<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1997
1933 Act File No. 033-63493
1940 Act File No. 811-07367
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 4 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 /X/
(Check appropriate box or boxes)
BERGER INSTITUTIONAL PRODUCTS TRUST
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
210 University Boulevard, Suite 900, Denver, Colorado 80206
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
-----------------------------
Gerard M. Lavin, 210 University Boulevard, Suite 900, Denver, CO 80206
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective: (check appropriate box)
/X/ immediately upon filing pursuant to paragraph (b)
/ / on May 1, 1997, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered SHARES OF BENEFICIAL INTEREST OF THE
BERGER IPT - 100 FUND, THE BERGER IPT - GROWTH AND INCOME FUND, THE BERGER IPT -
SMALL COMPANY GROWTH FUND AND THE BERGER/BIAM IPT - INTERNATIONAL FUND
<PAGE>
BERGER INSTITUTIONAL PRODUCTS TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
Item No. And Caption in Form N-1A Number of Section
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A. PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Section 2
4. General Description of Registrant Sections 3, 4, 5 and 11
5. Management of the Fund Sections 6 and 7
5A. Management's Discussion of Fund Performance In Annual Report
6. Capital Stock and Other Securities Sections 10, 11 and 12
7. Purchase of Securities Being Offered Sections 8 and 9
8. Redemption or Repurchase Section 8
9. Pending Legal Proceedings Not Applicable
B. STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 12
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Funds Section 3
15. Control Persons and Principal Holders of
Securities Sections 3 and 12
16. Investment Advisory and Other Services Sections 3, 4, 5 and 12
17. Brokerage Allocation and Other Practices Sections 1 and 6
18. Capital Stock and Other Securities Section 12
19. Purchase, Redemption and Pricing of
Securities Being Offered Sections 7, 8 and 9
20. Tax Status Section 10
21. Underwriters Sections 5 and 12
22. Calculations of Performance Data Section 11
23. Financial Statements Financial Statements
<PAGE>
BERGER/BIAM IPT - INTERNATIONAL FUND
SUPPLEMENT DATED NOVEMBER 13, 1997
TO
PROSPECTUS DATED MAY 1, 1997
AS SUPPLEMENTED OCTOBER 24, 1997
The Prospectus dated May 1, 1997, as supplemented October 24, 1997, for the
Berger Institutional Products Trust is amended by changing the date of the
Statement of Additional Information referred to on the cover thereof to May 1,
1997, as amended November 13, 1997, and by supplementing Section 2 "Condensed
Financial Information" with the following:
Following is a table setting forth certain financial highlights for the
Berger/BIAM IPT - International Fund for the period May 1, 1997 (commencement
of operations) to October 31, 1997. The information contained in the table
is unaudited. Additional performance information is contained in the Funds'
most recent Semi-Annual Report dated June 30, 1997, which may be obtained
upon request and without charge by calling the Berger Funds at 1-800-706-0539
or by calling a Participating Insurance Company.
BERGER/BIAM IPT - INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
MAY 1, 1997 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1997
(UNAUDITED)
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . $ 10.00
-----------
Income From Investment Operations:
Net Investment Income (Loss) . . . . . . . . . . . . . . . . . . . 0.05
Net Realized and Unrealized Gains
(Losses) on Securities. . . . . . . . . . . . . . . . . . . . . . (0.58)
-----------
Total From Investment Operations . . . . . . . . . . . . . . . . . (0.53)
-----------
Less Distributions:
Dividends (from net investment income) . . . . . . . . . . . . . . 0.00
Distributions (from capital gains) . . . . . . . . . . . . . . . . 0.00
-----------
Total Distributions. . . . . . . . . . . . . . . . . . . . . . . . 0.00
-----------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . $ 9.47
-----------
-----------
Total Return++*. . . . . . . . . . . . . . . . . . . . . . . . . . (5.30)%
-----------
-----------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period. . . . . . . . . . . . . . . . . . . . . $ 2,405,676
Ratios of Expenses to Average Net Assets:+++#
Net expenses. . . . . . . . . . . . . . . . . . . . . . . . . .90%
Gross expenses. . . . . . . . . . . . . . . . . . . . . . . . 1.77%
Ratio of Net Income (Loss) to Average Net Assets+++. . . . . . . . 1.30%
Portfolio Turnover Rate* . . . . . . . . . . . . . . . . . . . . . 23.60%
Average Commission Rate. . . . . . . . . . . . . . . . . . . . . . $ .0246
++ Total return reflects the effect of fees offset by earnings credits, fee
waivers and expense reimbursements, and does not reflect expenses that apply to
related variable insurance contracts. Had the fee offsets, waivers and
reimbursements not been made, and had variable contract charges been included,
total return would have been lower for the period shown.
* Based on operations for the period shown and, accordingly, is not
representative of a full year.
+++ Annualized.
# Net expenses reflect the Fund's gross (total) expenses, reduced by fees offset
by earnings credits, fee waivers and expense reimbursements. Gross expenses and
net expenses do not include the deduction of any charges or expenses
attributable to any particular variable insurance contract.
<PAGE>
BERGER IPT - GROWTH AND INCOME FUND
SUPPLEMENT DATED OCTOBER 24, 1997
TO
PROSPECTUS DATED MAY 1, 1997
Berger Associates Vice President Sheila J. Ohlsson has been appointed
co-manager of the Berger IPT - Growth and Income Fund, joining Patrick S. Adams,
who has been co-managing the Fund since February 1997. Ms. Ohlsson succeeds
former co-manager Mark R. McKinney.
Accordingly, page 13 of the Prospectus for the Berger IPT - Growth and
Income Fund of the Berger Institutional Products Trust is amended to read as
follows: The third paragraph under "6. Management and Investment Advice" is
deleted in its entirety and replaced with the following:
"Patrick S. Adams, Senior Vice President of Berger Associates, is the
portfolio manager for the Berger IPT - 100 Fund. Mr. Adams also co-manages the
Berger IPT - Growth and Income Fund, along with Berger Associates Vice President
Sheila J. Ohlsson. The portfolio managers are responsible for the investments
of their Funds, including the day-to-day investment decisions for these Funds.
Mr. Adams is also President of the Berger IPT - 100 Fund and the Berger IPT -
Growth and Income Fund."
In addition, the fifth paragraph under "6. Management and Investment
Advice" is deleted in its entirety and replaced with the following:
"Ms. Ohlsson joined Berger Associates in 1991, where she currently serves
as Vice President and co-portfolio manager, along with Patrick Adams, for the
Berger Growth and Income Fund. Previously, Ms. Ohlsson served as Senior
Analyst/Portfolio Manager (February 1997 to October 1997) and Analyst (September
1991 to February 1997) with Berger Associates."
<PAGE>
PROSPECTUS
Berger Institutional Products Trust (the "Trust") is an open-end
management investment company. The Trust currently consists of the four
diversified series or portfolios named below (individually referred to as a
"Fund"). Each Fund has its own investment objective and policies. 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.
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.
BERGER/BIAM IPT - INTERNATIONAL FUND - The investment objective of the
Berger/BIAM IPT - International Fund is long-term capital appreciation. The
Berger/BIAM IPT - International Fund seeks to achieve this objective by
investing primarily in common stocks of well established companies located
outside the United States. The Fund intends to diversify its holdings among
several countries and to have, under normal market conditions, at least 65% of
the Fund's total assets invested in the securities of companies located in at
least five countries, not including the United States.
This Prospectus concisely sets forth 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 ("Separate Account Prospectus") 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, dated May 1,
1997, is incorporated by reference into this Prospectus in its entirety and 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.
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK (INCLUDING BANK OF IRELAND). SHARES OF THE
FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
<PAGE>
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN THE FUNDS IS SUBJECT TO INVESTMENT RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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.
DATED MAY 1, 1997
<PAGE>
Table of Contents
Section Page
- ------- ----
1. Fee Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Condensed Financial Information . . . . . . . . . . . . . . . . . . 2
3. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Investment Objectives and Policies and Risk Factors . . . . . . . . 4
5. Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . . . . 10
6. Management and Investment Advice. . . . . . . . . . . . . . . . . . 11
7. Expenses of the Funds . . . . . . . . . . . . . . . . . . . . . . . 13
8. How to Purchase and Redeem Shares in the Funds. . . . . . . . . . . 13
9. How the Net Asset Value Is Determined . . . . . . . . . . . . . . . 14
10. Income Dividends, Capital Gains Distributions and Tax Treatment. . 14
11. Additional Information . . . . . . . . . . . . . . . . . . . . . . 15
12. Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13. Shareholder Inquiries. . . . . . . . . . . . . . . . . . . . . . . 17
i
<PAGE>
1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO ALL FOUR 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)
Investment Other Total Fund
Advisory Expenses* Operating
Fee Expenses
---------- --------- ----------
Berger IPT - 100 Fund .00%+ 1.00%+ 1.00%+
Berger IPT - Growth and .00%+ 1.00%+ 1.00%+
Income Fund
Berger IPT - Small Company .00%+ 1.15%+ 1.15%+
Growth Fund
Berger/BIAM IPT - .00%++ 1.20%++ 1.20%++
International Fund
* Other Expenses primarily include transfer agency fees, shareholder report
expenses, registration fees and custodian fees.
+ After fee waivers and expense reimbursements. The Funds' investment
advisor has voluntarily agreed to waive its advisory fee and has
voluntarily reimbursed the Funds for additional expenses to the extent that
normal operating expenses in any fiscal year, including the investment
advisory 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. Absent
the voluntary waiver and reimbursement, the Investment Advisory Fee for the
Berger IPT - 100 Fund, Berger IPT - Growth and Income Fund and the Berger
IPT - Small Company Growth Fund would have been 0.75%, 0.75% and 0.90%,
respectively, and their Total Fund Operating Expenses would have been
7.69%, 7.70% and 8.57%, respectively.
++ Based on estimated expenses for the first year of operations of the
Berger/BIAM IPT - International Fund, after fee waivers and expense
reimbursements. The Fund's investment advisor has voluntarily agreed to
waive its advisory fee and expects to voluntarily reimburse the Fund for
additional expenses to the extent that normal operating expenses in any
fiscal year, including the investment advisory fee but excluding brokerage
commissions, interest, taxes and extraordinary expenses, of the Berger/BIAM
IPT - International Fund exceed 1.20%, of the Fund's average daily net
assets. Absent the voluntary waiver and reimbursement, the Investment
Advisory Fee for the Berger/BIAM IPT - International Fund would be 0.90%,
and its Total Fund Operating Expenses would be estimated to be 8.96%.
-1-
<PAGE>
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 3 Years 5 Years 10 Years
------ ------- ------- --------
Berger IPT - 100 Fund $10 $32 $55 $122
Berger IPT - Growth and Income $10 $32 $55 $122
Fund
Berger IPT - Small Company $12 $37 $63 $140
Growth Fund
Berger/BIAM IPT - International $12* $38* N/A N/A
Fund
* Based on estimated expenses for the Fund's first year of operations.
THE EXPENSES SET FORTH IN THE PRECEDING TABLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, 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. THE TABLES AND EXAMPLE ABOVE DO NOT
REFLECT THE DEDUCTION OF ANY APPLICABLE CHARGES OR EXPENSES ATTRIBUTABLE TO
VARIABLE INSURANCE CONTRACTS OR QUALIFIED PLANS INVESTED IN THE FUNDS.
PROSPECTIVE INVESTORS SHOULD REFER TO THE APPLICABLE SEPARATE ACCOUNT PROSPECTUS
OR QUALIFIED PLAN DOCUMENTS THAT ACCOMPANY THIS PROSPECTUS FOR INFORMATION
PERTAINING TO SUCH CONTRACT CHARGES AND EXPENSES.
Each of the investment advisors for their respective Funds has
voluntarily agreed to waive its advisory fee and expects to voluntarily
reimburse the Funds for additional expenses to the extent that normal operating
expenses in any fiscal year, including the investment advisory fee but excluding
brokerage commissions, interest, taxes and extraordinary expenses, exceed 1.00%
for each of the Berger IPT - 100 Fund and the Berger IPT - Growth and Income
Fund, exceed 1.15% for the Berger IPT - Small Company Growth Fund and exceed
1.20% for the Berger/BIAM IPT - International Fund, 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-
<PAGE>
2. CONDENSED FINANCIAL INFORMATION
On the following page is a table setting forth certain financial
highlights of the Funds in existence at December 31, 1996, for the period May 1,
1996 (date operations commenced) to the end of their first fiscal year on
December 31, 1996. The information has been audited by Price Waterhouse LLP,
whose report thereon is incorporated by reference from the Funds' 1996 Annual
Report into the Statement of Additional Information. Additional performance
information is contained in the Funds' most recent Annual Report dated December
31, 1996, which may be obtained upon request and without charge by calling the
Funds at 1-800-706-0539 or by calling a Participating Insurance Company.
-3-
<PAGE>
BERGER IPT - 100 FUND
BERGER IPT - GROWTH AND INCOME FUND
BERGER IPT - SMALL COMPANY GROWTH FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
MAY 1, 1996 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
Berger IPT - Berger IPT - Berger IPT -
100 Fund Growth and Small
Income Company
Fund Growth
Fund
------------ ------------ ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $10.00 $10.00 $10.00
------ ------ ------
Income From Investment Operations:
Net Investment Income (Loss) . . . . . . . .03 .10 .01
Net Realized and Unrealized Gains
(Losses) on Securities. . . . . . . . . . .36 1.04 (.06)
------ ------ ------
Total From Investment Operations . . . . . .39 1.14 (.05)
------ ------ ------
Less Distributions:
Dividends (from net investment income) . . .00 .00 .00
Distributions (from capital gains) . . . . .00 .00 .00
------ ------ ------
Total Distributions. . . . . . . . . . . . .00 .00 .00
------ ------ ------
Net Asset Value, End of Period . . . . . . $10.39 $11.14 $ 9.95
------ ------ ------
------ ------ ------
Total Return++*. . . . . . . . . . . . . . 3.90% 11.40% (.50)%
------ ------ ------
------ ------ ------
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period. . . . . . . . . $331,296 $344,373 $291,362
Ratios of Expenses to Average Net Assets:+++
Net expenses+. . . . . . . . . . . . .93% .94% .95%
Gross expenses+. . . . . . . . . . . 7.69% 7.70% 8.57%
Ratio of Net Income (Loss) to Average
Net Assets+++ . . . . . . . . . . . . . . .50% 1.80% .14%
Portfolio Turnover Rate* . . . . . . . . . 56% 60% 80%
Average Commission Rate. . . . . . . . . $.0590 $.0756 $.0392
</TABLE>
- ---------------
++ Total return reflects the effect of fees offset by earnings credits, fee
waivers and expense reimbursements, and does not reflect expenses that apply to
related variable insurance contracts. Had the fee offsets, waivers and
reimbursements not been made, and had variable contract charges been included,
total return would have been lower for the period shown.
-4-
<PAGE>
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
+++ Annualized.
+ Net expenses reflect the Fund's gross (total) expenses, reduced by fees offset
by earnings credits, fee waivers and expense reimbursements. Gross expenses and
net expenses do not include the deduction of any charges or expenses
attributable to any particular variable insurance contract.
-5-
<PAGE>
3. INTRODUCTION
The Funds 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. 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 or plan and certain contracts or plans may
limit allocations among the Funds. See the accompanying Separate Account
Prospectuses or qualified retirement plan documents 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 many of the same 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.
4. INVESTMENT OBJECTIVES AND POLICIES AND RISK FACTORS
Each of the Funds is a separate series of the Berger Institutional
Products Trust, 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.
The Funds have the same investment objectives and follow substantially
the same investment strategies and policies as those of certain publicly-offered
investment companies managed by the same investment advisors (the "Berger retail
funds"). The Berger IPT - 100 Fund corresponds to the Berger 100
Fund-Registered Trademark-. 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-Registered Trademark-.
The Berger/BIAM IPT - International Fund corresponds to the Berger/BIAM
International Institutional Fund. 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.
-6-
<PAGE>
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
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
-7-
<PAGE>
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 Berger IPT - 100 Fund, the
Berger IPT - Growth and Income Fund and the Berger IPT - Small Company Growth
Fund 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 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.
BERGER/BIAM IPT - INTERNATIONAL FUND. The investment objective of the
Berger/BIAM IPT - International Fund is long-term capital appreciation. The
Fund seeks to achieve this objective by investing primarily in common stocks of
well established companies located outside the United States. A company will be
considered to be located outside the United States if the principal securities
trading market for its equity securities is located outside the U.S. or it is
organized under the laws of, and has a principal office in, a country other than
the U.S. The Fund may also invest in securities other than common stock if the
Fund's sub-advisor believes these are likely to be the best suited at that time
to achieve the Fund's objective. These include equity-related securities (such
as preferred stocks and convertible securities), debt securities issued by
foreign governments or foreign corporations, U.S. or foreign short-term
investments or other securities described on the following pages. The Fund
intends to diversify its holdings among several countries and to have, under
normal market conditions, at least 65% of the Fund's total assets invested in
the securities of companies located in at least five countries, not including
the
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United States. Current income is not an investment objective of the Fund and
any income produced will be only of secondary importance as a by-product of the
investment selection process used to achieve the Fund's objective.
In selecting its portfolio securities, the Fund places primary
emphasis on fundamentally undervalued stocks as determined by a range of
characteristics, including relatively low price/earnings multiples, dividend
yield, consistency of earnings growth and cash flow, financial strength,
realizable asset value and liquidity. Securities of companies with medium to
large market capitalizations usually constitute the majority of the Fund's
investments. The Fund currently considers medium to large market
capitalizations to be those in excess of $1 billion. Market capitalization is
defined as total current market value of a company's outstanding common stock.
In addition, the Fund is presently anticipated to be weighted largely toward
companies located in Western Europe (for example, the United Kingdom, Germany,
France, Italy, Spain, Switzerland, the Netherlands, Sweden, Ireland and
Finland), Australia and the Far East (for example, Japan, Hong Kong, Singapore,
Malaysia, Thailand, Indonesia and the Philippines). However, the Fund is free
to invest in companies of any size and in companies located in other foreign
countries, including developing countries.
The investment approach of the sub-advisor for the Berger/BIAM IPT -
International Fund is based on "bottom-up" fundamental analysis of individual
companies within a framework of dynamic economic and business themes that are
believed to provide the best opportunities for effective stock selection. Stock
selection decisions are guided by:
- - GLOBAL ECONOMIC AND BUSINESS THEMES. The sub-advisor identifies
economic and business themes and trends that have the potential to
support the long-term growth prospects of companies best positioned to
take advantage of them. These themes and trends may transcend
political and geographic boundaries and may be global or regional in
nature. Current themes and trends include, for example, worldwide
growth in telecommunications and multimedia, positive banking
environment, rapid economic development in the Pacific Basin, global
healthcare trends and unique consumer franchises.
- - FUNDAMENTAL ANALYSIS. The sub-advisor seeks to identify companies
that it believes are best positioned to benefit from the identified
themes and trends. It conducts an extensive "bottom-up" analysis
seeking individual quality companies with stocks that are
fundamentally undervalued relative to their long-term prospective
earnings growth rate, their historic valuation levels and their peer
group. This process includes examining financial statements,
evaluating management and products, assessing competitive position and
strengths, as well as analyzing the economic variables affecting the
company's operating environment. This in-depth, fundamental analysis
is believed to be the most important step in identifying stock
selections for the Fund.
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Actual country weightings are a by-product of the bottom-up stock
selection approach. Accordingly, the country in which a company is located is
considered by the sub-advisor to be less important than the diversity of its
sources of earnings and earnings growth.
Investors should also be aware that investment in foreign securities
carries additional risks not present when investing in domestic securities. See
"Foreign Securities" below. The Berger/BIAM IPT - International Fund is not
intended as a complete or balanced investment vehicle, but rather as an
investment for persons who are in a financial position to assume the risk and
share price volatility associated with foreign investments. As a result, the
Fund should be considered as a long-term investment vehicle.
* * *
The investment objective of each of the Berger IPT - 100 Fund, the
Berger IPT - Small Company Growth Fund and the Berger/BIAM IPT - International
Fund, and the primary investment objective of the Berger IPT - Growth and Income
Fund, is considered fundamental, meaning that it 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.
The Berger IPT - 100 Fund, the Berger IPT - Growth and Income Fund and
the Berger IPT - Small Company Growth Fund may each increase its investment in
government securities and other short-term interest-bearing securities without
limit when its advisor believes market conditions warrant a temporary defensive
position, during which period it may be more difficult for the Fund to achieve
its investment objective. Following is additional information about some of the
other specific types of securities and other instruments in which the Funds may
invest.
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 adverse political, social, diplomatic and economic
developments and, with respect to certain countries, the possibility of
expropriation, taxes imposed by foreign countries or limitations on the removal
of monies or other assets of a Fund. Moreover, the economies of individual
foreign countries will vary in comparison to the U.S. economy in such respects
as growth of gross domestic product, rate of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position. Securities of
some foreign companies, particularly those in developing countries, are less
liquid and more volatile than securities of comparable domestic companies.
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
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countries. A Fund's investments may include American Depositary Receipts
(ADRs). The Funds may also invest in European Depositary Receipts (EDRs) which
are similar to ADRs, in bearer form, designed for use in the European securities
markets, and in Global Depositary Receipts (GDRs). Some of the companies in
which a Fund may invest may be considered passive foreign investment companies
(PFICs), which are described in greater detail in the Statement of Additional
Information.
There also may be less publicly available information about foreign
issuers and securities than domestic issuers and securities, and foreign issuers
generally are not subject to accounting, auditing and financial reporting
standards, requirements and practices comparable to those applicable to domestic
issuers. Also, there is generally less government supervision and regulation of
exchanges, brokers, financial institutions and issuers in foreign countries than
there is in the U.S. Foreign financial markets typically have substantially
less volume than U.S. markets. Foreign markets also have different clearance
and settlement procedures and, in certain markets, delays or other factors could
make it difficult to effect transactions, potentially causing a Fund to
experience losses or miss investment opportunities.
