<PAGE>
File Nos. 33-21677
811-5547
As filed with the Securities and Exchange Commission on July 18, 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. 15 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT /X/
COMPANY ACT OF 1940
Amendment No. 18 /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)
- --------------------------------------------------------------------------------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has previously registered an indefinite number or amount of its
shares of beneficial interest under the Securities Act of 1933. The Registrant
filed its 24f-2 Notice for its fiscal year ended March 31, 1997 on May 30,
1997.
It is proposed that this filing will become effective:
X Immediately upon filing pursuant to paragraph (b)
---
On _______ pursuant to paragraph (b)
---
--- 60 days after filing pursuant to paragraph (a)(1)
On _______ pursuant to paragraph (a)(1)
---
75 days after filing pursuant to paragraph (a)(2)
---
On _______ pursuant to paragraph (a)(2), of Rule 485
---
If appropriate, check the following box:
--- This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
BARR ROSENBERG SERIES TRUST
CROSS REFERENCE SHEET
N-1A Item No. Location
- ------------ --------
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Financial Highlights
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 Investment Performance
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 Objective and
and Policies Policies; Miscellaneous
Investment Practices; and
Investment Restrictions
Item 14. Management of the Fund Management of the Trust
<PAGE>
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 Financial Statements
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.
<PAGE>
BARR ROSENBERG SERIES TRUST
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-447-3332 (ADVISER AND SELECT SHARES)
1-800-527-6026 (INSTITUTIONAL SHARES)
JULY 18, 1997
Barr Rosenberg Series Trust (the "Trust") is an open-end management
investment company offering the following three diversified portfolios with
different investment objectives and strategies: U.S. Small Capitalization
Series, International Small Capitalization Series and Japan Series. The Trust's
portfolios are referred to individually as a "Series" or a "Fund," and
collectively as the "Series" or the "Funds." Each Fund's investment manager is
Rosenberg Institutional Equity Management (the "Manager").
DOMESTIC EQUITY PORTFOLIO
The U.S. SMALL CAPITALIZATION SERIES seeks a total return greater than that
of the Russell 2000 Index through investment primarily in equity securities of
smaller companies that are traded principally in the markets of the United
States. The Fund is designed for long-term investors willing to assume
above-average risk in return for above-average capital growth potential.
INTERNATIONAL EQUITY PORTFOLIOS
The INTERNATIONAL SMALL CAPITALIZATION SERIES seeks a total return greater
than that of the Cazenove Rosenberg Global Smaller Companies Index excluding the
United States ("CRIexUS") through investment primarily in equity securities of
smaller companies that are traded principally in markets outside of the United
States. The Fund is designed for long-term investors willing to assume
above-average risk in return for above-average capital growth potential.
The JAPAN SERIES seeks a total return greater than that of the Tokyo Stock
Price Index of the Tokyo Stock Exchange ("TOPIX") through investment in Japanese
securities, primarily in common stocks of Japanese companies traded in Japanese
markets. The Fund is designed for long-term investors willing to assume above-
average risk in return for above-average capital growth potential.
Each Fund offers three classes of shares: Institutional Shares, Adviser
Shares and Select Shares. Whether an investor is eligible to purchase
Institutional, Adviser or Select Shares generally depends on the amount invested
in a particular Fund and on whether the investor makes the investment in the
Fund directly or through a financial adviser. The classes differ primarily with
respect to (i) the level of Shareholder Service Fee and (ii) the level of
Distribution Fee borne by each class.
This Prospectus concisely describes the information which investors ought to
know before investing. Please read this Prospectus carefully and keep it for
future reference.
A Statement of Additional Information dated July 18, 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 Adviser and Select
Share customers) and 1-800-527-6026 (for Institutional Share customers). The
Statement, which contains more detailed information about the Trust, has been
filed with the Securities and Exchange Commission (the "Commission") and is
incorporated by reference in 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.
<PAGE>
TABLE OF CONTENTS
PAGE
----
FUND EXPENSES......................................................... 3
FINANCIAL HIGHLIGHTS.................................................. 5
INVESTMENT OBJECTIVES AND POLICIES.................................... 8
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS..................... 11
INVESTMENT PERFORMANCE................................................ 15
MANAGEMENT OF THE TRUST............................................... 20
MULTIPLE CLASSES...................................................... 28
PURCHASE OF SHARES.................................................... 29
IRA ACCOUNTS.......................................................... 31
REDEMPTION OF SHARES.................................................. 31
EXCHANGE OF FUND SHARES............................................... 33
DETERMINATION OF NET ASSET VALUE...................................... 34
DISTRIBUTIONS......................................................... 35
TAXES................................................................. 35
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES...................... 36
SHAREHOLDER INQUIRIES................................................. 37
2
<PAGE>
FUND EXPENSES
The 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>
OTHER TOTAL FUND
MANAGEMENT SHAREHOLDER EXPENSES OPERATING
FEE (AFTER SERVICE DISTRIBUTION (AFTER REIM- EXPENSES
WAIVER) FEE FEE BURSEMENT) (AFTER WAIVER)
---------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
U.S. Small Capitalization Series................ 0.46% None None 0.69% 1.15%
International Small Capitalization Series....... 0.00% None None 1.50% 1.50%
Japan Series.................................... 0.00% None None 1.50% 1.50%
ADVISER SHARES
U.S. Small Capitalization Series................ 0.46% 0.25% None 0.69% 1.40%
International Small Capitalization Series....... 0.00% 0.25% None 1.50% 1.75%
Japan Series.................................... 0.00% 0.25% None 1.50% 1.75%
SELECT SHARES
U.S. Small Capitalization Series................ 0.46% 0.25% 0.25% 0.69% 1.65%
International Small Capitalization Series....... 0.00% 0.25% 0.25% 1.50% 2.00%
Japan Series.................................... 0.00% 0.25% 0.25% 1.50% 2.00%
</TABLE>
The expense information in the table relating to the U.S. Small
Capitalization Series and the Japan Series has been restated to reflect an
increase of 0.10% in their respective management fees effective on August 6,
1996 and an increase in the expense limitation of the U.S. Small Capitalization
Series and the Japan Series from 0.90% to 1.15% and 1.00% to 1.50%,
respectively, effective on August 6, 1996. In addition, no Shareholder Service
Fees or Distribution Fees were charged in the fiscal year ended March 31, 1997.
The Manager has agreed to reduce its management fee and bear certain
expenses until further notice in order to limit the total annual operating
expenses (which do not include nonrecurring account fees and extraordinary
expenses) of each class to the percentage of a Fund's total annual operating
expenses attributable to that class listed under Total Fund Operating Expenses
above. Absent such agreement by the Manager to waive its fee and bear such
expenses and absent waiver of the Shareholder Service Fee and Distribution Fee,
(1) the U.S. Small Capitalization Series' management fees would be 0.90% and
Total Fund Operating Expenses would be 1.54% for Institutional Shares, 1.79% for
Adviser Shares and 2.04% for Select Shares; (2) the Japan Series' management
fees would be 1.00%, Other Expenses would be 12.33% and Total Fund Operating
Expenses would be 13.33% for Institutional Shares and 13.83% for Select Shares;
and (3) the International Small Capitalization Series' management fees would be
1.00%, estimated Other Expenses would be 6.46% and estimated Total Fund
Operating Expenses would be 7.46% for Institutional Shares, 7.71% for Adviser
Shares and 7.96% for Select Shares. See "Management of the Trust."
3
<PAGE>
The percentages listed above under Other Expenses with respect to the U.S.
Small Capitalization Series are the actual expenses incurred for the fiscal year
ended March 31, 1997. The estimated percentages listed above under Other
Expenses and Total Fund Operating Expenses with respect to the International
Small Capitalization Series have been based on annualized amounts for the Fund's
first fiscal year. Furthermore, no Adviser Shares of each of the Japan Series
and the International Small Capitalization Series were sold in the fiscal year
ended March 31, 1997.
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 5 10
YEAR YEARS YEARS YEARS
----- ----- ----- -----
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
U.S. Small Capitalization Series................ 12 37 63 140
International Small Capitalization Series....... 15 47 -- --
Japan Series.................................... 15 47 82 179
ADVISER SHARES
U.S. Small Capitalization Series................ 14 44 77 168
International Small Capitalization Series....... 18 55 -- --
Japan Series.................................... 18 55 95 206
SELECT SHARES
U.S. Small Capitalization Series................ 17 52 90 195
International Small Capitalization Series....... 20 63 -- --
Japan Series.................................... 20 63 108 233
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST 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.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables present per share financial information for the periods
listed for each Fund. Each of the Financial Highlights has been audited by Price
Waterhouse LLP, independent accountants, whose report on the financial
statements of the Funds appears in the Funds' Annual Report for the fiscal year
ended March 31, 1997 (the "Annual Report"). These statements should be read in
conjunction with the "Report of Independent Accountants," the other audited
financial statements and related notes which are contained in the Annual Report
and are incorporated by reference into this Prospectus and the Statement of
Additional Information.
U.S. SMALL CAPITALIZATION SERIES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
1997
------------------------------------- --------------------------------------------------
(For a Share outstanding INSTITUTIONAL SELECT ADVISER
throughout each period) SHARES SHARES(1) SHARES(2) 1996 1995 1994 1993 1992
------------- --------- --------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period................... $ 7.60 $ 8.49 $ 7.38 $ 6.97 $ 7.36 $ 12.33 $ 12.04 $ 10.74
------------- --------- --------- -------- ------- ------- -------- --------
Income from Investment
Operations
Net investment income *..... 0.04 0.07 0.02 0.03 0.01 0.08 0.13 0.11
Net realized and unrealized
gain on investments and
foreign currency.......... 1.39 0.47 (0.26) 2.34 0.78 1.28 2.31 1.53
------------- --------- --------- -------- ------- ------- -------- --------
Total from investment
operations.............. 1.43 0.54 (0.24) 2.37 0.79 1.36 2.44 1.64
------------- --------- --------- -------- ------- ------- -------- --------
Distributions to shareholders
from:
Net investment income....... (0.05) (0.05) -- (0.01) (0.08) (0.14) (0.10) (0.08)
Net realized gain on
investments............... (1.85) (1.85) -- (1.73) (1.10) (6.19) (2.05) (0.26)
------------- --------- --------- -------- ------- ------- -------- --------
Total distributions....... (1.90) (1.90) -- (1.74) (1.18) (6.33) (2.15) (0.34)
------------- --------- --------- -------- ------- ------- -------- --------
Net asset value at end of
period...................... $ 7.13 $ 7.13 $ 7.14 $ 7.60 $ 6.97 $ 7.36 $ 12.33 $ 12.04
------------- --------- --------- -------- ------- ------- -------- --------
------------- --------- --------- -------- ------- ------- -------- --------
Total return **............... 19.53% 6.84% (3.25)% 35.69% 12.21% 12.83% 22.51% 15.79%
Net assets, end of period
(000)....................... $ 82,116 $2,375 $ 208 $ 60,046 $56,910 $52,500 $ 69,458 $119,343
Ratio of net expenses to
average daily net
assets(a)................... 1.07% 1.15%+ 1.15%+ 0.90% 0.90% 0.90% 0.90% 0.90%
Ratio of net expenses to
average daily net assets
before waiver/
reimbursement............... 1.54% 1.54%+ 1.54%+ 1.15% 1.17% 1.14% 1.03% 0.94%
Ratio of net investment income
to average daily net
assets...................... 0.35% 0.46%+ 0.46%+ 0.47% 0.60% 0.60% 0.59% 0.66%
Portfolio turnover rate....... 126.83% 126.83% 126.83% 71.87% 57.27% 59.61% 32.61% 59.04%
Average commission rate....... $ 0.0327 $0.0327 $0.0327 -- -- -- -- --
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------
INSTITUTIONAL
SHARES
(For a Share outstanding ----------------------------------
throughout each period) 1991 1990 1989(3)
-------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning
of period................... $ 10.70 $ 10.34 $ 10.00
-------- -------- --------
Income from Investment
Operations
Net investment income *..... 0.09 0.08 0.11
Net realized and unrealized
gain on investments and
foreign currency.......... 0.05 0.67 0.23
-------- -------- --------
Total from investment
operations.............. 0.14 0.75 0.34
-------- -------- --------
Distributions to shareholders
from:
Net investment income....... (0.07) (0.15) --
Net realized gain on
investments............... (0.03) (0.24) --
-------- -------- --------
Total distributions....... (0.10) (0.39) --
-------- -------- --------
Net asset value at end of
period...................... $ 10.74 $ 10.70 $ 10.34
-------- -------- --------
-------- -------- --------
Total return **............... 1.56% 7.37% 39.06%
Net assets, end of period
(000)....................... $171,942 $113,222 $ 57,058
Ratio of net expenses to
average daily net
assets(a)................... 0.90% 0.90% 0.90%+
Ratio of net expenses to
average daily net assets
before waiver/
reimbursement............... 1.04% 1.06% 1.86%+
Ratio of net investment income
to average daily net
assets...................... 1.22% 1.24% 10.10%+
Portfolio turnover rate....... 64.97% 60.10% 0.04%
Average commission rate....... -- -- --
</TABLE>
- ---------------------------
(1) Shares of the Class were first offered for sale to investors on October 22,
1996.
(2) Shares of the Class were first offered for sale to investors on January 21,
1997.
(3) The Fund commenced operations on February 22, 1989.
* Net of fees and expenses waived/reimbursed by the Manager in the amount of
$.04, $.04, $.04, $.02, $.01, $.05, $.03, $.01, $.01, $.01 and $.01 per
share.
** Total return would have been lower had certain fees and expenses not been
waived/reimbursed by the Manager.
(a) Difference in expense ratios between classes for 1997 is due to the change
in the maximum expense ratio charged to the Fund during the year and the
introduction of the Select and Adviser Shares after such change.
+ Computed on an annualized basis.
5
<PAGE>
JAPAN SERIES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
-----------------------------------------------------------------------------------------------------
1997
------------------------- INSTITUTIONAL SHARES
(For a Share outstanding INSTITUTIONAL SELECT --------------------------------------------------------------------------
throughout each period) SHARES SHARES(1) 1996 1995 1994 1993 1992 1991 1990 1989(2)
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period................... $ 8.77 $ 8.08 $ 8.96 $ 8.25 $ 6.94 $ 6.15 $ 7.87 $ 8.23 $ 9.88 $10.00
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Income (loss) from Investment
Operations
Net investment income
(loss)*.................. (0.05)(a) (0.01)(a) 0.04 0.10 (0.01) 0.02 0.04 0.06 0.06 0.02
Net realized and unrealized
gain/(loss) on
investments and foreign
currency................. (2.45) (1.80) (0.15) 0.63 1.41 0.84 (1.69) 0.09 (1.67) (0.14)
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Total from investment
operations............. (2.50) (1.81) (0.11) 0.73 1.40 0.86 (1.65) 0.15 (1.61) (0.12)
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Distributions to shareholders
from:
Net investment income...... (0.04) (0.04) -- -- -- (0.07) (0.07) (0.07) (0.04) --
In excess of net investment
income................... (0.03) (0.03) (0.08) (0.02) (0.09) -- -- -- -- --
Net realized gain on
investments.............. -- -- -- -- -- (0.44) -- --
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Total distributions...... (0.07) (0.07) (0.08) (0.02) (0.09) (0.07) (0.07) (0.51) (0.04) --
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Net asset value at end of
period...................... $ 6.20 $ 6.20 $ 8.77 $ 8.96 $ 8.25 $ 6.94 $ 6.15 $ 7.87 $ 8.23 $ 9.88
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Total return **.............. (28.68%) (22.59%) (1.20%) 8.86% 20.35% 14.24% (21.09%) 1.94% (16.39%) (4.94%)
Net assets, end of period
(000)....................... $ 1,009 $ 13 $1,378 $1,385 $1,258 $1,044 $ 915 $1,864 $ 1,829 $2,186
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
------------- ---------- ------- ------- ------- ------- -------- ------- -------- ---------
Ratio of net expenses to
average daily net
assets(b)................... 1.42% 1.50%+ 1.00% 1.00% 1.00% 0.70% 0.59% 0.02% 0.00% 0.28%+
Ratio of net expenses to
average daily net assets
before waiver/
reimbursement............... 13.33% 13.33%+ 7.16% 7.02% 7.63% 10.70% 8.56% 8.40% 7.35% 9.30%+
Ratio of net investment
income/ (loss) to average
daily net assets............ (0.63%) 0.00%+ (0.22%) (0.20%) (0.26%) 0.37% 0.20% 0.76% 0.62% 0.88%+
Portfolio turnover rate...... 51.70% 51.70% 60.60% 57.10% 74.60% 162.10% 53.13% 78.61% 87.72% 0.00%
Average commission rate...... $0.0165 $0.0165 -- -- -- -- -- -- -- --
</TABLE>
- ---------------------------
(1) Shares of the Class were first offered for sale to investors on October 22,
1996.
(2) The Fund commenced operations on January 3, 1989.
* Net of fees and expenses waived/reimbursed by the Manager (and Administrator
for 1997) in the amount of $.95, $.95, $.38, $.67, $.49, $.59, $1.64, $.71,
$.74 and $.21 per share.
** Total return would have been lower had certain fees and expenses not been
waived/reimbursed by the Manager (and Administrator for 1997).
(a) Calculated based on the average shares outstanding during the period.
(b) Difference in expense ratios between classes for 1997 is due to the change
in the maximum expense ratio charged to the Fund during the year and the
introduction of the Select Shares after such change.
+ Computed on an annualized basis.
6
<PAGE>
INTERNATIONAL SMALL CAPITALIZATION SERIES
<TABLE>
<CAPTION>
SEPTEMBER 23, 1996
(COMMENCEMENT OF OPERATIONS)
THROUGH MARCH 31, 1997
----------------------------
INSTITUTIONAL SELECT
For a share outstanding throughout the period SHARES SHARES(1)
------------ --------------
<S> <C> <C>
Net asset value at beginning of period.............................. $ 10.00 $ 10.04
------------ -------
Income from Investment Operations:
Net investment income*............................................ 0.02(a) 0.02(a)
Net realized and unrealized gain on investments
and foreign currency............................................ 0.11 0.07
------------ -------
Total from investment operations............................ 0.13 0.09
------------ -------
Net asset value at end of period.................................. $ 10.13 $ 10.13
------------ -------
------------ -------
Total Return**.................................................... 1.30% 0.90%
Net assets, end of period (000)................................... $ 12,859 $ 185
------------ -------
------------ -------
Ratio of net expenses to average daily net assets+................ 1.50%+ 1.50%+
Ratio of expenses to average daily net assets
before waiver/reimbursement+.................................... 7.46%+ 7.46%+
Ratio of net investment income to average daily net assets+....... 0.11%+ 0.44%+
Portfolio turnover rate........................................... 6.71% 6.71%
Average commission rate........................................... $ 0.0108 $ 0.0108
</TABLE>
- ------------------------
(1) Select shares were first offered for sale to investors on October 29, 1996.
(a) Calculated based on the average shares outstanding during the period.
* Net of fees and expenses waived/reimbursed by the Manager and Administrator
in the amount of $0.31 and $0.31, respectively.
** Total return would have been lower had certain fees and expenses not been
waived/reimbursed by the Manager and Administrator.
+ Computed on an annualized basis.
Further information about the performance of the Funds is contained in the
Funds' semiannual and annual reports to shareholders, which may be obtained
without charge by writing or telephoning the Trust at the address and telephone
numbers stated on the cover of this Prospectus.
7
<PAGE>
The Funds' investment performance may from time to time be included in
advertisements about the Funds. Total return for a Fund is measured by comparing
the value of an investment in a Fund at the beginning of the relevant period to
the redemption value of the investment in a Fund at the end of the period
(assuming immediate reinvestment of any dividends or capital gain
distributions). All data are based on the Funds' 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 objectives 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.
INVESTMENT OBJECTIVES AND POLICIES
U.S. SMALL CAPITALIZATION SERIES
The investment objective of the U.S. Small Capitalization Series is to seek
total return greater than that of the Russell 2000 Index through investment
primarily in equity securities of smaller companies that are traded principally
in the markets of the United States. Total return is a combination of capital
appreciation and current income (dividend or interest). In the case of the Fund,
total return will be measured by changes in value of an investment over a given
period, assuming that any dividends or capital gains distributions are
reinvested in the Fund rather than paid to the investor in cash. The Fund does
not seek to MAXIMIZE total return but, as indicated above, seeks a total return
greater than that of the common stocks referred to above. Because the companies
in which the Fund invests typically do not distribute significant amounts of
company earnings to shareholders, the Fund's objective will place relatively
greater emphasis on capital appreciation than on current income. The Fund's
investment objective is non-fundamental and thus may be changed by the Trustees
without shareholder approval.
It is currently expected that, under normal circumstances, most of the
Fund's assets will be invested in common stocks of companies that are
principally traded in the markets of the United States with total market
capitalization of less than $750 million ("small capitalization securities").
This corresponds with the defining range of market capitalization of companies
in the Russell 2000 Index. Investments in issuers of small capitalization
securities may present greater opportunities for capital appreciation because of
high potential earnings growth, but may also involve greater risk. See "General
Description of Risks and Fund Investments -- Companies with Small Market
Capitalizations" below.
To meet redemptions or pending investments in common stocks, the Fund may
also temporarily hold a portion of its assets not invested in small
capitalization securities in full faith and credit obligations of the United
States government (e.g., U.S. Treasury Bills) and in short-term notes,
commercial paper or other money market instruments of high quality (i.e., rated
at least "A-2" or "AA" by Standard & Poor's ("S&P") or Prime 2 or "Aa" by
Moody's Investors Service, Inc. ("Moody's")) issued by companies having an
outstanding debt issue rated at least "AA" by S&P or at least "Aa" by Moody's,
or determined by the Manager to be of comparable quality to any of the
foregoing. The Fund may also invest in stock index futures. See "General
Description of Risks and Fund Investments -- Stock Index Futures" below.
8
<PAGE>
Also, the Fund may invest without limit in common stocks of foreign issuers
that are principally traded in the markets of the United States. Investments in
common stocks of foreign issuers may involve certain special risks due to
foreign economic, political and legal developments. See "General Description of
Risks and Fund Investments -- Special Considerations of Foreign Investments"
below. The Fund will not invest in securities which are principally traded
outside of the United States.
FUNDAMENTAL POLICIES. The Fund will normally invest most of its assets in
small capitalization securities, and it is a fundamental policy of the Fund,
which may not be changed without shareholder approval, that at least 65% of the
Fund's total assets will be invested in small capitalization securities.
INTERNATIONAL SMALL CAPITALIZATION SERIES
The investment objective of the International Small Capitalization Series is
to seek total return greater than the Cazenove Rosenberg Global Smaller
Companies Index excluding the United States ("CRIEXUS") through investment
primarily in equity securities (i) that are traded principally in securities
markets outside of the United States and (ii) that represent interests in
companies with market capitalizations of between $15 million and $1 billion at
the time of purchase by the Fund. Such companies are referred to herein as
"small capitalization companies." CRIexUS is comprised of stocks of small
capitalization companies in mature markets. Total return is a combination of
capital appreciation and current income (dividend or interest). In the case of
the Fund, total return will be measured by changes in value of an investment
over a given period, assuming that any dividends or capital gains distributions
are reinvested in the Fund rather than paid to the investor in cash. The Fund
does not seek to MAXIMIZE total return but, as indicated above, seeks a total
return greater than that of the common stocks referred to above. Because the
companies in which the Fund invests typically do not distribute significant
amounts of company earnings to shareholders, the Fund's objective will place
relatively greater emphasis on capital appreciation than on current income. The
Fund's investment objective is non-fundamental and thus may be changed by the
Trustees without shareholder approval.
There are no prescribed limits on the Fund's geographic asset distribution,
and the Fund has the authority to invest in securities traded in securities
markets of any country in the world. It is currently expected that the Fund will
invest in approximately twenty-one different countries across three regions --
Europe, Pacific and North America (excluding the United States). Under certain
adverse investment conditions, the Fund may restrict the number of securities
markets in which its assets will be invested, although under normal market
circumstances, the Fund's investments will involve securities principally traded
in at least three different countries. See "General Description of Risks and
Fund Investments -- Special Considerations of Foreign Investments" below.
Under normal circumstances, at least 90% of the Fund's total assets will be
invested in common stocks of small capitalization companies and it is the
non-fundamental policy of the Fund to invest at least 65% of the Fund's total
assets in common stocks of small capitalization companies. Investments in such
companies may present greater opportunities for capital appreciation because of
high potential earnings growth, but may also involve greater risk. See "General
Description of Risks and Fund Investments -- Companies with Small Market
Capitalizations" below.
The Fund will not normally invest in securities of United States issuers
traded on United States securities markets.
9
<PAGE>
JAPAN SERIES
The investment objective of the Japan Series is to seek total return greater
than that of the Tokyo Stock Price Index ("TOPIX") of the Tokyo Stock Exchange.
