PROSPECTUS
Berger Institutional Products Trust (the "Trust") is an
open-end management investment company. The Trust currently consists
of three diversified series or portfolios (individually referred to as
a "Fund"), known as the Berger IPT - 100 Fund, the Berger IPT - Growth
and Income Fund and the Berger IPT - Small Company Growth Fund. Each
Fund has its own investment objective and policies. The Funds are
recently organized and have no operating history, but their investment
advisor, Berger Associates, Inc. ("Berger Associates") has been in the
investment advisory business for over 20 years. Shares of the Funds
are not offered directly to the public, but are sold only in
connection with investment in and payments under variable annuity
contracts and variable life insurance contracts (collectively
"variable insurance contracts") issued by life insurance companies
("Participating Insurance Companies"), as well as to certain qualified
retirement plans.
BERGER IPT - 100 FUND
The investment objective of the Berger IPT - 100 Fund is
long-term capital appreciation. The Berger IPT - 100 Fund seeks to
achieve this objective by investing primarily in common stocks of
established companies which the Fund's advisor believes offer
favorable growth prospects. Current income is not an investment
objective of the Berger IPT - 100 Fund, and any income produced will
be a by-product of the effort to achieve the Fund's objective.
BERGER IPT - GROWTH AND INCOME FUND
The primary investment objective of the Berger IPT - Growth
and Income Fund is capital appreciation. A secondary objective is to
provide a moderate level of current income. The Berger IPT - Growth
and Income Fund seeks to achieve these objectives by investing
primarily in common stocks and other securities, such as convertible
securities or preferred stocks, which the Fund's advisor believes
offer favorable growth prospects and are expected to also provide
current income.
BERGER IPT - SMALL COMPANY GROWTH FUND
The investment objective of the Berger IPT - Small Company
Growth Fund is capital appreciation. The Berger IPT - Small Company
Growth Fund seeks to achieve this objective by investing primarily in
equity securities (including common and preferred stocks, convertible
debt securities and other securities having equity features) of small
growth companies with market capitalization of less than $1 billion at
the time of initial purchase.
This Prospectus sets forth concise information about each of
the Funds that a prospective purchaser of a variable insurance
contract or plan participant should consider before purchasing a
variable contract, allocating contract values to one or more of the
Funds or selecting one of the Funds as an investment option under a
qualified plan. It should be read carefully in conjunction with any
separate account prospectus of the specific insurance product or
qualified plan documents that accompany this Prospectus and retained
for future reference. Additional information about the Funds has been
filed with the Securities and Exchange Commission. A copy of the
Statement of Additional Information, which is incorporated in its
entirety by this reference into the Prospectus, is available upon
request without charge by writing the Berger Funds, c/o Berger
Associates, Inc., P.O. Box 5005, Denver, CO 80217, or call 1-303-329-
0200 or 1-800-706-0539 or by writing or calling a Participating
Insurance Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH STATE.
The date of this Prospectus and the Statement of Additional
Information referred to above is MAY 1, 1996.
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Table of Contents
Section Page
- ------- ----
1. Fee Tables . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Investment Objectives and Policies and Risk Factors . . . . . . 2
4. Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . 9
5. Management and Investment Advice . . . . . . . . . . . . . . . 9
6. Expenses of the Funds. . . . . . . . . . . . . . . . . . . . . 11
7. How to Purchase and Redeem Shares in the Funds . . . . . . . . 12
8. How the Net Asset Value Is Determined. . . . . . . . . . . . . 13
9. Income Dividends, Capital Gains Distributions and Tax
Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. Additional Information. . . . . . . . . . . . . . . . . . . . 14
11. Performance . . . . . . . . . . . . . . . . . . . . . . . . . 15
12. Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO ALL THREE FUNDS)
Maximum Sales Load Imposed on Purchases 0%
Maximum Sales Load Imposed on Reinvested Dividends 0%
Deferred Sales Load 0%
Redemption Fees 0%
Exchange Fee 0%
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Other Expenses/1/ Total Fund
Fee Operating
Expenses/1/
Berger IPT - 100 Fund .75% .22% .97%
Berger IPT - Growth and .75% .22% .97%
Income Fund
Berger IPT - Small Company .90% .22% 1.12%
Growth Fund
EXAMPLES
You would pay the following expenses on a $1,000 investment,
assuming 5% annual return, and assuming redemption at the end of each
time period:
1 Year/1/ 3 Years/1/
Berger IPT - 100 Fund $10 $31
Berger IPT - Growth and Income
Fund $10 $31
Berger IPT - Small Company
Growth Fund $11 $35
/1/ Based on estimated expenses for the Funds' first year of
operations.
THE EXPENSES SET FORTH IN THE PRECEDING TABLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES,
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AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE
GREATER OR LESS THAN THE ASSUMED AMOUNT.
The purpose of the preceding tables is to assist the investor in
understanding the various costs and expenses that an investor in any
of the Funds will bear directly or indirectly. In the fee table,
"Other Expenses" and "Total Fund Operating Expenses" are based on
estimated amounts for the Funds' first year of operation. The Funds'
investment advisor has agreed to waive its advisory fee to the extent
that normal operating expenses in any fiscal year, including the
management fee but excluding brokerage commissions, interest, taxes
and extraordinary expenses, of each of the Berger IPT - 100 Fund and
the Berger IPT - Growth and Income Fund exceed 1.00%, and the normal
operating expenses in any fiscal year of the Berger IPT - Small
Company Growth Fund exceed 1.15%, of the respective Fund's average
daily net assets. The Funds' expenses are described in greater detail
under "Management and Investment Advice" and "Expenses of the Funds".