Costs associated with transactions in foreign securities are generally
higher than with transactions in U.S. securities. A Fund will incur greater
costs in maintaining assets in foreign jurisdictions and in buying and selling
foreign securities generally, resulting in part from converting foreign
currencies into U.S. dollars. In addition, a Fund might have greater difficulty
taking appropriate legal action with respect to foreign investments in non-U.S.
courts than with respect to domestic issuers in U.S. courts, which may heighten
the risk of possible losses through the holding of securities by custodians and
securities depositories in foreign countries.
Since the Funds may invest in securities denominated or quoted in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the value of the investments in its portfolio and the
unrealized appreciation or depreciation of investments insofar as U.S. investors
are concerned. If the foreign currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the foreign currency
against the U.S. dollar would adversely affect the dollar value of the foreign
securities. Foreign currency exchange rates are determined by forces of supply
and demand on the foreign exchange markets, which are in turn affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors.
CONVERTIBLE SECURITIES. Each Fund may purchase securities which are
convertible into common stock when the Fund's advisor or sub-advisor 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 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
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investment grade by organizations such as Moody's Investors Service, Inc., or
Standard & Poor's Corporation, or being of similar creditworthiness in the
determination of the advisor or sub-advisor. 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, 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. If convertible securities purchased by a Fund are downgraded
following purchase, or if other circumstances cause 20% or more of a Fund's
assets to be invested in convertible securities rated below investment grade,
the trustees of the Trust, in consultation with the advisor or sub-advisor will
determine what action, if any, is appropriate in light of all relevant
circumstances. For a further discussion of debt security ratings, see Appendix
A to the Statement of Additional Information.
SECURITIES OF SMALLER COMPANIES. All of the Funds may invest in, and
the portfolio of the Berger IPT - Small Company Growth Fund will be weighted
toward, securities of companies with small- or mid-sized market capitalizations.
Market capitalization is defined as total current market value of a company's
outstanding common stock. Investments in companies with smaller market
capitalizations may involve greater risks and price volatility (that is, more
abrupt or erratic price movements) than investments in larger, more mature
companies since smaller companies may be at an earlier stage of development and
may have limited product lines, reduced market liquidity for their shares,
limited financial resources or less depth in management than larger or more
established companies. Smaller companies also may be less significant factors
within their industries and may have difficulty withstanding competition from
larger companies. While smaller companies may be subject to these additional
risks, they may also realize more substantial growth than larger or more
established companies.
UNSEASONED ISSUERS. The Funds may invest to a limited degree in
securities of unseasoned issuers. Unseasoned issuers are companies with a
record of less than three years' continuous operation, even including the
operations of any predecessors and parents. Unseasoned issuers by their nature
have only a limited operating history which can be used for evaluating the
company's growth prospects. As a result, investment decisions for these
securities may place a greater emphasis on current or planned product lines and
the reputation and experience of the company's management and less emphasis on
fundamental valuation factors than would be the case for more mature growth
companies. In addition, many unseasoned issuers may also be small companies and
involve the risks and price volatility associated with smaller companies. The
Berger IPT - Small Company Growth Fund may invest up to 10% of its total assets
in securities of unseasoned issuers, and each of the Berger IPT - 100 Fund, the
Berger IPT - Growth and Income Fund and the Berger/BIAM IPT - International Fund
may invest up to 5% of its total assets in such securities.
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
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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, 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.
HEDGING TRANSACTIONS. Each Fund except the Berger/BIAM IPT -
International Fund is authorized to make limited use of 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. The Berger/BIAM IPT - International Fund is authorized
to make limited use only of forward contracts for the same purpose. 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, hedging may also
limit the Fund's opportunity to profit from favorable price movements, and 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 which
the Funds may
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utilize, provided that no more than 5% of a Fund's net assets at the time of
purchase may be utilized as 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 exchange traded instruments that
may be physically settled or settled with cash or by entering into an offsetting
transaction, 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 or a futures contract) 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. Securities options may be either exchange-traded or
privately negotiated, whereas options on futures contracts are always
exchange-traded. 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.
Use of these instruments by a Fund involves the potential for a loss
that may exceed the amount of initial margin the Fund would be permitted to
commit to the contracts under its investment limitation, 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 use such instruments for hedging
purposes only, and only if the aggregate amount of its obligations under these
contracts 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 help 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 maintain liquid assets in a segregated account with its custodian
bank or to set aside portfolio securities to "cover" its position in these
contracts.
The principal risks of the Funds utilizing futures transactions,
forward contracts and/or options are: (a) losses resulting from market
movements not anticipated by the 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 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) lack of assurance that
the counterparty to a forward contract would be willing to negotiate an offset
or termination of the contract when so desired; (e) the need for additional
information and skills beyond those required for the management of a portfolio
of traditional securities; and (f) 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
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<PAGE>
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' use of 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 or not readily marketable because they are subject to
restrictions on their resale ("restricted securities") or because, based upon
their nature or the market for such securities, no ready market is available.
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. If securities become illiquid
following purchase or other circumstances cause more than 15% of a Fund's net
assets to be invested in illiquid securities, the trustees of the Trust, in
consultation with the advisor or sub-advisor, will determine what action, if
any, is appropriate in light of all relevant circumstances. 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/BIAM IPT - International Fund is similarly restricted with respect to
100% of its total assets, although this restriction may be reduced to apply to
75% or more of its total assets without a shareholder vote. 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 total 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 and may lend portfolio securities in accordance with the Fund's
investment policies). Neither of the Berger IPT - Small Company Growth Fund or
the Berger/BIAM IPT - International Fund may borrow money, except borrowing
undertaken from banks for temporary or emergency purposes in amounts not to
exceed 25% of the market value of its total assets (including the
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amount borrowed), and none may make loans (except that a 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 total assets at the time of investment, nor
invest in commodities, except, only for the purpose of hedging, in certain
futures, forwards and/or 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 that each of the Funds other than the Berger/BIAM IPT -
International Fund may make 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 none of the Funds intends 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.
5. PORTFOLIO TURNOVER
In pursuit of each Fund's investment objective, management
continuously monitors the Fund's investments and makes portfolio changes
whenever changes in the markets, industry trends or the outlook for any
portfolio security indicate to them 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%. Increased portfolio
turnover would necessarily result in correspondingly higher brokerage costs for
the Funds. The portfolio turnover rates are shown in the tables in Section 2
beginning on page 2.
6. 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 except the Berger/BIAM IPT
- - International Fund is Berger Associates, 210 University Boulevard, Suite 900,
Denver, CO 80206. Berger Associates furnishes continuous advice and
recommendations to each of those Funds 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 or
sub-advisor to mutual funds, pension and profit-sharing plans, and institutional
and private investors, and had assets under management of more than $3.5 billion
as of December 31, 1996. Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 87% of the outstanding shares of Berger Associates. KCSI is a
publicly traded holding company with
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principal operations in rail transportation, through its subsidiary The Kansas
City Southern Railway Company, and financial asset management businesses. 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.
Patrick S. Adams, Senior Vice President of Berger Associates, is the
portfolio manager for the Berger IPT - 100 Fund. Mr. Adams also co-manages the
Berger IPT - Growth and Income Fund, along with Berger Associates Senior Analyst
Mark R. McKinney. The portfolio managers are responsible for the investments of
their Funds, including the day-to-day investment decisions for these Funds. Mr.
Adams is also President of the Berger IPT - 100 Fund and the Berger IPT - Growth
and Income Fund, and Mr. McKinney is Vice President of the Berger IPT - Growth
and Income Fund.
Mr. Adams joined Berger Associates in February 1997, where he serves
as portfolio manager for the Berger IPT - 100 Fund and the retail Berger 100
Fund, co-manager for the Berger IPT - Growth and Income Fund and the retail
Berger Growth and Income Fund, and portfolio manager for retirement plans and
institutional and private investors. Mr. Adams previously served as Senior Vice
President with Zurich Kemper Investments, Inc., from June 1996 to January 1997,
where he was portfolio manager of the Kemper Growth Fund. Mr. Adams served as
Portfolio Manager with Founders Asset Management, Inc., from March 1993 to May
1996, where he managed the Founders Blue Chip Growth Fund and the Founders
Balanced Fund. Prior to that, Mr. Adams served in various positions with First
of America Investment Corp. for over three years, including as Senior Portfolio
Manager/Senior Analyst from January 1992 to February 1993, during which time he
managed the Parkstone Equity Fund.
Mr. McKinney joined Berger Associates in January 1996, where he serves
as Senior Analyst and co-portfolio manager, along with Patrick Adams, for the
Berger IPT - Growth and Income Fund and the retail Berger Growth and Income
Fund. Mr. McKinney previously served as Analyst/Portfolio Manager with Farmers
Insurance Co. from April 1992 to January 1996.
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 in December 1993 and serves as
Senior Vice President-Investment Management. 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, including the
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.
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The investment advisor to the Berger/BIAM IPT - International Fund is
BBOI Worldwide LLC ("BBOI Worldwide"), 210 University Boulevard, Denver, CO
80206. BBOI Worldwide oversees, evaluates and monitors the investment advisory
services provided to the Fund by the Fund's sub-advisor and is responsible for
furnishing administrative services to the Fund, such as coordinating certain
matters relating to the operations of the Fund and monitoring the Fund's
compliance with all applicable federal and state securities laws.
BBOI Worldwide is a Delaware limited liability company formed in 1996.
Since BBOI Worldwide was only recently formed, it has only limited prior
experience as an investment advisor. However, BBOI Worldwide is a joint venture
between Berger Associates and Bank of Ireland Asset Management (U.S.) Limited
("BIAM"), the sub-advisor to the Fund, which have both been in the investment
advisory business for many years.
Berger Associates and BIAM each own a 50% membership interest in BBOI
Worldwide and each have an equal number of representatives on BBOI Worldwide's
Board of Managers. Berger Associates' role in the joint venture is to provide
administrative services and BIAM's role is to provide international and global
investment management expertise. Agreement of representatives of both Berger
Associates and BIAM is required for all significant management decisions for
BBOI Worldwide.
Since its founding in 1966, Bank of Ireland's investment management
group has become recognized among international and global investment managers,
serving clients in Europe, the United States, Canada, Australia and South
Africa. BIAM, the sub-advisor to the Berger/BIAM IPT - International Fund, is
an indirect wholly-owned subsidiary of Bank of Ireland. Bank of Ireland,
founded in 1783, is a publicly traded, diversified financial services group with
business operations worldwide. Bank of Ireland provides investment management
services through a network of related companies, including BIAM which serves
primarily institutional clients in the United States and Canada. Bank of
Ireland and its affiliates managed assets for clients worldwide in excess of $21
billion as of December 31, 1996.
As permitted in its Investment Advisory Agreement with the Berger/BIAM
IPT - International Fund, BBOI Worldwide has delegated day-to-day portfolio
management responsibility to BIAM, as the sub-advisor. As sub-advisor, BIAM
manages the investments in the Fund and determines what securities and other
investments will be purchased, retained, sold or loaned, consistent with the
investment objective and policies established by the trustees of the Trust.
BIAM serves as investment advisor or sub-advisor to pension and profit-sharing
plans and other institutional investors and mutual funds. BIAM also acts as
sub-advisor for and is responsible for the day-to-day portfolio management of
the Berger/BIAM International Portfolio. BIAM's main offices are at 26
Fitzwilliam Place, Dublin 2, Ireland. BIAM maintains a representative office at
2 Greenwich Plaza, Greenwich, CT 06830.
All investment decisions made for the Berger/BIAM IPT - International
Fund by its sub-advisor are made by a team of BIAM investment personnel. No one
individual is primarily responsible for making the day-to-day investment
decisions for the Fund. Most of the investment professionals at BIAM have been
with BIAM at least 10 years.
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<PAGE>
Bank of Ireland or its affiliates may have deposit, loan or other
commercial or investment banking relationships with the issuers of securities
which may be purchased by the Berger/BIAM IPT - International Fund, including
outstanding loans to such issuers which could be repaid in whole or in part with
the proceeds of securities purchased by the Fund. Federal law prohibits the
sub-advisor, in making investment decisions, from using material non-public
information in its possession or in the possession of any of its affiliates. In
addition, in making investment decisions for the Fund, BIAM will not take into
consideration whether an issuer of securities proposed for purchase or sale by
the Fund is a customer of Bank of Ireland or its affiliates.
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. Under its
Investment Advisory Agreement with BBOI Worldwide, the Berger/BIAM IPT -
International Fund compensates BBOI Worldwide for its investment advisory
services 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 Berger/BIAM IPT - International Fund
pays no fees directly to BIAM, the sub-advisor. Under a Sub-Advisory Agreement
with BBOI Worldwide, BIAM receives from BBOI Worldwide a fee at the annual rate
of .4 of 1% (0.40%) of the average daily net assets of the Berger/BIAM IPT -
International Fund. During certain periods, BIAM may voluntarily waive all or a
portion of its fee under the Sub-Advisory Agreement, which will not affect the
fee paid by the Fund to the BBOI Worldwide.
From time to time, Berger Associates or BBOI Worldwide 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' or BBOI's own resources and not from the assets of
the Funds.
7. 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 in the preceding section, approximately 41% of the outstanding shares of
DST are owned by KCSI.
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<PAGE>
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 portfolio
transactions to be placed on an agency basis through DST Securities, Inc.
("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When transactions for
a Fund are effected through DSTS, the commission received by DSTS is credited
against, and thereby reduces, certain operating expenses that the Fund would
otherwise be obligated to pay. No portion of the commission is retained by
DSTS.
In addition, under a separate Administrative Services Agreement with
each Fund except the Berger/BIAM IPT - International 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 of those Funds pays Berger
Associates a fee at the annual rate of 1/100 of 1% (0.01%) of its average daily
net assets for such services. Under a separate Administrative Services
Agreement with the Berger/BIAM IPT - International Fund, BBOI Worldwide performs
administrative and recordkeeping services for the Fund and the Fund pays BBOI
Worldwide a fee at the annual rate of 1/100 of 1% (0.01%) of its average daily
net assets. Under a Sub-Administration Agreement between the BBOI Worldwide and
Berger Associates, Berger Associates has been delegated all of BBOI Worldwide's
duties under the Administrative Services Agreement and BBOI Worldwide's
administrative duties under the Investment Advisory Agreement for the
Berger/BIAM IPT - International Fund. For its services under the
Sub-Administration Agreement, BBOI Worldwide pays Berger Associates a fee of .2
of 1% (0.20%) of the average daily net assets of the Berger/BIAM IPT -
International Fund. During certain periods, Berger Associates may voluntarily
waive all or a portion of its fee from BBOI Worldwide, which will not affect the
fee paid by the Fund to BBOI Worldwide under the Administrative Services
Agreement or the advisory fee paid to BBOI Worldwide under the Investment
Advisory Agreement. Each of the Funds also incurs other expenses, including
accounting, administrative and legal expenses.
Berger Associates has voluntarily agreed to waive its advisory fee and
expects to voluntarily reimburse the Funds for additional expenses to the extent
that normal operating expenses in any fiscal year, including the investment
advisory 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. BBOI Worldwide has voluntarily
agreed to waive its advisory fee and expects to voluntarily reimburse the Fund
for additional expenses to the extent that normal operating expenses in any
fiscal year, including the investment advisory fee but excluding brokerage
commissions, interest, taxes and extraordinary expenses, of the Berger/BIAM IPT
- - International Fund exceed 1.20% of that Fund's average daily net assets.
-20-
<PAGE>
DISTRIBUTOR
The distributor (principal underwriter) of each Fund's shares is
Berger Distributors, Inc. (the "Distributor"), 210 University Boulevard, Suite
900, Denver, CO 80206. The Distributor may be reimbursed by Berger Associates
for its costs in distributing the Funds' shares. The Distributor is a
wholly-owned subsidiary of Berger Associates, and certain officers of the Trust
are officers or directors of the Distributor.
8. 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 designee. 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.
9. 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 (the "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. 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.
All assets and liabilities initially expressed in terms of non-U.S. dollar
currencies are translated into U.S. dollars at the prevailing market rates as
quoted by one or more banks or dealers shortly before the close of the Exchange.
See the Statement of Additional Information for more detailed information.
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<PAGE>
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of the Exchange. The
values of foreign securities used in computing the net asset value of the shares
of the Fund are determined as of the earlier of such market close or the closing
time of the Exchange. Occasionally, events affecting the value of such
securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in good faith pursuant to consistently
applied procedures established by the trustees.
A Fund's securities may be listed primarily on foreign exchanges or
over-the-counter dealer markets which may trade on days when the Exchange is
closed (such as customary U.S. holidays) and the Fund's net asset value is not
calculated. As a result, the net asset value of a Fund may be significantly
affected by such trading on days when shareholders cannot purchase or redeem
shares of the Fund.
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.
10. 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 and 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 generally will not be liable for Federal
income tax on the amount of their earnings that are timely distributed. 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.
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<PAGE>
11. 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 unlimited number of shares of beneficial interest in
series or portfolios. The series comprising the Berger IPT - 100 Fund, the
Berger IPT - Growth and Income Fund and the Berger IPT - Small Company Growth
Fund were established under the Trust in October 1995. The series comprising
the Berger/BIAM IPT - International Fund was established under the Trust in
March 1997. Currently, these four series are the only series established under
the Trust, although others may be added in the future. Shares of each Fund are
fully paid and non-assessable 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 non-cumulative 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 BBOI
Worldwide 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
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<PAGE>
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 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.
The Glass-Steagall Act prohibits a depository institution and certain
affiliates from underwriting or distributing most securities and from
affiliating with businesses engaged in certain similar activities. BIAM
believes, based on advice of its counsel, that it may perform the services for
the Berger/BIAM IPT - International Fund contemplated by this Prospectus
consistent with the Glass-Steagall Act and other applicable banking laws and
regulations. However, future changes in either Federal or state statutes and
regulations concerning the permissible activities of banks and their affiliates,
as well as future judicial or administrative decisions or interpretations of
present and future statutes and regulations, might prevent BIAM from continuing
to perform those services for that Fund. If the circumstances described above
should change, the trustees of the Trust would review the relationships with
BIAM and consider taking all actions appropriate under the circumstances.
12. 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 Value Line Investment Survey 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, the Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, the Dow Jones World Index or the Nasdaq Composite
Index, or more narrowly-based indices which reflect the market sectors in which
that Fund invests.
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<PAGE>
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
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.
Each Fund has the same investment objective and follows similar
investment strategies as a Berger retail fund. The Berger retail funds have the
same investment advisor (and, as to the Berger/BIAM IPT - International Fund,
the same sub-advisor) as the corresponding Funds offered under this Prospectus.
As described 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.
Set forth in the tables below is total return data for each of the
Funds, where available. Also set forth is total return information for each of
the corresponding Berger retail funds, calculated as described above. Investors
should not consider the performance data for the corresponding Berger retail
funds as a substitute for the performance of the Funds offered under this
Prospectus, nor as an indication of the past or future performance of the Funds.
The performance figures below reflect the deduction of the historical fees and
expenses paid by the Berger retail funds, and not those paid or to be paid by
these Funds. The figures also do not
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<PAGE>
reflect the deduction of charges or expenses attributable to variable insurance
contracts or qualified plans invested in the Funds. As discussed above,
investors should refer to the applicable Separate Account Prospectus or
qualified plan documents accompanying this Prospectus for information pertaining
to such contract charges and expenses and, in the case of a Separate Account
Prospectus for a variable annuity contract, to the hypothetical performance data
in that prospectus that illustrate the impact of contract charges and loads on
the returns shown below. Each Fund and its corresponding Berger retail fund
will be managed separately and the investments and 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.
The following tables show, where available, the average annualized
total returns for each Fund and for its corresponding Berger retail fund for the
one-, five- and ten-year periods ended December 31, 1996, and, for the period
from inception (or for the relevant Funds, immediately prior to Berger
Associates assuming the duties as the investment advisor on September 30, 1974)
through December 31, 1996. Performance data for the Funds reflect fee waivers
and expense reimbursements by the Funds' advisor, without which performance
would be lower.
BERGER IPT - 100 FUND
- --------------------------------------------------------------------------
Berger IPT - Berger
100 Fund 100 Fund^
- --------------------------------------------------------------------------
Since Inception of the 3.90%* 2.77%*
Berger IPT - 100 Fund(5/1/96)
- --------------------------------------------------------------------------
1-year N/A 13.73%
- --------------------------------------------------------------------------
5-year N/A 11.12%
- --------------------------------------------------------------------------
10-year N/A 18.08%**
- --------------------------------------------------------------------------
Since Inception of the N/A 15.08%**
Berger 100 Fund (9/30/74)
- --------------------------------------------------------------------------
^ As of December 31, 1996, the retail Berger 100 Fund had assets of
approximately $2,004,000,000.
* Not annualized.
** Since the 12b-1 fees applicable to the Berger 100 Fund did not take effect
until June 19, 1990, the performance figures do not reflect the deduction
of the 12b-1 fees for the full length of the ten-year and longer periods
shown.
BERGER IPT - GROWTH AND INCOME FUND
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- --------------------------------------------------------------------------
Berger IPT - Berger
Growth and Growth and
Income Fund Income Fund^
Since Inception of the 11.40%* 9.22%*
Berger IPT - Growth and
Income Fund (5/1/96)
- --------------------------------------------------------------------------
1-year N/A 15.61%
- --------------------------------------------------------------------------
5-year N/A 11.03%
- --------------------------------------------------------------------------
10-year N/A 11.89%**
- --------------------------------------------------------------------------
Since Inception of the N/A 13.70%**
Berger Growth and Income
Fund (9/30/74)
- --------------------------------------------------------------------------
^ As of December 31, 1996, the retail Berger Growth and Income Fund had
assets of approximately $321,000,000.
* Not annualized.
** Since the 12b-1 fees applicable to the Berger Growth and Income Fund did
not take effect until June 19, 1990, the performance figures do not reflect
the deduction of the 12b-1 fees for the full length of the ten-year and
longer periods shown.
