BARR ROSENBERG SERIES TRUST, 497, 1999-08-06

BARR ROSENBERG SERIES TRUST
497, 1999-08-06

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<PAGE>
BARR ROSENBERG SERIES TRUST

U.S. SMALL CAPITALIZATION SERIES
INTERNATIONAL SMALL CAPITALIZATION SERIES
JAPAN SERIES

3435 STELZER ROAD
COLUMBUS, OHIO 43219
1-800-555-5737 (INSTITUTIONAL SHARES)
1-800-447-3332 (ADVISER AND SELECT SHARES)

JULY 30, 1999

Barr Rosenberg Series Trust is an open-end management investment company
offering six diversified portfolios with different investment objectives and
strategies, including the U.S. Small Capitalization Series, International Small
Capitalization Series and Japan Series. The other portfolios of the Trust, which
are offered under another prospectus, are the Barr Rosenberg Market Neutral
Fund, Barr Rosenberg Double Alpha Market Fund and Barr Rosenberg Select Sectors
Market Neutral Fund. Each Fund's investment adviser is AXA Rosenberg Investment
Management LLC.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIME.
<PAGE>
TABLE OF CONTENTS

PAGE
----

Risk/Return Summary................................................... 3

U.S. Small Capitalization Series.................................. 4

International Small Capitalization Series......................... 7

Japan Series...................................................... 9

Fees and Expenses..................................................... 12

Investment Objectives and Principal Investment Strategies............. 13

Principal Risks....................................................... 16

Certain Investment Techniques and Related Risks....................... 19

Management Discussion of Fund Performance............................. 22

The Adviser's General Investment Philosophy........................... 25

Management of the Trust............................................... 28

Multiple Classes...................................................... 32

Purchasing Shares..................................................... 34

IRA Accounts.......................................................... 36

Redemption of Shares.................................................. 36

Exchanging Shares..................................................... 38

How the Trust Prices Shares of the Funds.............................. 39

Determination of Net Asset Value...................................... 39

Distributions......................................................... 40

Taxes................................................................. 40

Other Information..................................................... 41

Financial Highlights.................................................. 41

2
<PAGE>
RISK/RETURN SUMMARY

The following is a summary of certain key information about the U.S. Small
Capitalization Series, International Small Capitalization Series and Japan
Series (each a "Series" or a "Fund" and, collectively, the "Series" or the
"Funds"). You will find additional information about each Fund, including a
detailed description of the risks of an investment in each Fund, after this
Summary. This Summary identifies each Fund's investment objective, principal
investment strategies and principal risks. The summary of each Fund's principal
investment strategies is accompanied by a short discussion of some of the Fund's
principal risks. The principal risks of each Fund are identified and more fully
discussed beginning on page 16. You can find more detailed descriptions of the
Funds, including the risks associated with investing in the Funds, further back
in this Prospectus. Please be sure to read this additional information BEFORE
you invest.

This Risk/Return Summary includes a table for each Fund showing its average
annual returns and a bar chart showing its annual returns. The table and bar
chart provide an indication of the historical risk of an investment in a Fund by
showing:

- how the Fund's average annual returns for one, five, and ten years (or
over the life of the Fund if the Fund is less than ten years old) compare
to those of a broad-based securities market index; and

- changes in the Fund's performance from year to year over ten years (or
over the life of the Fund if the Fund is less than ten years old).

A Fund's past performance, of course, does not necessarily indicate how it will
perform in the future.

Other important things for you to note:

- You may lose money by investing in the Funds.

- An investment in the Funds is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

- Except as described in the subsections entitled "Fundamental Policies" in
the Principal Investment Strategies section of this prospectus and in the
Investment Restrictions section in the Trust's Statement of Additional
Information, the investment objective and policies of each of the Funds
may be changed without shareholder approval.

3
<PAGE>
U.S. SMALL CAPITALIZATION SERIES
INVESTMENT OBJECTIVE

The Fund seeks a return greater than that of the Russell 2000 Index. The
Russell 2000 consists of the smallest 2000 securities in the Russell 3000 Index.
Widely regarded in the industry as the premier measure of small capitalization
stocks, the Russell 2000 Index represents approximately 8% of the Russell 3000
Index total market capitalization.

SUMMARY OF PRINCIPAL INVESTMENT STRATEGIES

The Fund invests primarily in equity securities of smaller companies (i.e.,
companies that have market capitalizations of up to $1.3 billion) that are
traded principally in the markets of the United States. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in these
Small Capitalization Securities. The Fund will place relatively greater emphasis
on capital appreciation than on current income. The Fund may also temporarily
hold a portion of its assets not invested in Small Capitalization Securities in
full faith and credit obligations of the United States government and in
short-term notes, commercial paper or other money market instruments of high
quality 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 Adviser to be of
comparable quality. The Fund may invest without limit in common stocks of
foreign issuers that are principally traded in the markets of the United States.

The Adviser uses quantitative, proprietary investment computer models to
determine which securities to buy and sell. Using these models, the Adviser
employs a bottom-up approach based on factors such as a company's fair value,
financial strength, earnings and price momentum, cash flow, book value, and its
competitive position within its industry. These models tend to produce a "value"
style of management by favoring securities believed to be selling below a price
that would accurately value the underlying company.

SUMMARY OF PRINCIPAL RISKS

As with any stock mutual fund, you may lose money if you invest in the Fund.
Among the principal risks that could adversely affect the value of the Fund's
shares and cause you to lose money on your investment are:

- INVESTMENT RISKS. The value of Fund shares may increase or decrease
depending on external conditions affecting the Fund's portfolio. These
conditions depend upon market, economic, political, regulatory and other
factors.

- MANAGEMENT RISK. Any actively managed investment portfolio is subject to
the risk that its investment adviser will make poor stock selections. The
Funds' investment adviser, AXA Rosenberg Investment Management LLC (the
"Adviser") will apply its investment techniques and risk analyses in
making investment decisions for the Fund, but there can be no guarantee
that they will produce the desired results.

4
<PAGE>
- SMALLER COMPANY RISK. Investment risks are particularly pronounced for
this Fund because it invests a significant percentage of its assets in the
stocks of companies with relatively small market capitalizations. These
companies may have limited product lines, markets or financial resources
or may depend on a few key employees.

- LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing a Fund from selling out
of these illiquid securities at an advantageous price.

For a more detailed description of these and other risks associated with an
investment in the Fund, turn to page 16.

This Risk/Return Summary includes a table showing the Fund's average annual
returns and a bar chart showing its annual returns. The table and bar chart
provide an indication of the historical risk of an investment in the Fund by
showing:

- HOW THE FUND'S AVERAGE ANNUAL RETURNS FOR ONE, FIVE, AND TEN YEARS (OR
OVER THE LIFE OF THE FUND IF THE FUND IS LESS THAN TEN YEARS OLD) COMPARE
TO THOSE OF A BROAD-BASED SECURITIES MARKET INDEX; AND

- CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR OVER TEN YEARS (OR
OVER THE LIFE OF THE FUND IF THE FUND IS LESS THAN TEN YEARS OLD).

A Fund's past performance, of course, does not necessarily indicate how it
will perform in the future.

YEARLY PERFORMANCE (%) -- INSTITUTIONAL SHARES

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
YEARLY PERFORMANCE
<S> <C>
CALENDAR YEAR END ANNUAL RETURN (%)
1990 -19.88
1991 34.45
1992 22.00
1993 22.50
1994 5.41
1995 38.18
1996 26.53
1997 30.63
1998 -4.03
</TABLE>

During all periods shown in the bar graph, the Fund's highest quarterly
return was 26.06%, for the quarter ended March 31, 1991, and its lowest
quarterly return was -24.66%, for the quarter ended September 30, 1990.

For the period January 1, 1999 through June 30, 1999, the aggregate
(non-annualized) total returns of Institutional Shares, Select Shares and
Adviser Shares were 4.52%, 4.42% and 4.40%, respectively.

5
<PAGE>
PERFORMANCE TABLE

This table shows how the Fund's performance compares with the returns of a
broad-based securities market index.

AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDING DECEMBER 31, 1998)

<TABLE>
<CAPTION>
SINCE
INCEPTION
ONE YEAR OF SINCE SINCE
ENDED FIVE YEARS INSTITUTIONAL INCEPTION OF INCEPTION OF
DECEMBER 31, ENDED DECEMBER SHARES SELECT SHARES ADVISER SHARES
1998 31, 1998 (2/22/89) (10/22/96) (1/21/97)
------------- -------------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Institutional Shares..................... -4.03% 18.23% 15.53% -- --
Select Shares............................ -4.52% -- -- 14.34% --
Adviser Shares........................... -4.29% -- -- -- 10.65%
Russell 2000 Index*...................... -2.56% 11.87% 12.51% 11.08% 7.76%
</TABLE>

* The Russell 2000 consists of the smallest 2000 securities in the Russell
3000 Index. (The Russell 3000 Index represents approximately 98% of the
investable U.S. equity market.) The Russell 2000 Index, widely regarded in
the industry as the premier measure of small capitalization stocks,
represents approximately 8% of the Russell 3000 Index total market
capitalization.

6
<PAGE>
INTERNATIONAL SMALL CAPITALIZATION SERIES
INVESTMENT OBJECTIVE

The Fund seeks a return greater than that of the Cazenove Rosenberg Global
Smaller Companies Index excluding the United States ("CRIexUS"). The CRIexUS is
an unmanaged index of non-U.S. companies with market capitalizations of up to
$2.5 billion.

SUMMARY OF PRINCIPAL INVESTMENT STRATEGIES

The Fund invests primarily in equity securities of smaller companies that
are traded principally in markets outside the United States with market
capitalizations between $14 million and $2.5 billion at the time of purchase by
the Fund. Under normal circumstances, the Fund invests at least 90% of its net
assets in these International Small Capitalization Companies. The Fund will
place relatively greater emphasis on capital appreciation than on current
income.

SUMMARY OF PRINCIPAL RISKS

- MANAGEMENT RISK. Any actively managed investment portfolio is subject to
the risk that its investment adviser will make poor stock selections. The
Adviser will apply its investment techniques and risk analyses in making
investment decisions for the Fund, but there can be no guarantee that they
will produce the desired results.

- SMALLER COMPANY RISK. Investment risks are particularly pronounced for
this Fund because it invests a significant percentage of its assets in the
stocks of companies with relatively small market capitalizations. These
companies may have limited product lines, markets or financial resources
or may depend on a few key employees.

- FOREIGN INVESTMENT RISK. As a result of its foreign investments, the Fund
may experience more rapid and extreme changes in value than funds that
invest solely in securities of U.S. companies. This is because the
securities markets of many foreign countries are relatively small, with a
limited number of companies representing a small number of industries.
Additionally, issuers of foreign securities are usually not subject to the
same degree of regulation as U.S. issuers. Reporting, accounting and

7
<PAGE>
auditing standards of foreign countries differ, in some cases
significantly, from U.S. standards. Also, nationalization, expropriation
or confiscatory taxation, currency blockage, political changes or
diplomatic developments could adversely affect a Fund's investments in a
foreign country.

- CURRENCY RISK. As a result of its investments in securities denominated
in, and/or receiving revenues in, foreign currencies, the Fund will be
subject to currency risk. This is the risk that those currencies will
decline in value relative to the U.S. Dollar, or, in the case of hedging
positions, that the U.S. Dollar will decline in value relative to the
currency hedged. In either event, the dollar value of these types of
investments would be adversely affected.

- LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing the Fund from selling
out of these illiquid securities at an advantageous price.

For a more detailed description of these and other risks associated with an
investment in the Fund, turn to page 16.

- CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR OVER TEN YEARS (OR
OVER THE LIFE OF THE FUND IF THE FUND IS LESS THAN TEN YEARS OLD).

A Fund's past performance, of course, does not necessarily indicate how it
will perform in the future.

YEARLY PERFORMANCE(%) -- INSTITUTIONAL SHARES

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
YEARLY PERFORMANCE
<S> <C>
CALENDAR YEAR END ANNUAL RETURN (%)
1997 -11.73
1998 4.12
</TABLE>

8
<PAGE>
During all periods shown in the bar graph, the Fund's highest quarterly
return was 17.17%, for the quarter ended March 31, 1998, and its lowest
quarterly return was -18.39%, for the quarter ended September 30, 1998.

For the period January 1, 1999 through June 30, 1999, the aggregate
(non-annualized) total returns of Institutional Shares and Select Shares were
14.41% and 14.21%, respectively.

PERFORMANCE TABLE

This table shows how the Fund's performance compares with the returns of an
index of funds with similar investment objectives and the returns of a
broad-based securities market index.

AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDING DECEMBER 31, 1998)

<TABLE>
<CAPTION>
SINCE SINCE
ONE YEAR INCEPTION OF INCEPTION OF
ENDED INSTITUTIONAL SELECT
DECEMBER 31, SHARES SHARES
1998 (9/23/96) (10/29/96)
------------- ------------ ------------
<S> <C> <C> <C>
Institutional Shares...................................................... 4.12% -3.47% --
Select Shares............................................................. 3.64% -- -4.09%
Salomon Smith Barney World ex US EMI*..................................... 12.15% 0.44% 0.64%
CRIexUS Index**........................................................... 3.23% -5.84% -6.07%
</TABLE>

* The Salomon Smith Barney World ex US EMI is an unmanaged broad-based index
of non-U.S. small/ mid-capitalization companies. The Index includes 21
countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom.

** The Cazenove Rosenberg Global Smaller Companies Index excluding the U.S.
(CRlexUS) is the benchmark for the International Small Capitalization
Series. It is an unmanaged index of non-U.S. small capitalization companies
with market capitalizations up to $2.5 billion. The index includes 21
developed countries: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland and United Kingdom.

JAPAN SERIES
INVESTMENT OBJECTIVE

The Fund seeks a return greater than that of the Tokyo Stock Price Index
("TOPIX"). TOPIX is a capitalization-weighted index of all stocks in the First
Section of the Tokyo Stock Exchange.

SUMMARY OF PRINCIPAL INVESTMENT STRATEGIES

The Fund invests primarily in the common stocks of Japanese Companies that
are listed and traded on any of the eight Japanese exchanges or traded over the
counter. The Fund may also invest in other Japanese

9
<PAGE>
Securities, such as convertible preferred stock or debentures, and may purchase
futures contracts or options on futures contracts on the Tokyo Stock Price Index
or the NIKKEI 225 Index. Under normal circumstances, at least 65% of the Fund's
total assets will be invested in Japanese Securities. The Adviser may hedge up
to 100% of the Fund's total assets against a possible decline in the Japanese
Securities market by utilizing futures and options on futures on Japanese stock
indices.

SUMMARY OF PRINCIPAL RISKS

- FOREIGN INVESTMENT RISK. As a result of its foreign investments, the Fund
may experience more rapid and extreme changes in value than funds that
invest solely in securities of U.S. companies. Additionally, issuers of
foreign securities are usually not subject to the same degree of
regulation as U.S. issuers. Reporting, accounting and auditing standards
of foreign countries differ, in some cases significantly, from U.S.
standards. Also, nationalization, expropriation or confiscatory taxation,
currency blockage, political changes or diplomatic developments could
adversely affect a Fund's investments in a foreign country.

- RISKS OF INVESTING IN JAPANESE SECURITIES. Unlike other mutual funds which
invest in the securities of many countries, the Fund will invest almost
exclusively in Japanese Securities. In addition to the risks associated
with investing in foreign securities generally, investments in the Fund
will be subject to the market risk associated with investing almost
exclusively in stocks of companies which are subject to Japanese economic
and financial factors and conditions. Since the Japanese economy is
dependent to a significant extent on foreign trade, the relationships
between Japan and its trading partners and between the yen and other
currencies are expected to have a significant impact on particular
Japanese Companies and on the Japanese economy generally.

10
<PAGE>
decline in value relative to the U.S. Dollar, or, in the case of hedging
positions, that the U.S. Dollar will decline in value relative to the
currency hedged. In either event, the dollar value of these types of
investments would be adversely affected.

For a more detailed description of these and other risks associated with an
investment in the Fund, turn to page 16.

- CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR OVER TEN YEARS (OR
OVER THE LIFE OF THE FUND IF THE FUND IS LESS THAN TEN YEARS OLD).

A Fund's past performance, of course, does not necessarily indicate how it
will perform in the future.

YEARLY PERFORMANCE (%) -- INSTITUTIONAL SHARES

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
YEARLY PERFORMANCE
<S> <C>
CALENDAR YEAR END ANNUAL RETURN (%)
1990 -29.75
1991 3.57
1992 -21.57
1993 21.73
1994 25.59
1995 0.10
1996 -19.09
1997 -34.75
1998 5.65
</TABLE>

During all periods shown in the bar graph, the Fund's highest quarterly
return was 28.23%, for the quarter ended December 31, 1998, and its lowest
quarterly return was -26.71%, for the quarter ended March 31, 1990.

For the period January 1, 1999 through June 30, 1999, the aggregate
(non-annualized) total returns of Institutional Shares and Select Shares were
24.07% and 23.71%, respectively.

PERFORMANCE TABLE

This table shows how the Fund's performance compares with the returns of a
broad-based securities market index.

11
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDING DECEMBER 31, 1998)

<TABLE>
<CAPTION>
SINCE SINCE
ONE YEAR FIVE YEARS INCEPTION OF INCEPTION OF
ENDED ENDED INSTITUTIONAL SELECT
DECEMBER 31, DECEMBER 31, SHARES SHARES
1998 1998 (1/3/89) (10/22/96)
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Institutional Shares....................................... 5.65% -6.85% -5.82% --
Select Shares.............................................. 5.66% -- -- -20.46%
TOPIX*..................................................... 5.79% -4.84% -5.68% -16.10%
</TABLE>

* The Tokyo Stock Price Index ("TOPIX") is a capitalization-weighted index of
all stocks in the First Section of the Tokyo Stock Exchange.

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
FUND U.S. SMALL CAPITALIZATION SERIES CAPITALIZATION SERIES
- -------------------------------------------------- ----------------------------------------- ---------------------------
CLASS OF SHARES INSTITUTIONAL ADVISER SELECT INSTITUTIONAL SELECT
- -------------------------------------------------- --------------- ------------ ---------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Management Fees................................... 0.90% 0.90% 0.90% 1.00% 1.00%
Distribution and Shareholder Service (12b-1)
Fees............................................ None 0.25% 0.25%* None 0.25%*
Other Expenses**.................................. 0.29 % 0.29 % 0.44 % 0.97 % 1.12%
Total Annual Fund Operating Expenses.............. 1.19 % 1.44 % 1.59 % 1.97 % 2.37%
Expense Waiver***................................. 0.04 % 0.04 % 0.04 % 0.47 % 0.47%
Net Expenses...................................... 1.15 % 1.40 % 1.55 % 1.50 % 1.90%

FUND JAPAN SERIES
- -------------------------------------------------- ---------------------------
CLASS OF SHARES INSTITUTIONAL SELECT
- -------------------------------------------------- --------------- ----------
<S> <C> <C>
Management Fees................................... 1.00% 1.00%
Distribution and Shareholder Service (12b-1)
Fees............................................ None 0.25 %*
Other Expenses**.................................. 13.32 % 13.47 %
Total Annual Fund Operating Expenses.............. 14.32 % 14.72 %
Expense Waiver***................................. 12.82 % 12.82 %
Net Expenses...................................... 1.50 % 1.90 %
</TABLE>

* As of March 31, 1999, the Trustees have reduced the maximum amount payable
by Select shares under the Trust's distribution and shareholder service plan
from 0.50% to 0.25% of the average daily net assets attributable to such
shares. These figures therefore are based on the contractual maximum for the
current fiscal year.

** As of March 31, 1999, the Trustees have authorized the payment of up to
0.15% of each Fund's average daily net assets attributable to Select Shares
for subtransfer and subaccounting services in connection with such shares.
The expense information in the table has therefore been restated to reflect
current fees.

*** Reflects a contractual limitation by the Adviser to waive its management fee
and bear certain expenses (exclusive of nonrecurring account fees and
extraordinary expenses) until further notice (and in any event at least
until March 31, 2000) and/or a conditional fee waiver by the Administrator
based on the reasonable expectation that the relevant conditions will
continue through March 31, 2000.

EXAMPLE

This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.

