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File Nos. 33-21677
811-5547
As filed with the Securities and Exchange Commission on August 19, 1998
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. 22 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT /X/
COMPANY ACT OF 1940
Amendment No. 25 /X/
BARR ROSENBERG SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, OH 43219
(Address of principal executive offices)
925-254-6464
(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, MA 02110-2624
Orinda, CA 94563
(Name and address of agent for service)
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It is proposed that this filing will become effective:
Immediately upon filing pursuant to paragraph (b)
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On _________________ pursuant to paragraph (b)
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X 60 days after filing pursuant to paragraph (a)(1)
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On _______ pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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On _______ pursuant to paragraph (a)(2), of Rule 485
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If appropriate, check the following box:
--- This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
NOTE: This Amendment relates solely to shares of beneficial interest in the
Barr Rosenberg Select Sector Market Neutral Fund. Information contained in the
Registration Statement relating to the other series of the Registrant is
neither amended nor superseded hereby.
<PAGE>
BARR ROSENBERG SERIES TRUST
CROSS REFERENCE SHEET FOR
THE BARR ROSENBERG SELECT SECTOR MARKET NEUTRAL FUND ONLY
N-1A Item No. Location
- ------------ --------
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses
Item 3. Condensed Financial Other Information
Information
Item 4. General Description of Description of the Trust
Registrant and Ownership of Shares;
Investment Objective and
Policies; Cover Page;
and General Description
of Risks and Fund Investments
Item 5. Management of the Fund Management of the Trust;
Back Cover
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Other Description of the Trust
Securities and Ownership of Shares;
Distributions; Multiple
Classes; Shareholder Inquiries;
Taxes; Back Cover; and General
Description of Risks and Fund
Investments
Item 7. Purchase of Securities Being Purchase of Shares; Management
Offered of the Trust; Multiple Classes;
Determination of Net Asset
Value; and Back Cover
Item 8. Redemption or Repurchase Redemption of 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
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Item 15. Control Persons and Principal Description of the Trust
Holders of Securities and Ownership of Shares
Item 16. Investment Advisory and Other Investment Advisory and
Services Other Services; Management of
the Trust; and Description of
the Trust and Ownership of
Shares
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; Redemption of Shares;
Determination of Net Asset Value
Item 20. Tax Status Income Dividends,
Distributions and Tax
Status
Item 21. Underwriters Investment Advisory and
Other Services
Item 22. Calculation of Performance Data Total Return Calculations
Item 23. Financial Statements Not Applicable
Part C
Information to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 19, 1998
BARR ROSENBERG SERIES TRUST
BARR ROSENBERG SELECT SECTOR MARKET NEUTRAL FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-555-5737 (INSTITUTIONAL SHARES)
1-800-447-3332 (INVESTOR SHARES)
OCTOBER , 1998
Barr Rosenberg Series Trust (the "Trust") is an open-end management
investment company offering six diversified portfolios with different investment
objectives and strategies including the Barr Rosenberg Select Sector Market
Neutral Fund (the "Fund"). The other portfolios of the Trust, which are offered
under separate prospectuses, are the U.S. Small Capitalization Series, Japan
Series, International Small Capitalization Series, Barr Rosenberg Market Neutral
Fund and Barr Rosenberg Double Alpha Market Fund. The Fund's investment adviser
is Rosenberg Institutional Equity Management (the "Manager").
The Fund seeks long-term capital appreciation while maintaining minimal
exposure to general equity market risk by taking long positions primarily in the
500 largest capitalization stocks principally traded in the markets of the
United States that the Manager has identified as undervalued and short positions
in such stocks that the Manager has identified as overvalued. The Fund may also
overweight its long and short positions in different industries and sectors of
the market based on the results of the Manager's stock selection models. For a
description of the risks of an investment in the Fund, see "Investment Objective
and Policies" and "General Description of Risks and Fund Investments." The Fund
seeks a total return greater than the return on 3-month U.S. Treasury Bills. For
a description of the differences between an investment in the Fund and in
3-month U.S. Treasury Bills, see "Investment Objective and Policies."
Information contained herein is subject to completion or amendment. A
post-effective amendment to the registration statement relating to these
securities has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy such securities be accepted
prior to the time the post-effective amendment to the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
The Fund offers two classes of shares: Institutional Shares and Investor
Shares. Whether an investor is eligible to purchase Institutional Shares or
Investor Shares depends on the amount invested in the Fund. Investor Shares bear
a Shareholder Service Fee and Distribution Fee.
This Prospectus concisely describes the information that investors ought to
know before investing. Please read this Prospectus carefully and keep it for
future reference.
A Statement of Additional Information dated August 19, 1998 (the
"Statement") is available free of charge by writing to Barr Rosenberg Funds
Distributor, Inc., the Fund's distributor (the "Distributor"), at 3435 Stelzer
Road, Columbus, Ohio 43219 or by telephoning 1-800-555-5737 (for Institutional
Share customers) and 1-800-447-3332 (for Investor Share customers). The
Statement, which contains more detailed information about the Fund, has been
filed with the Securities and Exchange Commission (the "Commission") and is
incorporated by reference into this Prospectus. The Commission maintains a World
Wide Web site at http://www.sec.gov that contains the Statement, material
incorporated by reference and other information regarding registrants that file
electronically with the Commission.
SHARES OF THE FUND 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
INVESTMENT OBJECTIVE AND POLICIES..................................... 4
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS..................... 5
MANAGEMENT OF THE TRUST............................................... 7
MULTIPLE CLASSES...................................................... 14
PURCHASE OF SHARES.................................................... 15
IRA ACCOUNTS.......................................................... 17
REDEMPTION OF SHARES.................................................. 17
DETERMINATION OF NET ASSET VALUE...................................... 19
DISTRIBUTIONS......................................................... 20
TAXES................................................................. 20
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES...................... 21
SHAREHOLDER INQUIRIES................................................. 22
OTHER INFORMATION..................................................... 22
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FUND EXPENSES
The estimated annual expenses of the Fund are set forth in the following
tables, the forms of which are prescribed by federal securities laws and
regulations.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT SHAREHOLDER OPERATING
FEE (AFTER SERVICE DISTRIBUTION OTHER EXPENSES
WAIVER) FEE FEE EXPENSES(a) (AFTER WAIVER)(a)
---------- ----------- ------------ ----------- -----------------
<S> <C> <C> <C> <C> <C>
Institutional Shares.............................. 0.81 None None 0.44 1.25%
Investor Shares................................... 0.81 0.25% 0.25% 0.44 1.75%
</TABLE>
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(a) Other Expenses and Total Fund Operating Expenses do not include dividend
expenses incurred in connection with short sales (estimated at 0.75% for the
Fund's first fiscal year), which are included in and reduce the Fund's
investment return.
The Manager has undertaken to waive 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, extraordinary expenses
and dividends and interest paid on securities sold short) of each class to the
percentage of the Fund's average daily net assets attributable to that class
listed under Total Fund Operating Expenses above. Absent such undertaking by the
Manager to waive its fee and bear such expenses, the Fund's management fees
would be 1.00% and estimated Total Fund Operating Expenses would be 1.44% for
Institutional Shares and 1.94% for Investor Shares. See "Management of the
Trust."
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)(b):
-------------------------------------
1 3
YEAR YEARS
----- -----
<S> <C> <C> <C> <C> <C>
Institutional Shares.............................. 13 40
Investor Shares................................... 18 55
</TABLE>
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(b) Excluding dividend expenses incurred in connection with short sales.
THE PURPOSE OF THIS TABLE IS TO ASSIST YOU IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES OF THE FUND THAT YOU WILL BEAR DIRECTLY OR INDIRECTLY. 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.
3
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek long-term capital
appreciation while maintaining minimal exposure to general equity market risk.
The Fund seeks a total return greater than the return on 3-month U.S. Treasury
Bills. The Fund attempts to achieve its investment objective by taking long
positions primarily in the 500 largest capitalization stocks principally traded
in the markets of the United States that the Manager has identified as
undervalued and short positions in such stocks that the Manager has identified
as overvalued. See "General Description of Risks and Fund Investments -- Risks
of Short Sales" below. By taking long and short positions in different stocks,
the Fund attempts to cancel out the effect of general stock market movements on
the Fund's performance. It is expected that the Fund can achieve a positive
return if the Fund's long portfolio outperforms the Fund's short portfolio.
Conversely, it is expected that the Fund will incur losses if the Fund's long
portfolio underperforms the Fund's short portfolio. The Fund may also overweight
its long and short positions in different industries and sectors of the market
based on the results of the Manager's stock selection models. See "Management of
the Trust -- The Manager's General Investment Philosophy and Strategy." In other
words, the Fund may take long positions in an industry or sector of the market
that is not offset by short positions in such industry or sector and vice versa.
Consequently, the Fund may have net exposures to different industries and
sectors of the market, thereby increasing the risk of the Fund and the
opportunity for loss should the stocks in a particular industry or sector not
perform as predicted by the Manager's valuation models. The Manager will
determine the size of each long or short position by analyzing the tradeoff
between the attractiveness of each position and its impact on the risk
characteristics of the overall portfolio. The Fund seeks to construct a
diversified portfolio that has minimal net exposure to the U.S. equity market
generally.
Although the Fund's investment strategy seeks to minimize the risk
associated with investing in the equity market, an investment in the Fund will
be subject to various risks, including the risk of poor stock selection by the
Manager. There can be no assurance that the Manager will successfully take long
positions in stocks and short positions in other stocks such that the portfolio
of long positions outperforms the portfolio of short positions. The Fund will
also be subject to the risk that the Manager may incorrectly select the
industries or sectors of the market in which to overweight the Fund's long and
short positions. In addition, the Manager may fail to construct a portfolio that
has minimal exposure to general equity market risk. Further, because the Manager
will manage both a long and a short portfolio, an investment in the Fund will
involve the risk that the Manager may make more poor investment decisions than a
manager of a typical stock mutual fund with only a long portfolio. Moreover, an
investment in the Fund is different from an investment in 3-month U.S. Treasury
Bills because Treasury Bills are backed by the full faith and credit of the U.S.
Government, Treasury Bills have a fixed rate of return, investors in Treasury
Bills do not bear the risk of losing their investment and an investment in
Treasury Bills is less volatile than an investment in the Fund.
To meet margin requirements related to short sales, redemption requests or
for investment purposes, the Fund may also hold a portion of its assets in full
faith and credit obligations of the United States government (E.G., U.S.
Treasury Bills) and in short-term notes, commercial paper or other money market
instruments of high quality (I.E., rated at least "A-2" or "AA" by Standard &
Poor's ("S&P") or Prime 2 or "Aa" by Moody's Investors Service, Inc.
("Moody's")) issued by companies having an outstanding debt issue rated at least
"AA" by S&P or at least "Aa" by Moody's, or determined by the Manager to be of
comparable quality to any of the foregoing.
4
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The Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are principally traded in the markets of the
United States. See "General Description of Risks and Fund Investments -- Special
Considerations of Foreign Investments." The Fund will not invest in equity
securities that are principally traded outside of the United States.
