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
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. . . . . . . . . . . . . . . . . . . 11
6. Management and Investment Advice. . . . . . . . . . . . . 11
7. Expenses of the Funds . . . . . . . . . . . . . . . . . . 13
8. How to Purchase and Redeem Shares in the Funds. . . . . . 14
9. How the Net Asset Value Is Determined . . . . . . . . . . 15
10. Income Dividends, Capital Gains Distributions and Tax
Treatment. . . . . . . . . . . . . . . . . . . . . . . . 15
11. Additional Information . . . . . . . . . . . . . . . . . 16
12. Performance. . . . . . . . . . . . . . . . . . . . . . . 17
13. Shareholder Inquiries. . . . . . . . . . . . . . . . . . 18
-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
Income Fund .00%^ 1.00%^ 1.00%^
Berger IPT - Small Company
Growth Fund .00%^ 1.15%^ 1.15%^
Berger/BIAM IPT -
International Fund .00%~ 1.20%~ 1.20%~
* 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 Fund $10 $32 $55 $122
Berger IPT - Small
Company Growth Fund $12 $37 $63 $140
Berger/BIAM IPT -
International Fund $12* $38* N/A N/A
* 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. 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.
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<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
Berger IPT - Berger IPT - Berger IPT
100 Fund Growth and Small
Income Company
Fund Growth
Fund
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
_______________
^ 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, 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.
</TABLE>
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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[R]. The Berger IPT - Growth
and Income Fund corresponds to the Berger Growth and Income Fund. The
Berger IPT - Small Company Growth Fund corresponds to the Berger Small
Company Growth Fund[R]. 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.
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.
-4-<PAGE>
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 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
-5-<PAGE>
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 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.
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.
* * *
-6-<PAGE>
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 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
-7-<PAGE>
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 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 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.
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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 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
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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 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 -
-10-<PAGE>
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 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 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.
-11-<PAGE>
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.
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.
-12-<PAGE>
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.
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.
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
-13-<PAGE>
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.
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
-14-<PAGE>
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.
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
-15-<PAGE>
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.
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 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
-16-<PAGE>
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.
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
-17-<PAGE>
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.
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.
-18-
<PAGE>
PROSPECTUS
BERGER IPT - SMALL COMPANY GROWTH FUND
Berger IPT - Small Company Growth Fund (the "Fund") is a
diversified series or portfolio of Berger Institutional Products Trust
(the "Trust"), an open-end management investment company. Shares of
the Fund 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.
The investment objective of the 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.
This Prospectus concisely sets forth information about the
Fund that a prospective purchaser of a variable insurance contract or
plan participant should consider before purchasing a variable
contract, allocating contract values to the Fund or selecting the Fund
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 Fund 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 calling
1-303-329-0200 or 1-800-706-0539, or by writing or calling a
Participating Insurance Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Dated May 1, 1997
<PAGE>
Table of Contents
Section Page
- ------- ----
1. Fee Tables. . . . . . . . . . . . . . . . . . . . . . . . 1
2. Condensed Financial Information . . . . . . . . . . . . . 2
3. Introduction. . . . . . . . . . . . . . . . . . . . . . . 4
4. Investment Objective and Policies and Risk Factors. . . . 4
5. Portfolio Turnover. . . . . . . . . . . . . . . . . . . . 8
6. Management and Investment Advice. . . . . . . . . . . . . 9
7. Expenses of the Fund. . . . . . . . . . . . . . . . . . . 9
8. How to Purchase and Redeem Shares in the Fund . . . . . . 10
9. How the Net Asset Value Is Determined . . . . . . . . . . 11
10. Income Dividends, Capital Gains Distributions and Tax
Treatment. . . . . . . . . . . . . . . . . . . . . . . . 11
11. Additional Information . . . . . . . . . . . . . . . . . 12
12. Performance. . . . . . . . . . . . . . . . . . . . . . . 13
13. Shareholder Inquiries. . . . . . . . . . . . . . . . . . 13
-i-<PAGE>
1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
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 - Small Company
Growth Fund .00%^ 1.15%^ 1.15%^
* Other Expenses primarily include transfer agency fees, shareholder
report expenses, registration fees and custodian fees.
^ After fee waivers and expense reimbursements. The Fund's
investment advisor has voluntarily agreed to waive its advisory fee
and has voluntarily reimbursed 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
Fund exceed 1.15% of the Fund's average daily net assets. Absent
the voluntary waiver and reimbursement, the Investment Advisory Fee
for the Fund would have been 0.90% and its Total Fund Operating
Expenses would have been 8.57%.
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 - Small
Company Growth Fund $12 $37 $63 $140
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 the Fund 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 FUND. 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.
The investment advisor for the Fund 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, exceed 1.15% of the Fund's average daily net assets. The
Fund's expenses are described in greater detail under "Management and
Investment Advice" and "Expenses of the Fund."
-1-<PAGE>
2. CONDENSED FINANCIAL INFORMATION
On the following page is a table setting forth certain
financial highlights of the Fund for the period May 1, 1996 (date
operations commenced) to the end of its 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 Fund's 1996
Annual Report into the Statement of Additional Information.