The example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment earns a 5%

12
<PAGE>
return each year and that the Fund's operating expenses remain the same as the
Total Annual Fund Operating Expenses shown above. Your actual costs may be
higher or lower. Based on these assumptions, your costs would be:

<TABLE>
<CAPTION>
FUND CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------- -------------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Institutional $ 117 $ 374 $ 651 $ 1,442
U.S. Small Capitalization Series
Adviser $ 143 $ 452 $ 784 $ 1,724
Select $ 158 $ 498 $ 862 $ 1,889
Institutional $ 153 $ 575 $ 1,027 $ 2,304
International Small Capitalization Series
Select $ 193 $ 697 $ 1,233 $ 2,724
Institutional $ 153 $ 3,222 $ 6,509 $ 15,789
Japan Series
Select $ 193 $ 3,323 $ 6,650 $ 15,914
</TABLE>

INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES

U.S. SMALL CAPITALIZATION SERIES

The investment objective of the U.S. Small Capitalization Series is to seek
a total return greater than that of the Russell 2000 Index through investment
primarily in equity securities of smaller companies (i.e. -- companies that have
market capitalizations of up to $1.3 billion, which corresponds with the market
capitalization of the largest company in the Russell 2000 after the annual
reconstitution of the Index on May 31, 1999) that are traded principally in the
markets of the United States ("Small Capitalization Securities"). The definition
of Small Capitalization Securities may change from time to time to correspond
with the market capitalization of the largest company in the Russell 2000. Total
return is a combination of capital appreciation and current income (dividend or
interest). The Fund does not seek to MAXIMIZE total return but, as indicated
above, seeks a total return greater than that of the index referred to above.
Because the companies in which the Fund invests typically do not distribute
significant amounts of company earnings to shareholders, the Fund's objective
will place relatively greater emphasis on capital appreciation than on current
income. The Fund's investment objective is non-fundamental and thus may be
changed by the Trustees without shareholder approval.

It is currently expected that, under normal circumstances, most of the
Fund's assets will be invested in Small Capitalization Securities. Investments
in issuers of Small Capitalization Securities may present greater opportunities
for capital appreciation because of high potential earnings growth, but may also
involve greater risk. See "Principal Risks -- Smaller Company Risk."

To meet redemption requests or for investment purposes, the Fund may also
temporarily hold a portion of its assets not invested in Small Capitalization
Securities in full faith and credit obligations of the United States government
(E.G., U.S. Treasury Bills) and in short-term notes, commercial paper or other
money market instruments of high quality (I.E., rated at least "A-2" or "AA" by
Standard & Poor's ("S&P") or Prime 2 or "Aa" by Moody's Investors Service, Inc.
("Moody's")) issued by companies having an outstanding debt issue rated at least
"AA" by S&P or at least "Aa" by Moody's, or determined by the Adviser to be of
comparable quality to any of the foregoing. The Fund may also invest in stock
index futures and repurchase agreements. See "Certain Investment Techniques and
Related Risks -- Stock Index Futures and -- Repurchase Agreements."

13
<PAGE>
Also, the Fund may invest without limit in common stocks of foreign issuers
that are principally traded in the markets of the United States. Investments in
common stocks of foreign issuers may involve certain special risks due to
foreign economic, political and legal developments. See "Principal Risks --
Foreign Investment Risk." The Fund will not invest in securities which are
principally traded outside of the United States.

During the fiscal year ended March 31, 1999, the Fund engaged in active and
frequent trading. Because of the frequency with which the Fund buys and sells
portfolio securities, a larger portion of distributions you receive are likely
to be ordinary dividends, rather than capital gain distributions.

FUNDAMENTAL POLICIES. It is a fundamental policy of the Fund, which may not
be changed without shareholder approval, that at least 65% of the Fund's total
assets will be invested in Small Capitalization Securities.

INTERNATIONAL SMALL CAPITALIZATION SERIES

The investment objective of the International Small Capitalization Series is
to seek a total return greater than that of the Cazenove Rosenberg Global
Smaller Companies Index excluding the United States ("CRIexUS") through
investment primarily in equity securities that are traded principally in
securities markets outside of the United States of companies with market
capitalizations between $14 million and $2.5 billion at the time of purchase by
the Fund ("International Small Capitalization Companies"). This corresponds with
the defining range (as of May 1, 1999) of market capitalization of companies in
the CRIexUS, which represents the lowest 15% of companies by market
capitalization in mature markets* other than the United States. The definition
of International Small Capitalization Companies may change from time to time to
correspond with the market capitalizations of companies included in the CRIexUS
as it may be adjusted from time to time. Total return is a combination of
capital appreciation and current income (dividend or interest). The Fund does
not seek to MAXIMIZE total return but, as indicated above, seeks a total return
greater than that of the index referred to above. Because the companies in which
the Fund invests typically do not distribute significant amounts of company
earnings to shareholders, the Fund's objective will place relatively greater
emphasis on capital appreciation than on current income. The Fund's investment
objective is non-fundamental and thus may be changed by the Trustees without
shareholder approval.

There are no prescribed limits on the Fund's geographic asset distribution,
and the Fund has the authority to invest in securities traded in securities
markets of any country in the world. It is currently expected that the Fund will
invest in approximately twenty-one different countries across three regions --
Europe, Pacific and North America (excluding the United States). Under certain
adverse investment conditions, the Fund may restrict the number of securities
markets in which its assets will be invested, although under normal market
circumstances, the Fund's investments will involve securities principally traded
in at least three different countries.

Under normal circumstances, at least 90% of the Fund's net assets will be
invested in common stocks of International Small Capitalization Companies and it
is the non-fundamental policy of the Fund to invest at

- -------------------

* The index includes 21 developed countries: Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom.

14
<PAGE>
least 65% of the Fund's total assets in common stocks of International Small
Capitalization Companies. Investments in such companies may present greater
opportunities for capital appreciation because of high potential earnings
growth, but may also involve greater risk. See "Principal Risks -- Smaller
Company Risk."

The Fund will not normally invest in securities of United States issuers
traded on United States securities markets.

JAPAN SERIES

The investment objective of the Japan Series is to seek a total return
greater than that of the Tokyo Stock Price Index ("TOPIX") of the Tokyo Stock
Exchange. The Fund will seek to meet this objective primarily through investment
in Japanese equity securities, primarily in common stocks of Japanese Companies.
Total return is a combination of capital appreciation and current income
(dividend or interest). The Fund does not seek to MAXIMIZE total return but, as
indicated above, seeks a total return greater than that of the index referred to
above. The Fund expects that any income it derives will be from dividend or
interest payments on securities. The Fund's investment objective is
non-fundamental and thus may be changed by the Trustees without shareholder
approval.

It is currently expected that, under normal circumstances, the Fund will
invest at least 90% of its net assets in "Japanese Securities," that is,
securities issued by entities ("Japanese Companies") that are organized under
the laws of Japan and that either have 50% or more of their assets in Japan or
derive 50% or more of their revenues from Japan. Although the Fund will invest
primarily in common stocks of Japanese Companies, it may also invest in other
Japanese Securities, such as convertible preferred stock or debentures, warrants
or rights, as well as short-term government debt securities or other short-term
prime obligations (I.E., high quality debt obligations maturing not more than
one year from the date of issuance). The Fund will not ordinarily purchase
warrants or rights, although it may receive warrants or rights through
distributions on other securities it owns. In those cases, the Fund expects to
sell such warrants and rights within a reasonable period of time following their
distribution to the Fund.

The Fund currently intends to make its investments principally in the
securities of Japanese Companies that have been subject for at least two years
to the financial accounting rules for a company whose securities are traded on a
Japanese securities exchange. In the discretion of the Fund's management, the
balance of the Fund's investments may be in companies that do not meet such
qualifications, although the nature of the market for the shares will always be
an important consideration in determining whether the Fund will invest in such
shares. The Fund anticipates that most Japanese equity securities in which it
will invest, either directly or indirectly (by means of convertible debentures),
will be listed on securities exchanges in Japan.

Unlike other mutual funds which invest in the securities of many countries,
the Fund will invest almost exclusively in Japanese Securities. Generally, the
Adviser will not vary the percentage of the Fund's assets which are invested in
Japanese Securities. Based on its assessment of Japanese economic, political or
regulatory developments or changes in currency exchange rates, the Adviser has
from time to time hedged up to 21% of the Fund's portfolio value and reserves
the right to hedge up to 100% of the Fund's total assets

15
<PAGE>
against a possible decline in the Japanese securities market by utilizing
futures and options on futures on Japanese stock indices as described above.

Because a high percentage of the Fund's assets will be invested in Japanese
Securities, investment in the Fund will involve the general risks associated
with investing in foreign securities. See "Principal Risks -- Foreign Investment
Risk." In addition, investors will be subject to the market risk associated with
investing almost exclusively in stocks of companies which are subject to
Japanese economic factors and conditions. Since the Japanese economy is
dependent to a significant extent on foreign trade, the relationships between
Japan and its trading partners and between the yen and other currencies are
expected to have a significant impact on particular Japanese Companies and on
the Japanese economy generally. The Fund is designed for investors who are
willing to accept the risks associated with changes in such conditions and
relationships.

INDEX FUTURES. The Fund may also purchase futures contracts or options on
futures contracts on TOPIX or the NIKKEI 225 Index ("NIKKEI") for investment
purposes. TOPIX futures are traded on the Chicago Board of Trade and NIKKEI
futures are traded on the Chicago Mercantile Exchange. See "Certain Investment
Techniques and Related Risks -- Stock Index Futures."

FUNDAMENTAL POLICIES. The Fund will normally invest at least 90% of its net
assets in Japanese Securities, and it is a fundamental policy of the Fund, which
may not be changed without shareholder approval, that at least 65% of the Fund's
total assets will be invested in Japanese Securities.

PRINCIPAL RISKS

The value of your investment in a Fund changes with the values of the Fund's
investments. Many factors can affect those values. This section describes the
principal risks that may affect a particular Fund's investments as a whole. Any
Fund could be subject to additional risks because the types of investments made
by the Funds can change over time.

- INVESTMENT RISKS. An investment in the Funds involves risks similar to
those of investing in common stocks directly. Just as with common stocks,
the value of Fund shares may increase or decrease depending on market,
economic, political, regulatory and other conditions affecting a Fund's
portfolio. These types of risks may be greater with respect to investments
in securities of foreign issuers. Investment in shares of the Funds is,
like investment in common stocks, more volatile and risky than some other
forms of investment.

- MANAGEMENT RISK. Each Fund is subject to management risk because it is an
actively managed investment portfolio. This is the risk that Adviser will
make poor stock selections. The Adviser will apply its investment
techniques and risk analyses in making investment decisions for each Fund,
but there can be no guarantee that they will produce the desired results.
In some cases, certain investments may be unavailable or the Adviser may
not choose certain investments under market conditions when, in
retrospect, their use would have been beneficial to a particular Fund or
Funds.

16
<PAGE>
- SMALLER COMPANY RISK. As specified above, the U.S. Small Capitalization
Series and the International Small Capitalization Series will invest a
relatively high percentage of their assets in companies with relatively
small market capitalizations. Companies with small market capitalizations
may be dependent upon a single proprietary product or market niche, may
have limited product lines, markets or financial resources, or may depend
on a limited management group. Typically, such companies have fewer
securities outstanding, which may be less liquid than securities of larger
companies. Their common stock and other securities may trade less
frequently and in limited volume and are generally more sensitive to
purchase and sale transactions. Therefore, the prices of such securities
tend to be more volatile than the prices of securities of companies with
larger market capitalizations. As a result, the absolute values of changes
in the price of securities of companies with small market capitalizations
may be greater than those of larger, more established companies.

- FOREIGN INVESTMENT RISK. Investing in foreign securities (I.E. those which
are traded principally in markets outside of the United States) involves
certain risks not typically found in investing in U.S. domestic
securities. These include risks of adverse changes in foreign economic,
political, regulatory and other conditions, and changes in currency
exchange rates, exchange control regulations (including currency
blockage), expropriation of assets or nationalization, imposition of
withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against foreign entities.
Furthermore, issuers of foreign securities are subject to different, and
often less comprehensive, accounting, reporting and disclosure
requirements than domestic issuers. In certain countries, legal remedies
available to investors may be more limited than those available with
respect to investments in the United States or other countries. The laws
of some foreign countries may limit a Fund's ability to invest in
securities of certain issuers located in those countries. The securities
of some foreign issuers and securities traded principally in foreign
securities markets are less liquid and at times more volatile than
securities of comparable U.S. issuers and securities traded principally in
U.S. securities markets. Foreign brokerage commissions and other fees are
also generally higher than those charged in the United States. There are
also special tax considerations which apply to securities of foreign
issuers and securities traded principally in foreign securities markets.
See "Taxes."

- JAPANESE SECURITIES RISK. Investment in the Japan Series will involve
foreign investment risk because that Fund will invest almost exclusively
in Japanese Securities. In addition, investors will be subject to the
market risk associated with investing almost exclusively in stocks of
companies which are subject to Japanese economic factors and conditions.
Since the Japanese economy is dependent to a significant extent on foreign
trade, the relationships between Japan and its trading partners and
between the yen and other currencies are expected to have a significant
impact on particular Japanese Companies and on the Japanese economy
generally.

17
<PAGE>
- CURRENCY RISK. As a result of their investments in securities denominated
in, and/or receiving revenues in, foreign currencies, the International
Equity Portfolios of the Trust (I.E. the International Small
Capitalization Series and the Japan Series) will be subject to currency
risk. This is the risk that those currencies will decline in value
relative to the U.S. Dollar, or, in the case of hedging positions, that
the U.S. Dollar will decline in value relative to the currency hedged. In
either event, the dollar value of these types of investments would be
adversely affected.

- INDEX FUTURES RISK. Each of the Funds may at times use index futures,
which are financial contracts whose value depends on, or is derived from,
the value of an underlying index. Index futures involve the risk of
mispricing or improper valuation and the risk that changes in the value of
an index future may not correlate perfectly with the relevant index.

- LIQUIDITY RISK. Each Fund may purchase "illiquid securities," defined as
securities which cannot be sold or disposed of in the ordinary course of
business within seven days at approximately the value at which a Fund has
valued such securities, so long as no more than 15% of the Fund's net
assets would be invested in such illiquid securities after giving effect
to the purchase. Investment in illiquid securities involves the risk that,
because of the lack of consistent market demand for such securities, the
Fund may be forced to sell them at a discount from the last offer price.

- PORTFOLIO TURNOVER. The consideration of portfolio turnover will not
constrain the Adviser's investment decisions. Each of the Funds is
actively managed, and, in some cases, each Fund's portfolio turnover may
exceed 100%. Higher portfolio turnover rates are likely to result in
comparatively greater brokerage commissions or transaction costs. Such
costs will reduce the relevant Fund's return. A higher portfolio turnover
rate also may result in the realization of substantial net short-term
gains, which are taxable as ordinary income to shareholders when
distributed.

- RISK OF YEAR 2000 PROBLEMS. Many services provided to the Funds depend on
the smooth functioning of computer systems. Many systems in use today
cannot distinguish between the year 1900 and the year 2000. Any failure of
the service systems to process information properly could have an adverse
impact on the Funds' operations and the services they provide to
shareholders. The Adviser, Transfer Agent, Custodian, Administrator and
certain other service providers to the Funds have reported that each is
working toward minimizing the risks associated with the so-called "year
2000 problem." However, the Funds and the Adviser cannot be certain that
they or their various service providers will be able to correct the year
2000 problem in all respects and that such problems will not adversely
affect the Funds' operations and the services provided to shareholders.
The Year 2000 problem may be particularly acute with respect to foreign
markets and the securities of foreign issuers in which the Funds invest
due to a potential lack of Year 2000 compliance efforts in foreign markets
and by foreign issuers.

18
<PAGE>
PRINCIPAL RISKS BY FUND
<TABLE>
<CAPTION>
U.S. SMALL CAPITALIZATION INTERNATIONAL SMALL
SERIES CAPITALIZATION SERIES
------------------------- -------------------------
<S> <C> <C>
Investment Risks............................................. X X
Management Risk.............................................. X X
Smaller Company Risk......................................... X X
Foreign Investment Risk...................................... X X
Japanese Securities Risk.....................................
Currency Risk................................................ X
Index Futures Risk........................................... X X
Liquidity Risk............................................... X X
Portfolio Turnover........................................... X X
Risk of Year 2000 Problems................................... X X

JAPAN SERIES
-----------------
<S> <C>
Investment Risks............................................. X
Management Risk.............................................. X
Smaller Company Risk.........................................
Foreign Investment Risk...................................... X
Japanese Securities Risk..................................... X
Currency Risk................................................ X
Index Futures Risk........................................... X
Liquidity Risk............................................... X
Portfolio Turnover........................................... X
Risk of Year 2000 Problems................................... X
</TABLE>

CERTAIN INVESTMENT TECHNIQUES AND RELATED RISKS

The Funds have the flexibility to invest, within limits, in a variety of
instruments designed to enhance their investment capabilities. A brief
description of certain of these investment instruments and the risks associated
with them appears below. You can find more detailed information in the Trust's
Statement of Additional Information ("SAI").

- FOREIGN EXCHANGE TRANSACTIONS. The International Equity Portfolios of the
Trust do not currently intend to hedge the currency risk associated with
investments in securities denominated in foreign currencies. However, in
order to hedge against possible variations in foreign exchange rates
pending the settlement of securities transactions, the International
Equity Portfolios reserve the right to buy or sell foreign currencies or
to deal in forward foreign currency contracts; that is, to agree to buy or
sell a specified currency at a specified price and future date. The
International Equity Portfolios also reserve the right to purchase
currency futures contracts and related options thereon for similar
purposes. For example, if the Adviser anticipates that the value of the
yen will rise relative to the dollar, a Fund could purchase a currency
futures contract or a call option thereon or sell (write) a put option to
protect against a currency-related increase in the price of
yen-denominated securities such Fund intends to purchase. If the Adviser
anticipates a fall in the value of the yen relative to the dollar, a Fund
could sell a currency futures contract or a call option thereon or
purchase a put option on such futures contract as a hedge. If the
International Equity Portfolios change their present intention and decide
to utilize hedging strategies, futures contracts and related options will
be used only as a hedge against anticipated currency rate changes (not for
investment purposes) and all options on currency futures written by a Fund
will be covered. These practices, if utilized, may present risks different
from or in addition to the risks associated with investments in foreign
currencies.

- STOCK INDEX FUTURES. A stock index futures contract (an "Index Future") is
a contract to buy an integral number of units of the relevant index at a
specified future date at a price agreed upon when the contract is made. A
unit is the value at a given time of the relevant index. An option on an
Index Future gives the purchaser the right, in return for the premium
paid, to assume a long or a short position in an Index Future. A Fund will
realize a loss if the value of an Index Future declines between

19
<PAGE>
the time the Fund purchases an Index Future or takes a long position in an
Index Future and may realize a gain if the value of the Index Future rises
between such dates.

In connection with a Fund's investment in common stocks, a Fund may invest
in Index Futures while the Adviser seeks favorable terms from brokers to effect
transactions in common stocks selected for purchase. A Fund may also invest in
Index Futures when the Adviser believes that there are not enough attractive
common stocks available to maintain the standards of diversity and liquidity set
for the Fund pending investment in such stocks when they do become available.
Through the use of Index Futures, a Fund may maintain a portfolio with
diversified risk without incurring the substantial brokerage costs which may be
associated with investment in multiple issuers. This may permit a Fund to avoid
potential market and liquidity problems (E.G., driving up or forcing down the
price by quickly purchasing or selling shares of a portfolio security) which may
result from increases or decreases in positions already held by a Fund. A Fund
may also use Index Futures in order to hedge its equity positions.

In contrast to purchases of a common stock, no price is paid or received by
a Fund upon the purchase of a futures contract. Upon entering into a futures
contract, a Fund will be required to deposit with its custodian in a segregated
account in the name of the futures broker a specified amount of cash or
securities. This is known by participants in the market as "initial margin." The
type of instruments that may be deposited as initial margin, and the required
amount of initial margin, are determined by the futures exchange on which the
Index Futures are traded. The nature of initial margin in futures transactions
is different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions. Rather, the initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, called "variation margin,"
to and from the broker, will be made on a daily basis as the price of the
particular index fluctuates, making the position in the futures contract more or
less valuable, a process known as "marking to the market."

A Fund may close out a futures contract purchase by entering into a futures
contract sale. This will operate to terminate the Fund's position in the futures
contract. Final determinations of variation margin are then made, additional
cash is required to be paid by or released to the Fund, and the Fund realizes a
loss or a gain.