2. INTRODUCTION
The Berger IPT - 100 Fund, the Berger IPT - Growth and Income
Fund and the Berger IPT - Small Company Growth Fund are all
diversified portfolios or series of the Berger Institutional Products
Trust, a management investment company. The Funds sell and redeem
their shares at net asset value without any sales charges, commissions
or redemption fees. Sales charges for variable insurance contracts
are described in the accompanying separate account prospectuses
relating to those contracts ("Separate Account Prospectuses"). Each
variable insurance contract involves fees and expenses not described
in this Prospectus. Certain Funds may not be available in connection
with a particular contract and certain contracts may limit allocations
among the Funds. See the Separate Account Prospectuses for
information regarding contract fees and expenses and any restrictions
on purchases or allocations.
This Prospectus describes the securities offered by each of the
Funds. Because the Funds have the same investment advisor, officers
and trustees and have similar investment restrictions and investment
privileges, the Funds believe you will find this combined Prospectus
useful and informative in understanding the important features of the
Funds and their similarities and differences.
3. INVESTMENT OBJECTIVES AND POLICIES AND RISK FACTORS
The Berger IPT - 100 Fund, the Berger IPT - Growth and Income
Fund and the Berger IPT - Small Company Growth Fund are each separate
Funds of the Berger Institutional Products Trust, each with its own
portfolio of securities selected to achieve its particular investment
objective. Since the shares of the Funds primarily represent an
investment in common stocks, the net asset value of each Fund will
reflect changes in the market value of the securities held in that
Fund's portfolio, and the value of a Fund share will therefore go up
and down.
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Although the Funds are newly-organized, they have the same
investment objectives and follow substantially the same investment
strategies and policies as those of certain publicly-offered
investment companies managed by Berger Associates (the "Berger retail
funds"). The Berger IPT - 100 Fund corresponds to the Berger 100
Fund[R]. The Berger IPT - Growth and Income Fund corresponds to the
Berger Growth and Income Fund. The Berger IPT - Small Company Growth
Fund corresponds to the Berger Small Company Growth Fund[R]. As
described below under "Management and Investment Advice," the same
persons who serve as portfolio managers of the Funds also serve as
portfolio managers of the corresponding Berger retail funds.
Although it is anticipated that each Fund and its corresponding
retail fund will hold similar securities selections, their investment
results are expected to differ. In particular, differences in asset
size and in cash flow resulting from purchases and redemption of Fund
shares may result in different security selections, differences in the
relative weightings of securities or differences in the prices paid
for particular portfolio holdings. Expenses and expense limitations
of each Fund and its corresponding retail fund are expected to differ.
The variable insurance contract owner will also bear various insurance
related costs at the insurance company level and should refer to the
accompanying Separate Account Prospectus for a summary of contract
fees and expenses.
BERGER IPT - 100 FUND. The investment objective of the Berger
IPT - 100 Fund is long-term capital appreciation. Current income is
not an investment objective of the Berger IPT - 100 Fund, and any
income produced will be a by-product of the effort to achieve the
Fund's objective.
In selecting its portfolio securities, the Berger IPT - 100 Fund
places primary emphasis on established companies which it believes to
have favorable growth prospects, regardless of the company's size.
Common stocks usually constitute all or most of the Fund's investment
portfolio, but the Fund remains free to invest in securities other
than common stocks, and may do so when deemed appropriate by the
investment advisor to achieve the objective of the Fund. The Fund
may, from time to time, take substantial positions in securities
convertible into common stocks, and it may also purchase government
securities, preferred stocks and other senior securities if its
advisor believes these are likely to be the best suited at that time
to achieve the Fund's objective. The Fund's policy of investing in
securities believed to have a potential for capital growth means that
a Fund share may be subject to greater fluctuations in value than if
the Fund invested in other securities.
BERGER IPT - GROWTH AND INCOME FUND. The primary investment
objective of the Berger IPT - Growth and Income Fund is capital
appreciation. A secondary objective is to provide a moderate level of
current income. However, neither capital appreciation nor a fixed or
moderate rate of current income can be assured, and in periods of low
interest rates and yields on securities, the income available for
distribution to the Fund shareholders will likely be substantially
reduced or eliminated.
In selecting its portfolio securities, the Berger IPT - Growth
and Income Fund places primary emphasis on securities which it
believes offer favorable growth prospects and are expected to also
provide current income. Common stocks of companies with mid-sized to
large market capitalizations usually constitute the majority of the
Fund's investment portfolio. Market
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capitalization is defined as total current market value of a company's
outstanding common stock. The Fund also invests in senior securities
such as convertible securities, preferred stocks, government
securities and corporate bonds, as seems appropriate from time to
time. Attention is given to the anticipated reliability of income as
well as to its indicated current level.
BERGER IPT - SMALL COMPANY GROWTH FUND. The investment objective
of the Berger IPT - Small Company Growth Fund is capital appreciation.
The Fund seeks to achieve its investment objective by investing its
assets principally in a diversified group of equity securities of
small growth companies with market capitalization of less than $1
billion at the time of initial purchase. Market capitalization is
defined as total current market value of a company's outstanding
common stock. Under normal circumstances, the Berger IPT - Small
Company Growth Fund will invest at least 65% of its assets in equity
securities of such companies, consisting of common and preferred stock
and other securities having equity features such as convertible bonds,
warrants and rights (subject to certain restrictions). The balance of
the Fund may be invested in equity securities of companies with market
capitalization in excess of $1 billion, government securities, short-
term investments or other securities as described on the following
pages. Because income is not an objective of the Berger IPT - Small
Company Growth Fund, any income produced will be a by-product of the
effort to achieve the Fund's objective of capital appreciation.
