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File Nos. 33-21677
811-5547
As filed with the Securities and Exchange Commission on October 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. 23 /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT /X/
COMPANY ACT OF 1940
Amendment No. 26 /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:
X Immediately upon filing pursuant to paragraph (b)
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On _________________ pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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On _______ pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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On _______ pursuant to paragraph (a)(2), of Rule 485
---
If appropriate, check the following box:
--- This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
NOTE: This Amendment relates solely to shares of beneficial interest in the
Barr Rosenberg Select Sectors Market Neutral Fund. Information contained in the
Registration Statement relating to the other series of the Registrant is
neither amended nor superseded hereby.
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BARR ROSENBERG SERIES TRUST
CROSS REFERENCE SHEET FOR
THE BARR ROSENBERG SELECT SECTORS 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.
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BARR ROSENBERG SERIES TRUST
BARR ROSENBERG SELECT SECTORS MARKET NEUTRAL FUND
3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-555-5737 (INSTITUTIONAL SHARES)
1-800-447-3332 (INVESTOR SHARES)
OCTOBER 19, 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 Sectors Market
Neutral Fund (the "Fund"). The other portfolios of the Trust, which are offered
under two separate prospectuses, are the U.S. Small Capitalization Series, Japan
Series and International Small Capitalization Series, and the 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. Under normal
circumstances, the Manager's stock selection models will result in the Fund
being overweighted in its long and short positions in different sectors
(including industries within different sectors). 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 "General Description of Risks and Fund Investments."
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, whereas Institutional Shares do
not.
This Prospectus concisely describes the information that investors ought to
know before investing. Please read this Prospectus carefully and keep it for
future reference.
A Statement of Additional Information dated October 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..................... 4
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......................................................... 19
TAXES................................................................. 20
DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES...................... 20
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 dividends
paid 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 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."
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.
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>
Institutional Shares.............................. 13 40
Investor Shares................................... 18 55
</TABLE>
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(b) Excluding dividends paid in connection with short sales.
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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. Under normal circumstances,
the Manager's stock selection models will result in the Fund being overweighted
in its long and short positions in different sectors (including industries
within different sectors). See "Management of the Trust -- The Manager's General
Investment Philosophy and Strategy." In other words, the Fund may take long
positions in a sector of the market that are not offset by short positions in
such 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 stock selection 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.
To meet margin requirements related to short sales, to meet 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.
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."
4
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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.
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 may 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, exchange control regulations (including currency blockage),
expropriation of assets or nationalization,
5
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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 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.
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.
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
9
<PAGE>
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 and the Manager's Near-Term Prospects Model. 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. 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.
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
10
<PAGE>
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 Manager considers the difference between the values of stocks as
determined by its Appraisal Model and the market prices of such stocks in
deciding whether to purchase or sell stocks.
The Manager's proprietary Near-Term Prospects Model attempts to predict the
earnings growth of companies over a one-year period. This Model examines, among
other things, measures of company profitability as well as measures of investor
sentiment towards a company, such as broker recommendations, analyst earnings
estimates and prior market performance. The Manager combines the results of this
Model with the results of the Appraisal Model to measure the attractiveness of a
stock for purchase or sale.
OPTIMIZATION. The Manager attempts to create and maintain the most
favorable portfolio for the Fund by analyzing the results of its stock selection
models along with the risk to the portfolio of a particular transaction. The
Manager will not execute a purchase or sale transaction unless the anticipated
benefits to the portfolio exceed the 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.
11
<PAGE>
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 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 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 dividends paid in connection with short sales.
12
<PAGE>
ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
BISYS Fund Services Ohio, Inc. (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 Ohio, 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 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 a material adverse impact on the Fund's
operations and services provided to shareholders. The Manager, Distributor,
Servicing Agent, Transfer
13
<PAGE>
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 materially 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."
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."
14
<PAGE>
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.
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
15
<PAGE>
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 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 Trust or 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.
16
<PAGE>
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.
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.
17
<PAGE>
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 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.
18
<PAGE>
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 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.
19
<PAGE>
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.
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").
20
<PAGE>
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 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.
21
<PAGE>
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 Ohio, Inc.
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 Sectors
Market Neutral Fund
Prospectus
October 19, 1998
<PAGE>
BARR ROSENBERG SERIES TRUST
BARR ROSENBERG SELECT SECTORS MARKET NEUTRAL FUND
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 19, 1998
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the prospectus of the Barr
Rosenberg Select Sectors Market Neutral Fund of Barr Rosenberg Series Trust
dated October 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.
<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
Sectors 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* (49) 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.
Sara Ronan (39) Paralegal, Rosenberg Institutional Equity Management,
Clerk September 1997 to present. Director of Marketing,
MIG Realty Advisors, January 1996 to September 1997.
Vice President, Liquidity Financial Advisors, May
1985 to January 1996.
Edward H. Lyman (55) 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 (52) 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 $45,540 plus $4,950 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 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
-8-
<PAGE>
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 Ohio, Inc. (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 Ohio, 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
PART C
OTHER INFORMATION --
THE BARR ROSENBERG SELECT SECTORS 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) 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 Sectors 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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<PAGE>
(b) Form of Special Custody Account Agreement among the
Registrant, Custodial Trust Company and Bear, Stearns
Securities Corp. -- filed herewith;
(c) Form of Schedule of remuneration to Custody Agreement
between the Registrant and Custodial Trust Company
relating to the Barr Rosenberg Select Sector Market
Neutral Fund -- filed herewith;
9. (a) Transfer Agency Agreement between the Registant and
BISYS Fund Services, Inc. -- incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement filed on July 18, 1997;
(b) Form of Notification of Expense Limitation by Rosenberg
Institutional Equity Management to the Barr Rosenberg
Select Sectors Market Neutral Fund -- filed herewith;
(c) Fund Administration Agreement between the Registrant
and BISYS Fund Services Limited Partnership --
incorporated by reference to Post-Effective Amendment
No. 15 to the Registration Statement filed on
July 18, 1997;
(d) Fund Accounting Agreement between the Registrant and
BISYS Fund Services, Inc. -- incorporated by reference
to Post-Effective Amendment No. 15 to the Registration
Statement filed on July 18, 1997;
(e) Form of Amendment to Administration Agreement dated as
of October 1, 1998 among the Registrant, BISYS Fund
Services, Inc. and BISYS Fund Services Ohio, Inc.