GENERAL DESCRIPTION OF RISKS AND FUND INVESTMENTS
INVESTMENT RISKS. The value of Fund shares may increase or decrease
depending on market, economic, political, regulatory and other conditions
affecting the Fund's portfolio. Investment in shares of the Fund is more
volatile and risky than some other forms of investment. In addition, it is
possible that the Fund's long positions will decline in value at the same time
that the value of securities sold short increases, thereby increasing the
potential for loss. Moreover, the Fund's strategy has the effect of accelerating
the recognition of gain for tax purposes and increasing the short-term gain
component of gains in the Fund. Short-term gains are ordinarily taxed to
shareholders at ordinary income tax rates, thereby increasing the amount of
taxes payable by shareholders. See "Taxes."
RISKS OF SHORT SALES. When the Manager anticipates that a security is
overvalued, it may sell the security short and borrow the same security from a
broker or other institution to complete the sale. The Fund will incur a loss as
a result of a short sale if the price of the borrowed security increases between
the date of the short sale and the date on which the Fund replaces such
security. The Fund will realize a gain if the security declines in price between
those dates. There can be no assurance that the Fund will be able to close out a
short position at any particular time or at an acceptable price. During the time
the Fund is short a security it is subject to the risk that the lender will
terminate the loan at a time when the Fund is unable to borrow the same security
from another lender, in which event the Fund may be "bought in" at the price
required to purchase the security to close out the short position. Although the
Fund's gain is limited to the amount at which it sold a security short, its
potential loss is limited only by the maximum attainable price of the security
less the price at which the security was sold. Until the security sold short is
replaced, the Fund is required to repay the lender any dividends or interest
that accrue during the period of the loan. To borrow the security, the Fund also
may be required to pay a premium. The Fund also will incur transaction costs in
effecting short sales. The amount of any gain resulting from a short sale will
be decreased, and the amount of any loss increased, by the amount of premiums,
dividends, interest or expenses the Fund may be required to pay in connection
with a short sale. Until the Fund replaces a borrowed security, it will maintain
daily a segregated account with its Custodian containing cash, U.S. Government
securities, or other liquid securities such that the amount deposited in the
account plus any amount deposited with a broker or other custodian as collateral
will at least equal the current market value of the security sold short.
Depending on arrangements made with such broker or custodian, the Fund may not
receive any payments (including interest) on collateral deposited with such
broker or custodian. The Fund will not make a short sale if, after giving effect
to such sale, the market value of all securities sold exceeds 100% of the value
of the Fund's net assets. The Fund's use of short sales may result in the Fund
realizing more short-term capital gains (subject to tax at ordinary income
rates) than it would if it did not engage in short sales.
SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS. Investing in securities of
foreign issuers involves certain risks not typically found in investing in
securities of U.S. issuers. These include risks of adverse change in foreign
economic, political, regulatory and other conditions, and changes in currency
exchange rates,
5
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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 securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. There are also special tax considerations which apply
to securities of foreign issuers.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements, by
which the Fund purchases a security and obtains a simultaneous commitment from
the seller (a bank or, to the extent permitted by the Investment Company Act of
1940, as amended (the "1940 Act"), a recognized securities dealer) to repurchase
the security at an agreed-upon price and date (usually seven days or less from
the date of original purchase). The resale price is in excess of the purchase
price and reflects an agreed-upon market rate unrelated to the coupon rate on
the purchased security. Such transactions afford the 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, the Fund
would attempt to exercise rights with respect to the underlying security,
including possible disposition in the market. However, the 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 the Fund seeks to
enforce its rights thereto and (b) inability to enforce rights and the expenses
involved in attempted enforcement.
LOANS OF PORTFOLIO SECURITIES. The 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
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, the Fund retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by the Fund
if the holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. The Fund may also call such loans in order
to sell the securities involved. The risks in lending portfolio securities, as
with other extensions of credit, include possible delay in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. However, such loans will be made only to broker-dealers that are
believed by the Manager to be of relatively high credit standing.
ILLIQUID SECURITIES. The Fund may purchase "illiquid securities," defined
as securities which cannot be sold or disposed of in the ordinary course of
business within seven days at approximately the price at which the 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 a purchase.
Investment in illiquid securities involves the risk
6
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that, because of the lack of consistent market demand for such securities, the
Fund may be forced to sell them at a discount from the last offer price.
PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions of the Manager. The Fund's portfolio turnover
rate may vary significantly from time to time depending on the volatility of
economic and market conditions. Although the rate of portfolio turnover is
difficult to predict, it is not anticipated that under normal circumstances the
annual portfolio turnover rate of each of the long and short portfolios of the
Fund will exceed 150%. It is, however, impossible to predict portfolio turnover
in future years. High portfolio turnover involves correspondingly greater
brokerage commissions or dealer markup 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 the Fund. To the
extent portfolio turnover results in the realization of net short-term capital
gains, such gains ordinarily are taxed to shareholders at ordinary income tax
rates. See "Taxes."
INVESTMENT OBJECTIVE AND POLICIES. Except as explicitly described
otherwise, the investment objective and policies of the Fund may be changed
without shareholder approval.
MANAGEMENT OF THE TRUST
The Fund is advised and managed by Rosenberg Institutional Equity
Management, which provides investment advisory services to a number of
institutional investors as well as the other portfolios of the Trust.
KEY PERSONNEL OF THE MANAGER
The biography of each of the General Partners of the Manager, each of whom
is also a Trustee of the Trust, is set forth below.
BARR ROSENBERG. Dr. Rosenberg is Managing General Partner and Chief
Investment Officer of the Manager. As such, he has ultimate responsibility for
the Manager's securities valuation and portfolio optimization systems used to
manage the Fund 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
until his departure in 1986. Dr. Rosenberg, the founder of the Berkeley Program
in Finance, has experience in the modeling of complex processes with substantial
elements of risk.
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.
7
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Ms. Fritz earned a B.S. degree from the University of Michigan, Ann Arbor,
in 1971. After working in life insurance management and sales for seven years,
she entered the investment management business in 1978 as Marketing Associate
with Forstmann-Leff Associates, New York. From 1983 until 1985, she was Vice
President, Marketing at Criterion Investment Management Company, Houston, Texas.
KENNETH REID. Dr. Reid is a General Partner and Director of Research of the
Manager. His work is focused on the design and estimation of the Manager's
valuation models and he has primary responsibility for analyzing the empirical
evidence that validates and supports the day-to-day recommendations of the
Manager's securities valuation models. Patterns of short-term price behavior
discussed by Dr. Reid as part of his Ph.D. dissertation have been refined and
incorporated into the Manager's proprietary valuation and trading systems.
Dr. Reid earned both a B.A. degree (1973) and an M.D.S. (1975) from Georgia
State University, Atlanta. In 1982, he earned a Ph.D. from the University of
California, Berkeley, where he was awarded the American Bankers Association
Fellowship. From 1981 until June 1986, Dr. Reid worked as a consultant at BARRA
in Berkeley, California. His responsibilities included estimating
multiple-factor risk models, designing and evaluating active management
strategies, and serving as an internal consultant on econometric matters in
finance.
Each of Marlis S. Fritz and Kenneth Reid holds a greater than 5% interest in
the Manager. 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.
There are approximately 43 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 nineteen individuals with other graduate degrees.
Six 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 1940 Act) of the Trust or the
Manager.
Dr. Sharpe is the STANCO 25 Professor of Finance at Stanford University's
Graduate School of Business. He is best known as one of the developers of the
Capital Asset Pricing Model, including the beta and alpha concepts used in risk
analysis and performance measurement. He developed the widely-used binomial
method for the valuation of options and other contingent claims. He also
developed the computer algorithm used in many asset allocation procedures. Dr.
Sharpe has published articles in a number of professional journals. He has also
written six books, including PORTFOLIO THEORY AND CAPITAL MARKETS (McGraw-Hill,
1970), ASSET ALLOCATION TOOLS (Scientific Press, 1987), FUNDAMENTALS OF
INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey, Prentice-Hall, 1993)
and INVESTMENTS (with Gordon J. Alexander and Jeffery Bailey, Prentice-Hall,
1995). Dr. Sharpe is a past President of the American Finance Association. He
has 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.
8
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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, Australia and, in
1982, the Chevron Fellow at Simon Fraser University in British Columbia, Canada.
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 articles in a number of academic
journals and 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.
INDIVIDUALS RESPONSIBLE FOR THE FUND
Management of the portfolio of the Fund is overseen by the Manager's General
Partners who are responsible for the design and maintenance of the Manager's
portfolio system, and by a portfolio manager who is responsible for research and
monitoring the Fund's characteristic performance against its benchmark and for
monitoring cash balances. Dr. Rosenberg, Dr. Reid and James Kan, C.F.A., the
portfolio manager, are responsible for the day-to-day management of the Fund's
portfolio. Dr. Rosenberg and Dr. Reid both have been employed by the Manager
since 1985. Mr. Kan has had numerous responsibilities including trading,
applications programming and portfolio engineering since he joined the Manager
in 1990. He received a B.S. from the University of British Columbia in 1984, an
M.S. from the University of Southern California in 1987 and an M.B.A. from the
University of Chicago.
THE MANAGER'S GENERAL INVESTMENT PHILOSOPHY AND STRATEGY
The Manager attempts to add value relative to a benchmark through a
quantitative stock selection process, and generally seeks to diversify
investment risk across the holdings in the Fund. In seeking to outperform the
Fund's benchmark, the Manager also attempts to control risk in the Fund's
portfolio relative to the benchmark.
INVESTMENT PHILOSOPHY. The Manager's investment strategy is based on the
belief that stock prices imperfectly reflect the present value of the expected
future earnings of companies, their "fundamental value." The Manager believes
that market prices will converge towards fundamental value over time, and that
therefore, if the Manager can accurately determine fundamental value, and can
apply a disciplined investment process to select those stocks that are currently
undervalued (in the case of purchases) or overvalued (in the case of short
sales), the Manager will outperform the Fund's benchmark over time.
9
<PAGE>
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 that
are undervalued (I.E., they are currently cheaper than similar stocks with the
same characteristics) and engages in short sales with respect to those stocks
that are overvalued (I.E., they are currently more expensive than similar stocks
with the same characteristics). The Manager believes that the market will
recognize the "better value" and that the mispricing will be corrected as the
stocks in the Fund's portfolios are purchased or sold by other investors.
Determination of the relative valuation of a stock is based upon a
comparison of similar companies. In any group of similar companies, it is the
Manager's view that there are always some that are overvalued, some that are
undervalued, and some that are fairly-valued relative to the average valuation
for the group. These moderate valuation errors are believed to be present in
every sector of the market and can be identified through rigorous quantitative
analysis of fundamental data.
In determining whether or not a stock is attractive, the Manager considers
the company's current estimated fundamental value as determined by the Manager's
proprietary Appraisal Model, the Manager's model for expected earnings, and
analysis of investor sentiment toward the stock. The Manager identifies and
causes the Fund to purchase an undervalued stock and to hold it in the Fund's
portfolio until the market recognizes and corrects for the misvaluation.
Conversely, the Manager identifies and causes the Fund to sell short an
overvalued stock.