TOPIX is a capitalization weighted index of all stocks in the First Section of
the Tokyo Stock Exchange. Total return is a combination of capital appreciation
and current income (dividend or interest). The Fund will seek to meet this
objective primarily through investment in Japanese equity securities, primarily
in common stocks of Japanese companies. The Fund expects that any income it
derives will be from dividend or interest payments on securities. The Fund's
investment objective is non-fundamental and thus may be changed by the Trustees
without shareholder approval.
It is currently expected that, under normal circumstances, the Fund will
invest at least 90% of its assets in "Japanese Securities," that is, securities
issued by entities ("Japanese Companies") that are organized under the laws of
Japan and that either have 50% or more of their assets in Japan or derive 50% or
more of their revenues from Japan. While the Fund will invest primarily in
common stocks of Japanese Companies, it may also invest in other Japanese
Securities, such as convertible preferred stock or debentures, warrants or
rights, as well as short-term government debt securities or other short-term
prime obligations (i.e., high quality debt obligations maturing not more than
one year from the date of issuance). The Fund will not ordinarily purchase
warrants or rights, although it may receive warrants or rights through
distributions on other securities it owns. In those cases, the Fund expects to
sell such warrants and rights within a reasonable period of time following their
distribution to the Fund. The Fund does not currently expect to own warrants or
rights with an aggregate value of greater than 5% of the Fund's assets.
The Fund currently intends to make its investments in Japanese equity
securities, principally in well-established Japanese Companies that have an
active market for their shares. Japanese Companies will be considered
well-established if they have been subject for at least two years to the
financial accounting rules for a company whose securities are traded on a
Japanese securities exchange. In the discretion of the Fund's management, the
balance of the Fund's investments may be in companies that do not meet such
qualifications, although the nature of the market for the shares will always be
an important consideration in determining whether the Fund will invest in such
shares. The Fund anticipates that most Japanese equity securities in which it
will invest, either directly or indirectly (by means of convertible debentures),
will be listed on securities exchanges in Japan.
INDEX FUTURES. The Fund may also purchase futures contracts or options on
futures contracts on the Tokyo Stock Price Index ("TOPIX") or the NIKKEI 225
Index ("NIKKEI") for investment purposes. TOPIX futures are traded on the
Chicago Board of Trade and NIKKEI futures are traded on the Chicago Mercantile
Exchange. See "General Description of Risks and Fund Investments -- Stock Index
Futures" below.
RISKS OF INVESTING IN JAPANESE SECURITIES. Unlike other mutual funds which
invest in the securities of many countries, the Fund will invest almost
exclusively in Japanese Securities. Generally, the Manager will not vary the
percentage of the Fund's assets which are invested in Japanese Securities based
on its assessment of Japanese economic, political or regulatory developments or
changes in currency exchange rates. However, the Manager has from time to time
hedged up to 21% of the Fund's portfolio value and reserves the right to hedge
up to 100% of the Fund's total assets against a possible decline in the Japanese
Securities market by utilizing futures and options on futures on Japanese stock
indices as described above.
10
<PAGE>
Because a high percentage of the Fund's assets will be invested in Japanese
Securities, investment in the Fund will involve the general risks associated
with investing in foreign securities. See "General Description of Risks and Fund
Investments -- Special Considerations of Foreign Investments" below. In
addition, investors will be subject to the market risk associated with investing
almost exclusively in stocks of companies which are subject to Japanese economic
factors and conditions. Since the Japanese economy is dependent to a significant
extent on foreign trade, the relationships between Japan and its trading
partners and between the yen and other currencies are expected to have a
significant impact on particular Japanese companies and on the Japanese economy
generally. The Fund is designed for investors who are willing to accept the
risks associated with changes in such conditions and relationships.
FUNDAMENTAL POLICIES. The Fund will normally invest at least 90% of its
total assets in Japanese Securities, and it is a fundamental policy of the Fund,
which may not be changed without shareholder approval, that at least 65% of the
Fund's total assets will be invested in Japanese Securities.
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS
INVESTMENT RISKS. An investment in the Funds involves risks similar to
those of investing in common stocks directly. Just as with common stocks, the
value of Fund shares may increase or decrease depending on market, economic,
political, regulatory and other conditions affecting a Fund's portfolio. These
types of risks may be greater with respect to investments in securities of
foreign issuers. Investment in shares of the Funds is, like investment in common
stocks, more volatile and risky than some other forms of investment.
COMPANIES WITH SMALL MARKET CAPITALIZATIONS. As specified above, the U.S.
Small Capitalization Series and the International Small Capitalization Series
will invest a relatively high percentage of their assets in companies with
relatively small market capitalizations (generally, market capitalizations of
under $750 million for the U.S. Small Capitalization Series and under $1 billion
for the International Small Capitalization Series). Companies with small market
capitalizations may be dependent upon a single proprietary product or market
niche, may have limited product lines, markets or financial resources, or may
depend on a limited management group. Typically, such companies have fewer
securities outstanding, which may be less liquid than securities of larger
companies. Their common stock and other securities may trade less frequently and
in limited volume and are generally more sensitive to purchase and sale
transactions. Therefore, the prices of such securities tend to be more volatile
than the prices of securities of companies with larger market capitalizations.
As a result, the absolute values of changes in the price of securities of
companies with small market capitalizations may be greater than those of larger,
more established companies.
SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS. Investing in foreign
securities (i.e., those which are traded principally in markets outside of the
United States) involves certain risks not typically found in investing in U.S.
domestic securities. These include risks of adverse change in foreign economic,
political, regulatory and other conditions, and changes in currency exchange
rates, exchange control regulations (including currency blockage), expropriation
of assets or nationalization, imposition of withholding taxes on dividend or
interest payments, and possible difficulty in obtaining and enforcing judgments
against foreign entities. Furthermore, issuers of foreign securities are subject
to different, and often less comprehensive, accounting, reporting and disclosure
requirements than domestic issuers. In certain countries, legal remedies
available to investors may be more limited than those available with respect to
investments in the United States or other countries. The
11
<PAGE>
laws of some foreign countries may limit a Fund's ability to invest in
securities of certain issuers located in those countries. The securities of some
foreign issuers and securities traded principally in foreign securities markets
are less liquid and at times more volatile than securities of comparable U.S.
issuers and securities traded principally in U.S. securities markets. Foreign
brokerage commissions and other fees are also generally higher than those
charged in the United States. There are also special tax considerations which
apply to securities of foreign issuers and securities traded principally in
foreign securities markets.
The risks of investing in foreign securities 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. Local securities
markets may trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times.
Consequently, securities of issuers located in countries with developing markets
may have limited marketability and may be subject to more abrupt or erratic
price movements. Also, such local markets typically offer less regulatory
protections for investors.
FOREIGN EXCHANGE TRANSACTIONS. The International Equity Portfolios of the
Trust (i.e., the International Small Capitalization Series and the Japan Series)
do not currently intend to hedge the foreign currency risk associated with
investments in securities denominated in foreign currencies. However, in order
to hedge against possible variations in foreign exchange rates pending the
settlement of securities transactions, the International Equity Portfolios
reserve the right to buy or sell foreign currencies or to deal in forward
foreign currency contracts; that is, to agree to buy or sell a specified
currency at a specified price and future date. The International Equity
Portfolios also reserve the right to purchase currency futures contracts and
related options thereon for similar purposes. For example, if the Manager
anticipates that the value of the yen will rise relative to the dollar, a Fund
could purchase a currency futures contract or a call option thereon or sell
(write) a put option to protect against a currency-related increase in the price
of yen-denominated securities such Fund intends to purchase. If the Manager
anticipates a fall in the value of the yen relative to the dollar, a Fund could
sell a currency futures contract or a call option thereon or purchase a put
option on such futures contract as a hedge. If the International Equity
Portfolios change their present intention and decide to utilize hedging
strategies, futures contracts and related options will be used only as a hedge
against anticipated currency rate changes (not for investment purposes) and all
options on currency futures written by a Fund will be covered. These practices,
if utilized, may present risks different from or in addition to the risks
associated with investments in foreign currencies.
STOCK INDEX FUTURES. A stock index futures contract (an "Index Future") is
a contract to buy an integral number of units of the relevant index at a
specified future date at a price agreed upon when the contract is made. A unit
is the value at a given time of the relevant index.
12
<PAGE>
In connection with a Fund's investment in common stocks, a Fund may invest
in Index Futures while the Manager seeks favorable terms from brokers to effect
transactions in common stocks selected for purchase. A Fund may also invest in
Index Futures when the Manager believes that there are not enough attractive
common stocks available to maintain the standards of diversity and liquidity set
for the Fund pending investment in such stocks when they do become available.
Through the use of Index Futures, a Fund may maintain a portfolio with
diversified risk without incurring the substantial brokerage costs which may be
associated with investment in multiple issuers. This may permit a Fund to avoid
potential market and liquidity problems (e.g., driving up or forcing down the
price by quickly purchasing or selling shares of a portfolio security) which may
result from increases or decreases in positions already held by a Fund. Certain
provisions of the Internal Revenue Code may limit this use of Index Futures. A
Fund may also use Index Futures in order to hedge its equity positions.
In contrast to purchases of a common stock, no price is paid or received by
a Fund upon the purchase of a futures contract. Upon entering into a futures
contract, a Fund will be required to deposit with its custodian in a segregated
account in the name of the futures broker a specified amount of cash or
securities. This is known by participants in the market as "initial margin." The
type of instruments that may be deposited as initial margin, and the required
amount of initial margin, are determined by the futures exchange on which the
Index Futures are traded. The nature of initial margin in futures transactions
is different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, called "variation margin,"
to and from the broker, will be made on a daily basis as the price of the
particular Index fluctuates, making the position in the futures contract more or
less valuable, a process known as "marking to the market."
A Fund may close out a futures contract purchase by entering into a futures
contract sale. This will operate to terminate the Fund's position in the futures
contract. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to the Fund, and the Fund realizes a
loss or a gain.
A Fund's use of Index Futures involves risk. Positions in Index Futures may
be closed out by a Fund only on the futures exchanges on which the Index Futures
are then traded. There can be no assurance that a liquid market will exist for
any particular contract at any particular time. The liquidity of the market in
futures contracts could be adversely affected by "daily price fluctuation
limits" established by the relevant futures exchange which limit the amount of
fluctuation in the price of an Index Futures contract during a single trading
day. Once the daily limit has been reached in the contract, no trades may be
entered into at a price beyond the limit. In such events, it may not be possible
for a Fund to close its futures contract purchase, and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. The futures market may also attract more
speculators than does the securities market, because deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Increased participation by speculators in the futures market may also
cause price distortions.
A Fund will not purchase Index Futures if, as a result, the Fund's initial
margin deposits on transactions that do not constitute "bona fide hedging" under
relevant regulations of the Commodities Futures Trading
13
<PAGE>
Commission would be greater than 5% of the Fund's total assets. In addition to
margin deposits, when a Fund purchases an Index Future, it is required to
maintain, at all times while an Index Future is held by the Fund, cash, U.S.
Government securities or other high grade liquid 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.
ILLIQUID SECURITIES. Each Fund may purchase "illiquid securities," defined
as securities which cannot be sold or disposed of in the ordinary course of
business within seven days at approximately the value at which a Fund has valued
such securities, so long as no more than 15% of the Fund's net assets would be
invested in such illiquid securities after giving effect to the purchase.
Investment in illiquid securities involves the risk that, because of the lack of
consistent market demand for such securities, the Fund may be forced to sell
them at a discount from the last offer price.
REPURCHASE AGREEMENTS. 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 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
a Fund 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
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.
PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions. The rate of a Fund's portfolio turnover may
vary significantly from time to time depending on the volatility of economic and
market conditions. High portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by a Fund, and could involve realization of capital gains that would be taxable
when distributed to shareholders of such Fund. To the extent portfolio turnover
results in the realization of net short-term capital gains, such gains
ordinarily are taxed to shareholders at ordinary income tax rates. See "Taxes".
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend some or all of its
portfolio securities to broker-dealers. Securities loans are made to
broker-dealers pursuant to agreements requiring that loans be continuously
secured by collateral in cash or U.S. Government securities at least equal at
all times to the market value of the securities lent. The borrower pays to the
lending Fund an amount equal to any dividends or interest received on the
securities lent. When the collateral is cash, the Fund may invest the cash
collateral in interest-bearing, short-term securities. When the collateral is
U.S. Government securities, the Fund usually receives a fee from the borrower.
Although voting rights or rights to consent with respect to the loaned
securities pass to the borrower, a Fund retains the right to call the loans at
any time on reasonable notice, and it will do so in order that the securities
may be voted by the Fund if the holders of such securities are asked to
14
<PAGE>
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.
INVESTMENT POLICIES. Except for investment policies which are explicitly
described as fundamental, the investment policies of each of the Funds may be
changed without shareholder approval. In addition to the policies described in
this Prospectus, please see the Statement of Additional Information for a
statement of fundamental and non-fundamental policies of the Funds.
INVESTMENT PERFORMANCE
MANAGER'S DISCUSSION OF U.S. SMALL CAPITALIZATION SERIES PERFORMANCE
For the fiscal year ended March 31, 1997, the total return of the U.S. Small
Capitalization Series (Institutional Shares) was 19.53% after deduction of fees
and expenses, more than 14 percentage points above the total return of the
Russell 2000 Index. The Manager believes that the Fund's total return was the
result of the Manager's identification of undervalued U.S. small company stocks
combined with an overall rise in the market. In the last fiscal year, the prices
of the U.S. small company stocks selected by the Manager generally rose towards
the Manager's estimates of their fair value.
The U.S. Small Capitalization Series has built a diversified portfolio that
closely tracks the risk factor and industry profile of the Russell 2000 Index
while emphasizing companies that are selling at prices below the Manager's
estimates of their fair value. The total return of the U.S. Small Capitalization
Series has exceeded the total return of the Russell 2000 Index since inception
of the Fund as well as in the latest 3- and 5- year fiscal periods of the Fund.
15
<PAGE>
U.S. SMALL CAPITALIZATION SERIES
(BASED ON THE PERFORMANCE OF INSTITUTIONAL SHARES ONLY)(1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. SMALL CAPITALIZATION SERIES (2) RUSSELL 2000 INDEX
<S> <C> <C>
1989 1000000 (1) $1,000,000
1990 1,109,590 1,074,961
1991 1,126,873 1,147,863
1992 1,304,847 1,391,403
1993 1,598,522 1,598,039
1994 1,803,561 1,773,698
1995 2,024,074 1,871,243
1996 2,746,344 2,415,788
1997 3,282,825 Portfolio 2,539,511 Benchmark
Past performance is not predictive of future
performance.
</TABLE>
(1) Based on minimum initial investment of $1,000,000 for Institutional Shares.
Note that the minimum initial investment for Adviser Shares is $100,000 and
for Select Shares is $2,500.
(2) Fund returns are net of all fees while the Russell 2000 Index returns are
based solely on market returns without deduction of fees or transaction
costs for rebalancing.
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED 3/31/97)
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS (2/22/89)
--------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
U.S. Small Capitalization Series (Institutional Shares)................... 19.53 % 22.10 % 20.26 % 15.79 %
Russell 2000 Index........................................................ 5.12 % 12.71 % 12.79 % 12.10 %
</TABLE>
THE NUMBERS REPORTED IN BOTH THE GRAPH AND THE TABLE REPRESENT PAST
PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE PERFORMANCE.
16
<PAGE>
MANAGER'S DISCUSSION OF JAPAN SERIES PERFORMANCE
During the last fiscal year, the total return of the Japan Series
(Institutional Shares) after deduction of fees and expenses was less than the
total return of its Tokyo Stock Price Index ("TOPIX") benchmark by 1.5
percentage points. Most of the Fund's underperformance occurred during November
and December 1996. In those two months, the Fund underperformed TOPIX by 2.94
percentage points primarily because high book-to-price stocks (value stocks)
performed poorly during this period. The movement of investors to stocks with
positive price momentum negatively affected the Manager's strategy. Since
inception in January 1989, the Fund has outperformed TOPIX by an average of .98
percentage points per year. The Fund maintains a diversified portfolio of
moderately undervalued securities identified by the Manager's proprietary stock
selection models.
JAPAN SERIES
(BASED ON THE PERFORMANCE OF INSTITUTIONAL SHARES ONLY)(1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
JAPAN SERIES (2) TOPIX
<S> <C> <C> <C> <C>
1989 $1,000,000 $1,000,000
1990 825,963 760,601
1991 842,011 759,691
1992 664,446 582,912
1993 759,076 686,635
1994 913,564 847,235
1995 994,336 845,399
1996 982,039 882,838
1997 700,383 642,958 Portfolio Benchmark
Performance is not predictive of future
performance.
</TABLE>
(1) Based on minimum initial investment of $1,000,000 for Institutional Shares.
Note that the minimum initial investment for Adviser Shares is $100,000 and
for Select Shares is $2,500.
(2)3> Fund returns are net of all fees while the TOPIX Index returns are based
solely on market returns without deduction of fees or transaction costs for
rebalancing.
17
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED 3/31/97)
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS (1/3/89)
--------- --------- ----------- ---------------
<S> <C> <C> <C> <C>
Japan Series (Institutional Shares).................................... -28.68 % -8.48 % 1.06 % -4.23 %
TOPIX Index............................................................ -27.16 % -8.78 % 1.98 % -5.21 %
</TABLE>
THE NUMBERS REPORTED IN BOTH THE GRAPH AND THE TABLES REPRESENT PAST
PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE PERFORMANCE.
MANAGER'S DISCUSSION OF INTERNATIONAL SMALL CAPITALIZATION SERIES PERFORMANCE
From inception, September 23, 1996, to March 31, 1997 the total return of
the International Small Capitalization Series (Institutional Shares) after
deduction of fees and expenses was 1.30%. This exceeded the Fund's Cazenove
Rosenberg Global Smaller Companies Index excluding the U.S. ("CRIexUS")
benchmark by more than 2 percentage points. The Manager believes that the Fund's
total return was the result of identifying undervalued international small
company stocks. The Fund has built a diversified portfolio that closely tracks
the country and industry sectors of CRIexUS.(1)
- ------------------------
(1) CRIexUS excluding the U.S. includes 21 developed countries: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong,
Ireland, Italy, Japan, Malaysia, Netherlands, New Zealand, Norway,
Singapore, Spain, Sweden, Switzerland and U.K.
18
<PAGE>
INTERNATIONAL SMALL CAPITALIZATION SERIES
(BASED ON THE PERFORMANCE OF INSTITUTIONAL SHARES ONLY)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
INTERNATIONAL SMALL CAPITALIZATION SERIES CRIexUS
9/23/1997 $1,000,000 (1) $1,000,000
9/30/1997 1,002,000 999,999
998,000 999,299
1,008,000 1,015,787
1,004,000 995,979.6
999,000 991,198.9
1,017,000 1,005,770
3/31/1997 1,013,000 Portfolio 990,884.1 Benchmark
Past performance is not predictive of future
performance.
</TABLE>
* Based on minimum initial investment of $1,000,000 for Institutional Shares.
Note that the minimum initial investment for Adviser Shares is $100,000 and
for Select Shares is $2,500.
** Fund returns are net of all fees while the CRIexUS Index returns are based
solely on market returns without deduction of fees or transaction costs for
rebalancing.
CUMULATIVE TOTAL RETURN (FOR PERIOD ENDED 3/31/97)
<TABLE>
<CAPTION>
SINCE INCEPTION
(9/23/96)
---------------
<S> <C>
International Small Capitalization Series (Institutional Shares)..................................... 1.30%
CRIexUS Index........................................................................................ -0.91%
</TABLE>
THE NUMBERS REPORTED IN BOTH THE GRAPH AND THE TABLE REPRESENT PAST
PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE RESULTS.
19
<PAGE>
MANAGEMENT OF THE TRUST
Each Fund is advised and managed by Rosenberg Institutional Equity
Management (the "Manager") which provides investment advisory services to a
substantial number of institutional investors.
KEY PERSONNEL OF THE MANAGER
The biography of each of the General Partners of the Manager, each of 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
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<PAGE>
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.
THE OUTSIDE TRUSTEES
William F. Sharpe and Nils H. Hakansson are Trustees of the Trust who are
not "interested persons" (as defined in the Investment Company Act of 1940, as
amended) 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.
21
<PAGE>
THE MANAGER'S GENERAL INVESTMENT PHILOSOPHY AND STRATEGY
The Manager attempts to add value relative to the designated benchmark
through a quantitative stock selection process, and seeks to diversify
investment risk across the several hundred holdings in each of the U.S. Small
Capitalization Series and the International Small Capitalization Series and the
holdings in the Japan Series. In seeking to outperform each Fund's designated
benchmark, the Manager also attempts to control risk in the Fund's portfolio
relative to the securities constituting that benchmark. Since each Fund is
substantially invested in equities at all times, the Manager does not earn the
extraordinary return, or "alpha," by timing the market. The Manager seeks to
avoid constructing portfolios that significantly differ from the relevant
benchmark with respect to characteristics such as market capitalization,
historic volatility or "beta," and industry weightings. Each Fund seeks to have
a similar exposure to these factors as the designated benchmark.
INVESTMENT PHILOSOPHY. The Manager's investment strategy is based on the
belief that stock prices imperfectly reflect the present value of the expected
future earnings of companies, their "fundamental value." The Manager believes
that market prices will converge towards fundamental value over time, and that
therefore, any investor who can accurately determine fundamental value, and who
applies a disciplined investment process to select those stocks that are
currently undervalued (i.e., the price is less than fundamental value), will
outperform the market over time.
The premise of the Manager's investment philosophy is that there is a link
between the price of a stock and the underlying financial and operational
characteristics of the company. In other words, the price reflects the market's
assessment of how well the company is positioned to generate future earnings
and/or future cash flow. The Manager identifies and purchases those stocks which
are undervalued (i.e., they are currently cheaper than similar stocks with the
same characteristics). The Manager believes that the market will recognize the
"better value" and that the mispricing will be corrected as the stocks in the
Funds' portfolios are purchased by other investors.
Determination of the relative valuation of a stock is based upon a
comparison of similar companies. In any group of similar companies, it is the
Manager's view that there are always some that are overvalued, some that are
undervalued, and some that are fairly-valued relative to the average valuation
for the group. These moderate valuation errors are believed to be present in
every sector of the market and can be identified through rigorous quantitative
analysis of fundamental data.
In determining whether or not a stock is attractive, the Manager considers
the company's current estimated fundamental value as determined by the Manager's
proprietary Appraisal Model, the company's future earnings, and investor
sentiment toward the stock. The Manager identifies and causes a Fund to purchase
an undervalued stock and to hold it in the relevant Fund's portfolio until the
market recognizes and corrects for the misvaluation. Each Fund's portfolio is
composed of undervalued stocks from every sector represented in such Fund's
benchmark, with a typical portfolio consisting of several hundred stocks.
DECISION PROCESS. The Manager's decision process is a continuum. Its
research function develops Models which analyze the 12,000 securities in the
global universe, both fundamentally and technically, and determines the risk
characteristics of the relevant Fund's benchmark. The portfolio management
function optimizes each portfolio's composition, executes trades, and monitors
performance and trading costs.
22
<PAGE>
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 declared only
for the total company, such as taxes, capital structure, and pension funding.
The result is a single valuation for each of the 12,000 companies followed.
The difference between the Manager's appraisal and the market price is
believed to represent an opportunity for profit. For each stock, the Manager
develops "appraisal alphas" (i.e., the expected rate of extraordinary return) by
adjusting for the rate at which the market has corrected for such misvaluations
in the past.
A second sphere of analysis is captured by the Manager's proprietary
Earnings Change Model, which analyzes more than 20 variables to predict
individual company earnings over a one year horizon. The variables are
fundamental and fall into three categories: measures of past profitability,
measures of company operations and consensus earnings forecasts. The Earnings
Change Model is independent of the Appraisal Model and projects the change in a
company's earnings in cents/current price. The value of the projected earnings
change is converted to an "earnings change alpha" by multiplying the projected
change by the market's historical response to changes of that magnitude.
Finally, the Manager's proprietary Investor Sentiment Model quantifies
investor sentiment about features of stocks which influence price but which are
not captured by the Appraisal Model or the Earnings
23
<PAGE>
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 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 (i.e., the expected short-term extraordinary
return) which is designed to enable the Funds to purchase stocks from supply and
to sell stocks into demand, greatly reducing trading costs.
OPTIMIZATION. The Manager's portfolio optimization system seeks to optimize
the trade-off between risk and reward relative to each Fund's benchmark. It
exploits the information developed by the Manager's stock selection Models to
maximize return relative to the benchmark, while avoiding a portfolio with
exposure to any other extraneous factors that would distinguish the Fund's
portfolio from the stocks constituting the relevant benchmark. Within the
geographic zone appropriate for each Fund, the optimizer recommends positions in
companies which in aggregate constitute the most efficient portfolio. The
optimizer simultaneously considers total company alphas, trading alphas, and
risk and quantifies the expected "net benefit" to the portfolio of each
recommended transaction. A stock is considered for sale when a higher alpha
stock with complementary risk characteristics has been identified. No
transaction will be executed unless the opportunity offered by the purchase
candidate sufficiently exceeds the potential of an existing holding to justify
the transaction costs. In most markets, portfolios are reoptimized continuously
throughout the day, allowing the Manager to respond immediately to investment
opportunities, subject to certain limitations on short-term trading applicable
by virtue of each Fund's intention to qualify as a regulated investment company
under the Internal Revenue Code.