Additional performance information is contained in the Fund's most
recent Annual Report dated December 31, 1996, which may be obtained
upon request and without charge by calling the Fund at 1-800-706-0539
or by calling a Participating Insurance Company.
-2-<PAGE>
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
Berger IPT - Berger IPT - Berger IPT
100 Fund Growth and Small
Income Company
Fund Growth
Fund
Net Asset Value, Beginning of Period. . . . . . .$10.00$10.00 $10.00
----- ----- -----
Income From Investment Operations:
Net Investment Income (Loss). . . . . . . . . . .01
Net Realized and Unrealized Gains
(Losses) on Securities. . . . . . . . . . . . . (.06)
-----
Total From Investment Operations. . . . . . . . (.05)
-----
Less Distributions:
Dividends (from net investment income). . . . . .00
Distributions (from capital gains). . . . . . . .00
---
Total Distributions. . . . . . . . . . . . . . . .00
---
Net Asset Value, End of Period. . . . . . . . . $ 9.95
----
Total Return^*. . . . . . . . . . . . . . . . . (.50)%
=====
Ratios/Supplemental Data:
Net Assets, End of Period. . . . . . . . . . . . $291,362
Ratios of Expenses to Average Net Assets:~
Net expenses+. . . . . . . . . . . . . . . .95%
Gross expenses+. . . . . . . . . . . . . . 8.57%
Ratio of Net Income (Loss) to Average
Net Assets~. . . . . . . . . . . . . . . . . . .14%
Portfolio Turnover Rate*. . . . . . . . . . . . 80%
Average Commission Rate. . . . . . . . . . . . . $.0392
_______________
^ 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, 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.
</TABLE>
-3-<PAGE>
3. INTRODUCTION
The Fund is a diversified portfolio or series of the Berger
Institutional Products Trust, a management investment company. The
Fund sells and redeems its 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 contracts or plans may limit allocations to the Fund. 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 the Fund.
4. INVESTMENT OBJECTIVE AND POLICIES AND RISK FACTORS
The Fund 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
Fund primarily represent an investment in common stocks, the net asset
value of the Fund will reflect changes in the market value of the
securities held in the Fund's portfolio, and the value of a Fund share
will therefore go up and down.
The Fund has the same investment objective and follows
substantially the same investment strategies and policies as those of
a publicly-offered investment company managed by the same investment
advisor (the "Berger retail fund"). The Fund corresponds to the
Berger Small Company Growth Fund[R]. As described below under
"Management and Investment Advice," the same person who serves as
portfolio manager of the Fund also serves as portfolio manager of the
corresponding Berger retail fund.
Although it is anticipated that the 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 the 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.
The investment objective of the 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 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 Fund, any income
produced will be a by-product of the effort to achieve the Fund's
objective of capital appreciation.
-6-<PAGE>
In selecting its portfolio securities, the 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 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
-4-<PAGE>
potential of small growth companies frequently takes time. As a
result, the Fund should be considered as a long-term investment
vehicle.
In general, investment decisions for the 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.
* * *
The investment objective of the Fund is considered
fundamental, meaning that it cannot be changed without a shareholders'
vote. There can be no assurance that the Fund's investment objective
will be realized. The Fund may 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 Fund 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 the 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 countries.
The Fund's investments may include American Depositary Receipts
(ADRs). The Fund 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 the 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 the 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. The 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, the 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 Fund 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
-5-<PAGE>
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. The Fund may purchase securities
which are convertible into common stock when the Fund's 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 Fund 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 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. The credit risk associated with convertible securities
generally is reflected by their being rated below investment grade by
organizations such as Moody's Investors Service, Inc., or Standard &
Poor's Corporation, or being of similar creditworthiness in the
determination of the advisor. The Fund has 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, the Fund will not invest in any security
in default at the time of purchase or in any nonconvertible debt
securities rated below investment grade, and the 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 the Fund are downgraded following purchase, or
if other circumstances cause 20% or more of the Fund's assets to be
invested in convertible securities rated below investment grade, the
trustees of the Trust, in consultation with the 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. The Fund may invest in,
and the portfolio of the 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 Fund 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 Fund may invest up to 10% of its total
assets in securities of unseasoned issuers.
REPURCHASE AGREEMENTS. The 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 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.
-6-<PAGE>
Repurchase agreements maturing in more than seven days will be
considered illiquid for purposes of the restriction on the Fund's
investment in illiquid and restricted securities.
LENDING PORTFOLIO SECURITIES. The Fund may lend its
portfolio securities to qualified institutional investors such as
brokers, dealers or other financial organizations. This practice
permits the Fund to earn income, which, in turn, can be invested in
additional securities to pursue the Fund's investment objective.