-- filed herewith;
(f) Form of Amendment to Transfer Agency Agreement dated
as of October 1, 1998 among the Registrant, BISYS Fund
Services, Inc. and BISYS Fund Services Ohio, Inc.
-- filed herewith;
(g) Form of Amendment to Fund Accounting Agreement dated as
of October 1, 1998 among the Registrant, BISYS Fund
Services, Inc. and BISYS Fund Services Ohio, Inc.
-- filed herewith;
10. Opinion of Ropes & Gray -- filed herewith;
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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<PAGE>
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.
-5-
<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:
-6-
<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.
-7-
<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 certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 23 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 October, 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 October, 1998.
SIGNATURE TITLE DATE
/s/Marlis S. Fritz Vice President, October 19, 1998
- -------------------- Trustee
Marlis S. Fritz
Kenneth Reid* President, Trustee October 19, 1998
- -------------------- (principal executive officer)
Kenneth Reid
Po-Len Hew* Treasurer October 19, 1998
- -------------------- (principal financial
Po-Len Hew and accounting officer)
Nils H. Hakansson* Trustee October 19, 1998
- --------------------
Nils H. Hakansson
Barr M. Rosenberg* Trustee October 19, 1998
- --------------------
Barr M. Rosenberg
William F. Sharpe* Trustee October 19, 1998
- --------------------
William F. Sharpe
*By: /s/ Marlis S. Fritz
------------------
Marlis S. Fritz
Attorney-in-Fact
Date: October 19, 1998
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
99.1(c) 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 Sectors Market
Neutral Fund and Rosenberg Institutional Equity
Management
99.8(b) Form of Special Custody Account Agreement
99.8(c) Form of Schedule of renumeration to Custody Agreement
relating to the Barr Rosenberg Select Sectors Market
Neutral Fund
99.9(b) Form of Notification of Expense Limitation
99.9(e) Form of Amendment to Administration Agreement
99.9(f) Form of Amendment to Transfer Agency Agreement
99.9(g) Form of Amendment to Fund Accounting Agreement
99.10 Opinion of Ropes & Gray
</TABLE>
<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 Sectors 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 Sectors 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
<PAGE>
and preferences as are set forth in the Plan attached as Exhibit 3.6 hereto
as such Plan may be amended from time to time by the Board of Trustees."
The foregoing amendment shall become effective as of the time it is filed
with the Secretary of State of The Commonwealth of Massachusetts.
-2-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Trustees as aforesaid do hereto
set their hands this 19th day of October, 1998.
MARLIS S. FRITZ
----------------------------------------
Marlis S. Fritz
NILS HAKANSSON
----------------------------------------
Nils Hakansson
KENNETH REID
----------------------------------------
Kenneth Reid
BARR M. ROSENBERG
----------------------------------------
Barr M. Rosenberg
WILLIAM F. SHARPE
----------------------------------------
William F. Sharpe
-3-
<PAGE>
EXHIBIT 99.5
MANAGEMENT CONTRACT
Management Contract executed as of October 19, 1998 between Barr Rosenberg
Series Trust, a Massachusetts business trust (the "Trust"), on behalf of its
Barr Rosenberg Select Sectors 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 Ohio, Inc. 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.
-2-
<PAGE>
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment is approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not interested persons of the Trust or of the
Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain
in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this Contract by
not more than sixty days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Trust by majority vote or the
shareholders by the affirmative vote of a majority of the outstanding
shares of the Fund, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval, do
not specifically approve at least annually the continuance of this
Contract, then this Contract shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the expiration
of one year from the effective date of the last such continuance, whichever
is later; provided, however, that if the continuance of this Contract is
submitted to the shareholders of the Fund for their approval and such
shareholders fail to approve such continuance of this Contract as provided
herein, the Manager may continue to serve hereunder in a manner consistent
with the Investment Company Act of 1940 and the rules and regulations
thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
-3-
<PAGE>
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" of the Fund means the affirmative vote, at a duly called
and held meeting of shareholders, (a) of the holders of 67% or more of the
shares of the Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "control", "interested person"
and "assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act; and the phrase "specifically approve at least annually" shall be
construed in a manner consistent with the Investment Company Act of 1940 and the
rules and regulations thereunder.
7. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust, or to
any shareholder of the Trust, for any act or omission in the course of, or
connected with, rendering services hereunder.
