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File Nos. 33-21677
811-5547
As filed with the Securities and Exchange Commission on December 9, 1997
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. 17 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT /X/
COMPANY ACT OF 1940
Amendment No. 20 /X/
BARR ROSENBERG SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, OH 43219
(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
Building E Boston, Massachusetts 02110-2624
Orinda, CA 94563
(Name and address of agent for service)
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It is proposed that this filing will become effective:
X Immediately upon filing pursuant to paragraph (b)
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On _________________ pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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On _______ pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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On _______ pursuant to paragraph (a)(2), 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.
NOTE: This Amendment relates solely to shares of beneficial interest in the
Barr Rosenberg Market Neutral Fund and the Barr Rosenberg Double Alpha Market
Fund. Information contained in the Registration Statement relating to the
other series of the Registrant is neither amended nor superseded hereby.
<PAGE>
BARR ROSENBERG SERIES TRUST
CROSS REFERENCE SHEET FOR
THE BARR ROSENBERG MARKET NEUTRAL FUND AND
THE BARR ROSENBERG DOUBLE ALPHA MARKET FUND ONLY
N-1A Item No. Location
- ------------ --------
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of Description of the Trust
Registrant and Ownership of Shares;
Investment Objectives and
Policies; Cover Page;
and General Description
of Risks and Fund Investments
Item 5. Management of the Fund Management of the Trust;
Back Cover
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Other Description of the Trust
Securities and Ownership of Shares;
Distributions; Multiple
Classes; Shareholder Inquiries;
Taxes; and Back Cover
Item 7. Purchase of Securities Being Purchase of Shares; Exchange of
Offered Fund Shares; Management of the
Trust; Multiple Classes;
Determination of Net Asset
Value; and Back Cover
Item 8. Redemption or Repurchase Redemption of Shares; Exchange
of Fund Shares; and
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 Description of the Trust
History and Ownership of Shares
Item 13. Investment Objectives Investment Objectives and
and Policies Policies; Miscellaneous
Investment Practices; and
Investment Restrictions
Item 14. Management of the Fund Management of the Trust
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Item 15. Control Persons and Principal Description of the Trust
Holders of Securities and Ownership of Shares
Item 16. Investment Advisory and Other Investment Advisory and
Services Other Services; Management of
the Trust
Item 17. Brokerage Allocation and Other Portfolio Transactions
Practices
Item 18. Capital Stock and Other Description of the Trust
Securities and Ownership of Shares
Item 19. Purchase, Redemption Determination of Net Asset
and Pricing of Securities Value; See in Part A, Purchase
Being Offered of Shares; Exchange of Fund
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
Item 22. Calculation of Performance Data Total Return Calculations
Item 23. Financial Statements Not Applicable
Part C
Information to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
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BARR ROSENBERG SERIES TRUST
BARR ROSENBERG MARKET NEUTRAL FUND
BARR ROSENBERG DOUBLE ALPHA MARKET FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-447-3332 (INVESTOR SHARES)
1-800-527-6026 (INSTITUTIONAL SHARES)
DECEMBER 9, 1997
Barr Rosenberg Series Trust (the "Trust") is an open-end management
investment company offering five diversified portfolios with different
investment objectives and strategies including the Barr Rosenberg Market Neutral
Fund and Barr Rosenberg Double Alpha Market Fund. The other portfolios of the
Trust, which are offered under a separate prospectus, are the U.S. Small
Capitalization Series, Japan Series and International Small Capitalization
Series. The Barr Rosenberg Market Neutral Fund and Barr Rosenberg Double Alpha
Market Fund are referred to herein 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").
The BARR ROSENBERG MARKET NEUTRAL FUND seeks long-term capital appreciation
while maintaining minimal exposure to general equity market risk by taking long
positions in stocks principally traded in the markets of the United States that
the Manager has identified as undervalued and short positions in such stocks
that the Manager has identified as overvalued. For a description of the risks of
an investment in the Fund, see "Investment Objectives and Policies -- Barr
Rosenberg Market Neutral Fund" and "General Description of Risks and Fund
Investments". The Fund seeks a total return greater than the return on 3-month
U.S. Treasury Bills. For a description of the differences between an investment
in the Fund and in 3-month U.S. Treasury Bills, see "Investment Objectives and
Policies -- Barr Rosenberg Market Neutral Fund."
The BARR ROSENBERG DOUBLE ALPHA MARKET FUND seeks a total return greater
than that of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500
Index") by investing in shares of the Barr Rosenberg Market Neutral Fund while
simultaneously utilizing S&P 500 Index Futures, options on S&P 500 Index Futures
and equity swap contracts to gain exposure to the equity market as measured by
the S&P 500 Index. See "Investment Objectives and Policies--Barr Rosenberg
Double Alpha Market Fund" and "General Description of Risks and Fund
Investments."
The Funds offer two classes of shares: Institutional Shares and Investor
Shares. Whether an investor is eligible to purchase Institutional or Investor
Shares generally depends on the amount invested in a particular Fund. Investor
Shares bear a Shareholder Service Fee and Distribution Fee whereas Institutional
Shares do not.
This Prospectus concisely describes the information that investors ought to
know before investing. Please read this Prospectus carefully and keep it for
future reference.
A Statement of Additional Information dated December 9, 1997 (the
"Statement") is available free of charge by writing to Barr Rosenberg Funds
Distributor, Inc., the Funds' distributor (the "Distributor"), at 3435 Stelzer
Road, Columbus, Ohio 43219 or by telephoning 1-800-447-3332 (for Investor Share
customers) and 1-800-527-6026 (for Institutional Share customers). The
Statement, which contains more detailed information about the Funds, has been
filed with the Securities and Exchange Commission (the "Commission") and is
incorporated by reference into this Prospectus. The Commission maintains a World
Wide Web site at http://www.sec.gov that contains the Statement and other
information regarding the Trust.
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 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.
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FUND EXPENSES
The estimated annual expenses of each of the Funds are set forth in the
following tables, the forms of which are prescribed by federal securities laws
and regulations.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
OTHER EXPENSES
MANAGEMENT SHAREHOLDER EXPENSES (AFTER WAIVER
FEE (AFTER SERVICE DISTRIBUTION (AFTER REIM- AND/OR REIM-
WAIVER) FEE FEE BURSEMENT)* BURSEMENT)*
---------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Market Neutral Fund............................. 1.57% None None 0.43%** 2.00%
Double Alpha Market Fund........................ 0.00% None None 2.35% 2.35%
INVESTOR SHARES
Market Neutral Fund............................. 1.57% 0.25% 0.25% 0.43%** 2.50%
Double Alpha Market Fund........................ 0.00% 0.25% 0.25% 2.35% 2.85%
</TABLE>
The Manager has undertaken 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 undertaking by the Manager to waive its fee and bear such
expenses, the Barr Rosenberg Market Neutral Fund's management fees would be
1.90% and estimated Total Fund Operating Expenses would be 2.33% for
Institutional Shares and 2.83% for Investor Shares, and the Barr Rosenberg
Double Alpha Market Fund's management fees would be 0.10%, estimated Other
Expenses (including indirect expenses) would be 2.88% and estimated Total Fund
Operating Expenses (including indirect expenses) would be 2.98% for
Institutional Shares and 3.48% for Investor Shares. See "Management of the
Trust."
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*Includes, in the case of the Barr Rosenberg Double Alpha Market Fund, indirect
expenses borne through ownership of Institutional Shares of the Barr Rosenberg
Market Neutral Fund.
**Estimated Other Expenses without reimbursement of expenses by the Manager.
EXAMPLE:
<TABLE>
<CAPTION>
YOU WOULD PAY THE
FOLLOWING EXPENSES ON A
$1,000 INVESTMENT
ASSUMING A 5% ANNUAL
RETURN (WITH OR WITHOUT
A REDEMPTION AT THE END
OF EACH TIME PERIOD):
-----------------------
1 3
YEAR YEARS
----- -----
<S> <C> <C>
INSTITUTIONAL SHARES
Market Neutral Fund............................. $20 $63
Double Alpha Market Fund........................ $24 $73
INVESTOR SHARES
Market Neutral Fund............................. $25 $78
Double Alpha Market Fund........................ $29 $88
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST YOU IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES OF THE FUNDS THAT ARE BORNE DIRECTLY OR INDIRECTLY BY HOLDERS
OF SHARES OF THE FUNDS. THE EXPENSES USED IN THE EXAMPLE AND THE FIVE PERCENT
ANNUAL RETURN (WHICH IS MANDATED BY THE SECURITIES AND EXCHANGE COMMISSION) ARE
NOT REPRESENTATIONS OF PAST OR FUTURE EXPENSES OR PERFORMANCE; ACTUAL EXPENSES
AND/OR PERFORMANCE MAY BE MORE OR LESS THAN THOSE SHOWN.
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INVESTMENT OBJECTIVES AND POLICIES
BARR ROSENBERG MARKET NEUTRAL FUND
The investment objective of the Barr Rosenberg Market Neutral Fund is to
seek long-term capital appreciation while maintaining minimal exposure to
general equity market risk. The Fund seeks a total return greater than the
return on 3-month U.S. Treasury Bills. The Fund attempts to achieve its
objective by taking long positions in stocks principally traded in the markets
of the United States that the Manager has identified as undervalued and short
positions in such stocks that the Manager has identified as overvalued. See
"General Description of Risks and Fund Investments -- Risks of Short Sales"
below. By taking long and short positions in different stocks with similar
characteristics, the Fund attempts to cancel out the effect of general stock
market movements on the Fund's performance. The Manager will determine the size
of each long or short position by analyzing the tradeoff between the
attractiveness of each position and its impact on the risk of the overall
portfolio. The Fund seeks to construct a diversified portfolio that has minimal
net exposure to the U.S. equity market generally and near neutral exposure to
specific industries, specific capitalization ranges (e.g., large cap, mid cap
and small cap) and certain other risk factors.
Although the Fund's investment strategy seeks to minimize the risk
associated with investing in the equity market, an investment in the Fund will
be subject to the risk of poor stock selection by the Manager. In other words,
the Manager may not be successful in executing its strategy of taking long
positions in stocks that outperform the market and short positions in stocks
that underperform the market. Further, since the Manager will manage both a long
and a short portfolio, an investment in the Fund will involve the risk that the
Manager may make more poor investment decisions than a manager of a typical
stock mutual fund with only a long portfolio may make. An investment in 3-month
U.S. Treasury Bills is different from an investment in the Barr Rosenberg Market
Neutral Fund because Treasury Bills are backed by the full faith and credit of
the U.S. Government, Treasury Bills have a fixed rate of return and investors in
Treasury Bills do not bear the risk of losing their investment.
To meet margin requirements, redemptions or pending investments, the Fund
may also temporarily hold a portion of its assets in full faith and credit
obligations of the United States government (e.g., U.S. Treasury Bills) and in
short-term notes, commercial paper or other money market instruments of high
quality (i.e., rated at least "A-2" or "AA" by Standard & Poor's ("S&P") or
Prime 2 or "Aa" by Moody's Investors Service, Inc. ("Moody's")) issued by
companies having an outstanding debt issue rated at least "AA" by S&P or at
least "Aa" by Moody's, or determined by the Manager to be of comparable quality
to any of the foregoing.
The Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are principally traded in the markets of the
United States. See "General Description of Risks and Fund Investments -- Special
Considerations of Foreign Investments." The Fund will not invest in equity
securities that are principally traded outside of the United States.
BARR ROSENBERG DOUBLE ALPHA MARKET FUND
The investment objective of the Barr Rosenberg Double Alpha Market Fund is
to seek a total return greater than that of the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500 Index"). The Fund seeks to achieve its objective
by investing in shares of the Barr Rosenberg Market Neutral Fund while
4
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simultaneously utilizing S&P 500 Index Futures, options on S&P 500 Index Futures
and equity swap contracts to gain exposure to the equity market as measured by
the S&P 500 Index. See "Investment Objectives and Policies -- Barr Rosenberg
Market Neutral Fund" and "General Description of Risks and Fund Investments --
Risks of S&P 500 Index Futures and Related Options" and "-- Equity Swap
Contracts" below. The Fund has applied to the Securities and Exchange Commission
for an exemptive order allowing it to invest without limit in the Barr Rosenberg
Market Neutral Fund. Once the Fund has indirectly constructed a diversified long
and short portfolio through the purchase of shares of the Barr Rosenberg Market
Neutral Fund, the Manager will purchase S&P 500 Index Futures, options on S&P
500 Index Futures and equity swap contracts in an amount approximately equal to
the net asset value of the Fund in order to gain full net exposure to the U.S.
equity market as measured by the S&P 500 Index. In addition to purchasing shares
of the Barr Rosenberg Market Neutral Fund, the Fund may also take long positions
in stocks principally traded in the markets of the United States that the
Manager has identified as undervalued and short positions in such stocks that
the Manager has identified as overvalued. See "General Description of Risks and
Fund Investments -- Risks of Short Sales."
The S&P 500 Index is an unmanaged index composed of 500 common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500 Index assigns
relative values to the stocks included in the index, weighted according to each
stock's total market value relative to the total market value of the other
stocks included in such index.
To meet margin requirements, redemptions or pending investments, the Fund
may also temporarily hold a portion of its assets in full faith and credit
obligations of the United States government (e.g., U.S. Treasury Bills) and in
short-term notes, commercial paper or other money market instruments of high
quality (i.e., rated at least "A-2" or "AA" by S&P or Prime 2 or "Aa" by
Moody's) issued by companies having an outstanding debt issue rated at least
"AA" by S&P or at least "Aa" by Moody's, or determined by the Manager to be of
comparable quality to any of the foregoing.
The Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are principally traded in the markets of the
United States. See "General Description of Risks and Fund Investments -- Special
Considerations of Foreign Investments." The Fund will not invest in equity
securities that are principally traded outside of the United States.
In a typical stock mutual fund the portfolio manager attempts to earn an
excess return (return above market return) or "alpha" by identifying and
purchasing UNDERVALUED stocks. However, there is another "alpha" possibility --
identifying and selling short OVERVALUED stocks. The term "double alpha" refers
to the fact that there are thus two potential sources of alpha: one from
correctly identifying undervalued stocks and one from correctly identifying
overvalued stocks. The market neutral strategy employed by both the Barr
Rosenberg Market Neutral Fund and indirectly by the Barr Rosenberg Double Alpha
Market Fund (through investment in shares of the Barr Rosenberg Market Neutral
Fund) seeks to capture both alphas. The Barr Rosenberg Double Alpha Market Fund
also seeks gain (and incurs additional risk) by investing in S&P 500 Index
instruments.
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INVESTMENT CONSIDERATIONS
An investor desiring capital appreciation with minimal exposure to the
equity market may wish to consider the Barr Rosenberg Market Neutral Fund. An
investor desiring enhanced equity market returns exceeding the return on the S&P
500 Index may wish to consider the Barr Rosenberg Double Alpha Market Fund.
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS
INVESTMENT RISKS. The value of Fund shares may increase or decrease
depending on market, economic, political, regulatory and other conditions
affecting each Fund's portfolio. Investment in shares of the Funds is more
volatile and risky than some other forms of investment. In addition, if the
Manager takes long positions in stocks that underperform the market and short
positions in stocks that outperform the market, then the losses of the Barr
Rosenberg Market Neutral Fund and Barr Rosenberg Double Alpha Market Fund may
exceed those of other stock mutual funds.
RISKS OF SHORT SALES (BOTH FUNDS). When the Manager anticipates that a
security is overvalued, it may sell the security short and borrow the same
security from a broker or other institution to complete the sale. A Fund will
incur a loss as a result of a short sale if the price of the borrowed security
increases between the date of the short sale and the date on which the Fund
replaces such security. A Fund will realize a gain if the security declines in
price between those dates. There can be no assurance that a Fund will be able to
close out a short position at any particular time or at an acceptable price.
Although a Fund's gain is limited to the amount at which it sold a security
short, its potential loss is limited only by the maximum attainable price of the
security less the price at which the security was sold. Until a Fund replaces a
borrowed security, it will maintain daily a segregated account with its
Custodian containing cash, U.S. Government securities, or other liquid
securities such that the amount deposited in the account plus any amount
deposited with a broker or other custodian as collateral will at least equal the
current market value of the security sold short. Depending on arrangements made
with such broker or custodian, a Fund may not receive any payments (including
interest) on collateral deposited with such broker or custodian. The Funds will
not make a short sale if, after giving effect to such sale, the market value of
all securities sold exceeds 100% of the value of a Fund's net assets.
RISKS OF S&P 500 INDEX FUTURES AND RELATED OPTIONS (BARR ROSENBERG DOUBLE
ALPHA MARKET FUND ONLY). An S&P 500 Index Future contract (an "Index Future") is
a contract to buy or sell an integral number of units of the S&P 500 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 S&P 500 Index. Entering into a contract to
buy units is commonly referred to as buying or purchasing a contract or holding
a long position in the S&P 500 Index. An option on an Index Future gives the
purchaser the right, in return for the premium paid, to assume a long or a short
position in an Index Future. The Barr Rosenberg Double Alpha Market Fund will
realize a loss if the value of the S&P 500 Index declines between the time the
Fund purchases an Index Future or an option transaction in which the Fund has
assumed a long position and may realize a gain if the value of the S&P 500 Index
rises between such dates.
The Barr Rosenberg Double Alpha Market 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.
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Positions in Index Futures may be closed out by the 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 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 Future
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
event, it may not be possible for the Fund to close its futures contract
purchase, and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of variation margin (payments to and
from a broker made on a daily basis as the price of the Index Future
fluctuates). 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.
Further, when the Barr Rosenberg Double Alpha Market 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
securities 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.
EQUITY SWAP CONTRACTS (BARR ROSENBERG DOUBLE ALPHA MARKET FUND ONLY). In an
equity swap contract, the counterparty generally agrees to pay the Barr
Rosenberg Double Alpha Market Fund the amount, if any, by which the notional
amount of the equity swap contract would have increased in value had it been
invested in the basket of stocks comprising the S&P 500 Index, plus the
dividends that would have been received on those stocks. The Fund agrees to pay
to the counterparty a floating rate of interest (typically the London Inter Bank
Offered Rate) on the notional amount of the equity swap contract plus the
amount, if any, by which that notional amount would have decreased in value had
it been invested in such stocks. Therefore, the return to the Fund on any equity
swap contract should be the gain or loss on the notional amount plus dividends
on the stocks comprising the S&P 500 Index (as if the Fund had invested the
notional amount in stocks comprising the S&P 500 Index) less the interest paid
by the Fund on the notional amount. Therefore, the Fund will generally realize a
loss if the value of the S&P 500 Index declines and will generally realize a
gain if the value of the S&P 500 Index rises. The Fund will enter into equity
swap contracts only on a net basis, i.e., where the two parties' obligations are
netted out, with the Fund paying or receiving, as the case may be, only the net
amount of any payments. If there is a default by the counterparty to an equity
swap contract, the Fund will be limited to contractual remedies pursuant to the
agreements related to the transaction.
There is no assurance that the equity swap contract counterparties will be
able to meet their obligations or that, in the event of default, the Barr
Rosenberg Double Alpha Market Fund will succeed in pursing contractual remedies.
The Fund thus assumes the risk that it may be delayed in or prevented from
obtaining payments owed to it pursuant to these contracts. The Fund will closely
monitor the credit of equity swap contract counterparties in order to minimize
this risk. The Fund will not use equity swap contracts for leverage.
The Barr Rosenberg Double Alpha Market Fund will not enter into any equity
swap contract unless, at the time of entering into such transaction, the
unsecured senior debt of the counterparty is rated at least A by Moody's or S&P.
In addition, the staff of the Securities and Exchange Commission considers
equity swap contracts to be illiquid securities. Consequently, while the staff
maintains this position, the Fund will not
7
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invest in equity swap contracts if, as a result of the investment, the total
value of such investments together with that of all other illiquid securities
which the Fund owns would exceed 15% of the Fund's net assets.
The net amount of the excess, if any, of the Fund's obligations over its
entitlement with respect to each equity swap contract will be accrued on a daily
basis, and an amount of cash, U.S. Government Securities or other liquid
securities having an aggregate market value at least equal to the accrued excess
will be maintained in a segregated account by the Fund's Custodian. The Fund
does not believe that the Fund's obligations under equity swap contracts are
senior securities, so long as such a segregated account is maintained, and
accordingly, the Fund will not treat them as being subject to its borrowing
restrictions.
SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS (BOTH FUNDS). Investing in
securities of foreign issuers involves certain risks not typically found in
investing in securities of U.S. issuers. These include risks of adverse change
in foreign economic, political, regulatory and other conditions, and changes in
currency exchange rates, exchange control regulations (including currency
blockage), expropriation of assets or nationalization, imposition of withholding
taxes on dividend or interest payments, and possible difficulty in obtaining and
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 are less liquid and at times more volatile than securities of
comparable U.S. issuers. There are also special tax considerations which apply
to securities of foreign issuers.
The risks of investing in securities of foreign issuers may be intensified
in the case of investments in countries with limited or developing capital
markets. Prices of securities of companies in developing markets can be
significantly more volatile than prices of securities of companies in the more
developed nations of the world, reflecting the greater uncertainties of
investing in less developed markets and economies. In particular, countries with
developing 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 developing
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.
REPURCHASE AGREEMENTS (BOTH FUNDS). Each Fund may enter into repurchase
agreements, by which a Fund purchases a security and obtains a simultaneous
commitment from the seller (a bank or, to the extent permitted by the Investment
Company Act of 1940, as amended (the "1940 Act"), a recognized securities
dealer) to repurchase the security at an agreed-upon price and date (usually
seven days or less from the date of original purchase). The resale price is in
excess of the purchase price and reflects an agreed-upon market rate unrelated
to the coupon rate on the purchased security. Such transactions afford the Funds
the opportunity to earn a return on temporarily available cash. Although the
underlying security may be a bill, certificate of indebtedness, note or bond
issued by an agency, authority or instrumentality of the U.S. Government, the
obligation of the seller is not guaranteed by the U.S. Government and there is a
risk that the seller may fail to repurchase the underlying security. In such
event, a Fund would attempt to exercise rights with respect to the underlying
security, including possible disposition in the market. However, a Fund may be
8
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subject to various delays and risks of loss, including (a) possible declines in
the value of the underlying security during the period while a Fund seeks to
enforce its rights thereto and (b) inability to enforce rights and the expenses
involved in attempted enforcement.
LOANS OF PORTFOLIO SECURITIES (BOTH FUNDS). 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 Funds 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, include possible delay
in recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. However, such loans will be made only to
broker-dealers that are believed by the Manager to be of relatively high credit
standing.
ILLIQUID SECURITIES (BOTH FUNDS). 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 price at
which a Fund has valued such securities, so long as no more than 15% of a Fund's
net assets would be invested in such illiquid securities after giving effect to
a purchase. Investment in illiquid securities involves the risk that, because of
the lack of consistent market demand for such securities, a 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 of the Manager. The rate of a Fund's portfolio
turnover may vary significantly from time to time depending on the volatility of
economic and market conditions. Although the rate of portfolio turnover is
difficult to predict, it is not anticipated that under normal circumstances the
annual portfolio turnover rate of each of the long and short portfolios of the
Barr Rosenberg Market Neutral Fund will exceed 150%, and it is not anticipated
that under normal circumstances the annual portfolio turnover rate of the Barr
Rosenberg Double Alpha Market Fund will exceed 50%. It is, however, impossible
to predict portfolio turnover in future years. 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 results in the realization of net short-term capital
gains, such gains ordinarily are taxed to shareholders at ordinary income tax
rates. See "Taxes."
INVESTMENT OBJECTIVES AND POLICIES. Except as explicitly described
otherwise, the investment objective and policies of each of the Funds may be
changed without shareholder approval.
9
<PAGE>
PERFORMANCE INFORMATION
Rosenberg Institutional Equity Management also serves as the manager of
other accounts that have investment objectives, policies and strategies that are
substantially similar to those of the Barr Rosenberg Market Neutral Fund
(collectively, the "Market Neutral Accounts"). The information below should not
be considered a prediction of the future performance of the Barr Rosenberg
Market Neutral Fund. The performance of such Fund may be higher or lower than
the performance of the Market Neutral Accounts. The performance information
shown below is based on a composite of all of the Manager's accounts with
substantially similar investment objectives, policies and strategies and has
been adjusted to give effect to the estimated annualized expenses (without
giving effect to any expense waivers or reimbursements) of Institutional Shares
of the Barr Rosenberg Market Neutral Fund during its first year of operations.