DECISION PROCESS. The Manager's decision process is a continuum. Its
research function develops models that analyze the more than 12,000 securities
in the global universe, both fundamentally and technically, and determines the
risk characteristics of the Fund's benchmark. The portfolio management function
optimizes each portfolio's composition, executes trades, and monitors
performance and trading costs.
The essence of the Manager's approach is 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 assimilates, checks
and structures 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 Appraisal Model
incorporates the various accounting standards that apply in different markets
and makes adjustments to ensure meaningful comparisons.
10
<PAGE>
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 companies followed.
The difference between the Manager's appraisal and the market price is
believed to represent an opportunity for profit. For each stock, the Manager
develops "appraisal alphas" (I.E., the expected rate of extraordinary return) by
adjusting for the rate at which the market has corrected for such misvaluations
in the past.
A second sphere of analysis is captured by the Manager's proprietary
Earnings Change Model, which analyzes more than 20 variables to predict
individual company earnings over a one-year horizon. The variables are
fundamental and fall into three categories: measures of past profitability,
measures of company operations and consensus earnings forecasts. The Earnings
Change Model is independent of the Appraisal Model and projects the change in a
company's earnings in cents/current price. The value of the projected earnings
change is converted to an "earnings change alpha" by multiplying the projected
change by the market's historical response to changes of that magnitude.
Finally, the Manager's proprietary Investor Sentiment Model quantifies
investor sentiment about features of stocks which influence price but which are
not captured by the Appraisal Model or the Earnings Change Model. This Model
measures company quality by looking at past price patterns and by predicting the
probability of deficient earnings. The Investor Sentiment Model also captures
market enthusiasm towards individual stocks by looking at broker recommendations
and analyst estimates. Investor sentiment alphas are developed by multiplying
the Model's sentiment scores by the market's historical response to such scores.
Each company's earnings change alpha and investor sentiment alpha are added
to its appraisal alpha to arrive at a total company alpha. Stocks with large
positive total company alphas are candidates for purchase. Stocks with large
negative total company alphas are candidates for short sales.
Before trading, the Manager systematically analyzes the short-term price
behavior of individual stocks to determine the timing of trades. The Investor
Sentiment Model quantifies investor enthusiasm for each stock by analyzing its
short-term performance relative to similar stocks, changes in analyst and broker
opinions about the stock, and earnings surprises. The Manager develops a
"trading alpha" for each stock, which is the Manager's prediction of the
short-term return of a particular stock. This return is calculated by the
Manager's proprietary model by analyzing short-term factors such as trading
volume and price movements. The Manager believes its model, used in this way,
can add value by helping determine the optimal timing of portfolio trades.
11
<PAGE>
OPTIMIZATION. The Manager's portfolio optimization system attempts to
construct a Fund portfolio that will outperform the relevant benchmark, while
maintaining portfolio risk characteristics similar to those of the Fund's
benchmark. The optimizer simultaneously considers both the results of the
Manager's stock selection models and risk in determining the benefit to a
portfolio of a particular transaction. No transaction will be executed unless
the opportunity offered by a purchase or sale candidate sufficiently exceeds the
potential of an existing holding to justify the transaction costs.
TRADING. The Manager's trading system aggregates the recommended
transactions for the Fund and determines the feasibility of each recommendation
in light of the stock's liquidity, the expected transaction costs and general
market conditions. It relays target price information to a trader for each stock
considered for purchase or sale. Trades are executed through any one of four
trading strategies: traditional brokerage, networks, accommodation, and package
or "basket" trades.
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 (also referred to herein 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 that the brokers have presented and the Manager's own
recommended trades are signaled to the Manager's traders. Because 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 disturbances on the Fund's portfolio.
MANAGEMENT CONTRACT
Under a Management Contract with the Trust on behalf of the Fund, the
Manager selects and reviews the 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 the Fund, the right of the Trust to use the
identifying name "Barr Rosenberg" and/or "Rosenberg" may be withdrawn.
The Fund will pay all other expenses incurred in the operation of the 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
12
<PAGE>
qualification of its shares under 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 the net asset
value of Fund shares, expenses of reports to shareholders, expenses of printing
and mailing proxy statements and proxies to existing shareholders, expenses of
meetings of shareholders, expenses of printing and mailing prospectuses and
insurance premiums.
In addition, the Fund has agreed to pay the Manager a quarterly management
fee at an annual percentage rate of 1.00% of the Fund's average daily net
assets. The Manager has voluntarily undertaken to waive some or all of its
management fee and, if necessary, to bear certain expenses of the Fund until
further notice to the extent required to limit the total annual operating
expenses (which do not include nonrecurring account fees, extraordinary expenses
and dividends and interest paid on securities sold short) of each class of
shares to the percentage of the Fund's average daily net assets attributable to
that class listed in the Expense Limitation column below.
<TABLE>
<CAPTION>
CONTRACTUAL
MANAGEMENT FEE (AS EXPENSE LIMITATION
A % OF AVERAGE DAILY (AS A % OF AVERAGE
NET ASSETS) DAILY NET ASSETS)(a)
--------------------- ---------------------
<S> <C> <C>
Institutional Shares....................................................... 1.00% 1.25%
Investor Shares............................................................ 1.00% 1.75%
</TABLE>
- -------------------
(a) Excluding dividend expenses incurred in connection with short sales.
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
BISYS Fund Services (the "Administrator"), a wholly-owned subsidiary of The
BISYS Group, Inc., serves as the Trust's administrator and generally assists the
Trust in all aspects of its administration and operation. As compensation for
its administrative services, the Administrator receives a monthly fee based upon
an annual percentage rate of 0.15% of the aggregate average daily net assets of
the Trust.
BISYS Fund Services, Inc. (the "Transfer Agent") serves as the Trust's
transfer agent and provides dividend disbursing services. The principal business
address of the Transfer Agent is 3435 Stelzer Road, Columbus, Ohio 43219.
Custodial Trust Company (the "Custodian") serves as custodian of the assets
of the Fund. The principal business address of the Custodian is 101 Carnegie
Center, Princeton, New Jersey 08540.
DISTRIBUTOR
Investor Shares of the Fund are sold on a continuous basis by the Trust's
distributor, Barr Rosenberg Funds Distributor, Inc. (the "Distributor"), a
wholly-owned subsidiary of The BISYS Group, Inc. The Distributor's principal
offices are located at 90 Park Avenue, New York, New York 10016. Institutional
Shares are sold directly by the Trust.
Solely for the purpose of compensating the Distributor for services and
expenses primarily intended to result in the sale of Investor Shares, such
shares are subject to an annual Distribution Fee of up to 0.50% of
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<PAGE>
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, the Fund pays the Distributor an
annual Distribution Fee of 0.25% of the Fund's average daily net assets
attributable to Investor Shares. Activities for which the Distributor may be
reimbursed include, but are not limited to, the development and implementation
of direct mail promotions and advertising for the Fund, the preparation,
printing and distribution of prospectuses for the Fund to recipients other than
existing shareholders, and contracting with one or more wholesalers of the
Fund's shares. The Distribution 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 holders of
Investor Shares of the Fund (the Distributor or such entity is referred to as a
"Servicing Agent" in such capacity). A Servicing Agent will be paid some or all
of the Shareholder Servicing Fees charged with respect to Investor Shares of the
Fund pursuant to a Servicing Plan for such shares.
YEAR 2000 ISSUES
Many of the services provided to the Fund depend on the smooth functioning
of computer systems. Many systems in use today cannot distinguish between the
year 1900 and the year 2000. Should any of the service systems fail to process
information properly, that could have an adverse impact on the Fund's operations
and services provided to shareholders. The Manager, Distributor, Servicing
Agent, Transfer Agent, Custodian, Administrator and certain other service
providers to the Fund have reported that each is working toward mitigating the
risks associated with the so-called "year 2000 problem." However, there can be
no assurance that the problem will be corrected in all respects and that the
Fund's operations and services provided to shareholders will not be adversely
affected.
MULTIPLE CLASSES
As indicated previously, the Fund offers two classes of shares to investors,
with eligibility depending on the amount invested in the Fund. The two classes
of shares are Institutional Shares and Investor Shares. The following table sets
forth basic investment and fee information for each class.
<TABLE>
<CAPTION>
MINIMUM ANNUAL ANNUAL
FUND SUBSEQUENT SHAREHOLDER DISTRIBUTION
NAME OF CLASS INVESTMENT* INVESTMENTS* SERVICE FEE FEE
- -------------------------------------------------------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Institutional................................................. $ 1 million $ 10,000 None None
Investor...................................................... $ 2,500 $ 500 .25% .25%
</TABLE>
- ------------------------
* Certain exceptions apply. See "-- Institutional Shares" and "-- Investor
Shares" below.
The offering price of Fund shares is based on the net asset value per share
next determined after an order is received. See "Purchase of Shares" and
"Redemption of Shares."
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<PAGE>
INSTITUTIONAL SHARES
Institutional Shares may be purchased by institutions such as endowments and
foundations, plan sponsors of 401(a), 401(k), 457 and 403(b) plans and
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 Fund. In its sole discretion, the Manager may waive this minimum
investment requirement and the Manager intends to do so for employees of the
Manager, for the spouse, parents, children, siblings, grandparents or
grandchildren of such employees, for employees of the Administrator and for
Trustees of the Trust who are not interested persons of the Trust or Manager and
their spouses. Institutional Shares are sold without any initial or deferred
sales charges and are not subject to any ongoing distribution expenses or
shareholder servicing fees.
INVESTOR SHARES
Investor Shares may be purchased by institutions, certain individual
retirement accounts and individuals. In order to be eligible to purchase
Investor Shares, an investor must make an initial investment of at least $2,500
in the Fund. In its sole discretion, the Manager may waive this minimum
investment requirement. Investor Shares are subject to an annual Shareholder
Service Fee equal to 0.25% of the average daily net assets attributable to
Investor Shares and an annual Distribution Fee equal to 0.25% of the average
daily net assets attributable to Investor Shares. As described above, the
Distribution Plan permits payments of up to 0.50% of the Fund's average daily
net assets attributable to Investor Shares. See "Management of the Trust --
Distributor."
GENERAL
The Shareholder Service Fee charged with respect to Investor Shares is
intended to be compensation for personal services rendered and for account
maintenance with respect to such shares. The Distribution Fee charged with
respect to Investor Shares is intended to compensate the Distributor for
services and expenses primarily intended to result in the sale of Investor
Shares. See "Management of the Trust -- Distributor."
As described above, shares of the Fund may be sold to corporations or other
institutions such as trusts, foundations or broker-dealers purchasing for the
accounts of others (collectively, "Shareholder Organizations"). Investors
purchasing and redeeming shares of the Fund through a Shareholder Organization
may be charged a transaction-based fee or other fee for the services provided by
the Shareholder Organization. Each such Shareholder Organization is responsible
for transmitting to its customers a schedule of any such fees and information
regarding any additional or different conditions regarding purchases and
redemptions of Fund shares. Customers of Shareholder Organizations should read
this Prospectus in light of the terms governing accounts with their particular
organization.
PURCHASE OF SHARES
The offering price for shares of the 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.
