually although it may do so more frequently as determined by the
trustees of the Trust to the extent permitted by applicable regulations.
All dividends and/or distributions will be paid out in the form of
additional shares of the Fund to which the dividends and/or
distributions relate at net asset value unless the shareholder elects to
receive cash. Shareholders may make this election by marking the
appropriate box on the Account Application or by writing to the
Administrator. There is no Fund Reimbursement Fee on reinvested
dividends or distributions.
TAXES
Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended. So long as a Fund distributes substantially all of its
dividend, interest and certain other income, its net realized short-term
capital gains and its net realized long-term capital gains to its
shareholders and otherwise qualifies for the special rules governing the
taxation of regulated investment companies, the Fund itself will not pay
federal income tax on the amount distributed. Dividend distributions
(i.e., distributions derived from interest, dividends and certain other
income, including in general short-term capital gains) will be taxable
to shareholders subject to income tax as ordinary income. Distributions
of any long-term capital gains are taxable as such to shareholders
subject to income tax, regardless of how long a shareholder may have
owned shares in such Fund. A distribution paid to shareholders by a
Fund in January of a year is generally deemed to have been received by
shareholders on December 31 of the preceding year, if the distribution
was declared and payable to shareholders of record on a date in October,
November or December of that preceding year. Each Fund will provide
federal tax information annually, including information about dividends
and distributions paid during the preceding year.
If more than 50% of a Fund's assets at fiscal year-end is represented
by debt and equity securities of foreign corporations, the Fund may (and
the Japan Series and the International Small Capitalization Series
intend to) elect to permit shareholders who are U.S. citizens or U.S.
corporations to claim a foreign tax credit or deduction (but not both)
on their U.S. income tax returns for their pro rata portion of
qualified taxes paid by the Fund to foreign countries. As a result, the
amounts of foreign income taxes paid by such Fund would be treated as
additional income to shareholders of such Fund for purposes of the
foreign tax credit. Each such shareholder would include in gross income
from foreign sources its pro rata share of such taxes. Certain
limitations imposed by the Internal Revenue Code may prevent
shareholders from receiving a full foreign tax credit or deduction for
their allocable amount of such taxes.
-39-
<PAGE>
The foregoing is a general summary of the federal income tax
consequences of investing in a Fund to shareholders who are U.S.
citizens or U.S. corporations. Shareholders should consult their own
tax advisers about the tax consequences of an investment in the Funds in
light of each shareholder's particular tax situation. Shareholders
should also consult their own tax advisers about consequences under
foreign, state, local or other applicable tax laws.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
The Trust is a diversified open-end series investment company
organized as a Massachusetts business trust under the laws of The
Commonwealth of Massachusetts by an Agreement and Declaration of Trust
(the "Declaration of Trust") dated April 1, 1988, as amended from time
to time. The U.S. Small Capitalization Series commenced operations on
or about September 13, 1988. The Japan Series commenced operations on
or about January 3, 1989. The International Small Capitalization Series
expects to commence operations on or about the date of this Prospectus.
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares of beneficial interest which are
presently divided into three series. Interests in each of the Funds
described in this Prospectus are represented by shares of such Fund.
The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide any series of shares into various sub-series of
shares with such dividend 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 merge two or more
existing portfolios. Shareholders' investments in such a portfolio
would be evidenced by a separate series of shares.
Each Fund is further divided into three classes of shares designated
as Institutional Shares, Adviser Shares and Select Shares. Each class
of shares of each Fund represents interests in the assets of the Fund
and has identical dividend, liquidation and other rights and the same
terms and conditions except that expenses, if any, related to the
distribution and shareholder servicing of a particular class are borne
solely by such class and each class may, at the Trustees' discretion,
also pay a different share of other expenses, not including advisory or
custodial fees or other expenses related to the management of the
Trust's assets, if these expenses are actually incurred in a different
amount by that class, or if the class receives services of a different
kind or to a different degree than the other classes. All other
expenses are allocated to each class on the basis of the net asset value
of that class in relation to the net asset value of the particular Fund.
-40-
<PAGE>
Each class of shares of each Fund has identical voting rights except
that each class has exclusive voting rights on any matter submitted to
shareholders that relates solely to that class, and has separate voting
rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class. Each class of
shares has exclusive voting rights with respect to matters pertaining to
any distribution or servicing plan applicable to that class. Matters
submitted to shareholder vote must be approved by each Fund separately
except (i) when required by the Investment Company Act of 1940, all
shares shall be voted together and (ii) when the Trustees have
determined that the matter does not affect all Funds, then only
shareholders of the Fund or Funds affected shall be entitled to vote on
the matter. All three classes of shares of a Fund will vote together,
except with respect to any distribution or servicing plan applicable to
a class or when a class vote is required as specified above or otherwise
by the Investment Company Act of 1940. Shares are freely transferable,
are entitled to dividends as declared by the Trustees and, in
liquidation of a Fund portfolio, are entitled to receive the net assets
of that portfolio, but not of the other Funds. 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 from office by votes cast in person or by
proxy at a meeting of shareholders or by written consent.
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.
Shareholders could, under certain circumstances, be held personally
liable for the obligations of the Trust. However, the risk of a
shareholder incurring financial loss on account of that liability is
considered remote since it may arise only in very limited circumstances.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust at 237 Park Avenue,
Suite 910, New York, New York 10017.
-41-
<PAGE>
BARR ROSENBERG SERIES TRUST
237 Park Avenue, Suite 910
New York, New York 10017
MANAGER
Rosenberg Institutional Equity Management
Four Orinda Way, Suite 300E
Orinda, CA 94563
ADMINISTRATOR, TRANSFER AND DIVIDEND PAYING AGENT
Furman Selz LLC
230 Park Avenue
New York, NY 10169
DISTRIBUTOR
Barr Rosenberg Funds Distributor, Inc.
230 Park Avenue
New York, New York 10169
CUSTODIAN OF ASSETS
State Street Bank and Trust Company
Mutual Funds Division
Boston, MA 02102
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110-2624
PROSPECTUS
________ __, 1996
-42-
<PAGE>
BARR ROSENBERG SERIES TRUST
SHAREHOLDER SERVICES
Account Inquiries, Balances
and Transaction Information
FOR ROSENBERG INSTITUTIONAL
EQUITY MANAGEMENT CUSTOMERS
1-800-___-____
FOR ALL SHAREHOLDERS
1-800-___-____
Additional Information May Be
Found on the WorldWide Web at
http://riem.com
-43-
<PAGE>
BARR ROSENBERG SERIES TRUST
U.S. SMALL CAPITALIZATION SERIES
INTERNATIONAL SMALL CAPITALIZATION SERIES
JAPAN SERIES
STATEMENT OF ADDITIONAL INFORMATION
_______ __, 1996
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Prospectus dated _______
__, 1996 and should be read in conjunction therewith. A copy of the
Prospectus may be obtained from Barr Rosenberg Series Trust, 237 Park Avenue,
Suite 910, New York, New York 10017.
<PAGE>
TABLE OF CONTENTS
Page
----
INVESTMENT OBJECTIVE AND POLICIES. . . . . . . . . . . . . . . . . . . . . . . 1
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . . . . . 7
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . .10
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .14
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . . .21
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . .24
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of each of the U.S. Small
Capitalization Series, the International Small Capitalization Series and the
Japan Series (each a "Fund" and collectively, the "Funds") of Barr Rosenberg
Series Trust (the "Trust") are summarized on the front page of the Prospectus
and in the text of the Prospectus under the headings "Investment Objectives and
Policies" and "General Description of Risks and Fund Investments."
In addition, the following investment objectives and policies apply to the
Fund or Funds indicated.
INDEX FUTURES (All Funds). An index futures contract (an "Index Future")
is a contract to buy or sell an integral number of units of an Index at a
specified future date at a price agreed upon when the contract is made. A unit
is the value of the relevant Index from time to time. Entering into a contract
to buy units is commonly referred to as buying or purchasing a contract or
holding a long position in an Index.
Index Futures contracts can be traded through all major commodity brokers.
Currently, contracts are expected to expire on the tenth day of March, June,
September and December. A Fund will be able to close open positions on the
United States futures exchange on which Index Futures are then traded at any
time up to and including the expiration day.
As noted in the Prospectus, upon entering into a futures contract, a Fund
will be required to deposit initial margin with its Custodian in a segregated
account in the name of the futures broker. Variation margin will be paid to and
received from the broker on a daily basis as the contracts are marked to market.
For example, when a Fund has purchased an Index Future and the price of the
relevant Index has risen, that position will have increased in value and the
Fund will receive from the broker a variation margin payment equal to that
increase in value. Conversely, when a Fund has purchased an Index Future and
the price of the relevant Index has declined, the position would be less
valuable and the Fund would be required to make a variation margin payment to
the broker.
The price of Index Futures may not correlate perfectly with movement in the
underlying Index due to certain market distortions. First, all participants in
the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the normal
relationship between the Index and futures markets. Secondly, the deposit
requirements in the futures market are less onerous than margin requirements in
<PAGE>
the securities market, and as a result the futures market may attract more
speculators than does the securities market. Increased participation by
speculators in the futures market may also cause temporary price distortions.
In addition, with respect to the Japan Series, trading hours for Index Futures
may not correspond perfectly to hours of trading on the Tokyo Stock Exchange.
This may result in a disparity between the price of Index Futures and the value
of the underlying Index due to the lack of continuous arbitrage between the
Index Futures price and the value of the underlying Index.
FOREIGN CURRENCY TRANSACTIONS (International Small Capitalization Series
and Japan Series). As is disclosed in the Prospectus following the heading
"General Description of Risks and Fund Investments," the Funds do not currently
intend to hedge the foreign currency risk associated with investments in
securities denominated in foreign currencies. However, the Funds reserve the
right to buy or sell foreign currencies or to deal in forward foreign currency
contracts to hedge against possible variations in foreign exchange rates pending
the settlement of securities transactions. The Funds also reserve the right to
invest in currency futures contracts and related options thereon for similar
purposes. By entering into a futures or forward contract for the purchase or
sale, for a fixed amount of dollars, of the amount of foreign currency involved
in the underlying security transactions, a Fund will be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the subject foreign currency during the period
between the date on which the security is purchased or sold and the date on
which payment is made or received. A Fund's dealing in forward contracts will
be limited to this type of transaction. A Fund will not engage in currency
futures transactions for leveraging purposes. A put option on a futures
contract gives a Fund the right to assume a short position in the futures
contract until the expiration of the option. A call option on a futures
contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option.
CURRENCY FORWARD CONTRACTS (International Small Capitalization Series and
Japan Series). A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract as agreed by the
parties, at a price set at the time of the contract. In the case of a
cancellable forward contract, the holder has the unilateral right to cancel the
contract at maturity by paying a specified fee. The contracts traded in the
interbank market are negotiated directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.
-2-
<PAGE>
CURRENCY FUTURES TRANSACTIONS (International Small Capitalization Series
and Japan Series). A currency futures contract sale creates an obligation by
the seller to deliver the amount of currency called for in the contract in a
specified delivery month for a stated price. A currency futures contract
purchase creates an obligation by the purchaser to take delivery of the
underlying amount of currency in a specified delivery month at a stated price.
Futures contracts are traded only on commodity exchanges --known as "contract
markets" -- approved for such trading by the Commodity Futures Trading
Commission ("CFTC"), and must be executed through a futures commission merchant,
or brokerage firm, which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out a futures contract
sale is effected by purchasing a futures contract for the same aggregate amount
of the specific type of financial instrument or commodity and the same delivery
date. If the price of the initial sale of the futures contract exceeds the
price of the offsetting purchase, the seller is paid the difference and realizes
a gain. Conversely, if the price of the offsetting purchase exceeds the price
of the initial sale, the seller realizes a loss. Similarly, the closing out of
a futures contract purchase is effected by the purchaser entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting sale
price, he realizes a loss.