The Market Neutral Accounts were not registered under the 1940 Act and therefore
were not subject to certain investment restrictions imposed by the 1940 Act. If
the Market Neutral Accounts had been registered under the 1940 Act, their
performance might have been adversely affected. In addition, the Market Neutral
Accounts were not subject to Subchapter M of the Internal Revenue Code. The
following table shows the average annual total return for the one-year,
three-year, five-year and since-inception periods ending November 30, 1997 for
the Market Neutral Accounts. The following table also shows the average annual
total return on 3-month U.S. Treasury bills for the same periods.
<TABLE>
<CAPTION>
ONE-YEAR PERIOD THREE-YEAR PERIOD FIVE-YEAR PERIOD PERIOD FROM
ENDING ENDING ENDING FEBRUARY 28, 1989
NOVEMBER 30, 1997 NOVEMBER 30, 1997 NOVEMBER 30, 1997 TO NOVEMBER 30, 1997
----------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Market Neutral Accounts............. 17.42% 17.66% 13.85% 8.04%
3-month U.S. Treasury Bills......... 5.19% 5.33% 4.57% 5.34%
</TABLE>
An investment in 3-month U.S. Treasury Bills is different from an investment
in the Barr Rosenberg Market Neutral Fund because Treasury Bills are backed by
the full faith and credit of the U.S. Government, Treasury Bills have a fixed
rate of return and investors in Treasury Bills do not bear the risk of losing
their investment. Giving effect to the expense limitation of 2.00% on the
expenses of the Institutional Shares of the Barr Rosenberg Market Neutral Fund
as set forth in the "Fund Expenses" section, the average annual total return for
the one-year, three-year, five-year and since-inception periods ending November
30, 1997 for the Market Neutral Accounts would have been 17.80%, 18.05%, 13.96%
and 8.26%, respectively. There have been two enhancements to the Manager's
market neutral strategy since its inception in 1989. First, the Manager
incorporated its Earnings Change Model and Investor Sentiment Model into its
market neutral strategy in October 1992 and April 1993, respectively. See
"Management of the Trust -- The Manager's General Investment Philosophy and
Strategy." The second change to the Manager's market neutral strategy occurred
in July 1995, when the Manager focused its strategy on medium and smaller
capitalization companies. Prior to such date, the Manager had applied its market
neutral strategy to companies across the capitalization spectrum (i.e., large,
medium and small capitalization companies). Throughout both periods, however,
the Manager has maintained long and short positions of approximately the same
dollar amount within a given capitalization sector. The Funds may invest in
stocks of companies of any capitalization to meet risk/return objectives and
liquidity needs. Despite the two enhancements to the Manager's market neutral
strategy since 1989, the Barr Rosenberg Market Neutral Fund will have
substantially similar investment objectives, policies and strategies as the
Market Neutral Accounts.
10
<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. The Manager is also the
investment manager of the other funds of the Trust.
KEY PERSONNEL OF THE MANAGER
The biography of each of the General Partners of the Manager, each of whom
is also a Trustee of the Trust, is set forth below.
BARR ROSENBERG. Dr. Rosenberg is Managing General Partner and Chief
Investment Officer of the Manager. As such, he has ultimate responsibility for
the Manager's securities valuation and portfolio optimization systems used to
manage the 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
known 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 of 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.
KENNETH REID. Dr. Reid is a General Partner and Director of Research of the
Manager. His work is focused on the design and estimation of the Manager's
valuation models and he has primary responsibility for analyzing the empirical
evidence that validates and supports the day-to-day recommendations of the
Manager's securities valuation models. Patterns of short-term price behavior
discussed by Dr. Reid as part of his Ph.D. dissertation have been refined and
incorporated into the Manager's proprietary valuation and trading systems.
Dr. Reid earned both a B.A. degree (1973) and an M.D.S. (1975) from Georgia
State University, Atlanta. In 1982, he earned a Ph.D. from the University of
California, Berkeley, where he was awarded the American Bankers Association
Fellowship. From 1981 until June 1986, Dr. Reid worked as a consultant at BARRA
in Berkeley, California. His responsibilities included estimating
multiple-factor risk models, designing and evaluating active management
strategies, and serving as an internal consultant on econometric matters in
finance.
There are 42 professional staff members of the Manager and the Manager's
affiliate, Barr Rosenberg Investment Management, Inc., located in Orinda,
California. Included among the Manager's professional staff are seven
individuals with Ph.D.s and eighteen individuals with other graduate degrees.
Five members of the staff have been awarded C.F.A. certificates.
11
<PAGE>
THE OUTSIDE TRUSTEES
William F. Sharpe and Nils H. Hakansson are Trustees of the Trust who are
not "interested persons" (as defined in the 1940 Act) of the Trust or the
Manager.
Dr. Sharpe is the STANCO 25 Professor of Finance at Stanford University's
Graduate School of Business. He is best known as one of the developers of the
Capital Asset Pricing Model, including the beta and alpha concepts used in risk
analysis and performance measurement. He developed the widely-used binomial
method for the valuation of options and other contingent claims. He also
developed the computer algorithm used in many asset allocation procedures. Dr.
Sharpe has published articles in a number of professional journals. He has also
written six books, including PORTFOLIO THEORY AND CAPITAL MARKETS, (McGraw-Hill,
1970), ASSET ALLOCATION TOOLS, (Scientific Press, 1987), FUNDAMENTALS OF
INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey, Prentice-Hall, 1993)
and INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey, Prentice-Hall,
1995). Dr. Sharpe is a past President of the American Finance Association. He
has also served as consultant to a number of corporations and investment
organizations. He is also a member of the Board of Trustees of Smith Breeden
Trust, an investment company, and a director at CATS Software and Stanford
Management Company. He received the Nobel Prize in Economic Sciences in 1990.
Professor Hakansson is the Sylvan C. Coleman Professor of Finance and
Accounting at the Haas School of Business, University of California, Berkeley.
He is a former member of the faculty at UCLA as well as at Yale University. At
Berkeley, he served as Director of the Berkeley Program in Finance (1988-1991)
and as Director of the Professional Accounting Program (1985-1988). Professor
Hakansson is a Certified Public Accountant and spent three years with Arthur
Young & Company prior to receiving his Ph.D. from UCLA in 1966. He has twice
been a Visiting Scholar at Bell Laboratories in New Jersey and was, in 1975, the
Hoover Fellow at the University of New South Wales in Sydney and, in 1982, the
Chevron Fellow at Simon Fraser University in British Columbia. In 1984,
Professor Hakansson was a Special Visiting Professor at the Stockholm School of
Economics, where he was also awarded an honorary doctorate in economics. He is a
past president of the Western Finance Association (1983-1984). Professor
Hakansson has published numerous articles in academic journals and in
professional volumes. Many of his papers address various aspects of asset
allocation procedures as well as topics in securities innovation, information
economics and financial reporting. He has served on the editorial boards of
several professional journals and been a consultant to the RAND Corporation and
a number of investment organizations. Professor Hakansson is a member of the
board of two foundations and a past board member of SuperShare Service
Corporation and of Theatrix Interactive, Inc. He is also a Fellow of the
Accounting Researchers International Association and a member of the Financial
Economists Roundtable.
THE MANAGER'S GENERAL INVESTMENT PHILOSOPHY AND STRATEGY
The Manager attempts to add value relative to a benchmark through a
quantitative stock selection process, and seeks to diversify investment risk
across the holdings in each Fund. In seeking to outperform each Fund's
benchmark, the Manager also attempts to control risk in a Fund's portfolio
relative to the benchmark.
INVESTMENT PHILOSOPHY. The Manager's investment strategy is based on the
belief that stock prices imperfectly reflect the present value of the expected
future earnings of companies, their "fundamental value." The Manager believes
that market prices will converge towards fundamental value over time, and that
therefore, if the Manager can accurately determine fundamental value, and can
apply a disciplined investment process to select those stocks that are currently
undervalued (in the case of purchases) or overvalued (in the case of short
sales), the Manager will outperform a Fund's benchmark over time.
The premise of the Manager's investment philosophy is that there is a link
between the price of a stock and the underlying financial and operational
characteristics of the company. In other words, the price reflects the market's
assessment of how well the company is positioned to generate future earnings
and/or future cash
12
<PAGE>
flow. The Manager identifies and purchases those stocks which are undervalued
(i.e., they are currently cheaper than similar stocks with the same
characteristics) and engages in short sales with respect to those stocks that
are overvalued (i.e., they are currently more expensive than similar stocks with
the same characteristics). The Manager believes that the market will recognize
the "better value" and that the mispricing will be corrected as the stocks in
the Fund's portfolios are purchased or sold by other investors.
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.
In determining whether or not a stock is attractive, the Manager considers
the company's current estimated fundamental value as determined by the Manager's
proprietary Appraisal Model, the Manager's model for expected earnings, and
analysis of investor sentiment toward the stock. The Manager identifies and
causes a Fund to purchase an undervalued stock and to hold it in the Fund's
portfolio until the market recognizes and corrects for the misvaluation.
Conversely, the Manager identifies and causes a Fund to sell short an overvalued
stock.
DECISION PROCESS. The Manager's decision process is a continuum. Its
research function develops Models which analyze the approximately 12,000
securities in the global universe, both fundamentally and technically, and
determines the risk characteristics of the Fund's benchmark. The portfolio
management function optimizes each portfolio's composition, executes trades, and
monitors performance and trading costs.
The essence of the Manager's approach is 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 Appraisal Model discriminates
where the two markets are substantially different, while simultaneously
comparing companies in the two markets according to their degrees of similarity.
European companies and Asian companies (other than Japanese companies) are
analyzed in a nearly global Model, which includes the United States and Canada
as a further basis for comparative valuation, but which excludes Japan. Japanese
companies are analyzed in an independent national Model. The Model incorporates
the various accounting standards which apply in different markets and makes
adjustments to ensure meaningful comparisons.
An important feature of the Appraisal Model is the classification of
companies into one or more of 166 groups of "similar" businesses. Currently, in
the United States, 160 groups are applicable; in Japan, 122 groups are
applicable; and in Europe, 154 groups are applicable. Each company is broken
down into its individual business segments, and each segment is compared with
similar business operations of other companies doing business in the same
geographical market. In most cases, the comparison is extended to include
companies with similar business operations in different markets. Subject to the
availability of data in different markets, the Manager appraises the company's
assets, operating earnings and sales within each business segment, accepting the
market's valuation of that category of business as fair. The Manager then
integrates the segment appraisals into balance sheet, income statement and sales
valuation models for the total company, and simultaneously adjusts the segment
appraisals to include appraisals for variables which are
13
<PAGE>
declared only for the total company, such as taxes, capital structure, and
pension funding. The result is a single valuation for each of the approximately
12,000 companies followed.
The 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 Investor Sentiment 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 are added
to its appraisal alpha to arrive at a total company alpha. Stocks with large
positive total company alphas are candidates for purchase. Stocks with large
negative total company alphas are candidates for short sales. 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 Investor
Sentiment 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, which is the Manager's prediction of the
short-term return of a particular stock. This return is calculated by the
Manager's proprietary model by analyzing short-term factors such as trading
volume and price movements. The Manager believes its model, used in this way,
can add value by helping determine the optimal timing of portfolio trades.
OPTIMIZATION. The Manager's portfolio optimization system seeks to optimize
the trade-off between risk and reward relative to a 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 relevant benchmark. Within the geographic zone appropriate
for a Fund, the optimizer recommends positions in companies which in the
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. No
transaction will be executed unless the opportunity offered by a purchase or
sale candidate sufficiently exceeds the potential of an existing holding to
justify the transaction costs. In most markets, portfolios are reoptimized
continuously throughout the day, allowing the Manager to respond immediately to
investment opportunities.
TRADING. The Manager's trading system aggregates the recommended
transactions for a Fund and determines the feasibility of each recommendation in
light of the stock's liquidity, the expected transaction costs, and general
market conditions. It relays target price information to a trader for each stock
considered for purchase or sale. Trades are executed through any one of four
trading strategies: traditional brokerage, networks, accommodation, and package
or "basket" trades.
14
<PAGE>
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 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 a Fund's portfolio.
INDIVIDUALS RESPONSIBLE FOR THE FUNDS
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 the 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.
Dr. Rosenberg, Dr. Reid and F. William Jump, Jr., the portfolio manager, are
responsible for the day-to-day management of each Fund's portfolio. Dr.
Rosenberg and Dr. Reid both have been employed by the Manager since 1985. Mr.
Jump has had numerous responsibilities including trading, applications
programming, new product development and portfolio engineering since he joined
the Manager in 1990. He received a B.A. from Swarthmore College in 1977 and a
M.B.A. from The Wharton School, University of Pennsylvania in 1983.
MANAGEMENT CONTRACTS
Under a Management Contract 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, as amended, the Board of Trustees supervises
the affairs of the Trust as conducted by the Manager. In the event that the
Manager ceases to be the manager of a Fund, the right of the Trust to use the
identifying name "Barr Rosenberg" and/or "Rosenberg" may be withdrawn.
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 the Fund's portfolio transactions, all applicable taxes and
filing fees, distribution fees, shareholder servicing fees, the fees and
expenses for registration or qualification of its shares under the federal or
state securities laws, the compensation of
15
<PAGE>
trustees who are not partners, officers or employees of the Manager, interest
charges, expenses of issue or redemption of shares, charges of custodians,
auditing and legal expenses, expenses of determining net asset value of Fund
shares, expenses of reports to shareholders, expenses of meetings of
shareholders, expenses of printing and mailing prospectuses, proxy statements
and proxies to existing shareholders, insurance premiums and professional
association dues or assessments.
In addition, each Fund has agreed to pay the Manager a quarterly management
fee at the annual percentage rate of such Fund's average daily net assets set
forth below. The Manager has voluntarily undertaken to waive some or all of its
management fee and, if necessary, to bear certain expenses of each Fund until
further notice to the extent required to limit the total annual operating
expenses (which do not include nonrecurring account fees and extraordinary
expenses) of each class of shares 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 the Barr Rosenberg Market Neutral
Fund is higher than that paid by most other mutual funds although the Manager
believes it is competitive with the fees for similar collective investment
vehicles.
<TABLE>
<CAPTION>
CONTRACTUAL
MANAGEMENT FEE (AS EXPENSE LIMITATION
A % OF AVERAGE DAILY (AS A % OF AVERAGE
NET ASSETS) DAILY NET ASSETS)*
------------------------------- -------------------
<S> <C> <C>
INSTITUTIONAL SHARES
Market Neutral Fund........................................... 1.90% 2.00%
Double Alpha Market Fund...................................... 0.10% 2.35%
INVESTOR SHARES
Market Neutral Fund........................................... 1.90% 2.50%
Double Alpha Market Fund...................................... 0.10% 2.85%
</TABLE>
- ------------------------
* Includes indirect expenses borne by the Barr Rosenberg Double Alpha Market
Fund through ownership of Institutional Shares of the Barr Rosenberg Market
Neutral Fund.
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
BISYS Fund Services (the "Administrator"), a wholly-owned subsidiary of The
BISYS Group, Inc., serves as the Trust's administrator and generally assists the
Trust in all aspects of its administration and operation. As compensation for
its administrative services, the Administrator receives a monthly fee based upon
an annual percentage rate of 0.15% of the aggregate average daily net assets of
the Trust.
BISYS Fund Services, Inc. (the "Transfer Agent") has entered into an
agreement with the Trust for the provision of transfer agency services and
dividend disbursing services for the Trust. The principal business address of
the Transfer Agent is 3435 Stelzer Road, Columbus, Ohio 43219.
Custodial Trust Company (the "Custodian") serves as custodian of the assets
of the Funds. The principal address of the Custodian is 101 Carnegie Center,
Princeton, New Jersey 08540.
DISTRIBUTOR
Investor Shares of the Funds are sold on a continuous basis by the Trust's
distributor, Barr Rosenberg Funds Distributor, Inc. (the "Distributor"), a
wholly-owned subsidiary of BISYS. The Distributor's principal offices are
located at 125 West 55th Street, 11th Floor, New York, NY 10019. Institutional
Shares are sold directly by the Funds.
Solely for the purpose of compensating the Distributor for services and
expenses primarily intended to result in the sale of Investor 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
16
<PAGE>
"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 each Fund's average daily net assets attributable to Investor 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 each Fund, 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 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 Distribution 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 Investor
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 Investor Shares of the
Funds pursuant to a Servicing Plan for such shares.
MULTIPLE CLASSES
As indicated previously, the Funds offer two classes of shares to investors,
with eligibility generally depending on the amount invested in a particular
Fund. The two classes of shares are Institutional Shares and Investor Shares.
The following table sets forth basic investment and fee information for each
class.
<TABLE>
<CAPTION>
MINIMUM ANNUAL ANNUAL
FUND SUBSEQUENT METHOD 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
Investor.............................. $ 2,500 $ 500 Direct .25% .25%
</TABLE>
- ------------------------------
* Certain exceptions apply. See "Institutional Shares" and "Investor Shares"
below."
The offering price of Fund shares is based on the net asset value per share
next determined after an order is received. See "Purchase of Shares" and
"Redemption of Shares."
INSTITUTIONAL SHARES
Institutional Shares may be purchased by endowments, foundations and plan
sponsors of 401(a), 401(k), 457 and 403(b) plans and by individuals. In order to
be eligible to purchase Institutional 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, for employees of the Administrator and for Trustees of the Trust who
are not interested persons of the Trust or Manager and their spouses.
Institutional Shares are sold without any initial or deferred sales charges and
are not subject to any ongoing distribution expenses or shareholder servicing
fees.
INVESTOR SHARES
Investor Shares may be purchased by intermediary financial institutions and
certain individual retirement accounts and individuals. In order to be eligible
to purchase Investor Shares, an eligible investor must make an initial
investment of at least $2,500 in the particular Fund. In its sole discretion,
the Manager may waive this minimum investment requirement. Investor Shares are
subject to an annual Shareholder Service Fee equal to 0.25% of the average daily
net assets attributable to Investor Shares and an annual Distribution Fee equal
to 0.25% of the average daily net assets attributable to Investor Shares. As
described above, the
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Distribution Plan for Investor Shares permits payments of up to 0.50% of the
Funds' average daily net assets attributable to Investor Shares.
GENERAL
The Shareholder Service Fee charged with respect to Investor 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 Investor Shares is intended to compensate the Distributor for
services and expenses primarily intended to result in the sale of Investor
Shares. See "Multiple Classes -- Distributor".
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 may be charged
a transaction-based fee or other fee for the services provided by the
Shareholder Organization. Each such Shareholder Organization 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 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. See "Determination of Net
Asset Value." Investors may be charged an additional fee by their broker or
agent if they effect transactions through such persons.
INITIAL CASH INVESTMENTS BY WIRE
Subject to acceptance by the Trust, shares of the Funds may be purchased by
wiring federal funds. Please call 1-800-447-3332 for complete wiring
instructions. A completed Account Application must be overnighted to the Trust
at Barr Rosenberg Series Trust c/o BISYS Fund Services, Inc., 3435 Stelzer Road,
Columbus, Ohio 43219-8021. Notification must be given to the Trust at
1-800-447-3332 prior to 4:00 p.m., New York Time, of the wire date. Federal
funds purchases will be accepted only on a day on which the Trust, the
Distributor and the custodian bank are all 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 Barr Rosenberg Series
Trust, P.O. Box 182495, Columbus, Ohio 43219-2495.
The Fund(s) to be purchased should be specified on the Account Application.
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 a Fund next determined after receipt, even though the
check may not yet have been converted into federal funds.
ADDITIONAL CASH INVESTMENTS
Additional cash 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 as noted under "Initial Cash
Investments by Wire". Notification must be given at 1-800-447-3332 prior to 4:00
p.m., New York time, of the wire date. The minimum amounts for additional cash
investments are $10,000 for Institutional Shares and $500 for Investor Shares.
In its sole discretion, the Manager may waive the minimum additional investment
requirements.
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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. Generally,
the exchange of common stocks for Institutional Shares will be a taxable event
for federal income tax purposes, which will trigger gain or loss to an investor
subject to federal income taxation, measured by the difference between the value
of the Institutional Shares received and 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 Investor Shares of one or more of
the Funds through the use of electronic funds transfers. Investors may commence
their participation in this program with a minimum initial investment of $2,500
and may elect to make subsequent investments by transfers of a minimum of $50
into their established Fund account. 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 of Investor Shares to be in
"good order" on a particular day a check or money wire must be received on or
before 4:00 p.m., New York Time of that day. In the case of Institutional
Shares, the investor's securities must be placed on deposit at the Depository
Trust Company 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 a Fund prior to 4:00 p.m., New York Time, on the following
business day. If the consideration is received by the Trust after the deadline,
the purchase price of Fund shares will be based upon the next determination of
net asset value of Fund shares. No third party or foreign checks will be
accepted.
The Trust reserves the right, in its sole discretion, to suspend the
offering of shares of a Fund or to reject purchase orders when, in the judgment
of the Manager, such suspension or rejection would be in the best interests of
the Trust.
Purchases of each Fund's shares may be made in full or in fractional shares
of such Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
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IRA ACCOUNTS
Investor Shares of the Funds may be used as a funding medium for IRAs. The
minimum initial investment for an IRA is $2,000. A special application must be
completed in order to create such an account. Contributions to IRAs are subject
to prevailing amount limits set by the Internal Revenue Service. For more
information about IRAs, call the Trust at 1-800-447-3332.
REDEMPTION OF SHARES
Shares of the Funds may be redeemed by mail, or, if authorized by an
investor in an account application, by telephone. The value of shares redeemed
may be more or less than the original cost of those shares, depending on the
market value of the investment securities held by the particular Fund at the
time of the redemption.
BY MAIL
The Trust will redeem its shares at the net asset value next determined
after the request is received in "good order". See "Determination of Net Asset
Value." Requests should be addressed to Barr Rosenberg Series Trust, P.O. Box
182495, Columbus, Ohio 43219-2495.
Requests in "good order" must include the following documentation:
(a) a letter of instruction, if required, 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.
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 1-800-447-3332 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 1-800-447-3332 and requesting
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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 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.
Telephone Redemption will be suspended for a period of 10 days following a
telephonic address change.
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 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
Purchases of shares of the Trust made by check are not permitted to be
redeemed until payment of the purchase price has been collected, which may take
up to fifteen days after purchase. 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 a redemption
payment wholly or partly in cash, such Fund may pay the redemption price of
Institutional Shares in whole or in part by a distribution in kind of readily
marketable securities held by such Fund in lieu of cash. Securities used to
redeem Fund shares in kind will be valued in accordance with the Funds'
procedures for valuation described under "Determination of Net Asset Value."
Securities distributed by a Fund in kind will be selected by the Manager in
light of each Fund's objective and will not generally represent a PRO RATA
distribution of each security held in a 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
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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. 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. 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 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 Trust. 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.
EXCHANGE BY TELEPHONE
To exchange Fund shares by telephone or to ask questions about the exchange
privilege, shareholders may call the Trust at 1-800-447-3332. 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. The telephone
exchange privilege will be suspended for a period of 10 days following a
telephonic address change.
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DETERMINATION OF NET ASSET VALUE
The net asset value of each class of shares of the Funds will be determined
once on each day on which the New York Stock Exchange is open as of 4:00 p.m.,
New York time.
The net asset value per share of each class of the Funds 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 such 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 a 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 on futures are valued at the settlement price as
determined by the appropriate clearing corporation. Futures contracts are valued
by computing the gain or loss by reference to the current 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 short-term capital gains). Each Fund also intends to
distribute substantially all of its net long-term capital gains, if any, after
giving effect to any available capital loss carryover. 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 the Trustees of the Trust. Each
Fund's policy is to distribute net short-term capital gains and net long-term
gains annually, although it may do so more frequently as determined by the
Trustees of the Trust to the extent permitted by applicable regulations.
All dividends and/or distributions will be paid out in the form of
additional shares of the relevant 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.
If you elect to receive distributions in cash and checks (1) are returned
and marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that
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remain uncashed for six months will be canceled and will be reinvested in the
Fund at the per share net asset value determined as of the date of cancellation.
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, as dividends, substantially all of the sum of its taxable
net investment income, its net tax-exempt income (if any), and, the excess, if
any, of net short-term capital gains over net long-term capital losses for such
year 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. Such dividends will be taxable to shareholders
subject to income tax as ordinary income. Distributions designated by the Fund
as deriving from net gains on capital assets held for more than one year but not
more than 18 months and from net gains on capital assets held for more than 18
months will be taxable to shareholders as such, regardless of how long a
shareholder has held the shares. Distributions will be taxed as described above
whether received in cash or in shares through the reinvestment of distributions.