BERGER IPT - SMALL COMPANY GROWTH FUND
- --------------------------------------------------------------------------
Berger IPT - Berger
Small Company Small Company
Growth Fund Growth Fund^
- --------------------------------------------------------------------------
Since Inception of (0.50)%* (1.39)%*
the Berger IPT -
Small Company Growth
Fund (5/1/96)
- --------------------------------------------------------------------------
1-year N/A 16.77%
- --------------------------------------------------------------------------
3-year N/A 21.12%
- --------------------------------------------------------------------------
Since Inception of N/A 21.05%
the Berger Small
Company Growth Fund
(12/30/93)
- --------------------------------------------------------------------------
^ As of December 31, 1996, the retail Berger Small Company Growth Fund had
assets of approximately $782,000,000.
* Not annualized.
BERGER/BIAM IPT - INTERNATIONAL FUND
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<PAGE>
- --------------------------------------------------------------------------
Berger/BIAM IPT - Berger/BIAM
International Fund* International
Institutional
Fund^+
- --------------------------------------------------------------------------
1-year N/A 18.87%
- --------------------------------------------------------------------------
5-year N/A 14.72%
- --------------------------------------------------------------------------
Since Inception of N/A 14.05%
the Berger/BIAM
International
Institutional Fund
(7/31/89)
- --------------------------------------------------------------------------
* Since the Berger/BIAM IPT - International Fund is a new fund first offered
on May 1, 1997, it had no performance history of its own as of the date of
this Prospectus.
^ As of December 31, 1996, the retail Berger/BIAM International Institutional
Fund had assets of approximately $5,000,000.
+ Total returns for the Berger/BIAM International Institutional Fund in part
reflect the performance of a similarly managed, unregistered pool of assets
transferred into the Fund before the Fund commenced operations on October
11, 1996, adjusted to reflect any increased expenses associated with
operating the Fund. If the pool had been registered as an investment
company under the Investment Company Act of 1940, its performance might
have been adversely affected.
13. 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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<PAGE>
BERGER INSTITUTIONAL PRODUCTS TRUST
STATEMENT OF ADDITIONAL INFORMATION
Berger Institutional Products Trust (the "Trust") is an open-end
management investment company. The Trust currently consists of the four
diversified series or portfolios named below (individually referred to as a
"Fund"). Each Fund has its own investment objective and policies. 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 Berger IPT - 100 Fund's investment objective 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 believes offer favorable growth prospects.
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 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
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 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.
BERGER/BIAM IPT - INTERNATIONAL FUND - The investment objective of the
Berger/BIAM IPT - International Fund is long-term capital appreciation. The
Berger/BIAM IPT - International Fund seeks to achieve this objective by
investing primarily in common stocks of well established companies located
outside the United States. The Fund intends to diversify its holdings among
several countries and to have, under normal market conditions, at least 65% of
the Fund's total assets invested in the securities of companies located in at
least five countries, not including the United States.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus describing the Funds, dated May 1, 1997,
as supplemented October 24, 1997 and November 13, 1997, which may be obtained
by writing the Funds at P.O. Box 5005, Denver, Colorado 80217, calling
1-800-706-0539, or by contacting a Participating Insurance Company.
MAY 1, 1997
AS AMENDED NOVEMBER 13, 1997
<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
Cross-References to
Related Disclosures
Table of Contents In Prospectus
----------------- -------------------
Introduction Section 3
1. Portfolio Policies of the Funds Section 3, 4, 5
2. Investment Restrictions Section 4
3. Management of the Funds Section 6
4. Investment Advisors and Sub-Advisor Section 6
5. Expenses of the Funds Section 7
6. Brokerage Policy Section 7
7. How to Purchase and Redeem Shares in Section 8
the Funds
8. Suspension of Redemption Rights Section 8
9. How the Net Asset Value is Section 9
Determined
10. Income Dividends, Capital Gains Section 10
Distributions and Tax Treatment
11. Performance Information Section 12
12. Additional Information Section 11
Financial Statements
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INTRODUCTION
The Funds are diversified portfolios or series of the Berger
Institutional Products Trust, a management investment company. The investment
objective of both the Berger IPT - 100 Fund and the Berger/BIAM IPT -
International Fund is long-term capital appreciation. The primary investment
objective of the Berger IPT - Growth and Income Fund is capital appreciation,
and its secondary objective is to provide a moderate level of current income.
The investment objective of the Berger IPT - Small Company Growth Fund is
capital appreciation.
1. PORTFOLIO POLICIES OF THE FUNDS
The Prospectus discusses the investment objective of each of the Funds
and the policies to be employed to achieve that objective. This section
contains supplemental information concerning the types of securities and other
instruments in which the Funds may invest, the investment policies and portfolio
strategies that the Funds may utilize and certain risks attendant to those
investments, policies and strategies.
ILLIQUID AND RESTRICTED SECURITIES. Each of the Funds is authorized
to invest in securities which are illiquid or not readily marketable because
they are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, no ready
market is available. However, none of the Funds will purchase any such
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.
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. If securities become illiquid following purchase or other
circumstances cause more than 15% of a Fund's net assets to be invested in
illiquid securities, the directors or trustees of that Fund, in consultation
with the Fund's advisor or sub-advisor, will determine what action, if any, is
appropriate in light of all relevant circumstances.
Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. Pursuant to guidelines
established by the trustees, the Funds' advisor or sub-advisor will determine
whether securities eligible for resale to qualified institutional buyers
pursuant to SEC Rule 144A under the Securities Act of 1933 should be treated as
illiquid investments considering, among other things, the following
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factors: (1) the frequency of trades and quotes for the security; (2) the
number of dealers wanting to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the marketplace trades (e.g.,
the time needed to dispose of the security, the method of soliciting offers, and
the mechanics of the transfer). The liquidity of a Fund's investments in Rule
144A securities could be impaired if qualified institutional buyers become
uninterested in purchasing these securities.
REPURCHASE AGREEMENTS. As discussed in the Prospectus, each Fund may
invest in repurchase agreements with various financial organizations, including
commercial banks, registered broker-dealers and registered government securities
dealers. A repurchase agreement is an agreement under which a Fund acquires a
debt security (generally a security issued or guaranteed by the U.S. government
or an agency thereof, a banker's acceptance or a certificate of deposit) from a
commercial bank, broker or dealer, subject to resale to the seller at an agreed
upon price and date (normally, the next business day). A repurchase agreement
may be considered a loan collateralized by securities. The resale price
reflects an agreed upon interest rate effective for the period the instrument is
held by a Fund and is unrelated to the interest rate on the underlying
instrument. In these transactions, the securities acquired by a Fund (including
accrued interest earned thereon) must have a total value equal to or in excess
of the value of the repurchase agreement and are held by the Fund's custodian
bank until repurchased. In addition, the trustees will establish guidelines and
standards for review by the investment advisor or sub-advisor of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with a Fund. None of the Funds will enter into a repurchase agreement maturing
in more than seven days if as a result more than 15% of the Fund's total assets
would be invested in such repurchase agreements and other illiquid securities.
The use of repurchase agreements involves certain risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, a
Fund may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by a Fund not within the control of
the Fund and therefore the realization by the Fund on such collateral may
automatically be stayed. Finally, it is possible that a Fund may not be able to
substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement. Although these risks
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are acknowledged, it is expected that they can be controlled through careful
monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may purchase
and sell securities on a when-issued or delayed delivery basis. However, none
of the Funds currently intends to purchase or sell securities on a when-issued
or delayed delivery basis, if as a result more than 5% of its total assets taken
at market value at the time of purchase would be invested in such securities.
When-issued or delayed delivery transactions arise when securities (normally,
equity obligations of issuers eligible for investment by a Fund) are purchased
or sold by the Fund with payment and delivery taking place in the future in
order to secure what is considered to be an advantageous price or yield.
However, the yield on a comparable security available when delivery takes place
may vary from the yield on the security at the time that the when-issued or
delayed delivery transaction was entered into. Any failure to consummate a
when-issued or delayed delivery transaction may result in a Fund missing the
opportunity of obtaining a price or yield considered to be advantageous.
When-issued and delayed delivery transactions may generally be expected to
settle within one month from the date the transactions are entered into, but in
no event later than 90 days. However, no payment or delivery is made by a Fund
until it receives delivery or payment from the other party to the transaction.
When a Fund purchases securities on a when-issued basis, it will
maintain in a segregated account with its custodian cash, U.S. government
securities or other liquid assets having an aggregate value equal to the amount
of such purchase commitments, until payment is made. If necessary, additional
assets will be placed in the account daily so that the value of the account will
equal or exceed the amount of the Fund's purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, each Fund may
lend its securities to qualified institutional investors who need to borrow
securities in order to complete certain transactions, such as covering short
sales, avoiding failures to deliver securities, or completing arbitrage
operations. By lending its securities, a Fund will be attempting to generate
income through the receipt of interest on the loan which, in turn, can be
invested in additional securities to pursue the Fund's investment objective.
Any gain or loss in the market price of the securities loaned that might occur
during the term of the loan would be for the account of a Fund. A Fund may lend
its portfolio securities to qualified brokers, dealers, banks or other financial
institutions, so long as the terms, the structure and the aggregate amount of
such loans are not inconsistent with the Investment Company Act of 1940, or the
Rules and Regulations or interpretations of the Securities and Exchange
Commission (the
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"Commission") thereunder, which currently require that (a) the borrower pledge
and maintain with the Fund collateral consisting of cash, an irrevocable letter
of credit or securities issued or guaranteed by the United States government
having a value at all times not less than 100% of the value of the securities
loaned, (b) the borrower add to such collateral whenever the price of the
securities loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by the Fund at any time and
(d) the Fund receive reasonable interest on the loan, which interest may include
the Fund's investing cash collateral in interest bearing short-term investments,
and (e) the Fund receive all dividends and distributions on the loaned
securities and any increase in the market value of the loaned securities.
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 and the risk
of losing all or a part of the income from the transaction. None of the Funds
will lend its portfolio securities if, as a result, the aggregate value of such
loans would exceed 33-1/3% of the value of the Fund's total assets. Loan
arrangements made by a Fund will comply with all other applicable regulatory
requirements, including the rules of the New York Stock Exchange, which rules
presently require the borrower, after notice, to redeliver the securities within
the normal settlement time of three business days. All relevant facts and
circumstances, including creditworthiness of the broker, dealer or institution,
will be considered in making decisions with respect to the lending of
securities, subject to review by the Fund's trustees.
SHORT SALES. Each Fund other than the Berger/BIAM IPT - International
Fund currently only intends to engage in short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box"). The Berger/BIAM IPT - International Fund currently does not
intend to make any short sales of securities.
In a short sale, the seller does not immediately deliver the
securities sold and is said to have a short position in those securities until
delivery occurs. To make delivery to the purchaser, the executing broker
borrows the securities being sold short on behalf of the seller. While the
short position is maintained, the seller collateralizes its obligation to
deliver the securities sold short in an amount equal to the proceeds of the
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short sale plus an additional margin amount established by the Board of
Governors of the Federal Reserve. If a Fund engages in a short sale, the
collateral account will be maintained by the Fund's custodian. While the short
sale is open, the Fund will maintain in a segregated custodial account an amount
of securities convertible into or exchangeable for such equivalent securities at
no additional cost. These securities would constitute the Fund's long position.
A Fund may make a short sale, as described above, when it wants to
sell the security it owns at a current attractive price, but also wishes to
defer recognition of gain or loss for Federal income tax purposes and for
purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code. In such a case, any future losses in
the Fund's long position should be reduced by a gain in the short position. The
extent to which such gains or losses are reduced would depend upon the amount of
the security sold short relative to the amount the Fund owns. There will be
certain additional transaction costs associated with short sales, but the Fund
will endeavor to offset these costs with income from the investment of the cash
proceeds of short sales.
HEDGING TRANSACTIONS. As described in the Prospectus, each Fund
except the Berger/BIAM IPT - International Fund is authorized to make limited
use of certain types of futures, forwards and options, but only for the purpose
of hedging, that is, protecting against market risk due to market movements that
may adversely affect the value of a Fund's securities or the price of securities
that a Fund is considering purchasing. Currently, the Berger IPT -International
Fund is authorized to invest only in forward contracts for hedging purposes and
is not permitted to invest in futures or options. If the trustees ever
authorize the Berger/BIAM IPT - International Fund to invest in futures or
options, such investments would be permitted solely for hedging purposes, and
the Fund would not be permitted to invest more than 5% of its net assets at the
time of purchase in initial margins for financial futures transactions and
premiums for options. In addition, the advisor or sub-advisor for the
Berger/BIAM IPT - International Fund may be required to obtain bank regulatory
approval before the Fund engages in futures and options transactions. The
following information about the Funds' hedging transactions using futures,
forwards and options should be read to exclude the Berger/BIAM IPT -
International Fund, except to the extent the information relates to forward
contracts.
The utilization of futures, forwards and options is also subject to
policies and procedures which may be established by the trustees from time to
time. A hedging transaction may partially protect a Fund from a decline in the
value of a particular security
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or its portfolio generally, although hedging may also limit a Fund's opportunity
to profit from favorable price movements, and the cost of the transaction will
reduce the potential return on the security or the portfolio. Following is
additional information concerning the futures, forwards and options which the
Funds may utilize, provided that no more than 5% of the Fund's net assets at the
time the contract is entered into may be used for initial margins for financial
futures transactions and premiums paid for the purchase of options. In
addition, a Fund may only write call options that are covered and only up to 25%
of the Fund's total assets. The following information should be read in
conjunction with the information concerning the Funds' use of futures, forwards
and options and the risks of such instruments contained in the Prospectus.
FUTURES CONTRACTS. Financial futures contracts are exchange-traded
contracts on financial instruments (such as securities and foreign currencies)
and securities indices that obligate the holder to take or make delivery of a
specified quantity of the underlying financial instrument, or the cash value of
an index, at a future date. Although futures contracts by their terms call for
the delivery or acquisition of the underlying instruments or a cash payment
based on the mark-to-market value of the underlying instruments, in most cases
the contractual obligation will be offset before the delivery date by buying (in
the case of an obligation to sell) or selling (in the case of an obligation to
buy) an identical futures contract. Such a transaction cancels the original
obligation to make or take delivery of the instruments.
Each Fund may enter into contracts for the purchase or sale for future
delivery of financial instruments, such as securities and foreign currencies, or
contracts based on financial indices including indices of U.S. Government
securities, foreign government securities or equity securities. U.S. futures
contracts are traded on exchanges which have been designated "contract markets"
by the Commodity Futures Trading Commission ("CFTC") and must be executed
through a futures commission merchant (an "FCM"), or brokerage firm, which is a
member of the relevant contract market. Through their clearing corporations,
the exchanges guarantee performance of the contracts as between the clearing
members of the exchange.
Both the buyer and seller are required to deposit "initial margin" for
the benefit of the FCM when a futures contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or other
liquid assets. If the value of either party's position declines, that party
will be required to make additional "variation margin"
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payments to the other party to settle the change in value on a daily basis.
Initial and variation margin payments are similar to good faith deposits or
performance bonds or party-to-party payments resulting from daily changes in the
value of the contract, unlike margin extended by a securities broker, and would
be released or credited to the Funds upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Unlike margin
extended by a securities broker, initial and variation margin payments do not
constitute purchasing securities on margin for purposes of each Fund's
investment limitations. The Funds will incur brokerage fees when they buy or
sell futures contracts.
In the event of the bankruptcy of the FCM that holds margin on behalf
of a Fund, the Fund may be entitled to return of margin owed to the Fund only in
proportion to the amount received by the FCM's other customers. Each Fund will
attempt to minimize the risk by careful monitoring of the creditworthiness of
the FCMs with which the Fund does business and by depositing margin payments in
a segregated account with the Fund's custodian for the benefit of the FCM when
practical or otherwise required by law.
Each Fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool operator" with the
CFTC and the National Futures Association, which regulate trading in the futures
markets. Accordingly, the Fund will not enter into any futures contract or
option on a futures contract if, as a result, the aggregate initial margin and
premiums required to establish such positions would exceed 5% of the Fund's net
assets.
Although each Fund would hold cash and liquid assets in a segregated
account with a mark-to-market value sufficient to cover the Fund's open futures
obligations, the segregated assets would be available to the Fund immediately
upon closing out the futures position.
The acquisition or sale of a futures contract may occur, for example,
when a Fund is considering purchasing or holds equity securities and seeks to
protect itself from fluctuations in prices without buying or selling those
securities. For example, if prices were expected to decrease, the Fund might
sell equity index futures contracts, thereby hoping to offset a potential
decline in the value of equity securities in the portfolio by a corresponding
increase in the value of the futures contract position held by the Fund and
thereby preventing the Fund's net asset value from declining as much as it
otherwise would have. A Fund also could protect against potential price
declines by selling portfolio securities and investing in money market
instruments. However, the use of futures contracts as a hedging technique
allows the Funds to
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maintain a defensive position without having to sell portfolio securities.
Similarly, when prices of equity securities are expected to increase,
futures contracts may be bought to attempt to hedge against the possibility of
having to buy equity securities at higher prices. This technique is sometimes
known as an anticipatory hedge. Since the fluctuations in the value of futures
contracts should be similar to those of equity securities, a Fund could take
advantage of the potential rise in the value of equity securities without buying
them until the market has stabilized. At that time, the futures contracts could
be liquidated and the Fund could buy equity securities on the cash market.
The ordinary spreads between prices in the cash and futures markets,
due to differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced and prices in the futures market
distorted. Third, from the point of view of speculators, the margin deposit
requirements in the futures market are less than margin requirements in the
securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
the foregoing distortions, a correct forecast of general price trends by the
Funds still may not result in a successful use of futures.
Futures contracts entail additional risks. Although each Fund
believes that use of such contracts will benefit the Fund, if the Fund's
investment judgment is incorrect, the Fund's overall performance could be worse
than if the Fund had not entered into futures contracts. For example, if the
Fund has hedged against the effects of a possible decrease in prices of
securities held in the Fund's portfolio and prices increase instead, the Fund
will lose part or all of the benefit of the increased value of these securities
because of offsetting losses in the Fund's futures positions. In addition, if
the Fund has insufficient cash, it may have to sell securities from its
portfolio to meet daily variation margin requirements. Those sales may be, but
will not necessarily be, at increased prices which reflect the rising market and
may occur at a time when the sales are disadvantageous to the Fund. Although
the buyer of an option cannot lose more than the amount of
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the premium plus related transaction costs, a buyer or seller of futures
contracts could lose amounts substantially in excess of any initial margin
deposits made, due to the potential for adverse price movements resulting in
additional variation margin being required by such positions. However, each
Fund intends to monitor its investments closely and will attempt to close its
positions when the risk of loss to the Fund becomes unacceptably high.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to a
Fund will not match exactly the Fund's current or potential investments. A Fund
may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests --
for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities -- which involves a risk that the
futures position will not correlate precisely with the performance of the Fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a Fund's
investments. Futures prices are affected by such factors as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions may also
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts. A
Fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities, although this may not be successful in all cases.
If price changes in a Fund's futures positions are poorly correlated with its
other investments, its futures positions may fail to produce desired gains or
result in losses that are not offset by the gains in the Fund's other
investments.
Because futures contracts are generally settled within a day from the
date they are closed out, compared with a longer settlement period for most
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance a liquid secondary
market will exist for any particular futures contract at any particular time.
In addition, futures exchanges may establish daily price
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fluctuation limits for futures contracts and may halt trading if a contract's
price moves upward or downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached, it may be impossible
for a Fund to enter into new positions or close out existing positions. If the
secondary market for a futures contract is not liquid because of price
fluctuation limits or otherwise, a Fund may not be able to promptly liquidate
unfavorable futures positions and potentially could be required to continue to
hold a futures position until the delivery date, regardless of changes in its
value. As a result, a Fund's access to other assets held to cover its futures
positions also could be impaired.
OPTIONS ON FUTURES CONTRACTS. Each Fund may buy and write options on
futures contracts for hedging purposes. An option on a futures contract gives
the Funds the right (but not the obligation) to buy or sell a futures contract
at a specified price on or before a specified date. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based or
the price of the underlying instrument, ownership of the option may or may not
be less risky than ownership of the futures contract or the underlying
instrument. As with the purchase of futures contracts, a Fund may buy a call
option on a futures contract to hedge against a market advance, and a Fund might
buy a put option on a futures contract to hedge against a market decline.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign currency which
is deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the call option is below the exercise price,
a Fund will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in the Fund's portfolio
holdings. If a call option a Fund has written is exercised, the Fund will incur
a loss which will be reduced by the amount of the premium it received.
Depending on the degree of correlation between change in the value of its
portfolio securities and changes in the value of the futures positions, a Fund's
losses from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may buy a put option on a futures contract to hedge the Fund's
portfolio against the risk of falling prices.
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The amount of risk a Fund assumes when it buys an option on a 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 options bought.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward contract is a
privately negotiated agreement between two parties in which one party is
obligated to deliver a stated amount of a stated asset at a specified time in
the future and the other party is obligated to pay a specified invoice amount
for the assets at the time of delivery. The Funds currently intend that they
will only use forward contracts or commitments for hedging purposes and will
only use forward foreign currency exchange contracts, although the Funds may
enter into additional forms of forward contracts or commitments in the future if
they become available and advisable in light of the Funds' objectives and
investment policies. Forward contracts generally are negotiated in an interbank
market conducted directly between traders (usually large commercial banks) and
their customers. Unlike futures contracts, which are standardized
exchange-traded contracts, forward contracts can be specifically drawn to meet
the needs of the parties that enter into them. The parties to a forward
contract may agree to offset or terminate the contract before its maturity, or
may hold the contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Funds' principal uses of
forward foreign currency exchange contracts ("forward currency contracts"). A
Fund may enter into forward currency contracts with stated contract values of up
to the value of the Fund's assets. A forward currency contract is an obligation
to buy or sell an amount of a specified currency for an agreed price (which may
be in U.S. dollars or a foreign currency) on a specified date. A Fund will
exchange foreign currencies for U.S. dollars and for other foreign currencies in
the normal course of business and may buy and sell currencies through forward
currency contracts in order to fix a price (in terms of a specified currency)
for securities it has agreed to buy or sell ("transaction hedge"). A Fund also
may hedge some or all of its investments denominated in foreign currency against
a decline in the value of that currency (or a proxy currency whose price
movements are expected to have a high degree of correlation with the currency
being hedged) relative to the U.S. dollar by entering into forward currency
contracts to sell an amount of that currency approximating the value of some or
all of its portfolio securities denominated in that currency ("position hedge")
or by participating in futures contracts (or options on such futures) with
respect to the currency. A Fund also may enter into a forward currency contract
with respect to a currency where the Fund is considering the purchase or sale of
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investments denominated in that currency but has not yet selected the specific
investments ("anticipatory hedge").