The purchase or sale of a futures contract differs from the purchase or
sale of a security, in that no price or premium is paid or received. Instead,
an amount of cash or U.S. Treasury bills generally not exceeding 5% of the
contract amount must be deposited with the broker. This amount is known as
initial margin. Subsequent payments to and from the broker, known as variation
margin, are made on a daily basis as the price of the underlying futures
contract fluctuates making the long and short positions in the futures contract
more or less valuable, a process known as "marking to the market." At any time
prior to the settlement date of the futures contract, the position may be closed
out by taking an opposite position which will operate to terminate the position
in the futures contract. A final determination of variation margin is then
made, additional cash is required to be paid to or released by the broker, and
the purchaser realizes a loss or gain. In addition, a commission is paid on
each completed purchase and sale transaction.
Unlike a currency futures contract, which requires the parties to buy and
sell currency on a set date, an option on a futures contract entitles its holder
to decide on or before a future date whether to enter into such a contract. If
the holder decides not to enter into the contract, the premium paid for the
option is lost. Since the value of the option is fixed at the point of sale,
there are no daily payments of
-3-
<PAGE>
cash in the nature of "variation" or "maintenance" margin payments to reflect
the change in the value of the underlying contract as there are by a purchaser
or seller of a currency futures contract.
The ability to establish and close out positions on options on futures will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or be maintained.
The Funds will write (sell) only covered put and call options on currency
futures. This means that a Fund will provide for its obligations upon exercise
of the option by segregating sufficient cash or short-term obligations or by
holding an offsetting position in the option or underlying currency future, or a
combination of the foregoing. Set forth below is a description of methods of
providing cover that the Funds currently expect to employ, subject to applicable
exchange and regulatory requirements. If other methods of providing appropriate
cover are developed, a Fund reserves the right to employ them to the extent
consistent with applicable regulatory and exchange requirements.
A Fund will, so long as it is obligated as the writer of a call option
on currency futures, own on a contract-for-contract basis an equal long
position in currency futures with the same delivery date or a call option on
stock index futures with the difference, if any, between the market value of
the call written and the market value of the call or long currency futures
purchased maintained by the Fund in cash, U.S. Government securities, or
other high-grade liquid debt obligations in a segregated account with its
Custodian. If at the close of business on any day the market value of the
call purchased by a Fund falls below 100% of the market value of the call
written by the Fund, the Fund will so segregate an amount of cash, U.S.
Government securities, or other high-grade liquid debt obligations equal in
value to the difference. Alternatively, a Fund may cover the call option
through segregating with its custodian an amount of the particular foreign
currency equal to the amount of foreign currency per futures contract option
times the number of options written by the Fund.
In the case of put options on currency futures written by a Fund, the
Fund will hold the aggregate exercise price in cash, U.S. Government
securities, or other high-grade liquid debt obligations in a segregated
account with its custodian, or own put options on currency futures or short
currency futures, with the difference, if any, between the market value of
the put written and the market value of the puts purchased or the currency
futures sold maintained by the Fund in cash, U.S. Government securities, or
other high-grade liquid debt obligations in a segregated account with its
custodian. If at the close of business on any day the market value of the
put options purchased or the currency futures sold by a Fund falls below 100%
of the market value of the put options written by the Fund, the Fund will so
segregate an
-4-
<PAGE>
amount of cash, U.S. Government securities, or other high-grade liquid debt
obligations equal in value to the difference.
The Fund may not enter into currency futures contracts or related options
thereon if immediately thereafter the amount committed to margin plus the amount
paid for premiums for unexpired options on currency futures contracts exceeds 5%
of the market value of the Fund's total assets.
LIMITATIONS ON THE USE OF CURRENCY FUTURES CONTRACTS (International Small
Capitalization Series and Japan Series). A Fund's ability to engage in the
currency futures transactions described above will depend on the availability of
liquid markets in such instruments. Markets in currency futures are relatively
new and still developing. It is impossible to predict the amount of trading
interest that may exist in various types of currency futures. Therefore no
assurance can be given that a Fund will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, a Fund's ability to
engage in such transactions may be limited by tax considerations.
RISK FACTORS IN CURRENCY FUTURES TRANSACTIONS (International Small
Capitalization Series and Japan Series). Investment in currency futures
contracts involves risk. Some of that risk may be caused by an imperfect
correlation between movements in the price of the futures contract and the price
of the currency being hedged. The hedge will not be fully effective where there
is such imperfect correlation. To compensate for imperfect correlations, a Fund
may purchase or sell futures contracts in a greater amount than the hedged
currency if the volatility of the hedged currency is historically greater than
the volatility of the futures contracts. Conversely, a Fund may purchase or
sell fewer contracts if the volatility of the price of the hedged currency is
historically less than that of the futures contracts. The risk of imperfect
correlation generally tends to diminish as the maturity date of the futures
contract approaches.
The successful use of transactions in futures and related options also
depends on the ability of the Manager to forecast correctly the direction and
extent of exchange rate and stock price movements within a given time frame. It
is impossible to forecast precisely what the market value of securities a Fund
anticipates buying will be at the expiration or maturity of a currency forward
or futures contract. Accordingly, in cases where a Fund seeks to protect
against an increase in value of the currency in which the securities are
denominated through a foreign currency transaction, it may be necessary for the
Fund to purchase additional foreign currency on the spot market (and bear the
expense of such currency purchase) if the market value of the securities to be
purchased is less than the amount of foreign currency the Fund contracted to
purchase. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received
-5-
<PAGE>
upon the sale of the portfolio security or securities if the market value of
such security or securities exceeds the value of the securities purchased. When
a Fund purchases forward or futures contracts (or options thereon) to hedge
against a possible increase in the price of currency in which is denominated the
securities the Fund anticipates purchasing, it is possible that the market may
instead decline. If a Fund does not then invest in such securities because of
concern as to possible further market decline or for other reasons, the Fund may
realize a loss on the forward or futures contract that is not offset by a
reduction in the price of the securities purchased. As a result, a Fund's total
return for such period may be less than if it had not engaged in the forward or
futures transaction.
Foreign currency transactions that are intended to hedge the value of
securities a Fund contemplates purchasing do not eliminate fluctuations in the
underlying prices of those securities. Rather, such currency transactions
simply establish a rate of exchange which can be used at some future point in
time. Additionally, although these techniques tend to minimize the risk of loss
due to a change in the value of the currency involved, they tend to limit any
potential gain that might result from the increase in the value of such
currency.
The amount of risk a Fund assumes when it purchases an option on a currency
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The liquidity of a secondary market in a currency futures contract may be
adversely affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a futures contract price
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. Prices have in the past
exceeded the daily limit on a number of consecutive trading days.
A Fund's ability to engage in currency forward and futures transactions may
be limited by tax considerations.
WARRANTS (Japan Series). The Japan Series may from time to time purchase
warrants; however, not more than 5% of its net assets (at the time of purchase)
will be invested in warrants other than warrants acquired in units or attached
to other securities. Of such 5%, not more than 2% of such net assets at the
time of purchase may be invested in warrants that are not listed on the New York
Stock Exchange or American Stock Exchange. Warrants have no voting rights, pay
no dividends and have no rights with respect to the assets of the corporation
issuing them. Warrants
-6-
<PAGE>
represent options to purchase equity securities of an issuer at a specific price
for a specific period of time. They do not represent ownership of such
securities, but only the right to buy them.
MISCELLANEOUS INVESTMENT PRACTICES
PORTFOLIO TURNOVER. A change in securities held by a 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. Although the rate of portfolio turnover is difficult to
predict, it is not anticipated that under normal circumstances the annual
portfolio turnover rate for each of the Funds will exceed 100%. It is, however,
impossible to predict portfolio turnover in future years. As disclosed in the
Prospectus, high portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Fund, and could involve realization of capital gains that would be taxable when
distributed to shareholders of a Fund. To the extent that portfolio turnover
results in the realization of net short-term capital gains, such gains are
ordinarily taxed to shareholders at ordinary income tax rates.
NOTICE ON SHAREHOLDER APPROVAL
Unless otherwise indicated in the Prospectus or this Statement of
Additional Information, the investment objective and policies of each of the
Funds may be changed without shareholder approval.
INVESTMENT RESTRICTIONS
Without a vote of the majority of the outstanding voting securities of a
Fund, the Trust will not take any of the following actions with respect to
such 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.
-7-
<PAGE>
(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, 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. With
respect to the International Small Capitalization Series and the Japan
Series, collateral arrangements with respect to swaps and other
derivatives are also not deemed to be a pledge or other encumbrance of
assets.
(3) Purchase securities on margin, except such short-term credits as
may be necessary for the clearance of purchases and sales of securities.
(For this purpose, the deposit or payment of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.)
(4) Make short sales of securities or maintain a short position for
the Fund's account unless at all times when a short position is open the
Fund owns an equal amount of such securities or owns securities which,
without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to,
the securities sold short.
(5) Underwrite securities issued by other persons except to the
extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal securities
laws.
(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) With respect to the U.S. Small Capitalization Series only,
acquire more than 10% of the voting securities of any issuer.
(8) Concentrate more than 25% of the value of its total assets in any
one industry.
(9) Invest in securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940, as amended (the
"1940 Act"). Under the 1940 Act, no registered investment company may
generally (a) invest more than 10% of its total assets (taken at current
value) in securities of other investment companies, (b) own securities of
any one investment company having a value in
-8-
<PAGE>
excess of 5% of its total assets (taken at current value), or (c) own more
than 3% of the outstanding voting stock of any one investment company.)
(10) Purchase or sell commodities or commodity contracts except that
the each of the Funds may purchase and sell foreign currency, currency
futures contracts and options thereon, stock index and other financial
futures contracts and options thereon.
(11) Invest in (a) securities which at the time of such investment
are not readily marketableand (b) securities the disposition of which is
restricted under federal securities laws if, as a result, more than 15%
(10% in the case of the U.S. Small Capitalization Series) of the Fund's
net assets (taken at current value) would then be invested in securities
described in (a)and (b) above. The Securities and Exchange Commission is
currently of the view that repurchase agreements maturing in more than
seven days are not readily marketable, and the Fund currently intends to
conduct its operations in accordance with this view.
(12) Make loans, except by purchase of debt obligations or by
entering into repurchase agreements or through the lending of the Fund's
portfolio securities.
(13) 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; any collateral arrangements
with respect to options, future contracts and options in future contracts
and with respect to initial and variation margin; and the purchase or sale
of options, forward contracts, future contracts or options on future
contracts.)
Notwithstanding the latitude permitted by Restrictions 1, 2, 3, 4, 9 and
12 above, the Funds have no current intention of (a) borrowing money, (b)
purchasing interest rate futures, (c) entering into short sales or (d)
investing in repurchase agreements.
It is contrary to the present policy of each Fund, which may be changed by
the trustees without shareholder approval, to:
(a) With the exception of the Japan Series, 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).
-9-
<PAGE>
(b) Write, purchase or sell options on particular securities (as
opposed to market indices or currencies).
(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.
Except as indicated above in Restriction No. 1, 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 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 Funds and the distributions which they may make are
summarized in the Prospectus under the heading "Taxes." The Funds intend to
qualify each year as a regulated investment company under the Internal Revenue
Code. In order to qualify as a "regulated investment company," each 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) derive less than 30% of its gross income from the sale or the
other disposition of securities and certain other assets held less than three
months; (c) 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 such 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 assets is invested in the securities of any issuer
(other than U.S. Government securities or securities of other regulated
investment companies); and (d) distribute annually at least 90% of its dividend,
interest and certain other income (including, in general, short-term capital
gains). To the extent a Fund qualifies for treatment as a regulated investment
company, the Fund
-10-
<PAGE>
will not be subject to federal income tax on income paid to its shareholders in
the form of dividends or capital gain distributions.
The Japan Series and the International Small Capitalization Series may be
subject to foreign withholding taxes on income and gains derived from foreign
investments. Such taxes would reduce the yield on such Funds' investments, but,
as discussed in the Prospectus, may be taken as either a deduction or a credit
by U.S. citizens and corporations.