Loans of securities by the 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. The 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. The
Fund will not 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. The 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 the Fund's
securities or the price of securities that the Fund is considering
purchasing. Although a hedging transaction may, for example,
partially protect the 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 Fund may utilize, provided that no more than 5% of
the 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. The 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 the Fund's
total assets. A call option is considered "covered" if the Fund
already owns the security on which the option is written or, in the
case of an option written on a securities index, if the Fund owns a
portfolio of securities believed likely to substantially replicate
movement of the index.
Use of these instruments by the 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 the Fund, may
exceed the premium received for the option. However, the 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 the Fund will be able to meet its obligations under its
futures and forward contracts and its obligations under options
written by the Fund, the Fund will be required to maintain liquid
assets in a segregated account with its custodian or to set aside
portfolio securities to "cover" its position in these contracts.
The principal risks of the Fund utilizing futures
transactions, forward contracts and/or options are: (a) losses
resulting from market movements not anticipated by the Fund;
(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
-7-<PAGE>
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 the Fund enters into an over-the-counter contract with a
counterparty, the Fund will assume counterparty credit risk, that is,
the risk that the counterparty will fail to perform its obligations,
in which case the Fund could be worse off than if the contract had not
been entered into. Additional detail concerning the Fund's use of
futures, forwards and options and the risks of such investments can be
found in the Statement of Additional Information.
ILLIQUID SECURITIES. The 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, the Fund may not 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 the Fund's net assets to
be invested in illiquid securities, the trustees of the Trust, in
consultation with the 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 the 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, the Fund might have to incur
the potentially substantial expense and delay associated with
effecting registration.
INVESTMENT RESTRICTIONS
In addition to its investment objective, the Fund has
adopted a number of restrictions on its investments and other
activities that may not be changed without shareholder approval. For
example, with respect to 75% of its total assets, the Fund may not
purchase securities of any issuer (except U.S. Government securities)
if, immediately after and as a result of such purchase, the value of
the 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 of such issuer.
Further, the Fund may not borrow money, except borrowing
undertaken from banks for temporary or emergency purposes in amounts
not to exceed 25% of the market value of its total assets (including
the amount borrowed), and may not make loans (except that the Fund may
enter into repurchase agreements and may lend portfolio securities in
accordance with the Fund's investment policies). The Fund may not
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, the Fund currently does not intend to make short sales
of securities, except that the 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 the Fund does not intend to
purchase or sell securities on a when-issued or delayed delivery basis
if as a result, more than 5% of its assets are invested in such
securities, although these restrictions may be changed without
shareholder approval. For more detail about the Fund's investment
restrictions, see the Statement of Additional Information.
5. PORTFOLIO TURNOVER
In pursuit of the 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,
-8-<PAGE>
regardless of portfolio turnover. In addition, portfolio turnover may
increase as a result of large amounts of purchases and redemptions of
shares of the Fund due to economic, market or other factors that are
not within the control of management. The annual portfolio turnover
rates of the Fund may at times exceed 100%. Increased portfolio
turnover would necessarily result in correspondingly higher brokerage
costs for the Fund. The portfolio turnover rates are shown in the
table in Section 2 beginning on page 2.
6. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major
decisions relating to the Fund's policies and objectives. They also
oversee the operation of the Fund by its officers and review the
investment performance of the Fund on a regular basis.
The investment advisor to the Fund is Berger Associates,
210 University Boulevard, Suite 900, Denver, CO 80206. Berger
Associates furnishes continuous advice and recommendations to the Fund
regarding securities to be purchased and sold by the Fund. Berger
Associates, therefore, formulates a continuing program for management
of the assets of the Fund consistent with the investment objectives
and policies established by the trustees of the Trust. Berger
Associates also provides office space for the 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 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 Fund's sub-
transfer agent.
William R. Keithler is the President and portfolio manager
of the 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.
Under the Investment Advisory Agreement for the 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.
From time to time, Berger Associates may compensate
Participating Insurance Companies or their affiliates whose customers
hold shares of the Fund 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
Fund by the compensated Participating Insurance Company, depending on
the nature, extent and quality of the services provided, will be paid
from Berger Associates' own resources and not from the assets of the
Fund.
7. EXPENSES OF THE FUND
The Fund has appointed Investors Fiduciary Trust Company
("IFTC") as its recordkeeping and pricing agent to calculate the daily
net asset value of the Fund and to perform certain accounting and
recordkeeping
-9-<PAGE>
functions required by the Fund. In addition, IFTC also serves as the
Fund's custodian, transfer agent and dividend disbursing agent. IFTC
has engaged DST as sub-agent to provide transfer agency and dividend
disbursing services for the Fund. As noted in the preceding section,
approximately 41% of the outstanding shares of DST are owned by KCSI.
For custodian, recordkeeping and pricing services, the Fund
pays fees to IFTC based on a percentage of its assets, subject to
certain minimums. The 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 Fund reimburses IFTC and DST for certain out-of-pocket
expenses.
The trustees of the Fund 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 the 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 the 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. The Fund 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. The Fund 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 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 Fund exceed 1.15% of the Fund's average daily net assets.