8. THE NAMES "ROSENBERG" OR "BARR ROSENBERG".
The Manager owns the right to use the names "Rosenberg" or "Barr Rosenberg"
in connection with investment-related services or products, and such names may
be used by the Trust only with the consent of the Manager. The Manager consents
to the use by the Trust of the name "Barr Rosenberg Series Trust" or any other
name embodying the names "Rosenberg" or "Barr Rosenberg", in such forms as the
Manager shall in writing approve, but only on condition and so long as (i) this
Contract shall remain in full force and (ii) the Trust shall fully perform,
fulfill and comply with all provisions of this Contract expressed herein to be
performed, fulfilled or complied with by it. No such name shall be used by the
Trust at any time or in any place or for any purposes or under any conditions
except as in this section provided. The foregoing authorization by the Manager
to the Trust to use the names "Rosenberg" or "Barr Rosenberg" as part of a
business or name is not exclusive of the right of the Manager itself to use, or
to authorize others to use, said name; the Trust acknowledges and agrees that as
between the Manager and the Trust, the Manager has the exclusive right so to
use, or to authorize others to use, said names; and the Trust agrees, on behalf
of the Fund, to take such action as may reasonably be requested by the Manager
to give full effect to the provisions of this section (including, without
limitation, consenting to such use of said names). Without limiting the
generality of the foregoing, the Trust agrees that, upon any termination of
-4-
<PAGE>
this Contract by either party or upon the violation of any of its provisions by
the Trust, the Trust will, at the request of the Manager made within six months
after the Manager has knowledge of such termination or violation, use its best
efforts to change the name of the Trust so as to eliminate all reference, if
any, to the names "Rosenberg" or "Barr Rosenberg" and will not thereafter
transact any business in a name containing the names "Rosenberg" or "Barr
Rosenberg" in any form or combination whatsoever, or designate itself as the
same entity as or successor to an entity of such name, or otherwise use the
names "Rosenberg" or "Barr Rosenberg" or any other reference to the Manager.
Such covenants on the part of the Trust shall be binding upon it, its trustees,
officers, stockholders, creditors and all other persons claiming under or
through it.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust, as amended,
is on file with the Secretary of The Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
-5-
<PAGE>
IN WITNESS WHEREOF, Barr Rosenberg Series Trust, on behalf of its Barr
Rosenberg Select Sectors 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 Sectors Market Neutral Fund
By
---------------------------------------
Title:
ROSENBERG INSTITUTIONAL EQUITY
MANAGEMENT
By
---------------------------------------
Title: General Partner
-6-
<PAGE>
EXHIBIT 99.8(b)
SPECIAL CUSTODY ACCOUNT AGREEMENT
(SHORT SALES)
AGREEMENT (the "Agreement") dated as of October 19, 1998, by and among
Custodial Trust Company, in its capacity as custodian hereunder (the "Bank"),
Barr Rosenberg Series Trust, on behalf of its Barr Rosenberg Select Sectors
Market Neutral Fund (the "Customer"), and Bear, Stearns Securities Corp. (the
"Broker").
WHEREAS, Broker is a securities broker-dealer and is a member of several
national securities exchanges; and
WHEREAS, Customer desires from time to time to execute various
securities transactions, including short sales (which are permitted by
Customer's investment policies), and in connection therewith has executed
Broker's Customer Agreement which provides for margin transactions; and
WHEREAS, to facilitate Customer's transactions in short sales of
securities, Customer and Broker desire to establish procedures for the
compliance by Broker with the provisions of Regulation T of the Board of
Governors of the Federal Reserve System and other applicable requirements
(the "Margin Rules"); and
WHEREAS, to assist Broker and Customer in complying with the Margin Rules,
Bank is prepared to act as custodian to hold Collateral as defined below.
NOW THEREFORE, be it agreed as follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
(a) "Adequate Margin" in respect of short sales shall mean such collateral
as is adequate in Broker's reasonable judgment under the Margin Rules
and the internal policies of Broker, the latter of which shall be
subject to modification by Broker in its sole and absolute discretion
upon prior notice given orally to Customer and Bank.
(b) "Advice from Broker" or "Advice" means a written notice sent to
Customer and Bank or transmitted by a facsimile sending device, except
that Advice for initial or additional Collateral or with respect to
Broker's ability to effect a short sale for the Customer may be given
orally. With respect to any short sale or Closing Transaction, the
Advice from Broker shall mean a standard confirmation in use by Broker
and sent or transmitted to Customer and Bank. With respect to
substitutions or releases of Collateral, Advice from Broker means a
written notice signed by
<PAGE>
Broker and sent or transmitted to Customer and Bank. An authorized
agent of Broker will certify to Customer and Bank the names and
signatures of those employees who are authorized to sign Advice from
Broker, which certification may be amended from time to time. When
used herein, the term "Advise" means the act of sending an Advice from
Broker.
(c) "Closing Transaction" is a transaction in which Customer purchases
securities which have been sold short.
(d) "Collateral" shall mean cash or U.S. Government securities or other
marginable securities acceptable to Broker.
(e) "Insolvency" means that (A) an order, judgment or decree has been
entered under the bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law (herein called the "Bankruptcy law") of any competent
jurisdiction adjudicating the Customer insolvent; or (B) the Customer
has petitioned or applied to any tribunal for, or consented to the
appointment of, or taking possession by, a trustee, receiver,
liquidator or similar official, of the Customer, or commenced a
voluntary case under the Bankruptcy Law of the United States or any
proceedings relating to the Customer under the Bankruptcy Law of any
other competent jurisdiction, whether now or hereinafter in effect;
or (C) any such petition or application has been filed, or any such
proceedings commenced, against the Customer and the Customer by any
act has indicated its approval thereof, consent thereto or
acquiescence therein, or an order for relief has been entered in an
involuntary case under the Bankruptcy Law of the United States, as
now or hereinafter constituted, or an order, judgment or decree has
been entered appointing any such trustee, receiver, liquidator or
similar official, or approving the petition in any such proceedings,
and such order, judgment or decree remains unstayed and in effect for
more than 60 days.
(f) "Instructions from Customer" or "Instructions" means a request,
direction or certification in writing signed by Customer and delivered
to Bank and Broker or transmitted by a facsimile sending device. An
officer of Customer will certify to Bank and Broker the names and
signatures of those persons authorized to sign the instructions, which
certification may be amended from time to time. When used herein, the
term "Instruct" shall mean the act of sending an Instruction from
Customer.