A Fund's use of Index Futures involves risk. Positions in Index Futures may
be closed out by a Fund only on the futures exchanges on which the Index Futures
are then traded. There can be no assurance that a liquid market will exist for
any particular contract at any particular time. The liquidity of the market in
futures contracts could be adversely affected by "daily price fluctuation
limits" established by the relevant futures exchange which limit the amount of
fluctuation in the price of an Index Futures contract during a single trading
day. Once the daily limit has been reached in the contract, no trades may be
entered into at a price beyond the limit. In such events, it may not be possible
for a Fund to close its futures contract purchase, and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. The futures market may also attract more
speculators than does the securities market, because deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Increased participation by speculators in the futures market may also
cause price distortions. In addition, the price of Index Futures may not
correlate perfectly with movement in the underlying index due to certain market
disturbances.

20
<PAGE>
A Fund will not purchase Index Futures if, as a result, the Fund's initial
margin deposits on transactions that do not constitute "bona fide hedging" under
relevant regulations of the Commodities Futures Trading Commission would be
greater than 5% of the Fund's total assets. In addition to margin deposits, when
a Fund purchases an Index Future, it is required to maintain, at all times while
an Index Future is held by the Fund, cash, U.S. Government securities or other
high grade liquid securities in a segregated account with its Custodian, in an
amount which, together with the initial margin deposit on the futures contract,
is equal to the current value of the futures contract.

Further, the ability to establish and close out positions in options on
future contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. There is no
assurance that a liquid secondary market will exist for any particular option or
at any particular time.

- REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements, by
which a Fund purchases a security and obtains a simultaneous commitment
from the seller (a bank or, to the extent permitted by the 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 a Fund the opportunity to earn a return
on temporarily available cash. Although the underlying security may be a
bill, certificate of indebtedness, note or bond issued by an agency,
authority or instrumentality of the U.S. Government, the obligation of the
seller is not guaranteed by the U.S. government and there is a risk that
the seller may fail to repurchase the underlying security. In such event,
a Fund would attempt to exercise rights with respect to the underlying
security, including possible disposition in the market. However, a Fund
may be subject to various delays and risks of loss, including (a) possible
declines in the value of the underlying security during the period while a
Fund seeks to enforce its rights thereto and (b) inability to enforce
rights and the expenses involved in attempted enforcement.

- LOANS OF PORTFOLIO SECURITIES. Each Fund may lend some or all of its
portfolio securities to broker-dealers. Securities loans are made to
broker-dealers pursuant to agreements requiring that loans be continuously
secured by collateral in cash or U.S. Government securities at least equal
at all times to the market value of the securities lent. The borrower pays
to the lending Fund an amount equal to any dividends or interest received
on the securities lent. When the collateral is cash, the Fund may invest
the cash collateral in interest-bearing, short-term securities. When the
collateral is U.S. government securities, the Fund usually receives a fee
from the borrower. Although voting rights or rights to consent with
respect to the loaned securities pass to the borrower, a Fund retains the
right to call the loans at any time on reasonable notice, and it will do
so in order that the securities may be voted by the Fund if the holders of
such securities are asked to vote upon or consent to matters materially
affecting the investment. A Fund may also call such loans in order to sell
the securities involved. The risks in lending portfolio securities, as
with other extensions of credit, 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 Adviser to be of relatively high
credit standing.

21
<PAGE>
MANAGEMENT DISCUSSION OF FUND PERFORMANCE

U.S. SMALL CAPITALIZATION SERIES

Much of the Fund's underperformance relative to its benchmark for the year
ended March 31, 1999 was attributable to holding less actively traded stocks
relative to the Russell 2000. Also, the differences between the industry
weightings of the Fund and the Russell 2000 generally hurt the performance of
the Fund. Modest overexposure to the strong performing Service industry (3.12%
above the Russell 2000 weight) helped the Fund's performance relative to the
Russell 2000. On the negative side, underexposure to the strong performing
Telephone (3.01% below the Russell 2000 weight), Real Estate Assets (2.18% below
the Russell 2000 weight) and Electric Utilities (1.07% below the Russell 2000
weight) industries hurt the Fund's relative performance.

U.S. SMALL CAPITALIZATION SERIES
(BASED ON THE PERFORMANCE OF INSTITUTIONAL SHARES ONLY)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
US SMALL CAP SERIES RUSSELL 2000
<S> <C> <C>
1989 $1,000,000 $1,000,000
1990 $1,074,145 $1,055,330
1991 $1,090,875 $1,126,901
1992 $1,263,166 $1,363,735
1993 $1,547,461 $1,566,262
1994 $1,745,950 $1,738,538
1995 $1,959,423 $1,834,212
1996 $2,658,626 $2,367,285
1997 $3,177,964 $2,488,269
1998 $4,606,424 $3,533,668
1999 $3,659,382 $2,959,009
PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE PERFORMANCE.
</TABLE>

AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED MARCH 31, 1999)

<TABLE>
<CAPTION>
SINCE SINCE
ONE YEAR FIVE YEARS TEN YEARS INCEPTION OF INCEPTION OF
ENDED ENDED ENDED SELECT SHARES ADVISER SHARES
MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999 (10/22/96) (1/21/97)
-------------- ---------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares............ -20.56% 15.95% 13.85% -- --
Select Shares................... -20.75% -- -- 8.60% --
Adviser Shares.................. -20.70% -- -- -- 4.82%
Russell 2000 Index.............. -16.26% 11.22% 11.46% 7.37% 4.12%
</TABLE>

THE NUMBERS REPORTED IN BOTH THE GRAPH AND THE TABLE REPRESENT PAST
PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE PERFORMANCES. THE PERFORMANCE OF
ADVISER SHARES AND SELECT SHARES WILL BE LOWER THAN THE PERFORMANCE OF
INSTITUTIONAL SHARES BECAUSE OF THE HIGHER FEES PAID BY SHAREHOLDERS INVESTING
IN SUCH CLASSES.

22
<PAGE>
INTERNATIONAL SMALL CAPITALIZATION SERIES

For the year ending March 31, 1999, the Fund outperformed its benchmark, the
Cazenove Rosenberg Global Smaller Companies Index excluding the U.S. Since
inception, the Fund's performance has also exceeded that of its benchmark. The
Adviser strives to add value through bottom-up stock selection and avoids heavy
bets on countries and industries.

The International Small Capitalization Series follows a systematic and
disciplined approach to international investing. The portfolio closely tracks
the country and industry exposures of the benchmark with a diversification of
over 400 holdings in more than 21 countries. As of March 31, 1999, the top 10
holdings accounted for about 15% of the total portfolio. Approximately 70% of
the holdings were invested in Europe. Construction and Home Building, together
with Metal and Machinery Products represented 18% of the portfolio. The
price-to-positive-earnings ratio of the portfolio was 12.3, and the median
market capitalization of the holdings was approximately $230 million.

INTERNATIONAL SMALL CAPITALIZATION SERIES
(BASED ON THE PERFORMANCE OF INSTITUTIONAL SHARES ONLY)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
SALOMON SMITH BARNEY
INT'L SMALL CAP
SERIES CRIEXUS WORLD EX US EMI
<S> <C> <C> <C>
1996 $1,000,000 $1,000,000 $1,000,000
1997 $1,013,000 $991,182 $975,527
1998 $1,038,436 $995,775 $1,055,416
1999 $946,721 $883,210 $1,024,279
PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE PERFORMANCE.
</TABLE>

AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED MARCH 31, 1999)

<TABLE>
<CAPTION>
SINCE INCEPTION SINCE
OF INCEPTION
ONE YEAR INSTITUTIONAL OF SELECT
ENDED SHARES SHARES
MARCH 31, 1999 (9/23/96) (10/29/96)
-------------- --------------- -----------
<S> <C> <C> <C>
Institutional Shares.................................................... -8.83% -2.15% --
Select Shares........................................................... -9.16% -- -2.66%
Salomon Smith Barney World ex US EMI.................................... -2.95% 0.96% 1.16%
CRIexUS Index........................................................... -11.30% -4.85% -5.02%
</TABLE>

THE NUMBERS REPORTED IN BOTH THE GRAPH AND THE TABLE REPRESENT PAST
PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE RESULTS. THE PERFORMANCE OF SELECT
SHARES WILL BE LOWER THAN THE PERFORMANCE OF INSTITUTIONAL SHARES BECAUSE OF THE
HIGHER FEES PAID BY SHAREHOLDERS INVESTING IN SUCH CLASSES.

23
<PAGE>
JAPAN SERIES

For the year ending March 31, 1999, the Fund slightly outperformed its
benchmark, the Tokyo Stock Price Index of the Tokyo Stock Exchange (TOPIX). The
strength of the yen during the second half of the year contributed more than 12%
in Japanese equity dollar returns.

The Fund's performance was attributable to holding under-valued stocks as
identified by the Adviser's stock selection models and stocks with themes
related to corporate restructuring and re-engineering. Over the year, the
Adviser's value-based strategy worked well in the large and medium
capitalization sectors but under-performed the benchmark in the small
capitalization sector where stocks with low trading activity were still under
selling pressure.

JAPAN SERIES (BASED ON THE PERFORMANCE OF INSTITUTIONAL SHARES ONLY)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
JAPAN SERIES TOPIX
<S> <C> <C>
1989 $1,000,000 $1,000,000
1990 $835,992 $764,258
1991 $852,236 $763,343
1992 $672,513 $585,714
1993 $768,292 $689,935
1994 $924,653 $851,308
1995 $1,006,408 $849,462
1996 $993,949 $887,082
1997 $708,883 $646,116
1998 $539,666 $551,502
1999 $624,288 $635,573
PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE PERFORMANCE.
</TABLE>

AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED MARCH 31, 1999)

<TABLE>
<CAPTION>
SINCE
INCEPTION
ONE YEAR FIVE YEARS TEN YEARS OF SELECT
ENDED ENDED ENDED SHARES
MARCH 31, 1999 MARCH 31, 1999 MARCH 31, 1999 (10/22/96)
---------------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
Institutional Shares.................................. 15.68% -7.56% -4.60% --
Select Shares......................................... 15.50% -- -- -14.67%
TOPIX................................................. 15.24% -5.68% -4.43% -9.98%
</TABLE>

THE NUMBERS REPORTED IN BOTH THE GRAPH AND THE TABLES REPRESENT PAST
PERFORMANCE AND ARE NOT PREDICTIVE OF FUTURE PERFORMANCES. THE PERFORMANCE OF
SELECT SHARES WILL BE LOWER THAN THE PERFORMANCE OF INSTITUTIONAL SHARES BECAUSE
OF THE HIGHER FEES PAID BY SHAREHOLDERS INVESTING IN SUCH CLASS.

24
<PAGE>
THE ADVISER'S GENERAL INVESTMENT PHILOSOPHY

The Adviser attempts to add value relative to the designated benchmark
through a quantitative stock selection process and seeks to diversify investment
risk across the holdings in each of the Funds. In seeking to outperform each
Fund's designated benchmark, the Adviser also attempts to control risk in the
Fund's portfolio relative to the securities constituting that benchmark. Since
each Fund is substantially invested in equities at all times, the Adviser does
not earn extraordinary return, or "alpha," by timing the market. The Adviser
seeks to avoid constructing portfolios that significantly differ from the
relevant benchmark with respect to characteristics such as market
capitalization, historic volatility or "beta," and industry weightings. Each
Fund seeks to have exposure to these factors similar to that of the designated
benchmark.

INVESTMENT PHILOSOPHY

The Adviser'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 Adviser believes that market prices
will converge towards fundamental value over time, and that therefore, any
investor who can accurately determine fundamental value, and who applies a
disciplined investment process to select those stocks that are currently
undervalued (I.E., their current price is less than their fundamental value),
will outperform the market over time.

The premise of the Adviser's investment philosophy is that there is a link
between the price of a stock and the underlying financial and operational
characteristics of the company. In other words, the price reflects the market's
assessment of how well the company is positioned to generate future earnings
and/or future cash flow. The Adviser identifies and purchases those stocks that
are undervalued (I.E., they are currently cheaper than similar stocks with the
same characteristics). The Adviser believes that the market will recognize the
"better value" and that the mispricing will be corrected as the stocks in the
Funds' portfolios are purchased by other investors.

In determining whether or not a stock is attractive, the Adviser considers
the company's current estimated fundamental value as determined by the Adviser's
proprietary Appraisal Model, the company's future earnings, and investor
sentiment toward the stock. The Adviser identifies and causes a Fund to purchase
an undervalued stock and to hold it in the relevant Fund's portfolio until the
market recognizes and corrects for the misvaluation.

DECISION PROCESS

The Adviser's decision process is a continuum. Its research function
develops models that analyze the more than 12,000 securities in the Adviser's
global universe, both fundamentally and technically, and determines the risk
characteristics of the relevant Fund's benchmark. The portfolio management
function optimizes each portfolio's composition, executes trades, and monitors
performance and trading costs.

The essence of the Adviser'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 Adviser assimilates, checks
and structures the input data on which its models rely. The Adviser believes
that if the data is correct, the recommendations made by the system will be
sound.

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<PAGE>
STOCK SELECTION

Fundamental valuation of stocks is key to the Adviser's investment process,
and the heart of the valuation process lies in the Adviser'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 170 groups of "similar" businesses. Each company
is broken down into its individual business segments, and each segment is
compared with similar business operations of other companies doing business in
the same geographical market. In most cases, the comparison is extended to
include companies with similar business operations in different markets. Subject
to the availability of data in different markets, the Adviser 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
Adviser 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 Adviser 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.

With regard to the U.S. Small Capitalization Series, the Adviser's attempts
to predict the earnings growth of companies over a one-year period through its
proprietary Near-Term Prospects Model. This Model examines, among other things,
measures of company profitability as well as measures of investor sentiment
toward a company, such as broker recommendations, analyst earnings estimates and
prior market performance. The Adviser combines the results of this Model with
the results of the Appraisal Model to measure the attractiveness of a stock for
purchase or sale for the U.S. Small Capitalization Series.

With regard to the International Small Capitalization Series and the Japan
Series, the Adviser's proprietary Earnings Change Model analyzes more than 20
variables to predict individual company earnings over a one-year horizon. The
variables are fundamental and fall into three categories: measures of past
profitability, measures of company operations and consensus earnings forecasts.
The Earnings Change Model is independent of the Appraisal Model and projects the
change in a company's earnings in cents/current price. The value of the
projected earnings change is converted to an "earnings change alpha" by
multiplying the projected change by the market's historical response to changes
of that magnitude.

Also with regard to the International Small Capitalization Series and the
Japan Series, the Adviser's proprietary Investor Sentiment Model quantifies
investor sentiment about features of stocks which influence price but which are
not captured by the Appraisal Model or the Earnings Change Model. This Model
measures company quality by looking at past price patterns and by predicting the
probability of deficient earnings. The Investor Sentiment Model also captures
market enthusiasm towards individual stocks by

26
<PAGE>
looking at broker recommendations and analyst estimates. Investor sentiment
alphas are developed by multiplying the Model's sentiment scores by the market's
historical response to such scores.

Each company's earnings change alpha and investor sentiment alpha are added
to its appraisal alpha to arrive at a total company alpha. Stocks with large
positive total company alphas are candidates for purchase for the portfolios of
the International Small Capitalization Series and/or the Japan Series. Stocks
held in a portfolio with total company alphas that are only slightly positive,
zero or negative are candidates for sale by those Funds.

Before trading for the International Small Capitalization Series or the
Japan Series, the Adviser systematically analyzes the short-term price behavior
of individual stocks to determine the timing of trades. The Investor Sentiment
Model quantifies investor enthusiasm for each stock by analyzing its short-term
performance relative to similar stocks, changes in analyst and broker opinions
about the stock, and earnings surprises. The Adviser develops a "trading alpha"
for each stock (I.E., the expected short-term extraordinary return) which is
designed to enable the International Small Capitalization Series and the Japan
Series to purchase stocks from supply and to sell stocks into demand, greatly
reducing trading costs.

OPTIMIZATION

The Adviser's portfolio optimization system attempts to construct a Fund
portfolio that will outperform the relevant benchmark, while maintaining
portfolio risk characteristics similar to those of the Fund's benchmark. The
optimizer simultaneously considers both the results of the Adviser's stock
selection models and risk in determining the benefit to a portfolio of a
particular transaction. No transaction will be executed unless the opportunity
offered by a purchase or sale candidate sufficiently exceeds the potential of an
existing holding to justify the transaction costs.

TRADING

The Adviser's trading system aggregates the recommended transactions for
each of the Funds and determines the feasibility of each recommendation in light
of the stock's liquidity, the expected transaction costs, and general market
conditions. It relays target price information to a trader for each stock
considered for purchase or sale. Trades are executed through any one of four
trading strategies: traditional brokerage, networks, accommodation, and package
or "basket" trades.

The network arrangements the Adviser has developed with Instinet Matching
System (IMS) and Portfolio System for Institutional Trading (POSIT) facilitate
large volume trading with little or no price disturbance and low commission
rates.

Accommodative trading (which we also refer to as the Adviser's "match
system") allows institutional buyers and sellers of stock to electronically
present the Adviser with their "interest" lists each morning. Any matches
between the inventory that the brokers have presented and the Adviser's own
recommended trades are signaled to the Adviser's traders. Because the broker is
doing agency business and has a client on the other side of the trade, the
Adviser expects that the other side will be accommodative in the price. The
Adviser's objective in using this match system is to execute most trades on the
Adviser's side of the bid/ask spread so as to minimize market impact.

27
<PAGE>
Package trades further allow the Adviser to trade large lists of orders
simultaneously using state of the art tools such as the Instinet Real-Time
System, Instinet Order Management System and Lattice Trading System. Those tools
provide order entry, negotiation and execution capabilities, either directly to
other institutions or electronically to the floor of the exchange. The
advantages of using such systems include speed of execution, low commissions,
anonymity and very low market impact.

The Adviser continuously monitors trading costs to determine the impact of
commissions and price disturbances on the Funds' portfolios.

MANAGEMENT OF THE TRUST

The Trust's trustees oversee the general conduct of the Funds' business.

INVESTMENT ADVISER

As of January 1, 1999, AXA Rosenberg Investment Management LLC, Four Orinda
Way, Building E, Orinda, CA 94563 (the "Adviser") succeeded Rosenberg
Institutional Equity Management ("RIEM") as the Trust's investment adviser. The
Adviser is responsible for making investment decisions for the Funds and
managing the Funds' other affairs and business, subject to the supervision of
the Board of Trustees. The Adviser provides investment advisory services to a
number of institutional investors as well as the other portfolios of the Trust.
As with the Adviser's predecessor, RIEM, in the past, each of the Funds will pay
the Adviser a management fee for these services on a monthly basis. The Adviser
will reduce its management fee and bear certain expenses until further notice
(and in any event until March 31, 2000) to limit each Fund's total annual
operating expenses. See "Fees and Expenses." The U.S. Small Capitalization
Series, International Small Capitalization Series and the Japan Series paid the
Adviser $5,065,260, $251,362 and $0, respectively, in fees for the fiscal year
ended March 31, 1999. This represents 0.90%, 0.59% and 0% of the average daily
net assets of the U.S. Small Capitalization Series, International Small
Capitalization Series and Japan Series, respectively.

PORTFOLIO MANAGERS

Management of the portfolio of each Fund is overseen by the Adviser's
executive officers who are responsible for design and maintenance of the
Adviser's proprietary investment system, and by a portfolio manager who is
responsible for research and monitoring each Fund's characteristic performance
against the relevant benchmark and for monitoring cash balances.

U.S. SMALL CAPITALIZATION SERIES. Dr. Rosenberg, Dr. Reid and Floyd
Coleman, the portfolio manager, are responsible, and have been responsible since
inception, for the day-to-day management of the U.S. Small Capitalization
Series' portfolio. Dr. Rosenberg and Dr. Reid both have been employed by the
Adviser or its predecessor since 1985. Mr. Coleman has been a trader and
portfolio manager for the Adviser or its predecessor since 1988. He received a
B.S. from Northwestern University in 1982, a M.S. from Polytechnic Institute,
Brooklyn in 1984 and a M.B.A. from Harvard Business School in 1988.

INTERNATIONAL SMALL CAPITALIZATION SERIES. Dr. Rosenberg, Dr. Reid and
Joseph Leung, the portfolio manager, are responsible, and have been responsible
since inception, for the day-to-day management of the

28
<PAGE>
International Small Capitalization Series' portfolio. Mr. Leung has been a
senior research associate, programmer and portfolio manager with the Adviser or
its predecessor since 1993. He received a B.S. and a B.A. from Queen's
University, Ontario, Canada in 1989 and a M.B.A. from the University of Chicago
in 1993. Mr. Leung is a chartered financial analyst.