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
Fund's 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 FUND
Shares of the Fund are sold by the Fund on a continuous
basis to separate accounts of Participating Insurance Companies or to
qualified plans. Investors may not purchase or redeem shares of the
Fund 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 the Fund,
change existing allocation among investment alternatives, including
the Fund, or select the Fund as an investment option for a qualified
plan. No sales charge is imposed upon the purchase or redemption of
shares of the Fund. 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 the 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.
-10-<PAGE>
9. HOW THE NET ASSET VALUE IS DETERMINED
The price of the Fund's shares is based on the net asset
value of the 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 the 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.
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.
The 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 the Fund may be significantly affected by such trading on
days when shareholders cannot purchase or redeem shares of the Fund.
Since the Fund does not impose any front end sales load or
redemption fee, both the purchase price and the redemption price of
the Fund share are the same and will be equal to the next calculated
net asset value of a share of the Fund.
10. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
The Fund intends to declare dividends representing the
Fund's net investment income annually, normally in December. It is
also the present policy of the Fund to distribute annually all of its
net realized capital gains.
All dividends and capital gains distributions paid by the
Fund will be automatically reinvested in shares of the 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 Fund 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 it so qualifies and
meets certain minimum distribution requirements, the Fund generally
will not be liable for Federal income tax on the amount of its
earnings that are timely distributed. In addition, the 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.
-11-<PAGE>
11. ADDITIONAL INFORMATION
The Fund is a separate series or portfolio 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 Fund was established under the Trust in October 1995. Currently,
there are a total of four series (including the Fund) established
under the Trust, although others may be added in the future. Shares
of the Fund are fully paid and non-assessable when issued. Each share
has a par value of $.01. All shares issued by the 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
Fund, rather than individual contract owners or plan participants, are
the shareholders of the Fund. 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 the Fund generally vote separately on
matters relating to the 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 the Fund has one vote. Shares of the 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. The Fund is not 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 Fund will facilitate
appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a trustee.
The Fund sells its shares only to certain qualified
retirement plans and to variable annuity and variable life insurance
separate accounts of insurance companies that are unaffiliated with
Berger Associates and that may be unaffiliated with one another. The
Fund currently does not foresee any disadvantages to policyowners
arising out of the fact that the Fund offers its shares to such
entities. Nevertheless, the trustees intend to monitor events in
order to identify any material irreconcilable conflicts that may arise
and to determine what action, if any, should be taken in response to
such conflicts. If a conflict occurs, the trustees may require one or
more insurance company separate accounts or plans to withdraw its
investments in the Fund and to substitute shares of another fund. As
a result, the Fund may be forced to sell securities at disadvantageous
prices. In addition, the trustees may refuse to sell shares of the
Fund to any separate account or qualified plan or may suspend or
terminate the offering of shares of the 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 Fund's 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 Fund.
Owners of variable insurance contracts and qualified plan
administrators invested in the Fund will receive annual and semiannual
reports including the financial statements of the Fund. Each report
will show the investments owned by the Fund and the market values
thereof, as well as other information about the Fund and its
operations.
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12. PERFORMANCE
From time to time in advertisements, the Fund may discuss
its 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 Fund
may compare its performance to that of recognized broad-based
securities market indices, including the Standard & Poor's 500 Stock
Index, the Dow Jones Industrial Average, the Russell 2000 Stock Index,
the Standard & Poor's 600 Small Cap Index or the Nasdaq Composite
Index, or more narrowly-based indices which reflect the market sectors
in which the Fund invests.
The total return of the 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.
The 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 the Fund. Because average
annual total returns for more than one year tend to smooth out
variations in the Fund's return, investors should recognize that such
figures are not the same as actual year-by-year results.
The Fund's total return includes the effect of deducting the
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 Fund can be purchased only through a
variable insurance contract or qualified plan, the Fund's 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 the 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 Fund 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.
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.
-13-<PAGE>
PROSPECTUS
BERGER/BIAM IPT - INTERNATIONAL FUND
Berger/BIAM IPT - International Fund (the "Fund") is a
diversified series or portfolio of Berger Institutional Products Trust
(the "Trust"), an open-end management investment company. Shares of
the Fund 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.
The investment objective of the 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. 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 the
Fund that a prospective purchaser of a variable insurance contract or
plan participant should consider before purchasing a variable
contract, allocating contract values to the Fund or selecting the Fund
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 Fund 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 calling
1-303-329-0200 or 1-800-706-0539, or by writing or calling a
Participating Insurance Company.
INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK (INCLUDING BANK OF IRELAND).
SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND 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. Introduction. . . . . . . . . . . . . . . . . . . . . . . 2
3. Investment Objective and Policies and Risk Factors. . . . 2
4. Portfolio Turnover. . . . . . . . . . . . . . . . . . . . 7
5. Management and Investment Advice. . . . . . . . . . . . . 7
6. Expenses of the Fund. . . . . . . . . . . . . . . . . . . 8
7. How to Purchase and Redeem Shares in the Fund . . . . . . . 9
8. How the Net Asset Value Is Determined . . . . . . . . . . . 9
9. Income Dividends, Capital Gains Distributions and Tax
Treatment. . . . . . . . . . . . . . . . . . . . . . . . 10
10. Additional Information . . . . . . . . . . . . . . . . . 10
11. Performance. . . . . . . . . . . . . . . . . . . . . . . 12
12. Shareholder Inquiries. . . . . . . . . . . . . . . . . . 12
-i-<PAGE>
1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
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/BIAM IPT -
International Fund .00%~ 1.20%~ 1.20%~
* Other Expenses primarily include transfer agency fees, shareholder
report expenses, registration fees and custodian fees.
~ Based on estimated expenses for the first year of operations of the
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
Fund exceed 1.20%, of the Fund's average daily net assets. Absent
the voluntary waiver and reimbursement, the Investment Advisory Fee
for the Fund would be 0.90%, and its Total Fund Operating Expenses
would be estimated to be 8.96%.
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/BIAM IPT -
International Fund $12* $38* N/A N/A
* 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 the Fund 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 FUND. 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.
The investment advisor for the Fund 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, exceed 1.20% of the Fund's average daily net assets. The
Fund's expenses are described in greater detail under "Management and
Investment Advice" and "Expenses of the Fund."
-1-<PAGE>
2. INTRODUCTION
The Fund is a diversified portfolio or series of the Berger
Institutional Products Trust, a management investment company. The
Fund sells and redeems its 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 contracts or plans may limit allocations to the Fund. 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.
3. INVESTMENT OBJECTIVE AND POLICIES AND RISK FACTORS
The Fund 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
Fund primarily represent an investment in common stocks, the net asset
value of the Fund will reflect changes in the market value of the
securities held in the Fund's portfolio, and the value of the Fund
share will therefore go up and down.
The Fund has the same investment objective and follows
substantially the same investment strategies and policies as those of
a publicly-offered investment company managed by the same investment
advisor (the "Berger retail fund"). The Fund corresponds to the
Berger/BIAM International Institutional Fund. As described below
under "Management and Investment Advice," the same persons that serve
as portfolio manager of the Fund also serve as portfolio manager of
the corresponding Berger retail fund.
Although it is anticipated that the 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 the 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.
The investment objective of the 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 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
-2-<PAGE>
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 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.
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 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 the Fund is considered
fundamental, meaning that it cannot be changed without a shareholders'
vote. There can be no assurance that the Fund's investment objective
will be realized. Following is additional information about some of
the other specific types of securities and other instruments in which
the Fund 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 the 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 countries.
The Fund's investments may include American Depositary Receipts
(ADRs). The Fund 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 the Fund may invest may be
considered passive foreign investment companies (PFICs), which are
described in greater detail in the Statement of Additional
Information.
-3-<PAGE>
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 the 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. The 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, the 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 Fund 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. The Fund may purchase securities
which are convertible into common stock when the Fund's 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 Fund 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 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. The credit risk associated with convertible securities
generally is reflected by their being rated below investment grade by
organizations such as Moody's Investors Service, Inc., or Standard &
Poor's Corporation, or being of similar creditworthiness in the
determination of the sub-advisor. The Fund has 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, the Fund will not invest in any security
in default at the time of purchase or in any nonconvertible debt
securities rated below investment grade, and the 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 the Fund are downgraded following purchase, or
if other circumstances cause 20% or more of the Fund's assets to be
invested in convertible securities rated below investment grade, the
trustees of the Trust, in consultation with the 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. The Fund may invest in
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.
-4-<PAGE>
UNSEASONED ISSUERS. The Fund 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 Fund may invest up to 5% of its total
assets in such securities.
REPURCHASE AGREEMENTS. The 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 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 the Fund's
investment in illiquid and restricted securities.
LENDING PORTFOLIO SECURITIES. The Fund may lend its
portfolio securities to qualified institutional investors such as
brokers, dealers or other financial organizations. This practice
permits the Fund to earn income, which, in turn, can be invested in
additional securities to pursue the Fund's investment objective.
Loans of securities by the 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. The 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. The
Fund will not 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. The Fund is authorized to make
limited commitments in certain forward contracts, but only for the
purpose of hedging, that is, protecting against the risk of market
movements that may adversely affect the value (in foreign currency or
U.S. dollar terms) of the Fund's securities or the price of securities
that the Fund is considering purchasing. Forward contracts are
obligations between two parties to exchange particular goods or
instruments (such as foreign currencies) at a set price on a future
date. The Fund currently intends that it will use forward contracts
only for hedging purposes and that it may enter into forward foreign
currency exchange contracts, provided the aggregate value of all
outstanding contracts does not exceed the value of the Fund's assets.
Although a hedging transaction may, for example, partially protect the
Fund from a decline in the foreign exchange price of a particular
security or its portfolio generally, hedging may also limit the
potential return to the Fund due to positive foreign exchange
movements, and the cost of the transaction will reduce the potential
return on the security or the portfolio. In addition, forward foreign
currency exchange contracts do not eliminate fluctuations in the
prices of the underlying securities the Fund owns or intends to
acquire.