Investment by either Fund in certain "passive foreign investment companies"
could subject the Fund to a U.S. federal income tax or other charge on
distributions received from, or on the sale of its investment in, such a
company. Such a tax cannot be eliminated by making distributions to Fund
shareholders. If such Fund elects to treat a passive foreign investment company
as a "qualified electing fund," different rules will apply, although the Fund
does not expect to be in the position to make such elections.
As described in the Prospectus under the heading "Distributions," each Fund
intends to pay out substantially all of its ordinary income and net realized
short-term capital gains, and to distribute substantially all of its net
realized capital gains, if any, after giving effect to any available capital
loss carryover. Net realized capital gain is the excess of net realized long-
term capital gain over net realized short-term capital loss. Under the Tax
Reform Act of 1986, in order to avoid an excise tax imposed on certain
undistributed income, a 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 .
In general, all dividend distributions derived from ordinary income and
short-term capital gain are taxable to investors as ordinary income (eligible in
part for the dividends-received deduction in the case of corporations) and long-
term capital gain distributions are taxable to investors as long-term capital
gains, whether such dividends or distributions are received in shares or cash.
The dividends-received deduction for corporations will generally apply to a
Fund's dividends from investment income to the extent derived from dividends
received by the Fund from domestic corporations.
Certain tax exempt organizations or entities may not be subject to federal
income tax on dividends or distributions from a Fund. Each organization or
entity should review its own circumstances and the federal tax treatment of its
income.
Each Fund is generally required to withhold and remit to the U.S. Treasury
20% of all dividends from net investment income and capital gain distributions,
whether distributed in cash or reinvested in shares of the Fund, paid or
credited to any
-11-
<PAGE>
shareholder account for which an incorrect or no taxpayer identification number
has been provided or where the Fund is notified that the shareholder has
underreported income in the past (or the shareholder fails to certify that he is
not subject to such withholding). In addition, the Fund will generally be
required to withhold and remit to the U.S. Treasury 20% of the amount of the
proceeds of any redemption of Fund shares from a shareholder account for which
an incorrect or no taxpayer identification number has been provided. However,
the general back-up withholding rules set forth above will not apply to tax
exempt entities so long as each such entity furnishes the Fund with an
appropriate certificate.
To the extent such investments are permissible for a particular Fund,
the Fund's transactions in options, futures contracts, hedging transactions,
forward contracts, straddles and foreign currencies will be subject to
special tax rules (including mark-to-market, straddle, wash sale and short
sale rules), the effect of which may be to accelerate income to the Fund,
defer losses to the Fund, cause adjustments in the holding periods of the
Fund's securities and convert short-term capital losses into long-term
capital losses. These rules could therefore affect the amount, timing and
character of distributions to shareholders.
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
Kenneth Reid* (46) General Partnerand Director
President, Trustee of Research, Rosenberg Institutional Equity
Management, June, 1986 to present.
Marlis S. Fritz* (46) General Partnerand Director of
Vice President, Trustee Marketing, Rosenberg Institutional Equity
Management, April, 1985 to present.
Nils H. Hakansson ( ) Sylvan C. Coleman Professor of
Trustee Finance and Accounting, Haas School of
Business, University of California, Berkeley,
June, 1969 to present. Director, Supershare
Services Corporation, November, 1989 to
present.
Barr M. Rosenberg* (53) Managing General Partner and
Trustee Chief Investment Officer, Rosenberg
Institutional Equity Management, January,
1985 to present.
-12-
<PAGE>
William F. Sharpe ( ) Timken Professor of Finance,
Trustee Stanford University, September, 1970 to
September, 1989. Timken Professor Emeritus
of Finance, Stanford University, October,
1989 to present. Chairman, William F.
Sharpe Associates, Los Altos, California
(research and financial consulting), March,
1986 to present.
Po-Len Hew (30) Accounting Manager, Rosenberg
Treasurer Institutional Equity Management, October,
1989 to present.
Carolyn Demler (52) Administrative Coordinator, Rosenberg
Clerk Institutional Equity Management, December,
1988 to present.
John J. Pileggi ( ) [To be provided]
Assistant Treasurer
Gordon Forrester ( ) [To be provided]
Assistant Treasurer
Joan V. Fiore ( ) [To be provided]
Assistant Clerk
Carrie Zuckerman ( ) [To be provided]
Assistant Clerk
Eric Rubin ( ) [To be provided]
Assistant Clerk
* Trustees who are "interested persons" (as defined in the 1940 Act) of the
Trust or the Manager.
The mailing address of each of the officers and trustees is c/o Barr
Rosenberg Series Trust, 237 Park Avenue, Suite 910, New York, NY 10017. The
trustees and officers of the Trust as a group own less than 1% of any class
of outstanding shares of the Trust except for shares of the Japan Fund. As
of the date of this Statement of Additional Information, the Manager owned
100% of the shares of the Japan Series. Therefore, officers and trustees of
the Trust who are partners of the Manager may be deemed to own beneficially
100% of the shares of such Fund. As of the date of this Statement of
Additional Information, the shares of the Japan Series represented ____% of
the total number of shares of the Trust outstanding. The Manager will be
entitled to vote such shares on any matter submitted to the shareholders of
the Trust and on which shareholders of the Japan Series are entitled to vote.
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.
For the fiscal year beginning April 1, 1996, the Trust will pay the
trustees other than those who are interested persons of the Manager an annual
fee of $36,000 (including a base fee and a fee per Fund for each meeting). The
Trust does not pay any pension or retirement benefits for its trustees. The
total compensation paid to each of the trustees who are not interested
persons of the Trust in the fiscal year ended March 31, 1996 was $________.
As noted below under the heading "Investment Advisory and Other Services --
Management Contract," the
-13-
<PAGE>
Trust does not pay any compensation to officers or trustees of the Trust other
than those trustees who are not interested persons of the Manager.
Messrs. Rosenberg, Reid, and Hew and Ms. Fritz and Demler, each being a
general partner, officer or employee of the Manager, will each benefit from
the management fees paid by the Trust to the Manager, but receive no direct
compensation from the Trust.
INVESTMENT ADVISORY AND OTHER SERVICES
MANAGEMENT CONTRACTS
As disclosed in the Prospectus under the heading "Management of the Trust,"
under management contracts (each a "Management Contract") between the Trust, on
behalf of each Fund, and Rosenberg Institutional Equity Management (the
"Manager"), subject to the control of the trustees of the Trust and such
policies as the trustees may determine, the Manager will furnish continuously an
investment program for each Fund and will make investment decisions on behalf of
each Fund and place all orders for the purchase and sale of portfolio
securities. Subject to the control of the trustees, the Manager furnishes
office space and equipment, provides bookkeeping and certain clerical services
and pays all salaries, fees and expenses of officers and trustees of the Trust
who are affiliated with the Manager. As indicated under "Portfolio Transactions
- -- Brokerage and Research Services," the Trust's portfolio transactions may be
placed with broker-dealers which furnish the Manager, at no cost, certain
research, statistical and quotation services of value to the Manager in advising
the Trust or its other clients.
As is disclosed in the Prospectus, each of the Funds has agreed to pay the
Manager a quarterly management fee at the annual percentage rate of the relevant
Fund's average daily net assets set forth in the Prospectus. The Manager's
compensation will be reduced and the Manager will bear certain expenses until
further notice to the extent necessary to limit the total annual operating
expenses (which do not include nonrecurring account fees and extraordinary
expenses) of each class to the percentage of each Fund's average daily net
assets attributable to that class as set forth in the Prospectus. In addition,
the Manager's compensation under each Management Contract is subject to
reduction to the extent that in any year the expenses of a Fund (including
investment advisory fees but excluding taxes, portfolio brokerage commissions
and any distribution expenses paid by a class of shares of a Fund pursuant to a
distribution plan or otherwise) exceed the limits on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Fund are qualified for offer and sale. The most restrictive of
such limitations as of the date of this Statement of Additional Information is
believed to be 2 1/2% of the first $30 million of average net assets, 2% of the
next $70 million of average net assets and 1 1/2% of any excess over $100
million.
-14-
<PAGE>
Each Management Contract provides that the Manager shall not be subject to
any liability to the Trust or to any shareholder of the Trust in connection with
the performance of its services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.
Each Management Contract was approved by the trustees of the Trust
(including all of the trustees who are not "interested persons" of the Manager)
and by the shareholders of each Fund in connection with the organization and
establishment of each of the Funds. Each Management Contract will continue in
effect for a period more than two years from the date of its execution only so
long as its continuance is approved at least annually by (i) vote, cast in
person at a meeting called for that purpose, of a majority of those trustees
who are not "interested persons" of the Manager or the Trust, and by (ii) the
majority vote of either the full Board of Trustees or the vote of a majority of
the outstanding shares of the relevant Fund. Each Management Contract
automatically terminates on assignment, and is terminable on not more than 60
days' notice by the Trust to the Manager. In addition, each Management Contract
may be terminated on not more than 60 days' written notice by the Manager to the
Trust.
As disclosed in the Prospectus, the general partners of the Manager are
Barr M. Rosenberg, Marlis S. Fritz and Kenneth Reid. Each of these persons may
be deemed a controlling person of the Manager.
As discussed in this Statement of Additional Information under the heading
"Management of the Trust," Barr M. Rosenberg is a trustee of the Trust as well
as Managing General Partner and Chief Investment Officer of the Manager; Marlis
S. Fritz is a trustee and Vice President of the Trust as well as general partner
and Director of Marketing of the Manager; and Kenneth Reid is a trustee and
President of the Trust as well as general partner and Director of Research of
the Manager.
-15-
<PAGE>
During the last three fiscal years, the U.S. Small Capitalization Series
has paid the following amounts as management fees to the Manager pursuant to its
Management Contract:
Gross Reduction Net
----- --------- ---
4/1/93 - 3/31/94 $469,472 $140,112 $329,360
4/1/94 - 3/31/95 $427,746 $148,971 $278,775
4/1/95 - 3/31/96 $ $ $
During the last three fiscal years, the Japan Series has paid the following
amounts as management fees to the Manager pursuant to its Management Contract:
Gross Reduction Net
----- --------- ---
4/1/93 - 3/31/94 $ 10,945 $ 10,945 -0-
4/1/94 - 3/31/95 $12,148 $12,148 -0-
4/1/95 - 3/31/96 $ $
As of March 31, 1996, the International Small Capitalization Series had not
yet commenced operations.
ADMINISTRATIVE SERVICES
The Trust has entered into an Administrative Services Contract with Furman
Selz LLC ("Furman Selz") pursuant to which Furman Selz provides certain
management and administrative services necessary for the Funds' operations
including: (i) general supervision of the operation of the Funds including
coordination of the services performed by the Funds' investment advisor,
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 Funds; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Funds' officers and Board of
Trustees; and (iii) furnishing office space and
-16-
<PAGE>
certain facilities required for conducting the business of the Funds. For these
services, Furman Selz is entitled to receive a fee, payable monthly, at the
annual rate of 15% of the average daily net assets of the Funds. The Trust
did not pay any such fees to Furman Selz through the fiscal year ended
March 31, 1996.
DISTRIBUTOR AND DISTRIBUTION PLAN
As stated in the text of the Prospectus under the heading "Management of
the Trust-Distributor," Adviser and Select Shares of each Fund are sold on a
continuous basis by the Trust's distributor, Barr Rosenberg Funds Distributor,
Inc. (the "Distributor"). The Distributor is an affiliate of Furman Selz.
Under the Distributor's Contract between the Trust and the Distributor (the
"Distributor's Contract"), the Distributor is not obligated to sell any specific
amount of shares of the Trust and will purchase shares for resale only against
orders for shares.
Pursuant to the Distribution Plan (the "Plan") described in the Prospectus,
in connection with the distribution of Select Shares of the Trust, the
Distributor receives certain distribution fees from the Trust. Subject to the
percentage limitation on the distribution fee set forth in the Prospectus, the
distribution fee may be paid in respect of services rendered and expenses borne
in the past with respect to each such class as to which no distribution fee was
paid on account of such limitation. The Distributor may pay all or a portion of
the distribution fees it receives from the Trust to participating and
introducing brokers.