JAPAN SERIES. Dr. Rosenberg, Dr. Reid, and Cheng S. Liao, the portfolio
manager, are responsible, and have been responsible since inception, for the
day-to-day management of the Japan Series' portfolio. Mr. Liao has been a senior
research associate, programmer and portfolio manager, specializing in the
Japanese market with the Adviser or its predecessor since 1989. Mr. Liao has
also been a trader for the Adviser or its predecessor in Japanese securities
since 1994. He received a B.S. from Tohobu University, Japan, in 1984, a M.S.
from Stanford University in 1986, and a M.S. in Computer Science from
Polytechnic Institute, New York in 1988.

EXECUTIVE OFFICERS

The biography of each of the executive officers of the Adviser is set forth
below. Kenneth Reid is also a Trustee of the Trust.

BARR ROSENBERG. Dr. Rosenberg is the Director of Research of the Adviser,
Chairman of AXA Rosenberg Group LLC, the parent of the Adviser, and Managing
Director of Barr Rosenberg Research Center LLC. As such, he has ultimate
responsibility for the Adviser's securities valuation and portfolio optimization
systems used to manage the Funds and for the implementation of the decisions
developed therein. His area of special concentration is the design of the
Adviser's proprietary securities valuation models.

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. From 1985 to 1998, he was the founder and Managing General
Partner of Rosenberg Institutional Equity Management, the predecessor company to
the Adviser.

KENNETH REID. Dr. Reid is the Chief Executive Officer of the Adviser. His
work is focused on the design and estimation of the Adviser's valuation models
and he has primary responsibility for analyzing the empirical evidence that
validates and supports the day-to-day recommendations of the Adviser'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 Adviser'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

29
<PAGE>
BARRA in Berkeley, California. His responsibilities included estimating
multiple-factor risk models, designing and evaluating active management
strategies, and serving as an internal consultant on econometric matters in
finance. From 1986 to 1998, Dr. Reid was a general partner of Rosenberg
Institutional Equity Management, the predecessor company to the Adviser.

WILLIAM RICKS. Dr. Ricks is the Chief Investment Officer of the Adviser.
His primary responsibilities are the various aspects of the investment process:
trading, operations, portfolio engineering, and portfolio construction. He is
responsible for the implementation of the investment strategies that are
designed by the Research Center.

Dr. Ricks earned a B.S. from the University of New Orleans, Louisiana and a
Ph.D. from the University of California, Berkeley in 1980. He worked as a senior
accountant for Ernst & Ernst in New Orleans from 1974 to 1976. He was a
financial and managerial accounting instructor at the University of California,
Berkeley from 1978 to 1979, after which he was an associate professor of finance
and accounting at Duke University until 1989. From 1989 to 1998, he was a
research associate, a portfolio engineer and the Director of Accounting Research
at Rosenberg Institutional Equity Management, the predecessor company to the
Adviser.

INDEPENDENT TRUSTEES

William F. Sharpe, Nils H. Hakansson and Dwight M. Jaffee are the Trustees
of the Trust who are not "interested persons" (as defined in the 1940 Act) of
the Trust or the Adviser.

William F. Sharpe is the STANCO 25 Professor Emeritus of Finance at
Standford University's Graduate School of Business. He joined the Stanford
faculty in 1970, having previously taught at the University of Washington and
the University of California at Irvine. He was one of the originators of the
Capital Asset Pricing Model, developed the Sharpe ratio for investment
performance analysis, the binomial method for the valuation of options, the
gradient algorithm for asset allocation optimization, and returns-based style
analysis for evaluating the style and performance of investment funds.

Dr. Sharpe has published articles in a number of professional journals,
including Management Science, The Journal of Business, The Journal of Finance,
The Journal of Financial Economics, The Journal of Financial and Quantitative
Analysis, The Journal of Portfolio Management, and The Financial Analysts'
Journal. 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 Jeffrey Bailey,
Prentice-Hall, 1993), and Investments (with Gordon J. Alexander and Jeffrey
Bailey, Prentice-Hall, 1998)

Dr. Sharpe is past President of the American Finance Association. In 1990 he
received the Nobel Prize in Economic Sciences. He received his Ph.D., M.A. and
B.A. in Economics from the University of California at Los Angeles. He is also
the recipient of a Doctor of Humane Letters, Honoris Causa from DePaul
University as well as the UCLA Medal, UCLA's highest honor. Dr. Sharpe also
serves on the board of the Smith-Breeden Mutual Funds. He is also Chairman of
the Board of Financial Engines, a firm that provides electronic investment
advice to individuals.

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<PAGE>
Professor Hakansson is the Sylvan C. Coleman Professor of Finance and
Accounting at the Haas School of Business, University of California, Berkeley.
He is a former member of the faculty at UCLA as well as at Yale University. At
Berkeley, he served as Director of the Berkeley Program in Finance (1988-1991)
and as Director of the Professional Accounting Program (1985-1988). Professor
Hakansson is a Certified Public Accountant and spent three years with Arthur
Young & Company prior to receiving his Ph.D. from UCLA in 1966. He has twice
been a Visiting Scholar at Bell Laboratories in New Jersey and was, in 1975, the
Hoover Fellow at the University of New South Wales in Sydney and, in 1982, the
Chevron Fellow at Simon Fraser University in British Columbia. In 1984,
Professor Hakansson was a Special Visiting Professor at the Stockholm School of
Economics, where he was also awarded an honorary doctorate in economics. He is a
past president of the Western Finance Association (1983-1984). Professor
Hakansson has published a number of articles in academic journals and in
professional volumes. Many of his papers address various aspects of asset
allocation procedures as well as topics in securities innovation, information
economics and financial reporting. He has served on the editorial boards of
several professional journals and been a consultant to the RAND Corporation and
a number of investment organizations. Professor Hakansson is a member of the
board of two foundations and a past board member of SuperShare Services
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.

Professor Jaffee is the Willis H. Booth Professor of Banking and Finance at
the Haas School of Business, University of California, Berkeley. He was
previously a Professor of Economics at Princeton University for many years,
where he served as the Vice Chairman of the faculty. At Berkeley, he serves on a
continuing basis as the Co-chairman of the Fisher Center for Real Estate and
Urban Economics and as the Director of the UC Berkeley-St. Petersburg University
(Russia) School of Management Program. He has been a Visiting Professor at many
Universities around the world, most recently at the University of Aix/Marseille
in France and at the European University in Florence Italy. Professor Jaffee has
authored five books and numerous articles in academic and professional journals.
His research has focused on three key financial markets: business lending, real
estate finance, and catastrophe insurance. His current research is focused on
methods for securitizing real estate finance and catastrophe insurance risks,
and on the impact of international trade on the U.S. computer industry. He has
served on the editorial boards of numerous academic journals, and has been a
consultant to a number of U.S. government agencies and to the World Bank. In the
past, Professor Jaffee has been a member of the Board of Directors of various
financial institutions, including the Federal Home Loan Bank of New York. He is
currently a Visiting Scholar at the Federal Reserve Bank of San Francisco.

DISTRIBUTOR

Adviser Shares of the U.S. Small Capitalization Series and Select Shares of
each Fund are sold on a continuous basis by the Fund'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 Select Shares and/or in
connection with the provision of direct client service, personal services,
maintenance of shareholder accounts and reporting services to holders of Select
Shares of the Trust,

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<PAGE>
such shares are subject to an annual distribution and shareholder service fee
(the "Distribution and Shareholder Service Fee") of up to 0.25% of the average
daily net assets attributable to such shares in accordance with a Distribution
and Shareholder Service Plan (the "Distribution and Shareholder Service Plan")
adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act. Currently, each
Fund pays the Distributor an annual Distribution and Shareholder Service Fee of
0.25% of the average daily net assets attributable to Select Shares. Expenses
and services for which the Distributor may be reimbursed include, without
limitation, compensation to, and expenses (including overhead and telephone
expenses) of, financial consultants or other employees of the Distributor or of
participating or introducing brokers who engage in distribution of Select
Shares, printing of prospectuses and reports for other than existing Select
shareholders, advertising, preparing, printing and distributing sales literature
and forwarding communications from the Trust to Select shareholders. The
Distribution and Shareholder Service 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 and Shareholder Service Plan, the fees are payable to
compensate the Distributor for services rendered even if the amount paid exceeds
the Distributor's expenses. Because these fees are paid out of the Fund's assets
on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

Under a Service Plan adopted by the Trustees, the Distributor may also
provide (or arrange for another intermediary or agent to provide) personal
and/or account maintenance services to holders of Adviser Shares of the U.S.
Small Capitalization Series (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 Servicing Fees charged with respect to Adviser Shares pursuant to a
Servicing Plan for such shares.

MULTIPLE CLASSES

As indicated previously, the U.S. Small Capitalization Series offer three
classes of shares to investors, Institutional Shares, Adviser Shares and Select
Shares and each of the Japan Series and International Small Capitalization
Series offers two classes of shares to investors, Institutional Shares and
Select Shares. Eligibility to invest in a particular class generally depends on
the amount invested in the particular Fund and whether the investor makes the
investment directly or through a financial adviser. The following table sets
forth basic investment and fee information for each class.

<TABLE>
<CAPTION>
ANNUAL
DISTRIBUTION
MINIMUM AND
FUND SUBSEQUENT METHOD OF ANNUAL SHAREHOLDER
NAME OF CLASS INVESTMENT* INVESTMENTS* INVESTMENT* SERVICE FEE SERVICE FEE
- ----------------------------------------- ----------- ------------ ------------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Institutional............................ $ 1 million $ 10,000 Direct None None
Adviser.................................. $ 100,000 $ 1,000 Financial Adviser 0.25% None
Select................................... $ 2,500 $ 500 Direct None 0.25%
</TABLE>

* Certain exceptions apply. See "Institutional Shares", "Adviser Shares" and
"Select Shares" below.

The offering price is based on the net asset value per share next determined
after an order is received. See "Purchasing Shares," "Redemption of Shares" and
"How the Trust Prices Shares of the Funds -- Determination of Net Asset Value."

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<PAGE>
INSTITUTIONAL SHARES

Institutional Shares may be purchased by institutions such as endowments and
foundations, plan sponsors of 401(a), 401(k), 457 and 403(b) plans and
individuals. In order to be eligible to purchase Institutional Shares, an
institution, plan or individual must make an initial investment of at least $1
million in the particular Fund. In its sole discretion, the Adviser may waive
this minimum investment requirement and the Adviser intends to do so for
employees of the Adviser, 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 Adviser and their spouses. Institutional Shares are sold without
any initial or deferred sales charges and are not subject to any ongoing
Distribution and Shareholder Service Fees.

ADVISER SHARES

Adviser shares may be purchased solely through accounts established under a
fee-based program which is sponsored and maintained by a registered
broker-dealer or other financial adviser approved by the Trust's Distributor and
under which each investor pays a fee to the broker-dealer or other financial
adviser, or its affiliate or agent, for investment managery or administrative
services. In order to be eligible to purchase Adviser Shares, a broker-dealer or
other financial adviser must make an initial investment of at least $100,000 of
its client's assets in the U.S. Small Capitalization Series. In its sole
discretion, the Adviser may waive this minimum asset investment requirement.
Adviser Shares are sold without any initial or deferred sales charges and are
not subject to ongoing distribution and shareholder service fees, but are
subject to a Service Fee at an annual rate equal to 0.25% of the U.S. Small
Capitalization Series average daily net assets attributable to Adviser Shares.

SELECT SHARES

Select Shares may be purchased by institutions, certain individual
retirement accounts and individuals. In order to be eligible to purchase Select
Shares, an investor must make an initial investment of at least $2,500 in the
particular Fund. In its sole discretion, the Adviser may waive this minimum
investment requirement. Select Shares are subject to an annual Distribution and
Shareholder Service Fee equal to 0.25% of the average daily net assets
attributable to Select Shares, and the Trustees have authorized each Fund to pay
up to 0.15% of its average daily net assets attributable to Select Shares for
subtransfer and subaccounting services in connection with such shares. As
described above, the Distribution and Shareholder Service Plan permits payments
of up to 0.25% of the Funds' average daily net assets attributable to Select
Shares. See "Management of the Trust -- Distributor."

GENERAL

The Service Fee charged with respect to Adviser Shares is intended to be
compensation for direct client service, maintenance and reporting with respect
to such shares. The Distribution and Shareholder Service Fee charged with
respect to Select Shares is intended to compensate the Distributor for services
and expenses primarily intended to result in the sale of Select Shares and/or in
connection with the provision of shareholder services to holders of Select
Shares of the Trust. See "Management of the Trust -- Distributor."

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<PAGE>
As described above, shares of the Funds may be sold to corporations or other
institutions such as trusts, foundations or broker-dealers purchasing for the
accounts of others (collectively, "Shareholder Organizations"). Investors
purchasing and redeeming shares of the Funds through a Shareholder Organization
or through financial advisers may be charged a transaction-based fee or other
fee for the services provided by the Shareholder Organization or financial
adviser. Each such Shareholder Organization and financial adviser is responsible
for transmitting to its customers a schedule of any such fees and information
regarding any additional or different conditions regarding purchases and
redemptions of Fund shares. Customers of Shareholder Organizations and financial
advisers should read this Prospectus in light of the terms governing accounts
with their particular organization.

PURCHASING SHARES

The offering price for shares of each Fund is the net asset value per share
next determined after receipt of a purchase order. See "How the Trust Prices
Shares of the Funds -- Determination of Net Asset Value." Investors may be
charged an additional fee by their broker or agent if they effect transactions
through such persons.

The U.S. Small Capitalization Series was closed to all investments effective
January 1, 1999, except that (i) participants in 401(k) plans may continue to
direct the purchase of investments in the U.S. Small Capitalization Series by
their plan account; (ii) participants in certain "wrap programs" that have
entered into contractual arrangements with the Trust and/or Distributor will be
eligible to purchase shares of the U.S. Small Capitalization Series for as long
as the "wrap program" continues to own shares of such Fund; (iii) certain bank
"asset allocation programs" that have entered into an agreement with the Trust
and/or Distributor will be eligible to purchase shares of the U.S. Small
Capitalization Series under the terms of such agreement; (iv) holders of
accounts in the Rosenberg Money Purchase Plan and the Rosenberg Daily Valuation
401(k) Plan will be eligible to purchase shares of the U.S. Small Capitalization
Series for such accounts; (v) employees of, and consultants to, the Adviser and
any entities under common control with the Adviser will be eligible to purchase
shares of the U.S. Small Capitalization Series; and (vi) the Trustees of the
Trust may continue to invest in the U.S. Small Capitalization Series.

Shareholders of other Funds will not be permitted to exchange any of their
shares for shares of the U.S. Small Capitalization Series unless such
shareholders are independently eligible to purchase shares of the U.S. Small
Capitalization Series as described above. The Trust reserves the right at any
time to modify the restrictions set forth above, including the suspension of all
sales of all shares of the U.S. Small Capitalization Series or the lifting of
restrictions on different classes of investors and/or transactions."

INITIAL CASH INVESTMENTS BY WIRE

Subject to acceptance by the Trust, shares of each 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.

34
<PAGE>
INITIAL CASH INVESTMENTS BY MAIL

Subject to acceptance by the Trust, an account may be opened by completing
and signing an Account Application and mailing it to Barr Rosenberg Series
Trust, P.O. Box 182495, Columbus, Ohio 43218-2495. The Fund(s) to be purchased
should be specified on the Account Application. In all cases, subject to
acceptance by the Trust, payment for the purchase of shares received by mail
will be credited to a shareholder's account at the net asset value per share of
the Fund next determined after receipt, even though the check may not yet have
been converted into federal funds.

ADDITIONAL CASH INVESTMENTS

Additional cash investments may be made at any time by mailing a check to
the Trust at the address noted under "-- Initial Cash Investments by Mail"
(payable to Barr Rosenberg Series Trust) or by wiring monies as noted under "--
Initial Cash Investments by Wire." Notification must be given at 1-800-447-3332
prior to 4:00 p.m., New York time, of the wire date. The minimum amounts for
additional cash investments are $10,000 for Institutional Shares, $1,000 for
Adviser Shares and $500 for Select Shares.

INVESTMENTS IN-KIND (INSTITUTIONAL SHARES)

Institutional Shares may be purchased in exchange for common stocks on
deposit at The Depository Trust Company ("DTC") or by a combination of such
common stocks and cash. Purchase of Institutional Shares of a Fund in exchange
for stocks is subject in each case to the determination by the Adviser that the
stocks to be exchanged are acceptable. Securities accepted by the Adviser in
exchange for Fund shares will be valued as set forth under "Determination of Net
Asset Value" (generally the last quoted sale price) as of the time of the next
determination of net asset value after such acceptance. All dividends,
subscription or other rights which are reflected in the market price of accepted
securities at the time of valuation become the property of the Fund and must be
delivered to the Fund upon receipt by the investor from the issuer. A gain or
loss for federal income tax purposes would be realized by investors subject to
federal income taxation upon the exchange, depending upon the investor's basis
in the securities tendered.

The Adviser will not approve the acceptance of securities in exchange for
Fund shares unless (i) the Adviser, 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 Select Shares of one or more of the
Funds through the use of electronic funds transfers. Investors may commence
their participation in this program with a minimum initial investment of $2,500
and may elect to make subsequent investments by transfers of a minimum of $50
into their established Fund account. You may contact the Trust for more
information about the Barr Rosenberg Automatic Investment Program.

35
<PAGE>
For purposes of calculating the purchase price of Fund shares, a purchase
order is received by the Trust on the day that it is in "good order" unless it
is rejected by the Distributor. For a purchase order of Fund Shares to be in
"good order" on a particular day a check or money wire must be received on or
before 4:00 p.m., New York time of that day. In the case of a purchase in-kind
of Institutional Shares, the investor's securities must be placed on deposit at
the 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 its Funds or to reject purchase orders when, in the
judgment of the Adviser, such suspension or rejection would be in the best
interests of the Trust or a Fund.

Purchases of a Fund's shares may be made in full or in fractional shares of
the Fund calculated to three decimal places. In the interest of economy and
convenience, certificates for shares will not be issued.

IRA ACCOUNTS

Select Shares of all Funds may be used as a funding medium for IRAs. The
minimum initial investment for an IRA is $2,000. A special application must be
completed in order to create such an account. Contributions to IRAs are subject
to prevailing amount limits set by the Internal Revenue Service. For more
information about IRAs, call the Trust at 1-800-447-3332.

REDEMPTION OF SHARES

Shares of each Fund may be redeemed by mail, or, if authorized by an
investor in an Account Application, by telephone. The value of shares redeemed
may be more or less than the original cost of those shares, depending on the
market value of the investment securities held by the particular Fund at the
time of the redemption.

BY MAIL

The Trust will redeem its shares at the net asset value next determined
after the request is received in "good order." See "How the Trust Prices Shares
of the Funds -- Determination of Net Asset Value." Requests should be addressed
to Barr Rosenberg Series Trust, P.O. Box 182495, Columbus, Ohio 43218-2495.

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.

36
<PAGE>
SIGNATURE GUARANTEES

To protect shareholder accounts, the Trust and the Transfer Agent from
fraud, signature guarantees may be required to enable the Trust to verify the
identity of the person who has authorized a redemption from an account.
Signature guarantees are required for (1) redemptions where the proceeds are to
be sent to someone other than the registered shareholder(s) at the registered
address, (2) redemptions of $25,000 or more, and (3) share transfer requests.
Signature guarantees may be obtained from certain eligible financial
institutions, including but not limited to, the following: banks, trust
companies, credit unions, securities brokers and dealers, savings and loan
associations and participants in the Securities and Transfer Association
Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) or the
New York Stock Exchange Medallion Signature Program (MSP). Shareholders may
contact the Trust at 1-800-447-3332 for further details.

BY TELEPHONE

Provided the Telephone Redemption Option has been authorized by an investor
in an Account Application, a redemption of shares may be requested by calling
the Transfer Agent at 1-800-447-3332 and requesting that the redemption proceeds
be mailed to the primary registration address or wired per the authorized
instructions. If the Telephone Redemption Option or the Telephone Exchange
Option (as described below) 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 business days
following a telephonic address change.

SYSTEMATIC WITHDRAWAL PLAN

An owner of $12,000 or more of shares of a Fund may elect to have periodic
redemptions made from the investor's account to be paid on a monthly, quarterly,
semiannual or annual basis. The maximum payment per year is 12% of the account
value at the time of the election. The 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.