In selecting its portfolio securities, the Berger IPT - Small
Company Growth Fund places primary emphasis on companies which it
believes have favorable growth prospects. The Fund seeks to identify
small growth companies that either occupy a dominant position in an
emerging industry or a growing market share in larger fragmented
industries. While these companies may present above average risk,
management believes they may have the potential to achieve long-term
earnings growth rates substantially in excess of the growth of
earnings of other companies.
Investments in small growth companies may involve greater risks
and volatility than more traditional equity investments due to some of
these companies potentially having limited product lines, reduced
market liquidity for the trading of their shares and less depth in
management than more established companies. For this reason, the
Berger IPT - Small Company Growth Fund is not intended as a complete
investment vehicle but rather as an investment for persons who are in
a financial position to assume above average risk and share price
volatility over time. Realizing the full potential of small growth
companies frequently takes time. As a result, the Berger IPT - Small
Company Growth Fund should be considered as a long-term investment
vehicle.
* * *
In general, investment decisions for the Funds are based on an
approach which seeks out successful companies because they are
believed to be more apt to become profitable investments. To evaluate
a prospective investment, the investment advisor analyzes information
from various sources, including industry economic trends, earnings
expectations and fundamental securities valuation factors to identify
companies which in management's opinion are more likely to have
predictable, above average earnings growth, regardless of the
company's geographic
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location. The advisor also takes into account a company's management
and its innovations in products and services in evaluating its
prospects for continued or future earnings growth.
The investment objective of the Berger IPT - 100 Fund, the
primary investment objective of the Berger IPT - Growth and Income
Fund and the investment objective of the Berger IPT - Small Company
Growth Fund are considered fundamental, meaning that they cannot be
changed without a shareholders' vote. The secondary investment
objective of the Berger IPT - Growth and Income Fund is not considered
fundamental, and therefore may be changed in the future by action of
the directors without shareholder vote. However, the Berger IPT -
Growth and Income Fund will not change its secondary investment
objective without giving its shareholders such notice as may be
required by law. If the Berger IPT - Growth and Income Fund changes
its secondary investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their
then current financial position and needs. There can be no assurance
that any of the Funds' investment objectives will be realized.
Any of the Funds may increase their investment in government
securities and other short-term interest-bearing securities without
limit when the advisor believes market conditions warrant a temporary
defensive position, during which period it may be more difficult for a
Fund to achieve its investment objective. Following is additional
information about some of the other specific types of securities in
which the Funds may invest.
FOREIGN SECURITIES. Each Fund may invest in both domestic and
foreign securities. Investments in foreign securities involve some
risks that are different from the risks of investing in securities of
U.S. issuers, such as the risk of fluctuations in the value of the
currencies in which they are denominated, the risk of adverse
political and economic developments and, with respect to certain
countries, the possibility of expropriation, confiscatory taxation or
limitations on the removal of funds or other assets of the Funds.
Securities of some foreign companies, particularly those of developing
countries, are less liquid and more volatile than securities of
comparable domestic companies. A developing country generally is
considered to be in the initial stages of its industrialization cycle.
Investing in the securities of developing countries may involve
exposure to economic structures that are less diverse and mature, and
to political systems that can be expected to have less stability than
developed countries. There also may be less publicly available
information about foreign issuers than domestic issuers, and foreign
issuers generally are not subject to the uniform accounting, auditing
and financial reporting standards and practices applicable to domestic
issuers. Delays may be encountered in settling certain foreign
securities transactions and the Funds will incur costs in converting
foreign currencies into U.S. dollars. The Funds will consider the
political and economic conditions in a country, the prospect for
changes in the value of its currency and the liquidity of an
investment in that country's securities markets in selecting
investments in foreign securities.
CONVERTIBLE SECURITIES. Each Fund may purchase securities which
are convertible into common stock when management of the Funds
believes they offer the potential for a higher total return than
nonconvertible securities. While fixed income securities generally
have a priority claim on a corporation's assets over that of common
stock, some of the convertible securities which the Funds may hold are
high-yield/high-risk securities that are subject to special risks,
including the risk of default in interest or principal payments which
could result in a loss of income to the Funds or a decline in the
market value of the securities. Convertible securities
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often display a degree of market price volatility that is comparable
to common stocks. The credit risk associated with convertible
securities generally is reflected by their being rated below
investment grade by organizations such as Moody's Investors Service,
Inc., and Standard & Poor's Corporation. The Funds have no pre-
established minimum quality standards for convertible securities and
may invest in convertible securities of any quality, including lower
rated or unrated securities. However, under normal circumstances,
none of the Funds will invest in any security in default at the time
of purchase or in any nonconvertible debt securities rated below
investment grade, and each Fund will invest less than 20% of the
market value of its assets at the time of purchase in convertible
securities rated below investment grade. For a further discussion of
debt security ratings, see Appendix A to the Statement of Additional
Information.