TRADING. The Manager's trading system aggregates the recommended
transactions for each of the Funds and determines the feasibility of each
recommendation in light of the stock's liquidity, the expected transaction
costs, and general market conditions. It relays target price information to a
trader for each stock considered for purchase or sale. Trades are executed
through any one of four trading strategies: traditional brokerage, networks,
accommodation, and package or "basket" trades.
The network arrangements the Manager has developed with Instinet Matching
System (IMS), Portfolio System for Institutional Trading (POSIT), and the
Arizona Stock Exchange (AZX) facilitate large volume trading with little or no
price disturbance and low commission rates.
Accommodative trading (which we also refer to as the Manager's "match
system") allows institutional buyers and sellers of stock to electronically
present the Manager with their "interest" lists each morning. Any matches
between the inventory which the brokers have presented and the Manager's own
recommended
24
<PAGE>
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 the Funds' portfolios.
INDIVIDUALS RESPONSIBLE FOR EACH FUND
Each of the following General Partners of the Manager holds a greater than
5% interest in the Manager: Marlis S. Fritz and Kenneth Reid. Rosenberg Alpha
L.P., a California limited partnership, is a limited partner of the Manager and
holds a greater than 5% interest in the Manager. Barr M. Rosenberg, the Managing
General Partner of the Manager, and his wife, June Rosenberg, each holds a
greater than 5% general partnership interest in Rosenberg Alpha L.P.
Management of the portfolio of each Fund is overseen by the Manager's
General Partners who are responsible for design and maintenance of the Manager's
portfolio system, and by a portfolio manager who is responsible for research and
monitoring each Fund's characteristic performance against the relevant benchmark
and for monitoring cash balances.
U.S. SMALL CAPITALIZATION SERIES. Dr. Rosenberg, Dr. Reid and Floyd
Coleman, the portfolio manager, are responsible, and have been responsible since
inception, for the day-to-day management of the U.S. Small Capitalization
Series' portfolio. Dr. Rosenberg and Dr. Reid both have been employed by the
Manager since 1985. Mr. Coleman has been a trader and portfolio manager for the
Manager since 1988. He received a B.S. from Northwestern University in 1982, a
M.S. from Polytechnic Institute, Brooklyn in 1984 and a M.B.A. from Harvard
Business School in 1988.
JAPAN SERIES. Dr. Rosenberg, Dr. Reid, and Cheng S. Liao, the portfolio
manager, are responsible, and have been responsible since inception, for the
day-to-day management of the Japan Series' portfolio. Mr. Liao has been a senior
research associate, programmer and portfolio manager, specializing in the
Japanese market with the Manager since 1989. Mr. Liao has also been a trader for
the Manager in Japanese securities since 1994. He received a B.S. from Tohobu
University, Japan, in 1984, a M.S. from Stanford University in 1986, and a M.S.
in Computer Science from Polytechnic Institute, New York in 1988.
INTERNATIONAL SMALL CAPITALIZATION SERIES. Dr. Rosenberg, Dr. Reid and
Joseph Leung, the portfolio manager, are responsible, and have been responsible
since inception, for the day-to-day management of the International Small
Capitalization Series' portfolio. Mr. Leung has been a senior research
associate, programmer and portfolio manager with the Manager since 1993. He
received a B.S. and a B.A. from Queen's University, Ontario, Canada in 1989 and
a M.B.A. from the University of Chicago in 1993.
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<PAGE>
MANAGEMENT CONTRACTS
Under separate Management Contracts with the Trust on behalf of each Fund,
the Manager selects and reviews each Fund's investments and provides executive
and other personnel for the management of the Trust. Pursuant to the Trust's
Agreement and Declaration of Trust, 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 trustees who are not partners,
officers or employees of the Manager, interest charges, expenses of issue or
redemption of shares, charges of custodians, auditing and legal expenses,
expenses of determining net asset value of Fund shares, reports to shareholders,
expenses of meetings of shareholders, expenses of printing and mailing
prospectuses, proxy statements and proxies to existing shareholders, insurance
premiums and professional association dues or assessments.
In addition, each Fund has agreed to pay the Manager a quarterly management
fee at the annual percentage rate of the relevant Fund's average daily net
assets set forth below. The Manager has agreed to voluntarily 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 each of the Funds is higher than that
paid by most other mutual funds.
<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
U.S. Small Capitalization Series............................... .90% 1.15%
Japan Series................................................... 1.00% 1.50%
International Small Capitalization Series...................... 1.00% 1.50%
ADVISER SHARES
U.S. Small Capitalization Series............................... .90% 1.40%
Japan Series................................................... 1.00% 1.75%
International Small Capitalization Series...................... 1.00% 1.75%
SELECT SHARES
U.S. Small Capitalization Series............................... .90% 1.65%
Japan Series................................................... 1.00% 2.00%
International Small Capitalization Series...................... 1.00% 2.00%
</TABLE>
26
<PAGE>
ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
BISYS Fund Services ("BISYS" or 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, BISYS receives a monthly fee
based upon an annual percentage rate of 0.15% of the aggregate average daily net
assets of the Funds.
BISYS has also entered into an agreement with the Trust for the provision of
transfer agency services (and is referred to herein as the "Transfer Agent" in
such capacity) and dividend disbursing services for the Funds. The principal
business address of the Transfer Agent is 3435 Stelzer Road, Columbus, Ohio
43219.
State Street Bank and Trust Company (the "Custodian") serves as custodian of
the assets of the Funds. The principal address of the Custodian is Mutual Funds
Division, Boston, Massachusetts 02102.
A further discussion of the terms of the Trust's administrative arrangements
is contained in the Statement of Additional Information.
DISTRIBUTOR
Adviser and Select Shares of each Fund are sold on a continuous basis by the
Company's distributor, Barr Rosenberg Funds Distributor, Inc. (the
"Distributor"), a wholly-owned subsidiary of BISYS. The Distributor's principal
offices are located at 3435 Stelzer Road, Columbus, Ohio 43219. 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 Select Shares of the Funds,
such shares are subject to an annual Distribution Fee of up to 0.50% of the
average daily net assets attributable to such shares in accordance with a
Distribution Plan (the "Distribution Plan") adopted by the Trust pursuant to
Rule 12b-1 under the 1940 Act. Currently, each Fund pays the Distributor an
annual Distribution Fee of 0.25% of the Fund's average daily net assets
attributable to Select Shares. Activities for which the Distributor may be
reimbursed include (but are not limited to) the development and implementation
of direct mail promotions and advertising for the Funds, the preparation,
printing and distribution of prospectuses for the Funds to recipients other than
existing shareholders, and contracting with one or more wholesalers of the
Funds' shares. The Distribution Plan for Select Shares went into effect on
August 5, 1996. The Distribution Plan is of the type known as a "compensation"
plan. This means that, although the trustees of the Trust are expected to take
into account the expenses of the Distributor in their periodic review of the
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 Adviser and
Select shareholders of the Funds (the Distributor or such entity is referred to
as a "Servicing Agent" in such capacity). A Servicing Agent will be paid some or
all of the Shareholder Servicing Fees charged with respect to Adviser and Select
Shares of the Funds pursuant to Servicing Plans for such shares.
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<PAGE>
MULTIPLE CLASSES
As indicated previously, the Funds offer three classes of shares to
investors, with eligibility generally depending on the amount invested in the
particular Fund and whether the investor makes the investment directly or
through a financial adviser. The three classes of shares are Institutional
Shares, Adviser Shares and Select Shares. 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
Adviser....................... $ 100,000 $ 1,000 Financial Adviser .25% None
Select........................ $ 2,500 $ 500 Direct .25% .25%
</TABLE>
- ------------------------------
* Certain exceptions apply. See "Institutional Shares", "Adviser Shares" and
"Select Shares" below."
The offering price 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.
ADVISER SHARES
Adviser shares may be purchased solely through accounts established under a
fee-based program which is sponsored and maintained by a registered
broker-dealer or other financial adviser approved by the Trust's Distributor and
under which each investor pays a fee to the broker-dealer or other financial
adviser, or its affiliate or agent, for investment advisory or administrative
services. In order to be eligible to purchase Adviser Shares, a broker-dealer or
other financial adviser must make an initial investment of at least $100,000 of
its client's assets in the particular Fund. In its sole discretion, the Manager
may waive this minimum asset investment requirement. Adviser Shares are sold
without any initial or deferred sales charges and are not subject to ongoing
distribution expenses, but are subject to a Shareholder Service Fee at an annual
rate with respect to each Fund equal to 0.25% of the Fund's average daily net
assets attributable to Adviser Shares.
SELECT SHARES
Select Shares may be purchased by intermediary financial institutions and
certain individual retirement accounts and individuals. In order to be eligible
to purchase Select Shares, an eligible investor must make an
28
<PAGE>
initial investment of at least $2,500 in the particular Fund. In its sole
discretion, the Manager may waive this minimum investment requirement. Select
Shares are subject to an annual Shareholder Service Fee equal to 0.25% of the
average daily net assets attributable to Select Shares and an annual
Distribution Fee equal to 0.25% of the average daily net assets attributable to
Select Shares. As described above, the Distribution Plan for Select Shares
permits payments of up to 0.50% of the Funds' average daily net assets
attributable to Select Shares.
GENERAL
The Shareholder Service Fee charged with respect to Adviser Shares and
Select Shares is intended to be compensation for personal services rendered and
for account maintenance with respect to such shares. The Distribution Fee
charged with respect to Select Shares is intended to compensate the Distributor
for services and expenses primarily intended to result in the sale of Select
Shares.
As described above, shares of the Funds may be sold to corporations or other
institutions such as trusts, foundations or broker-dealers purchasing for the
accounts of others ("Shareholder Organizations"). Investors purchasing and
redeeming shares of the Funds through a Shareholder Organization or through
financial advisers may be charged a transaction-based fee or other fee for the
services provided by the Shareholder Organization or financial adviser. Each
such Shareholder Organization and financial adviser is responsible for
transmitting to its customers a schedule of any such fees and information
regarding any additional or different conditions regarding purchases and
redemptions of Fund shares. Customers of Shareholder Organizations and financial
advisers should read this Prospectus in light of the terms governing accounts
with their particular organization.
PURCHASE OF SHARES
The offering price for shares of each Fund is the net asset value per share
next determined after receipt of a purchase order. 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.
As described below, the net asset value of the Japan Series is determined as
of 3:00 p.m., Tokyo time (1:00 a.m. New York time). See "Determination of Net
Asset Value." Due to the 14 hour difference between Tokyo time and New York
time, investors who call in purchase orders after 1:00 a.m. New York time will
get the price of Japan Series shares as determined on the next business day in
Tokyo. In such circumstances, investors should expect to receive the price
published two days later (i.e., not the price published in the United States on
the morning after the day the order was placed).
INITIAL CASH INVESTMENTS BY WIRE
Subject to acceptance by the Trust, shares of each Fund may be purchased by
wiring federal funds. 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.
29
<PAGE>
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 the 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, $1,000 for Adviser Shares and
$500 for Select Shares.
INVESTMENTS IN-KIND (INSTITUTIONAL SHARES)
Institutional Shares may be purchased in exchange for common stocks on
deposit at The Depository Trust Company ("DTC") or by a combination of such
common stocks and cash. Purchase of Institutional Shares of a Fund in exchange
for stocks is subject in each case to the determination by the Manager that the
stocks to be exchanged are acceptable. Securities accepted by the Manager in
exchange for Fund shares will be valued as set forth under "Determination of Net
Asset Value" (generally the last quoted sale price) as of the time of the next
determination of net asset value after such acceptance. All dividends,
subscription or other rights which are reflected in the market price of accepted
securities at the time of valuation become the property of the Fund and must be
delivered to the Fund upon receipt by the investor from the issuer. A gain or
loss for federal income tax purposes would be realized by investors subject to
federal income taxation upon the exchange, depending upon the investor's basis
in the securities tendered.
The Manager will not approve the acceptance of securities in exchange for
Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor represents
and agrees that all securities offered to the Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise; and (3) the securities may be acquired under the Fund's investment
restrictions. In addition, portfolio securities acquired in exchange for Fund
shares will (1) be acquired for investment and not for resale; (2) be liquid
securities; and (3) have a readily ascertainable value.
OTHER PURCHASE INFORMATION
An eligible shareholder may also participate in the Barr Rosenberg Automatic
Investment Program, an investment plan that automatically debits money from the
shareholder's bank account and invests it in Select Shares of one or more of the
Funds 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
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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 Adviser Shares or Select
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 the 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 its Funds or to reject purchase orders when, in the
judgment of the Manager, such suspension or rejection would be in the best
interests of the Trust.
Purchases of a Fund's shares may be made in full or in fractional shares of
the Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
IRA ACCOUNTS
Select Shares of all 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 each Fund 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
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<PAGE>
(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 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.
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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, the 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 the relevant Fund in lieu of cash. Securities used
to redeem Fund shares in kind will be valued in accordance with the Fund's
procedures for valuation described under "Determination of Net Asset Value."
Securities distributed by the Fund in kind will be selected by the Manager in
light of the Fund's objective and will not generally represent a PRO RATA
distribution of each security held in the Fund's portfolio. Investors may incur
brokerage charges on the sale of any such securities so received in payment of
redemptions.
The Trust may suspend the right of redemption and may postpone payment for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the Securities and
Exchange Commission, during periods when trading on the Exchange is restricted
or during an emergency which makes it impracticable for the Funds to dispose of
their securities or to fairly determine the value of their net assets, or during
any other period permitted by the Securities and Exchange Commission for the
protection of investors.
EXCHANGE OF FUND SHARES
The Funds offer two convenient ways to exchange shares in one Fund for
shares of another Fund in the Trust. Shares of a particular class of a Fund may
be exchanged only for shares of the same class in another Fund. There is no
sales charge on exchanges. 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
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<PAGE>
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.
DETERMINATION OF NET ASSET VALUE
The net asset value of each class of shares of the U.S. Small Capitalization
Series and the International Small Capitalization Series will be determined once
on each day on which the New York Stock Exchange is open as of 4:00 p.m., New
York time. In the case of the Japan Series, the net asset value of each class of
shares of that Fund will be determined once on each day on which the Tokyo Stock
Exchange is open as of 3:00 p.m., Tokyo time. Due to the 14 hour time
difference, 3:00 p.m. Tokyo time corresponds to 1:00 a.m. New York time (with
adjustments for daylight savings time). Accordingly, purchase orders received
for the Japan Series after 1:00 a.m., New York time (with adjustments for
daylight savings time) will receive the offering price determined on the next
business day in Japan due to the 14 hour time difference between New York and
Tokyo time (with adjustment for daylight savings time). See "Purchase of Shares"
above.
The net asset value per share of each class of a Fund is determined by
dividing the particular class's proportionate interest in the total market value
of the Fund's portfolio investments and other assets, less any applicable
liabilities, by the total outstanding shares of that class of the Fund.
Specifically, each Fund's liabilities are allocated among its classes. The total
of such liabilities allocated to a particular class plus that class's
shareholder servicing and/or distribution expenses, if any, and any other
expenses specially allocated to that class are then deducted from the class's
proportionate interest in the Fund's assets. The resulting amount for each class
is divided by the number of shares of that class outstanding to produce the "net
asset value" per share.
Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent quoted
bid price. Price information on listed securities is generally taken from the
closing price on the exchange where the security is primarily traded. Unlisted
securities for which market quotations are readily
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<PAGE>
available are valued at the most recent quoted bid price, except that debt
obligations with sixty days or less remaining until maturity may be valued at
their amortized cost. Exchange-traded options, futures and options on futures
are valued at the settlement price as determined by the appropriate clearing
corporation. Other assets and securities for which no quotations are readily
available are valued at fair value as determined in good faith by the Trustees
of the Trust or by persons acting at their direction.
DISTRIBUTIONS
Each Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net realized short-term capital gains). Each Fund also
intends to distribute substantially all of its net realized long-term capital
gains, if any, after giving effect to any available capital loss carryover. Each
Fund's policy is to declare and pay distributions of its dividends and interest
annually although it may do so more frequently as determined by the Trustees of
the Trust. The Funds' policy is to distribute net realized short-term capital
gains and net realized long-term gains annually, although it may do so more
frequently as determined by the Trustees of the Trust to the extent permitted by
applicable regulations.
All dividends and/or distributions will be paid out in the form of
additional shares of the Fund to which the dividends and/or distributions relate
at net asset value unless the shareholder elects to receive cash. Shareholders
may make this election by marking the appropriate box on the Account Application
or by writing to the Administrator.
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 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 substantially all of its dividend, interest and certain other
income, its net realized short-term capital gains and its net realized long-term
capital gains to its shareholders and otherwise qualifies for the special rules
governing the taxation of regulated investment companies, the Fund itself will
not pay federal income tax on the amount distributed. Dividend distributions
(I.E., distributions derived from interest, dividends and certain other income,
including, in general, short-term capital gains) will be taxable to shareholders
subject to income tax as ordinary income. Distributions of any long-term capital
gains are taxable as such to shareholders subject to income tax, regardless of
how long a shareholder may have owned shares in such Fund. A distribution paid
to shareholders by a Fund in January of a year is generally deemed to have been
received by shareholders on December 31 of the preceding year, if the
distribution was declared and payable to shareholders of record on a date in
October, November or December of that preceding year. Each Fund will provide
federal tax information annually, including information about dividends and
distributions paid during the preceding year.
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If more than 50% of a Fund's assets at fiscal year-end is represented by
debt and equity securities of foreign corporations, the Fund may (and the Japan
Series and the International Small Capitalization Series intend to) elect to
permit shareholders who are U.S. citizens or U.S. corporations to claim a
foreign tax credit or deduction (but not both) on their U.S. income tax returns
for their PRO RATA portion of qualified taxes paid by the Fund to foreign
countries. As a result, the amounts of foreign income taxes paid by such Fund
would be treated as additional income to shareholders of such Fund for purposes
of the foreign tax credit. Each such shareholder would include in gross income
from foreign sources its PRO RATA share of such taxes. Certain limitations
imposed by the Internal Revenue Code may prevent shareholders from receiving a
full foreign tax credit or deduction for their allocable amount of such taxes.
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 U.S. Small
Capitalization Series commenced operations on or about September 13, 1988. The
Japan Series commenced operations on or about January 3, 1989. The International
Small Capitalization Series commenced operations on September 23, 1996.
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest which are presently divided
into three series. Interests in each of the Funds described in this Prospectus
are represented by shares of such Fund. The Declaration of Trust also permits
the Trustees, without shareholder approval, to subdivide any series of shares
into various sub-series of shares with such preferences and other rights as the
Trustees may designate. While the Trustees have no current intention to exercise
this power, it is intended to allow them to provide for an equitable allocation
of the impact of any future regulatory requirements which might affect various
classes of shareholders differently. The Trustees may also, without shareholder
approval, establish one or more additional separate portfolios for investments
in the Trust, 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 three classes of shares designated as
Institutional Shares, Adviser Shares and Select Shares. Each class of shares of
each Fund represents interests in the assets of that 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
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<PAGE>
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.
Each class of shares of each Fund has identical voting rights except that
each class has exclusive voting rights on any matter submitted to shareholders
that relates solely to that class, and has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive voting rights
with respect to matters pertaining to any distribution or servicing plan
applicable to that class. Matters submitted to shareholder vote must be approved
by each Fund separately except (i) when required by the Investment Company Act
of 1940, all shares shall be voted together and (ii) when the Trustees have
determined that the matter does not affect all Funds, then only shareholders of
the Fund or Funds affected shall be entitled to vote on the matter. All three
classes of shares of a Fund will vote together, except with respect to any
distribution or servicing plan applicable to a class or when a class vote is
required as specified above or otherwise by the Investment Company Act of 1940.
Shares are freely transferable, are entitled to dividends as declared by the
Trustees and, in liquidation of a Fund portfolio, are entitled to receive the
net assets of that portfolio, but not of the other Funds. The Trust does not
generally hold annual meetings of shareholders and will do so only when required
by law. Shareholders holding a majority of the outstanding shares may remove
trustees from office by votes cast in person or by proxy at a meeting of
shareholders or by written consent.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust, may, however, be terminated at any time by vote of at least
two-thirds of the outstanding shares of the Trust.
Shareholders could, under certain circumstances, be held personally liable
for the obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of that liability is considered remote since it may
arise only in very limited circumstances.
As of July 2, 1997, Rosenberg Institutional Equity Management may be deemed
to control the Japan Series and Charles Schwab & Co. Inc. may be deemed to
control the International Small Capitalization Series because such shareholders
possessed ownership, either directly or indirectly, of more than 25% of the
shares of such respective Funds.
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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<PAGE>
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, Ohio 43219
Distributor
Barr Rosenberg Funds Distributor, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Custodian of Assets
State Street Bank and Trust Company
Mutual Funds Division
Boston, MA 02102
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110
--------------------------------------
BARR ROSENBERG SERIES TRUST
--------------------------------
SHAREHOLDER SERVICES
Account Inquiries, Balances
and Transaction Information
FOR ROSENBERG INSTITUTIONAL
EQUITY MANAGEMENT CUSTOMERS
1-800-527-6026
FOR ALL SHAREHOLDERS
1-800-447-3332
Additional Information May Be Found on the WorldWide Web at http://riem.com
<PAGE>
BARR ROSENBERG SERIES TRUST
U.S. SMALL CAPITALIZATION SERIES
INTERNATIONAL SMALL CAPITALIZATION SERIES
JAPAN SERIES
STATEMENT OF ADDITIONAL INFORMATION
JULY 18, 1997
--------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THIS STATEMENT
OF ADDITIONAL INFORMATION RELATES TO THE PROSPECTUS OF BARR ROSENBERG SERIES
TRUST DATED JULY 18, 1997 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 OBJECTIVE AND POLICIES. . . . . . . . . . . . . . . . . . . 1
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . 5
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . 6
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . 8
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . 9
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . 11
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 15
TOTAL RETURN CALCULATIONS. . . . . . . . . . . . . . . . . . . . . . . 17
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . 19
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . 22
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of each of the U.S. Small Capitalization
Series, the International Small Capitalization Series and the Japan Series (each
a "Fund" and collectively, the "Funds") of Barr Rosenberg Series Trust (the
"Trust") are summarized on the front page of the Prospectus and in the text of
the Prospectus under the headings "Investment Objectives and Policies" and
"General Description of Risks and Fund Investments."
In addition, the following investment objectives and policies apply to the Fund
or Funds indicated.
INDEX FUTURES (ALL FUNDS). An index futures contract (an "Index Future") is a
contract to buy or sell an integral number of units of an Index at a specified
future date at a price agreed upon when the contract is made. A unit is the
value of the relevant Index from time to time. Entering into a contract to buy
units is commonly referred to as buying or purchasing a contract or holding a
long position in an Index.
Index Futures contracts can be traded through all major commodity brokers.
Currently, contracts are expected to expire on the tenth day of March, June,
September and December. A Fund will 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.
As noted in the Prospectus, upon entering into a futures contract, a Fund will
be required to deposit initial margin with its custodian in a segregated account
in the name of the futures broker. Variation margin will be paid to and
received from the broker on a daily basis as the contracts are marked to market.
For example, when a Fund has purchased an Index Future and the price of the
relevant Index has risen, that position will have increased in value and the
Fund will receive from the broker a variation margin payment equal to that
increase in value. Conversely, when a Fund has purchased an Index Future and
the price of the relevant Index has declined, the position would be less
valuable and the Fund would be required to make a variation margin payment to
the broker.
The price of Index Futures may not correlate perfectly with movement in the
underlying Index due to certain market distortions. First, all participants in
the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the normal
relationship between the Index and futures markets. Secondly, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market, and as a result the futures market may attract more
speculators than does the securities market. Increased participation by
speculators in the futures market may also cause temporary price distortions.
In addition, with respect to the Japan Series, trading hours for Index Futures
may not correspond perfectly to hours of trading on the Tokyo Stock Exchange.
This may result in a disparity between the price of Index Futures and the value
of the underlying Index due to the lack of continuous arbitrage between the
Index Futures price and the value of the underlying Index.
FOREIGN CURRENCY TRANSACTIONS (INTERNATIONAL SMALL CAPITALIZATION SERIES AND
JAPAN SERIES). As is disclosed in the Prospectus following the heading "General
Description of Risks and Fund Investments," the Funds do not currently intend to
hedge the foreign currency risk associated with investments in securities
denominated in foreign currencies. However, the Funds reserve the right to buy
or sell foreign currencies or to deal in forward foreign currency contracts to
hedge against possible variations in foreign exchange rates pending the
settlement of securities transactions. The Funds also reserve the right to use
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currency futures contracts and related options thereon for similar purposes. By
entering into a futures or forward contract for the purchase or sale, for a
fixed amount of dollars, of the amount of foreign currency involved in the
underlying security transactions, a Fund will be able to protect itself against
a possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
on which the security is purchased or sold and the date on which payment is made
or received. A Fund's dealing in forward contracts will be limited to this type
of transaction. A Fund will not engage in currency futures transactions for
leveraging purposes. A put option on a futures contract gives a Fund the right
to assume a short position in the futures contract until the expiration of the
option. A call option on a futures contract gives a Fund the right to assume a
long position in the futures contract until the expiration of the option.