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.
To the extent such investments are permissible for a Fund, the Fund's
transactions in options, futures contracts, hedging transactions, forward
contracts and straddles will be subject to special tax rules (including
mark-to-market, constructive sale, 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.
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 management investment company
organized as a Massachusetts business trust under the laws of The Commonwealth
of Massachusetts by an Agreement and Declaration of Trust dated April 1, 1988,
as amended from time to time (the "Declaration of Trust").
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest which are presently divided
into five 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 preferences and other rights as the
Trustees may designate. While the Trustees have no current intention to
24
<PAGE>
exercise this power, it is intended to allow them to provide for an equitable
allocation of the impact of any future regulatory requirements which might
affect various classes of shareholders differently. The Trustees may also,
without shareholder approval, establish one or more additional separate
portfolios for investments in the Trust, terminate a series of the Trust or
merge two or more existing portfolios. Shareholders' investments in such a
portfolio would be evidenced by a separate series of shares.
Each Fund is further divided into two classes of shares designated as
Institutional Shares and Investor Shares. Each class of shares of a Fund
represents interests in the assets of such 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 such Fund.
Each class of shares of a 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 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 each series of the Trust.
Shareholders could, under certain circumstances, be held personally liable
for the obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of that liability is considered remote since it may
arise only in very limited circumstances.
OTHER INFORMATION
Each Fund's investment performance may from time to time be included in
advertisements about such Fund. Total return for a Fund is measured by comparing
the value of an investment in such Fund at the beginning of the relevant period
to the redemption value of the investment in such Fund at the end of such period
(assuming immediate reinvestment of any dividends or capital gains
distributions). All data are based
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on a Fund's past investment results and do not predict future performance.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a Fund's portfolio and a Fund's operating
expenses. Investment performance also often reflects the risks associated with a
Fund's investment objective and policies. These factors should be considered
when comparing a Fund's investment results with those of other mutual funds and
other investment vehicles. Quotations of investment performance for any period
when an expense limitation was in effect will be greater than if the limitation
had not been in effect.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust at Barr Rosenberg Series
Trust, P.O. Box 182495, Columbus, Ohio 43219-2495.
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SHAREHOLDER SERVICES
1-800-447-3332 (Investor Share Customers)
1-800-527-6026 (Institutional Share Customers)
Additional Information may be found on the
World Wide Web at http://www.riem.com
BARR ROSENBERG SERIES TRUST
3435 Stelzer Road
Columbus, Ohio 43219
MANAGER
Rosenberg Institutional Equity Management
Four Orinda Way, Building E
Orindo, CA 94563
ADMINISTRATOR, TRANSFER AND DIVIDEND PAYING AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
DISTRIBUTOR
Barr Rosenberg Funds Distributor, Inc.
125 West 55th Street
11th Floor
New York, NY 10019
CUSTODIAN OF ASSETS
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
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BARR ROSENBERG SERIES TRUST
BARR ROSENBERG MARKET NEUTRAL FUND
BARR ROSENBERG DOUBLE ALPHA MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 9, 1997
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the prospectus of the Barr Rosenberg Market
Neutral Fund and Barr Rosenberg Double Alpha Market Fund of Barr Rosenberg
Series Trust dated December 9, 1997 (the "Prospectus") and should be read in
conjunction therewith. A copy of the Prospectus may be obtained from Barr
Rosenberg Series Trust, 3435 Stelzer Road, Columbus, Ohio 43219.
<PAGE>
TABLE OF CONTENTS
PAGE
----
INVESTMENT OBJECTIVES AND POLICIES.................................... 3
MISCELLANEOUS INVESTMENT PRACTICES.................................... 5
INVESTMENT RESTRICTIONS............................................... 5
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS........................ 7
MANAGEMENT OF THE TRUST............................................... 9
INVESTMENT ADVISORY AND OTHER SERVICES................................ 11
PORTFOLIO TRANSACTIONS................................................ 13
TOTAL RETURN CALCULATIONS............................................. 14
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES...................... 16
DETERMINATION OF NET ASSET VALUE...................................... 18
PURCHASE AND REDEMPTION OF SHARES..................................... 18
2
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INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of each of the Barr Rosenberg Market
Neutral Fund and Barr Rosenberg Double Alpha Market Fund (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 is an additional description of certain
investments of the Fund(s).
SHORT SALES (BOTH FUNDS). The Barr Rosenberg Market Neutral Fund will seek,
and the Barr Rosenberg Double Alpha Market Fund may seek, to realize additional
gains through short sales. Short sales are transactions in which a Fund sells a
security it does not own, in anticipation of a decline in the value of that
security relative to the long positions held by the Fund. To complete such a
transaction, a Fund must borrow the security to make delivery to the buyer. A
Fund then is obligated to replace the security borrowed by purchasing it at the
market price at or prior to the time of replacement. The price at such time may
be more or less than the price at which the security was sold by a Fund. Until
the security is replaced, a Fund is required to repay the lender any dividends
or interest that accrue during the period of the loan. To borrow the security, a
Fund also may be required to pay a premium, which would increase the cost of the
security sold. The net proceeds of the short sale will be retained by the broker
(or by the Fund's custodian in a special custody account), to the extent
necessary to meet margin requirements, until the short position is closed out. A
Fund also will incur transaction costs in effecting short sales.
A Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security. A Fund will realize a gain if the security
declines in price between those dates. The amount of any gain will be decreased,
and the amount of any loss increased, by the amount of the premium, dividends,
interest or expenses a Fund may be required to pay in connection with a short
sale. An increase in the value of a security sold short by a Fund over the price
at which it was sold short will result in a loss to the Fund, and there can be
no assurance that the Fund will be able to close out the position at any
particular time or at an acceptable price.
S&P 500 INDEX FUTURES AND RELATED OPTIONS (BARR ROSENBERG DOUBLE ALPHA
MARKET FUND ONLY). An S&P 500 Index Future contract (an "Index Future") is a
contract to buy or sell an integral number of units of the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index") at a specified future date at
a price agreed upon when the contract is made. A unit is the value of the S&P
500 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 the
S&P 500 Index.
Index Futures can be traded through all major commodity brokers. Currently,
contracts are expected to expire on the tenth day of March, June, September and
December. The Barr Rosenberg Double Alpha Market Fund will ordinarily 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.
In contrast to purchases of a common stock, no price is paid or received by
the Barr Rosenberg Double Alpha Market Fund upon the purchase of a futures
contract. Upon entering into a futures contract, the Fund will be required to
deposit with its custodian in a segregated account in the name of the futures
broker a
3
<PAGE>
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(s) 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 S&P 500 Index fluctuates, making the position in the futures
contract more or less valuable, a process known as "marking to the market". For
example, when the Fund has purchased an Index Future and the price of the S&P
500 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 the Fund has purchased an Index Future and the price
of the S&P 500 Index has declined, the position would be less valuable and the
Fund would be required to make a variation margin payment to the broker. When
the Fund terminates a position in a futures contract, a final determination of
variation margin is made, additional cash is paid by or to the Fund, and the
Fund realizes a gain or a loss.
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 S&P 500 Index and futures markets. Secondly, the
deposit requirements in the futures market are less onerous than margin
requirements in 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.
Options on index futures contracts give the purchaser the right, in return
for the premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the holder would assume the underlying futures position
and would receive a variation margin payment of cash or securities approximating
the increase in the value of the holder's option position. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash based on the difference between the
exercise price of the option and the closing level of the index on which the
futures contract is based on the expiration date. Purchasers of options who fail
to exercise their options prior to the exercise date suffer a loss of the
premium paid.
The ability to establish and close out positions in options on futures
contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. Although
the Barr Rosenberg Double Alpha Market Fund generally will purchase only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options, with the result that the Fund would have to exercise the
options in order to realize any profit.
4
<PAGE>
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 a Fund of
brokerage commissions or dealer markup and other transaction costs on the sale
of securities as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover is not a limiting factor with respect to
investment decisions. As disclosed in the Prospectus, high portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs, which will be borne directly by the Funds, 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. See "Portfolio Transactions" and "Income Dividends,
Distributions and Tax Status".
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.
Short sales and related borrowings of securities are not subject to this
restriction.
(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 10% of the Fund's total assets (taken at cost) and then only to
secure borrowings permitted by Restriction 1 above. (For the purposes of
this restriction, collateral arrangements with respect to options, short
sales, stock index, interest rate, currency or other futures, options on
futures contracts and collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge or other encumbrance of
assets. Collateral arrangements with respect to swaps and other derivatives
are also not deemed to be a pledge or other encumbrance of assets.)
(3) Purchase securities on margin, except such short-term credits as
may be necessary for the clearance of purchases and sales of securities.
(For this purpose, the deposit or payment of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.)
(4) Make short sales of securities or maintain a short position if,
when added together, more than 100% of the value of a Fund's net assets
would be (i) deposited as collateral for the obligation to replace
securities borrowed to effect short sales, and (ii) allocated to segregated
accounts in connection with short sales. Short sales "against the box" are
not subject to this limitation.
5
<PAGE>
(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) Concentrate more than 25% of the value of its total assets in any
one industry.
(8) Invest in securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940, as amended (the
"1940 Act"), or by an exemptive order issued by the Securities and Exchange
Commission.
(9) Purchase or sell commodities or commodity contracts except that
each of the Funds may purchase and sell stock index and other financial
futures contracts and options thereon.
(10) Make loans, except by purchase of debt obligations or by entering
into repurchase agreements or through the lending of the Fund's portfolio
securities.
(11) Issue senior securities. (For the purpose of this restriction none
of the following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (2) above; any borrowing
permitted by restriction (1) above; short sales permitted by restriction (4)
above; any collateral arrangements with respect to short sales, swaps,
options, future contracts and options on future contracts and with respect
to initial and variation margin; and the purchase or sale of options, future
contracts or options on future contracts.)
Notwithstanding the latitude permitted by Restrictions 1, 2, 3 and 9 above,
the Funds have no current intention of (a) borrowing money or (b) purchasing
interest rate futures.
It is contrary to the present policy of each of the Funds, which may be
changed by the Trustees of the Trust without shareholder approval, to:
(a) Invest in warrants or rights (other than warrants or rights acquired
by the Fund as a part of a unit or attached to securities at the time of
purchase).
(b) Write, purchase or sell options on particular securities (as opposed
to market indices).
(c) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
(d) Make investments for the purpose of exercising control of a
company's management.
(e) Invest in (a) securities which at the time of investment are not
readily marketable and (b) repurchase agreements maturing in more than seven
days if, as a result, more than 15% of the Fund's net assets (taken at
current value) would then be invested in such securities.
Unless otherwise indicated, all percentage limitations on investments set
forth herein and in the Prospectus will apply at the time of the making of an
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment.
6
<PAGE>
The phrase "shareholder approval," as used in the Prospectus and herein, and
the phrase "vote of a majority of the outstanding voting securities", as used
herein, means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of a Fund or the Trust, as the case may be, or (2) 67% or
more of the shares of a 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" and to qualify for
the special tax treatment accorded regulated investment companies and their
shareholders, 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) 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 total assets is invested
in the securities of any issuer (other than U.S. Government securities or
securities of other regulated investment companies); and (c) distribute annually
at least 90% of the sum of its taxable net investment income, its net tax-exempt
income (if any), and, the excess, if any, of net short-term capital gains over
net long-term capital losses for such year. To the extent a Fund qualifies for
treatment as a regulated investment company, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form of dividends
or capital gain distributions.
As described in the Prospectus under the heading "Distributions," each Fund
intends to pay out substantially all of its ordinary income and net short-term
capital gains, and to distribute substantially all of its net capital gains, if
any, after giving effect to any available capital loss carryover. Net capital
gain is the excess of net gains from assets held for more than one year over net
losses from capital assets held for not more than one year. In order to avoid an
excise tax imposed on certain undistributed income, 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, subject
to certain conditions). Pursuant to the Taxpayer Relief Act of 1997 (the "1997
Act"), two different tax rates apply to net capital gains. One rate (generally
28%) applies to net gains on capital assets held for more than one year but not
more than 18 months ("mid-term gains") and a second, preferred rate (generally
20%) applies to the balance of such net capital gains ("adjusted net capital
gains"). Distributions of net capital gains will be treated in the hands of
shareholders as mid-term gains to the extent designated by the Fund as deriving
from net gains from assets held for more than one year but not more than
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<PAGE>
18 months, and the balance will be treated as adjusted net capital gains.
Distributions of mid-term gains and adjusted net capital gains will be taxable
to shareholders as such, regardless of how long a shareholder has held the
shares in the Fund. Distributions will be taxable as described above whether
received in cash or in shares through the reinvestment of distributions. 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, provided the Fund and the shareholder
each meet the relevant holding period requirements.
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
31% of the taxable dividends and other distributions, whether distributed in
cash or reinvested in shares of the Fund, paid or credited to any 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). However, the general back-up withholding rules set forth
above will not apply to tax exempt entities so long as each such entity
furnishes a 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 and straddles will be subject to special tax rules (including
mark-to-market, constructive sale, 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.
Pursuant to the 1997 Act, new "constructive sale" provisions apply to
activities by a Fund which lock in gain on an "appreciated financial position."
Generally, a "position" is defined to include stock, a debt instrument, or
partnership interest, or an interest in any of the foregoing, including through
a short sale, a swap contract, or a future or forward contract. Under the 1997
Act, the entry into a short sale, a swap contract or a future or forward
contract relating to an appreciated direct position in any stock or debt
instrument, or the acquisition of stock or debt instrument at a time when the
Fund occupies an offsetting (short) appreciated position in the stock or debt
instrument, is treated as a "constructive sale" that gives rise to the immediate
recognition of gain (but not loss). The application of these new provisions may
cause a Fund to recognize taxable income from these offsetting transactions in
excess of the cash generated by such activities.
THE TAX DISCUSSION SET FORTH ABOVE IS A SUMMARY INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. EACH SHAREHOLDER IS ADVISED TO CONSULT ITS OWN TAX
ADVISER WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO IT OF AN INVESTMENT IN
THE FUNDS, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING.
8
<PAGE>
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
<TABLE>
<S> <C>
Kenneth Reid* (47) General Partner and Director of Research, Rosenberg Institutional
President, Trustee Equity Management, June, 1986 to present.
Marlis S. Fritz* (47) General Partner and Director of Marketing, Rosenberg Institutional
Vice President, Trustee Equity Management, April, 1985 to present.
Nils H. Hakansson (60) Sylvan C. Coleman Professor of Finance and Accounting, Haas School
Trustee of Business, University of California, Berkeley, June, 1969 to
present. Director, Supershare Services Corporation (investment
management), Los Angeles, California, November, 1989 to present.
Barr M. Rosenberg* (54) Managing General Partner and Chief Investment Officer, Rosenberg
Trustee Institutional Equity Management, January, 1985 to present.
William F. Sharpe (63) Timken Professor of Finance, Stanford University, September, 1970
Trustee 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 (31) Accounting Manager, Rosenberg Institutional Equity Management,
Treasurer October, 1989 to present.
Carolyn Demler (53) Administrative Coordinator, Rosenberg Institutional Equity
Clerk Management, December, 1988 to present.
Edward H. Lyman (53) Executive Vice President, Barr Rosenberg Investment Management,
Vice President Inc., and General Counsel to the Rosenberg Group of companies,
1990 to present.
Richard L. Saalfeld President and Chief Executive Officer of mutual fund unit of
(54) Rosenberg Institutional Equity Management from June 1996 to
Vice President present; Consultant to Rosenberg Institutional Equity Management,
September 1995 to May 1996; Chairman and Chief Executive Officer
of CoreLink Resources, Inc. (mutual fund marketing organization),
Concord, California, April 1993 to August 1995; Consultant,
December 1992 to March 1993.
Harold L. Arbit (50) Vice President and Partner, Rosenberg Alpha L.P., 1984 to present.
Vice President
F. William Jump, Jr. Portfolio engineer, Rosenberg Institutional Equity Management,
(42) August 1990 to present.
Vice President
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
David Bunstine (32) Employee of BISYS Fund Services.
Assistant Treasurer
Gregory Maddox (30) Director, Client Services, BISYS Fund Services.
Assistant Treasurer
Bruce Treff (31) Employee of BISYS Fund Services.
Assistant Clerk
Ellen Stoutamire (48) Employee of BISYS Fund Services.
Assistant Clerk
Jeanette Peplowski (39) Employee of BISYS Fund Services.
Assistant Clerk
Alaina Metz (31) Employee of BISYS Fund Services.
Assistant Clerk
</TABLE>
- ------------------------
* 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, 3435 Stelzer Road, Columbus, OH 43219.
The principal occupations of the officers and Trustees for the last five
years have been with the employers as shown above, although in some cases they
have held different positions with such employers.
The Trust pays the Trustees other than those who are interested persons of
the Trust or Manager an annual fee of $23,000 plus $2,500 for each meeting
attended. The Trust does not pay any pension or retirement benefits for its
Trustees. The Trust does not pay any compensation to officers or Trustees of the
Trust other than those Trustees who are not interested persons of the Trust or
Manager. The following table sets forth information concerning the total
compensation paid to each of the Trustees who are not interested persons of the
Trust or Manager in the fiscal year ended March 31, 1997.
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
FROM
AGGREGATE REGISTRANT AND
COMPENSATION PENSION OR RETIREMENT ESTIMATED ANNUAL FUND COMPLEX
NAME OF PERSON FROM BENEFITS ACCRUED AS BENEFITS UPON PAID TO
POSITION REGISTRANT PART OF FUND EXPENSES RETIREMENT DIRECTORS
- ----------------------------------------------- -------------- --------------------- --------------------- --------------
<S> <C> <C> <C> <C>
Nils H. Hakansson.............................. $ 33,000 $ 0 $ 0 $ 33,000
Trustee
William F. Sharpe.............................. $ 33,000 $ 0 $ 0 $ 33,000
Trustee
</TABLE>
Messrs. Rosenberg, Reid, Arbit, Lyman and Saalfeld and Ms. Fritz, Demler and
Hew, each being a general partner, limited partner, officer or employee of the
Manager, will each benefit from the management fees paid by the Trust to the
Manager, but receive no direct compensation from the Trust.
10
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
MANAGEMENT CONTRACT
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 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 has
informed the Trust that it will voluntarily waive some or all of its management
fees under the Management Contracts and, if necessary, will bear certain
expenses of each Fund until further notice so that each Fund's total annual
operating expenses (including the management fee but not including nonrecurring
account fees and extraordinary expenses) applicable to each class will not
exceed 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.
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 thereunder.
Each Management Contract will continue in effect for a period of no more
than two years from the date of its execution only so long as its continuance is
approved at least annually by (i) vote, cast in person at a meeting called for
that purpose, of a majority of those Trustees who are not "interested persons"
of the Manager or the Trust, and by (ii) the majority vote of either the full
Board of Trustees or the vote of a majority of the outstanding shares of the
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.
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<PAGE>
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 a general
partner of the Manager; and Kenneth Reid is a Trustee and President of the Trust
as well as a general partner and Director of Research of the Manager.
ADMINISTRATIVE SERVICES
The Trust has entered into a Fund Administration Agreement with BISYS Fund
Services (the "Administrator") pursuant to which the Administrator provides
certain management and administrative services necessary for the 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 certain facilities required for
conducting the business of the Funds. The Trust's principal underwriter is an
affiliate of the Administrator. For these services, the Administrator is
entitled to receive a fee, payable monthly, at the annual rate of 0.15% of the
average daily net assets of the Trust. The Trust has also entered into a Fund
Accounting Agreement with BISYS Fund Services, Inc. (the "Fund Accountant")
pursuant to which the Fund Accountant provides certain accounting services
necessary for the Funds' operations. For these services, the Fund Accountant is
entitled to receive an annual fee of $30,000 for each Fund. The Trust's
principal underwriter is an affiliate of the Fund Accountant.
DISTRIBUTOR AND DISTRIBUTION PLAN
As stated in the text of the Prospectus under the heading "Management of the
Trust--Distributor", Investor Shares of each Fund are sold on a continuous basis
by the Trust's distributor, Barr Rosenberg Funds Distributor, Inc. (the
"Distributor"). 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 Investor 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 Investor Shares 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 Investor 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 Investors Shares of any Fund
to which the Plan relates requires approval by the Investor shareholders of that
Fund. The
12
<PAGE>
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
Investor shares thereof at any time by not more than 60 days' nor less than 30
days' written notice without payment of any penalty either by the Distributor or
by such Fund or class and will terminate automatically, without the payment of
any penalty, in the event of its assignment.
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 believe that the Plan will result in greater sales and/or
fewer redemptions of Investor Shares, although it is impossible to know for
certain the level of sales and redemptions of Investor Shares that would occur
in the absence of the Plan or under alternative distribution schemes. The
Trustees 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. Custodial Trust Company ("CTC"), Princeton, NJ
08540, is the Trust's custodian. As such, CTC holds in safekeeping certificated
securities and cash belonging to the Trust and, in such capacity, is the
registered owner of securities in book-entry form belonging to a Fund. Upon
instruction, CTC 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.
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.
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.
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<PAGE>
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 prorata on the basis of cash
available or other equitable basis so as to avoid any one account's being
preferred over any other account.
BROKERAGE AND RESEARCH SERVICES. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different brokers. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid for such securities usually includes an undisclosed dealer
commission or mark up. In placing orders for the portfolio transactions of 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 a Fund's portfolio transactions. Research services may
include a wide variety of analyses, reviews and reports on such matters as
economic and political developments, industries, companies, securities and
portfolio strategy. The Manager uses such research in servicing other clients as
well as the Trust.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and subject to such policies as the Trustees of the Trust may
determine, the Manager may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in 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.
TOTAL RETURN CALCULATIONS
Each Fund computes its average annual total return separately for its share
classes by determining the average annual compounded rates of return during
specified periods that would equate the initial amount
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<PAGE>
invested in a particular share class to the ending redeemable value of such
investment in the class, according to the following formula:
P(1 + T)(n) = ERV
Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000 payment
made at the beginning of a period at the end of such period
P = A hypothetical initial payment of $1,000
n = Number of years
The calculation of average annual total return assumes that any dividends
and distributions are reinvested immediately, rather than paid to the investor
in cash. The ending redeemable value (variable "ERV" in the formula) is
determined by assuming complete redemption of the hypothetical investment and
the deduction of all nonrecurring charges at the end of the period covered by
the computations.
Unlike bank deposits or other investments that pay a fixed yield or return
for a stated period of time, the return for each Fund will fluctuate from time
to time and does not provide a basis for determining future returns. Average
annual total return is based on many factors, including market conditions, the
composition of a Fund's portfolio and a Fund's operating expenses.
Average annual total return is calculated separately for Investor Shares and
Institutional Shares. Investor Shares and Institutional Shares are subject to
different fees and expenses and may have different performance for the same
period.
PERFORMANCE COMPARISONS
Investors may judge the performance of the Funds by comparing them to the
performance of other mutual fund portfolios with comparable investment
objectives and policies through various mutual fund or market indices such as
those prepared by Dow Jones & Co., Inc. and Standard & Poor's Corporation and to
data prepared by Lipper Analytical Services, Inc., a widely recognized
independent service which monitors the performance of mutual funds. Comparisons
may also be made to indices or data published in MONEY MAGAZINE, FORBES,
BARRON'S, THE WALL STREET JOURNAL, MORNINGSTAR, INC., IBBOTSON ASSOCIATES,
CDA/WIESENBERGER, THE NEW YORK TIMES, BUSINESS WEEK, U.S.A. TODAY, INSTITUTIONAL
INVESTOR and other periodicals. In addition to performance information, general
information about the Funds that appears in a publication such as those
mentioned above may be included in advertisements, sales literature and reports
to shareholders. The Funds may also include in advertisements and reports to
shareholders information discussing the performance of the Manager in comparison
to other investment advisers and to other institutions.
From time to time, the Trust may include the following types of information
in advertisements, supplemental sales literature and reports to shareholders:
(1) discussions of general economic or financial principles (such as the effects
of inflation, the power of compounding and the benefits of dollar cost
averaging); (2) discussions of general economic trends; (3) presentations of
statistical data to supplement such discussions; (4) descriptions of past or
anticipated portfolio holdings for the Funds; (5) descriptions of
15
<PAGE>
investment strategies for the Funds; (6) descriptions or comparisons of various
investment products, which may or may not include the Funds; (7) comparisons of
investment products (including the Funds) with relevant market or industry
indices or other appropriate benchmarks; (8) discussions of fund rankings or
ratings by recognized rating organizations; and (9) testimonials describing the
experience of persons that have invested in a Fund. The Trust may also include
calculations, such as hypothetical compounding examples, which describe
hypothetical investment results in such communications. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of a Fund.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
As more fully described in the Prospectus, the Trust is a diversified
open-end series investment company organized as a Massachusetts business trust.