These types of hedging minimize the effect of currency appreciation as
well as depreciation, but do not eliminate fluctuations in the underlying U.S.
dollar equivalent value of the proceeds of or rates of return on a Fund's
foreign currency denominated portfolio securities. The matching of the increase
in value of a forward contract and the decline in the U.S. dollar equivalent
value of the foreign currency denominated asset that is the subject of the hedge
generally will not be precise. Shifting a Fund's currency exposure from one
foreign currency to another limits that Fund's opportunity to profit from
increases in the value of the original currency and involves a risk of increased
losses to such Fund if its portfolio manager's projection of future exchange
rates is inaccurate. Unforeseen changes in currency prices may result in poorer
overall performance for a Fund than if it had not entered into such contracts.
The Funds will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in the currency underlying
the forward contract or the currency being hedged. To the extent that a Fund is
not able to cover its forward currency positions with underlying portfolio
securities, the Funds' custodian will segregate cash or liquid assets having a
value equal to the aggregate amount of such Fund's commitments under forward
contracts entered into. If the value of the securities used to cover a position
or the value of segregated assets declines, the Fund must find alternative cover
or segregate additional cash or liquid assets on a daily basis so that the value
of the covered and segregated assets will be equal to the amount of a Fund's
commitments with respect to such contracts.
While forward contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward contracts. In such
event, the Funds' ability to utilize forward contracts may be restricted. A
Fund may not always be able to enter into forward contracts at attractive prices
and may be limited in its ability to use these contracts to hedge Fund assets.
In addition, when a Fund enters into a privately negotiated forward contract
with a counterparty, the Fund assumes 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.
Unlike many exchange-traded futures contracts and options on futures, there are
no daily price fluctuation limits with respect to forward contracts and other
negotiated or over-the-counter instruments, and with respect to those contracts,
adverse market movements could therefore continue to an unlimited extent over a
period of time. However, each Fund intends to monitor its investments closely
and will
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attempt to renegotiate or close its positions when the risk of loss to the Fund
becomes unacceptably high.
OPTIONS ON SECURITIES AND SECURITIES INDICES. A Fund may buy or sell
put or call options and write covered call options on securities that are traded
on United States or foreign securities exchanges or over-the-counter. Buying an
option involves the risk that, during the option period, the price of the
underlying security will not increase (in the case of a call) to above the
exercise price, or will not decrease (in the case of a put) to below the
exercise price, in which case the option will expire without being exercised and
the holder would lose the amount of the premium. Writing a call option involves
the risk of an increase in the market value of the underlying security, in which
case the option could be exercised and the underlying security would then be
sold by a Fund to the option holder at a lower price than its current market
value and the Fund's potential for capital appreciation on the security would be
limited to the exercise price. Moreover, when a Fund writes a call option on a
securities index, the Fund bears the risk of loss resulting from imperfect
correlation between movements in the price of the index and the price of the
securities set aside to cover such position. Although they entitle the holder
to buy equity securities, call options to purchase equity securities do not
entitle the holder to dividends or voting rights with respect to the underlying
securities, nor do they represent any rights in the assets of the issuer of
those securities.
A call option written by a Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also deemed to be covered if a Fund holds a call on the same security
and in the same principal amount as the call written and the exercise price of
the call held (i) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call written if the
difference is maintained by the Fund in liquid assets in a segregated account
with its custodian.
The writer of a call option may have no control when the underlying
securities must be sold. Whether or not an option expires unexercised, the
writer retains the amount of the premium. This amount, of course, may, in the
case of a covered call option, be offset by a decline in the market value of the
underlying security during the option period.
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The writer of an exchange-traded call option that wishes to terminate
its obligation may effect a "closing purchase transaction." This is
accomplished by buying an option of the same series as the option previously
written. The effect of the purchase is that the writer's position will be
cancelled by the clearing corporation. If a Fund desires to sell a particular
security from the Fund's portfolio on which the Fund has written a call option,
the Fund will effect a closing transaction prior to or concurrent with the sale
of the security. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option. An investor who
is the holder of an exchange-traded option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously bought. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected.
A Fund will realize a profit from a closing transaction if the price
of the purchase transaction is less than the premium received from writing the
option or the price received from a sale transaction is more than the premium
paid to buy the option; the Fund will realize a loss from a closing transaction
if the price of the purchase transaction is more than the premium received from
writing the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
An option position may be closed out only where there exists a
secondary market for an option of the same series. If a secondary market does
not exist, it might not be possible to effect closing transactions in particular
options with the result that a Fund would have to exercise the options in order
to realize any profit. If a Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or the Fund delivers the underlying security
upon exercise. Reasons for the absence of a liquid secondary market may include
the following: (i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national securities exchange on
which the option is traded ("Exchange") on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to
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handle current trading volume, or (vi) one or more Exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options on that Exchange that had
been issued by the OCC as a result of trades on that Exchange would continue to
be exercisable in accordance with their terms.
In addition, when a Fund enters into an over-the-counter option
contract with a counterparty, the Fund assumes 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.
An option on a securities index is similar to an option on a security
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, on exercise of the option, an amount of cash if the closing level of
the securities index on which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
A Fund may buy call options on securities or securities indices to
hedge against an increase in the price of a security or securities that the Fund
may buy in the future. The premium paid for the call option plus any
transaction costs will reduce the benefit, if any, realized by a Fund upon
exercise of the option, and, unless the price of the underlying security or
index rises sufficiently, the option may expire and become worthless to the
Fund. A Fund may buy put options to hedge against a decline in the value of a
security or its portfolio. The premium paid for the put option plus any
transaction costs will reduce the benefit, if any, realized by a Fund upon
exercise of the option, and, unless the price of the underlying security or
index declines sufficiently, the option may expire and become worthless to the
Fund.
An example of a hedging transaction using an index option would be if
a Fund were to purchase a put on a stock index, in order to protect the Fund
against a decline in the value of all securities held by it to the extent that
the stock index moves in a similar pattern to the prices of the securities held.
While the correlation between stock indices and price movements of the stocks in
which the Funds will generally invest may be imperfect, the Funds expect,
nonetheless, that the use of put options that relate to such indices will, in
certain circumstances, protect against declines in values of specific portfolio
securities or a Fund's portfolio generally. Although the purchase of a put
option may partially protect a Fund from a decline in the value of a
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particular security or its portfolio generally, the cost of a put will reduce
the potential return on the security or the portfolio.
PORTFOLIO TURNOVER. The portfolio turnover rates of each of the Funds
in existence at December 31, 1996, are shown in the tables under Financial
Highlights in Section 2 of the Prospectus. The annual portfolio turnover rates
of the Funds may at times exceed 100%. A 100% annual turnover rate results, for
example, if the equivalent of all of the securities in the Fund's portfolio are
replaced in a period of one year. The Funds anticipate that their portfolio
turnover rates in future years may exceed 100%, and investment changes will be
made whenever management deems them appropriate even if this results in a higher
portfolio turnover rate. In addition, portfolio turnover may increase as a
result of large amounts of purchases and redemptions of shares of the Funds due
to economic, market or other factors that are not within the control of
management.
Increased portfolio turnover would necessarily result in
correspondingly higher brokerage costs for the Funds. The existence of a high
portfolio turnover rate has no direct relationship to the tax liability of a
Fund, although sales of certain stocks will lead to realization of gains, and,
possibly, increased taxable distributions. The Funds' brokerage policy is
discussed further under Section 6 Brokerage Policy, and additional information
concerning income taxes is located under Section 10 Income Dividends, Capital
Gains Distributions and Tax Treatment.
2. INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental restrictions on its
investments and other activities, and none of these restrictions may be changed
without the approval of (i) 67% or more of the voting securities of the Fund
present at a meeting of shareholders thereof if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, or
(ii) more than 50% of the outstanding voting securities of the Fund.
BERGER IPT - 100 FUND AND BERGER IPT - GROWTH AND INCOME FUND
The following fundamental restrictions apply to each of the Berger IPT
- - 100 Fund and the Berger IPT - Growth and Income Fund. A Fund may not:
1. Purchase the securities of any one issuer (except U.S. Government
securities) if immediately after and as a result of such purchase (a) the value
of the holdings of the Fund in the securities of such issuer exceeds 5% of the
value of the Fund's
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total assets or (b) the Fund owns more than 10% of the outstanding voting
securities or of any class of securities of such issuer.
2. Purchase securities of any company with a record of less than
three years' continuous operation (including that of predecessors) if such
purchase would cause the Fund's investments in all such companies taken at cost
to exceed 5% of the value of the Fund's total assets.
3. Invest in any one industry more than 25% of the value of its
total assets at the time of such investment.
4. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities, to be the making of a loan.
5. Borrow in excess of 5% of the value of its total assets, or
pledge, mortgage, or hypothecate its assets taken at market value to an extent
greater than 10% of the Fund's total assets taken at cost (and no borrowing may
be undertaken except from banks as a temporary measure for extraordinary or
emergency purposes). This limitation shall not prohibit or restrict short sales
or deposits of assets to margin or guarantee positions in futures, options or
forward contracts, or the segregation of assets in connection with any of such
transactions.
6. Purchase or retain the securities of any issuer if those officers
and trustees of the Fund or its investment advisor owning individually more than
1/2 of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer.
7. Purchase the securities of any other investment company, except
by purchase in the open market involving no commission or profit to a sponsor or
dealer (other than the customary broker's commission).
8. Act as a securities underwriter (except to the extent the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing of a
security) or invest in real estate (although it may purchase shares of a real
estate investment trust), or invest in commodities or commodity contracts
except, only for the purpose of hedging, (i) financial futures transactions,
including futures contracts on securities, securities indices and foreign
currencies, and options on any such futures,
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(ii) forward foreign currency exchange contracts and other forward commitments
and (iii) securities index put or call options.
9. Participate on a joint or joint and several basis in any
securities trading account.
10. Invest in companies for the purposes of exercising control of
management.
In applying the industry concentration investment restriction (no. 3
above), the Funds use the industry groups used in the Data Monitor Portfolio
Monitoring System of William O'Neil & Co. Incorporated. Further, in
implementing that restriction, each Fund intends not to invest in any one
industry 25% or more of the value of its total assets at the time of such
investment.
The trustees have adopted additional non-fundamental investment
restrictions for each of the Berger IPT - 100 Fund and the Berger IPT - Growth
and Income Fund. These limitations may be changed by the trustees without a
shareholder vote. The non-fundamental investment restrictions include the
following:
1. Only for the purpose of hedging, the Fund may purchase and sell
financial futures, forward foreign currency exchange contracts and put and call
options, but no more than 5% of the Fund's net assets at the time of purchase
may be invested in initial margins for financial futures transactions and
premiums for options. The Fund may only write call options that are covered and
only up to 25% of the Fund's total assets.
1. The Fund may not purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its total assets taken at
market value at the time of purchase would be invested in such securities.
2. The Fund may not purchase or sell any interest in an oil, gas or
mineral development or exploration program, including investments in oil, gas or
other mineral leases, rights or royalty contracts (except that the Fund may
invest in the securities of issuers engaged in the foregoing activities).
3. The Fund may not purchase any security, including any repurchase
agreement maturing in more than seven days, which is not readily marketable, if
more than 15% of the net assets of the Fund, taken at market value at the time
of purchase would be invested in such securities.
4. The Fund may not purchase securities on margin from a broker or
dealer, except that the Fund may obtain such short-term
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credits as may be necessary for the clearance of transactions, and may not make
short sales of securities, except that the Fund may make short sales if, at the
time of the short sale, the Fund owns or has the right to acquire an equivalent
kind and amount of the security being sold short at no additional cost (i.e.,
short sales "against the box"). This limitation shall not prohibit or restrict
the Fund from entering into futures, forwards and options contracts or from
making margin payments and other deposits in connection therewith.
5. The Fund's investments in warrants valued at the lower of cost or
market, may not exceed 5% of the value of the Fund's net assets. Included
within that amount, but not to exceed 2% of the value of the Fund's net assets,
may be warrants that are not listed on the New York Stock Exchange or American
Stock Exchange. Warrants acquired by the Fund in units or attached to
securities are not subject to these limits.
BERGER IPT - SMALL COMPANY GROWTH FUND
The following fundamental restrictions apply to the Berger IPT - Small
Company Growth Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets, purchase the
securities of any one issuer (except U.S. government securities) if immediately
after and as a result of such purchase (a) the value of the holdings of the Fund
in the securities of such issuer exceeds 5% of the value of the Fund's total
assets or (b) the Fund owns more than 10% of the outstanding voting securities
of such issuer.
2. Invest in any one industry (other than U.S. government
securities) more than 25% of the value of its total assets at the time of such
investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets (including the
amount borrowed) taken at market value, nor pledge, mortgage or hypothecate its
assets, except to secure permitted indebtedness and then only if such pledging,
mortgaging or hypothecating does not exceed 25% of the Fund's total assets taken
at market value. When borrowings exceed 5% of the Fund's total assets, the Fund
will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing of a
security), issue senior securities (except to the extent permitted under the
Investment Company Act of 1940), invest in real estate (although it may purchase
shares of a real estate investment trust), or invest in commodities or
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commodity contracts except financial futures transactions, futures contracts on
securities and securities indices and options on such futures, forward foreign
currency exchange contracts, forward commitments or securities index put or call
options.
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities, to be the making of a loan.
In applying the industry concentration investment restriction (no. 2
above), the Fund uses the industry groups used in the Data Monitor Portfolio
Monitoring System of William O'Neil & Co. Incorporated. Further, in
implementing that restriction, the Fund intends not to invest in any one
industry 25% or more of the value of its total assets at the time of such
investment.
The trustees have adopted additional non-fundamental investment
restrictions for the Berger IPT - Small Company Growth Fund. These limitations
may be changed by the trustees without a shareholder vote. The non-fundamental
investment restrictions include the following:
1. The Fund may not purchase securities of any company which,
including its predecessors and parents, has a record of less than three years'
continuous operation, if such purchase would cause the Fund's investments in all
such companies taken at cost to exceed 10% of the value of the Fund's total
assets.
2. The Fund may not purchase securities on margin from a broker or
dealer, except that the Fund may obtain such short-term credits as may be
necessary for the clearance of transactions, and may not make short sales of
securities, except that the Fund may make short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box"). This limitation shall not prohibit or restrict the Fund
from entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
3. The Fund may not purchase the securities of any other investment
company, except by purchase in the open market involving no commission or profit
to a sponsor or dealer (other than the customary broker's commission).
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<PAGE>
4. The Fund may not invest in companies for the purposes of
exercising control of management.
5. The Fund may not purchase any security, including any repurchase
agreement maturing in more than seven days, which is not readily marketable, if
more than 15% of the net assets of the Fund, taken at market value at the time
of purchase would be invested in such securities.
6. Only for the purpose of hedging, the Fund may purchase
and sell financial futures, forward foreign currency exchange contracts and put
and call options, but no more than 5% of the Fund's net assets at the time of
purchase may be invested in initial margins for financial futures transactions
and premiums for options. The Fund may only write call options that are covered
and only up to 25% of the Fund's total assets.
7. The Fund may not purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its total assets taken at
market value at the time of purchase would be invested in such securities.
8. The Fund may not purchase or sell any interest in an oil, gas or
mineral development or exploration program, including investments in oil, gas or
other mineral leases, rights or royalty contracts (except that the Fund may
invest in the securities of issuers engaged in the foregoing activities).
9. The Fund's investments in warrants valued at the lower of cost or
market may not exceed 5% of the value of the Fund's net assets. Included within
that amount, but not to exceed 2% of the value of the Fund's net assets, may be
warrants that are not listed on the New York Stock Exchange or American Stock
Exchange. Warrants acquired by the Fund in units or attached to securities are
not subject to these limits.
BERGER/BIAM IPT - INTERNATIONAL FUND
The following fundamental restrictions apply to the Berger/BIAM IPT -
International Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets, purchase the
securities of any one issuer (except U.S. government securities) if immediately
after and as a result of such purchase (a) the value of the holdings of the Fund
in the securities of such issuer exceeds 5% of the value of the Fund's total
assets or (b) the Fund owns more than 10% of the outstanding voting securities
of such issuer.
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<PAGE>
2. Invest in any one industry (other than U.S. government
securities) 25% or more of the value of its total assets at the time of such
investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets (including the
amount borrowed) taken at market value, nor pledge, mortgage or hypothecate its
assets, except to secure permitted indebtedness and then only if such pledging,
mortgaging or hypothecating does not exceed 25% of the Fund's total assets taken
at market value. When borrowings exceed 5% of the Fund's total assets, the Fund
will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing of a
security), issue senior securities (except to the extent permitted under the
Investment Company Act of 1940), invest in real estate (although it may purchase
shares of a real estate investment trust), or invest in commodities or commodity
contracts except financial futures transactions, futures contracts on securities
and securities indices and options on such futures, forward foreign currency
exchange contracts, forward commitments or securities index put or call options.
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities, to be the making of a loan.
In applying the industry concentration investment restriction (no. 2
above), the Fund uses the industry groups designated by the Financial Times
World Index Service.
The trustees have adopted additional non-fundamental investment
restrictions for the Berger/BIAM IPT - International Fund. These limitations
may be changed by the trustees without a shareholder vote. The non-fundamental
investment restrictions include the following:
1. With respect to 100% of the Fund's total assets, the Fund may not
purchase the securities of any one issuer (except U.S. government securities) if
immediately after and as a result of such purchase (a) the value of the holdings
of the Fund in the securities of such issuer exceeds 5% of the value of the
Fund's
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total assets or (b) the Fund owns more than 10% of the outstanding voting
securities of such issuer.
2. The Fund may not purchase securities of any company which,
including its predecessors and parents, has a record of less than three years'
continuous operation, if such purchase would cause the Fund's investments in all
such companies taken at cost to exceed 5% of the value of the Fund's total
assets.
3. The Fund may not purchase securities on margin from a broker or
dealer, except that the Fund may obtain such short-term credits as may be
necessary for the clearance of transactions, and may not make short sales of
securities. This limitation shall not prohibit or restrict the Fund from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
4. The Fund may not purchase the securities of any other investment
company, except by purchase in the open market involving no commission or profit
to a sponsor or dealer (other than the customary broker's commission).
5. The Fund may not invest in companies for the purposes of
exercising control of management.
6. The Fund may not purchase any security, including any repurchase
agreement maturing in more than seven days, which is not readily marketable, if
more than 15% of the net assets of the Fund, taken at market value at the time
of purchase would be invested in such securities.
7. The Fund may not enter into any futures, forwards or options,
except that only for the purpose of hedging, the Fund may enter into forward
foreign currency exchange contracts with stated contract values of up to the
value of the Fund's assets.
8. The Fund may not purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its net assets taken at
market value at the time of purchase would be invested in such securities.
9. The Fund may not purchase or sell any interest in an oil, gas or
mineral development or exploration program, including investments in oil, gas or
other mineral leases, rights or royalty contracts (except that the Fund may
invest in the securities of issuers engaged in the foregoing activities).
10. The Fund may not invest more than 5% of its net assets in
warrants. Included in that amount, but not to exceed 2% of net assets, are
warrants whose underlying securities are not traded on principal domestic or
foreign exchanges. Warrants
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acquired by the Fund in units or attached to securities are not subject to these
limits.
On behalf of the Trust, an undertaking has been given to the State of
California Department of Insurance that limits borrowings of each Fund (to the
extent such borrowings are allowed by the Fund's investment policies) to 10% of
the Fund's total assets, except that a Fund may borrow up to 25% of its total
assets when such borrowing is necessary to meet Fund redemptions.
In addition, the undertaking to the State of California Department of
Insurance requires each Fund when investing in foreign securities (to the extent
consistent with the Fund's investment policies) to invest in a minimum of five
different foreign countries, provided that this minimum may be reduced to four
when foreign country investments comprise less than 80% of the Fund's assets, to
three when less than 60% of such assets, to two when less than 40% of such
assets, or to one when less than 20% of such assets. Additionally, no more than
20% of a Fund's assets may be invested in securities of issuers located in any
one foreign country, except that a Fund may have an additional 15% of its assets
in securities of issuers located in any one of the following countries:
Australia, Canada, France, Japan, the United Kingdom or Germany.
3. MANAGEMENT OF THE FUNDS
The same trustees and most of the same executive officers serve each
of the Funds. They are listed below, together with information which includes
their principal occupations during the past five years and other principal
business affiliations.
* GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver, CO 80206,
age 55. President and a Trustee of Berger Institutional Products Trust
since its inception in October 1995. President and a director of the
Berger 100 Fund and the Berger Growth and Income Fund since February
1997. President and a trustee of Berger/BIAM Worldwide Portfolios
Trust and Berger/BIAM Worldwide Funds Trust since their inception in
May 1996. President and a trustee of Berger Investment Portfolio Trust
and Berger Omni Investment Trust since February 1997. President and a
director since April 1995 of Berger Associates. Member and Chairman of
the Board of Managers and Chief Executive Officer on the Management
Committee of BBOI Worldwide LLC since November 1996. A Vice President
of DST Systems, Inc. (data processing) since July 1995. Formerly
President and Chief Executive Officer of Investors Fiduciary Trust
Company (banking) from February 1992 to March 1995 and Chief Operating
Officer of SunAmerica
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Asset Management Co. (money management) from January 1990 to February
1992.