(g) "Receipt of Payment" means receipt by Bank, of (1) a certified or
official bank check or wire transfer to Bank; (2) a written or
telegraphic advice from a registered clearing agency that funds have
been or will be credited to the account of Bank; or (3) a transfer of
funds from any of Broker's accounts maintained at Bank.
2
<PAGE>
(h) "Receipt of Securities" means receipt by Bank, of (1) securities in
proper form for transfer; or (2) a written or telegraphic advice from
a registered clearing agency that securities have been credited to the
account of Bank for the Special Custody Account.
(i) "Special Custody Account" shall have the meaning assigned to that term
in Section 2 hereof.
2. SPECIAL CUSTODY ACCOUNT
(a) OPENING CUSTODY ACCOUNT. Bank shall open an account on its books
entitled "Special Custody Account for Bear, Stearns Securities Corp.
as Pledgee of Barr Rosenberg Series Trust, on behalf of its Barr
Rosenberg Select Sectors Market Neutral Fund" (the "Special Custody
Account") and shall hold therein all securities and similar property
as shall be received and accepted by it therein pursuant to this
Agreement. Customer agrees to instruct Bank in Instructions from
Customer as to cash and specific securities which Bank is to identify
on its books and records as pledged to Broker as Collateral in the
Special Custody Account. Customer agrees that the value of such cash
and securities shall be at least equal in value to what Broker shall
initially and from time to time Advise Customer in an Advice from
Broker is necessary to constitute Adequate Margin. Such Collateral
(i) will be held by Bank for Broker as agent of Broker, (ii) may be
released only in accordance with the terms of this Agreement, and
(iii) except as required to be released hereunder to Broker, shall
not be made available to Broker or any other person claiming through
Broker, including the creditors of the Broker. In the event Customer
wishes to add another series of Barr Rosenberg Series Trust to this
Agreement, the title of such account shall be appended to this
Agreement as a schedule.
(b) SECURITY INTEREST. Customer hereby grants a continuing security
interest to Broker in the Collateral in the Special Custody Account.
To perfect Broker's security interest, Bank will hold the Collateral
in the Special Custody Account, subject to the interest therein of
Broker as the pledgee and secured party thereof in accordance with
the terms of this Agreement. Such security interest will terminate
at such time as Collateral is released as provided herein. Bank
shall have no responsibility for the validity or enforceability of
such security interest.
(c) CONFIRMATION. Bank will confirm in writing to Broker and Customer all
pledges, releases or substitutions of Collateral and will supply
Broker and Customer with a monthly statement of Collateral and
transactions in the Special Custody Account for such month. Bank
will also advise Broker upon request of the kind and amount of
Collateral pledged to Broker.
3
<PAGE>
(d) EXCESS COLLATERAL. Upon the request of Customer, Broker shall Advise
Bank and Customer of any excess of Collateral in the Special Custody
Account. Such excess shall at Customer's request be transferred
therefrom upon Advice from Broker. Customer represents and warrants to
Broker that securities included at any time in the Collateral shall be
in good deliverable form (or bank shall have the unrestricted power to
put such securities into good deliverable form) in accordance with the
requirements of such exchanges as may be the primary market or markets
for such securities.
(e) ACCOUNTS AND RECORDS. Bank will maintain accounts and records for the
Collateral in the Special Custody Account as more fully described in
paragraph 5 hereof. The Collateral shall at all times remain the
property of the Customer subject only to the extent of the interest
and rights therein of Broker as the pledgee thereof.
3. ORIGINAL AND VARIATION MARGIN ON SHORT SALES
(a) SHORT SALES. From time to time, Customer may place orders with Broker
for the short sale of securities. Prior to the acceptance of such
orders Broker will Advise Customer of Broker's ability to borrow such
securities or other properties and acceptance of short sale orders
will be contingent upon same.
(b) OPEN SHORT SALES BALANCE. Broker shall, based on the closing market
price on each business day, compute the aggregate net credit or debit
balance on Customer's open short sales and advise Customer and/or
Customer's designated agent by 11:00 A.M. New York time on the next
business day (the "Determination Day") of the amount of the net debit
or credit, as the case may be. If a net debit balance exists on the
Determination Day, Customer will cause an amount equal to such net
debit balance to be paid to Broker by the close of business on the
Determination Day. If a net credit balance exists on the
Determination Day, Broker will pay such credit balance to Customer by
the close of business on the Determination Day. As Customer's open
short positions are marked-to-market each business day, payments will
be made by or to Customer to reflect changes (if any) in the credit
or debit balances. Broker will charge interest on debit balances,
and Broker will pay interest on credit balances. Balances will be
appropriately adjusted when short sales are closed out.
4. PLACING ORDERS
It is understood and agreed that Customer, when placing with Broker any
order to sell short for Customer's account, will designate the order as such
and hereby authorizes Broker to mark such order as being "short", and when
placing with Broker any order to sell long for Customer's account, will
designate the order as such and hereby authorizes Broker to mark such order
as being "long".
4
<PAGE>
Any sell order which Customer shall designate as being for long account as
above provided is for securities then owned by Customer and, if such
securities are not then deliverable by Broker from any account of Customer,
the placing of such order shall constitute a representation by Customer that
it is impracticable for Customer then to deliver such securities to Broker
but that Customer shall deliver them by the settlement date or as soon as
possible thereafter.