The Plan may be terminated with respect to the class of shares of any
Fund to which the Plan relates by vote of a majority of the trustees of the
Trust who are not interested persons of the Trust (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation
of the Plan or the Distributor's Contract (the "Independent Trustees"), or by
vote of a majority of the outstanding voting securities of that class. Any
change in the Plan that would materially increase the cost to the class of
shares of any Fund to which the Plan relates requires approval by the
affected class of shareholders of that Fund. The trustees of the Trust
review quarterly a written report of such costs and the purposes for which
such costs have been incurred. Except as described above, the Plan may be
amended by vote of the trustees of the Trust, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose.
For so long as the Plan is in effect, selection and nomination of those
trustees of the Trust who are not interested persons of the Trust shall be
committed to the discretion of such disinterested persons.
The Distributor's Contract may be terminated with respect to any Fund or
class of shares thereof at any time by not less than 30 days' written notice
without
-17-
<PAGE>
payment of any penalty either by the Distributor or by such Fund or class by
vote of a majority of the outstanding voting securities of that Fund or that
class, as the case may be, or by vote of a majority of the trustees of the
Trust.
The Distributor's Contract and the Plan will continue in effect with
respect to each class of shares to which they relate for successive one-year
periods, provided that each such continuance is specifically approved (i) by the
vote of a majority of the Independent Trustees and (ii) by the vote of a
majority of the entire Board of Trustees (or by vote of a majority of the
outstanding shares of a class, in the case of the Distributor's Contract) cast
in person at a meeting called for that purpose.
If the Distributor's Contract or the Plan are terminated (or not renewed)
with respect to one or more classes, they may continue in effect with respect to
any class of any Fund as to which they have not been terminated (or have been
renewed).
The trustees of the Trust believe that the Plan will provide benefits to
the Trust. The trustees of the Trust believe that the Plan will result in
greater sales and/or fewer redemptions of Select Shares, although it is
impossible to know for certain the level of sales and redemptions of Select
Shares that would occur in the absence of the Plan or under alternative
distribution schemes. The trustees of the Trust believe that the effect on
sales and/or redemptions benefit the Trust by reducing Fund expense ratios
and/or by affording greater flexibility to Fund managers.
CUSTODIAL ARRANGEMENTS. State Street Bank and Trust Company ("State Street
Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such, State
Street Bank 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 a Fund. Upon instruction, State Street Bank receives
and delivers cash and securities of a Fund in connection with Fund transactions
and collects all dividends and other distributions made with respect to Fund
portfolio securities. State Street Bank also maintains certain accounts and
records of the Trust and calculates the total net asset value, total net income
and net asset value per share of a Fund on a daily basis. State Street Bank has
also contracted with certain foreign banks and depositories to hold portfolio
securities outside of the United States on behalf of the Trust.
INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are Price
Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110. Price
Waterhouse 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.
-18-
<PAGE>
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. The purchase and sale of portfolio securities for
the Funds and for the other investment advisory clients of the Manager are made
by the Manager with a view to achieving each client's investment objective. For
example, a particular security may be purchased or sold on behalf of certain
clients of the Manager even though it could also have been purchased or sold for
other clients at the same time. Likewise, a particular security may be
purchased on behalf of one or more clients when the Manager is selling the same
security on behalf of one or more other clients . In some instances, therefore,
the Manager, acting for one client may sell indirectly a particular security to
another client. It also happens that two or more clients may simultaneously buy
or sell the same security, in which event purchases or sales are effected pro
rata on the basis of cash available or other equitable basis so as to avoid any
one account's being preferred over any other account.
BROKERAGE AND RESEARCH SERVICES. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different brokers. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid for such securities usually includes an undisclosed dealer
commission or mark up. In placing orders for the portfolio transactions of a
Fund, the Manager will seek the best price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions for brokerage
and research services as described below. The determination of what may
constitute best price and execution by a broker-dealer in effecting a securities
transaction involves a number of considerations, including, without limitation,
the overall net economic result to the Fund (involving price paid or received
and any commissions and other costs paid), the efficiency with which the
transaction is effected, the ability to effect the transaction at all where a
large block is involved, availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Because of such factors, a broker-dealer effecting a
transaction may be paid a commission higher than that charged by another broker-
dealer. Most of the foregoing are judgmental considerations.
Over-the-counter transactions often involve dealers acting for their own
account. It is the Manager's policy to place over-the-counter market orders for
a Fund with primary market makers unless better prices or executions are
available elsewhere.
Although the Manager does not consider the receipt of research services as
a factor in selecting brokers to effect portfolio transactions for a Fund, the
Manager will receive such services from brokers who are expected to handle a
substantial amount of such Fund's portfolio transactions. Research services may
include a wide variety of analyses, reviews and reports on such matters as
economic and political developments,
-19-
<PAGE>
industries, companies, securities and portfolio strategy. The Manager uses such
research in servicing other clients as well as the Trust.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and subject to such policies as the trustees of the Trust may
determine, the Manager may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in the Act) to the Manager an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction.
The U.S. Small Capitalization Series paid brokerage commissions in the
amounts of $197,327.08 for the fiscal year ended March 31, 1994, $137,979 for
the fiscal year ended March 31, 1995 and $_________ for the fiscal year ended
March 31, 1996.
The Japan Series paid brokerage commissions in the amounts of $13,939 for
the fiscal year ended March 31, 1994, $10,763 for the fiscal year ended
March 31, 1995 and $________ for the fiscal year ended March 31, 1996.
The Japan Series may pay brokerage commissions to Nomura Securities
Company, Inc., which may be deemed to be an "affiliate of an affiliate" of the
Trust, for acting as the Fund's agent on purchases and sales of securities for
the portfolio of the Fund. 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 Nomura
Securities and will review these procedures periodically. In the fiscal years
ended March 31, 1994, 1995 and 1996, the Fund paid an aggregate of $9,782,
$2,967 and $______ in brokerage commissions to Nomura Securities. In the fiscal
year ended March 31, 1996, the percentage of the Fund's aggregate brokerage
commissions paid to Nomura Securities was ___% and the percentage of the Fund's
aggregate dollar amount of transactions involving the payment of commissions
effected through Nomura Securities for such fiscal year was ___%.
-20-
<PAGE>
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
As more fully described in the Prospectus, the Trust is a diversified open-
end series investment company organized as a Massachusetts business trust. A
copy of the Agreement and Declaration of Trust of the Trust (the "Declaration of
Trust") is on file with the Secretary of The Commonwealth of Massachusetts. The
fiscal year of the Trust ends on March 31. The Trust changed its name to "Barr
Rosenberg Series Trust" from "Rosenberg Series Trust" on ________.
Interests in the Trust portfolios are currently represented by shares of
three series, the U.S. Small Capitalization Series, the International Small
Capitalization Series and the Japan Series, issued pursuant to the Declaration
of Trust. The rights of shareholders and powers of the trustees of the Trust
with respect to such shares are described in the Prospectus.
As described in the Prospectus, each Fund is further divided into three
classes of shares designated as Institutional Shares, Adviser Shares and Select
Shares. Each class of shares of each Fund represents interests in the assets of
the Fund and has identical dividend, liquidation and other rights and the same
terms and conditions except that expenses, if any, related to the distribution
and shareholder servicing of a particular class are borne solely by such class
and each class may, at the discretion of the trustees of the Trust, also pay a
different share of other expenses, not including advisory or custodial fees or
other expenses related to the management of the Trust's assets, if these
expenses are actually incurred in a different amount by that class, or if the
class receives services of a different kind or to a different degree than the
other classes. All other expenses are allocated to each class on the basis of
the net asset value of that class in relation to the net asset value of the
particular Fund.
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.
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. Shareholders will
vote by individual Fund on all matters except (i) when required by the 1940 Act,
shares shall be voted in the aggregate and not by individual Fund, and (ii) when
the trustees have determined that the matter affects only the interests of one
or more Funds, then only shareholders of such Funds shall be entitled to vote
thereon. Shareholders of one Fund shall not be entitled to vote on matters
exclusively affecting another Fund, such matters including, without limitation,
-21-
<PAGE>
the adoption of or change in any fundamental policies or restrictions of the
other Fund and the approval of the investment advisory contracts of the other
Fund.
Each class of shares of each Fund has identical voting rights except that
each class has exclusive voting rights on any matter submitted to shareholders
that relates solely to that class, and has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive voting rights
with respect to matters pertaining to any distribution or servicing plan
applicable to that class. All three classes of shares of a Fund will vote
together, except with respect to any distribution or servicing plan applicable
to a class or when a class vote is required as specified above or otherwise by
the 1940 Act.
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 or
sub-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
-22-
<PAGE>
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 relevant Fund for
all loss and expense of any shareholder of that Fund held personally liable for
the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered remote since it
is limited to circumstances in which the disclaimer is inoperative and the Fund
of which he is or was a shareholder would be unable to meet its obligations.
The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The Declaration of Trust also provides for indemnification by the
Trust of the trustees and the officers of the Trust against liabilities and
expenses reasonably incurred in connection with litigation in which they may be
involved because of their offices with the Trust, except if it is determined in
the manner specified in the Declaration of Trust that such trustees are liable
to the Trust or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. In addition, the
Manager has agreed to indemnify each trustee who is not "an interested person"
of the Trust to the maximum extent permitted by the 1940 Act against any
liabilities arising by reason of such trustee's status as a trustee of the
Trust.
BENEFICIAL OWNERS OF 5% OR MORE OF A FUND'S SHARES
As of the date of this Prospectus, no shares of the International Small
Capitalization Series were issued and outstanding.
The following chart sets forth the names, addresses and percentage
ownership of those shareholders owning beneficially 5% or more of the
outstanding shares of the U.S. Small Capitalization Series as of 1996 (to be
provided prior to the effective date of this Amendment in a subsequent
Amendment filed pursuant to Rule 485(b):
Name Address % Ownership
- ---- ------- -----------
The Rockefeller Foundation 420 Fifth Avenue [ ]%
New York, NY 10018-2072
Yale University 230 Prospect Street [ ]%
New Haven, CT 06511
Nathan Cummings 1926 Broadway, Suite 600 [ ]%
Foundation New York, NY 10022
-23-
<PAGE>
Common Fund - 450 Post Road East [ ]%
Growth Portfolio P.O. Box 909
Westport, CT 06881
Leland Stanford Junior 2770 Sand Hill Road [ ]%
University Menlo Park, CA 94025
Evangelical Lutheran Church - 800 Marquette Avenue
Board of Pensions Suite 1050
Retirement Fund Minneapolis, MN 55402 [ ]%
Social Purpose Fund [ ]%
University of Washington Administration Building [ ]%
Financial Management AG-80
Box 351248
Seattle, WA 08145
Rosenberg Management Four Orinda Way, Ste. 300E [ ]%
Money Purchase Pension Plan Orinda, CA 94563
The following chart sets forth the names, addresses and percentage
ownership of those shareholders owning beneficially 5% or more of the
outstanding shares of the Japan Series as of May 1, 1996:
Name Address % Ownership
- ---- ------- -----------
Rosenberg Institutional 4 Orinda Way 100%
Equity Management Suite 300E
Orinda, CA 94563
DETERMINATION OF NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund share,
with the exception of shares of the Japan Series, is determined on each day on
which the New York Stock Exchange is open for trading. The Trust expects that
the days, other than weekend days, that the New York Stock Exchange will not be
open are Independence Day, Labor Day, Election Day, Thanksgiving Day, Christmas
Day, New Year's Day, President's Day, Good Friday and Memorial Day.
As indicated in the Prospectus, the net asset value of each share of the
Japan Series is determined on each day on which the Tokyo Stock Exchange is open
for trading. The Tokyo Stock Exchange is closed on Saturdays and Sundays. The
holidays for the Tokyo Stock Exchange for the remainder of 1996 are September
15,
-24-
<PAGE>
October 10, November 3 and November 23. If a holiday falls on a Saturday or
Sunday, there is not a holiday substitution. The Exchange is also expected not
to be open on the spring and fall equinox.
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.
The procedures for purchasing shares of each of the Funds and for
determining the offering price of such shares are described in the Prospectus.