ZEROS/STRIPS. The Berger IPT - 100 Fund and the Berger IPT -
Growth and Income Fund may each invest in zero coupon bonds or in
"strips". Zero coupon bonds do not make regular interest payments;
rather, they are sold at a discount from face value. Principal and
accreted discount (representing interest accrued but not paid) are
paid at maturity. "Strips" are debt securities that are stripped of
their interest coupon after the securities are issued, but otherwise
are comparable to zero coupon bonds. The market values of "strips"
and zero coupon bonds generally fluctuate in response to changes in
interest rates to a greater degree than do interest-paying securities
of comparable term and quality. None of the Funds will invest in
mortgage-backed or other asset-backed securities.
REPURCHASE AGREEMENTS. Each Fund is authorized to invest in
repurchase agreements. A repurchase agreement is a means of investing
cash for a short period. In a repurchase agreement, a seller
(typically a U.S. commercial bank or recognized U.S. securities
dealer) sells securities to the Fund and agrees to repurchase the
securities at the Fund's cost plus interest within a specified period
(normally one day). In these transactions, the securities purchased
by the Fund will have a total value equal to, or in excess of, the
value of the repurchase agreement, and will be held by the Fund's
custodian bank until repurchased. These transactions must be fully
collateralized at all times by debt securities (generally a security
issued or guaranteed by the U.S. Government or an agency thereof, a
banker's acceptance or a certificate of deposit), but involve some
credit risk to the Fund if the other party defaults on its obligation
and the Fund is delayed or prevented from liquidating the collateral.
Repurchase agreements maturing in more than seven days will be
considered illiquid for purposes of the restriction on each Fund's
investment in illiquid and restricted securities.
LENDING PORTFOLIO SECURITIES. Each Fund may lend its portfolio
securities to qualified institutional investors such as brokers,
dealers or other financial organizations. This practice permits a
Fund to earn income, which, in turn, can be invested in additional
securities to pursue the Fund's investment objective. Loans of
securities by a Fund will be collateralized by cash, letters of
credit, or securities issued or guaranteed by the U.S. Government or
its agencies. The collateral will equal at least 100% of the current
market value of the loaned securities, marked-to-market on a daily
basis. A Fund bears a risk of loss in the event that the other party
to a securities lending transaction defaults on its obligations and
the Fund is delayed in or prevented from exercising its rights to
dispose of the collateral, including the risk of a possible decline in
the value of the collateral securities during the period in which the
Fund seeks to assert these rights, the risk of incurring expenses
associated with asserting these rights,
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and the risk of losing all or a part of the income from the
transaction. None of the Funds will lend any security if, as a result
of such loan, the aggregate value of securities then on loan would
exceed 33-1/3% of the market value of the Fund's total assets.
FINANCIAL FUTURES, FORWARDS AND OPTIONS. Each Fund is authorized
to make limited investments in certain types of futures, forwards and
options, but only for the purpose of hedging, that is, protecting
against the risk of market movements that may adversely affect the
value of a Fund's securities or the price of securities that a Fund is
considering purchasing. Although a hedging transaction may, for
example, partially protect a Fund from a decline in the value of a
particular security or its portfolio generally, the cost of the
transaction will reduce the potential return on the security or the
portfolio. Following is a summary of the futures, forwards and
options in which the Funds may invest, provided that no more than 5%
of a Fund's net assets at the time of purchase may be invested in
initial margins for financial futures transactions and premiums for
options.
Financial futures and forwards are contracts on financial
instruments (such as securities, securities indices and foreign
currencies) that obligate the holder to take or make future delivery
of a specified quantity of the underlying financial instrument.
Futures are generally exchange traded and settled with cash, while
forwards are privately negotiated and contemplate actual delivery of
the underlying financial instrument (usually a foreign currency). An
option gives the holder the right, but not the obligation, to purchase
or sell something (such as a security) at a specified price at any
time until the expiration date. An option on a securities index is
similar, except that upon exercise, settlement is made in cash rather
than in specific securities. Each Fund may only write call options
(that is, issue options that obligate the Fund to deliver if the
option is exercised by the holder) that are "covered" and only up to
25% of a Fund's total assets. A call option is considered "covered"
if a Fund already owns the security on which the option is written or,
in the case of an option written on a securities index, if a Fund owns
a portfolio of securities believed likely to substantially replicate
movement of the index.
Investments in futures and forwards by a Fund involve the
potential for a loss that may exceed the amount of initial margin the
Fund would be permitted to invest in the contracts under its
investment limitations, or in the case of a call option written by a
Fund, may exceed the premium received for the option. However, each
Fund will be permitted to make such investments for hedging purposes
only, and only if the aggregate amount of its obligations under these
investments does not exceed the total market value of the assets the
Fund is attempting to hedge, such as a portion or all of its exposure
to equity securities or its holding in a specific foreign currency.
To ensure that each Fund will be able to meet its obligations under
its futures and forward contracts and its obligations under options
written by that Fund, each Fund will be required to place high-grade
liquid assets in a segregated account with its custodian bank or to
set aside portfolio securities to "cover" its position in these
investments. Assets segregated or set aside generally may not be
disposed of so long as the Fund maintains the positions requiring
segregation or cover, which could diminish the Fund's return due to
the opportunity losses of foregoing other potential investments with
such assets.