CURRENCY FORWARD CONTRACTS (INTERNATIONAL SMALL CAPITALIZATION SERIES AND JAPAN
SERIES). A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract as agreed by the parties, at a
price set at the time of the contract. In the case of a cancelable forward
contract, the holder has the unilateral right to cancel the contract at maturity
by paying a specified fee. The contracts traded in the interbank market are
negotiated directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any stage for trades.
CURRENCY FUTURES TRANSACTIONS (INTERNATIONAL SMALL CAPITALIZATION SERIES AND
JAPAN SERIES). A currency futures contract sale creates an obligation by the
seller to deliver the amount of currency called for in the contract in a
specified delivery month for a stated price. A currency futures contract
purchase creates an obligation by the purchaser to take delivery of the
underlying amount of currency in a specified delivery month at a stated price.
Futures contracts are traded only on commodity exchanges -- known as "contract
markets" -- approved for such trading by the Commodity Futures Trading
Commission ("CFTC"), and must be executed through a futures commission merchant,
or brokerage firm, which is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out a futures contract
sale is effected by purchasing a futures contract for the same aggregate amount
of the specific type of financial instrument or commodity and the same delivery
date. If the price of the initial sale of the futures contract exceeds the
price of the offsetting purchase, the seller is paid the difference and realizes
a gain. Conversely, if the price of the offsetting purchase exceeds the price
of the initial sale, the seller realizes a loss. Similarly, the closing out of
a futures contract purchase is effected by the purchaser entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting sale
price, the purchaser realizes a loss.
The purchase or sale of a futures contract differs from the purchase or sale of
a security, in that no price or premium is paid or received. Instead, an amount
of cash or U.S. Treasury bills generally not exceeding 5% of the contract amount
must be deposited with the broker. This amount is known as initial margin.
Subsequent payments to and from the broker, known as variation margin, are made
on a daily basis as the price of the underlying futures contract fluctuates
making the long and short positions in the futures contract more or less
valuable, a process known as "marking to the market." At any time prior to the
settlement date of the futures contract, the position may be closed out by
taking an opposite position which will operate to terminate the position in the
futures contract. A final determination of variation
2
<PAGE>
margin is then made, additional cash is required to be paid to or released by
the broker, and the purchaser realizes a loss or gain. In addition, a
commission is paid on each completed purchase and sale transaction.
Unlike a currency futures contract, which requires the parties to buy and sell
currency on a set date, an option on a futures contract entitles its holder to
decide on or before a future date whether to enter into such a contract. If the
holder decides not to enter into the contract, the premium paid for the option
is lost. Since the value of the option is fixed at the point of sale, there are
no daily payments of cash in the nature of "variation" or "maintenance" margin
payments to reflect the change in the value of the underlying contract as there
are by a purchaser or seller of a currency futures contract.
The ability to establish and close out positions on options on futures will be
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop or be maintained.
The Funds will write (sell) only covered put and call options on currency
futures. This means that a Fund will provide for its obligations upon exercise
of the option by segregating sufficient cash or short-term obligations or by
holding an offsetting position in the option or underlying currency future, or a
combination of the foregoing. Set forth below is a description of methods of
providing cover that the Funds currently expect to employ, subject to applicable
exchange and regulatory requirements. If other methods of providing appropriate
cover are developed, a Fund reserves the right to employ them to the extent
consistent with applicable regulatory and exchange requirements.
A Fund will, so long as it is obligated as the writer of a call option on
currency futures, own on a contract-for-contract basis an equal long position in
currency futures with the same delivery date or a call option on currency
futures with the difference, if any, between the market value of the call
written and the market value of the call or long currency futures purchased
maintained by the Fund in cash, U.S. Government securities, or other high-grade
liquid debt obligations in a segregated account with its custodian. If at the
close of business on any day the market value of the call purchased by a Fund
falls below 100% of the market value of the call written by the Fund, the Fund
will so segregate an amount of cash, U.S. Government securities, or other
high-grade liquid debt obligations equal in value to the difference.
Alternatively, a Fund may cover the call option through segregating with its
custodian an amount of the particular foreign currency equal to the amount of
foreign currency per futures contract option times the number of options written
by the Fund.
In the case of put options on currency futures written by a Fund, the Fund will
hold the aggregate exercise price in cash, U.S. Government securities, or other
high-grade liquid debt obligations in a segregated account with its custodian,
or own put options on currency futures or short currency futures, with the
difference, if any, between the market value of the put written and the market
value of the puts purchased or the currency futures sold maintained by the Fund
in cash, U.S. Government securities, or other high-grade liquid debt obligations
in a segregated account with its custodian. If at the close of business on any
day the market value of the put options purchased or the currency futures sold
by a Fund falls below 100% of the market value of the put options written by the
Fund, the Fund will so segregate an amount of cash, U.S. Government securities,
or other high-grade liquid debt obligations equal in value to the difference.
3
<PAGE>
A Fund may not enter into currency futures contracts or related options
thereon if immediately thereafter the amount committed to margin plus the amount
paid for premiums for unexpired options on currency futures contracts exceeds 5%
of the market value of the Fund's total assets.
LIMITATIONS ON THE USE OF CURRENCY FUTURES CONTRACTS (INTERNATIONAL SMALL
CAPITALIZATION SERIES AND JAPAN SERIES). A Fund's ability to engage in the
currency futures transactions described above will depend on the availability of
liquid markets in such instruments. Markets in currency futures are relatively
new and still developing. It is impossible to predict the amount of trading
interest that may exist in various types of currency futures. Therefore no
assurance can be given that a Fund will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, a Fund's ability to
engage in such transactions may be limited by tax considerations.
RISK FACTORS IN CURRENCY FUTURES TRANSACTIONS (INTERNATIONAL SMALL
CAPITALIZATION SERIES AND JAPAN SERIES). Investment in currency futures
contracts involves risk. Some of that risk may be caused by an imperfect
correlation between movements in the price of the futures contract and the price
of the currency being hedged. The hedge will not be fully effective where there
is such imperfect correlation. To compensate for imperfect correlations, a Fund
may purchase or sell futures contracts in a greater amount than the hedged
currency if the volatility of the hedged currency is historically greater than
the volatility of the futures contracts. Conversely, a Fund may purchase or
sell fewer contracts if the volatility of the price of the hedged currency is
historically less than that of the futures contracts. The risk of imperfect
correlation generally tends to diminish as the maturity date of the futures
contract approaches.
The successful use of transactions in futures and related options also depends
on the ability of the Manager to forecast correctly the direction and extent of
exchange rate and stock price movements within a given time frame. It is
impossible to forecast precisely what the market value of securities a Fund
anticipates buying will be at the expiration or maturity of a currency forward
or futures contract. Accordingly, in cases where a Fund seeks to protect
against an increase in value of the currency in which the securities are
denominated through a foreign currency transaction, it may be necessary for the
Fund to purchase additional foreign currency on the spot market (and bear the
expense of such currency purchase) if the market value of the securities to be
purchased is less than the amount of foreign currency the Fund contracted to
purchase. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the value
of the securities purchased. When a Fund purchases forward or futures contracts
(or options thereon) to hedge against a possible increase in the price of
currency in which is denominated the securities the Fund anticipates purchasing,
it is possible that the market may instead decline. If a Fund does not then
invest in such securities because of concern as to possible further market
decline or for other reasons, the Fund may realize a loss on the forward or
futures contract that is not offset by a reduction in the price of the
securities purchased. As a result, a Fund's total return for such period may be
less than if it had not engaged in the forward or futures transaction.
Foreign currency transactions that are intended to hedge the value of securities
a Fund contemplates purchasing do not eliminate fluctuations in the underlying
prices of those securities. Rather, such currency transactions simply establish
a rate of exchange which can be used at some future point in time.
Additionally, although these techniques tend to minimize the risk of loss due to
a change in the value of the currency involved, they tend to limit any potential
gain that might result from the increase in the value of such currency.
4
<PAGE>
The amount of risk a Fund assumes when it purchases an option on a currency
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.
The liquidity of a secondary market in a currency futures contract may be
adversely affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a futures contract price
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. Prices have in the past
exceeded the daily limit on a number of consecutive trading days.
A Fund's ability to engage in currency forward and futures transactions may be
limited by tax considerations.
WARRANTS (JAPAN SERIES). The Japan Series may from time to time purchase
warrants; however, not more than 5% of its net assets (at the time of purchase)
will be invested in warrants other than warrants acquired in units or attached
to other securities. Of such 5%, not more than 2% of such net assets at the
time of purchase may be invested in warrants that are not listed on the New York
Stock Exchange or American Stock Exchange. Warrants have no voting rights, pay
no dividends and have no rights with respect to the assets of the corporation
issuing them. Warrants represent options to purchase equity securities of an
issuer at a specific price for a specific period of time. They do not represent
ownership of such securities, but only the right to buy them.
MISCELLANEOUS INVESTMENT PRACTICES
PORTFOLIO TURNOVER. A change in securities held by a Fund is known as
"portfolio turnover" and almost always involves the payment by the Fund of
brokerage commissions or dealer markup and other transaction costs on the
sale of securities as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover is not a limiting factor with respect to
investment decisions. Although the rate of portfolio turnover is difficult
to predict, it is not anticipated that under normal circumstances the annual
portfolio turnover rate for the International Small Capitalization Series
will exceed 100%. It is, however, impossible to predict portfolio turnover
in future years. The portfolio turnover rate for the U.S. Small
Capitalization Series for the fiscal years ended March 31, 1996 and 1997 was
71.87% and 126.83%, respectively. An increase in the number of Fund shares
sold was the primary reason for the increase in the portfolio turnover rate
of the U.S. Small Capitalization Series for the fiscal year ended March 31,
1997. The portfolio turnover rate for the Japan Series for the fiscal years
ended March 31, 1996 and 1997 was 60.60% and 51.70%, respectively. As
disclosed in the Prospectus, high portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs, which will be
borne directly by the Fund, and could involve realization of capital gains
that would be taxable when distributed to shareholders of a Fund. To the
extent that portfolio turnover results in the realization of net short-term
capital gains, such gains are ordinarily taxed to shareholders at ordinary
income tax rates.
NOTICE ON SHAREHOLDER APPROVAL
Unless otherwise indicated in the Prospectus or this Statement of Additional
Information, the investment objective and policies of each of the Funds may be
changed without shareholder approval.
5
<PAGE>
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.
(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of
10% of the Fund's total assets (taken at cost) and then only to secure
borrowings permitted by Restriction 1 above. (For the purposes of this
restriction, collateral arrangements with respect to options, stock index,
interest rate, currency or other futures, options on futures contracts and
collateral arrangements with respect to initial and variation margin are not
deemed to be a pledge or other encumbrance of assets. With respect to the
International Small Capitalization Series and the Japan Series, collateral
arrangements with respect to swaps and other derivatives are also not deemed to
be a pledge or other encumbrance of assets.)
(3) Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities. (For this
purpose, the deposit or payment of initial or variation margin in connection
with futures contracts or related options transactions is not considered the
purchase of a security on margin.)
(4) Make short sales of securities or maintain a short position for the Fund's
account unless at all times when a short position is open the Fund owns an equal
amount of such securities or owns securities which, without payment of any
further consideration, are convertible into or exchangeable for securities of
the same issue as, and equal in amount to, the securities sold short.
(5) Underwrite securities issued by other persons except to the extent that, in
connection with the disposition of its portfolio investments, it may be deemed
to be an underwriter under federal securities laws.
6) Purchase or sell real estate, although it may purchase securities of issuers
which deal in real estate, including securities of real estate investment
trusts, and may purchase securities which are secured by interests in real
estate.
(7) 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").
Under the 1940 Act, no registered investment company may generally (a) invest
more than 10% of its total assets (taken at current value) in securities of
other investment companies, (b) own securities of any one investment company
having a value in excess of 5% of its total assets (taken at current value), or
(c) own more than 3% of the outstanding voting stock of any one investment
company.)
(9) Purchase or sell commodities or commodity contracts except that each of the
Funds may purchase and sell foreign currency, currency futures contracts and
options thereon, stock index and other financial futures contracts and options
thereon.
6
<PAGE>
(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; any collateral arrangements with respect to options,
future contracts and options on future contracts and with respect to initial and
variation margin; and the purchase or sale of options, forward contracts, future
contracts or options on future contracts.)
Notwithstanding the latitude permitted by Restrictions 1, 2, 3, 4 and 9
above, the Funds have no current intention of (a) borrowing money, (b)
purchasing interest rate futures or (c) entering into short sales.
It is contrary to the present policy of each Fund, which may be changed by the
Trustees of the Trust without shareholder approval, to:
(a) With the exception of the Japan Series, invest in warrants or rights (other
than warrants or rights acquired by the Fund as a part of a unit or attached to
securities at the time of purchase).
(b) Write, purchase or sell options on particular securities (as opposed to
market indices or currencies).
(c) Buy or sell oil, gas or other mineral leases, rights or royalty contracts.
(d) Make investments for the purpose of exercising control of a company's
management.
(e) Invest in (a) securities which at the time of investment are not readily
marketable, (b) securities the disposition of which is restricted under the
federal securities laws, and (c) 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 securities described in (a), (b) and
(c) above.
(f) With respect to 75% of its total assets, invest in a security if, as a
result of such investment, it would hold more than 10% (taken at the time of
such investment) of the outstanding voting securities of any one issuer, except
that this restriction does not apply to securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities.
Unless otherwise indicated, all percentage limitations on investments set forth
herein and in the Prospectus will apply at the time of the making of an
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment.
The phrase "shareholder approval," as used in the Prospectus and herein, and
the phrase "vote of a majority of the outstanding voting securities," as used
herein, means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of 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.
7
<PAGE>
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The tax status of the Funds and the distributions which they may make are
summarized in the Prospectus under the heading "Taxes." The Funds intend to
qualify each year as a regulated investment company under the Internal Revenue
Code. In order to qualify as a "regulated investment company," each Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
or other disposition of securities or foreign currencies or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such securities or
currencies; (b) derive less than 30% of its gross income from the sale or the
other disposition of securities and certain other assets held less than three
months; (c) diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally with respect to any
one issuer to not more than 5% of the total assets of such Fund and not more
than 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities of any issuer
(other than U.S. Government securities or securities of other regulated
investment companies); and (d) distribute annually at least 90% of its dividend,
interest and certain other income (including, in general, short-term capital
gains). To the extent a Fund qualifies for treatment as a regulated investment
company, the Fund will not be subject to federal income tax on income paid to
its shareholders in the form of dividends or capital gain distributions.
The Japan Series and the International Small Capitalization Series may be
subject to foreign withholding taxes on income and gains derived from foreign
investments. Such taxes would reduce the yield on such Funds' investments, but,
as discussed in the Prospectus, may be taken as either a deduction or a credit
by U.S. citizens and corporations. Investment by either Fund in certain
"passive foreign investment companies" could subject the Fund to a
U.S. federal income tax or other charge on distributions received from, or on
the sale of its investment in, such a company. Such a tax cannot be eliminated
by making distributions to Fund shareholders. If such Fund elects to treat a
passive foreign investment company as a "qualified electing fund," different
rules will apply, although the Fund does not expect to be in the position to
make such elections.
As described in the Prospectus under the heading "Distributions," each Fund
intends to pay out substantially all of its ordinary income and net realized
short-term capital gains, and to distribute substantially all of its net
realized capital gains, if any, after giving effect to any available capital
loss carryover. Net realized capital gain is the excess of net realized
long-term capital gain over net realized short-term capital loss. Under the Tax
Reform Act of 1986, in order to avoid an excise tax imposed on certain
undistributed income, a Fund must distribute prior to each calendar year end
without regard to the Fund's fiscal year end (i) 98% of the Fund's ordinary
income, and (ii) 98% of the Fund's capital gain net income, if any, realized in
the one-year period ending on October 31.
In general, all dividend distributions derived from ordinary income and
short-term capital gain are taxable to investors as ordinary income (eligible in
part for the dividends-received deduction in the case of corporations) and
long-term capital gain distributions are taxable to investors as long-term
capital gains, whether such dividends or distributions are received in shares or
cash. The dividends-received deduction for corporations will generally apply to
a Fund's dividends from investment income to the extent derived from dividends
received by the Fund from domestic corporations.
8
<PAGE>
Certain tax exempt organizations or entities may not be subject to federal
income tax on dividends or distributions from a Fund. Each organization or
entity should review its own circumstances and the federal tax treatment of its
income.
Each Fund is generally required to withhold and remit to the U.S. Treasury 20%
of all dividends from net investment income and capital gain distributions,
whether distributed in cash or reinvested in shares of the Fund, paid or
credited to any shareholder account for which an incorrect or no taxpayer
identification number has been provided or where the Fund is notified that the
shareholder has under-reported income in the past (or the shareholder fails to
certify that he is not subject to such withholding). In addition, the Fund will
generally be required to withhold and remit to the U.S. Treasury 20% of the
amount of the proceeds of any redemption of Fund shares from a shareholder
account for which an incorrect or no taxpayer identification number has been
provided. However, the general back-up withholding rules set forth above will
not apply to tax exempt entities so long as each such entity furnishes the Fund
with an appropriate certificate.
To the extent such investments are permissible for a particular Fund, the Fund's
transactions in options, futures contracts, hedging transactions, forward
contracts, straddles and foreign currencies will be subject to special tax rules
(including mark-to-market, straddle, wash sale and short sale rules), the effect
of which may be to accelerate income to the Fund, defer losses to the Fund,
cause adjustments in the holding periods of the Fund's securities and convert
short-term capital losses into long-term capital losses. These rules could
therefore affect the amount, timing and character of distributions to
shareholders.
MANAGEMENT OF THE TRUST
The Trustees and officers of the Trust and their principal occupations during
the past five years are as follows:
Kenneth Reid* (47) General Partner and Director
President, Trustee of Research, Rosenberg Institutional Equity
Management, June, 1986 to present.
Marlis S. Fritz* (47) General Partner and Director of
Vice President, Trustee Marketing, Rosenberg Institutional Equity
Management, April, 1985 to present.
Nils H. Hakansson (60) Sylvan C. Coleman Professor of
Trustee Finance and Accounting,
Haas School of Business, University of
California, Berkeley, June, 1969 to
present. Director, Supershare Services
Corporation (Investment Management), Los
Angeles, California, November, 1989
9
<PAGE>
to present.
Barr M. Rosenberg* (54) Managing General Partner and
Trustee Chief Investment Officer, Rosenberg
Institutional Equity Management, January,
1985 to present.
William F. Sharpe (63) Timken Professor of Finance,
Trustee Stanford University, September, 1970 to
September, 1989. Timken Professor Emeritus
of Finance, Stanford University, October,
1989 to present. Chairman, William F.
Sharpe Associates, Los Altos, California
(research and financial consulting),
March, 1986 to present.
Po-Len Hew (31) Accounting Manager, Rosenberg
Treasurer Institutional Equity Management, October,
1989 to present.
Carolyn Demler (53) Administrative Coordinator, Rosenberg
Clerk Institutional Equity Management, December,
1988 to present.
Edward H. Lyman (53) Executive Vice President, Barr Rosenberg
Vice President and Investment Management, Inc., and General
General Counsel Counsel to the Rosenberg Group of
companies, 1990 to present.
Richard L. Saalfeld (54) President and Chief Executive Officer
Vice President of mutual fund unit of Rosenberg
Institutional Equity Management from
June 1996 to 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.
Harold L. Arbit (50) Vice President and Partner, Rosenberg
Vice President Alpha, 1984 to present.
David Bunstine (32) Employee of 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
*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.
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<PAGE>
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>
(1) (2) (3) (4) (5)
Total
Pension or Compensation
Retirement from Registrant
Aggregate Benefits Accrued Estimated Annual and Fund
Name of Person Compensation as Part of Fund Benefits Upon Complex Paid
Position from Registrant Expenses Retirement to 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.
INVESTMENT ADVISORY AND OTHER SERVICES
MANAGEMENT CONTRACTS
As disclosed in the Prospectus under the heading "Management of the Trust,"
under management contracts (each a "Management Contract") between the Trust, on
behalf of each Fund, and Rosenberg Institutional Equity Management (the
"Manager"), subject to the control of the Trustees of the Trust and such
policies as the Trustees may determine, the Manager will furnish continuously an
investment program for each Fund and will make investment decisions on behalf of
each Fund and place all orders for the purchase and sale of portfolio
securities. Subject to the control of the Trustees, the Manager furnishes
office space and equipment, provides bookkeeping and certain clerical services
and pays all salaries, fees and expenses of officers and Trustees of the Trust
who are affiliated with the Manager. As indicated under "Portfolio Transactions
- -- Brokerage and Research Services," the Trust's portfolio transactions may be
placed with broker-dealers which furnish the Manager, at no cost, certain
research, statistical and quotation services of value to the Manager in advising
the Trust or its other clients.
As is disclosed in the Prospectus, each of the Funds has agreed to pay the
Manager a quarterly management fee at the annual percentage rate of the relevant
Fund's average daily net assets set forth in the Prospectus. The Manager 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 such 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 such 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
11
<PAGE>
excluding taxes, portfolio brokerage commissions and any distribution expenses
paid by a class of shares of a Fund pursuant to a distribution plan or
otherwise) exceed the limits on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of the Fund
are qualified for offer and sale. The most restrictive of such limitations as
of the date of this Statement of Additional Information is believed to be 21/2%
of the first $30 million of average net assets, 2% of the next $70 million of
average net assets and 11/2% of any excess over $100 million.
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 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.
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.
During the last three fiscal years, the U.S. Small Capitalization Series
has paid the following amounts as management fees to the Manager pursuant to its
Management Contract:
12
<PAGE>
Gross Reduction Net
-------- --------- --------
4/1/94 - 3/31/95 $427,746 $148,971 $278,775
4/1/95 - 3/31/96 $514,386 $157,913 $356,473
4/1/96 - 3/31/97 $544,082 $307,646 $236,436
During the last three fiscal years, the Japan Series has paid the following
amounts as management fees to the Manager pursuant to its Management Contract:
Gross Reduction Net
-------- --------- ---
4/1/94 - 3/31/95 $ 12,148 $ 12,148 -0-
4/1/95 - 3/31/96 $ 12,093 $ 12,093 -0-
4/1/96 - 3/31/97 $ 12,153 $ 12,153 -0-
For the period from commencement of operations, the International Small
Capitalization Series has paid the following amounts as management fees to the
Manager pursuant to its Management Contract:
Gross Reduction Net
-------- --------- ---
9/23/96 - 3/31/97 $ 35,711 $ 35,711 -0-
ADMINISTRATIVE SERVICES
The Trust has entered into a Fund Administration Agreement with BISYS
Fund Services ("BISYS") pursuant to which BISYS 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 BISYS. For these services, BISYS is entitled to receive a
fee, payable monthly, at the annual rate of 0.15% of the average daily net
assets of the Funds for each Fund. For the fiscal year ended March 31, 1997
the U.S. Small Capitalization Series, Japan Series and the International
Small Capitalization Series paid $81,281, $1,535 and $5,357 in administration
fees, respectively. 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. For the fiscal year ended
March 31, 1997 the U.S. Small Capitalization Series, Japan Series and the
International Small Capitalization Series paid $61,341, $35,771 and $62,686
in fund accounting fees, respectively.
13
<PAGE>
DISTRIBUTOR AND DISTRIBUTION PLAN
As stated in the text of the Prospectus under the heading "Management of
the Trust-Distributor," Adviser and Select Shares of each Fund are sold on a
continuous basis by the Trust's distributor, Barr Rosenberg Funds Distributor,
Inc. (the "Distributor"). The Distributor is an affiliate of BISYS. Under the
Distributor's Contract between the Trust and the Distributor (the "Distributor's
Contract"), the Distributor is not obligated to sell any specific amount of
shares of the Trust and will purchase shares for resale only against orders for
shares.
Pursuant to the Distribution Plan (the "Plan") described in the Prospectus,
in connection with the distribution of Select Shares of the Trust, the
Distributor receives certain distribution fees from the Trust. Subject to the
percentage limitation on the distribution fee set forth in the Prospectus, the
distribution fee may be paid in respect of services rendered and expenses borne
in the past with respect to each such class as to which no distribution fee was
paid on account of such limitation. The Distributor may pay all or a portion of
the distribution fees it receives from the Trust to participating and
introducing brokers. The Distributor did not charge any distribution fees to
the Trust through the fiscal year ended March 31, 1997.
The Plan may be terminated with respect to the class of shares of any Fund
to which the Plan relates by vote of a majority of the Trustees of the Trust who
are not interested persons of the Trust (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of the Plan or
the Distributor's Contract (the "Independent Trustees"), or by vote of a
majority of the outstanding voting securities of that class. Any change in the
Plan that would materially increase the cost to the class of shares of any Fund
to which the Plan relates requires approval by the affected class of
shareholders of that Fund. The Trustees of the Trust review quarterly a written
report of such costs and the purposes for which such costs have been incurred.