EXPERTS
The financial statements to be provided in this Statement of Additional
Information (see "Financial Statements" below) will be included in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
-25-
<PAGE>
FINANCIAL STATEMENTS
NOTE: The financial statements and schedules required by Item 23 of Form
N-1A will be provided prior to the effective date of this Post-Effective
Amendment No. 11 as part of Post-Effective Amendment No. 12 to the Trust's
Registration Statement filed pursuant to Rule 485(b).
-26-
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
----------------------------------
(a) Financial Statements.
Note: To be filed prior to the effective date of
this Amendment in Amendment No. 12 to the Registration
Statement pursuant to Rule 485(b);
(b) Exhibits:
1. Agreement and Declaration of Trust of the
Registrant, dated April 1, 1988, incorporated by reference
to the Trust's original Registration Statement on Form N-1A
(the "Registration Statement") filed on May 5, 1988;
1.1. Amendment No. 1 to Agreement and Declaration
of Trust, dated April 28, 1988, incorporated by reference to
the Trust's original Registration Statement filed on May 5,
1988;
1.2 Amendment No. 2 to Agreement and Declaration
of Trust, dated October 27, 1988, incorporated by reference
to Post-Effective Amendment No. 1 to the Registration
Statement filed on October 28, 1988;
1.3 Amendment No. 3 to Agreement and Declaration
of Trust filed in Post-Effective Amendment No. 6 to the
Registration Statement filed on December 11, 1991;
1.4 Amendment No. 4 to Agreement and Declaration
of Trust, dated ______, 1996 (to be filed prior to the
effective date of this Amendment in Amendment No. 12 to the
Registration Statement pursuant to Rule 485(b)).
2. By-Laws of the Registrant incorporated by
reference to the original Registration Statement filed on
May 5, 1988;
3. None;
4. Specimen Share Certificates for Institutional
shares, Adviser shares and Select shares of the U.S. Small
Capitalization Series, the International Small Capitalization
Series and the Japan Series (to be filed prior to the
effective date of this Amendment in Amendment No. 12 to the
Registration Statement pursuant to Rule 485(b));
<PAGE>
5.1. Form of Amended and Restated Management
Contract between the Registrant on behalf of its U.S. Small
Capitalization Series and Rosenberg Institutional Equity
Management filed herewith;
5.2. Form of Amended and Restated Management
Contract between the Registrant on behalf of its Japan Series
and Rosenberg Institutional Equity Management filed
herewith;
5.3. Form of Management Contract between the
Registrant on behalf of its International Small
Capitalization Series and Rosenberg Institutional Equity
Management filed herewith;
5.4. Form of Management Contract between the
Registrant on behalf of its United States Equity Series and
Rosenberg Institutional Equity Management incorporated by
reference to Post-Effective Amendment No. 6 to the
Registration Statement filed on December 11, 1991;
6. Form of Distributor's Contract between the
Registrant and Barr Rosenberg Funds Distributor, Inc.
relating to the Registrant's Select shares and Adviser shares
filed herewith;
7. None;
8.1. Form of Custody Agreement between the
Registrant on behalf of its Small Capitalization Series
(renamed U.S. Small Capitalization Series) and State Street
Bank and Trust Company incorporated by reference to Pre-
Effective Amendment No. 2 to the Registration Statement filed
on August 18, 1988;
8.2. Form of Custody Agreement between the
Registrant on behalf of its Japan Series and State Street
Bank and Trust Company incorporated by reference to Post-
Effective Amendment No. 2 to the Registration Statement filed
on January 4, 1989;
9. (a) Form of Transfer Agency Agreement between
the Registrant and State Street Bank and Trust Company
incorporated by reference to Pre-Effective Amendment No. 2 to
the Registration Statement filed on August 18, 1988;
(b) Letter Agreement amending Transfer Agency
Agreement with respect to the Registrant's Japan Series
incorporated by reference to Post-Effective Amendment No. 1
to the Registration Statement filed on October 28, 1988;
-2-
<PAGE>
(c) Form of Notification of Expense
Limitation by Rosenberg Institutional Equity Management to
the Registrant's Small Capitalization Series incorporated
by reference to Pre-Effective Amendment No. 2 to the
Registration Statement filed on August 18, 1988;
(d) Notification of Expense Limitation by
Rosenberg Institutional Equity Management to Registrant's
Japan Series incorporated by reference to Post-Effective
Amendment No. 7 to the Registration statement filed in May,
1993.
(e) Letter Agreement adding United States
Equity Series to Custody Agreement and Transfer Agency
Agreement filed in Post-Effective Amendment No. 6 to the
Registration Statement filed on December 11, 1991;
(f) Form of Notification of Expense
Limitation by Rosenberg Institutional Equity Management to
the Registrant's United States Equity Series incorporated
by reference to Post-Effective Amendment No. 6 to the
Registration Statement filed on December 11, 1991;
(g) Form of Letter Agreement adding
International Small Capitalization Series to Custody
Agreement filed herewith;
(h) Form of Notification of Expense
Limitation by Rosenberg Institutional Equity Management to
each Fund (to be filed prior to the effective date of this
Amendment in Amendment No. 12 to the Registration Statement
pursuant to Rule 485(b));
(i) Form of Fund Administration Agreement
between Registrant and Furman Selz LLC (to be filed prior to
the effective date of this Amendment in Amendment No. 12 to
the Registration Statement pursuant to Rule 485(b));
(j) Form of Transfer Agency Agreement between
Registrant and Furman Selz LLC on behalf of each Fund (to be
filed prior to the effective date of this Amendment in
Amendment No. 12 to the Registration Statement pursuant to
Rule 485(b));
10. Opinions of Ropes & Gray (filed or to be filed
with each Fund's Rule 24f-2 Notice) (to be filed prior to the
effective date of this Amendment in Amendment No. 12 to the
Registration Statement pursuant to Rule 485(b));
11. Consent of Price Waterhouse LLP (to be filed
prior to the effective date of this Amendment in Amendment
No. 12 to the Registration Statement pursuant to Rule
485(b));
-3-
<PAGE>
12. None;
13. Investment letter regarding initial capital
incorporated by reference to Pre-Effective Amendment No. 3 to
the Registration Statement filed on September 12, 1988;
14. None;
15. Form of Distribution Plan for Select shares
filed herewith;
16. Schedule for Computation of Performance
Quotations (to be filed prior to the effective date of this
Amendment in Amendment No. 12 to the Registration Statement
pursuant to Rule 485(b));
17. Financial Data Schedule for Registrant's
fiscal year ended March 31, 1996 (to be filed prior to the
effective date of this Amendment in Amendment No. 12 to the
Registration Statement pursuant to Rule 485(b));
18. Form of Multi-Class Plan to be entered into by
Registrant pursuant to Rule 18f-3 under the Investment
Company Act of 1940 filed herewith;
19. Powers of Attorney incorporated by reference
to Post-Effective Amendment No. 3 to the Registration
Statement filed on July 28, 1989 and Post-Effective Amendment
No. 4 to the Registration Statement filed on July 31, 1990.
Item 25. Persons Controlled by or under Common Control
with Registrant.
----------------------------------------------
None.
Item 26. Number of Holders of Securities.
--------------------------------
The following table sets forth the number of holders of
each class of securities of the Trust as of May 15, 1996
(only one class of shares was outstanding as of this date):
Title of Class Number of Record Holders
-------------- ------------------------
Shares of Beneficial Interest 7
Small Capitalization Series
Shares of Beneficial Interest
Japan Series 1
-4-
<PAGE>
Shares of Beneficial Interest 0
United States Equity Series
Shares of Beneficial Interest N/A
International Small Capitalization Series
Item 27. Indemnification.
----------------
Article VIII of the Registrant's Agreement and
Declaration of Trust reads as follows (referring to the
Registrant as the "Trust"):
"ARTICLE VIII
Indemnification
SECTION 1. TRUSTEES, OFFICERS, ETC. The Trust shall
indemnify each of its Trustees and officers (including
persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may
have been threatened, while in office or thereafter, by
reason of being or having been such a Covered Person except
with respect to any matter as to which such Covered person
shall have been finally adjudicated in any such action, suit
or other proceeding to be liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time
to time by the Trust in advance of the final disposition of
any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay
amounts so paid to the Trust if it is ultimately determined
that indemnification of such expenses is not authorized under
this Article, provided, however, that either (a) such Covered
Person shall have provided appropriate security for such
undertaking, (b) the Trust shall be insured against losses
arising from any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees then
in office act on the matter), or independent legal counsel in
a written opinion, shall have determined, based upon a review
of readily available facts (as opposed to a full trial type
inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this
Article.
-5-
<PAGE>
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 wilful 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 fact (as opposed to a full trial type inquiry) that
such Covered Person is not liable to the Trust or its
Shareholders by reason of wilful 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 wilful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct
of his 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 wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
such Covered Person's office.
SECTION 3. INDEMNIFICATION NOT EXCLUSIVE. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which such Covered Person may be
entitled. As used in this Article VIII, the term "Covered
Person" shall include such person's heirs, executors and
administrators and a "disinterested Trustee" is a Trustee who
is not an "interested person" of the Trust as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended, (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
-6-
<PAGE>
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."
Item 28. Business and Other Connections of Investment
Adviser.
--------------------------------------------
Rosenberg Institutional Equity Management (the
"Manager") was organized as a limited partnership under the
laws of the State of California in 1985, and is registered as
an investment adviser under the Investment Advisers Act of
1940.
Set forth below are the substantial business
engagements during at least the past two fiscal years of each
director, officer or partner of the Manager:
Name and Position Business and
with Manager other connections
- ----------------- ------------------
Barr M. Rosenberg General Partner, Rosenberg
Managing General Partner Alpha L.P. (formerly (RBR
and Chief Investment Officer Partners (limited partner of
Manager)), 12 El Sueno,
Orinda, California,
December, 1984 to present;
Chairman of the Board,
Rosenberg Management Company
S.A., April 1989 to present;
Chairman of the Board,
Rosenberg U.S. Japan
Management Company S.A.,
July, 1989 to present.
Chairman of the Board,
Rosenberg Global Management
Company, S.A., April 1990 to
present; Director and
Chairman of the Board,
Rosenberg 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., February
1990 to present. Chairman,
Barr Rosenberg European
Management, Ltd., March 1990
to present; Chairman and
Director, Nomura Rosenberg
Investment Technology
Institute, June 1990 to
present.
-7-
<PAGE>
Marlis S. Fritz Director, Barr Rosenberg
General Partner and Director European Management Ltd.,
of Marketing May 1990 to present.
Kenneth Reid Consultant, BARRA (financial
General Partner consulting), 2001 Addison
and Director of Research Street, Berkeley,
California, June, 1982 to
June, 1986. Director,
Nomura Rosenberg Investment
Technology Institute,
January 1991 to present.
Po-Len Hew Controller, Rosenberg
Controller Institutional Equity
Management, October 1989 to
present, Treasurer, Barr
Rosenberg Investment
Management, May 1994 to
present.
Item 29. Principal Underwriters:
-----------------------
(a) Barr Rosenberg Funds Distributor, Inc. (the
"Distributor") is the principal underwriter of the Funds'
Adviser and Select shares. The Distributor does not act as
principal underwriter, depositor or investment adviser for
any other investment company.
(b) Information with respect to the Distributor's
directors and officers is as follows:
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------------ ----------------------- ---------------------
Robert Hering President None
Michael C. Petrycki Vice President and Director None
Gordon Forrester Vice President None
Steven D. Blecher Vice President, Secretary None
and Treasurer
-8-
<PAGE>
Lawrence Wagner Vice President, Chief None
Financial Officer
Elizabeth Q. Solazzo Assistant Secretary None
Thalia M. Cody Assistant Secretary None
The business address of all directors and officers of the
Distributor is 230 Park Avenue, New York, New York 10169.
(c) None.
Item 30. Location of Accounts and Records.