15
<PAGE>
INITIAL CASH INVESTMENTS BY WIRE
Subject to acceptance by the Trust, shares of the Fund may be purchased by
wiring federal funds. Please first contact the Trust at 1-800-447-3332 for
complete wiring instructions. 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 are all open for business. 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.
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. 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 and $500 for
Investor Shares. In its sole discretion, the Manager may waive the minimum
additional investment requirements.
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 the Fund in exchange
for stocks is subject in each case to the determination by the Manager that the
stocks to be exchanged are acceptable. Securities accepted by the Manager in
exchange for Fund shares will be valued as set forth under "Determination of Net
Asset Value" (generally the last quoted sale price) as of the time of the next
determination of net asset value after such acceptance. All dividends,
subscription or other rights which are reflected in the market price of accepted
securities at the time of valuation become the property of the Fund and must be
delivered to the Fund upon receipt by the investor from the issuer. Generally,
the exchange of common stocks for Institutional Shares will be a taxable event
for federal income tax purposes, which will trigger gain or loss to an investor
subject to federal income taxation, measured by the difference between the value
of the Institutional Shares received and the investor's basis in the securities
tendered.
The Manager will not approve the acceptance of securities in exchange for
Fund shares unless (i) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (ii) the investor
represents and agrees that all securities offered to the Fund are not subject to
any restrictions upon
16
<PAGE>
their sale by the Fund under the Securities Act of 1933, or otherwise; and (iii)
the securities may be acquired under the Fund's investment restrictions.
OTHER PURCHASE INFORMATION
An eligible shareholder may also participate in the Barr Rosenberg Automatic
Investment Program, an investment plan that automatically debits money from the
shareholder's bank account and invests it in Investor Shares of the Fund through
the use of electronic funds transfers. Investors may commence their
participation in this program with a minimum initial investment of $2,500 and
may elect to make subsequent investments by transfers of a minimum of $50 into
their 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 Fund 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 a purchase in-kind
of Institutional Shares, the investor's securities must be placed on deposit at
DTC prior to 10:00 a.m., New York time. 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 the Fund or to reject purchase orders when, in the
judgment of the Manager, such suspension or rejection would be in the best
interests of the Trust or Fund.
Purchases of the Fund's shares may be made in full or in fractional shares
of the Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.
IRA ACCOUNTS
Investor Shares of the Fund may be used as a funding medium for IRAs. The
minimum initial investment for an IRA is $2,000. A special application must be
completed in order to create such an account. Contributions to IRAs are subject
to prevailing amount limits set by the Internal Revenue Service. For more
information about IRAs, call the Trust at 1-800-447-3332.
REDEMPTION OF SHARES
Shares of the 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 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.
17
<PAGE>
Requests in "good order" must include the following documentation:
(a) a letter of instruction specifying the number of shares or dollar
amount to be redeemed, signed by all registered owners of the shares in the
exact names in which they are registered;
(b) any required signature guarantees (see "-- Signature Guarantees"
below); and
(c) other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pension and
profit sharing plans and other organizations.
SIGNATURE GUARANTEES
To protect shareholder accounts, the Trust and the Transfer Agent from
fraud, signature guarantees may be 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 is authorized, the Transfer
Agent may act on telephone instructions 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 the 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 Trust 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
18
<PAGE>
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust the account. A shareholder may request that these payments be sent to a
predesignated bank or other designated party. Capital gains and dividend
distributions paid to the account will automatically be reinvested at net asset
value on the distribution payment date.
FURTHER REDEMPTION INFORMATION
Purchases of shares of the Fund 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 the 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 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 Fund to dispose of
its securities or to fairly determine the value of its net assets, or during any
other period permitted by the Securities and Exchange Commission for the
protection of investors.
DETERMINATION OF NET ASSET VALUE
The net asset value of each class of shares of the Fund will be determined
once on each day on which the New York Stock Exchange is open as of 4:00 p.m.,
New York time.
The net asset value per share of each class of the 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, the 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 for long securities and at the most recent quoted ask price for
securities sold short. Price information on listed securities is generally taken
from the closing price on the exchange where the security is
19
<PAGE>
primarily traded. Unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price for long securities and
at the most recent quoted ask price for securities sold short, except that debt
obligations with sixty days or less remaining until maturity may be valued at
their amortized cost. Other assets and securities for which no quotations are
readily available are valued at fair value as determined in good faith by the
Trustees of the Trust or by persons acting at their direction.
DISTRIBUTIONS
The Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net short-term capital gains). The Fund also intends to
distribute substantially all of its net long-term capital gains, if any, after
giving effect to any available capital loss carryover. The 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 Fund's
policy is to distribute net short-term capital gains and net long-term gains
annually, although it may do so more frequently as determined by the Trustees of
the Trust to the extent permitted by applicable regulations.
All dividends and/or distributions will be paid out in the form of
additional shares of the Fund 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 (i) are returned
and marked as "undeliverable" or (ii) 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
The 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
the Fund distributes, as dividends, substantially all of the sum of its taxable
net investment income, its net tax-exempt income (if any), and, the excess, if
any, of net short-term capital gains over net long-term capital losses for such
year and otherwise qualifies for the special rules governing the taxation of
regulated investment companies, the Fund itself will not pay federal income tax
on the amount distributed. Such dividends will be taxable to shareholders
subject to income tax as ordinary income. Distributions designated by the Fund
as deriving from net gains on capital assets held for more than one year will be
taxable to shareholders as such, regardless of how long a shareholder has held
shares of the Fund. Distributions will be taxed as described above whether
received in cash or in shares through the reinvestment of distributions. A
distribution paid to shareholders by the 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. The Fund will
provide federal tax information annually, including information about dividends
and distributions paid during the preceding year.
20
<PAGE>
The Fund's short sales, options, futures contracts, hedging transactions,
forward contracts and straddles will be subject to special tax rules (including
mark-to-market, constructive sale, straddle, wash sale and short sale rules),
the effect of which may be to accelerate income to the Fund, defer losses to the
Fund, cause adjustments in the holding periods of the Fund's securities, convert
long-term capital gains into short-term capital gains and convert short-term
capital losses into long-term capital losses. These rules could therefore affect
the amount, timing and character of distributions to shareholders. The Fund's
use of short sales may result in the Fund realizing more short-term capital
gains and ordinary income subject to tax at ordinary income tax rates than it
would if it did not engage in such transactions.
The foregoing is a general summary of the federal income tax consequences of
investing in the 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 Fund 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 (the "Declaration of Trust").
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest which are presently divided
into six series. Interests in the Fund are represented by shares of the Fund.
The Declaration of Trust also permits the Trustees, without shareholder
approval, to subdivide any series of shares into various sub-series of shares
with such preferences and other rights as the Trustees may designate. Although
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.
The Fund is further divided into two classes of shares designated as
Institutional Shares and Investor Shares. Each class of shares of the Fund
represents interests in the assets of the Fund and has identical dividend,
liquidation and other rights and the same terms and conditions except that
expenses, if any, related to the distribution and shareholder servicing of a
particular class are borne solely by such class and each class may, at the
Trustees' discretion, also pay a different share of other expenses, not
including advisory or custodial fees or other expenses related to the management
of the Trust's assets, if these expenses are actually incurred in a different
amount by that class, or if the class receives services of a different kind or
to a different degree than the other classes. All other expenses are allocated
to each class on the basis of the net asset value of that class in relation to
the net asset value of the Fund.
Each class of shares of the 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
21
<PAGE>
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 the Fund
separately except (i) when required by the 1940 Act, all shares of the Trust
shall be voted together and (ii) when the Trustees have determined that the
matter does not affect all funds, then only shareholders of the fund or funds
affected shall be entitled to vote on the matter. All classes of shares of the
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. Shares are freely transferable, are entitled to
dividends as declared by the Trustees and, in liquidation of the Fund's
portfolio, are entitled to receive the net assets of such portfolio, but not of
the other portfolios. The Trust does not generally hold annual meetings of
shareholders and will do so only when required by law. Shareholders holding a
majority of the outstanding shares may remove Trustees from office by votes cast
in person or by proxy at a meeting of shareholders or by written consent.
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust may, however, be terminated at any time by vote of at least two-thirds
of the outstanding shares of each series of the Trust.
Shareholders could, under certain circumstances, be held personally liable
for the obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of that liability is considered remote since it may
arise only in very limited circumstances.
SHAREHOLDER INQUIRIES
Shareholders may direct inquiries to the Trust at Barr Rosenberg Series
Trust, P.O. Box 182495, Columbus, Ohio 43219-2495.
OTHER INFORMATION
The Fund's investment performance may from time to time be included in
advertisements about the Fund. Total return for the Fund is measured by
comparing the value of an investment in the Fund at the beginning of the
relevant period to the redemption value of the investment in the Fund at the end
of such period (assuming immediate reinvestment of any dividends or capital
gains distributions). All data are based on the Fund's past investment results
and do not predict future performance. Investment performance, which will vary,
is based on many factors, including market conditions, the composition of the
Fund's portfolio and the Fund's operating expenses. Investment performance also
often reflects the risks associated with the Fund's investment objective and
policies. These factors should be considered when comparing the 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.
22
<PAGE>
SHAREHOLDER SERVICES
1-800-555-5737 (INSTITUTIONAL SHARE CUSTOMERS)
1-800-447-3332 (INVESTOR SHARE CUSTOMERS)
Additional Information may be found on the
World Wide Web at http://www.riem.com
BARR ROSENBERG SERIES TRUST
3435 Stelzer Road
Columbus, OH 43219
MANAGER
Rosenberg Institutional Equity Management
Four Orinda Way, Building E
Orinda, CA 94563
ADMINISTRATOR, TRANSFER AND
DIVIDEND-PAYING AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
DISTRIBUTOR
Barr Rosenberg Funds Distributor, Inc.
90 Park Avenue
New York, NY 10016
CUSTODIAN OF ASSETS
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
555 California Street
San Francisco, CA 94104
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
B a r r
R o s e n b e r g
S e r i e s
T r u s t
- - Barr Rosenberg Select Sector Market Neutral Fund
Prospectus
October , 1998
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 19, 1998
BARR ROSENBERG SERIES TRUST
BARR ROSENBERG SELECT SECTOR MARKET NEUTRAL FUND
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER __, 1998
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the prospectus of the Barr
Rosenberg Select Sector Market Neutral Fund of Barr Rosenberg Series Trust
dated August 19, 1998 (the "Prospectus") and should be read in conjunction
therewith. A copy of the Prospectus may be obtained from Barr Rosenberg
Series Trust, 3435 Stelzer Road, Columbus, Ohio 43219.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY SUCH SECURITIES BE ACCEPTED
PRIOR TO THE TIME THE POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE
A PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES. . . . . . . . . . . . . . . . . . . . . . . 3
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . . 5
MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . 8
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
TOTAL RETURN CALCULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .11
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . . .12
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . .14
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . .15
</TABLE>
-2-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Barr Rosenberg Select
Sector Market Neutral Fund (the "Fund") 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 Objective and Policies" and
"General Description of Risks and Fund Investments."