A copy of the Agreement and Declaration of Trust of the Trust, as amended (the
"Declaration of Trust"), is on file with the Secretary of The Commonwealth of
Massachusetts. The fiscal year of the Trust ends on March 31. The Trust changed
its name to "Barr Rosenberg Series Trust" from "Rosenberg Series Trust" on
August 5, 1996.
Interests in the Trust's portfolios are currently represented by shares of
five series, the Barr Rosenberg Market Neutral Fund, Barr Rosenberg Double Alpha
Market Fund, U.S. Small Capitalization Series, International Small
Capitalization Series and 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 two
classes of shares designated as Institutional Shares and Investor 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
16
<PAGE>
limitation, 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 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, sub-series or
classes of shares of any series of Trust shares or other provisions relating to
Trust shares in response to applicable laws or regulations.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Trust or
the Trustees. The Declaration of Trust provides for indemnification out of all
the property of the 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.
17
<PAGE>
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.
The officers and trustees of the Trust, as a group, own less than 1% of any
class of outstanding shares of the Trust.
DETERMINATION OF NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund share 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 Christmas Day, New Year's Day, Martin Luther
King's Day, President's Day, Good Friday and Memorial Day, Independence Day
(observed), Labor Day and Thanksgiving Day.
Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent quoted
bid price. Price information on listed securities is generally taken from the
closing price on the exchange where the security is primarily traded. Unlisted
securities for which market quotations are readily available are valued at the
most recent quoted bid price, except that debt obligations with sixty days or
less remaining until maturity may be valued at their amortized cost.
Exchange-traded options, futures and options on futures are valued at the
settlement price as determined by the appropriate clearing corporation. Other
assets and securities for which no quotations are readily available are valued
at fair value as determined in good faith by the Trustees of the Trust or by
persons acting at their direction.
PURCHASE AND REDEMPTION OF SHARES
The procedures for purchasing shares of each of the Funds and for
determining the offering price of such shares are described in the Prospectus.
The Trust has elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Trust is obligated to redeem shares solely in cash for any
shareholder during any 90-day period up to the lesser of (i) $250,000 or (ii) 1%
of the total net asset value of the Trust at the beginning of such period. The
procedures for redeeming shares of each of the Funds are described in the
Prospectus.
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<PAGE>
PART C
OTHER INFORMATION --
THE BARR ROSENBERG MARKET NEUTRAL FUND AND
THE BARR ROSENBERG DOUBLE ALPHA MARKET FUND ONLY
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Exhibits:
1. Form of Second Amended and Restated Agreement and
Declaration of Trust of the Registrant -- filed herewith;
2. By-Laws of the Registrant -- filed herewith;
3. None;
4. Not applicable;
5.1. Form of Management Contract between the Registrant on
behalf of its Barr Rosenberg Market Neutral Fund and
Rosenberg Institutional Equity Management -- incorporated
by reference to Post-Effective Amendment No. 16 to the
Registration Statement filed on September 16, 1997;
5.2. Form of Management Contract between the Registrant on behalf
of its Barr Rosenberg Double Alpha Market Fund and
Rosenberg Institutional Equity Management -- incorporated
by reference to Post-Effective Amendment No. 16 to the
Registration Statement filed on September 16, 1997;
6. Form of Amended and Restated Distributor's Contract
between the Registrant and Barr Rosenberg Funds
Distributor, Inc. -- filed herewith;
7. None;
8. (a) Form of Custody Agreement between the Registrant and
Custodial Trust Company -- filed herewith;
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<PAGE>
(b) Form of Special Custody Account Agreement among the
Registrant, Custodial Trust Company and Bear, Stearns
Securities Corp. -- filed herewith;
9. (a) Transfer Agency Agreement between the Registant and
BISYS Fund Services, Inc. -- incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement filed on July 18, 1997;
(b) Form of Notification of Expense Limitation by
Rosenberg Institutional Equity Management to the Barr
Rosenberg Market Neutral Fund and the Barr Rosenberg
Double Alpha Market Fund -- filed herewith;
(c) Fund Administration Agreement between the Registrant
and BISYS Fund Services Limited Partnership --
incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement filed on
July 18, 1997;
(d) Fund Accounting Agreement between the Registrant and
BISYS Fund Services, Inc. -- incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement filed on July 18, 1997;
10. Opinion of Ropes & Gray -- filed herewith;
11. Not Applicable;
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 Investor shares -- filed
herewith;
16. Not Applicable;
17. Not Applicable;
18. Form of Amended and Restated Multi-Class Plan -- filed
herewith;
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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.
None.
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Item 27. INDEMNIFICATION.
Article VIII of the Registrant's Second Amended and Restated 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.
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
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<PAGE>
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 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. The Manager provides investment advisory services to a substantial
number of institutional investors.
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 Alpha L.P.
Managing General Partner (formerly RBR Partners (limited partner of
and Chief Investment Officer Manager)), 12 El Sueno, Orinda, California,
December, 1984 to present; Chairman of the
Board, Rosenberg Management Company S.A.,
2 Place Winston Churchill, L-1340 Luxembourg,
April 1989 to present; Chairman of the Board,
Rosenberg U.S. Japan Management Company
S.A., 2 Place Winston Churchill, L-1340
Luxembourg, July, 1989 to present. Chairman
of the Board, Rosenberg Global Management
Company, S.A., 2 Place Winston Churchill,
L-1340 Luxemburg, April 1990 to present;
Director and Chairman of the Board, Rosenberg
Nomura Asset Management Company, Ltd.,
Dai-Ichi Edobashi Bldg., 1-11-1 Nihonbashi
Chuo-Ku, Tokyo 103, Japan; Chairman of the
Board and Director of Barr Rosenberg
Investment Management, Inc., 4 Orinda Way,
Orinda, California, February 1990 to
present. Chairman, Barr Rosenberg European
Management, Ltd., 9A Devonshire Square,
London EC2M 4LY, United Kingdom, March 1990 to
present.
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<PAGE>
Marlis S. Fritz Director, Barr Rosenberg European Management
General Partner Ltd., 9A Devonshire Square,
London EC2M 4LY, United Kingdom, May 1990 to
present; Director, Barr Rosenberg Investment
Management, Inc., 4 Orinda Way, Orinda,
California, February 1990 to present.
Kenneth Reid Director, Barr Rosenberg Investment
General Partner Management, Inc., 4 Orinda Way, Orinda,
and Director of Research California, February 1990 to present.
Po-Len Hew Controller, Rosenberg Institutional Equity
Controller Management, October 1989 to present,
Treasurer, Barr Rosenberg Investment
Management, Inc., May 1994 to present.
Item 29. PRINCIPAL UNDERWRITERS:
(a) Barr Rosenberg Funds Distributor, Inc. (the "Distributor") is the
principal underwriter of the Funds' Investor 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 Positions and
Offices Offices with Offices with
Business Address Underwriter Registrant
------------------ ------------- -------------
David J. Huber President None
Lynn J. Mangum Director, Chairman None
Kevin J. Dell Vice President, None
Secretary
Michael D. Burns Vice President, Chief None
Financial Officer
Robert J. McMullan Vice President, Director, None
Treasurer
The business address of all directors and officers of the Distributor is
125 West 55th Street, 11th Floor, New York, NY 10019.
(c) None.
Item 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
thereunder will be maintained at the offices of:
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1) Barr Rosenberg Series Trust
3435 Stelzer Road
Columbus, Ohio 43219
Rule 31a-1 (b)(1),(2),(3), (4), (5), (6), (7), (8), (9), (10), (11)
Rule 31a-2 (a)
2) Rosenberg Institutional Equity Management
Four Orinda Way
Building E
Orinda, CA 94563
Rule 31a-1 (f)
Rule 31a-2 (e)
3) Barr Rosenberg Funds Distributor, Inc.
125 West 55th Street
11th Floor
New York, NY 10019
Rule 31a-1 (d)
Rule 31a-2 (c)
Item 31. MANAGEMENT SERVICES.
None.
Item 32. UNDERTAKINGS.
The Registrant undertakes to comply with the last three paragraphs
of Section 16(c) of the Investment Company Act of 1940 as though such
provisions of the Act were applicable to the Trust.
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NOTICE
A copy of the Agreement and Declaration of Trust, as amended, of the
Registrant is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
for any of the trustees or shareholders individually but are binding only upon
the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 17 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Orinda, and the State of California, on the 8th day of December, 1997.
BARR ROSENBERG SERIES TRUST
By /s/Marlis S. Fritz
----------------------
Marlis S. Fritz
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacities indicated and on the 8th day of December, 1997.
SIGNATURE TITLE DATE
/s/Marlis S. Fritz Vice President, December 8, 1997
____________________ Trustee
Marlis S. Fritz
Kenneth Reid* President December 8, 1997
____________________ Principal Executive Officer,
Kenneth Reid Trustee
Po-Len Hew* Treasurer, December 8, 1997
____________________ Principal Financial
Po-Len Hew and Accounting Officer
Nils H. Hakansson* Trustee December 8, 1997
____________________
Nils H. Hakansson
Barr M. Rosenberg* Trustee December 8, 1997
____________________
Barr M. Rosenberg
William F. Sharpe* Trustee December 8, 1997
____________________
William F. Sharpe
*By: /s/Marlis S. Fritz
__________________
Marlis S. Fritz
Attorney-in-Fact
Date: December 8, 1997
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99.1 Form of Second Amended and Restated Agreement and
Declaration of Trust of the Registrant
99.2 By-Laws of the Registrant
99.6 Form of Amended and Restated Distributor's Contract
between the Registrant and Barr Rosenberg Funds
Distributor, Inc.
99.8(a) Form of Custody Agreement between the Registrant and
Custodial Trust Company
99.8(b) Form of Special Custody Account Agreement among the
Registrant, Custodial Trust Company and Bear, Stearns
Securities Corp.
99.9(b) Form of Notification of Expense Limitation
99.10 Opinion of Ropes & Gray
99.15 Form of Distribution Plan (Investor Shares)
99.18 Form of Amended and Restated Multi-Class Plan
<PAGE>
BARR ROSENBERG SERIES TRUST
SECOND AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
THIS SECOND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made
this __ of December, 1997 by the Trustees hereunder and the holders of shares of
beneficial interest issued hereunder and to be issued hereunder as hereinafter
provided:
WITNESSETH that
WHEREAS the Trustees desire to amend and restate the First Amended and
Restated Agreement and Declaration of Trust to add each of the Barr Rosenberg
Market Neutral Fund and Barr Rosenberg Double Alpha Market Fund to the Trust
pursuant to the power of the Trustees set forth in Article III, Section 5 of the
First Amended and Restated Agreement and Declaration of Trust.
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby direct that this Second Amended and
Restated Agreement and Declaration of Trust be filed with the Secretary of The
Commonwealth of Massachusetts and with the Clerk of every city or town where
such association or trust has a usual place of business, and do hereby declare
that they will hold all cash, securities and other assets, which they may from
time to time acquire in any manner as Trustees hereunder IN TRUST to manage and
dispose of the same upon the following terms and conditions for the pro rata
benefit of the holders from time to time of Shares in this Trust as hereinafter
set forth.
ARTICLE I
Name and Definitions
SECTION 1. This Trust shall be known as Barr Rosenberg Series Trust and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
SECTION 2. DEFINITIONS. Whenever used herein, unless otherwise required
by the context or specifically provided
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(a) "Trust" refers to the Massachusetts business trust established by
the Trust's original Agreement and Declaration of Trust, dated April 1, 1988, as
amended and restated by the First Amended and Restated Declaration of Trust,
dated August 5, 1996, as further amended by this instrument and as further
amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named in Article
IV hereof or elected in accordance with such Article;
(c) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust or in the Trust property belonging to
any Series of the Trust (or in the property belonging to any Series allocable to
any Class of that Series) (as the context may require) shall be divided from
time to time;
(d) "Shareholder" means a record owner of Shares;
(e) "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Commission" and "principal underwriter" shall have the
meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time;
(i) "Series Company" refers to the form of registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in any
successor statutory provision;
(j) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article III; and
(k) "Class" refers to any Class of Shares established and designated
under or in accordance with the provisions of Article III. The Shares of any
Class shall represent a subset of Shares of a Series, and together with all
other Classes of the same Series, shall constitute all Shares of that Series.
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ARTICLE II
Purpose of Trust
The purpose of the Trust is to provide investors a managed investment
primarily in securities (including options), debt instruments, money market
instruments, commodities, commodity contracts and options thereon.
ARTICLE III
Shares
SECTION 1. DIVISION OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of Shares,
without par value. Subject to the provisions of Section 6 of this Article III,
each Share shall have voting rights as provided in Article V hereof, and holders
of the Shares of any Series or Class shall be entitled to receive dividends,
when and as declared with respect thereto in the manner provided in Article VI,
Section 1 hereof. No Share shall have any priority or preference over any other
Share of the same Series and Class with respect to dividends or distributions
upon termination of the Trust or of such Series or Class made pursuant to
Article IX, Section 4 hereof. All dividends and distributions shall be made
ratably among all Shareholders of a particular Series or Class from the assets
belonging to such Series (or, in the case of a Class, allocable to such Class)
according to the number of Shares of such Series or Class held of record by such
Shareholders on the record date for any dividend or on the date of termination,
as the case may be. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust. The
Trustees may from time to time divide or combine the Shares of any particular
Series or Class into a greater or lesser number of Shares of that Series or
Class without thereby changing the proportionate beneficial interest of the
Shares of that Series or Class in the assets belonging to that Series (or, in
the case of a Class, allocable to such Class) or in any way affecting the rights
of Shares of any other Series or Class.
SECTION 2. OWNERSHIP OF SHARES. The ownership of Shares shall be recorded
on the books of the Trust or a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series and Class.
No certificates certifying the ownership of Shares shall be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the transfer of Shares of each Series and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each Series and Class and as to the number of Shares of each
Series and Class held from time to time by each.
SECTION 3. INVESTMENT IN THE TRUST. The Trustees shall accept investments
in the Trust from such persons and on such terms and for such consideration as
they from time to time authorize.
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SECTION 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the same nor entitle the representative of
any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but entitles such representative
only to the rights of said deceased Shareholder under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholders, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
SECTION 5. POWER OF TRUSTEES TO CHANGE PROVISIONS RELATING TO SHARES.
Notwithstanding any other provisions of this Declaration of Trust and without
limiting the power of the Trustees to amend the Declaration of Trust as provided
elsewhere herein, the Trustees shall have the power to amend this Declaration of
Trust, at any time and from time to time, in such manner as the Trustees may
determine in their sole discretion, without the need for Shareholder action, so
as to add to, delete, replace or otherwise modify any provisions relating to the
Shares contained in this Declaration of Trust for the purpose of (i) responding
to or complying with any regulations, orders, rulings or interpretations of any
governmental agency or any laws, now or hereafter applicable to the Trust, or
(ii) designating and establishing Series and Classes in addition to the Series
and Classes established in Section 6 of this Article III; provided that before
adopting any such amendment without Shareholder approval the Trustees shall
determine that it is consistent with the fair and equitable treatment of all
Shareholders. The establishment and designation of any Series or Class of
Shares in addition to the Series and Classes established and designated in
Section 6 of this Article III shall be effective upon the execution by a
majority of the then Trustees of an amendment to this Declaration of Trust,
taking the form of a complete restatement or otherwise, setting forth such
establishment and designation and the relative rights and preferences of such
Series or Class, as the case may be, or as otherwise provided in such
instrument.
Without limiting the generality of the foregoing, the Trustees may, for the
above-stated purposes, amend the Declaration of Trust to:
(a) create one or more Series or Classes of Shares (in addition to
any Series or Classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as the
Trustees shall determine and reclassify any or all outstanding Shares as shares
of particular Series or Classes in accordance with such eligibility
requirements;
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(b) amend any of the provisions set forth in paragraphs (a) through
(j) of Section 6 of this Article III;
(c) combine one or more Series or Classes of Shares into a single
Series or Class on such terms and conditions as the Trustees shall determine;
(d) change or eliminate any eligibility requirements for investment
in Shares of any Series or Class, including without limitation the power to
provide for the issue of Shares of any Series or Class in connection with any
merger or consolidation of the Trust with another trust or company or any
acquisition by the Trust of part or all of the assets of another trust or
company;
(e) change the designation of any Series or Class of Shares;
(f) change the method of allocating dividends among the various
Series and Classes of Shares;
(g) allocate any specific assets or liabilities of the Trust or any
specific items of income or expense of the Trust to one or more Series or
Classes of Shares;
(h) specifically allocate assets to any or all Series or Classes of
Shares or create one or more additional Series or Classes of Shares which are
preferred over all other Series or Classes of Shares in respect of assets
specifically allocated thereto or any dividends paid by the Trust with respect
to any net income, however determined, earned from the investment and
reinvestment of any assets so allocated or otherwise and provide for any special
voting or other rights with respect to such Series or Classes.
SECTION 6. ESTABLISHMENT AND DESIGNATION OF SERIES AND CLASSES. Without
limiting the authority of the Trustees set forth in Section 5, INTER ALIA, to
establish and designate any further Series or Classes of Shares or to modify
the rights and preferences of any Series or Class, the "Japan Series", the
"U.S. Small Capitalization Series" (formerly the Small Capitalization
Series), the "International Small Capitalization Series", the "Barr Rosenberg
Market Neutral Fund" and the "Barr Rosenberg Double Alpha Market Fund" shall
be, and are hereby, established and designated; and with respect to the U.S.
Small Capitalization Series, Japan Series and International Small
Capitalization Series, the Institutional Shares Class, Adviser Shares Class
and Select Shares Class, which may be issued by each such Series from time to
time, shall be, and are hereby, established and designated, and with respect
to the Barr Rosenberg Market Neutral Fund and Barr Rosenberg Double Alpha
Market Fund, the Institutional Shares Class and Investor Shares Class, which
may be issued by each such Series from time to time, shall be, and are
hereby, established and designated, all of which Classes shall have the
respective rights and preferences as are set forth in the Plan attached as
Exhibit 3.6 hereto as such Plan may be amended from time to time by the Board
of Trustees.
Shares of each Series (or Class, as the case may be) established in this
Section 6 shall have the following relative rights and preferences:
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(a) ASSETS BELONGING TO SERIES. All consideration received by the
Trust for the issue or sale of Shares of a particular Series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof from whatever source derived, including,
without limitation, any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to that
Series for all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust. Such consideration, assets,
income, earnings, profits and proceeds thereof, from whatever source derived,
including, without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, are herein
referred to as "assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits and proceeds thereof, funds or payments
which are not readily identifiable as belonging to any particular Series
(collectively "General Assets"), the Trustees shall allocate such General Assets
to, between or among any one or more of the Series established and designated
from time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable, and any General Asset so allocated to a
particular Series shall belong to that Series. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all Series for
all purposes.
(b) LIABILITIES BELONGING TO SERIES. The assets belonging to each
particular series shall be charged solely with the liabilities of the Trust in
respect to that Series, expenses, costs, charges and reserves attributable to
that Series, and any general liabilities of the Trust which are not readily
identifiable as belonging to any particular Series but which are allocated and
charged by the Trustees to and among any one or more of the Series established
and designated from time to time in a manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities, expenses,
costs, charges, and reserves so charged to a Series are herein referred to as
"liabilities belonging to" that Series. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the holders of all Series for all purposes.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND REPURCHASES.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or of any Series
or Class) with respect to, nor any redemption or repurchase of, the Shares of
any Series shall be effected by the Trust other than from the assets belonging
to such Series, nor shall any Shareholder of any particular Series otherwise
have any right or claim against the assets belonging to any other Series except
to the extent that such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series.
(d) VOTING. Notwithstanding any of the other provisions of this
Declaration of Trust, including, without limitation, Section 1 of Article V, the
Shareholders of any particular Series or Class shall not be entitled to vote on
any matters as to which such Series or Class is not affected except as otherwise
required by the 1940 Act or other applicable law. On any
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matter submitted to a vote of Shareholders, all Shares of the Trust then
entitled to vote shall be voted by individual Series, unless otherwise required
by the 1940 Act or other applicable law.
(e) EQUALITY. All the Shares of each particular Class of a Series
shall represent an equal proportionate interest in the assets allocable to that
Class, and each Share of any particular Series shall be equal to each other
Share of that Series (subject to the liabilities allocated to each Class of that
Series).
(f) FRACTIONS. Any fractional Share of a Series or Class shall carry
proportionately all the rights and obligations of a whole share of that Series
or Class, including rights with respect to voting, receipt of dividends and
distributions, redemption of Shares and termination of the Trust.
(g) EXCHANGE PRIVILEGE. The Trustees shall have the authority to
provide that the holders of Shares of any Series or Class shall have the right
to exchange said Shares for Shares of one or more other Series or Classes of
Shares in accordance with such requirements and procedures as may be established
by the Trustees.
(h) COMBINATION OF SERIES OR CLASSES. The Trustees shall have the
authority, without the approval of the Shareholders of any Series or Class
unless otherwise required by applicable law, to combine the assets and
liabilities belonging to any two or more Series (or the assets allocable to any
two or more Classes) into assets and liabilities belonging (or allocable) to a
single Series (or Class).
(i) ELIMINATION OF SERIES OR CLASSES. If at any time that there are
no Shares outstanding of any particular Series or Class previously established
and designated, the Trustees may amend this Declaration of Trust to abolish that
Series or Class and to rescind the establishment and designation thereof, such
amendment to be effected in the manner provided in Section 5 of this Article
III.
(j) ASSETS AND LIABILITIES ALLOCABLE TO A CLASS. The assets and
liabilities belonging to a Series shall be proportionately allocated among all
the Classes of that Series according to the percentage of net assets allocated
to each particular Class. For purposes of determining the assets and
liabilities belonging to a Series that are allocable to a Class of that Series,
expenses shall be accrued as described in the Plan attached as Exhibit 3.6
hereto subject to the provisions of paragraph (g) of Section 5 of this Article
III.
SECTION 7. INDEMNIFICATION OF 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 of the Trust or of a particular Series
and not because of his or her acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the
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Series of which he is a Shareholder or former Shareholder to be held harmless
from and indemnified against all loss and expense arising from such liability.
SECTION 8. NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
ARTICLE IV
The Trustees
SECTION 1. ELECTION AND TENURE. The Trustees may fix the number of
Trustees, fill vacancies in the Trustees, including vacancies arising from an
increase in the number of Trustees, or remove Trustees with or without cause.
Each Trustee shall serve during the continued lifetime of the Trust until he
dies, resigns or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of his successor. Any Trustee may resign at any time by
written instrument signed by him and delivered to any officer of the Trust or to
a meeting of the trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee resigning
and no Trustee removed shall have any right to any compensation for any period
following his resignation or removal, or any right to damages on account of such
removal. The Shareholders may fix the number of Trustees and elect Trustees at
any meeting of Shareholders called by the Trustees for that purpose.
SECTION 2. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
declination, resignation, retirement, removal, or incapacity of the Trustees, or
any of them, shall not operate to annul the Trust or to revoke any existing
agency created pursuant to the terms of this Declaration of Trust.
SECTION 3. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and they
shall have all powers necessary or convenient to carry out that responsibility
including the power to engage in securities transactions of all kinds on behalf
of the Trust. Without limiting the foregoing, the Trustees may adopt By-Laws
not inconsistent with this Declaration of Trust providing for the regulation and
management of the affairs of the Trust and may amend and repeal them to the
extent that such By-Laws do not reserve that right to the Shareholders; they may
fill vacancies in or remove from their number (including any vacancies created
by an increase in the number of Trustees); they may remove from their number
with or without cause; they may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; they may appoint from their
own number and terminate one or more committees consisting of two or more
Trustees which may exercise the powers and authority of the Trustees to the
extent that the Trustees determine; they may employ one or more custodians of
the assets of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a system or
systems for the central handling of securities or with a Federal
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Reserve Bank, retain a transfer agent or a shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one or more
principal underwriters or otherwise, set record dates for the determination of
Shareholders with respect to various matters, and in general delegate such
authority as they consider desirable to any officer of the Trust, to any
committee of the Trustees and to any agent or employee of the Trust or to any
such custodian or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property rights relating
to any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to executive and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including but not limited to
claims for taxes;
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(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property;
(k) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person against
liability; and
(m) To pay pensions as deemed appropriate by the Trustees and to
adopt, establish and carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive and benefit plans,
trusts and provisions, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present
or future law or custom in regard to investments by Trustees. The Trustees
shall not be required to obtain any court order to deal with any assets of the
Trust or take any other action hereunder.