The principal risks of the Funds investing in futures
transactions, forward contracts and options are: (a) losses resulting
from market movements not anticipated by the
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Funds; (b) possible imperfect correlation between movements in the
prices of futures, forwards and options and movements in the prices of
the securities or currencies hedged or used to cover such positions;
(c) lack of assurance that a liquid secondary market will exist for
any particular futures, forwards or options at any particular time,
and possible exchange-imposed price fluctuation limits, either of
which may make it difficult or impossible to close a position when so
desired; (d) the need for additional information and skills beyond
those required for the management of a portfolio of traditional
securities; and (e) possible need to defer closing out certain futures
or options contracts in order to continue to qualify for beneficial
tax treatment afforded "regulated investment companies" under the
Internal Revenue Code of 1986, as amended. In addition, when a Fund
enters into an over-the-counter contract with a counterparty, the Fund
will assume counterparty credit risk, that is, the risk that the
counterparty will fail to perform its obligations, in which case the
Fund could be worse off than if the contract had not been entered
into. Additional detail concerning the Funds' investment in futures,
forwards and options and the risks of such investments can be found in
the Statement of Additional Information.
ILLIQUID SECURITIES. Each Fund is authorized to invest in
securities which are illiquid because they are subject to restrictions
on their resale ("restricted securities") or because, based upon their
nature or the market for such securities, they are not readily
marketable. However, none of the Funds may purchase any security, the
purchase of which would cause the Fund to invest more than 15% of its
net assets, measured at the time of purchase, in illiquid securities.
Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. Certain
restricted securities, such as Rule 144A securities, may be treated as
liquid under this restriction if a determination is made that such
securities are readily marketable. Investments in illiquid securities
involve certain risks to the extent that a Fund may be unable to
dispose of such a security at the time desired or at a reasonable
price or, in some cases, may be unable to dispose of it at all. In
addition, in order to resell a restricted security, a Fund might have
to incur the potentially substantial expense and delay associated with
effecting registration.
INVESTMENT RESTRICTIONS
In addition to its investment objective, each Fund has
adopted a number of restrictions on its investments and other
activities that may not be changed without shareholder approval. For
example, neither the Berger IPT - 100 Fund nor the Berger IPT - Growth
and Income Fund may purchase securities of any issuer (except U.S.
Government securities) if, immediately after and as a result of such
purchase, the value of such Fund's holdings in the securities of that
issuer exceeds 5% of the value of its total assets or it owns more
than 10% of the outstanding voting securities or of any class of
securities of such issuer. The Berger IPT - Small Company Growth Fund
is similarly restricted with respect to 75% of its total assets.
Further, neither the Berger IPT - 100 Fund nor the Berger
IPT - Growth and Income Fund may borrow in excess of 5% of its assets
or pledge assets taken at market value to an extent greater than 10%
of its total assets taken at cost (and no borrowing may be undertaken
except from banks as a temporary measure for extraordinary or
emergency purposes), subject to certain exclusions, and neither may
make loans (except that each Fund may enter into repurchase agreements
in accordance with the Fund's investment policies). The
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Berger IPT - Small Company Growth Fund may not borrow money, except
borrowing undertaken from banks for temporary or emergency purposes in
amounts not to exceed 25% of the market value of its assets (including
the amount borrowed) and may not make loans (except that the Fund may
enter into repurchase agreements and may lend portfolio securities in
accordance with the Fund's investment policies). None of the Funds
may invest in any one industry more than 25% of the value of its
assets at the time of investment, nor invest in commodities, except,
only for the purpose of hedging, in certain futures, forwards and
options as specified in greater detail above and in the Statement of
Additional Information.
Also, none of the Funds currently intends to make short
sales of securities, except short sales of securities which the Fund
owns or has the right to acquire at no additional cost (i.e., short
sales "against the box"), and does not intend to purchase or sell
securities on a when-issued or delayed delivery basis if as a result,
more than 5% of its assets are invested in such securities, although
these restrictions may be changed without shareholder approval. For
more detail about the Funds' investment restrictions, see the
Statement of Additional Information.
4. PORTFOLIO TURNOVER
In pursuit of each Fund's investment objective, management
continuously reviews its investments and makes portfolio changes
whenever changes in the market, industry trends or the outlook for the
growth of any portfolio security indicate to management that the
objective could be better achieved by investment in another security,
regardless of portfolio turnover. In addition, portfolio turnover may
increase as a result of large amounts of purchases and redemptions of
shares of a Fund due to economic, market or other factors that are not
within the control of management. The annual portfolio turnover rates
of the Funds may at times exceed 100%. An annual turnover rate of
100% or more would be higher than that of most other funds. Increased
portfolio turnover would necessarily result in correspondingly higher
brokerage costs for the Funds and may result in the acceleration of
net taxable gains.
5. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major
decisions relating to each Fund's policies and objectives. They also
oversee the operation of each Fund by its officers and review the
investment performance of the Funds on a regular basis.
The investment advisor to each of the Funds is Berger
Associates, 210 University Boulevard, Suite 900, Denver, CO 80206.
Berger Associates furnishes continuous advice and recommendations to
each Fund regarding securities to be purchased and sold by the Fund.
Berger Associates, therefore, formulates a continuing program for
management of the assets of each Fund consistent with the investment
objectives and policies established by the trustees of the Trust.
Berger Associates also provides office space for each Fund and pays
the salaries, fees and expenses of all Fund officers and trustees of
the Funds who are interested persons of Berger Associates. Berger
Associates serves as investment advisor to mutual funds, pension and
profit-sharing plans, and institutional and private investors.
Rodney L. Linafelter, Vice President and Chief Investment
Officer of Berger Associates, is the President and portfolio manager
of the Berger IPT - 100 Fund and the Berger
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IPT - Growth and Income Fund and as such is responsible for the
investments of both of these Funds, including the day-to-day
investment decisions for the Funds. Mr. Linafelter is also a trustee
of the Trust and a director or trustee of each of the Berger retail
funds. As Chief Investment Officer of Berger Associates, Mr.