MISCELLANEOUS INVESTMENT PRACTICES
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and almost always involves the payment by the Fund of
brokerage commissions or dealer markup and other transaction costs on the sale
of securities as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover is not a limiting factor with respect to
investment decisions. As disclosed in the Prospectus, high portfolio turnover
involves correspondingly greater brokerage commissions and other transaction
costs, which will be borne directly by the Fund, and could involve realization
of capital gains that would be taxable when distributed to shareholders of the
Fund. To the extent that portfolio turnover results in the realization of net
short-term capital gains, such gains are ordinarily taxed to shareholders at
ordinary income tax rates. See "Income Dividends, Distributions and Tax Status"
and "Portfolio Transactions."
NOTICE ON SHAREHOLDER APPROVAL. Unless otherwise indicated in the
Prospectus or this Statement of Additional Information, the investment objective
and policies of the Fund may be changed without shareholder approval.
INVESTMENT RESTRICTIONS
Without a vote of the majority of the outstanding voting securities of the
Fund, the Trust will not take any of the following actions with respect to the
Fund:
(1) Borrow money in excess of 10% of the value (taken at the lower of
cost or current value) of the Fund's total assets (not including the amount
borrowed) at the time the borrowing is made, and then only from banks as a
temporary measure to facilitate the meeting of redemption requests (not for
leverage) or margin requirements related to short sales which might otherwise
require the untimely disposition of portfolio investments or for extraordinary
or emergency purposes. Such borrowings will be repaid before any additional
investments are purchased. Short sales and related borrowings of securities are
not subject to this restriction.
(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 10% of the Fund's total assets (taken at cost) and then only to secure
borrowings permitted by Restriction 1 above. (For the purposes of this
restriction, collateral arrangements with respect to options, short sales, stock
index, interest rate, currency or other futures, options on futures contracts
and collateral arrangements with respect to initial and variation margin are not
deemed to be a pledge or other encumbrance of assets. Collateral arrangements
with respect to swaps and other derivatives are also not deemed to be a pledge
or other encumbrance of assets.)
(3) Purchase securities on margin, except such short-term credits as
may be necessary for the clearance of purchases and sales of securities. (For
this purpose, the deposit or payment of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin.)
(4) Make short sales of securities or maintain a short position if,
when added together, more than 100% of the value of the Fund's net assets would
be (i) deposited as collateral for the obligation to replace securities
-3-
<PAGE>
borrowed to effect short sales, and (ii) allocated to segregated accounts in
connection with short sales. Short sales "against the box" are not subject to
this limitation.
(5) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under federal securities laws.
(6) Purchase or sell real estate, although it may purchase securities
of issuers which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by interests in
real estate.
(7) Concentrate more than 25% of the value of its total assets in any
one industry.
(8) Invest in securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940, as amended (the "1940
Act"), or by an exemptive order issued by the Securities and Exchange
Commission.
(9) Purchase or sell commodities or commodity contracts except that the
Fund may purchase and sell stock index and other financial futures contracts and
options thereon.
(10) Make loans, except by purchase of debt obligations or by entering
into repurchase agreements or through the lending of the Fund's portfolio
securities.
(11) Issue senior securities. (For the purpose of this restriction none
of the following is deemed to be a senior security: any borrowing permitted by
restriction (1) above; any pledge or other encumbrance of assets permitted by
restriction (2) above; short sales permitted by restriction (4) above; any
collateral arrangements with respect to short sales, swaps and other
derivatives, options, future contracts and options on future contracts and with
respect to initial and variation margin; the purchase or sale of options, future
contracts or options on future contracts; and the entering into of swaps and
other derivative contracts.)
It is contrary to the present policy of the Fund, which may be changed by
the Trustees of the Trust without shareholder approval, to:
(a) Invest in warrants or rights (other than warrants or rights
acquired by the Fund as a part of a unit or attached to securities at the time
of purchase).
(b) Write, purchase or sell options on particular securities (as
opposed to market indices).
(c) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts.
(d) Make investments for the purpose of exercising control of a
company's management.
(e) Invest in (a) securities which at the time of investment are not
readily marketable and (b) repurchase agreements maturing in more than seven
days if, as a result, more than 15% of the Fund's net assets (taken at current
value) would then be invested in such securities.
Unless otherwise indicated, all percentage limitations on investments set
forth herein and in the Prospectus will apply at the time of the making of an
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment.
The phrase "shareholder approval," as used in the Prospectus and herein,
and the phrase "vote of a majority of the outstanding voting securities," as
used herein, means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund or the Trust, as the case may be, or (2) 67%
or more of the shares of the Fund
-4-
<PAGE>
or the Trust, as the case may be, present at a meeting if more than 50% of the
outstanding shares are represented at the meeting in person or by proxy.
INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The tax status of the Fund and the distributions which it may make are
summarized in the Prospectus under the headings "Distributions" and "Taxes."
The Fund intends to qualify each year as a regulated investment company under
the Internal Revenue Code of 1986, as amended. In order to qualify as a
"regulated investment company" and to qualify for the special tax treatment
accorded regulated investment companies and their shareholders, the Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
or other disposition of securities or foreign currencies or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such securities or
currencies; (b) diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally with respect to any
one issuer to not more than 5% of the total assets of the Fund and not more than
10% of the outstanding voting securities of such issuer, and (ii) not more than
25% of the value of its total assets is invested in the securities of any issuer
(other than U.S. Government securities or securities of other regulated
investment companies); and (c) distribute annually at least 90% of the sum of
its taxable net investment income, its net tax-exempt income (if any), and, the
excess, if any, of net short-term capital gains over net long-term capital
losses for such year. To the extent the Fund qualifies for treatment as a
regulated investment company, the Fund will not be subject to federal income tax
on income paid to its shareholders in the form of dividends or capital gain
distributions.
As described in the Prospectus under the heading "Distributions," the Fund
intends to pay out substantially all of its ordinary income and net short-term
capital gains, and to distribute substantially all of its net capital gains, if
any, after giving effect to any available capital loss carryover. Net capital
gain is the excess of net gains from assets held for more than one year over net
losses from capital assets held for not more than one year. In order to avoid
an excise tax imposed on certain undistributed income, the Fund must distribute
prior to each calendar year end without regard to the Fund's fiscal year end (i)
98% of the Fund's ordinary income, and (ii) 98% of the Fund's capital gain net
income, if any, realized in the one-year period ending on October 31.
In general, all dividend distributions derived from ordinary income and
short-term capital gain are taxable to investors as ordinary income.
Distributions of long-term gains will be taxable to shareholders as such,
regardless of how long a shareholder has held the shares in the Fund.
Distributions will be taxable as described above whether received in cash or in
shares through the reinvestment of distributions. The dividends-received
deduction for corporations will generally apply to the Fund's dividends from
investment income to the extent derived from dividends received by the Fund from
domestic corporations, provided the Fund and the shareholder each meet the
relevant holding period requirements.
Dividends and distributions on the Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when the Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed.
Certain tax-exempt organizations or entities may not be subject to federal
income tax on dividends or distributions from the Fund. Each organization or
entity should review its own circumstances and the federal tax treatment of its
income.
The Fund is generally required to withhold and remit to the U.S. Treasury
31% of the taxable dividends and other distributions, whether distributed in
cash or reinvested in shares of the Fund, paid or credited to any shareholder
-5-
<PAGE>
account for which an incorrect or no taxpayer identification number has been
provided or where the Fund is notified that the shareholder has underreported
income in the past (or the shareholder fails to certify that he is not subject
to such withholding). However, the general back-up withholding rules set forth
above will not apply to tax-exempt entities so long as each such entity
furnishes the Fund with an appropriate certificate.
The Internal Revenue Service recently revised its regulations affecting the
application to foreign investors of the back-up withholding and withholding tax
rules described above. The new regulations will generally be effective for
payments made after December 31, 1999 (although transition rules will apply).
In some circumstances, the new rules will increase the certification and filing
requirements imposed on foreign investors in order to qualify for exemption from
the 31% back-up withholding tax and for reduced withholding tax rates under
income tax treaties. Foreign investors in the Fund should consult their tax
advisors with respect to the potential application of these new regulations.
To the extent such investments are permissible for the Fund, the Fund's
short sales, options, futures contracts, hedging transactions, forward contracts
and straddles will be subject to special tax rules (including mark-to-market,
constructive sale, straddle, wash sale and short sale rules), the effect of
which may be to accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's securities, convert long-term
capita gains into short-term capital gains and convert short-term capital losses
into long-term capital losses. These rules could therefore affect the amount,
timing and character of distributions to shareholders.
Pursuant to the 1997 Act, new "constructive sale" provisions apply to
activities by the Fund which lock in gain on an "appreciated financial
position." Generally, a "position" is defined to include stock, a debt
instrument, or partnership interest, or an interest in any of the foregoing,
including through a short sale, a swap contract, or a future or forward
contract. Under the 1997 Act, the entry into a short sale, a swap contract or a
future or forward contract relating to an appreciated direct position in any
stock or debt instrument, or the acquisition of stock or debt instrument at a
time when the Fund occupies an offsetting (short) appreciated position in the
stock or debt instrument, is treated as a "constructive sale" that gives rise to
the immediate recognition of gain (but not loss). The application of these new
provisions may cause a Fund to recognize taxable income from these offsetting
transactions in excess of the cash generated by such activities.
THE TAX DISCUSSION SET FORTH ABOVE IS A SUMMARY INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. EACH SHAREHOLDER IS ADVISED TO CONSULT ITS OWN TAX
ADVISER WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO IT OF AN INVESTMENT IN
THE FUND, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING.
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* (48) General Partner and Director of Research, Rosenberg
President, Trustee Institutional Equity Management, June 1986 to
present.
Marlis S. Fritz* (49) General Partner and Director of Marketing, Rosenberg
Vice President, Trustee Institutional Equity Management, April 1985 to
present.
-6-
<PAGE>
Nils H. Hakansson (61) Sylvan C. Coleman Professor of Finance and
Trustee Accounting, Haas School of Business, University of
California, Berkeley, June 1969 to present.
Director, Supershare Services Corporation (investment
management), Los Angeles, California, November 1989
to 1995.
Barr M. Rosenberg* (55) Managing General Partner and Chief Investment
Trustee Officer, Rosenberg Institutional Equity Management,
January 1985 to present.
William F. Sharpe (64) STANCO 25 Professor of Finance, Stanford University.
Trustee Chairman, Financial Engines Incorporated, Los Altos,
California (electronic investment advice), March 1996
to present.
Po-Len Hew (32) Accounting Manager, Rosenberg Institutional Equity
Treasurer Management, October 1989 to present.
Carolyn Demler (54) Administrative Coordinator, Rosenberg Institutional
Clerk Equity Management, December, 1988 to present.
Edward H. Lyman (54) Executive Vice President, Barr Rosenberg Investment
Vice President Management, Inc., and General Counsel to the
Rosenberg Group of companies, 1990 to present.
Richard L. Saalfeld (55) President and Chief Executive Officer of mutual fund
Vice President 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; Consultant, December 1992 to March 1993.
Harold L. Arbit (51) Vice President and Partner, Rosenberg Alpha L.P.,
Vice President 1984 to present.
F. William Jump, Jr. (42) Portfolio engineer, Rosenberg Institutional Equity
Vice President Management, August 1990 to present.