SECTION 4. PAYMENT OF EXPENSE BY THE TRUST. The Trustees are authorized
to pay or cause to be paid out of the principal or income of the Trust, or
partly out of principal and partly out of income, as they deem fair, all
expenses, fees, charges, taxes and liabilities incurred or arising in connection
with the Trust, or in connection with the management thereof, including but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser or manager,
principal underwriter, auditor, counsel, custodian, transfer agent, shareholder
servicing agent, and such other agents or independent contractors and such other
expenses and charges as the Trustees may deem necessary or power to incur.
SECTION 5. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series or Class, to pay directly, in advance
or arrears, for charges of the Trust's custodian or transfer, shareholder
servicing or similar agent, an amount fixed from time to
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time by the Trustees, by setting off such charges due from such Shareholder from
declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such charges
due from such Shareholder.
SECTION 6. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the assets
of the Trust shall at all times be considered as vested in the Trustees.
SECTION 7. ADVISORY, MANAGEMENT AND DISTRIBUTION CONTRACTS. Subject to
such requirements and restrictions as may be set forth in the By-Laws, the
Trustees may, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services for the Trust or for any Series
with Rosenberg Institutional Equity Management or any other partnership,
corporation, trust, association or other organization (the "Manager"); and any
such contract may contain such other terms as the Trustees may determine,
including without limitation, authority for a Manager to determine from time to
time without prior consultation with the Trustees what investments shall be
purchased, held, sold or exchanged and what portion, if any, of the assets of
the Trust shall be held uninvested and to make changes in the Trust's
investments. The Trustees may also, at any time and from time to time, contract
with the Manager or any other partnership, corporation, trust, association or
other organization, appointing it exclusive or nonexclusive distributor or
principal underwriter for the Shares, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter, distributor or affiliate or agent of or for any
partnership, corporation, trust, association, or other organization, or of or
for any parent or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or distributor's contract, or
transfer, shareholder servicing or other agency contract may have been or may
hereafter be made, or that any such organization, or any parent or affiliate
thereof, is Shareholder or has an interest in the Trust, or that
(ii) any corporation, trust, association or other organization
with which an advisory or management contract or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other agency
contract may have been or may hereafter be made also has an advisory or
management contract, or principal underwriter's or distributor's contract, or
transfer, shareholder servicing or other agency contract with one or more other
corporations, trusts, associations, or other organizations, or has other
business or interests, shall not affect the validity of any such contract or
disqualify any Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the Trust or its
Shareholders.
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ARTICLE V
Shareholders' Voting Powers and Meetings
SECTION 1. VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Article IV, Section 1, (ii) with
respect to any amendment of this Declaration of Trust to the extent and as
provided in Article IX, Section 8, (iii) to the same extent as the stockholders
of a Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, (iv) with
respect to the termination of the Trust or any Series or Class to the extent and
as provided in Article IX, Section 4, and (v) with respect to such additional
matters relating to the Trust as may be required by this Declaration of Trust,
the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. At any time when no Shares of
a Series or Class are outstanding, the Trustees may exercise all rights of
Shareholders of that Series or Class with respect to matters affecting that
Series or Class and may with respect to that Series or Class take any action
required by law, this Declaration of Trust or the By-Laws to be taken by the
Shareholders.
SECTION 2. VOTING POWER AND MEETINGS. Meetings of the Shareholders may be
called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section 1 and for such other purposes as may be prescribed by law,
by this Declaration of Trust or by the By-Laws. Meetings of the Shareholders
may also be called by the Trustees from time to time for the purpose of taking
action upon any other matter deemed by the Trustees to be necessary or
desirable. A meeting of Shareholders may be held at any place designated by the
Trustees. Written notice of any meeting of Shareholders shall be given or
caused to be given by the Trustees by mailing such notice at least seven days
before such meeting, postage prepaid, stating the time and place of the meeting,
to each Shareholder at the Shareholder's address as it appears on the records of
the Trust. Whenever notice of a meeting is required to be given to a
Shareholder under this Declaration of Trust or the By-Laws, a written waiver
thereof, executed before or after the meeting by such Shareholder or his
attorney thereunto authorized and filed with the records of the meeting, shall
be deemed equivalent to such notice.
SECTION 3. QUORUM AND REQUIRED VOTE. Except when a larger quorum is
required by law, by the By-Laws or by this Declaration of Trust, 40% of the
Shares entitled to vote shall constitute a quorum at a Shareholders' meeting.
When any one Series or Class is to vote separately from any other Shares which
are to vote on the same matters as a separate Series or Class, 40% of the Shares
of each such Series or Class entitled to vote shall constitute a quorum
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at a Shareholder's meeting of that Series or Class. Any meeting of Shareholders
may be adjourned from time to time by a majority of the votes properly cast upon
the question, whether or not a quorum is present, and the meeting may be held as
adjourned within a reasonable time after the date set for the original meeting
without further notice. When a quorum is present at any meeting, a majority of
the Shares voted shall decide any questions and a plurality shall elect a
Trustee, except when a larger vote is required by any provision of this
Declaration of Trust or the By-Laws or by law. If any question on which the
Shareholders are entitled to vote would adversely affect the rights of any
Series or Class, the vote of a majority (or such larger vote as is required as
aforesaid) of the Shares of such Series or Class which are entitled to vote,
voting separately, shall also be required to decide such question.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action taken by Shareholders
may be taken without a meeting if Shareholders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the
By-Laws) and holding a majority (or such larger proportion as aforesaid) of the
Shares of any Series or Class entitled to vote separately on the matter consent
to the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
SECTION 5. RECORD DATES. For the purpose of determining the Shareholders
of any Series or Class who are entitled to vote or act at any meeting or any
adjournment thereof, the Trustees may from time to time fix a time, which shall
be not more than 60 days before the date of any meeting of Shareholders, as the
record date for determining the Shareholders of such Series or Class having the
right to notice of and to vote at such meeting and any adjournment thereof, and
in such case only Shareholders of record on such record date shall have such
right, notwithstanding any transfer of shares on the books of the Trust after
the record date. For the purpose of determining the Shareholders of any Series
or Class who are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a date, which shall be
before the date for the payment of such dividend or such other payment, as the
record date for determining the Shareholders of such Series or Class having the
right to receive such dividend or distribution. Without fixing a record date
the Trustees may for voting and/or distribution purposes close the register or
transfer books for one or more Series or Classes for all or any part of the
period between a record date and a meeting of shareholders or the payment of a
distribution. Nothing in this section shall be construed as precluding the
Trustees from setting different record dates for different Series or Classes.
SECTION 6. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
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ARTICLE VI
Net Income, Distributions, and Redemptions and Repurchases
SECTION 1. DISTRIBUTIONS OF NET INCOME. The Trustees shall each year, or
more frequently if they so determine in their sole discretion, distribute to the
Shareholders of each Series or Class, in shares of that Series or Class, cash or
otherwise, an amount approximately equal to the net income attributable to the
assets belonging to such Series (or the assets allocable to such Class) and may
from time to time distribute to the Shareholders of each Series or Class, in
shares of that Series, cash or otherwise, such additional amounts, but only from
the assets belonging to such Series (or allocable to such Class), as they may
authorize. All dividends and distributions on Shares of a particular Series or
Class shall be distributed pro rata to the holders of that Series or Class in
proportion to the number of Shares of that Series or Class held by such holders
and recorded on the books of the Trust at the date and time of record
established for that payment of such dividend of distributions.
The manner of determining net income, income, asset values, capital gains,
expenses, liabilities and reserves of any Series or Class may from time to time
be altered as necessary or desirable in the judgement of the Trustees to conform
such manner of determination to any other method prescribed or permitted by
applicable law. Net income shall be determined by the Trustees or by such
person as they may authorize at the times and in the manner provided in the
By-Laws. Determinations of net income of any Series or Class and determination
of income, asset value, capital gains, expenses, and liabilities made by the
Trustees, or by such person as they may authorize, in good faith, shall be
binding on all parties concerned. The foregoing sentence shall not be construed
to protect any Trustee, officer or agent of the Trust against any liability to
the Trust or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
If, for any reason, the net income of any Series or Class determined at any
time is a negative amount, the pro rata share of such negative amount allocable
to each Shareholder of such Series or Class shall constitute a liability of such
Shareholder to that Series or Class which shall be paid out of such
Shareholder's account at such times and in such manner as the Trustees may from
time to time determine (x) out of the accrued dividend account of such
Shareholder, (y) by reducing the number of Shares of that Series or Class in the
account of such Shareholder, or (z) otherwise.
SECTION 2. REDEMPTIONS AND REPURCHASES. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request directed to the Trust
or a person designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, as determined in accordance with the By-Laws, the 1940 Act and the
rules of the Commission. Payment for said Shares shall be made by the Trust to
the Shareholders within seven days after the date on which the request is made
or in accordance with such other procedures, consistent with the 1940 Act and
the rules of the Commission, as the Trustees may
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from to time authorize. The obligation set forth in this Section 2 is subject
to the provision that in the event that any time the New York Stock Exchange is
closed for other than weekends or holidays, or if permitted by the rules of the
Commission during periods when trading on the Exchange is restricted or during
any emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets belonging to such Series (or net assets allocable to such Class) or
during any other period permitted by order of the Commission for the protection
of investors, such obligations may be suspended or postponed by the Trustees.
The Trust may also purchase or repurchase Shares at a price not exceeding the
net asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made.
The redemption price may in any case or cases be paid wholly or partly in
kind if the Trustees determine that such payment is advisable in the interest of
the remaining Shareholders of the Series or Class the Shares of which are being
redeemed. In making any such payment wholly or partly in kind, the Trust shall,
so far as may be practicable, deliver assets which approximate the
diversification of all of the assets belonging at the time to the Series (or
allocable to the Class) the Shares of which are being redeemed. Subject to the
foregoing, the fair value, selection and quantity of securities or other
property so paid or delivered as all or part of the redemption price may be
determined by or under authority of the Trustees. In no case shall the Trust be
liable for any delay of any corporation or other person in transferring
securities selected for delivery as all or part of any payment in kind.
SECTION 3. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall have
the right at its option and at any time to redeem Shares of any Shareholder at
the net asset value thereof as described in Section 1 of this Article VI: (i)
if at such time such Shareholder owns Shares of any Series or Class having an
aggregate net asset value of less than an amount determined from time to time by
the Trustees; or (ii) to the extent that such Shareholder owns Shares equal to
or in excess of a percentage determined from time to time by the Trustees of the
outstanding Shares of the Trust or of any Series or Class.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
SECTION 1. COMPENSATION. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount of their
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
SECTION 2. LIMITATION OF LIABILITY. The Trustees shall not be responsible
or liable in any event for any neglect or wrong-doing of any officer, agent,
employee, manager or principal underwriter of the Trust, nor shall any Trustee
be responsible for the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
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Every note, bond, contract, instrument, certificate or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.
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.
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
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(provided that a majority of the disinterested Trustees then in office act on
the matter) upon a determination, based upon a review of readily available facts
(as opposed to a full trial type inquiry) that such Covered Person is not liable
to the Trust or its Shareholders by reason of 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 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.
ARTICLE IX
Miscellaneous
SECTION 1. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust or any Series or
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Class shall look only to the assets of the Trust, or, to the extent that the
liability of the Trust may have been expressly limited by contract to the assets
of a particular Series (or the assets allocable to a particular Class), only to
the assets belonging to the relevant Series (or allocable to the relevant
Class), for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Nothing in this Declaration of Trust shall protect any Trustee against any
liability to which such 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 the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued on behalf of the Trust by the Trustees, by any officers or officer or
otherwise shall give notice that this Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts and shall recite that the same
was executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as officers or officer or otherwise and not individually and that
the obligations of such instrument are not binding upon any of them or the
shareholders individually but are binding only upon the assets and property of
the Trust or upon the assets belonging to the Series (or allocable to the Class)
for the benefit of which the Trustees have caused the note, bond, contract,
instrument, certificate or undertaking to be made or issued, and may contain
such further recital as he or they may deem appropriate, but the omission of any
such recital shall not operate to bind any Trustee or Trustees or officers or
officer or Shareholders or any other person individually.
SECTION 2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with such advice or for failing to follow such
advice. The Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
SECTION 3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
SECTION 4. TERMINATION OF TRUST OR SERIES OR CLASS. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by vote of at least 66-2/3% of the Shares of each
Series entitled to vote and voting separately by Series or by the Trustees by
written notice to the Shareholders. Any Series may be terminated at any time by
vote of at least 66-2/3% of the Shares of that Series or by the Trustees by
written notice to the Shareholders of that Series. Any Class may be separately
terminated at any time by vote of at least a majority of the Shares of that
Class present and
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voting on the question (a quorum being present) or by the Trustees by written
notice to the Shareholders of that Class.
Upon termination of the Trust (or any Series or Class, as the case may be),
after paying or otherwise providing for all charges, taxes, expenses and
liabilities belonging, severally, to each Series or allocable to each Class (or
the applicable Series or Classes, as the case may be), whether due or accrued or
anticipated as may be determined by the Trustees, the Trust shall in accordance
with such procedures as the Trustees consider appropriate reduce the remaining
assets belonging, severally, to each Series or allocable to each Class (or the
applicable Series or Classes, as the case may be), to distributable form in cash
or shares or other securities, or any combination thereof, and distribute the
proceeds belonging to each Series or allocable to each Class (or the applicable
Series or Classes, as the case may be), to the Shareholders of that Series or
Class, as a Series or Class, ratably according to the number of Shares of that
Series or Class held by the several Shareholders on the date of termination.
SECTION 5. MERGER AND CONSOLIDATION. The Trustees may cause the Trust to
be merged into or consolidated with another trust or company or its shares
exchanged under or pursuant to any state or federal statute, if any, or
otherwise to the extent permitted by law, if such merger or consolidation or
share exchange has been authorized by vote of a majority of the outstanding
Shares; provided that in all respects not governed by statute or applicable law,
the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation.
SECTION 6. FILING OF COPIES, REFERENCES, HEADINGS. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts and with any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein,"
"hereof" and "hereunder" shall be deemed to refer to this instrument as amended
or affected by any such amendments. Headings are placed herein for convenience
of reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
SECTION 7. APPLICABLE LAW. This Declaration of Trust is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust.
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SECTION 8. AMENDMENTS. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then Trustees when
authorized so to do by vote of a majority of the Shares entitled to vote, except
that amendments described in Article III, Section 5 hereof or having the purpose
of changing the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by Shareholder vote.
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IN WITNESS WHEREOF, each of the undersigned Trustees as aforesaid do hereto
set their hands this ____ day of December, 1997.
----------------------------------------
Marlis S. Fritz
----------------------------------------
Nils H. Hakansson
----------------------------------------
Kenneth Reid
----------------------------------------
Barr M. Rosenberg
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William F. Sharpe
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EXHIBIT 3.6
BARR ROSENBERG SERIES TRUST
Plan pursuant to Rule 18f-3(d) under the Investment Company Act of 1940
Effective August 5, 1996
Amended and Restated December __, 1997
WHEREAS, the Board of Trustees of Barr Rosenberg Series Trust (the "TRUST")
has considered the following amended and restated 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, Select shares and Investor shares. Each
class is subject to such investment minimums and other conditions of eligibility
as are set forth in the Trust's prospectuses, each as from time to time in
effect (each, a "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.
CLASS CHARACTERISTICS
Institutional, Adviser, Select and Investor shares of a Fund represent
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
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(1) The current Funds of the Trust are the U.S. Small Capitalization
Series, the International Small Capitalization Series, the Japan Series, the
Barr Rosenberg Market Neutral Fund and the Barr Rosenberg Double Alpha Market
Fund.
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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. Service 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 a Fund equal to 0.25% of such
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 a Fund equal
to 0.25% of such Fund's average daily net assets attributable to Select shares.
Select shares are also subject to a Distribution Fee. The Distribution Plan for
Select shares permits a 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 a Fund's average daily net assets attributable to Select
shares.
(4) INVESTOR SHARES are sold without any initial or deferred sales charges,
but are subject to a Service Fee at an annual rate with respect to a Fund equal
to 0.25% of such Fund's average daily net assets attributable to Investor
shares. Investor shares are also subject to a Distribution Fee. The
Distribution Plan and Distributor's Contract currently provide that the
Distributor will be paid 0.25% per annum of a Fund's average daily net assets
attributable to Investor shares.
EXPENSE ALLOCATIONS
Institutional, Adviser, Select and Investor 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.
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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. 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 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, Select and
Investor 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 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.
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 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.
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REPORTS TO THE TRUSTEES
The Manager and/or the Administrator will be responsible for reporting any
potential or existing conflicts among the classes of shares to the Trustees.
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<PAGE>
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:
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<PAGE>
BY-LAWS
OF
BARR ROSENBERG SERIES TRUST
ARTICLE 1
Agreement and Declaration
of Trust and Principal Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Barr Rosenberg Series Trust (the "Trust"), the
Massachusetts business trust established by the Declaration of Trust.
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust
shall be located at such place as the Trustees may determine from time to time.
ARTICLE 2
Meetings of Trustees
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held, at
any time and at any place designated in the call of the meeting, when called by
the Chairman of the Board, if any, the President or the Treasurer or by two or
more Trustees, sufficient notice thereof being given to each Trustee by the
Clerk or an Assistant Clerk or by the officer or the Trustees calling the
meeting.
2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his usual
or last known business or residence address or to give notice to him in person
or by telephone at least twenty-four hours before the meeting. Notice of a
meeting need not be given to any Trustee if a written waiver of notice, executed
by him before or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him. Neither notice of a meeting nor a
waiver of a notice need specify the purposes of the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from
time to time by a majority of
<PAGE>
the votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
2.5 ACTION BY VOTE. When a quorum is present at any meeting, a majority
of Trustees present may take any action, except when a larger vote is expressly
required by law, by the Declaration of Trust or by these By-Laws.
2.6 ACTION BY WRITING. Except as required by law, any action required or
permitted to be taken at any meeting of the Trustees may be taken without a
meeting if a majority of the Trustees (or such larger proportion thereof as
shall be required by any express provision of the Declaration of Trust or these
By-Laws) consent to the action in writing and such written consents are filed
with the records of the meetings of Trustees. Such consent shall be treated for
all purposes as a vote taken at a meeting of Trustees.
2.7 PRESENCE THROUGH COMMUNICATIONS EQUIPMENT. Except as required by law,
the Trustees may participate in a meeting of Trustees by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
President, a Treasurer, a Clerk, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time may in their discretion
appoint. If a Chairman of the Board is elected, he shall be a Trustee and may
but need not be a Shareholder; and any other officer may be but none need be a
Trustee or Shareholder. Any two or more offices may be held by the same person.
3.2 ELECTION AND TENURE. The President, the Treasurer, the Clerk and such
other officers as the Trustees may in their discretion from time to time elect
shall each be elected by the Trustees to serve until his successor is elected or
qualified, or until he sooner dies, resigns, is removed or becomes disqualified.
Each officer shall hold office and each agent shall retain authority at the
pleasure of the Trustees.
3.3 POWERS. Subject to the other provisions of these By-Laws, in addition
to the duties and powers herein and set forth in the Declaration of Trust and in
addition to such duties and powers as may be determined by the Trustees, the
President shall have such duties and powers with respect to the Trust as are
commonly incident to the president of a Massachusetts business corporation as if
the Trust were organized as a Massachusetts business corporation; each other
officer shall have such duties and powers as are commonly incident to
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<PAGE>
the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation.
3.4 PRESIDENT AND VICE PRESIDENTS. The President shall have the duties
and powers specified in these By-Laws and shall have such other duties and
powers as may be determined by the Trustees.
Any Vice Presidents shall have such duties and powers as shall be
designated from time to time by the Trustees.
3.5 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Trust
shall be the Chairman of the Board, if any, the President or such other officer
as is designated by the Trustees and shall, subject to the control of the
Trustees, have general charge and supervision of the business of the Trust and,
unless there is a Chairman of the Board, or except as the Trustees (or the
Chairman of the Board if the Trustees do not act) shall otherwise determine,
preside at all meetings of the stockholders and of the Trustees. If no such
designation is made, the President shall be the Chief Executive Officer.
3.6 CHAIRMAN OF THE BOARD. If a Chairman of the Board of Trustees is
elected, he shall have the duties and powers specified in these By-Laws and
shall have such other duties and powers as may be determined by the Trustees.
The Chairman of the Board shall, unless the Trustees (or the Chairman of the
Board if the Trustees do not act) shall otherwise determine, preside at all
meetings of the stockholders and of the Trustees.
3.7 TREASURER. The Treasurer shall be the chief financial and accounting
officer of the Trust, and shall, subject to the provisions of the Declaration of
Trust and to any arrangement made by the Trustees with a custodian, investment
adviser or manager or transfer, shareholder servicing or similar agent, be in
charge of the valuable papers, books of account and accounting records of the
Trust, and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the Chief Executive Officer.
3.8 CLERK. The Clerk shall record all proceedings of the Shareholders and
the Trustees in books to be kept therefor, which books or a copy thereof shall
be kept at the principal office of the Trust. In the absence of the Clerk from
any meeting of the Shareholders or Trustees, an assistant Clerk, or if there be
none or if he is absent, a temporary clerk chosen at such meeting shall record
the proceedings thereof in the aforesaid books.
3.9 RESIGNATIONS AND REMOVALS. Any officer may resign at any time by
written instrument signed by him and delivered to the President or the Clerk or
to a meeting of the Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. The Trustees may remove
any officer with or without cause. Except to the extent expressly provided in a
written agreement with the Trust, no officer resigning and no
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<PAGE>
officer removed shall have any right to any compensation for any period
following his resignation or removal, or any right to damages on account of such
removal.
ARTICLE 4
Reports
4.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 5
Fiscal Year
5.1 GENERAL. Except as from time to time otherwise provided by the
Trustees, the initial fiscal year of the Trust shall end on such date as is
determined in advance or in arrears by the Treasurer and subsequent fiscal years
shall end on such date in subsequent years.
ARTICLE 6
Seal
6.1 GENERAL. The seal of the Trust shall consist of a flat-faced die with
the word "Massachusetts," together with the name of the Trust and the year of
its organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 7
Execution of Papers
7.1 GENERAL. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all checks, notes, drafts
and other obligations and all registration statements and amendments thereto and
all applications and amendments thereto to the Securities and Exchange
Commission shall be signed by the Chairman, if any, the President, any Vice
President or the Treasurer or any of such other officers or agents as shall be
designated for that purpose by a vote of the Trustees.
ARTICLE 8
Provisions Relating to the
Conduct of the Trust's Business
8.1 CERTAIN DEFINITIONS. When used herein the following words shall have
the following meanings: "Distributor" shall mean any one or more partnerships,
corporations,
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<PAGE>
firms or associations which have distributor's or principal underwriter's
contracts in effect with the Trust providing that redeemable shares of any class
or series issued by the Trust shall be offered and sold by such Distributor.
"Adviser" shall mean any partnership, corporation, firm or association which may
at the time have an advisory or management contract with the Trust.
8.2 LIMITATION ON DEALINGS WITH OFFICERS OR TRUSTEES. The Trust will not
lend any of its assets to the Distributor or Adviser or to any officer or
director of the Distributor or Adviser or any officer or Trustee of the Trust
and shall not permit any officer or Trustee or any officer or director of the
Distributor or Adviser, to deal for or on behalf of the Trust with himself as
principal or agent, or with any partnership, association or corporation in which
he has a financial interest; provided that the foregoing provisions shall not
prevent (a) officers and Trustees of the Trust or officers and directors of the
Distributor or Adviser from buying, holding or selling shares in the Trust or
from being partners, officers or directors of or otherwise financially
interested in the Distributor or the Adviser; (b) a purchase or sale of
securities or other property if such transaction is permitted by or is exempt or
exempted from the provisions of the Investment Company Act of 1940 and does not
involve any commission or profit to any securities dealer who is, or one or more
of whose partners, shareholders, officers or directors is, an officer or Trustee
of the Trust or an officer or director of the Distributor or Adviser; (c)
employment of legal counsel, registrars, transfer agents, shareholder servicing
agents, dividend disbursing agents or custodians who are, or any one of which
has a partner, shareholder, officer or director who is, an officer or Trustee of
the Trust or an officer or director of the Distributor or Adviser if only
customary fees are charged for services to the Trust; (d) sharing of
statistical, research, legal and management expenses and office hire and
expenses with any other investment company in which an officer or Trustee of the
Trust or an officer or director of the Distributor or Adviser is an officer or
director or otherwise financially interested.