* PATRICK S. ADAMS, 210 University Boulevard, Suite 900, Denver, CO 80206,
age 37. President and Portfolio Manager of the Berger IPT - 100 Fund
and President and Co-Portfolio Manager of the Berger IPT - Growth and
Income Fund since February 1997. Executive Vice President and
Portfolio Manager of the Berger 100 Fund and Executive Vice President
and Co-Portfolio Manager of the Berger Growth and Income Fund since
February 1997. President and co-portfolio manager of the Berger
Balanced Fund since its inception in August 1997. President and
portfolio manager of the Berger Select Fund since November 1997. Senior
Vice President of Berger Associates since February 1997. Formerly,
Senior Vice President from June 1996 to January 1997 with Zurich Kemper
Investments, Inc.; Portfolio Manager from March 1993 to May 1996 with
Founders Asset Management, Inc.; research analyst and portfolio manager
from January 1990 to January 1992 and Senior Portfolio Manager/Senior
Analyst from January 1992 to February 1993 with First of America
Investment Corp.; and Portfolio Manager from August 1985 to December
1989 with Capital Management Group - Star Bank.
* WILLIAM R. KEITHLER, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 45. President and Portfolio Manager of the Berger IPT -
Small Company Growth Fund since its inception in October 1995.
President since November 1994 (formerly, Vice President from December
1993 to November 1994) and Portfolio Manager since its inception in
December 1993 of the Berger Small Company Growth Fund. President and
Portfolio Manager of the Berger New Generation Fund since its inception
in December 1995. Senior Vice President-Investment Management (since
January 1997) and Vice President-Investment Management (December 1993
to January 1997) of Berger Associates. Formerly, Senior Vice President
(January 1993 to December 1993), Vice President (January 1991 to
January 1993) and Portfolio Manager (January 1988 to January 1991) of
INVESCO Trust Company (investment management).
* SHEILA J. OHLSSON, 210 University Boulevard, Suite 900, Denver, CO 80206,
age 31. Co-portfolio manager of the Berger Growth and Income Fund and
the Berger IPT - Growth and Income Fund since October 1997. Vice
President (since October 1997), Senior Analyst/Portfolio Manager
(February 1997 to October 1997) and Analyst (September 1991 to February
1997) with Berger Associates.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110, age 68.
President, Baldwin Financial Counseling. Formerly (1978-1990), Vice
President and Denver Office Manager of
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Merrill Lynch Capital Markets. Director of Berger 100 Fund and Berger
Growth and Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide Funds Trust,
Berger/BIAM Worldwide Portfolios Trust and Berger Omni Investment
Trust.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900, Denver, CO
80206, age 72. Trustee of Berger Institutional Products Trust since
its inception in October 1995. Director and, formerly, President
(1974-1994) of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust since its inception in
August 1993 (Chairman of the Trustees through November 1994). Trustee
of Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide
Portfolios Trust since their inception in May 1996. Trustee of Berger
Omni Investment Trust since February 1997. Chairman (since 1994) and a
Director (since 1973) and, formerly, President (1973-1994) of Berger
Associates.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 72. President,
Climate Engineering, Inc. (building environmental systems). Director
of Berger 100 Fund and Berger Growth and Income Fund. Trustee of
Berger Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios
Trust and Berger Omni Investment Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age 52.
Managing Principal, Sovereign Financial Services, L.L.C. (investment
consulting firm). Formerly (1981-1988), Executive Vice President,
Captiva Corporation, Denver, Colorado (private investment management
firm). Ph.D. in Finance (Arizona State University); Chartered
Financial Analyst (CFA). Director of Berger 100 Fund and Berger Growth
and Income Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust,
Berger/BIAM Worldwide Portfolios Trust and Berger Omni Investment
Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age 70.
Associate, University College, University of Denver. Formerly,
President of the Colorado State Board of Land Commissioners
(1989-1995), and Vice President and Economist (1983-1988) and
Consulting Economist (1989) for First Interstate Bank of Denver. Ph.D.
in Economics (Harvard University). Director of Berger 100 Fund and
Berger Growth and Income Fund. Trustee of Berger Investment Portfolio
Trust, Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
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<PAGE>
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1900, Chicago, IL 60602, age
52. Since 1991, Chairman, President, Chief Executive Officer and a
director of Catalyst Institute (international public policy research
organization focused primarily on financial markets and institutions).
Since September 1997, President, Chief Executive Officer and a director
of DST Catalyst, Inc. (international financial markets consulting,
software and computer services company). Prior thereto (1991 -
September 1997), Chairman, President, Chief Executive Officer and a
director of Catalyst Consulting (international financial institutions
business consulting firm). Prior thereto (1988-1991), President, Chief
Executive Officer and a director of Kessler Asher Group (brokerage,
clearing and trading firm). Director of Berger 100 Fund and Berger
Growth and Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide Funds Trust,
Berger/BIAM Worldwide Portfolios Trust and Berger Omni Investment
Trust.
HARRY T. LEWIS, JR., 370 17th Street, Suite 3560, Denver, CO 80202, age
64. Self-employed as a private investor. Formerly (1981-1988), Senior
Vice President, Rocky Mountain Region, of Dain Bosworth Incorporated
and member of that firm's Management Committee. Director of Berger 100
Fund and Berger Growth and Income Fund. Trustee of Berger Investment
Portfolio Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios Trust and
Berger Omni Investment Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman, MT 59717,
age 60. Since 1994, Dean, and from 1989 to 1994, a member of the
Finance faculty, of the College of Business, Montana State University.
Self-employed as a financial and management consultant, and in real
estate development. Formerly (1976-1989), Chairman and Chief Executive
Officer of Royal Gold, Inc. (mining). Chairman of the Board of Berger
100 Fund and Berger Growth and Income Fund. Chairman of the Trustees
of Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide
Portfolios Trust and Berger Omni Investment Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, age 68.
President, Sinclaire Cattle Co., and private investor. Director of
Berger 100 Fund and Berger Growth and Income Fund. Trustee of Berger
Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios
Trust and Berger Omni Investment Trust.
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<PAGE>
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver, CO 80206, age
42. Vice President, Secretary and Treasurer of Berger Institutional
Products Trust since its inception in October 1995, of Berger 100 Fund
and Berger Growth and Income Fund since October 1991, of Berger
Investment Portfolio Trust since its inception in August 1993, of
Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios
Trust since their inception in May 1996, and of Berger Omni Investment
Trust since February 1997. Also, Senior Vice President-Finance and
Administration (since January 1997), Vice President-Finance and
Administration (September 1991 to January 1997), Secretary and
Treasurer (since September 1991) of Berger Associates, and a director
of Berger Distributors, Inc., since its inception in May 1996.
Formerly, Financial Consultant (registered representative) with
Neidiger Tucker Bruner, Inc. (broker-dealer) (October 1989 to September
1991)and Financial Consultant with Merrill Lynch, Pierce, Fenner &
Smith, Inc. (October 1985 to October 1989).
- --------------------
* Interested person (as defined in the Investment Company Act of 1940) of each
Fund and of its advisor or sub-advisor.
The trustees of the Trust have adopted a trustee retirement age of 75
years.
TRUSTEE COMPENSATION
The officers of the Funds receive no compensation from the Funds.
However, trustees of the Funds who are not interested persons of Berger
Associates are compensated for their services according to a fee schedule,
allocated among the Funds, which includes an annual fee component and a per
meeting fee component. Neither the officers of the Funds nor the trustees
receive any form of pension or retirement benefit compensation from the Funds.
Set forth below is information regarding compensation paid or accrued
during the period May 1, 1996 (date operations commenced) through December 31,
1996, for each trustee of the Trust, for their service as a director or trustee
of each of the Funds and of some or all of the other Berger Funds. Since the
Berger/BIAM IPT - International Fund was not organized until after the period
covered by the table, it is not listed separately in the table.
- --------------------------------------------------------------------------------
NAME AND POSITION WITH AGGREGATE COMPENSATION FROM
BERGER FUNDS
- --------------------------------------------------------------------------------
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<PAGE>
- --------------------------------------------------------------------------------
Berger Berger Berger All
IPT - IPT - IPT - Berger
100 Growth Small Funds(1)
Fund and Company
Income Growth
Fund Fund
- --------------------------------------------------------------------------------
Dennis E. Baldwin(2) -0- -0- -0- $30,000
- --------------------------------------------------------------------------------
William M.B. Berger(2),(4) -0- -0- -0- -0-
- --------------------------------------------------------------------------------
Louis R. Bindner(2) -0- -0- -0- 24,000
- --------------------------------------------------------------------------------
Katherine A. Cattanach(2) -0- -0- -0- 30,000
- --------------------------------------------------------------------------------
Lucy Black Creighton(2) -0- -0- -0- 29,000
- --------------------------------------------------------------------------------
Paul R. Knapp(2) -0- -0- -0- 30,000
- --------------------------------------------------------------------------------
Gerard M. Lavin(2),(3),(4) -0- -0- -0- -0-
- --------------------------------------------------------------------------------
Harry T. Lewis(2) -0- -0- -0- 30,000
- --------------------------------------------------------------------------------
Rodney L. Linafelter(5) -0- -0- -0- -0-
- --------------------------------------------------------------------------------
Michael Owen(2) -0- -0- -0- 36,667
- --------------------------------------------------------------------------------
William Sinclaire(2) -0- -0- -0- 22,500
- --------------------------------------------------------------------------------
(1) For the period covered by this table, the Berger Funds included the Berger
100 Fund, the Berger Growth and Income Fund, the Berger Investment Portfolio
Trust (two series), the Berger Institutional Products Trust (three series), the
Berger/BIAM Worldwide Portfolios Trust and the Berger/BIAM Worldwide Funds Trust
(three series). After December 31, 1996, one additional series was added to the
Berger Institutional Products Trust and the Berger Omni Investment Trust was
added to the Berger Funds complex. Of the aggregate amounts shown for each
trustee, the following amounts were deferred under applicable deferred
compensation plans: Dennis E. Baldwin $2,700; Louis R. Bindner $18,000;
Katherine A. Cattanach $30,000; Lucy Black Creighton $17,981; Michael Owen
$7,326; William Sinclaire $11,250.
(2) Director of Berger 100 Fund and Berger Growth and Income Fund. Trustee of
Berger Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Fund Trust, Berger/BIAM Worldwide Portfolios Trust and
Berger Omni Investment Trust.
(3) President of Berger 100 Fund, Berger Growth and Income Fund, Berger
Investment Portfolio Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
(4) Interested person of Berger Associates.
(5) Formerly, officer and director of Berger Associates and certain of the
Berger Funds through January 1997.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by the Berger Institutional Products
Trust. Under the plan, deferred fees are credited to an account and adjusted
thereafter to reflect the
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<PAGE>
investment experience of whichever of the Berger Funds (or approved money market
funds) is designated by the trustees for this purpose. Pursuant to an SEC
exemptive order, the Trust is permitted to purchase shares of the designated
funds in order to offset its obligation to the trustees participating in the
plan. Purchases made pursuant to the plan are excepted from any otherwise
applicable investment restriction limiting the purchase of securities of any
other investment company. The Trust's obligation to make payments of deferred
fees under the plan is a general obligation of the Trust.
As of the date of this Statement of Additional Information, the
officers and trustees of the Trust as a group did not own of record or
beneficially any shares of any of the Funds of the Berger Institutional Products
Trust.
4. INVESTMENT ADVISORS AND SUB-ADVISOR
Berger Associates is the investment advisor to each Fund except the
Berger/BIAM IPT - International Fund, to which BBOI Worldwide LLC ("BBOI
Worldwide") is the investment advisor and Bank of Ireland Asset Management
(U.S.) Limited ("BIAM") is the sub-advisor.
Kansas City Southern Industries, Inc. ("KCSI") owns approximately 87%
of the outstanding shares of Berger Associates. KCSI is a publicly traded
holding company with principal operations in rail transportation, through its
subsidiary The Kansas City Southern Railway Company, and financial asset
management businesses. 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.
BBOI Worldwide is a Delaware limited liability company formed in 1996.
Berger Associates and BIAM each own a 50% membership interest in BBOI Worldwide
and each have an equal number of representatives on its Board of Managers.
Berger Associates' role in the joint venture is to provide administrative
services, and BIAM's role is to provide international and global investment
management expertise. Agreement of representatives of both Berger Associates
and BIAM is required for all significant management decisions for BBOI
Worldwide. BIAM is an indirect wholly-owned subsidiary of Bank of Ireland, a
publicly traded, diversified financial services group with business operations
worldwide.
INVESTMENT ADVISORY AGREEMENTS AND SUB-ADVISORY AGREEMENT
The current Investment Advisory Agreements for the Berger IPT - 100
Fund, the Berger IPT - Growth and Income Fund and the Berger IPT - Small Company
Growth Fund will continue in effect
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<PAGE>
until the last day of April, 1998, and thereafter from year to year if such
continuation is specifically approved at least annually by the trustees or by
vote of a majority of the outstanding shares of the Fund and in either case by
vote of a majority of the trustees who are not "interested persons" (as that
term is defined in the 1940 Act) of the Fund or Berger Associates. The current
Investment Advisory Agreement for the Berger/BIAM IPT - International Fund will
continue in effect until the last day of April, 1999, and thereafter from year
to year if continuation is approved as set out above. Each Agreement is subject
to termination by the Fund or the advisor on 60 days' written notice, and
terminates automatically in the event of its assignment.
The Sub-Advisory Agreement between BBOI Worldwide and BIAM with
respect to the Berger/BIAM IPT - International Fund will continue in effect
until April 1999, and thereafter from year to year if such continuation is
specifically approved at least annually by the trustees or by vote of a majority
of the outstanding shares of the Fund and in either case by vote of a majority
of the trustees of the Trust who are not "interested persons" (as that term is
defined in the Investment Company Act of 1940) of the Fund or BBOI Worldwide or
BIAM. The Sub-Advisory Agreement is subject to termination by the Fund, BBOI
Worldwide or BIAM on 60 days' written notice, and terminates automatically in
the event of its assignment and in the event of termination of the Investment
Advisory Agreement between the Trust and BBOI Worldwide with respect to the
Berger/BIAM IPT - International Fund.
TRADE ALLOCATIONS
Investment decisions for the Funds and other accounts advised by
Berger Associates and BIAM are made independently with a view to achieving each
of their respective investment objectives and after consideration of such
factors as their current holdings, availability of cash for investment and the
size of their investments generally. However, certain investments may be
appropriate for a Fund and one or more such accounts. If a Fund and other
accounts advised by Berger Associates or BIAM are contemporaneously engaged in
the purchase or sale of the same security, the orders may be aggregated and/or
the transactions averaged as to price and allocated equitably to the Fund and
each participating account. While in some cases, this policy might adversely
affect the price paid or received by a Fund or other participating accounts, or
the size of the position obtained or liquidated, Berger Associates and BIAM will
aggregate orders if it believes that coordination of orders and the ability to
participate in volume transactions will result in the best overall combination
of net price and execution.
-31-
<PAGE>
RESTRICTIONS ON PERSONAL TRADING
Berger Associates permits its directors, officers, employees and other
access persons (as defined below) of Berger Associates ("covered persons") to
purchase and sell securities for their own accounts in accordance with
provisions governing personal investing in Berger Associates' Code of Ethics.
The Code requires all covered persons to conduct their personal securities
transactions in a manner which does not operate adversely to the interests of
the Funds or Berger Associates' other advisory clients. Directors and officers
of Berger Associates (including those who also serve as directors or trustees of
the Berger Funds), investment personnel and other designated covered persons
deemed to have access to current trading information ("access persons") are
required to pre-clear all transactions in securities not otherwise exempt under
the Code. Requests for authority to trade will be denied pre-clearance when,
among other reasons, the proposed personal transaction would be contrary to the
provisions of the Code or would be deemed to adversely affect any transaction
then known to be under consideration for or currently being effected on behalf
of any client account, including the Funds.
In addition to the pre-clearance requirements described above, the
Code subjects those covered persons deemed to be access persons to various
trading restrictions and reporting obligations. All reportable transactions are
reviewed for compliance with Berger Associates' Code. Those covered persons
also may be required under certain circumstances to forfeit their profits made
from personal trading. The Code is administered by Berger Associates and the
provisions of the Code are subject to interpretation by and exceptions
authorized by its board of directors.
BBOI Worldwide has adopted a Code of Ethics covering all board
members, officers, employees and other access persons of BBOI Worldwide who are
not also covered by an approved Code of Ethics of an affiliated person who is an
investment advisor. At present, there are no persons who would be covered by
BBOI Worldwide's Code of Ethics who are not also covered by the Code of Ethics
of Berger Associates or BIAM, which are both investment advisors affiliated with
BBOI Worldwide. BBOI Worldwide's Code is substantially similar to the Code of
Ethics adopted by Berger Associates (described above).
BIAM has also adopted a Code of Ethics which restricts its officers,
employees and other staff from personal trading in specified circumstances,
including among others prohibiting participation in initial public offerings,
prohibiting dealing in a security for the seven days before and after any trade
in that security on behalf of clients, prohibiting trading in a security while
an order is pending for any client on that same security, and requiring profits
from short-term trading in securities (purchase
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<PAGE>
and sale within a 60-day period) to be forfeited. In addition, staff of BIAM
must report all of their personal holdings in securities annually and must
disclose their holdings in any private company if an investment in that same
company is being considered for clients. Staff of BIAM are required to
pre-clear all transactions in securities not otherwise exempt under the Code of
Ethics and must instruct their broker to provide BIAM with duplicate
confirmations of all such personal trades.
5. EXPENSES OF THE FUNDS
Under their Investment Advisory Agreements, the Berger IPT - 100 Fund
and the Berger IPT - Growth and Income Fund have each 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. The fee is accrued daily and payable monthly.
Under the Investment Advisory Agreement for the Berger IPT - Small
Company Growth Fund, Berger Associates is compensated for its investment
advisory services to the 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 fee is accrued
daily and payable monthly.
Under the Investment Advisory Agreement for the Berger/BIAM IPT -
International Fund, BBOI Worldwide is compensated for its investment advisory
services to the 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 fee is accrued daily
and payable monthly.
Under the Sub-Advisory Agreement between BBOI Worldwide and BIAM for
the Berger/BIAM IPT - International Fund, BBOI Worldwide has delegated
day-to-day portfolio management responsibility for the Fund to BIAM. The Fund
pays no fees directly to BIAM. BIAM receives from BBOI Worldwide a fee at the
annual rate of .4 of 1% (0.40%) of the average daily net assets of the Fund.
During certain periods, BIAM may voluntarily waive all or a portion of its fee
under the Sub-Advisory Agreement, which will not affect the fee paid by the Fund
to BBOI Worldwide.
Each Fund pays all of its expenses not assumed by its advisor,
including, but not limited to, investment advisory fees, custodian and transfer
agent fees, legal and accounting expenses, administrative and record keeping
expenses, interest charges, federal and state taxes, costs of share
certificates, expenses of shareholders' meetings, compensation of trustees who
are not interested persons of the advisor or sub-advisor, expenses of printing
and distributing reports to shareholders and federal and state administrative
agencies, and all expenses incurred in
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<PAGE>
connection with the execution of its portfolio transactions, including brokerage
commissions on purchases and sales of portfolio securities, which are considered
a cost of securities of each Fund. Each Fund also pays all expenses incurred in
complying with all federal and state laws and the laws of any foreign country
applicable to the issue, offer or sale of shares of the Fund, including, but not
limited to, all costs involved in preparing and printing prospectuses for
shareholders of the Funds.
Each of the Funds has appointed Investors Fiduciary Trust Company
("IFTC") as its recordkeeping and pricing agent. 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 in the previous section, approximately 41% of
the outstanding shares of DST are owned by KCSI. The addresses and telephone
numbers for DST set forth in the Prospectus and this Statement of Additional
Information should be used for correspondence with the transfer agent.
As recordkeeping and pricing agent, IFTC calculates the daily net
asset value of each of the Funds and performs certain accounting and
recordkeeping functions required by the Funds. Each Fund pays IFTC a monthly
base fee plus an asset-based fee. IFTC is also reimbursed for certain
out-of-pocket expenses.
IFTC, as custodian, and its subcustodians have custody and provide for
the safekeeping of the Funds' securities and cash, and receive and remit the
income thereon as directed by the management of the Funds. The custodian and
subcustodians do not perform any managerial or policy-making functions for the
Funds. For its services as custodian, IFTC receives an asset-based fee plus
certain transaction fees and out-of-pocket expenses.
As transfer agent and dividend disbursing agent, IFTC (through DST, as
sub-agent) maintains all shareholder accounts of record; assists in mailing all
reports, proxies and other information to the Funds' shareholders; calculates
the amount of, and delivers to the Funds' shareholders, proceeds representing
all dividends and distributions; and performs other related services. For these
services, IFTC receives a base fee of $600 per month and an annual fee of $15.65
per open Fund shareholder account, subject to scheduled increases, plus certain
transaction fees and fees for closed accounts, and is reimbursed for
out-of-pocket expenses, which fees in turn are passed through to DST as
sub-agent.
All of IFTC's fees are subject to reduction pursuant to an agreed
formula for certain earnings credits on the cash balances of the Funds. The
following table shows gross fees, earnings credits and net fees paid to IFTC for
the period May 1, 1996 (date
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<PAGE>
operations commenced) to December 31, 1996, for each of the Funds in existence
during that period.