---------------------------------
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder include Registrant's Clerk,
Carolyn Demler; Registrant's Manager, Rosenberg
Institutional Equity Management; Registrant's Custodian,
State Street Bank and Trust Company; and Registrant's
Administrator, Accounting Agent and Transfer Agent, Furman
Selz LLC. The address of the Clerk and Manager is 4 Orinda
Way, Suite 300E, Orinda, California 94583; the address of
the Custodian is 225 Franklin Street, Boston, Massachusetts
02110; and the address of the Administrator, Accounting Agent
and Transfer Agent is 230 Park Avenue, New York, NY 10169.
Item 31. Management Services.
--------------------
None.
Item 32. Undertakings.
(i) 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.
(ii) The Registrant undertakes to file a post-
effective amendment to the Registration Statement within four
to six months from the later of (i) the effective date of
this post-effective amendment or (ii) the commencement of
operations of the International Small Capitalization Series
which includes financial statements (which need not be
audited) for the International Small Capitalization Series
reflecting an initial period of operations.
-9-
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust 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
upon any of the trustees of shareholders individually but are
binding only upon the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this Post-Effective Amendment No. 11 to be signed on its
behalf by the undersigned, thereto duly authorized, in the City
of Orinda, and the State of California, on the 15th day of May,
1996.
ROSENBERG SERIES TRUST
By: /s/ Marlis S. Fritz
------------------------------
Marlis S. Fritz
Vice President
<PAGE>
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 11 to the Registration
Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Marlis S. Fritz Vice President, May 15, 1996
- ---------------------- Trustee
Marlis S. Fritz
Kenneth Reid * President, May 15, 1996
- ---------------------- Principal Executive Officer,
Kenneth Reid Trustee
Po-Len Hew * Treasurer, May 15, 1996
- ---------------------- Principal Financial Officer,
Po-Len Hew Principal Accounting Officer
Nils H. Hakansson * Trustee May 15, 1996
- ----------------------
Nils H. Hakansson
Barr M. Rosenberg * Trustee May 15, 1996
- ----------------------
Barr M. Rosenberg
William F. Sharpe * Trustee May 15, 1996
- ----------------------
William F. Sharpe
*By /s/ Marlis S. Fritz
----------------------------
Marlis S. Fritz
Attorney-in-Fact
Date: May 15, 1996
<PAGE>
EXHIBIT LIST
5.1. Form of Amended and Restated Management Contract between the Registrant
on behalf of its U.S. Small Capitalization Series and Rosenberg
Institutional Equity Management.
5.2. Form of Amended and Restated Management Contract between the Registrant
on behalf of its Japan Series and Rosenberg Institutional Equity
Management.
5.3. Form of Management Contract between the Registrant on behalf of its
International Small Capitalization Series and Rosenberg Institutional
Equity Management.
6. Form of Distributor's Contract between the Registrant and Barr
Rosenberg Funds Distributor, Inc. relating to the Registrant's Select
shares and Adviser shares.
9.(g) Form of Letter Agreement adding International Small Capitalization
Series to Custody Agreement.
15. Form of Distribution Plan for Select shares filed herewith;
18. Form of Multi-Class Plan to be entered into by Registrant pursuant to
Rule 18f-3 under the Investment Company Act of 1940 filed herewith;
<PAGE>
AMENDED AND RESTATED MANAGEMENT CONTRACT
Amended and Restated 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 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
<PAGE>
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 condition as the Manager
may prescribe in such notice, the compensation due the Manager shall be
reduced, and, if
-2-
<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.
-3-
<PAGE>
Termination of this Contract pursuant to this Section
5 shall be without the payment of any penalty.
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 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
-4-
<PAGE>
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 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, as
amended, is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not
binding upon any of the Trustees or shareholders individually but
are binding only upon the assets and property of the Fund.
-5-
<PAGE>
IN WITNESS WHEREOF, Barr Rosenberg 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
-6-
<PAGE>
AMENDED AND RESTATED MANAGEMENT CONTRACT
Amended and Restated Management Contract executed as of ______,
1996, between Barr Rosenberg Series Trust, a Massachusetts business trust
(the "Trust"), on behalf of its Japan 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 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
<PAGE>
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 1.00% 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 condition as the Manager may
prescribe in such notice, the compensation due the Manager shall be reduced,
and, if
-2-
<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.
-3-
<PAGE>
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
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
-4-
<PAGE>
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 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, as
amended, is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property
of the Fund.
-5-
<PAGE>
IN WITNESS WHEREOF, Barr Rosenberg Series Trust, on behalf of its Japan
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 Japan Series
By_______________________________
Title:
ROSENBERG INSTITUTIONAL EQUITY
MANAGEMENT
By_______________________________
Title: General Partner
-6-
<PAGE>
MANAGEMENT CONTRACT
-------------------
Management Contract executed as of ______, 1996 between Barr
Rosenberg Series Trust, a Massachusetts business trust (the
"Trust"), on behalf of its International Small Capitalization
Series (the "Fund"), and Rosenberg Institutional Equity
Management, a California limited partnership (the "Manager").
W I T N E S S E T H:
That in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY 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 result to the Fund
(involving price paid or received and any commissions and other
costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a
large block is involved, availability of the broker to stand
ready to execute possibly difficult transactions in the future
and financial strength and stability of the broker. Subject to
such policies as the Trustees may determine, the Manager shall
not be deemed to have acted unlawfully or to have breached any
duty created by this Contract or otherwise solely by reason of
its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Manager an amount
of commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager
determines 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
<PAGE>
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 Fund will pay to the Manager as compensation for the
Manager's services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to Section 1, a fee,
computed and paid quarterly at the annual rate of 1.00% of the
Fund's average daily net asset value. Such average daily net
asset value of the Fund shall be determined by taking an average
of all of the determinations of such net asset value during such
quarter at the close of business on each business day during such
quarter while this Contract is in effect. Such fee shall be
payable for each quarter within five (5) business days after the
end of such quarter.
In the event that expenses of the Fund (including investment
advisory fees but excluding taxes, portfolio brokerage
commissions and any distribution expenses paid by the Fund
pursuant to a distribution plan or otherwise) for any fiscal year
should exceed the expense limitation on investment company
expenses imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Fund are qualified for offer
and sale, the compensation due the Manager for such fiscal year
shall be reduced by the amount of such excess by reduction or
refund thereof. In the event that the expenses of the Fund
exceed any expense limitation that the Manager may, by written
notice to the Trust, voluntarily declare to be effective with
respect to the Fund, subject to such terms and conditions as the
Manager may prescribe in such notice, the compensation due the
Manager shall be reduced, and, if necessary, the Manager shall
bear the Fund's expenses to the extent required by such expense
limitation.
-2-
<PAGE>
If the Manager shall serve for less than the whole of a
month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and this
Contract shall not be amended unless such amendment is approved
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.
-3-
<PAGE>
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of
a majority of the outstanding shares" of the Fund means the
affirmative vote, at a duly called and held meeting of
shareholders, (a) of the holders of 67% or more of the shares of
the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding
shares of the Fund entitled to vote at such meeting are present
in person or by proxy, or (b) of the holders of more than 50% of
the outstanding shares of the Fund entitled to vote at such
meeting, whichever is less.
For the purposes of this Contract, the terms "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 any other
name embodying the names "Rosenberg" or "Barr Rosenberg", in such
forms as the Manager shall in writing approve, but only on
condition and so long as (i) this Contract shall remain in full
force and (ii) the Trust shall fully perform, fulfill and comply
with all provisions of this Contract expressed herein to be
performed, fulfilled or complied with by it. No such name shall
be used by the Trust at any time or in any place or for any
purposes or under any conditions except as in this section
provided. The foregoing authorization by the Manager to the
Trust to use the 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, said name; the
Trust acknowledges and agrees that as between the Manager and the
Trust, the Manager has the exclusive right so to use, or to
authorize others to use, said names; and the Trust agrees, on
behalf of the Fund, to take such action as may reasonably be
requested by the Manager to give full effect to the provisions of
this section (including, without limitation, consenting to such
use of said names). Without limiting the generality of the
foregoing, the Trust agrees that, upon any termination of
-4-
<PAGE>
this Contract by either party or upon the violation of any of its
provisions by the Trust, the Trust will, at the request of the
Manager made within six months after the Manager has knowledge of
such termination or violation, use its best efforts to change the
name of the Trust so as to eliminate all reference, if any, to
the names "Rosenberg" 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 an 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, as amended, is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.
-5-
<PAGE>
IN WITNESS WHEREOF, Barr Rosenberg Series Trust, on behalf
of its International 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 International Small
Capitalization Series
By_______________________________
Title:
ROSENBERG INSTITUTIONAL EQUITY
MANAGEMENT
By_______________________________
Title: General Partner
-6-
<PAGE>
BARR ROSENBERG SERIES TRUST
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated as of July __, 1996, by and
between BARR ROSENBERG SERIES TRUST, a Massachusetts business
trust (the "Trust"), and BARR ROSENBERG FUNDS DISTRIBUTOR,
INC. (the "Distributor").
WHEREAS, the Trust and the Distributor are desirous of
entering into a new agreement providing for the distribution
of certain classes of shares of the Trust by the Distributor;
NOW THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's
Contract attached to and forming a part of this Contract (the
"Terms and Conditions"), the Trust hereby appoints the
Distributor as a distributor of such shares of the Trust, and
the Distributor hereby accepts such appointment, all as set
forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the
Trust, as amended, is on file with the Secretary of The
Commonwealth of Massachusetts and notice is hereby given that
this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the
obligations of or arising out 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
Trust.
IN WITNESS WHEREOF, BARR ROSENBERG SERIES TRUST and BARR
ROSENBERG FUNDS DISTRIBUTOR, INC. have each caused this
Distributor's Contract to be signed in duplicate on its
behalf, all as of the day and year first above written.
BARR ROSENBERG SERIES TRUST
By:___________________________
BARR ROSENBERG FUNDS
DISTRIBUTOR, INC.
By: __________________________
Dated:________________________
<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. SALE OF SHARES TO THE DISTRIBUTOR AND SALES BY THE
DISTRIBUTOR. The Distributor will have the right, as
principal, to sell shares of beneficial interest ("shares")
of the Trust's Select shares and Adviser shares (each a
"Class" and collectively the "Classes") of each portfolio of
the Trust represented by a separate series of shares (a
"Fund") directly to the public against orders therefor at the
applicable public offering price as described below. For
such purposes, the Distributor will have the right to
purchase shares at the public offering price as described
below. The Distributor will also have the right, as agent,
to sell shares of a Fund indirectly to the public through
broker dealers who are members of the National Association of
Securities Dealers, Inc. and who are acting as introducing
brokers pursuant to clearing agreements with the Distributor
("introducing brokers"), or to broker dealers which are
members of the National Association of Securities Dealers,
Inc. and who have entered into selling agreements with the
Distributor ("participating brokers"), in each case against
orders therefor. The price for introducing brokers and
participating brokers shall be net asset value.
Prior to the time of transfer of any shares by the Trust
to, or on the order of, the Distributor or any introducing
broker or participating broker, the Distributor shall pay or
cause to be paid to the Trust or to its order an amount in
New York clearing house funds equal to the applicable public
offering price of the shares. Upon receipt of registration
instructions in proper form, the Distributor will transmit or
cause to be transmitted such instructions to the Trust or its
agent for registration of the shares purchased.
The public offering price of each Class shall be the net
asset value of such shares, plus any applicable fee paid to
the particular Fund to defray the costs to existing
shareholders associated with investing the proceeds of the
sale (a "Fund Reimbursement Fee") as set forth in the then
current prospectus and statement of additional information
(collectively, the "prospectus") of the Trust.
On every sale, the Fund purchased shall receive the net
asset value of the shares and any Fund Reimbursement Fee
charged. The net asset value of shares shall be determined
in the manner provided in the Agreement and Declaration of
Trust and By-laws of the Trust as then amended.
2. FEES. For its services as distributor of a Fund's
Select shares, the Trust shall pay the Distributor on behalf
of the Fund a monthly distribution fee at an annual rate
equal to 0.25% of the average daily net assets of the Fund
attributable to its Select shares and otherwise on the terms
and conditions set forth in any Distribution Plan in effect
for Select shares as amended from time to time. Any such
distribution fee shall be accrued daily and paid monthly to
the Distributor as soon as practicable after the end of the
calendar month in which it accrues, but in any event within 5
business days following the last calendar day of each month.