8.3 LIMITATION ON DEALING IN SECURITIES OF THE TRUST BY CERTAIN OFFICERS,
TRUSTEES, DISTRIBUTOR OR ADVISER. Neither the Distributor nor Adviser, nor any
officer or Trustee of the Trust or officer, director or partner of the
Distributor or Adviser shall take long or short positions in securities issued
by the Trust; provided, however, that:
(a) The Distributor may purchase from the Trust and otherwise deal in
shares issued by the Trust pursuant to the terms of its contract with the
Trust;
(b) Any officer or Trustee of the Trust or officer or director or
partner of the Distributor or Adviser or any trustee or fiduciary for the
benefit of any of them may at any time, or from time to time, purchase from
the Trust or from the Distributor shares issued by the Trust at the price
available to the public or to such officer, Trustee, director, partner or
fiduciary, no such purchase to be in contravention of any applicable state
or federal requirement; and
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<PAGE>
(c) The Distributor or the Adviser may at any time, or from time to
time, purchase for investment shares issued by the Trust.
8.4 SECURITIES AND CASH OF THE TRUST TO BE HELD BY CUSTODIAN SUBJECT TO
CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust shall, as hereinafter
provided, be held by or deposited with one or more banks or trust companies
having (according to its last published report) not less than $2,000,000
aggregate capital, surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"), provided such a Custodian
can be found ready and willing to act. The Trust may, or may permit any
Custodian to, deposit all or any part of the securities owned by any class
or series of shares of the Trust in a system for the central handling of
securities established by a national securities exchange or national
securities association registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, or such other person
as may be permitted by said Commission, including, without limitation, a
clearing agency registered under Section 17A of said Securities Exchange
Act of 1934, pursuant to which system all securities of any particular
class or series of any issue deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry, without
physical delivery of such securities.
(b) The Trust shall enter into a written contract with each Custodian
regarding the powers, duties and compensation of such Custodian with
respect to the cash and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be approved by the Trustees.
(c) The Trust shall upon the resignation or inability to serve of any
Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve, use its
best efforts to obtain a successor Custodian;
(ii) require that the cash and securities owned by any class or
series of shares of the Trust and in the possession of the resigning
or disqualified Custodian be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian can be found,
submit to the shareholders, before permitting delivery of the cash and
securities owned by any class or series of shares of the Trust and in
the possession of the resigning or disqualified Custodian otherwise
than to a successor Custodian, the question whether that class or
series shall be liquidated or shall function without a Custodian.
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<PAGE>
8.5 LIMITATIONS ON INVESTMENT BY THE TRUST IN SECURITIES OF ANY ONE
ISSUER. The Trust may not purchase for its portfolio or for the portfolio of
any class or series of the Trust's shares the securities of any issuer if
immediately after such purchase the Trust or that class or series would
thereupon hold securities representing more than 10% of the voting securities of
such issuer as disclosed in the last available financial statements of such
issuer. This limitation shall not apply to securities issued by registered
investment companies, obligations issued or guaranteed by the government of the
United States of America or to obligations of any corporation organized under a
general Act of Congress if such corporation is an instrumentality of the United
States. For purposes of this limitation, each state and each political
subdivision, agency, authority or instrumentality thereof and each multistate
agency and authority shall be considered a separate issuer.
8.6 DETERMINATION OF NET ASSET VALUE. The Trustees or any officer or
officers or agent or agents of the Trust designated from time to time for this
purpose by the Trustees shall determine at least once daily the net income and
the value of all the assets attributable to any class or series of shares of the
Trust on each day upon which the New York Stock Exchange is open for
unrestricted trading or at such other times as the Trustees shall, consistent
with the 1940 Act and the rules of the Commission, designate. In determining
asset values, all securities for which representative market quotations are
readily available shall be valued at market value and other securities and
assets shall be valued at fair value, all as determined in good faith by the
Trustees or an officer or officers or agent or agents, as aforesaid, in
accordance with accounting principles generally accepted at the time.
Notwithstanding the foregoing, the assets belonging to any class or series of
shares of the Trust may, if so authorized by the Trustees, be valued in
accordance with the amortized cost method, subject to the power of the Trustees
to alter the method for determining asset values. The value of such assets so
determined, less total liabilities belonging to that class or series of shares
(exclusive of capital stock and surplus) shall be the net asset value until a
new asset value is determined by the Trustees or such officers or agents. In
determining the net asset value the Trustees or such officers or agents may
include in liabilities such reserves for taxes, estimated accrued expenses and
contingencies in accordance with accounting principles generally accepted at the
time as the Trustees or such officers or agents may in their best judgment deem
fair and reasonable under the circumstances. The manner of determining net
asset value may from time to time be altered as necessary or desirable in the
judgment of the Trustees to conform it to any other method prescribed or
permitted by applicable law or regulation. Determinations of net asset value
made by the Trustees or such officers or agents in good faith shall be binding
on all parties concerned. The foregoing sentence shall not be construed to
protect any Trustee, officer or agent of the Trust against any liability to the
Trust or its security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
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<PAGE>
ARTICLE 9
Amendments to the By-Laws
9.1 GENERAL. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees.
Date: December 8, 1997
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<PAGE>
BARR ROSENBERG SERIES TRUST
AMENDED AND RESTATED DISTRIBUTOR'S CONTRACT
Amended and Restated Distributor's Contract dated as of December __, 1997,
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 an
amended and restated 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 Amended and Restated 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, Investor 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 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.
On every sale, the Fund purchased shall receive the net asset value of the
shares. 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
and/or Investor 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 or Investor
shares, as applicable, and otherwise on the terms and conditions set forth in
any Distribution Plan in effect for Select shares or Investor shares, each 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.
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 THIRD PARTIES; NON-EXCLUSIVITY; SALES OF SHARES BY THE TRUST.
The Distributor may employ such third parties, including one or more
participating brokers or introducing brokers, for the purposes of selling shares
of the Trust as the Distributor,
<PAGE>
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 and statement of
additional information (collectively, the "prospectus") of the Trust or as the
Trust acting through its Trustees may otherwise direct. The Distributor may
employ such third parties, 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 and for maintaining 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 Bisys Fund Services Limited
Partnership d.b.a.
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<PAGE>
Bisys Fund Services ("Bisys Fund Services") to perform such services, in which
event the Distributor agrees to look solely to Bisys Fund Services in the event
of any breach of the agreements of the Trust set forth in this Section 9. The
Trust or Bisys Fund Services 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 to persons other than current
shareholders).
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 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 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
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<PAGE>
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. The
foregoing rights of indemnification shall be in addition to any other rights to
which the Distributor may be entitled as a matter of law.
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 all three 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
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.
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Action by a Fund or a Class thereof under (a) above may be taken either (i)
by vote of 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, 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.
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CUSTODY AGREEMENT
AGREEMENT, dated as of December 9, 1997, by and between BARR ROSENBERG
SERIES TRUST (the "Trust"), a business trust organized and existing under the
laws of The Commonwealth of Massachusetts, acting with respect to and on behalf
of each of the series of the Trust that are identified on Exhibit A hereto, as
amended from time to time (each, a "Portfolio"), and CUSTODIAL TRUST COMPANY, a
bank organized and existing under the laws of the State of New Jersey (the
"Custodian").
WHEREAS, the Trust desires that the securities, funds and other assets of
the Portfolios be held and administered by Custodian pursuant to this Agreement;
WHEREAS, each Portfolio is an investment portfolio represented by a series
of Shares included among the shares of beneficial interest issued by the Trust,
an open-end management investment company registered under the 1940 Act;
WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in the 1940 Act to act as custodian for management investment
companies registered under the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:
1.1 "AUTHORIZED PERSON" means any person authorized by resolution of the
Board of Trustees to give Oral Instructions and Written Instructions on behalf
of the Trust and identified, by
<PAGE>
name or by office, in Exhibit B hereto or any person designated to do so by an
investment adviser of any Portfolio who is named by the Trust in Exhibit C
hereto.
1.2 "BOARD OF TRUSTEES" means the Board of Trustees of the Trust or, when
permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "BOOK-ENTRY SYSTEM" means a book-entry system maintained by a Federal
Reserve Bank for securities of the United States government or of agencies or
instrumentalities thereof (including government-sponsored enterprises).
1.4 "BUSINESS DAY" means any day on which banks in the State of New Jersey
and New York are open for business.
1.5 "CUSTODY ACCOUNT" means, with respect to a Portfolio, the account in
the name of such Portfolio, which is provided for in Section 3.2 below.
1.6 "DOMESTIC SECURITIES DEPOSITORY" means The Depository Trust Company and
any other clearing agency registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, which acts as a securities
depository.
1.7 "ELIGIBLE DOMESTIC BANK" means a bank as defined in the 1940 Act.
1.8 "ELIGIBLE FOREIGN CUSTODIAN" means any banking institution, trust
company or other entity (including any Foreign Securities Depository)
incorporated or organized under the laws of a country other than the United
States which is eligible under the 1940 Act to act as a custodian for securities
and other assets of a Portfolio held outside the United States.
1.9 "FOREIGN CUSTODY MANAGER" has the same meaning as in the 1940 Act.
1.10 "FOREIGN SECURITIES DEPOSITORY" means a foreign securities depository
or clearing agency that qualifies as an Eligible Foreign Custodian as defined in
the 1940 Act.
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1.11 "MASTER REPURCHASE AGREEMENT" means the Master Repurchase Agreement
of even date herewith between the Trust and Bear, Stearns & Co. Inc. as it may
from time to time be amended.
1.12 "MASTER SECURITIES LOAN AGREEMENT" means the Master Securities Loan
Agreement of even date herewith between the Trust and Bear, Stearns Securities
Corp. as it may from time to time be amended.
1.13 "1940 ACT" means the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
1.14 "ORAL INSTRUCTIONS" means instructions orally transmitted to and
received by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person and (b) completed in accordance with
Custodian's reasonable requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust.
1.15 "PROPER INSTRUCTIONS" means Oral Instructions or Written Instructions.
Proper Instructions may be continuing Written Instructions when deemed
appropriate by the Trust and Custodian.
1.16 "SECURITIES DEPOSITORY" means any Domestic Securities Depository or
Foreign Securities Depository.
1.17 "SHARES" means, with respect to a Portfolio, those shares in a series
or class of beneficial interests of the Trust that represent interests in such
Portfolio.
1.18 "WRITTEN INSTRUCTIONS" means written communications received by
Custodian that are (a) reasonably believed by Custodian to have been signed or
sent by an Authorized Person, (b) sent or transmitted by letter, facsimile,
central processing unit connection, on-line terminal or magnetic
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tape, and (c) completed in accordance with Custodian's reasonable requirements
from time to time as to content of instructions and their manner and timeliness
of delivery by the Trust.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Trust hereby appoints Custodian as custodian of all
such securities, funds and other assets of each Portfolio as may be acceptable
to Custodian and from time to time delivered to it by the Trust or others for
the account of such Portfolio.
2.2 ACCEPTANCE. Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1 SEGREGATION. All securities and non-cash property of a Portfolio in the
possession of Custodian (other than securities maintained by Custodian with a
sub-custodian appointed pursuant to this Agreement or in a Securities Depository
or Book-Entry System) shall be physically segregated from other such securities
and non-cash property in the possession of Custodian. All cash, securities and
other non-cash property of a Portfolio shall be identified as belonging to such
Portfolio.
3.2 CUSTODY ACCOUNT. (a) Custodian shall open and maintain in its trust
department a custody account in the name of each Portfolio, subject only to
draft or order of Custodian, in which Custodian shall enter and carry all
securities, funds and other assets of such Portfolio which are delivered to
Custodian and accepted by it.
(b) If, with respect to any Portfolio, Custodian at any time fails to
receive any of the documents referred to in Section 3.10(a) below, then, until
such time as it receives such document, it shall not be obligated to receive any
securities into the Custody Account of such Portfolio and shall be entitled to
return to such Portfolio any securities that it is holding in such Custody
Account.
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3.3 SECURITIES IN PHYSICAL FORM. Custodian may, but shall not be obligated
to, hold securities that may be held only in physical form.
3.4 DISCLOSURE TO ISSUERS OF SECURITIES. Custodian is authorized to
disclose the Trust's and any Portfolio's names and addresses, and the securities
positions in such Portfolio's Custody Account, to the issuers of such securities
when requested by them to do so.
3.5 APPOINTMENT OF DOMESTIC SUB-CUSTODIANS. Custodian may at any time and
from time to time, subject to the Trust's prior approval, appoint and employ,
and at any time, in its sole discretion, cease to employ, any Eligible Domestic
Bank qualified to act as custodian for management investment companies
registered under the 1940 Act as sub-custodian to hold securities and other
assets of a Portfolio that are maintained in the United States and to carry out
such other provisions of this Agreement as it may determine. The appointment of
any such sub-custodian shall be at Custodian's expense and shall not relieve
Custodian of any of its obligations or liabilities under this Agreement.
3.6 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. (a) At any time and from time to
time, Custodian may, in its discretion, appoint and employ in accordance with
the 1940 Act (i) any overseas branch of any Eligible Domestic Bank, or (ii) any
Eligible Foreign Custodian selected by the Foreign Custody Manager, in each case
as a foreign sub-custodian for securities and other assets of a Portfolio that
are maintained outside the United States, provided that the employment of any
such overseas branch has been approved by the Fund, and provided that, in the
case of any such Eligible Foreign Custodian, the Foreign Custody Manager has
approved, in writing, the agreement (and/or, in the case of a Foreign Securities
Depository, the rules and/or established practices or procedures thereof)
pursuant to which Custodian employs such Eligible Foreign Custodian.
(b) Set forth on Exhibit D hereto, with respect to each Portfolio, are the
foreign sub-custodians (including Foreign Securities Depositories) that
Custodian may employ pursuant to Section 3.6(a) above. Exhibit D shall be
revised from time to time as foreign sub-custodians are added or deleted.
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(c) If the Trust proposes to have a Portfolio make an investment which is
to be held in a country in which Custodian does not have appropriate
arrangements in place with a foreign sub-custodian selected by the Foreign
Custody Manager, then the Trust shall inform Custodian sufficiently in advance
of such investment to allow Custodian to put such arrangements in place.
(d) Notwithstanding anything to the contrary in Section 8.1 below or
elsewhere in this Agreement, Custodian shall have no greater liability to any
Portfolio or the Trust for the actions or omissions of any foreign sub-custodian
appointed pursuant to this Agreement than any such foreign sub-custodian has to
Custodian, and Custodian shall not be required to discharge any such liability
which may be imposed on it unless and until such foreign sub-custodian has
effectively indemnified Custodian against it or has otherwise discharged its
liability to Custodian in full.
(e) Upon the request of the Foreign Custody Manager, Custodian shall
furnish to the Foreign Custody Manager (but no more often than once per year)
information concerning all foreign sub-custodians appointed pursuant to this
Agreement which shall be similar in kind and scope to any such information that
may have been furnished to the Foreign Custody Manager in connection with the
initial approval by the Foreign Custody Manager of the agreements pursuant to
which Custodian employs such foreign sub-custodians or as otherwise required by
the 1940 Act.
3.7 APPOINTMENT OF OTHER AGENTS. Custodian may employ other suitable
agents, which may include affiliates of Custodian such as Bear, Stearns & Co.
Inc. ("Bear Stearns") or Bear, Stearns Securities Corp. ("BS Securities"), both
of which are securities broker-dealers, provided, however, that Custodian shall
not employ (a) BS Securities to hold any collateral pledged by BS Securities
under the Master Securities Loan Agreement or any other securities loan
agreement between the Trust and BS Securities, whether now or hereafter in
effect, or (b) Bear Stearns to hold any securities purchased from Bear Stearns
under the Master Repurchase Agreement or any other repurchase agreement between
the Trust and Bear Stearns, whether now or hereafter in effect, and Custodian
shall not employ any agent that would subject a Portfolio to any special audits
or other requirements pursuant to Rule 17f-1 under the 1940 Act. The appointment
of any agent pursuant to this Section 3.7 shall not relieve Custodian of any of
its obligations or liabilities under this Agreement.
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<PAGE>
3.8 BANK ACCOUNTS. In its discretion and from time to time Custodian may
open and maintain one or more demand deposit accounts with any Eligible Domestic
Bank (any such accounts to be in the name of Custodian and subject only to its
draft or order), provided, however, that the opening and maintenance of any such
account shall be at Custodian's expense and shall not relieve Custodian of any
of its obligations or liabilities under this Agreement.
3.9 DELIVERY OF ASSETS TO CUSTODIAN. Provided they are acceptable to
Custodian, the Trust shall deliver to Custodian the securities, funds and other
assets of each Portfolio, including without limitation (a) payments of income,
payments of principal and capital distributions received by such Portfolio with
respect to securities, funds or other assets owned by such Portfolio at any time
during the term of this Agreement, and (b) funds received by such Portfolio for
the issuance, at any time during such term, of Shares of such Portfolio.
Custodian shall not be under any duty or obligation to require the Trust to
deliver to it any securities or other assets owned by a Portfolio and shall have
no responsibility or liability for or on account of securities or other assets
not so delivered.
3.10 DOMESTIC SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. Custodian and
any sub-custodian appointed pursuant to Section 3.5 above may deposit and/or
maintain securities of any Portfolio in a Domestic Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of a Portfolio in any Domestic
Securities Depository or Book-Entry System, the Trust shall deliver to Custodian
a resolution of the Board of Trustees, certified by an officer of the Trust,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.5 above) on an on-going basis to deposit in such Domestic
Securities Depository or Book-Entry System all securities eligible for deposit
therein and to make use of such Domestic Securities Depository or Book-Entry
System to the extent possible and practical in connection with the performance
of its obligations hereunder (or under the applicable sub-custody agreement in
the case of such sub-custodian), including, without limitation, in connection
with settlements of purchases and sales of securities, loans of securities, and
deliveries and returns of collateral consisting of securities.
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(b) Securities of a Portfolio kept in a Book-Entry System or Domestic
Securities Depository shall be kept in an account ("Depository Account") of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) in
such Book-Entry System or Domestic Securities Depository which includes only
assets held by Custodian (or such sub-custodian) as a fiduciary, custodian or
otherwise for customers (i.e., a non-proprietary account).
(c) The records of Custodian with respect to securities of a Portfolio that
are maintained in a Book-Entry System or Domestic Securities Depository shall at
all times identify such securities as belonging to such Portfolio.
(d) If securities purchased by a Portfolio are to be held in a Book-Entry
System or Domestic Securities Depository, Custodian (or any sub-custodian
appointed pursuant to Section 3.5 above) shall pay for such securities upon (i)
receipt of advice from the Book-Entry System or Domestic Securities Depository
that such securities have been transferred to the Depository Account, and (ii)
the making of an entry on the records of Custodian (or of such sub-custodian) to
reflect such payment and transfer for the account of such Portfolio. If
securities sold by a Portfolio are held in a Book-Entry System or Domestic
Securities Depository, Custodian (or such sub-custodian) shall transfer such
securities upon (A) receipt of advice from the Book-Entry System or Domestic
Securities Depository that payment for such securities has been transferred to
the Depository Account, and (B) the making of an entry on the records of
Custodian (or of such sub-custodian) to reflect such transfer and payment for
the account of such Portfolio.
(e) Custodian shall provide the Trust with copies of any report obtained by
Custodian (or by any sub-custodian appointed pursuant to Section 3.5 above) from
a Book-Entry System or Domestic Securities Depository in which securities of a
Portfolio are kept on the internal accounting controls and procedures for
safeguarding securities deposited in such Book-Entry System or Domestic
Securities Depository.
(f) At its election, the Trust shall be subrogated to the rights of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) with
respect to any claim against a Book-Entry
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System or Domestic Securities Depository or any other person for any loss or
damage to a Portfolio arising from the use of such Book-Entry System or Domestic
Securities Depository, if and to the extent that such Portfolio has not been
made whole for any such loss or damage.
3.11 RELATIONSHIP WITH SECURITIES DEPOSITORIES. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or sub-contractor of Custodian for purposes of Section 3.7 above or
otherwise.
3.12 PAYMENTS FROM CUSTODY ACCOUNT. Upon receipt of Proper Instructions
with respect to a Portfolio but subject to its right to foreclose upon and
liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall make payments from the Custody Account of such Portfolio, but only in the
following cases, provided, first, that there are sufficient funds in such
Custody Account to make such payments, whether belonging to such Portfolio or
advanced to it by Custodian in its sole and absolute discretion as set forth in
Section 3.18 below, and, second, that after the making of such payments, such
Portfolio would not be in violation of any margin or other requirements agreed
upon pursuant to Section 3.18 below:
(a) For the purchase of securities for such Portfolio but only (i) in the
case of securities (other than options on securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any
sub-custodian appointed pursuant to this Agreement) of such securities
registered as provided in Section 3.20 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities Depository, in accordance with the conditions set forth in
Section 3.10 above, and (ii) in the case of options, futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of such Portfolio, the
Custodian, any such sub-custodian, or any nominee referred to in Section 3.20
below;
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(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.13(f) below, of securities owned by such Portfolio;
(c) For transfer in accordance with the provisions of any agreement among
the Trust, Custodian and a securities broker-dealer, relating to compliance with
rules of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions of such Portfolio;
(d) For transfer in accordance with the provisions of any agreement among
the Trust, Custodian and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding margin or other
deposits in connection with transactions of such Portfolio;
(e) For the funding of any time deposit (whether certificated or not) or
other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial institution of loan
participations, but only if Custodian has in its possession a copy of the
agreement between the Trust and such banking or other financial institution with
respect to the purchase of such loan participations and provided that Custodian
shall receive and retain such participation certificate or other evidence of
participation (if any) as such banking or other financial institution may
deliver with respect to any such loan participation;
(g) For the purchase and/or sale of foreign currencies or of options to
purchase and/or sell foreign currencies, for spot or future delivery, for the
account of such Portfolio pursuant to contracts between the Trust and any
banking or other financial institution (including Custodian, any sub-custodian
appointed pursuant to this Agreement and any affiliate of Custodian);
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(h) For transfer to a securities broker-dealer as margin for a short sale
of securities for such Portfolio, or as payment in lieu of dividends paid on
securities sold short for such Portfolio;
(i) For the payment of amounts in respect of equity swap contracts entered
into by such Portfolio;
(j) For the payment as provided in Article IV below of any dividends,
capital gain distributions or other distributions declared on the Shares of such
Portfolio;
(k) For the payment as provided in Article IV below of the redemption price
of the Shares of such Portfolio;
(l) For the payment of any expense or liability incurred by such Portfolio,
including but not limited to the following payments for the account of such
Portfolio: interest, taxes, and administration, investment advisory,
distribution, servicing, accounting, auditing, transfer agent, custodian,
trustee and legal fees, and other operating expenses of such Portfolio; in all
cases, whether or not such expenses are to be in whole or in part capitalized or
treated as deferred expenses; and
(m) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of such Portfolio, and naming the person or
persons to whom such payment is to be made.