5. RIGHTS AND DUTIES OF THE BANK
(a) GENERALLY. Except as set forth in sub-paragraph 2(d) hereof, the Bank
shall receive and hold in the Special Custody Account, as custodian
upon the terms of this Agreement, all Collateral deposited and
maintained pursuant to the terms of this Agreement and all monies and
other property paid, distributed or substituted in respect of such
Collateral or realized on the sale or other disposition of such
Collateral; provided, however, that the Bank shall have no duty to
require any money or securities to be delivered to it or to determine
that the amount and form of assets delivered to it comply with any
applicable requirements. Collateral held in the Special Custody
Account shall be released only in accordance with this Agreement or as
required by applicable law. The Customer warrants its authority to
deposit in such account any money, securities and other property
received by the Bank. The Bank may hold the securities in the Special
Custody Account in bearer, nominee, book entry, or other form and in a
depository or clearing corporation, with or without indicating that
the securities are held hereunder; provided, however, that all
securities held in the Special Custody Account shall be identified on
the Bank's records as subject to this Agreement and shall be in a
form that permits transfer without additional authorization or consent
of the Customer.
(b) DIVIDENDS AND INTEREST. Any interest, dividends or other
distributions paid with respect to the Collateral held in the Special
Custody Account shall be retained therein as additional Collateral.
(c) REPORTS. The Bank shall provide Broker and Customer with written
confirmation of each transfer into and out of the Special Custody
Account, in each case as promptly as practical, but in any event not
later than the next business day. The Bank also shall render to the
Broker and the Customer and/or Customer's designated agent a monthly
statement of the Collateral held in the Special Custody Account. In
addition, the Bank will advise the Broker and the Customer and/or
Customer's designated agent, upon request of the Broker or Customer,
at any time of the type and amount of Collateral held in the account;
provided, however, that the Bank shall have no responsibility for
making any determination as to the value of such Collateral.
5
<PAGE>
(d) LIMITATION OF BANK'S LIABILITY. The Bank's duties and
responsibilities under this Agreement are as set forth herein. The
Bank shall act only upon receipt of Advice from Broker regarding
release or substitution of Collateral. The Bank shall not be liable
or responsible for anything done, or omitted to be done by it in good
faith and in the absence of negligence and may rely and shall be
protected in acting upon any notice, instruction or other
communication which it reasonably believes to be genuine and
authorized. As between Customer and the Bank, the terms of the
Custodian Agreement entered into thereby shall apply with respect to
the responsibilities of the Bank and any losses or liabilities of
such parties arising out of matters covered by this Agreement. As
between the Bank and Broker, Broker shall indemnify and hold the Bank
harmless with regard to any losses or liabilities of the Bank
(including counsel fees) imposed on or incurred by the Bank arising
out of any action or omission of the Bank in accordance with any
Advice, notice or instruction of Broker under this Agreement. In
matters concerning or relating to this Agreement, the Bank shall not
be responsible for compliance with any statute or regulation
regarding the establishment or maintenance of margin credit, including
but not limited to Regulations T or X of the Board of Governors of
the Federal Reserve System, or with any rules or regulations of the
Office of the Controller of the Currency (or the Securities and
Exchange Commission). With respect to all securities, however
registered, it is understood that all voting rights and other rights
and powers shall be exercised exclusively by Customer. Bank's only
duty with respect thereto shall be to mail to Customer any documents
received, including proxy statements and offering circulars, with any
proxies for securities registered in a nominee name executed by such
nominee. The Bank shall not be liable to any party for any acts or
omissions of the other parties to this Agreement.
(e) COMPENSATION. Bank shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time
be agreed upon in writing between Customer and Bank.
6. DEFAULT
In the event of any failure by Customer to timely comply with any
obligation on Customer's part to be performed or observed under this
Agreement or the Customer Agreement, including, but not limited to, the
obligation to maintain Adequate Margin, or in the event of Customer's
Insolvency, Broker may effect a Closing Transaction or buy-in of any
securities of which Customer's account may be short, provided that Broker
shall first use reasonable efforts to (i) give notice to Customer specifying
such default (which notice may be by telegraph, facsimile transmission or
hand delivery) and (ii) hold a discussion with Customer regarding such
default and Broker's intended actions in response thereto. Notwithstanding
the foregoing, neither notice nor a discussion shall be required in the event
market conditions render same impracticable in the reasonable discretion of
Broker. In the event of any default
6
<PAGE>
as aforesaid, after making a reasonable attempt to give notice to and hold a
discussion with Customer (subject to market conditions as set forth above),
Broker shall also have the right to sell any and all Collateral in the
Special Custody Account and to give Advice to Bank to deliver such Collateral
free of payment to Broker, which Advice shall state that, pursuant to this
Agreement, the condition precedent to Broker's right to receive such
Collateral free of payment has occurred. The Bank will provide immediate
telephone notice to Customer of any receipt by Bank of Advice from Broker to
deliver Collateral free of payment, and shall promptly effect delivery of
Collateral to Broker. Subject to applicable requirements of the New York
Uniform Commercial Code, such sale or purchase may be made according to
Broker's judgement and may be made at Broker's discretion, on the principal
exchange or other market for such securities, or in the event such principal
market is closed, in a manner commercially reasonable for such securities.
7. LIMITATION OF BROKER LIABILITY
Broker shall not be liable for any losses, costs, damages, liabilities
or expenses suffered or incurred by Customer as a result of any transaction
executed hereunder, or any other action taken or not taken by Broker hereunder
for Customer's account at Customer's direction or otherwise, except to the
extent that such loss, cost, damage, liability or expense is the result of
Broker's own negligence, recklessness, willful misconduct or bad faith. With
respect to all securities in the Special Custody Account, it is understood that
all voting rights and other rights and powers shall be exercised exclusively
by Customer, and that Broker shall have no responsibilities in connection
therewith, whether pertaining to the delivery of proxy statements or offering
circulars or otherwise.
8. CUSTOMER REPRESENTATION
Customer represents and warrants that the Collateral will not be subject to
any other liens or encumbrances other than those granted to the Bank under the
Custodian Agreement.