Except as described above, the Plan may be amended by vote of the Trustees of
the Trust, including a majority of the Independent Trustees, cast in person at a
meeting called for the purpose. For so long as the Plan is in effect, selection
and nomination of those trustees of the Trust who are not interested persons of
the Trust shall be committed to the discretion of such disinterested persons.
The Distributor's Contract may be terminated with respect to any Fund or
class of shares thereof at any time by not 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 of the Trust believe that the Plan will result in
greater sales and/or fewer redemptions of Select Shares, although it is
14
<PAGE>
impossible to know for certain the level of sales and redemptions of Select
Shares that would occur in the absence of the Plan or under alternative
distribution schemes. The Trustees of the Trust believe that the effect on
sales and/or redemptions benefit the Trust by reducing Fund expense ratios
and/or by affording greater flexibility to Fund managers.
CUSTODIAL ARRANGEMENTS. State Street Bank and Trust Company ("State Street
Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such,
State Street Bank holds in safekeeping certificated securities and cash
belonging to the Trust and, in such capacity, is the registered owner of
securities in book-entry form belonging to a Fund. Upon instruction, State
Street Bank receives and delivers cash and securities of a Fund in connection
with Fund transactions and collects all dividends and other distributions
made with respect to Fund portfolio securities. State Street Bank has also
contracted with certain foreign banks and depositories to hold portfolio
securities outside of the United States on behalf of the Trust.
INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are Price
Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110. Price
Waterhouse LLP conducts an annual audit of the Trust's financial statements,
assists in the preparation of the Trust's federal and state income tax returns
and the Trust's filings with the Securities and Exchange Commission, and
consults with the Trust as to matters of accounting and federal and state income
taxation.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. The purchase and sale of portfolio securities for the
Funds and for the other investment advisory clients of the Manager are made by
the Manager with a view to achieving each client's investment objective. For
example, a particular security may be purchased or sold on behalf of certain
clients of the Manager even though it could also have been purchased or sold for
other clients at the same time. Likewise, a particular security may be
purchased on behalf of one or more clients when the Manager is selling the same
security on behalf of one or more other clients. In some instances, therefore,
the Manager, acting for one client may sell indirectly a particular security to
another client. It also happens that two or more clients may simultaneously buy
or sell the same security, in which event purchases or sales are effected pro
rata on the basis of cash available or other equitable basis so as to avoid any
one account's being preferred over any other account.
BROKERAGE AND RESEARCH SERVICES. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different brokers. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid for such securities usually includes an undisclosed dealer
commission or mark up. In placing orders for the portfolio transactions of a
Fund, the Manager will seek the best price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions for brokerage
and research services as described below. The determination of what may
constitute best price and execution by a broker-dealer in effecting a securities
transaction involves a number of considerations, including, without limitation,
the overall net economic result to the Fund (involving price paid or received
and any commissions and other costs paid), the efficiency with which the
transaction is effected, the ability to effect the transaction at all where a
large block is involved, availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Because of such factors, a broker-dealer effecting a
transaction may be paid a commission higher than that charged by another
broker-dealer. Most of the foregoing are judgmental considerations.
15
<PAGE>
Over-the-counter transactions often involve dealers acting for their own
account. It is the Manager's policy to place over-the-counter market orders for
a Fund with primary market makers unless better prices or executions are
available elsewhere.
Although the Manager does not consider the receipt of research services as a
factor in selecting brokers to effect portfolio transactions for a Fund, the
Manager will receive such services from brokers who are expected to handle a
substantial amount of such Fund's portfolio transactions. Research services may
include a wide variety of analyses, reviews and reports on such matters as
economic and political developments, industries, companies, securities and
portfolio strategy. The Manager uses such research in servicing other clients
as well as the Trust.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and subject to such policies as the Trustees of the Trust may
determine, the Manager may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in the Act) to the Manager an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction.
The U.S. Small Capitalization Series paid brokerage commissions in the amounts
of $137,979 for the fiscal year ended March 31, 1995, $220,065.63 for the fiscal
year ended March 31, 1996 and $235,162 for the fiscal year ended March 31,
1997.
The Japan Series paid brokerage commissions in the amounts of $10,763 for the
fiscal year ended March 31, 1995, $6,509.21 for the fiscal year ended March 31,
1996 and $2,266 for the fiscal year ended March 31, 1997.
The Japan Series may pay brokerage commissions to Nomura Securities Company,
Inc. ("Nomura Securities"), which may be deemed to be an "affiliate of an
affiliate" of the Trust, for acting as the Fund's agent on purchases and
sales of securities for the portfolio of the Fund. Securities and Exchange
Commission rules require that commissions paid to an affiliate of an
affiliate by the Fund for portfolio transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a
comparable period of time." The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to Nomura Securities and will review these
procedures periodically. In the fiscal year ended March 31, 1995, the Fund
paid an aggregate of $2,967 in brokerage commissions to Nomura Securities.
The Fund did not pay any brokerage commissions to Nomura Securities during
its fiscal years ended March 31, 1996 and March 31, 1997.
The International Small Capitalization Series paid brokerage commissions in
the amount of $32,340 for the period from September 23, 1996 (inception date)
to March 31, 1997.
16
<PAGE>
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 invested in a
particular share class to the ending redeemable value of such investment in
the class, according to the following formula:
n
P(1 + T) = 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 each 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 a 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 Select Shares,
Adviser Shares and Institutional Shares. Select Shares, Adviser Shares and
Institutional Shares are subject to different fees and expenses and may have
different performance for the same period.
The average annual total returns for each of the Funds as of March 31, 1997
were as follows:
U.S. Small Capitalization Series
- --------------------------------
<TABLE>
<CAPTION>
Inception Date to 4/1/92 to 4/1/94 to 4/1/96 to
Inception Date 3/31/97 3/31/97 3/31/97 3/31/97
-------------- ----------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Select Shares 10/22/96 6.84%* N/A N/A N/A
Adviser Shares 1/21/97 -3.25%* N/A N/A N/A
Institutional
Shares 2/22/89 15.79% 20.26% 22.10% 19.53%
</TABLE>
* Represents cumulative total return since inception.
17
<PAGE>
JAPAN SERIES
- ------------
<TABLE>
<CAPTION>
Inception Date to 4/1/92 to 4/1/94 to 4/1/96 to
Inception Date 3/31/97 3/31/97 3/31/97 3/31/97
-------------- ----------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Select Shares 10/22/96 -22.59%* N/A N/A N/A
Institutional
Shares 1/3/89 -4.23% 1.06% -8.48% -28.68%
</TABLE>
* Represents cumulative total return since inception.
INTERNATIONAL SMALL CAPITALIZATION SERIES
- -----------------------------------------
Inception Date to
Inception Date 3/31/97
-------------- -----------------
Select Shares 9/23/96 .90%*
Institutional
Shares 10/29/96 1.30%*
* Represents cumulative total return since inception.
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 local 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 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.
18
<PAGE>
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
As more fully described in the Prospectus, the Trust is a diversified open-end
series investment company organized as a Massachusetts business trust. A copy
of the Agreement and Declaration of Trust of the Trust, 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 three
series, the U.S. Small Capitalization Series, the International Small
Capitalization Series and the Japan Series, issued pursuant to the Declaration
of Trust. The rights of shareholders and powers of the Trustees of the Trust
with respect to such shares are described in the Prospectus.
As described in the Prospectus, each Fund is further divided into three classes
of shares designated as Institutional Shares, Adviser Shares and Select Shares.
Each class of shares of each Fund represents interests in the assets of the Fund
and has identical dividend, liquidation and other rights and the same terms and
conditions except that expenses, if any, related to the distribution and
shareholder servicing of a particular class are borne solely by such class and
each class may, at the discretion of the Trustees of the Trust, also pay a
different share of other expenses, not including advisory or custodial fees or
other expenses related to the management of the Trust's assets, if these
expenses are actually incurred in a different amount by that class, or if the
class receives services of a different kind or to a different degree than the
other classes. All other expenses are allocated to each class on the basis of
the net asset value of that class in relation to the net asset value of the
particular Fund.
The Declaration of Trust provides for the perpetual existence of the Trust. The
Trust may, however, be terminated at any time by vote of at least two-thirds of
the outstanding shares of the Trust.
VOTING RIGHTS
Shareholders are entitled to one vote for each full share held (with fractional
votes for fractional shares held) and will vote (to the extent provided herein)
in the election of Trustees and the termination of the Trust and on other
matters submitted to the vote of shareholders. Shareholders will vote by
individual Fund on all matters except (i) when required by the 1940 Act, shares
shall be voted in the aggregate and not by individual Fund, and (ii) when the
Trustees have determined that the matter affects only the interests of one or
more Funds, then only shareholders of such Funds shall be entitled to vote
thereon. Shareholders of one Fund shall not be entitled to vote on matters
exclusively affecting another Fund, such matters including, without limitation,
the adoption of or change in any fundamental policies or restrictions of the
other Fund and the approval of the investment advisory contracts of the other
Fund.
Each class of shares of each Fund has identical voting rights except that each
class has exclusive voting rights on any matter submitted to shareholders that
relates solely to that class, and has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive voting rights
with respect to matters pertaining to any distribution or servicing plan
applicable to that class. All three classes of shares of a Fund will vote
together, except with respect to any distribution or servicing plan applicable
to a class or when a class vote is required as specified above or otherwise by
the 1940 Act.
There will normally be no meetings of shareholders for the purpose of electing
Trustees, except that in accordance with the 1940 Act (i) the Trust will hold a
shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by shareholders, and
19
<PAGE>
(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.
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.
20
<PAGE>
OWNERS OF 5% OR MORE OF A FUND'S SHARES
The following chart sets forth the names, addresses and percentage ownership of
those shareholders owning beneficially and of record 5% or more of the
outstanding shares of the U.S. Small Capitalization Series as of July 2, 1997:
Name and Address Percentage Ownership
of Owner of the Fund
- -------------------- -----------
The Nathan Cummings Foundation 6.84%
50 S. LaSalle St.
Chicago, IL 60675-0001
The Evangelical Lutherans 17.28%
1 Cabot Rd.
Medford, MA 02155-5158
University of Washington
Northern Trust Co. 8.27%
801 S. Canal CB3S
Chicago, IL 60607
Charles Schwab & Co. Inc. 22.69%
101 Montgomery St.
San Francisco, CA 94104
Miter & Co. 14.13%
c/o Marshall & Ilsley Trust Company
P.O. Box 2977
Milwaukee, WI 53202
21
<PAGE>
The following chart sets forth the names, addresses and percentage ownership of
those shareholders owning beneficially and of record 5% or more of the
outstanding shares of the Japan Series as of July 2, 1997:
Name and Address Percentage Ownership
of Owner of the Fund
-------- -----------
Rosenberg Institutional 92.03%
Equity Management
4 Orinda Way, Suite 300E
Orinda, CA 94563
Koko M Baker 5.51%
c/o RIEM
4 Orinda Way
Orinda, CA 94563
As of July 2, 1997, Rosenberg Institutional Equity Management, a
California limited partnership, may be deemed to control the Japan Series
because it owned of record more than 25% of the Japan Series' shares. As a
result, it may not be possible for matters subject to a vote of a majority of
the outstanding voting securities of the Fund to be approved without the
affirmative vote of such shareholder, and it may be possible for such matters
to be approved by such shareholder without the affirmative vote of any other
shareholder.
The following chart sets forth the names, addresses and percentage
ownership of those shareholders owning beneficially(1) and of record 5% or
more of the outstanding shares of the International Small Capitalization
Series as of July 2, 1997:
Name and Address Percentage Ownership
of Owner of the Fund
-------- -----------
Rosenberg Money Purchase Pension Plan 13.09%
101 Carnegie Ctr
Princeton, NJ 08540-6231
Stetson University Inc. 10.95%
421 N. Woodland Blvd.
Deland Fl 32720
Charles Schwab & Co. Inc. 60.81%
101 Montgomery St.
San Francisco, CA 94104-1299
Harco Investors 5.46%
P.O. Box 15299
Sacramento, CA 95851-1299
Batrus and Company 5.18%
c/o Bankers Trust Company
P.O. Box 4005
Church Street Station
New York, NY 10003
(1) Charles Schwab & Co. Inc. disclaims beneficial ownership.
As of July 2, 1997, Charles Schwab & Co. Inc., a wholly-owned subsidiary
of Charles Schwab Corporation, a Delaware corporation, may be deemed to
control the International Small Capitalization Series because it owned of
record more than 25% of the International Small Capitalization Series'
shares. As a result, it may not be possible for matters subject to a vote of
a majority of the outstanding voting securities of the Fund to be approved
without the affirmative vote of such shareholder, and it may be possible for
such matters to be approved by such shareholder without the affirmative vote
of any other shareholder.
The officers and trustees of the Trust, as a group, own less than 1% of
any class of outstanding shares of the Trust except of the Japan Series.
DETERMINATION OF NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund share, with the
exception of shares of the Japan Series, is determined on each day on which the
New York Stock Exchange is open for trading. The Trust expects that the days,
other than weekend days, that the New York Stock Exchange will not be open are
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, New Year's Day,
President's Day, Good Friday and Memorial Day.
As indicated in the Prospectus, the net asset value of each share of the
Japan Series is determined on each day on which the Tokyo Stock Exchange is
open for trading. The Tokyo Stock Exchange is closed on Saturdays and
Sundays. The holidays for the Tokyo Stock Exchange for the remainder of 1997
are September 15, October 10, November 3 and November 23. If a holiday falls
on a Saturday or Sunday, there is not a holiday substitution. The Tokyo
Stock Exchange is also expected not to be open on the spring and fall equinox.
Portfolio securities listed on a securities exchange for which market quotations
are available are valued at the last quoted sale price on each business day, or,
if there is no such reported sale, at the most recent quoted bid price. Price
information on listed securities is generally taken from the closing price on
the exchange where the security is primarily traded. Unlisted securities for
which market quotations are readily available are valued at the most recent
quoted bid price, except that debt obligations with sixty days or less remaining
until maturity may be valued at their amortized cost. Exchange-traded options,
futures and options on futures are valued at the settlement price as determined
by the appropriate clearing corporation. Other assets and securities for which
no quotations are readily available are valued at fair value as determined in
good faith by the Trustees of the Trust or by persons acting at their direction.
The procedures for purchasing shares of each of the Funds and for determining
the offering price of such shares are described in the Prospectus. 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.
FINANCIAL STATEMENTS
The Report of Independent Accountants, financial highlights and financial
statements of the Funds included in their Annual Report for the period ended
March 31, 1997 (the "Annual Report") are incorporated herein by reference to
such Annual Report. Copies of such Annual Report are available without charge
upon request by writing to Barr Rosenberg Series Trust, 3435 Stelzer Road,
Columbus, Ohio 43219 or telephoning 1-800-447-3332.
The financial statements incorporated by reference into this Statement of
Additional Information have been audited by Price Waterhouse LLP, independent
accountants, and have been so included and incorporated by reference in
reliance upon the report of said firm, which report is given upon their
authority as experts in auditing and accounting.
22
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
See the section entitled "Financial Highlights" in the Prospectus.
See the section entitled "Financial Statements" in the Statement of
Additional Information.
(b) Exhibits:
1.1 Agreement and Declaration of Trust of the Registrant,
dated April 1, 1988, incorporated by reference to the
Trust's original Registration Statement on Form N-1A (the
"Registration Statement") filed on May 5, 1988;
1.2 Amendment No. 1 to Agreement and Declaration of Trust,
dated April 28, 1988, incorporated by reference to the
Trust's original Registration Statement filed on May 5,
1988;
1.3 Amendment No. 2 to Agreement and Declaration of Trust,
dated October 27, 1988, incorporated by reference to
Post-Effective Amendment No. 1 to the Registration
Statement filed on October 28, 1988;
1.4 Amendment No. 3 to Agreement and Declaration of Trust,
incorporated by reference to Post-Effective Amendment No. 6
to the Registration Statement filed on December 11, 1991;
1.5 Form of First Amended and Restated Agreement and
Declaration of Trust of the Registrant, dated as of
August __, 1996, incorporated by reference to
Post-Effective Amendment No. 12 to the Registration
Statement filed on August 5, 1996.
2. By-Laws of the Registrant incorporated by reference to the
Trust's original Registration Statement (the "Registration
Statement") filed on May 5, 1988;
3. None;
4. Specimen Share Certificates for Institutional shares,
Adviser shares and Select shares of the U.S. Small
Capitalization Series, the International Small
Capitalization Series and the Japan Series, incorporated
by reference to Post-Effective Amendment No. 12 to the
Registration Statement filed on August 5, 1996;
5.1. Form of Management Contract between the Registrant on
behalf of its U.S. Small Capitalization Series and
Rosenberg Institutional Equity Management incorporated by
reference to Post-Effective Ammendment No. 11 to the
Registration Statement filed on May 22, 1996;
5.2. Form of Management Contract between the Registrant on
behalf of its Japan Series and Rosenberg Institutional
Equity Management incorporated by reference to Post-
Effective Amendment No. 11 to the Registration
Statement filed on May 22, 1996;
5.3. Form of Management Contract between the Registrant on
behalf of its International Small Capitalization Series
and Rosenberg Institutional Equity Management incorporated
by reference to Post-Effective Amendment No. 11 to the
Registration Statement filed on May 22, 1996;
5.4. Form of Management Contract between the Registrant on
behalf of its United States Equity Series and Rosenberg
Institutional Equity Management incorporated by reference
to Post-Effective Amendment No. 6 to the Registration
Statement filed on December 11, 1991;
6. Distributor's Contract dated as of January 1, 1997
between the Registrant and Barr Rosenberg Funds
Distributor, Inc. relating to the Registrant's Select
shares and Adviser shares -- filed herewith;
7. None;
8.1. Form of Custody Agreement between the Registrant on behalf
of its Small Capitalization Series (renamed U.S. Small
Capitalization Series) and State Street Bank and Trust
Company incorporated by reference to Pre-Effective
Amendment No. 2 to the Registration Statement filed on
August 18, 1988;
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<PAGE>
8.2. Form of Custody Agreement between the Registrant on behalf
of its Japan Series and State Street Bank and Trust
Company incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement filed on
January 4, 1989;
8.3. Form of Amendment No.1 to the Custodian Contract between
the Registrant on behalf of its Japan Series and State
Street Bank and Trust Company -- filed herewith;
9. (a) Transfer Agency Agreement between the Registant and
BISYS Fund Services, Inc -- filed herewith.
(b) Form of Notification of Expense Limitation by
Rosenberg Institutional Equity Management to the
Japan Series, U.S. Small Capitalization Series
and International Small Capitalization Series,
incorporated by reference to Post-Effective Amendment
No. 12 to the Registration Statement filed on
August 5, 1996;
(c) Fund Administration Agreement between the
Registrant and BISYS Fund Services Limited
Partnership -- filed herewith;
(d) Fund Accounting Agreement between the Registrant and
BISYS Fund Services, Inc. -- filed herewith;
10. Opinion of Ropes & Gray -- filed herewith
11. Consent of Price Waterhouse LLP -- filed
herewith;
12. None;
13. Investment letter regarding initial capital incorporated
by reference to Pre-Effective Amendment No. 3 to the
Registration Statement filed on September 12, 1988;
14. None;
15. Form of Distribution Plan for Select shares incorporated
by reference to Post-Effective Amendment No. 11 to the
Registration Statement filed on May 22, 1996;
16. Schedule for Computation of Performance Quotations -- filed
herewith;
17. Financial Data Schedule for Registrant's fiscal year ended
March 31, 1997 -- filed herewith;
18. Form of Multi-Class Plan entered into by Registrant
pursuant to Rule 18f-3 under the Investment Company Act of
1940 incorporated by
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<PAGE>
reference to Post-Effective Amendment No. 11 to the
Registration Statement filed on May 22, 1996;
19. Powers of Attorney incorporated by reference to Post-
Effective Amendment No. 3 to the Registration Statement
filed on July 28, 1989 and Post-Effective Amendment No. 4
to the Registration Statement filed on July 31, 1990.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
The following table sets forth the number of holders of each class of
securities of the Trust as of July 2, 1997:
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of Beneficial Interest
U.S. Small Capitalization Series
Select Class 438
Adviser Class 14
Institutional Class 48
Shares of Beneficial Interest
Japan Series
Select Class 6
Adviser Class 0
Institutional Class 3
Shares of Beneficial Interest
International Small Capitalization Series
Select Class 30
Adviser Class 0
Institutional Class 3
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<PAGE>
Item 27. INDEMNIFICATION.
Article VIII of the Registrant's First 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
-4-
<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' Adviser and Select shares.
The Distributor does not act as principal underwriter, depositor
or investment adviser for any other investment company.
(b) Information with respect to the Distributor's directors and
officers is as follows:
Name and Principal Positions and 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
3435 Stelzer Road, Columbus, OH 43219
(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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<PAGE>
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.
3435 Stelzer Road
Columbus, OH 43219
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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<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust, as amended, of the
Registrant is on file with the Secretary of The Commonwealth of Massachusetts
and notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
for any of the trustees of shareholders individually but are binding only upon
the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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. 15 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 17th day of July, 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 and on the 17th day of July, 1997.
SIGNATURE TITLE DATE
/s/Marlis S. Fritz Vice President, July 17, 1997
____________________ Trustee
Marlis S. Fritz
Kenneth Reid* President July 17, 1997
Kenneth Reid Principal Executive Officer,
Trustee
Po-Len Hew* Treasurer, July 17, 1997
____________________ Principal Financial
Po-Len Hew and Accounting Officer
Trustee
Nils H. Hakansson* Trustee July 17, 1997
____________________
Nils H. Hakansson
Barr M. Rosenberg* Trustee July 17, 1997
____________________
Barr M. Rosenberg
William F. Sharpe* Trustee July 17, 1997
____________________
William F. Sharpe
*By: /s/Marlis S. Fritz
__________________
Marlis S. Fritz
Attorney-in-Fact
Date: July 17, 1997
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
6 Distributor's Contract dated as of January 1,
1997 between Barr Rosenberg Series Trust and Barr
Rosenberg Funds Distributor, Inc.
8.3 Form of Amendment No. 1 to the Custodian Contract
between Barr Rosenberg Series Trust on behalf of
its Japan Series and State Street Bank and Trust
Company
9(a) Transfer Agency Agreement dated as of October 1,
1996 between Barr Rosenberg Series Trust and
BISYS Fund Services, Inc.
9(c) Fund Administration Agreement dated as of
October 1, 1996 between Barr Rosenberg Series
Trust and BISYS Fund Services Limited Partnership
d/b/a BISYS Fund Services
9(d) Fund Accounting Agreement dated as of October 1,
1996 between Barr Rosenberg Series Trust and
BISYS Fund Services, Inc.
10 Opinion of Ropes & Gray
11 Consent of Price Waterhouse LLP
16 Schedule for Computation of Performance
Quotations
17 Financial Data Schedule for fiscal year ended
March 31, 1997
<PAGE>
BARR ROSENBERG SERIES TRUST
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated as of January 1, 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 a new
agreement providing for the distribution of certain classes of shares of the
Trust by the Distributor;
NOW THEREFORE, in consideration of the mutual agreements contained in the
Terms and Conditions of Distributor's Contract attached to and forming a part of
this Contract (the "Terms and Conditions"), the Trust hereby appoints the
Distributor as a distributor of such shares of the Trust, and the Distributor
hereby accepts such appointment, all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Trust, as amended,
is on file with the Secretary of The Commonwealth of Massachusetts and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations of or arising
out of this instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, BARR ROSENBERG SERIES TRUST and BARR ROSENBERG FUNDS
DISTRIBUTOR, INC. have each caused this Distributor's Contract to be signed in
duplicate on its behalf, all as of the day and year first above written.
BARR ROSENBERG SERIES TRUST
By: /s/ Edward H. Lyman
----------------------------
BARR ROSENBERG FUNDS
DISTRIBUTOR, INC.
By: /s/ Steven Mintos
---------------------------
Dated: January 1, 1997
-------------------------
<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. SALE OF SHARES TO THE DISTRIBUTOR AND SALES BY THE DISTRIBUTOR. The
Distributor will have the right, as principal, to sell shares of beneficial
interest ("shares") of the Trust's Select shares and Adviser shares (each a
"Class" and collectively the "Classes") of each portfolio of the Trust
represented by a separate series of shares (a "Fund") directly to the public
against orders therefor at the applicable public offering price as described
below. For such purposes, the Distributor will have the right to purchase
shares at the public offering price as described below. The Distributor will
also have the right, as agent, to sell shares of a Fund indirectly to the public
through broker dealers who are members of the National Association of Securities
Dealers, Inc. and who are acting as introducing brokers pursuant to agreements
with the Distributor ("introducing brokers"), or to broker dealers which are
members of the National Association of Securities Dealers, Inc. and who have
entered into selling agreements with the Distributor ("participating brokers"),
in each case against orders therefor. The price for introducing brokers and
participating brokers shall be net asset value.