Linafelter has management responsibilities with respect to all
investment activities of the Trust.
Mr. Linafelter joined Berger Associates in January 1990,
where he has served as a portfolio manager for the Berger 100 Fund and
the Berger Growth and Income Fund, as well as for retirement plans and
institutional and private investors. From April 1986 to December
1989, Mr. Linafelter was employed as a Financial Consultant
(registered representative) with Merrill Lynch, Pierce, Fenner &
Smith, Inc., providing investment advice to institutions and
individuals.
William R. Keithler is the President and portfolio manager
of the Berger IPT - Small Company Growth Fund and is primarily
responsible for the investments of the Fund, including the day-to-day
investment decisions for the Fund. Mr. Keithler also serves as
President and portfolio manager for the Berger Small Company Growth
Fund and the Berger New Generation Fund.
Mr. Keithler joined Berger Associates as Vice President-
Investment Management in December 1993. Previously, he was employed
by INVESCO Trust Company, Denver, Colorado, as Senior Vice President
(January 1993 to December 1993), Vice President (January 1991 to
January 1993) and Portfolio Manager (January 1988 to January 1991).
During his seven years with INVESCO, Mr. Keithler was portfolio
manager of several mutual funds, most recently INVESCO Dynamics Fund
and INVESCO Emerging Growth Fund. From 1982 to 1986, Mr. Keithler
was Vice President and portfolio manager with First Trust St. Paul, in
St. Paul, Minnesota.
William M.B. Berger is a director (Chairman of the Board) of
Berger Associates, a trustee of the Trust and a director or trustee of
each of the Berger retail funds. Although he is no longer involved in
making investment decisions for the Berger Funds, he was founder of
Berger Associates and its President from 1973 until 1994, and he was a
principal shareholder and executive officer of predecessor investment
advisory firms which served as investment advisors to mutual funds and
other investors from 1960. From 1950 to 1960, he was an investment
officer in the trust department of The Colorado National Bank of
Denver in charge of common stock investments.
Gerard M. Lavin, President and a director of Berger
Associates, is also President and a trustee of the Trust. In those
capacities, Mr. Lavin serves as the chief executive officer for Berger
Associates and the Trust, but does not participate in making
investment decisions for any of the Funds. In addition to his
positions with Berger Associates and the Trust, Mr. Lavin also serves
as a Vice President of DST Systems, Inc. Formerly, Mr. Lavin was
President and Chief Executive Officer of Investors Fiduciary Trust
Company (February 1992 to March 1995) and Chief Operating Officer of
SUNAMERICA Asset Management Co. (January 1990 to February 1992).
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Under their Investment Advisory Agreements, the Berger IPT -
100 Fund and the Berger IPT - Growth and Income Fund each have agreed
to compensate Berger Associates for its investment advisory services
to the Fund by the payment of a fee at the annual rate of .75 of 1%
(0.75%) of the average daily net assets of the Fund. Under the
Investment Advisory Agreement for the Berger IPT - Small Company
Growth Fund, Berger Associates is compensated for its investment
advisory services to that Fund by the payment of a fee at the annual
rate of .9 of 1% (0.90%) of the average daily net assets of the Fund.
The management fees are higher than those paid by most other mutual
funds.
From time to time, Berger Associates may compensate
Participating Insurance Companies or their affiliates whose customers
hold shares of the Funds for providing a variety of administrative
services (such as recordkeeping and accounting) and investor support
services (such as responding to inquiries and preparing mailings to
shareholders). This compensation, which may be paid as a per account
fee or as a percentage of the average daily net assets invested in the
Funds by the compensated Participating Insurance Company, depending on
the nature, extent and quality of the services provided, will be paid
from Berger Associates' own resources and not from the assets of the
Funds.
Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 80% of the outstanding shares of Berger Associates.
KCSI is a publicly traded holding company whose primary subsidiaries
are engaged in transportation services and financial asset management.
KCSI also owns approximately 41% of the outstanding shares of DST
Systems, Inc. ("DST"), a publicly traded information and transaction
processing company which also acts as the Funds' sub-transfer agent.
6. EXPENSES OF THE FUNDS
Each of the Funds has appointed Investors Fiduciary Trust
Company ("IFTC") as its recordkeeping and pricing agent to calculate
the daily net asset value of such Fund and to perform certain
accounting and recordkeeping functions required by the Fund. In
addition, IFTC also serves as the Funds' custodian, transfer agent and
dividend disbursing agent. IFTC has engaged DST as sub-agent to
provide transfer agency and dividend disbursing services for the
Funds. As noted above, approximately 41% of the outstanding shares of
DST are owned by KCSI.
For custodian, recordkeeping and pricing services, each Fund
pays fees to IFTC based on a percentage of its assets, subject to
certain minimums. Each Fund also pays a monthly fee based primarily
on the number of accounts maintained on behalf of the Fund for
transfer agency and dividend disbursing services, which fees are paid
by the Funds to IFTC and in turn passed through to DST as sub-agent.
In addition, the Funds reimburse IFTC and DST for certain out-of-
pocket expenses.
The trustees of each of the Funds have authorized Berger
Associates to place portfolio transactions on an agency basis through
DST Securities, Inc., a wholly-owned broker-dealer subsidiary of DST
("DSTS"). When transactions for a Fund are effected through DSTS, the
portion of the commissions received by it is credited against, and
thereby reduces, certain
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operating expenses that the Fund would otherwise be obligated to pay.