9. TERMINATION
Any of the parties hereto may terminate this Agreement by 30 days' notice
in writing to the other parties hereto; provided, however, that the status of
any short sales, and of Collateral held at
7
<PAGE>
the time of such notice to margin such short sales shall not be affected by such
termination until the release of such Collateral pursuant to applicable law or
regulations or rules of any self regulatory organization to which the Broker is
subject. In the event of the release of Collateral, the Collateral shall be
transferred to Customer.
10. NOTICE
Written communications hereunder shall be telegraphed, sent by facsimile
transmission or hand delivered as required herein, when another method of
delivery is not specified, may be mailed first class postage prepaid, except
that written notice of termination shall be sent by certified mail, addressed:
(a) if to Bank, to:
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
Attention: Vice President - Trust Operations
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
(b) if to Customer, to:
Barr Rosenberg Series Trust
4 Orinda Way, Building E
Orinda, California 95463
Attention: Edward H. Lyman
Telephone: (925) 254-6464
Facsimile: (925) 253-3401
(c) if to Broker, to:
Bear, Stearns Securities Corp.
245 Park Avenue
New York, New York 10167
Attention: Michael Minikes, Treasurer
Telephone: 212-272-2089
8
<PAGE>
Facsimile: 212-272-3099
11. CONTROLLING LAW
The construction and enforcement of this Agreement shall be subject to and
governed by the laws of the State of New York.
12. LIMITATION OF LIABILITY
To the extent that the trustees of Barr Rosenberg Series Trust are
regarded as entering into this Agreement, they do so only as trustees thereof
and not individually. The obligations under this Agreement of Barr Rosenberg
Series Trust or Barr Rosenberg Select Sectors Market Neutral Fund shall not
be binding upon any trustee, officer or employee of Barr Rosenberg Series
Trust individually, or upon any holder of shares issued by Barr Rosenberg
Series Trust individually, but shall be binding only upon the assets and
property of Barr Rosenberg Select Sectors Market Neutral Fund. Such
trustees, officers, employees and holders, when acting in such capacities,
shall not be personally liable under this Agreement, and Broker and Bank
shall look solely to the assets and property of Barr Rosenberg Select Sectors
Market Neutral Fund for the performance of this Agreement thereby and for the
payment of any claim against Barr Rosenberg Select Sectors Market Neutral
Fund pertaining to this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the day and year first above
written.
BARR ROSENBERG SERIES TRUST,
ON BEHALF OF ITS
BARR ROSENBERG SELECT
SECTORS MARKET NEUTRAL FUND
By:
------------------------------
Name:
Title:
CUSTODIAL TRUST COMPANY
By:
------------------------------
Name:
Title:
BEAR, STEARNS SECURITIES CORP.
By:
------------------------------
Name:
Title:
10
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
DATE NAME OF PORTFOLIO SIGNATURE, PRINTED NAME SIGNATURE, PRINTED NAME SIGNATURE, PRINTED NAME
AND TITLE OF AUTHORIZED AND TITLE OF AUTHORIZED AND TITLE OF AUTHORIZED
PERSON FOR BROKER PERSON FOR CUSTOMER PERSON FOR BANK
<S> <C> <C> <C> <C>
- ------ ----------------- ----------------------- ----------------------- ----------------------
- ------ ----------------- ----------------------- ----------------------- ----------------------
- ------ ----------------- ----------------------- ----------------------- ----------------------
DATE NAME OF PORTFOLIO SIGNATURE, PRINTED NAME SIGNATURE, PRINTED NAME SIGNATURE, PRINTED NAME
AND TITLE OF AUTHORIZED AND TITLE OF AUTHORIZED AND TITLE OF AUTHORIZED
PERSON FOR BROKER PERSON FOR CUSTOMER PERSON FOR BANK
- ------ ----------------- ----------------------- ----------------------- ----------------------
- ------ ----------------- ----------------------- ----------------------- ----------------------
- ------ ----------------- ----------------------- ----------------------- ----------------------
DATE NAME OF PORTFOLIO SIGNATURE, PRINTED NAME SIGNATURE, PRINTED NAME SIGNATURE, PRINTED NAME
AND TITLE OF AUTHORIZED AND TITLE OF AUTHORIZED AND TITLE OF AUTHORIZED
PERSON FOR BROKER PERSON FOR CUSTOMER PERSON FOR BANK
- ------ ----------------- ----------------------- ----------------------- ----------------------
- ------ ----------------- ----------------------- ----------------------- ----------------------
- ------ ----------------- ----------------------- ----------------------- ----------------------
</TABLE>
<PAGE>
EXHIBIT 99.8(c)
EXHIBIT E-III
CUSTODY FEES AND TRANSACTION CHARGES
All fees and charges set forth in this Exhibit E-III shall be calculated
and paid in the manner provided in Article XII above. For purposes of
calculating the annual fee hereinafter provided for and charging the transaction
fees hereinafter provided for, all assets held in the account established
pursuant to the Special Custody Account Agreement among Barr Rosenberg Series
Trust, on behalf of its Barr Rosenberg Select Sectors Market Neutral Fund,
Custodian and Bear, Stearns Securities Corp., dated as of October 19, 1998,
shall be deemed to be held in the Custody Account of the Barr Rosenberg Select
Sectors Market Neutral Fund under this Agreement and all transactions in such
assets shall be deemed to have occurred in such Custody Account. The Barr
Rosenberg Select Sectors Market Neutral Fund shall pay Custodian the following
fees for assets maintained by such Portfolio in the Custody Account and charges
for transactions by such Portfolio, all such fees and charges to be payable
monthly:
(1) an annual fee consisting of the total of 0.04% (4 basis points) per
annum of the value of the first $50 million of assets in the Custody Account of
such Portfolio, 0.02% (2 basis points) per annum of the next $150 million of
such assets and 0.01% (1 basis point) per annum of the amount of such assets in
excess of $200 million;
(2) a transaction charge for each repurchase transaction in the Custody
Account of such Portfolio which represents a cash sweep investment for such
Portfolio's account, computed at a rate of 0.10% (ten basis points) per annum on
the amount of the purchase price paid by such Portfolio in such repurchase
transaction;
(3) a charge of $10 for each "free" transfer of funds from the Custody
Account of such Portfolio; and
(4) a service charge for each holding of securities or other assets of such
Portfolio that are sold by way of private placement or in such other manner as
to require services by Custodian which in its reasonable judgment are materially
in excess of those ordinarily required for the holding of publicly traded
securities in the United States.