The Fund will generally enter into forward foreign currency
exchange contracts either with respect to specific transactions or
with respect to the Fund's security positions. For example, the Fund
may enter into a forward contract in order to fix the price (in terms
of a specified currency, which may be U.S. dollars or a foreign
currency) for securities it has agreed to buy or sell or is
considering buying or selling. Further, when the sub-advisor believes
that a particular foreign currency in which some or all of the Fund's
investments are denominated may decline compared to the U.S. dollar,
the Fund may enter into a forward contract to sell the currency that
is expected to decline (or another currency which acts as a proxy for
that currency). However, the Fund will be
-5-<PAGE>
permitted to make such investments 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 securities denominated in a
specific foreign currency. To ensure that the Fund will be able to
meet its obligations under its forward foreign currency exchange
contracts, the Fund will be required to place liquid assets in a
segregated account with its custodian bank or to set aside securities
to "cover" its commitments in these contracts.
Forward foreign currency exchange contracts are privately
negotiated (i.e., over-the-counter) and the parties may agree to
offset or terminate the contract before its maturity or may hold the
contract to maturity and complete the contemplated delivery of the
underlying foreign currency. Transactions in forward foreign currency
exchange contracts by the Fund involve the potential for a loss that
may exceed the amount of commitment the Fund would be permitted to
make in those contracts under its investment limitations. The
principal risks of the Fund's use of forward foreign currency exchange
contracts are: (a) losses resulting from currency market movements
not anticipated by the Fund; (b) possible imperfect correlation
between movements in the prices of forward contracts and movements in
the spot (i.e., cash) prices of the currencies hedged or used to cover
such positions; (c) lack of assurance that the Fund will be able to
enter into an offset or termination of the contract at any particular
time; (d) the need for additional information and skills beyond those
required for the management of a portfolio of traditional securities;
and (e) possible need to defer closing out certain forward contracts
in order to facilitate the Fund's qualification for beneficial tax
treatment afforded "regulated investment companies" under the Internal
Revenue Code of 1986. In addition, when the Fund enters into an over-
the-counter contract with a counterparty, the Fund will assume
counterparty credit risk, that is, the risk that the counterparty will
fail to perform its obligations, in which case the Fund could be worse
off than if the contract had not been entered into.
Although they currently have no intention of doing so, the
trustees of the Fund may, without shareholder approval, authorize the
Fund to invest in certain types of other instruments for hedging
purposes, such as financial futures and options. Appropriate notice
to shareholders will be provided of any intention to commence
investing in such instruments. Additional detail concerning the
Fund's transactions in forwards, futures and options and the risks of
such investments can be found in the Statement of Additional
Information.
ILLIQUID SECURITIES. The 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, the Fund may not 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 the Fund's net assets to
be invested in illiquid securities, the trustees of the Trust, in
consultation with the 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 the 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, the Fund might have to incur
the potentially substantial expense and delay associated with
effecting registration.
INVESTMENT RESTRICTIONS
In addition to its investment objective, the Fund has
adopted a number of restrictions on its investments and other
activities that may not be changed without shareholder approval. For
example, the Fund may not borrow money, except borrowing undertaken
from banks for temporary or emergency purposes in amounts not to
exceed 25% of the market value of its total assets (including the
amount borrowed), and may not make loans (except that the Fund may
enter into repurchase agreements and may lend portfolio securities in
accordance with the Fund's investment policies). The Fund may not
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.
-6-<PAGE>
Further, the Fund may not purchase securities of any issuer
(except U.S. Government securities) if, immediately after and as a
result of such purchase, the value of the 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, although this restriction may
be reduced to apply to 75% or more of the Fund's total assets without
a shareholder vote. Also, the Fund currently does not intend to make
short sales of securities and the Fund does not intend to purchase or
sell securities on a when-issued or delayed delivery basis if as a
result, more than 5% of its assets are invested in such securities,
although these restrictions may also be changed without shareholder
approval. For more detail about the Fund's investment restrictions,
see the Statement of Additional Information.
4. PORTFOLIO TURNOVER
In pursuit of the 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
the Fund due to economic, market or other factors that are not within
the control of management.
5. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major
decisions relating to the Fund's policies and objectives. They also
oversee the operation of the Fund by its officers and review the
investment performance of the Fund on a regular basis.
The investment advisor to the 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
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
Fund, BBOI Worldwide has delegated day-to-day portfolio management
responsibility to BIAM, as the sub-advisor. As sub-advisor, BIAM
manages the
-7-<PAGE>
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 management of the portfolio in which the assets of
the Berger/BIAM International Institutional Fund are invested. 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 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.
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 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 its Investment Advisory Agreement with BBOI Worldwide,
the 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 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 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, BBOI Worldwide may compensate
Participating Insurance Companies or their affiliates whose customers
hold shares of the Fund 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
Fund by the compensated Participating Insurance Company, depending on
the nature, extent and quality of the services provided, will be paid
from BBOI Worldwide's own resources and not from the assets of the
Fund.