* Trustees who are "interested persons" (as defined in the 1940 Act) of the
Trust or the Manager.
The mailing address of each of the officers and Trustees is c/o Barr
Rosenberg Series Trust, 3435 Stelzer Road, Columbus, OH 43219.
The principal occupations of the officers and Trustees for the last five
years have been with the employers as shown above, although in some cases they
have held different positions with such employers.
The Trust pays the Trustees other than those who are interested persons of
the Trust or Manager an annual fee of $37,950 plus $4,125 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, 1998:
-7-
<PAGE>
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Estimated from Registrant
Aggregate Accrued Annual Benefits and Fund
Name of Person, Compensation as Part of Fund Upon Complex Paid
Position from Registrant Expenses Retirement to Directors
<S> <C> <C> <C> <C>
Nils H. Hakansson $42,487.50 $ 0 $ 0 $42,487.50
Trustee
William F. Sharpe $42,487.50 $ 0 $ 0 $42,487.50
Trustee
</TABLE>
Messrs. Rosenberg, Reid, Arbit, Lyman, Saalfeld and Jump 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 CONTRACT
Under a management contract (the "Management Contract") between the Trust,
on behalf of the 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 the Fund and will make investment decisions on behalf of
the Fund and place all orders for the purchase and sale of portfolio securities.
Subject to the control of the Trustees, the Manager furnishes office space and
equipment, provides certain bookkeeping and clerical services and pays all
salaries, fees and expenses of officers and Trustees of the Trust who are
affiliated with the 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.
The Fund has agreed to pay the Manager a quarterly management fee at the
annual percentage rate of the 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 Contract and, if
necessary, will bear certain expenses of the Fund until further notice so that
the total annual operating expenses (which do not include nonrecurring account
fees, extraordinary expenses and dividends and interest paid on securities sold
short) of each class of shares will not exceed the percentage of the Fund's
average daily net assets attributable to that class as set forth in the
Prospectus. In addition, the Manager's compensation under the Management
Contract is subject to reduction to the extent that in any year the expenses of
the Fund (including investment advisory fees but excluding taxes, portfolio
brokerage commissions and any distribution expenses paid by a class of shares of
the Fund pursuant to a distribution plan or otherwise) exceed the limits on
investment company expenses imposed by any statute or regulatory authority of
any jurisdiction in which shares of the Fund are qualified for offer and sale.
The 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.
The Management Contract will continue in effect for a period of no more
than two years from the date of its execution only so long as its continuance is
approved at least annually by (i) vote, cast in person at a meeting called
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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 Fund. The Management Contract automatically terminates on assignment,
and is terminable on not more than 60 days' notice by the Trust to the Manager.
In addition, the 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.
ADMINISTRATIVE SERVICES
The Trust has entered into a Fund Administration Agreement with BISYS Fund
Services (the "Administrator") pursuant to which the Administrator provides
certain management and administrative services necessary for the Fund's
operations including: (i) general supervision of the operation of the Fund
including coordination of the services performed by the Fund's investment
adviser, transfer agent, custodian, independent accountants and legal counsel,
regulatory compliance, including the compilation of information for documents
such as reports to, and filings with, the SEC and state securities commissions,
and preparation of proxy statements and shareholder reports for the Fund; (ii)
general supervision relative to the compilation of data required for the
preparation of periodic reports distributed to the Fund's officers and Board of
Trustees; and (iii) furnishing office space and certain facilities required for
conducting the business of the Fund. The Trust's principal underwriter is an
affiliate of the Administrator. For these services, the Administrator is
entitled to receive a fee, payable monthly, at the annual rate of 0.15% of the
average daily net assets of the Trust. The Trust has also entered into a Fund
Accounting Agreement with BISYS Fund Services, Inc. (the "Fund Accountant")
pursuant to which the Fund Accountant provides certain accounting services
necessary for the Fund's operations. For these services, the Fund Accountant is
entitled to receive an annual fee of $50,000. The Trust's principal underwriter
is an affiliate of the Fund Accountant.
DISTRIBUTOR AND DISTRIBUTION PLAN
As stated in the Prospectus under the heading "Management of the Trust --
Distributor," Investor Shares of the Fund are sold on a continuous basis by the
Trust's distributor, Barr Rosenberg Funds Distributor, Inc. (the "Distributor").
Under the Distributor's Contract between the Trust and the Distributor (the
"Distributor's Contract"), the Distributor is not obligated to sell any specific
amount of shares of the Trust and will purchase shares for resale only against
orders for shares.
Pursuant to the Distribution Plan (the "Plan") described in the Prospectus,
in connection with the distribution of Investor Shares of the Trust, the
Distributor receives certain distribution fees from the Trust. Subject to the
percentage limitation on the distribution fee set forth in the Prospectus, the
distribution fee may be paid in respect of services rendered and expenses borne
in the past with respect to Investor Shares as to which no distribution fee was
paid on account of such limitation. The Distributor may pay all or a portion of
the distribution fees it receives from the Trust to participating and
introducing brokers.
The Plan may be terminated with respect to Investor Shares by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust and who have no direct or indirect financial interest in the operation of
the 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 Investor Shares requires
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approval by the holders of Investor Shares. 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 the Fund or
Investor Shares thereof at any time by not more than 60 days' nor less than 30
days' written notice without payment of any penalty either by the Distributor or
by the Fund or class and will terminate automatically, without the payment of
any penalty, in the event of its assignment.
The Plan and the Distributor's Contract 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 Plan or Distributor's Contract are terminated (or not renewed) with
respect to one or more classes, they may continue in effect with respect to any
class of the Fund as to which they have not been terminated (or have been
renewed).
The Trustees of the Trust believe that the Plan will provide benefits to
the Trust. The Trustees believe that the Plan will result in greater sales
and/or fewer redemptions of Investor Shares, although it is impossible to know
for certain the level of sales and redemptions of Investor Shares that would
occur in the absence of the Plan or under alternative distribution schemes. The
Trustees believe that such effect on sales and/or redemptions benefit the Trust
by reducing Fund expense ratios and/or by affording greater flexibility to the
Trust.
CUSTODIAL ARRANGEMENTS. Custodial Trust Company ("CTC"), Princeton, NJ
08540, is the Trust's custodian. As such, CTC holds in safekeeping certificated
securities and cash belonging to the Trust and, in such capacity, is the
registered owner of securities in book-entry form belonging to the Fund. Upon
instruction, CTC receives and delivers cash and securities of the Fund in
connection with Fund transactions and collects all dividends and other
distributions made with respect to portfolio securities.
INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are
PricewaterhouseCoopers LLP, 555 California Street, San Francisco, California
94104. PricewaterhouseCoopers LLP conducts an annual audit of the Trust's
financial statements, assists in the preparation of the Trust's federal and
state income tax returns and the Trust's filings with the Securities and
Exchange Commission, and consults with the Trust as to matters of accounting
and federal and state income taxation.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. The purchase and sale of portfolio securities for
the Fund 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.
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BROKERAGE AND RESEARCH SERVICES. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different brokers. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid for such securities usually includes an undisclosed dealer
commission or mark-up. In placing orders for the portfolio transactions of the
Fund, the Manager will seek the best price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions for brokerage
and research services as described below. The determination of what may
constitute best price and execution by a broker-dealer in effecting a securities
transaction involves a number of considerations, including, without limitation,
the overall net economic result to the Fund (involving price paid or received
and any commissions and other costs paid), the efficiency with which the
transaction is effected, the ability to effect the transaction at all where a
large block is involved, availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Because of such factors, a broker-dealer effecting a
transaction may be paid a commission higher than that charged by another
broker-dealer. Most of the foregoing are judgmental considerations.
Over-the-counter transactions often involve dealers acting for their own
account. It is the Manager's policy to place over-the-counter market orders for
the 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 the Fund, the
Manager will receive such services from brokers who are expected to handle a
substantial amount of the Fund's portfolio transactions. Research services may
include a wide variety of analyses, reviews and reports on such matters as
economic and political developments, industries, companies, securities and
portfolio strategy. The Manager uses such research in servicing other clients
as well as the Trust.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and subject to such policies as the Trustees of the Trust may
determine, the Manager may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in the Act) to the Manager an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction.
TOTAL RETURN CALCULATIONS
The 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 such class,
according to the following formula:
P(1 + T)n=ERV
Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000 investment 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
The Fund computes its cumulative total return separately for its share
classes by determining the cumulative 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 such class, according to the
following formula:
Where: T = ERV-1,000
1,000
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Where:
T = Cumulative rate of return
ERV = Ending redeemable value of a hypothetical $1,000 investment made
at the beginning of a period at the end of such period.
The calculations of average annual total return and cumulative total return
assume 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 the Fund will fluctuate from time to
time and does not provide a basis for determining future returns. Average
annual total return and cumulative return are based on many factors, including
market conditions, the composition of the Fund's portfolio and the Fund's
operating expenses.
Average annual total return and cumulative return are calculated separately
for Investor Shares and Institutional Shares. Investor Shares and Institutional
Shares are subject to different fees and expenses and may have different
performance for the same period.
PERFORMANCE COMPARISONS
Investors may judge the performance of the Fund by comparing it to the
performance of other mutual fund portfolios with comparable investment
objectives and policies through various mutual fund or market indices such as
those prepared by Dow Jones & Co., Inc. and Standard & Poor's and to data
prepared by Lipper Analytical Services, Inc., a widely recognized independent
service which monitors the performance of mutual funds. Comparisons may also be
made to indices or data published in MONEY MAGAZINE, FORBES, BARRON'S, THE WALL
STREET JOURNAL, MORNINGSTAR, INC., IBBOTSON ASSOCIATES, CDA/WIESENBERGER, THE
NEW YORK TIMES, BUSINESS WEEK, U.S.A. TODAY, INSTITUTIONAL INVESTOR and other
periodicals. In addition to performance information, general information about
the Fund that appears in a publication such as those mentioned above may be
included in advertisements, sales literature and reports to shareholders. The
Fund may also include in advertisements, sales literature 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 Fund; (5) descriptions of investment
strategies for the Fund; (6) descriptions or comparisons of various investment
products, which may or may not include the Fund; (7) comparisons of investment
products (including the Fund) with relevant market or industry indices or other
appropriate benchmarks; (8) discussions of fund rankings or ratings by
recognized rating organizations; and (9) testimonials describing the experience
of persons that have invested in the Fund. The Trust may also include
calculations, such as hypothetical compounding examples, which describe
hypothetical investment results in such communications. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of the Fund.
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES
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
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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
six series, the Barr Rosenberg Select Sector Fund, Barr Rosenberg Market Neutral
Fund, Barr Rosenberg Double Alpha Market Fund, U.S. Small Capitalization Series,
International Small Capitalization Series and Japan Series, issued pursuant to
the Declaration of Trust. The rights of shareholders and powers of the Trustees
of the Trust with respect to such shares are described in the Prospectus.