37
<PAGE>
FURTHER REDEMPTION INFORMATION

The Trust will not make payment on redemptions of shares purchased by check
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 Adviser determines, in its sole discretion, that it would not be in
the best interests of the remaining shareholders of a Fund to make a redemption
payment to an Institutional Shareholder wholly or partly in cash, such Fund may
pay the redemption price of Institutional Shares in whole or in part by a
distribution in kind of readily marketable securities held by such Fund in lieu
of cash. Securities used to redeem Fund shares in kind will be valued in
accordance with the Fund's procedures for valuation described under
"Determination of Net Asset Value." Securities distributed by the Fund in kind
will be selected by the Adviser in light of the Fund's objective and will not
generally represent a PRO RATA distribution of each security held in the Fund's
portfolio. Investors may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.

The Trust may suspend the right of redemption and may postpone payment for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the Securities and
Exchange Commission, during periods when trading on the Exchange is restricted
or during an emergency which makes it impracticable for the Funds to dispose of
their securities or to fairly determine the value of their net assets, or during
any other period permitted by the Securities and Exchange Commission for the
protection of investors.

EXCHANGING SHARES

The Funds offer two convenient ways to exchange shares in one Fund for
shares of another Fund in the Trust. Shares of a particular class of a Fund may
be exchanged only for shares of the same class in another Fund. There is no
sales charge on exchanges. Before engaging in an exchange transaction, a
shareholder should read carefully the information in the Prospectus describing
the Fund into which the exchange will occur. A shareholder may not exchange
shares of a class of one Fund for shares of the same class of another Fund that
is not qualified for sale in the state of the shareholder's residence. Although
the Trust has no current intention of terminating or modifying the exchange
privilege, it reserves the right to do so at any time.

An exchange is taxable as a sale of a security on which a gain or loss may
be recognized. Shareholders should receive written confirmation of the exchange
within a few days of the completion of the transaction.

A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the respective net asset values next determined following
receipt of the request by the Funds containing the information indicated below.

EXCHANGE BY MAIL

To exchange Fund shares by mail, shareholders should simply send a letter of
instruction to the Trust. The letter of instruction must include: (a) the
investor's account number; (b) the class of shares to be exchanged; (c) the Fund
from and the Fund into which the exchange is to be made; (d) the dollar or share
amount to be exchanged; and (e) the signatures of all registered owners or
authorized parties.

38
<PAGE>
EXCHANGE BY TELEPHONE

To exchange Fund shares by telephone or to ask questions about the exchange
privilege, shareholders may call the Trust at 1-800-447-3332. If you wish to
exchange shares, please be prepared to give the telephone representative the
following information: (a) the account number, social security number and
account registration; (b) the class of shares to be exchanged; (c) the name of
the Fund from which and the Fund into which the exchange is to be made; and (d)
the dollar or share amount to be exchanged. Telephone exchanges are available
only if the shareholder so indicates by checking the "yes" box on the Account
Application. The Trust employs procedures, including recording telephone calls,
testing a caller's identity, and sending written confirmation of telephone
transactions, designed to give reasonable assurance that instructions
communicated by telephone are genuine, and to discourage fraud. To the extent
that a Fund does not follow such procedures, it may be liable for losses due to
unauthorized or fraudulent telephone instructions. A Fund will not be liable for
acting upon instructions communicated by telephone that it reasonably believes
to be genuine. The Trust reserves the right to suspend or terminate the
privilege of exchanging by mail or by telephone at any time. The telephone
exchange privilege will be suspended for a period of 10 business days following
a telephonic address change.

HOW THE TRUST PRICES SHARES OF THE FUNDS

The price of each Fund's shares is based on its net asset value as next
determined after receipt of a purchase order. See "Determination of Net Asset
Value," below.

For purposes of calculating the purchase price of Fund shares, if it does
not reject a purchase order, the Trust considers an order received on the day
that it receives a check or money order on or before 4:00 p.m., New York Time.
If the Trust receives the payment after the deadline, it will base the purchase
price of Fund shares on the next determination of net asset value of Fund
shares.

The Trust reserves the right, in its sole discretion, to suspend the
offering of shares of a Fund or Funds or to reject purchase orders when the
Adviser believes that suspension or rejection would be in the best interests of
the Trust.

Purchases of each Fund's shares may be made in full or in fractional shares
of the relevant Fund calculated to three decimal places. In the interest of
economy and convenience, the Trust will not issue certificates for shares.

DETERMINATION OF NET ASSET VALUE

The net asset value of each class of shares of the Funds will be determined
once on each day on which the New York Stock Exchange is open as of 4:00 p.m.,
New York time. The net asset value per share of each class of a Fund is
determined by dividing the particular class's proportionate interest in the
total market value of the Fund's portfolio investments and other assets, less
any applicable liabilities, by the total outstanding shares of that class of the
Fund. Specifically, each Fund's liabilities are allocated among its classes. The
total of such liabilities allocated to a particular class plus that class'
servicing or distribution and shareholder service 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.

39
<PAGE>
Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent quoted
bid price. Price information on listed securities is generally taken from the
closing price on the exchange where the security is primarily traded. Unlisted
securities for which market quotations are readily available are valued at the
most recent quoted bid price, except that debt obligations with sixty days or
less remaining until maturity may be valued at their amortized cost.
Exchange-traded options, futures and options on futures are valued at the
settlement price as determined by the appropriate clearing corporation. Other
assets and securities for which no quotations are readily available are valued
at fair value as determined in good faith by the Trustees of the Trust or by
persons acting at their direction.

DISTRIBUTIONS

Each Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net realized short-term capital gains). Each Fund also
intends to distribute substantially all of its net realized long-term capital
gains, if any, after giving effect to any available capital loss carryover. Each
Fund's policy is to declare and pay distributions of its dividends and interest
annually although it may do so more frequently as determined by the Trustees of
the Trust. The Funds' policy is to distribute net realized short-term capital
gains and net realized long-term gains annually, although it may do so more
frequently as determined by the Trustees of the Trust to the extent permitted by
applicable regulations.

All dividends and/or distributions will be paid out in the form of
additional shares of the Fund to which the dividends and/or distributions relate
at net asset value unless the shareholder elects to receive cash. Shareholders
may make this election by marking the appropriate box on the Account Application
or by writing to the Administrator.

If you elect to receive distributions in cash and checks (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

Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. So long as
a Fund distributes substantially all of its dividend, interest and certain other
income, its net realized short-term capital gains and its net realized long-term
capital gains to its shareholders and otherwise qualifies for the special rules
governing the taxation of regulated investment companies, the Fund itself will
not pay federal income tax on the amount distributed. Dividend distributions
(I.E., distributions derived from interest, dividends and certain other income,
including, in general, short-term capital gains) will be taxable to shareholders
subject to income tax as ordinary income. Distributions of any long-term capital
gains (generally taxed at a 20% rate) are taxable as such to shareholders
subject to income tax, regardless of how long a shareholder may have owned
shares in such Fund. A distribution paid to shareholders by a Fund in January of
a year is generally deemed to have been received by

40
<PAGE>
shareholders on December 31 of the preceding year, if the distribution was
declared and payable to shareholders of record on a date in October, November or
December of that preceding year. Each Fund will provide federal tax information
annually, including information about dividends and distributions paid during
the preceding year.

If more than 50% of a Fund's assets at fiscal year-end is represented by
debt and equity securities of foreign corporations, the Fund may (and the Japan
Series and the International Small Capitalization Series intend to) elect to
permit shareholders who are U.S. citizens or U.S. corporations to claim a
foreign tax credit or deduction (but not both) on their U.S. income tax returns
for their pro rata portion of qualified taxes paid by the Fund to foreign
countries. As a result, the amounts of foreign income taxes paid by such Fund
would be treated as additional income to shareholders of such Fund for purposes
of the foreign tax credit. Each such shareholder would include in gross income
from foreign sources its pro rata share of such taxes. Certain limitations
imposed by the Internal Revenue Code may prevent shareholders from receiving a
full foreign tax credit or deduction for their allocable amount of such taxes.

The foregoing is a general summary of the federal income tax consequences of
investing in a Fund to shareholders who are U.S. citizens or U.S. corporations.
Shareholders should consult their own tax advisers about the tax consequences of
an investment in the Funds in light of each shareholder's particular tax
situation. Shareholders should also consult their own tax advisers about
consequences under foreign, state, local or other applicable tax laws.

OTHER INFORMATION

The Funds' investment performance may from time to time be included in
advertisements about the Funds. Total return for a Fund is measured by comparing
the value of an investment in a Fund at the beginning of the relevant period to
the redemption value of the investment in such Fund at the end of such period
(assuming immediate reinvestment of any dividends or capital gain
distributions). All data are based on the Funds' past investment results and do
not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of a Fund's
portfolio and a Fund's operating expenses. Investment performance also often
reflects the risks associated with a Fund's investment objective and policies.
These factors should be considered when comparing a Fund's investment results
with those of other mutual funds and other investment vehicles. Quotations of
investment performance for any period when an expense limitation was in effect
will be greater than if the limitation had not been in effect.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand each
Fund's financial performance for the past 5 years (or, if shorter, for the life
of the Fund). Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate that an investor would
have earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Trust's financial
statements, is included in the Funds' Statement of Additional Information, or
SAI.

41
<PAGE>
BARR ROSENBERG SERIES TRUST

U.S. SMALL CAPITALIZATION SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Net asset value, beginning of period.............. $ 9.76 $ 7.13 $ 7.60 $ 6.97 $ 7.36
---------- --------- --------- -------- --------
Income from investment operations:
Net investment income/(loss).................... 0.01** 0.02** 0.04 0.03 0.01
Net realized and unrealized gain/(loss) on
investments................................... (2.02) 3.14 1.39 2.34 0.78
---------- --------- --------- -------- --------
Total from investment operations................ (2.01) 3.16 1.43 2.37 0.79
---------- --------- --------- -------- --------
Distributions to shareholders from:
Net investment income........................... (0.01) (0.01) (0.05) (0.01) (0.08)
Net realized gain on investments (0.08) (0.52) (1.85) (1.73) (1.10)
---------- --------- --------- -------- --------
Total distributions to shareholders............. (0.09) (0.53) (1.90) (1.74) (1.18)
---------- --------- --------- -------- --------
Net asset value, end of period.................... $ 7.66 $ 9.76 $ 7.13 $ 7.60 $ 6.97
---------- --------- --------- -------- --------
---------- --------- --------- -------- --------
Total return...................................... (20.56)% 44.95% 19.53% 35.69% 12.21%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................. $ 445,476 $ 537,891 $ 82,116 $ 60,046 $ 56,910
Net investment income/(loss) before waivers/
reimbursements................................ 0.10% 0.04% (0.12)% 0.22% 0.33%
Net investment income/(loss) net of waivers/
reimbursements................................ 0.16% 0.19% 0.35% 0.47% 0.60%
Expenses before waivers/reimbursements.......... 1.19% 1.30% 1.54% 1.15% 1.17%
Expenses net of waivers/reimbursements.......... 1.15% 1.15% 1.07% 0.90% 0.90%
Portfolio turnover rate......................... 123.66% 77.70% 126.83% 71.87% 57.27%
</TABLE>

- -------------------

** Calculated based on the average shares outstanding during the period.

42
<PAGE>
BARR ROSENBERG SERIES TRUST

U.S. SMALL CAPITALIZATION SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
YEAR YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997(a)
--------- --------- ---------
<S> <C> <C> <C>
ADVISER SHARES
Net asset value, beginning of period............................. $ 9.75 $ 7.14 $ 7.38
--------- --------- ---------
Income from investment operations:
Net investment income/(loss)................................... --** (0.01)** 0.02
Net realized and unrealized gain/(loss) on investments......... (2.02) 3.14 (0.26)
--------- --------- ---------
Total from investment operations............................... (2.02) 3.13 (0.24)
--------- --------- ---------
Distributions to shareholders from:
Net investment income.......................................... -- -- --
Net realized gain on investments............................... (0.08) (0.52) --
--------- --------- ---------
Total distributions to shareholders............................ (0.08) (0.52) --
--------- --------- ---------
Net asset value, end of period................................... $ 7.65 $ 9.75 $ 7.14
--------- --------- ---------
--------- --------- ---------
Total return..................................................... (20.70)% 44.50% (3.25)%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $15,465 $17,448 $ 208
Net investment income/(loss) before waivers/ reimbursements.... (0.06)% (0.22)% 0.07%*
Net investment income/(loss) net of waivers/ reimbursements.... (0.00)% (0.06)% 0.46%*
Expenses before waivers/reimbursements......................... 1.35% 1.56% 1.54%*
Expenses net of waivers/reimbursements......................... 1.29% 1.40% 1.15%*
Portfolio turnover rate........................................ 123.66% 77.70% 126.83%
</TABLE>

- -------------------

* Annualized.

** Calculated based on the average shares outstanding during the period.

(a) From commencement of operations on January 21, 1997 to March 31, 1997.

43
<PAGE>
BARR ROSENBERG SERIES TRUST

U.S. SMALL CAPITALIZATION SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
YEAR YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31,
1999 1998 1997(a)
--------- --------- ---------
<S> <C> <C> <C>
SELECT SHARES
Net asset value, beginning of period............................. $ 9.73 $ 7.13 $ 8.49
--------- --------- ---------
Income from investment operations:
Net investment income/(loss)................................... (0.01)** (0.02)** 0.07
Net realized and unrealized gain/(loss) on investments......... (2.01) 3.14 0.47
--------- --------- ---------
Total from investment operations............................... (2.02) 3.12 0.54
--------- --------- ---------
Distributions to shareholders from:
Net investment income.......................................... -- -- (0.05)
Net realized gain on investments............................... (0.08) (0.52) (1.85)
--------- --------- ---------
Total distributions to shareholders............................ (0.08) (0.52) (1.90)
--------- --------- ---------
Net asset value, end of period................................... $ 7.63 $ 9.73 $ 7.13
--------- --------- ---------
--------- --------- ---------
Total return..................................................... (20.74)% 44.42% 6.84%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $16,228 $33,724 $ 2,375
Net investment income/(loss) before waivers/ reimbursements.... (0.50)% (0.70)% 0.07%*
Net investment income/(loss) net of waivers/ reimbursements.... (0.15)% (0.24)% 0.46%*
Expenses before waivers/reimbursements......................... 1.77% 2.05% 1.54%*
Expenses net of waivers/reimbursements......................... 1.42% 1.59% 1.15%*
Portfolio turnover rate........................................ 123.66% 77.70% 126.83%
</TABLE>

- -------------------

* Annualized.

** Calculated based on the average shares outstanding during the period.

(a) From commencement of operations on October 22, 1996 to March 31, 1997.

44
<PAGE>
BARR ROSENBERG SERIES TRUST

JAPAN SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
--------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Net asset value, beginning of period.............. $ 4.72 $ 6.20 $ 8.77 $ 8.96 $ 8.25
--------- ---------- -------- --------- --------
Income from investment operations:
Net investment income/(loss).................... (0.02)** (0.04)** (0.05)** 0.04 0.10
Net realized and unrealized gain/(loss) on
investments and foreign currency
transactions.................................. 0.76 (1.44) (2.45) (0.15) 0.63
--------- ---------- -------- --------- --------
Total from investment operations................ 0.74 (1.48) (2.50) (0.11) 0.73
--------- ---------- -------- --------- --------
Distributions to shareholders from:
Net investment income........................... -- -- (0.04) -- --
In excess of net investment income.............. -- -- (0.03) (0.08) (0.02)
--------- ---------- -------- --------- --------
Total distributions to shareholders............. -- -- (0.07) (0.08) (0.02)
--------- ---------- -------- --------- --------
Net asset value, end of period.................... $ 5.46 $ 4.72 $ 6.20 $ 8.77 $ 8.96
--------- ---------- -------- --------- --------
--------- ---------- -------- --------- --------
Total return...................................... 15.68% (23.87)% (28.68)% (1.20)% 8.86%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................. $ 1,053 $ 866 $ 1,009 $ 1,378 $ 1,385
Net investment income/(loss) before waivers/
reimbursements................................ (13.32)% (13.49)% (12.54)% (6.38)% (6.22)%
Net investment income/(loss) net of waivers/
reimbursements................................ (0.50)% (0.74)% (0.63)% (0.22)% (0.20)%
Expenses before waivers/reimbursements.......... 14.32% 14.25% 13.33% 7.16% 7.02%
Expenses net of waivers/reimbursements.......... 1.50% 1.50% 1.42% 1.00% 1.00%
Portfolio turnover rate......................... 152.20% 102.13% 51.70% 60.60% 57.10%
</TABLE>

- -------------------

** Calculated based on the average shares outstanding during the period.

45
<PAGE>
BARR ROSENBERG SERIES TRUST

JAPAN SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR ENDED
ENDED ENDED MARCH 31,
MARCH 31, 1999 MARCH 31, 1998 1997(a)
-------------- -------------- --------------
<S> <C> <C> <C>
SELECT SHARES
Net asset value, beginning of period............................. $ 4.71 $ 6.20 $ 8.08
------- ------- -------
Income from investment operations:
Net investment income/(loss)................................... (0.04)** (0.04)** (0.01)**
Net realized and unrealized gain/(loss) on investments and
foreign currency transactions................................ 0.77 (1.45) (1.80)
------- ------- -------
Total from investment operations............................... 0.73 (1.49) (1.81)
------- ------- -------
Distributions to shareholders from:
Net investment income.......................................... -- -- (0.04)
In excess of net investment income............................. -- -- (0.03)
------- ------- -------
Total distributions to shareholders............................ -- -- (0.07)
------- ------- -------
Net asset value, end of period................................... $ 5.44 $ 4.71 $ 6.20
------- ------- -------
------- ------- -------
Total return..................................................... 15.50% (24.03)% (22.59)%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $ 48 $ 50 $ 13
Net investment income/(loss) before waivers/ reimbursements.... (14.06)% (9.10)% (11.83)%*
Net investment income/(loss) net of waivers/ reimbursements.... (0.91)% (0.82)% 0.00%*
Expenses before waivers/reimbursements......................... 14.95% 10.12% 13.33%*
Expenses net of waivers/reimbursements......................... 1.80% 1.85% 1.50%*
Portfolio turnover rate........................................ 152.20% 102.13% 51.70%
</TABLE>

- -------------------

* Annualized.

** Calculated based on the average shares outstanding during the period.

(a) From commencement of operations on October 22, 1996 to March 31, 1997.

46
<PAGE>
BARR ROSENBERG SERIES TRUST

INTERNATIONAL SMALL CAPITALIZATION SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1997(a)
-------------- -------------- -----------------
<S> <C> <C> <C>
INSTITUTIONAL SHARES
Net asset value, beginning of period............................. $ 10.10 $ 10.13 $ 10.00
------- ------- -------
Income from investment operations:
Net investment income/(loss)................................... 0.12** 0.08** 0.02**
Net realized and unrealized gain/(loss) on investment and
foreign currency transactions................................ (1.02) 0.14 0.11
------- ------- -------
Total from investment operations............................... (0.90) 0.22 0.13
------- ------- -------
Distributions to shareholders from:
Net investment income.......................................... (0.09) (0.05) --
Net realized gain on investments and foreign currency
transactions................................................. -- (0.06) --
In excess of net realized gain on investments and foreign
currency transactions........................................ -- (0.14) --
------- ------- -------
Total distributions to shareholders............................ (0.09) (0.25) --
------- ------- -------
Net asset value, end of period................................... $ 9.11 $ 10.10 $ 10.13
------- ------- -------
------- ------- -------
Total return..................................................... (8.83)% 2.51% 1.30%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $ 34,292 $ 39,218 $ 12,859
Net investment income/(loss) before waivers/ reimbursements.... 0.82% (0.32)% (5.85)%*
Net investment income/(loss) net of waivers/ reimbursements.... 1.29% 0.82% 0.11%*
Expenses before waivers/reimbursements......................... 1.97% 2.64% 7.46%*
Expenses net of waivers/reimbursements......................... 1.50% 1.50% 1.50%*
Portfolio turnover rate........................................ 111.05% 77.72% 6.71%
</TABLE>

- -------------------

* Annualized.

** Calculated based on the average shares outstanding during the period.

(a) From commencement of operations on September 23, 1996 to March 31, 1997.