- --------------------------------------------------------------------------------
GROSS FEES EARNINGS NET FEES PAID
PAYABLE TO IFTC CREDITS TO IFTC
RECEIVED
FROM IFTC
- --------------------------------------------------------------------------------
Berger IPT - 100 Fund $9,111 $ 127 $8,984
Berger IPT - Growth and Income Fund $8,831 $ 101 $8,730
Berger IPT -Small Company Growth Fund $10,387 $ 369 $10,018
- --------------------------------------------------------------------------------
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DST Securities, Inc.
("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When transactions for
a Fund are effected through DSTS, the commission received by DSTS is credited
against, and thereby reduces, certain operating expenses that the Fund would
otherwise be obligated to pay. No portion of the commission is retained by
DSTS. See Section 6 Brokerage Policy for further information concerning the
expenses reduced as a result of these arrangements.
In addition, under a separate Administrative Services Agreement with
each Fund except the Berger/BIAM IPT - International 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 of those Funds pays Berger
Associates a fee at the annual rate of 1/100 of 1% (0.01%) of its average daily
net assets for such services. Under an Administrative Services Agreement with
the Berger/BIAM IPT - International Fund, BBOI Worldwide performs similar
administrative and recordkeeping services and the Fund pays BBOI Worldwide a fee
at the annual rate of 1/100 of 1% (0.01%) of its average daily net assets.
These administrative services fees are in addition to the investment advisory
fees paid by each Fund under its Investment Advisory Agreement. The
administrative services fees may be changed by the trustees without shareholder
approval.
Under a Sub-Administration Agreement between the BBOI Worldwide and
Berger Associates, Berger Associates has been delegated all of BBOI Worldwide's
duties under the Administrative Services Agreement and BBOI Worldwide's
administrative duties under
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<PAGE>
the Investment Advisory Agreement for the Berger/BIAM IPT - International Fund.
For its services under the Sub-Administration Agreement, BBOI Worldwide pays
Berger Associates a fee of .2 of 1% (0.20%) of the average daily net assets of
the Berger/BIAM IPT - International Fund. During certain periods, Berger
Associates may voluntarily waive all or a portion of its fee from BBOI
Worldwide, which will not affect the fee paid by the Fund to BBOI Worldwide
under the Administrative Services Agreement or the advisory fee paid to BBOI
Worldwide under the Investment Advisory Agreement.
Berger Associates has voluntarily 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. BBOI Worldwide has voluntarily
agreed to waive its advisory fee to the extent that normal operating expenses in
any fiscal year, including the investment advisory fee but excluding brokerage
commissions, interest, taxes and extraordinary expenses, of the Berger/BIAM IPT
- - International Fund exceed 1.20% of that Fund's average daily net assets.
The following tables show the cost to each Fund in existence at
December 31, 1996, of the advisory fee and the fees for the administrative
services for the period shown, the amounts reimbursed to each Fund on account of
excess expenses under the applicable expense limitation, and the percentage of
average daily net asset value of the respective Fund that those represent.
BERGER IPT - 100 FUND
Adminis- Fee
Fiscal Year trative Waiver and Percent of
Ended Advisory Service Reimburse- Average
December 31, Fee Fee ments Total Net Assets
- ------------ -------- -------- ----------- ----- ----------
1996* $ 1,393 $ 19 $ (12,453) $ 0 0.0%
BERGER IPT - GROWTH AND INCOME FUND
Adminis- Fee
Fiscal Year trative Waiver and Percent of
Ended Advisory Service Reimburse- Average
December 31, Fee Fee ments Total Net Assets
- ------------ -------- -------- ----------- ----- ----------
1996* $ 1,350 $ 17 $ (12,091) $ 0 0.0%
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<PAGE>
BERGER IPT - SMALL COMPANY GROWTH FUND
Adminis- Fee
Fiscal Year trative Waiver and Percent of
Ended Advisory Service Reimburse- Average
December 31, Fee Fee ments Total Net Assets
- ------------ -------- -------- ----------- ----- ----------
1996* $ 1,620 $ 17 $ (13,415) $ 0 0.0%
- --------------------
* Covers period from May 1, 1996 (date operations commenced) to the end of the
Funds' first fiscal year on December 31, 1996.
From time to time, Berger Associates or BBOI Worldwide 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' or BBOI Worldwide's own resources and not from the
assets of the Funds.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is Berger
Distributors, Inc. (the "Distributor"), 210 University Boulevard, Suite 900,
Denver, CO 80206. The Distributor may be reimbursed by Berger Associates for
its costs in distributing the Funds' shares.
6. BROKERAGE POLICY
Although each Fund retains full control over its own investment
policies, the Funds' advisor (or sub-advisor, in the case of the Berger/BIAM IPT
- - International Fund) is authorized to place the portfolio transactions of each
Fund. The advisor or sub-advisor is required to report on the placement of
brokerage business to the trustees of the Fund every quarter, indicating the
brokers with whom Fund portfolio business was placed and the basis for such
placement. The brokerage commissions paid by the Funds in existence during the
past fiscal year was as follows:
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<PAGE>
BROKERAGE COMMISSIONS
- --------------------------------------------------------------------------------
FISCAL YEAR
ENDED
DECEMBER 31, 1996*
- --------------------------------------------------------------------------------
BERGER IPT - 100 FUND $ 535
- --------------------------------------------------------------------------------
BERGER IPT - GROWTH AND INCOME FUND $ 688
- --------------------------------------------------------------------------------
BERGER IPT - SMALL COMPANY GROWTH FUND $ 607
- --------------------------------------------------------------------------------
* Covers period from May 1, 1996 (date operations commenced) to the end of the
Funds' first fiscal year on December 31, 1996.
The Investment Advisory Agreement that each Fund has with its advisor
(and the Sub-Advisory Agreement with the sub-advisor, in the case of the
Berger/BIAM IPT - International Fund) authorizes and directs the advisor (or
sub-advisor) to place portfolio transactions for the Fund only with brokers and
dealers who render satisfactory service in the execution of orders at the most
favorable prices and at reasonable commission rates. However, each Agreement
specifically authorizes the advisor (or sub-advisor) to place such transactions
with a broker with whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for effecting that
transaction if the advisor (or sub-advisor) determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker viewed in terms of either that
particular transaction or the overall responsibilities of the advisor (or
sub-advisor).
In accordance with this provision of the Agreements, Berger Associates
places and BIAM may place portfolio brokerage business of each Fund it advises
with brokers who provide useful research services. Such research services
typically consist of studies made by investment analysts or economists relating
either to the past record of and future outlook for companies and the industries
in which they operate, or to national and worldwide economic conditions,
monetary conditions and trends in investors' sentiment, and the relationship of
these factors to the securities market. In addition, such analysts may be
available for regular consultation so that Berger Associates or BIAM may be
apprised of current developments in the above-mentioned factors. During the
period May 1, 1996 (date operations commenced) through the fiscal year ended
December 31, 1996, $27, $46, and $39 of the brokerage commissions paid by the
Berger IPT - 100 Fund, the Berger IPT - Growth and Income Fund and the Berger
IPT - Small Company Growth Fund, respectively, were paid to brokers who agreed
to provide to the Fund selected research services prepared by the broker or
subscribed or paid for by the broker on behalf of the Fund. Those
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<PAGE>
services included a service used by the independent trustees of the Funds in
reviewing the Investment Advisory Agreements.
The research services received from brokers are often helpful to
Berger Associates and could be helpful to BIAM in performing its investment
advisory responsibilities to the Funds, but they are not essential, and the
availability of such services from brokers does not reduce the responsibility of
Berger Associates' or BIAM's advisory personnel to analyze and evaluate the
securities in which the Funds invest. The research services obtained as a
result of the Funds' brokerage business also will be useful to Berger Associates
or may be useful to BIAM in making investment decisions for its other advisory
accounts, and, conversely, information obtained by reason of placement of
brokerage business of such other accounts may be used by Berger Associates or
BIAM in rendering investment advice to the Funds. Although such research
services may be deemed to be of value to Berger Associates or BIAM, they are not
expected to decrease the expenses that Berger Associates or BIAM would otherwise
incur in performing its investment advisory services for the Funds nor will the
advisory fees that are received by Berger Associates or BIAM for their services
be reduced as a result of the availability of such research services from
brokers.
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DST Securities, Inc.
("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When transactions for
a Fund are effected through DSTS, the commission received by DSTS is credited
against, and thereby reduces, certain operating expenses that the Fund would
otherwise be obligated to pay. No portion of the commission is retained by
DSTS.
Included in the brokerage commissions paid by the Funds during the
period May 1, 1996 (date operations commenced) through the fiscal year ended
December 31, 1996, as stated in the preceding table, are the following amounts
paid to DSTS, which served to reduce each Fund's out-of-pocket expenses as
follows:
- --------------------------------------------------------------------------------
COMMISSIONS PAID REDUCTION IN
THROUGH DSTS(1) EXPENSES(1)
- --------------------------------------------------------------------------------
Berger IPT - 100 Fund $ 8(2) $ 6
- --------------------------------------------------------------------------------
Berger IPT - Growth and Income Fund $ 0 $ 0
- --------------------------------------------------------------------------------
Berger IPT - Small Company Growth Fund $ 0 $ 0
- --------------------------------------------------------------------------------
-39-
<PAGE>
(1) No portion of the commission is retained by DSTS. Difference between
commissions paid through DSTS and reduction in expenses constitute commissions
paid to an unaffiliated clearing broker.
(2) Constitutes 1.5% of the aggregate brokerage commissions paid by the Berger
IPT - 100 Fund and 1% of the aggregate dollar amount of transactions placed by
the Berger IPT - 100 Fund.
The trustees of each Fund have authorized sales by a broker-dealer of
variable insurance contracts that permit allocation of contract values to one or
more of the Funds to be considered as a factor in the selection of
broker-dealers to execute portfolio transactions for the Funds. In placing
portfolio business with such broker-dealers, the advisor or sub-advisor will
seek the best execution of each transaction.
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 designee. 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. SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended for any period during which
the New York Stock Exchange is closed or the Securities and Exchange Commission
determines that trading on the Exchange is restricted, or when there is an
emergency as determined
-40-
<PAGE>
by the Securities and Exchange Commission as a result of which it is not
reasonably practicable for a Fund to dispose of securities owned by it or to
determine the value of its net assets, or for such other period as the
Securities and Exchange Commission may by order permit for the protection of
shareholders of a Fund.
Each Fund intends to redeem its shares only for cash, although it
retains the right to redeem its shares in-kind under unusual circumstances, in
order to protect the interests of the remaining shareholders, by the delivery of
securities selected from its assets at its discretion. If shares are redeemed
in-kind, the redeeming shareholder generally will incur brokerage costs in
converting the assets to cash. The method of valuing securities used to make
redemption in-kind will be the same as the method of valuing portfolio
securities described below.
9. HOW THE NET ASSET VALUE IS DETERMINED
The net asset value of each Fund is determined once daily, at the
close of the regular trading session of the New York Stock Exchange (the
"Exchange") (normally 4:00 p.m., New York time, Monday through Friday) each day
that the Exchange is open. The Exchange is closed and the net asset value of
the Funds is not determined on weekends and on New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day each year. 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.
In determining net asset value, securities listed or traded primarily
on national exchanges, The Nasdaq Stock Market and foreign exchanges are valued
at the last sale price on such markets, or, if such a price is lacking for the
trading period immediately preceding the time of determination, such securities
are valued at the mean of their current bid and asked prices. Securities that
are traded in the over-the-counter market are valued at the mean between their
current bid and asked prices. The market value of individual securities held by
each Fund will be determined by using prices provided by pricing services which
provide market prices to other mutual funds or, as needed, by obtaining market
quotations from independent broker/dealers. Short-term money market securities
maturing within 60 days are valued on the amortized cost basis, which
approximates market value. All assets and liabilities initially expressed in
terms of non-U.S. dollar currencies are translated into U.S. dollars at the
prevailing market rates as quoted by one or more banks or dealers shortly before
the close of the Exchange. Securities and assets for which quotations are not
readily available are valued at fair values determined in good faith pursuant to
consistently applied procedures established by the trustees.
-41-
<PAGE>
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of the Exchange. The
values of foreign securities used in computing the net asset value of the shares
of a Fund are determined as of the earlier of such market close or the closing
time of the Exchange. Occasionally, events affecting the value of such
securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in good faith pursuant to consistently
applied procedures established by the directors or trustees.
A Fund's securities may be listed primarily on foreign exchanges or
over-the-counter dealer markets which may trade on days when the Exchange is
closed (such as a customary U.S. holiday) and on which the Fund's net asset
value is not calculated. As a result, the net asset value of a Fund may be
significantly affected by such trading on days when shareholders cannot purchase
or redeem shares of the Fund.
10. INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAX TREATMENT
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 generally will not be liable for Federal
income tax on the amount of their earnings that are timely distributed. If a
Fund distributes annually less than 98% of its income and gain, under certain
circumstances, it may be subject to a nondeductible excise tax equal to 4% of
the shortfall.
Each Fund intends to restrict sales of its shares to Participating
Insurance Companies and qualified plans so as to qualify for "look-through"
treatment under the investment diversification requirements of Code Section
817(h) which apply to certain insurance company separate accounts. Each Fund
also intends to manage its investments in accordance with the diversification
requirements of Code Section 817(h) so that any separate account that holds
shares in any of the Funds as its sole asset will comply with those
requirements. 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.
-42-
<PAGE>
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. The tax treatment of
distributions made to any shareholder will depend on the shareholder's tax
status.
The amount, timing and character of a Fund's income may be affected by
certain special U.S. tax rules that may apply to foreign or other investments of
a Fund. Any income received by a Fund from foreign investments may also be
subject to foreign income, withholding or other taxes.
11. PERFORMANCE INFORMATION
The Prospectus contains a brief description of how total return is
calculated.
Quotations of average annual total return for the Funds will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund over periods of 1, 5 and 10 years (or the
life of the Fund, if shorter). These are the rates of return that would
equate the initial amount invested to the ending redeemable value. These
rates of return are calculated pursuant to the following formula:
P(1 + T)(n) = ERV (where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of
the period). All total return figures reflect the deduction of a
proportional share of Fund expenses on an annual basis, and assume that all
dividends and distributions are reinvested when paid.
In conjunction with performance reports, comparative data between a
Fund's performance for a given period and other types of investment vehicles may
be provided. A Fund's performance is based upon amounts available for
investment under variable insurance contracts of Participating Insurance
Companies or available for allocation to a qualified plan account, rather than
upon premiums paid or contributions by contract owners or plan participants.
Consequently the Fund's total return data does not reflect the impact of sales
loads (whether front-load or deferred) or other contract or plan charges
deducted from premiums or from the assets of the separate accounts or qualified
plans that invest in the Fund. Such sales loads and charges may be substantial
and may vary widely among Participating Insurance Companies and qualified plans.
Accordingly, the total return data for the Funds is most useful for comparison
with comparable data for other investment options under the same variable
insurance contract or qualified plan.
-43-
<PAGE>
Comparisons of the Funds' total returns to those of other investment
vehicles are useful in evaluating the historical portfolio management
performance of the Funds' investment advisor. However, such comparisons should
not be mistaken for comparisons of the returns from the purchase of a variable
insurance contract of a Participating Insurance Company, or investment in a
qualified plan, to the purchase of another investment vehicle. The Funds' total
return data should be reviewed along with comparable total return data for an
associated separate account or in conjunction with data (such as the data
contained in personalized, hypothetical illustrations of variable life insurance
contracts) 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 data.
For the Berger IPT - 100 Fund, the Berger IPT - Growth and Income Fund
and the Berger IPT - Small Company Growth Fund, the total returns (not
annualized) were 3.90%, 11.40% and (.50)%, respectively, for the period May 1,
1996 (date operations commenced) through December 31, 1996.
12. ADDITIONAL INFORMATION
The Funds are separate series or portfolios established under the
Berger Institutional Products Trust, a Delaware business trust organized under
the Delaware Business Trust Act on October 17, 1995. The Berger IPT - 100 Fund,
the Berger IPT - Growth and Income Fund and the Berger IPT - Small Company
Growth Fund were established under the Trust on October 17, 1995. The
Berger/BIAM IPT - International Fund was established under the Trust in April
1997. Currently the Funds are the only series established under the Trust,
although others may be added in the future.
Under Delaware law, shareholders of the Trust will enjoy the same
limitations on personal liability as extended to stockholders of a Delaware
corporation. Further, the Trust Instrument of the Trust provides that no
shareholder shall be personally liable for the debts, liabilities, obligations
and expenses incurred by, contracted for or otherwise existing with respect to,
the Trust or any particular series (fund) of the Trust. However, the principles
of law governing the limitations of liability of beneficiaries of a business
trust have not been authoritatively established as to business trusts organized
under the laws of one jurisdiction but operating or owning property in other
jurisdictions. In states that have adopted legislation containing provisions
comparable to the Delaware Business Trust Act, it is believed that the
limitation of liability of beneficial owners provided by Delaware law should be
respected. In those jurisdictions that have not adopted similar legislative
provisions, it is possible that a court might hold that the shareholders of the
Trust are not entitled to the limitations of liability set forth in
-44-
<PAGE>
Delaware law or the Trust Instrument and, accordingly, that they may be
personally liable for the obligations of the Trust.
In order to protect shareholders from such potential liability, the
Trust Instrument requires that every written obligation of the Trust or any
series thereof contain a statement to the effect that such obligation may only
be enforced against the assets of the Trust or such series. The Trust
Instrument also provides for indemnification from the assets of the relevant
series for all losses and expenses incurred by any shareholder by reason of
being or having been a shareholder, and that the Trust shall, upon request,
assume the defense of any such claim made against such shareholder for any act
or obligation of the relevant series and satisfy any judgment thereon from the
assets of that series.
As a result, the risk of a shareholder of any Fund incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations. The Trust believes
that, in view of the above, the risk of personal liability to shareholders of
any of the Funds is remote. The trustees intend to conduct the operations of
the Trust and the Funds so as to avoid, to the extent possible, liability of
shareholders for liabilities of the Trust or the Funds.
Shares of the Funds have no preemptive rights, and since each Fund has
only one class of securities there are no sinking funds or arrearage provisions
which may affect the rights of the Fund shares. Fund shares have no conversion
or subscription rights. Shares of the Funds may be transferred by endorsement,
or other customary methods, but none of the Funds is bound to recognize any
transfer until it is recorded on its books.
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
-45-
<PAGE>
each Fund have non-cumulative 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 shares voting for the election of trustees will not be able to elect
any 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.
PRINCIPAL SHAREHOLDERS
As of October 31, 1987, the following shareholders owned of record
more than 5% of the outstanding shares of the Funds:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Name and Address Berger IPT Berger IPT Berger IPT Berger/BIAM
- 100 Fund - Growth - Small IPT -
and Income Company International
Fund Growth Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Berger Associates, 28.7% 38.2% 13.7% --(2)
Inc. (1)
210 University Blvd.
#900
Denver, CO 80206
- ---------------------------------------------------------------------------------------
Great American Reserve 54.7% 61.8% 8.7% 78.8%(2)
Insurance Company
11815 N. Pennsylvania
St.
Carmel, IN 46032
- ---------------------------------------------------------------------------------------
First Great-West Life & -- -- 10.3% --
Annuity Insurance
Company
8515 East Orchard Road
Englewood, CO 80111
- ---------------------------------------------------------------------------------------
Great-West Life & -- -- 61.6% --
Annuity Insurance
Company
8515 East Orchard Road
Englewood, CO 80111
- ---------------------------------------------------------------------------------------
Ameritas Life Insurance 14.8%(3) -- 2.8%(3) --
Corp. Separate Account
LLVA
5900 O Street
Lincoln, NE 68510
- ---------------------------------------------------------------------------------------
Canada Life Insurance -- -- -- 21.2%
Company of America
330 University Avenue
SP12
Toronto, Ontario,
Canada M5G1R8
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Berger Associates is a Delaware corporation which provided initial capital
to establish the Trust and each of the Funds. As a result of its share
ownership, Berger Associates may be deemed to control each of the Funds and the
Trust.
(2) The shares owned of record by Great American Reserve Insurance Company
include shares attributable to a variable annuity contract owned by Berger
Associates, Inc., which constitute 78.7% of the outstanding shares of the Fund.
(3) An additional 1.8% of the Berger IPT - 100 Fund and an additional 2.9% of
the Berger IPT - Small Company Growth Fund are owned of record by Ameritas Life
Insurance Corp. Separate Account LLVL.
DISTRIBUTION
The Distributor is the principal underwriter of the shares of the
Funds. The Distributor is a registered broker-dealer under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. The Distributor acts as the agent of the Funds in connection with
the sale of their shares in all states in which the shares are eligible for sale
and in which the Distributor is qualified as a broker-dealer.
The Trust, on behalf of each Fund, and the Distributor are parties to
a Distribution Agreement that continues through April 30, 1999, and thereafter
from year to year if such continuation is specifically approved at least
annually by the trustees or by vote of a majority of the outstanding shares of
the Fund and in either case by vote of a majority of the trustees of the Trust
who are not "interested persons" (as that term is defined in the Investment
Company Act of 1940) of the Trust or the Distributor. The Distribution
Agreement is subject to termination by a Fund or the Distributor on 60 days'
prior written notice, and terminates automatically in the event of its
assignment. Under the Distribution Agreement, the Distributor continuously
offers the shares of the Funds and solicits orders to purchase Fund shares at
net asset value.
-46-
<PAGE>
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado,
acts as counsel to the Trust and the Funds.
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado, acted
as independent accountants for the Trust and each of the Funds in existence for
the period May 1, 1996 (date operations commenced) to December 31, 1996.
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities of the Funds, of which this Statement of
Additional Information is a part. If further information is desired with
respect to any of the Funds or such securities, reference is made to the
Registration Statement and the exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The statements of assets and liabilities, including the schedules of
investments, and the related statements of operations and of changes in net
assets and the financial highlights for the Berger IPT - 100 Fund, the Berger
IPT - Growth and Income Fund and the Berger IPT - Small Company Growth Fund for
the period May 1, 1996 (date operations commenced) to December 31, 1996, and the
Report of Independent Accountants thereon dated January 27, 1997, are
incorporated by reference into this Statement of Additional Information from the
Annual Report to Shareholders dated December 31, 1996, for each of those Funds.