As described in the Prospectus, the Fund is further divided into two
classes of shares designated as Institutional Shares and Investor Shares. Each
class of shares of the 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
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 each series 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 series on all matters except (i) when required by the 1940
Act, shares shall be voted in the aggregate and not by individual series, and
(ii) when the Trustees have determined that the matter affects only the
interests of one or more series, then only shareholders of such series shall be
entitled to vote thereon. Shareholders of one series shall not be entitled to
vote on matters exclusively affecting another series, such matters including,
without limitation, the adoption of or change in any fundamental policies or
restrictions of the other series and the approval of the investment advisory
contracts of the other series.
Each class of shares of the Fund has identical voting rights except that
each class has exclusive voting rights on any matter submitted to shareholders
that relates solely to that class, and has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive voting rights
with respect to matters pertaining to any distribution or servicing plan
applicable to that class. All classes of shares of the Fund will vote together,
except with respect to any distribution or servicing plan applicable to a class
or when a class vote is required as specified above or otherwise by the 1940
Act.
There will normally be no meetings of shareholders for the purpose of
electing Trustees, except that in accordance with the 1940 Act (i) the Trust
will hold a shareholders' meeting for the election of Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy in the Board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may only be filled by a vote of the shareholders. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for the purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of at least 1% of the outstanding shares
stating that such shareholders wish to communicate with the other shareholders
for the purpose of obtaining the signatures necessary to demand a meeting to
consider removal of a Trustee, the Trust has undertaken to provide a list of
shareholders or to disseminate
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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 series for all loss and expense of any shareholder
of that series 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 series 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.
The officers and Trustees of the Trust, as a group, own less than 1% of any
class of outstanding shares of the Trust.
DETERMINATION OF NET ASSET VALUE
As indicated in the Prospectus, the net asset value of each Fund share is
determined on each day on which the New York Stock Exchange is open for trading.
The Trust expects that the days, other than weekend days, that the New York
Stock Exchange will not be open are Christmas Day, New Year's Day, Martin Luther
King's Day, President's Day, Good Friday, Memorial Day, Independence Day
(observed), Labor Day and Thanksgiving Day.
Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent quoted
bid price for long securities and at the most recent quoted ask price for
securities sold short. 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 for long securities and at the
most recent quoted ask price for securities sold short, except that debt
obligations with sixty days or less remaining until maturity may be valued at
their amortized cost. Other assets and securities for which no quotations are
readily available are valued at fair value as determined in good faith by the
Trustees of the Trust or by persons acting at their direction.
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PURCHASE AND REDEMPTION OF SHARES
The procedures for purchasing shares of the Fund and for determining the
offering price of such shares are described in the Prospectus. 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 the Fund are described in the Prospectus.
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PART C
OTHER INFORMATION --
THE BARR ROSENBERG SELECT SECTOR MARKET NEUTRAL FUND ONLY
Item 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
None
(b) Exhibits:
1. (a) Second Amended and Restated Agreement and Declaration
of Trust of the Registrant -- incorporated by
reference to Post-Effective Amendment No. 19 to the
Registration Statement filed on July 29, 1998;
(b) Amendment No. 1 to Second Amended and Restated Agreement
and Declaration of Trust of the Registrant --
incorporated by reference to Post-Effective Amendment
No. 19 to the Registration Statement filed on July 29,
1998;
(c) Form of Amendment No. 2 to Second Amended and Restated
Agreement and Declaration of Trust of the Registrant --
filed herewith;
2. By-Laws of the Registrant -- incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement filed on December 9, 1997;
3. None;
4. Not applicable;
5. Form of Management Contract between the Registrant on behalf
of its Barr Rosenberg Select Sector Market Neutral Fund and
Rosenberg Institutional Equity Management -- filed herewith;
6. Amended and Restated Distributor's Contract
between the Registrant and Barr Rosenberg Funds
Distributor, Inc. -- incorporated by reference to
Post-Effective Amendment No. 19 to the Registration
Statement filed on July 29, 1998;
7. None;
8. (a) Custody Agreement between the Registrant and
Custodial Trust Company -- incorporated by reference
to Post-Effective Amendment No. 19 to the
Registration Statement filed on July 29, 1998;
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(b) Special Custody Account Agreement among the
Registrant, Custodial Trust Company and Bear, Stearns
Securities Corp. -- to be filed by amendment;
(c) Schedule of remuneration to Custody Agreement between
the Registrant and Custodial Trust Company relating
to the Barr Rosenberg Select Sector Market Neutral
Fund -- to be filed by amendment;
9. (a) Transfer Agency Agreement between the Registant and
BISYS Fund Services, Inc. -- incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement filed on July 18, 1997;
(b) Notification of Expense Limitation by Rosenberg
Institutional Equity Management to the Barr Rosenberg
Select Sector Market Neutral Fund -- to be filed by
amendment;
(c) Fund Administration Agreement between the Registrant
and BISYS Fund Services Limited Partnership --
incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement filed on
July 18, 1997;
(d) Fund Accounting Agreement between the Registrant and
BISYS Fund Services, Inc. -- incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement filed on July 18, 1997;
10. Opinion of Ropes & Gray -- to be filed by amendment;
11. None;
12. None;
13. Investment letter regarding initial capital --
incorporated by reference to Post-Effective Amendment
No. 19 to the Registration Statement filed on July 29,
1998;
14. None;
15. Distribution Plan for Investor shares -- incorporated by
reference to Post-Effective Amendment No. 19 to the
Registration Statement filed on July 29, 1998;
16. Not applicable;
17. Not applicable;
18. Amended and Restated Multi-Class Plan -- incorporated by
reference to Post-Effective Amendment No. 19 to the
Registration Statement filed on July 29, 1998;
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<PAGE>
19. Power of Attorney -- incorporated by reference to
Post-Effective Amendment No. 19 to the Registration
Statement filed on July 29, 1998;
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
None.
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Item 27. INDEMNIFICATION.
Article VIII of the Registrant's Second Amended and Restated Agreement
and Declaration of Trust reads as follows (referring to the Registrant as the
"Trust"):
ARTICLE VIII
Indemnification
SECTION 1. TRUSTEES, OFFICERS, ETC. The Trust shall indemnify each
of its Trustees and officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in which the Trust
has any interest as a shareholder, creditor or otherwise) (hereinafter referred
to as a "Covered Person") against all liabilities and expenses, including but
not limited to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees reasonably incurred by any Covered Person
in connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person except with respect to any matter as to which such
Covered person shall have been finally adjudicated in any such action, suit or
other proceeding to be liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust shall be insured against losses arising from any such advance
payments or (c) either a majority of the disinterested Trustees acting on the
matter (provided that a majority of the disinterested Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
full trial type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Article.
SECTION 2. COMPROMISE PAYMENT. As to any matter disposed of (whether
by a compromise payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the proceeding was
brought, that such Covered Person is liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, indemnification
shall be provided if (a) approved, after notice that it involves such
indemnification, by at least a majority of the disinterested Trustees acting on
the matter (provided that a majority of the disinterested Trustees then in
office act on the matter) upon a determination, based upon a review of readily
available fact (as opposed to a full trial type inquiry) that such Covered
Person is not liable to the Trust or its Shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, or (b) there has been obtained an
opinion in writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to the effect that
such indemnification would not protect such Person against any liability to the
Trust to which he would otherwise be subject by reason of wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. Any approval pursuant to this Section shall not prevent
the recovery from any Covered Person of any amount paid to such Covered Person
in accordance with this Section as indemnification if such Covered Person is
subsequently adjudicated by a court of competent
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<PAGE>
jurisdiction to have been liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
SECTION 3. INDEMNIFICATION NOT EXCLUSIVE. The right of
indemnification hereby provided shall not be exclusive of or affect any other
rights to which such Covered Person may be entitled. As used in this Article
VIII, the term "Covered Person" shall include such person's heirs, executors and
administrators and a "disinterested Trustee" is a Trustee who is not an
"interested person" of the Trust as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, (or who has been exempted from being
an "interested person" by any rule, regulation or order of the Commission) and
against whom none of such actions, suits or other proceedings or another action,
suit or other proceeding on the same or similar grounds is then or has been
pending. Nothing contained in this Article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees or
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person; provided, however, that the Trust shall not purchase
or maintain any such liability insurance in contravention of applicable law,
including without limitation the 1940 Act.
SECTION 4. SHAREHOLDERS. In case any Shareholder or former
Shareholder shall be held to be personally liable solely by reason of his or her
being or having been a Shareholder and not because of his or her acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and indemnified against
all loss and expense arising from such liability, but only out of the assets of
the particular series of Shares of which he or she is or was a Shareholder."
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Rosenberg Institutional Equity Management (the "Manager") was
organized as a limited partnership under the laws of the State of California in
1985, and is registered as an investment adviser under the Investment Advisers
Act of 1940. The Manager provides investment advisory services to a substantial
number of institutional investors.
Set forth below are the substantial business engagements during at
least the past two fiscal years of each director, officer or partner of the
Manager:
Name and Position Business and
with Manager other connections
- ------------------ -----------------
Barr M. Rosenberg General Partner, Rosenberg Alpha L.P.
Managing General Partner (formerly RBR Partners (limited partner of
and Chief Investment Officer Manager)), 12 El Sueno, Orinda, California,
December, 1984 to present; Chairman of the
Board, Rosenberg Management Company S.A.,
2 Place Winston Churchill, L-1340 Luxembourg,
April 1989 to present; Chairman of the Board,
Rosenberg U.S. Japan Management Company
S.A., 2 Place Winston Churchill, L-1340
Luxembourg, July, 1989 to present. Chairman
of the Board, Rosenberg Global Management
Company, S.A., 2 Place Winston Churchill,
L-1340 Luxemburg, April 1990 to present;
Director and Chairman of the Board, Rosenberg
Nomura Asset Management Company, Ltd.,
Dai-Ichi Edobashi Bldg., 1-11-1 Nihonbashi
Chuo-Ku, Tokyo 103, Japan; Chairman of the
Board and Director of Barr Rosenberg
Investment Management, Inc., 4 Orinda Way,
Orinda, California, February 1990 to
present. Chairman, Barr Rosenberg European
Management, Ltd., 9A Devonshire Square,
London EC2M 4LY, United Kingdom, March 1990 to
present.
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<PAGE>
Marlis S. Fritz Director, Barr Rosenberg European Management
General Partner Ltd., 9A Devonshire Square,
London EC2M 4LY, United Kingdom, May 1990 to
present; Director, Barr Rosenberg Investment
Management, Inc., 4 Orinda Way, Orinda,
California, February 1990 to present.
Kenneth Reid Director, Barr Rosenberg Investment
General Partner Management, Inc., 4 Orinda Way, Orinda,
and Director of Research California, February 1990 to present.
Po-Len Hew Treasurer, Barr Rosenberg Investment
Controller Management, Inc., May 1994 to present.
Edward H. Lyman Executive Vice President, Barr Rosenberg
Vice President Investment Management, Inc., 4 Orinda Way,
Orinda, California, 1990 to present.
Item 29. PRINCIPAL UNDERWRITERS:
(a) Barr Rosenberg Funds Distributor, Inc. (the "Distributor") is the
principal underwriter of the Investor Shares of Barr Rosenberg
Series Trust. 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 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
90 Park Avenue, New York, NY 10016.
(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.