6. EXPENSES OF THE FUND
The Fund has appointed Investors Fiduciary Trust Company
("IFTC") as its recordkeeping and pricing agent to calculate the daily
net asset value of the Fund and to perform certain accounting and
recordkeeping functions required by the Fund. In addition, IFTC also
serves as the Fund's custodian, transfer agent and dividend disbursing
agent. IFTC has engaged DST as sub-agent to provide transfer agency
and dividend disbursing services for the Fund. As noted in the
preceding section, approximately 41% of the outstanding shares of DST
are owned by KCSI.
For custodian, recordkeeping and pricing services, the Fund
pays fees to IFTC based on a percentage of its assets, subject to
certain minimums. The 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
Fund to IFTC and in turn passed through to DST as sub-agent. In
addition, the Fund reimburses IFTC and DST for certain out-of-pocket
expenses.
The trustees of the Fund 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 the Fund are effected through DSTS, the commission
received by DSTS is credited against, and thereby reduces,
-8-<PAGE>
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 the 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 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.
The Fund also incurs other expenses, including accounting,
administrative and legal expenses.
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 Fund
exceed 1.20% of the Fund's average daily net assets.
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
Fund's shares. The Distributor is a wholly-owned subsidiary of Berger
Associates, and certain officers of the Trust are officers or
directors of the Distributor.
7. HOW TO PURCHASE AND REDEEM SHARES IN THE FUND
Shares of the Fund are sold by the Fund on a continuous
basis to separate accounts of Participating Insurance Companies or to
qualified plans. Investors may not purchase or redeem shares of the
Fund 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 the Fund,
change existing allocation among investment alternatives, including
the Fund, or select the Fund as an investment option for a qualified
plan. No sales charge is imposed upon the purchase or redemption of
shares of the Fund. 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 the 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. HOW THE NET ASSET VALUE IS DETERMINED
The price of the Fund's shares is based on the net asset
value of the 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 the 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
-9-<PAGE>
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.
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.
The 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 the Fund may be significantly affected by such trading on
days when shareholders cannot purchase or redeem shares of the Fund.
Since the Fund does not imposes any front end sales load or
redemption fee, both the purchase price and the redemption price of
the Fund share are the same and will be equal to the next calculated
net asset value of a share of the Fund.
9. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
The Fund intends to declare dividends representing the
Fund's net investment income annually, normally in December. It is
also the present policy of the Fund to distribute annually all of its
net realized capital gains.
All dividends and capital gains distributions paid by the
Fund will be automatically reinvested in shares of the 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 Fund 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 it so qualifies and
meets certain minimum distribution requirements, the Fund generally
will not be liable for Federal income tax on the amount of its
earnings that are timely distributed. In addition, the 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.
10. ADDITIONAL INFORMATION
The Fund is a separate series or portfolio 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 Fund was established under the Trust in March 1997. Currently,
there are a total of four series (including the Fund) established
under the Trust, although others may be added in the future. Shares
of the Fund are fully paid and non-assessable when issued. Each share
has a par value
-10-<PAGE>
of $.01. All shares issued by the 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
Fund, rather than individual contract owners or plan participants, are
the shareholders of the Fund. 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 the Fund generally vote separately on
matters relating to the 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 the Fund has one vote. Shares of the 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. The Fund is not 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 Fund will facilitate
appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a trustee.
The 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
BBOI Worldwide and that may be unaffiliated with one another. The
Fund currently does not foresee any disadvantages to policyowners
arising out of the fact that the Fund offers its shares to such
entities. Nevertheless, the trustees intend to monitor events in
order to identify any material irreconcilable conflicts that may arise
and to determine what action, if any, should be taken in response to
such conflicts. If a conflict occurs, the trustees may require one or
more insurance company separate accounts or plans to withdraw its
investments in the Fund and to substitute shares of another fund. As
a result, the Fund may be forced to sell securities at disadvantageous
prices. In addition, the trustees may refuse to sell shares of the
Fund to any separate account or qualified plan or may suspend or
terminate the offering of shares of the 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 Fund's 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 Fund.
Owners of variable insurance contracts and qualified plan
administrators invested in the Fund will receive annual and semiannual
reports including the financial statements of the Fund. Each report
will show the investments owned by the Fund and the market values
thereof, as well as other information about the Fund and its
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 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 the Fund. If the circumstances
-11-<PAGE>
described above should change, the trustees of the Trust would review
the relationships with BIAM and consider taking all actions
appropriate under the circumstances.
11. PERFORMANCE
From time to time in advertisements, the Fund may discuss
its 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 Fund
may compare its performance to that of recognized broad-based
securities market indices, including the Standard & Poor's 500 Stock
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 the Fund invests.
The total return of the 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.
The 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 the Fund. Because average
annual total returns for more than one year tend to smooth out
variations in the Fund's return, investors should recognize that such
figures are not the same as actual year-by-year results.