Prior to the time of transfer of any shares by the Trust to, or on the
order of, the Distributor or any introducing broker or participating broker, the
Distributor shall pay or cause to be paid to the Trust or to its order an amount
in New York clearing house funds equal to the applicable public offering price
of the shares. Upon receipt of registration instructions in proper form, the
Distributor will transmit or cause to be transmitted such instructions to the
Trust or its agent for registration of the shares purchased.
The public offering price of each Class shall be the net asset value of
such shares, plus any applicable fee paid to the particular Fund to defray the
costs to existing shareholders associated with investing the proceeds of the
sale (a "Fund Reimbursement Fee") as set forth in the then current prospectus
and statement of additional information (collectively, the "prospectus") of the
Trust.
On every sale, the Fund purchased shall receive the net asset value of the
shares and any Fund Reimbursement Fee charged. The net asset value of shares
shall be determined in the manner provided in the Agreement and Declaration of
Trust and By-laws of the Trust as then amended.
2. FEES. For its services as distributor of a Fund's Select shares, the
Trust shall pay the Distributor on behalf of the Fund a monthly distribution fee
at an annual rate equal to 0.25% of the average daily net assets of the Fund
attributable to its Select shares and otherwise on the terms and conditions set
forth in any Distribution Plan in effect for Select shares as amended from time
to time. Any such distribution fee shall be accrued daily and paid monthly to
the Distributor as soon as practicable after the end of the calendar month in
which it accrues, but in any event within 5 business days following the last
calendar day of each month.
<PAGE>
3. RESERVATION OF RIGHT NOT TO SELL. The Trust reserves the right to
refuse at any time or times to sell any of its shares for any reason deemed
adequate by it.
4. USE OF 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, in its sole discretion, shall deem advisable or
desirable. The Distributor may not enter into similar arrangements with other
issuers without the consent of the Trust. The Trust reserves the right to issue
shares at any time directly to its shareholders as a stock dividend or stock
split and to sell shares to its shareholders or other persons at not less than
net asset value.
5. REPURCHASE OF SHARES. The Distributor will act as agent for the Trust
in connection with the repurchase and redemption of shares by the Trust upon the
terms and conditions set forth in the then current prospectus of the Trust or as
the Trust acting through its Trustees may otherwise direct. The Distributor may
employ such 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
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<PAGE>
the registration of each Fund of the Trust and the Trust under the Securities
Act of 1933 (the "1933 Act") and the Investment Company Act of 1940 (together
with the rules and regulations thereunder, the "1940 Act"), to the end that
there will be available for sale from time to time such number of shares as the
Distributor may reasonably be expected to sell. The Trust may also contract
with Bisys Fund Services Limited Partnership d.b.a. 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
-3-
<PAGE>
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 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 both Classes by the affirmative vote of a
majority of the outstanding shares of the Classes, and by a majority of the
Trustees of the Trust who are not interested persons of the Trust and who have
no direct or indirect financial interest in the operation of the Distribution
Plan(s) or this Agreement by vote cast in person at a meeting called for the
purpose of voting on such approval.
15. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT. This Agreement
shall take effect upon the date first above written and shall remain in full
force and effect continuously as to a Fund and a Class of shares thereof (unless
terminated automatically as set forth in Section 14 hereof) until terminated:
(a) Either by such Fund or such Class or the Distributor by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the other
party; or
(b) Automatically as to any Fund or Class thereof at the close of
business one year from the date hereof, or upon the expiration of one year
from the effective date of the last continuance of this Agreement,
whichever is later, if the continuance of this Agreement is not
specifically approved at least annually
-4-
<PAGE>
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.
Action by a Fund or a Class thereof under (a) above may be taken either (i)
by vote of the Trustees of the Trust, or (ii) by the affirmative vote of a
majority of the outstanding shares of such Fund or such Class. The requirement
under (b) above that the continuance of this Agreement be "specifically approved
at least annually" shall be construed in a manner consistent with the 1940 Act.
Termination of this Agreement pursuant to this Section 15 shall be without
the payment of any penalty.
If this Agreement is terminated or not renewed with respect to one or more
Funds or Classes thereof, it may continue in effect with respect to any Fund or
any Class thereof as to which it has not been terminated (or has been renewed).
16. LIMITED RECOURSE. The Distributor hereby acknowledges that the
Trust's obligations hereunder with respect to the distribution fees payable with
respect to the shares of any Fund of the Trust or a particular Class of shares
of a Fund are binding only on the assets and property belonging to such Fund or
such Class.
17. CERTAIN DEFINITIONS. For the purposes of this Agreement, the
"affirmative vote of a majority of the outstanding shares" means the affirmative
vote, at a duly called and held meeting of shareholders, (a) of the holders of
67% or more of the shares of the Trust or the Fund, as the case may be, present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting are present in person or by proxy, or
(b) of the holders of more than 50% of the outstanding shares of the Trust or
the Fund, as the case may be, entitled to vote at such meeting, whichever is
less.
For the purposes of this Agreement, the terms "interested persons" and
"assignment" shall have the meanings defined in the 1940 Act, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. Certain other items used herein that are not otherwise defined
have the meaning given in the current prospectus of the Trust or constituent
agreements or documents of the Trust.
-5-
<PAGE>
AMENDMENT NO. 1 TO THE CUSTODIAN CONTRACT
BETWEEN BARR ROSENBERG SERIES TRUST
ON BEHALF OF ITS JAPAN SERIES AND
STATE STREET BANK AND TRUST COMPANY
This Amendment No. 1 to the Custodian Contract dated as of December 19, 1988, as
amended (the "Custodian Contract") is between Barr Rosenberg Series Trust (the
"Trust"), a business trust organized and existing under the laws of The
Commonwealth of Massachusetts and having its principal place of business at 4
Orinda Way, Orinda, California 94563, on behalf of its Japan Series, and State
Street Bank and Trust Company (the "Custodian"), a Massachusetts trust company
having its principal place of business at 225 Franklin Street, Boston,
Massachusetts 02110.
WITNESSETH:
WHEREAS, the Trust and the Custodian are parties to the Custodian Contract;
WHEREAS, the Trust has established both of the series listed on Schedule 1
hereto (each a "Portfolio") and seeks to have such Portfolios made subject to
the Custodian Contract as amended by this Amendment.
WHEREAS, the Trust and the Custodian desire to amend the Custodian Contract
to reflect the establishment of the Portfolios and also to amend the terms and
conditions under which the Custodian maintains the Portfolios foreign
securities;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. CONTINUATION OF CUSTODIAN CONTRACT. The rights and obligations of the
Trust and the Custodian under the Custodian Contract as amended hereby
shall continue in the full force and effect. The rights and obligations of
the Trust under the Custodian Contract as amended hereby shall be held by
the Trust on behalf of and for the benefit of each of the Portfolios.
2. AMENDMENT OF THE CUSTODIAN CONTRACT.
2.1 (a) GENERAL. Each reference in the Custodian Contract as amended
hereby to the securities or other assets of the Trust or the Fund shall
mean and refer to the securities and assets of the applicable Portfolio.
Each reference to "Shares" of the Trust or the Fund shall mean and refer to
shares of the applicable Portfolio. Each reference to the Board of
Trustees or Board of Directors or Declaration of Trust or Articles of
Incorporation of the Trust shall continue to mean and refer to the Board of
Trustees and Declaration of Trust of the Trust. All of the rights and
obligations of the Trust under the Custodian Contract as amended hereby
shall henceforth be rights and obligations of the Trust on behalf of the
applicable Portfolio. Without
<PAGE>
limiting the generality of the foregoing, the Custodian agrees to maintain
custody of the assets of each Portfolio separately and to look only to the
assets of the applicable Portfolio for satisfaction of any claim arising
out of services rendered under the Custodian Contract as amended hereby on
behalf of such Portfolio.
(b) ADDITIONAL SERIES. In the event that the Trust establishes,
in addition to the Portfolios, one or more series of shares of
beneficial interest with respect to which it desires to have the
Custodian render services as custodian under the terms of the Custodian
Contract, it shall so notify the Custodian in writing, and if the Custodian
agrees in writing to provide such services, such series shall become a
Portfolio under the Custodian Contract as amended hereby.
2.2 (a) HOLDING FOREIGN SECURITIES. Section 3.4 of the Custodian
Contract is hereby amended in its entirety as follows:
"The Custodian may hold securities and other non-cash property
for all of its customers, including the Portfolios of the Trust, with
a foreign sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, PROVIDED
HOWEVER, that (i) the records of the Custodian with respect to
securities and other non-cash property of the Portfolios which are
maintained in such account shall identify by book-entry those
securities and other non-cash property belonging to the Portfolios and
(ii) the Custodian shall require that securities and other non-cash
property so held by the foreign sub-custodian be held separately from
any assets of the foreign sub-custodian or of others."
2.3 The Custodian Contract is hereby amended to add a new Section 18 to
read as follows:
"18. SHAREHOLDER COMMUNICATIONS
Securities and Exchange Commission Rule 14b-2 under the
Securities Exchange Act of 1934, requires banks which hold securities
for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners
of securities of that issuer held by the bank unless the beneficial
owner has expressly objected to disclosure of this information. In
order to comply with the rule, the Custodian needs the Trust to
indicate whether the Trust authorizes the Custodian to provide the
Trust's name, address, and share position to requesting companies
whose stock the Trust owns. If the Trust tells the Custodian "no",
the Custodian will not provide this information to requesting
companies. If the Trust tells the Custodian "yes" or does not
check either "yes" or "no" below, the Custodian is required by the
Rule to treat the Trust as consenting to disclosure of this
information for all
2
<PAGE>
securities owned by the Trust or any funds or accounts established by
the Trust. For the Trust's protection, the Rule prohibits the
requesting company from using the Trust's name and address for any
purpose other than corporate communications. Please indicate below
whether the Trust consents or objects by checking one of the
alternatives below.
YES [ ] The Custodian is authorized to release the Trust's
name, address, and share positions.
No [ ] The Custodian is not authorized to release the Trust's
name, address, and share positions."
3. MASSACHUSETTS LAW TO APPLY. This Amendment shall be construed and the
provisions thereof interpreted under and in accordance with the substantive
laws of The Commonwealth of Massachusetts.
3
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as of
the ____________ day of September, 1996.
BARR ROSENBERG SERIES TRUST*
By:
------------------------
STATE STREET BANK AND TRUST
COMPANY
By:
------------------------
Executive Vice President
*A copy of the First Amended and Restated Agreement and Declaration of
Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts. The Custodian acknowledges that the
obligations arising out of this instrument are not binding upon any of the
trustees, officers or shareholders of the Trust individually, but are
binding only upon the assets and property of the Trust.
4
<PAGE>
BARR ROSENBERG SERIES TRUST
SCHEDULE 1
Japan Series
International Small Capitalization Series
5
<PAGE>
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY FEE SCHEDULE
BARR ROSENBERG SERIES TRUST
Rosenberg Small Capital Fund
Rosenberg Japan Fund
Rosenberg International Small Capital Fund
I. DOMESTIC CUSTODY
CUSTODY: Maintain custody of fund assets. Settle portfolio purchases and
sales. Report buy and sell fails. Determine and collect portfolio income.
Make cash disbursements and report cash transactions. Monitor corporate
actions. Report portfolio positions.
The fee shown below is an actual charge, billed and payable monthly,
based on average monthly net assets.
First $50 Million 4 Basis Points
Next $50 Million 2 Basis Points
Thereafter 1 Basis Point
Minimum monthly fee $2,000
NEW FUND MONTHLY MINIMUM PHASE-IN
First 3 Months 0
Next 3 Months $1,000.00
Thereafter $2,000.00
II. CUSTODY
INCLUDES: Maintaining custody of fund assets. Settling portfolio purchases
and sales. Reporting buy and sell fails. Determining and collecting
portfolio income. Making cash disbursements and reporting cash
transactions. Monitoring corporate actions. Withholding foreign taxes.
Filing foreign tax reclaims.
A. HOLDING FEES (basis points per portfolio annum):
<TABLE>
<CAPTION>
Group I Group II Group III Group IV Group V Group VI Group VII
- ------- -------- --------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Australia Canada Austria Belgium Hong Kong Argentina Bangladesh
Denmark France Ireland Finland Korea Brazil China
Eurclear New Zealand Italy Indonesia Mexico Chile Columbia
Germany Switzerland Netherlands Malaysia Portugal Greece India
Japan United Kingdom Norway Singapore Spain Philippines Israel
Sweden Taiwan Turkey Hungary
Thailand Venezuela Pakistan
S. Africa Peru
Uruguay
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Group I Group II Group III Group IV Group V Group VI Group VII
------- -------- --------- -------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
First $100 Million 5.0 9.0 10.0 14.0 20.0 30.0 40.0
Thereafter 4.0 7.0 8.0 12.0 18.0 30.0 40.0
</TABLE>
B. TRANSACTION CHARGES (U.S. Dollars):*
<TABLE>
<CAPTION>
Group I Group II Group III Group IV Group V Group VI
- ------- -------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
$30 $60 $75 $100 $125 $150
Canada Austria Australia Argentina Indonesia Hungary
Euroclear Chile Brazil Belgium Philippines Portugal
Germany Hong Kong Ireland Denmark Greece India
Japan Italy Mexico Finland Peru
Korea Netherlands Spain France
Switzerland Sweden New Zealand
U.K. Thailand Norway
Taiwan* Venezuela Singapore
Turkey Malaysia
S. Africa
</TABLE>
* Excludes: agent, depository and local auditing fees
** Transaction charge waived if brokerage provided by National Securities
Company
UNITED STATES - for each line item processed
State Street Bank Repos $7.00
DTC or Fed Book Entry Buy/Sell $12.00
New York Physical $25.00
PTC Buy/Sell $20.00
All Other Trades $16.00
Maturity Collections $8.00
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration/Option exercised $15.00
Interest Rate Futures - no security movement $8.00
Monitoring for calls and processing coupons -
for each coupon issue held - monthly charge $5.00
Holdings charge per security per month $5.00
Princpal reduction payments per paydown $10.00
Third Party Foreign Exchange $50.00
<PAGE>
III. SPECIAL SERVICES
Fees for activities of non-recurring nature such as consolidations
or reorganizations, extraordinary security shipments and the
preparation of special reports will be subject to negotiation. Fees
for automated pricing, standardized yield calculation, and other
special items will be negotiated separately.
IV. OUT-OF-POCKET EXPENSES
A billing for the recovery of applicable out-of-pocket expenses will
be made as of the end of each month. Out-of-pocket expenses include,
but are not limited to the following:
Telephone/Telexes
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Transfer Fees
Sub-Custodian Out-of-Pocket Charges (e.g. startup duties, registration,
etc.)
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check Items Over $2,500 - $5.25 each
GNMA Transfer - $15.00 each
BARR ROSENBERG SERIES TRUST STATE STREET BANK AND TRUST CO.
By: By:
------------------------------- ------------------------------------
Title: Title:
---------------------------- ---------------------------------
Date: Date:
----------------------------- ----------------------------------
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 1st day of October, 1996, between BARR ROSENBERG SERIES
TRUST (the "Trust"), a Massachusetts business trust, and BISYS FUND SERVICES,
INC. ("BISYS"), a Delaware corporation.
WHEREAS, the Trust desires that BISYS perform certain services for each
series of the Trust (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. RETENTION OF BISYS; CONVERSION TO THE SERVICES.
The Trust hereby engages BISYS to act as the transfer agent for the
Funds to perform (i) the transfer agent services set forth in Schedule A hereto
(the "Initial Services"), (ii) such special services (the "Special Services")
incidental to the performance of such services as may be agreed to by the
parties from time to time (for such fees as the parties may agree as aforesaid)
and (iii) such additional services (collectively with the Initial Services and
the Special Services, the "Services"), as may be agreed to by the parties from
time to time and set forth in an amendment to said Schedule A (for such fees as
the parties may agree as aforesaid), and, in connection therewith, the Trust
agrees to convert to BISYS' data processing systems and software (the "BISYS
System") as necessary in order to receive the Services. The Trust shall
cooperate with BISYS to provide BISYS with all necessary information and
assistance required to successfully convert to the BISYS System. BISYS shall
provide the Trust with a schedule relating to such conversion and the parties
agree that the conversion may progress in stages. The date upon which all
Initial Services shall have been converted to the BISYS System shall be referred
to herein as the "Conversion Date." BISYS hereby accepts such engagement and
agrees to perform the Services commencing, with respect to each individual
Service, on the date that the conversion of such Service to the BISYS System has
been completed. BISYS shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Trust (individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided,
however, that the Sub-transfer Agent shall be the agent of BISYS and not the
agent of the Trust or such Fund, and that BISYS shall be fully responsible
for the acts of such Sub-transfer Agent and shall not be relieved of any of
its responsibilities hereunder by the appointment of such Sub-transfer Agent.
<PAGE>
2. FEES.
Commencing on the Conversion Date, the Trust shall pay BISYS for the
services to be provided by BISYS under this Agreement in accordance with, and in
the manner set forth in, Schedule B hereto. Fees for any additional services to
be provided by BISYS pursuant to an amendment to Schedule A hereto shall be
subject to mutual agreement at the time such amendment to Schedule A is
proposed.
3. REIMBURSEMENT OF EXPENSES.
In addition to paying BISYS the fees described in Section 2 hereof,
the Trust agrees to reimburse BISYS for BISYS' reasonable out-of-pocket expenses
in providing services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust and in
delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Trust, the Trust's investment adviser or
custodian, dealers, shareholders or others as required for BISYS
to perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms, proxies,
notices or other form of printed material which shall be required
by BISYS for the performance of the services to be provided
hereunder;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BISYS shall reasonably incur at the written
direction of an officer of the Trust (other than an officer of
the Trust who is also an employee of BISYS or Furman Selz)
thereunto duly authorized.
4. EFFECTIVE DATE.
This Agreement shall become effective as of the date first written
above (the "Effective Date").
5. TERM.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties and
ending on the date that is
2
<PAGE>
one year after the Conversion Date. Thereafter, it shall be renewed
automatically for successive one-year terms unless written notice not to renew
is given by the non-renewing party to the other party at least 60 days prior to
the expiration of the then-current term; provided, however, that, after the
Initial Term, (i) the Trust may terminate this Agreement at any time, without
the payment of a penalty, by a vote of a majority of the Trust's outstanding
voting securities (as defined in the 1940 Act) or by vote of a majority of the
Trustees of the Trust on 60 days' written notice to BISYS and (ii) BISYS may
terminate this Agreement at any time, without penalty, on 60 days' written
notice to the Trust; and, provided further, that after such termination, for so
long as BISYS, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
Schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Fees and reasonable out-of-pocket expenses incurred by BISYS
but unpaid by the Trust upon termination of this Agreement shall be immediately
due and payable upon and notwithstanding such termination. BISYS shall be
entitled to collect from the Trust, in addition to the fees and disbursements
provided by Sections 2 and 3 hereof, the amount of all of BISYS' reasonable
costs in connection with BISYS' activities in effecting such termination,
including without limitation, the delivery to the Trust and/or its distributor
or investment adviser and/or other parties, of the Trust's property, records,
instruments and documents, or any copies thereof. To the extent that BISYS may
retain in its possession copies of any Trust documents or records subsequent to
such termination which copies had not been requested by or on behalf of the
Trust in connection with the termination process described above, BISYS will
provide the Trust with reasonable access to such copies; provided, that BISYS
shall be reimbursed for reasonable costs incurred in connection therewith.
In the event of a material breach of this Agreement by either party,
the non-breaching party shall notify the breaching party in writing of such
breach and, upon receipt of such notice, the breaching party shall have 45 days
to remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
If, for any reason, other than a material breach of this Agreement or
termination of this Agreement by the Trust after the Initial Term, BISYS is
replaced as transfer agent, or if a third party is added to perform all or a
part of the services provided by BISYS under this Agreement (excluding any sub-
transfer agent appointed by BISYS as provided in Section 1 hereof), then the
Trust shall make a one-time cash payment, as liquidated damages to, BISYS equal
to the balance due BISYS for the remainder of the term of this Agreement,
assuming for purposes of calculation of the payment that the asset level of the
Trust on the date BISYS is replaced, or a third party is added, will remain
constant for the balance of the contract term.
6. UNCONTROLLABLE EVENTS.
BISYS assumes no responsibility hereunder, and shall not be liable for
any damage, loss of data, delay or any other loss whatsoever caused by events
beyond its reasonable control.
3
<PAGE>
7. LEGAL ADVICE.
BISYS shall notify the Trust at any time BISYS believes that it is in
need of the advice of counsel (other than counsel in the regular employ of BISYS
or any affiliated companies) with regard to BISYS' responsibilities and duties
pursuant to this Agreement; and after so notifying the Trust, BISYS, at its
discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing (which counsel shall be reasonably acceptable to the
Trust) and BISYS shall in no event be liable to the Trust or any Fund or any
shareholder or beneficial owner of the Trust for any action reasonably taken
pursuant to such advice.
8. INSTRUCTIONS.
Whenever BISYS is requested or authorized to take action hereunder
pursuant to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, reasonably believed by BISYS to be genuine and to have been
properly made, signed or authorized by an officer or other authorized agent of
the Trust or by the shareholder or shareholder's agent, as the case may be, and
shall be entitled to receive as conclusive proof of any fact or matter required
to be ascertained by it hereunder a certificate signed by an officer of the
Trust or any other person authorized by the Trust's Board of Trustees or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Trust relating to the Funds to the extent that such services
are described therein unless BISYS receives written instructions to the contrary
in a timely manner from the Trust.
9. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or reckless disregard by it of its obligations and
duties. The Trust agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other reasonable expenses of every nature and
character arising out of or in any way relating to BISYS' actions taken or
nonactions with respect to the performance of services under this Agreement or
based, if applicable, upon reasonable reliance on information, records,
instructions or requests given or made to BISYS by a duly authorized
representative of the Trust or the investment adviser and on any records
provided by any fund accountant or custodian thereof; provided that this
indemnification shall not apply to actions or omissions of BISYS, its employees,
agents, directors, officers and nominees in cases of their own bad faith,
willful misfeasance, negligence or reckless disregard by any or all of them of
BISYS'
4
<PAGE>
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Trust written notice of and a reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.
BISYS agrees to indemnify and hold harmless the Trust, its employees,
agents, Trustees, officers and nominees from and against any and all actions,
suits, demands and claims, whether groundless or otherwise, and from and against
any and all judgments, liabilities, losses, damages, costs, charges, reasonable
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' or its employees', agents', directors', officers'
and nominees' bad faith, willful misfeasance, negligence or reckless disregard
by any or all of them of BISYS' obligations and duties with respect to the
performance of services under this Agreement; provided, that, prior to
confessing any claim against it which may be the subject of this
indemnification, the Trust shall give BISYS written notice of and a reasonable
opportunity to defend against said claim in its own name or in the name of the
Trust.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party, but failure to do so
in good faith shall not affect the rights hereunder.
The indemnifying party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the indemnifying party and satisfactory to the other party, whose
approval shall not be unreasonably withheld. In the event that the indemnifying
party elects to assume the defense of any suit and retain counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the other party.
10. RECORD RETENTION AND CONFIDENTIALITY.
BISYS shall keep and maintain on behalf of the Trust all books and
records which the Trust or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees
that all such
5
<PAGE>
books and records shall be the property of the Trust and to make such books and
records available for inspection by the Trust or by the Securities and Exchange
Commission (the "Commission") at reasonable times and otherwise to keep
confidential all books and records and other information relative to the Trust
and its shareholders, except when requested to divulge such information by duly-
constituted authorities or court process, or requested by a shareholder or
shareholder's agent with respect to information concerning an account as to
which such shareholder has either a legal or beneficial interest or when
requested by the Trust, the shareholder, or shareholder's agent, or the dealer
of record as to such account.
11. REPORTS.
BISYS will furnish to the Trust and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to
Schedule C.
12. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
All records and other data except such computer programs and procedures are the
exclusive property of the Trust and all such other records and data will be
furnished to the Trust in appropriate form as soon as practicable after
termination of this Agreement for any reason.
13. RETURN OF RECORDS.
BISYS may at its option at any time, and shall promptly upon the
Trust's demand, turn over to the Trust and cease to retain BISYS' files, records
and documents created and maintained by BISYS pursuant to this Agreement which
are no longer needed by BISYS in the performance of its services or for its
legal protection. If not so turned over to the Trust, such documents and
records will be retained by BISYS for six years from the year of creation. At
the end of such six-year period, such records and documents will be turned over
to the Trust unless the Trust authorizes in writing the destruction of such
records and documents.
14. BANK ACCOUNTS.
The Trust and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Trust, as are necessary
in order that BISYS may perform the services required to be performed hereunder.
To the extent that the performance of such services shall require BISYS directly
to disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Trust and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.