47
<PAGE>
BARR ROSENBERG SERIES TRUST

INTERNATIONAL SMALL CAPITALIZATION SERIES

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1997(a)
-------------- -------------- -----------------
<S> <C> <C> <C>
SELECT SHARES
Net asset value, beginning of period............................. $ 10.09 $ 10.13 $ 10.04
------- ------ ------
Income from investment operations:
Net investment income/(loss)................................... 0.07** 0.06** 0.02**
Net realized and unrealized gain/(loss) on investments and
foreign currency transactions................................ (1.00) 0.14 0.07
------- ------ ------
Total from investment operations............................... (0.93) 0.20 0.09
------- ------ ------
Distributions to shareholders from:
Net investment income.......................................... (0.06) (0.04) --
Net realized gain on investments and foreign currency
transactions................................................. -- (0.06) --
In excess of net realized gain on investments and foreign
currency transactions........................................ -- (0.14) --
------- ------ ------
Total distributions to shareholders............................ (0.06) (0.24) --
------- ------ ------
Net asset value, end of period................................... $ 9.10 $ 10.09 $ 10.13
------- ------ ------
------- ------ ------
Total return..................................................... (9.16)% 2.22% 0.90%

RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................................ $ 1,697 $ 1,375 $ 185
Net investment income/(loss) before waivers/ reimbursements.... 0.08% (0.83)% (5.52)%*
Net investment income/(loss) net of waivers/ reimbursements.... 0.79% 0.61% 0.44%*
Expenses before waivers/reimbursements......................... 2.66% 3.35% 7.46%*
Expenses net of waivers/reimbursements......................... 1.95% 1.91% 1.50%*
Portfolio turnover rate........................................ 111.05% 77.72% 6.71%
</TABLE>

- -------------------

* Annualized.

** Calculated based on the average shares outstanding during the period.

(a) From commencement of operations on October 29, 1996 to March 31, 1997.

48
<PAGE>

The Fund's statement of additional information ("SAI") dated July 30, 1999
contains additional information about the Funds. It is incorporated by
reference into this prospectus, which means that it is part of this
prospectus for legal purposes. Additional information about the funds'
investments is available in the Funds' annual and semi-annual reports to
shareholders. You may obtain free copies of the SAI and the Funds' annual and
semi-annual reports, request other information about the Funds, or make
shareholder inquiries by writing to the Trust at the address below or by
telephoning 1-800-447-3332.

The SAI has been filed with the Securities and Exchange Commission. You
may review and copy information about the Funds, including the SAI, at the
Commission's Public Reference Room in Washington, D.C. You may call the
Commission at 1-800-SEC-0330 for information about the operation of the
Public Reference Room. The commission maintains a World Wide Web site at
http://www.sec.gov, which contains reports and other information about the
Fund. You may also obtain copies of these materials, upon payment of a
duplicating fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009.

Address Correspondence To:
Barr Rosenberg Series Trust
3435 Stelzer Road
Columbus, Ohio 43219
1-800-447-3332

Shareholder Services
1-800-555-5737 (Institutional Shares)
1-800-447-3332 (Adviser and Select Shares)

Adviser
AXA Rosenberg Investment Management LLC
Four Orinda Way, Building E
Orinda, CA 94563

Additional Information about the Adviser may be found on
the World Wide Web at http://www.axarosenberg.com

Administrator, Transfer and Dividend Paying Agent
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219

Custodian of Assets
State Street Bank and Trust Company
Mutual Funds Division
Boston, MA 02102

Independent Accountants
PricewaterhouseCoopers LLP
333 Market Street
San Francisco, CA 94105

Legal Counsel
Ropes & Gray
One International Place
Boston, MA 02110

BRG-0036R

Investment Company Act File No. 811-05547

[LOGO]
Barr
Rosenberg
Series
Trust

- - U.S. Small Capitalization Series

- - International Small Capitalization Series

- - Japan Series

Prospectus

July 30, 1999

<PAGE>

BARR ROSENBERG SERIES TRUST

U.S. SMALL CAPITALIZATION SERIES
INTERNATIONAL SMALL CAPITALIZATION SERIES
JAPAN SERIES

STATEMENT OF ADDITIONAL INFORMATION

JULY 30, 1999

This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the prospectus of the U.S. Small
Capitalization Series, Japan Series and International Small Capitalization
Series of Barr Rosenberg Series Trust dated July 30, 1999 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

<S> <C>
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . 3

MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . 7

INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . . . .10

MANAGEMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . .15

PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

TOTAL RETURN CALCULATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . .23

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . .28

PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . .28

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
</TABLE>

2
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The investment objective and policies of each of the U.S. Small
Capitalization Series, International Small Capitalization Series and Japan
Series (each a "Fund" and collectively, the "Funds") of Barr Rosenberg Series
Trust (the "Trust") are summarized on the front page of the Prospectus and in
the text of the Prospectus under the headings "Investment Objectives and
Policies" and "General Description of Risks and Fund Investments."

The following is an additional description of certain investments and/or
policies of the Fund(s).

INDEX FUTURES (ALL FUNDS). An index futures contract (an "Index Future") is
a contract to buy or sell an integral number of units of an index at a specified
future date at a price agreed upon when the contract is made. A unit is the
value of the relevant index from time to time. Entering into a contract to buy
units is commonly referred to as buying or purchasing a contract or holding a
long position in an index.

Index Futures contracts can be traded through all major commodity brokers.
Currently, contracts are expected to expire on the tenth day of March, June,
September and December. A Fund will ordinarily be able to close open positions
on the United States futures exchange on which Index Futures are then traded at
any time up to and including the expiration day.

As noted in the Prospectus, upon entering into a futures contract, a Fund
will be required to deposit initial margin with its custodian in a segregated
account in the name of the futures broker. Variation margin will be paid to and
received from the broker on a daily basis as the contracts are marked to market.
For example, when a Fund has purchased an Index Future and the price of the
relevant index has risen, that position will have increased in value and the
Fund will receive from the broker a variation margin payment equal to that
increase in value. Conversely, when a Fund has purchased an Index Future and the
price of the relevant index has declined, the position would be less valuable
and the Fund would be required to make a variation margin payment to the broker.

The price of Index Futures may not correlate perfectly with movement in
the underlying index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index
and futures markets. Secondly, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market, and as a
result the futures market may attract more speculators than does the
securities market. Increased participation by speculators in the futures
market may also cause temporary price distortions. In addition, with respect
to the Japan Series, trading hours for Index Futures may not correspond
perfectly to hours of trading on the Tokyo Stock Exchange. This may result in
a disparity between the price of Index Futures and the value of the
underlying index due to the lack of continuous arbitrage between the Index
Futures price and the value of the underlying Index.

FOREIGN CURRENCY TRANSACTIONS (INTERNATIONAL SMALL CAPITALIZATION SERIES
AND JAPAN SERIES). As is disclosed in the Prospectus following the heading
"General Description of Risks and Fund Investments," the Funds do not currently
intend to hedge the foreign currency risk associated with investments in
securities denominated in foreign currencies. However, the Funds reserve the
right to buy or sell foreign currencies or to deal in

3
<PAGE>

forward foreign currency contracts to hedge against possible variations in
foreign exchange rates pending the settlement of securities transactions. The
Funds also reserve the right to use currency futures contracts and related
options thereon for similar purposes. By entering into a futures or forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying security transactions, a Fund
will be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the security is purchased
or sold and the date on which payment is made or received. A Fund's dealing in
forward contracts will be limited to this type of transaction. A Fund will not
engage in currency futures transactions for leveraging purposes. A put option on
a futures contract gives a Fund the right to assume a short position in the
futures contract until the expiration of the option. A call option on a futures
contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option.

CURRENCY FORWARD CONTRACTS (INTERNATIONAL SMALL CAPITALIZATION SERIES AND
JAPAN SERIES). A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract as agreed by the
parties, at a price set at the time of the contract. In the case of a cancelable
forward contract, the holder has the unilateral right to cancel the contract at
maturity by paying a specified fee. The contracts traded in the interbank market
are negotiated directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades.

CURRENCY FUTURES TRANSACTIONS (INTERNATIONAL SMALL CAPITALIZATION SERIES
AND JAPAN SERIES). A currency futures contract sale creates an obligation by the
seller to deliver the amount of currency called for in the contract in a
specified delivery month for a stated price. A currency futures contract
purchase creates an obligation by the purchaser to take delivery of the
underlying amount of currency in a specified delivery month at a stated price.
Futures contracts are traded only on commodity exchanges -- known as "contract
markets" -- approved for such trading by the Commodity Futures Trading
Commission ("CFTC"), and must be executed through a futures commission merchant,
or brokerage firm, which is a member of the relevant contract market.

Although futures contracts by their terms call for actual delivery or
acceptance, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out a futures contract
sale is effected by purchasing a futures contract for the same aggregate amount
of the specific type of financial instrument or commodity and the same delivery
date. If the price of the initial sale of the futures contract exceeds the price
of the offsetting purchase, the seller is paid the difference and realizes a
gain. Conversely, if the price of the offsetting purchase exceeds the price of
the initial sale, the seller realizes a loss. Similarly, the closing out of a
futures contract purchase is effected by the purchaser entering into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the offsetting sale
price, the purchaser realizes a loss.

The purchase or sale of a futures contract differs from the purchase or
sale of a security, in that no price or premium is paid or received. Instead, an
amount of cash or U.S. Treasury bills generally not exceeding 5% of the contract
amount must be deposited with the broker. This amount is

4
<PAGE>

known as initial margin. Subsequent payments to and from the broker, known as
variation margin, are made on a daily basis as the price of the underlying
futures contract fluctuates making the long and short positions in the futures
contract more or less valuable, a process known as "marking to the market." At
any time prior to the settlement date of the futures contract, the position may
be closed out by taking an opposite position which will operate to terminate the
position in the futures contract. A final determination of variation margin is
then made, additional cash is required to be paid to or released by the broker,
and the purchaser realizes a loss or gain. In addition, a commission is paid on
each completed purchase and sale transaction.

Unlike a currency futures contract, which requires the parties to buy and
sell currency on a set date, an option on a futures contract entitles its holder
to decide on or before a future date whether to enter into such a contract. If
the holder decides not to enter into the contract, the premium paid for the
option is lost. Since the value of the option is fixed at the point of sale,
there are no daily payments of cash in the nature of "variation" or
"maintenance" margin payments to reflect the change in the value of the
underlying contract as there are by a purchaser or seller of a currency futures
contract.

The ability to establish and close out positions on options on futures will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or be maintained.

The Funds will write (sell) only covered put and call options on currency
futures. This means that a Fund will provide for its obligations upon exercise
of the option by segregating sufficient cash or short-term obligations or by
holding an offsetting position in the option or underlying currency future, or a
combination of the foregoing. Set forth below is a description of methods of
providing cover that the Funds currently expect to employ, subject to applicable
exchange and regulatory requirements. If other methods of providing appropriate
cover are developed, a Fund reserves the right to employ them to the extent
consistent with applicable regulatory and exchange requirements.

A Fund will, so long as it is obligated as the writer of a call option on
currency futures, own on a contract-for-contract basis an equal long position in
currency futures with the same delivery date or a call option on currency
futures with the difference, if any, between the market value of the call
written and the market value of the call or long currency futures purchased
maintained by the Fund in cash, U.S. government securities, or other high-grade
liquid debt obligations in a segregated account with its custodian. If at the
close of business on any day the market value of the call purchased by a Fund
falls below 100% of the market value of the call written by the Fund, the Fund
will so segregate an amount of cash, U.S. government securities, or other
high-grade liquid debt obligations equal in value to the difference.
Alternatively, a Fund may cover the call option through segregating with its
custodian an amount of the particular foreign currency equal to the amount of
foreign currency per futures contract option times the number of options written
by the Fund.

In the case of put options on currency futures written by a Fund, the Fund
will hold the aggregate exercise price in cash, U.S. government securities, or
other high-grade liquid debt obligations in a segregated account with its
custodian, or own put options on currency futures or short currency futures,
with the difference, if any, between the market value of the put written and the
market value of the puts purchased or the currency futures sold maintained by
the Fund in cash, U.S. government securities, or other high-grade liquid debt
obligations in a segregated account with its custodian. If at the close of
business on any day the market value of the put options purchased or the

5
<PAGE>

currency futures sold by a Fund falls below 100% of the market value of the put
options written by the Fund, the Fund will so segregate an amount of cash, U.S.
Government securities, or other high-grade liquid debt obligations equal in
value to the difference.

A Fund may not enter into currency futures contracts or related options
thereon if immediately thereafter the amount committed to margin plus the amount
paid for premiums for unexpired options on currency futures contracts exceeds 5%
of the market value of the Fund's total assets.

LIMITATIONS ON THE USE OF CURRENCY FUTURES CONTRACTS (INTERNATIONAL SMALL
CAPITALIZATION SERIES AND JAPAN SERIES). A Fund's ability to engage in the
currency futures transactions described above will depend on the availability of
liquid markets in such instruments. Markets in currency futures are relatively
new and still developing. It is impossible to predict the amount of trading
interest that may exist in various types of currency futures. Therefore no
assurance can be given that a Fund will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, a Fund's ability to
engage in such transactions may be limited by tax considerations.

RISK FACTORS IN CURRENCY FUTURES TRANSACTIONS (INTERNATIONAL SMALL
CAPITALIZATION SERIES AND JAPAN SERIES). Investment in currency futures
contracts involves risk. Some of that risk may be caused by an imperfect
correlation between movements in the price of the futures contract and the price
of the currency being hedged. The hedge will not be fully effective where there
is such imperfect correlation. To compensate for imperfect correlations, a Fund
may purchase or sell futures contracts in a greater amount than the hedged
currency if the volatility of the hedged currency is historically greater than
the volatility of the futures contracts. Conversely, a Fund may purchase or sell
fewer contracts if the volatility of the price of the hedged currency is
historically less than that of the futures contracts. The risk of imperfect
correlation generally tends to diminish as the maturity date of the futures
contract approaches.

The successful use of transactions in futures and related options also
depends on the ability of the Adviser to forecast correctly the direction and
extent of exchange rate and stock price movements within a given time frame. It
is impossible to forecast precisely what the market value of securities a Fund
anticipates buying will be at the expiration or maturity of a currency forward
or futures contract. Accordingly, in cases where a Fund seeks to protect against
an increase in value of the currency in which the securities are denominated
through a foreign currency transaction, it may be necessary for the Fund to
purchase additional foreign currency on the spot market (and bear the expense of
such currency purchase) if the market value of the securities to be purchased is
less than the amount of foreign currency the Fund contracted to purchase.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security or securities if the
market value of such security or securities exceeds the value of the securities
purchased. When a Fund purchases forward or futures contracts (or options
thereon) to hedge against a possible increase in the price of currency in which
is denominated the securities the Fund anticipates purchasing, it is possible
that the market may instead decline. If a Fund does not then invest in such
securities because of concern as to possible further market decline or for other
reasons, the Fund may realize a loss on the forward or futures contract that is
not offset by a reduction in the price of the securities purchased. As a result,
a Fund's total return for such period may be less than if it had not engaged in
the forward or futures transaction.

Foreign currency transactions that are intended to hedge the value of
securities a Fund contemplates purchasing do not eliminate fluctuations in the

6
<PAGE>

underlying prices of those securities. Rather, such currency transactions simply
establish a rate of exchange which can be used at some future point in time.
Additionally, although these techniques tend to minimize the risk of loss due to
a change in the value of the currency involved, they tend to limit any potential
gain that might result from the increase in the value of such currency.

The amount of risk a Fund assumes when it purchases an option on a currency
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.

The liquidity of a secondary market in a currency futures contract may be
adversely affected by "daily price fluctuation limits" established by commodity
exchanges which limit the amount of fluctuation in a futures contract price
during a single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures positions. Prices have in the past
exceeded the daily limit on a number of consecutive trading days.

A Fund's ability to engage in currency forward and futures transactions may
be limited by tax considerations.

WARRANTS (JAPAN SERIES). The Japan Series may from time to time purchase
warrants; however, not more than 5% of its net assets (at the time of purchase)
will be invested in warrants or rights other than warrants acquired in units or
attached to other securities. Of such 5%, not more than 2% of such net assets at
the time of purchase may be invested in warrants that are not listed on the New
York Stock Exchange or American Stock Exchange. Warrants have no voting rights,
pay no dividends and have no rights with respect to the assets of the
corporation issuing them. Warrants represent options to purchase equity
securities of an issuer at a specific price for a specific period of time. They
do not represent ownership of such securities, but only the right to buy them.

MISCELLANEOUS INVESTMENT PRACTICES

PORTFOLIO TURNOVER. A change in securities held by a Fund is known as
"portfolio turnover" and almost always involves the payment by the Fund of
brokerage commissions or dealer markup and other transaction costs on the
sale of securities as well as on the reinvestment of the proceeds in other
securities. Portfolio turnover is not a limiting factor with respect to
investment decisions. The portfolio turnover rate for the U.S. Small
Capitalization Series for the fiscal years ended March 31, 1999 and 1998 was
123.66% and 77.70%, respectively. The portfolio turnover rate for the Japan
Series for the fiscal years ended March 31, 1999 and 1998 was 152.20% and
102.13%, respectively. The portfolio turnover rate for the International
Small Capitalization Series for the fiscal years ended March 31, 1999 and
March 31, 1998 was 111.05% and 77.72%, respectively. As disclosed in the
Prospectus, high portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs, which will be borne
directly by the Fund, and could involve realization of capital gains that
would be taxable when distributed to shareholders of a Fund. To the extent
that portfolio turnover results in the realization of net short-term capital
gains, such gains are ordinarily taxed to shareholders at ordinary income tax
rates. 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 each of the Funds may be changed without shareholder approval.

7
<PAGE>

INVESTMENT RESTRICTIONS

Without a vote of the majority of the outstanding voting securities of a
Fund, the Trust will not take any of the following actions with respect to such
Fund:

(1) Borrow money in excess of 10% of the value (taken at the lower of cost
or current value) of the Fund's total assets (not including the amount borrowed)
at the time the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not for leverage)
which might otherwise require the untimely disposition of portfolio investments
or for extraordinary or emergency purposes. Such borrowings will be repaid
before any additional investments are purchased.

(2) Pledge, hypothecate, mortgage or otherwise encumber its assets in
excess of 10% of the Fund's total assets (taken at cost) and then only to secure
borrowings permitted by Restriction 1 above. (For the purposes of this
restriction, collateral arrangements with respect to options, stock index,
interest rate, currency or other futures, options on futures contracts and
collateral arrangements with respect to initial and variation margin are not
deemed to be a pledge or other encumbrance of assets. With respect to the
International Small Capitalization Series and the Japan Series, collateral
arrangements with respect to swaps and other derivatives are also not deemed to
be a pledge or other encumbrance of assets.)

(3) Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities. (For this
purpose, the deposit or payment of initial or variation margin in connection
with futures contracts or related options transactions is not considered the
purchase of a security on margin.)

(4) Make short sales of securities or maintain a short position for the
Fund's account unless at all times when a short position is open the Fund owns
an equal amount of such securities or owns securities which, without payment of
any further consideration, are convertible into or exchangeable for securities
of the same issue as, and equal in amount to, the securities sold short.

(5) Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under federal securities laws.

(6) Purchase or sell real estate, although it may purchase securities of
issuers which deal in real estate, including securities of real estate
investment trusts, and may purchase securities which are secured by interests in
real estate.

(7) Concentrate more than 25% of the value of its total assets in any one
industry.

(8) Invest in securities of other investment companies, except to the
extent permitted by the Investment Company Act of 1940, as amended (the "1940
Act"). Under the 1940 Act, no registered investment company may generally (a)
invest more than 10% of its total assets (taken at current value) in securities
of other investment companies, (b) own securities of any one investment company
having a value in excess of 5% of its total assets (taken at current value), or
(c) own more than 3% of the outstanding voting stock of any one investment
company.)

(9) Purchase or sell commodities or commodity contracts except that each of
the Funds may purchase and sell foreign currency, currency futures contracts and
options thereon, stock index and other financial futures

8
<PAGE>

contracts and options thereon.

(10) Make loans, except by purchase of debt obligations or by entering into
repurchase agreements or through the lending of the Fund's portfolio securities.

(11) Issue senior securities. (For the purpose of this restriction none of
the following is deemed to be a senior security: any pledge or other encumbrance
of assets permitted by restriction (2) above; any borrowing permitted by
restriction (1) above; any collateral arrangements with respect to options,
future contracts and options on future contracts and with respect to initial and
variation margin; and the purchase or sale of options, forward contracts, future
contracts or options on future contracts.)

Notwithstanding the latitude permitted by Restrictions 1, 2, 3, 4 and 9
above, the Funds have no current intention of (a) borrowing money, (b)
purchasing interest rate futures or (c) entering into short sales.

It is contrary to the present policy of each Fund, which may be changed by
the Trustees of the Trust without shareholder approval, to:

(a) With the exception of the Japan Series, invest in warrants or rights
(other than warrants or rights acquired by the Fund as a part of a unit or
attached to securities at the time of purchase).

(b) Write, purchase or sell options on particular securities (as opposed to
market indices or currencies).

(d) Make investments for the purpose of exercising control of a company's
management.