No portion of the commissions is retained by DSTS.
In addition, under a separate Administrative Services
Agreement with each Fund, Berger Associates performs certain
administrative and recordkeeping services not otherwise performed by
IFTC, including the preparation of financial statements and reports to
be filed with regulatory authorities. Each Fund pays Berger
Associates a fee at the annual rate of one-hundredth of one percent
(0.01%) of its average daily net assets for such services. The Funds
also incur other expenses, including accounting, administrative and
legal expenses.
Berger Associates has agreed to waive its advisory fee to
the extent that normal operating expenses in any fiscal year,
including the management fee but excluding brokerage commissions,
interest, taxes and extraordinary expenses, of each of the Berger IPT
- - 100 Fund and the Berger IPT - Growth and Income Fund exceed 1.00%,
and the normal operating expenses in any fiscal year of the Berger IPT
- - Small Company Growth Fund exceed 1.15%, of the respective Fund's
average daily net assets.
7. HOW TO PURCHASE AND REDEEM SHARES IN THE FUNDS
Shares of the Funds are sold by the Funds on a continuous
basis to separate accounts of Participating Insurance Companies or to
qualified plans. Investors may not purchase or redeem shares of the
Funds directly, but only through variable insurance contracts offered
through the separate accounts of Participating Insurance Companies or
through qualified retirement plans. You should refer to the
applicable Separate Account Prospectus or your plan documents for
information on how to purchase or surrender a contract, make partial
withdrawals of contract values, allocate contract values to one or
more of the Funds, change existing allocation among investment
alternatives, including the Funds, or select specific Funds as
investment options for a qualified plan. No sales charge is imposed
upon the purchase or redemption of shares of the Funds. Sales charges
for the variable insurance contracts or qualified plans are described
in the relevant Separate Account Prospectuses or plan documents.
Fund shares are purchased or redeemed at the net asset value
per share next computed after receipt of a purchase or redemption
order by a Fund, its agent or its delegatee. Payment for redeemed
shares generally will be made within three business days following the
date of the request for redemption. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking
place on the New York Stock Exchange, an emergency as defined by the
Securities and Exchange Commission exists, or as permitted by the
Securities and Exchange Commission.
8. HOW THE NET ASSET VALUE IS DETERMINED
The price of each Fund's shares is based on the net asset
value of that Fund, which is determined at the close of the regular
trading session of the New York Stock Exchange (normally 4:00 p.m.,
New York time) each day that the Exchange is open.
The per share net asset value of each Fund is determined by
dividing the total value of its securities and other assets, less
liabilities, by the total number of shares outstanding.
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In determining net asset value, securities are valued at market value
or, if market quotations are not readily available, at their fair
value determined in good faith pursuant to consistently applied
procedures established by the trustees. Money market instruments
maturing within 60 days are valued at amortized cost, which
approximates market value.
Since none of the Funds imposes any front end sales load or
redemption fee, both the purchase price and the redemption price of a
Fund share are the same and will be equal to the next calculated net
asset value of a share of that Fund.
9. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
Each of the Funds intends to declare dividends representing
the Fund's net investment income annually, normally in December. It
is also the present policy of each Fund to distribute annually all of
its net realized capital gains.
All dividends or capital gains distributions paid by a Fund
will be automatically reinvested in shares of that Fund at the net
asset value on the ex-dividend date unless an election is made on
behalf of a separate account or qualified plan to receive
distributions in cash.
Each of the Funds intends to qualify to be treated as a
separate regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). If they so
qualify and meet certain minimum distribution requirements, the Funds
will not be liable for Federal income tax on the amount of their
earnings that are distributed. If a Fund distributes annually less
than 98% of its income and gain, it will be subject to a nondeductible
excise tax equal to 4% of the shortfall. In addition, each Fund
intends to qualify under the diversification requirements of Code
Section 817(h) relating to insurance company separate accounts. By
meeting these and other requirements, the Participating Insurance
Companies, rather than the owners of the variable insurance contracts,
should be subject to tax on distributions received with respect to
Fund shares. The tax treatment of distributions made to a
Participating Insurance Company will depend on the Participating
Insurance Company's tax status. Participating Insurance Companies
should consult their own tax advisors concerning whether such
distributions are subject to Federal income tax if retained as part of
contract reserves. For further information concerning Federal income
tax consequences for the owners of variable insurance contracts and
qualified plan participants, consult the appropriate Separate Account
Prospectus or plan documents.
Dividends and interest received by the Funds on foreign
securities may give rise to withholding and other taxes imposed by
foreign countries. It is expected that foreign taxes paid by the
Funds will be treated as expenses of the Funds. Tax conventions
between certain countries and the United States may reduce or
eliminate such taxes.
10. ADDITIONAL INFORMATION
The Funds are each separate series or portfolios established
under the Trust, a Delaware business trust organized on October 17,
1995. The Trust is authorized to issue an
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unlimited number of shares of beneficial interest in series or
portfolios. Currently, the series comprising the Berger IPT - 100
Fund, the Berger IPT - Growth and Income Fund and the Berger IPT -
Small Company Growth Fund are the only portfolios established under
the Trust, although others may be added in the future. Shares of each
Fund are fully paid and nonassessable when issued. Each share has a
par value of $.01. All shares issued by a Fund participate equally in
dividends and other distributions by the Fund, and in the residual
assets of the Fund in the event of its liquidation.