BARR ROSENBERG SERIES TRUST, ON CUSTODIAL TRUST COMPANY
BEHALF OF ITS BARR ROSENBERG SELECT
SECTORS MARKET NEUTRAL FUND
- ------------------------------------ -----------------------------
By: By:
Title: Title:
Date: Date:
<PAGE>
EXHIBIT 99.9(b)
NOTIFICATION OF
EXPENSE LIMITATION
NOTIFICATION made this 19th day of October, 1998 by Rosenberg Institutional
Equity Management, a California limited partnership (the "Adviser"), to Barr
Rosenberg Series Trust, a Massachusetts business trust (the "Trust"), and its
Barr Rosenberg Select Sectors Market Neutral Fund (the "Fund").
WITNESSETH:
WHEREAS, the Adviser serves as investment adviser for the Fund;
WHEREAS, on or about October 19, 1998, the Fund will offer two separate
classes of shares, designated as "Institutional Shares" and "Investor Shares"
that will be subject to different shareholder service, distribution and other
fees and expenses; and
WHEREAS, the Adviser believes it would benefit from a high sales volume of
shares of the Fund in that such a volume would maximize the Adviser's fee as
investment adviser to the Fund; and
WHEREAS, the Adviser has undertaken to furnish certain services and, as
necessary, to voluntarily bear a portion of the costs thereof and/or reimburse
certain expenses so as to enable the Fund to offer competitive returns with
respect to investments in each class of shares of the Fund.
NOW THEREFORE, pursuant to Section 3 of the Management Contract between the
Adviser and the Trust on behalf of the Fund (the "Management Contract"), the
Adviser hereby notifies the Trust that the Adviser shall, until further notice,
voluntarily reduce its compensation due under the Management Contract and, if
necessary, bear certain expenses of the Fund to the extent required to limit the
expenses (which do not include extraordinary expenses and dividends and interest
paid on securities sold short) of each class of shares of the Fund to the
following annual percentages of the Fund's average daily net asset value
attributable to such class:
<TABLE>
<CAPTION>
Total Fund Operating Expenses
Classes applicable to each Class after waiver
- ------- -------------------------------------
<S> <C>
Institutional Shares 1.25%
Investor Shares 1.75%
</TABLE>
<PAGE>
IN WITNESS WHEREOF, the Adviser has executed this Notification of Expense
Limitation on the day and year first above written.
ROSENBERG INSTITUTIONAL EQUITY MANAGEMENT
By:
-------------------------------------------
Title:
The foregoing is hereby accepted:
BARR ROSENBERG SERIES TRUST,
on behalf of its Barr Rosenberg Select Sectors
Market Neutral Fund
By:
---------------------------
Title:
-2-
<PAGE>
EXHIBIT 99.9(e)
AMENDMENT TO
ADMINISTRATION AGREEMENT
This Amendment is made as of October 1, 1998, between BARR
ROSENBERG SERIES TRUST, (the "Trust"), BISYS FUND SERVICES, INC.
and BISYS FUND SERVICES OHIO, INC. The parties hereby amend the
Administration Agreement (the "Agreement") between the Trust and
BISYS Fund Services, Inc, dated as of October 1, 1996, as set
forth below.
WHEREAS, the parties hereto wish to substitute BISYS Fund
Services Ohio, Inc. for BISYS Fund Services, Inc. as the
administrator under the Agreement; and
WHEREAS, the parties hereto wish to modify the portion of
Schedule A to the Agreement entitled "Portfolios".
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein set forth, the parties agree as
follows:
1. Capitalized terms not otherwise defined herein shall have the same
meaning as in the Agreement.
2. BISYS Fund Services Ohio, Inc. (the "Administrator") shall replace
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services as
the Administrator under the Agreement.
3. Schedule A to the Agreement shall be amended by replacing the second
sentence of the section entitled "Portfolios" with the following:
The current portfolios of the Trust are set forth below:
U.S. Small Capitalization Series;
Japan Series;
International Small Capitalization Series;
Barr Rosenberg Market Neutral Fund;
Barr Rosenberg Double Alpha Market Fund; and
Barr Rosenberg Select Sectors Market Neutral Fund.
4. This Amendment may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together shall
constitute one and the same instrument.
<PAGE>
5. Except as specifically set forth herein, all other provisions of the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
BARR ROSENBERG SERIES TRUST
By:
------------------------
Title:
---------------------
BISYS FUND SERVICES, INC.
By:
------------------------
Title:
----------------------
BISYS FUND SERVICES OHIO, INC.
By:
------------------------
Title:
---------------------
2
<PAGE>
EXHIBIT 99.9(f)
AMENDMENT TO
TRANSFER AGENCY AGREEMENT
This Amendment is made as of October 1, 1998, between BARR
ROSENBERG SERIES TRUST, (the "Trust"), BISYS FUND SERVICES, INC.
and BISYS FUND SERVICES OHIO, INC. The parties hereby amend the
Transfer Agency Agreement (the "Agreement") between the Trust and
BISYS Fund Services, Inc, dated as of October 1, 1996, as set
forth below.