<PAGE>
3. RESERVATION OF RIGHT NOT TO SELL. The Trust
reserves the right to refuse at any time or times to sell any
of its shares for any reason deemed adequate by it.
4. USE OF SUB-AGENTS; NON-EXCLUSIVITY; SALES OF SHARES
BY THE TRUST. The Distributor may employ such sub-agents,
including one or more participating brokers or introducing
brokers, for the purposes of selling shares of the Trust as
the Distributor, in its sole discretion, shall deem advisable
or desirable. The Distributor may not enter into similar
arrangements with other issuers without the consent of the
Trust. The Trust reserves the right to issue shares at any
time directly to its shareholders as a stock dividend or
stock split and to sell shares to its shareholders or other
persons at not less than net asset value.
5. REPURCHASE OF SHARES. The Distributor will act as
agent for the Trust in connection with the repurchase and
redemption of shares by the Trust upon the terms and
conditions set forth in the then current prospectus of the
Trust or as the Trust acting through its Trustees may
otherwise direct. The Distributor may employ such sub-
agents, including one or more participating brokers or
introducing brokers, for the purpose as the Distributor, in
its sole discretion, shall deem to be advisable or desirable.
6. BASIS OF PURCHASES AND SALES OF SHARES. The
Distributor's obligation to sell shares hereunder shall be on
a best efforts basis only and the Distributor shall not be
obligated to sell any specific number of shares. Shares will
be sold by the Distributor only against orders therefor. The
Distributor will not purchase shares from anyone other than
the Trust except in accordance with Section 5, and will not
take "long" or "short" positions in shares.
7. RULES OF NASD, ETC. The Distributor will conform
to the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and the securities laws of any
jurisdiction in which it sells, directly or indirectly, any
shares. The Distributor also agrees to furnish to the trust
sufficient copies of any agreement or plans it intends to use
in connection with any sales of shares in adequate time for
the Trust to file and clear them with the proper authorities
before they are put in use, and not to use them until so
filed and cleared.
8. INDEPENDENT CONTRACTOR. The Distributor shall be
an independent contractor and neither the Distributor nor any
of its officers or employees as such, is or shall be an
employee of the Trust. The Distributor is responsible for
its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or
employees or to others through its agents or employees. The
Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
9. REGISTRATION AND QUALIFICATION OF SHARES. The
Trust agrees to execute such papers and to do such acts and
things as shall from time to time be reasonably requested by
the Distributor for the purpose of qualifying and maintaining
qualification of the shares for sale under the so-called Blue
Sky Laws of any state or for maintaining
-2-
<PAGE>
the registration of each Fund of the Trust and the Trust
under the Securities Act of 1933 (the "1933 Act") and the
Investment Company Act of 1940 (together with the rules and
regulations thereunder, the "1940 Act"), to the end that
there will be available for sale from time to time such
number of shares as the Distributor may reasonably be
expected to sell. The Trust may also contract with Furman
Selz LLC to perform such services, in which event the
Distributor agrees to look solely to Furman Selz LLC in the
event of any breach of the agreements of the Trust set forth
in this Section 9. The Trust or Furman Selz LLP shall
advise the Distributor promptly of (a) any action of the
Securities and Exchange Commission or any authorities of any
state or territory, of which it may be advised, affecting
registration or qualification of the Trust, a Fund or the
shares thereof, or rights to offer such shares for sale and
(b) the happening of any event which makes untrue any
statement or which requires the making of any change in the
registration statement or prospectus in order to make the
statements therein not misleading.
10. EXPENSES. The Trust will pay or reimburse the
Distributor for all expenses of qualifying shares of the
Trust for sale under the securities or so-called "Blue Sky"
laws of any State. The Distributor will pay all expenses of
preparing, printing and distributing advertising and sales
literature (apart from expenses of registering shares under
the 1933 Act and the 1940 Act and the preparation and
printing of prospectuses and reports as required by said Acts
and the direct expenses of the issue of shares, except that
the Distributor will pay the cost of the preparation and
printing of prospectuses and shareholders' reports used by it
in the sale of shares).
11. SECURITIES TRANSACTIONS. The Trust agrees that the
Distributor may effect a transaction on any national
securities exchange of which it is a member for the account
of the Trust and any Fund of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934.
12. INDEMNIFICATION OF TRUST. The Distributor agrees
to indemnify and hold harmless the Trust and each person who
has been, is, or may hereafter be, a Trustee of the Trust
against expenses reasonably incurred by any of them in
connection with any claim or in connection with any action,
suit or proceeding to which any of them may be a party, which
arises out of or is alleged to arise out of any
misrepresentation or omission to state a material fact, or
out of any alleged misrepresentation or omission to state a
material fact, on the part of the Distributor or any agent or
employee of the Distributor or any other person for whose
acts the Distributor is responsible or is alleged to be
responsible, unless such misrepresentation or omission was
made in reliance upon written information furnished by the
Trust, PROVIDED, that in no event shall anything contained in
this Agreement be construed to protect the Trust or any such
person against any liability to which the Trust or such
person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance
of its duties under this Agreement. The Distributor also
agrees likewise to indemnify and hold harmless the Trust and
each such person in connection with any claim or in
connection with any action, suit or proceeding which arises
out of or is alleged to arise out of the Distributor's
failure to exercise reasonable care and diligence with
respect to its services
-3-
<PAGE>
rendered in connection with investment, reinvestment,
employee benefit and other plans for shares. The term
"expenses" includes amounts paid in satisfaction of
judgments or in settlements which are made with the
Distributor's consent. The foregoing rights of
indemnification shall be in addition to any other rights to
which the Trust or a Trustee may be entitled as a matter of
law.
13. INDEMNIFICATION OF THE DISTRIBUTOR. The Trust
agrees to indemnify and hold harmless the Distributor, its
several officers, employees and directors, and any person who
controls the Distributor within the meaning of Section 15 of
the 1933 Act, against expenses reasonably incurred by any of
them in connection with any claim or in connection with any
action, suit or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of any
misrepresentation or omission to state a material fact, or
out of any alleged misrepresentation or omission to state a
material fact in the Trust's Registration Statement or
prospectus, provided that in no event shall anything
contained in this Agreement be construed so as to protect the
Distributor against any liability to the Trust or its
shareholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith, or
negligence, in the performance of its duties under this
Agreement.
14. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF
THIS AGREEMENT. This Agreement shall automatically
terminate, without the payment of any penalty, in the event
of its assignment. This agreement may be amended only if
such amendment be approved either by action of the Trustees
of the Trust or at a meeting of the shareholders of both
Classes by the affirmative vote of a majority of the
outstanding shares of the Classes, and by a majority of the
Trustees of the Trust who are not interested persons of the
Trust and who have no direct or indirect financial interest
in the operation of the Distribution Plan(s) or this
Agreement by vote cast in person at a meeting called for the
purpose of voting on such approval.
15. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall take effect upon the date first above
written and shall remain in full force and effect
continuously as to a Fund and a Class of shares thereof
(unless terminated automatically as set forth in Section 14
hereof) until terminated:
(a) Either by such Fund or such Class or the
Distributor by not more than sixty (60) days' nor less
than thirty (30) days' written notice delivered or
mailed by registered mail, postage prepaid, to the other
party; or
(b) Automatically as to any Fund or Class thereof
at the close of business one year from the date hereof,
or upon the expiration of one year from the effective
date of the last continuance of this Agreement,
whichever is later, if the continuance of this Agreement
is not specifically approved at least annually by the
Trustees of the Trust or the shareholders of such Fund
or such Class by the affirmative vote of a majority of
the outstanding shares of such Fund or such Class, and
by a majority of the Trustees of the Trust who are not
interested persons of the Trust and who have no direct
or indirect financial interest in the
-4-
<PAGE>
operation of the Distribution Plan(s) or this Agreement
by vote cast in person at a meeting called for the purpose
of voting on such approval.
Action by a Fund or a Class thereof under (a) above may
be taken either (i) by vote of the Trustees of the Trust, or
(ii) by the affirmative vote of a majority of the outstanding
shares of such Fund or such Class. The requirement under (b)
above that the continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner
consistent with the 1940 Act.
Termination of this Agreement pursuant to this Section
15 shall be without the payment of any penalty.
If this Agreement is terminated or not renewed with
respect to one or more Funds or Classes thereof, it may
continue in effect with respect to any Fund or any Class
thereof as to which it has not been terminated (or has been
renewed).
16. LIMITED RECOURSE. The Distributor hereby
acknowledges that the Trust's obligations hereunder with
respect to the distribution fees payable with respect to the
shares of any Fund of the Trust or a particular Class of
shares of a Fund are binding only on the assets and property
belonging to such Fund or such Class.
17. CERTAIN DEFINITIONS. For the purposes of this
Agreement, the "affirmative vote of a majority of the
outstanding shares" 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 Trust or the Fund, as the
case may be, 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 Trust or the Fund, as the case may
be, 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 Trust or the Fund, as the case may
be, entitled to vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms
"interested persons" and "assignment" shall have the meanings
defined in the 1940 Act, subject, however, to such exemptions
as may be granted by the Securities and Exchange Commission
under said Act. Certain other items used herein that are not
otherwise defined have the meaning given in the current
prospectus of the Trust or constituent agreements or
documents of the Trust.
-5-
<PAGE>
ROSENBERG SERIES TRUST
State Street Bank and Trust Company
1776 Heritage Drive
No. Quincy, MA 02171
Gentlemen:
This is to advise you that the Rosenberg Series Trust (the
"Trust") has established a new series of shares to be known as
International Small Capitalization Series (the "Fund"). In
accordance with the additional Funds provisions in Section 12 of
the Custodian Contract dated 8/10/88 between the Trust and State
Street Bank and Trust Company, the Trust hereby requests that you
act as Custodian for the Fund under the terms of the respective
contract.
Please indicate your acceptance of the foregoing by executing two
copies of this Letter Agreement, returning one to the Trust and
retaining one copy for your records.
ROSENBERG SERIES TRUST
By:____________________________________
Agreed to this ______ day of ___________, 1996
STATE STREET BANK AND TRUST COMPANY
By:____________________________________
Vice President
<PAGE>
BARR ROSENBERG SERIES TRUST
Distribution Plan (Select Shares)
(Effective as of July __, 1996)
This Plan (the "Plan"), as amended from time to time,
constitutes the Distribution Plan with respect to the Select
shares of BARR ROSENBERG SERIES TRUST, a Massachusetts business
trust (the "Trust").
Section 1. The Trust will pay to the principal distributor
of the Trust's shares (the "Distributor") a fee (the
"Distribution Fee") for services rendered and expenses borne by
the Distributor in connection with the distribution of Select
shares of the Trust. The Distribution Fee shall be paid at an
annual rate with respect to each Fund (series) of the Trust (a
"Fund") not to exceed 0.50% of the Fund's average daily net
assets attributable to its Select shares. Subject to such limits
and subject to the provisions of Section 9 hereof, the
Distribution Fee shall be as approved from time to time by (a)
the Trustees of the Trust and (b) the Independent Trustees of the
Trust, and may be paid in respect of services rendered and
expenses borne in the past as to which no Distribution Fee was
paid on account of such limitation. If at any time this Plan
shall not be in effect with respect to all Funds of the Trust,
the Distribution Fee shall be computed on the basis of sales of
Select shares or net assets attributable to Select shares (as
applicable) of those Funds for which the Plan is in effect. The
Distribution Fee shall be accrued daily and paid monthly or at
such other intervals as the Trustees shall determine.