The Fund's total return includes the effect of deducting the
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 Fund can be purchased only through a
variable insurance contract or qualified plan, the Fund's 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 the 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 Fund are based upon
historical results and do not assure future performance. The
investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
12. SHAREHOLDER INQUIRIES
Shareholders with questions should write to the Berger
Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, CO 80217,
or call 1-303-329-0200 or 1-800-706-0539, or contact a Participating
Insurance Company.
-12-<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, 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
<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
-i-<PAGE>
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 apprecia-
tion. 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 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
-1-<PAGE>
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 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
-2-<PAGE>
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
"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
-3-<PAGE>
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 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
-4-<PAGE>
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 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
-5-<PAGE>
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" 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
-6-<PAGE>
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 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.
-7-<PAGE>
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 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.
-8-<PAGE>
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 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
-9-<PAGE>
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.
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
-10-<PAGE>
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 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-
-11-<PAGE>
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 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.
-12-<PAGE>
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 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
-13-<PAGE>
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 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
-14-<PAGE>
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 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.
-15-<PAGE>
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, (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.
-16-<PAGE>
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.
2. 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.
3. 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).
4. 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.
5. 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.
6. 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.
-17-<PAGE>
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 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.
-18-<PAGE>
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).
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
-19-<PAGE>
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.
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,
-20-<PAGE>
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 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.
-21-<PAGE>
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 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 54. 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
-22-<PAGE>
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. Director of First of Michigan Capital Corp. (holding
company) and First of Michigan Corp. (broker-dealer) since
March 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
Asset Management Co. (money management) from January 1990 to
February 1992.
* PATRICK S. ADAMS, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 36. 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. 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., and
Senior Portfolio Manager/Senior Analyst from January 1992 to
February 1993 with First of America Investment Corp.
* WILLIAM R. KEITHLER, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 43. 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).
* MARK R. MCKINNEY, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 29. Vice President and Co-Portfolio Manager of
the Berger IPT - Growth and Income Fund since February 1997.
Vice President and Co-Portfolio Manager of the Berger Growth and
Income Fund since February 1997. Senior Analyst with Berger
Associates since January 1996. Formerly, Analyst/Portfolio
Manager with Farmers Insurance Co. from April 1992 to January
1996.
-23-<PAGE>
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 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 71. 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. From 1960 to 1973, principal shareholder and
executive officer of predecessor investment advisory firms which
served as investment advisors to mutual funds and other
investors, and from 1950 to 1960, investment officer in the
trust department of The Colorado National Bank of Denver in
charge of common stock investments.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 71.
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 51.
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 69.
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
-24-<PAGE>
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.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL
60602, age 51. Since 1991, Director, Chairman, President and
Chief Executive Officer of Catalyst Institute (international
public policy research organization focused primarily on
financial markets and institutions) and Catalyst Consulting
(international financial institutions business consulting firm).
Formerly (1988-1991), Director, President and Chief Executive
Officer 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 63. 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 59. 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.
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 41. 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
-25-<PAGE>
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
- ----------------------------------------------------------------------
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-
-26-<PAGE>
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
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.
-27-<PAGE>
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 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
-28-<PAGE>
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.
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.
-29-<PAGE>
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 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.
-30-<PAGE>
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 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
-31-<PAGE>
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 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 - $9,111 $ 127 $8,984
100 Fund
Berger IPT - $8,831 $ 101 $8,730
Growth and
Income Fund
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
-32-<PAGE>
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 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.
-33-<PAGE>
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%
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.
-34-<PAGE>
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:
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
-35-<PAGE>
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 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 $ 8/2/ $ 6
Fund
-36-<PAGE>
Berger IPT - Growth $ 0 $ 0
and Income Fund
Berger IPT - Small $ 0 $ 0
Company Growth Fund
____________________
/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.
-37-<PAGE>
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 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, 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
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values determined in good faith pursuant to consistently applied
procedures established by the trustees.
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.
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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.
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
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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 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
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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 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.
As of December 31, 1996, 78% of the outstanding shares of the
Berger IPT - 100 Fund, 81% of the outstanding shares of the Berger IPT
- - Growth and Income Fund and 85% of the outstanding
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shares of the Berger IPT - Small Company Growth Fund, were held by
Berger Associates, a Delaware corporation, which provided the initial
capital necessary to establish the Trust. Berger Associates may also
acquire shares of the Berger/BIAM IPT - International Fund to provide
it with start-up capital. As a result of its share ownership, Berger
Associates may be deemed to control each of those Funds and the Trust.
As of December 31, 1996, there was one other shareholder that owned
more than 5% of the outstanding shares of any of the Funds: Great
American Reserve Insurance Company, 11815 N. Pennsylvania Street,
Carmel, Indiana 46032, which owned 22%, 19% and 15% of the Berger IPT
- - 100 Fund, the Berger IPT - Growth and Income Fund and the Berger IPT
- - Small Company Growth Fund, respectively.
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.
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
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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.
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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 the issuance of a rating
and the update of the rating, during which time a published rating may
be inaccurate.
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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.
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.
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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.
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.
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