WHEREAS, the parties hereto wish to substitute BISYS Fund
Services Ohio, Inc. for BISYS Fund Services, Inc. as the transfer
agent under the Agreement; and
WHEREAS, the parties wish to modify the fee schedule set forth in
Schedule B to the Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein set forth, the parties agree as
follows:
1. Capitalized terms not otherwise defined herein shall have the same
meaning as in the Agreement.
2. BISYS Fund Services Ohio, Inc. ("BISYS") shall replace BISYS Fund
Services, Inc. as the transfer agent under the Agreement.
3. Schedule B to the Agreement shall be amended by replacing the first
paragraph with the following:
Annual Fees:
Effective as of October 1, 1998, BISYS shall be entitled to
receive an annual account maintenance fee of $15.00 per
shareholder account which is in existence at any time during the
month for which payment is made, such fee to be paid in equal
monthly installments. BISYS shall be entitled to receive the
account maintenance fee on all shareholder accounts maintained in
its records during the year, including those shareholder accounts
which have a zero balance during any portion of the year. The
annual account maintenance fee set forth above shall be subject
to a minimum annual fee of $12,000 per Fund.
4. This Amendment may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together shall
constitute one and the same instrument.
<PAGE>
5. Except as specifically set forth herein, all other provisions of the
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
BARR ROSENBERG SERIES TRUST
By:
------------------------
Title:
---------------------
BISYS FUND SERVICES, INC.
By:
------------------------
Title:
---------------------
BISYS FUND SERVICES OHIO, INC.
By:
------------------------
Title:
---------------------
2
<PAGE>
EXHIBIT 99.9(g)
AMENDMENT TO
FUND ACCOUNTING AGREEMENT
This Amendment is made as of October 1, 1998, between BARR
ROSENBERG SERIES TRUST, (the "Trust"), BISYS FUND SERVICES, INC.
and BISYS FUND SERVICES OHIO, INC. The parties hereby amend the
Fund Accounting Agreement (the "Agreement") between the Trust and
BISYS Fund Services, Inc, dated as of October 1, 1996, as set
forth below.
WHEREAS, the parties hereto wish to substitute BISYS Fund
Services Ohio, Inc. for BISYS Fund Services, Inc. as the fund
accountant under the Agreement; and
WHEREAS, the parties hereto wish to modify Schedule A entitled
"Fees" to the Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
premises and covenants herein set forth, the parties agree as
follows:
1. Capitalized terms not otherwise defined herein shall have the same
meaning as in the Agreement.
2. BISYS Fund Services Ohio, Inc. (the "Fund Accountant") shall replace
BISYS Fund Services, Inc. as the Fund Accountant under the Agreement.
3. Schedule A to the Agreement shall be amended by replacing it with the
following:
Effective as of October 1, 1998, Fund Accountant shall be entitled to
receive fees from each Fund in accordance with the following schedule:
Annual Fees:
$30,000 annual per Fund fee for each of the following Funds:
U.S. Small Capitalization Series;
Japan Series; and
International Small Capitalization Series.
$40,000 annual per Fund fee for each of the following Funds plus
an additional annual fee of $10,000 per class per Fund in the
event new classes of shares are added:
<PAGE>
Barr Rosenberg Double Alpha Market Fund;
Barr Rosenberg Market Neutral Fund; and
Barr Rosenberg Select Sectors Market Neutral Fund.
Out-of-Pocket Expenses:
BISYS shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses, including, but not limited to, the
expenses set forth in Section 4 of the Fund Accounting Agreement
to which this Schedule A is attached.
4. This Amendment may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together shall
constitute one and the same instrument.
5. Except as specifically set forth herein, all other provisions of the
Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
BARR ROSENBERG SERIES TRUST
By:
---------------------------
Title:
------------------------
BISYS FUND SERVICES, INC.
By:
---------------------------
Title:
------------------------
BISYS FUND SERVICES OHIO, INC.
By:
---------------------------
Title:
------------------------
3
<PAGE>
EXHIBIT 99.10
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
(617) 951-7000
Telecopier: (617) 951-7050
October 19, 1998
Barr Rosenberg Series Trust
4 Orinda Way, Building E
Orinda, CA 94563
Ladies and Gentlemen:
We are furnishing this opinion in connection with the proposed offer and
sale by Barr Rosenberg Series Trust, a Massachusetts business trust (the
"Trust"), of shares of beneficial interest of its Barr Rosenberg Select Sectors
Market Neutral Fund (the "Shares") pursuant to a Registration Statement on Form
N-1A (the "Registration Statement") under the Securities Act of 1933, as
amended.
We are familiar with the action taken by the Trustees of the Trust to
authorize the issuance of the Shares. We have examined the Trust's By-Laws, as
amended, and its Second Amended and Restated Agreement and Declaration of Trust,
as amended (the "Declaration of Trust"), on file in the office of the Secretary
of The Commonwealth of Massachusetts and such other documents as we have deemed
necessary for the purposes of this opinion.
We assume that upon sale of the Shares the Trust will receive the net asset
value thereof.
Based upon the foregoing, we are of the opinion that the Trust is
authorized to issue an unlimited number of Shares, and that, when the Shares are
issued and sold, they will be validly issued, fully paid and nonassessable by
the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
the property of the particular series of shares for all loss and expense of any
shareholder of that series held personally liable solely by reason of his or her
having been a shareholder of that
<PAGE>
Barr Rosenberg Series Trust -2- October 19, 1998
series. Thus, the risk of shareholder liability is limited to circumstances in
which that series itself would be unable to meet its obligations.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
ROPES & GRAY
Ropes & Gray