A copy of the 1996 Annual Report for each of those Funds is enclosed with this
Statement of Additional Information.
The unaudited statements of assets and liabilities, including the
schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights for the Berger IPT - 100
Fund, the Berger IPT - Growth and Income Fund and the Berger IPT - Small Company
Growth Fund for the period January 1, 1997 to June 30, 1997, are incorporated by
reference into this Statement of Additional Information from the Semi-Annual
Report to Shareholders dated June 30, 1997, for each of those Funds. A copy of
the June 30, 1997 Semi-Annual Report for each of those Funds is enclosed with
this Statement of Additional Information.
The following additional unaudited financial statements are attached
at the end of this Statement of Additional Information for the Berger/BIAM IPT -
International Fund:
Schedule of Investments as of October 31, 1997 (Unaudited)
-47-
<PAGE>
Statement of Assets and Liabilities as of October 31, 1997 (Unaudited)
Statement of Operations for the Period May 1, 1997 (Commencement of Operations)
to October 31, 1997 (Unaudited)
Statement of Changes in Net Assets for the Period May 1, 1997 (Commencement of
Operations) to October 31, 1997 (Unaudited)
Notes to Financial Statements, October 31, 1997 (Unaudited)
Financial Highlights for the Period May 1, 1997 (Commencement of Operations) to
October 31, 1997 (Unaudited)
-48-
<PAGE>
APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Funds may purchase securities which are convertible into common
stock when the Funds' management 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 a Fund or a decline in the market value of the securities.
Convertible securities often display a degree of market price volatility that is
comparable to common stocks.
Specifically, corporate debt securities which are below investment
grade (securities rated Ba or lower by Moody's or BB or lower by Standard &
Poor's) and unrated securities which a Fund may purchase and hold are subject to
a higher risk of non-payment of principal or interest, or both, than higher
grade debt securities. Generally speaking, the lower the quality of a debt
security (which may be reflected in its Moody's and/or Standard & Poor's
ratings), the higher the yield it will provide, but the greater the risk that
interest or principal payments will not be made when due. Thus, the lower the
grade of a security, the more speculative characteristics it generally has.
Information about the ratings of Moody's and Standard & Poor's, and the
investment risks associated with the various ratings, is set forth below.
The market prices of these lower grade convertible securities are
generally less sensitive to interest rate changes than higher-rated investments,
but more sensitive to economic changes or individual corporate developments.
Periods of economic uncertainty and change can be expected to result in
volatility of prices of these securities. Lower rated securities also may have
less liquid markets than higher rated securities, and their liquidity as well as
their value may be adversely affected by poor economic conditions. Adverse
publicity and investor perceptions as well as new or proposed laws may also have
a negative impact on the market for high-yield/high-risk bonds.
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and Standard &
Poor's are a generally accepted measurement of credit risk. However, they are
subject to certain limitations. Ratings are generally based upon historical
events and do not necessarily reflect the future. In addition, there is a
period of time between
-49-
<PAGE>
the issuance of a rating and the update of the rating, during which time a
published rating may be inaccurate.
KEY TO MOODY'S CORPORATE RATINGS
Aaa-Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A-Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa-Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba-Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds of this class.
B-Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
-50-
<PAGE>
Caa-Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca-Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C-Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
category.
KEY TO STANDARD & POOR'S CORPORATE RATINGS
AAA-Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A-Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC AND C-Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are out-weighed by the large uncertainties or major risk
exposures to adverse conditions.
-51-
<PAGE>
C1-The rating C1 is reserved for income bonds on which no interest is
being paid.
D-Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
PLUS (+) OR MINUS (-)-The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
-52-
<PAGE>
BERGER/BIAM IPT-INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
Country/shares Company Industry Market Value
- -------------- ------- -------- ------------
<S> <C> <C> <C>
COMMON STOCK -92.0%
AUSTRALIA - 5.3%
1,300 Broken Hill Proprietary Mining, Metals & Minerals $ 12,861
4,150 National Australia Bank Commercial Banks & Other Banks 56,635
9,850 News Corporation Media 47,066
2,700 Western Mining Mining, Metals & Minerals 9,567
------------
126,129
------------
FRANCE - 2.5%
440 Michelin Auto Components 22,496
340 Total Co. Francaise Petrole 'B' Oil 37,599
------------
60,095
------------
GERMANY - 6.3%
900 Hoechst Chemicals 34,168
123 Mannesmann Machinery & Engineering Services 51,821
410 Siemens Electrical Equipment 25,175
630 Veba Diversified Industrials 35,037
10 Viag AG Utilities 4,633
------------
150,834
------------
GREAT BRITAIN - 30.6%
2,150 Barclays Bank Commercial Banks & Other Banks 53,781
8,000 B.A.T. Industries Beverage Industry/
Tobacco Manufacturing 69,900
9,800 BTR Diversified Indusstrials 33,044
3,000 Cable & Wireless Utilities 23,925
2,350 Cadbury Schweppes Beverage Industry/
Tobacco Manufacturing 23,624
1,350 EMI Group Entertainment/Leisure/Toys 10,913
5,150 General Electric Co. Electronics & Instruments 32,853
1,750 Glaxo Wellcome Health & Personal Care 37,471
3,150 Granada Group Entertainment/Leisure/Toys 43,382
2,000 Grand Metropolitan Beverage Industry/
Tobacco Manufacturing 18,028
2,070 Kingfisher Retail Trade 29,757
4,000 Ladbroke Group Entertainment/Leisure/Toys 17,894
4,720 Lloyds TSB Group Commercial Banks & Other Banks 58,915
1,100 Premier Farnell Wholesale Trade 8,551
3,600 Prudential Corporation Insurance Life & Agents/Brokers 38,361
4,600 Safeway Retail Trade 29,923
2,300 Scottish Power Utilities 17,187
6,140 Shell Transport & Trading Company Oil 43,489
2,000 Siebe Machinery & Engineering Services 38,368
3,550 TI Group Machinery & Engineering Services 32,565
5,900 Vodafone Group Utilities 32,127
1,275 Zeneca Group Health & Personal Care 40,182
------------
734,240
------------
HONG KONG - 1.5%
1,600 HSBC Holdings Commercial Banks & Other Banks 36,222
------------
<PAGE>
INDONESIA - 1.5%
5,000 Gudang Garam Beverage Industry/
Tobacco Manufacturing $ 14,147
7,000 HM Sampoerna Beverage Industry/
Tobacco Manufacturing 12,184
9,500 Telekomunikasi Utilities 8,828
------------
35,159
------------
IRELAND - 1.0%
5,850 Smurfit (Jefferson) Group Forestry & Paper Products 17,318
------------
ITALY - 1.7%
823 ENI SPA ITL Oil 4,618
5,650 Telecom Italia Utilities 35,336
------------
39,954
------------
JAPAN - 15.6%
3,000 Canon, Inc. Computer/Commercial/
Office Equipment 72,836
1,000 Dai Nippon Printing Media 19,955
2,000 Honda Motor Automobiles 67,349
2,000 Kao Corporation Food & Grocery 27,937
100 Keyence Corporation Electronics & Instruments 14,966
1,000 Murata Manufacturing Electronics & Instruments 40,575
2,000 Shiseido Health & Personal Care 27,272
600 Sony Corporation Household Durables & Appliances 49,838
2,000 Takeda Chemical Health & Personal Care 54,544
------------
375,272
------------
MALAYSIA - 1.1%
2,000 Hume Industries Malaysia Construction & Building Materials 3,870
5,000 RHB Capital Commercial Banks & Other Banks 4,167
7,000 Sime - Darby Diversified Holding Companies 10,001
3,000 United Engineers Construction & Building Materials 7,055
------------
25,093
------------
MEXICO - 0.4%
4,650 Grupo Financiero Banamex Commercial Banks & Other Banks 9,328
------------
NETHERLANDS - 7.4%
1,575 ABN-Amro Holdings Commercial Banks & Other Banks 31,605
1,800 Elsevier Media 28,176
1,150 ING Groep Insurance - Multi/Property/Casualty 48,101
700 Koninklijke PPT Nederland Utilities 26,656
625 Nutricia Ver Bedrijven Food Manufacturing 17,802
480 Royal Dutch Petroleum Oil 25,300
------------
177,640
------------
PHILIPPINES - 0.2%
4,000 San Miguel 'B' Beverage Industry/
Tobacco Manufacturing 4,470
------------
PORTUGAL - 0.2%
250 Electricidade de Portugal Utilities 4,376
------------
SINGAPORE - 4.0%
4,000 City Developments Real Estate 16,757
4,000 Development Bank of Singapore Commercial Banks & Other Banks 37,321
3,000 Fraser and Neave Beverage Industry/
Tobacco Manufacturing 15,043
2 000 Singapore Press Holdings Media 27,547
------------
96,668
------------
SPAIN -1.0%
885 Banco De Santander Commercial Banks & Other Banks 24,699
------------
2
<PAGE>
SWITZERLAND - 11.7%
30 Alusuisse Lonza Holdings Fabricated Metal Products $ 26,790
30 Nestle Food & Grocery Products 42,118
66 Novartis Health & Personal Care 102,991
5 Roche Holdings Health & Personal Care 43,779
44 Schw Ruckverischer Insurance - Multi/Property/Casualty 66,031
------------
281,709
------------
Thailand -0.4%
3,000 Bangkok Bank Commercial Banks & Other Banks 10,435
------------
TOTAL COMMON STOCK (Cost $2,373,553) 2,209,641
------------
REPURCHASE AGREEMENT - 5.3%
Repurchase agreement with State Street Bank, 5%, dated October 31, 1997,
to be purchased at $130,054 on November 3, 1997, collateralized by U.S.
Government Agency Obligations, 6.5% - May 15, 2014, with a value of $137,200 130,000
------------
TOTAL INVESTMENTS (Cost $2,503,553+)-97.3% 2,339,641
OTHER ASSETS, LESS LIABILITIES - 2.7% 66,035
------------
NET ASSETS - 100% $ 2,405,676
------------
------------
</TABLE>
+ ALSO REPRESENTS COST FOR TAX PURPOSES
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
BERGER/BIAM IPT-INTERNATIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
OCTOBER 31, 1997
- ------------------------------------------------------------------------------
ASSETS
Investments at cost $ 2,503,553
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Investments at value $ 2,339,641
Cash 702
Foreign currency at value (cost $15,020) 14,994
Due from advisor (Note 2) 4,682
Receivables:
Investment securities sold 71,753
Dividends and Interest 5,269
- ------------------------------------------------------------------------------
Total Assets 2,437,041
- ------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment securities purchased 16,523
Accrued investment advisory fees (Note 2) 1,831
Other accrued expenses 94
Net Unrealized Depreciation on Open Forward Currency Contracts 12,917
- ------------------------------------------------------------------------------
Total Liabilities 31,365
- ------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 2,405,676
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Capital Shares:
Authorized (Par Value $0.01) unlimited
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Shares Outstanding 254,067
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE $ 9.47
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
BERGER/BIAM IPT-INTERNATIONAL FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD FROM MAY 1, 1997 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1997
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Income:
Dividends (net of foreign withholding taxes of $2,127) $ 16,425
Interest 6,915
- ------------------------------------------------------------------------------
Total income 23,340
- ------------------------------------------------------------------------------
Expenses:
Investment advisory fees (Note 2) 9,547
Custody fees 6,488
Audit Fees 1,375
Other 1,212
Administrative Services (Note 2) 106
- ------------------------------------------------------------------------------
Total Expenses 18,728
Less expenses reimbursed by adviser (6,000)
Less Earnings Credits (3,193)
- ------------------------------------------------------------------------------
Expenses - Net 9,535
- ------------------------------------------------------------------------------
Net Investment Income (Loss) 13,805
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) on securities and foreign
currency transactions 35,631
Net change in unrealized appreciation (depreciation)
on securities and foreign currency transactions (177,271)
- ------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions (141,640)
- ------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations $ (127,835)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
BERGER/BIAM IPT-INTERNATIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
FOR THE PERIOD FROM MAY 1, 1997 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1997
- ------------------------------------------------------------------------------
FROM OPERATIONS:
Net investment income (loss) $ 13,805
Net realized gain (loss) on securities and foreign
currency transactions 35,631
Net changes in unrealized appreciation (depreciation) on
securities and foreign currency transactions (177,271)
- ------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations (127,835)
- ------------------------------------------------------------------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income 0
Net realized gains on investments 0
- ------------------------------------------------------------------------------
Net Decrease in Net Assets from Distributions to Shareholders 0
- ------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS:
Proceeds from shares sold 2,608,921
Net asset value of shares issued in reinvestment of dividends 0
- ------------------------------------------------------------------------------
Total 2,608,921
Payments for shares redeemed (75,410)
- ------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Derived From Fund
Share Transactions 2,533,511
- ------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2,405,676
Net Assets:
BEGINNING OF PERIOD 0
- ------------------------------------------------------------------------------
End of period $ 2,405,676
- ------------------------------------------------------------------------------
COMPONENTS OF NET ASSETS:
Capital (par value and paid in surplus) $ 2,533,511
Undistributed net investment income (loss) 13,805
Accumulated net realized gain (loss) from investments 35,631
Unrealized appreciation (depreciation) on investments (177,271)
- ------------------------------------------------------------------------------
Total $ 2,405,676
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TRANSACTIONS IN FUND SHARES:
Shares sold 261,565
Shares issued to shareholders in reinvestment of dividends 0
- ------------------------------------------------------------------------------
Total 261,565
Shares repurchased (7,498)
- ------------------------------------------------------------------------------
Net Increase (decrease) in shares 254,067
Shares outstanding, beginning of period 0
- ------------------------------------------------------------------------------
Shares outstanding, end of period 254,067
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
BERGER/BIAM IPT-INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER 31, 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Berger Institutional Products Trust (the "Trust"), a Delaware business
trust, was established on October 17, 1995 as a diversified open-end management
investment company. The Trust is authorized to issue an unlimited number of
shares of beneficial interest in series or portfolios. Currently, the series
comprising Berger IPT-100 Fund ("IPT-100"), Berger IPT-Growth and Income Fund
("IPT-G&I"), Berger IPT-Small Company Growth Fund ("IPT-SCG") and Berger/BIAM
IPT-International Fund ("IPT-International"), (individually the "Fund" and
collectively the "Funds") are the only portfolios established under the Trust,
although others may be added in the future. The Funds commenced investment
operations on May 1, 1996, except for the Berger/BIAM IPT-International Fund
which commenced operations on May 1, 1997.
The Trust is registered under the Investment Company Act of 1940 and the
Securities Act of 1933 (the "Acts"). Shares of each Fund are fully paid and
non-assessable when issued. All shares issued by a particular Fund participate
equally in dividends and other distributions by that Fund. The Trust's shares
are not offered directly to the public, but are sold exclusively to insurance
companies ("Participating Insurance Companies") as a pooled funding vehicle for
variable annuity and variable life insurance contracts issued by separate
accounts of Participating Insurance Companies and to qualified plans. All costs
incurred in organizing the Trust were paid by Berger Associates, Inc.
("Berger"), the investment advisor to IPT-100, IPT-G&I and the IPT-SCG.
On May 1, 1997, Berger purchased 200,000 shares of the IPT-International
for $2 million. At October 31, 1997, Berger owned 79% of the outstanding shares
of IPT-International.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATION
Securities are valued at the close of the regular trading session of the
New York Stock Exchange (the "Exchange") on each day that the Exchange is open.
Securities listed on national exchanges, the NASDAQ Stock Market and foreign
exchanges are valued at the last sale price on such markets, or, if no last sale
price is available, they are valued using the mean between their current bid and
asked prices. Securities that are traded on the over-the-counter market are
valued at the mean between their current bid and asked prices. Short-term
obligations maturing within sixty days are valued at amortized cost, which
approximates market value. Securities for which quotations are not readily
available are valued at fair values determined in good faith pursuant to
consistently applied procedures established by the trustees.
Foreign securities are converted to U.S. dollars using exchange rates
determined prior to the close of the Exchange. Generally, trading in foreign
securities markets is substantially completed each day at various times prior to
the close of the Exchange. The values of foreign securities used in computing
the net asset value of the shares in the portfolio are determined as of the
earlier of such market close or the closing time of the Exchange. Occasionally,
events affecting the value of such securities may occur between the times at
which they are determined and the close of the Exchange, or when the foreign
market on which such securities trade is closed but the Exchange is open, which
will not be reflected in the computation of net asset value. If during such
periods, events occur which materially affect the value of such securities, the
securities will be valued at their fair market value as determined in good faith
pursuant to consistently applied procedures established by the trustees.
7
<PAGE>
FEDERAL INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. Therefore, no income tax provision is
required.
SECURITY GAINS AND LOSSES
Gains and losses are computed on the identified cost basis for both
financial statement and Federal income tax purposes for all securities. Assets
and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the date of valuation. The cost of securities is
translated into U.S. dollars at the rates of exchange prevailing when such
securities were acquired. Income and expenses are translated into U.S. dollars
at rates of exchange prevailing when accrued.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the date investments are
purchased or sold. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of discounts.
COMMON EXPENSES
Certain expenses which are not directly allocable to a specific Fund are
allocated to the Funds on the basis of relative net assets.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
2. AGREEMENTS
BBOI Worldwide LLC ("BBOI") serves as the investment advisor to the
IPT-International. BBOI has delegated the day-to-day portfolio management of
the IPT-International to Bank of Ireland Asset Management (U.S.) Limited
("BIAM"). As compensation for its services to the Fund, BBOI receives an
investment advisory fee which is accrued daily and paid monthly. The fee is
based on an annual rate of .90 of 1% of the Fund's average daily net assets As
sub-advisor to IPT-International, BIAM receives a sub-advisory fee from BBOI at
an annual rate of .40 of 1% of the average daily net assets of the Fund. Such
sub-advisory fee has been voluntarily waived by BIAM for the period from May 1,
1997 (commencement of operations) to October 31, 1997. BBOI has agreed to waive
its advisory fee and reimburse expenses to the Fund to the extent that normal
operating expenses in any fiscal year (including the advisory fee but excluding
brokerage commissions, interest, taxes and extraordinary expenses) exceed 1.20%
of the average daily net assets of the IPT-International.
The IPT-International has entered into an administrative services agreement
with BBOI. The administrative services agreement provides for a fee at an
annual rate of .01 of 1% of the average daily net assets of the Fund accrued
daily and paid monthly. BBOI has delegated the day-to-day administrative duties
to Berger. Berger receives a sub-administration fee from BBOI at an annual rate
of .20 of 1% of the average daily net assets of the IPT-International. Such
sub-administration fee has been voluntarily waived by Berger for the period from
May 1, 1997 (commencement of operations) to October 31, 1997.
The Trust has entered into a recordkeeping and pricing agreement with
Investors Fiduciary Trust Company ("IFTC"), who also serves as the Fund's
custodian and transfer agent. The recordkeeping and pricing agreement provides
for the monthly payment of a base fee plus a fee computed as a percentage of
average daily net assets on a total relationship basis. IFTC's fees for
custody, recordkeeping and pricing, or transfer agency services are subject to
reduction by credits earned by the Fund, based on the cash balances of the Fund
held by IFTC as custodian or by credits received from directed brokerage
transactions.
8
<PAGE>
Certain officers and directors of Berger are also officers and trustees of
the Trust. Trustees, who are not affiliated with Berger, received no
compensation from the Berger/BIAM IPT-International Fund for the period from May
1, 1997 (commencement of investment operations) to October 31, 1997.
3. INVESTMENT TRANSACTIONS
A. Purchases and Sales
Purchases and sales of investment securities for the period from May 1, 1997
(commencement of operations) through October 31, 1997, were as follows:
- ------------------------------------------------------------------------------
Purchases of investment securities
(excluding short-term securities) $ 2,589,029
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Sales of investment securities
(excluding short-term securities) $ 228,481
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
There were no purchases or sales of long-term U.S. Government securities
during the period.
At October 31, 1997, the composition of unrealized appreciation (the excess of
value over tax cost) and unrealized depreciation (the excess of tax cost over
value) for securities was as follows:
- ------------------------------------------------------------------------------
Appreciation $ 92,554
Depreciation (256,466)
- ------------------------------------------------------------------------------
Net $ (163,912)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
The IPT-International may hold forward foreign currency exchange contracts
for the purpose of hedging the portfolio against exposure to market value
fluctuations. The use of such instruments may involve certain risks as a result
of unanticipated movements in the market. A lack of correlation between the
value of such investments and the assets being hedged, or unexpected price
movements, could render the Fund's hedging strategy unsuccessful. In addition,
there can be no assurance that a liquid secondary market will exist for the
instrument. Realized gains or losses on these securities, if any, are included
in Net Realized Gain (Loss) on Securities Transactions in the Statements of
Operations.
B. Federal Income Tax Status
Dividends paid by the Fund from net investment income and distributions of
net realized short-term capital gains are, for Federal income tax purposes,
taxable as ordinary income to shareholders.
The Fund distributes net realized capital gains, if any, to its shareholders
at least annually, if not offset by capital loss carryovers. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to the differing treatments for
net operating losses and expiring capital loss carryforwards. Accordingly,
these permanent differences in the character of income and distributions between
financial statements and tax basis will be reclassified to paid-in-capital. At
October 31, 1997, no such differences existed.