(e) Invest in (a) securities which at the time of investment are not
readily marketable, (b) securities the disposition of which is restricted
under the federal securities laws, and (c) repurchase agreements maturing in
more than seven days if, as a result, more than 15% of the Fund's net assets
(taken at current value) would then be invested in securities described in
(a), (b) and (c) above.

(f) With respect to 75% of its total assets, invest in a security if, as
a result of such investment, (a) more than 5% of the Fund's total assets
would be invested in the securities of that issuer, or (b) it would hold more
than 10% (taken at the time of such investment) of the outstanding voting
securities of any one issuer, except that this restriction does not apply to
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

Unless otherwise indicated, all percentage limitations on investments set
forth herein and in the Prospectus will apply at the time of the making of an
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment.

The phrase "shareholder approval," as used in the Prospectus and herein,
and the phrase "vote of a majority of the outstanding voting securities," as
used herein, means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of a Fund or the Trust, as the case may be, or (2) 67% or
more of the shares of a Fund or the Trust, as the case may be, present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.

9
<PAGE>

INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS

The tax status of the Funds and the distributions which they may make are
summarized in the Prospectus under the headings "Distributions" "Taxes." The
Funds intend 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, each Fund must, among
other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
or other disposition of securities or foreign currencies or other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such securities or
currencies; (b) diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally with respect to any
one issuer to not more than 5% of the total assets of such Fund and not more
than 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities of any issuer
(other than U.S. Government securities or securities of other regulated
investment companies); and (c) distribute annually at least 90% of the sum of
its taxable net investment income, its net tax-exempt income (if any), and, the
excess, if any, of net short-term capital gains over net long-term capital
losses for such year. To the extent a Fund qualifies for treatment as a
regulated investment company, the Fund will not be subject to federal income tax
on income paid to its shareholders in the form of dividends or capital gain
distributions.

The Japan Series and the International Small Capitalization Series may be
subject to foreign withholding taxes on income and gains derived from foreign
investments. Such taxes would reduce the yield on such Funds' investments, but,
as discussed in the Prospectus, may be taken as either a deduction or a credit
by U.S. citizens and corporations. Investment by either Fund in certain "passive
foreign investment companies" could subject the Fund to a U.S. federal income
tax or other charge on distributions received from, or on the sale of its
investment in, such a company. Such a tax cannot be eliminated by making
distributions to Fund shareholders. A Fund may avoid this tax by making an
election to mark such securities to the market annually. Alternatively, where it
is in a position to do so, a Fund may elect to treat a passive foreign
investment company as a "qualified electing fund," in which case different rules
will apply, although the Funds generally do not expect to be in the position to
make such elections.

As described in the Prospectus under the heading "Distributions," each Fund
intends to pay out substantially all of its ordinary income and net realized
short-term capital gains, and to distribute substantially all of its net
realized capital gains, if any, after giving effect to any available capital
loss carryover. Net realized capital gain is the excess of net realized
long-term capital gain over net realized short-term capital loss. Under the Tax
Reform Act of 1986, in order to avoid an excise tax imposed on certain
undistributed income, a Fund must distribute prior to each calendar year end
without regard to the Fund's fiscal year end (i) 98% of the Fund's ordinary
income, and (ii) 98% of the Fund's capital gain net income, if any, realized in
the one-year period ending on October 31.

In general, all dividend distributions derived from ordinary income and
short-term capital gain are taxable to investors as ordinary income and
long-term capital gain distributions are taxable to investors as long-term
capital gains (generally taxed at 20%), whether such dividends or distributions
are received in shares or cash.

10
<PAGE>

The Fund generally does not expect its dividends to be eligible for
dividends-received deduction for corporations.

Dividends and distributions on a 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 a 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 a Fund. Each organization or
entity should review its own circumstances and the federal tax treatment of its
income.

Each Fund is generally required to withhold and remit to the U.S. Treasury
31% of all dividends from net investment income and capital gain distributions,
whether distributed in cash or reinvested in shares of the Fund, paid or
credited to any shareholder account for which an incorrect or no taxpayer
identification number has been provided or where the Fund is notified that the
shareholder has underreported income in the past (or the shareholder fails to
certify that he is not subject to such withholding). In addition, the Fund will
generally be required to withhold and remit to the U.S. Treasury 31% of the
amount of the proceeds of any redemption of Fund shares from a shareholder
account for which an incorrect or no taxpayer identification number has been
provided. However, the general back-up withholding rules set forth above will
not apply to tax exempt entities so long as each such entity furnishes the Fund
with an appropriate certificate.

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 a particular Fund, the
Fund's transactions in options, futures contracts, hedging transactions, forward
contracts, straddles and foreign currencies will be subject to special tax rules
(including mark-to-market, straddle, wash sale, constructive sale, and short
sale rules), the effect of which may be to accelerate income to the Fund, defer
losses to the Fund, cause adjustments in the holding periods of the Fund's
securities and convert short-term capital losses into long-term capital losses.
These rules could therefore affect the amount, timing and character of
distributions to shareholders.

THE TAX DISCUSSION SET FORTH ABOVE IS A SUMMARY INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. EACH SHAREHOLDER IS ADVISED TO CONSULT ITS OWN TAX
ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO IT OF AN INVESTMENT IN
THE FUNDS, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS. THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING.

MANAGEMENT OF THE TRUST

11
<PAGE>

The Trust's trustees oversee the general conduct of the Funds' business.
The Trustees and officers of the Trust and their principal occupations during
the past five years are as follows:

<TABLE>
<CAPTION>
- ----------------------------------------- --------------------------------------- ---------------------------------------
Name (Age) Position with the Trust Principal Occupation
- ----------------------------------------- --------------------------------------- ---------------------------------------
<S> <C> <C>
Barr M. Rosenberg (56) Vice President Director of Research, AXA Rosenberg
Investment Management LLC, January
1999 to present; Chairman, AXA
Rosenberg Group LLC, January 1999 to
present; Director, Barr Rosenberg
Research Center LLC, January 1999 to
present; Managing General Partner and
Chief Investment Officer, Rosenberg
Institutional Equity Management,
January 1985 to December 1998.

- ----------------------------------------- --------------------------------------- ---------------------------------------
Kenneth Reid* (49) Trustee Chief Executive Officer, AXA
Rosenberg Investment Management LLC,
January 1999 to present; General Partner
and Director of Research, Rosenberg
Institutional Equity Management, June
1986 to December 1998.
- ----------------------------------------- --------------------------------------- ---------------------------------------
Marlis S. Fritz (49) Vice President Vice Chairman and Global Marketing
Director, AXA Rosenberg Group LLC,
January 1999 to present; Managing
Director AXA Rosenberg Global
Services LLC, January 1999 to present;
General Partner and Director of
Marketing, Rosenberg Institutional
Equity Management, April 1985 to
December 1998.
- ----------------------------------------- --------------------------------------- ---------------------------------------
Nils H. Hakansson (61) Trustee Sylvan C. Coleman Professor of
Finance and Accounting, Haas School of
Business, University of California,
Berkeley, June 1969 to present;
Director, Supershare Services
Corporation (investment management),
Los Angeles, California, November 1989
to 1995.

- ----------------------------------------- --------------------------------------- ---------------------------------------
William F. Sharpe (64) Trustee STANCO 25 Professor Emeritus of
Finance, Stanford
- ----------------------------------------- --------------------------------------- ---------------------------------------
</TABLE>

12
<PAGE>

<TABLE>
<S> <C> <C>
- ----------------------------------------- --------------------------------------- ---------------------------------------
University, September 1995
to June 1999; Professor of Finance,
Stanford University, September 1992
to September 1995; Timken Professor
Emeritus of Finance, Stanford
University, September 1989 to September
1992; Timken Professor of Finance,
Stanford University, September 1970 to
1989; Chairman, Financial Engines
Incorporated, Los Altos, California
(electronic investment advice),
March 1996 to present.

- ----------------------------------------- --------------------------------------- ---------------------------------------
Dwight M. Jaffee (55) Trustee Booth Professor of Banking, Finance and
Real Estate, Haas School of Business,
University of California, Berkeley,
California, July 1991 to present;
Professor of Economics, Princeton
University, July 1968 to July 1991.

- ----------------------------------------- --------------------------------------- ---------------------------------------
Po-Len Hew (32) Treasurer Director of Finance, AXA Rosenberg
Global Services LLC, January 1999 to
present; Chief Financial Officer, Barr
Rosenberg Investment Management Inc.,
April 1994 to December 1998; Accounting
Manager, Rosenberg Institutional Equity
Management, October 1989 to December
1998.

- ----------------------------------------- --------------------------------------- ---------------------------------------
Sara Ronan (39) Clerk Global Services Coordinator and
Paralegal, AXA Rosenberg Global
Services LLC, January 1999 to
present; Paralegal, Barr Rosenberg
Investment Management, September 1997
to December 1998;

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) Vice President Chief Operating Officer,
AXA Rosenberg Group LLC,
January 1999 to present;
- ----------------------------------------- --------------------------------------- ---------------------------------------
</TABLE>

13
<PAGE>

<TABLE>
<S> <C> <C>
- ----------------------------------------- --------------------------------------- ---------------------------------------
Chief Executive Officer, AXA
Rosenberg Global Services LLC,
January 1999 to present; Executive
Vice President, Barr Rosenberg
Investment Management, Inc.
and General Counsel to the
Rosenberg Group of companies,
1990 to present.
- ----------------------------------------- --------------------------------------- ---------------------------------------
Richard L. Saalfeld (55) President President and Chief Executive
Officer, Barr Rosenberg Mutual Funds,
a division of AXA Rosenberg Investment
Management LLC, January 1999 to present;
President and Chief Executive Officer
of mutual fund unit of Rosenberg
Institutional Equity Management,
June 1996 to December 1998; 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.

- ----------------------------------------- --------------------------------------- ---------------------------------------
</TABLE>

- ----------------------------------
* Trustee who is an "interested person" (as defined in the 1940 Act) of the
Trust or the Adviser.

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 Adviser 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
Adviser. 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 Adviser in the fiscal year ended March 31, 1999:

14
<PAGE>

<TABLE>
<CAPTION>
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
Name of Person, Position Aggregate Pension or Retirement Estimated Annual Total Compensation
Compensation from Benefits Accrued as Benefits upon from Registrant
Registrant Part of Fund Expenses Retirement and Fund Complex*
Paid to Directors
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Nils H.
Hakansson Trustee $68,145 $0 $0 $68,145
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
William F.
Sharpe Trustee $68,145 $0 $0 $68,145
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
Dwight M.
Jaffee $29,947.50 $0 $0 $29,947.50
Trustee
- ------------------------- ----------------------- ----------------------- ----------------------- -----------------------
</TABLE>

* The Fund Complex consists of seven funds: the U.S. Small Capitalization
Series, the International Small Capitalization Series, the Japan Series, the
Barr Rosenberg Market Neutral Fund, the Barr Rosenberg Double Alpha Market Fund,
the Barr Rosenberg Select Sectors Market Neutral Fund and the Barr Rosenberg VIT
Market Neutral Fund. The Barr Rosenberg VIT Market Neutral Fund had not
commenced operations as of March 31, 1999.

Messrs. Rosenberg, Reid, Lyman and Saalfeld and Ms. Fritz, Ronan and Hew,
each being an officer or employee of the Adviser or its affiliates, will each
benefit from the management fees paid by the Trust to the Adviser, but receive
no direct compensation from the Trust.

INVESTMENT ADVISORY AND OTHER SERVICES

MANAGEMENT CONTRACTS. As disclosed in the Prospectus under the heading
"Management of the Trust," under management contracts (each a "Management
Contract") between the Trust, on behalf of each Fund, and AXA Rosenberg
Investment Management LLC (the "Adviser"), subject to the control of the
Trustees of the Trust and such policies as the Trustees may determine, the
Adviser will furnish continuously an investment program for each Fund and will
make investment decisions on behalf of each Fund and place all orders for the
purchase and sale of portfolio securities Subject to the control of the
Trustees, the Adviser 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 Adviser. As
indicated under "Portfolio Transactions -- Brokerage and Research Services," the
Trust's portfolio transactions may be placed with broker-dealers which furnish
the Adviser, at no cost, certain research, statistical and quotation services of
value to the Adviser in advising the Trust or its other clients.

Each of the Funds has agreed to pay the Adviser a monthly management fee
at the annual percentage rate of the relevant Fund's average daily net assets
set forth in the Prospectus. The Adviser has informed the Trust that it has
undertaken to waive some or all of its management fees under the Management
Contracts and, if necessary, will bear certain expenses of each Fund until
further notice (and in any event at least until 3/31/00) so that such
Fund's total annual operating expenses (which do not include nonrecurring
account fees and extraordinary expenses) applicable to each class will not
exceed the percentage of such Fund's average daily net assets attributable to
that class as set forth in the Prospectus. In addition, the Adviser's
compensation under each Management Contract is subject to reduction to the
extent that in any year the expenses of a Fund (including investment advisory
fees but excluding taxes, portfolio brokerage commissions and any service
expenses or distribution and shareholder service expenses paid by a class of
shares of a Fund pursuant to a service plan or a distribution and shareholder
service plan or otherwise) exceed the limits on investment company expenses
imposed by

15
<PAGE>

any statute or regulatory authority of any jurisdiction in which shares of the
Fund are qualified for offer and sale.

Each Management Contract provides that the Adviser shall not be subject to
any liability to the Trust or to any shareholder of the Trust in connection with
the performance of its services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties thereunder.

Each Management Contract will continue in effect for a period no more than
one year from the date of its execution, and renewals thereof must be approved
by (i) vote, cast in person at a meeting called for that purpose, of a majority
of those Trustees who are not "interested persons" of the Adviser or the Trust,
and by (ii) the majority vote of either the full Board of Trustees or the vote
of a majority of the outstanding shares of the relevant Fund. Each Management
Contract automatically terminates on assignment, and is terminable on not more
than 60 days' notice by the Trust to the Adviser. In addition, each Management
Contract may be terminated on not more than 60 days' written notice by the
Adviser to the Trust.

The Adviser is wholly owned by AXA Rosenberg Group LLC. AXA Rosenberg Group
LLC is contractually controlled by AXA-IM Rose Inc. AXA-IM Rose Inc. is wholly
owned by AXA-IM Holdings U.S. Inc. AXA-IM Holdings U.S. Inc. is wholly owned by
AXA Investment Managers S.A., a French societe anonyme, which, in turn, is
owned, collectively, by AXA Assurances IARD, S.A., a French societe anonyme, and
AXA-UAP, a French holding company. AXA Assurances IARD, S.A. is owned,
collectively, by AXA France Assurance, a French insurance holding company, and
UAP Incendie Accidents, a French casualty and insurance company, each of which,
in turn, is wholly owned by AXA-UAP. Finaxa, a French holding company,
beneficially owns more than 25% of the voting securities ("Controls") of
AXA-UAP. Mutuelles AXA, a group of four French mutual insurance companies, one
of which Controls Finaxa, acting as a group, Controls both AXA-UAP and Finaxa.
Each of these entities may be deemed a controlling person of the Adviser.

As discussed in this Statement of Additional Information under the heading
"Management of the Trust," Kenneth Reid is a Trustee of the Trust and the Chief
Executive Officer of the Adviser; Barr M. Rosenberg is a Vice President of the
Trust and the Director of Research of the Adviser. Dr. Rosenberg, Dr. Reid and
Marlis S. Fritz, the former general partners of RIEM, may be deemed to be
controlling persons of the Adviser as a result of their interest in Area
Rosenberg Group LLC, the parent of the Adviser.

During the last three fiscal years, the U.S. Small Capitalization Series
has paid the following amounts as management fees to the Adviser pursuant to its
Management Contract:

<TABLE>
<CAPTION>
- -------------------------- ------------------------- ----------------------
Time Period Management Fee Amount Waived
- -------------------------- ------------------------- ----------------------
<S> <C> <C>
4/1/96 - 3/31/97 $544,082 $307,646
- -------------------------- ------------------------- ----------------------
4/1/97 - 3/31/98 $2,571,254 $206,166
- -------------------------- ------------------------- ----------------------
4/1/98 - 3/31/99 $5,065,260 $0
- -------------------------- ------------------------- ----------------------
</TABLE>

During the last three fiscal years, the Japan Series has paid the following
amounts as management fees to the Adviser pursuant to its Management Contract:

16
<PAGE>

<TABLE>
<CAPTION>
- -------------------------- ------------------------- ---------------------
Time Period Management Fee Amount Waived
- -------------------------- ------------------------- ---------------------
<S> <C> <C>
4/1/96 - 3/31/97 $12,153 $12,153
- -------------------------- ------------------------- ---------------------
4/1/97 - 3/31/98 $10,618 $10,618
- -------------------------- ------------------------- ---------------------
4/1/98 - 3/31/99 $9,032 $9,032
- -------------------------- ------------------------- ---------------------
</TABLE>

Since its inception (9/23/96), the International Small Capitalization
Series has paid the following amounts as management fees to the Adviser pursuant
to its Management Contract:

<TABLE>
<CAPTION>
- -------------------------- ------------------------- ---------------------
Time Period Management Fee Amount Waived
- -------------------------- ------------------------- ---------------------
<S> <C> <C>
9/23/96 - 3/31/97 $35,711 $35,711
- -------------------------- ------------------------- ---------------------
4/1/97 - 3/31/98 $245,559 $221,059
- -------------------------- ------------------------- ---------------------
4/1/98 - 3/31/99 $424,779 $173,417
- -------------------------- ------------------------- ---------------------
</TABLE>

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 Funds' operations
including: (i) general supervision of the operation of the Funds including
coordination of the services performed by the Funds' 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 Funds; (ii) general supervision relative to the compilation of data
required for the preparation of periodic reports distributed to the Funds'
officers and Board of Trustees; and (iii) furnishing office space and certain
facilities required for conducting the business of the Funds. The Trust's
principal underwriter is an affiliate of the Administrator. For these
services, the Administrator is entitled to receive a fee, payable monthly, at
the annual rate of 0.15% of the average daily net assets of the Trust. For
the fiscal years indicated, the Administrator was entitled to receive, and
waived, the following amounts:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Fund Fiscal Year Ended: Entitled to Waived
March 31 Receive
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Small 1999 $844,211 $343,817
Capitalization ------------------------------------------------------------------------------------------
Series 1998 $428,543 $142,850
------------------------------------------------------------------------------------------
1997 $81,281 not available
- ---------------------------------------------------------------------------------------------------------------------
International 1999 $63,717 $25,953
Small ------------------------------------------------------------------------------------------
Capitalization 1998 $36,834 $23,451
Series ------------------------------------------------------------------------------------------
1997 $5,357 $5,357
- ---------------------------------------------------------------------------------------------------------------------
Japan 1999 $1,355 $1,355
Series ------------------------------------------------------------------------------------------
1998 $1,593 $1,593
------------------------------------------------------------------------------------------
1997 $1,535 $1,535
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

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 Funds'
operations. For these services, the Fund Accountant is entitled to receive an
annual fee of $30,000 for each Fund. For the fiscal years indicated, the Fund
Accountant was entitled to receive, and waived, the following amounts:

17
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Fund Fiscal Year Ended: Amount Paid* Amount Waived
March 31
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Small Capitalization 1999 $60,767 $0
Series -------------------------------------------------------------------------------
1998 $76,899 $7,500
-------------------------------------------------------------------------------
1997 $61,341 not available
- -------------------------------------------------------------------------------------------------------------------------
International Small 1999 $90,266 $0
Capitalization Series -------------------------------------------------------------------------------
1998 $103,482 $7,500
-------------------------------------------------------------------------------
1997 $63,686 not available
- -------------------------------------------------------------------------------------------------------------------------
Japan 1999 $38,842 $0
Series -------------------------------------------------------------------------------
1998 $35,288 $7,500
-------------------------------------------------------------------------------
1997 $35,771 not available
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Includes reimbursement for out-of-pocket expenses.