90 Park Avenue
New York, NY 10016
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
upon any of the trustees or shareholders of the Registrant individually but
are binding only upon the assets and property of the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 22 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 19th day of August, 1998.
BARR ROSENBERG SERIES TRUST
By /s/ Marlis S. Fritz
----------------------
Marlis S. Fritz
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacities indicated and on the 19th day of August, 1998.
SIGNATURE TITLE DATE
/s/Marlis S. Fritz Vice President, August 19, 1998
____________________ Trustee
Marlis S. Fritz
Kenneth Reid* President, Trustee August 19, 1998
____________________ (principal executive officer)
Kenneth Reid
Po-Len Hew* Treasurer August 19, 1998
____________________ (principal financial
Po-Len Hew and accounting officer)
Nils H. Hakansson* Trustee August 19, 1998
____________________
Nils H. Hakansson
Barr M. Rosenberg* Trustee August 19, 1998
____________________
Barr M. Rosenberg
William F. Sharpe* Trustee August 19, 1998
____________________
William F. Sharpe
*By: /s/ Marlis S. Fritz
__________________
Marlis S. Fritz
Attorney-in-Fact
Date: August 19, 1998
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99.1(c) Form of Amendment No. 2 to Second Amended and
Restated Agreement and Declaration of Trust
99.5 Form of Management Contract between the Registrant on
behalf of its Barr Rosenberg Select Sector Market
Neutral Fund and Rosenberg Institutional Equity
Management
<PAGE>
EXHIBIT 99.1(c)
BARR ROSENBERG SERIES TRUST
AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
The undersigned, being all of the trustees of Barr Rosenberg Series Trust,
a Massachusetts business trust created and existing under an Agreement and
Declaration of Trust dated April 1, 1988, as amended, a copy of which is on file
in the Office of the Secretary of The Commonwealth of Massachusetts (the
"Trust"), having determined that the creation of a new Series of the Trust is
consistent with the fair and equitable treatment of all Shareholders, do hereby
direct that this Amendment No. 2 be filed with the Secretary of The Commonwealth
of Massachusetts and do hereby consent to and adopt the following amendment to
the Second Amended and Restated Agreement and Declaration of Trust:
1. The first sentence of Section 6 of Article III of the Second Amended
and Restated Agreement and Declaration of Trust is amended and restated to read
in its entirety as follows:
"Without limiting the authority of the Trustees set forth in Section
5, INTER ALIA, to establish and designate any further Series or Classes of
Shares or to modify the rights and preferences of any Series or Class, the
"Japan Series," "U.S. Small Capitalization Series" (formerly the Small
Capitalization Series), "International Small Capitalization Series," "Barr
Rosenberg Market Neutral Fund," "Barr Rosenberg Double Alpha Market Fund"
and "Barr Rosenberg Select Sector Market Neutral Fund" shall be, and are
hereby, established and designated; and with respect to the U.S. Small
Capitalization Series, Japan Series and International Small Capitalization
Series, the Institutional Shares Class, Adviser Shares Class and Select
Shares Class, which may be issued by each such Series from time to time,
shall be, and are hereby, established and designated, and with respect to
the Barr Rosenberg Market Neutral Fund, Barr Rosenberg Double Alpha Market
Fund and Barr Rosenberg Select Sector Market Neutral Fund, the Institutional
Shares Class and Investor Shares Class, which may be issued by each such
Series from time to time, shall be, and are hereby, established and
designated, all of which Classes shall have the respective rights and
<PAGE>
preferences as are set forth in the Plan attached as Exhibit 3.6 hereto as
such Plan may be amended from time to time by the Board of Trustees."
The foregoing amendment shall become effective as of the time it is filed
with the Secretary of State of The Commonwealth of Massachusetts.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned Trustees as aforesaid do hereto
set their hands this ____ day of ________, 1998.
----------------------------------
Marlis S. Fritz
---------------------------------
Nils Hakansson
---------------------------------
Kenneth Reid
----------------------------------
Barr M. Rosenberg
---------------------------------
William F. Sharpe
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<PAGE>
EXHIBIT 99.5
MANAGEMENT CONTRACT
Management Contract executed as of _______, 1998 between Barr Rosenberg
Series Trust, a Massachusetts business trust (the "Trust"), on behalf of its
Barr Rosenberg Select Sector Market Neutral Fund (the "Fund"), and Rosenberg
Institutional Equity Management, a California limited partnership (the
"Manager").
W I T N E S S E T H:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO THE TRUST.
(a) Subject always to the control of the Trustees of the Trust and to such
policies as the Trustees may determine, the Manager will, at its expense, (i)
furnish continuously an investment program for the Fund and make investment
decisions on behalf of the Fund and place all orders for the purchase and sale
of its portfolio securities and (ii) furnish office space and equipment, provide
bookkeeping and clerical services (excluding determination of net asset value,
shareholder accounting services and fund accounting services for the Fund being
supplied by BISYS Fund Services or its successors and permitted assigns) and pay
all salaries, fees and expenses of officers and Trustees of the Trust who are
affiliated with the Manager. In the performance of its duties, the Manager will
comply with the provisions of the Agreement and Declaration of Trust and By-laws
of the Trust, each as amended from time to time, and the Fund's stated
investment objective, policies and restrictions.
(b) In placing orders for the portfolio transactions of the Fund, the
Manager will seek the best price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the Fund the most favorable price and execution available, the Manager shall
consider all factors it deems relevant, including, without limitation, the
overall net economic result to the Fund (involving price paid or received and
any commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block is
involved, availability of the broker to stand ready to execute possibly
difficult transactions in the future and financial strength and stability of the
broker. Subject to such policies as the Trustees may determine, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its having caused the
Fund to pay a broker or dealer that provides brokerage and research services to
the Manager an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager determines
<PAGE>
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Manager's overall
responsibilities with respect to the Trust and to other clients of the Manager
as to which the Manager exercises investment discretion.
(c) The Manager shall not be obligated under this Contract to pay any
expenses of or for the Trust or of or for the Fund not expressly assumed by the
Manager pursuant to this Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a partner, shareholder, director, officer or
employee of, or be otherwise interested in, the Manager, and in any person
controlled by or under common control with the Manager, and that the Manager and
any person controlled by or under common control with the Manager may have an
interest in the Trust. It is also understood that the Manager and persons
controlled by or under common control with the Manager have and may have
advisory, management service, distribution or other contracts with other
organizations and persons, and may have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager's services
rendered, for the facilities furnished and for the expenses borne by the Manager
pursuant to Section 1, a fee, computed and paid quarterly at the annual rate of
1.00% of the Fund's average daily net asset value. Such average daily net asset
value of the Fund shall be determined by taking an average of all of the
determinations of such net asset value during such quarter at the close of
business on each business day during such quarter while this Contract is in
effect. Such fee shall be payable for each quarter within five (5) business
days after the end of such quarter.
In the event that expenses of the Fund (including investment advisory fees
but excluding taxes, portfolio brokerage commissions and any distribution
expenses paid by the Fund pursuant to a distribution plan or otherwise) for any
fiscal year should exceed the expense limitation on investment company expenses
imposed by any statute or regulatory authority of any jurisdiction in which
shares of the Fund are qualified for offer and sale, the compensation due the
Manager for such fiscal year shall be reduced by the amount of such excess by
reduction or refund thereof. In the event that the expenses of the Fund exceed
any expense limitation that the Manager may, by written notice to the Trust,
voluntarily declare to be effective with respect to the Fund, subject to such
terms and conditions as the Manager may prescribe in such notice, the
compensation due the Manager shall be reduced, and, if necessary, the Manager
shall bear the Fund's expenses to the extent required by such expense
limitation.
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<PAGE>
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment is approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of the
Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain
in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract by
not more than sixty days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust by majority vote or the
shareholders by the affirmative vote of a majority of the outstanding
shares of the Fund, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval, do
not specifically approve at least annually the continuance of this
Contract, then this Contract shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the expiration
of one year from the effective date of the last such continuance, whichever
is later; provided, however, that if the continuance of this Contract is
submitted to the shareholders of the Fund for their approval and such
shareholders fail to approve such continuance of this Contract as provided
herein, the Manager may continue to serve hereunder in a manner consistent
with the Investment Company Act of 1940 and the rules and regulations
thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
-3-
<PAGE>
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" of the Fund means the affirmative vote, at a duly called
and held meeting of shareholders, (a) of the holders of 67% or more of the
shares of the Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "control", "interested person"
and "assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act; and the phrase "specifically approve at least annually" shall be
construed in a manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust, or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. THE NAMES "ROSENBERG" OR "BARR ROSENBERG".
The Manager owns the right to use the names "Rosenberg" or "Barr Rosenberg"
in connection with investment-related services or products, and such names may
be used by the Trust only with the consent of the Manager. The Manager consents
to the use by the Trust of the name "Barr Rosenberg Series Trust" or any other
name embodying the names "Rosenberg" or "Barr Rosenberg", in such forms as the
Manager shall in writing approve, but only on condition and so long as (i) this
Contract shall remain in full force and (ii) the Trust shall fully perform,
fulfill and comply with all provisions of this Contract expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by the
Trust at any time or in any place or for any purposes or under any conditions
except as in this section provided. The foregoing authorization by the Manager
to the Trust to use the names "Rosenberg" or "Barr Rosenberg" as part of a
business or name is not exclusive of the right of the Manager itself to use, or
to authorize others to use, said name; the Trust acknowledges and agrees that as
between the Manager and the Trust, the Manager has the exclusive right so to
use, or to authorize others to use, said names; and the Trust agrees, on behalf
of the Fund, to take such action as may reasonably be requested by the Manager
to give full effect to the provisions of this section (including, without
limitation, consenting to such use of said names). Without limiting the
generality of the foregoing, the Trust agrees that, upon any termination of
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<PAGE>
this Contract by either party or upon the violation of any of its provisions by
the Trust, the Trust will, at the request of the Manager made within six months
after the Manager has knowledge of such termination or violation, use its best
efforts to change the name of the Trust so as to eliminate all reference, if
any, to the names "Rosenberg" or "Barr Rosenberg" and will not thereafter
transact any business in a name containing the names "Rosenberg" or "Barr
Rosenberg" in any form or combination whatsoever, or designate itself as the
same entity as or successor to an entity of such name, or otherwise use the
names "Rosenberg" or "Barr Rosenberg" or any other reference to the Manager.
Such covenants on the part of the Trust shall be binding upon it, its trustees,
officers, stockholders, creditors and all other persons claiming under or
through it.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust, as amended,
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
-5-
<PAGE>
IN WITNESS WHEREOF, Barr Rosenberg Series Trust, on behalf of its Barr
Rosenberg Select Sector Market Neutral Fund, and Rosenberg Institutional
Equity Management have each caused this instrument to be signed in duplicate
on its behalf by its duly authorized representative, all as of the day and
year first above written.
BARR ROSENBERG SERIES TRUST, on behalf of its Barr
Rosenberg Select Sector Market Neutral Fund
By_______________________________________
Title:
ROSENBERG INSTITUTIONAL EQUITY MANAGEMENT
By_______________________________________
Title: General Partner
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