The separate accounts of the Participating Insurance
Companies and the trustees of the qualified plans invested in the
Funds, rather than individual contract owners or plan participants,
are the shareholders of the Funds. However, each Participating
Insurance Company or qualified plan will vote such shares as required
by law and interpretations thereof, as amended or changed from time to
time. Under current law, a Participating Insurance Company is
required to request voting instructions from its contract owners and
must vote Fund shares held by each of its separate accounts in
proportion to the voting instructions received. Additional
information about voting procedures is contained in the applicable
Separate Account Prospectuses.
Shareholders of each Fund generally vote separately on
matters relating to that Fund, although they will vote together with
the holders of all other series of the Trust in the election of
trustees of the Trust and on all matters relating to the Trust as a
whole. Each full share of each Fund has one vote. Shares of each
Fund have noncumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of trustees can
elect 100% of the trustees if they choose to do so and, in such event,
the holders of the remaining less than 50% of the shares voting for
the election of trustees will not be able to elect any person or
persons as trustees. None of the Funds is required to hold annual
shareholder meetings unless required by the Investment Company Act of
1940 or other applicable law or unless called by the trustees.
If shareholders owning at least 10% of the outstanding
shares of the Trust so request, a special shareholders' meeting will
be held for the purpose of considering the removal of a trustee of the
Trust. Special meetings will be held for other purposes if the
holders of at least 25% of the outstanding shares of the Trust so
request. Subject to certain limitations, the Funds will facilitate
appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a trustee.
Each Fund sells its shares only to certain qualified
retirement plans and to variable annuity and variable life insurance
separate accounts of insurance companies that are unaffiliated with
Berger Associates and that may be unaffiliated with one another. The
Funds currently do not foresee any disadvantages to policyowners
arising out of the fact that each Fund offers its shares to such
entities. Nevertheless, the trustees intend to monitor events in
order to identify any material irreconcilable conflicts that may arise
and to determine what action, if any, should be taken in response to
such conflicts. If a conflict occurs, the trustees may require one or
more insurance company separate accounts or plans to withdraw its
investments in one or more of the Funds and to substitute shares of
another Fund. As a result, a Fund may be forced to sell securities at
disadvantageous prices. In addition, the trustees may refuse to sell
shares of any Fund to any separate account or qualified plan or may
suspend or terminate the offering of
-14-<PAGE>
shares of any Fund if such action is required by law or regulatory
authority or is deemed by the Fund to be in the best interests of the
shareholders of the Fund.
The Funds' transfer agent and dividend disbursing agent is
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, MO 64105. IFTC has engaged DST Systems, Inc. ("DST"),
P.O. Box 419958, Kansas City, MO 64141, as sub-agent to provide
transfer agency and dividend disbursing services for the Funds.
Owners of variable insurance contracts and qualified plan
administrators will receive annual and semiannual reports including
the financial statements of the Funds in which contract values or
qualified plan assets are invested. Each report will show the
investments owned by each Fund and the market values thereof, as well
as other information about the Funds and their operations.
11. PERFORMANCE
From time to time in advertisements, the Funds may discuss
their performance ratings as published by recognized mutual fund
statistical services, such as Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., or Morningstar, Inc., or by
publications of general interest such as The Wall Street Journal,
Investor's Business Daily, Barron's, Financial World or Kiplinger's
Personal Finance Magazine. In addition, the Funds may compare their
performance to that of recognized broad-based securities market
indices, including the Standard & Poor's 500 Stock Index, the Dow
Jones Industrial Average, the Russell 2000 Stock Index, the Standard &
Poor's 600 Small Cap Index or the Nasdaq Composite Index, or more
narrowly-based indices which reflect the market sectors in which that
Fund invests.
The total return of each Fund is calculated for any
specified period of time by assuming the purchase of shares of the
Fund at the net asset value at the beginning of the period. Each
dividend or other distribution paid by the Fund is assumed to have
been reinvested at the net asset value on the reinvestment date. The
total number of shares then owned as a result of this process is
valued at the net asset value at the end of the period. The
percentage increase is determined by subtracting the initial value of
the investment from the ending value and dividing the remainder by the
initial value.
Each Fund's total return reflects the Fund's performance
over a stated period of time. An average annual total return reflects
the hypothetical annually compounded return that would have produced
the same total return if the Fund's performance had been constant over
the entire period. Total return figures are based on the overall
change in value of a hypothetical investment in each Fund. Because
average annual total returns for more than one year tend to smooth out
variations in a Fund's return, investors should recognize that such
figures are not the same as actual year-by-year results.
A Fund's total return includes the effect of deducting that
Fund's expenses, but does not include any charges and expenses
attributable to a particular variable insurance contract or qualified
plan. Because shares of the Funds can be purchased only through a
variable insurance contract or qualified plan, the Funds' total return
data should be reviewed along with the description of charges and
expenses contained in the applicable Separate Account Prospectus
-15-<PAGE>
or plan documents. Total return for a Fund must always be accompanied
by, and reviewed with, comparable total return data for an associated
separate account, or data that would permit evaluation of the
magnitude of charges and expenses attributable to the contract or plan
that are not reflected in the Fund's total return.
Any performance figures for the Funds are based upon
historical results and do not assure future performance. The
investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
12. SHAREHOLDER INQUIRIES
Shareholders with questions should write to the Berger
Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, CO 80217,
or call 1-303-329-0200 or 1-800-706-0539, or contact a Participating
Insurance Company.
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