DISTRIBUTOR AND SHAREHOLDER SERVICE DISTRIBUTION PLAN. As stated in the
Prospectus under the heading "Management of the Trust -- Distributor," Adviser
Shares of the U.S. Small Capitalization Series and Select Shares of each Fund
are sold on a continuous basis by the Trust's distributor, Barr Rosenberg Funds
Distributor, Inc. (the "Distributor"). The Distributor is an affiliate of the
Administrator and Fund Accountant. 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 and Shareholder Service Plan (the "Plan")
described in the Prospectus, in connection with the distribution of Select
Shares of the Trust and/or in connection with the provision of direct client
service, personal services, maintenance of shareholder accounts and reporting
services to holders of Select Shares of the Trust, the Distributor receives
certain distribution and shareholder service fees from the Trust. Subject to
the percentage limitation on the distribution and shareholder service fee set
forth in the Prospectus, the distribution and shareholder service fee may be
paid in respect of services rendered and expenses borne in the past with
respect to each such class as to which no distribution and shareholder
service fee was paid on account of such limitation. The Distributor may pay
all or a portion of the distribution and shareholder service fees it receives
from the Trust to participating and introducing brokers. The Distributor did
not charge any distribution and shareholder service fees to the Trust for the
fiscal year ended March 31, 1997. For the fiscal years indicated, the Funds
incurred distribution and shareholder service expenses and the Distributor
retained, waived, and paid to broker-dealers and other selling and/or
servicing institutions as follows:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Fund Fiscal Year Distribution Amount Amount Paid out by
Ended: Expenses Retained by Waived Distributor as
March 31 Incurred Distributor Described
Above
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Small 1999 $131,917 $24,206 $74,944 $32,767
Capitalization Series -----------------------------------------------------------------------------------------------
1998 $64,573 $19,895 $36,584 $8,094
-----------------------------------------------------------------------------------------------
1997 $0 $0 $0 $0
- ------------------------- -----------------------------------------------------------------------------------------------
International Small 1999 $10,810 $1,021 $5,405 $4,384
Capitalization Series -----------------------------------------------------------------------------------------------
1998 $2,457 $575 $1,360 $522
-----------------------------------------------------------------------------------------------
1997 $0 $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
Japan Series 1999 $221 $54 $110 $57
-----------------------------------------------------------------------------------------------
1998 $154 $62 $98 $0
-----------------------------------------------------------------------------------------------
1997 $0 $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

18
<PAGE>

The following table sets forth the amounts paid by the Funds for each
principal type of distribution-related activity during the fiscal year ended
March 31, 1999:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Actviity U.S. Small Capitalization International Small Japan Series
Series Capitalization Series
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advertising $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
Printing and Mailing of
Prospectuses to other than
Current Shareholders $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
Compensation to
Underwriters $56,973 $5,405 $111
- -------------------------------------------------------------------------------------------------------------------------
Compensation to
Broker-Dealers $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
Compensation to Sales
Personnel $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
Interest, Carrying
or Other $0 $0 $0
Financing Charges
- -------------------------------------------------------------------------------------------------------------------------
Other $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Plan may be terminated with respect to Select 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 Select Shares requires
approval by holders of Select 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 that purpose. For so long as the Plan is in
effect, selection and nomination of those trustees of the Trust who are not
interested persons of the Trust shall be committed to the discretion of such
disinterested persons.

The Distributor's Contract may be terminated with respect to any Fund or
class of shares thereof at any time by not more than 60 days' nor less than 30
days' written notice without payment of any penalty either by the Distributor or
by such Fund or class and will terminate automatically, without the payment of
any penalty, in the event of its assignment.

The 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 the 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 any Fund as to which they have not been terminated (or have been
renewed).

19
<PAGE>

The Trustees of the Trust believe that the Plan will provide benefits to
the Trust. The Trustees of the Trust believe that the Plan will result in
greater sales and/or fewer redemptions of Select Shares, although it is
impossible to know for certain the level of sales and redemptions of Select
Shares that would occur in the absence of the Plan or under alternative
distribution schemes. The Trustees of the Trust believe that the effect on sales
and/or redemptions benefit the Trust by reducing Fund expense ratios and/or by
affording greater flexibility to the Trust.

CUSTODIAL ARRANGEMENTS. State Street Bank and Trust Company ("State Street
Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such, State
Street Bank holds in safekeeping certificated securities and cash belonging to
the Trust and, in such capacity, is the registered owner of securities in
book-entry form belonging to a Fund. Upon instruction, State Street Bank
receives and delivers cash and securities of a Fund in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities. State Street Bank has also contracted with
certain foreign banks and depositories to hold portfolio securities outside of
the United States on behalf of the Trust.

INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are
PricewaterhouseCoopers LLP. 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
Funds and for the other investment advisory clients of the Adviser are made by
the Adviser 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 Adviser 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 Adviser is selling the same security
on behalf of one or more other clients. In some instances, therefore, the
Adviser, acting for one client may sell indirectly a particular security to
another client. It also happens that two or more clients may simultaneously buy
or sell the same security, in which event purchases or sales are effected pro
rata on the basis of cash available or other equitable basis so as to avoid any
one account's being preferred over any other account.

BROKERAGE AND RESEARCH SERVICES. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different brokers. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid for such securities usually includes an undisclosed dealer
commission or mark up. In placing orders for the portfolio transactions of a
Fund, the Adviser 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

20
<PAGE>

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 Adviser's policy to place over-the-counter market orders for
a Fund with primary market makers unless better prices or executions are
available elsewhere.

Although the Adviser does not consider the receipt of research services as
a factor in selecting brokers to effect portfolio transactions for a Fund, the
Adviser will receive such services from brokers who are expected to handle a
substantial amount of such Fund's portfolio transactions. Research services may
include a wide variety of analyses, reviews and reports on such matters as
economic and political developments, industries, companies, securities and
portfolio strategy. The Adviser 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 Adviser may pay an unaffiliated broker or dealer that provides
"brokerage and research services" (as defined in the Act) to the Adviser 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.

For the period indicated, the Funds paid brokerage commissions as
follows:

<TABLE>
<CAPTION>
- ------------------------------- ----------------------------- ----------------------------- -----------------------------
3/31/96 - 3/31/97 3/31/97 - 3/31/98 3/31/98 - 3/31/99
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Small Capitalization
Series $235,162 $1,096,445 $2,056,871
- -------------------------------------------------------------------------------------------------------------------------
Japan Series $2,266 $3,750 $3,072
- -------------------------------------------------------------------------------------------------------------------------
International Small
Capitalization Series $32,340* $100,120 $124,891
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* From inception date (9/23/96).

The Funds pay brokerage commissions to various entities each of which may
be deemed to be an "affiliate of an affiliate" of the Trust. Securities and
Exchange Commission rules require that commissions paid to an affiliate of an
affiliate by the Fund for portfolio transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." The Trustees, including those who are not "interested persons" of the
Trust, have adopted procedures for evaluating the reasonableness of commissions
paid to such affiliates and will review these procedures periodically. During
the fiscal year ended March 31, 1999, the U.S. Small Capitalization Series paid
$41,220 to Donaldson Lufkin and Jenrette, the Japan Series paid $119.39 to
Nomura International, and the International Small Capitalization Series paid
$775.15 to Nomura International in brokerage commissions.

TOTAL RETURN CALCULATIONS

21
<PAGE>

Each Fund computes its average annual total return separately for its share
classes by determining the average annual compounded rates of return during
specified periods that would equate the initial amount invested in a particular
share class to the ending redeemable value of such investment in such class,
according to the following formula:

n
P(1 + T) = ERV

Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000
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

Each 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 the class, according to the
following formula:

T = ERV-1,000
---------
1,000

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 a Fund will fluctuate from time to
time and does not provide a basis for determining future returns. Average annual
total return and cumulative total return are based on many factors, including
market conditions, the composition of a Fund's portfolio and a Fund's operating
expenses.

Average annual total returns are calculated separately for Select Shares,
Adviser Shares and Institutional Shares. Select Shares, Adviser Shares and
Institutional Shares are subject to different fees and expenses and may have
different performance for the same period.

The average annual total returns for each of the Funds for periods ended
March 31, 1999 were as follows:

<TABLE>
<CAPTION>
- ------------------------- ------------------------ -------------- ------------- -------------- --------------------------
Fund Class of Shares 1 Year 5 Years 10 Years Since Inception
(inception date)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Small Institutional -20.56% 15.95% 13.85%
Capitalization Series -----------------------------------------------------------------------------------------------
Select -20.75% 8.60% (10/22/96)
-----------------------------------------------------------------------------------------------
Adviser -20.70% 4.82% (1/21/97)
-----------------------------------------------------------------------------------------------
International -8.83% (2.15)%
Small Institutional (9/23/96)
Capitalization
Series
</TABLE>

22
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C>
------------------------ -------------- ------------- -------------- --------------------------
-2.66%
Select -9.16% (10/29/96)
- -------------------------------------------------------------------------------------------------------------------------
Japan Series
Institutional 15.68% -7.56% -4.60%
-----------------------------------------------------------------------------------------------
-14.67%
Select 15.50% (10/22/96)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

PERFORMANCE COMPARISONS. Investors may judge the performance of the
Funds by comparing them to the performance of other mutual fund portfolios
with comparable investment objectives and policies through various mutual
fund or market indices such as those prepared by Dow Jones & Co., Inc. and
Standard & Poor's and to data prepared by Lipper, Inc., a widely recognized
independent service which monitors the performance of mutual funds.
Comparisons may also be made to indices or data published in MONEY MAGAZINE,
FORBES, BARRON'S, THE WALL STREET JOURNAL, MORNINGSTAR, INC., IBBOTSON
ASSOCIATES, CDA/WIESENBERGER, THE NEW YORK TIMES, BUSINESS WEEK, U.S.A.
TODAY, INSTITUTIONAL INVESTOR and local periodicals. In addition to
performance information, general information about the Funds that appears in
a publication such as those mentioned above may be included in
advertisements, sales literature and reports to shareholders. The Funds may
also include in advertisements and reports to shareholders information
discussing the performance of the Adviser in comparison to other investment
advisers and to other institutions.

From time to time, the Trust may include the following types of information
in advertisements, supplemental sales literature and reports to shareholders:
(1) discussions of general economic or financial principles (such as the effects
of inflation, the power of compounding and the benefits of dollar cost
averaging); (2) discussions of general economic trends; (3) presentations of
statistical data to supplement such discussions; (4) descriptions of past or
anticipated portfolio holdings for the Funds; (5) descriptions of investment
strategies for the Funds; (6) descriptions or comparisons of various investment
products, which may or may not include the Funds; (7) comparisons of investment
products (including the Funds) with relevant market or industry indices or other
appropriate benchmarks; (8) discussions of fund rankings or ratings by
recognized rating organizations; and (9) testimonials describing the experience
of persons that have invested in a Fund. The Trust may also include
calculations, such as hypothetical compounding examples, which describe
hypothetical investment results in such communications. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of a Fund.

DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES

The Trust is a diversified open-end series investment company organized as
a Massachusetts business trust. A copy of the Agreement and Declaration of Trust
of the Trust, as amended (the "Declaration of Trust"), is on file with the
Secretary of The Commonwealth of Massachusetts. The fiscal year of the Trust
ends on March 31. The Trust changed its name to "Barr Rosenberg Series Trust"
from "Rosenberg Series Trust" on August 5, 1996.

Interests in the Trust's portfolios are currently represented by shares of
six series, the Barr Rosenberg Market Neutral Fund, Barr Rosenberg Double Alpha
Market Fund, Barr Rosenberg Select Sectors Market Neutral 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.

The U.S. Small Capitalization Series is further divided into three classes

23
<PAGE>

of shares designated as Institutional Shares, Adviser Shares and Select Shares.
The Japan Series and International Small Capitalization Series are further
divided into Institutional Shares and Select Shares. Each class of shares of
each Fund represents interests in the assets of that Fund and has identical
dividend, liquidation and other rights and the same terms and conditions except
that expenses, if any, related to the servicing or distribution and shareholder
servicing of a particular class are borne solely by such class and each class
may, at the Trustees' discretion, also pay a different share of other expenses,
not including advisory or custodial fees or other expenses related to the
management of the Trust's assets, if these expenses are actually incurred in a
different amount by that class, or if the class receives services of a different
kind or to a different degree than the other classes. All other expenses are
allocated to each class on the basis of the net asset value of that class in
relation to the net asset value of the particular Fund.

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 each Fund has identical voting rights except that
each class has exclusive voting rights on any matter submitted to shareholders
that relates solely to that class, and has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class. Each class of shares has exclusive voting rights
with respect to matters pertaining to any distribution and shareholder service
plan applicable to that class. All classes of shares of a Fund will vote
together, except with respect to any distribution and shareholder service 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

24
<PAGE>

shareholders or to disseminate appropriate materials (at the expense of the
requesting shareholders). Except as set forth above, the Trustees shall continue
to hold office and may appoint successor Trustees. Voting rights are not
cumulative.

No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust except (i)
to change the Trust's name or to cure technical problems in the Declaration of
Trust and (ii) to establish, designate or modify new and existing series,
sub-series or classes of shares of any series of Trust shares or other
provisions relating to Trust shares in response to applicable laws or
regulations.

SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for the
obligations of the Trust. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation, or instrument
entered into or executed by the Trust or the Trustees. The Declaration of Trust
provides for indemnification out of all the property of the relevant 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
Adviser 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.

OWNERS OF 5% OR MORE OF A FUND'S SHARES. The following chart sets forth the
names, addresses and percentage ownership of those shareholders owning
beneficially and of record (except as otherwise indicated) 5% or more of the
outstanding shares of the U.S. Small Capitalization Series as of July 2,
1999. Those persons who beneficially own more than 25% of a particular class
of shares may be deemed to control such class. As a result, it may not be
possible for matters subject to a vote of a majority of the outstanding
voting securities of the Fund to be approved without the affirmative vote of
such shareholder, and it may be possible for such matters to be approved by
such shareholder without the affirmative vote of any other shareholder.

Institutional Shares

<TABLE>
<CAPTION>
- ----------------------------------------- --------------------------------------- ---------------------------------------
Name and Address Number of Shares Ownership Percentage
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co Inc
The Exclusive Use of our Customers
101 Montgomery St. 15,439,778.796 29.39%
San Francisco, CA 94104
- -------------------------------------------------------------------------------------------------------------------------
Citizens Bank
101 N Washington Ave 6,749,157.639 12.85%
Saginaw, MI 48607
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

25
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Evangelical Lutherans
Jeanie Seto
1 Cabot Rd 3,064,867.779 5.83%
Medford, MA 02155
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Adviser Shares
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Name and Address Number of Shares Ownership Percentage
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Prudential Securities
For Exclsv Bnft of Our Customers
1 New York Plz 402,322.280 27.79%
NY, NY 10292
- -------------------------------------------------------------------------------------------------------------------------
FTC and Co
P O Box 173736 143,938.333 9.94%
Denver, CO 80217
- -------------------------------------------------------------------------------------------------------------------------
National Investor Services Corp
The Exclusive Benefit of Customers
55 Water St. 32nd Floor
NY, NY 10041 72,430.955 5.00%
- -------------------------------------------------------------------------------------------------------------------------
Vanguard Fiduciary Trust Co
Dresser-Rand Co Rmt Svgs Pln A 91621
P O Box 2600
Valley Forge, PA 19482 75,754.720 5.23%
- -------------------------------------------------------------------------------------------------------------------------
Roderick M Williams
GM Nameplate Inc 401K Prft Shrg Pln
2040 15th Ave West 92,406.022 6.38%
Seattle, WA 98119
- -------------------------------------------------------------------------------------------------------------------------
Fifth Third Bank
Harrington Bank 03-3443900
P O Box 630074 74,120.577 5.12%
Cincinnati, OH 45263
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following chart sets forth the names, addresses and percentage
ownership of those shareholders owning beneficially and of record (except as
otherwise indicated) 5% or more of the outstanding shares of the Japan Series
as of July 2, 1999. Those persons who beneficially own more than 25% of a
particular class of shares may be deemed to control such class. As a result,
it may not be possible for matters subject to a vote of a majority of the
outstanding voting securities of the Fund to be approved without the
affirmative vote of such shareholder, and it may be possible for such matters
to be approved by such shareholder without the affirmative vote of any other
shareholder.

26
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AXA Rosenberg Group
4 Orinda Way Bldg E 159,951.776 83.79%
Orinda, CA 94563
- -------------------------------------------------------------------------------------------------------------------------
Koko M Baker
C/O RIEM 4 Orinda Way 14,362.949 7.52%
Orinda, CA 94563
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Select Shares
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Name and Address Number of Shares Ownership Percentage
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
National Investor Services Corp
55 Water St. 32nd Floor
NY, NY 10041 4,598.845 35.30%
- -------------------------------------------------------------------------------------------------------------------------
Omprakash N Sureka
Anuradha O Sureka
5431 W Stonebridge Ct 3,309.685 25.41%
Peoria, IL 61615
- -------------------------------------------------------------------------------------------------------------------------
Sandra B Cook
Sandra B Cook Family Trust
425 N Martingale Rd 19 Floor
Schaumburg, IL 60173 1,248.388 9.58%
- -------------------------------------------------------------------------------------------------------------------------
Arthur Y Liss
1400 N Woodward Ave 100 1,985.567 15.24%
Bloomfield, MI 48304
- -------------------------------------------------------------------------------------------------------------------------
Charles B Murdock
Amanda S Murdock
818 Thackston Dr 961.478 7.38%
Spartanburg, SC 29307
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following chart sets forth the names, addresses and percentage
ownership of those shareholders owning of record 5% or more of the
outstanding shares of the International Small Capitalization Series as of
July 2, 1998. Those persons who beneficially own more than 25% of a
particular class of shares may be deemed to control such class. As a result,
it may not be possible for matters subject to a vote of a majority of the
outstanding voting securities of the Fund to be approved without the
affirmative vote of such shareholder, and it may be possible for such matters
to be approved by such shareholder without the affirmative vote of any other
shareholder.

Institutional Shares
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Name and Address Number of Shares Ownership Percentage
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co Inc
The Exclusive Use of our Customers
101 Montgomery St.
San Francisco, CA 94104 3,464,982.181 93.61%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

27
<PAGE>

<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Exclusive Use of our Customers
101 Montgomery St. 106,228.319 59.26%
San Francisco, CA 94104
- -------------------------------------------------------------------------------------------------------------------------
National Investor Services Corp
55 Water St 32nd Floor
NY, NY 10041-3299 10,806.147 6.03%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Except as follows, the officers and Trustees of the Trust, as a group,
owned less than 1% of any class of outstanding shares of the Trust as of July 2,
1999. Japan Series, Institutional Shares: as of July 2, 1999, Richard L.
Saalfeld held 1862.197 shares and William F. Sharpe held 1582.278 shares, for a
total between them of 1.80% of the outstanding shares of that class;
International Small Capitalization Series, Institutional Shares: as of July 2,
1999, William F. Sharpe held 1027.905 shares, Dwight M. Jaffee held 564.972
shares and Barr Rosenberg held 37,870.614 shares, for a total between them of
1.07% of the outstanding shares of that class.

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 Independence Day, Labor Day, Thanksgiving
Day, Christmas Day, New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday and Memorial Day.

Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
business day, or, if there is no such reported sale, at the most recent quoted
bid price. Price information on listed securities is generally taken from the
closing price on the exchange where the security is primarily traded. Unlisted
securities for which market quotations are readily available are valued at the
most recent quoted bid price, except that debt obligations with sixty days or
less remaining until maturity may be valued at their amortized cost.
Exchange-traded options, futures and options on futures are valued at the
settlement price as determined by the appropriate clearing corporation. Other
assets and securities for which no quotations are readily available are valued
at fair value as determined in good faith by the Trustees of the Trust or by
persons acting at their direction.

PURCHASE AND REDEMPTION OF SHARES

The procedures for purchasing shares of each of the Funds and for
determining the offering price of such shares are described in the Prospectus.
The Trust has elected to be governed by Rule 18f-1 under the 1940 Act pursuant
to which the Trust is obligated to redeem shares solely in cash for any
shareholder during any 90-day period up to the lesser of (i) $250,000 or (ii) 1%
of the total net asset value of the Trust at the beginning of such period. The
procedures for redeeming shares of each of the Funds are described in the
Prospectus.

The Funds have authorized one or more brokers to accept on their behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Funds' behalf.
The Funds will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts
such order. Such orders will be priced at the respective Funds' net asset value

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per share next determined after such orders are accepted by an authorized broker
or the broker's authorized designee.

FINANCIAL STATEMENTS

The Report of Independent Accountants, financial highlights and financial
statements of the Funds included in their Annual Report for the period ended
March 31, 1999 (the "Annual Report") are incorporated herein by reference to
such Annual Report. Copies of such Annual Report are available without charge
upon request by writing to Barr Rosenberg Series Trust, 3435 Stelzer Road,
Columbus, Ohio 43219 or telephoning 1-800-447-3332.

The financial statements incorporated by reference into this Statement of
Additional Information have been audited by PricewaterhouseCoopers LLP,
independent accountants, and have been so included and incorporated by reference
in reliance upon the report of said firm, which report is given upon their
authority as experts in auditing and accounting.