6
<PAGE>
15. REPRESENTATIONS OF THE TRUST.
The Trust certifies to BISYS that: (a) as of the close of business on
the Effective Date, each Fund which is in existence as of the Effective Date has
authorized unlimited shares, and (b) by virtue of its Agreement and Declaration
of Trust, as amended, shares of each Fund which are redeemed by the Trust may be
sold by the Trust from its treasury, and (c) this Agreement has been duly
authorized by the Trust and, when executed and delivered by the Trust, will
constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties and general
principles of equity.
16. REPRESENTATIONS OF BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law, including
Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required in connection with the performance of its duties under this
Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Trust and BISYS' records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
17. INSURANCE.
BISYS shall notify the Trust should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Trust of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Trust from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to BISYS, or will furnish to BISYS within 90
days following the Effective Date, the following:
(a) Copies of the Agreement and Declaration of Trust of the Trust and
of any amendments thereto, certified by the proper official of
the state in which such Declaration has been filed.
(b) Copies of the following documents:
7
<PAGE>
1. The Trust's By-Laws and any amendments thereto.
2. Certified copies of resolutions of the Board of Trustees
covering the following matters:
A. Approval of this Agreement and authorization of a
specified officer of the Trust to execute and deliver
this Agreement and authorization for specified officers
of the Trust to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer Agent for the
Trust on behalf of the Funds.
(c) A list of all officers of the Trust, together with specimen
signatures of those officers, who are authorized to instruct
BISYS in all matters.
(d) Two copies of the following (if such documents are employed by
the Trust):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
3. All other forms commonly used by the Trust or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Trust
authorized, issued, and outstanding as of the Effective Date of
BISYS' appointment as Transfer Agent (or as of the date on which
BISYS' services are commenced, whichever is the later date) and
as to receipt of full consideration by the Trust for all shares
outstanding, such statement to be certified by the Treasurer of
the Trust.
19. INFORMATION FURNISHED BY BISYS.
BISYS has furnished to the Trust the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' By-Laws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following
matters:
1. Approval of this Agreement, and authorization of a specified
officer of BISYS to execute and deliver this Agreement;
8
<PAGE>
2. Authorization of BISYS to act as Transfer Agent for the
Trust.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with the
Commission pursuant to Rule 17Ad-13 under the Exchange Act.
20. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish BISYS written copies of any amendments to, or
changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Trust agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Trust which might have the effect of changing the procedures
employed by BISYS in providing the services agreed to hereunder or which
amendment might affect the duties of BISYS hereunder unless the Trust first
obtains BISYS' approval of such amendments or changes.
21. RELIANCE ON AMENDMENTS.
BISYS may rely on any amendments to or changes in any of the documents
and other items to be provided by the Trust pursuant to Sections 18 and 20 of
this Agreement and the Trust hereby agrees to indemnify and hold harmless BISYS
from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
reasonable expenses of every nature and character which may result from actions
or omissions on the part of BISYS in reasonable reliance upon such amendments
and/or changes. Although BISYS is authorized to rely on the above-mentioned
amendments to and changes in the documents and other items to be provided
pursuant to Sections 18 and 20 hereof, BISYS shall be under no duty to comply
with or take any action as a result of any of such amendments or changes unless
the Trust first obtains BISYS' written consent to and approval of such
amendments or changes.
22. COMPLIANCE WITH LAW.
Except for the obligations of BISYS set forth in Section 10 hereof,
the Trust assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Trust's shares. The Trust
represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the 1933 Act and the 1940
Act has been declared or becomes effective.
9
<PAGE>
23. NOTICES.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Trust, to it at Rosenberg Institutional
Equity Management, 4 Orinda Way, Orinda, California 94563, Attn: Edward H.
Lyman, Esq., with a copy to J.B. Kittredge, Esq., Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624; if to BISYS, to it at
3435 Stelzer Road, Columbus, Ohio 43219, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
24. HEADINGS.
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
25. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way
affect BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1
hereof. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
26. GOVERNING LAW AND MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS
BUSINESS TRUST.
This Agreement shall be governed by and its provisions shall be
construed in accordance with the laws of the State of Ohio. It is expressly
agreed that the obligations of the Trust hereunder shall not be binding upon any
of the Trustees, shareholders, nominees, officers, agents or employees of the
Trust personally, but shall bind only the property of the Trust. The execution
and delivery of this Agreement have been authorized by the Trustees, and this
Agreement has been signed and delivered by an authorized officer of the Trust,
acting as such, and neither such authorization by the Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the property of the Trust as provided in the Trust's Amended and
Restated Agreement and Declaration of Trust, which is on file with the Secretary
of The Commonwealth of Massachusetts.
27. CONFIDENTIAL INFORMATION.
Each party acknowledges that it may acquire knowledge and information
relating to the other party and its affiliates which is not generally known by
others including, but not limited to, information pertaining to business plans,
prior, present or potential shareholders, employees, customers and/or suppliers,
and that all such knowledge and information acquired or developed is
10
<PAGE>
and shall be confidential and proprietary information (all such confidential and
proprietary information is herein collectively referred to as the "Confidential
Information"). Each party agrees to hold the Confidential Information in strict
confidence, to refrain from directly or indirectly disclosing it to others or
using it in any way except for purposes of performing services hereunder, and to
prevent any unauthorized person access to it either before or after termination
of this Agreement, without the prior written consent of the other party. Both
parties further agree to take all action reasonable and necessary to protect the
confidentiality of the Confidential Information. The parties shall use their
best efforts to have their officers, partners, employees and agents agree to the
terms of this Section. The obligations of the parties contained in this section
shall survive termination of this Agreement. Neither party's confidentiality
obligations under this provision shall apply to such information that (i) was in
the public domain or available to a third party without restrictions at or prior
to the time such information was made known to such party, (ii) had been
independently known to such party at the time of disclosure from persons who
were not subject to similar confidentiality obligations, or (iii) is required to
be disclosed by law (except that each party will use best efforts to give the
other party written notice prior to any such disclosure).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BARR ROSENBERG SERIES TRUST
By: /s/ Edward H. Lyman
----------------------------------------
Title: Vice President
-------------------------------------
BISYS FUND SERVICES, INC.
By: /s/ J. David Huber
----------------------------------------
Title: Executive Vice President
-------------------------------------
11
<PAGE>
Dated: October 1, 1996
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BARR ROSENBERG SERIES TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
1. SHAREHOLDER TRANSACTIONS
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
2. SHAREHOLDER INFORMATION SERVICES
a. Make information available to shareholder servicing unit and other
remote access units regarding trade date, share price, current
holdings, yields, and dividend information.
b. Produce detailed history of transactions through duplicate or special
order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
d. Provide toll-free lines for direct shareholder use, plus customer
liaison staff with on-line inquiry capacity.
A-1
<PAGE>
3. COMPLIANCE REPORTING
a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in which the
Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service forms for
corresponding Fund and shareholder income and capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. DEALER/LOAD PROCESSING (IF APPLICABLE)
a. Provide reports for tracking rights of accumulation and purchases made
under a Letter of Intent.
b. Account for separation of shareholder investments from transaction
sale charges for purchase of Fund shares.
c. Calculate Fund Reimbursement Fees, fees due under 12b-1 plans for
distribution and marketing expenses and any shareholder servicing
fees.
d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load Fund.
5. SHAREHOLDER ACCOUNT MAINTENANCE
a. Maintain all shareholder records for each account in the Trust.
b. Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
A-2
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BARR ROSENBERG SERIES TRUST
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
Effective as of the Conversion Date, BISYS shall receive an account
maintenance fee of $15.00 per year for each account which is in existence at any
time during the month for which payment is made, such fee to be paid in equal
monthly installments. BISYS shall be entitled to this account maintenance fee
on all accounts maintained in its records during the year, including those
accounts which have a zero balance during any portion of the year.
Notwithstanding the foregoing, the fee set forth above shall be subject to a
minimum annual fee amount of $12,000 per Fund.
ADDITIONAL SERVICES:
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts are subject to additional fees which will
be quoted upon request. Programming costs or database management fees for
special reports or specialized processing will be quoted upon request.
OUT-OF-POCKET EXPENSES:
BISYS shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses including, but not limited to, the expenses set forth in Section 3 of
the Transfer Agency Agreement to which this Schedule B is attached.
B-1
<PAGE>
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
BARR ROSENBERG SERIES TRUST
AND
BISYS FUND SERVICES, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed with
the Securities and Exchange Commission pursuant to Rule 17Ad-13 of the
Securities Exchange Act of 1934, as amended.
C-1
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of October, 1996, by and between
BARR ROSENBERG SERIES TRUST, a Massachusetts business trust (the "Trust"), and
BISYS FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES (the
"Administrator"), an Ohio limited partnership.
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), that is
authorized to issue series of shares of beneficial interest ("Shares"); and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR; CONVERSION TO THE SERVICES.
The Trust hereby engages the Administrator to act as the administrator of the
Portfolios and to furnish the Portfolios with the management and administrative
services as set forth in Article 2 below (collectively, the "Services"), and, in
connection therewith, the Trust agrees to convert to the Administrator's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Trust shall cooperate with the Administrator to
provide the Administrator with all necessary information and assistance required
to successfully convert to the BISYS System. The Administrator shall provide
the Trust with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date." The Administrator hereby accepts such engagement and agrees
to perform the Services commencing, with respect to each individual Service, on
the date that the conversion of such Service to the BISYS System has been
completed. The Administrator shall determine in accordance with its normal
acceptance procedures when the applicable Service has been successfully
converted.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE SERVICES. The Administrator shall perform or
supervise the performance by others of administrative services in connection
with the operations of the Portfolios, and, on behalf of the Trust, will
investigate, assist in the selection of and conduct relations with
<PAGE>
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations.
The Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Trust with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and Trustees
of the Trust) for handling the affairs of the Portfolios and such other services
as the Administrator shall, from time to time, determine to be necessary to
perform its obligations under this Agreement. In addition, at the request of
the Board of Trustees, the Administrator shall make reports to the Trust's
Trustees concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Trust expenses and control all disbursements for
the Trust, and as appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighted maturity;
(b) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements and proxy
materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in
order to comply with Federal and state securities law) as may be
necessary or desirable to register the Trust's Shares with state
securities authorities, monitor the sale of Trust Shares for
compliance with state securities laws, and file with the appropriate
state securities authorities the registration statements and reports
for the Trust and the Trust's Shares and all amendments thereto, as
may be necessary or convenient to register and keep effective the
Trust and the Trust's Shares with state securities authorities to
enable the Trust to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Trust's investment
adviser, communications to Shareholders, including the annual report
to Shareholders, coordinate the mailing of prospectuses, notices,
proxy statements, proxies and other reports to Trust Shareholders, and
supervise and facilitate the proxy solicitation process for all
shareholder meetings, including the tabulation of shareholder votes;
(e) administer contracts on behalf of the Trust with, among others, the
Trust's investment adviser, distributor, custodian, transfer agent and
fund accountant;
2
<PAGE>
(f) supervise the Trust's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(g) calculate performance data of the Trust and its Portfolios for
dissemination to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the Trust's tax
returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, fund accountant, transfer agent, outside legal
counsel and independent public accountants, and at the request of the
Board of Trustees, report to the Board on the performance of such
organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to Shareholders;
(k) assist with the design, development, and operation of the Trust
Portfolios, including new classes, investment objectives, policies and
structure;
(l) provide individuals reasonably acceptable to the Trust's Board of
Trustees to serve as officers of the Trust, who will be responsible
for the management of certain of the Trust's affairs as determined by
the Trust's Board of Trustees;
(m) advise the Trust and its Board of Trustees on matters concerning the
Trust and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(d)(7) under
the 1940 Act as such bonds and policies are approved by the Trust's
Board of Trustees;
(o) monitor and advise the Trust and its Portfolios on their regulated
investment company status under the Internal Revenue Code of 1986, as
amended;
(p) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are
not provided to the Trust or such Portfolio pursuant to the Trust's or
such Portfolio's investment advisory agreement, distribution
agreement, custodian agreement, transfer agent agreement and fund
accounting agreement;
3
<PAGE>
(q) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for the Trust on
Form N-SAR and all required notices pursuant to Rule 24f-2.
The Administrator shall perform such other services for the Trust that are
mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide at its
own expense the items which it is obligated to provide under this Agreement, and
shall pay all compensation, if any, of officers of the Trust as well as all
Trustees of the Trust who are affiliated persons of the Administrator or any
affiliated corporation of the Administrator; provided, however, that unless
otherwise specifically provided, the Administrator shall not be obligated to pay
the compensation of any employee of the Trust retained by the Trustees of the
Trust to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Directors who are not
affiliated persons of the Administrator or the investment adviser to the Trust
or any affiliated corporation of the Administrator or the investment adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. Commencing on the Conversion Date, for the
services to be rendered, the facilities furnished and the expenses assumed by
the Administrator pursuant to this Agreement, the Trust shall pay to the
Administrator compensation at an annual rate specified in Schedule A attached
hereto. Such compensation shall be calculated and accrued daily, and paid to
the Administrator monthly.
4
<PAGE>
If the Conversion Date occurs subsequent to the first day of a month
or termination of this Agreement occurs before the last day of a month, the
Administrator's compensation for that part of the month in which this Agreement
is in effect shall be prorated in a manner consistent with the calculation of
the fees as set forth above. Payment of the Administrator's compensation for
the preceding month shall be made promptly.
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence and
without negligence or reckless disregard of its obligations and duties
hereunder, the Trust assumes full responsibility and shall indemnify the
Administrator and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of the administration services described
herein or any other service rendered to the Trust hereunder. The Administrator
agrees to indemnify and hold harmless the Trust, its employees, agents,
Trustees, officers and nominees from and against any and all actions, suits and
claims, whether groundless or otherwise, and from and against any and all
judgments, liabilities, losses, damages, costs, charges, payments, reasonable
counsel fees and disbursements and other expenses of every nature and character
(including reasonable investigation expenses) arising directly or indirectly out
of or in any way relating to the Administrator's bad faith, willful misfeasance,
negligence or reckless disregard by it of its obligations and duties with
respect to the performance of services under this Agreement. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning
5
<PAGE>
any situation which presents or appears likely to present the probability of
such a claim for indemnification against the indemnifying party, but failure to
do so in good faith shall not affect the rights hereunder.
The indemnifying party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the indemnifying party and satisfactory to the other party, whose
approval shall not be unreasonably withheld. In the event that the indemnifying
party elects to assume the defense of any suit and retain counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the other party.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instructions or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that trustees, officers, employees
and shareholders of the Trust are or may be or become interested in the
Administrator, as partners, officers and employees or otherwise and that
partners, officers and employees of the Administrator and its counsel are or may
be or become similarly interested in the Trust, and that the Administrator may
be or become interested in the Trust as a shareholder or otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense and with the written consent of the Trust,
subcontract with any entity or person concerning the provision of the services
contemplated hereunder. The Administrator shall not, however, be relieved of
any of its obligations under this Agreement by the appointment of such
subcontractor and provided further, that the Administrator shall be responsible,
to the extent provided in Article 5 hereof, for all acts of such subcontractor
as if such acts were its own. This Agreement shall be
6
<PAGE>
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
ARTICLE 9. AMENDMENTS. This Agreement may be amended if such amendment is
specifically approved (i) by the vote of a majority of the Trustees of the
Trust, and (ii) by the vote of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons of the Trust.
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and 31a-
2 under the 1940 Act which are prepared or maintained by the Administrator on
behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the following address: if to the Administrator, to it at 3435
Stelzer Road, Columbus, Ohio 43219; if to the Trust, to it at Rosenberg
Institutional Equity Management, 4 Orinda Way, Orinda, California 94563, Attn:
Edward H. Lyman, Esq., with a copy to J.B. Kittredge, Esq., Ropes & Gray, One
International Place, Boston, Massachusetts 02110-2624, or at such other address
as such party may from time to time specify in writing to the other party
pursuant to this Section.
ARTICLE 13. GOVERNING LAW. This Agreement shall be construed in
accordance with the substantive laws of the State of Ohio and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Ohio, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
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ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 15. CONFIDENTIAL INFORMATION. Each party acknowledges that it may
acquire knowledge and information relating to the other party and its affiliates
which is not generally known by others including, but not limited to,
information pertaining to business plans, prior, present or potential
shareholders, employees, customers and/or suppliers, and that all such knowledge
and information acquired or developed is and shall be confidential and
proprietary information (all such confidential and proprietary information is
herein collectively referred to as the "Confidential Information"). Each party
agrees to hold the Confidential Information in strict confidence, to refrain
from directly or indirectly disclosing it to others or using it in any way
except for purposes of performing services hereunder, and to prevent any
unauthorized person access to it either before or after termination of this
Agreement, without the prior written consent of the other party. Both parties
further agree to take all action reasonable and necessary to protect the
confidentiality of the Confidential Information. The parties shall use their
best efforts to have their officers, partners, employees and agents agree to the
terms of this Section. The obligations of the parties contained in this section
shall survive termination of this Agreement. Neither party's confidentiality
obligations under this provision shall apply to such information that (i) was in
the public domain or available to a third party without restrictions at or prior
to the time such information was made known to such party, (ii) had been
independently known to such party at the time of disclosure from persons who
were not subject to similar confidentiality obligations, or (iii) is required to
be disclosed by law (except that each party will use best efforts to give the
other party written notice prior to any such disclosure).
ARTICLE 16. MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS BUSINESS
TRUST. It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the property of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Trust, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the property of the Trust as provided in the
Trust's Amended and Restated Agreement and Declaration of Trust, which is on
file with the Secretary of The Commonwealth of Massachusetts.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BARR ROSENBERG SERIES TRUST
By: /s/ Edward H. Lyman
---------------------------------------
Title: Vice President
------------------------------------
BISYS FUND SERVICES LIMITED PARTNERSHIP
BY: BISYS FUND SERVICES, INC.
GENERAL PARTNER
By: /s/ J. David Huber
---------------------------------------
Title: Executive Vice President
------------------------------------
9
<PAGE>
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1996
BETWEEN BARR ROSENBERG SERIES TRUST
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios of Barr Rosenberg
Series Trust, either now or hereafter created (collectively, the
"Portfolios"). The current portfolios of the Trust are set forth
below:
U.S. Small Capitalization Series;
Japan Series; and
International Small Capitalization Series.
Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Trust will pay
the Administrator on the first business day of each month, or at
such time(s) as the Administrator shall request and the parties
hereto shall agree, a fee computed daily at the annual rate of:
Fifteen one-hundredths of one percent (.15%) of the Trust's
average daily net assets.
The fee for the period from the day of the month upon which the
Conversion Date occurs until the end of that month shall be
prorated according to the proportion which such period bears to
the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month
shall be prorated according to the proportion which such period
bears to the full monthly period and shall be payable upon the
date of termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Trust's Amended and Restated Agreement and Declaration of Trust
or in the Prospectus or Statement of Additional Information
respecting that Portfolio as from time to time in effect for the
computation of the value of such net assets in connection with
the determination of the liquidating value of the shares of such
Portfolio.
The parties hereby confirm that the fees payable hereunder shall
be applied to each Portfolio as a whole, and not to separate
classes of shares within the Portfolios.
A-1
<PAGE>
Term: The initial term of this Agreement (the "Initial Term") shall be
for a period commencing on the date this Agreement is executed by
both parties and ending on the date that is one year after the
Conversion Date. This Agreement shall be renewed automatically
for successive periods of one year after the Initial Term,
unless written notice of nonrenewal is provided by either party
not less than 60 days prior to the end of the then-current term.
After the Initial Term, (i) the Trust may terminate this
Agreement at any time, without the payment of any penalty, by a
vote of a majority of the Trust's outstanding voting securities
(as defined in the 1940 Act) or by a vote of a majority of the
Trustees of the Trust on 60 days' written notice to the
Administrator and (ii) the Administrator may terminate this
Agreement at any time, without penalty, on 60 days' written
notice to the Trust. In the event of a material breach of this
Agreement by either party, the non-breaching party shall notify
the breaching party in writing of such breach and upon receipt of
such notice, the breaching party shall have 45 days to remedy the
breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this
Agreement.
Notwithstanding the foregoing, after such termination for so long
as the Administrator, with the written consent of the Trust, in
fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto,
the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in
full force and effect. Compensation due the Administrator and
unpaid by the Trust upon such termination shall be immediately
due and payable upon and notwithstanding such termination. The
Administrator shall be entitled to collect from the Trust, in
addition to the compensation described in this Schedule A, the
amount of all of the Administrator's reasonable cash
disbursements for services in connection with the Administrator's
activities in effecting such termination, including without
limitation, the delivery to the Trust and/or its designees of the
Trust's property, records, instruments and documents, or any
copies thereof. Subsequent to such termination, for a reasonable
fee, the Administrator will provide the Trust with reasonable
access to any Trust documents or records remaining in its
possession.
If, for any reason other than a material breach of this Agreement
or termination of this Agreement by the Trust after the Initial
Term, the Administrator is replaced as fund manager and
administrator, or if a third party is added to perform all or a
part of the services provided by the Administrator under this
Agreement (excluding any sub-administrator appointed by the
Administrator as provided in Article 8 hereof), then the Trust
shall make a one-time cash payment, as liquidated damages, to the
Administrator equal to the balance due the Administrator for the
remainder of the term of this Agreement, assuming for purposes of
calculation of the payment that the asset level of the Trust on
the date the Administrator is
A-2
<PAGE>
replaced, or a third party is added, will remain constant for the
balance of the contract term.
A-3
<PAGE>
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 1st day of October, 1996, between BARR ROSENBERG SERIES
TRUST (the "Trust"), a Massachusetts business trust, and BISYS FUND SERVICES,
INC. (the "Fund Accountant"), a corporation organized under the laws of the
State of Delaware.
WHEREAS, the Trust desires that the Fund Accountant perform certain fund
accounting services for each investment portfolio of the Trust, all as now or
hereafter may be established from time to time (individually referred to herein
as a "Fund" and collectively as the "Funds"); and
WHEREAS, the Fund Accountant is willing to perform such services on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS THE FUND ACCOUNTANT; CONVERSION TO SERVICES.
The Trust hereby engages the Fund Accountant to perform fund accounting
services as set forth in this Section 1 (collectively, the "Services"), and, in
connection therewith, the Trust agrees to convert to the Fund Accountant's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Trust shall cooperate with the Fund Accountant to
provide the Fund Accountant with all necessary information and assistance
required to successfully convert to the BISYS System. The Fund Accountant shall
provide the Trust with a schedule relating to such conversion and the parties
agree that the conversion may progress in stages. The date upon which all
Services shall have been converted to the BISYS System shall be referred to
herein as the "Conversion Date." The Fund Accountant hereby accepts such
engagement and agrees to perform the Services commencing, with respect to each
individual Service, on the date that the conversion of such Service to the BISYS
System has been completed. The Fund Accountant shall determine in accordance
with its normal acceptance procedures when the applicable Service has been
successfully converted.
(a) MAINTENANCE OF BOOKS AND RECORDS. The Fund Accountant will keep
and maintain the following books and records of each Fund
pursuant to Rule 31a-1 under the Investment Company Act of 1940
(the "Rule"):
(i) Journals containing an itemized daily record in detail of
all purchases and sales of securities, all receipts and
disbursements of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
<PAGE>
(ii) General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts,
including interest accrued and interest received, as
required by subsection (b)(2)(I) of the Rule;
(iii) Separate ledger accounts required by subsection (b)(2)(ii)
and (iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of
the Rule.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition to the
maintenance of the books and records specified above, the Fund
Accountant shall perform the following accounting services daily
for each Fund:
(i) Calculate the net asset value per share utilizing prices
obtained from the sources described in subsection 1(b)(ii)
below;
(ii) Obtain security prices from independent pricing services,
or if such quotes are unavailable, then obtain such prices
from each Fund's investment adviser or its designee, as
approved by the Trust's Board of Trustees;
(iii) Verify and reconcile with the Fund's custodian all daily
trade activity;
(iv) Compute, as appropriate, each Fund's net income and
capital gains, dividend payables, dividend factors, 7-day
yields, 7-day effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation and dividend
factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ;
(vi) Report to the Trust the daily market pricing of securities
in any money market Funds, with the comparison to the
amortized cost basis;
(vii) Determine unrealized appreciation and depreciation on
securities held in variable net asset value Funds;
(viii) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if requested
by the Trust;
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<PAGE>
(ix) Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser, on variable
interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to instructions
received from the Trust's Administrator;
(xii) Determine the outstanding receivables and payables for all
(1) security trades, (2) Fund share transactions and (3)
income and expense accounts;
(xiii) Provide accounting reports in connection with the Trust's
regular annual audit and other audits and examinations by
regulatory agencies; and
(xiv) Provide such periodic reports as the parties shall agree
upon, as set forth in a separate schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) The Fund Accountant may provide additional special reports
upon the request of the Trust or a Fund's investment
adviser, which may result in an additional charge, the
amount of which shall be agreed upon between the parties.