3.13 DELIVERIES FROM CUSTODY ACCOUNT. Upon receipt of Proper Instructions
with respect to a Portfolio but subject to its right to foreclose upon and
liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall release and deliver securities and other assets from the Custody Account
of such Portfolio, but only in the following cases, provided, first, that there
are sufficient amounts and types of securities or other assets in such Custody
Account to make such delivery, and, second, that after the making of such
delivery, such Portfolio would not be in violation of any margin or other
requirements agreed upon pursuant to Section 3.18 below:
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(a) Upon the sale of securities for the account of such Portfolio but,
subject to Section 3.14 below, only against receipt of payment therefor or, if
such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
(b) To an offeror's depository agent in connection with tender or other
similar offers for securities of such Portfolio; provided that, in any such
case, the funds or other consideration for such securities is to be delivered to
Custodian;
(c) To the issuer thereof or its agent when such securities are called,
redeemed or otherwise become payable, provided that in any such case the funds
or other consideration for such securities is to be delivered to Custodian;
(d) To the issuer thereof or its agent for exchange for a different number
of certificates or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new securities are to be
delivered to Custodian;
(e) To the securities broker through whom securities are being sold for
such Portfolio, for examination in accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new securities and
funds, if any, are to be delivered to Custodian;
(g) In the case of warrants, rights or similar securities, to the issuer of
such warrants, rights or similar securities, or its agent, upon the exercise
thereof, provided that, in any such case, the new securities and funds, if any,
are to be delivered to Custodian;
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(h) To the borrower thereof, or its agent, in connection with any loans of
securities for such Portfolio pursuant to any securities loan agreement entered
into by the Trust, but only against receipt by Custodian of such collateral as
is required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings from such
lender by such Portfolio that require a pledge of assets of such Portfolio, but
only against receipt by Custodian of the amounts borrowed;
(j) Pursuant to any authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of such Portfolio or the Trust;
(k) For delivery in accordance with the provisions of any agreement among
the Trust, Custodian and a securities broker-dealer, relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions of such Portfolio;
(l) For delivery in accordance with the provisions of any agreement among
the Trust, Custodian, and a futures commission merchant, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding margin or other
deposits in connection with transactions of such Portfolio;
(m) For delivery to a securities broker-dealer as margin for a short sale
of securities for such Portfolio;
(n) To the issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter, collectively, "ADRs") for such securities, or
its agent, against a written receipt therefor adequately describing such
securities, provided that such securities are delivered together with
instructions to issue ADRs in the name of Custodian or its nominee and to
deliver such ADRs to Custodian;
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(o) In the case of ADRs, to the issuer thereof, or its agent, against a
written receipt therefor adequately describing such ADRs, provided that such
ADRs are delivered together with instructions to deliver the securities
underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of such Portfolio, and naming the person or persons to
whom delivery of such securities or other assets is to be made.
3.14 DELIVERY PRIOR TO FINAL PAYMENT. When instructed by the Trust to
deliver securities of a Portfolio against payment, Custodian shall be entitled,
but only if in accordance with generally accepted market practice, to deliver
such securities prior to actual receipt of final payment therefor and,
exclusively in the case of securities in physical form, prior to receipt of
payment therefor. In any such case, such Portfolio shall bear the risk that
final payment for such securities may not be made or that such securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and Custodian shall have no liability for any of the foregoing.
3.15 CREDIT PRIOR TO FINAL PAYMENT. In its sole discretion and from time to
time, Custodian may credit the Custody Account of a Portfolio, prior to actual
receipt of final payment thereof, with (a) proceeds from the sale of securities
of such Portfolio which it has been instructed to deliver against payment, (b)
proceeds from the redemption of securities or other assets in such Custody
Account, and (c) income from securities, funds or other assets in such Custody
Account. Any such credit shall be conditional upon actual receipt by Custodian
of final payment and may be reversed if final payment is not actually received
in full. Custodian may, in its sole discretion and from time to time, permit a
Portfolio to use funds so credited to its Custody Account in anticipation of
actual receipt of final payment. Any funds so used shall constitute an advance
subject to Section 3.18 below.
3.16 DEFINITION OF FINAL PAYMENT. For purposes of this Agreement, "final
payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, levy, lien or other encumbrance.
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3.17 PAYMENTS AND DELIVERIES OUTSIDE UNITED STATES. Notwithstanding
anything to the contrary that may be required by Section 3.12 or Section 3.13
above, or elsewhere in this Agreement, in the case of securities and other
assets maintained outside the United States and in the case of payments made
outside the United States, Custodian and any sub-custodian appointed pursuant to
this Agreement may receive and deliver such securities or other assets, and may
make such payments, in accordance with the laws, regulations, customs,
procedures and practices applicable in the relevant local market outside the
United States;
3.18 CLEARING CREDIT. Custodian may, in its sole discretion and from time
to time, advance funds to the Trust to facilitate the settlement of a
Portfolio's transactions in the Custody Account of such Portfolio. Any such
advance (a) shall be repayable immediately upon demand made by Custodian, (b)
shall be fully secured as provided in Section 9.3 below, and (c) shall bear
interest at such rate, and be subject to such other terms and conditions, as
Custodian and the Trust may agree.
3.19 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Trust, Custodian shall with respect to all securities and other assets
held for a Portfolio:
(a) Subject to Section 8.4 below, receive into the Custody Account of such
Portfolio any funds or other property, including payments of principal, interest
and dividends, due and payable on or on account of such securities and other
assets;
(b) Deliver securities of such Portfolio to the issuers of such securities
or their agents for the transfer thereof into the name of such Portfolio,
Custodian or any of the nominees referred to in Section 3.20 below;
(c) Endorse for collection, in the name of such Portfolio, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or securities in temporary form for
securities in definitive form;
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(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws of the United States, or the laws or
regulations of any other taxing authority, in connection with the transfer of
such securities or other assets or the receipt of income or other payments with
respect thereto;
(f) Receive and hold for such Portfolio all rights and similar securities
issued with respect to securities or other assets of such Portfolio;
(g) As may be required in the execution of Proper Instructions, transfer
funds from the Custody Account of such Portfolio to any demand deposit account
maintained by Custodian pursuant to Section 3.8 above; and
(h) In general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase and transfer of, and other dealings
in, such securities and other assets.
3.20 REGISTRATION AND TRANSFER OF SECURITIES. All securities held for a
Portfolio that are issuable only in bearer form shall be held by Custodian in
that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for a Portfolio may be registered in the name of (a)
Custodian as agent, (b) any sub-custodian appointed pursuant to this Agreement,
(c) any Securities Depository, or (d) any nominee or agent of any of them. The
Trust shall furnish to Custodian appropriate instruments to enable Custodian to
hold or deliver in proper form for transfer, or to register as in this Section
3.20 provided, any securities or other assets delivered to Custodian which are
registered in the name of a Portfolio.
3.21 RECORDS. (a) Custodian shall maintain complete and accurate records
with respect to securities, funds and other assets held for a Portfolio,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of securities and all
receipts and disbursements of funds; (ii) ledgers (or other records) reflecting
(A) securities in transfer, if any, (B) securities in physical possession, (C)
monies and securities borrowed and monies
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and securities loaned (together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest received, and (E)
dividends receivable and interest accrued; and (iii) canceled checks and bank
records related thereto. Custodian shall keep such other books and records with
respect to securities, funds and other assets of a Portfolio which are held
hereunder as the Trust may reasonably request or as may be required by the 1940
Act.
(b) All such books and records maintained by Custodian for a Portfolio
shall (i) be maintained in a form acceptable to the Trust and in compliance with
the rules and regulations of the Securities and Exchange Commission, (ii) be the
property of such Portfolio and at all times during the regular business hours of
Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Trust (including without limitation
independent auditors of the Trust) and employees or agents of the Securities
and Exchange Commission, and (iii) if required to be maintained under the 1940
Act, be preserved for the periods prescribed therein.
3.22 ACCOUNT REPORTS BY CUSTODIAN. Custodian shall furnish the Trust with a
daily activity statement, including a summary of all transfers to or from the
Custody Account of each Portfolio (in the case of securities and other assets
maintained in the United States, on the day following such transfers). At least
monthly and from time to time, Custodian shall furnish the Trust with a detailed
statement of the securities, funds and other assets held for each Portfolio
under this Agreement.
3.23 OTHER REPORTS BY CUSTODIAN. Custodian shall provide the Trust with
such reports as the Trust may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.24 PROXIES AND OTHER MATERIALS. (a) Unless otherwise instructed by the
Trust, Custodian shall promptly deliver to the Trust all notices of meetings,
proxy materials (other than proxies) and other announcements, which it receives
regarding securities held by it in the Custody Account of a Portfolio. Whenever
Custodian or any of its agents receives a proxy with respect to securities in
the Custody Account of a Portfolio, Custodian shall promptly request
instructions from Trust on how
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such securities are to be voted, and shall give such proxy, or cause it to be
given, in accordance with such instructions. If Trust timely informs Custodian
that Trust wishes to vote any such securities in person, Custodian shall
promptly seek to have a legal proxy covering such securities issued to Trust.
Unless otherwise instructed by the Trust, neither Custodian nor any of its
agents shall exercise any voting rights with respect to securities held
hereunder.
(b) Unless otherwise instructed by the Trust, Custodian shall promptly
transmit to the Trust all other written information received by Custodian from
issuers of securities held in the Custody Account of any Portfolio. With respect
to tender or exchange offers for such securities or rights offerings in
connection therewith, Custodian shall promptly transmit to the Trust all written
information received by Custodian from the issuers of the securities whose
tender or exchange is sought and from the party (or its agents) making the
tender or exchange offer or from the issuers of the securities with respect to
which the rights offering is being made. If the Trust desires to take action
with respect to any tender offer, exchange offer, rights offering or other
similar transaction, the Trust shall notify Custodian (i) in the case of
securities maintained outside the United States, such number of Business Days
prior to the date on which Custodian is to take such action as will allow
Custodian to take such action in the relevant local market for such securities
in a timely fashion, and (ii) in the case of all other securities, at least
three Business Days prior to the date on which Custodian is to take such action.
3.25 CO-OPERATION. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trust to keep or audit
the books of account of a Portfolio, to record the owners of the Portfolios'
Shares and/or to compute the value of the assets of a Portfolio.
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the Custody Account of a Portfolio, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of such Portfolio or to
pay dividends or other distributions to holders of Shares of
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such Portfolio, Custodian shall transfer each amount specified in such Proper
Instructions to such account of such Portfolio or of an agent thereof (other
than Custodian), at such bank, as the Trust may designate therein with respect
to such amount.
4.2 SOLE DUTY OF CUSTODIAN. Custodian's sole obligation with respect to the
redemption of Shares of a Portfolio and the payment of dividends and other
distributions thereon shall be its obligation set forth in Section 4.1 above,
and Custodian shall not be required to make any payments to the various holders
from time to time of Shares of a Portfolio nor shall Custodian be responsible
for the payment or distribution by the Trust, or any agent designated in Proper
Instructions given pursuant to Section 4.1 above, of any amount paid by
Custodian to the account of the Trust or such agent in accordance with such
Proper Instructions.
ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish and
maintain a segregated account or accounts for and on behalf of any Portfolio,
into which account or accounts may be transferred funds and/or securities,
including securities maintained in a Securities Depository:
(a) in accordance with the provisions of any agreement among the Trust,
Custodian and a securities broker-dealer (or any futures commission merchant),
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions of such Portfolio,
(b) for purposes of segregating funds or securities in connection with
securities options purchased or written by such Portfolio or in connection with
financial futures contracts (or options thereon) purchased or sold by such
Portfolio,
(c) which constitute collateral for loans of securities made by such
Portfolio,
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(d) for purposes of compliance by such Portfolio with requirements under
the 1940 Act for the maintenance of segregated accounts by registered management
investment companies in connection with reverse repurchase agreements,
when-issued, delayed delivery and firm commitment transactions, short sales of
securities, and any other appropriate transactions, and
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of such Portfolio.
ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make for the account of such Portfolio the transfers of funds and
deliveries of securities which such Portfolio is required to make pursuant to
the Master Repurchase Agreement and shall receive for the account of such
Portfolio the transfers of funds and deliveries of securities which the seller
under the Master Repurchase Agreement is required to make pursuant thereto.
Custodian shall make and receive all such transfers and deliveries pursuant to,
and subject to the terms and conditions of, the Master Repurchase Agreement.
6.2 COLLATERAL. Custodian shall daily mark to market the securities
purchased under the Master Repurchase Agreement and held in the Custody Account
of a Portfolio, and shall give to the seller thereunder any such notice as may
be required thereby in connection with such mark-to-market.
6.3 EVENTS OF DEFAULT. Custodian shall promptly notify the Trust of any
event of default under the Master Repurchase Agreement (as such term "event of
default" is defined therein) of which it has actual knowledge.
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6.4 MASTER REPURCHASE AGREEMENT. Custodian hereby acknowledges its receipt
from the Trust of a copy of the Master Repurchase Agreement. The Trust shall
provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make for the account of such Portfolio the transfers of funds and
deliveries of securities which such Portfolio is required to make pursuant to
the Master Securities Loan Agreement and shall receive for the account of such
Portfolio the transfers of funds and deliveries of securities which the borrower
under the Master Securities Loan Agreement is required to make pursuant thereto.
Custodian shall make and receive all such transfers and deliveries pursuant to,
and subject to the terms and conditions of, the Master Securities Loan
Agreement.
7.2 COLLATERAL. Custodian shall daily mark to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding thereunder.
7.3 DEFAULTS. Custodian shall promptly notify the Trust of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4 MASTER SECURITIES LOAN AGREEMENT. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Securities Loan Agreement. The
Trust shall provide Custodian, prior to the effectiveness thereof, with a copy
of any amendment to the Master Securities Loan Agreement.
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ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 STANDARD OF CARE. Notwithstanding any other provisions of this
Agreement, Custodian shall be held to the exercise of reasonable care in
carrying out its obligations under this Agreement, and shall be without
liability to any Portfolio or the Trust for any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim which does not
arise from willful misfeasance, bad faith or negligence on the part of
Custodian. In no event shall Custodian be liable for special, incidental or
consequential damages, even if Custodian has been advised of the possibility of
such damages, or be liable in any manner whatsoever for any action taken or
omitted upon instructions from an Authorized Person of the Trust or any
authorized agent of the Trust in conformity with such instructions.
8.2 ACTUAL COLLECTION REQUIRED. So long as and to the extent that it is in
the exercise of reasonable care, Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to a Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such funds or collect on
such instrument.
8.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any assets or evidence of title thereto
received or delivered by it or its agents.
8.4 LIMITATION ON DUTY TO COLLECT. Custodian shall promptly notify the
Trust whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for a Portfolio is not timely received
by it. Custodian shall not, however, be required to enforce collection, by legal
means or otherwise, of any such money or other property not paid when due, but
will use commercially reasonable efforts to obtain such money or property and
shall receive the proceeds of such collections as may be effected by it or its
agents in the ordinary course of Custodian's custody and safekeeping business or
of the custody and safekeeping business of such agents.
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8.5 EXPRESS DUTIES ONLY. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account of any
Portfolio and is not a fiduciary to any Portfolio or the Trust. In particular,
Custodian shall not be under any obligation at any time to monitor or to take
any other action with respect to compliance by any Portfolio or the Trust with
the 1940 Act, the provisions of theTrust's trust instruments or by-laws, or any
Portfolio's investment objectives, policies and limitations as in effect from
time to time.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. Each Portfolio shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including reasonable attorneys' fees and disbursements), liability (including,
without limitation, liability arising under the Securities Act of 1933, the
Securities Exchange Act of 1934, the 1940 Act, and any federal, state or foreign
securities and/or banking laws) or claim arising directly or indirectly (a) from
the fact that securities or other assets in the Custody Account of such
Portfolio are registered in the name of any such nominee, or (b) from any action
or inaction, with respect to such Portfolio, by Custodian or such sub-custodian
or nominee (i) at the request or direction of or in reliance on the advice of an
Authorized Person of the Trust or any of its authorized agents, or (ii) upon
Proper Instructions, or (c) generally, from the performance of its obligations
under this Agreement with respect to such Portfolio, provided that Custodian,
any such sub-custodian or any nominee of any of them shall not be indemnified
and held harmless from and against any such loss, damage, cost, expense,
liability or claim arising from willful misfeasance, bad faith or negligence on
the part of Custodian or any such sub-custodian or nominee.
9.2 INDEMNITY TO BE PROVIDED. If the Trust requests Custodian to take any
action with respect to securities or other assets of a Portfolio, which may, in
the opinion of Custodian, result in
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Custodian or its nominee becoming liable for the payment of money or incurring
liability of some other form, Custodian shall not be required to take such
action until such Portfolio shall have provided indemnity therefor to Custodian
in an amount and form satisfactory to Custodian.
9.3 SECURITY. As security for the payment of any present or future
obligation or liability of a Portfolio arising under Section 3.18 hereof to
Custodian (but not to any affiliate of Custodian or any other person), the Trust
hereby pledges to Custodian all securities, funds and other assets of every kind
which are in such Custody Account or otherwise held for such Portfolio pursuant
to this Agreement in an amount not to exceed the total amount advanced under
Section 3.18 hereof, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such securities, funds and other assets.
ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance of
its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS WITH RESPECT TO PORTFOLIOS. The Trust represents and
warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of each Portfolio, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of each
Portfolio, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by-law, or other instrument, restriction
or provision applicable to it or such Portfolio or by which it or such
Portfolio, or their respective assets, may be bound, and (c) this Agreement
constitutes a legal, valid and binding obligation of the Trust, enforceable
against the Portfolios in accordance with its terms.
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11.2 REPRESENTATIONS OF CUSTODIAN. Custodian represents and warrants that
(a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it or
its assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
Each Portfolio shall pay Custodian such fees and charges as are set forth
in Exhibit E hereto, as such Exhibit E may from time to time be amended in
writing by Custodian and the Trust. Any annual fee payable by a Portfolio shall
be calculated on the basis of the total market value of the assets in the
Custody Account of such Portfolio as determined on the last Business Day of the
month for which such fee is charged; and such fee, and any transaction charges
payable by such Portfolio, shall be paid monthly by automatic deduction from
such Custody Account. Out-of-pocket expenses incurred by Custodian in the
performance of its services hereunder, and all other proper charges and
disbursements of the Custody Account of any Portfolio, shall be charged to such
Custody Account by Custodian and paid therefrom.
ARTICLE XIII
TAXES
13.1 TAXES PAYABLE BY PORTFOLIOS. Any and all taxes, including any interest
and penalties with respect thereto, which may be levied or assessed under
present or future laws in respect of the Custody Account of any Portfolio or any
income thereof shall be charged to such Custody Account by Custodian and paid
therefrom.
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13.2 TAX RECLAIMS. Custodian shall exercise, on behalf of any Portfolio,
any tax reclaim rights of such Portfolio which arise in connection with foreign
securities in the Custody Account of such Portfolio.
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1 AUTHORIZED PERSONS. Custodian may rely upon and act in accordance with
any notice, confirmation, instruction or other communication received by it from
the Trust which is reasonably believed by Custodian to have been given or signed
on behalf of the Trust by one of the Authorized Persons designated by the Trust
in Exhibit B hereto, as it may from time to time be revised. The Trust may
revise Exhibit B hereto at any time by notice in writing to Custodian given in
accordance with Section 14.4 below, but no revision of Exhibit B hereto shall be
effective until Custodian actually receives such notice.
14.2 INVESTMENT ADVISERS. Custodian may also act in accordance with any
Written or Oral Instructions given with respect to a Portfolio which are
reasonably believed by Custodian to have been given or signed by one of the
persons designated from time to time by any of the investment advisers of such
Portfolio who are specified in Exhibit C hereto (if any) as it may from time to
time be revised. The Trust may revise Exhibit C hereto at any time by notice in
writing to Custodian given in accordance with Section 14.4 below, and each
investment adviser specified in Exhibit C hereto (if any) may at any time by
like notice designate an Authorized Person or remove an Authorized Person
previously designated by it, but no revision of Exhibit C hereto (if any) and no
designation or removal by such investment adviser shall be effective until
Custodian actually receives such notice.
14.3 ORAL INSTRUCTIONS. Custodian may rely upon and act in accordance with
Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the validity of the transaction authorized by such Oral
Instructions or the authorization given by an Authorized Person to effect such
transaction. Custodian shall incur no liability to any Portfolio or the Trust in
acting upon Oral Instructions. To the extent
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such Oral Instructions vary from any confirming Written Instructions, Custodian
shall advise the Trust of such variance but unless confirming Written
Instructions are timely received, such Oral Instructions shall govern.
14.4 ADDRESSES FOR NOTICES. Unless otherwise specified herein, all demands,
notices, instructions, and other communications to be given hereunder shall be
sent, delivered or given to the recipient at the address, or the relevant
telephone number, set forth after its name hereinbelow:
IF TO THE TRUST:
Barr Rosenberg Series Trust for [INSERT NAME OF FUND]
4 Orinda Way, Bldg E
Orinda, CA 94563
Attention: Edward H. Lyman
Telephone: (510) 254-6464
Facsimile: (510) 253-0141
IF TO CUSTODIAN:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: Vice President - Trust Operations
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
14.5 REMOTE CLEARANCE. Written Instructions for the receipt, delivery or
transfer of securities may include, and Custodian shall accept, Remote Clearance
Instructions (as defined hereinbelow) and Bulk Input Instructions (as defined
hereinbelow), provided that such Instructions are given in
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accordance with the procedures prescribed by Custodian from time to time as to
content of instructions and their manner and timeliness of delivery by Customer.
Custodian shall be entitled to conclusively assume that all Remote Clearance
Instructions and Bulk Input Instructions have been given by an Authorized
Person, and Custodian is hereby irrevocably authorized to act in accordance
therewith. For purposes of this Agreement, "Remote Clearance Instructions" means
instructions that are input directly via a remote terminal which is located on
the premises of the Trust, or of an investment adviser named in Exhibit C
hereto, and linked to Custodian; and "Bulk Input Instructions" means
instructions that are input by bulk input computer tape delivered to Custodian
by messenger or transmitted to it via such transmission mechanism as the Trust
and Custodian shall from time to time agree upon.
ARTICLE XV
TERMINATION
Either party hereto may terminate this Agreement with respect to one or
more of the Portfolios by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than thirty
(30) days after the date of the giving of such notice. Upon the date set forth
in such notice this Agreement shall terminate with respect to each Portfolio
specified in such notice, and Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on that date (a) deliver directly to the
successor custodian or its agents all securities (other than securities held in
a Book-Entry System or Securities Depository) and other assets then owned by
such Portfolio and held by Custodian as custodian, and (b) transfer any
securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of such Portfolio, provided that such Portfolio shall have
paid to Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled.
ARTICLE XVI
LIMITATION OF LIABILITIES
To the extent that the trustees of the Trust are regarded as entering into
this Agreement, they do so only as trustees of the Trust and not individually.
The obligations under this Agreement of the Trust or any Portfolio shall not be
binding upon any trustee, officer or employee of the Trust individually, or upon
any holder of Shares individually, but shall be binding only upon the assets and
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<PAGE>
property of such Portfolio. Such trustees, officers, employees and holders, when
acting in such capacities, shall not be personally liable under this Agreement,
and Custodian shall look solely to the assets and property of each Portfolio for
the performance of this Agreement with respect to such Portfolio and the payment
of any claim against such Portfolio under this Agreement.
ARTICLE XVII
MISCELLANEOUS
17.1 BUSINESS DAYS. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
17.2 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
17.3 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for a Portfolio and such other printed
matter as merely identifies Custodian as custodian for a Portfolio. The Trust
shall submit printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel prior to any
deadline for printing.
17.4 NO WAIVER. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
17.5 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
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<PAGE>
17.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
17.7 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
17.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 17.8 shall be void.
17.9 JURISDICTION. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, in the United States District Court for the Southern District of
New York, in the Superior Court of the State of California or in the United
States District Court for the Northern District of California and the parties
hereto hereby submit to the non-exclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding, and hereby waive for such
purpose any other preferential jurisdiction by reason of their present or future
domicile or otherwise.
17.10 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
BARR ROSENBERG SERIES TRUST
By:
----------------------------------
Name:
Title:
CUSTODIAL TRUST COMPANY
By:
----------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
PORTFOLIOS
- Barr Rosenberg Market Neutral Fund
- Barr Rosenberg Double Alpha Market Fund
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<PAGE>
EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Custody Accounts of the Portfolios.
Name Signature
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
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<PAGE>
EXHIBIT C
INVESTMENT ADVISERS
ALL PORTFOLIOS
Rosenberg Institutional Equity Management
-34-
<PAGE>
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
ALL PORTFOLIOS
Foreign Sub-custodian Country(ies) Securities Depositories
- --------------------- ------------ -----------------------
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<PAGE>
EXHIBIT E
CUSTODY FEES AND TRANSACTION CHARGES
All fees and charges set forth in this Exhibit E shall be calculated and
paid in the manner provided in Article XII above. The Barr Rosenberg Market
Neutral Fund shall pay Custodian the following fees for assets maintained by
such Portfolio in the Custody Account and charges for transactions by such
Portfolio, all such fees and charges to be payable monthly:
(1) an annual fee consisting of the total of 0.04% (4 basis points) per
annum of the first $50 million of assets in the Custody Account of such
Portfolio, 0.02% (2 basis points) per annum of the next $150 million of such
assets and 0.01% (1 basis point) per annum of the amount of such assets in
excess of $200 million;
(2) a transaction charge for each repurchase transaction in the Custody
Account of such Portfolio which represents a cash sweep investment for such
Portfolio's account, computed at a rate of 0.10% (ten basis points) per annum on
the amount of the purchase price paid by such Portfolio in such repurchase
transaction;
(3) a charge of $10 for each "free" transfer of funds from the Custody
Account of such Portfolio; and
(4) a service charge for each holding of securities or other assets of such
Portfolio that are sold by way of private placement or in such other manner as
to require services by Custodian which in its reasonable judgment are materially
in excess of those ordinarily required for the holding of publicly traded
securities in the United States.