9
<PAGE>
BERGER/BIAM IPT-INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
FROM MAY 1, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1997 (UNAUDITED)
- ------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
- ------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.05
Net realized and unrealized gain (loss) on securities (0.58)
- ------------------------------------------------------------------------------
Total from investment operations (0.53)
- ------------------------------------------------------------------------------
Less distributions:
Dividends (from net investment income) 0.00
Distributions (from capital gains) 0.00
- ------------------------------------------------------------------------------
Total distributions 0.00
- ------------------------------------------------------------------------------
Net asset value, end of period $ 9.47
- ------------------------------------------------------------------------------
Total Return^* (5.30)%
- ------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $ 2,405,676
Ratio of expenses to average net assets:~+
Net expenses .90%
Gross expenses 1.77%
Ratio of net income (loss) to average net assets~ 1.30%
Portfolio turnover rate* 23.60%
Average commission rate $ .0246
^ TOTAL RETURN REFLECTS THE EFFECT OF FEES OFFSET BY EARNINGS CREDITS, FEE
WAIVERS AND EXPENSE REIMBURSEMENTS, AND DOES NOT REFLECT EXPENSES THAT
APPLY TO RELATED VARIABLE INSURANCE CONTRACTS. HAD THE FEE OFFSETS,
WAIVERS AND REIMBURSEMENTS NOT BEEN MADE, AND HAD VARIABLE CONTRACT CHARGES
BEEN INCLUDED, TOTAL RETURN WOULD HAVE BEEN LOWER FOR THE PERIOD SHOWN.
* BASED ON OPERATIONS FOR THE PERIOD SHOWN AND, ACCORDINGLY,IS NOT
REPRESENTATIVE OF A FULL YEAR.
~ ANNUALIZED.
+ NET EXPENSES REFLECT THE FUND'S GROSS (TOTAL) EXPENSES, REDUCED BY FEES
OFFSET BY EARNINGS CREDITS, FEE WAIVERS AND EXPENSE REIMBURSEMENTS. GROSS
EXPENSES AND NET EXPENSES DO NOT INCLUDE THE DEDUCTION OF ANY CHARGES OR
EXPENSES ATTRIBUTABLE TO ANY PARTICULAR VARIABLE INSURANCE CONTRACT.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
BERGER INSTITUTIONAL PRODUCTS TRUST
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) FINANCIAL STATEMENTS.
In Part A of the Registration Statement (Prospectus dated May 1, 1997)
for Berger IPT - 100 Fund, Berger IPT - Growth and Income Fund and
Berger IPT - Small Company Growth Fund:
1. Financial Highlights for the Period May 1, 1996 (Date Operations
Commenced) to December 31, 1996
In Part A of the Registration Statement (Prospectus Supplement dated
November 13, 1997) for Berger/BIAM IPT - International Fund:
1. Financial Highlights for the Period May 1, 1997 (Commencement of
Operations) to October 31, 1997(unaudited)*
Incorporated by reference into Part B of this Registration Statement
(Statement of Additional Information) for the Berger IPT - 100 Fund,
Berger IPT - Growth and Income Fund and Berger IPT - Small Company
Growth Fund:
1. Report of Independent Accountants, dated January 27, 1997
2. Schedules of Investments as of December 31, 1996
3. Statements of Assets and Liabilities as of December 31, 1996
4. Statements of Operations for the Period May 1, 1996 (Commencement
of Investment Operations) to December 31, 1996
5. Statements of Changes in Net Assets for the Period May 1, 1996
(Commencement of Investment Operations) to December 31, 1996
6. Notes to Financial Statements, December 31, 1996
7. Financial Highlights for the Period May 1, 1996 (Commencement of
Investment Operations) to December 31, 1996
C-1
<PAGE>
Incorporated by reference into Part B of this Registration Statement
(Statement of Additional Information) for the Berger IPT - 100 Fund,
Berger IPT - Growth and Income Fund and Berger IPT - Small Company
Growth Fund:
1. Schedules of Investments as of June 30, 1997 (Unaudited)
2. Statements of Assets and Liabilities as of June 30, 1997
(Unaudited)
3. Statements of Operations for the Period January 1, 1997 to June
30, 1997(Unaudited)
4. Statements of Changes in Net Assets for the Period January 1,
1997 to June 30, 1997 (Unaudited) and for the Period May 1, 1996
(Commencement of Investment Operations) to December 31, 1996
5. Notes to Financial Statements, June 30, 1997 (Unaudited)
6. Financial Highlights for the Period January 1, 1997 to June 30,
1997(Unaudited)
Included in Part B of this Registration Statement (Statement of
Additional Information) for the Berger/BIAM IPT - International Fund:
1. Schedule of Investments as of October 31, 1997 (Unaudited)
2. Statement of Assets and Liabilities as of October 31, 1997
(Unaudited)
3. Statement of Operations for the Period May 1, 1997 (Commencement
of Operations) to October 31, 1997 (Unaudited)
4. Statement of Changes in Net Assets for the Period May 1, 1997
(Commencement of Operations) to October 31, 1997 (Unaudited)
5. Notes to Financial Statements, October 31, 1997 (Unaudited)
6. Financial Highlights for the Period May 1, 1997 (Commencement of
Operations) to October 31, 1997 (Unaudited)
In Part C of the Registration Statement:
C-2
<PAGE>
None.
(b) EXHIBITS.
The Exhibit Index following the signature pages below is incorporated
herein by reference.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
On the date that this amendment to the Registration Statement becomes
effective, Berger Associates, Inc., a Delaware corporation, will own a majority
of the outstanding shares of the Registrant, having provided all the initial
seed capital to establish the Registrant. Consequently, Berger Associates will
be a control person of the Registrant. Berger Associates will continue to be a
control person of the Registrant so long as it holds more than 25% of the
Registrant's outstanding shares, as the term "control" is defined in the
Investment Company Act of 1940. So long as the Registrant is controlled by
Berger Associates, it will be under common control with the other companies
controlled by Berger Associates' corporate parent, Kansas City Southern
Industries, Inc. ("KCSI"). See "Management and Investment Advice" in the
Prospectus and "Investment Advisor" in the Statement of Additional Information
for more information on KCSI and its affiliates.
Item 26. NUMBER OF HOLDERS OF SECURITIES
The number of record holders of shares of beneficial interest in
the series of Registrant's shares outstanding as of October 31, 1997, was
as follows:
- --------------------------------------------------------------------------
SERIES OR FUND NUMBER OF RECORD
HOLDERS
OF SHARES
- --------------------------------------------------------------------------
Berger IPT - 100 Fund 3
- --------------------------------------------------------------------------
Berger IPT - Growth and Income Fund 2
- --------------------------------------------------------------------------
Berger IPT - Small Company Growth Fund 5
- --------------------------------------------------------------------------
Berger/BIAM IPT - International Fund 2
- --------------------------------------------------------------------------
Item 27. INDEMNIFICATION
Article IX, Section 2 of the Trust Instrument for Berger Institutional
Products Trust (the "Trust"), provides for indemnification of certain persons
acting on behalf of the Trust to
C-3
<PAGE>
the fullest extent permitted by the law. In general, trustees, officers,
employees, managers and agents will be indemnified against liability and against
all expenses incurred by them in connection with any claim, action, suit or
proceeding (or settlement thereof) in which they become involved by virtue of
their Trust office, unless their conduct is determined to constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties,
or unless it has been determined that they have not acted in good faith in the
reasonable belief that their actions were in or not opposed to the best
interests of the Trust. The Trust also may advance money for these expenses,
provided that the trustees, officers, employees, managers or agents undertake to
repay the Trust if their conduct is later determined to preclude
indemnification. The Trust has the power to purchase insurance on behalf of its
trustees, officers, employees, managers and agents, whether or not it would be
permitted or required to indemnify them for any such liability under the Trust
Instrument or applicable law, and the Trust has purchased and maintains an
insurance policy covering such persons against certain liabilities incurred in
their official capacities.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
The business of Berger Associates, Inc., the investment advisor of the
Berger IPT - 100 Fund, the Berger IPT - Growth and Income Fund and the Berger
IPT - Small Company Growth Fund is described in the Prospectus in Section 6 and
in the Statement of Additional Information in Section 4 which are included in
this Registration Statement. Information relating to the business and other
connections of the officers and directors of Berger Associates (current and for
the past two years) is listed in Schedules A and D of Berger Associates' Form
ADV as filed with the Securities and Exchange Commission (File No. 801-9451,
dated September 29, 1997), which information from such schedules is incorporated
herein by reference.
The business of BBOI Worldwide LLC ("BBOI Worldwide"), the investment
advisor of the Berger/BIAM IPT - International Fund, is described in the
Prospectus in Section 6 and in the Statement of Additional Information in
Section 4 which are included in this Registration Statement. Information
relating to the business and other connections of the officers and managers of
BBOI Worldwide (current and for the past two years) is listed in Schedules A and
D of BBOI Worldwide's Form ADV as filed with the Securities and Exchange
Commission (File No. 801-52264, dated September 3, 1997), which information from
such schedules is incorporated herein by reference.
The business of Bank of Ireland Asset Management (U.S.) Limited
("BIAM"), the sub-advisor to the Berger/BIAM IPT -
C-4
<PAGE>
International Fund, is also described in Section 6 of the Prospectus and in
Section 4 of the Statement of Additional Information. Information relating to
the business and other connections of the officers and directors of BIAM
(current and for the past two years) is listed in Schedules A and D of BIAM's
Form ADV as filed with the Securities and Exchange Commission (File No.
801-29606, dated July 7, 1997), which information from such schedules is
incorporated herein by reference.
Item 29. PRINCIPAL UNDERWRITERS
(a) Investment companies (other than the Registrant) for which the
Registrant's principal underwriter also acts as principal underwriter:
The One Hundred Fund, Inc.
Berger One Hundred and One Fund, Inc.
Berger Investment Portfolio Trust
- --Berger Small Company Growth Fund
- --Berger New Generation Fund
- --Berger Balanced Fund
- --Berger Select Fund
- --Berger Mid Cap Growth Fund
Berger/BIAM Worldwide Funds Trust
- --Berger/BIAM International Fund
- --International Equity Fund
- --Berger/BIAM International CORE Fund
Berger Omni Investment Trust
- --Berger Small Cap Value Fund
(b) For Berger Distributors, Inc.:
- --------------------------------------------------------------------------------
Name Positions and Positions and
Offices with Offices with
Underwriter Registrant
- --------------------------------------------------------------------------------
Craig D. Cloyed President and Director None
- --------------------------------------------------------------------------------
David G. Mertens Vice President and Director None
- --------------------------------------------------------------------------------
David J. Schultz Chief Financial Officer, Assistant Treasurer
Secretary and Treasurer
- --------------------------------------------------------------------------------
Brian S. Ferrie Chief Compliance Officer None
- --------------------------------------------------------------------------------
C-5
<PAGE>
- --------------------------------------------------------------------------------
Kevin R. Fay Director Vice President,
Secretary
and Treasurer
- --------------------------------------------------------------------------------
The principal business address of Mr. Mertens is 1850 Parkway Place,
Suite 420, Marietta, GA 30067. The principal business address of each of the
other persons in the table above is 210 University Blvd., Suite 900, Denver, CO
80206.
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's
sub-transfer agent, DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141;
(b) Accounting records relating to cash and other money balances;
asset, liability, reserve, capital, income and expense accounts;
portfolio securities; purchases and sales; and brokerage
commissions are maintained by the Registrant's Recordkeeping and
Pricing Agent, Investors Fiduciary Trust Company ("IFTC"), 127
West 10th Street, Kansas City, Missouri 64105. Other records of
the Registrant relating to purchases and sales; the Trust
Instrument, minute books and other trust records; brokerage
orders; performance information and other records are maintained
at the offices of the Registrant at 210 University Boulevard,
Suite 900, Denver, Colorado 80206.
(c) Certain records relating to day-to-day portfolio management of
the Berger/BIAM IPT - International Fund are kept at Bank of
Ireland Asset Management (U.S.) Limited, 26 Fitzwilliam Street,
Dublin 2, Ireland; or at Bank of Ireland Asset Management (U.S.)
Limited, 20 Horseneck Lane, Greenwich, Connecticut 06830.
Item 31. MANAGEMENT SERVICES
The Registrant has no management-related service contract which is not
discussed in Parts A and B of this form. See Section 7 of the Prospectus and
Section 5 of the Statement of
C-6
<PAGE>
Additional Information for a discussion of the Recordkeeping and Pricing Agent
Agreement entered into between the Registrant and IFTC and the Administrative
Services Agreements entered into between the Registrant and Berger Associates,
Inc., and between the Registrant and BBOI Worldwide LLC, investment advisors to
various series of the Registrant.
Item 32. UNDERTAKINGS
(a) Registrant undertakes to comply with the following policy with
respect to calling meetings of shareholders for the purpose of voting upon the
removal of any trustee of the Registrant and facilitating shareholder
communications related to such meetings:
1. The trustees will promptly call a meeting of shareholders for the
purpose of voting upon the removal of any trustee of the Registrant when
requested in writing to do so by the record holders of at least 10% of the
outstanding shares of the Registrant.
2. Whenever ten or more shareholders of record who have been
shareholders of the Registrant for at least six months, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at least
1% of the outstanding shares of the Registrant, whichever is less, apply to the
trustees in writing stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request such a meeting, and
deliver to the trustees a form of communication and request which they wish to
transmit, the trustees within 5 business days after receipt of such application
either will (i) give such applicants access to a list of the names and addresses
of all shareholders of record of the Registrant, or (ii) inform such applicants
of the approximate number of shareholders of record and the approximate cost of
mailing the proposed communication and form of request.
3. If the trustees elect to follow the course specified in clause
(ii), above, the trustees, upon the written request of such applicants
accompanied by tender of the material to be mailed and the reasonable expenses
of the mailing, will, with reasonable promptness, mail such material to all
shareholders of record, unless within 5 business days after such tender the
trustees shall mail to such applicants and file with the Securities and Exchange
Commission (the "Commission"), together with a copy of the material requested to
be mailed, a written statement signed by at least a majority of the trustees to
the effect that in their opinion either such material contains untrue statements
of fact or omits to state facts necessary to make the statements contained
C-7
<PAGE>
therein not misleading, or would be in violation of applicable law, and
specifying the basis of such opinion.
4. If the Commission enters an order either refusing to sustain any
of the trustees' objections or declaring that any objections previously
sustained by the Commission have been resolved by the applicants, the trustees
will cause the Registrant to mail copies of such material to all shareholders of
record with reasonable promptness after the entry of such order and the renewal
of such tender.
(b) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and County of Denver, and State of
Colorado, on the 13th day of November, 1997.
BERGER INSTITUTIONAL PRODUCTS TRUST
----------------------------------------
(Registrant)
By /s/ Gerard M. Lavin
-------------------------------------
Name: Gerard M. Lavin
--------------------------------
Title: President
-------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Gerard M. Lavin
- --------------------------- President (Principal November 13, 1997
Gerard M. Lavin Executive Officer)
and Trustee
/s/ Kevin R. Fay
- --------------------------- Vice President, November 13, 1997
Kevin R. Fay Secretary and
Treasurer (Principal
Financial and
Accounting Officer)
/s/Dennis E. Baldwin*
- --------------------------- Trustee November 13, 1997
Dennis E. Baldwin
/s/William M.B. Berger*
- --------------------------- Trustee November 13, 1997
William M.B. Berger
/s/Louis R. Bindner*
- --------------------------- Trustee November 13, 1997
C-9
<PAGE>
Louis R. Bindner
/s/Katherine A. Cattanach*
- --------------------------- Trustee November 13, 1997
Katherine A. Cattanach
/s/Lucy Black Creighton*
- --------------------------- Trustee November 13, 1997
Lucy Black Creighton
/s/Paul R. Knapp*
- --------------------------- Trustee November 13, 1997
Paul R. Knapp
/s/Harry T. Lewis, Jr.*
- --------------------------- Trustee November 13, 1997
Harry T. Lewis, Jr.
/s/Michael Owen*
- --------------------------- Trustee November 13, 1997
Michael Owen
/s/William Sinclaire*
- --------------------------- Trustee November 13, 1997
William Sinclaire
/s/ Gerard M. Lavin
- ------------------------------
*By: Gerard M. Lavin,
Attorney-in-fact
C-10
<PAGE>
EXHIBIT INDEX
N-1A EDGAR
Exhibit Exhibit
No. No. Name of Exhibit
- ------------- ---------- ---------------
(1) Exhibit 1 Trust Instrument
(1) Exhibit 2 Bylaws
Exhibit 3 Not Applicable
Exhibit 4 Not Applicable
(1) Exhibit 5.1 Form of Investment Advisory
Agreement for Berger IPT - 100
Fund
(1) Exhibit 5.2 Form of Investment Advisory
Agreement for Berger IPT -
Growth and Income Fund
(1) Exhibit 5.3 Form of Investment Advisory
Agreement for Berger IPT -
Small Company Growth Fund
(3) Exhibit 5.4 Form of Investment Advisory
Agreement for Berger/BIAM IPT
- International Fund
(3) Exhibit 5.5 Form of Sub-Advisory Agreement
for Berger/BIAM IPT -
International Fund
(2) Exhibit 6 Distribution Agreement between
Berger Institutional Products
Trust and Berger Distributors,
Inc.
Exhibit 7 Not Applicable
(1) Exhibit 8 Form of Custody Agreement
(1) Exhibit 9.1.1 Form of Administrative
Services Agreement for Berger
IPT - 100 Fund
(1) Exhibit 9.1.2 Form of Administrative
Services Agreement for Berger
IPT - Growth and Income Fund
(1) Exhibit 9.1.3 Form of Administrative
Services Agreement for Berger
IPT - Small Company Growth
Fund
(3) Exhibit 9.1.4 Form of Administrative
Services Agreement for
Berger/BIAM IPT -
International Fund
(3) Exhibit 9.1.5 Form of Sub-Administration
Agreement for Berger/BIAM IPT
- International Fund
(1) Exhibit 9.2 Form of Recordkeeping and
Pricing Agent Agreement
(1) Exhibit 9.3 Form of Agency Agreement
<PAGE>
(1) Exhibit 9.4 Form of Participation
Agreement between Berger
Institutional Products Trust,
Berger Associates, Inc. and
Great American Reserve
Insurance Company
(2) Exhibit 9.5 Form of Participation
Agreement between Berger
Institutional Products Trust,
Berger Associates, Inc. and
Ameritas Life Insurance
Company
(3) Exhibit 9.6 Form of Participation
Agreement between Berger
Institutional Products Trust,
BBOI Worldwide LLC and Great
American Reserve Insurance
Company
(3) Exhibit 9.7 Form of Participation
Agreement between Berger
Institutional Products Trust,
Berger Associates, Inc.,
Berger Distributors, Inc.,
Charles Schwab & Co. Inc. and
Great-West Life & Annuity
Insurance Company
(3)Exhibit 9.8 Form of Participation
Agreement between Berger
Institutional Products Trust,
Berger Associates, Inc.,
Berger Distributors, Inc.,
Charles Schwab & Co. Inc. and
First Great-West Life &
Annuity Insurance Company
(3)Exhibit 9.9 Form of Participation
Agreement between Berger
Institutional Products Trust,
BBOI Worldwide LLC and Canada
Life Insurance Company of
America
(3)Exhibit 9.10 Form of Participation
Agreement between Berger
Institutional Products Trust,
BBOI Worldwide LLC and Canada
Life Insurance Company of New
York
(3)Exhibit 9.11 Form of Participation
Agreement between Berger
Institutional Products Trust,
Berger Associates, Inc. and
Prudential Insurance Company
of America
<PAGE>
(3)Exhibit 9.12 Form of Participation
Agreement between Berger
Institutional Products Trust,
BBOI Worldwide LLC and
Prudential Insurance Company
of America
(1) Exhibit 10 Opinion and consent of Davis,
Graham & Stubbs LLP
* Exhibit 11 EX-99.B11 Consent of Price Waterhouse
LLP
Exhibit 12 Not Applicable
(1) Exhibit 13 Investment Letter from Initial
Stockholder
Exhibit 14 Not Applicable
Exhibit 15 Not Applicable
(1) Exhibit 16 Schedule for Computation of
Performance Data
(2) Exhibit 17.1 Financial Data Schedule for
Berger IPT - 100 Fund
(2) Exhibit 17.2 Financial Data Schedule for
Berger IPT - Growth and Income
Fund
(2) Exhibit 17.3 Financial Data Schedule for
Berger IPT - Small Company
Growth Fund
* Exhibit 17.4 EX-27.4 Financial Data Schedule for
Berger/BIAM IPT -
International Fund
Exhibit 18 Not Applicable
- -----------------------
* Filed herewith.
(1) Previously filed on April 18, 1996, with Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
(2) Previously filed on February 14, 1997, with Post-Effective
Amendment No. 2 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
(3) Previously filed on April 18, 1997, with Post-Effective
Amendment No. 3 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 4 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated January 27, 1997, relating to the financial
statements and financial highlights appearing in the December 31, 1996 Annual
Report to Shareholders of Berger Institutional Products Trust, which is also
Incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Condensed Financial Information" in the
Prospectus and under the heading "Additional Information" in the Statement of
Additional Information.
Price Waterhouse LLP
Denver, Colorado
November 12, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> BERGER/BIAM IPT-INTERNATIONAL FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 2,503,553
<INVESTMENTS-AT-VALUE> 2,339,641
<RECEIVABLES> 81,704
<ASSETS-OTHER> 15,696
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,437,041
<PAYABLE-FOR-SECURITIES> 16,523
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,842
<TOTAL-LIABILITIES> 31,365
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,533,511
<SHARES-COMMON-STOCK> 254,067
<SHARES-COMMON-PRIOR> 0
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<ACCUMULATED-NET-GAINS> 35,631
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (177,271)
<NET-ASSETS> 2,405,676
<DIVIDEND-INCOME> 16,425
<INTEREST-INCOME> 6,915
<OTHER-INCOME> 0
<EXPENSES-NET> 9,535
<NET-INVESTMENT-INCOME> 13,805
<REALIZED-GAINS-CURRENT> 35,631
<APPREC-INCREASE-CURRENT> (177,271)
<NET-CHANGE-FROM-OPS> (127,835)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 261,565
<NUMBER-OF-SHARES-REDEEMED> (7,498)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,405,676
<ACCUMULATED-NII-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,547
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,728
<AVERAGE-NET-ASSETS> 2,104,251
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> (.58)
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 9.47
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