(ii) The Fund Accountant may provide such other similar
services with respect to a Fund as may be reasonably
requested by the Trust, which may result in an additional
charge, the amount of which shall be agreed upon between
the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. The Fund Accountant shall also
perform the following additional accounting services for each
Fund:
(i) Provide monthly a download (and hard copy thereof) of the
financial statements described below, upon request of the
Trust. The download will include the following items:
Schedule of Investments,
Cash Statement,
Schedule of Capital Gains and Losses,
Statement of Assets and Liabilities,
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<PAGE>
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal
excise tax returns;
(B) the Trust's semi-annual reports with the Securities
and Exchange Commission ("SEC") on Form N-SAR;
(C) the Trust's annual, semi-annual and quarterly (if
any) shareholder reports;
(D) registration statements on Form N-1A and other
filings relating to the registration of Shares;
(E) the Administrator's monitoring of the Trust's status
as a regulated investment company under Subchapter M
of the Internal Revenue Code, as amended;
(F) annual audit by the Trust's auditors; and
(G) examinations performed by the SEC.
2. SUBCONTRACTING.
The Fund Accountant may, at its expense and with the written consent
of the Trust, subcontract with any entity or person concerning the provision of
the services contemplated hereunder; provided, however, that the Fund Accountant
shall not be relieved of any of its obligations under this Agreement by the
appointment of such subcontractor and provided further, that the Fund Accountant
shall be responsible, to the extent provided in Section 7 hereof, for all acts
of such subcontractor as if such acts were its own.
3. COMPENSATION.
Commencing on the Conversion Date, the Trust shall pay the Fund
Accountant for the services to be provided by the Fund Accountant under this
Agreement in accordance with, and in the manner set forth in, Schedule A hereto,
as such Schedule may be amended from time to time.
4
<PAGE>
4. REIMBURSEMENT OF EXPENSES.
In addition to paying the Fund Accountant the fees described in
Section 3 hereof, the Trust agrees to reimburse the Fund Accountant for the
following reasonable out-of-pocket expenses in providing services hereunder:
(a) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by the Fund Accountant in
communication with the Trust, the Trust's investment advisor or
custodian, dealers or others as required for the Fund Accountant to
perform the services to be provided hereunder;
(b) The cost of obtaining security market quotes pursuant to Section
l(b)(ii) above; and
(c) Any expenses the Fund Accountant shall incur at the written direction
of an officer of the Trust (other than an officer of the Trust who is
also an employee of BISYS or Furman Selz) thereunto duly authorized.
5. EFFECTIVE DATE.
This Agreement shall become effective with respect to a Fund as of the
date first written above.
6. TERM.
The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. This Agreement
shall be renewed automatically for successive one-year terms unless written
notice not to renew is given by the non-renewing party to the other party at
least 60 days prior to the expiration of the then-current term; provided,
however, that, after the Initial Term, (i) the Trust may terminate this
Agreement at any time, without the payment of any penalty, by a vote of a
majority of the Trust's outstanding voting securities (as defined in the 1940
Act) or by vote of a majority of the Trustees of the Trust on 60 days' written
notice to the Fund Accountant and (ii) the Fund Accountant may terminate this
Agreement at any time, without penalty, on 60 days' written notice to the Trust;
and, provided, further, that after this Agreement is terminated, for so long as
the Fund Accountant, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due the Fund Accountant and unpaid by the Trust
upon such termination shall be immediately due and payable upon and
notwithstanding such termination. The Fund Accountant shall be entitled to
collect from the Trust, in addition to the compensation described under Section
3 hereof, the amount of all of the Fund Accountant's reasonable cash
disbursements for services in connection with the Fund Accountant's activities
in effecting such termination, including without limitation, the delivery
5
<PAGE>
to the Trust and/or its designees of the Trust's property, records, instruments
and documents, or any copies thereof. Subsequent to such termination, for a
reasonable fee, the Fund Accountant will provide the Trust with reasonable
access to any Trust documents or records remaining in its possession.
In the event of a material breach of this Agreement by either party,
the non-breaching party shall notify the breaching party in writing of such
breach and, upon receipt of such notice, the breaching party shall have 45 days
to remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
If, for any reason other than a material breach of this Agreement or
termination of this Agreement by the Trust after the Initial Term, the Fund
Accountant is replaced as the Fund Accountant, or if a third party is added to
perform all or a part of the services provided by the Fund Accountant under this
Agreement (excluding any sub-accountant appointed by the Fund Accountant as
provided in Section 2 hereof), then the Trust shall make a one-time cash
payment, as liquidated damages, to the Fund Accountant equal to the balance due
the Fund Accountant for the remainder of the term of this Agreement, assuming
for purposes of calculation of the payment that the asset level of the Trust on
the date the Fund Accountant is replaced, or a third party is added, will remain
constant for the balance of the contract term.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
The Fund Accountant shall use its best efforts to ensure the accuracy
of all services performed under this Agreement, but shall not be liable to the
Trust for any action taken or omitted by the Fund Accountant in the absence of
bad faith, willful misfeasance, negligence or reckless disregard by it of its
obligations and duties. The Trust agrees to indemnify and hold harmless the
Fund Accountant, its employees, agents, directors, officers and nominees from
and against any and all claims, demands, actions and suits, whether groundless
or otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other reasonable expenses
of every nature and character arising out of or in any way relating to the Fund
Accountant's actions taken or nonactions with respect to the performance of
services under this Agreement or based, if applicable, upon reasonable reliance
on information, records, instructions or requests with respect to a Fund given
or made to the Fund Accountant by a duly authorized representative of the Trust;
provided that this indemnification shall not apply to actions or omissions of
the Fund Accountant or its employees, agents, directors, officers or nominees in
cases of their own bad faith, willful misfeasance, negligence or reckless
disregard by any or all of them of the Fund Accountant's obligations and duties,
and further provided that prior to confessing any claim against it which may be
the subject of this indemnification, the Fund Accountant shall give the Trust
written notice of and reasonable opportunity to defend against said claim in its
own name or in the name of the Fund Accountant.
The Fund Accountant agrees to indemnify and hold harmless the Trust,
its employees, agents, Trustees, officers and nominees from and against any and
all actions, suits, demands and
6
<PAGE>
claims, whether groundless or otherwise, and from and against any and all
judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees
and other expenses of every nature and character arising out of or in any way
relating to the Fund Accountant's or its employees', agents', directors',
officers' or nominees' bad faith, willful misfeasance, negligence or reckless
disregard by any or all of them of the Fund Accountant's obligations and duties
with respect to the performance of services under this Agreement; provided,
that, prior to confessing any claim against it which may be the subject of this
indemnification, the Trust shall give the Fund Accountant written notice of and
a reasonable opportunity to defend against said claim in its own name or in the
name of the Trust.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provisions contained herein shall apply, however, it is
understood that if in any case the indemnifying party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party, but failure to do so
in good faith shall not affect the rights hereunder.
The indemnifying party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the indemnifying party and satisfactory to the other party, whose
approval shall not be unreasonably withheld. In the event that the indemnifying
party elects to assume the defense of any suit and retain counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and
expenses of any counsel retained by the other party.
8. RECORD RETENTION AND CONFIDENTIALITY.
The Fund Accountant shall keep and maintain on behalf of the Trust all
books and records which the Trust and the Fund Accountant is, or may be,
required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. The Fund Accountant further agrees that all such books and records
shall be the property of the Trust and to make such books and records available
for inspection by the Trust or by the SEC at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Trust and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
7
<PAGE>
9. UNCONTROLLABLE EVENTS.
The Fund Accountant assumes no responsibility hereunder, and shall not
be liable, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
10. REPORTS.
The Fund Accountant will furnish to the Trust and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Trust
in writing, such reports and at such times as are prescribed pursuant to the
terms and the conditions of this Agreement to be provided or completed by the
Fund Accountant, or as subsequently agreed upon by the parties pursuant to an
amendment hereto.
11. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform services
required to be provided by the Fund Accountant under this Agreement are the
property of the Fund Accountant. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
12. RETURN OF RECORDS.
The Fund Accountant may at its option at any time, and shall promptly
upon the Trust's demand, turn over to the Trust and cease to retain the Fund
Accountant's files, records and documents created and maintained by the Fund
Accountant pursuant to this Agreement which are no longer needed by the Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Trust, such documents and records will be retained by
the Fund Accountant for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
13. REPRESENTATIONS OF THE TRUST.
The Trust certifies to the Fund Accountant that: (1) as of the close
of business on each Conversion Date, each Fund that is in existence as of the
Conversion Date has authorized unlimited shares, and (2) this Agreement has been
duly authorized by the Trust and, when executed and delivered by the Trust, will
constitute a legal, valid and binding obligation of the Trust, enforceable
against the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties and general
principles of equity.
8
<PAGE>
14. REPRESENTATIONS OF THE FUND ACCOUNTANT.
The Fund Accountant represents and warrants that: (1) the various
procedures and systems which the Fund Accountant has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Trust and the Fund Accountant's records,
data, equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, and (2) this Agreement has been duly authorized by the Fund
Accountant and, when executed and delivered by the Fund Accountant, will
constitute a legal, valid and binding obligation of the Fund Accountant,
enforceable against the Fund Accountant in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
15. INSURANCE.
The Fund Accountant shall notify the Trust should any of its insurance
coverage be canceled or reduced. Such notification shall include the date of
change and the reasons therefor. The Fund Accountant shall notify the Trust of
any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Trust from time to time as may be appropriate of the total outstanding claims
made by the Fund Accountant under its insurance coverage.
16. INFORMATION TO BE FURNISHED BY THE TRUST AND FUNDS.
The Trust has furnished to the Fund Accountant, or will furnish to the
Fund Accountant within 90 days following the effective date of this Agreement,
the following:
(a) Copies of the Agreement and Declaration of Trust of the Trust and
of any amendments thereto, certified by the proper official of
the state in which such document has been filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments thereto; and
(ii) Certified copies of resolutions of the Board of Trustees
covering the approval of this Agreement, authorization of
a specified officer of the Trust to execute and deliver
this Agreement and authorization for specified officers of
the Trust to instruct the Fund Accountant thereunder.
9
<PAGE>
(c) A list of all the officers of the Trust, together with specimen
signatures of those officers who are authorized to instruct the
Fund Accountant in all matters.
(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. INFORMATION FURNISHED BY THE FUND ACCOUNTANT.
(a) The Fund Accountant has furnished to the Trust the following:
(i) The Fund Accountant's Articles of Incorporation; and
(ii) The Fund Accountant's Bylaws and any amendments thereto.
(b) The Fund Accountant shall, upon request, furnish certified copies
of corporate actions covering the following matters:
(i) Approval of this Agreement, and authorization of a
specified officer of the Fund Accountant to execute and
deliver this Agreement; and
(ii) Authorization of the Fund Accountant to act as fund
accountant for the Trust and to provide accounting
services for the Trust.
18. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish the Fund Accountant written copies of any
amendments to, or changes in, any of the items referred to in Section 16 hereof
forthwith upon such amendments or changes becoming effective. In addition, the
Trust agrees that no amendments will be made to the Prospectuses or Statements
of Additional Information of the Trust which might have the effect of changing
the procedures employed by the Fund Accountant in providing the services agreed
to hereunder or which amendment might affect the duties of the Fund Accountant
hereunder unless the Trust first obtains the Fund Accountant's approval of such
amendments or changes.
19. COMPLIANCE WITH LAW.
Except for the obligations of the Fund Accountant set forth in Section
8 hereof, the Trust assumes full responsibility for the preparation, contents
and distribution of each prospectus of the Trust as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. The Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
Shares. The Trust represents and warrants
10
<PAGE>
that no Shares of the Trust will be offered to the public until the Trust's
registration statement under the Securities Act and the 1940 Act has been
declared or becomes effective.
20. NOTICES.
Any notice required or permitted to be given by either party to the
other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
following address: if to the Fund Accountant, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Trust, to it at Rosenberg Institutional Equity
Management, 4 Orinda Way, Orinda, California, 94563, Attn: Edward H. Lyman,
Esq., with a copy to J.B. Kittredge, Esq., Ropes & Gray, One International
Place, Boston, Massachusetts 02110-2624, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
21. HEADINGS.
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
22. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to a Fund by either of the parties hereto except by the
specific written consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. GOVERNING LAW.
This Agreement shall be governed by and provisions shall be construed
in accordance with the laws of the State of Ohio.
24. MATTERS RELATING TO THE TRUST AS A MASSACHUSETTS BUSINESS TRUST.
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the property of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees, and this Agreement has been signed and delivered by an authorized
officer of the Trust, acting as such, and neither such authorization by the
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the property of the Trust as provided in the
Trust's Amended and Restated Agreement and Declaration of Trust, which is on
file with the Secretary of The Commonwealth of Massachusetts.
11
<PAGE>
25. CONFIDENTIAL INFORMATION.
Each party acknowledges that it may acquire knowledge and information
relating to the other party and its affiliates which is not generally known by
others including, but not limited to, information pertaining to business plans,
prior, present or potential shareholders, employees, customers and/or suppliers,
and that all such knowledge and information acquired or developed is and shall
be confidential and proprietary information (all such confidential and
proprietary information is herein collectively referred to as the "Confidential
Information"). Each party agrees to hold the Confidential Information in strict
confidence, to refrain from directly or indirectly disclosing it to others or
using it in any way except for purposes of performing services hereunder, and to
prevent any unauthorized person access to it either before or after termination
of this Agreement, without the prior written consent of the other party. Both
parties further agree to take all action reasonable and necessary to protect the
confidentiality of the Confidential Information. The parties shall use their
best efforts to have their officers, employees and agents agree to the terms of
this Section. The obligations of the parties contained in this section shall
survive termination of this Agreement. Neither party's confidentiality
obligations under this provision shall apply to such information that (i) was in
the public domain or available to a third party without restrictions at or prior
to the time such information was made known to such party, (ii) had been
independently known to such party at the time of disclosure from persons who
were not subject to similar confidentiality obligations, or (iii) is required to
be disclosed by law (except that each party will use best efforts to give the
other party written notice prior to any such disclosure).
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BARR ROSENBERG SERIES TRUST
By: /s/ Edward H. Lyman
----------------------------------------
Title: Vice President
-------------------------------------
BISYS FUND SERVICES, INC.
By: /s/ J. David Huber
----------------------------------------
Title: Executive Vice President
-------------------------------------
12
<PAGE>
Dated: October 1,1996
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
BARR ROSENBERG SERIES TRUST
AND
BISYS FUND SERVICES, INC..
FEES
Effective as of the Conversion Date, the Fund Accountant shall be entitled to
receive an annual fee of $30,000 per Fund.
BARR ROSENBERG SERIES TRUST BISYS FUND SERVICES, INC.
By: /s/ Edward H. Lyman By: /s/ J. David Huber
- ----------------------------------- -----------------------------------
A-1
<PAGE>
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
Telecopier: (617) 951-7050
May 30, 1997
Barr Rosenberg Series Trust
Four Orinda Way, Suite 300E
Orinda, CA 94563
Ladies and Gentlemen:
You have informed us that you intend to file a Rule 24f-2 Notice (the
"Notice") with the Securities and Exchange Commission (the "Commission")
pursuant to Rule 24f-2 (the "Rule") under the Investment Company Act of 1940, as
amended, making definite the registration of 6,645,447 shares of beneficial
interest, without par value (the "Shares"), of the U.S. Small Capitalization
Series, the Japan Series and the International Small Capitalization Series
(together, the "Funds") of Barr Rosenberg Series Trust (the "Trust"), sold in
reliance upon the Rule during your fiscal year ended March 31, 1997 (the "Fiscal
Year"). We also understand that the registration fee in Item 12 of the Notice
was calculated by reference to aggregate sales prices of (i) $53,425,634 for the
Shares, (ii) $11,688,321 for shares of the Funds issued by the Trust during the
Fiscal Year in connection with dividend reinvestment plans and (iii) $26,196,632
for shares of the Funds redeemed or repurchased by the Trust during the Fiscal
Year.
We have examined the Trust's Agreement and Declaration of Trust dated April
1, 1988, as amended, on file in the office of the Secretary of State of The
Commonwealth of Massachusetts (the "Agreement and Declaration of Trust"). We
are familiar with the actions taken by the Trust's Trustees to authorize the
issue and sale from time to time of shares of beneficial interest of the Trust
at not less than net asset value, and have assumed that the Shares have been
issued and sold in accordance with such actions. We have also examined a copy
of the Trust's By-laws and such other documents as we have deemed necessary for
the purposes of this opinion.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized and validly issued and are fully paid and non-assessable by the
Trust.
<PAGE>
Barr Rosenberg Series Trust -2- May 30, 1997
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 Agreement and Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each 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. The Agreement and Declaration of Trust provides for
indemnification out of the property of the particular series of shares for all
loss and expense of any shareholder of that series held personally liable solely
by reason of his being or having been a shareholder. Thus, the risk of
shareholder liability is limited to circumstances in which that series of shares
itself would be unable to meet its obligations.
We consent to this opinion accompanying the Notice when filed with the
Commission.
Very truly yours,
ROPES & GRAY
Ropes & Gray
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 15 to the registration
statement of Barr Rosenberg Series Trust on Form N-1A (the "Registration
Statement") of our report dated May 23, 1997, relating to the financial
statements and financial highlights of the U.S. Small Capitalization Series,
Japan Series, and International Small Capitalization Series which are
incorporated by reference into such Statement of Additional Information, and
to the incorporation by reference of our report into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
references to us under the headings "Financial Statements," and "Independent
Accountants" in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in such Prospectus.
Price Waterhouse LLP
Boston, Massachusetts
July 17, 1997
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
U.S. SMALL CAPITALIZATION SERIES
INSTITUTIONAL SHARES
AVERAGE ANNUAL TOTAL RETURN
----------------------------
n
P(1+T) = 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 INVESTMENT OF $1,000.
N = NUMBER OF YEARS
EXAMPLE:
SINCE INCEPTION: ( 02/22/89 TO 03/31/97 ):
8.107
1,000(1+15.79%) = 3,282.80
ONE YEAR ( 04/01/96 TO 03/31/97 ):
1,000(1+19.53%) = 1,195.30
THREE YEAR ( 04/01/94 TO 03/31/97 ):
3
1,000(1+22.10%) = 1,827.50
FIVE YEAR ( 04/01/92 TO 03/31/97 ):
5
1,000(1+20.26%) = 2,515.00
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
U.S. SMALL CAPITALIZATION SERIES
ADVISER SHARES
CUMULATIVE TOTAL RETURN
- -----------------------
ERV - 1,000
T = -------------
1,000
WHERE: T = CUMULATIVE TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE
PERIOD OF A HYPOTHETICAL $1,000 INVESTMENT
MADE AT THE BEGINNING OF THE PERIOD.
EXAMPLE:
SINCE INCEPTION: ( 01/21/97 TO 03/31/97 ):
(967.5 - 1,000)
(---------------) = -3.25%
( 1,000 )
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
U.S. SMALL CAPITALIZATION SERIES
SELECT SHARES
CUMULATIVE TOTAL RETURN
- -----------------------
ERV - 1,000
T = -------------
1,000
WHERE: T = CUMULATIVE TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE
PERIOD OF A HYPOTHETICAL $1,000 INVESTMENT
MADE AT THE BEGINNING OF THE PERIOD.
EXAMPLE:
SINCE INCEPTION: ( 10/22/96 TO 03/31/97 ):
(1,068.4 - 1,000)
(-----------------) = 6.84%
( 1,000 )
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
JAPAN SERIES
INSTITUTIONAL SHARES
AVERAGE ANNUAL TOTAL RETURN
- ------------------------------
n
P(1+T) = 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 INVESTMENT OF $1,000.
N = NUMBER OF YEARS
EXAMPLE:
SINCE INCEPTION: ( 01/03/89 TO 03/31/97 )
8.244
1,000(1-4.25%) = 699.20
ONE YEAR ( 04/01/96 TO 03/31/97 )
1,000(1-28.68%) = 713.20
THREE YEAR ( 04/01/93 TO 03/31/97 )
1,000(1-8.48%) = 766.56
FIVE YEAR ( 04/01/91 TO 03/31/97 )
5
1,000(1+1.03%) = 1,052.50
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
JAPAN SERIES
SELECT SHARES
CUMULATIVE TOTAL RETURN
- -----------------------
ERV - 1,000
T = -------------
1,000
WHERE: T = CUMULATIVE TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE
PERIOD OF A HYPOTHETICAL $1,000 INVESTMENT
MADE AT THE BEGINNING OF THE PERIOD.
EXAMPLE:
SINCE INCEPTION: ( 10/22/96 TO 03/31/97 ):
(774.1 - 1,000)
(---------------) = -22.59%
( 1,000 )
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
INTERNATIONAL SMALL CAPITALIZATION SERIES
INSTITUTIONAL SHARES
CUMULATIVE TOTAL RETURN
- -----------------------
ERV - 1,000
T = -------------
1,000
WHERE: T = CUMULATIVE TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE
PERIOD OF A HYPOTHETICAL $1,000 INVESTMENT
MADE AT THE BEGINNING OF THE PERIOD.
EXAMPLE:
SINCE INCEPTION: ( 10/29/96 TO 03/31/97 ):
(1,013 - 1,000)
(---------------) = 1.30%
( 1,000 )
<PAGE>
BARR ROSENBERG SERIES TRUST
EXHIBIT 16
TOTAL RETURN
INTERNATIONAL SMALL CAPITALIZATION SERIES
SELECT SHARES
CUMULATIVE TOTAL RETURN
- -----------------------
ERV - 1,000
T = -------------
1,000
WHERE: T = CUMULATIVE TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE
PERIOD OF A HYPOTHETICAL $1,000 INVESTMENT
MADE AT THE BEGINNING OF THE PERIOD.
EXAMPLE:
SINCE INCEPTION: ( 10/29/96 TO 03/31/97 ):
(1,009 - 1,000)
(---------------) = 0.90%
( 1,000 )
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> BARR ROSENBERG SERIES TRUST, JAPAN SERIES, INST. SH
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 1250
<INVESTMENTS-AT-VALUE> 1022
<RECEIVABLES> 58
<ASSETS-OTHER> 10
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1090
<PAYABLE-FOR-SECURITIES> 27
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41
<TOTAL-LIABILITIES> 68
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1697
<SHARES-COMMON-STOCK> 163
<SHARES-COMMON-PRIOR> 157
<ACCUMULATED-NII-CURRENT> 2
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (449)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (228)
<NET-ASSETS> 1022
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 17
<NET-INVESTMENT-INCOME> (8)
<REALIZED-GAINS-CURRENT> (89)
<APPREC-INCREASE-CURRENT> (304)
<NET-CHANGE-FROM-OPS> (401)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 4
<NUMBER-OF-SHARES-SOLD> 4
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 5
<ACCUMULATED-NII-PRIOR> 7
<ACCUMULATED-GAINS-PRIOR> (363)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 169
<AVERAGE-NET-ASSETS> 159
<PER-SHARE-NAV-BEGIN> 8.77
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> (2.45)
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.20
<EXPENSE-RATIO> .014
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> BARR ROSENBERG SERIES TRUST, INT'L SM CAP SER, INST. SH
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 12722
<INVESTMENTS-AT-VALUE> 12771
<RECEIVABLES> 430
<ASSETS-OTHER> 934
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14135
<PAYABLE-FOR-SECURITIES> 974
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 117
<TOTAL-LIABILITIES> 1091
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12990
<SHARES-COMMON-STOCK> 1269
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 18
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 40
<NET-ASSETS> 13044
<DIVIDEND-INCOME> 56
<INTEREST-INCOME> 0
<OTHER-INCOME> 2
<EXPENSES-NET> 54
<NET-INVESTMENT-INCOME> 4
<REALIZED-GAINS-CURRENT> 4
<APPREC-INCREASE-CURRENT> 40
<NET-CHANGE-FROM-OPS> 48
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1302
<NUMBER-OF-SHARES-REDEEMED> 33
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1269
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269
<AVERAGE-NET-ASSETS> 6895
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> .11
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.13
<EXPENSE-RATIO> .015
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> BARR ROSENBERG SERIES TRUST, U.S. SM CAP SERIES, SEL SH
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 78655
<INVESTMENTS-AT-VALUE> 84194
<RECEIVABLES> 8034
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 92228
<PAYABLE-FOR-SECURITIES> 3945
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3584
<TOTAL-LIABILITIES> 7529
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71759
<SHARES-COMMON-STOCK> 333
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 288
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7114
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5538
<NET-ASSETS> 84699
<DIVIDEND-INCOME> 821
<INTEREST-INCOME> 31
<OTHER-INCOME> 38
<EXPENSES-NET> 670
<NET-INVESTMENT-INCOME> 220
<REALIZED-GAINS-CURRENT> 17712
<APPREC-INCREASE-CURRENT> (7399)
<NET-CHANGE-FROM-OPS> 10533
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 28
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 331
<NUMBER-OF-SHARES-REDEEMED> 2
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 333
<ACCUMULATED-NII-PRIOR> 300
<ACCUMULATED-GAINS-PRIOR> 3966
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 978
<AVERAGE-NET-ASSETS> 617
<PER-SHARE-NAV-BEGIN> 8.49
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .47
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 1.85
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.13
<EXPENSE-RATIO> .012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
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