Section 2. The Distribution Fee may be spent by the
Distributor on any activities or expenses primarily intended to
result in the sale of Select shares of the Trust, including, but
not limited to, compensation to, and expenses (including overhead
and telephone expenses) of, financial consultants or other
employees of the Distributor or of participating or introducing
brokers who engage in distribution of Select shares, printing of
prospectuses and reports for other than existing Select
shareholders, advertising and preparation, printing and
distribution of sales literature. The Distributor's expenditures
may include, but shall not be limited to, compensation to, and
expenses (including telephone and overhead expenses) of,
financial consultants or other employees of the Distributor or of
participating or introducing brokers, certain banks and other
financial intermediaries who aid in the processing of purchase or
redemption requests for Select shares or the processing of
dividend payments with respect to Select shares, who provide
information periodically to shareholders showing their positions
in a Fund's Select shares, who forward communications from the
Trust to Select shareholders, who render ongoing advice
concerning the suitability of particular investment opportunities
offered by the Trust in light of the shareholder's needs, who
respond to inquiries from Select shareholders relating to such
services, or who train personnel in the provision of such
services.
<PAGE>
Section 3. This Plan shall not take effect with respect to
any class of shares of any Fund of the Trust until it has been
approved by a vote of at least a majority of the outstanding
voting securities of that class. This Plan shall be deemed to
have been effectively approved with respect to any class if a
majority of the outstanding voting securities of that class votes
for the approval of this Plan, notwithstanding that this Plan has
not been approved by a majority of the outstanding voting
securities of any other class of that Fund or that this Plan has
not been approved by a majority of the outstanding voting
securities of that Fund or the Trust as a whole.
Section 4. This Plan shall not take effect until it has
been approved, together with any related agreements, by votes of
the majority (or whatever greater percentage may, from time to
time, be required by Section 12(b) of the Investment Company Act
of 1940, as amended (the "Act"), or the rules and regulations
thereunder), of both (a) the Trustees of the Trust, and (b) the
Independent Trustees of the Trust cast in person at a meeting
called for the purpose of voting on this Plan or such agreement.
Section 5. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 4. It is
acknowledged that the Distributor may expend or impute interest
expense in respect of its activities or expenses under this Plan
and the Trustees and the Independent Trustees may give such
weight to such interest expense as they determine in their
discretion.
Section 6. Any person authorized to direct the disposition
of monies paid or payable by the Trust pursuant to this Plan or
any related agreement shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
Section 7. This Plan may be terminated at any time with
respect to a class of shares of any Fund by vote of a majority of
the Independent Trustees, or by vote of a majority of the
outstanding voting securities of that class.
Section 8. All agreements with any person relating to
implementation of this Plan with respect to any Fund shall be in
writing, and any agreement related to this Plan with respect to
any Fund shall provide:
A. That such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority
of the Independent Trustees or by vote of a majority of
the outstanding Select share voting securities of such
Fund, on not more than 60 days' written notice to any
other party to the agreement; and
B. That such agreement shall terminate automatically in
the event of its assignment.
-2-
<PAGE>
Section 9. This Plan may not be amended to increase
materially the Distribution Fee permitted pursuant to Section 1
hereof without approval in the manner provided in Section 3
hereof, and all material amendments to this Plan shall be
approved in the manner provided for approval of this Plan in
Section 4 hereof.
Section 10. As used in this Plan, (a) the term "Independent
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, (b) the terms "assignment", "interested
person" and "majority of the outstanding voting securities" shall
have the respective meanings specified in the Act and the rules
and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission, (c) the term
"introducing broker" shall mean any broker or dealer who is a
member of the National Association of Securities Dealers, Inc.
and who is acting as an introducing broker pursuant to clearing
agreements with the Distributor; and (d) the term "participating
broker" shall mean any broker or dealer which is a member of the
National Association of Securities Dealers, Inc. and who has
entered into a selling or dealer agreement with the Distributor.
Section 11. This Plan has been adopted pursuant to Rule
12b-1 under the Act and is designed to comply with all applicable
requirements imposed under such Rule. All Distribution Fees
shall be deemed to have been paid under this Plan and pursuant to
clause (b) of such Rule.
Dated: July __, 1996
-3-
<PAGE>
BARR ROSENBERG SERIES TRUST
Plan pursuant to Rule 18f-3(d) under the Investment Company Act of 1940
- -----------------------------------------------------------------------
Effective _______, 1996
WHEREAS, the Board of Trustees of the Barr Rosenberg Series
Trust (the "TRUST") has considered the following multi-class plan
(the "PLAN") under which the Trust may offer multiple classes of
shares of its now existing and hereafter created series pursuant
to Rule
18f-3 (the "RULE") under the Investment Company Act of 1940 (the
"1940 ACT"); and
WHEREAS, a majority of the Trustees of the Trust and a
majority of the Trustees who are not interested persons of the
Trust have found the Plan, as proposed, to be in the best
interests of each class of shares of each series of the Trust
individually and the Trust as a whole.
NOW, THEREFORE, the Trust hereby approves and adopts the
following Plan pursuant to the Rule.
THE PLAN
Each now existing and hereafter created series ("FUND")(1) of
the Trust may from time to time issue one or more of the
following classes of shares: Institutional shares, Adviser shares
and Select shares. Each class is subject to such investment
minimums and other conditions of eligibility as are set forth in
the Trust's prospectus as from time to time in effect (the
"PROSPECTUS"). The differences in expenses among these classes
of shares, and the conversion and exchange features of each class
of shares, are set forth below in this Plan, which is subject to
change, to the extent permitted by law and by the Agreement and
Declaration of Trust and By-laws of the Trust, as amended from
time to time, by action of the Board of Trustees of the Trust.
- -----------------------------
(1) The current operational Funds of the Trust are the
U.S. Small Capitalization Series, the International Small
Capitalization Series and the Japan Series.
<PAGE>
CLASS CHARACTERISTICS
Institutional, Adviser and Select shares of each Fund
represents interests in the assets of such Fund and have
identical dividend and liquidation rights. The classes differ
materially only with respect to (i) the level of shareholder
service fee ("SERVICE FEE"), if any, borne by each class, and
(ii) the level of distribution fee ("DISTRIBUTION FEE"), if any,
borne by each class. Service Fees are paid for services rendered
and expenses borne in connection with personal services rendered
to shareholders of a class and the maintenance of shareholder
accounts. Servicing Fees are paid pursuant to Servicing
Agreement(s) between the Trust and appropriate shareholder
servicing agent(s) and under related plans (each a "SERVICE
PLAN") for applicable classes. Distribution Fees are paid in
connection with services and expenses primarily intended to
result in the sale of shares pursuant to a Distributor's Contract
between the Trust and Barr Rosenberg Funds Distributor, Inc., the
Funds' distributor (the "DISTRIBUTOR"), and under a separate plan
(each a "DISTRIBUTION PLAN") for each applicable class adopted by
the Trust pursuant to Rule 12b-1 under the 1940 Act.
(1) INSTITUTIONAL SHARES are sold without any initial or
deferred sales charges and are not subject to any ongoing
Distribution Fees or Service Fees.
(2) ADVISER SHARES are sold without any initial or deferred
sales charges and are not subject to any ongoing Distribution
Fees, but are subject to a Service Fee at an annual rate with
respect to each Fund equal to 0.25% of the Fund's average daily
net assets attributable to Adviser shares.
(3) SELECT SHARES are sold without any initial or deferred
sales charges, but are subject to a Service Fee at an annual rate
with respect to each Fund equal to 0.25% of the average daily net
assets attributable to Select shares.
Select shares are also subject to a Distribution Fee. The
Distribution Plan for Select shares permits each Fund to pay the
Distributor up to 0.50% per annum of the Fund's average daily net
assets attributable to Select shares. However, the Distributor's
contract currently provides that the Distributor will be paid
0.25% per annum of each Fund's average daily net assets
attributable to Select shares.
-2-
<PAGE>
FUND REIMBURSEMENT FEES
Investors in each class of shares of the Funds pay a
separate fee (a "FUND REIMBURSEMENT FEE")(2) upon both the
purchase and redemption of Fund shares, with the exception of
certain categories of purchases and redemptions as described in
the Prospectus. Fund Reimbursement Fees do not constitute "sales
charges" because they are retained by the particular Fund and no
portion thereof is paid to or retained by the Distributor, the
Manager or Furman Selz LLC, the Funds' Administrator. Each class
of shares of a Fund pays the same Fund Reimbursement Fee on
purchases and redemptions of shares of that Fund, expressed as a
percentage of the net asset value of the Fund, as follows: U.S.
Small Capitalization Series -- 0.25%; International Small
Capitalization Series -- 0.50%; Japan Series -- 0.50%.
EXPENSE ALLOCATIONS
Institutional, Adviser and Select shares pay the expenses
associated with their different distribution and/or shareholder
servicing arrangements. Each class may, at the Trustees'
discretion, also pay a different share of other expenses, not
including advisory or custodial fees or other expenses related to
the management of the Trust's assets, if these expenses are
actually incurred in a different amount by that class, or if the
class receives services of a different kind or to a different
degree than the other classes ("CLASS EXPENSES"). All other
expenses will be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of a
particular Fund attributable to that class.
EXCHANGE FEATURES / CONVERSIONS
Shares of any particular class of a Fund may be exchanged
only for shares of the same class of another Fund. There is no
sales charge on exchanges, but both the Fund from which the
exchange is made and the Fund into which the exchange is made
will charge a Fund Reimbursement Fee, unless an exception
applies. A shareholder may not exchange shares of a class of one
Fund for shares of the same class of another Fund that is not
qualified for sale in the state of the shareholder's residence.
Although the Trust has no current intention of terminating or
modifying the exchange privilege, it reserves the right to do so
at any time. Except as otherwise permitted by regulations of the
Securities and Exchange Commission, the
- -----------------------------
(2) Fund Reimbursement Fees are used to defray the
costs and expenses associated with investing the proceeds of
the sale of Fund shares in the case of purchases, and
the sale of Fund portfolio securities in the case of
redemptions, and are designed to eliminate the diluting
effect such costs and expenses would otherwise have on the
net asset value of shares held by existing shareholders.
-3-
<PAGE>
Trust will give 60 days' advance notice to shareholders of
any termination or material modification of the exchange
privilege. All exchanges will be made based on the
respective net asset values next determined following
receipt of the request by the Funds.
The Trust does not currently offer any automatic conversion
feature among the classes.
DIVIDENDS/DISTRIBUTIONS
Each Fund intends to pay out as dividends substantially all
of its net investment income (which comes from dividends and any
interest it receives from its investments and net realized short-
term capital gains). Each Fund also intends to distribute
substantially all of its net realized long-term capital gains, if
any, after giving effect to any available capital loss carryover.
Dividends paid by the Funds with respect to Institutional,
Adviser and Select shares, to the extent any dividends are paid,
will be calculated in the same manner, at the same time, and will
be in the same amount, except that any Service Fee or
Distribution Fee charged to a particular class will be borne
solely by such class and, if applicable, at the Trustees
discretion, Class Expenses relating to a particular class may be
borne exclusively by that class.
VOTING RIGHTS
Each class of shares of each Fund has identical voting
rights except that each class has exclusive voting rights on any
matter submitted to shareholders that relates solely to that
class, and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive
voting rights with respect to matters pertaining to any
Distribution Plan or Service Plan applicable to that class. All
three classes of shares of a Fund will vote together, except with
respect to any Distribution Plan or Service Plan applicable to a
class or when a class vote is required by the 1940 Act.
-4-
<PAGE>
RESPONSIBILITIES OF THE TRUSTEES
On an ongoing basis, the Trustees will monitor the Trust for
the existence of any material conflicts among the interests of
the three classes of shares. The Trustees shall further monitor
on an ongoing basis the use of waivers or reimbursement of
expenses by the Manager to guard against cross-subsidization
between classes. The Trustees, including a majority of the
independent Trustees, shall take such action as is reasonably
necessary to eliminate any such conflict that may develop.
REPORTS TO THE TRUSTEES
The Manager and/or the Administrator will be responsible for
reporting any potential or existing conflicts among the three
classes of shares to the Trustees.
AMENDMENTS
The Plan may be amended from time to time in accordance with
the provisions and requirements of the Rule.
BARR ROSENBERG SERIES TRUST
________________________________
By:
Title:
Date:
-5-