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<PAGE>
-37-
<PAGE>
<PAGE>
SPECIAL CUSTODY ACCOUNT AGREEMENT
(Short Sales)
AGREEMENT (the "Agreement") dated as of December ___, 1997, by and among
Custodial Trust Company, in its capacity as custodian hereunder (the "Bank"),
Barr Rosenberg Series Trust, on behalf of its Barr Rosenberg Market Neutral Fund
(the "Customer"), and Bear, Stearns Securities Corp. (the "Broker").
WHEREAS, Broker is a securities broker-dealer and is a member of several
national securities exchanges; and
WHEREAS, Customer desires from time to time to execute various securities
transactions, including short sales (which are permitted by Customer's
investment policies), and in connection therewith has executed Broker's Customer
Agreement which provides for margin transactions; and
WHEREAS, to facilitate Customer's transactions in short sales of
securities, Customer and Broker desire to establish procedures for the
compliance by Broker with the provisions of Regulation T of the Board of
Governors of the Federal Reserve System and other applicable requirements (the
"Margin Rules"); and
WHEREAS, to assist Broker and Customer in complying with the Margin Rules,
Bank is prepared to act as custodian to hold Collateral as defined below.
NOW THEREFORE, be it agreed as follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
(a) "Adequate Margin" in respect of short sales shall mean such collateral
as is adequate in Broker's reasonable judgment under the Margin Rules
and the internal policies of Broker, the latter of which shall be
subject to modification by Broker in its sole and absolute discretion
upon prior notice given orally to Customer and Bank.
(b) "Advice from Broker" or "Advice" means a written notice sent to
Customer and Bank or transmitted by a facsimile sending device, except
that Advice for initial or additional Collateral or with respect to
Broker's ability to effect a short sale for the Customer may be given
orally. With respect to any short sale or Closing Transaction, the
Advice from Broker shall mean a standard confirmation in use by Broker
and sent or transmitted to
<PAGE>
Customer and Bank. With respect to substitutions or releases of
Collateral, Advice from Broker means a written notice signed by Broker
and sent or transmitted to Customer and Bank. An authorized agent of
Broker will certify to Customer and Bank the names and signatures of
those employees who are authorized to sign Advice from Broker, which
certification may be amended from time to time. When used herein, the
term "Advise" means the act of sending an Advice from Broker.
(c) "Closing Transaction" is a transaction in which Customer purchases
securities which have been sold short.
(d) "Collateral" shall mean cash or U.S. Government securities or other
marginable securities acceptable to Broker.
(e) "Insolvency" means that (A) an order, judgment or decree has been
entered under the bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law (herein called the "Bankruptcy law") of any competent
jurisdiction adjudicating the Customer insolvent; or (B) the Customer
has petitioned or applied to any tribunal for, or consented to the
appointment of, or taking possession by, a trustee, receiver,
liquidator or similar official, of the Customer, or commenced a
voluntary case under the Bankruptcy Law of the United States or any
proceedings relating to the Customer under the Bankruptcy Law of any
other competent jurisdiction, whether now or hereinafter in effect; or
(C) any such petition or application has been filed, or any such
proceedings commenced, against the Customer and the Customer by any
act has indicated its approval thereof, consent thereto or
acquiescence therein, or an order for relief has been entered in an
involuntary case under the Bankruptcy Law of the United States, as now
or hereinafter constituted, or an order, judgment or decree has been
entered appointing any such trustee, receiver, liquidator or similar
official, or approving the petition in any such proceedings, and such
order, judgment or decree remains unstayed and in effect for more than
60 days.
(f) "Instructions from Customer" or "Instructions" means a request,
direction or certification in writing signed by Customer and delivered
to Bank and Broker or transmitted by a facsimile sending device. An
officer of Customer will certify to Bank and Broker the names and
signatures of those persons authorized to sign the instructions, which
certification may be amended from time to time. When used herein, the
term "Instruct" shall mean the act of sending an Instruction from
Customer.
(g) "Receipt of Payment" means receipt by Bank, of (1) a certified or
official bank check or wire transfer to Bank; (2) a written or
telegraphic advice from a registered clearing agency that funds have
been or will be credited to the account of Bank; or (3) a transfer of
funds from any of Broker's accounts maintained at Bank.
(h) "Receipt of Securities" means receipt by Bank, of (1) securities in
proper form for transfer; or (2) a written or telegraphic advice from
a registered clearing agency that securities have been credited to the
account of Bank for the Special Custody Account.
2
<PAGE>
(i) "Special Custody Account" shall have the meaning assigned to that term
in Section 2 hereof.
2. SPECIAL CUSTODY ACCOUNT
(a) OPENING CUSTODY ACCOUNT. Bank shall open an account on its books
entitled "Special Custody Account for Bear, Stearns Securities Corp.
as Pledgee of Barr Rosenberg Series Trust, for its Barr Rosenberg
Market Neutral Fund" (the "Special Custody Account") and shall hold
therein all securities and similar property as shall be received and
accepted by it therein pursuant to this Agreement. Customer agrees to
instruct Bank in Instructions from Customer as to cash and specific
securities which Bank is to identify on its books and records as
pledged to Broker as Collateral in the Special Custody Account.
Customer agrees that the value of such cash and securities shall be at
least equal in value to what Broker shall initially and from time to
time Advise Customer in an Advice from Broker is necessary to
constitute Adequate Margin. Such Collateral (i) will be held by Bank
for Broker as agent of Broker, (ii) may be released only in accordance
with the terms of this Agreement, and (iii) except as required to be
released hereunder to Broker, shall not be made available to Broker or
any other person claiming through Broker, including the creditors of
the Broker. In the event Customer wishes to add another series of
Barr Rosenberg Series Trust to this Agreement, the title of such
account shall be appended to this Agreement as a schedule.
(b) SECURITY INTEREST. Customer hereby grants a continuing security
interest to Broker in the Collateral in the Special Custody Account.
To perfect Broker's security interest, Bank will hold the Collateral
in the Special Custody Account, subject to the interest therein of
Broker as the pledgee and secured party thereof in accordance with the
terms of this Agreement. Such security interest will terminate at
such time as Collateral is released as provided herein. Bank shall
have no responsibility for the validity or enforceability of such
security interest.
(c) CONFIRMATION. Bank will confirm in writing to Broker and Customer all
pledges, releases or substitutions of Collateral and will supply
Broker and Customer with a monthly statement of Collateral and
transactions in the Special Custody Account for such month. Bank will
also advise Broker upon request of the kind and amount of Collateral
pledged to Broker.
(d) EXCESS COLLATERAL. Upon the request of Customer, Broker shall Advise
Bank and Customer of any excess of Collateral in the Special Custody
Account. Such excess shall at Customer's request be transferred
therefrom upon Advice from Broker. Customer represents and warrants to
Broker that securities included at any time in the Collateral shall be
in good deliverable form (or bank shall have the unrestricted power
3
<PAGE>
to put such securities into good deliverable form) in accordance with
the requirements of such exchanges as may be the primary market or
markets for such securities.
(e) ACCOUNTS AND RECORDS. Bank will maintain accounts and records for the
Collateral in the Special Custody Account as more fully described in
sub-paragraph 5(a) below. The Collateral shall at all times remain
the property of the Customer subject only to the extent of the
interest and rights therein of Broker as the pledgee thereof.
3. ORIGINAL AND VARIATION MARGIN ON SHORT SALES
(a) SHORT SALES. From time to time, Customer may place orders with Broker
for the short sale of securities. Prior to the acceptance of such
orders Broker will Advise Customer of Broker's ability to borrow such
securities or other properties and acceptance of short sale orders
will be contingent upon same.
(b) OPEN SHORT SALES BALANCE. Broker shall, based on the closing market
price on each business day, compute the aggregate net credit or debit
balance on Customer's open short sales and advise Customer and/or
Customer's designated agent by 11:00 A.M. New York time on the next
business day (the "Determination Day") of the amount of the net debit
or credit, as the case may be. If a net debit balance exists on the
Determination Day, Customer will cause an amount equal to such net
debit balance to be paid to Broker by the close of business on the
Determination Day. If a net credit balance exists on the
Determination Day, Broker will pay such credit balance to Customer by
the close of business on the Determination Day. As Customer's open
short positions are marked-to-market each business day, payments will
be made by or to Customer to reflect changes (if any) in the credit or
debit balances. Broker will charge interest on debit balances, and
Broker will pay interest on credit balances. Balances will be
appropriately adjusted when short sales are closed out.
4. PLACING ORDERS
It is understood and agreed that Customer, when placing with Broker any
order to sell short for Customer's account, will designate the order as such and
hereby authorizes Broker to mark such order as being "short", and when placing
with Broker any order to sell long for Customer's account, will designate the
order as such and hereby authorizes Broker to mark such order as being "long".
Any sell order which Customer shall designate as being for long account as above
provided is for securities then owned by Customer and, if such securities are
not then deliverable by Broker from any account of Customer, the placing of such
order shall constitute a representation by Customer that it is impracticable for
Customer then to deliver such securities to Broker but that Customer shall
deliver them by the settlement date or as soon as possible thereafter.
5. RIGHTS AND DUTIES OF THE BANK
4
<PAGE>
(a) GENERALLY. The Bank shall receive and hold in the Special Custody
Account, as custodian upon the terms of this Agreement, all Collateral
deposited and maintained pursuant to the terms of this Agreement and,
except as provided in sub-paragraph 5(b) below, shall receive and hold
all monies and other property paid, distributed or substituted in
respect of such Collateral or realized on the sale or other
disposition of such Collateral; provided, however, that the Bank shall
have no duty to require any money or securities to be delivered to it
or to determine that the amount and form of assets delivered to it
comply with any applicable requirements. Collateral held in the
Special Custody Account shall be released only in accordance with this
Agreement or as required by applicable law. The Customer warrants its
authority to deposit in such account any money, securities and other
property received by the Bank. The Bank may hold the securities in
the Special Custody Account in bearer, nominee, book entry, or other
form and in a depository or clearing corporation, with or without
indicating that the securities are held hereunder; provided, however,
that all securities held in the Special Custody Account shall be
identified on the Bank's records as subject to this Agreement and
shall be in a form that permits transfer without additional
authorization or consent of the Customer.
(b) DIVIDENDS AND INTEREST. Any interest, dividends or other
distributions paid with respect to the Collateral held in the Special
Custody Account shall be retained therein as additional Collateral.
(c) REPORTS. The Bank shall provide Broker and Customer with written
confirmation of each transfer into and out of the Special Custody
Account, in each case as promptly as practical, but in any event not
later than the next business day. The Bank also shall render to the
Broker and the Customer and/or Customer's designated agent a monthly
statement of the Collateral held in the Special Custody Account. In
addition, the Bank will advise the Broker and the Customer and/or
Customer's designated agent, upon request of the Broker or Customer,
at any time of the type and amount of Collateral held in the account;
provided, however, that the Bank shall have no responsibility for
making any determination as to the value of such Collateral.
(d) LIMITATION OF BANK'S LIABILITY. The Bank's duties and
responsibilities under this Agreement are as set forth herein. The
Bank shall act only upon receipt of Advice from Broker regarding
release or substitution of Collateral. The Bank shall not be liable
or responsible for anything done, or omitted to be done by it in good
faith and in the absence of negligence and may rely and shall be
protected in acting upon any notice, instruction or other
communication which it reasonably believes to be genuine and
authorized. As between Customer and the Bank, the terms of the
Custodian Agreement entered into thereby shall apply with respect to
the responsibilities of the Bank and any losses or liabilities of such
parties arising out of matters covered by this Agreement. As between
the Bank and Broker, Broker shall indemnify and hold the Bank harmless
with regard to any losses or liabilities of the Bank (including
counsel
5
<PAGE>
fees) imposed on or incurred by the Bank arising out of any action or
omission of the Bank in accordance with any Advice, notice or
instruction of Broker under this Agreement. In matters concerning or
relating to this Agreement, the Bank shall not be responsible for
compliance with any statute or regulation regarding the establishment
or maintenance of margin credit, including but not limited to
Regulations T or X of the Board of Governors of the Federal Reserve
System, or with any rules or regulations of the Office of the
Controller of the Currency (or the Securities and Exchange
Commission). With respect to all securities, however registered, it
is understood that all voting rights and other rights and powers shall
be exercised exclusively by Customer. Bank's only duty with respect
thereto shall be to mail to Customer any documents received, including
proxy statements and offering circulars, with any proxies for
securities registered in a nominee name executed by such nominee. The
Bank shall not be liable to any party for any acts or omissions of the
other parties to this Agreement.
(e) COMPENSATION. Bank shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time
be agreed upon in writing between Customer and Bank.
6. DEFAULT
In the event of any failure by Customer to timely comply with any
obligation on Customer's part to be performed or observed under this Agreement
or the Customer Agreement, including, but not limited to, the obligation to
maintain Adequate Margin, or in the event of Customer's Insolvency, Broker has
the right to give notice (which notice may be by telegraph, facsimile
transmission or hand delivery) to Customer specifying such default and Broker
may, after giving such notice to Customer and holding a discussion with
Customer, effect a Closing Transaction or buy-in of any securities of which
Customer's account may be short. In the event of any default as aforesaid,
Broker shall also have the right, after giving notice to Customer and holding a
discussion with Customer, to sell any and all Collateral in the Special Custody
Account and to give Advice to Bank to deliver such Collateral free of payment to
Broker, which Advice shall state that, pursuant to this Agreement, the condition
precedent to Broker's right to receive such Collateral free of payment has
occurred. The Bank will provide immediate telephone notice to Customer of any
receipt by Bank of Advice from Broker to deliver Collateral free of payment, and
shall promptly effect delivery of Collateral to Broker. Subject to applicable
requirements of the New York Uniform Commercial Code, such sale or purchase may
be made according to Broker's judgement and may be made at Broker's discretion,
on the principal exchange or other market for such securities, or in the event
such principal market is closed, in a manner commercially reasonable for such
securities.
7. LIMITATION OF BROKER LIABILITY
6
<PAGE>
Broker shall not be liable for any losses, costs, damages, liabilities or
expenses suffered or incurred by Customer as a result of any transaction
executed hereunder, or any other action taken or not taken by Broker hereunder
for Customer's account at Customer's direction or otherwise, except to the
extent that such loss, cost, damage, liability or expense is the result of
Broker's own negligence, recklessness, willful misconduct or bad faith. With
respect to all securities in the Special Custody Account, it is understood that
all voting rights and other rights and powers shall be exercised exclusively by
Customer, and that Broker shall have no responsibilities in connection
therewith, whether pertaining to the delivery of proxy statements or offering
circulars or otherwise.
8. CUSTOMER REPRESENTATION
Customer represents and warrants that the Collateral will not be subject to
any other liens or encumbrances other than those granted to the Bank under the
Custodian Agreement.
9. TERMINATION
Any of the parties hereto may terminate this Agreement by 30 days' notice
in writing to the other parties hereto; provided, however, that the status of
any short sales, and of Collateral held at the time of such notice to margin
such short sales shall not be affected by such termination until the release of
such Collateral pursuant to applicable law or regulations or rules of any self
regulatory organization to which the Broker is subject. In the event of the
release of Collateral, the Collateral shall be transferred to Customer.
10. NOTICE
Written communications hereunder shall be telegraphed, sent by facsimile
transmission or hand delivered as required herein, when another method of
delivery is not specified, may be mailed first class postage prepaid, except
that written notice of termination shall be sent by certified mail, addressed:
(a) if to Bank, to:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
Attention: Vice President - Trust Operations
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
(b) if to Customer, to:
Barr Rosenberg Series Trust
4 Orinda Way, Building E
7
<PAGE>
Orinda, California 95463
Attention: Edward H. Lyman
Telephone: (510) 254-6464
Facsimile: (510) 253-0141
(c) if to Broker, to:
Bear, Stearns Securities Corp.
245 Park Avenue
New York, New York 10167
Attention: Michael Minikes, Treasurer
Telephone: 212-272-2089
Facsimile: 212-272-3099
11. CONTROLLING LAW
The construction and enforcement of this Agreement shall be subject to and
governed by the laws of the State of New York.
12. LIMITATION OF LIABILITY
To the extent that the trustees of Barr Rosenberg Series Trust are regarded
as entering into this Agreement, they do so only as trustees thereof and not
individually. The obligations under this Agreement of Barr Rosenberg Series
Trust or Barr Rosenberg Market Neutral Fund shall not be binding upon any
trustee, officer or employee of Barr Rosenberg Series Trust individually, or
upon any holder of shares issued by Barr Rosenberg Series Trust individually,
but shall be binding only upon the assets and property of Barr Rosenberg Market
Neutral Fund. Such trustees, officers, employees and holders, when acting in
such capacities, shall not be personally liable under this Agreement, and Broker
and Bank shall look solely to the assets and property of Barr Rosenberg Market
Neutral Fund for the performance of this Agreement thereby and for the payment
of any claim against Barr Rosenberg Market Neutral Fund pertaining to this
Agreement.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the day and year first above
written.
BARR ROSENBERG SERIES TRUST
ON BEHALF OF ITS
BARR ROSENBERG MARKET NEUTRAL FUND
By:
-------------------------------------
Name:
Title:
CUSTODIAL TRUST COMPANY
By:
-------------------------------------
Name:
Title:
BEAR, STEARNS SECURITIES CORP.
By:
-------------------------------------
Name:
Title:
9
<PAGE>
NOTIFICATION OF
EXPENSE LIMITATION
NOTIFICATION made this _____ day of December, 1997 by Rosenberg
Institutional Equity Management, a California limited partnership (the
"Adviser"), to Barr Rosenberg Series Trust, a Massachusetts business trust (the
"Trust"), and its Barr Rosenberg Market Neutral Fund and Barr Rosenberg Double
Alpha Market Fund (each a "Fund", and together, the "Funds").
WITNESSETH:
WHEREAS, the Adviser serves as investment adviser for each of the Funds;
WHEREAS, on or about December 9, 1997, each Fund will offer two separate
classes of shares, designated as "Institutional Shares" and "Investor Shares"
which will be subject to different shareholder service, distribution and other
fees and expenses; and
WHEREAS, the Adviser believes it would benefit from a high sales volume of
shares of the Funds in that such a volume would maximize the Adviser's fee as
investment adviser to the Funds; and
WHEREAS, the Adviser has undertaken to furnish certain services and, as
necessary, to voluntarily bear a portion of the costs thereof and/or
reimburse certain expenses so as to enable the Funds to offer competitive
returns with respect to investments in each class of shares of the Funds.
NOW THEREFORE, pursuant to Section 3 of each Management Contract (each, a
"Management Contract") between the Adviser and the Trust on behalf of each Fund,
the Adviser hereby notifies the Trust that the Adviser shall, until further
notice, voluntarily reduce its compensation due under the particular Management
Contract, and, if necessary, bear certain expenses of each Fund to the extent
required to limit the expenses of each class of shares of such Fund to the
following annual percentages of such Fund's average daily net asset value
attributable to such class:
Total Fund Operating
Expenses applicable to
Series/Class each class after waiver
- ------------ -----------------------
BARR ROSENBERG MARKET NEUTRAL FUND
Institutional Shares 2.00%
Investor Shares 2.50%
<PAGE>
BARR ROSENBERG DOUBLE ALPHA MARKET FUND
Institutional Shares 2.35% *
Investor Shares 2.85% *
* Includes indirect expenses borne through ownership of Institutional
Shares of the Barr Rosenberg Market Neutral Fund.
IN WITNESS WHEREOF, the Adviser has executed this Notification of Expense
Limitation on the day and year first above written.
ROSENBERG INSTITUTIONAL EQUITY
MANAGEMENT
By:
-------------------------------------
Title:
The foregoing is hereby accepted:
BARR ROSENBERG SERIES TRUST,
on behalf of its Barr Rosenberg Market Neutral
Fund and Barr Rosenberg Double Alpha Market Fund
By:
-------------------------------------
Title:
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<PAGE>
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
Fax: (617) 951-7050
December 9, 1997
Barr Rosenberg Series Trust
4 Orinda Way, Building E
Orinda, CA 94563
Ladies and Gentlemen:
We are furnishing this opinion in connection with the proposed offer and
sale by Barr Rosenberg Series Trust, a Massachusetts business trust (the
"Trust"), of shares of beneficial interest of its Barr Rosenberg Market Neutral
Fund and Barr Rosenberg Double Alpha Market Fund (the "Shares") pursuant to a
registration statement on Form N-1A (the "Registration Statement") under the
Securities Act of 1933, as amended.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's By-Laws and
its Second Amended and Restated Agreement and Declaration of Trust (the
"Declaration of Trust") on file in the office of the Secretary of The
Commonwealth of Massachusetts and such other documents as we deem necessary for
the purposes of this opinion.
We assume that upon sale of the Shares the Trust will receive the net asset
value thereof.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the Shares are
issued and sold, they will be validly issued, fully paid and nonassessable by
the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
the
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Barr Rosenberg Series Trust -2- December 9, 1997
property of the particular series of shares for all loss and expense of any
shareholder of that series held personally liable solely by reason of his or her
having been a shareholder of that series. Thus, the risk of shareholder
liability is limited to circumstances in which that series itself would be
unable to meet its obligations.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
ROPES & GRAY
Ropes & Gray
<PAGE>
BARR ROSENBERG SERIES TRUST
Distribution Plan (Investor Shares)
(Effective as of December __, 1997)
This Plan (the "Plan"), as amended from time to time, constitutes the
Distribution Plan with respect to the Investor 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
Investor shares of the Trust. The Distribution Fee shall be paid at an annual
rate with respect to a series of shares of beneficial interest of the Trust (a
"Fund") not to exceed 0.50% of a Fund's average daily net assets attributable to
its Investor 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 Investor shares
or net assets attributable to Investor 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 Investor
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 Investor shares, printing of prospectuses and
reports for other than existing Investor 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 Investor shares or the
processing of dividend payments with respect to Investor shares, who provide
information periodically to shareholders showing their positions in a Fund's
Investor shares, who forward communications from the Trust to Investor
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 Investor 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 Investor 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.
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<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: December __, 1997
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<PAGE>
BARR ROSENBERG SERIES TRUST
Plan pursuant to Rule 18f-3(d) under the Investment Company Act of 1940
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Effective August 5, 1996
Amended and Restated December 8, 1997
WHEREAS, the Board of Trustees of Barr Rosenberg Series Trust (the "TRUST")
has considered the following amended and restated 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, Select shares and Investor shares. Each
class is subject to such investment minimums and other conditions of eligibility
as are set forth in the Trust's prospectuses, each as from time to time in
effect (each, a "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.
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(1) The current Funds of the Trust are the U.S. Small Capitalization
Series, the International Small Capitalization Series, the Japan Series, the
Barr Rosenberg Market Neutral Fund and the Barr Rosenberg Double Alpha Market
Fund.
<PAGE>
CLASS CHARACTERISTICS
Institutional, Adviser, Select and Investor shares of a Fund represent
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. Service 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 a Fund equal to 0.25% of such
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 a Fund equal
to 0.25% of such Fund's average daily net assets attributable to Select shares.
Select shares are also subject to a Distribution Fee. The Distribution Plan for
Select shares permits a 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 a Fund's average daily net assets attributable to Select
shares.
(4) INVESTOR SHARES are sold without any initial or deferred sales charges,
but are subject to a Service Fee at an annual rate with respect to a Fund equal
to 0.25% of such Fund's average daily net assets attributable to Investor
shares. Investor shares are also subject to a Distribution Fee. The
Distribution Plan for Investor shares permits a Fund to pay the Distributor up
to 0.50% per annum of the Fund's average daily net assets attributable to
Investor shares. However, the Distributor's Contract currently provide that
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<PAGE>
the Distributor will be paid 0.25% per annum of a Fund's average daily net
assets attributable to Investor shares.
EXPENSE ALLOCATIONS
Institutional, Adviser, Select and Investor 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 or, if a Fund does not offer the same class
of shares, then the class of shares with the lowest expenses that a given
shareholder is eligible to purchase. There is no sales charge on exchanges.
A shareholder may not exchange shares of a class of one Fund for shares of
a 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 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, Select and
Investor 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
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<PAGE>
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 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.
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 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 classes of shares to the Trustees.
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<PAGE>
AMENDMENTS
The Plan may be amended from time to time in accordance with the provisions
and requirements of the Rule.
BARR ROSENBERG SERIES TRUST
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By:
Title:
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